ghafoor mba project

7/28/2019 Ghafoor Mba Project

1/108

1

ACKNOWLEDGEMENT

All praises to Almighty Allah, the one and only, the Merciful, Beneficent and

Compassionate. Billions of Darood-o-Salam upon Muhammad (PBUH) Last Prophet

of Allah who is savior of humanity.

This report is one of the necessary elements to get the Master of Business Administration

Degree from Allama Iqbal Open University . I hope that this report will give a detail and

true picture of organization and what I did and learnt during my internship program. I

have also tried my level best to obtain as accurate data and present all what I have learnt

in the following pages.

I am sure that the department of business administration will oblige me by giving its

recommendation and consent for the approval of the degree and the purpose which I have

gone through internship and report writing procedure will be served positively.

In order to accomplish the task of completion of the degree, I choose the renowned and

esteemed organization that is The Bank Alfalah . It is my good luck that, I receive full

cooperation and encouragement from my loving parents for the achievements of my

tasks.

I am thankful to Mr. Muhammad Javed Iqbal (BAL) and Mr.Abdul Ghafoor (BAL) for

their nice cooperation.


2/108

2

Outline of Contents

1. Executive Summary

2. Objectives of Studying the organization

3. Overview of the Organization

3.1 History of the Organization

3.2 Nature of the Organization

3.3 Business Volume

3.4 No. Of Employees

3.5 Product Lines

3.6 Detail

4. Organizational structure of the Human Resource Management (HRM)

department

4.1 Human Resource Management Process in the organization:

4.2 Human Resource Planning (HRP) and Forecasting

4.3 HRP process

4.4 Forecasting HR requirements

4.5 Methods to forecast HR needs

5. Employee recruitment and selection

5.1 Sources of candidates:

5.2 Internal sources

5.3 External sources

5.4 Employment selection process

6. Training and development

6.1 Training need assessment

6.2 Employee development

7. Performance Management

7.1 Setting performance standards and expectations


3/108

3

7.2 Performance reports writing procedure

8. Employee compensation and benefits

8.1 Types of compensation and benefits

9. Organizational career management

9.1 Employee job changes

10. Job changes within the organization

10.1 Promotion

10.2 Transfer

10.3 Demotion

10.4 Separations

10.5 Layoff

10.6 Termination

10.7 Resignation

10.8 Retirement

11. Labor Management Relations

12. SWOT Analysis

13. HRM process in the organization.

17. Competitor Analysis

14. Recommendations15. References & Sources

16. Annexes / Appendices.

16.1 Annexes

16.1 Organization Chart of Head Office

16.2 Organization Chart of Branch

16.3 Organization Chart of Finance & Accounts Department

16.4 Latest Five Years Income Statement


4/108

4

1. Executive Summary

The evolution of Bank Alfalah signifies a movement from concept to reality; a

reality to bring about a change in the banking industries of Pakistan; offering an

alternative way of banking; providing people an opportunity to practice beliefs in their

financial matters.

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

NahayanMabarak Al-Nayayan, the bank has already made significant contributions in

building and strengthening both corporate and retail banking sector in Pakistan.

At present the bank has expanded its operations across Pakistan in 74 cities with

189 operational branches. However, it has total 195 branches that include 23 Islamic

Banking branches, five overseas branches three in Bangladesh and two in Afghanistan

and one offshore banking unit in Bahrain. It is pertinent to note that all of its branches

commenced their operations in Real Time Online Mode. Today Bank Alfalah is the

fifth largest Banking operation in Pakistan. Since its inception, it has registered the fastest

growth rate ever witnessed by any Banking operation in Pakistan.

Bank Alfalah continues to grow in a robust manner amidst considerable volatility

in the banking industry. The bank is striving to prosper in terns of financial returns and

the value it continues to provide its shareholders especially when tighter spreads are

exercised and margin are compressed due to high interest rates as a tool to curb

inflationary pressures. The profit before provisions and taxation of your bank for the year

2008 stood at Rs. 3.264 billion which was 10% higher than that of last year. The deposit

grew by 7.7% and stood at a figure of Rs. 239.509 billion while advance portfolio grew

by 26% and showed a figure of Rs. 149.999 billion.

.

The most valuable asset of any financial institution is its human resource. Bank

Alfalah has at present a dedicated and commendable workforce of around 6,543 staff


5/108

5

members other than outsourced. The training and development centre remains at the helm

of imparting training and related skills, not to only fresh recruits but also to existing

employees. Bank Alfalah has in place the state-of-the-art Training and Development

Center both in Lahore and Karachi for equipping the personnel of Bank Alfalah with

tools that help carve a brighter future. Its philosophy in this regard is that training is

indispensable in not only enhancing organizational effectiveness but also individual job

satisfaction.

Bank Alfalah has lined up a number of innovative products. These include

Alfalah credit cards, AlfalahHilal cards, Bank Alfalah Car finance and Leasing,

AlfalahMilkiat finance, AlfalahKarobar finance, Bank Alfalah Home finance,

AlfalahZariesahulat, Money gram, Alfalah Phone banking and online baking. Designing

the product portfolio of bank in response to the customers preferences, the product like

Royal Profit,Alfalahkifayat scheme, are prime examples of quality and innovation

providing timely banking opportunities to the customers of bank. Being an active player

in banking sector in Pakistan, they are confident that with the commitment of their team

they will be able to gain the reputation of the fastest paced financial institution.

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 near 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. The bank is serving the people at high level of standard by going

according to the whishes of the customers.


6/108

6

2. Objective of Study the Organization

The primary purpose of the internship is to fulfill the academic requirements of my study.

The secondary purpose of the internship is to evaluate the banking practices, in corporate

world and to compare these practices with the contemporary banking practices. The

purpose of the study also is, to do practical work, in the field and apply the knowledge of

classroom lectures to the real life situations, which thus enables a student to be a future

banking practitioner. Besides this, some other purposes are associated, which includes:

To give a comprehensive review of BAL.

To analyze BAL organizational, financial and other aspects.

To identify the areas of the bank where there is some room for improvement.

To present some feasible solutions for the problems pertaining to BAL.

To apply the knowledge gained in practical field.

Merits of the Report

The study conducted will benefit the finance students in particular and banking students

in general because the third chapter of this report comprehensively encompasses most of

the aspects of banking, followed by SWOT analysis, conclusion and recomendations.

Furthermore, BAL branch Abbottabad may also benefit from the recommendations made

at the end of the report.

Scope of Work/Report

Banking has a very broad scope. In only six weeks of internship, it is very difficult to

understand each and every aspect of bank. Due to the barriers of limited time and space,

the scope of work is usually confined. However this study of BAL will help the

management to identify their weaknesses and threats and over come them by using their

strengths and capitalizing on the opportunities. This internship report will be source offinancial data for all those who are interested in financial statement analysis of BAL.


7/108

7

Methodology of the Report.

This study involves two types of data for report writing.

Primary Sources:

Interviews and discussion with staff members

Personal observations

Secondary Sources

Annual reports of BAL

Brochures & Manuals.

Websites

Newspapers

Previous Internship Reports.


8/108

8

3. Overview of the Organization

3.1 History of the Organization

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited

company, under the Companies Ordinance 1984. Its banking operations commenced

from November 1st, 1997. The bank is engaged in Islamic banking,

commercial banking and related services as defined in the Banking Companies

Ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities, with

the registered office at B.A.Building, I.I.Chundrigar, Karachi.

Management of Bank Alfalah accepted the challenge to transform this bank into

a highly professional, most efficient & service oriented institution. The management has

been successful in fulfilling the undertaken challenge. It has been successful in making a

significant contribution to both corporate and retail banking in Pakistan.

Over the years, its emphasis on growth has resulted in a strong entity capable of

offering high quality services to a wide spectrum of clients, in a highly challenging

business environment. Its strategy is to maximize the synergies of branch network

through an optimal allocation of financial resources in the face of dynamic challenges of

present financial environment.

Strengthened with the banking of the Abu Dhabi Group and driven by the

strategic goals set out by its board of management, the Bank has invested in

revolutionary technology to have an extensive range of products and services.

This facilitates their commitment to a culture of innovation and seeks out synergies

with clients and service providers to ensure uninterrupted services to its customers.

The bank perceives the requirements of its customers and matches them with quality

products and service solutions. During the past ten years, we have emerged as one

of the foremost financial institution in the region endeavoring to meet the needs of

tomorrow today.

Bank Alfalah Limited has continued its upward climb in pursuit of excellence.

Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals set

out by its Board and management, Bank Alfalah Limited increasingly inspires trust and


9/108

9

confidence of all its clients. Within a short span of time the bank has carved a significant

niche for itself in the banking industry.

These achievements have been preceded by concerted effort to provide highest

levels of service and value to our customers. The bank aims to further 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 Limited to evolve as a single source financial service

provider of corporate and retail banking services. Bank Alfalah reputation has been built

on its tradition of high quality and the expertise of its extremely motivated and qualified

staff. With strategic mergers and acquisition, Bank Alfalah has become a leading player

in the global banking arena.

The Bank Alfalah Limited 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 greater 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 Highly Responsive Product Portfolio isnot only comprehensive but also

customizable to match the needs and preferences of the customers. These characteristics

of the portfolio have helped Bank Alfalah Limited to face challenging economic

conditions. The 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. Today, as Pakistan moves into the 21st century with its ambitious

expansion and development programs, Bank Alfalah is here to join the efforts to help the

country meet its growth objectives. The bank offers an extensive range of financialservices specifically designed to cater to the needs of its successful associations with the

Government and Private Sector.

Bank Alfalah Limited (BAL) is a banking company incorporated in Pakistan on June

21st, 1992 as a public limited company under the Companies Ordinance 1984. Its


10/108

10

banking operations commenced from November 1st 1992. The bank is engaged in

commercial banking and related services as defined in the Banking companies ordinance

1962. The Bank is currently operating through 238 branches in 75 cities, with the

registered office at B.A.Building, I.I.Chundrigar, Karachi.

Since its inception, the management of the bank has implemented strategies and

policies to shape a distinct position for the bank in the market place.

Strengthened with the banking of the Abu Dhabi Group and driven by the

strategic goals set out by its board of management, the Bank has invested in revolutionary

technology to have an extensive range of products and services.

This facilitates our commitment to a culture of innovation and seeks out synergies

with clients and service providers to ensure uninterrupted services to its customers. We

perceive the requirements of our customers and match them with quality products and

service solutions. During the past seventeen years, we have emerged as one of the

foremost financial institution in the region endeavoring to meet the needs of tomorrow

today.

3.2 Nature of the Organization

Bank Alfalah is a profit organization.

Its profits in 2011 are as follows.

Profit before provisions and taxation 9,757,522

Provisions (net) (4, 323,804)

Profit before tax 5,433,718

Tax (1,930,588)

Profit after tax 3,503,130

Earnings per share Rs. 2.50


11/108

11

DIVIDEND:

The directors recommend the payment of cash dividend @17.50 subject to approval of

shareholders.

OPERATING RESULTS:

During the year Banks profit before tax stood at Rs. 5,433.718 million compared to Rs.

1,368.745 million for the previous year.


12/108

12

V I S I O N

To be the premierorganizations operating

locally and

internationally that

provided the completerange of financial

services to all segments


13/108


14/108

14

3.3 Business Volume

All Figures are in Rs.

million

2004

2005

2006

2007

2008

2009

2010

2011

OPERATIONAL RESULTS

Total Income 5,24

6

7,42

5

7,14

0

14,51

5

24,416 31,82

2

35,78

9

40,7

43

Operating Expenses 1,18

4

1,80

3

2,67

9

4,34

4

5,918 8,28

9

9,95

7

11,0

02

Profit before Income Tax and

Provision

948 3,59

3

2,02

6

2,96

6

3,264 6,90

6

3,83

1

4,71

1

Profit before Income Tax 895 3,50

6

1,65

4

2,56

3

2,566 4,53

6

1,79

5

1,01

6

Profit after Taxation 446 2,12

3

1,09

2

1,70

2

1,763 3,13

0

1,30

1

897

BALANCE SHEET

Shareholders' Equity 1,61

6

3,75

3

4,36

9

6,73

8

10,573 13,76

7

14,60

9

19,7

70

Total Assets 65,16

7

98,95

2

154,83

5

248,31

4

275,686 328,89

5

348,99

1

389,0

70

Advances - net of provision 28,31

9

49,21

6

88,93

1

118,86

4

149,999 171,19

9

191,79

0

188,0

42

Investments - net of

provision

24,47

0

28,90

4

35,50

3

57,41

6

56,502 88,49

2

75,97

3

99,1

60

Deposits and other

accounts

51,68

5

76,69

8

129,71

5

222,34

5

239,509 273,17

4

300,73

3

324,7

60

OTHERS

Imports 33,87

9

46,80

7

78,47

2

116,21

0

119,937 184,30

5

190,28

9

197,3

04


15/108

15

Exports 33,05

7

44,27

3

57,31

7

71,84

7

70,844 79,09

0

93,40

6

100,4

93

RATIOS

Capital Adequacy % 8.70 8.45 8.16 8.66 9.48 9.85 8.03 12.4

6

Profit before Tax ratio

(PBT/Gross mark up

income)

% 19.6

7

86.9

2

29.4

3

20.9

3

12.11 17.5

9

5.80 2.86

Gross spread ratio (Net

mark up

income/gross mark up

income)

% 31.6

2

49.7

1

56.6

9

41.1

7

28.12 35.5

4

33.8

2

30.6

7Income/Expense ratio Tim

es

4.43 4.12 2.67 3.34 4.13 3.84 3.59 3.70

Return on Average Equity

(ROE)

% 29.9

5

79.0

8

26.8

9

30.6

5

20.37 25.7

2

9.17 5.22

Return on Average Assets

(ROA)

% 0.85 2.59 0.86 0.84 0.67 1.04 0.38 0.24

Advances/Deposits Ratio % 54.7

9

64.1

7

68.5

6

53.4

6

62.63 62.6

7

63.7

7

57.9

0Cash Dividends % 25 25 - 12 - - 15% -

Stock Dividend % 33.3

3

100.0

0

25.0

0

- 33.33 30.0

0

23% 12.5

%

Book value per share

excluding

revaluation of Assets Rs. 16.1

6

18.7

7

17.4

8

22.4

6

21.15 21.1

8

18.2

7

14.6

5

Book value per share

including

revaluation of Assets Rs. 36.5

3

23.7

9

21.0

5

24.8

8

24.48 24.9

5

21.3

2

16.4

1

Basic Earnings per share Rs. 2.23 8.49 3.90 3.92 2.91 3.92 1.41 0.71

No. of Employees


16/108

16

(other than outsourced) N

o.

1,50

4

2,13

3

3,35

2

5,21

8

6,543 7,37

1

7,58

4

7,46

2


17/108

17


18/108

18

3.4 Number of Employees

Years 2007 2008 2009 2010 2011

No. Of

employees

7371 7584 7462 7571 7580

3.4Product lines

Product and services

General Banking

Deposit Accounts

Financial services

Structured Finance

Trade finance

Lease finance

SME

AlfalahKaraobar Finance

AlfalahMilkiat Finance Alfalah Quick Finance

Agri finance


19/108

19

Consumer finance Credit cards

Home loans

AutoVehicle loans

Prepaid card

Debit cards

Islamic banking

Personal Banking

Corporate Banking

Consumer Banking

Important products

Car Financing:

Car Financing is one of the major renowned product of Bank Alfalah and can

beutilized in terms of Financing of Used Vehicles, Loan against Car, Balance

TransferFacility, Refinancing Facility (only for Alfalah Customers) and it is

characterized interms of:

Lowest Mark up

Lower Insurance

Quick Processing

Lower Down Payment


20/108

20

Home Loan

Major features of Bank Alfalh Home Financing are Lowest Mark-up, Quick

Processing, Multiple Repayment Options and Free Valuation. It has been bifurcated

in terms of Home Buyer, Home Construct, Home Improver, Home Balance Transfer

Facility.

Financing Limit upto: Rs. 10,000,000/-

Tenure upto: 20Years

Equity Participation: 30% Borrower / 70% Bank

Debit cards

Bank Alfalah Limited presents AlfalahHilalCard, the first Visa ElectronInternational

Debit Card which gives an unlimited access to current / savings accountwith a simple

swipe, at millions of retail shops and ATMs, worldwide. The AlfalahHilalCard comes

with a host of conveniences and benefits combined with the wide reach ofVisaNetwork enabling it to be accepted at more than 840,000 ATMs and 13 million

retailoutlets around the world, making it the most acceptable Debit Card available in

Pakistan


21/108

21

Credit card

Bank Alfalah Credit Card is globally accepted and welcomed at locations displaying the

VISA logo. It is accepted at over 29 million locations in more than 200 countries around

the globe and over 27,000 Bank Alfalahs establishments in Pakistan.

No Joining / Annual / Renewal fee (except Platinum cards)

Electricity, Sui Gas, PTCL and Warid bills payment through 24 hour Call Center

and Auto Debit instructions

SMS for card usage, mini statement, payment receipt confirmation, etc.

Cash withdrawal at all 1LINK ATMs

Special offer on Waridpost paid connections

Platinum Card

It is accepted at over 29 million locations in more

than 200 countries around the globe and at over

27,000 establishments in Pakistan.

Titanium Card

Titanium MasterCard is globally accepted and

welcomed at locations displaying the MasterCard

logo.

Gold Card

A perfect card combination for all segments of

salaried & professional individuals.

Supplementary

Card

All Bank Alfalah basic credit card members can apply

for supplementary cards for their sons, daughters(Children who are above 13 years of age), house staff

or anyone.
http://www.bankalfalah.com/creditcards/titanium.asphttp://www.bankalfalah.com/creditcards/supp_card.asphttp://www.bankalfalah.com/creditcards/gold.asphttp://www.bankalfalah.com/creditcards/platinum.asphttp://www.bankalfalah.com/creditcards/titanium.asphttp://www.bankalfalah.com/creditcards/supp_card.asphttp://www.bankalfalah.com/creditcards/gold.asphttp://www.bankalfalah.com/creditcards/platinum.asphttp://www.bankalfalah.com/creditcards/titanium.asphttp://www.bankalfalah.com/creditcards/supp_card.asphttp://www.bankalfalah.com/creditcards/gold.asphttp://www.bankalfalah.com/creditcards/platinum.asphttp://www.bankalfalah.com/creditcards/titanium.asphttp://www.bankalfalah.com/creditcards/supp_card.asphttp://www.bankalfalah.com/creditcards/gold.asphttp://www.bankalfalah.com/creditcards/platinum.asp


22/108

22

Islamic Banking

A separate division is a recently initiated, which operates as separate branch. It offers

Shariah Compliant products through a network of five branches. Islamic Banking has

launched following products with the perception that these are in accordance with the

Shariah Principles.

AlfalahMasharaka Homes

Murabaha Finance

Aflalah Car Ijarah

Corporate and Structured Financing

The portfolio concentrates on all aspects of conventional banking as well as the financial

needs of corporate sector including dynamic and high value product.

Loaning against securities

Letter of Credit

Letter of Guarantee

Demand Finance

Cash Finance

Automated teller Machine

The bank offers 24 hours self service banking facilities to its customers on

countrywide basis through deployment of Automated Teller Machine. This system

allows thebanking facilities such as cash withdrawals, cash deposits, and funds

transfer, balanceinquiries, account statements.Electronic cash dispensing facilities are

available in majorcities of Pakistan. All ATMs are linked through a state-of-the-art

Satellite BasedCommunication System which offers 24 hours real time service.


23/108

23

Customers of Bank Alfalah

Accounts for customers Minor Account

Illiterate Person Account

Individual Account

Proprietorship Account

Partnership Account

Limited Companys Account

Current Account

PLS Savings Account

Royal Profit

Basic Banking Account

AlfalahKifayat

AlfalahMahanaAmdan

Alfalah Education

AlfalahKamyabKarobar

Types of accounts shows that bank Alfalah has all types of customers like

businessman, individuals, salaried persons, companies, institutions, students,

employees, retailers, manufacturers etc. Every type of account is specially made for

nature of work a person performs.

For example royal profit is made for rich persons and minimum deposit requirement is of

Rs. 50,000 only. Customer receives higher returns on higher balances.

AlfalahMahanaAmdan is a 3 year TDR with expected rate of profit of 10% p.a. This term

deposit will provide an opportunity to individual/joint customers to enjoy higher returns

that will automatically be credited to his/her current/PLS/RP/BBA account on 1st

working day of each month. This facility is not available for business and corporate

customers


24/108

24

4. Organizational Structure HRM Department.

4.1 HR department hierarchy


25/108

25

4.2 Humane Resource Planning and Forecasting

The Board

The list of Board of Directors of Bank Alfalah Limited is as under:

H.H. Sheikh NahayanMabarak Al-Nahayan.

Mr. Abdulla NaseerHawalled Al-Mansoori.

Mr. Abdulla Khalil Al-Mutawa.

Mr. Omar Z. Al-Askari.

Mr. NaeemIqbal Sheikh.

Mr. Ikram-ul-MajeedSehgal.

Mr. Muhammad SaleemAkhtar.

The core group


26/108

26

In the core group, there are 2 committees, i.e.,

Board Advisory Committee.

Executive Committee.

Board advisory committee

Mr. Omar Z. Al-Askari.

Mr. Abdulla K. Al Mutawa.

Mr. GanpatSinghvi.

Mr. Bashir A. Tahir.

Executive Committee

Mr. Mohammad SaleemAkhtar.

Mr. Ikram-ul-MajeedSehgal.

Mr. Parvez A. Shahid.

Mr. Tanveer A. Khan.

Mr. Mohammad Yousaf.

Mr. M. WaqasMohsin.

Auditors

A.F. Ferguson & Co.

Chartered Accountants.

ORGANIZATIONAL CHARTS


27/108

27

President (CEO)

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

Officers Grade I, II, III


28/108

28

Clerical Staff Non-Clerical Staff

Cashier Typist Clerks & Guards Messengers

Assistants

4.2 Branches

Branch Network of Bank Alfalah Limited


29/108

29

4.3 Various Departments Details

Departments Worked During Internship

With an intention of grooming the best executives of the future, the Institute of Business

& Information Technology has organized a comprehensive internship-training program.

All of us were placed in leading organizations of business arena to gain first hand


30/108

30

knowledge and insight into their management and working. So, when I was given the

chance of selecting an organization, I opted for Bank

Al-Falah.

Getting a chance of working in Bank Al-Falah proved to be very beneficial for me. I

think that I gained comprehensive insight into the working of a bank. But nothing could

have been possible without the co-operation and guidance of the officers of BAL.

I did my internship at Bank Al-Falah Limited Liberty Market Branch, for a total duration

of six weeks. It is relatively a small branch with a limited number of departments. Total

number of employees in this branch is sixteen.The Branch is running smoothly under the

leadership of Mrs.AasmaMushtaq, who is the branch manager of Bank Al-Falah Liberty

Market Branch. The departments that I worked during this time are as follows:

Account

Department

Types of Accounts

Departments Duration

Accounts Opening 1 weeks

Operations 1 weeks

Car Financing 1 week

Accounts 1 week


31/108

31

There are three types of accounts and are as follows:

A (Current Account

Individuals Partners, companies associations, Clubs, Societies, and NGOs are eligible to

open current account. Salient features are as follows:

Requirements

Minimum initial deposit Rs.10, 000/-

Minimum average balance Rs.10, 000/-

There is no restriction on number of transaction.

There is no limitation on amount of withdrawal.

Low balance penalty of Rs.50 per month is charged.

Business or job must be required for opening all type of Accounts.

Introduction is necessary.

Identity cards copy is required. Original must be seen.

B) Foreign Currency Accounts

Both resident and non-resident Pakistanis as well as foreigners can open foreign

currency accounts.

Foreign currency accounts can be opened either as savings accounts or current accounts.

C) PLS Saving Account

Saving account are designed to mobilizing savings primarily from a large number of

individuals and household.

Any one or more individuals or partners can open a PLS saving account with the Bank.


32/108

32

Requirements

Minimum initial deposit is Rs.5, 000/-

A smaller initial deposit can be accepted at the discretion of branch management

if average deposit is expected to remain above RS. 5, 000/-

Profit on PLS saving account is calculated on minimum monthly balance basis.

Profit rates are announced and paid biannually in January and July respectively.

Profit rate for the period ending is 5% per annum. However profit rates are

subject to charge in response to change in the return earned by the Bank on

deployment of funds.

There are four sub types of each account which are as follows:

A.)Individual Account

This type of account is for the customers who are interested in

personal/individual account and such customers can be a salaried person, a sole

proprietor who does not want to open their account on the name of company, a

housewife.

B.)Sole Proprietor Account

This type of account is only for the customers who want to operate an account

on the name of their company.

C.)Joint Account

This type of account is for the customers who want to operate joint account and

this type of customer can be a house wife, a salaried person, a sole proprietor and a

student as well.

D.)Partnership AccountThis type of account is limited only for the partners of one business and maximum

limit of partners for an account is three.


33/108

33

Required Documents

Documents required under opening an account are as follows:

Documents for Individual Accounts

a. Original CNIC,

b. One copy of any family member CNIC for next of kin,

c. In case of business, business proof (letter head of company or visiting

card),

d. In case of job, job certificate,

e. Introduction of any account holder of BAL(account holders who are

operating photo account cannot introduce any one),

f. Deposit.

Documents for Sole Proprietor Account

a. Original CNIC,

b. One copy of any family member CNIC for next of kin,

c. Business proof (letter head of business and visiting card),

d. Stamp,

Name of company

Proprietor

e. Introduction of any account holder of BAL,

f. Deposit,

g. National Tax Number.

Documents for Joint Account

a. Original CNIC of all members,

b. One copy of any ones family member CNIC for next of kin,


34/108

34

c. In case of business, business proof (letter head of business and visiting

card),

d. In case of job, job certificate,

e. In case of student, student proof,

f. Introduction of any account holder of BAL,

g. Deposit,

Documents for Partnership Account

a. Original CNIC of all members,

b. Partnership deed,

c. If instructions for operating account are not given on partnership deed then

instructions are required on letter head of company,

d. Stamp,

Name of company

Proprietor

e. Introduction of any account holder of BAL,

f. Deposit,

g. National Tax Number.

Three passport size photo graphs are also required but only in case customer is unable to

signature or as well as due to shaky signatures.

D) Royal Profit Account

It is a special product of BAL. It can be treated both as a current account and saving

account. It can be treated as a current account only in case of businessmen as they cannot

open saving account. But by opening royal profit account they can earn profit on the

money deposited. In this account minimum average balance should be Rs.50, 000. Every


35/108

35

month profit is transferred to the account of client. The method of calculation of the profit

is the Average Balance Method- (i.e. average balance of one month) and is paid monthly

and calculated daily basis. High returns on higher balances.

E) Alfalah Mahana Amdan

Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of 10.5% p.a. This

term deposit will provide an opportunity to individual/joint customers to enjoy higher

returns that will automatically be credited to his/her account on 1st working day of each

month, but it depend upon customer when he want to take profit at monthly basis or

yearly it is mentioned at form.

Some salient features

1. Minimum placement limit is Rs. 100,000/- and maximum placement limit is

Rs.15,000,000/-

2. Expected Rate of profit is 10.5% Per annum (as per PLS governing rules)

3. Profit will be automatically credited on the 1st working day of each month into

customers account.

4. Free Personal Accident Insurance coverage up to the deposit amount or Rs.

1,500,000/- whichever is lower.

5. Customer can avail financing facility up to 90% of the deposit(as per banks

policy)

6. Any Pakistani resident over the age of 18 can open this account

7. AlfalahMahanaAmdan term deposit can be maintained only at any one BAL

branch with a maximum capacity of Rs 15 Million. An undertaking shall be

obtained from the customer certifying that he/she is not availingAlfalahMahanaAmdan Term Deposit Receipt facility from any other BAL branch.

AlfalahMahanaAmdan TDR will be issued for three years tenure with auto

renewal facility of principal amount i.e. the facility will be renewed automatically

on maturity.


36/108

36

AlfalahMahanaAmdan TDR will be subject to Zakat, Withholding Tax as well as any

other applicable taxes.

1. Is the customer required to have a checking account with BAL?

Yes. The Customer must be maintaining a Pak Rupees checking account with

BAL and TDR facility shall be availed from the same branch.

2. What is the minimum & maximum placement limit for availing this facility?

Minimum placement limit is Rs. 100,000 and maximum placement limit is Rs.

15,000,000.

3. What is the tenure of this TDR?

The AlfalahMahanaAmdan Term Deposit Receipt will be issued for three yearstenure with auto renewal facility.

4. When will the profit be credited in the account?

Profit will be credited on 1st working day of each month to the customers

account after deducting applicable WHT, etc.

5. Is there any detailed medical examination required before the facility can be

availed?

No medical examination/health declaration is required.

6. How insurance benefit will be given in case of joint account?

In case of a joint account the amount of insurance cover will be proportionately

divided (equally) among the joint account holders.

7. Is premature encashment allowed?

Yes, premature encashment is allowed. However, in such cases system will

calculate profit amount at the prevailing rate of normal TDR depending upon

the nearest period bracket completed. For example, if premature encashment is

made after 1 year & 11 months, the 1 year prevailing profit rate of normal TDR

will be applied on number of days funds remain placed with the bank. Rate

differential on already paid profit will be adjusted from the principal amount.

8. How many AlfalahMahanaAmdan TDR facilities can be availed by one

customer?


37/108

37

Customer can maintain AlfalahMahanaAmdan Term Deposit only at any one

BAL branch, with a maximum capacity of Rs. 15 million. An undertaking shall

be obtained from the customer certifying that he/she is not availing

AlfalahMahanaAmdan TDR facility at any other branch.

9. What shall be the procedure if a customer is found maintaining more than one

AlfalahMahanaAmdan TDR facility at any other BAL Branch?

In case a customer is found maintaining placement at more than one branch than

all subsequent AlfalahMahanaAmdan Term Deposit Receipts availed at any

other branch shall be treated as normal TDR and profit shall be paid as per

prevailing normal TDR rates. Rate differential on already paid profit will be

adjusted from the principal amount.

Account Opening Form

The first step is to fill an account opening form by the applicant. Following information

is to be given:

Currency of Accounts

One of the following choices is to be ticked:

1) PKR 2) US $ 3) Pound GBP 4) Euro

Type Of Accounts

The account opened can be PLS/saving, current, royal profit account. And BBA

account.

Joint Account

In case of joint account more than one person can operate the account. However

instructions are to be concerning the operation of the account i.e.:

Jointly:

In this case account cannot be operated if signature of anyone of the account

holder is missing.

Either or survivor:


38/108

38

In this case if anyone of the account holder of the joint account passes away

the survivor cannot operate the account without getting the succession

certificate.

Anyone of us:

Under this instruction account can be operated with the signatures of any of

the joint account holders.

Following information is also given on the account opening form:

Name in block letters

In case of joint account the names of both account holders are to be

mentioned.

Fathers/husbands name

Occupation:

The applicant must give exact description of occupation e.g. instead of

writing businessman, the nature of business is to be written.

Name and address of employer

Nationality

Country of residence

Telephone number

N.I.C Number

Passport number (if any)

Date and place of issue

Required in case of N.I.D as well as Passport.

Next Of Kin

The name, address and relation are to be specified. This information is required toget information concerning account holder in case he cannot be contacted. The

form is not accepted if this information is missing.

Type Of Organization

One of the following choices is to be ticked:

Limited company


39/108

39

Public

Private

Partnership

Club/society/association

Sole proprietorship

Others

The documents required in each case are different which have been mentioned above. In

case of corporate account it is necessary to give following information:

Name in block letters

Brief description of business

Date of incorporation

Place of incorporation

NTN #

Telephone and Fax number

Zakat Deduction

Instruction of zakat deduction is to be given. However zakat deduction is compulsory in

case of PLS/SAVING ACCOUNTS. But if someone, before the Ramzan submit the

Affidavit form then Zakat could not be deducted in the A/C.

Details Of Other Accounts

Details involve the account number, Bank, and address. However the form is acceptable

without this information.

Introducer

An applicant has to be introduced by someone. The introducer can only be a person who

is an existing account holder of BAL or an Officer of BAL. The applicant has to provider

following information concerning the introducer:

Name

Signature: The signatures are to be verified by an officer.

Account number

Branch


40/108

40

Hold Mail Account

In case the account holder does not want to receive any correspondence for any reason

the account is marked as hold mail account

Signature Specimen Card

It is card on which specimen of applicants signature are taken for future reference. Every

time a cheque is presented for payment, the signature on the cheque is verified by

comparing it with S.S Card. In case of joint account two applicants can sign on one SS

card. In case of more than two joint account holders more than one SS card are required.

Cheque Book Requisition

Cheque book is issued to the applicant after filling the cheque book requisition. It

contains the account number issued to the new account holder, serial numbers (range) of

cheques in the book.

Checking The Form

After the applicant fills the application form it is checked for any missing

information.

After checking the form it is stamped. Round stamp is used in case of any

mistakes.

Signatures of the applicant are admitted and that of introducer are verified

by using the admitted stamp and verified stamp respectively.

Getting Approval

The next step is to get the form approved by at least three higher authorities.

Allocating The Account Number

After the form is approved the account number is allocated to the applicant and

account is opened in the system. Record is maintained in the register as well. The

allocated account number is written on the application form as well as SSC.

Initial Deposit


41/108

41

The applicant is asked to deposit initial amount in the account. The amount is

deposited after filling the pay in slip. The initial deposit amount requirement varies

with the nature of account.

Filling The Cheque Book Requisition

After depositing the amount the requisition slip is filled. Against this requisition slip

the cheque book is issued after verifying the signature of the applicant. Every

chequeof the booklet is stamped with the account holders name. The cheque book

issued contains a requisition slip for future use. Record of cheque books issued is

maintained in CHEQUE BOOK ISSUE REGISTER.

Scanning Of SS Card

The SS cards are scanned by the Cash Department and entered into the system for

future reference.

Letter Of Thanks

After opening the account two letters of thanks are typed on letterhead of BAL. One

is mailed to the account holder and the second one is sent to the introducer.This is

done to keep a check on fake introduction

Records Of Application FormsAll the application forms are kept in record in numerical order.

Photo Account

In case the signatures of applicant are shaky or in Urdu or he/she uses thumb

impression a Photo Account is opened. In this case a passport size photograph is

posted on the SS card as well as form. All the cheques are to be signed in the

presence of a BAL official.

Form B

In case of misplacement of cheque book Form B is filled. The signatures are

verified. A new cheque book is issued after canceling the old one. A fee of Rs.100 per

booklet is charged. In case of foreign currency account no fee is charged.


42/108

42

Change Of Address Or Telephone Number

If the account holder has to change the address or telephone number he can do so on

giving an application on the printed form. The application is filed after making the

changes.

Change Of Signatures Or Signatories

The account holder gives an application. A new SS card is issued and after getting the

new signatures of the account holder it is attached to the old one and kept in record.

In case of partnership or company a request signed by all partners or board resolution

is required.

Mandate For The Operation Of The Account

In case a person wants to authorize another person to operate his account he has to

sign a mandate. By signing this mandate he authorizes that person to sign cheques on

his behalf. The signatures of that person are admitted in the system just like the

signatures of any account holder are admitted i.e. by taking a specimen on SS

CARD.

Closing Of An Account

For closing an account balance must be nil for foreign currency, saving and Royal

Profit Accounts and current accounts too.

An account is automatically closed by the system if it remains dormant for 6 months.

Before closing an account a liability form is filled and approved by credit department.

Then if the account holder is not liable to pay any sum to BAL, his account is closed

in the system. Record is entered in the register as well.

Steps For Opening Accounts

After receiving above mentioned documents from customers, steps for opening

accounts are:


43/108

43

a. Account opening form: is filled up (this form contains all the detailed

information about the customer).

b. Specimen signature card: is filled up and required signatures are taken.

c. For issuing cheque book signatures are taken on cheque book requisition

slip.

d. In case of change signature from NIC, undertaking perform is assigned by

customer.

e. Online transaction Performa: is filled up.

Maintaining minimum average balance of Rs.100, 000.

No transaction is to be made for greater than Rs.25, 000.

For any transaction of greater amount .02% will be charged.

f. If account holder is unable to signature his/her photo account is opened,

thumb impressions are taken instead of signatures in the Performa of

picture account andpasted his/her two passport size photos in specimen

signature card and account opening form.

g. In case of partnership account filled up a Performa of partnership

account.

h. In case of corporate account filled up a Performa of corporate account.

i. All the documents are attached with account opening form.

j. All the details of customer is entered in computer (and as well as a

scanned copy of specimen signature card is also saved.)

k. While opening a new account a KYC (Know Your Customer) form is

filled up for each customer. This is a form which contains all the detail of

customer and is filled up to keep record of customer in one page.

l. Account number is given.

(At the end of the week all account opening forms and documents are arranged and

attached account number wise and are bind in a folder.)


44/108

44

Bank Alfalah Issues The Following Chequebooks

a. Saving account - 25 to 100 leaves

b. Current account - 25 to 100 leaves

c. Current account - 25 to 100 leaves

d. Foreign currency $ - 25 to 100 leaves

e. Foreign currency - 25 to 100 leaves

f. If account holder does not come to receive his/her cheque book and send

any one else on their own behalf, a photo copy of NIC of that receiver is

taken and issued him/her cheque book and then a letter by TCS is sent to

account holder that this very person have received your cheque book on

your behalf.

Customers have to come to receive their first cheque book by their own

self, no one else can receive a first cheque book on the behalf of customer.

Indemnity

In case cheque book has been replaced a Performa is filled up by customer of

indemnity, which is a request for the issuance of new cheque book and as well

as informed bank that You will be fully indemnified, safe and harmless from

any liability, claim or loss that may arises by the misplacement of my cheque

book.

ATM Cards

Procedure is:

a. ATM cards form and Hillal card Performa are filled up and assigned by

customers, (one copy of original CNIC with clear signatures and picture is

required from customers).b. Then signatures of customers are verified by officers.

c. After signatures verification submission summary of ATM cards is

prepared.

d. ATM forms, Hillal Performa and submission summary are then sent to

area office.


45/108

45

e. ATM cards are prepared and TCS to customers within a month.

Banks Statement

One who make a remittance. He comes to the issuing or originating branch, ask

for a remittance to be made, and deposit the money to be remitted. the bank charges

him for the remittance. He may or not be the bank's customers.

Remittances Department

Transferring of funds from person to person, and from place to place, constitute the

concept of a remittance. Remittance is very important service provided by banks to

customer as well as non-customer. It is not a free service hence is a continuous source

of income for the bank.

Parties To A Remittance

1. Remitter

One who make a remittance. He comes to the issuing or originating branch, ask for a

remittance to be made, and deposits the money to be remitted. The bank charges him

for the remittance. He may ornot be the banks customer.

2. Remitee

Also sometimes called the beneficiary, or the payee.The person to whom the

remittance is made.The one who receives the payment.

3. Issuing Bank

The bank that effect the remittances, through the Demand Drafts, Telegraphic

Transfer, or Mail Transfer.

4. Paying Bank

Also known as the drawee branch.The branch on which the instrument is drawn. It

has to make the payment. (Usually located in a different city or country)

Modes Of Transferring Funds In Remittances

1) Demand Draft


46/108

46

2) Telegraphic transfer

3) Mail Transfer

4) Pay Orders

5) Pay Slip

6) Rupee Traveler Cheque

1. Demand Draft

Demand draft is a written order, drawn by one branch of a bank upon another

branch of the same bank, or upon another bank under special arrangements to pay

a certain sum of money to or to the order of a specified person.

Demand draft is a negotiable instrument.

Demand draft is neither issued payable to bearer nor drawn on branches situated

within the same city.

It is to be insured that the purchaser of Demand Draft is able to at least sign his

name.

Thumb impression is not to be accepted on DD. A person unable to sign and nothaving an account may be advised to apply for DD through a literate person to

sign on his behalf. To avoid complications DD are not to be issued to Minors.

The followings are the parties to a Draft:

Purchases: Is a person, firm, company or local authority.

Issuing or Drawing Branch:This issues a draft on another branch.

Drawee Branch: Is one on which a draft is drawn.

Payee: Is a person named in the Demand Draft to whom or to whoseorder the

money is directed to be paid.


47/108

47

Procedure For Issuance Of Drafts

i) An application on printed form is obtain for issue of demand draft. It should be

properly filled in and signed by the purchaser.

Before issuing the demand draft it must be seen that the cheque is in order and

sufficient amount is available in the account of the drawer. If the manager is

satisfied with the creditability of the customer, he may issue a demand draft

on application and subsequently must obtain a cheque. Application form

should be used as a credit voucher, where as the cheque is to be as a debit

voucher. The printed number of the cheque in such cases should be reported

on the application form of the customer.

Precautions for Issuance of Drafts

i) Scrutiny Of application Form

ii) Rate of commission / charges

i) Scrutiny Of application Form

There should be our banks branch at the place where payment is desired to be

made.

Full name of the payee should be mentioned.

Amount in words and figure should not differ.

Purchasers name address and telephone numbers are complete.


48/108

48

ii) Rate of commission / charges

Commission and other charges should be recovered at the rates mentioned in the

banks schedule of charges, as advised from time to time; withholding tax will

also be recovered wherever applicable.

2) Telegraphic Transfer

Transfer of funds from one branch to another branch of the same bank or upon

other bank under special arrangements for the payment to the beneficiary

through Telegram / Telex / Fax is called a Telegraphic Transfer (TT).

Telegraphic Transfer is not negotiable.

Telegraphic Transfer of funds to a branch situated with in same city should

not be affected.

Remittance can be made for credit of the account of the payee / beneficiary if

maintaining account with the drawee branch or may be paid in cash. If the

customer wants to send amount through TT then he will provide information

of the beneficiary like id card number, name. Then bank will make a credit

advice and send it to branch on which it should be drawn .Now the beneficiary

will go to that branch and show his ID card number and other information andbank will make TTR and customer will get that amount from cash department.

The followings are the parties to a TT

i) Applicant: A person, firm, company, or local authority etc who

desire to remit funds from one branch to another branch.

ii) Remitting or drawing branch: Which remits the funds on another branch.

iii) Drawee branch: On which TT is issued.

iv) Beneficiary: The person named in the TT whom the money is payable.


49/108

49

Precautions for Issuance of TT

Full name of payee / beneficiary or account number should be mentioned in

the application form along with his address.

Instruction regarding mode of payment should be obtained i.e. whether the

amount of TT is credited to the payees account or beneficiary should be

advised to receive the amount of the TT from a drawee branch either in cash

on proper identification.

Special Request for Enhancement of cheque

Because there is no real time banking so cheque is scanned and fax that the Head

Office.

3) Mail Transfer

Transfer of funds from one branch to another branch of the same bank within or

outside the city or upon other bank under special arrangement for the payment to

the beneficiary through Mail/ Courier services is called MAIL TRANSFER.

Mail transfer is not negotiable.The funds remitted by Mail transfer are not payable to bearer.

Like TT , funds can be remitted by MT for the credit of the payees Account

Or the payee / beneficiary can be advised to receive the amount from the

drawee branch either on cash on proper identification

4) Pay Order

Payment order is meant for banks own payments but in practice these are

also issued to our customer for making payments.


50/108

50

A pay order is written authorization for payment, made in a receipt form

issued and payable by the bank, to the person named and addressed therein

on his giving a proper discharge thereon.

It is issued by and drawn upon and payable by the same branch of the

bank.

It is neither transferable nor negotiable and as such it is payable to the

payee named therein.

Pay order cannot be issued to a minor. Sometime bank dont want to give

its deposits to customer. So in that case pay order is given to that customer

and he can use it for making payments. When customer wants to cash the

pay order then the amount of the pay order will be debited from the bank.

If pay order submit to other bank like MCB then the process of clearing

will be adopt.

Following are the parties to a pay order:

i) Purchaser: Is a person, firm , company or local authority

ii) Issuing / paying branch: which issues / pays on presentation.

iii) Payee: is a person named therein.


51/108

51

5) Pay Slip

Pay slip is for payment of branch expenses.

6) Rupee Traveler Cheque

BAL always provide to its customers different type of services. Which are safe and

quality services. RTC is very popular among the people of the country. The bank

provides RTC in the following categories

1,000

5,000

10,000

Purchases of RTC

The person who wants to purchase RTC is required to fill a form. The form contains

name, address, amount or denomination and other necessary information. The

purchaser deposits the amount in the bank and gets a voucher from the cashier. And

then RTC is providing to the purchaser. Before handing over to the purchaser,

signature is taken from him on the RTC and on the copy of form. BAL rupee

travelers Cheques are acceptable in all the branches of BAL in Pakistan.

Features

Following are some features of RTC.

It is acceptable in all the branches of BAL in Pakistan.

In case of lost the purchaser inform to BAL in 24 hours. Then there is no way

of loss of purchaser and his amount is safe.

Available easily in all the branches of BAL Acceptable by major businesses of

Pakistan


52/108

52

Clearing

through State Bank of Pakistan.It is the transfer of funds from one branch of bank to the

other branch of the same bank or the other bank on which the instrument is drawn,

without involving cash through State banks clearing house.The procedure of clearing is

facilitated by BAL (Bank Alfalah Ltd.) on the behalf ofState Bank of Pakistan The

clearing procedure requires 2 days for completion if it is outward z.

Clearing can be of two types:

1) Outward Clearing

All the instruments (i.e. cheques, pay orders, travelers cheques, demand drafts), which are

originated by some other banks, and are presented to the BAL are included in outward

clearing.

2) Inward Clearing

All the instruments, which are originated by BAL and are presented for payment to the

bank by BAL, are part of inward clearing.

Stamps On Cheques Meant For Clearing

Crossing STAMP

It is used on all types of cheques. It shows the Branch name of the Bank.

Clearing Stamp

It is used on the front side of the cheque and it indicates the presenting date of the

cheques. If the cheques is dishonored and deposited again for clearing, the clearing stamp

is used again with new date of presenting. A cheque cannot be presented without clearing

stamp.


53/108

53

Endorsement

It shows that cheque is meant for outward clearing Payees account only is to

be credited.

Credit Department

Advances department plays a vital role in the functions of a bank. In BAL its sharing

ration in profit is high. The main source of Advances department is mark up. Their

Advances department is working under the trustworthy, enthusiastic and committed a

staff. The efforts of the staff are providing good services to their customers and getting a

good amount for contributing the overall profit of BAL. The BAL provides loans to

customers. These loans are sanctioned by the head office. There are different types of

loans that are provided to customers. The types are as under.

Current Finance

The bank provides Current Finance for short period less than one year. The customers

Pay markup in current finance on monthly basis. On the expire date of limit he will just

pay principal amount.

Term Finance

Customer utilized the sanction limit or not the markup will be charged on whole amount.

Customer can withdraw whole amount at once.

Different document required for facilities

1) Current Finance

1. Demand promissory note

2. Letter of arrangement

3. Letter of continuity

4. Markup agreement

5. Latter of authority of debit markup


54/108

54

2) Term finance

1. Demand promissory note

2. Letter of disbursement

3. Letter of arrangement

4. Markup agreement

5. Letter of authority of debit markup

6. letter of installment

Loans to staff members House loan

The house loan is provided to its staff members up to a

certain limit. And up to this limit there is no interest.

Car loan

This is expensive loan and interest is charged on this type

of loan.

Motorcycle loan

Mainly this type of loan is provided to clerical staff. But the

officers can also apply for this loan.

Accounts

Most important department of the bank is concerned with

Revenues

Expenses

Assets

Liabilities

These are the pillars of business.

The accounts department is supervised by Mr. HamidSiddique and assisted by

Mr.Majid Malikand Mr. Hafiz Naveed. In this department, all the vouchers are posted

during one day are sent to Accounts department next day. These vouchers are already


55/108

55

posted to computer by the concerned department. The accounts department has to tell that

all the vouchers are posted under the right head. Amount, date, stamps, signatures all 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, stationary charges, medical allowances, etc

are all paid by this department

Major Activates

Accounts department is totally a backend department and is not linked to customers at all.

All the days transactions inside, outside the branch and for other banks are handled with

this department. This is one of the most sensitive departments because the customers

account are credited and debited solely by this department so there is a very strict check

and balance system for this department and each transaction is monitored and rechecked

at least twice and supervised even by Manager Operations if amounts are high. Major

activities in accounts department are

Maintaining accounts of customers

Monitoring & posting daily activities and transactions

The major activates are to update customers account continuously and on daily basis.

Because more of less each and every account is been credited or debited by some amount

so the purpose of this department is to make sure that the right persons account is

credited and debited.

Maintaining Account Of Customers

Once the account is created by the Account Opening Department it is not duty of

accounts department to continuously monitor each and every account on daily basis.

They monitor which account is performing well and which is not? Which account and

which customer needs special care and special services? There are special accounts

associated with credits and loans they are monitored specially.


56/108

56

Monitoring & Posting Daily Activities & Transactions

Monitoring daily activities include each and every transaction from all customers

accounts including, ATM transaction, International remittance, local remittance, inward

and outward transactions etc. The responsibilities in the accounts department are to debit

and credit each and every transaction, monitor it, supervise it and special transactions

which require supervision by higher authorities should be supervised.

Functions

Reports

It generates reports like Statement of Account Activity (a report on the activity of all

accounts at Bank Al-falah Liberty Market), Statement of Affairs (a report on the assets

and liabilities of Bank Al-falah Liberty Market), Statement of Foreign Exchange (a report

on the foreign exchange currencies at the bank) and Statement of Profit & Loss (a report

on the income and expenditures of Bank Al-falah Liberty Market).

These reports can be generated at daily, weekly, monthly, quarterly or yearly basis as

required by the bank.

Income And Expense

The department also needs to calculate the revenues and expenses, control expenditure

and forecast profits every month.

Budget

Formulation of yearly budgets & targets in consultation with the branch manager is also

done by the accounts department.

Storage Of Records

Accounts Department also has the duty to store vouchers and system generated reports.

Payments

The accounts department is responsible to pay vendors on behalf of the bank with

authorization from the branch manager. It also has to amortize large payments and

calculate depreciation of branch assets.


57/108

57

Activity Checking

In the accounts department, I had to do daily activity checking and there are four stages

in which activity checking takes place:

1. Collecting vouchers, cheques etc from all departments

2. Sorting Vouchers

3. Checking Activity

4. Packing

Collecting Voucher

The first stage of activity checking is collecting all vouchers, cheques, DDs, pay order,

pay slips etc from all departments of the bank. Mainly vouchers come from the

operations department. After collecting these vouchers etc from the departments, we need

to check if all stamps are stamped on these vouchers etc.

Sorting Voucher

After all vouchers are collected, they need to be sorted into eight categories:

1. Customer Debit: Includes debit vouchers and cheques

2. Customer Credit: Includes credit vouchers and credit slips

3. Income: Income vouchers

4. Expenditure: Expenses vouchers and payment vouchers

5. Others: Includes vouchers about excise duty, FED, teller, ATM, payables etc

6. Online: Contain online vouchers and online credit slips etc

7. Head Office (H.O): Includes HO vouchers and IBCA, DD advices

8. Bills Payable General (BPG): Includes vouchers and DD, Pay orders, Pay slips

etc

Checking Activity

After sorting takes place, daily activity is checked using the statement of account activity,

which contains all daily activity of the accounts in the bank. Activity checking is done by


58/108

58

seeing if the values and account numbers in the sorted vouchers match that of the activity

and whether or not there is any missing activity that is not in the vouchers.

Packing

After the activity is checked, all sorted vouchers are counted, both debit and credit and

then packed by totalling the vouchers.


59/108

59

5. Description Of The Finance/Accounts Structure

5.1Description Of The Finance/Account Structure

Structure And Functions Of The Accounts/Finance

Department

CFO

Finance Department

Finance Manager

Operations &

Business

Senior Business

Analyst

Business Analysts

Accounts

Department

AccountsManager

PayrollManager

Senior

Accounts

Payable

Accounts Asst

Payable

Senior

Accounts

Receivable

Accounts Asst

Receivable

Asst Finance

Officer


60/108

60

The department of finance and accounting is a large department and the head of this

department is chief executive Finance and second major controlling authority is the

assistant executive finance and all the reporting comes to the executive finance in the

end. In this major department there are two major operation authorities, one is the head of

finance department and the second is the head of accounts department and both the heads

have separate duties and responsibilities and they report to the executive finance in the

end.

Head of finance department works with the sub-ordinates like manager business

operations and finance manager business and senior business analyst etc. and they

perform their duties like budgeting controlling and analyzing the different activities of

finance department. And the other officer is the accounts manager, who performs

managing the accounts operations and reports upon them to the executive finance.

5.2Finance and Account Operations

Accounts Department

Accounts Department plays a vital role in the development of banking functions. Its

considering a backbone of the bank. The accounts department in BAL is functioning

computerized as well as manual. It handles each and every transaction is being made into

the bank, and control expenses and allocation of funds through appropriation of accounts.

The work in accounts department is depending on vouchers and contra entries are passed

through different heads.

This officer is working under the director finance, or in other words director finance isthe higher authority for this department and its functions are as under.

The functions cover the working in accounts department is as follows.


61/108

61

Budgeting

Controlling

Analyzing

Directing

Coordinating business activities

Reporting to director finance

Admin activities

Finance Department

It is the person, which is also bond to the executive, finance and accounts because

executive finance is the higher authority to this person but the functions of this

department are not same in the nature to the above first department.

The primary responsibility of finance department is making planning, analyzing, and

valuation of financial resources and to provide consistent, reliable, and timely

information to management, stakeholders, regulators, and internal business groups to help

management in appropriate decisions making for improved performance of the bank.

The main functions of the finance department are as follows.

Analysis of accounts

To maintain inventory records

Finance activities

Audit preparation

To keep record of loans, accounts, cash, and all banking transactions according to

accounting principles

Funds management

Preparation of cash flow, income statement, and balance sheet

The use of effective budgetary techniques for budgets

Preparation of reports/ cash forecast


62/108

62

BAL is a most growing organization and performing a role as a treasury on behalf of

SBP, the whole functions of the bank is totally depend upon the finance department. It

has a core value in the promotion of banking sector. Budgets and forecasting is further

assist for future planning. Different books of accounts are prepared into the bank through

computerized system and manual. The accountants prepare daily, weekly, monthly,

quarterly, and yearly reports.

Preparation Of Repots

The basic purpose of accounts and finance department is to prepare financial reports for

decision-making and future planning. Different reports are prepared in BAL due to

getting information and time period requirements. Reports are prepared by using general

ledger. The following reports in accounts and finance department are prepared.

Daily reports: It summarizes the daily position of all the main heads of the bank i.e.

cash, loans, deposits, accounts and ATMs. Other daily reports are

Balance Sheet

Reconciliation reports

Trial balance

Financial statement Daily expense vouchers

Monthly Statement: These reports are monthly basis in order to know the position of the

bank and pay rewards on monthly basis, etc.

Balance sheet

Profit and loss statement

Monthly analysis of expenses

Actual budget analysis

Cost of funds statement

Variance analysis

Trial balance

Quarterly Statement: It includes tax statement, reconciliations, others reports and

interest statements etc.


63/108

63

5.3 Role Of Financial Managers

Cash Management

Cash includes physical cash comprising of currency notes and coins held in the office, at

the factory, branch or company. There are three major reasons for holding cash:

Transactional motive

Precautionary (Emergency) motives

Speculative (Investment) motive

As a financial manager, it is the responsibility of a manager to hold cash up to the point

where current ratio should never be decrease in by one. The focus of manager to holds

the optimum, amount of cash in hand at the right time. Cash management shows that how

an organization needs, how much it as, and where to be collected. The objectives of

financial manager to invest excessive amount for a return while retaining sufficient

liquidity to satisfy future needs and plan where money to be collected or borrowed.

The amount of cash to be held depends upon the following factors.

1. The Manager develops a complete cash management policy.

2. Idle cash should be minimized.

3. The bank should be able to payment obligations on due dates so as not to lose any

goodwill.

4. The bank completely maintains a current liquidity position.

5. Forecast short and long-term cash flow.

6. The maintenance of cash flow due to deterioration in economy.

7. The Manager follows a speed up cash receipts methods.

Concentration Banking

Offer cash Discount to the customers

Selling of Account Receivables

Prompt follow up debtors/Reminder


64/108

64

2nd Reminder

Contact to court or recovery department

Credit Management

It is management of account receivables or the people to whom a company sells goods

or services. Advances and Deposits are the major sources of the bank. The volume of

banking sector is depending upon these factors. Financial experts are desired to extend

credit due to the limitations of the customers and capability to pay back. In BAL, Block-

2, branch advance salary and subordinated loans are basic and big credits issued to

customers. BALextend credit in order to.

To attract new customers

By encouraging existing customers to get more deposits and credit

By producing loyalty among customers, leading to client retention

1. The role of Manager to draw up a complete credit policy to ensure

2. The manager analyzes Credit Information Bureau Report (CIBR) before issuance of

credit to any customers. The basic needs to be discussed and study by the Manager are to

see.

Overall parameters for credit volume

Vetting process of new clients

Classifying clients

Procedure for processing orders from clients

Credit records

Follow up procedure

Incentives for prompt settlement

Recovery process

Provision for Bad and Doubtful debts

Periodic review of credit situation


65/108

65

5.4 Use Of Information Technology In Decision Making

Today banking is becoming more and more complex with the introduction of new

products, services and enhancing regulatory compliance requirements. It is the use of

information technology that can improve the customers services and reduce the cost at

the same time. BAL adopted IBM Software for service providing motives, the IBM

Software categories into two sections.

BBO (Branch Banking Office)

EBS (Electronic Banking System)

EBS is used for any kind of transaction within the bank .i.e. Receipts and payments, Bills

Collection, Tax receipts, etc. BBO is use for remittances. The use of IBM Software is one

of the main purposes of collection electronic data for the bank that further helpful in

future in decision making. Now a day, the bank plans for transformation of the entire I.T.

architecture by implementing a core Banking Solutions.

The bank prepares financial statements, agricultural reports, customers management, risk

management and other reports for decision-making purposes. The I.T. system of the bank

not only increases distribution capabilities but also simplify internal procedures thereby

reducing the cost and lead-time for services. BAL has started a number of projects in

relation to I.T. infrastructure up gradation. The bank is expanding its ATM (Automatic

Teller Machine) network and connectivity to reach to the customers in every corner. In

future, BAL is looking I.T. products for salary and pension disbursements and E-banking

for better services.


66/108

66

5.5 Source Of Funds

Bank Sources And Uses Of Funds

Major Sources Of Funds

1. Deposit Accounts

Transaction Deposits

Savings Deposits

Time Deposits

Money Market Deposits

2.

Borrowed Funds Fed Funds

Federal Reserve Borrowing

Repos

Eurodollar Borrowing

3. Long-Term Capital

Bonds


67/108

67

Bank Capital

Major Uses Of Funds

1. Cash

2. Loans -Main Use

Working Capital Loans

Term Loans

Line Of Credit

Revolving Credit Loan

Consumer Loans

Highly Leveraged Transact.

Real Estate Loans

Direct Lease Loans

Loan Participations


68/108

68

3. Securities Investments

Treasuries

Agencies

Tax Exempts

Corporate Bonds

4. Fed Funds Sold

5. Repos

6. Eurodollar Loans

7. Fixed Assets

Off Balance-Sheet Activities

Generate Fee Income Without Investing Funds

1. Loan Commitments

2. Standby Letters Of Credit


69/108

69

3. Forward Contracts

4. Swaps

5.6 Generation Of Funds

BAL offers different products and services to generate funds. Deposits are the main heads

of generation of funds. The banks receive from public and invest it for the sake of return.

Banks receive fees, commission on services offering; get interest of investments, and

dividend etc.

Descriptions/Years 2005 2006 2007 2008 2009

Interest income 12,716 14,387 23,312 30,153 33,629

Total income 17,345 20,944 30,512 39,945 42,451

Net profit 4,198 6,242 12,709 17,023 19,033


70/108

70

5.7 Allocation Of Funds

The most important functions of banks are to allocate funds and make a portfolio of funds

to profitability. BAL allocate resources from different ways i.e. reserves, and fixed asset

sales.

Reserves

It is the amount set aside to meet statutory requirements of SBP and maintain liquidity

position. The reserves of BAL are Rs.8, 133/- in million in financial year 2003 and then

constant increase with 26.8% in 2004, 17.86% in 2005, 2.54% in 2006 and 12.01% in

year 2007. It also determines the position of the bank during a period of time.

Fixed Assets

Fixed assets are immoveable assets of the organization. Financial year ended December

31, 2007 shows property and equipment of BAL are Rs.29, 792/= in million before

depreciation and after depreciation amount is Rs.25, 454/= in million, it is also a

comparative figure to show a bright future of the bank.


71/108

71

5.8 Mobilization Of Fund

Rupees in

Millions

Year 2005 2006 2007 2008 2009

Lendings to Financial

Institutions 10,511,322 16,282,942 23,012,732 21,464,600 17,128,032

Investments 149,350,096 156,985,686 139,946,995 210,787,868 170,822,491

Advances 220,794,075 268,838,779 316,110,406 340,677,100 412,986,865

Operating Fixed Assets 9,202,969 9,454,365 9,681,974 25,922,979 24,217,655

Other Assets 19,141,569 23,941,056 37,113,698 30,994,965 44,550,347

Horizontal Analysis (%)

Lendings to Financial

Institutions 100 155 219 204 163

Investments 100 105 94 141 114

Advances 100 122 143 154 187

Operating Fixed Assets 100 103 105 282 263

Other Assets 100 125 194 162 233


72/108

72

6. Criticational Analysis Of The Organiz

During Internship it was my prime objective to furnish my knowledge (Theory) to

various practical situations. The practical work presents an analytical problem while

relating theory with practice. As a result, analysis of practical versus theory requires a

distinct approach. This part of report is the essence of the internship, as this will help to

better understand the working environment of the bank by finding the relationship

between what is written in the books and what is actually going on in fields. The theory

written in the books in cases is not implemented as it is. In some cases theory

isimplemented with a little modification but in other cases theory has nothing to do with

practice.

In accounting, banks dont prepare worksheet, but part of worksheet is prepared like trial

balance. The securities for the loans are handled in the same way as theory says like

mortgage, pledge, hypothecation, advances against insurance policies or liquidation

procedure is the same. There is some difference lies in types of loans in bank that is

theory talks about four or five types of loans that is cash finance, overdraft, loans etc., but

in practice there are some more types used by bank like running finance, demand finance

etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit

are in accordance with theory almost. A bank's balance sheet is different from that of a

typical company. You won't find inventory, accounts receivable, or accounts payable.

Instead, under assets, you'll see mostly loans and investments, and on the liabilities side,

you'll see deposits and borrowings.


73/108

73

7. Financial Analysis of the Organization

1. Total Assets Turnover:

This ratio measures that how much turnover is generated by the total assets of