Internship

Report:

BANK
ALFALAH LIMITED
Submitted By:

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 Nahayan
Mabarak 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
2

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
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, Alfalah Hilal cards, Bank Alfalah Car finance and Leasing, Alfalah Milkiat
finance, Alfalah Karobar finance, Bank Alfalah Home finance, Alfalah Zarie sahulat,
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, Alfalah
kifayat 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.

Internship is the basic requirement of all business programs in nearly all of the
business institutes and especially in Hailey College of Commerce, University of the
Punjab, Lahore. It is actually the basic requirement of the course of B-Com (Honors).
Firstly the purpose of internship period is to become familiar with the practical world that
what is actually happening in different national and multinational companies and how
different activities are performed over there. Secondly, to cope the theoretical knowledge
with the practical side that what is to be taught us in business institutes and how it is
implemented in different enterprises?

I have done my internship in Bank Alfalah Limited (Garden Town Branch,

Lahore) since 16th of July 2009 to 15th of September, 2009. I gained a lot from this
internship tenor under the kind supervision and guidance of my internship supervisor.
During my whole time I was visited through different cells of the bank and was
thoroughly briefed about the procedure and working by cordial senior staff of there. My
report is all based on what I have learnt there. I hope that my report will given you good
overlook of all the banking related matters.

All praises, thanks and acknowledgements are for CREATOR; the ALMIGHTY
ALLAH Who has bestowed upon human being the crown of creation and has endowed
him with knowledge and wisdom. I offer thanks to the Holy PROPHET (PBUH) WHO
is the beacon of enlightment and the greatest benefactor the mankind ever had. Who
brought for us revelation and unlimited knowledge and civilized the barbarian human
being.
I would like to present a token of thanks for the staff members of Bank Alfalah
Limited Garden Town Branch, Lahore, who were cooperative to me in the completion of
this report and provide me their complete guidance. As banks are very much sensitive
about their secrecy, even then after taking an understanding, they let me handle their
delicate operations.
My special thanks to Mr. Gohar Irfan (branch manager), Mr. Raheel Yaqoob
(operations manager), Miss. Sara Dawood (HR manager), Mr. Ateeq-ur-Rehman Sidu
(credit manager), Mr. Saad Mahmood (Accounts officer), Mr. Ahmed Moin (officer
consumer finance), Mr. Naveed Khalid (Account opening officer), Mr. Irfan Siddique
(incharge of Remmittance department)

Mr. Muhammad Hamid Bashir, Mr. Numan

Akram and Mr. Majid Sharif who gave me a horde of useful information and treated me
extraordinarily at each step of my learning over there.

Maidah Masood

I would like to dedicate this accomplishment

offline to my beloved
and caring parents,
and to my teachers with the support of whom I
am standing at this step of my life stairs.

Table of Contents
Introduction to Bank Alfalah Ltd....9
History & Present Status of BAL....11
Mission Statement....16
Vision Statement...17
Company Management Systems.20
Organizations Structure.....23
Fields and Activities.....25
Administrative/Management Styles...36
Work Done by Me....41
Financial Highlights...101
Ratio Analysis.....103
Marketing Mix of BAL..148
Recommendations..181
Conclusions.183

INTRODUCTION TO BANK ALFALAH

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.

commercial banking and related

The

bank

services

is

engaged

as defined in

the

in Islamic
Banking

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
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 is not 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

10

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 financial
services specifically designed to cater to the needs of its successful associations with the
Government and Private Sector.

HISTORY AND PRESENT STATUS OF BANK

ALFALAH
Bank of Credit & Commerce International (BCCI) was a Pakistan based bank,
established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe.
BCCI has its branches in 74 different countries of the world. It had its 3 branches in
Pakistan. In 1991, the BCCI was banned, when was accused by European countries that
the bank was involved in some illegal operations with Gulf countries. The major reason
behind European accusation was that BCCI was of Islamic mode. Therefore, the bank
was closed due to international pressure. Then, its 3 Pakistani branches were taken over
by the Government of Pakistan, which were named as Habib Credit and Exchange Bank
(HCEB) and these were working as subsidiary of Habib Bank Limited.
Following the privatization in July 1997, Habib credit and Exchange Bank
assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi
based bank as the family of H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan purchased
70% of its shares and 30% shares remained with Habib Bank on behalf of Government of
Pakistan. Since its inception, as the new identity of H.C.E.B after the privatization in
1997, the management of the bank has implemented strategies and policies to carve a
distinct position for the bank in the market place.

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Since 1997, the bank has made great strides towards growth and profitability.
BAL network has expanded from 3 in 1997 to 195 as on March 2009. The deposit base
moved from less than Rs.9 billion to over Rs. 227 billion, advance from 5.8 billion to 109
billion. Being a bank that is focused on financing of foreign trade, volume of foreign
trade business has grown from Rs. 5.8 billion to over Rs. 190 billion as on December
2008.
Charged with the strength of Abu Dhabi consortium, and under the leadership of
His Highness Sheikh Nahayan Mabarak Al-Nahayan, Minister of Higher Education and
Scientific Research, Government of Abu Dhabi, and a prominent member of Royal
Family, the bank is energized with the vision, envisaging the development of various
sectors in Pakistan.

Commercial Banking Scenario in

Pakistan
The function of commercial banking and application of the fundamental principle
of the depositor bank relationship have remind essentially the same since about 500 B.C.
bank operation methods and procedures, on the other hand , have undergone a constant
process of evaluation because of economic growth, the mounting volume of transaction
and greater use of banking feasibilities.
At the time of independence there were practically no industries and resources so
it was very difficult of Pakistan to run its own banking system immediately. There were
487 offices of scheduled banks in the territories now constituting Pakistan. Therefore in
accordance with the provision of India independence Act of 1947, and expert committee
was appointed to study the issue. The committee recommended that the Reserve bank of
India should continue to function in Pakistan until 30th September 1948.

12

It was also stipulated that Pakistan would take over the management of public
debt and exchange control Reserve bank of India on 1 st April 1948. Then Indian notes
would continue to be legal ender in Pakistan till 30th September1948. By 30th June 1948,
the number of offices of scheduled banks in Pakistan decline from 487 to 195. In order to
establish a full-fledged control bank the Governor General of Pakistan Quaid-E-Azam
Muhammad Ali Jinnah, inaugurated the state bank of Pakistan on July1st, 1948. At the
time of independence in 1947, there were 38 scheduled banks with 195 offices in
Pakistan but by December 31, 1973, there were 14 scheduled Pakistani commercial
banks with 3,233 offices all over Pakistan & 74 offices in foreign countries.

Nationalization of Banks was not done 1st January 1974 under the Nationalization
act 1974, due to certain objectives. But it had negative effects on efficiency of the
banking sector afterwards a privatization Commission was set up on January 22, 1991,
the commission transferred many banks to the private sector i.e., MCB & ABL. The
government approved & permitted the establishment of 10 new private banks in 1991;
hence many new private banks have incorporated, since then, BANK ALFALAH in one
of the namely established private scheduled banks in Pakistan.
The fact show that the commercial banking has made tremendous progress and
achieve a phenomenal growth since independent and that commercial bank have duly
played a vital role as mobilize of people saving to constitute the most important source of
financing in country economy.
As the result of these contributing factors methods and practices necessary to
handle the increase volume of detail work have been developed while an other and
quicker method have been adopted in order to cope with the increase volume , much in
which has been accomplished without unduly increasing cost of doing business.
During to last 20 years we have experience a constant transaction from the old to
the new from manual to mechanical method and procedure, from old establish practices

13

to current techniques and to a more scientific approach to the solution of the problems
brought about day to day changes in business practices.
Commercial banks operating in the country can be divided into four distinct
categories, private banks, foreign banks, privatized banks and nationalized commercial
banks (NCBs). The number of private banks has remained almost constant ever since
they commenced operations in early nineties. However, ownership of a number of private
banks has changed over the years. Lately, with the take over of Prudential Bank and
Platinum Bank by the new sponsors their names were changed to Saudi Pak Commercial
Bank and KASB Bank respectively. Earlier, ownership of Union Bank and Schon
Commercial Bank changed. While the new sponsors of Union Bank preferred to continue
with the same name, the buyers of Schon Commercial Bank changed its name to PICIC
Commercial Bank.
Union Bank acquired the operation of Emirates Bank International (EBI) in
Pakistan. The scheme of amalgamation was notified by the central bank on September 03,
2002 and Union Bank settled the amalgamation price of US$ 37 million on September
09, 2002. Union Bank had acquired Pakistan operations of Bank of America in year 2000
and American Express credit card business in Pakistan in year 2001.
In the NCBs category two banks Habib Bank and National Bank of Pakistan
have been left after the privatization of United Bank. National Bank of Pakistan has
been listed at local stock exchanges and parts of its shares were off loaded. The GOP is
actively pursuing the privatization of Habib Bank, through sale of its 26% shares along
with transfer of management. The remaining shares of the GOP in Muslim Commercial
Bank and Bank Alfalah were also sold. The GOP sold majority shares of Allied Bank of
Pakistan in early nineties but has not been able to off load its remaining shares in
the bank.
United Bank's privatization demands specific mention for two reasons:
1)

It was the largest transaction, and

2)

A large part of sale proceeds was received in foreign exchange.

14

The consortium comprising of Abu Dhabi Group and Bestway Group has
acquired 51% shares of the bank along with management control. Since October 2002 the
bank has been working under the new sponsors.
Meezan Bank was created as a result of merger of Al-Meezan Investment Bank
and Societe Generale. The first ever license to operate as a Scheduled Islamic
Commercial Bank was granted to Meezan Bank on January 31, 2002. Pakistan operations
of Societe Generale were amalgamated into Meezan Bank on May 01, 2002.
The number of foreign banks operating in Pakistan has been declining constantly
since the GOP decided to freeze foreign currency accounts in May 1998. The total
number of foreign banks in the country has reduced to half since the freezing of foreign
currency accounts. The positive point is that most of the foreign banks were able to sell
their Pakistan operations at attractive prices.

15

To develop
products,

& deliver

manage

the most

customer

innovative

experience,

deliver

quality services that contributes to brand strength,

establishes a competitive advantage and enhances
profitability, thus providing value to the stakeholders
of the bank

16

To be the premier organizations operating locally

and internationally that provides the complete range
of financial Services to all segments under one roof.

17

OBJECTIVES OF BANK ALFALAH

The objectives of Bank Alfalah are as follows:

To please their customers by fulfilling the financial needs as best as possible, they
believe in placing the client at the center of business and all of the products and
services. For this the management has adopted the strategy of

Caring for you Our Customers

To get maximum share of the market

To price the products optimally

To expand more the network of branches in several other cities of Pakistan as well
as in the other countries of the world.

To reinforce a corporate culture that fosters learning, creativity and flexibility.

18

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

Home Loans and other areas of product development to provide higher levels of
services and value to the clients.

Message From,
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan
Chairman & Board of Director
Dear Colleagues
Bank Alfalah was launched on 25th February 1997 and with that we launched for
ourselves, the challenge to transform this bank into a highly professional, and most
efficient and service oriented institution. The-state-of the-art technology we plan to put in
place will be complemented and supported by the personal touch which we are
committed to add all spheres of our customer related services. Therefore necessity of
improving the quality of our human resource will remain on top of our priorities for all
times to come. We hope, you all will make the best use of this web site, which will
provide a medium for you to express your views on, different banking related subjects.
My greetings and best wishes to you all.
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan

19

COMPANY MANAGEMENT SYSTEM

Management means the administration and the governing body that is concerning the
whole organization. All the decision and strategies are been proposed and evaluated the
management of the organization. At Bank Alfalah, the management is pretty strong and
there is lot centralization in the whole network of the bank. The management at Bank
Alfalah has been divided into 3 major parts. i-e, Board of Directors, the Top management,
and the group of middle managers, supervisors and the employees.

The Board of Directors:

The upper most part of the management is the Board of Directors or the Executives. The
Board of Directors are responsible for the first phase of the management process, i-e,
planning. So, all the decisions and the strategies are being proposed and implemented
under the instructions and the supervision of the board of directors or the executives. Also
the policies and the overall objectives of the Bank are being proposed at this level of the
organization.

The Top Management:

20

The top management involves the branch managers and the chief managers of the bank
including the operations managers as well. The major responsibilities include the strategy
formulating for the bank and supervising the whole staff at the branch. They define and
interpret the objectives and vision and then formulate policies for their completion.

The middle management, supervisors and the employees:

Departmental heads constitute this level of management at Bank Alfalah. They are
directly responsible for planning and controlling the activities of officers. Finally, the
employees whose activities are monitored and controlled according to the desired
objectives.

THE OVERALL MANAGEMENT

BOARD OF DIRECTORS
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan

- Chairman

Mr. Mohammad Saleem Akhtar

- Chief Executive Officer

Mr. Abdullah Khalil Al-Mutawa

- Director

Mr. Omar Z. Al-Askari

- Director

Mr. Abdullah Naseer Hawaileel Al-Mansoori

- Director

Mr. Nadeem Iqbal Sheikh

- Director

Mr. Ikram Ul-Majeed Sehgal

- Director

THE CORE GROUP

21

Board Advisory Committee

Mr. Abdullah Khalil Al Mutawa
Mr. Khalid Mana Saeed Al Otaiba
Mr. Ganpat Singhvi
Mr. Bashir A. Tahir

Central Management Committee

Mr. Mohammad Saleem Akhtar

(Chairman)

Mr. Pervaiz A. Shahid

Mr. Sirrajuddin Aziz
Mr. Mohammad Yousaf
Mr. Ijaz Farooq
Mr. Bakhtiar Khawaja
Mr. Arfa Waheed Maklik
Mr. Adil Rasheed
Mr. Shakeel Sadiq
Mr. Adnan Anwar Khan
Mr. Shahid M. Murtaza
Mr. Nadeemul Haq

Corporate Information
Mr. Hamid Ashraf

- Company Secretary

Mr. Zahid Ali H. Jamal

- Chief Financial Officer

Taseer Hadi Khalid & Co. (Chartered Accountants)

- Auditors

22

B A Building,

- Head Office

I. I. Chundrigar Road,
P. O. Box 6773, Karachi.
www.bankalfalah.com

Chief Executive
Officer

Executive
In charge

Credit
Card

Credit

Audit

Internation
al Banking

Finance

Marketing

23

Branch Setup

Assistant

Credit
Marketing

Operations
Mng.Ops

Credit
Admin

Consumer
Finance

Agri
Finance

Help Desk

CD

Accounts

Accounts

CROS

Consumer
Banking

IT

Bkg/Ops/

24

Cash
Cust serv

Clearing/
Collection

Peons

Guards

Driver

Others

FIELDS AND ACTIVITIES

A support functions Group, mainly responsible for development of systems and
procedures, process-re-engineering, automaton and credit management. The Group is
organized in three divisions i.e. Systems and Operations Division, Human Resource
Division and the Credit Division.

CREDIT DIVISION
Providing extensive support to branches for credit administration, control and
monitoring, the Division has played a pivotal role in helping the Bank achieve a
remarkable loan growth of with well-diversified risk exposure. Most of the loans are
for short-term trade financing on a secure and self-liquidating basis. The Division has
a special Assets Management team, which is responsible for ensuring low ratio of bad
debts, effective monitoring of delinquent advances and close follow-up for recoveries.
Banks Head Office Credit Committee (H.O.C.C) reviews the credit quality and
pricing on regular basis not only to ensure healthy credit growth but also the
management of Banks risk assets in a most prudent and profitable manner.

SYSTEMS and OPERATIONS DIVISION

This Division has been instrumental in developments of procedures and manuals for
various operating requirements of the Bank. After careful mapping of existing process
25

flow, the Division recommends automation and re-engineering requirements to

improve transaction efficiencies. The Division is active in providing equipment
procurement support and development of new branches. This Division, as a direct
function also manages the protection of fixed assets of Bank.

Technological innovation:
Modern science is not an option, it is an obligation
Technology is rapidly changing the way we think, act and do business. Is has played
pivotal role in enhancing customer expectation, particularly with respect to speed and
quality of service.
Alfalah bank enjoys a strategic competitive advantage overall domestic players by
virtue of its leadership in technological innovation. Phone banking service and
Internet banking facility allows customer to enjoy routine banking services from
anywhere in the world. 365 days a year, 24 hours a day.

CREDIT CARD DIVISION

The Banks product portfolio is designed to remain flexible and adapt itself to
changing customer needs. Bank endeavor in this regard is to actively explore newer
avenues of offering higher value to our clients, whom bank feel deserve nothing less.
The Bank Alfalah Credit Card success story has made the institution proud. In
acquiring business, we have signed over 15,959 merchants by 31 st December 2008
posting a growth of 16.2% in the corresponding period over last year. Bank Alfalah
has launched various unique credit card schemes to cater to numerous segments.

HUMAN RESOURCE DIVISION

Strategically, perhaps the most important Division at the Head Office is responsible
for human resource management, including recruitment, staff training and evaluation.
This division is also handles matters relating top administration.
This Division operates on a future oriented strategy focusing on employees personal
and professional growth.
Staff development activities are reared to enhance their capabilities for applying the
knowledge and fats towards development of practical solutions. Under our Human
Resource management policy, Alfalah develops and grooms the management

26

personnel for position of greater responsibility analytical, interpersonal, and

conceptual and specialization skills to enable them to understand the cause-and-effect
relationships and to think logically.
The hiring philosophy is based upon meritocracy and selecting the right person for
the right job. Alfalah laid great emphasis on the employee honesty and integrity
besides technical competence and, candidates are selected through well defined &
systematic selection procedure.

Dedicated Professionals:
Unusual efforts on the part of the employees who are apparently ordinary
workers is one of the key indicates of the superior enterprise
Staff is the most valuable asset of any organization. The human resource philosophy
at Alfalah bank focus on multi-talent hiring, professional grooming, requisite training
and meritocracy based reward system. Staff welfare has been a priority.
Employee productivity enhancement is organized through in-house and external
training programs. Bank continues to offer opportunity for people to develop their
knowledge, skills and personalities, thus ensuring greater self-fulfillment and
progression in the organization.
In short bank Alfalah team comprise of dedicated professionals equipped with a
diverse array of skills and vast experience. The management concentrates its energies
on making informed economic decisions, translating it into greater returns for our
investors and customer. The prudent attitude has created a synergistic organizational
structure leading to improvements in profitability and a sustainable competitive
advantage for the bank.

Training & Development:

Bank Alfalah is committed to the personal welfare and professional development of
all our team members. Proper training of human resource is essential, not only for the
more productive and satisfied work force but for also homogenous corporate culture.
The bank continuous to follow its strategy of hiring batches of young and energetic
Management Trainees who are sent to our Training and Development Center for
training in all areas of banking. Our Training and Development Center is a state of
the art facility with an impressive faculty.

27

Ethical values:
Professionalism without integrity is like a book without pages
Because the right may not always be obvious, we must be guided in our every action
by set of well-defined values, governing our decision. Alfalah bank understands that
its commitment to satisfy customer needs must be fulfilled within in a professional
and ethical framework.

FINANCE DIVISION
Finance Division is responsible for bookkeeping and accounts. This Division is the
head office and manages all financial returns and the MIS through its Management
Reporting Wing. The Division is actively involved in preparing market comparative
analysis, consolidation of Banks budgets, monitoring and constant review of various
financial indicators.
Financial Division works as the backbone for Banks operations. The Division, which
reports directly to the President And Chief Executive of the Banks, has been
instrumental in preparation of Banks business plans and future stratigies.the
budgetary performances are constantly reviewed and trough a sophisticated Monthly
Performance Report (MPR) which is a computer based program, the Division
provides feedback to the senior management on strategic issues like reasons for
budgetary variances and methods to arrest negative performance factors.
Preparing the Banks Annual Accounts and coordinating external audits is a direct
function of the Finance Division. Through the dedicated efforts of staff at this
division, the Bank has been winning various awards for the Best Presentation of its
Annual Accounts and also the management has been able to monitor and review the
Banks performance in procreative manner.

AUDIT DIVISION
The Audit Division reports directly to the Board through the Executive Committeewhich are also the Audit Committee.
The Audit Division acts completely independent of the management and is
responsible for checking and reporting on the Managements compliance with the
Boards policies and directives, as also the Prudential Regulations and other directives
of the SBP. However, their role is not intended to be just that of fault- finding; but
also guiding and assisting branches in improving their operations.
28

POLICY FORMULATION AND PROCESS MEETINGS

At Bank Alfalah, policies as mentioned earlier, are been formulated at the
Executive level of the organization. Policies for any organization constitute a major part
in the overall long term functioning of the bank. In short we can say that policies and the
objectives are the lifeblood of the organization in long run. Though policy formulation is
in the prescribed hands yet the policies formulated by the top level have been very
successful as indicated by the success pattern of the bank so far.
Then these policies are transformed into the hands of the top-level management.
The top management is been suggested to make the policies implemented keeping in
view the long-term objectives of the organization. Also the views from the middle
managers and employees are encouraged as well for the purpose of removing flaws form
the system. For these very purpose meetings arte held almost weekly at the branches level
and also in case of any contingent dispute resolving the meeting scan be called at any
time during the branch timings.

POLICIES OVERVIEW AT BANK

Since the inception of Bank Alfalah Limited in 1997, by the grace of almighty, the bank
has moved rapidly in expanding its branch network and deposit base, along with making
profitable advances and increasing its range of products and services. It has made a
break-through in providing premier services at an affordable cost to our customers.
Managerial policies followed by the bank have a direct contribution in its success.
The Board and Management of the Bank have implemented strategies and policies to
carve a distinct position for the Bank in the market place. In a bid to satisfy Bank
Alfalahs shareholders and valued clients, the management initiated the process of
realization of the Bank's vision by consolidating its financial position and creating a large
and diversified business base. Bank Alfalah has made notable progress in business

29

volume, efficiency, and profitability following its increased involvement in trade finance,
commercial lending, and foreign exchange and money market operation.
Major policies hat have been made and implemented at Bank Alfalah are: Consumer Banking Policy

Alfalahs policy regarding consumer-banking policies includes the development

through the electronic consumer banking operations. Likewise, Bank Alfalah has created
a niche for itself in the marketplace. It is planning to introduce new consumer products
like credit cards, e-banking etc.

Lending Policy
Bank Alfalah pursues a conservative yet dynamic credit policy. This strategy has
enabled the bank to have a high quality risk portfolio. Bank prefers to finance exporters
because of less risk involved. Bank Alfalah manages the credit risk, liquidity risk, market
risk and other operational risks very efficiently. For this very purpose Bank Alfalah has
got an effective credit line proposals system to be sanctioned to the clients on demand.

Selection of Clients
Management is very selective of clients. All of the references are carefully
checked to learn about a potential client before establishing a relationship. References are
excellent sources of new accounts as they give an opportunity to learn about a potential
client before establishing a relationship. This policy helps in protecting the integrity of
the bank. It ensures good relationship with the clients.

Services and Product Polices

Bank Alfalah provides a vast variety of services to its clients. Some of those policies are
discussed below:
i.

Credit Facility
In this service the loans are provided to the customers by the bank to meet revenue
shortfalls.

30

ii.
Stop Payment Instructions
It is one of the most important services provided by the bank to its clients. In case the
account holder has lost his/her cheque he can issue the stop payment instructions to
the bank. The bank till further instructions will not honor the cheque.

iii.

Deposits

The bank offers different types of Deposits to its account holders.

a. Alfalah Musharakah Saving Account
b. Current Account
c. Musharakah Time Deposits On PLS Basis

iv.

Drafts, Telephonic Transfers, Pay Orders

These are the facilities that the bank offers its customers and, at times, to the people
who do not maintain an account with the bank, that is, ordinary people.

For offering these services the bank charges commission besides the government
taxes and duties.

Trade Department Policy

Bank Alfalahs focus is on Foreign Trade as its primary market of business. It
maintains high emphasis on enlarging its Correspondent Banking network besides aiming
to enhance the scope and level of cooperation with existing correspondents. The Trade
finance department has efficiently done management of the changing trade policies by the
central bank over there.

31

Marketing Policy
Bank Alfalah inverts heavily for the marketing policies and orientation, for the publicity
of its new products/services. It uses television advertisements, newspaper as well as
various promotional schemes to attract customers. The Bank sponsors a number of
sporting and community development initiatives to play its part as a responsible corporate
citizen

Promotion and Incentives

Bank hires officers in range 1. Then depending upon their job performance they are promoted to
next range. More facilities and increments are given along with promotion. The bank gives a car facility to
the officers of range 5. Banks policy is to give cash rewards and salary increments for increasing the
employees satisfaction. Also with the expansion of the branch network growth in the current era, more and
more opportunities have been provoked not only for the young generation but also for the employees of the
bank.

Accounting Policies
Bank Alfalah has adopted almost the same accounting procedures that other financial
institutions are adopting at this time. These accounting procedures or Accounting
policies are made according to Generally Accepted Accounting Principles, the GAAP.
The process flow and the usage of the policies in the day wise routine are mandatory
for all the employees working in the specified departments at the branch.

Recruitment Policy
Hiring is mainly of two types i.e. direct hiring and promotion from lower levels.
Banks policy is to hire suitable candidates. By suitable candidates bank refers to
candidates having proper educational qualification, experience and background. It is the
policy of the bank that President of the bank will be the representative of major

32

stakeholders/owners. Board of Directors is representative of sponsors. Bank is reluctant

in making direct appointment of senior executives. EVPs are promoted from lower levels.
Every year Bank Alfalah opens its doors for about 30 fresh post-graduates to join the
prestigious ranks of Management Trainee officers with the Bank. The MTO scheme is a
highly competitive and sought after induction scheme, in which short-listed applicants
appear in a written test followed by a panel interview. Successful candidates then receive
comprehensive training in essential areas of branch banking at the Banks state-of-the-art
training facility at Lahore and Karachi, prior to their posting at various branch locations.
Preferred educational background for entry into the MTO scheme includes an MBA
degree, MA Economics or M.Com from reputable Pakistani or foreign institutions with
GPA of 3 plus, or equivalent. Strong personal character, as well as communication and
interpersonal skills are essential pre-requisites to succeed as an MTO.

Training and Development Policy

Bank Alfalahs policy is to take special interest in recruitment and training. This
training is been given in two instances, i-e, the Off-job training and the On-job Training.
To impart technical skills to its staff Training and Development Center offers programs
in several skill areas. Its employees attend seminars and courses offered by Institute of
Bankers. Alfalah also offers various computer-training courses to its employees. It is
obligatory for each staff member of the bank to attend a minimum number of training
courses during the course of a year. Wherever the Training Department is unable to
provide focused training for certain groups of staff, reputable external training providers
are invited to fill the gap

Quality assurance services

Service excellence is one of the priorities of Bank Alfalah. A separate quality
assurance department is to be established as well very soon for the removal of little flaws
that are still prevailing at some of the branches regarding facilities for the consumers. The

33

focus of the bank is to develop new areas of activities along with traditional banking
activities of resource mobilization and credit disbursement.

Growth Policy
Bank Alfalah emphasizes on growth along with providing best quality customer
service. Banks policy is to maximize the synergies of branch network through optimal
allocation of financial, human and other resources to compete in the marketplace.

Liquidity Policy
Bank Alfalah maintains positive and healthy liquidity. Banks policy is to keep
surplus liquidity in fixed income securities issued by the Federal Government of
Pakistan. If necessary it can be easily converted into cash.

Investments Policies
Bank Alfalah investment policies are based on federal and provincial securities,
debentures, and participation term certificates treasury bills and blue chip share of joint
stock companies.

Job Satisfaction
Job satisfaction is the major important factor to be considered while evaluating any
organization. To evaluate an organizations strength and repute in the industry, job
satisfaction is the key factor as well like that of growth and development in the monetary
terms.
During my internship program, I observed being in touch with most of the employees
over there, that all the employees are working with devotion that is the basis for job
satisfaction. In addition all the employees are satisfied with the working ambiance, with
the salaries and with the increments and promotions. Only thing to be mentioned out over
34

here is the workload and the employee timings for their job. Some of the employees are
over burdened with the work. But that does not impact the overall job satisfaction of the
organization. Bank takes much care of its employees because they are precious assets of
it. Bank celebrates birthdays of all employees, arrange trips and give them opportunity
for recreation and enjoyment.
Bank hires officers in range 1. Then depending upon their job performance they
are promoted to next range. More facilities and increments are given along with
promotion. The bank gives a car facility to the officers of range 5. Banks policy is to
give cash rewards and salary increments for increasing the employees satisfaction. Also
with the expansion of the branch network growth in the current era, more and more
opportunities have been provoked not only for the young generation but also for the
employees of the bank. At Bank Alfalah the employees are very much satisfied with the
job and the overall working conditions of the bank, so in due response, the bank is
enjoying high efficiency in managing the time delays in reporting and working
operations.

35

ADMINISTRATIVE/MANAGEMENT STYLES
Management at Bank Alfalah Ltd. is very much keen towards maintaining the
decorum of the cooperative culture within the organization and also with the clients of the
bank. The way managers treat the employees and an operative is outstanding at bank
Alfalah. This is the reason why each and every employee is pretty much satisfied with the
job.

MANAGEMENT STYLES
Management must have to adopt some administrative style to get all the activities
to be done effectively and efficiently. As far as the management styles at Alfalah Bank are
concerned, there is both centralization and decentralization to some extent. Management
must adopt some administrative style to get all the activities done effectively and
efficiently. As far as the management style at Bank Alfalah Limited Township Branch is
concerned, there is centralization to a certain extent and decentralization in some other
areas.

36

Management refers to the universal process of effectively and efficiently getting

activities completed with and through other people. It is a process by which certain basic
functions, that are planning, organizing, leading and controlling, are performed to
achieve the desired objectives of the organization. These functions are being performed at
three levels in Bank Alfalah.

Managerial level
Administrative style of Branch Manager is authoritative. His authoritative style is
the requirement of administration. For the implementation of strategies and
getting all the activities to be done properly with an organized environment, unity
of command was the requirement of the time. In his absence, I observed the
environment of uncertainty and deregulation in the bank to a little extent.

Department Head level

Department heads are responsible for the overall operations of the department
assigned. There is a sign of good delegation of authority for decision-making in
Alfalah Bank at this level. Department managers always ask his subordinates
before referring the solution to a problem to the Branch Manager. So at this level
employees are very much contended to their work.

Staff level
At the staff level, as employees are satisfied to the work assigned and authority
structure, so management at this level is concerned to the decisions of the
department heads level.

37

IMPACT OF MANAGEMENT STYLE ON EMPLOYEES

Management styles have a great impact on the overall working of an organization.
The key issues, which can arise due to strong authoritative actions by the management,
can be of the following nature:
o Absenteeism
o Irresponsible behavior
o Coordination
o Reporting time delays
o Turnover
But at Bank Alfalah Ltd. these issues have never been provoked till now. This is due to
the fact that employees have been given equal importance as been given to high level
operatives. The following important aspects need consideration.

Motivation
The term motive implies action to satisfy a need. Motivation can be
defined as a willingness to expend energy to achieve a goal or a reward. The
management styles adopted by the bank affect greatly, and employees are
motivated in order to enhance their performance and achieve the derived goals.

Morale and Productivity

The employees of the bank possess high morale, and thus exhibit high
productivity. The employees are happy and are also productive workers. Job
attitudes and morale are quite positive for two reasons. Firstly employees gain

38

social satisfaction from interactions at the work place. Working conditions and
supervision are good; secondly high morale results from high motivation to
produce. In other words we can say that management should put its eggs in the
basket that creates a high-motivated work force.

Job efficiency and satisfaction

Consequently the overall impact of the well-equipped management styled
organization is the job efficiency and job satisfaction. At Bank Alfalah the
employees are very much satisfied with the job and the overall working
conditions of the bank, so in due response, the bank is enjoying high efficiency in
managing the time delays in reporting and working operations.

THE STRATEGICAL HIERARCHY

The Strategic management model provides a conceptual basis for applying strategic
management. Alternate strategies that an enterprise could pursue can be categorized into
4 actions:

Integration Strategies

Intensive Strategies

Diversification Strategies

Defensive Strategies

39

Integration Strategies:
Forward integration, backward integration, and horizontal integration are
sometimes collectively referred to as vertical integration strategies. Vertical integration
strategies allow a firm to gain control over distributors, suppliers, and/or competitors.

Intensive Strategies:
Market penetration, market development, and product development are sometimes
referred to as intensive strategies because they require intensive efforts to improve a
firms competitive position with existing products.

Diversification Strategies:
Concentric, horizontal and conglomerate are some of the strategies, which are
inculcated under the head of diversification strategies. Overall, diversification strategies
are becoming less and less popular as organizations are finding it more and more difficult
to manage diverse business activities.

Defensive Strategies:
Another way to pursue strategies is through the defensive way, which includes
joint venture, retrenchment, divestiture and liquidation strategies.

40

WORK DONE BY ME
I was been assigned by our department, Bank Alfalah Ltd, Garden Town Branch,
Lahore as my internship organization. There I worked for about eight weeks.
I worked in three departments. I started up with account opening (operations),
where I worked for about three weeks and learned about different types of accounts, and
how to open a new account, etc. I was working under the supervision of the Manager
Operations, Mr. Raheel Yaqoob at my internship in that department.
After working in Operations, I was moved to Credits, where I learned that how
finance is advanced to the clients and different types of facilities the bank is providing to
its customers. There I worked for about two weeks with Mr. Ateeq-ur-Rehman Sidu
officer of CAD Department Mr. Ahmed Moin Lodhi officer of car Finance Department
and under supervision and training of the employees working as the finance officers as
well.

41

Garden Town Branch has got a wide range of excellent services departments been
supervised under the best ambiance and a very well educated staff. The following list is
showing the main departments at Garden Town Branch

Operations Department

Agri Finance Department

Car Finance Department

Accounts Department

IT Department

The Credit Administration Department

Now, I am going to discuss the six departments with which I was in touch during my
internship program. That is, the Account Opening department, the Remittance department
the car finance department, the Accounts department and the Credits department.

THE ACCOUNT OPENING DEPARTMENT

Borrowing funds from different sources has become an essential feature of todays
business enterprises. But in the case of bank borrowing funds from outside parties is
more vital because the borrowed capital of a bank is much greater their own capital.
Banks borrowing is mostly in the form of deposits. These deposits are lent out to different
parties such deposit creation is done through open an account in the bank.
The department that is responsible for opening and closing an account assumes
immense significance and holds a central place in the basic banking operations. The
Account opening department was the very first experience of my practical life being
working with a bank, during my internship with Bank Alfalah Ltd.
This department is the best way to start with the banking career or training. This is
because the ways you deal with the customers give a lot exposure to you for the coming
42

days in banking because the bankers are always in contact with customers as customers
are the biggest source of assets for the bank. I really enjoyed my stay at this department
as I got to interact with the customers directly for the first time. I was given under the
supervision of Mr. Naveed Khalid, who is the Incharge of Accounts Opening.
During my stay at this department I got to fill the forms of individuals who
wanted to get their accounts opened at Bank Alfalah Limited, fill the cheque and deposit
slips of customers who were not literate enough or needed instructions, and I also got the
opportunity to give advice to the customers regarding the requirements of account
opening and the benefits of opening an account with Bank Alfalah Limited.
Working with the Accounts opening department gave me a lot of courage as it
taught me the way that you should deal with the customers of the bank. Now coming
towards the documentations, stuff requirement at this department for the accounts
opening process.

Types of Account
Current Account.
Saving Account.
Notice Deposit.
Term Deposit.

Current Account
The current account is the most common account and the most preferred amongst
business concerns. The theoretical explanation for this would be that they can function
more efficiently but since in reality there are no restrictions on any withdrawal. The only
reason we can think of is that current account facilitates online banking which saves time
to a considerable extent. No interest is being credited to the customers accounts that are

43

maintaining the current accounts with the bank. Current account enables the client to do
cash transactions in a more efficient manner.
There is no interest on these accounts. It is only for transaction purposes. They paid on
demand. Where a banker accepts, paying all checks drawn against him to extend of the
balance in the accounts. As there is no profit paid on this account, it is also called
checking account because cheque can be drawn on it. Current account is mostly opened
for business. The minimum balance requirement for opening the current account is Rs.
10,000.

BASIC BANKING ACCOUNT:

Initial deposit for account opening is Rs. 1,000 with no minimum balance
requirement.

Non interest bearing checking account.

Maximum 2 deposits & 2 withdrawals through cheque are allowed.

Free debit card can be used to withdraw cash and make purchases at thousands of
outlets across Pakistan which provides access to funds 24 hours a day.

No restriction on ATM withdrawal.

The PLS Savings Account:

The purpose of this account is to introduce the habit of saving individuals in the
neighborhood. The profit on saving accounts is paid on the basis of profit and loss
sharing at 2 % per month. The minimum balance requirement for opening the account is
Rs.5000.

The PLS savings Account is meant for those people who have got an aptitude
towards earning some profit on their amount deposited for sometime with the bank.
Individuals who wish to earn profit/interest on their investment normally maintain the

44

profit and loss sharing account but in order to earn interest the client is required to keep
his/her deposits with the bank for some time. For this purpose, there are some restrictions
on withdrawal of money from a Profit and Loss sharing account but in general banking
practice there is no restriction on any with drawl from a Profit and Loss sharing account.
The interest/profit is paid half yearly.

NOTICE DEPOSITS
Notice Deposits are kind of fixed deposits. The minimum balance requirement for
opening the account is Rs. 5000 and payment is drawn on maturity of the specific period.
NOTICE DEPOSIT IS OF TWO TYPES.
One for which a prior notice of 30 days and is required from the customer before
withdrawing deposited amount and for which rate return is 4.00%.
Second for which a prior notice of 30 days and above is required from the customer
before withdrawing deposited amount and for which the rate of return is 4.50 %.

TERM DEPOSIT
A term deposit is a deposit that is made of a certain period of time. At the end of
specific period the customer is allowed to with draw the principal amount. The rate of
return of this account varies from 3.25 % to 6.50 %. The term deposit account varies from
one month to 3 years and the minimum balance requirement is Rs. 50,000.

PROFIT CALCULATION METHODS

45

DAILY PRODUCT BASIS

Deposited Amount Rate of return
365 (No. of days in a year)
AVERAGE MONTH BALANCE
Sum of daily end Balance Rate of return
No. of days in month

MINIMUM MONTH BALANCE

Any minimum balance during the month is taken for calculating profit

SAVING A/C (05 DAYS _ MINIMUM MONTHLY BALANCE).

Minimum Balance of first 5 days is compared to the minimum balance of the

minimum balance of remaining 25 days. Less balance is calculated for profit.
The amount of profit is given to deposits in three ways:
Cash payment (only in case of term Deposits). Or as per customer requirement.
By sending bank draft to depositors home address or officers or whichever is
specified as mailing address.
The depositors account is credited at maturity.

Amount of Deposits & Other Accounts in 2008

Fixed Deposits. Rs.88.851 billion
Saving Deposits... Rs78.893 billion
Current Accounts. Rs58.234 billion

46

OthersRs. 3.616 billion

Financial institutions
Remunerative Deposits. Rs. 9.892 billion
Non-Remunerative Deposits..Rs. 0.021 billion

Particulars of Deposits & Other Accounts

In Local Currency Rs. 214.824 billion
In Foreign Currencies. Rs. 24.685 billion

Total Deposits

Rs. 239.509 billion

The main document in this department is, of course, the Account Opening Form.

Particulars at the Account Opening Form:

In the account opening form the client is required to provide the following information.
The first part establishes the currency in which the account is to be maintained / operated.
The currencies include
o Pakistani rupee.
o U.S. dollar
o Pound sterling
o Euro

47

The second part then establishes the preference regarding the type of account to be
maintained. The various choices offered are
o

Savings account

o Current account.
o Royal profit

For the chequing account, there are different types of account holders are required for all
these types of account holders. The operation/procedure requirement that is needed for
Individual Account differs greatly from the Joint Accounts proprietorship A/C,
Partnership A/C, Private Limited Company A/C and Public Limited Company A/C.
Now, during my internship at the Account Opening department at Bank Alfalah Ltd.
Garden Town Branch, I found out the following documentation and writings are required
in order to open an account with us:
The first thing mentioned at the account opening form is the Title of the
account. Title of the account is to be written in block letters. By title of an
account we mean the name (either of the individual or of the business
concern) with which the account is to be opened and operated.
The client is supposed to provide the information whether the account would
be maintained singly (only one person operates the account) or jointly (two or
more than two persons maintain the account).
The name of the person who intends to operate the account.
Provision of either Fathers or the Husbands name is also a pre-requisite.
48

 Occupation of the prospective account holder.

The name and complete address of the employer.
Nationality of the Account opener
Country of residence is to be specified.
Contact numbers both the cellular and the landline numbers are to be provided
in addition to the segregation of the residential and the office phone as well.
The national identity card, of course is an integral part of the account opening
application.
Passport number, if the prospective client has got one.
Another requirement is the date and place of issue of the national identity
card.
The prospective client also has to provide the name, address and relationship
of any one of his/her close relatives in order to facilitate the communication
problem. The clients often have a misconception that there next of kin might,
if some peculiar circumstances arise, get the profit out of his account but this
is not the case. The name and address of a close relative is only recorded in
order to undertake necessary communication when needed.
In case of a business concern there are two more things that are to be provided
by the business.

49

 Type of organization
The various types of organization which are present in Pakistan at present are:

Public Limited Company

Private Limited Company

Partnership

Association/Club/Society

Sole-Proprietorship

Some special documentation is also required like the certifications regarding

the incorporation and commencement of business and the Form 29. The
business concerns also have to give their full name, brief description of the
business, date of incorporation, and place of incorporation, national tax
number, telephone number and fax number.
The choice of either the deduction or non-deduction of zakat also needs to be
highlighted. Zakat is deducted out of a Musharakah savings account and not in
the case f the current accounts...
Details of other accounts maintained with other branches of Bank Alfalah Ltd.
or other banks are also to be given.
The name, signatures, and account number of the introducer is a very essential
prerequisite in order to facilitate the opening of an account. The introducer is a
person who already has an account in the same branch. It can also be a person
from the staff of the branch as well. This introduction is the mandatory

50

requirement in order to open an account in order to trace out the defaulter in

case of defaults.
Then the client also has to put forth the instructions regarding as to whether
the account would be maintained on the basis of either or survivor,
jointly or any one of us.
After this three signatures of the client are needed and if it is an account of a
business concern then the rubber stamp of the company/organization is also
needed below the three signatures.
In case of a joint account all the persons unanimously might give the right to
operate the account to one person. This right is also termed as mandate for
joint account. If the mandate is given to a person all join account holders
must sign as an evidence of their approval. The names of persons are written
on the title of A/C and on S.S. card.
INDIVIDUAL ACCOUNT
Any individual or proprietor of business can open an individual account at BAL.
PLS (profit and loss sharing) saving accounts can be opened with the minimum balance
Rs. 5000/- with expected profit rate is 2% on Rs. 25,000 or above. Following
requirements has to be fulfilled for this account.
Signature of customer on back of AOF.
Mention next of kin (nominee)
Name and A/C # of introducer.
Verified sign of introducer.
Customer signature admitted by officer.
N.I.C photocopy attached.
51

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

In case of account opened by a business concern there are some documents that are
needed to be attached with the account opening form. The details of these documents are
given below.
Limited Company:
Copy of certificate of incorporation
Memorandum and Articles of Association
List of Directors
Copy of the board resolution
Certificate of Commencement of Business

52

 Copies of CNICs of Directors

Latest copy of Form-29
Partnership:
Partnership deed certified copy
NIC photocopies of all partners.
Partnership mandate for account signed by all the partners
A letter duly signed by all the partners containing the operating instructions of the
account also has to be taken.
Club/Society/Association:
Copy of rules/ by-laws
Copy of registration (if applicable)
List of Executive member management committee/management board etc
Certified copy of Resolution
NIC of all members of the management body
Sole Proprietorship / Individual:
NIC/ Passport photocopy
Letter from Proprietor confirming sole proprietorship

Term and Conditions Governing the Account

Account

53

(I) Each Account will be allotted a distinctive number, which should be quoted in all
correspondence with the bank relating to the account.
(II) The account should be subject to the applicable laws of Pakistan and prevailing
rules, regulations and directives of the State Bank of Pakistan.

Minimum Balance
Subject to the regulations of State Bank of Pakistan, the customer should maintain a
minimum credit balance in the account as may be prescribed by Bank from time to time.
The bank reserves the right to close the account after giving 14 days notice if the
customer fails to maintain the required minimum balance in the account.

Deposits
(I) All deposits in the account should be accompanied by pay in slip showing the correct
title & account number to be credited.
(II) If the amount indicated on the deposit slip differs from that later cash account the
banks count shall be final and conclusive.
(III) Proceeds of a cheque deposited in the account for collection will be value dated after
receipt of the proceeds thereof.
(IV) In receiving cheque/instruments the bank acts only a collective agent of the
customer & assumes no responsibility for the realization of such cheques/instruments.
The bank may refuse to accept such cheques/instruments drawn in favor of third party.
The customer shall not draw against unclear cheques/instruments though credited.
(V) The bank shall recover return cheque charges at the rate fixed by the bank by
dividing the account on every cheque deposited for collection and return unpaid.
(VI) The bank is realizes the services of other bank, customer do so for account and the
sole risk of the customer. The bank assumes no liability should the instruction is transmits
is not carried by such banks.

54

(VII) The bank shall not be responsible for the delay or loss in transit of any cheque not
for any act, omission, neglect, default, and failure of any correspondent bank, agent or
sub agent or for any reason beyond the control of the bank.

Withdrawals
(I) Withdrawals from the account shall only be made by using cheque books supplied
by the bank at the request of the customer. The bank reserves the right to withdraw
cheque book facility without notice if in the opinion of the bank the account is not being
maintained or operated in accordance with these terms and conditions or for any other
reason.
(II) The customer shall exercise care when drawing cheques and agree that cheques
will not be drawn in a manner which may enable a cheque to be altered in a manner
which is not readily detectable.
(III) The customer shall ensure safe keeping of the cheque book and shall not allow
access to the cheque book to any unauthorized person. In case of loss or theft of the
chequebook or any cheque leaf, the customer will inform the bank, if he will not then he
will be himself responsible for any loss.

Minors Account
In respect of an account opened in the name of a minor, the bank shall be entitled to act
on the instructions received from the guardian name on the account opening form,
irrespective of whether the minor account holder continues to be a minor or not unless the
bank receives written instructions from the guardian or a notice to the contrary from an
appropriate authority.

Statement of Account

55

The bank shall quarterly or at such other interval as it may deem fit send to the
customer statement of account and the customer shall check the entries made therein. In
case of any discrepancy or error in the statement of account, the customer will notify the
bank within 14 days of receipt of the statement.

Hold Mail Facility

Upon written request of the customer, the bank may in its sole discretion provide
a hold mail facility. The customer hereby waives his right to question any detail
appearing in the hold mail communication or statement of account irrespective of their
actual receipt. The customer accepts all risks and responsibilities in this regard.

Stop Payment Instructions

The bank may, in its absolute discretion, accept stop payment instructions from customer
if a cheque is reported lost or stolen, provided the necessary details of the lost/stolen
cheque given by the customer.

Death of a Customer
In case of death of individual customer, the bank will permit no withdrawal from that
account after receiving notice of customers death, except on production of a succession
certificate or other court order from a court of competent jurisdiction.
Now, there are some documents that are always there with the account opening
forms. These things need to be filled in by the customers efficiently and carefully. These
are:
Signature Specimen Card.
Cheque Book Requisition.

56

The Signature specimen card basically contains information that is basically a

repertoire of information given in the account opening form, but in this card the client
vividly puts his signatures as a specimen, which are scanned and stored in an intelligent
terminal for future use and reference.
The Cheque Book requisition basically serves as an application to issue a
Chequebook. The client also fills it up and submits it along with the account opening
form as a result of which he is issued a Chequebook once his account is approved. As
regards the Chequebook one of the most important entries in a Chequebook requisition is
the series number of Cheques that correspond with the numbers of the cheques contained
in the Chequebook issued to the client

Procedure of Opening an Account

The Account Opening Form:
When a client comes to the bank, and makes a request for opening of an A/C. The
officer says that first fill up a prescribed application form. If he/she wants to open
a PLS A/C, then he/she has to fill a form according to the account.
Completion of The Form:
The name, occupation, and complete address of the person opening the account
are written in the columns are provided in the form. One signature of the person is
taken on the face of the form and one is taken on the backside. These signatures
should be usual signatures and he would operate the account with them future.
Introduction:
57

The introduction of a current account holder is accepted for the opening of either
a current account or a solving account. The introduction of saving bank account is
accepted only for saving bank accounts. The signature of the account-holder
introducing the account is obtained at the place provided for in the account
opening form.
Specimen Signature Card (S. S. 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.
Account Number:
As now a days Bank Alfalah has acquired centralized banking system where all
the branches are directly connected to Head office. When customers give all the
information about him, this information is entered into centralized data base.
When this procedure is completed, the system automatically generated the
account number of that customer. Due to this system the process of account
opening becomes fast and also there is no chance of any mistake.
The account numbers of various accounts start with the following series

Ac c o u n t t i t l e

Ac c o u n t n u m b e r

Current account
Saving account
Ro y a l p r o fi t a c c o u n t
Te r m d e p o s i t a c c o u n t

01
02
029
03

58

C a r fi n a n c e a c c o u n t
A g r i fi n a n c e a c c o u n t

0191
0141

Issuance Of Cheque book:

After opening an A/C with the bank, the A/C holder once again makes a request in
the name of bank for the issuance of a chequebook. The A/C holder mentions title
of A/C, A/C number, sign it properly and mentions the no of leaves he requires.
Normally BAL issues a chequebook having at least 25 leaves. Every chequebook
also contains one leaf that is used for another issue of a Chequebook
Bank Alfalah issues the following chequebooks.
o Saving account - 25 leaves
o Current account - 50 leaves
o Current account - 25 leaves
o Foreign currency $ - 10 leaves
o Foreign currency - 10 leaves
Loose cheques are also issued in some cases.
Entry Of cheque book:
Before issuance of a chequebook, the employee performs certain functions. They
include:

o Stamping every leaf with specific A/C number.

o Enters it in the chequebook issue register.

59

o Check whether or not a senior officer has verified the signatures, if no then
first he gets them verified.
o If the check book is of photo account then be sure that each and every leaf of
cheque book should carry photo account stamp
After entry in the manual register, the employee issues the chequebook to the A/C
holder after his/her signature on the register.

Filling Of Account Opening Forms:

For current and saving account, separate files are maintained in which the forms
are pasted or punched in numerical order and kept under lock and key in fireproof
steel or safe. This is because these forms are the basic documents of the contract
with the customer.
Maintaining the Computer Record:
After opening of account, all information regarding the account is entered into the
computer. Currently, a program named Bank Smart is being used for this purpose.
Record of all the transactions regarding the account of a customer is kept updated
in the computer.

Procedure Followed In Order To Close An Account:

Now, coming towards the procedure for the closing of an account at Bank Alfalah, the
following steps will be followed.
The client who wishes to close an account first has to give an application, duly
signed on the pre-printed application of the bank. The client has to attach this
60

application with the liability form (explained below). The client can also give
an application on a plain paper, but correct signatures are very necessary.
Then it has to be made sure that if the account to be closed is a saving or
Royal Profit then the account balance before closing should be zero. In case of
these two types of accounts the bank does not take any closing charges. If a
client wishes to close a current account then the bank charges Rs.150, so at the
time of closing the balance should be Rs.150.
Along with the application to close the account clients Chequebook is also
received from him and then it is destroyed in order to prevent any misuse in
the future.
A liability form is filled and sent to the Credit Department in order to Cheque
that the customer does not owe the bank a single penny in any regard. A debit
voucher and a credit voucher are also attached to the liability form.
When the Credit department approves that the customer does not owe any
money to the bank and the form is returned to the account opening department
then the original account opening form pasted in the ledger when the account
was opened is marked account closed along with the date on which it is so
marked. One thing has to be taken into immediate consideration that the
account number allotted to the client (who has closed his account), after
closure of the account becomes useless and is not allotted to any one in the
future.
After approval of the liability form, it is sent to the Cash Department so that
the officer who scanned it in the first place could return the specimen
signature card to the account-opening department.

61

 Once the S. S. Card is received back from the concerned official then the
liability form, the clients application along with the specimen signature card
is pasted in the ledger right along side the original account opening form. The
form has to be pasted with the original account opening form even if the
account was opened a decade ago. In the computer as well all the entries and
records related to that particular account is permanently deleted by using the
close account option.

Important Documents Used In the Account Opening Department

Liability Form
This particular form is used when an account is to be closed. The staff of
account opening department, after filling in the name and account number of
the client forwards this form to the credit department and the trade finance
department who upon receipt of such liability form make required scrutiny so
as to check whether or not the customer owes some money to the bank or not.
Account Statement Request Form
This small form is used to request for the account statement for the desired
period. The client gets this Performa from the account-opening department
and then, after filling it up, gives it to the computer section that gives the
statement to the client in printed form.
Vernacular Form
This form basically functions as a thank you letter (and also as a request) on
behalf of the customer if he wants to operate his account by doing signatures in a
language other than that of English. In this particular form the client gives his
62

assurance in writing that he would indemnify the branch against any loss that may
be caused by reason of his signing in a language other than that of English.
Issuance Requisition
This requisition is used by the staff to order for any thing (e.g. stationary) they
need. They write the type and quantity of the stationary they need, get it signed by
the Manager Operations, give it to the person in-charge of issuance of stationary
who on receipt of this requisition (duly signed) issues the stationary.
Debit And Credit Vouchers
These two vouchers are basically used when an account has to be closed. The
debit voucher shows as to how much amount has to be taken from the clients
account and the credit voucher shows as to how much amount has to be credited
as Banks income, in order to facilitate the account closing process.
Application To Close The Account
This is a pre printed application of the bank in which the client fills in the account
number, the title of the account and the type of account and requests the branch
manager to close his account with the Bank.
Application To Change The Address
This is again a pre printed request form in which the client fills in his name,
account number, telephone number/s and the new address so that he could
communicate with the bank and receives all the notices, statements and other
necessary document which the bank might send through mail depending upon the
circumstances.
63

Discrepancies:
If there is fond any discrepancy in any of the following particulars then the form will not
be entertained:
1. Date of account opening
2. Account opening Approval
3. Customer Name
4. Joint Name (in case of joint account)
5. Mailing Address
6. Alternate Mailing Address
7. Telephone Number
8. Nationality
9. NIC / Passport
10. Currency of Account
11. Related Account Information
12.Zakat Deduction Authorization

13. Hold Mail

14.Either or Survivor Instructions
15. Next of Kin Information
16. Proof of Guardianship in case of
Minors Account
17. Thirty Party Mandate
18. Specimen Signature Card
19. Check Book Ordered
20. Introducers Name and

Account

number
21. Introducers Signature Verification
22. Segment Code mentioned
23. Signature on Banks Terms and
Conditions
24.Account Type

My experiences during internship in Accounts Opening Department:

During my internship at Bank Alfalah Ltd, Garden Town Branch, my experience was
very good while working in the said department that is the Accounts Opening
Department. This was the first ever experience of my life regarding working in any
professional environment with practical people working around.
Mr. Naveed Khalid (Incharge of Account Opening) was very much keen in telling me all
the details of all the workings of that accounts opening department. I was being
supervised by sir Naveed at that critical time who was a very ebullient person and make
me lighten up to a greater extant. Being a former PU student, university fellow and
admirer of Hailey College of Commerce, he went very supportive to me. He was also
64

very hardworking and supportive type of a colleague to me. He taught me each and every
thing that can happen in the accounts opening department also direct me about the
procedures of other banks dealings. Whenever he was busy in doing a work regarding the
accounts opening things he never forgot to tell me what he is doing and what is the
purpose of doing that thing.
During my stay at the accounts opening department, I got a chance to open some
accounts after the approval and due verification from my supervisor Mr. Naveed Khalid.
He told all the stamps, which have to be incorporated in the account opening form, to me.
I did mistakes as well while opening of accounts regarding stamping at the correct place
and writing account titles. But he never ever said a word to me regarding that. This is the
thing, which I observed that employees at Bank Alfalah are very cooperative and
supportive. This is the reason why the customer satisfactions provoking all along in the
branches of the bank.

Remittance Department
Remittance department comes under the category of the Domestic Banking. By
remittance we mean transfer of money from one city to another. Hence this department
deals with the transfer of money using different mode from one place to another.

PARTIES TO A REMITTANCE

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 or not be the banks customer.

REMITEE

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Also sometimes called the beneficiary, or the payee (the person to whom the
remittance is made/ the one who receives the payment.)

ISSUING BANK

The bank that affect the remittances, through the Demand Drafts, Telegraphic
Transfer, or Mail Transfer.

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.

PRINCIPAL DUTIES: -

The principal duties this department is performing are as follows

1. Pay Slips
2. Pay orders
3. Demand Drafts (DD)
4. Rupee Travelers Cheque (RTC)
5. Money Gram

DEMAND DRAFTS

Demand Drafts (DD) are a bill of exchange. It is an instrument in writing signed by the
banker containing an unconditional order to pay certain amount to or to the order of
certain person for payment on demand or otherwise as future determinant time. If it is
made through cheque than it is necessary that person must be account holder while in
case of cash any person can make. It consists of four copies.
66

1)

Original copy which is given to account holder.

2)

DD advice is sent to the central branch.

3)

Third copy is for reconciliation.

4)

Last copy is sent to head office for reconciliation.

PURPOSE: AS

THE NAME SUBJECTS

DD

IS MADE ON THE REQUEST OF THE CUSTOMER (WHICH MAY

OR MAY NOT BE THE ACCOUNTHOLDER OF THE

CUSTOMER OR PARTY IN SOME OTHER CITY.

BANK)

IN FAVOR OF ANOTHER

THUS IT IS A MODE OF PAYMENT USED BY

ONE CUSTOMER TO PAY ANOTHER WHO MUST BE RESIDING IN SOME OTHER CITY.

PAYMENT
PAYMENT

OF

DD

CAN BE MADE THROUGH ALL MODES I.E. TRANSFER, CASH, CHEQUE

COLLECTION (ALL BRANCHES IN

PAKISTAN) ETC.

RECORD
No manual record of the demand draft is kept; only the record is saved in the computer at
the time of making the demand draft.

DD APPLICATION SLIP

On the DD application slip enter the

Date
Branch name draft no. (which is entered after the computer entry)
67

In favor of (the name of the person or party)

Drawn on (the city name and the branch code of BAL )
Amount in words as well as in figures
Commission charged is entered
Signatures of the applicant are taken
Then it is signed by the in charge remittance and the customer deposits the money
against this slip.
The DD slip is available with the attached forms.

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.

COMPUTER ENTRY
In the system enter into the DD section then enter the

Name of the person who is being favored

Branch code at which draft will be drawn

Bank code of that branch

Name of the person to whom the draft is being issued

The account no of the issues (if he/she has an account with our branch)

The total amount of the demand draft is entered

The commission charged is entered (computer usually perform this job

automatically)
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Entry of DD:

Entry in BAL GTN branch

Yellow slip
DD Payable

credit
H.off

debit

---------------------------------------------------------------------------------------------------

Entry in H.off Karachi branch

H.off

debit
DD

credit

---------------------------------------------------------------------------------------------------

Issuance Pink Slip

H.off

credit
DD

debit

-------------------------------------------------------------------------------------------------------

Entry when customer will draw amount from DD

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DD payable

debit
Customer

credit

-----------------------------------------------------------------------------------------------------------

The DD number appears at the end which is entered on the demand draft application
form for record purpose.
Now press yes for the print of DD, which is in two, parts both are given to the customer.
When the computer record has been saved now the advices are made in the favor of the
bank on which DD will be drawn. The advices for BAL branches are sent directly to that
branch through mail.

PAY ORDER

Pay order is also a bank instrument a bill of exchange. The pay orders are usually used
for the payment within the city. The pay orders issued from one branch of bank can only
be drawn at the same branch, thats why it is generally referred to as Bankers cheque.
There is a separate slip for the pay order application. All the procedures for the pay orders
are similar to the demand drafts except the charges and the record keeping which are
given below

70

RECORD KEEPING:
The record of the pay orders is kept in both the computers and manually in registers. The
computer record keeping system is similar to that of the demand drafts. Where as in
register you enter the

Date on which the pay order is issued.

Pay order number.

Payee, to whom the pay order is being issued.

Amount of pay order is entered then the officer signs it.

Date of the payment and the remarks are taken.

Entry of issuance pay order

Customer

debit

Pay order

credit

-----------------------------------------------------------------------------

Entry when customer get amount from pay order

71

Pay order

debit

Customer

credit

---------------------------------------------------------------------------------

Following are the parties to a pay order:

i) Purchaser:

Is a person, firm, company or local authority

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

iii) Payee:

is a person named therein.

PAY SLIPS
The bank for the settlement of its own payment uses this instrument.
There are no charges for the pay slips. They are used to meet the miscellaneous expenses of the bank. The
pay slips can only be drawn on the same branch of the bank. No manual or computer record of the pay slips
is kept. Only the record of the counter file of the slip is maintained as a record at the bank of which two
signatures of the beneficiary are taken.

On the pay slip

Enter the name of the party as Messrs

72

The reasons of payment i.e. repair, releases of security etc are written as on account
of.
Signs and stamp of the beneficiary are taken.
The payment of the pay slips can be made through any of clearing, transfer (same city branches), cheque,
and cash. Collection (all branches within Pakistan) the pay slips can issue to both minors and majors. On
the slip the signatures of two authorized bank officials are must.

RUPEE TRAVELERS CHEQUES

These are the banks instruments issued to only major account holders of the bank. TCs
are issued to the facilities the customers during the travel.
There are the three copies of the travels cheque application. The white copy, which is also
known as agreement, remains with the customer with the agreement at the back of it.
This copy is must to be shown lost for the reimbursment. The yellow copy is for the
record and the blue one is for the head office.
According to the government policies only the RTCs of rupees 10,000 & 5,000 are being
offered to the customers .The amount in the RTC (the application for rupee travelers
cheque) is entered in multiples of 10000 as per request of the customer but separate
cheque are issued against it each of RS. 10,000 or in multiples of 5,000 as per request of
the customer but separate cheque are issued against it each of RS. 5,000.

All the travelers cheque is credited by the head office HO accounts. The payment mode
used for the travelers cheque can be cash. Transfer, authority letters, collection (all
branches in Pakistan), the president of the bank and it already signs cheque is also signed
by an authorized person at the bank.

ISSUING BRANCH

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The branch that is issuing the TC will take the signs of the customer on upper part of the
cheque.
The issuing bank send one copy of RTC application to head office and keeps other with it
after entering all the account opening conditions i.e. NIC.no, NTC.no, address, phone no,
name etc into the system.

PAYING BRANCH: On the next date when the cheque is presented in the paying branch (any BAL branch in
PK) same signatures on the lower part of the cheque are taken and the bank officer
cheque whether they match or not.

MONEY GRAM
Bank Alfalah Limited, in collaboration with money gram offer remittance services to
Pakistan.
Its basically a person to person money transfer service that allows consumer to receive
money in just a few minutes.

PROCEDURE

Person must have reference no.

Person must tell reference no. and compute the simple form.

Person has to show NIC and tell compute introduction after that he can obtain
money.

THE CREDITS DEPARTMENT

The sum of money that a bank makes available to client in excess of any deposit. Credit
means belief or trust. The quality of being credible or trustworthy. Another words we
74

can define credit as trust in ones integrity in money matters and ones ability to meet
payment when due.

Purpose of Credits
Earnings of a bank are dependent on CREDITS, because:

A bank receives (borrows) deposits. It pays cost on these deposits.

On the other hand bank lends the deposits to borrowers and charges interest on the
lending. This function is performed by CREDITS in any bank

Credit philosophy at BAL

Banking is an art of striking between risk and revenue
The extension of a credit facility should add value to the banks assets.

Importance of Credits
CREDITS are the most important department of a bank. Performance of all other
departments is dependent upon Credits. It attracts corporate accounts, as a company
prefers to do import and export business from the banks from where it is availing limit
(credit) facilities.
Risks involved in Lending
Though lending is main source of earnings for any bank but it is risky as
well. Whenever money is advanced to any customer there is always a risk
involved of default. To minimize the risk involved BAL gives loans to credible
customers.

75

Sub Division of Credits

CREDITS are further sub divided into two sections:

Credits Marketing

Credits Administration

The above-mentioned two sections perform the overall activities of credits. Role of each
section is discussed below:

Credits Marketing:
Marketing personnel is responsible for attracting customers to bank for advancement
of loan facilities. They must have complete information of trends in the industry.
However several precautions are followed to give loans to only credible customers, as
the aim of bank is to recover the money at time and through earnings of the client and
through liquidation of securities.
Bank Alfalah Ltd. always prefers to give loans to credible customers. For this BAL
requires information about:

Basic Cs of a Credit:
Character
Who is the borrower (company)? What is its reputation for honesty, integrity and
willingness to pay?

Capacity
How is the business managed? What are its strength weaknesses? What is the business
capacity to generate the funds to repay?

76

Capital
How solid are its financial and human resources? Are financial resources matched with
adequate human resources?

Conditions
What is the condition of company within the economic cycle? Will the economic and
business conditions impact the borrowers ability to repay?

Collateral
What is the real liquidation value of the collateral? If the creditor is forced to use thee
collateral as payment, what value will be realized at liquidation?

Carelessness
While evaluating, disbursing and monitoring of the credit, professional standards and
tools are not exercised.

Complacence
When the information and data base on which decisions are to be made, are accepted
without any critical evaluation

Connivance
While certain adverse aspects observed in the operating performance, financial position,
debt servicing, etc. are not accounted for which tacit understanding of favoring the client.

Concealment
When certain important facts are deliberately and willfully conceal from the management
which could have undermined security, credit recovery and bilateral relationship with
borrower.

Collusion
When a bank officer and borrower willfully join their hands for achieving some ulterior
motives
Corruption
When official matters are dealt with for financial and non- financial benefits at the cost
of the lender

77

Credit Line Proposal:

A CLP is prepared on the basis of above facts. It is forwarded to HEAD OFFICE. If
HO is satisfied then it gives a CREDIT ADVICE.

Offer Letter:
On the basis of credit advice the branch prepares an offer letter. This letter gives
a detail of the terms and conditions such as duration of facility, securities, mark up etc.

After fulfilling the entire formalities loan is advanced.

After the disbursement of loan marketing personnel keeps track of every activity
of the party. They continuously observe the financial statements of the customer.

Detail of credit line proposal prepared by marketing personnel is given below:

Credit Administration
It is the second section of CREDITS. It performs very important functions for the
bank. After the approval of CREDIT LINE PROPOSAL, it comes to Administration
section. The Administration decides the terms and conditions regarding securities offered
against the facility given to a client. It is a highly responsible task because in case of
default liquidation of securities is an important source for bank for recovery of loan
amount. Other important functions such as adjustment of loans are also handled by
administration section.

Nature of the Risk Exposed To a Bank

78

Credibility of the sponsors

Financial standing

Professional capability

Willful management

Credibility of credentials, data and information

Reliability of the basis assumptions underlying business and financial projections

misappropriation

Unauthorized advances to sister concern, affiliates undertaking

Agent transactions

Product obsoleteness, waning market and threatening market environment

Inconsistent and ineffective marketing plans and business strategies

Obsolescence of the technology and lack of adaptability

High interest rates

Liquidity risk

Inconsistent government tariff policies and their impact on the selling price, cost
of production, profitability etc

International environment and inter-country business risk

Currency exchange rates deterioration

Credibility and poor performance of Muccadams

Credibility of surveyors, evaluators, pre-delivery inspectors

Over capitalization

Credibility of the auditing firms

Types of borrowers
Individuals
79

 Existing account holders staff members

Close relatives of staff members
Business sponsored by staff members
Employees of other banks
Joint accounts

Businesses Entities
Sole proprietorship
Partnership
Limited liabilities Company
Joint venture
Group account\s

Others
Clubs and associates
Government bodies
Traders
Contractors
Transport, storage and warehousing
Property dealers
Manufacturers
While lending to any of these parties the credit officer of BAL has to check the
following things.
1. COMPANY:
Where a company is a borrower the credit officer must ask and keep on
record following information:
The certificate of incorporation
The memorandum and articles of association
The certificate of commencement of business and

80

 The last annual report containing accounts and balance sheet, to ensure that the
company is legally qualified to do business.
To ensure that the company is currently existing and is in good standing.
Credit officer should check with the registrar of joint stock companies, and
request the borrower to furnish certified List of shareholders (current)
List of directors
With public limited company verify its existence and standing on the stock
Exchange.
It is important that the borrowing company and its directors should have requisite
authorization and power to borrow which should be reflected in the memorandum
and article of association
Also see corporate resolution to borrow.
2. PARTNERSHIP
Where the borrower is a partnership, the credit officer must ask to see,
following documents;
Original partnership agreement/deed and the original certificate of registration
which will contain the name of the partners and the date of their joining the
partnership.
An individual financial statement from each partner
along these, also obtain the following document:
normal loan documents signed by all partners
continuing guarantee duly signed by all partners
Resolution/authorization to borrow and execute loan documents, signed by all
partners.
A letter signed by all partners, requesting the bank to extend credit facilities to
the firm
Certified copy of the partnership deed and certification of registration.

81

3. INDIVIDUAL
Lending to an individual the credit officer must ask him to see.
His financial statements for, at least the previous three years.
A continuing guarantee.
The decision of extending credit to an individual borrower is necessarily a
decision for the officer concerned based on the reputation and credit standing as a
client. Depending on the amount advanced, the loan should be secured by a
pledge, hypothecation, or mortgage.
4. GOVERNMENT
Where the government is a borrower, the credit officer must ensure that the
documents of indebtedness are signed by an officer of the government who is duly
authorized in writing and or by the rules of business. Legal counsels opinion should be
taken in these cases.

Credit Line Proposal (CLP):

A CLP contains and takes into consideration following information:

Types of Proposal:
o New
o Renewal
o Revision
o Single transaction

Names of owners and their shareholding

82

Nature of business

Existing and proposed limit for funded and non-funded facility

Group Exposure for both funded and non-funded facility

Purpose of each facility and Repayment

Security both existing and proposed

Customer Profile:

LEGAL STATUS: It specifies legal status such as:

o Individual
o Proprietor
o Partnership
o Limited liability company

Date if Incorporation

Date of Account opening and Account Number

History of Relationships with Bank

History of Borrowing Relationship

Information of whether account opening formalities are complete or not

Line of Business/Main Products:

Following information is required in this regard

Sales break-up in various cities

Market share

83

Competitive brands

Industry Profile and Market Position

Summary of key Financials:

It includes following ratios:

Sales/Revenue, Net Profit

Total Assets, Liabilities

Working Capital, Current Ratio

Paid-up Capital, Reserves, Net Worth

ROE, Debt-to-Equity Ratio

Days Receivables, Days Payables, Days Inventory

Details of Allied Accounts

Background of Directors
Management
Central Risk (as reported by CIB)

Liability Details:
It includes liabilities with Allied Concerns and with other banks both funded and
non-funded.
Performance during Last One Year:
Following questions are considered:

84

Are acceptance paid on due date

Are all the instruments of TFs paid as per schedule

Audit exceptions related to credit matters only

Are checks returned due to lack of funds

Account Statistics for the previous year:

It shows:

Maximum balance

Minimum balance

Date of latest adjustment of CF

Branch Comments and Recommendations:

Based on all of the above facts and information branch gives its comments and
recommends different suitable facilities.
Credit Division Comments and Recommendations:
Based on all of the above facts and information, credit division gives its comments and
recommends different facilities.
Prudential Regulations Compliance Checklist pertaining to Credit:
Following matters are to be checked:

Limit of banks exposure to a single person

85

Limit of banks exposure against clean facilities

Linkage between a borrowers equity and total borrowing from bank

Maintenance of debt-to-equity ratio

Opening of Account:
Its required that every reasonable effort is to be made for determining the true
character of every would-be account holder.

Weight age to Credit Report:

Due weight age is to be given to the credit report relating to the borrower and his
group. Latest report is obtained from CIB of SBP for funds and non-fund facility
provided.

Minimum information of the borrower:

For this purpose bank asks for BASIC FACT SHEET.

Financial Summary
It contains:

Balance Sheet

Income Statement

Cash Flow Statement

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Security Analysis Sheet

It contains analysis of the security offered for availing the facility.

Industry Overview
It provides an overview of the industry in which a company is operating.

Financial Analysis
Sales & Profitability ratios, Activity Ratios, Leverage Ratios and Liquidity Ratios
are calculated. More over utilization of the plant capacity over the years is also
calculated

TYPES OF FACILITIES

These facilities are either:

Fund Based

Non-Fund Based

Various types of funded and non-funded facilities are given below:

Fund Based Facilities:

Funded facility is that facility in which the bank funds are physically involved.

87

Cash Finance/Running Finance

Cash Finance/Running Finance:

It is a short-term facility given to companies for working capital requirements
(raw material, WIP, finished goods, receivables). It is a revolving limit. In this facility a
specific limit is given to the customer. He is given withdrawing right up to that limit. He
can avail the facility by playing within that limit. Mark-up is charged on the outstanding
amount. Marketing personnel keeps a check that whether or not a party is adjusting the
limit and then withdrawing the amount or not. If not then there is something wrong and
the facility availed is being misused.

Non fund based facilities:

It is a facility in which funds of bank are not involved. However a non-funded
facility can become funded at any time.

Letter of guarantee

Letter of Guarantee:
It is a non-fund based facility hence no funds from the bank side are
involved in it.
Parties involved:
Three parties are involved:

88

Principal: to whom bank is giving guarantee on beneficiarys behalf.

Beneficiary: in whose favor guarantee is given.

Guarantor: it is the bank that is giving the guarantee.

In this facility bank guarantees the payment of loan amount if the beneficiary fails
to perform his or her duty at the settled time.

SECURITIES:
Lending is very risky for any bank. Bank covers the risk involved in lending by keeping a
suitable security, which can be tangible as well as intangible. Bank always prefers a
security that is marketable as well as sustains its value (not perishable).

Types of Securities:
Following are various types of securities
Pledge
Hypothecation
Mortgage
1. Pledge:
It is the bailment of delivery of goods from one person to another for some
specific purpose. Two parties are involved:

Pledger i.e. the borrower/customer

Pledgee i.e. the bank

89

Possession is with the bank. Bank keeps the goods in its go downs. Mucaddams
are responsible for the security of the pledged goods.
Borrower is entitled to get back the goods after the repayment of loan.
In case of non-payment bank has the right to sell the goods.
Surplus on sale is paid back to the pledger.
In case of deficit after the sale, bank always has the recourse to the court of law to
recover the deficit.

Documents required for C.F. Pledge

Legal stamps documents required:

Agreement of finance

Promissory note

Letter of guarantee

Memorandum of deposit of title deed

Letter of hypothecation

Letter of continuity

Letters without Stamp:

90

Letter of arrangement

Letter of disbursement

Letter of authority

SBP regulation undertaking

Margin:
Bank keeps a margin or cushion for every facility advanced. The margin differs
from case to case depending upon several other factors.

Precautions:
Following are some of the precautions, which are taken by the bank:

Banker looks closely at the NATURE OF COMMODITY. The

commodity should not be perishable. It should be marketable.

Banker should have complete knowledge about the market value of the
commodity pledged. Price should not fluctuate.

Banker must take store the pledged commodity in proper go downs under
suitable conditions

91

Banker must take precautions in valuing the commodity. There are

approved valuers for this purpose. The commodity should not be over valued
because it will lead to difficulty in the recovery of loan amount at the time of
liquidation.

2. Hypothecation:
It is an agreement to give charge on goods or documents of title to these goods
without conferring possession to the lender.

Lender neither has possession nor ownership.

Security is created through a letter of hypothecation, which contains information
such as description of goods, and value of goods.

Documents required for C.F. Hypothecation

Legal stamp documents required:

Promissory note

Letter of Hypothecation

Letter of guarantee

Letter of continuity

Agreement of finance

Letters without Stamp:

Letter of arrangement

Letter of disbursement
92

Letter of authority

SBP regulation undertaking

Periodical Stock Reports:

Bank requires periodical stock reports from the borrower.
Stop Orders:
The bank can issue stop orders against the trading of hypothecated stock.

Precautions:
Lender/bank should go for surprise visits to check stocks.
Stock should be insured against all possible risks such as theft, fire etc.
Lender should put the nameplate, which signifies that stock has been
hypothecated.
Before lending bank should make sure that stocks have not been already
hypothecated with any other bank. It can be confirmed from the registrar.

3. Mortgage:
It is the transfer of specific right in an immovable property for securing a
payment of money advanced or to be advanced as a loan or for the performance of an
agreement or settling a future liability.

Parties:
Mortgager:
Who transfers specific rights to the mortgagee. He can get back the specific rights
after the repayment of loan.

93

Mortgagee:
He is the lender i.e. bank.
Mortgage Deed:
Mortgage deed is that document through which the mortgage is executed

Property Documents for mortgage

Legal advice about property documents

Title deeds (original documents of property

Aux Sajra (location site map)

NEC (non-encompress certificate)

PT 1 in favor of borrower

PT 1 in favor of bank

MoTD (Mortgage of title deeds)

Agreement to create mortgage

Letters submit to registrar

Irrevocable general power of attorney (IGPA)

Valuation report

Transfer of Legal Title:

According to this there can be two types of mortgage.

94

i.

Legal Mortgage:
Title is legally transferred to mortgagee.
Mortgage is to be registered in case the loan amount is greater than
Rs.100.
After the payment of loan, legal title is transferred back to the mortgager
It is executed by the mortgage deed, which is signed by the mortgager
and 2 witnesses. This mortgage deed is registered with the revenue officer.
It is mentioned in the mortgage deed that legal title will be transferred to
the mortgager.

ii. Equitable Mortgage

The original deeds are submitted with the mortgagee with an intention of
creating its equitable interest in that property.
Mortgager cannot sell the property without the consent of the mortgagee.

Process:
The original title deeds are submitted with the bank with the covering letter
stating that these documents are submitted with the bank for the purpose of creating an
equitable mortgage.
It is to be registered with the Registrar of Joint Stock Companies within 21 days of the
mortgage agreement.

GUIDE LINE OF CREDIT POLICY

Total outstanding financing facilities by banking company to single person shall
not at any point of time exceed 30% of banks unimpaired capital.

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 No banking company shall make loans or advances against the security of its own
shares.
No banking company shall grant unsecured loans / advances on the guarantee of,
o Any of its directors.
o Family member of director
o Any private company in which banking company is interested.
In arriving at exposure per person weight age of 50% shall be given to
o Documentary credit opened by bank.
o Guarantees/bonds other than repayment guarantees.
In arriving at per party exposure 90% of
o Deposit of party with bank under lien.
o Face value of FIBs lodged by the party as collateral.
o Pak rupee equivalent of face value of special US Dollar bonds converted
at official rate, lodged by the party as collateral shall be deducted.
Aggregate exposure of bank against all its clean facility shall not at any point
exceed the amount of banks capital and general reserve.
Advances given to the employees of bank in accordance with their entitlement.
While granting any accommodation, bank shall ensure the total accommodation
availed by any borrower from banks / financial institution does not exceed 10
tines of the capital and reserve of the borrower.
A borrower who is prepared to inject fresh equity irrespective of the fact that its
equity is negative is eligible to obtain finance from bank to the extent of 10 times
fresh injected equity.
No banking company allow financing facilities whether fund based / non funded
against the shares of companies which are not in central depository system.

My experience at the Credit Department:

96

Corporate credits was the second last department in which I was been rotated. The most
important department in any bank is considered to be the Credits department. This is, in
my opinion, is also true due to some reasons. Firstly the reason being that in credits
department, the decision-making skills of a person are explored. When you need to make
a decision regarding the credit proposal after due verification, this will give a little stress
to your mind either to sanction the financing or not?
Credits involve very technological procedures and also a lot of exciting activities
because each case varies from the other one. You never become unenthusiastic because
you get an opportunity to walk around new bits and pieces every time.
In this department I worked under the supervision of Mr. Ateeq-ur-Rehman Sidu
(Credits Officer). He was also very supportive to me. He taught me the credit line
proposal from the first step till the end of its filling process. In the nutshell, the credits
department contributed a lot towards my decision-making and learning skills.

CLEARING DEPARTMENT:
Clearing is the arrangement to which collection of cheque, bills and other
instruments payable or deliverable at or through the offices of the members of the
clearinghouses for credit of the customers account for speedy and economic collections.
The clearinghouse members are authorized to send their cheque and instruments in the
clearinghouse established in the State Bank of Pakistan.
Clearing house is the gathering of all the members of different banks and institutions
where they deliver or receive the instruments drawn on them for their clearances through
their branches in the city.

97

Advantages of clearing:
1) Systematic arrangement for the collection and clearance of cheque.
2) Speedy and economic collection and clearance of cheque.
3) Clearance of cheque and other instruments of different branches of
different banks in a systematic way without any flow or mistake.
4) The collection and clearance of government bills, instruments and cheque.
5) The collection of government revenue through cheque, pay orders and
drafts payable through State Bank of Pakistan and National Bank of
Pakistan.
6) It avoids the difficulties and cumbrances faced by the branches if they
collect the instruments directly from branch to branch.
7) Confidence among the clearing members is produced.
Role of State Bank of Pakistan in clearing:

State Bank of Pakistan gives the license end enlist them as clearing house
members authorizing to submit their clearance cheque and instruments through
the clearing house established as the office of State Bank Of Pakistan in
particular city.

The clearinghouse advantages are given in the big cities where the State Bank
office is available.

Where State Bank of Pakistan office is not available the clearinghouse functions
in the National bank of Pakistan branch. However the procedure is the same.

The State Bank of Pakistan provides the facility to member banks for clearances
of their cheque drawn on different branches of banks in different parts of their
cities. It would have been more cumbersome and time consuming if they had
been dealing from branch to branch.

98

State Bank of Pakistan is a bankers bank; it deals in a parental attitude and

provides space staff and technique to clear the bills and cheque of the member
bank.

State Bank of Pakistan maintains the statuary reserve of different banks in their
accounts and all the clearances are made by the debit and credit of these
accounts.

All the payments and receipts are settled to these accounts without any difficulty.

The State Bank of Pakistan chalks out clearing house timings and its procedures.

CLEARING OUTWARD

When the customer deposits cheque & other instruments of other banks for
collection, we send the cheque in outward clearing.
PROCEDURE:

Cheque are receives duly entered on pay-in-slip.

Counter foils are returned to customer after signature.

Crossing stamp is fixed on the Cheque is fixed on cheque and pay-in-slip.

Clearing stamp with next date is fixed on the cheque and pay-in-slip.

Endorsement stamp is fixed on the reverse of the instruments.

Depositors account number shall be mentioned on the reverse of the

instruments for the future reference. Endorsement and pay-in-slip are signed
by an officer.

All the instruments ate entered in clearing register.

The officer concerned will enter the cheque in computer system.

Clearing register is generated by the computer system.

99

Clearing summary is produced and computer also generates bank wise

schedules.

The cheque is sorted bank wise and respective schedule id attached with
these cheque.

Total of bank wise schedule will tally with total in clearing register and
clearing summary.

All cheques along with bank wise summary are sent to main branch where a
revised summary is prepared.

The representative of the bank takes all the cheque of all the branches to the
branches to the clearinghouse at State Bank of Pakistan.

CLEARING HOUSE
In the clearinghouse the representatives of all the banks gather and exchange their
instruments. They enter the total amount of cheque delivered and received in their
summary sheets. The total of schedule received tally with the total of summary.
Clearing cheques received from other banks are sent to branches, which will clear the
cheque and instruments to the respective accounts. Some cheque is returned unpaid
with the reasons mentioned in the cheque return memo. IBCA for net amount is sent
to main branch.
In the 2nd house clearing cheque are returned and exchange by the representatives of
the banks. A summary is prepared for cheque received and delivered and net position
is ascertained. Amounts are settled through SBP accounts.
After cheque is returned, the main branch sends IBCA for net amounts to the
branches. Computer entries are made for (-) credits for returns and debits to Main
office A/C.

100

FINANCIAL HIGHLIGHTS
For the year ended the Banks profit before provision and taxation stood at Rs.
3,263.635 million as compared to Rs.2,965.588 million for the previous comparable
period, which is 10% higher than that of last year . This increase in profit is primarily
attributable to overall increase in business volume.

101

The Bank has successfully carved in the market an enviable niche for its
consumer products. Auto Finance, Credit Cards and Home Loans have significantly
contributed to the profit and growth in addition to contributions made by the core banking
activities during the period under review. Bank is indisputably market leader in some of
these initiatives.
Bank continues to make significant in-roads into the Agri-rural finance, SME,
corporate and investment banking sectors of the economy. With expanding network of
branches, bank is ideally poised and positioned to carry forward the success. It acquired
the operations of Shamil Bank of Bahrains B.S.C, Bangladesh operations for US$ 17.88
million under an agreement dated November 1, 2004. The entire undertaking of the
Bangladesh operations including all the properties, assets and liabilities and all the right
and obligations were taken over. It has also successfully obtained license to establish
banking operations in Kabul, Afghanistan. It continues to strengthen its presence in the
market place and as of June 30, 2007, bank has a nationwide network of 195 branches
that includes 23 Islamic Banking branches and five overseas branches 3 in Bangladesh, 2
in Afghanistan and one offshore banking unit in Bahrain. Banks plan is to add more
branches to the network during the 2nd half of 2007.
PACRA, a premier rating agency of the country, has rated the Bank AA (double
A), Entity Rating for Long Term and A1+ for the Short Term. These ratings denote a very
low expectation of credit risk, strong capacity for timely payment of financial
commitments in the long term and by highest capacity for timely repayment in the short
term, respectively. Further, the unsecured subordinated debt (Term Finance Certificates)
of the Bank has been awarded a credit rating of AA- (double a minus).
In compliance with the requirement of State Bank of Pakistan, Bank has in place
an approved integrated risk management framework for managing risk, market risk,
liquidity risk and operational risk as evidence by its Board approved Risk Management
and Internal Control manual and a dedicated Risk Management Division (RMD) has

102

been created with the Head RMD reporting directly to the Chief Executive Officer, Risk
management Division has been structured to address credit, market and operational risk
and a team of suitable person has been hired.
In summary, Bank had successful half-year results, as of June 30, 2009. This was
achieved primarily due to its long-standing and stable customer base, coupled with the
Managements well-defined, focused strategies and positioning. Accordingly the Board
would like to thank its valued clients and Correspondents and also to acknowledge the
support of the State Bank of Pakistan, Ministry of Finance and other regulatory
authorities for their invaluable support, which has greatly facilitated its work. The Board
would also like to place on record its appreciation for the hard work, dedication,
professionalism and sincere efforts of the senior management, officers and staff of the
Bank.

RATIO ANALYSIS
Ratio analysis includes calculating different ratios for the
organization of the figures taken from its financial statements. The
basic purpose of ratio analysis is that absolute figures often give

103

misleading image so comparison with other figures is necessary which

can be done through ratio analysis. The ratios may be:

Balance Sheet ratios

Income Statement ratios

Mixed ratios

PROFITABILITY RATIOS
The continued viability of any bank depends on its ability to earn an
appropriate return on its assets and capital. Good earning performance
enables a bank to fund its operations, remain competitive in the
market and increase or decrease in market funds.
Profitability reflects not only the
quantity and trend in earning but
also the factors that may affect the
sustainability

or

quality

of

earnings.

NET PROFIT RATIO

Net Profit after Tax X 100
Net markup/interest income after provisions

2007

2008

104

1325389

100

3506737 x 100
25816457

21194254
= 6.25%

= 13.58%

Significance:
o It is a more specific measure of sales profit ability. It is used to
measure over all profit ability and hence it is very useful to
proprietors.
o The ratio is very useful as if the net profit is not sufficient, the
firm shall not be able to achieve a satisfactory return on its
investment.
o It also indicates firms, capacity to face adverse economic
conditions such as price competitions, low demand etc.
o Higher is better is the profitability.

Analysis:
The above ratio indicates that the proportion of profit has seen
increase over the years from 6.25% in 2007; to 13.58% in 2008 the
increase is significant. So it is a healthy sign for bank.
7

OPERATING EXPENSE RATIO

Non Mark Expense

X 100

Gross Income

105

2007
15235688
100

2008
x

16645178 x 100
6142240

3290623
= 436%

= 271%

Significance
This ratio shows how well the organization is managing its
operating cost. Operating expenses are those expenses which are
incurred indirectly for the generation of revenue. A large portion of
these expenses is the administrative expenses which are incurred on
management of the organization. It is necessary to cut down these
expenses especially when interest rates on advances are declining
leaving a narrower margin for payment of such expense. So Lower it is
better it is.

Analysis
Operating expenses for the bank decreased in 2008 from 436%
in 2007 to 271%in 2008 and which is a good sign as it shows
decreased costs of the banks and hence increased net income.

106

ADMIN EXPENSE TO TOTAL DEPOSITS

Administrative expenses

X 100

Total deposit
2007
5952637
100

2008
x

8383322 x 100
273172088

239480772
= 2.49%

= 3.07%%

Significance
This ratio measures banks ability to cover administrative expenses by spreading over
large number of depositors. Total deposits have been used as base as they are main
business activity of bank. A declining trend is desirable.

107

Analysis
In 2007 banks administrative expenses were 2.49% and in 2008
they are on rising side i.e. 3.07%

its not good for the bank. Bank

should try to control its expenses.

TOTAL ASSET TURN OVER

Interest- markup- return earned
Total Assets
2007
21194254

2008
x

25816457x 100

100

330679872

275511483
= 7.96%

= 7.81%%

Significance
This ratio indicates the efficiency with which total assets have
been utilized to generate net interest income. If a bank has ROA on a
higher side but the relation of net interest income to total assets is not
very significant, this may translate into the fact that bank is relying on

108

sources of income other than interest income which is not a healthy

sign.

Analysis
It is decreasing which is unfavorable. It means bank is not able to
utilize its assets efficiently in generating its main stream income. It was
7.96% in 2007, 7.81% in 2008.

RETURN ON ASSETS
Net profit after tax

x 100

Total assets
2007
1906672
275511483
= 0.69%

2008
x 100

5004600x 100
330679872
=1.51%

Significance
ROA is the most comprehensive measure of banks earning
capacity. Net profit margin ignores efficiency concept while total asset
turn over ignores earning perspectives. ROA takes both perspectives
into account. Thats why it is most widely used indicator for

109

representing the earnings of bank over time period. Higher it is better

it is. An increasing trend of this ratio signifies increased efficiency of
management of a bank to improve upon its earnings capacity.
Analysis
As this ratio explains how much you are utilizing your assets. In year
2008 it is improved from 1.151% to 0.69%. But still it is not very good,
so bank should try to improve it.

RETURN ON EQUITY
Net profit after tax

x 100

Share Holders Equity

2007

2008

1325389x 100

3506737x 100

11827209

17414154

= 11.21%

= 20.14%%

Significance

110

This is another measure of overall performance of bank. This

ratio

is

of

great

importance

to

the

present

and

prospective

shareholders as well as the management of the company. As the ratio

reveals how well the resources of a firm are being used, higher the
ratio better it is.
Analysis
In real sense ordinary shareholders are the real owners of the company
(preference shareholders have a preference over ordinary shareholders
in the payment of dividend as well as capital. Preference shareholders
get a fixed rate of dividend irrespective of the quantum of Profit
Company).The rate of dividend very with the availability of profit in
case of ordinary share only. Thus ordinary shareholders are more
interested in the profitability of the company.
Return of equity of BAL is showing a good situation in year 2008 as
compare to year 2007. In year 2007 the return on equity of BAL was
11.21 % and in year 2008 it was 20.14%, this increase shows that
company is utilizing its funds properly relating to its previous year.

111

NON INTEREST INCOME TOTAL ASSETS

Non interest income

x 100

Total assets

2007

2008

3290623x 100

6142240x 100

275511483
= 1.19%

330679872
= 1.86%

Significance

Non interest income represents fees, commission, brokerage,

and other income and extra ordinary or unusual items if they represent
income. Non interest income is also an important source of banks
earnings. While analyzing this ratio the trend of non interest income to
total assets should be considered. Whether the bank has maintained
this ratio at a reasonable level or are there any significant changes
over time? If this ratio increases significantly, then there is a problem
with the bank in generating revenue from its mainstream activities. But
on the other hand, high non interest income can also represent a
positive point for a bank. This income represents a diversification from
earnings generated from the taking and placement of money, which is
subject to interest rate and credit risk. An emphasis on fee income is
another global trend along with the growth of capital and rising ROA's.
Analysis

112

This ratio is increasing in the year 2008 but shows decreasing in year
2007. Over all non markup income is increasing for the Bank. It is a
positive sign.

NON INTEREST EXPENSE TO TOTAL ASSETS

Non markup expense

x 100

Total assets

2007

2008

= 0.93%
2554019x 100

= 1.37%
4535382x 100

275511483

330679872

Significance

113

Non interest expenses represent operating expenses such as

administrative expenses, staff salaries and other charges plus extra
ordinary and unusual items if they represent expense. Lower this ratio
better it is for the bank. If the level of non interest expense to total
assets is high this will also distort the ROA of the bank. Non interest
expense is a very critical number.
Analysis
This ratio is good when it is low. This ratio is higher in year 2008. It
shows non mark up expense in increasing and it should be controlled.

RISK ASSET TURN OVER RATIO

Net mark up after provision
Risk assets

2007

2008

3296623x 100

6142240x 100

149942717
= 2.19%

171031183
= 3.59%

Significance
Advances are the main use of banks assets. So it is necessary that bank
earns sufficient value of income on its investment of risk assets. So a steadily rising
trend is desirable.

114

Analysis
In year 2008 it is higher than 2007. This is a good sign.

LIQUIDITY RATIOS
Liquidity represents the ability of a bank to efficiently and economically
accommodate deposits withdrawal as well as fund increase in assets. A
bank has a liquidity potential when it has the ability to obtain sufficient
funds in a timely manner at a reasonable cost. Illiquidity is a primary
factor leading to a banks failure whereas high liquidity helps otherwise
weak institutions to remain funded during the period of difficulty.
Liquidity reflects the adequacy of
the

institutions

current

and

prospective sources of liquidity and

funds management practices.

115

CURRENT RATIO
Current Assets
Current Liabilities

2007

2008

259122914x 100

311886135x 100

254203477
= 1.02

302091341
= 1.03

Significance

Current ratio may be defined as the relationship between current

asset and current liabilities. This ratio is also known as working capital
ratio. It is a measure of general liquidity and is most widely used to
make the analysis for a short-term financial position or liquidity of a
bank. It represents the margin of safety or cushion available to the
creditors. It is an index of the banks financial stability. It is also an
index of the strength of working capital.
A relatively high current ratio is an indication that the bank is
liquid and has the ability to pay its current obligations in time as and
when they become due. On the other hand, a relatively low current
ratio represents that the liquidity position of the bank is not good and
the bank shall not be able to pay its current liabilities in time without
facing

difficulties.

An

increase

in

the

current

ratio

represents

improvement in the liquidity position of bank while a decrease in the

current ratio indicates that there has been deterioration in the liquidity
position of the bank. A ratio equal or near to 2: 1, i.e., current assets
double the current liabilities, is considered to be satisfactory. The idea
of having doubled the current assets as compared to current liabilities

116

is to provide for the delays and losses in the realization of current

assets. However, the rule of 2 : 1 should not be blindly followed while
making interpretation of the ratio, because banks having less than 2 :
1 ratio may be having a better liquidity than even banks having more
than 2 : 1 ratio. This is so because the current ratio measures only the
quantity of current asset and not the quality of current assets. If a
banks current assets include debtor which are not recoverable, the
current ratio may be high but it does not represent a good liquidity
position.
Analysis:
BAL has maintained its liquidity position over the years. In 2007
and 2008 there is increment in ratio which shows it have current assets
to pay current liabilities.

ADVANCES TO TOTAL DEPOSITS

Advances

100

Deposits

2007

2008

117

149942717x 100

1171031183x

239480772

100

= 62.61%

273172088
=62.62%

62.74%

Significance
2007

62.61%

2008

This
is
the

62.48%

perhaps
most

important
2007

2008

ratio as far
as financial

analysis of a bank is concerned. Advances represents lending to

general public and deposits represent amount borrowed from general
public. Both these items represent core activities of a bank. A bank is
there to accept deposits and lend to general public. Deposits represent
source of banks funds and advances are use of funds. This ratio
compares the major source of a bank's funds with the major use of it. It
signifies that how much deposits the bank has mobilized from general
public and to what extent has made use of these deposits. Credit risk is
the most recognizable risk associated with banking and granting credit
is the primary activity of a bank but at the same time interest earned
on advances is the major source of banks earnings. Although the bank
wants to maximize its earnings, but it can never lend the entire
amount received through deposits. It has to keep a certain proportion

118

of its deposits in cash form with it as well as with SBP to meet the day
to day requirements of its customers. So there is a trade off between
risk and return. If the bank wants to increase return, it will go towards
more lending thereby enhancing risk and if the bank focuses on
liquidity, it will have to forego return. Current accounts to are the
lowest cost source of funds. The bank should strive to attract current
accounts to increase this ratio, so as to control its interest expense.
The bank should decide upon the mix of its sources and uses after
taking

into

consideration

the

CRR

and

SLR

requirements

and

demographics of its depositors.

Analysis
We can see that for every one rupee deposit loan is given with the ratio
62. It is good but it needs to be improved as increasing loans is always
good source of earning for a bank.

DEPOITS TO TOTAL ASSETS

= deposits / total asset
2007

2008

239480772x 100

273172088x 100

275511483
= 86.92%

330679872
=82.61%

Analysis
This ratio explains how much deposits are in percentage and trend
shows a decrease from 2007 to 2008.

119

120

INTEREST COVERAGE RATIO

Earning before interest and tax
Financial charges

2007

2008

15235688

5004600

1906672
= 7.99

16645178
=3.32

Significance
This ratio measures banks ability to pay financial charges. Interest expense is
main expense of bank just like cost of goods sold. So higher the ratio better is the
ability of bank to pay this compulsory obligation and hence better is the liquidity
potential of bank.

Analysis
We observe a decreasing trend which is not favorable.

121

PORTFOLIO MANAGEMENT RATIOS

Portfolio refers to the assets held by an investor taken as a
group. From banking point of view it means how the bank is
maintaining its advances, investments and lending to financial
institutions with respect to its total assets. The portfolio of the bank
should be so that it contribute to overall profitability of the bank
Portfolio management deals with managing
Advances, investments and lending to financial
Institutions with respect to the total assets of
the
Bank.

ADVANCES TO TOTAL ASSET RATIO

Advances x 100
Total Assets
2007

2008

149942717 *100

171031183

275511483
= 54.42%

330679872
=51.72%

Significance
This ratio indicates proportion of advance to total assets. This is
main earning assets of bank. It has two distinct features. It is most
risky earning asset and highest return getting asset. As we know, a
proper balance should be maintained between risk and return so bank
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should attain such level of advances. However a rising trend is

desirable. It indicates banks ability to compete in the market and
generate sufficient subsequent deposits.
Analysis
Over the last two years bank is showing decrease in ratio
i.e.54.42%, 51.72%. It is not good sign as it shows decrease in
advances and hence earnings of the bank decrease but risk is also
decreasing as there is inverse relationship between risk and return.

GEARING RATIOS
These ratios measure the extent to which banks resources have
been geared by debt i.e. financed by debt in relation to share holders
equity. It takes into account total debt, capital employed, shareholders
funds and total assets and then on the basis of all these the proportion
of debt is compared and it helps in understanding that what proportion
of needs should be met by debt and how much through equity.

These ratios measure the extent to which banks

123

Resources have been geared by debt i.e. financed

By debt in relation to share holders equity.

Following ratios have been calculated:

1. Debt to equity ratio
2. Debt to capital employed ratio
3. Debt to total assets ratio

DEBT TO EQUITY RATIO

Long term debt x 100
Shareholders founds
2006

2008

263684274 *100

313265718

11827209
= 22.29%

17414154
=17.98%

124

Significance
It shows amount of long term debt per rupee of equity. In case of
manufacturing concern, acceptable ratio is 40:60. This ratio high lights
composition of capital employed of bank. In a banking concern this
ratio could be 3:1
Analysis
Debt equity ratio of BAL is showing decreasing trend. It means that
company is trying to rely on its own resources and increasing its
Capital.

DEBT TO TOTAL ASSET

Total debt x 100
`Total assets

2007

2008

263684274 *100

313265718*100

275511483
= 95.7%

330679872
=94.73%

125

SIGNIFICANCE
This ratio indicates the extent to which assets have been
financed by debt. This ratio has a direct bearing on financial risk of
bank. In manufacturing concerns 50% is a desirable proportion of
assets financed by debt. However a banking concern, ratio up to 90%
is acceptable as whole structure of banking is based on funds provided
by the depositors.
Analysis
This ratio for bank is same over years and 94% assets are financed
through debt.

SHAREHOLDERS EQUITY TO TOTAL ASSET

= Shareholders equity/ Total assets

126

2007

2008

11827209 *100

17414154*100

275511483
= 4.29%

330679872
=5.27%

Analysis
This ratio shows that how much banks assets are financed by internal
resources. In year 2008 it is improved from 4.29% to 5.27%, which is
not bad but bank should focus to improve this ratio.

THE S.W.O.T ANALYSIS OF BANK ALFALAH LTD.

ISLAMIC BANKING:
Key External Forces:
External forces can be divided into four broad categories:

127

Social, cultural, demographic, and environmental

Forces

Political, governmental, and legal forces

Economic forces

Technological forces, and

Competitive forces

While performing an external audit, our company gathered the competitive

intelligence and information about social, cultural, demographic, economic, political, and
technological forces as well. The overall motive was to consider and evaluate the
Opportunities and Threats for the company
Following can be some of the key opportunities and threats for Bank Alfalah.

Opportunities
The opportunities on which bank Alfalah can capitalize upon are delineated as under.

1) Extension of Local Branch Network

One of the biggest opportunities for bank Alfalah Limited is to extend its branch
network in Pakistan. The essential pre-requisites for a vast branch network are all there;
sponsors have the money, managerial expertise are available, and last but not the least
any bank with Bank Alfalah Limited written in blue at its front is accepted in the
market.

2) Establishing Foreign Branch Network

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Going global could have been termed as a fad a few years ago, but now for those
business organizations that want to survive and thrive globalization has become the order
of the day. In order to increase the bottom line figure, it really is crucial. But the senior
management would start implementing this course of action once they feel that they have
got a strong hold in Pakistan.

3) Capitalizing On Information Technology

The information revolution has certainly made its inroads in almost all human
functions. If Bank Alfalah Limiteds senior management and the IT division make a
concerted effort to make best possible use of this miracle of human mind it would enable
Bank Alfalah Limited to harness unexplored benefits of immense magnitude.

4) Unexplored Market of Multinational Corporations

Unfortunately in spite of unprecedented image building efforts, Bank Alfalah Limited
still is an unattractive bank for big multi nationals functioning in Pakistan. If the
management is able to develop a strong relationship with such MNCs then it would open
doors of huge and unimaginable opportunities for Bank Alfalah Limited. If even a single
MNC becomes a corporate client of Bank Alfalah Limited i.e. it deposits its revenue with
Bank Alfalah Limited, pays its salaries through Bank Alfalah Limited, does trade dealings
through Bank Alfalah Limited, and avails credit facilities offered by Bank Alfalah
Limited, it would make a world of difference to Bank Alfalah Limited.

5) Customers are more willing

Muslims are more consciously differentiate the Islamic-base banking from interestbase banking. That is why there is large caution of expansion.
129

THREATS
The predominant threats Bank Alfalah is facing at the moment are discussed in the
following lines.
1) Private Sector Banks
Bank Alfalah Limited is at present facing really tough competition from not only the
first line international banks (ABN AMRO, Standard Chartered, Citi Bank) but is also
having a neck to neck race with other privatized banks such as Askari Commercial Bank
Limited, Union Bank, Prime Commercial Bank, Faysal Bank Limited, Bank Al-Habib
Ltd etc. All the new schemes launched by these banks and their plans to expand branch
networks are a real threat for Bank Alfalah Limited.

2) New Trade Polices

Introduction of new trade policies and laws are also been a source of threats to the
organization due to the imposition of new rules and terrifies, previous maintained
regulations have to be amended.
3) Network Expansion By Foreign Banks
Foreign banks have a lot of plus points as compared to Pakistani banks (state owned
and private); they have better products, better and personalized service, desirable interest
rates, foreign branch network, but they definitely lack in local branch network (in
Pakistan). Literary no foreign bank has been able to expand its network to far-fetched
places of Pakistan. Pakistani banks (private banks in general and state owned banks in
particular) are spread all over Pakistan. This is an intangible asset for Pakistani banks.
But if any of the foreign banks expands it network, backed by their traditional powerful
130

service, then it might prove to be the start of downfall for Bank Alfalah Limited, unless
and until Bank Alfalah Limited raises its level of service and product feasibility to the
international standards.
4) If Pakistani Banks (Especially State Owned Banks), Backed By Huge
Network Improve the Service They Give And Their Employee Skill Set
State owned banks like National Bank of Pakistan and Habib Bank Limited have
huge networks, they have the experience, but the only set back they have is below par
service and lack of motivation amongst the employees. If their corporate strategy is
altered, and the managerial policy is revitalized, enabling them to improve upon the
service they give and enabling them to convert their work force into human capital then
such financial institutions backed up by their huge networks pose a potential threat to
Bank Alfalah Limited. So, Bank Alfalah Limited should endeavor to expand their branch
network as efficiently as possible and as soon as possible.
5) Terrorist Image of the Country
After the 9 / 11 incident every kind of transaction that uses to take place with the
outside world has assumed a different mode. The trade finance transactions are the bread
and butter for the commercial bank, were also hampered by that terrorist attack on 11th of
September i.e. the magnitude of orders the exporters were receiving decreased by a great
deal, but as far as our image in the international community is concerned there is still a
considerable room for improvement. If this situation further aggravates rather than
improving, the trade finance business would really be hampered, and one of the major
earning avenues for Bank Alfalah Limited will loose its footings. This fact poses a real
threat to the sanctity of Bank Alfalah Limited.
6) Inconsistency in Government Policies

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This is a phenomenon that could hamper smooth functioning of any organization

working in a particular country. Although the sponsors of Bank Alfalah Limited --- AlNahayan Family --- are really committed to invest more and more in the country but still
any drastic change in either the economic policies like increase in taxation rates, or any
change in the foreign policy, which could hurt Pakistans image could also shake the
investor confidence and also could lead to a decrease in the repute of the entire banking
sector of Pakistan.

STRENGTHS
The predominant strengths of Bank Alfalah Limited are
1) Humble Management
The senior management of Bank Alfalah Limited is considerably humble. Their
humility is an integral part of the organizational culture of the bank. The modern
management techniques have discarded the bureaucratic style of management in which
employees were treated as servants if not as slaves. In the contemporary business world
employees are said to be the biggest and the most crucial assets of a business concern,
specifically if we are talking about a service industry and this is precisely the
management policy Bank Alfalah Limited follows. The humility of the management
serves as a big morale booster and encouragement catalyst for all employees in general
and new inductees in particular.

2) Strength And Commitment Of Sponsors

Bank Alfalah Limited is a project of Al-Nahayan family, which is a renowned Abu
Dhabi based investor family. The first project of this particular family was Bank of Credit
and Commerce International (which later on became on of the most renowned banks of

132

the Muslim world). BCCI was acquired by Habib Bank Limited (a nationalized bank) and
as a result BCCI became Habib Credit and Exchange Bank (H.C.E.B). The bank
functioned under this particular name for six years and then Al-Nahayan family bought
70% of its shares from Habib Bank Limited and renamed the institute as Bank Alfalah
Limited. Thus in real terms the same family reinvested in their lost project and tried to
rejuvenate their brainchild. This reinvestment shows the investors trust, commitment,
and perseverance to transform Bank Alfalah Limited into one of the strongest financial
houses of Pakistan. The Al-Nahayan family is a royal family and this fact further adds
to the banks inherent strength.
3) Kaizan
Kaizan is a process of continuous improvement in production and every aspect of
value added (Japanese). In a very short time span the management of Bank Alfalah
Limited has been able to develop its image in a very effective and efficient manner.
Through the laborious efforts of the top management and the employees, the entire
organization as a whole has been able to continuously add its prestige as a reliable,
service oriented, and flourishing financial institution. When we compare the image of
Habib Credit and Exchange Bank with that of Bank Alfalah Limited we find a world of
difference, and when we compare the image of Bank Alfalah Limited at its inception with
its present image we find an even greater difference. This fact proves the thesis that there
has been continuous value addition. The number of individuals and corporate entities that
feel comfortable while dealing with Bank Alfalah Limited is increasing on a daily basis.

4) Phenomenal Growth In Profitability, Branch Network And Deposit

Portfolio

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In the very first year of its inception Bank Alfalah Limited closed its operations at
a deposit portfolio of Rs. 7 billion, at the end of the second year the deposit portfolio had
risen to Rs. 14 billion. Thus Bank Alfalah Limited is growing at a multiplier rate of 50%.
The profit before provisions and taxation of your bank for the year 2006 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. When Bank Alfalah Limited started its operations it only
had three branches and in a short time span the branch network has expanded to 195.
5) Vastly Experienced Management
The people who occupy the top positions in Bank Alfalahs management
hierarchy are certainly no mugs at what they do. Rather they are as capable and as
competent as they come. Their superior management skills certainly do create a
synergistic effect when coupled with the enormous amount of trust sponsors have put in
the management. One of the most evident proofs of above average management expertise
are the deposit portfolio growth, profitability growth, and branch network growth figures
shown under the previous heading.
6) Highly Trained Human Resource Department; Transformation Of Work
Force Into Human Capital
One of the most significant catalysts, management of BAL had incorporated---and
it still is incorporating---in the organization, when H.C.E.B was transformed into Bank
Alfalah Limited, was induction of young and energetic business graduates. This was done
in order to achieve quite a few objectives; one was to raise the overall skill level of the
work force so that service provision could be improved and the second objective was to
reduce the average age of Bank Alfalah Limiteds employees so that an overall sense of
change is trickled down to the grass root level of the organization. Bank Alfalah Limited

134

has an excellent selection / recruitment and training program which are undertaken at its
Training and Development Center, Human Resource Division Karachi.
7) Superior Consumer Finance
In contemporary banking consumer finance has assumed immense significance, as
it is that department of a commercial bank whose personnel directly and extensively deal
with the client body. One of the most predominant sub departments of consumer finance
is Alfalah Car Finance. The customer interface is greater in the consumer finance
department, and the diligent staff of Bank Alfalah limited enriched with its superior
service and relationship skills attracts / persuades these clients to develop relationship
with Bank Alfalah Limited in the arena of corporate banking as well. Thus a strong
consumer finance department really helps the bank to expand its corporate banking
business.
8) Crucial Location Of Branches
All the forty five branches of Bank Alfalah Limited are located at extremely
crucial and vital locations, which is indeed a very significant factor towards earning more
profit. Moreover all of the branches are very well furnished which is an integral
characteristic of a good bank in this age of consumerism.
9) Image Building Activities
Activities such as building of Alfalah Square at Liberty Lahore, the China Khan at
the Alfalah Square, Alfalah Mini Golf Course, and Shahdin Manzil (proposed main
branch, Lahore at The Mall, under construction) have really contributed a lot towards the
image building process of Bank Alfalah Limited. Such activities also make people aware
of the rejuvenation process of Bank Alfalah Limited. Such activities are classified as

135

strength because they involve people in the change process that contributes a lot towards
building customer loyalty.
WEAKNESSES
The chief weaknesses are enlisted as under
1) Small Size
Bank Alfalah Limited is small in size; there is no doubt about this fact. Although, as I
mentioned in the strengths section, the branch network is expanding at a phenomenal rate
but still the size is not big enough as compared to some of the big banks present in the
market. Bank Alfalah limited has 189 branches in the whole of Pakistan. A huge branch
network is always an invaluable asset for any bank. Customers simply love it when they
could see another branch of their own bank at every turn they take. Extensive branch
network might reduce per branch profit but it is very likely to raise the overall profit
figure for the entire organization as a whole.

2) Lack of Research Cell

There should be a research cell in the bank, which should be engaged in gathering the
information about the present actions of its competitors

3) Uneven treatment with customers

Customers having accounts with small amounts are not given same services and
dealing given to those with high accounts.
4) Skill Set Of Employees Is Not Up To The Mark As There Is No Job Rotation

136

The contemporary banking all over the world has taken a unique turn i.e. they have
made job rotation an integral part of their management philosophy. Job rotation adds
value to every single employee, as he is able to perform a variety of jobs related to
banking profession. Moreover job rotation increases the human capital pool of the
organization as every one is trained in more than one sphere of banking. Bank Alfalah
Limited completely lacks this.
5) Foreign Banks Still Are A Little More Prestigious
Although Bank Alfalah Limited is continuously adding to its prestige, but still it can
not be rated as a bank with the same repute as International Banks functioning in
Pakistan, for instance ABN AMRO Bank, Citi Bank and Standard Chartered Grindlays.
Banks function as custodian of peoples possessions, act as their agents, represent clients
in trade dealings outside the country, and give different types of guarantees and in all of
these transactions repute plays a central role. And when it comes to repute foreign banks
have a little more of it as compared to Bank Alfalah Limited.
6) Bank Alfalah Limited Does Not Possess Foreign Network
Foreign banks and some local banks having international network have this edge over
Bank Alfalah Limited. Banking transactions regarding trade finance constitute a very
important part of contemporary banking and moreover they are said to be the bread and
butter for the commercial bank. Bank Alfalah Limited, for such transactions has to rely
on its correspondents and agents in other countries, and naturally has to pay them some
remuneration --- an expense banks having foreign network do not have to incur.

7) No Advertising in Electronic Media

137

Bank Alfalah does embark upon occasional sales promotion activities, it also gives
advertisements in the print media, but it has never flashed an advertisement on the
television screen, which is said to be the strongest of all Medias. Some other commercial
banks are really capitalizing on the power of this media; examples are Askari commercial
bank, Muslim commercial bank, Habib Bank Limited etc.

INDUSTRY ANALYSIS:
1) External Factor Evaluation (EFE) Matrix
External factor evaluation matrix is a very useful tool towards assessing as to what
are the factors that constitute the set of the most significant opportunities and threats. I
found it considerably enlightening because of its two dimensional approach towards
assessing an organization i.e. this particular matrix not only considers the relative
importance of the opportunities and threats by assigning them weights but it also allots
the factors rates on a one to four scale depending upon the kind response the organization
is giving to the opportunities and threats.
In the summer break I did my internship at Bank Alfalah Limited, Garden Town
Branch so assessing the opportunities and threats for Bank Alfalah Limited did not pose
any serious difficulties. But since I was also suppose to weight and rate the opportunities
and threats I had to go to the bank in order to get some views from the members of the
organization as to what do they think about the relative importance of the factors and
what is their view point regarding their organizations response to these opportunities and
threats.

The resultant score of 2.23 shows an average External position of the bank.

138

OPPORTUNITIES
Extension Of Local Branch Network
Establishing Foreign Branch Network
Capitalizing On Information Technology
Unexplored Market Of MNCs
More customers are willing
THREATS
Private Sector Banks
New Trade Policies
Network Expansion By Foreign Banks
Pakistani Banks Improve Their Services
Terrorist Image Of The Country
Inconsistency In Government Policies
TOTAL

WEIGHT

RATING

0.15
0.10
0.10
0.10
0.05

3
1
3
3
1

WEIGHT

RATING

0.10
0.05
0.10
0.05
0.10
0.10

3
1
3
3
2
3

WEIGHTED
SCORE
0.45
0.10
0.30
0.30
0.05
WEIGHTED
SCORE
0.03
0.05
0.30
0.15
0.20
0.30

1.00

2.23

2) Internal Factor Evaluation (IFE) Matrix

The IFE matrix is constructed as a summary step to performing the Internal Audit /
Assessment. Its basic purpose is to list down the major Strengths and Weaknesses of an
organization. Other than these factors, its construction is more or less similar to that of
the EFE Matrix.
As I have mentioned before, I did my internship at Bank Alfalah Limited, Garden
Town Branch. Therefore I have taken the Strengths and Weaknesses of Bank Alfalah
Limited to construct this matrix.
The resultant score of 3.15 shows the strong position of the bank internally.

139

STRENGTHS
Humble Management
Commitment Of Sponsors
Kaizan
Phenomenal Growth In Profitability
Vastly Experienced Management
Highly Trained HR
Superior Consumer Finance
Crucial Location Of Branches
Image Building Activities
WEAKNESSES
Small Size
Lack of research cell
Uneven treatment with customers
Skill Set Of Employees Is Not Up To The
Mark
Foreign Banks Still Are A Little More
Prestigious
Bank Does Not Possess Foreign Network
No Advertising In Electronic Media
TOTAL

WEIGHT
0.06
0.08
0.10
0.05
0.02
0.05
0.10
0.02
0.02
WEIGHT

RATING WEIGHTED
SCORE
3

0.18

0.24
0.4
0.2
0.04
0.15
0.3
0.08
0.02
WEIGHTED
RATING
SCORE
3
4
4
2
3
3
4
1

0.15

0.45

0.05
0.05

4
2

0.2
0.1

0.15

0.45

0.04

0.16

0.02
0.04
1.00

1
4

0.02
0.16
3.15

3) Competitive Profile Matrix

The Competitive Profile Matrix identifies a firms major competitors and their
particular strengths and weaknesses in relation to a sample firms strategic position. First
of all the critical success factors are determined and examined. Rates and weights are
assigned to each factor. Rate are company based which means the significance and
importance of such factors with in a firm whereas weights are industry based which
means their relative importance in an industry. So weights from 0.0 to 1.0 are assigned to
each critical success factor and the total of such weights should not exceed 1. On the
other hand rates are assigned from 1 to 4, 1 being the minimum and 4, the maximum.

140

Each factors weight is multiplied by the factors rate and hence the weighted score is
observed. Here advertising, turnover, organizational culture, market share etc are
considered to be the various critical success factors.
For comparison with Bank Alfalah Limited, I have chosen Askari Commercial Bank
and Muslim Commercial Bank. The reason for such a choice is simple. As Bank Alfalah
Limited is a local bank; its primary competitors are the other local private banks. Other
than Bank Alfalah Limited, these two banks are providing the best services to the general
public.
BANK
ASKARI
ALFALAH COMMERCIAL
MCB
CRITICAL
Sr.
BANK
SUCCESS
WEIGHT LIMITED
No.
FACTORS
Wt.
Wt.
Wt.
Rating
Rating
Rating
Score
Score
Score
1 Market Share
0.03
2
0.06
2
0.06
3
0.09
2 Price Competitiveness 0.02
3
0.06
2
0.04
2
0.04
3 Advertising
0.15
3
0.45
3
0.45
3
0.45
4 Financial Position
0.03
4
0.12
4
0.12
3
0.09
Variety
0.02
4
0.08
2
0.04
3
0.06
5
Of Products
6 Online Banking
0.05
0
0
3
0.15
4
0.2
7 Location
0.15
3
0.45
1
0.15
1
0.15
8 Domestic Networking
0.1
4
0.4
2
0.2
2
0.2
9 International Network
0.05
0
0
4
0.2
4
0.2
10 Customer Loyalty
0.1
4
0.4
3
0.3
3
0.3
Environment
0.05
3
0.15
4
0.2
3
0.15
11
& Decor
Customer
0.15
4
0.6
3
0.45
2
0.3
12
Relationship
Efficiency
0.05
3
0.15
3
0.15
3
0.15
13
of Staff
14 Brand Recognition
0.05
2
0.1
2
0.1
3
0.15
TOTAL
1
3.02
2.61
2.53

141

4) The Strengths-Weaknesses-Opportunities-Threats SWOT

matrix:
SWOT matrix is formulated by considering and evaluating the strengths, weaknesses,
opportunities and threats of an organization. Through proper and keen observation, the
following factors are been initialized for the SWOT analysis of Bank Alfalah Ltd.
STRENGTHS

1.
2.
3.
4.
5.
6.
7.
8.
9.
OPPORTUNITIES
1.
1. Extension Of Local Branch
Network
2. Establishing Foreign
2.
Branch Network
3. Capitalizing On
3.
Information Technology
4. Unexplored Market Of
MNCs
4.
5. More customers are willing
THREATS

WEAKNESSES

1. Small Size
2. Lack of research cell
Humble Management
Commitment Of Sponsors 3. Disproportionate Presence
Of Old Staff
Kaizan
4. Skill Set Of Employees Is
Phenomenal Growth In
Not Up To The Mark
Profitability
5. Foreign Banks Still Are A
Vastly Experienced
Little More Prestigious
Management
6. Bank Does Not Possess
Highly Trained HR
Foreign Network
Superior Consumer Finance 7. No Advertising In
Crucial Location Of
Electronic Media
Branches
Image Building Activities
SO STRATEGIES
WO STRATEGIES
Expansion of branch
network to increase
1. Increase Branch
profitability
Communications
Capturing the market
Network
currently held by the
2. Product development
foreign banks
3. Expansion to foreign
More investment in the
countries to facilitate
projects of Multi National
Expatriates in transmitting
companies
money
More Advertisement to
4. Training of the existing
promote the
employees to increase their
increasing branch network
efficiency and effectiveness
ST STRATEGIES

WT STRATEGIES

142

143

1. Private Sector Banks

2. New trade policies
3. Network Expansion By
Foreign Banks
4. Pakistani Banks
Improve Their Services
5. Terrorist Image Of The
Country
6. Inconsistency In
Government Policies

1. High customer loyalty

and experience can be
use to avoid disasters and
breakdown in service
2. More effective leadership
to increase competitive
and relative advantage
3. Increased profits to be
used to open new
branches to compete with
competitors
4. Opening new branches in
business related hubs

1. Increase the marketing to

the customers to meet the
competitors claims
2. Decrease the number of
personnel to avoid the
threat of takeovers
3. Increasing employee
retention through the
introduction of attractive
pay and benefits

5) Strategic Position and Action Evaluation (SPACE) Matrix

This four-quadrant framework indicates whether aggressive, conservative, defensive, or
competitive strategies are most appropriate for an organization. The axes of the SPACE
matrix represent two internal dimensions (financial strength [FS] and competitive
advantage [CA]) and two external dimensions environmental stability [ES] and industry
strength [IS]). These four factors are the most important determinants of an organizations
overall strategic position. For Bank Alfalah Ltd. this matrix is been drawn using the
following critical success factors
Ratings Average
Financial Strength (FS)
Banks revenue increased by 74 %

Banks profits increased by 43.5 %

Return on assets have also increased showing effectiveness of bank in

proper utilization of its assets

Return on equity has increased indicating that the bank has become more
attractive for its investors

3.50

144

Industry Strength (IS)

Growth and Profit potential

Deregulation provides geographic & product freedom & increases competition

in banking industry
Environmental Stability (ES)
High inflation and Technological changes

Political instability
Competitive pressure and Demand variability
Competitive Advantage (CA)
Becoming increasingly Competitive
Banks customer base is expanding and strong Customer loyalty
Providing services all over Pakistan

3.50

-4
-3

-3.33

-3

-2
-3
-3

DIRECTIONAL VECTOR COORDINATES

X - axis:
Industry Strength + Competitive Advantage
3.50 + (-2.67) = 0.83
Y - axis:
Financial Strength + Environmental Stability
+ (- 3.33) = 0.17

145

-2.67

Conservative

Aggressive
3
2
1

-4

-3

-2

-1

-1
-2
-3

Defensive

-4

Competitive

-5

From the examination and evaluation of the above mentioned SPACE matrix for Bank
Alfalah Ltd.,it can be represented that the bank is currently been falling into the region of
being AGGRESSIVE, which shows the banks is in an excellent position to use its internal
strengths to take advantage of external opportunities overcome internal weaknesses and
avoid external threats.

6) Boston Consulting Group (BCG) Matrix

This matrix enhances multidivisional firms efforts to formulate strategies. It stresses
that autonomous divisions (or profit centers) constitute the business portfolio. It states
that a firms divisions may compete in different industries requiring separate strategy.
This matrix

Graphically portrays differences among divisions

Focuses on market share position and industry growth rate

146

Manages business portfolio through relative market share position and industry
growth rate

Relative market share position is defined as

Ratio of a divisions own market share in a particular industry to the market share held
by the largest rival firm in that industry

Relative Market Share Position

High 1.0

Medium 0.5

Low 0.0

Industry Sales Growth Rate

High 1.0

Stars
II

Question Marks
I

Bank
Medium 0.5

Alfalah
Limited

Cash Cows
III

Dogs
IV

Low 0.0

147

7) Internal External Matrix

This matrix is a continuation and an advanced form of the Boston Consulting Group
(BCG) Matrix. The same interpretation goes for this matrix as well. The non-availability
of the department wise data limits me to construct only a rough sketch of the matrix.

THE IFE TOTAL WEIGHTED

SCORES (3.15)

(2.23)THE EFE TOTAL WEIGHTED SCORES

Strong
3.0 to
4.0
4.0
High
3.0 to 4.0

Average
2.0 to
2.99

3.0

Weak
1.0 to 1.99

2.0

1.0

II

III

IV

VI

3.0
Medium
2.0 to 2.99

Bank Alfalah

2.0
Low
1.0 to 1.99

VII

VIII

IX

1.0

148

8) The Grand Strategy Matrix:

The upcoming details and evaluation will show a grand strategy matrix for Bank
Alfalah Ltd. based on the observation.
RAPID MARKET GROWTH

Quadrant II

Quadrant I

1. Market development

1.Market development

2. Market penetration

2. Market penetration

3. Product
development
4 Horizontal
integration
WEAK
COMPETITIVE
POSITION

3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration

STRONG

6. Liquidation

7. Concentric
diversification

COMPETITIVE

Quadrant III

Quadrant IV

1. Retrenchment

1. Concentric

5. Diversification

POSITION

149

2. Concentric
diversification
3. Conglomerate
diversification

diversification
2. Horizontal
diversification

4. Divestiture

3. Conglomerate
diversification

5. Liquidation

4. Joint Venture

SLOW MARKET GROWTH

According to my observation while working with Bank Alfalah Ltd.,It have experienced
and evaluated that my bank lies in the first quadrant of the Grand Strategy Matrix,i-e,
Quadrant I. This is because Bank Alfalah is enjoying a moderate rapid growth in the
market and the competitive strategy position as well in the industry. So for this purpose,
we can say that Bank Alfalah is in an excellent strategic position. So continued
concentration on current markets and products are appropriate strategies. Also Bank
Alfalah Ltd. can afford to take risks and advantages of external opportunities in many
areas, this is the reason that now Bank Alfalah Ltd, has started the ISLAMIC banking in
the countries like Afghanistan and Bangladesh. So market development, market
penetration and product development are appropriate strategies.

150

MARKETING MIX OF BANK ALFALAH LTD.

Marketing mix is a set of tools you need for establishing your detailed marketing
plans and forecasting your sales to pursue the marketing objectives in the target markets.
Thus marketing mix of any organization is very much important in order to ascertain the
overall functioning of the organization. Bank Alfalah has a strong marketing mix
structure for its branches growth. Marketing mix of Bank Alfalah will be focusing the
following major aspects:
Product
Price
Place
Promotion

151

PRODUCT
Due to trend setting and innovative banking, Bank Alfalah presents a range of
quality products with revolutionary perks and convenience. Alfalah provides a wide range
of products/ services to its customers, which can be compared with any foreign, or
national bank in terms of quality and reliability. The acceptability of these products is
very much effective to the customers. Bank Alfalah has now achieved a competitive
advantage over other banking institutions by offering a complete range of banking
solution for its valued customers.
As per current laws and State Bank of Pakistans regulations, customers are
required to provide proof of their identity and a satisfactory introduction to open any
Bank Account. Term Deposit account can be opened by providing a copy of national
identity card only.
Here is an overview of different products and services formulated by Bank Alfalah.

Nature of Accounts Offered

No doubt in saying that the basic function around which the banks operations
circulate constitute the opening of accounts and ultimately enhancing the deposit base for
the branch. Accounts offered by the banks for the deposits of customers constitute the
basis of their operations and develop the basic relationship between a banker and
customer.

Deposit Products
Likewise, Bank Alfalah has formulated a number of accounts for the deposits of
customers, with unique features. These are:

152

 Current Accounts
This account offers unlimited deposit and withdrawal facility to facilitate business
transactions. There is absolutely no limit on number of transactions deposits and
withdrawals. Individuals, partnerships, companies, associations, clubs, societies, and
NGOs are eligible to open current account.

PLS SAVINGS Accounts

Saving account is the most common account for individuals. Saving accounts are
designed to mobilize savings primarily from a large number of individuals and
households. Any one or more individuals or partners can open a PLS saving account with
the bank.

ROYAL PROFIT:
Royal profit is a highly yield rupee account intended to provide higher rates of
profit to high net worth customers and greater flexibility and convenience in terms of
transactions.

BASIC BANKING ACCOUNT:

153

Initial deposit for account opening is Rs. 1,000 with no minimum balance
requirement.

Non interest bearing checking account.

Maximum 2 deposits & 2 withdrawals through cheque are allowed.

Free debit card can be used to withdraw cash and make purchases at thousands of
outlets across Pakistan which provides access to funds 24 hours a day.

No restriction on ATM withdrawal.

Alfalah Education:
Alfalah Education is a Term Deposit product with No Additional Cost (NAC)
education insurance cover for account holders with school going children. Alfalah
Education Account , beside offering competitive return on TERM DEPOSIT , offers
tuition fee reimbursement of children for 15 years of schooling or up to their 20th
birthday, in the unfortunate event of the death (either through accident, illness or natural
causes) of the main breadwinner (account holder) parent.
Alfalah Education offers a competitive return on term deposit and secondly, it creates a
contingency provision for our school going youths education in the hapless event of the
death of any major breadwinner. The product seems rewarding in the current scenario of
increasing number of children of school going age and the general public interest in
quality education of their off springs.

Alfalah Mahana Amdan:

154

Alfalah Mahana Amdan 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.

Alfalah Kifayat :( more than a saving account)

Features:

Any Pakistani resident over the age of 18 can open this account. This account is
for individual/joint customers only. Other customers like companies, corporate etc
are not eligible for opening of this account

Minimum balance requirement for opening this account is Rs. 10,000/- with a
maximum of Rs

1, 000,000/-

Three debit transactions are allowed in a month either through cheques or Debit
Card/POS machine.

There is no restriction on deposit transactions.

The bank will issue the first cheque book of 25 leaves and a Debit card free of
cost.

Profit will be calculated on monthly minimum balance basis and will be credited
in the account on quarterly basis. No profit shall be payable for a particular
month, if the minimum balance for any particular day of said month falls below
the amount of Rs. 10,000/-.

All service charges are as per the prevailing Schedule of Charges.

Only one account per customer will be allowed across all branches of Bank
Alfalah.

NOTICE DEPOSITS

155

These are the short-term deposits of customers where the notice is to be given to the
bank prior to the withdrawal. Profit rates for these deposits are:

07 - 29 days

4.00%

30 days & above

4.50%

TERM DEPOSITS

Term deposit is a fixed PLS account where the profit rates increase with the amount as:

Tenures

Rates of profit

1 Month

3.50%

3 Months

4.00%

6 Months

4.25%

1 Year

4.75%

2 Years

6.00%

5 Years

6.50%

Salient features:

Short to long term deposits

Choice of term 1,3,6,12,26 & 36

Minimum balance required Rs. 50,000/-

Profit paid on maturity of respective term profit rates increase with tenure and
amount

156

 FOREIGN CURRENCY ACCOUNTS

Due to the increasing globalize business; all leading commercial banks have been
offering foreign currency accounts to their customers. Bank Alfalah has done it by
facilitating its customers to have their foreign currency accounts in the bank.
At present, BAL offers US Dollar & UK Pound accounts and profit is being paid on half
yearly basis.

ON-LINE SERVICE
Bank Alfalah provides on-line services to its customers. At present, this service
facilitates the customers to deposit and transfer their amounts from one branch to another
of BAL. It is being planned to launch a universal account to update this facility and make
it more extensive.

OTHER CONSUMER PRODUCTS

Besides the accounts variety that has been mentioned in the previous sections,
Bank Alfalah Islamic Banking provides a wide range of products that are purely Islamic
based.
These products fall in the category of Musharakah, Maharajah based financing, that is
related to the trade concerns and not the interest based financing or mark up thing.

ALFALAH VISA CARDS (FREE forever)

Your Bank Alfalah Credit Card is your partner everywhere and is globally accepted and
welcomed at locations displaying the VISA logo. It is accepted at nearly 30 million

157

locations in more than 150 countries around the globe and over 18,000 Bank Alfalahs
establishments in Pakistan.
Alfalah VISA lets you pay for shopping, travel, entertainment, meals and much more.
Card members are facilitated through a number of promotions from time to time. In
addition, there are a number of strategic business partnerships with leading local and
international brands for purchase of home appliances at exciting Step-BY-Step (SBS)
monthly installment plan with free home delivery at lowest interest rates.

ALFALAH HILAL CARD (Debit Card)

In our endeavor to give you versatile banking options to fulfill your financial needs,
Bank Alfalah Limited presents you the Alfalah Hilal Card, the first Visa Electron
International Debit Card which gives you an unlimited access to your current / savings
account with a simple swipe, at millions of retail shops and ATMs, worldwide. The
Alfalah HilalCard is globally accepted welcomed at all locations displaying the VISA/
ELECTRON/PLUS logos with self-printing POS terminals. Your card is accepted at
nearly 13 million physical locations in more than 130 countries round the globe with
above 14,000 major establishments in Pakistan.
What's more, it is easy to operate and can be used on any electronic self-printing POS
machine where VISA is accepted, locally and internationally. No more hassle of
remembering your PIN for retail transactions and no need to go to the ATM for cash
withdrawal, one swipe and your transaction is complete.

CAR FINANCE
Financing a car at Alfalah Bank is very easy with the due favor of no collateral
requirement. Alfalah Car is a consumer-financing scheme that enables a customer to own
158

his desired car at easily affordable and flexible installation with minimum down payment
and insurance. All maintenance and insurance expenses are borne by the bank because of
the reason that the ownership of the car is still with the bank even after the signing of the
contract. The bank is just receiving the rentals from the customers. All businessmen,
Corporate Employees, Salaried and self-employed professionals having net take home
income in excess of three times the monthly installment are eligible to take the advantage
of this scheme.
The customer is able to finance their vehicle(s) the smart way with us. Bank will
purchase the vehicles(s) of the customers choice and later rent to the client at a pre
agreed rental amount. Ownership of the vehicle(s) is transferred to the client upon
satisfactory payment of all the rentals by the time the customers security deposits period
expires.

ALFALAH AGRI FINANCE

Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank Alfalah
Zarie Sahulat. Bank is extending this service to the clients on a competitive markup rate.
BAL model is in letter and spirit based on SBP instruction. The scheme now covers
financing of a multitude of activities related to crop production, harvesting,
transportation, marketing, storage, processing, packing, export, agri development,
working capital and fixed investment financing of agri non crop activities, storage, silos,
etc. making it quite exhaustive and comprehensive. The products have been, therefore,
designed keeping in mind objectivity of practical applicability in market scenario and to
cater to the most commonly demanded items of agricultural financing by farmers

Alfalah Karobar finance

159

a) AKF is a Running Finance facility between Rs 0.50M to Rs 10.0M.

b) Tailor-made product for SMEs for their working capital financing based on the
cash flow methodology. (Our Edge = Better pricing, quicker TAT and low
processing charges.)

c) At Bank Alfalah, 65 branches are designated to deal with AKF business in the
entire country.

d) The purpose of the AKF is financing procurement of raw material, finished goods
and receivables of SME businesses.

MONEYGRAM

Bank Alfalah limited, in collaboration with Money Gram, offers remittance service
to Pakistan. Money Gram is person to person money transfer service that allows
consumers to receive money in just a few minutes. Money Gram is available in over 156
countries and in more than 40,000 locations worldwide.
With Money Gram your money is transferred immediately and usually arrives at the
receiving end within 10 minutes, other services can take days or weeks. There are no
complicated procedures and you do not need a bank account or a credit card. Whats
more, the receiver is handed the cash immediately.

SOME SERVICES OF BANK ALFALAH LTD.

160

In addition to the above mentioned products offerings by the bank, we are engaged in
providing some extraordinary facility services to our customers as well. The details are as
under:

Bank Alfalah Rupee Traveler Cheques

Rupee travelers cheques are being pioneered by MCB Bank limited initially but
these days many banks are engaged in providing this service to the clients. Rupee traveler
cheques are been issued at different denominations at Bank Alfalah.

Relationship Banking
Relationship banking is basically a term been used for the purpose of the banking 365
days all along and 24 hours a day. The Bank prides itself on recognizing and fulfilling the
varied financial needs of its customers. In doing so, it tries to develop and build upon
relationships that are based on mutual trust and confidence: the very essence of what they
call "Relationship Banking". A customer can operate his account from any branch in
the country, or through its 24-hour ATMs.

Bank Alfalah Lockers

Before disclosing the details of lockers facility by the bank, a quote needs to be
mentioned,
If your jewellery has been giving you sleepless nights, and the prize bonds tucked in
the bottom drawer make you feel tense, it's time to discover peace of mind.
Bank Alfalah provides safe deposit locker facility to its customers for safe keeping of
their valuables like documents, securities and jewellery etc. For the snatching of the

161

peace of mind, Bank Alfalah is the best Trustee amongst all. Because of the reasons that
the bank is providing extraordinary services for the easy lockers.

The online Banking

Contrary to other banking organizations, Bank Alfalah is constantly engaged in
finding new ways to facilitate its customers and to increase its customer net. THE BANK
ALFALAHs ON-LINE BANKING is a competitive edge for them; because in this
service they provide a facility to their customer that they can operate transfer their
amount on a phone call! All the requirements for inquiries, transactions, suggestions and
complaints are handled over the phone.

Phone Banking
24 hours UAN connectivity with unmatched ease and convenience servers our
customers efficiently through interactive Voice Response delivering cards, PIN
generation and other services.

Automated Teller Machines (ATMs)

The ATMs are provoking new ways to attract the customers through facilitating
transactions. The Auto Teller Machines at Bank Alfalah are continuously running and
delivering instant cash facilities to the customers any time in the day. Its ATMs allow the
customers an access to their money 24 hours a day, 7 days a week, giving you flexibility
to bank at your convenience.

Miscellaneous Services:
o Issuance of Pay Order

162

o Issuance of Demand Draft

o Collection of Local, outstation and foreign bills
o Import export facilitation

PRICE
The term pricing refers to:
The key to pricing is to Build value into the product and price it accordingly.
Bank Alfalah has to face the ever-increasing competition in the fabric industry. As the
number of competitors are increasing day by day but still Bank Alfalah enjoys a
reasonable market share with the facts of providing excellent services amongst the
competitors.
BAL provides different products and services to its customers, which have been
discussed in previous section. Pricing of products means the commission to be paid by
the customer in return of services provided by the bank. The price paid for the services
mainly include:

Mark up

Bank charges

Fees and bank commission etc.

These charges and commissions are prescribed on Schedule of Bank Charges (SOC)
that keeps on changing time-to-time, and issued by the bank periodically (generally after
six months).The price charged for all the products and all the services is given in
complete detail in the schedule of bank charges for Islamic banking are as follows:

PLACE
163

Pricing refers to the following methodologies taken by an organization:

Various activities the company undertakes to make the product accessible and
available to the target customers
Also,
Its can be viewed as set of interdependent organization involved in the process of
making a product or service available for use or consumption

Place refers to the means by which our customer acquires your product. This includes the
actual place it is purchased (the shop, the telephone, the web page, the warehouse) as well
as the actual route of distribution. Simply place refers how you will sell your product to
your customers.
The objective of Bank Alfalahs has always been to expand its branch network to
meet clients needs as has been mentioned clearly in the mission statement of the bank. .
Bank is well positioned and geographically poised, to cater for increased business
demands, from its existing potential clientele. Bank Alfalah has 195 branches, spread all
over Pakistan covering major business centers and principle cities. Bank plans to add
more branches to his growing network in the ensuing years.
At present, Bank Alfalah has opened all its branches at commercial and business areas or
near to commercial areas so that the customers or clients face no problem in reaching the
bank. Head Office of Bank Alfalah is situated in Karachi. The detail description of its
branches is as follows:

164

No.

Branch Name

Address

PABX

FAX No

165

Abbottabad

191, Supply

0992-344723- 0992-344728

Bazar, Main

Mansehra Road,
Abbottabad
1

Ahmedpur East

Plot#188, Block

(062)

(062)

Branch

XI, Kutchery

2275504-8

2275503

Road, Ahmedpur
East
1

Arifwala Branch

47/D, Zain Palace, 0457-835711Qaboola Road,

0457-835717

13

Arifwala
1

Attock Branch

Zila Council

057-2701557- 057-2700248

Building, Kutchery 58
Chowk, Attock City
1

Bahawalnagar

Shop # 6, Ghallah (063)

(063)

Mandi,

2277437

2272005-8

Bahawalnagar
1

Bahawalpur Branch

Ground Floor,

062-2889922- 062-2889874

Bldg.No.V/912,

25

Circular Road,
Bahawalpur
1

Bahawalpur Branch

Ground Floor,

062-2889922- 062-2889874

Bldg.No.V/912,

25

Circular Road,
Bahawalpur
1

Bhalwal Branch

Liaqat Shaheed

048-6642647

048-6643709

Road, Bhalwal
1

Burewala

95-C, AL-Aziz

067-3771901- 067-3771905

Market, College

04

Road, Burewala

166

Chakwal

City trade Centre,

0543-555206- 0543-555220

Tehsil Chowk,

218

Rawalpindi Road,
Chakwal
1

Chaman Branch

Trunch Road,

0826-613440

0826-613488

Chaman,
Balochistan
1

Karachi Main Branch B. A. Building

I.I.Chundrigar

021-2414030- 021-2417006
39

Road, Karachi
2

Cloth Market Branch Luximidas Street,

Clifton Branch

021-2401621- 021-2401627

Karachi

26

Fl-10, Block 5,

021-5833779 - 021-5879175

KDA Scheme 5,

82

Khayaban-eRoomi, Clifton,
Karachi
4

Shahrah-e-Faisal

Progressive

021-4313536- 021-4313539

Branch

Square, Block 6,

38

PECHS, Shahrahe-Faisal, Karachi

5

Jodia Bazar Branch

Gulzar Manzil,

021-7532482- 021-2401627

Jodia Bazar,

84

NP/12/49-50,
Mohammad Shah
Street, Karachi
6

Korangi Branch

Plot No ST 4/2,

021-5050964,- 021-5050653

Sector 12-B,

387

Aiwan-e-Sanat,
Korangi, Industrial

167

Area, Karachi
7

M.A.Jinnah Road

Plot No.23/1, Zelin 021-2750627- 021- 2750

Branch

Place, (Habib

629

Siemens

021-2582114-

021-2582113

Chaurangi,

116

Bank
Bldg.)M.A.Jinnah,
Road / Abdullah
Haroon Road,
Karachi
8

SITE Branch

S.I.T.E. Karachi
9

North Karachi

Plot No SA-1 (ST

021-6950805- 021-6986051

Branch

1/1/) Sector 12-B,

06

Gabol Town, North

Karachi, Industriail
Area, Karachi
10

Paper Market

Plot No.S.R.7/23,

021-2211353-

Branch

Campbell Street,

58

021-2211243

Paper Market,
Karachi
11

Gulshan-e-Iqbal

Ground Floor,

Branch

Sumera

021-4984937

021-4984971

Apartments, Plot
SB-15, Block 13B, KDA Scheme
No 24, Gulshan-eIqbal, Karachi
12

Stock Exchange

18-20, Karachi

021-2417515-

Branch

Stock Exchange,

19

Building, Stock

168

Exchange Road,
Karachi
13

North Napier Road

Ground Floor,

021-2544021- 021-254006

Branch

Building at

24

Surv.No.35 /
Sheet, No.NP-10
(Old
Surv.No.A26/5),
Napier Quarters,
Karachi
14

Bahadurabad

1-3, Prime Arcade, 021-4128577- 021-4129676

Branch

Bahadur Shah

81

Zafar Road,
Bahadurabad,
Karachi
15

Timber Market

Siddiq Wahab

021-7750635- 021-7733463

Road, Old Haji

Camp, Karachi
16

Defence, Karachi

Plot No 40 & 42,

021-5304167

26th Commercial
street, Defense
Housing Authority,
Phase V, Karachi
17

18

PECHS

Federal B Area

154-S, Block 2,

021-4538423- 021-4314221

PECHS, Karachi

24

C-28, Block 13,

021- 6344700

021-6803043

Federal B Area,
Karachi
19

Eidgah Branch,

166, M.A. Jinnah

021-2217290- 021-2217244

Karachi

Road, Near Light

169

House, Karachi
20

Tipu Sultan Road

Z-111,112,

021-4398457- 021-4398456

Adamjee Nagar,

Tipu Sultan Road,

Karachi
21

Marriot Road

Murad Khan

021-2414138- 021-2412082

Road, Marriot

40

Road, Karachi
22

Hyderi

Al-Burhan Circle,

021-6626066

Block E North
Nazimabad,
Karachi
23

Gulistan-e-Jauhar

30-31, Saima

021-4815926- 021-4815924

Classic, Rashid

Minhas Road,
Karachi
24

Korangi bypass (D.

114, 9th East

021-5887571- 021-5887574

H. A. Phase I)

Street, D. H. A.

73

Phase I, Karachi
25

Hawksbay Road

KB-28, Haji Ishaq

021-2355873

Market, Main
Hawksbay Road,
Karachi
26

Shershah Branch

D-283, Main

021-2585001- 021-2585005

Shershah Road,

SITE, Karachi
27

Landhi Branch,

Area 5-D, Sctor

021-5034451- 021-5030875

Karachi

36-E, Landhi

Township, Karachi
28

Tariq Road Branch

124/A, Block 2,

(021)

(021)

170

P.E.C.H.S, Main,

4386052-5

4386056

021- 4904601

021-4904602

021-4988695

021-4985729

Garden East Branch, Silver Jubilee

021-2238704,

021-2225941

Karachi

Apartment,

2238717,

194/2/1, Britto

2238722,

Road, Near

2238605

Tariq Road,
Karachi
29

Malir Cantt Branch

Old Malir
Cantonment
Library, Cantt
Bazar, Malir Cantt,
Karachi

30

Gulshan Chowrangi

Sani Arcade,

Branch

Block 3, Gulshane-Iqbal, Karachi

31

Ismailia Jamat
Khana, Garden
East, Karachi
32

DHA Phase IV,

Plot No. 80, 10th

021-5312832- 021-5312837

Karachi

Commercial

35

Street, Phase IV,

Defence Housing
Authority, Karachi
33

Gizri

K-4/3, Bazar Area 021-5868991- 021-5867149

Clifton, Karachi

34

Sea View

93

Sahil Promenade, 021-5364095- 021-5371259

Block 3, Scheme

97

5, Clifton, Karachi
35

Nazimabad

"Al-Kausar

(021)

(021)

Homes, Plot # 2,

6708980-83

6708978

171

Block-III, SubBlock E,
Nazimabad,
Karachi
1

L. D. A. Plaza

Kashmir Road

042-630 6201- 042-

Branch

Lahore

5, 042-630

6307836,042-

5614-18

6301193,0426368905

Gulberg, Lahore

125/E-1,Gulberg-

042-5877800- 042-5754900

Branch

III, Lahore

Defence Lahore

G-9, Commercial

042-5729723- 042-5729727

Branch

Area, Phase-I,

26

ICCHS (Defence),
Lahore Cantt.
Lahore
4

Circular Road,

Circular Road,

042-7638256-

Branch

Lahore

58

Township Branch

47, B/1, Block 10,

042-5152831- 042-5113716

Akber Chowk,

Township, Lahore
6

Badami Bagh

29-30,PECO

Branch

Road, Badami

042-7704961

042-7728074

Bagh, Lahore
7

Allama Iqbal Town

36, College Block, 042-543 2961- 042-5432960

Branch

Allama Iqbal

Town, Lahore
8

Shah Alam Market

Hilal-e-Ahmar

042-7673401- 042-7673409

Complex, Shah

Alam Market,
Lahore

172

Shadman Branch

Bunglow No. 88,

042-7538116-

Shadman - 1,

18

042-7538119

Lahore
10

11

Tufail Road, Lahore

50/3, Tufail Road,

042-6689016- 042-6688374

Cantt

Lahore Cantt

19

Lahore Stock

Basement Level 2, 042-6307461- 042-6307469

Exchange

Lahore Stock

68

Exchange
Building, 19,
Khayaban-e-Iqbal,
Lahore
12

IBD- New Garden

Awami Complex,

042-5846374- 042-5846386

Town

Block 1, New

81

Garden Town,
Lahore
13

Baghbanpura,

268, G.T. Road,

042-6844006- 042-6844010

Lahore

Baghbanpura,

Lahore
14

15

Ravi Road, Lahore

Thoker Niaz Beg

13, Ravi Road,

042-7708661- 042-7708660

Lahore

Raiwind Road,
Lahore

16

Shahdin Manzil

Faysal Chowk,

042-601 2000

042-6012081

Lahore
17

Liberty Market

10-C, Commercial 042-5789431- 042-5755226

Area, Liberty

34

Market, Gulberg
III, Lahore
18

Azam Cloth Market

Rehman Centre,

042-7643851- 042-7643860

Akbar Block,

54

173

Azam Cloth
Market, Lahore
19

Shadbagh

37,Umer Din

042-7616252- 042-6260295

Road,

56

Wassanpura,
Lahore
20

Defence Extension

Divine Centre,

042- 570

Near Bhatta

0301-9

042-570 0311

Chawk, New
Airport Road,
Lahore Cantt
21

Urdu Bazar

Urdu Bazar,

042- 7210644

042- 7210647

Lahore
22

Shahdara Branch

Main G.T Road,

(042) 7900290 (042)

Shahdara Chowk,

7900291

Lahore
23

Walton Road Branch E-28/A, Main

Walton Road,

(042)

(042)

6602334-8

6687391

042-7671633

Lahore
24

Brandreth Road

91-A, Brandreth

042-7674115-

Branch

Road, Near

18

Australia Building,
Lahore
25

Ghari Shahu Branch 99-A, Allama Iqbal (042) 6310973 (042)

Road, Ghari

6360962

Shahu, Lahore
26

27

DHA Phase II

65 CCA, Phase II, 042-5748846- 042-5748849

Branch, Lahore

DHA, Lahore

Model Town, Lahore 13 Bank Square,

Central

47
042-5884670- 042-5884675
72

174

Commercial
Market, Model
Town, Lahore
28

Cavalry Ground,

35 Main

042-6610531- 042-6610536

Lahore

Boulevard,

32, 6610534

Officers Housing
Scheme, Cavalry
Ground Lahore
29

Chuburji

24, Niaz View

(042)7356640- (042)7222236

Scheme, Rewaz

42

Garden, Chuburji,
Lahore
30

Main Market Gulberg 32-E-Main Market, 042-5786955- 042-5786964

Gulberg II, Lahore 59

Islamabad Branch

Awan Arcade,

051-2873345- 051-2279897

Jinnah Avenue,

Blue Area,
Islamabad
2

I-10, Markaz,

4-A,I-10 Markaz,

051-4435804- 051-4435807

Islamabad

Islamabad

F-7, Markaz

5-A, Markaz, F-7,

051- 265

Islamabad

3941-49

4-D, Urfi Centre,

051-2809 703- 051-2809 702

F-10 Markaz,

711

F-10, Markaz

051-265 3940

Islamabad
5

Islamabad Stock

101, W. Waqas

051-280 4102- 051-280 4106

Exchange

Plaza, Blue Area,

104

Islamabad
6

I-8 Markaz,

Plot No. 34, I-8

051-4862563- 051-4862567

Islamabad

Markaz,

175

Islamabad
7

G-9 Markaz,

39, G-9 Markaz,

051-2253002- 051-2854932

Islamabad

Mauve Area,

Islamabad
8

F-8 Markaz,

Shop # 2 & 3 Al-

051-7151673,

Islamabad

Babar Center, F-8 2854615

051-2260270

Markaz,
Islamabad
1

The Mall ,

B.A. Building, 8

051-5700038- 051-

Rawalpindi

The Mall,

40,051-

5700042,051-

Rawalpindi

5566084,051-

5700029,051-

5566086

5700037

Satellite Town

B/20 North Star

051-4424080-

Branch

Plaza, Murree,

85

Road, Satellite
Town, Rawalpindi
3

Jinnah Road ,

A-351, Jinnah

051-5775325- 051-5775324

Rawalpindi

Road, Rawalpindi

28

College Road

Rawalpindi

051-5762

051-5762 007

0008
5

Chaklala Scheme III

59, Shah Plaza,

051-5766003- 051-5766005

Branch

Commercial Area, 4
Chaklala Scheme
III, Rawalpindi

Lalazar Branch

Tulsa Road,

051-5522904- 051-5527814

Lalazar,

Rawalpindi
7

Peshawar Road

Plot No. 400/2,

051-5468401- 051-5468403

Branch

Gammon House,

02

Peshawar Road,

176

Rawalpindi
8

Airport Road

7- Fazal Town,

(051)5781484- (051)5781483

Airport Link Road, 5

Rawalpindi
1

Peshawar Branch

6-B, Saddar Road, 091-5287051- 091-5287058

Peshawar Cantt.

Peshawar City

Park-in Hotel

091-251794-6 091-251380

Branch

Building,
Peshawar City

Hayatabad

Hayatabad,

091-5822903- 091-5822908

Karkhano Market, 907

Jamrud Road,
Peshawar
4

G. T. Road

1045-

091- 2593003

091-2593001

081-2827567

081-2827562

081-2460520

081-2460519

081-2834425

081-2827270

Arbab Plaza,

(081)

(081)

Double Road,

2441961-62,

2441665

1046,Hashtnagri,
Opp: Sarhad
Chamber of
Commerce,
G.T.Road,
Peshawar
1

Quetta Branch

M. A. Jinnah
Road, Quetta

Hazar Gunji

Truck Stand,
Hazar Gunji,
Quetta

Cut Piece Cloth

Shahra-e-Iqbal,

Market

Quetta,
Balochistan

Double Road

177

Chichawatni

Quetta

2441662

Rai House, 1,

040-5487802- 040-5487807

Railway Road,

Chichawatni
1

Chiniot

Chitral Branch

1-A, Shahrah-e-

047- 6337704- 047- 6337706

Quaid-e-Azam

05

D.C. Office Road,

(0943)

(0943)

Opposite

414367,

412988

Mountain Inn

414396

Hotel, Attalique
Bazar, Chitral
1

Daharki Branch

1285-1287, Zafar

0723-641255

0723-644040

Bazaar, Daharki,
Taluka & Town
Daharki
1

Daska

Dera Ismail Khan

Gujranwala Road, 052- 6616834- 052- 6619650

Daska

3666-B, Kashmir

0966-720606- 0966-720612

Chowk, North

610

Circular Road,
Dera Ismail Khan
1

Dera Ghazi Khan

B.A. Building,

064 -

064 -

Branch

Jampur Road,

2468201-6

2468104

Deara Ghazi Khan

1

Faisalabad Branch

Ground Floor,

041-2617436- 041-2617432

State Life Bldg.

Liaqat Road,
Faisalabad
2

Peoples Colony

237-B,

041-8722636- 041-8722184

Commercial Area, 39

178

D-Ground,
Peoples Colony
No 1, Faisalabad
3

Susan Road

25-Z-101, Susan

041-8556 673- 041-8556679

Road, Madina

Town, Faisalabad
4

Rail Bazar,

P-81, Rail Bazar,

041-2540801- 041-2540806

Faisalabad

Faisalabad

Yarn Market Branch

P-229, Tikka Gali

041-2621486

041-2621487

No. 2,
Montgomery,
Bazar, Faisalabad
6

Minerva Road

Shop No. 16 & 17, 041-2540763- 041-2540759

Branch

Golden Market,

New Grain Market,

Minerva Road,
Faisalabad
7

Sheikhupura Road,

P-352-A, Gulistan 041-8582141- 041-8582147

Faisalabad

Colony II, Millat

Chowk,
Sheikhupura
Road, Faisalabad
1

Gawadar

Airport Road,

0864-211783

Gawadar
No.

Branch Name

Address

Gilgit Branch

Shahrah-e-Quaid- 05811-51904e-Azam, Near,

PABX

FAX No
05811-51903

07

Radio Station,
Jutial, Gilgit
1

Gojra

P-86, Block III,

046-3517876- 046-3517878

179

Bohar Wali Gali,

77

Gojra
1

Gujar Khan

58-D & 59-C,

051-3515704- 051-3515703

Akbar Kiani

707

Shopping Mall,
G.T. Road, Gujar
Khan
1

Gujranwala Branch

B XII-7S-145,

055-3859931- 055-3856471

Krishan Nagar,

33

G.T. Road,
Gujranwala
1

Gujrat Branch

G.T.S Chowk, G.T. 053-3530069

053-3530319

Road, Gujrat
2

Kotla Branch

Bhimber Road,

0537-586892

0537-586337

Thana Road,

(053)

(053)

Dinga, Distt.

7404844-46

7404840

0547-540801

0547-540804

Kotla Arab Ali

Khan, Tehsil
Kharian, Dist.
Gujrat
3

Dinga

Gujrat
1

Hafizabad Branch

Railway Road,
Hafizabad

Hangu

Saif ur Rehman

0925-624641- 0925-624644

Market, Opp: DCO 43

Bunglow, Kohat
Road, Main Bazar,
Hangu
1

Haripur

Main Shahrah-e-

(0995)

(0995)

Hazara, G.T.

627451-2

627831

180

Road, Haripur
1

Haroonabad Branch 15/16-C, Ghalla

063- 2256457

063-2256458

Mandi,
Haroonabad

PROMOTION
Promotion is a term that refers to the following statement:
Steps taken by the company to enhance its sales by focusing the target markets
Thus we can say that promotion can be categorized into different categories based on the
above mentioned marketing perspective definition of promotion. So advertisement, sales
force, billboards etc are major sources through which the promotion scheme can be
implemented.
This is an age of competition. Numerous organizations are providing financial
services to the customer. These days every one is facing pressure of competitors. In this
world of growing competition, the only way to survive and grow, for an organization, in
the market place is the proper marketing and promotion of its products. Same is the case
with banking companies. There is large number of foreign and local banks working in the
country and it has been noticed that they are emphasizing much on their marketing
strategies. In this scenario, the key for a bank to succeed and attract its customers is
adequate promotion of its products &services. The bank can attract and retain its
customers through:

Sales Promotion

Advertisement

Direct Marketing
181

Public Relations
The most prominent and important way to attract a large number of customers is

the advertisement of bank and its products/services. Bank Alfalah has adopted different
approaches for the accomplishment of this purpose. For example, formation of Alfalah
Mini Golf near Gulberg is a major step taken by BAL. It not only provides a source of
recreation to the people but it serves as a major source of marketing for the bank. Due to
Bank Alfalahs assistance for the construction of fountain in Liberty Market Square, it is
named as Bank Alfalah Square. BAL Square, for being situated in such a business and
commercial area has its unusual importance and has resulted into banks promotion.
Construction of Shaahdin Manzil as main branch Lahore is going to be the
revolutionary step for Bank Alfalah. It would not serve just as a main branch only, but it
would also be a great source of ever growing marking and promotion of bank.
Bank Alfalah issued its own rupee travellers cheques with highest denomination
during the course of my internship. I have seen some colored advertisements of RTCs in
some well-known magazines like Herald. Also, some fascinating advertisements have
been printed on Daewoo City Busses, which serves as a dynamic source of marketing.
However, one drawback or shortcoming is that, Banl Alfalah has formalized a lot
of products and services for its customers, even more than other commercial banks, but
any advertisement on electronic media has not been seen. Since, Bank Alfalahs major
competitor, Union Bank Limited has started large media campaign, so keeping in view
these threats; Bank Alfalah is emphasizing more on its advertisement.
Along with the advertisement, the bank is providing personal services to its
clients with maximum security as other banks provide. Bank also encourages the public
relation policy of marketing.

182

Some brochures and promotional material has been printed but it is distributed
mainly through the clients who visit the branch for their day-to-day business or through
the customers who come to get information about new schemes launched by the bank.

183

RECOMMENDATIONS
It was an interested experience to do internship in Bank Alfalah Limited. The staff was
highly cooperated and due to their help I learned big deal about modern banking.
I suggest that such an internship program highly integrative for the students of commerce
education so that the students should be enquired with the knowledge of practice world .I
do summarize that it would be a great help to me in selection of job or future field of
work.
Here I am putting some suggestions, which will enable the bank to compete with other
banks more effectively & efficiently.
It is observed that the employees were overburdened so they have to
stay at branch till late at night. In this way their efficiency is affected and
hiring more employees can reduce their work.
The employees should be signed jobs for specific period and than they
should shifted to other department so that they gain knowledge of other
jobs.
Bank

Alfalah Limited should properly advertise and Communicate to

public about the services provided by it, so that more customers will be
attracted.
The banks management should give more incentives and pay scale of
officers should be revised & improved.
System and operations should be more defined and organized.
IT draw backs should be improved.

184

Administration drawbacks should be improved by the strict control of

general issues.
Audit should be held internally. Rather there should be an Audit
Department in the branch to make audit on daily basis. This can become as
helpful as different banks are having this department of their own.
Lockers, ATM, all these facilities should be provided to attract more
customers.
Expenditures must be control, which are very high.

185

 CONCLUSIONS
If I have to express my experience of internship in Bank Alfalah Limited Garden Town
Branch Lahore I would briefly say:
Bank Alfalah is a good Organization in the way that anybody can join it for his/ her longterm career. Overall working environment is comfortable. Management of branch cares a
lot of its employees and considers them as the Asset of bank. Behavior of senior
executive of bank is very polite and they are caring about the individuals career and their
growth.
However management is very demanding about the targets but good reward at the
achievement of assigned targets is awarded.
Employees at Bank Alfalah are quite efficient. As Garden Town Branch is a new one, its
employees have to bring their bank among the list of good banks. Therefore, they work
more than their working hours and it is all according to their will. It also shows their
loyalty, commitment to organization.
Employees are given the benefits like bonus, gratuity funds, loans, increments, and
medical.
All the customers are entertained individually. Same kind of behavior and attention is
given to all the customers. Getting ideas for improvement from customer side is a new
idea and that is working very well in Bank Alfalah Ltd. All the customers are asked to fill
a suggestion form and the standards of the bank are improved through them.
Prioritizing its product portfolio in line with its corporate and consumer needs and wants
the bank is committed to develop products that give more value to its customers in both
the sectors.

186

In bank, all the work is done on computers. All the entries are made in computer. Balance
is fed into the computer. This increases efficiency of the bank.
During my internship training I gathered information regarding how a successful bank
operational aspect decorticated with the practical.
I found my internship training at Bank Alfalah Limited Garden Town Branch Lahore to
be a very rewarding experience. The training was beneficial because it helpful me to
aware a real life working environment.
So far my learning is concerned; all the employees at branch were quite cooperative.
They helped me to understand the activities of a bank to possible extent. Their good
attitude gave me more confidence to learn more and to ask if I have any query in my
mind. Besides their ever going activities they never get irritant by my questioning. I had
made an honest efferent to present the working & operation of Bank Alfalah Limited
Garden Town Branch Lahore in simplest way.
I feel pleasure that I have really gained a lot during 8 weeks & enjoyed working with
experienced cooperative & intelligent staff.

187