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HISTORY OF BANKING
“Bank is a pipeline through which currency moves into and out of circulation.” Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a profit-lending concern. Bank cannot lend all the money that has been deposited with it. It has to keep a certain portion of the total deposits in cash with them in order to meet the cash requirements of the individuals and business concern.

Banking History Word Bank is said to be derived from the words Banc us or Banque or Bank. The history of banking is traced to as early as 2000 BC. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The persons who had surplus money found it safe and convenient to deposit their valuables with them. The FIRST STAGE in the development of modern banking, thus, was the accepting of deposits of cash from those persons who had surplus money with them. The goldsmiths used to issue receipts for the money deposited with them. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths.

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2 When it was found that these receipts were drawn in such a way that it entitles any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The SECOND STAGE in development of banking thus was the issue of bank notes. The goldsmiths soon discovered that all the people who had deposited money with them did not come to withdraw their funds in cash. They found that only a few persons presented the receipt for encashment during a given period of time. They also found that most of the money deposited with was lying idle. At the same time, they found that they were being constantly requested for loan on good security. They thought it profitable to lend at least some of the money deposited with them too the needy persons. This proved quite a profitable business for the goldsmiths. They instead of charging interest from the depositors began to give them interest on the money deposited with them. The THIRD STAGE, in the development of banking by experience the banks came to know that they could keep a small proportion of the total deposits for meeting the demands of customers for cash and the rest they could easily lend. They allowed the depositors to draw over and above the money actually standing to their credit. In Economics terminology we can say that they allowed the overdraft facilities to their depositors.

The FOURTH STAGE, in development of banking. When every bank issues receipts and most of them allowed the overdraft facilities, there was then too

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2 much confusion in the banking system. The banks in order to earn profits could not keep adequate reserves for meeting the demands of the customers for cash. The failures on the part of the bankers to return money caused widespread distress among the peoples. In order to create confidence among the people, steps were taken to regulate the banking organization. A conference was held in Nuremberg in 1548. It was decided that a bank should be set up by the state, which should streamline the banking organization and technique. The first central bank was formed in Geneva in 1578. Bank of England was established in 1694. The responsibility of issuing of notes is now entrusted to a central bank of each country.

COMMERCIAL BANKING IN PAKISTAN
At the time of partition total number of Banks was 38 only. Out of these Banks the Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks were 7. The total of deposits of Pakistani Banks was Rs.880 Million &

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2 Advances were Rs: 198 Million. According to banking companies ordinance Banks are the companies, which transacts the business of Banking in Pakistan. Commercial Banks have constituted the most important [part of the intuitional credit in the economy of Pakistan. Being the largest source of credits, Banking Industry is a pivot of whole the economic activities in Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down that the Banks must have paid-up capital & reserve of not less then Rs: 5 Lac & fulfilling certain other requirements for declaring as “Scheduled Bank”. At the time of independence Bank services was badly affected. But with the passage of time these are improving. The government of Pakistan nationalized all Banks in early 1974. This act was done to minimize control of few hands over banking. But this step was proved e futile for the Banking in Pakistan. So the Govt. had to revise its decision in1990. Two Banks (Allied Bank of Pakistan Limited & Muslim commercial Bank Of Pakistan Limited has been denationalized. Since then Banks were working well. Now slogan of the Banks is to serve their customers in the best possible manner.

FORMS OF BANK
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FORMS OF BANKS

Central Bank

Commercial Banks
Scheduled Banks Non-Scheduled Banks

INTRODUCTION
Following privatization, Bank Alfalah emerged as new identity of Habib Credit and Exchange Bank with a revived purpose and commitment. Charged with the strength of Abu Dhabi consortium and under the leadership of his Highness Sheikh Nahayan Mabarak Al - Nayayan, the bank has already made significant conditions in building and strengthening both corporate retailbanking sectors in Pakistan. Designing the product portfolio of bank response to the customer’s preferences, the product like Royal Profit, Royal Patriot and Royal Custodial

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2 are prime examples of quality and innovation providing timely banking opportunities to customers of bank. Assessment of the needs and wants of the customers is an on going process at Bank Alfalah, which helps to continually develop new products and services. To continuously offer courteous, professional and advanced banking solutions, the team of bank has recently been rejuvenated by going though training programs with a focus on information technology. To make their banking solutions become accessible to more and more people, they have embarked upon a rapid expansion program, aiming to provide a networking that makes the services available to any of their customers in all the major urban centers of Pakistan with a view to go international in the future. With their key indicators of progress already soaring to new heights, the bank is committed to dedicate all its energies, resources and time to bring higher value and satisfaction to their customers, employees and shareholders. The graph of bank is going up and up every year. The ratio of profit is increasing at good percentage.

COMMERCIAL BANKING SCENARIO IN PAKISTAN
At the time of independence in 1947, there were 38 scheduled banks with 195 offices in “Pakistan” but by December 31,1973, there were 14 scheduled Pakistani commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign countries. Nationalization of Banks was not done 1st January 1974 under the Nationalization act 1974, due to certain objectives. But it had negative effects on efficiency of the of the banking sector afterwards a privatization Commission was set up on January 22, 1991, the commission transferred many banks to the private sector i.e., MCB & ABL.

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2 The government approved & permitted the establishment of 10 new private banks in 1991; hence many new private banks have incorporated, since then, BANK ALFALAH in one of the namely established private scheduled banks in Pakistan.

INTRODUCTION TO BANK ALFALAH
Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established by Mr.Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its 3 branches in Pakistan. In 1991, the BCCI was banned, when it was accused by European countries, that the bank was involved in some illegal operations with Gulf countries. The major reason behind European accusation was that BCCI was of Islamic mode. Therefore, the bank was closed due to international pressure. Then, its 3 Pakistani branches were taken over by the Government of Pakistan, which were named as Habib Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited. Following the privatization

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2 in July 1997, Habib credit and Exchange Band assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as the family of Sheikh Nahayan Mubarik Al Nahayan purchased 70% of its shares and 30 % shares remained with Habib Bank on behalf of Government of Pakistan. It has it 145 branches in 35 cities in Pakistan. The D.G.Khan branch was opened in August 2002. Alfalah has emerged as one of the leading commercial banks in the financial sector of Pakistan. Charged with strength of Abu Dhabi consortium and under the leadership of his highness Sheikh Nahayan Mubarak, minister of higher education and scientific research and prominent member of Royal family. The bank is energized with vision, envisaging. The development of various sectors in Pakistan. The bank has already made significant contribution in building and strengthening both corporate and retail banks sector in Pakistan. Assessment of the needs and wants of customer is an on going process at Bank Alfalah, which help to centennially develop new products of services. Designing the product portfolio in response to royal patriot, royal custodial, Alfalah car finance, Alfalah rupee traveler cheques home loans are prime example of quality innovation providing timely banking opportunities to customer. To continuously offer courteous, professional and advanced banking going through training programs with focus to information technology has recently rejuvenated solution the team of bank. With their key indicators of progress a steady soaring to new heights, the bank is committed to dedicate all its energies, resources and time to bring higher value and satisfaction to their customers and employers. The graph of the bank is going up and up every year. The ratio of profit is increasing at a good percentage. The bank is serving the people at high level of standard by according to expectation of customers.

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BRANCH LEVEL HIERARCHY

Area Manager

Mr. Shahid Husain Qazi
Corporate Manager

Mr. Asif Ali Sheikh
Branch Manager

Mr. Aon Abbas
Operation Manager

Mr. Ali Akbar

Adnan Rasheed

OPERATION DEPARTMEN Lets T

FOREIGN CREDIT EXCHANGE DEPARTM © Look Ahead Towards a Brighter Future Together DEPARTMENT ENT

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Cash Departmen t

Imports Mr. Yaseen

A/C Opening Dept. (Miss
Amara)

Exports Mr. Arif

CMD Mr. M.Farrukh Aslam

CAD Mr. Arif Naqvi

Remittance Dept. Mr. Danish

Home Finance Mr. Atriaz Ali Agri-Finance Mr. Nawazish Ali

Accounts Dept.
Mr. Jawad Durrani

THE VISION
Our vision is to be a leading financial institution, with a niche in areas where we have a competitive advantage with complete banking solutions. Our focus is on improving performance in each of our businesses to achieve consistent and superior returns for our highly valued clients and stakeholders.

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THE MISSION
Our mission is to maintain a competitive edge in quality banking, customer service and profit performance. Our activities are geared towards making Bank Alfalah a responsible corporate citizen. The emphasis on “Quality & Innovation” will remain our key mission statement. We will continue to strengthen our position as the leading provider of quality financial services in Pakistan. The Philosophy

 Excellence in service  Quality performance  Product innovations

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THE BOARD
H. H. Sheikh Hamdan Bin Mabarak Al-Nahayan
Mr. Abdulla Khalil Al-Mutawa Mr. Omar Z. Al-Askari Mr. Abdullah Nasser Hawaileel Al-Mansoori Mr. Nadeem Iqbal Sheikh Mr. Ikram Ul-Majeed Sehgal Mr. Mohammad Saleem Akhtar Officer Chief Executive

Chairman

CORPORATE INFORMATION
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2 Company Secretary Mr. Hamid Ashraf Auditors A. F. Ferguson & Co. Chartered Accountants Head Office B. A Building I. I. Chundrigarh Road P.O. Box 6773 Karachi

EXECUTIVE COMMITTEE
Mr. Mohammad Saleem Akthar Mr. Parvez A. Shahid Mr. Ikram Ul-Majeed Sehgal Mr. Mohammad Yousuf Mr. Tanweer A. Khan Mr. Sirajuddin Aziz Mr. Mahmood Ashraf Chairman

BANK ALFALAH’s SLOGAN
”Let’s Look Ahead Towards a Brighter Future Together.”

BRANCHES NETWORK
Bank Alfalah has 145 branches in 39 cities of Pakistan. Detail of some major branches as under: -

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2 Karachi  Main branch, B.A. Building, I.I. Chundrigar Road  Cloth market branch  Clifton branch  Shahrah-e-Faisal Branch  Jodia Bazar branch  Korangi industrial area branch  M.A. Jinah Road Branch  S.I.T.E Branch  Paper market branch  North Karachi branch  Gulshan-e -Iqbal  Karachi stock exchange  North Napier road branch  S.I.T.E Branch  P.E.C.H.S Branch  Timber Market Branch  D.H.A. Branch Lahore  Gulberg branch  Defense branch  Circular road branch  Township branch  LDA Plaza branch  Badami bagh branch  Allama Iqbal branch  Shah Alam Market branch

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2 Rawalpindi  Mall road branch  Satellite town branch Other Branches Other branches are in:  Sialkot  Islamabad  Peshawar  Multan.  Faisalabad  Quetta  Sukkur  Hydrabad  Gujranwala  Rahim Yar khan  Sahiwal  Sargodha  Gujrat  Mardan  D.G.Khan  Gohtiki  Mianchunho  Dehrki Now, Bank Alfalah is going to establish its branches in some foreign countries. Hopefully, in Dhaka (Bangladesh) and Bahrain, its branches will be opened in the year 2004. Some branches will also be opened in European

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2 countries. Bank is going to establish its branches in D.G. Khan, Bore wala and in Bahawalpur as well.

ABOUT THE BANK FEATURES
Bank Alfalah Limited is an established bank. It has some special features with the help of those it is growing rapidly.

Pursuit of Excellence Bank Alfalah has continued its upward climb in pursuit of excellence. Strengthened by backing of the Abu Dhabi group and driven by strategic goals set out by its Board and Management, bank Alfalah increasingly inspires trust and confidence of all its clients. Within a short span of time the bank has carved a significant niche for itself in the banking industry.

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2 These achievements have been preceded by concerted efforts to provide highest levels of service and value to our customers. The bank aims to future enhance performance standards through implementation of innovations in both products as well as customer care, by discovering newer avenues of client benefit. This customer-focused strategy has enabled Bank Alfalah to evolve as a single source financial service provider of corporate and retail banking services.

Dedicated Professionals The bank Alfalah team comprises of dedicated professionals equipped with a diverse array of skills, vast experience and pro-customer attitudes. The management concentrates its energies on making informed economic decisions, translating it into grater returns for our investors and customers. This prudent attitude has created a synergistic organizational structure leading to improvements in profitability and a sustainable competitive advantage for the bank.

A High Responsive Product Portfolio Not only comprehensive but also customize to match the needs and preferences of our customers. These strategic characteristics of our portfolio have helped us to face challenging economic conditions.

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2 Our product lineup continues to fulfill and satisfy the banking requirements of not just the conventional consumer, but the demanding financial needs of the corporate sector as well. The lineup includes:

Car financing, Rupee Travelers Cheques, Anmol Saving Certificates, Home Loans, On-Line Banking, Money Gram Remittance Service, Monthly income plan, Credit Cards, ATMs.

Outstanding Work Environment As the work environment plays a great role in this competition age, so the bank has good work environment. All the people work with cooperation; managers are so kind that each problem can be discussed with them.

Efficiency Employees at Bank Alfalah are quite efficient. They work more than their working hours and it is all according to their will. It also shows their loyalty, commitment to organization.

Customer Services All the customers are entertained individually. Same kind of behavior and attention is given to all the customers. Branch sitting arrangements; internal atmosphere is above meeting international standards

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Suggestions Asked From Customers Getting ideas for improvement from customer side is a new idea and that is working very well in Bank Alfalah Ltd. All the customers are asked to fill a suggestion form and the standards of the bank are improved through them. Daily report maintained about the complaints and presented to the top management and it will show their interest about development.

Employee Benefits Employees are given the benefits like bonus, gratuity funds, loans, increments, and house rent, medical and conveyance allowances.

Computerized Working Environment In bank, all the work is done remotely. All the entries are made using the systems, which are internally and externally integrated. This increases efficiency of the bank.

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PRODUCTS
Bank Alfalah is designing its portfolio bank is committed to develop products that give more value to its customers in both the sectors in corporate and consumer need. 1. Royal profit 2. Royal patriot 3. Royal group 4. Financing scheme 5. Alfalah Car financing 6. Bank Alfalah home loan 7. Rupee traveler cheque 8. Credit Cards 9. Agri-Finance

Following their trend of bringing value added products and services to their customers the bank has present Royal Group, Royal Profit and Royal Patriot.

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Royal Group
Royal Group is a joint investment plan that allows individuals to invest money collectively and earn higher rate of profit. Amount From Rs. 100000/- to 999999/From Rs. 1000000/- to 9999999/From Rs. 10000000/- and above Profit %age 3.25% 4.50% 5.50%

Royal Profit
It is profit obtained by individuals on their deposited amount. 50,000,000 & Alone profit is given on daily basis. It is just to attract customer. Amount From From From From From Rs. Rs. Rs. Rs. Rs. 50000/- to 999999/1000000/- to 9999999/10000000/- to 49999999/50000000/- to 149999999/150000000/- to and above Profit %age 3.25% 3.75.% 4.25% 4.75% 5.50%

Royal Patriot
It is fixing for specified time period. It is similar to term deposit. In term deposit one get no benefit of profit when he withdraws his money before maturity date. But in case of Royal Patriot of one withdraw his money before

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2 the maturity date; he can get the benefit of profit. The profit rates for different periods are following: Tenure 1 mont 25000-999999 1000000-49999999 5000000 & above 3 month 6 month s 9.00% 9.10% 9.20% 12 s 9.50% 9.60% 9.70% 24 s 9.50% 9.75% 10.00 %

month month

h s 7.50% 8.50% 7.60% 8.60% 7.70% 8.70%

Financing Schemes
The bank has introduced many financing schemes such as Term Finance and CF, FAFB, FAPC. The bank has recently introduced a Car Finance Scheme.

Alfalah Car Financing
It’s a scheme that enables one to own his desired car at easily affordable and flexible installments with a minimum down payment and insurance. All brands of new Pakistani assembled/manufactured cars are facilitated in bank Alfalah car financing. The loan can be availed from 1 year to 5 years with early adjustment facility at any time before the maturity. Initial down payment 20% of the value of the car. You have to pay a one-time fee of

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2 Rs.3000/-being amount of processing and documentation charges and 1st year insurance premium. Bank Alfalah has made arrangements with the top insurance companies who are offering special lowest insurance rates for bank Alfalah clients. You will repay the loan by making easy equal monthly installments to Bank Alfalah in the form of post-dated cheque. You are having the option to pay the installment before the maturity. The car is the security, which will be hypothecated in favor of the Bank and a lien will be marked with the registrar. You can include your spouse, children (18 years and above) or parents as co-applicants for the car loan and the car can be registered in their names. Eligibility Criteria

All Businessmen, Corporate Employees, and other salaried or selfemployed professionals having net take home income in excess of three times the monthly installment.

Required Documents For Car Finance Facility
{AGE LIMIT BETWEEN 21-55 YEARS}

1) Copy of national identity card. 2) Copy of driving license (optional). 3) N.T.N certificate. 4) Copy of current utility bill of residence. 5) Bank account statement for last six months from the date of application. 6) Signature verification from duly verified by the banker. 7) Asset &liabilities statement (Where Banks financing exceeds Rs.5 Lac.)

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2 8) CIB report requirement (Where Banks financing exceeds Rs.5 Lac.) 9) Basic borrower fact sheet. Additional Requirements for Business Class Individuals  Copy of rental/purchase agreement of business premises.  Sole proprietorship letter on relevant business letterhead.  Partnership deed (if applicable)  NOC from other partner (if applicable) Additional Requirements for Self-Employed Professionals  Copy of rental/purchase agreement of business premises.  Copy of membership of respective institute Association.  Must be practicing/conducting for last 3years.

Additional Requirements for Salaried Persons  Certificate from employer showing permanent employment for the last 2 years.  Original salary certificate.  Take home salary should be three times of the proposed installment.  Income of spouse can also be clubbed. Minimum Installments Monthly Installments for Alfalah Car can be calculated by multiplying Bank’s financing amount with the following factors:

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Periods

Advance Installme nt 0.08661 0.04514 0.03135 0.02447 0.02037

Deferred Installmen t 0.08722 0.04546 0.03157 0.02465 0.02052

For 12 months For 24 months For 36 months For 48 months For 60 months

Alfalah Credit Cards
Bank Alfalah welcome you as an esteemed recipient of Alfalah Hilal Card-the international Debit Card, Visa Electron that gives you an unlimited access to your current/saving account with a simple swipe, at millions of retail shops or ATMs, Worldwide. The Alfalah Hilal Card comes with a host of conveniences and benefits combined with the wide reach of Visa Network enabling it to be accepted at more than 840,000 ATMs and 13 million retail outlets around the world, making it the most acceptable Debit card available in Pakistan. What’s more, it is easy to operate and can be used on any electronic self-printing POS machine where VISA is accepted, locally and internationally.

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2 No more hassle of remembering your PIN for retail transactions and no need to go to the ATM for cash withdrawals, one swipe and your transaction is complete. Difference between Hilal Card a Credit Card is simple, a Hilal Card is a buy now, pay now option while a Credit Card is Buy now, Pay later option.

Alfalah Visa Card
Credit cards are mode of payment to concerned parties on behalf of the creditor. Credit cards are the best alternative to cash, are globally acceptable and offer security and convenience at the same time joining Alfalah VISA without paying any fee, start enjoying your free card from the moment you become a card member. No annual renewal fee. Only Bank Alfalah gives you the unmatched feature of lowest service charges @ 2.25% per month. Transfer facility @ 1.5%per month applicable on all existing credit card in Pakistan.75% of your assigned credit limit is available to you for cash withdrawals. Alfalah VISA Card gives you access to ready cash through your card and (PIN) personal identification number at 840,000 ATMs or you can request over-thecounter cash advances at 360,000 financial institutions worldwide or at any Alfalah Branch. New card will be issued within 72 hours of the loss/theft being reported. The facility that saves you from paying surcharge while using your Alfalah VISA Card at all Petrol Station in Pakistan. Whether you make

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2 transaction in dollars or any other currency, all your billing will be converted Pak Rupees for your Convenience. Alfalah VISA Card offers a comprehensive cover up to Rs.7million on Alfalah Visa Gold Card and Rs.305 million on Visa Classic, Classic Blue and Women Exclusive Card.

Features of Alfalah Visa Card Are  No Joining Fee  No Annual / Renewal Fee  Balance Transfer Facility  Global Acceptability  Cash Withdrawal  Revolving Credit  Free Supplementary Cards  24-Hour Phone Banking Services  Zero Loss Liability  All billing in Pak Rupee  Monthly Statement of Accounts  Fortunes and Discounts Salient Features  Lowest financing cost available in the market.  Tenure of 1 to 5 years as per individual requirement

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2  Quickest processing  Minimum processing charges: Rs. 3000 payable once  Down payment requirement of 25%  Repayment through monthly installments  Insurance rates available from bank’s approved insurance companies  Flexibility of adjustment at anytime during tenure.  Easily affordable flexible installment

Alfalah Hilal Card
Alfalah Hilal card is debit card that gives you access to your bank account. Alfalah Hilal Card allows you to purchase goods merchant establishments across Pakistan and abroad and also gives you the freedom to withdraw cash from any Visa/Electron/Plus ATMs in Pakistan and abroad, and all Local Bank Alfalah and 1 link ATMs. The Alfalah Hilal Card comes with all saving and current accounts except Non resident (ordinary) accounts with joint mandate or condition mandate. However, accounts with joint/conditional mandate can obtain the Alfalah Hilal Card on request by completing the required formalities. The main benefit of being a Alfalah Hilal Cardholder is that you enjoy unparallel access to your account-whatever you want, wherever you go. Besides, you can control your finances since the balance in your account determines your spending limit. Alfalah Hilal Card is accepted at more locations worldwide than any other debit card available in Pakistan. You can now enquire on your balance or withdraw cash using ATMs. You can use all Alfalah ATMs, local 1linkATMs and all other bank’s 840,000 ATMs worldwide on the VISA electron network for cash withdrawals. Subject to the maximum cash withdrawals limit of Rs.50, 000/-per day.

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2 Presently, the card can be used at over 7,000 establishments in Pakistan and at over 13 million outlets worldwide, where the VISA sign is displayed. The card is also welcomed at over 840,000 ATMs worldwide. There is no monthly outstanding in the case of Alfalah Hilal Card.

Bank Alfalah Home Loan
Alfalah home loan is especially designed for those non-resident Pakistani’s in UAE whose families live in Pakistan. This product is for NRD’s to buy build or renovate arouse in Pakistan. Home Financing Options Buy Your Home: With this facility, you no longer need to just dream about the home you want for yourself and your family .We will provide you up to Rs: 7.50 million or 70% of the purchase price of the property (whichever is less), so that you can realize your dream and enter the reality of owning a home. Build Your Home: You have a plot, and need finance to construct a home, which excites everyone in your family! No problem. We will provide you up to Rs:7.50 million, or 70% of the estimated value of constructed property to enable you to say good-bye to rent forever! Even if you don't have a plot, we will provide you up to 60% of the value of the plot that you have selected to purchase! Do we excite your imagination?

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Renovate Your Home: You already own a home, but need extra space for a growing family. Simply apply for financing of up to Rs: 2.50 million or 30% of the surveyed value of your home (whichever is less) and get yourself the extra space! You can stretch payment up to 7 years.

Lets Start It Together: The crown jewel of our Home Finance Scheme, the golden opportunity for someone starting a career to buy an already constructed housing unit so early in life! We offer a moratorium of up to 3 years in principal payments, for a financing of up to 20 years. You service only the mark-up element initially, and principal repayment starts after the end of monotorium period. Home Start is specially designed for young people to own a home of their own.

Make An Easy Transfer: Does your existing installment on a home finance leave you with nothing to spend? You need not worry any more because we have genuinely low rates and payment options that could leave more funds with you each month. With our BTF, repaying your home finance will not make you break into a sweet! Transfer up to Rs: 7.50 million or 100 % of the existing finance, whichever is less.

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Documents The following documents are required to be submitted by an applicant with the completed application. 1) 2) 3) 4) 5) 6) 7) 8) 2 passport size photographs Copy of NIC. Copies of last Salary / Pay Slip duly attested by the HR department. Salary Certificate (original) from the employer, showing the gross salary and deductions. Employment verification form from the employer. Non-resident Pakistani of UAE, holding valid Pakistani passport. Valid UAE visa Pakistani ID Card Must be 21 year of age or over salaried and 62 in case of businessmen

Processing Fee (Non-Refundable)

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2 For financing up to Rs. 1.00 M Rs. 5,000,For financing up to Rs. 5.00 M Rs. 10,000, For financing up to Rs. 10.00 M Rs. 20,000. Mark-up Rates: For SVR (Standard Variable Rate) option: SBP discount rate + 1%, Currently 7.5% + 1% = 8.5% For Fixed Rate Option: 1 year 7% P.A 2 year 8% P.A 3 year 9% P.A Late Payment Charges: Rs: 400/- per late payment. Pre-Payment Charges: Up to 5% of the outstanding amount. Documentation Charges At actual, including stamp duty, charges for legal documentation, on-site inspection during construction, lawyer’s fee and charge registration fee, as advised by the relevant persons/ agencies.

The Eligibility Criteria  You may apply for Bank Alfalah Home Finance.  For acquiring a residential accommodation in Karachi, Lahore, Islamabad, Rawalpindi, Multan, Peshawar and Faisalabad.

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2  For building your dream house on your property / land.  For renovation or extension of your already owned house.  For transfer of your existing home finance from another lender.  If you are a Pakistani National.  If your age is between 25 and 65 years.  If you are in continuous employment in a permanent position for 2 years or more.  If you have 3 years (or more) of business or professional experience.  If your gross annual income is Rs: 200,000/ — or more [Your spouse’s income (up to 50%) can also be combined with yours].  If you require a financing of at least Rs: 500,000/- or more (maximum Rs: 7,500,000/-).  If you have been a Bank Alfalah borrower for past one year with clean payment record.

10 Steps to Arranging Your Bank Alfalah Home Financing 1. We provide you with all the information you need about Bank Alfalah Home Finance. This can be through a face-to-face meeting with our Relationship Officer, or over the telephone, or through the post. 2. You give us some basic information about your income and the amount you need so that we can give you an agreement in principle.

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2 3. Once you have decided on the amount you want, you complete an application form and pass it on to us, together with the required documents. 4. We make some inquiries about your financial circumstances. 5. We carryout a valuation of the property and verification of your income. 6. Once we have carried out all the initial processing, we send you our offer through a “Facility Advice Letter”. 7. You sign the Facility Advice Letter and return it to us. 8. Our Documentation Control Center will get in touch with you to complete Finance & Security documentation including legal opinion on the title documents of the property and also the insurances. 9. You sign the Finance Agreement and Charge documents. 10. the appointed date with our cheque against the financing for conveyancing of the property and your home finance begins. Our legal advisor will accompany you to the Registrar’s office on

Bank Alfalah Zarie Sahulat

Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank Alfalah Zarie Sahulat”. We are extending this service to the clients on a competitive markup rate. BAL model is in letter and spirit based on SBP instruction.

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2 The scheme now covers financing of a multitude of activities related to crop production, harvesting, transportation, marketing, storage, processing, packing, export, agri development, working capital and fixed investment financing of agri non crop activities, storage, silos, etc. making it quite exhaustive and comprehensive. The products have been, therefore, designed keeping in mind objectivity of practical applicability in market scenario and to cater to the most commonly demanded items of agricultural financing by farmers.

Bank Alfalah Ltd. (BAL) Agri Finance programme has been named as “Bank Alfalah Zarie Sahulat”. Our products along with the nature of facility and their purpose are quoted below:

1. Alfalah Paidawari Zarie Sahulat is Short Term with the purpose of Processor, agri producer, exporters and other eligible items. 2. Alfalah Musalsal Zarie Sahulat Short Term (Running finance limit for 3 years with annual clean up) purpose for fulfilling Credit needs under working capital.

3. Alfalah Tractor and Transport Zarie Sahulat Medium Term cf with the Purchase of tractors, trolleys, pick-up, motor cycle, trucks, milk van or other such items including repair of tractors, as per eligible items. 4. Alfalah Machinery & Equipment Zarie Sahulat is Medium/Long Term with the purpose to finance machinery and equipments, such as, combine harvester, thresher, picker, digger, trolley, planter, sowing drill, cultivator, plough, power tiller, harrow, sprinkler, cane crusher, tobacco curing equipment etc.

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2 5. Alfalah Islah-e-Araazi Zarie Sahulat is Medium Term with the purpose of Land development and improvement, land leveling laser leveling, clearance of soil jungle, reclamation, farm field layout, land terracing, contouring, improvement etc. 6. Alfalah Dairy & Livestock is Zarie Sahulat Short/Medium Term with the purpose of fulfilling Working capital and fixed investment financing of dairy and milch animals, feed lot and fattening station structure and equipment, livestock farm structure and equipment, fattening of animal, milk chilling plant, construction of sheds for animal, opening of private veterinary clinics (veterinary equipment), opening of veterinary store, milk plant. embankment,

formation, bund construction, water management, water course

Documents Required The purpose of documentation is to secure the interest of the bank. Therefore, security and support documents must be completed in all respects. BAL requires the following documents for agriculture financing: 1. Loan application form which is available from Bank Alfalah Limited branches/website. 2. Pass Book issued by Revenue department. 3. Copy of Khasra Gardawri.

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2 4. Proof of leased in land if any. 5. Other documents required according to nature of finance. Finance can be provided to all categories of farmers (owners, owner-cumtenant, & tenant). The under mentioned criteria shall be observed while extending agri finance to the farmers under various products of Bank Alfalah Zarie Sahulat.

 The applicant is a genuine farmer.  The applicant’s name must appear in the Revenue records.  The applicant is not a defaulter of th banking system.  The applicant must be able to produce proper securities /
sureties / passbook.

 Any other criteria considered necessary.

OPERATIONAL PERFORMANCE OF BANK ALFALAH
Bank Alfalah’s operations can be alienated to three divisions as per participation in banking. A. OPERATION DEPARTMENT B. FOREIGN EXCHANGE DEPARTMENT C. CREDIT DEPARTMENT

Operation Department

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2 Operation Department has following segments: 1. 2. 3. 4. 5. Cash Clearing Remittance Account opening Accounts department

Operation Department Performance
Operations department of the Bank Alfalah Limited is responsible for the overall operations of the bank. Mr.Najam (Op’s Manager) is responsible for all function under operation department. The detail of those departments, which are controlled under this department, is as under. a) b) c) d) Account Opening Cash Department Clearing Remittances

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Account Opening Department
It is most important department of bank and its major source of income for bank. Ms. Saira & Shazia operation officers deal in this department. Following procedure is adopted for this purpose. Procedure Of Account Opening It is very simple and quick procedure. A person who wants to open an account must have the introduction of bank’s staff or any already existing account holder of the bank. The customer is required to fill an account opening form. Then signatures of the introduce are verified from S.S. Card (signature specimen) before opening account. AOF is very standard and up to the mark which contains almost whole information about customers. Customer is guide to fill all columns of AOF. All formalities and requirements are completed and verified, and all supportive documents are taken and checked according to the nature of account. If any formality is incomplete, chequebook is not issued until it is fulfilled. If a person cannot sign write his / her hand thumb impression is affixed marked, which is attested by one male or two female witnesses. Thumb impression for female right hand and for male left hand. Account number is allotted to the customer and all particular such as nature of account, opening date, initial deposit, title of accounts are written in register. Account is opened in the system (Bank Excel) by putting all the particulars

of the customers in the system. S.S. cards are handed over to in charge of operations department for record and verification. The letter of thanks is sent to customer for confirmation of address and other particulars of

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2 customer and one copy is attached to AOF. After complete procedures finally the manager of bank signs the AOF and these forms are filed in a proper sequence. They also have to give identity letter 1) 2) NIC copies Passport size photograph

One place on the form other is on SS Card they have non-bearer cheques. On their cheque book a stamp is affixed on it there is written. Thumb impression should be fixed in front of an officer of the bank. Cheque book request forward by fax to the head office and cheque books will received after one day and derived to the customer on the desk by taking their signature or if some one else want to take on the behalf of account holder he must have to show initial deposit slip and give ID card photo copy. The bank does not make payment of a cheque bearing a six months or older date. If an account is not operated in six months. It is called dormant account.

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Types of Accounts
The bank different types of accounts exist. 1) Individual Account

Any individual or proprietor of business can open an individual account at BAF. PLS (profit and loss sharing) saving accounts can be opened with the minimum balance Rs. 1000/- with expected profit rate is 9%. Following requirements has to be fulfilled for this account.  Signature of customer on back of AOF.  Mention next of kin (nominee)  Name and A/C # of introducer.  Verified sign of introducer.  Customer signature admitted by officer.  N.I.C photocopy attached.  Letter of thanks.

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2)

Joint Account

When different people want to or need to share a single account it is called joint account. The names of persons are written on the title of A/C and on S.S. card. Single person cannot open joint A/C. Both persons have to sign on cheque. When two or more person neither partner nor trustee open account in their name is joint account. Requirements  Sign of both customers on back of AOF  Sign on joint A/C # mandate  Name and A/C # of introducer  NIC copies of both members.  Mode of operation.

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3) Business Accounts When the owner of the firm operating singly, open an in his term name. i. Sole Of Proprietor Account This account is for those person who has his own business and he must be the solely owner of the business. Requirements  Companies stamp  Declaration of proportion companies’ letterhead.  Sign on AOF.  NIC copy  Verified signature of introducer.  Sole proprietorship declaration ii. Partnership Account Account title will be the name of the partnership firm. Requirements  Sign of customers on back of AOF.  NIC copies of partners  Partnership deed (certified copy) duly attested by notary republic.  Partnership mandate (prescribed format)  Companies rubber stamp

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The A/C is opened in the firm name and all partners designate one or two persons to act behalf of the partnership firm all acts of the firm jointly and severely. iii. Limited Company

Limited Co: a) b) Private Limited Public Limited

Private Limited Requirements  Restrain on companies letterhead dully attested by chairman.  Sing of all directors on back of AOF.  NIC copies of all directors.  List of directors on companies’ letterhead.  List of memorandum and article of association.  Copy of board resolution.  Latest form 29 (if director is to be changed or in case of his death, this kind of form is filled, it includes information that a new director has how much number of shares with him.  Companies rubber stamp.  Director should attest copy of certificate of incorporation; co register an office stamp should be affix.

Public Limited

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2   Certificate of commencement of business Same as a home documents.

Club / Society / Association These concerns are non-trading in nature. They have their own rules and regulation and their affairs are mentioned by the committee called as a governing body or managing committee. 1) 2) 3) 4) 5) 6) 7) 8) 9) Stamp of directors NIC copies Certified copy of resolution Memorandum and article of association List of heads on companies’ letterhead. Bank account opened in their name with BAL. Name of person to be specified for the operation in account. The manner in which the account shall be operated. Letter of registration.

Cheque Book Issuance
When the account is opened, then the customer is given a cheque book to sign upon and to cash money. It proceeded as under.

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2 Procedure All the account opening formalities must be completed before issuance of chequebook. Particulars of the chequebook requisition should be completed containing title of account, account number, type of currency, number of leaves and signature to the customer. Signatures of the customer are verified on the requisition. If customer is unable to collect his cheque book, then he can give authority to the third person to collect his cheque book on his behalf by signing on the back of the requisition, in such case, the particulars of the third person are required like name of the person NIC number and signature of that person on requisition and cheque book issuance register. Chequebook is taken out from the safe / locker. It is assured that series of the chequebook. Particulars are entered in the chequebook issuance register. Account number is stamped on very leave of the chequebook and those leaves are counted. Name of account holder is written on the cover of the chequebook. And requisition on the chequebook for further issuance is properly filled, stamped and signed by officer of the bank.

Chequebook is delivered to the customer and his signature on the cheque book issuance register. Chequebook serial number entered. In the system (FoxPro). Stock of cheque book are balanced at the end of each day and kept under safe custody. Earlier the banks were charging a fee for issuance of cheque book but now whenever a new account is opened, the account holder issued a cheque book free of charge. Bank Alfalah issues the following cheque books.

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2  Saving account-25 leaves  Current account 50 to 100 leaves.  Current account – 25 leaves  Foreign currency $ 10 leaves  Foreign currency 10 leaves Loose cheques are also issued in some cases. Number of leaves can be increased on the request up to 100 leaves.

Closing of Account
When a customer wants to close an account he has to given a hand written application to the head of the operations department to close his account plus remaining leaves of cheque book. The manager first verifies the sign of account holder, and then closing is done from the registers on the computer where the account was opened. In the file of the account holder his account opening form is crossed. For this closing a fee of Rs. 150/- is charge in BAF.

Cash Department
Cash department of Bank Alfalah works under the operation department. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsible for the book keeping of these transactions and the safe custody of cash. This department performs the main function. a) b) Cash receipts Cash payments

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2 Cash Receipts In cash department depositors use deposit slip for depositing the amount into their accounts. The officer checks if the deposit slip is properly filled up containing title of account, A/C number, date and amount in words and figures. Detail on both counter file and cash receipt voucher should be the same. Cash receiving officer, after twice counted and matched with the deposit slips will handover cash to the customer. The cash details are written on the back of the deposit slip and are also entered in cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signature of the cash receiving officer. Deposit slip and cash receiving register is given to the officer in the cash department. The officer cash department both on cash receipt and cash receiving register do again proper checking. Officer cash department signs both the deposit slip and register. Deposit slip is credited and posted in the concerned accounted in the system. Counter folio is given the deposition as receipt. One consolidated cash debit voucher is posted in the system to balance the cash. Cash Payments of Cheque Mr. Zahid and Imran deals with cash payments the process for payment of cheque local and foreign currency is same. First the cheque is presented by the customer or holder to cash payment officer. He confirms that it is drawn on the same branch and the particulars of cheque are properly filled in. one signature of the holder is taken on the back of the cheque. Cheque is handed over to the officer cash department for scrutiny where officer checks the date, amount in words and amount in figures, payee’s

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2 name, crossing if any, account number, cheque serial number, any material alterations / endorsements and signature of the customer. Account is debited and then the officer cancels cheque. It is posted in the system and posting stamp and number is affixed on it. Cheque is handed over to the cash payment officer for payment. One more signature on that back of the cheque is taken from the holder to match with the first one, and then cash is paid to the cash detail is written on the back of the cheque. Cash paid stamp is affixed on the face of the cheque. Entry is passed in the cash payment register and system.

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Clearing Department
Mr.Danish deals this department. Before discussing it is necessary to know what is “clearing”. “The process by which cheque exchanged between the collecting and paying bank and the ensuing financial settlement is called “clearing”. This facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types. 1) 2) Inward clearing Outward clearing

Inward Clearing When cheque drafts, etc, of our branch presented to us for clearing by the SBP. Cheque to be honored by bank. Outward Clearing The cheque of other banks, which the account holder deposit in their accounts is, sends for collection.

Clearing Process (Inward/Outward)

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2 Here the local cheques are received that are drawn on BAF. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheque and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for Bank Alfalah on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. These are then entered in clearing register and cheques for collecting are entered in OBC register and handed over the bills department of collection. Clearing officer checks and verifies title of all the cheques deposited by the customer to confirm the good title of the cheques. Cheques are scrutinized properly and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then entered into the clearing system of bank. Print out of the clearing is taken and details are attached. With the cheques of each bank. Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Total number of cheques presented to all banks and their total amount is written on the foot of that schedule, which is tallied with the clearing register. Next morning, these cheques are delivered to the respective banks in clearing house of SBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearing drawn on Bank Alfalah.

Total number of cheques and their amount delivered to other banks are received from them are written on the clearing house schedule and handed over to the officer clearing house SBP. Cheques / DD received in clearing are given to the officer cash department of the branch for their repayment. After I proper scrutiny of cheques, verification of signatures and confirmation of

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2 balance in the account, officer cash department pays these cheque by canceling and posting them in the system.If any cheque is not passed due to insufficient balance or any other reason, officer cash department returns the same cheque by attaching a cheque return memo containing reason for return. This cheque is entered into the cheque returned register and bank charges are deducted according to the schedule of charges. Second clearing is called at 2:30 PM to check the fate of the cheques presented to other banks in the morning. If any cheque is to return, that is delivered to the same bank in second clearing. In the same manner, if any cheque presented by Bank Alfalah in first clearing is returned, they receive it and once again give schedule of clearing figure to the officer-clearing house SBP containing number of cheques and their amount delivered and received unpaid.

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Account Department Account department is the most important department of the bank. Because it is concerned with:  Revenue  Expenses  Assets  Liabilities These are the pillars of any business. In this department, all the vouchers that are posted during one day are sent to the account department next day. These vouchers are already posted to computer by the concerned department. So computer also sends a report to the accounts department. The accounts department has to tell that the requirements for cheques and vouchers are fully checked. If any kind of renovation or construction or rebuilding is done, all is paid from the accounts department. Like petrol for the car of EVP or VP, this department pays all stationery charges, medical allowance, etc. Daily Customer Movements List All the changes that are made in accounts of customer are shown in the daily customer movement list. By using this list, people of accounts department can prepare the vouchers.

Account department performs following activities.

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2  Voucher preparation  Preparation of daily, weekly, monthly, and annual statement.  Budgeting and fixed assts  Employer’s benefit  Expenditure approval. The bank does not make payment of a cheque bearing a six-month or older date. If an account is not operated in six months, it is called dormant account. In Account Department Function Are Performed In 3 Steps 1) Data controlling 2) Payment/disbursement/payroll system. 3) Reporting system In Data controlling, vouchers are received from every department like Account Opening, Car-Financing, Cash dept, credit card section etc and then sorting will start and sorting by two ways a) By Customer Activities. b) By General Ledger

After sorting sub-sorting will start and this can also be done in two ways a) by a/c title (current, saving, royal group, royal profit etc) b) by computer codes (01,02,05,019,12,029)

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In disbursement and payment function they perform IBCA’s and preparing cash payment Vouchers & pay slips etc. In reporting different types of reports are prepared, stored in folders or mailed to head offices. There are 6 basic reports on Daily basis. 1. Daily Branch Position. (Treasury) 2. Daily Deposit & Advances Position. 3. Daily Management Information System. 4. Daily Forgein Currency Report. 5. Daily fund Rupee position. 6. Statement of Affairs.

Weekly Reports 1. Weekly FE-25. 2. Advances & Deposit Statements.

Types of Account
A. Current account B. Saving account C. Notice deposit D. Term deposit

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2 Current Account There is no interest on these accounts. It is only for transaction purposes. They paid on demand. Where a banker accepts, paying all checks drawn against him to extend of the balance in the accounts. As there is no profit paid on this account, it is also called checking account because cheque can be drawn on it. Current account is mostly opened for business. The minimum balance requirement for opening the current account is Rs. 1000/- inter bank fund transaction are handled by current account. Saving Account The purpose of this account is to introduce the habit of saving individuals in the neighborhood. The profit on saving accounts is paid on the basis of profit and loss sharing at 9.00% six monthly. The minimum balance requirement for opening the account is Rs. 500/-.

Notice Deposits Notice deposits are kind of fixed deposits. The minimum balance

requirement for opening the account is Rs. 500/- and payment is drawn on maturity of the specific period. Notice Deposit Is Of Two Types

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2 a) One for which a prior notice of 30 days and is required from the customer before withdrawing deposited amount and for which rate return is 6.10%. b) Second for which a prior notice of 30 days and above is required from the customer before withdrawing deposited amount and for which the rate of return is 7.50%.

Term Deposit A term deposit is a deposit that is made of a certain period of time. At the end of specific period the customer is allowed to with draw the principal amount. The rate of return of this account varies from 7.5% to 12.5%. The term deposit account varies from one month to 5 years and the minimum balance requirement is Rs. 500/-.

Remittance Department
The need of remittance is commonly felt in today’s business. A major function of any bank is to “transfer of funds form one place to another”. Bank Alfalah uses the following modes of transfer of funds. 1) 2) 3) 4) Demand draft (DD) Telegraphic Transfer (TT) Pay order (PO) Call deposit

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2 5) 6) Pay slip Money gram

Demand Draft
It is instrument, which is used to transfer amount from one city to another city it can be made on cash as well as on cheque. If it is made through cheque that it is necessary that person must be A/c account holder while in case of cash any person can make. The demand draft is secured mode of payment. It consists of three copies. 1) 2) 3) Original copy, which is given to account holder. DD advice is sent to the central branch. Third copy is for reconciliation. Its photocopy is kept with us (bank) while original is sent to head office for reconciliation. Procedure

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2 The client who wants to transfer his funds form one city to another fills a form requesting the bank to prepare a DD. DD application form contains columns requiring information for the preparations of DD e.q.  Beneficiary name  Applicant’s name  Address  Amount to be sent etc. Bank deducts some charges against DD. These charges include commission tax provincial tax etc. Tax is deducted 0.3% while PT charges are 0.50 paisas. If customer is taxpayer than advance tax is exempt provided that he submit the tax exemption certificate.

Telegraphic Transfer
It is another mode of transfer of funds. It is quickest mode of transfer of funds from one city to another. For TT, client has to submit the application on a prescribed form of the bank. Client can deposit money in to the bank or can request the bank to deduct the amount against the TT along with the charges against the issuance of TT from his account. The charges against the issuance of TT charged by Bank Alfalah. Procedure For Telegraphic Transfer Issuance Application form is given to the customer to fill. Two signatures are taken on the form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission charges and with holding tax are written on the top of the applicant form. If the customer is maintaining his account with the branch he can give cheque for total amount of instrument plus bank charges.

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Cheque and application form is then given to the officer cash department for the payment of the cheque. After proper scrutiny, officer cash department posts whom cheque and signs the application form to assure that payment is received. If the customer wants to pay cash, the customer on cash counter deposits it. Cash receiving officer receives cash on the application form along with the bank charges and withholding tax; application form is then given to the remittances in charge for issuance of the instrument.

He enters all the particulars of the application form in the system (BPG) and computer gives an Auto Control Number to the T.T message of receiving branch. This message is then sent through telex to the receiving branch followed by a T.T. advice. The customer is confirmed that T.T. has been sent. Procedure for T.T. Payable When TT message is received, tested number on the TT is checked and verified. Tested number is then written in the register and signed by the holder of test keys for office record. All the particulars of the TT payable are entered in the system. Payment instructions on the TT message are followed it if is pay and advice it will be paid through TTR on the cash counter or through clearing and if it is credit and advice, it will be transferred in the account mentioned in the TT message. Printouts of vouchers (TT payable are taken. If TTR is presented for payment, signature of the authorized officers are verified on TTR is presented for payment, signature of the authorized officers are verified on TTR and after proper scrutiny, it is posted in the BPG and canceled by the remittances in charge.

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2 Procedure For Foreign Demand Draft Issuance Application form is given to the customer to fill the same. Two signatures are taken on the form, one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission is charged, which is US$ 5/- for each amount of FDD. Cheque is received from the customer for total amount of FDD plus bank commission. Cheque and application form is then given to the officer cash department for the payment cheque. After proper scrutiny, officer cash department posts the cheque and signs the application form, to assure that payment is received. Then cheque and application form is given to the incharge. Remittances, who will enter all the particulars of the application in the FDD issuance register. If the customer wants to pay cash, the customer on cash counter deposits it. Cash receiving officer receives cash on the application form along with the bank charges. Application form is then given to the remittances in charge for the issuance of the instrument. A control number is allotted to the instrument form FD registers. Instrument is complete by putting all the particulars in it and signed by two attorney holders. Instruments are then handed over to the customers. FDD advice is sent to the responding foreign bank / paying bank where they are maintaining dollar account through registered mail. Exchange transaction credit advice (ETCA) is sent to eh Head office fore the reimbursement. Copies of the FDD and ETCA are kept in the record of the bank. Procedure For Foreign Telegraphic Transfer Issuance Application form is given to the customer to fill the same. Two signatures are taken on the form one for request and other for signatures are taken on the

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2 form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission is charged, which is US$ 15/- that rate for each amount of each FTT. If the cheque is received from the customer, it is taken for total amount of FTP plus bank commission.

Cheque and application form is then given to the officer cash department for the payment of cheque. After proper scrutiny, officer cash department posts the cheque and signs the application form to assure that payment is received. If the customer wants to pay cash, the customer on cash counter deposits it; cash receiving officer receives cash on the application form along with the bank charges. Application form is then given to the remittances in charge for the issuance of instrument. He enters all the particulars of the application form in the FTT register and a control number is allotted to the FTP. TT message is written in the telex containing name of transferring branch, name of receiving branch, date amount, currency, payee’s name and account number or identification if any, payer name and payment instructions. A test number is given to the FTT message for receiving branch. This message is then sent through telex to the receiving branch. Customer is confirmed that FTT has been made. Exchange transaction credit advice (ETCA) is sent to the Head Office for the reimbursement. Copies of advice (ETCA) and FT are kept in the record for the bank.

Collection

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2 All the cheques under collection are called cheques under collection in Bank Alfalah Limited. There are two types of bills for collection:  Outward Bills for Collection  Inward Bills for Collection

Outwards Bills For Collection All the cheques are received on one counter along with paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to ht customer by putting stamp for “cheque received for collection for Bank Alfalah” on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. Cheques for local clearing are entered in clearing register, whereas cheques for collection are entered in OBC register and handed over to the bills department for collection. OBC number is allotted to the cheque from OBC register. Special crossing and bank endorsement stamps are affixed on the cheque. OBC schedule is attached with the cheque and dispatched to the main branch of that city for collection. If they do not have any branch in that city, then cheque will be sent to the collecting agent of Bank Alfalah for then cheque can be sent directly to the drawing branch, instructions are given on the OBC schedule for the payment of that cheque.

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Inward Bills For Collection If any other bank sends a cheque of bank Alfalah limited, it is inward bill for recollection. Bank Alfalah remits money after checking the balance of the customer account. The process collection starts when the cheques of bank Alfalah ltd are received from other banks. Then these cheques are sent to the head office Karachi, which sends the cheques to SBP for clearing and get the confirmation of cheque and credit advice.

Pay Order
Written order which is issued and received to the save book or drawn or payable on same branch. Application form is given to the customer to fill. Two signatures are taken on the form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission charges and with holding tax are written on the top of the applicant form. If the customer is maintaining his account with the branch he can give cheque for total amount of instrument plus bank charges. Cheque and application form is then given to the officer cash department for the payment post the cheque and signs the application form in token of payment received. If the customer wants to pay cash, cash is deposited by the customer on cash counter cash receiving officer receives, cash on the application form along with the bank charges and withholding tax. Application form is given to the remittances in charge for issuance of instrument. He enters all the particulars of the application form in the system (BPG) and computer gives an auto control number to the instrument. Print out a take on the block payment order.

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Two authorized officers of the branch then sign it. Instrument is the protect graphed and given to the customers. When the instrument is presented for payment, it is posted in the BPG and canceled by the remittances in charge after proper scrutiny.

Call Deposit
When the party wants to give payment from itself to another party then it makes call deposit. The bank keeps it with itself unless it does not receive instructions from other bank. Normally it is made on cash and goes in party account.

Pay Slip
It is used when bank itself pay for any type of transaction e.g. purchased of stationary.

Money Gram
Bank Alfalah Limited, in collaboration with money gram offer remittance services to Pakistan. “It’s basically a person to person money transfer service that allows consumer to receive money in just a few minutes.”

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Procedure  Person must have reference no.  Person must tell reference no. And compute the simple form.  Person has to show NIC and tell compute introduction after that he can obtain money.

Vouchers are also posted in the system. When OBC is realized collection bank pays the amount through IBCA if it is the same bank or through DD if it is another bank. If DD is received against OBC, it is presented in the clearing for collection. If IBCA is received the branch for the payment of OBC, certain vouchers are posted in the system.

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Foreign Exchange Department
“The transfer of credits to a foreign country to settle debts or accounts between resident of home country and those of the foreign country” or “the foreign bills currencies etc used to settle such accounts”. Foreign exchanged department deals within exports and imports. Mr. Yaseen at BAF supervises it. The bank acts as exporter as well as importer bank for different parties who are in the business of export and import. Import All goods and services brought into a country that were purchased from organization located in other countries. Export All goods and services sent from one country to another country. Document Required For Exporter 1) 2) 3) National tax number Registration with EPB Sales tax registration

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Documents to Be Attached For Exporters Invoice Bill of lading Packing list  Total quantity  Net weight / carton  Gross weight / carton  Total net weight / carton  Total gross weight   Bill of exchange (original or draft) E-form: Initial document on which total export proceeding is based. In this form, all the conditions are given, which are necessary for exports.  Letter of credit: It is written agreement between importer and exporter.     Beneficiary certificate. DHL certificate (TCS certificate) Form ‘M’ Certificate of Origin (Form – A)

  

FORM-E Government has provided facility to exporter in taking E-Form from any bank and he can present it to any bank for negotiation. Export precede realization certificate. SBP gives rebate to exporter against export after realization. It is paid according to commodity wise and bill wise. Claim period: 1 year.

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Transport Document (Bill Of Lading, Airway Bill) When insurance is done by importer, C&F (cost and freight) usually used.   FOB cost (free on board) CIF (cost insurance and freight) when insurance is done by exporter, CIF is used.  Tenor (At sight) immediate payment by importer after receiving product.   Partial shipment: Product is sent partially. Transshipment: Product is sent via any country.

E-FORM Certification When export is done on C&F basis, so bank issues E-form certification to exporter and he submits it to the custom officer along with e-form certification to certify e-form. Form Of Authorized Dealer’s Certificate State bank permits exporter to issue bill of lading in the favor of e-form bank. But if requirement of L/C is to issue bill of lading in favor of company then shipping company issues bill of lading in favor of Exporter Company. Authorized dealer certificate is filled for this purpose.

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Certificate Of Origin This certificate shows that goods are from Pakistan. Covering Schedule If in covering schedule, it is given that “please remit proceed to our Karachi office a/c no. 5740734881 with ABN (Amro Bank New York), USA for onward credit to BAF Multan. Beneficiary Certificate If L/C requires some information as proof of anything from exporter then exporter has to present beneficiary certificate for that proof. E-FORM E-form has four copies: 1. One for custom officer 2. One for exporter 3. Triplicate copy for SBP 4. Duplicate copy for bank Bank reporting or duplicate and triplicate is done by bank. Custom officer (date is given on the foot form) should clear product.

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Payment From Importer Bank It is the choice of importer to open L/C from any bank and the bank from which L/C is opened can also refer to some other bank for payment. So bill of exchange is sent to refer bank and other documents are sent to L/C opening bank. SWIFT (Standard World Wide Inter Bank Financial Transaction) It is network among all banks. No other institute can get involved in it. Bill Of Lading Certificate from shipping company for loading commodities. If requirement of L/C is to issue bill of lading in favor of L/C opening bank, then authorized dealer certificate will be provided by bank in favor of L/C opening bank. Bank Keep In Record  Covering schedule  Invoice  Packing list  AWB  Certificate of origin  E-form Normally bank keeps photocopy of all documents in record. Negotiable documents (original documents).

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Documentary Credit
DC Department Alfalah Bank has his full-fledged documentary credit department. As a credit instrument and as a means of making as a payment the documentary credit is an essential instrument for conducting word trade today. A documentary credit represents a commitment bank to pay the seller of goods or services a certain amount provided present stipulated documents evidencing the shipment of the goods with prescribed period of time. For the cases of imports or exports first the parties have to do upon a sale contract regarding the term and condition of sale. One mode of payment is by L/C, which is secured, and now days mostly use the business. Letter of credit is under taking by opening bank (Importers bank the Exporters bank (Negotiating bank) that it will make payment if documents are as per terms of LC. Four Parties Are Involved In Letter Of Credit 1. Applicant 2. Beneficiary 3. Issuing Bank 4. Advising Bank Importer Exporter Bank Of Importer Bank Of Importer

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2 According to import policy, no import is valid with out import license, which is issued by the chief controller of import, and export or we can say export promotion bureau (EPB). If a person desires to take up import trade must get his name, his firm or his limited company, registered with the EPB. On being granted registration certificate, he will be eligible to import goods according to import policy. There is no special condition of eligibility for registration. The only requirement is that he should be a Pakistani and must be registered with income tax department. L/C Opening Procedure When the importer obtained import license, then the bank will open letter of credit. “A letter of credit is undertaking by LC opening bank to put an agreed sum of money to sellers bank on behalf of the buyer of the goods under clearly defined terms and conditions”. Pakistani banks open only irrevocable LC. An essential feature of the irrevocable LC is that it cannot be modified, altered, amended, or canceled without the prior consent of all the parties. Party comes to the bank and fills the form, which is provided on the payment of Rs. 100.

This form is filled by the party and is return to the bank, it includes details like.

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 Name of company  Address  Country of origin  Branch name  Quantity  Insurance company  Shipment from  Shipment to One thing should also be submitted which is INDENT. If the foreign party has any agent they will issue the indent with following details. a) To Messer b) Importers, etc Document Required for “LC” Opening When the bank opens LC, it requires following documents. 1. Valid import license 2. Performa invoice 3. Importer should be Pakistani 4. Letter of under taking form importer 5. Insurance cover. An important point, which the bank will consider before opening of LC, is that sufficient funds be available in the LC openers accounts. At the time of establishing the LC the opening bank generally retains a maximum margin to safe guard its own commitment. The margin may vary from nil to 100%

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2 according to the nature of commodities and it also depends upon the party. At the item of establishing the LC opening bank charges bank commission, postage and other charges from the LC opener account. Another main important point is that value of LC should not increase the value of import license. After all the documents are being checked and signed or verified by the bank. A sanction slip is attached with each form so that the approval can be gained from the manager of the bank. After the approval is made four copies are prepared and the entries are made on the computer and the printout is taken the margin amount is checked from the importer account and if the amount is not found then LC is not opened and the party is informed about the situation. On the deposit of the margin then LC is opened LC limit if set by the bank is also checked. After the LC is opened following entries are made.  LC opening register  Margin / Liability Account Register.

Payment To Seller The negotiating bank upon receiving the documents from the seller checks the documents according to terms and conditions of credit upon satisfying it self of this the negotiating bank makes payment to the seller if sight credit. It then forwards the documents to the opening bank and reimburses it self through the opening banks account with itself.

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Documents Received By The Opening Bank Importers bank or opening bank receives the following documents form the exporters bank or negotiating bank. 1. Bill of exchange 2. Invoices 3. Bill of lading 4. Packing list 5. Certificate of origin 6. Insurance

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Credit Department
Introduction The credit policy of any banking institution is a combination of certain globally and locally accepted, time tested standards, and other dynamic factors dictated by the realities in the ever-changing marketplace and industry. The globally and locally accepted standards relate to safety, liquidity and profitability of the advance whereas dynamic factors relate to aspects such as nature and extent of risk, profit margins, spreads and credit granting. The key to safe, healthy and profitable credit portfolio lies in the quality of judgment used by the officers making lending decisions. They should have thorough knowledge about the borrowers and market conditions and should be well conversant with applicable credit policies and procedures. They should also stay updated with the SBP Prudential Regulations, circulars, directives and market trends in order to provide the Head Office, with accurate information regarding the credit proposals along with their recommendations so that the right decisions can be made on the right time. Deviations from basic policies could be permitted only with prior written approval of the Head Office. As credit policies must remain flexible and responsive to changing economic conditions and regulations prevalent in the Country, the Head Office, from time to time, shall issue circulars for amendments / changes which shall form an integral part of this manual.

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2 The philosophy that “The extension of a credit facility should add value to the bank’s assets”, has to be borne in mind by all concerned. Type of Borrowers This section classifies and describes various types of borrowers in the market along with specific lending guidelines. The policy should be read and understood carefully as the Bank may enter into a business relationship with them at any point in time. Following are the three broad categories of borrowers. Individuals a) Existing Account Holders b) Staff Members c) Close relatives of staff members d) Businesses sponsored by staff members e) Employees of other banks f) Joint Accounts Business Entities a) Sole Proprietorship b) Partnership c) Limited Liability Company d) Joint Venture e) Group Accounts Others

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2 a) Clubs and Associations b) Federal, Provincial and Local Government bodies c) Traders d) Contractors / Construction Companies e) Transport, Storage and Warehousing f) Property Dealers g) Manufacturers

Target Customers
Identification of a particular target market carries great importance for banks. An accurate target market will result in a healthy and profitable credit portfolio for the bank. This section deals with different types of target customers with whom the bank will be keen to develop mutually beneficial

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2 business relationship along with the types of customer that are to be avoided.

Types Of Target Customers 1) The Bank shall primarily focus on extending credit facilities for Trade finance and construction / contractor financing for short to medium term, and on self liquidating basis, supported by cash flows and acceptable collaterals. 2) The Bank shall also consider providing finance for working capital in the fields of manufacturing, assembling and processing of goods and commodities for domestic and / or export markets, provided it is adequately secured. 3) Well-established traders dealing in particular products range with establish markets presence, experience and track record. 4) Highly valued MNCs and local corporate group with undoubted integrity and steady cash flows so that the failure of one segment of the business will not impair the overall strength of the group. 5) Joint ventures of established local groups and reputed foreign companies. 6) The Bank shall concentrate on lending to customers based in Pakistan. However, participation in selective cross-border syndicated lending may also be considered on a case-to-case basis and subject to the Board's prior approval. For syndicated

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2 loans the Bank shall secure acceptable return on equity (ROE) based on mark-up and commission. Exposures to various segments of the Economy / Industry shall be reviewed from time to time in order to avoid concentration in any single segment. The Board of Directors in accordance with any guidelines laid down by the SBP shall guide target customers and areas of business thrust.

Credit Department Functions And Facilities 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”. At bank Alfalah Ltd (BAL) Mr.Asif Ali is manager corporate banking of the credit department. The earnings of BAL are chiefly derived from interest charge and discounts. This department is the revenue-generating department. Credit department basically has three segments. 1) 2) 3) Credit marketing department Credit administration department Trade finance services department

Credit and advance department deals with extending loans (credit facility) to customers. 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 under the core spirit of SBP PAK (RS).

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2 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. Commercial Credit A commercial Credit facility is the core business area of the Bank. The types of facilities being offered to customers can be broadly presented as follows: a) Facilities where the bank actually advances money against future repayment - ('Funded Credits'), and b) Facilities where the bank substitutes 'its' own credit for that of its customer e.g. opening import Letters of Credit, issuance of bank guarantees - ('Non-Funded Credits') Credit lines must be defined as to currency, total amount and time, purpose and the general or specific conditions upon which they are made available to a customer. The mark-up and/or commission rates and method of computing should be specified.

The agreement should also provide for default rate for delayed payments, unless default rate is waived with the approval of the sanctioning authority.

Following Are The Different Types Of Facilities Offered By The Bank

Funded Credits
a ) Adnan Rasheed Current Finance

NON-Funded Credits
a ) Letters of Credit

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Guarantees Shipping Guarantees Bid Bonds Advance Payment Guarantees Performance Bonds Others

) c) Syndication / Consortium Financing d ) e ) f) Negotiations of Export bills under L/C Preshipment Finance (Packing

Credit) Import Financing i) Finance Against Trust Receipt (FTR) ii) Finance Against Imported

 

g )

Merchandise (FIM) Contract Financing

Current Finance (CF) A facility under which the bank makes available funds upto a specific amount at any time over a specified period of time (i.e. one year) is termed as current finance. It allows a borrower to borrow from time to time, upto the validity period, according to his needs. The funds may be borrowed partially, be repaid and borrowed again upto the amount established and within the time period allowed under the agreement.

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2 This facility is a revolving advance and mark-up is charged only on the utilized part of the facility. CF facilities are allowed primarily for working capital requirement and repayable on demand. In order to strengthen the control to. environment all CF accounts should be scrutinized by the Brand/Credit Managers and/or their designates, at least once every month

Term Finance (TF)

Term Finance is usually granted for specific purposes and is fixed as to amount and period. Such a loan can be liquidated either by a single repayment of principal and mark-up, in which case the mark-up is fixed for the period or by means of a repayment schedule in the case of medium or long term loans. TF should be granted at a fixed rate for the tenor of the facility.

Syndication / Consortium Financing

The preceding paragraph of this section assumes that there is only one bank involved in the extension of credit facilities. However, especially when large amounts are involved, it is common for a number of banks to take up portions in financing of a project. This becomes necessary, when the amount of credit exceeds the lending limit of the principal bank as per SBP Prudential Regulations. Bank may also participate in such activity when it is prudent to spread the risk amongst a number of banks.

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Arrangements in which a principal lending bank pulls its fund along with one or more other banks, which are not a party to the original agreement, are called Consortium Agreement. When the borrower deals with more than one bank all of which are party to the credit agreement, it is called syndication. In all syndications/ consortiums the bank should not take a subordinate position to other members of the syndicate/participants and the securities should be shared on a pari passu basis without preference or priority of one or more banks.

Negotiation Of Export Bills Under L/C Bills under L/Cs will be negotiated only if: A bank that is a correspondent has established the L/C so that signature/ test can be verified or issued by a bank whose signature/test can be verified with an intermediary bank (if presented through another bank) and where previous experience in bills negotiation with that bank has been satisfactory. The L/C has been established in favour of the beneficiary who is of good repute and a known credit worthy customer of the branch approval from the Head Office for inter-bank exposure in respect of the transaction is on record. Finance Against Packing And Credit “FAPC” Packing Credit is extended against future exports. The usual reason for advances against exports is to enable the merchant of the to buy and and pack/manufacture merchandise pending shipment goods

negotiation of the relative bills, hence the expression "Packing Credit". While extending packing credit, the following aspects should be kept in view:

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a) Advances should not be granted to enable a merchant to

speculate. To prevent this, the merchant should exhibit and lodge with the bank a Letter of Credit or other evidence of a definite order for the goods (e.g. Purchase order/ firm contract etc.).
b) A Letter of Credit in itself is not "security" and it need not even

constitute evidence of a firm order. However, with reliable customers a Letter of Credit assists in deciding whether or not a Packing Credit advance should be given. Care should be exercised to ensure that the money is used for proper purposes.
c) Regular scrutiny of the borrower's current account is essential and

is usually very useful. Frequent inspections should be carried out where the merchandise (raw materials/finished goods) is stored and brief details recorded in a register.
d) The inspection should be used to ensure that the borrower is

capable of executing the order within the given time frame. If not, request for extension in the validity of export order/export L/C must be submitted well in advance. e) It may be desirable for forward exchange to be booked when the advance is granted. The packing credit advance should be adjusted from the proceeds of the export bills. Finance Against Imported Merchandise FIM This facility is allowed against the commodities imported from other countries usually through letter of credit. Some time importer does not have enough amounts for paying the imported merchandise therefore. He request

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2 to the bank to pay all dues to the exporter against the security of imported merchandise. Bank pays the amount and releases the goods, when the importer pays off its liability partially / fully. Finance Against Trust Receipt FATR Finance Against Trust Receipts (FTRs) - are related to import transactions and should be granted only as a sub-limit of an import L/C line. The bank may also allow to specific customers FTR facility against collection documents as per the terms set out by the Head Office from time to time, which are discussed as follows:

FTRs in respect of L/C documents – under this facility, the Bank is required to deliver documents of title to goods imported under L/C, to the customer to enable the latter to obtain goods prior to payment and the customer undertakes to hold the documents. The goods represented thereby and the sale proceeds thereof in trust for the bank. There are very obvious risks in permitting a customer to deal with goods in this way. A customer having in his custody, goods released to him against a trust receipt can fraudulently sell them or pledge them to a third party, leaving the holder of the trust receipt only the right to sue for breach of trust. FTR facilities should therefore be granted to undoubted importers against established credit lines. It is important to note that the goods released under a trust receipt must be fully insured by the customer and the Bank reserves the right to inspect, repossess and if necessary, dispose of the goods at anytime.

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2 FTRs in respect of collection documents-FTRs are granted only in respect of collection documents routed through the Bank's branches. This facility is restricted to selected customers with satisfactory account relationship and is governed by the following safeguards: Facility to be allowed with prior clearance of the Head Office only to prime customers with Grade 1A to 1E and 2A and 2B rating. Branches should be satisfied that the collection bills have genuine underlying trade transactions and that by denying this facility, the customer would divert business to other banks. Branches are also required to ensure that the facility is used for the customer's regular line of business. The facility should be given as a separate FTR line under the import line (i.e. FTR for collection documents) as distinct from FTR sub-limit under import (L/C) line.

Finance Against Imported Merchandise (FIM) Branches may grant Finance against Imported Merchandise by way of a sub-limit under a customer's import credit line. This facility is usually allowed against imported goods but occasionally such financing may be allowed against locally manufactured goods covered under L/Cs or received for collection. Contract Finance When financing contracts, the main concerns by the banks on the contractors net worth are as follows: 1. The standing of the employer who has to pay the contractor. 2. The terms of the contract.

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2 3. The contractor's ability to execute the work properly and within stipulated time frame. 4. Viability of the quoted price and adequacy of the financing amount being sought. 5. The contract is framed to be irrevocable without the banks consent and is acknowledged by the employer. 6. Overall profitability and viability of the contract.

For contracts in excess of RS. 50.00 Million a control account should be kept for each contract starting with the contract price and showing variations added and payments authorized, so that at any time the branch can produce a statement of:

 Contract price (as amended by variations)  Work completed and paid for  Work measured and to be paid for  Work in progress (not measured)  Retentions by employer  Balance of contract price

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Non Funded Facilities The facilities where there is no direct involvement of banks fund. Following are the non-funded facilities. 1) 2) Letter of credit L/C Letter of Guarantee L/G

Letter Of Credit A Letters of Credit (L/C) is a written undertaking by a bank (issuing bank) given at the request and accordance in a instruction of a buyer (the applicant) to the seller (the beneficiary) to effect payment up to a stated sum with in prescribed time limit, against stipulated documents and provider that the terms and conditions are complied with. The Bank groups L/Cs into two categories.

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2 1. Sight L/C 2. Usance L/C

Sight L/C Requires the importer / importing bank to pay as soon as it receives the clean documents from exporter. Sight L/Cs are letters of credit where the Bank engages to honour the beneficiary's sight draft upon presentation, provided that the documents are in accordance with the conditions of the L/C. Drafts drawn at sight simply serves as receipts for payments and are without value for any other purpose. In establishing sight L/Cs branches should ensure that goods are duly insured and that the Bank retains control over the goods at all times. Documents of title to the goods should be released only against payment, either by cash or to the debit of the customer's current account / FTR account / FIM account. L/C will not be opened for a period in excess of 180 days unless Head Office approval for a longer period has been obtained for specific customers. Usance L/C ULC are similar to sight L/Cs but call for a time or usance draft payable after a specified period of time. The normal usance period allowed for this facility should be 90 days. But depending on the circumstances a maximum of 180 days may be allowed. Exceptionally for undoubted customers, usance period

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2 exceeding 180 days may be allowed with specific Head Office approval. For risk purposes, branches should consider the risk under a Usance L/C as similar to a funded advance (FTR).

Letter of Guarantees These facilities cover a number of specific types of guarantees that the Bank may issue for its customers but in all cases the common factors are: The Bank substitutes its own credit standing for that of its customer, No actual movement of funds takes place at the time of issuing the although there is a clear commitment by the Bank to effect payment when called upon to do so under the terms of the particular guarantee. Thus it is necessary to record these commitments as contingent liabilities. The Bank charges a commission for this service usually quoted on a quarterly basis. Guarantees fall into many different categories, each of which has its own characteristics and related risks; some of the important characteristics and the appropriate cautionary measures are enumerated in the relevant sections below: Shipping Guarantees Guarantees of this nature are required to enable customers to release goods before the arrival of the documents of title; they therefore render the Bank liable to the shipping company to whom the guarantee has been issued. The

 

guarantee

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2 shipping company is, in turn liable to the true owners of the goods in the event the goods are released wrongfully. It follows therefore that such guarantees should only be issued to importers with a credit line. Full cash margin must be taken, for shipping guarantees issued against SLC unless waived by appropriate Credit Authority. Bid Bonds (BB) The purpose of a bid bond is to substantiate the ability of a person submitting the tender to perform the contract when awarded. Such a bond is issued in connection with a tender and its normal characteristic is an undertaking by the Bank on behalf of the applicant to pay the beneficiary a fixed amount within a stipulated period on his simple written demand if the applicant withdraws his obligation after the acceptance of his tender. A bid bond must not contain any conditions linking it with performance of a contract if awarded and must contain a definite expiry date. If branches are asked to give such undertakings the guarantees must be treated as Performance Bonds. If there is any ambiguity in the terms of a bid bond which a branch is asked to sign it should study the basic "conditions of tender" to ascertain its precise liability. Branches must insist on the return of the original bid bond after its expiry. Advance Payment Guarantees (APG) Civil engineering contracts, particularly those awarded by local governments, sometimes provide for an advance payment to be made to the contractor for purposes such as mobilizing site, plant and equipment. In order to obtain this payment the contractor is required to produce an Advance Payment Guarantee.

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Financial Guarantees Financial Guarantee is a general description of various guarantees whose main characteristic is an undertaking to meet any claim from the beneficiary up to a fixed sum on simple demand. Claims under such guarantees must not be made contingent on the non-fulfillment of the terms of contracts, which are unknown to the issuer. Unless the creditworthiness of the concerned customer is undoubted, such guarantees should be issued against full cash margin. Maximum Maturities Unless stated otherwise and agreed between the Bank and the borrower, all credits are repayable upon demand. The maximum maturity/tenor for facilities are as follows. Any deviation from maximum maturity/tenor will require approval from Head Office:

S. No 1 2 3 4 5

FACILITIES Term Finance Current Finance Validity of L/Cs L/C / Usance Period DA Bills under L/C

TENOR Maximum one year. Maximum one year. Maximum 1 year inclusive of usuance period. Maximum 6 months (Except for supplier credit) Maximum 180 days (Subject to approval of SBP if tenor exceeds 120 days)

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2 6 Preshipment/ Postshipment 7 finance Other Loans Tenor as specifically approved by Head Office. Loans repayment installments which are as follows: a) Maximum Grace period 6 months (no grace period for mark-up payment). b) Amortization is at least quarterly after the grace period. 8 Bank Guarantees Maximum period 3 years or as approved by the Head Office Note: Changes in tenors / maturities are subject to regulatory requirements advised by State Bank of Pakistan from time to time and approval by Head Office. are subject to minimum Maximum 150 days (Presently)

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2 Documentation For Considering Credit Facilities While considering credit facilities, following documents should be given special attention as they serve to bring to light the vary factors that play an important part in facilitating "Credit Granting and Credit Enhancement" decisions. Visit Report a) Prior to a review, the branch manager or his designated lending officer should visit the customer and discuss relevant details of the account and the business including clarifications on their financial statements, as required. The calling officer should make use of the visit to gather up-to-date information and strengthen the Bank's relationship with the customer. Details of the visit should be recorded in the customer file. b) Business visits are an important tool for assessing the business situation of a customer and it is therefore desirable that credit officers visit the customers regularly. The branch manager should conduct visits connected with the review of large and/or important facilities at the branch. Status Reports Status reports primarily include reports from the CIB and other banks. Such reports from the customer's other bankers must be obtained at least once a year, prior to the review or at more frequent intervals if there is deterioration in the customer's account operations and/or financial statements or in the event of adverse market rumor.

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2 Furthermore, CIB Reports (issued by the State Bank of Pakistan) should also be obtained on a quarterly basis to facilitate further scrutiny of the customers account. State Bank of Pakistan maintains a record of individuals/businesses in the country having outstanding liabilities of RS.500, 000 and above, with all financial institutions. A through study of the CIB Report should be undertaken before taking up reviews. Situations like significant increase in the exposure vis-à-vis the previous reports, loss of business to other banks or similar critical issues should be commented upon in 'comments and recommendations' section under 'CIBR'. If the CIB reports over dues or defaults then as per SBP Prudential Regulations branches cannot extend any credit facility even if covered fully against most liquid security. Credit Line Proposal (CLP) The branch at which facilities are to be extended must prepare Credit Line Proposal. Where CLPs are sent to HO for approval, copies of all enclosures must accompany, and a photocopy should be retained with the forwarding branch. CLPs should portray a factual picture of the borrower discussing in detail the constitution of the firm, line of business, business commitment, financial health, etc. In order to bring a degree of uniformity into the CLPs, the branches are required to provide information, and comments on the under noted aspects. There should be no repetition but this section should provide comments portraying a factual status of the account:

i)

Proposition

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2 To state clearly and concisely the limits that are being requested, highlighting changes if any. ii) Purpose Specific reasons for granting facilities (particularly for new facilities/ increase in existing facilities) should be brought out here. Some examples are 'to secure the customer's business from other banks', 'increased facilities required to finance a supply contract 'etc. iii) Background Full information on the customer's constitution and business when applying for establishment of facilities. For renewals, changes since last review should be covered. The write-up should comment on the length of relationship and time in business including general reputation of the customer. iv) Management Names of Directors/Partners/Owners/Key persons and an assessment of their capacity to manage the business highlighting any changes since last review. The write-up should also comment on standing of the proprietor/ partners/ shareholders (details of net worth should be provided).

v)

Financial Statements Brief comments on the important aspects as highlighted by the customer's financial statements with steps being taken to eliminate the

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2 shortcomings, if any. A detailed spread sheet should be attached along with the CLP to assess the financial health of the borrower. vi) Market/Competitors An idea of the market the business is functioning in, major competitors and the state of the business. The write up should comment on product range/export/ import goods handled, agencies held etc. In case of manufacturing companies, special emphasis should be placed on the product line and viability of the venture to be established. vii) Conduct of Account While quantitative aspect of account operation is available elsewhere in the Facility Application, the qualitative aspect should be covered here. Does the borrower meet his commitment on time? Is there an adequate spread on drawers of bills? Does the overdraft swing into credit? etc. Adverse features like cheque returns, frequent excesses in facility lines, hard-core and over dues should be highlighted along with steps being taken to overcome the shortcomings. In this section, the facilities sought should also be justified vis-a-vis turnover, future projections etc.

viii) Profitability to Bank: While the numbers are available in 'Customer Profitability Analysis', branches should comment on pricing aspects vis-a-vis risk grade. The considerations which justify lower pricing (when recommended on a proposal) should be clearly brought out here. If significant increase in facilities is being sought or downward revision in rates, this should be

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2 backed by projected profitability analysis. In essence, an attempt should be made here to gauge the true value of the account to the bank. ix) CIBR All critical issues arising from these statements such as utilization of our Banks facilities in comparison to other Banks should be elaborated here. x) Security Appropriateness of mode of valuation, agency undertaking the valuation, margin of safety available etc. If significant change in security position is taking place, this should be elaborated here. xi) Recommendation A summary highlighting strengths and weaknesses of the account and an unequivocal recommendation.

Analysis Of Customers' Financial Statements Before granting or renewing facilities to a company or partnership, the manager should insist upon latest audited / certified accounts. For comparison purposes, it is desirable to have such accounts for the previous two years. Even though such accounts may not reflect the true position of a company or firm, much useful information can be gained from studying them. The inability to produce upto date accounts usually indicates that something is wrong; the company or firm may be inefficiently conducted or has something to hide.

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Where the customer cannot produce Audited accounts, it should be ensured that the unaudited accounts submitted by them are detailed and contain all relevant information and later complemented by certified accounts which should be compared for misreporting etc. However, no exceptions are to be made for large (corporate) customers, and branches must insist on regular audited financial statements prior to processing of the requested facilities. The manager should therefore look beyond the balance sheet and profit and loss accounts and inquire more deeply into borrowings, losses or any extraordinary items. A copy of the customer's latest available accounts together with the auditor's certificate and notes, (if applicable) with Spread Sheets should accompany the CLP, which should draw attention to, and comment upon exceptional features in the accounts.

Stock Inspection Reports The concerned credit officer along with the officer assigned the task of stock inspection should inspect the stocks pledged / hypothecated to the bank. A note of the inspection should be signed by both the visiting officers and placed in the credit file. If any objectionable or adverse situation relating to the stock is noted during the inspection the same should be advised in writing to the customer seeking immediate rectification. The credit/branch managers should sign this letter. It should be ensured that a valid insurance policy is held at all times for the pledged stocks. Credit Files

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2 A ‘Credit’ file must be maintained for every borrowing account as it provides all the relevant information when considering credit facilities. The file should contain: a) i. ii. iii. b) i. ii. Review Diary: Credit Line proposal, expiry dates / renewals / rescheduling. Sanction advice HO stipulations and their deadlines. Temporary excess over approved limit by BCC/EC Internal Memos: All correspondence with HO and their responses. Check of markup rates on a quarterly basis to approved

financials etc.

c)

Correspondence i. ii. iii. iv. Correspondence with the customer regarding renewal, adjustment and enhancement of facilities. Facility request letter from the customer. Correspondence regarding overdue facilities and markup etc. Other miscellaneous correspondence.

d)

Insurance Policy & Stock Reports : i. Insurance policy (along with premium paid receipts) Stock Reports

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2 ii. Inspection reports of both pledged and hypothecated stocks with the bank. e) Opinions / Copies of Charge Documents: i. ii. iii. iv. v. vi. vii. viii. ix. Pre-disbursement Audit Certificate. Copies of Finance / Securities Documentation Checklist. Copies of charge Forms and property documents. Legal opinion on documents. Copies of auditor’s pre disbursement certificate and offer letter duly signed in acceptance by the customer. Confidential opinion from other banks and institutions Copy of Memorandum & Articles of Association or Partnership Deed. Copy of Certificates of Incorporation and Commencement of Business. Correspondence regarding any change in company’s name, management etc. f) Financial Reports / Valuation/ CIB /Credit Reports:

i.

Copies of last three years approved Financial Statements together with financial analysis.

ii. iii. iv.

Valuation Certificates by bank’s approved surveyors Updated CIB Reports from SBP. Credit Reports from other banks and financial institutions previously/ partly handling borrower’s business.

v. vi.

Company’s Reports evidencing ranking of charge. Visit Report.

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Approval Of Facilities Branch Managers should approve facilities within their delegated limits. Any amount exceeding the managers’ limit should be referred to the Branch Credit Committees for approval. The Branch Credit Committees should recommend and seek approval from the Executive Committee for facilities exceeding their delegated powers. In case of new or increase in existing facilities approval will be sought from the BCC only in respect of those facilities which in total do not exceed the committee's limit. If on a group basis, the facility proposed on a group account exceeds the BCC's lending limit, the proposal should be submitted to the Head Office for a decision by the appropriate authority. The CLP must be recommended and co-signed by the Credit / Branch Managers and all other members of the BCC prior to submission to the Head Office and a copy retained in customer's file. Renewal of Facilities The BCC may renew Credit lines which were initially approved by them under their lending authority provided that:  There is no downward revision in the terms on which the facility was originally granted i.e. change in mark-up and commission rates.  No significant adverse change in the customer's finances or account conduct which should require downgrading of the account  All terms of the prudential regulations have been complied with.

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Sanction Advice

When a regular facility is granted for whatever period, the Credit Division will prepare the sanction advice, original sent to the concerned branch, which upon receipt should file the original advice in the respective customer file and a photocopy filed in the Master File of BCC.

Offer / Facility Letter Having received the "Sanction Advice" the concerned Credit Officer will prepare the Offer Letter in accordance with the terms and conditions of the "Sanction". The Offer Letter will be signed by the Branch / Credit Manager on behalf of the Bank and dispatched to the customer for his acceptance. This acceptance must manifest itself in the form of signatures by the authorized signatories of the customer. Transfer Of Account When the facility offer letter is prepared then the transfer of limit will done by this the transfer of account will done which mean the specific amount of loan is furnished and complete check over the operations of account done periodically.

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FINANCIAL ANALYSIS
Background BAL was incorporated in 1992 as Habib Credit and Exchange Bank Limited to take over three Pakistan branches and assets of BCCI. The bank remained a wholly owned subsidiary of Habib Bank Limited (HBL) till its privatization in the second half of 1997. An Abu Dhabi based consortium of investors acquired 70% stake in the bank in 1997 while the balance (30%) held by HBL till the consortium also acquired 2002. The chairman of the board, H.E. Sheikh Hamdan Bin Mabarak Al Nahayan, is also member of the Executive Council of the Emirates of Abu Dhabi and of Higher Consultative Committee for Development of Abu Dhabi Emirates. He is also the chairman Gulf Air, Department of Civil Aviation, Abu Dhabi and Abu Dhabi Aviation. The present chief executive of the bank is a career

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2 banker with over 40 years experience both within Pakistan and abroad and has been with the bank since its incorporation. BAL is providing a full range of banking facilities. The future strategy of the management envisages continuation of high growth, expansion of branch network and introduction of new products.

Credit Rating Assessments Update this….
Ratings (June 2004) Bank Alfalah Limited Entity* Long Term Short Term TFC Unsecured, Subordinated (PKR 650mln)
* Applicable to senior unsecured Creditors (depositors).

New AAA1+ A+

Previous AAA1+ A+

Financial Data PKR (mln) Total Assets Equity Net Income ROA % ROE % Equity/ Total Assets % SBP CAR 31/12/03 65,229.9 1,678.6 497.4 0.94 32.60 2.57 8.70 31/12/02 40,109.3 1,372.5 321.8 0.93 28.31 3.42 9.56

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BAL’s ratings reflect steady growth with sustained performance and maintained risk profile of assets. The ratings also reflect a somewhat constrained equity base of the bank vis-à-vis aggressive growth targets, while taking into account strong sponsor support. During 2002, the banking sector, by and large, experienced a robust deposit led growth, but the Lackluster credit demand compelled banks to invest a larger proportion of these funds in government securities, resulting in decline of credit to deposit and borrowings ratio. While the proportion of pure equity depicted a declining trend owing to overall growth in assets, its impact was generally neutralized by the surplus on revaluation of investments, mainly government securities. However, the CAR benefited from the change in risk profile of assets and was largely maintained. Interest based revenues are increasingly under pressure across the sector due to intense competition and declining yields on the government securities. Going forward, identification of untapped credit avenues, improvement in operational efficiency and Enlargement of non-fund based revenues are critical for the banking sector to sustain its performance. BAL is better positioned than peers due to its proactive management in tapping unexplored business areas. This stands demonstrated by the success of the bank in emerging as the leading institution in car financing in a short period

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2 of time. In expanding its consumer-financing niche, BAL is expected to benefit from its increased outreach through its branch expansion. BAL, despite reduction in spreads, maintained its profitability, due to substantial volume growth and increasing trend in non-fund based income, though it was slightly lower compared to growth in net interest revenue.

Though BAL’s operating cost increased in line with network expansion, the cost-to-total net revenue improved due to higher growth in revenues. Like other banks, BAL has been flush with liquidity due to significant growth in deposits. However, BAL deployed its assets efficiently by increasing its advances portfolio through identification of new business avenues. The bank has also increased its funds deployment in the money market, but still remains heavily invested in government securities, which also strengthened its liquidity. During 2003, BAL, in addition to maintained focus on trade finance, plans to further expand its consumer-financing base by starting housing finance and also intends to venture into financing of agro-based industry to enhance its market share and diversify its credit portfolio. Advances portfolio, constituting 43% of total assets, has moderate concentration in the textile sector and a review of the overall security structure reveals an adequate collateralization pattern. BAL has continued its trend in the 2003 of increasing customer deposits, advances and investments, which is in line with the projected figures of the bank for the year 2003.Non-fund based income is increasingly under pressure due to stiff competition in the sector; the impact is expected to be managed, largely by increase in volumes. BAL is also planning to expand its branch network by 10 more branches during 2003.

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2 During the year, while BAL continued to strengthen its risk management function as a result net addition in the classified portfolio was only PKR 76.4mln, which is less than 1% of advances portfolio. However, impaired lending to gross advances ratio has improved due to increase in advances portfolio and certain recoveries of non-performing loans.

The provision coverage remains close to 68% and the management is confident of recoveries from some of the chronic NPLs, which are not fully provided for as the bank holds collaterals against these NPLs. However, the bank’s profitability remains under pressure in case the outcome of recovery efforts is not according to the management’s expectations. BAL’s equity-tototal assets ratio, which was the lowest in the peer group declined further with consequential impact on CAR, even after taking into account the tier II capital represented by the TFC. However, the substantial surplus on revaluation of investments – not recognized for purposes of CAR – provides considerable comfort. BAL issued an unsecured subordinate TFC during December 2002 for a tenor of 6 years at a floating rate of latest cut-off yield on 5 year PIB plus 1.35% with a floor of 10.00% and a cap of 15.00%. Principal redemption will be in two equal semi-annual installments commencing from the 66thmonth of the issue. While the senior unsecured creditors (depositors) derive additional comfort from the structure of the TFC, the TFC holders are exposed to relatively higher risk, as the obligations towards the TFC holders are subordinate to those of the senior unsecured creditors (depositors) of the bank. Consequently PACRA assigns an A+ (A plus) rating to the TFC, that is, one notch below BAL’s entity rating.

Ref: The Pakistan Credit Rating Agency (Pvt.) Limited.

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RATIO ANALYSIS Update This…. Earning Assets to Total Assets: Earning Assets / Total Assets 2003 85,557,449 / 98,952,499 2002 57,424,113 / 65,167,031 = = 86.46% 88.12%

Earning assets to total ratio tells us about the bank management efficiency to utilize the earning assets to get return. Earning assets include loans, investment securities and money market assets. The BAL earning assets to total assets is slightly decline as compare to previous year. But after comparison with last year we can easily find out that total assets and earning assets are increasing because BAL is going to expand its network. Return on Earning Asset: Net income / Earning Assets 2003 2,123,234 / 85,557,449 2002 445,679 / 57,424,113 = = 2.48% 0.78%

Return on earning assets can help us about the measurement of profitability. Better ratio means good utilization of earning assets by bank management to earn profit. If we compare this years ratio that is 2.48% as compare to previous year that is 0.78%. The difference shows incredible change in positive direction. With the help of better utilization of assets and expansion of its network BAL increase its ratio. Interest margin on Average Earning Assets 2003 2,004,803 / 85,557,449 Adnan Rasheed = 2.34% ©

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2 2002 1,439,016 / 57,424,113 = 2.50%

This is a key determinant of bank profitability, for it provides an indication of management’s ability to control the spread between interest income and interest expense. The ratio of 2003 is 2.34% as compare to 2002 value that is 2.50%. The ratio is decline, may be the reason behind is that continues decline in rate of interest by SBP. Government gives more relaxation for investors to increase their investment in different areas like SME sector etc. Equity Capital to Total Assets: Average Equity / Average Total Assets 2003 3,253,416 / 98,952,499 2002 1,615,777 / 65,167,031 = = 3.29% 2.48%

The ratio another name is funds to total assets. This ownership provides the cushion against the risk of using debt and leverages. The higher the ratio then more cushions is there and lower cushion with lower ratio. BAL ratio in 2003 is 3.29% as compare to 2.48% in 2002, which show the improvement and recently more shares are floating in the market that will make this ratio even better than 2003 value.

Deposits times Capital: Average Deposits / Average SHE 2003 76,698,322 / 3,253,416 2002 51,684,984 / 1,615,777 = = 23.54t 31.98t

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2 The ratio of deposits time’s capital concerns both depositors and

stockholders. To some extent, it is a type of debt/equity ratio, indicating a bank’s debt position. As I define above, more capital implies a greater margin of safety, while a larger deposit base gives a prospect of higher return to stockholders, since more money is available for investment purpose. The overall this ratio is very good in last two years. But this ratio is decrease in 2003 than 2002 from 23.54t to 31.98t respectively. Deposits are increased by 48% so more deposits are available for investments are there and equity is double approximately.

Loans to Deposits: Average Total Loans / Average Deposits 2003 49,216,120 / 76,698,322 2002 28,319,401 / 51,684,984 = = 64.17% 54.79%

Average total loans to average deposits are a type of asset to liability ratio. As we know, loans make up a large portion of the bank’s assets, and its principal obligations are the deposits that can be withdraw on request. This ratio is increased from 54.79%in 2002 to 64.17% in 2003, but it’s not a good sign from debt point of view because it’s indicating the increase in risk.

ROA: Net Income / Total Assets 2003 2,123,234 / 98,952,499 2002 445,679 / 65,167,031 = = 2.14% 0.68%

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2 Through that ratio we measure the ability of bank to utilize its assets to create profits by comparing profits with its assets that generating profits. The BAL ratio is incredibly improved 3 times as compare to 2002 ratio. In 2003 this ratios is 2.14% as compare to 2002 ratio of only 0.68%. The reason is behind is that BAL income is exceedingly increased in 2003 as compare to preceding year.

ROE: Net Income / Total Equity 2003 2,123,234 / 3,253,416 2002 445,679 / 1,615,777 = = 65.26%

27.58%

Return on Equity is informs us about the return for shareholders. That also shows incredible increase approx. three times. Increase in shareholders couldn’t any effect on this ratio because the reason is that income is unexceptionally increased. The 2003 ratio is 65.26% as compare to 2002 value of 27.58%.

Profit Before Tax Ratio: PBT / Gross Markup Income 2003 3,505,680 / 4,033,380 2002 894,653 / 4,551,329 = = 86.92%

19.65%

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2 For banking sector, profit before tax ratio is very much important because large amount is deducted in shape of taxes. Banks profit before tax ratio is incredibly increases in 2003 that is 86.92% as compare to 2002 value 19.65%.

Basic Earning Per Share: Net Income / # of outstanding shares 2003 2,123,234 / 200,000 2002 445,679 / 200,000 = = 10.62 Rs. 2.23 Rs.

This ratio is the most interesting area for stockholders and management too. This ratio tells that how much rupees you can earn against each outstanding share. Alls ratio shows astonishing increased because of growth in future perspective and unbelievable change in income compare to preceding year in 2003. 10.62 Rs. is five times greater than last year 2002 EPS that was Rs. 2.23 only.

Book Value Per Share: SHE / # of outstanding shares 2003 3,253,416 / 200,000 2002 1,615,777 / 200,000 = = 16.27 8.08

Book value per share ratio tells us about the original value of shares in books of account. BAL book value per share ratio increased two times as compare

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2 to preceding year. 16.27 in 2003 shows incredible increase as compare to 2002 value that is 8.08.

Balance Sheet, Income Statement & Cash Flow Statement
You Should Update …………..

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SWOT ANALYSIS
Strengths
 By the grace of the Almighty, Alfalah have moved rapidly in expanding branches network and deposit base, along with making profitable advances and increasing the range of products and services. Alfalah have made a break-through in providing premier services at an affordable cost to our customers.  As we BALs know our pursuing customers the better, path can of we excellence, customer satisfaction remains its priority. It is only when

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2 deliver a higher quality of services, thereby adding synergy to our existing management expertise, financial strength and profitability.  Bank Chairman Message ”our core philosophy of honesty, transparency in customer dealings, product innovation, excellence in customer service and our commitment to being a responsible corporate citizen”  As a premier organization operating locally & internationally that provides the complete range of financial services to all segment under one roof.  Bank Alfalah developing & delivering the most innovative products, manage customer experience, deliver quality service that contribute to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.  Most of the customers are satisfied with the bank services and friendly environment of the bank.  In comparison to other banks Alfalah providing high excellence services like home, car, agri-financing, which facilitate bank to get market excellence and move towards prosperity and development.  Customer’s behavior shows that they feel proud to being as an account holder in Bank Alfalah and also refer people to enjoy different schemes and open their accounts.  Customer gives suggestion for the improvement of bank and these suggestions are listened carefully and communicated to the higher management so that action taken on relative deficiencies immediately.  Bank having good friendly environment, security system concentration like cameras installed and security guards available all the time.  Modernized banking system with highly integrated informative system, record kept properly, online banking, and integrated circuits between branches and personal computer provided at every desk.  Higher management committed to the development, quality, and continious improvement.

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2  Salaries are very reasonable, so the employees are not financially disturbed and they devote their selves fully to their work.  They have wide area network in all over the Pakistan, so that they cover a lot of portion of cash transactions and make customer satisfied.  Entertainment facilities are available in the Bank when customer goes to the Bank for a longer time they will enjoy newspaper, magazines, television and serve with tea, soft drink, sweets and snakes etc.

Weaknesses
 The majority of people are not well aware about the products of Bank Alfalah. Therefore it should advertise extensively especially home, agri & car loans, RTC and Credit Cards.  Mismanagement of time is another big mistake in Bank Alfalah branches, the bank official time of closing is 6:00pm but due Mismanagement of time employees leave their desk at 8.00pm which is so hectic and cause employee frustration.  A behavior has been noted that bank tries to feel at ease with good looking rich and educated people and the un-educated and old customers feel some bit strange in the environment of the bank.  Proper guideline should be given to the customer about bank products. They facilitate with current information. Many of the customer’s complaint that there should be two or more person who will guide people at entrance where they have to move, concerned person and department, teach how to fill forms, slips and cheaqes.

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2  The number of cash counter must be increased because the customer has to wait at peak hours on the counter for deposit, withdrawals and online.

Opportunities
 The policies of the new government to uplift the economy and pursue financial sector reforms are expected to yield positive results in the banking industry of the country. The Bank Alfalah is very well praised to avail promising opportunities.  As a result of the different steps taken by the Government regarding the betterment of the economy, small borrowers are attracted to get the financing and start small businesses. So, the Bank Alfalah has an opportunity to attract the customers by giving them attractive schemes.  The need of privatization has made people to switch to banks to satisfy their needs of lending and borrowing. This not only increases the deposits but also the credit business.  Bank Alfalah is surrounded by many competitors it has an opportunity to aggressive marketing to increase its business.  Government is taking very bold steps to promote IT in Pakistan BankAlfalah has an opportunity to improve in IT stock exchange is very volatile and takes immediate effect so in times of crises conservative investors turns to saving deposits.

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Threats
 Bank Alfalah has many competitors who are continuously increasing their products and marketing aggressively it may cause its customer to shift to its competitors. 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.  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.  The privatization of other banks is also a threat for the Bank. Due to the privatization of the different bank e.g. MCB; the competition has increased a lot. the customers.  The biggest threat in the banking sector is the continuous downfall of the country economy since the last few years. If this downfall remains for more few years then it may be the great hindrance in achieving the Bank’s objectives. Furthermore many private banks have come in the sector due to which it is becoming more difficult day by day to attract

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RECOMMENDATIONS
Finally, we are giving some suggestions for Bank Alfalah Limited. These suggestions are based on our experience with bank.

1. Human Resources Department should be there in order to motivate
and trained the employees. I have noted some dissatisfaction among the employees, due to in efficient promoting system. So the bank should provide clean and on the merit basis promotion system.

2. The bank is now over staff. The building under operation is in adequate
for such a large staff because new branches opening in small cities like Bahawalpur, Sadiq Abad, Bore wala etc staff member of these branches getting training in Multan branch, so the building should be extended.

3. This is a routine practice that in order to give personalized services to
the customer, bank staff tries to fill all the columns of AOE with their own handwriting, which is wrong. The customers must fill in AOE. Bankers should avoid filling in the AOE because it can create problem if the address, title of account or any other information provided by the customer has not been written properly. Customer may be affected or he may claim that he did not provide this information, but if the customer fills AOE then banker cannot be held responsible for any incorrect information provided by the customer.

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4. Under no circumstances cheque book should be given to the customer
if the account formalities are incomplete.

5. There are two officers involved in cash deposit process, which is time
consuming. Cashier should be given certain powers to receive cash of US$ & DM to provide prompt services.

6. Similarly, there are two officers involved in cheque payment process,
which is time consuming. Cashier should be given certain powers to pay cheques up to Rs. 25000/- to provide prompt services.

7. Cheques, which are drawn on Bank Alfalah Branch and returned unpaid
in clearing, are not reflected in the statement of account of the customers. This cheque must be reflected in the accounts so that credibility of the customers may be assessed.

8. Audit should be held internally, rather there should be an audit
department in the branch to make audit on daily basis. This can become so, helpful as a different banks are having this department of their own.

9. When giving the loan, the Bank must carefully analyze the past six
months transaction history of the borrower. This will help in judging the dealing behavior and financial status of the client. In most cases, this thing is not properly done and it is the major reason of default of many clients.

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10. The Bank should try to give more loans to the small borrowers as the
past history shows that most of the loans given to the corporate borrowers have converted into bad debts.

OBSERVATION & CONCLUSION
I observed the bank Alfalah a financially sound bank. Its profits are increasingly year-by-year. Its staff is very good and sincere with the bank.

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2 Bank Alfalah under the leadership of Sheik Nahayan Mabarak Al-Nahayan has made significant progress in building and strengthening both the corporate and retail banking sectors in Pakistan. The bank attained number 2 positions in terms of its balance sheet size amongst the private banks in Pakistan in 2000. Bank Alfalah views specialization and service excellence as the cornerstone of its strategy. The people at bank realize that innovation; creativity, reliability, customized, services and their execution are they key ingredients for their future growth. Revenues from these activities have started yielding dividends and they expect significant growth. They are aware that they have stepped into the 21st century and they must meet its challenges by acquiring the highest level of the technology. They will thus be accelerating their technological advance to enable them to distribute their products and services through most efficient and high tech means. They say that they will continue to invest in the modern tools and substantial allocation to resources will be made to achieve this objective during the current year. Online banking has been started and the introduction of ATM at strategic locations has been firmed up and it will be fully operations during the June 2001.

COMMENTS

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Signatures

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