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Submitted To: Mrs Javeria Abbas
Submitted By: Organization: Bank Alfalah Limited, Bosan Road Branch, Multan Internship Period: June 1???, 2009 to July ???, 2009
INSTITUTE OF MANAGEMENT SCIENCES BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN
Up and above Beneficent, the Who is forever greatly obliged successfully.
every thing, I am grateful to Almighty ALLAH, the Merciful, and His Holly Prophet (Peace be upon Him) a true torch of guidance for whole humanity. I am to “Allah” Who enabled me to complete this report
This report was conducted under the guidance of Mrs Javeria Abbas whose deep devotion, dedication to her profession, her technical guidance, her unworldly and ambitious nature and her kind behavior towards students are worth mentioning. She has guided me in all problems that I have faced not only during report period but also through out the internship. I also pay thanks to the my supervisors at Bank Alfalah, especially Mr. Taimur Arif, for kind help, best cooperation, and valuable suggestions throughout the duration of internship. Moreover, I am grateful to my loving parents for providing me all sort of moral and social support in life. Their prayers have enabled me to reach this stage. I can’t express my feelings in words for them.
TABLE OF CONTENTS
Introduction to Bank Alfalah Limited Account Opening Department And it’s Products Facilities offered by Credits Marketing Department Remittances Department Credit Administration Department (CAD) My Activities in Different Departments Application of Class Room Concepts SWOT Analysis PEST Analysis Suggestions and Recommendations FINANCIAL ANALYSIS 6 7 12 14 17 20 21 22 25 26 27
Early this year, I asked the Internship Coordinator of IMS to guide me in selecting my organization for internship. He suggested one of the leading banks of Pakistan - Bank Alfalaht Ltd. Upon my father’s approval, I applied and got selected in time. In previous semester, I made a term report on Mergers and Acquisitions of Banks of Pakistan, in the course of HRM, which introduced me to numerous branches of banks of my city. The orientation to banks in that term report proved very useful to me in my internship. My internship in Bank Alfalah was an interesting learning experience for me. Although the timings were short, yet the learning was abundant. I gained a lot of practical knowledge about banking instruments, professional culture, and management in general. The fortnightly reports helped me in keeping a record of my assignments and helped me a lot in compiling my report. The credit goes to the Institute of Management Sciences, for making internship mandatory for me. This Internship program has proved to be a fruitful way to gain practical view of business life, management and a style of on-Job-training.
Their focus is on improving performance in each of their businesses to achieve consistent and superior returns for their highly valued clients and stakeholders. with a niche in areas where they have a competitive advantage with complete banking solutions. The emphasis on “Quality & Innovation” will remain their key mission statement. with the registered office at B.I.Introduction to Bank Alfalah Limited “Bank is a pipeline through which currency moves into and out of circulation. 5. 1997. It has also branches in Bangladesh.” 1. customer service and profit performance. It is engaged in commercial banking and related services as defined in the Banking Company’s ordinance. Quality performance 8. The Philosophy 6. 1962.A. Afghanistan and Bahrain. Bank Alfalah Limited was incorporated on June 21st. 4.Building. Karachi. The Mission Their mission is to maintain a competitive edge in quality banking. 1997 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st. It is currently operating through 282 branches in 57 cities in Pakistan. It is Abu Dhabi based bank. They will continue to strengthen their position as the leading provider of quality financial services in Pakistan. Product innovations The Slogan “THE CARING BANK” . 3. The Vision Their vision is to be a leading financial institution. Excellence in service 7. Their activities are geared towards making Bank Alfalah a responsible corporate citizen. I. 2.Chundrigar.
S. title of the account and the specimen signatures of the account holder. 16. 17.The new client is allotted a new account number after entering the entire particular such as nature of account.If a person cannot write then his / her hand thumb impression is affixed in front of an officer of the bank along with that three passport size photo graphs are also attached.The form along with the specimen signature card (known as S. salary slip.Then stamping and signature of operation officer on the form is done. This card contains account number.S Card) and the Cheque book requisition after being received from the customer is checked for any errors. initial deposit. business card.Account is opened by putting all the particulars of the customer in the system.S.Account Opening Department And it’s Products PROCEDURE TO OPEN AN ACCOUNT The procedure to open an account in Bank Alfalah is explained below: 9. cards are handed over to in charge of operations department for record and verification. Account type and about initial deposit. contact number. ID cards (see expiry date). one is affixed on the account opening form and the other two are affixed on the S. 10. PROCEDURE TO CLOSE AN ACCOUNT ON THE REQUEST OF CUSTOMER . title of accounts into the information system of the Bank Alfalah limited.The very next step is that when the customer comes to open his/her account then he/she is given a complete set of an account opening form. Customer is guided to fill all columns of AOF (Account Opening Form). 18.If customer’s signatures are not mature enough then to facilitate the proper recognition of the customer a picture account is opened and three pictures are taken from the client. take introduction from customer and ask about address. joining letter). opening date. income. type of business.The customer submits that form duly filled and signed with other necessary requirements (ID card. 14. 13. card.S.Finally the manager of bank signs the AOF and these forms are filed in a sequence. 12. 15. 19. The very first step is that when customer comes to open his/her account. 11.
Business Accounts: These are the accounts used for business purpose transactions. WHEN BANK ITSELF CLOSES THE ACCOUNT The bank reserves the right to close the account without assigning any reason by giving 14 days notice. But only in case of current account there should be a balance of Rs. 2. 22.Personal Accounts 25. 23.Public limited company accounts 29.In the computer all the entries and record related to that particular account are permanently deleted by using “close account” option.It is also checked that the client has no liabilities and he does not owe any money to bank. 21.Partnership accounts 27. Single account is opened in the name of one person and S. 150 for closing current account. When such an account is opened the banker obtains clear directions to whether one or more of them shall operate the account.The client who wishes to close his account has to give an application duly signed. card carries the signatures of that person only.S. The names of all the persons are written on the title of A/C and on S.The procedure followed in order to close an account is as follows: 20. Personal accounts: There can be single accounts or joined accounts operated singly or jointly. Joint account is the account of two or more persons who are neither partner nor trustee.S. ATM card and credit card for cancellation.Business Accounts 1. relationship card.Sole proprietorship accounts 28. 24. the unused cheque. On closure of the account the customer shall return to the bank. In business accounts there comes: 26. MAJOR CATEGORIES OF ACCOUNTS Two major categories of accounts are. 150 in the account because bank charges Rs. Then it has to be made sure that the balance in the account to be closed should be zero.Private limited company accounts . In the absence of such directions the bank allows the operation under the signature of all the joint account holders. card.
g. The service charges for saving account are Rs.Mahana Amdan 36. if the time period of term deposit is 1 year at the rate of 12% (say) and the customer withdraws money before the maturity then the bank will give the profit at the rate of 6%. In term deposit for profit .Current Account PKR 32. There is certain %age of profit that increases with the amount deposited and the duration of deposit.Royal Profit The Special accounts are classified as. He is also required to provide affidavit or CZ 50. 31. There exists no interest and no other charges only service charges are deducted. Types of Accounts in Bank Alfalah Two major classifications of accounts are general and special accounts. It is general account for business purpose. The service charges for current account are Rs. non-Muslim) then has to make application for that.per month. If someone doesn’t want zakat deduction (e. Saving accounts: These are profit-bearing accounts.Kifayat account 35. For example. Current accounts: Current accounts are non-profit bearing accounts. Saving accounts can be opened with a minimum balance of Rs.Club.Alfalah Kamyab Karobar GENERAL ACCOUNTS 1. 34. Previously it was 7days to 5 year but now 1month to 5 years. The general accounts are classified as. 5000. 2.per month. Profit is credited to customer’s account. 50/.10. 50/. There is zakat deduction at the rate of 2.PLS Saving Account 33.5%.30. All have different account opening requirements. But in such case bank does not pay full interest as was promised.Alfalah Mahana Amdan Plus 37. There is no Zakat deduction in current account. Society and Association accounts etc.000. This is an account where an amount of money is deposited for a fixed period of time. It can be opened with a minimum balance of Rs. The money can be withdrawn before completion of the term. Term deposit: It is a type of saving account.
It can be opened with Rs. SPECIAL ACCOUNTS 1. It is kind of saving account with greater profit.000/. 15. This account can be opened with a balance of Rs. it is expected to increase in the new policy. The Alfalah Mahana Amdan Plus term deposit receipts will be issued for 1 year tenor with auto-renewal facility. But in it bank gives a higher rate of return than that of saving accounts.at the minimum and Rs. Profit will be credited monthly after deducting applicable withholding tax and zakat(if applicable). 3. 10.000.50. The profit is calculated at the rate of 10% p.at the maximum. Alfalah Mahana Amdan: It is kind of term deposit in it the amount is deposited for three years. Kifayat Account: This account is only for single or joint account.then there would be no profit for that month. 7% profit is calculated on quarterly basis and credited to the customer account semi annually.at the maximum.000 with no maximum placement limit. Customer can withdraw amount from account only for 3 times in a month. 4. Minimum placement limit is Rs. Alfalah Kamyab Karobar: To fulfill your business requirements. .at the minimum and Rs. 1000.separate account is maintained that means the profit is not credited to the same account. The accidental insurance is given free. It can be opened with 25. 10. It can be opened with 5000 and zakat is also deducted.000/. 100. In this account three kinds of are available gold.a. Below 1lac profit is 5% formally but on amount of 1 million or above profit increase. Alfalah Mahana Amdan Plus: It’s a non-checking account. 000/. 3. 2. and is credited to the customer account every month on the first business day of the month. Ever month profit is added in the account. If at any day in a month the balance is less than Rs. The profit is credited to the same customer account there is no need to maintain separate account for that as was the case in term deposit. it’s a kind of current account. Royal profit: It is just like saving account.000. silver and platinum.000/. Now bank is offering 5% profit.000/.
315 per year. But if the customer does not make a request for activation of account in this time period then the account is referred to SBP. Now if the customer wants to get his account active again then he is required to make an application for that and his account is activated on his request. Budgeting: . Now this account is converted to unclaimed account that means the customer can not make any claim for the balance of account from bank. There are no charges for getting a dormant account activated. But if the dormant account carries some balance then bank can not close the account.Alfalah Hilal Card: Bank Alfalah Limited is also offering ATM facility with the name Alfalah Hilal Card. 300 to Rs. If there comes some discrepancies in the debit and credit sides of the accounts the instructions for their rectification are given immediately. The accountholder is served a notice informing that his account has become dormant. It can be availed against general or special both kind of accounts. Accounts Department Functions In accounts department. The vouchers are arranged in the form of bunches under different titles. The customer can get his funds back from SBP but after fulfilling a lot of formalities. Ticking: The transactions with small denominations are checked during ticking process. other banks charge Rs. In this case the customer is required to make a request for activation of dormant account before a time period of 10 years. But if some customer comes for his funds then he is referred to SBP. If the dormant account has zero balance and the accountholder does not make request for activation of account for 3 months then the bank has the authority to close the account. This facility carries no transaction charges in Alfalah however. DORMANT ACCOUNTS: If an account is not operated and no transaction is passed for 6 months’ period then the account is called dormant account. It is the temporary closure of the customer account. Online activity is also checked during ticking process. major tasks performed are: Sorting: Debit and credit vouchers and cheques that are posted during one day are sent to accounts department the next day and then they are sorted under different account heads and then arranged in a sequence.
Other reports prepared by the accounts department are: 38.Income and Expense report 43.Daily Account Activity 39. GL Statement: It shows the opening and ending values of local balance.General Ledger Account balance 41. • • • • Assets Liabilities Income Expenses Customer Activity: It shows the daily debit and credit transaction done by the customers. The head of the accounts department checks the major transactions in the GL Statement that is further divided under following 4 heads. That report consists of following major heads. advances and deposits are shown) 42. Individual transactions are shown in the form of vouchers while transfer register shows multiple transactions.Account Activity Summary 40. Reporting: A complete report of the banking activities is prepared each day by the banking software ''Bank Smart'' according to the data that is entered in the system.It is also performed by the Accounts officer.Daily Advances and deposits report Other tasks performed by Accounts Incharge are keeping the record of depreciation. renovation. and purchases of any asset for the bank etc. Billing: Salary bills and the other branch expenditure bills are prepared by the accounts officers that are approved by the branch manager. .Currency wise Branch Position (In it profits. Transfer Register: It is basically a complete record of multiple transactions. The complete format is given by the head office and then they do the budgeting. At the end of the budgeting period the projected results are compared with the realized results.
Current Finance CF: . They arrange meetings with them and make discussion over their business needs. Then after approval securities are taken from customer after proper assessment. They extend loans and advances against securities and pledges and earn markups against money advanced. They also make discussion that how the customer runs his business and that what is their business cycle. TYPES OF BORROWERS Credit facilities are extended by the BAL. Periodically reviews are conducted and reports are prepared to minimize the risk exposure.SME (Small and medium enterprises) up to 75 Million. 150 Million. 46. 45. what is the financial position etc.000 CREDIT FACILITIES BEING OFFERED Bank Alfalah is offering both funded and non funded facilities. 500. but their branch only deals with SMEs: 44. The Credit Line Proposal gives complete detail of the business of the customer and that since when he is in business. In other words we can define credit as: “Trust in one’s integrity in money matters and ones ability to meet payment when due”. They make money in millions. Credit department is the real revenue-generating department of the bank. 47.Corporate loans more then Rs. After making complete discussion regarding their business credit officials make an estimate that what facility can be extended to the customer and they prepare Credit Line Proposal that is send to higher authorities for approval. then this CLP is send to the higher authorities for approval. what is the nature of business. to the following borrowing parties. The credit officials’ task is to identify and attract the new customer.Commercial loans up to Rs. They have to convince customers plus authorities at the same time.Facilities offered by Credits Marketing Department Credit means belief or trust.Personal Loans up to Rs. They have to think not only from customer’s point of view but also they have to see their banking policies and SBP’s policies. They present cases of customers in front of authorities like Area Office and Head Office for approval. 150 Million.
However renewals can be done. There is a check list of documents used in preparation of CLP. On the expiry date of limit he will just pay principal amount. Term Finance (TF): Term Finance is usually granted for specific purposes.CF facilities are allowed primarily for working capital requirements. 10M. personal and household needs. The markup charged is only on the amount extended not on the whole limit amount. It is a kind of running finance and it is extended for a time period of 1 year. The minimum limit amount is Rs. It depends upon the complexity of the case for approval. Markups are recovered on quarterly basis. Alfalah Quick Finance: The customer can avail himself of Alfalah Quick Finance to meet his or her families. . 1M and the maximum is Rs.000. In TF whether the customer utilizes the whole sanctioned limit or not the markup will be charged on the whole amount.2500. CLP is sent to authorities for approval and they may send some queries that are replied by credit officials and when facility is approved the authorities send a “Sanction Advice”. CREDIT LINE PROPOSAL The CLP is prepared by the credit officials and this is very important document that is presented to the authorities for approval. But not necessarily all the documents are used in each case. He can obtain upto 90 % of the encashment value of his security. But before renewal the customer is required to make adjustment of 25% of the outstanding amount. This facility is a revolving advance and mark-up is charged only on the utilized part of the facility. Customer can obtain loan against his deposit or government securities and can avail himself of financing starting from Rs 50.000. Such a loan can be liquidated either by a single repayment of principal and mark-up. TF is granted at a fixed rate for the tenor of the facility. The customers pay markup in current finance on monthly basis. It must be attractive enough for getting a credit line approved. The CLP should provide following information: i) Proposition: It states clearly and concisely the limits that are being requested. AKF (Alfalah Karobar Finance): Bank Alfalah also offers facility to the customer to help flourish their businesses. It is particularly for SMEs. For corporate customers documentation is more complex as compared to partnership and sole proprietorship.
v) Market/ Competitors: An idea of the market in which the business of the client and his competitors is functioning also helps in making decision regarding credit facility. iii) Background: It describes full information on the customer's constitution and business when applying for establishment of facilities. . and safety method and margin requirements are elaborated here. Remittances Department The need of remittances is commonly felt in today’s business. viii) ECIB Report (Electronic Credit Information Bureau Report): This report is basically a complete credit record of the customer. All the credit facilities taken from Alfalah and other banks are mentioned here. x) Recommendation: On the basis of the strengths and weaknesses of the account recommendations are made by the credit officials. Sanction Advice: When a credit facility is approved the Credit Division prepares the sanction advice that is sent to the concerned branch.ii) Purpose: Specific reasons for granting facilities (particularly for new facilities/ increase in existing facilities) are described here. Mr. It is also checked here that whether there were any over dues or not. which upon receipt is filed in the respective customer file and disbursement of the facility is made after fulfilling all documentary formalities. salman in Bank Alfalah is the officer for Remittances Department. iv) Management: Names of Directors/Partners/Owners/Key persons and an assessment of their capacity to manage the business are also mentioned in CLP. It also gives detail of over dues if any. previously if customer has availed credit facilities then it is checked that whether he met his liabilities properly. its valuation method. ix) Security: The details of the security. vii) Profitability to Bank: Estimated profitability to bank explains that how the customer is profitable to bank. The main function of remittance department in a bank is the transfer of funds. vi) Conduct of Account: Here the conduct of customer account is analyzed like.
It is made by the bank. He enters all the particulars of the application form in the system and computer gives an Auto Control Number to the instrument. Instrument is then protectographed. given to the purchaser against cash or cheque. Printout is taken on the block of payment Order. Officer Cash Department posts the cheque and signs the application form in token of payment received. and given to the customer. All the particulars of application form are checked and bank commission charges and withholding tax is written on the top of the application form. Procedure for Pay Order Application form is given to the customer to fill. Parties Involved in DD: • • • Purchaser Issuing Branch Drawee Branch . DEMAND DRAFT A Demand Draft (DD) is an instrument. he can give cheque for total amount of instrument plus bank charges. If the customer wants to pay cash.In remittances. Cheque and application from is then given to the officer Cash Department for the payment of cheque. Two authorized officers of the branch then sign it. When instrument is presented for payment. PAY ORDER A pay order is a written order issued by a bank. to pay a specified sum of money to or to the order of a specified person. which is drawn by one bank upon another bank for a specific sum of money payable on demand. If the customer is maintaining his account with the branch. then cash is deposited by the customer along with the bank charges and withholding tax. Application form is then given to the Remittances Incharge for issuance of instrument. drawn upon & payable by itself. it is posted in the system and canceled by the Remittances Incharge after proper scrutiny. Two signatures are taken on the form one for request and other for receiving the instrument. following banking instruments are used: • Pay order • Demand draft The procedure for dealing with all these under local in BAF is as under. After proper scrutiny.
• Payee Procedure for Issuing DD Issuance procedure of Demand Draft is same as of pay Order.Online Cash Deposit Transaction 51. Procedure For Demand Draft Payable When DD advice is received. fill online deposit slip and deposit cash. When instrument is presented for payment. All the particulars of the DD payable are entered in the system. there are further two transactions involved: 50. ONLINE TRANSFER In this mode of remittances.Online Cash Withdrawal Transaction Online Cash Deposit Transaction If the customer wants to deposit cash in his account or of any other’s account. He will get proceeds into his account Necessaries For Online Cash Transaction . signatures of the attorneys are verified on DD and after proper scrutiny. both are having account in Bank Alfalah. signatures of both signatory on the DD are verified. E. fill cash online slip. For these transactions. In return.Online Cash Tranaction 49. he will visit any branch of Bank Alfalah. he will receive deposit receipt. account of both the parties must be there in bank. Transfer Transaction From Account To Account: In this type of transaction. it is not necessary that all parties to have account in bank. and get the proceeds from account of the person online. In online cash transaction. having account in any branch of bank Alfalah. within the branches of a bank.Online Transfer Transaction Online transaction is done only within a bank. Online Cash Withdrawal Transaction In this transaction. Prints out of vouchers (DD payable) are taken. It can not hit the account of another bank. it is posted in the system and canceled by the Remittances Incharge. Mr A will deposit his cheque by filling online deposit slip.g: Mr A received a cheque from Mr B. he will go to any branch of same bank. if any person receives cheque of Bank Alfalah from any other person. there are two types of transactions: 48.
000 and above: KYC form and all above mentioned Necessaries For Transfer Transaction If any person comes with cheque. 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. NIC copy is not required. If DD is received against OBC.For Rs 200. OBC number is allotted to the cheque from OBC register.Following are the requirements: 52. There are two types of bills for collection: 56.For Rs 50. collection bank pays the amount through IBCA if it is the same bank or through DD if it is another bank. Special crossing and bank endorsement stamps are affixed on the cheque. If IBCA is received from the branch for the payment of OBC. When OBC is realized. if the person is unknown.For Rs 500. whereas cheques for collection are entered in OBC register and handed over to the Bills Department for collection.Inward Bills for collection Outwards Bills For Collection Al the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. 53. OBC schedule is attached with the cheque and dispatched to the main branch of that city for collection. then cheque can be sent directly to the drawing branch. However. then cheque will be sent to the Collecting Agent of Bank Alfalah for that city. bank requires only two signatures. If they do not have any branch in that city.000: NIC Copy and Verification system (Verisys) 54.000 – Rs 500.Rs 50. These cheques are scrutinized and cheques for local clearing are separated from OBCs. then NIC Copy is required. certain vouchers are posted . and if they do not have any collecting agent even. Cheques for local clearing are entered in Clearing Register.Outward Bills for Collection 57.000 and NIC Copy are necessary. Contra-liability vouchers are also posted in the system. COLLECTION All the cheques under collection are called cheques under Collection in Bank Alfalah Limited. Instructions are given on the OBC schedule for the payment of that cheque.000 – Rs 200.000: NIC Copy and Verisys and inward/outward diligence form 55. it is presented in the clearing for collection.
before sanctioning the credit facility to a customer. Calculation of Drawing Power: CAD officials calculate the drawing power of the borrower. The bankers prefer such securities that carry less risk of depreciation due to market fluctuations and are easily saleable. Are received from other banks. CAD officials receive the sanction advice from credit manager and then they obtain security as per sanction advice. Inward Bills For Collection If any other bank sends a cheque of Bank Alfalah Limited. Common securities against banker advances are as under: . In case a customer wants to start an entirely new business then bank doesn’t extend loan to him because a lot of uncertainty is there. which sends the cheques to SBP for clearing and get the confirmation of cheque and credit advice. As the borrower gives goods or stock as pledge then the amount that he can draw is calculated as: Drawing Power = Stock * Unit Price – margin Securities against Facilities Extended Advancing of credit involves a great risk for the bank. which contacts other banks through SBP. They check all facility documents. Credit Administration Department (CAD) The main objective of the credit department is to provide assurance to Branch Manager and Head office Credit Monitoring Division that lending activities are properly controlled and monitored. to cover this risk. the bank keeps different tangible and non-tangible securities. They feed limits in the system and release the facilities. Bank Alfalah remits money after checking the balance of the customer account. The process of collection starts when the cheques of Bank Alfalah Ltd. Main activity of clearing is performed by Head Office. Then these cheques are sent to the Head Office Karachi.in the system. Credit officials ensure that the business for which loan has been extended is profitable enough and generating cash flows and the customer will be able to pay back the loan. The basic security is the business cash flows. Therefore. it is Inward Bill for Collection. The role of CAD begins when sanction Advice comes after approval of CLP. They complete registration of bank charge over security with SECP.
Accepted Facility offer Letter: When sanction advice comes after approval from the higher authorities then bank writes a facility offer letter to the customer. If the client accepts that facility letter then he sends accepted facility offer letter to the bank. Letter of Hypothecation: Letter of hypothecation is usually made in case of moveable assets. Guarantees of parent company and Cross Guarantees of group of companies and personnel Guidelines for Credit Facilities’ Documentation There is a little difference in the credit facility documentation for Current Finance Hypothecation. 59. Promissory note remains as security with the bank. He promises to be liable regarding making payment jointly or severally. payment to muccadam. taxes. FATR. In it bank explains that what facility has been approved at what cost and against what securities.In addition to the above mentioned securities following collaterals may also be considered as securities like. Letter of pledge: In letter of pledge the name of the customer and the facility amount in Rs. Demand Promissory Note: In promissory not the customer promises that on demand he will pay back to Bank Alfalah the required sum of money.58.Mortgage is a claim against real estate or Fixed Asset. In case of pledge bank appoints a muccadam for the security of goods pledged. If any loss occurs in pledged stock due to any . FAFB.Hypothecation is another security for debt in which the possession of the asset remains with the borrower. Letter of Credit. is mentioned. FAPC. The deposit of title deeds without documentation can create a mortgage. 60. However along with the board resolution other general documentation is. FIM.Pledge which confer physical possession of movables but not ownership. In it customer agrees to hypothecate his stocks/ goods as a security to ensure that all the sale proceeds would be used to make payments to bank and to discharge all liabilities incurred. 61. Here the customer promises to pay the amount plus service charges and expenses along with prescribed margin as liquidation damages. Margin requirements are also considered by the bank officials. Term Finance. Here customer also agrees to pay all the rentals. LBP/LBD etc. and all other charges in respect of godowns and premises where the hypothecated goods are kept. Bank Guarantees.
Search Report: All Public and Private limited companies are required to register bank’s charge over its current and fixed assets with SECP. Property Visit Report is prepared. Valuation Survey Report: For the proper valuation of securities offered against credit facilities. bank renders the services of valuators (like Harvester Services Pvt. Ltd. Search Report is prepared from the records of SECP showing the ranking of charges over the borrower’s assets to different banks. It is therefore essential that ECIB Reports should be obtained at the time of considering the proposal and at the time of renewal of facility. If ECIB Report indicates customer default in meeting obligations etc. the accommodation to the concerned borrower is denied. while considering proposals (both funded and non-funded based facilities) of over 0. Both the resale and forced sale values of securities are mentioned on the report. It also carries other important details about property.natural disaster then the borrower promises to pay for it. It is also prescribed in the letter that if borrower fails to fulfill his liabilities then bank has the right to sell all the pledged goods to cover its losses. Search Report is obtained at the time of considering fresh facility to the borrower and also in case of renewal of facility to the borrower subsequent to the registration of charge over assets of the company by the bank and as when it is deemed necessary by the bank. After having a thorough visit. in detail. Property Visit Report: Credit officers conduct visits of the property. Letter of authority to Debit Markup: In it customer authorizes to bank that bank can debit markups as they come due. CREDIT MONITORING In order to monitor the loans extended and facilities offered the credit . ECIB Report: State Bank of Pakistan’s Prudential Regulation requires banks to obtain detailed information from Electronic Central Information Bureau.5 million to any borrower. The borrower also promises to pay all the markups and principal amount. It describes the nature of property and associated threats. Customer maintains account with the bank from where bank can debit the markup amount.). These companies after conducting a proper survey prepare Valuation Survey Report.
63. They also inform regarding the expiries of extended limits and credit facilities to credit marketing department so that they can do renewal if customer asks for that. Where the stock/ goods are hypothecated it is implied that stock/ goods reports are obtained to monitor its movement and to comply with the margin requirements prescribed by the Bank and SBP. . Stock reports are also prepared by the CAD officials.Loss: Where markup/ interest or principal is overdue beyond 365 days or 1 year or more from the due date the customer is regarded as total loss. On the basis of the customer conduct customers are classified into flowing categories. In such case bank is allowed to do the provisioning of 50% of the total outstanding balance. CLASSIFICATION OF CUSTOMERS SBP has given guidelines in the matter of classification and provisioning for assets. It is ensured that description. Early warning indicators of risk are identified.Substandard: Where markup/ interest or principal is overdue by 90 days or more from the due date the customer is regarded as substandard. value of goods and complete address where goods have been stored etc.g.administration department has different post-disbursement accountabilities e. are in conformity with the details of Sanction Advice and Insurance Policy. CAD officials ensure that facility reviews are under taken on a timely basis. 64. CAD officials calculate markups accrued and they check that whether markups are timely paid or not. They inspect the stock on periodic basis and prepare the stock reports. They conduct pledge site visits. 62. In such case bank is allowed to do the provisioning of 25% of the total amount outstanding.Doubtful: Where markup/ interest or principal is overdue by 180 days or more from the due date the customer is regarded as doubtful customer. In such case bank is allowed to do the provisioning of 100% of the total outstanding balance. follow-up actions are taken where necessary and reports are made to appropriate approving authorities.
66.Pasting the cross bank stamp on clearing cheques as well as on deposit slips. 68.I have filled account opening forms of few customers and also entered that information in the system to generate the respective account numbers.Pasting the clearing stamp on the deposit slips & the cheques 74.Pasting the disbursement confirmed stamp on the back of the cheque 75. It performed the following activities on the clearing cheques: 72. the specimen cards are filled and information of account holders is verified. 67.Preparation of cheques for clearing: 71.Once again checking all the cheques for stamps & signature .My Activities In Different Departments ACCOUNT OPENING DEPARTMENT: I performed the following activities in the account opening department: 65.I used to check the daily status of cheque books and also maintained the daily cheque book issuance register while I was working in that department.Sending the cheques for the signature of manager 76..I prepare the cheques for sending them in clearing. 73.On the basis of the risk of the customer I assign the review date to each customer's account.I have learnt how the new account is opened & information provided by the customers is verified. 69.After filling account opening forms. CLEARING DEPARTMENT: I performed the following activities in the clearing department: 70.
Preparation of IBCA & IBDA 79.Preparation of CC (Collection Cheques) .Filling of debit & credit vouchers 80.REMITTANCES DEPARTMENT: I performed the following activities in remittance department: 77.Filling of application form for online transfer/DD/ PO 78.
Marketing 88. It includes horizontal analysis. vertical analysis and ratio analysis. 89. Management 85. During first week of every month there was a great crowd of the people because they have account there for salary. 84. It has much importance in daily transactions. Issues related to the employee satisfaction and motivation. The class room learning concepts are used in the analysis of financial reports. were clearly reflected in their policies.Ratio analysis was involved in the credit department.On every brouchers.I also learnt the concept of stress management while working in a bank. prominently written the slogan “The Caring Bank” IT in Business 91. A few of the classroom concepts were applied in various departments.Bank’s policies for employees implemented some of the Management concepts.I learnt how managers make daily decisions and how the handle uncertain conditions. 82. They are mentioned below: Managerial Finance 81. 87.Marketing concepts were also implemented as the management primarily focuses on caring for the customers. Accounting 83. 90. I found following applications of these concepts in the bank during my internship program.The concept of “interest” charge was applied in charging consumers for loans and advances.It helped me while reviewing balance sheet & income statements of bank in financial reports. So during those rush hours staff members deal with customer with care.Application Of Class Room Concepts There were lots of applications of class room concepts during working in the bank.The concept of accounting is applied in making daily transactions and entries of the account. 86.Basics of Microsoft Excel learnt in class in the course of “IT in . I was having the idea of credit and debit.These concepts were used to greet the customers in order to promote their good experience.
Alfalah has rapidly expanded its branch network in order to reach greater no. Bank has professional staff in the form of young.Concepts from Economics were also frequently used.The major strength of the Bank Alfalah Limited is its strong brand name. 96. e. 98. 97.Concepts of Financial Accounting were prevailing in banking procedures such as the concepts of debit and credit transactions. energetic. while working in its small unit. This brand strength is the major competitive advantage of the bank. Financial Accounting 93. business cycle etc. the issues related to economy and the effect on investments. Federal Excise duties which are to be paid to Government. depreciation charges(by straight line method) .Business” were frequently applied in accounts department for making weekly and daily reports. STRENGTHS: The major strengths of Bank Alfalah that I have observed are discussed below: 95. types of businesses (individual. 92.g. Tax impositions on transactions. The staff is very cooperative and helpful to each other. enthusiastic and educated people who have a sense of commitment. Bahrain etc. I tried my best to understand the strengths and weaknesses in internal environment and opportunities and threats in external environment of BAL.In Remittance department it was used frequently. partnerships & corporation).One more thing that I liked much there is the behavior of the . bank reconciliations etc Economics 94. It has its branches in Afghanistan and Bangladesh.BAL has strong positive culture with friendly environment. of customer and to increase its deposit base and profitable advances by offering wide variety of products and services. SWOT Analysis It is quite difficult to analyze the performance of the structure of the bank or any organization.
But the problem is that there is very little awareness about these products and services.Alfalah is offering a wide variety of products and services. coffee. Alfalah has modern banking system that is highly integrated with information system. cookies. Every official has his/her personal computer system and the branches have integrated circuits between them.Alfalah tries to be the first in offering innovative products to have competitive edge over other banks. more over different parties (like birthday parties) are also arranged and other recreational trips are also arranged for the bank staff.officials with the client that was friendly enough. . tea. the bank official time of closing is 6:00pm but usual observation is that they have to leave there offices at 8:00pm and even sometimes at 9:00pm because they have to answer some queries from area office or head office. Security cameras are installed all over the bank and security guards are available all the time. Bank is using technologies like Bank Smart a banking software n looking forward to get it replaced with Teminos more advanced banking software. 102. It keeps on offering new schemes. 104.Alfalah is one of those banks who are very flexible and adaptive to new technologies. snakes etc. 99. 100. This really becomes hectic and reduces employee efficiency. For example Alfalah credit cards came first in market and later on other banks start issuing credit cards. Many schemes face failure because of no or little advertisement. 101.Mismanagement of time is another problem in BAL. Bank officials have friendly interaction and clients discuss their problems as if they were discussing with their friends. WEAKNESSES: Bank Alfalah has some shortcomings also that need to be mentioned these shortcomings or weaknesses are: 103. 105.The bank claims to do the banking according to Islamic rules but full implementation of Islamic rules is not seen.BAL also provides entertainment facility to the bank staff and customers in the form of cold drinks.Alfalah has strong security system.
OPPORTUNITIES: There are some opportunities that are needed to be grabbed by Bank Alfalah: 109. Bank officials were little dissatisfied with the bonuses and the increments as they were not as per their expectations.I have also observed a little dissatisfaction among employees. 113. 111.New emerging banks pose threat to the BAL. Similarly some other officials also have over burdened with work.I have also observed that some employees were over burdened with work. 108. THREATS: Some threats faced by the Bank Alfalah Limited are: 114.I have visited some branches like Vehari road branch and Shah Rukn-e Alam branch and I felt that there is no reception for the proper guidance of the customers and customers feel a little disorientation. that is required to be done by one official that is really tiresome. 112.106. Like in accounts department there is a lot of manual work of sorting.There is an opportunity to start E-banking and full online banking transaction system to better cater the needs of the customers. ticking etc.Another opportunity is to be more and more adaptive to the new technologies before the others adapt them. . 107. 110.Bank Alfalah Limited has the opportunity to expand the no. of its foreign as well as local branches in order to capture greater market share. So Alfalah has the opportunity to attract the customers by giving them attractive schemes. On the other hand in some departments I’ve observed over staffing as well.Alfalah is offering credit facilities to all segments and there are greater opportunities in providing credit facilities to SMEs because SMEs are flourishing in Pakistan at higher rate.Alfalah has the opportunity to do aggressive marketing to create greater awareness of Alfalah products and thus to grab greater market share and to increase its business. slips arrangement.
Increased lending rates and withholding taxes imposed by the government also cause decreased no. .Economic and political instability is problematic as well. 123.Low entry and exit barriers pose threat to the bank. 117. 118. For example Meezan bank. 120.Privatization of the banks is another threat for Alfalah.There is not only local competition but also global competition faced by the bank.Bank Alfalah has many competitors that are doing advertisement of their products and services using all mediums and thus creating more customer awareness. This aggressive advertisement done by other private commercial banks is a bigger threat to the bank.Competitors can come up with innovative products in market.E-banking online services offered by banks like Meezan and Allied bank are threats for BAL. 119.A bank coming up with the claim of complete Islamic banking is a bigger threat for Alfalah Islamic banking branches. 122. Political interference and certain government policies can cause problem. When there are reduced savings then of course deposits also reduce and bank has less money to extend loans and hence the bank’s profitability reduces as well. Local and foreign banks coming up with new technologies pose threat to bank.115. of customers. 116. 121.Increasing rate of inflation is problem as well because it reduces purchasing power and thus reduced savings.
The bank also started new schemes like home finance and car finance etc. The situation could be avoided by keeping upper lock and the mower lock by the stock exchange controlling committee to control the trading volumes. Then there came decrease in remittances then markup rates increased. This resulted in increase in money supply and liquidity of the bank increased. Increasing rate of inflation is problem as well because it reduces purchasing power and thus reduced savings. When I asked to the manager that what the impact of political situation is on the bank’s profitability then he told that despite the fact that Pakistan’s Political situation was not much stable as we look at history but still the banking industry kept on thriving. Mangola and Banu. For example due to the recent political problems there were curfew imposed and the branches that were fully operative have to be closed in Swat. The bank was extending commercial as well as consumer loans at cheaper rates. raw materials. When there are reduced savings then of course deposits also reduce and bank has less money to extend loans and hence the bank’s profitability reduces as well. Reason being the SBP’s policies remained much supportive to expand the branch network and to flourish the commercial banks.PEST Analysis POLITICAL: Political conditions of any country do have an impact on its major industries so no exception to the banking industry. More over input costs (like costs of laborers’ wages. The decreased remittances. electricity costs etc. These schemes resulted in the debt-burdened economy. ECONOMIC: One thing that came under observation was that when there arise greater economic problems whether caused by political instability or the overall economic trend then the foreign investors extract there monies from the banks and sell there shares and result in greater losses.) has been increased and they are also facing food crisis. The oil prices are rising causing a trade deficit. increased oil prices. increased input costs . After 9 11 incident there came a lot of foreign money in the form of remittances. When Inflation rises then both the markups and the return increases. More over when there was Benazir murder case again political situation was much disturbed then some of the branches of Bank Alfalah were set on fire by some protestors.
Suggestions and Recommendations . The bank has also sponsored national and international cricket matches. SOCIAL: The Bank Alfalah has its prominent social character as well. Bank Alfalah donated Rs. It is doing much for the society’s welfare. LMS (Lease Management System) is also being used. For example it keeps on giving donations to different hospitals like Shaukat khan Memorial and Edhi to center. Recently it has sponsored a cricket match of blind people and now looking forward to arrange a women’s hockey tournament at national level. Moreover it has sponsored an institute of banking and finance which is under construction in the Bahauddin Zakriya University. This new banking software is expected to reduce the manual reporting system and the physical paper work will be reduced. CREAM (Credit Risk Management System) is also being used by the bank. Now the bank is going to maintain a separate CD of the record of each customer. It do the auto-posting and auto-accrual and keeps the track that when payments come due and that when the Kibor is to be adjusted. It is expected that the Bank Alfalah would be at the top in case of technology in the near future as the management is going to going to replace its current banking software “Bank Smart” with a new software “T-Mos” short of Teminos. UBL and Alfalah are more adaptive to new technologies and the latest technologies are being used in these banks.10 million when there was an earth quake for the rehabilitation program. TECHNOLOGICAL: The bank Alfalah is among the top 3 banks that are ahead other banks in the field of technology. The bank keeps some provisions in its budget against natural disasters. The banking is adopting the scanning system of all the necessary documents for example vouchers are being scanned currently and the bank is looking forward to do the scanning of all the documents because when some of the branches were set on fire then all the record was destroyed. Allied bank. Due to this the bank is facing problems in extending loans recovering monies extended and the default rate has increased.and the food crisis all these factors put pressures on the economy. Basically all the details regarding advances are recorded in it and the documentation and the facility structure is added in it.
This can give a competitive edge to the bank. Recommendations to the government are that: 134. 127. 133.There should be reception for the proper guidance of the customers to avoid inconvenience.Bank should start E. Majority of people are not well aware of Alfalah’s products so it should advertise its products using print media. 128. there are some suggestions and recommendations from our side to the management of the Bank Alfalah limited. Individual differences should be recognized and they should be awarded with bonuses and increments and promotions on merit basis. 125.banking and online banking to compete with other banks who are offering such facilities like Allied bank. 132.Bank Alfalah Limited should be more aggressive in opening foreign branches so that it can increase its deposit base and thus the profitability. 130. These recommendations and suggestions are: 124.The bank should do the proper Islamic banking in order to satisfy the needs of those customers who are greatly dissatisfied with the present banking system and who want full implementation of Islamic rules. electronic media etc. 131. 129. Management should try to rectify it. 126.Government should try to keep the economic and political situation stable so that they may not affect the banking .As the bank’s credit department focuses on corporate and commercial customers more then SMEs so there I’ll suggest that in order to boost the small and medium enterprises bank should also focus on this segment.There should be proper time management so that employees need not stay beyond the official closing timings.The management should do the proper placement of the employees to solve the problem of over staffing and over burden of work on some officials.The Bank Alfalah must focus on doing advertisement.Employee motivation programs should be started and proper incentives should be given to deal with problem of low job satisfaction.Finally based on my observations.The bank should keep on coming up with new schemes and products after analyzing customer needs.
. 136.system.Government should not allow free entry and exit system in banking industry.Government should try to have a control over inflation so that savings can be mobilized. 135.
Current Liabilities 3.36 Explanation: The current ratio shows the ability of bank to meet its short term obligations. Where as in 2008 it has shown an increase which is due to the decrease in bank's borrowings & hence its current liabilities. Net Working Capital 2008 51269175. Cash Ratio 2007 = 47817116 25368940 1.Current Ratio = Current Assets Current Liabilities 2007 2008 =51269175 = 57583878 25368940 17142253 2.FINANCIAL ANALYSIS LIQUIDITY RATIOS 137. 2.89 = Cash + Cash Equivalent Current Liabilities 2008 = 54268378 17142253 3. This ratio is decreased in 2007 which is due to the increase in current liabilities & increased borrowings. Current ratio of BAF is increased in 2008 as compared to 2007 which is due to increase in current assets & decrease in current liabilities.02 3. This ratio is increased in 2008 which shows an improvement in the ability of BAF to meet its short term obligations which is due to the decrease in current liabilities.16 Explanation: This ratio shows the ability of the bank to meet short term obligations with sufficient cash.= = Current Assets _ 2007 = 57583878- .
078 0. This shows that bank’s total assets are increasing at greater rate as compared to liabilities.088 Explanation: It indicates the efficiency with which the bank used its assets to generate more interest/ mark up income. bank’s overall business increased from 2007 to 2008. Total Asset Turnover = Mark-up earned Total assets 2007 2008 = 25783871 = 31046583 328895152 348990764 0.25368940 17142253 25900235 40441625 Explanation: It shows ability of the bank to meet their current liability with their current assets. Liabilities 4. Debt Ratio 2007 = Total liabilities Total assets 2008 . it is increased in 2008 which is due to the decrease in current liabilities & increase in its assets as compared to 2007. So. DEBT / LEVERAGE RATIOS 6.Total 2007 2008 = 328895152. There is a little bit decrease in it in 2007 as compared to 2008 which shows the decrease in efficiency where as in 2008 asset's turnover is increased which also shows the increase in efficiency. 5.= 34899076416219844 17044739 312675308 331946025 Explanation: It is showing increasing trend from year 2007 to 2008. Net Worth = Total Assets .
Gross Profit Margin * 100 Mark-up earned 2007 = 9162908 25783871 35.048 Explanation: This ratio indicates the ability of bank to pay its liabilities. where as in 2007 this ability is increased due to more increase in total assets as compared to total liabilities.5% Explanation: 2008 = 10715389 31046583 34. It shows that the ability of bank to pay its debts is decreased slightly in 2008 due to more increase in total liabilities as compared to total assets. PROFITABILITY RATIOS 8. It shows that indebt ness of shareholder's money is increased in 2007 but it is again decreased in 2008.53 ratio shows how much liabilities are being maintained with respect to share holder’s equity.5% = Net Interest income . 7.82 Explanation: Total Liabilities Share Holders Equity 2008 = 17044739 11161056 1.049 = 17044739 348990764 0. Where as it is decreased slightly in 2008 due to more decrease in liabilities as compared to SHE.= 16219844 328895152 0. It is decreased in 2008 as compared to 2007 because the increase in SHE is more as compared to increase in liabilities. Debt To Equity Ratio = 2007 16219844 8914833 1. This ratio shows very small variations.
But this ratio decreased a lot from 2007 to 2008 because the mark up earned is increased to much greater extent as compared to profit before taxation which is slightly increased. Net Profit Margin * 100 2007 = 3130229 25783871 12.769% to 67. 9.0037 . 71.19% ratio also shows a decreasing trend from 2006 to 2008. This decreasing trend is not a good indication for the bank's financial health. 11. 10.0095 Explanation: This ratio shows that how effectively the bank's assets are used to 2008 = 1301301 348990764 0. Operating Profit Margin taxation * 100 2007 = 4535552 25783871 17. Return On Total Assets taxation = Profit after Total Assets 2007 = 3130229 328895152 0.03% this is because that mark up earned was more in 2007 as compared to 2006.5% = Profit before Mark-up earned 2008 = 1794720 31046583 5.ratio shows a decreasing trend from 2007 to 2008. It decreased from 2006 to 2007.78% Explanation: This ratio shows decreasing trend. Because mark up earned increased from 2007 to 2008 and net interest income does not increased in proportion to mark up earned. The reasons are same as in operating profit margin.1% Explanation: = Profit after taxation Mark-up earned 2008 = 1301301 31046583 4.
63 Profit after taxation Outstanding Common Stock Explanation: EPS is decreasing from 2007 to 2008. in 2008 this is due to the reason that profit after taxation is decreased to lesser extent as compared to no of outstanding common stock. Earning Per Share = 2007 = 3130229 798527 3. This ratio also shows a decreasing trend from 2007 to 2008 because shareholder's equity is increased from 2007 to 2008.92 2008 = 1301301 798344 1. Return On Equity 2007 = 3130229 8914833 0. Where as in 2007 although the no of outstanding common stock remains constant but the profit after taxation is increased which causes an increase in EPS. MARKETABILITY RATIOS 13.12 Explanation: It shows return earned on SHE.35 = Share Holders Equity Profit after taxation 2008 = 1301301 11161056 0. This trend is due to the reason that in 2007 profit after taxation is increased in greater proportion as compared to total assets where as in 2008 there is only slight increase in profit after taxation but a larger increase in total assets. .generate profits. 12. This ratio is slightly increased in 2007 which shows improved efficiency but it is decreased in 2008 which shows a decrease in efficiency.
14.74 Explanation: Share Holders Equity Outstanding Common 2008 = 11161056 798344 13. Book Value Per Share = Stock 2007 = 8914833 628.212 87.9 Bank’s book value per share increased from 2006 to 2008 because stock holders equity increased & in 2007 the no of common stocks outstanding is increased in less proportion where as it is constant in 2008. .
98% 3.VERTICAL ANALYSIS OF BALANCE SHEET 2007 % Cash & Balances with 8.98% 0.92% 0.92% 86.47% 0.10% 4.29% 0.74% _ Investments Advances Operating Fixed Assets Deferred tax assets Other assets Total Assets Liabilities Bills payable borrowings Deposits and other accounts Subordinated loan Liabilities against asset subject to Finance lease Deferred tax liabilities Other liabilities Total liabilities Net Assets Share capital Reserves Inappropriate profits Surplus and revaluation of assets Total equity 26.59% banks Lending to Financial 1.97% 0.29% 0.24% 95.17% 0.05% Institutions 2008 % 9.62% _ 1.94% _ 2.87% .95% 21.58% 100% 2008 % 0.90% 52.69% 4.83% 100% 2007 % 1.20% 3.37% 6.46% 78.05% 3.18% 0.87% 2.98% _ 0.42% 2.95% treasury banks Balances with other 5.73% 1.75% 4.77% 55.3% 4.059% 3.26% 6.92% 1.91% 0.89% 90.
Net assets are taken as base .
25% Income from dealing in foreign 1.69% _ -1.46% Net mark up before provision 75.33% -2.05% 51.02% 10.095% .54% 1.35% 14.99% Unrealized gain on the reevaluation _ of investments Classified as held for trading -0.81% 0.70% 3.33% _ 61.13% 6.82% 1.61% Non mark up interest income Fee/commission/ brokerage income 9.39% 12.61% 18.26% 2.56% 18.46% 75.07% 20.95% 0% 54.42% Dividend income 0.85% -0.84% currencies Gain on sales of securities.19% Bad debts written off directly 0.net 7.91% income+ ++ 84.49% 71. _ 12.04% 38.VERTICAL ANALYSIS STATEMENT OF INCOME 2008 100% 65.02% Net mark up after provision+ 65.025% 2.52% Non mark up / interest expenses Administration expenses 32.95% _ 0.16% 0.08% Total non mark up/ interest 18.027% Other charges 0.16% 1.09% 7.26% 2007 Mark up earned 100% Mark up expensed 64.25% 48.08% Other provisions 0.037% Extra ordinary expenses Profit before taxation Taxation Current year Prior year Deffered Profit after taxes Unappropriated profit brought forward Transfer from surplus on reevaluation of fixed assets – net of tax Profit available for appropriation Mark up earned is taken as base.85% 0.14% 6.26% Provision for diminution in value of _ investment Provision against loans & advances 9.
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