INTRODUCTION TO BANKING

There are many definitions of the word Bank even the standard encyclopedia and law books find it difficult to state exactly what a Bank is. There have been many attempts by different writers to explain the exact significance of the term Bank. Here some of the definitions are quoted as follows: Banking Companies Ordinance 1962 Section 5 (b) defines banking as Banker means a person transacting the business of accepting, for the purpose of lending or investment, of deposits from the public, and withdrawal by cheques, drafts, order of otherwise, and include any post office saving banks. According to Crowther Bank is a dealer of debt, his own and of other people. According to Gilbert A bank is a dealer in capital or dealer in money. He is an intermediary party between the borrowers and lenders. According to Samulelson Commercial banks provide certain services for customers and in return receive payments from them. Thus the comprehensive definition of the bank is: A bank is a financial institution, which deals with money and credit. It accepts deposits from individuals, firms and companies at a lower rate of interest and gives at a higher rate of interest to those who need them. The difference between the terms at which it borrows and those at which it lends forms the source of it profit. A bank, thus, is a profit earning institution.

IMPORTANCE OF BANKING

Banks play very important role in the economic life of a nation. The growth of the economy is dependent upon the soundness of its banking system. Although banks do not create new wealth but borrow, exchange and consume. These make generation of wealth. In this way they become most effective partners in the development of that country. To encourage the habit of saving and to mobilize these savings is its basic purpose. Banks deposit surplus from the public and then advances these surpluses in the form of loans to the industrialists, agriculturists, businessmen and unemployed people under different schemes so that they set up their own business. Thus banks help in capital formation. If there are no banks, then there would be concentration of wealth in few hands and great portion of wealth of a country would be idle. In the fewer developing countries rate of saving is very low and due to this, rate of investment and rate of growth is also very low. We can take bank just like a heart in the economic structure and capital provided by it is like blood in it. As long as the blood is in circulation, the organs will remain sound and healthy. If the blood is not provided to any organ then the organ would become useless. So if the finance is not provided to agriculture sector or to industrial sector, it will be destroyed. Loan facility provided by bank works as an incentive to the producer to increase production. Banks provide transfer of payment facility, which is cheaper, quicker and safe. Many difficulties in the international payment have been overcome and volume of transactions has been increased. These facilities are very much helpful for the development of trade and commerce.

Evolution of Banking in Indo-Pak Sub Continent

The Indian society was quite familiar with the banking, right for the beginning. There is also sufficient evidence to show that during 5th century people were accustomed to use hounds as a credit investment. Loans were given to the people against personal and other securities such as ornaments, goods and other immovable properties. Commercial Banking In Pakistan First Phase (1947 1974) Establishment of Commercial Banking System There were 19 non-Indian foreign banks in Pakistan at the time of independence with the status of small branch network, whose policies and operations were controlled by their head office abroad. These banks were solely engaged in export of crops from Pakistan. There were only two banks in Pakistan at the time of Partition, Habib Bank, which had transferred its head office from Bombay to Karachi after the announcement of the partition, and Australian Bank, which has been working in Pakistani territories prior to June 1947.The government of Pakistan, tried hard to eliminate the banking crises. The imperial bank of India closed down most of its offices in Pakistan, which had been working as the agent of Reserve Bank of India was not willing to purchase even token amounts of the government of Pakistan. Securities on the plea that these securities were not marketable. The Reserve Bank of India was hardly of any help. It refused to help the govt. of Pakistan with advance argument adhoc securities to enable them to make essential disbursements such as salaries and other obligations to add to the difficulties. The Indian govt. withheld Pakistans share of 750 million in cash balances held by her at the time of independence. The forgoing developments clearly brought home the urgency of assuming the control and currency in Pakistan

and brought to the force the need to setup a central banking institution to take the place of reserve bank of India. Therefore it was agreed between the Govt. of India and Pakistan to authority of Pakistan from 30th September 1947 to 30th June 1948. When it assumed full control of banking and currency in Pakistan the first important task before the SBP was to issue of currency notes and withdrawal of reserve bank of India, which had been in circulating in Pakistan so far. Second Phase (1974-79) Nationalization Of Banks The banking reforms turned out to be a transitional and temporary step and hardly after 18 months, the government nationalized the banking system. Thus through the Nationalization Bank Act 1974, SBP and all commercial banks incorporated in Pakistan and carrying on business in or outside the Country was brought under the government ownership with effect from January 1974. The ownership and management of all Pakistan banks stood transferred and rested in the federal government. The shareholders were provided compensation in the form of federal government bonds redeemable at par any time with in a period of fifteen years. The amount of compensation was equal to the break up value of the shares in case of commercial banks. For the SBP shares the amount of compensation was estimated on the basis of average of the clearing quotations during the 6 working days preceding nationalization. The chairman, director and chief executive of various banks were removed from their offices other than those appointed by the federal government and the state bank. The central board of banks, managing committees and similar other bodies were dissolved.

Causes of Nationalization Nationalization of banks may be justified on the following grounds:

Large business and industrial houses dominate the lending policies of the

commercial banks; this brought forward the problem of concentration of wealth.

Commercial banking operations were guided by profit motives and as a

result the backward regions and the small entrepreneurs were never been their favorite customers.
The operation of banks, unlike after business, have direct implication on

the entire national economy. For instance if the banks raise the cost of their credit, the cost of every thing may go up.
Unhealthy complications among banks can lead to financial and

economic problems. Results Of Nationalization Although there are doubts about the positive results of the nationalization but we can say that the nationalization of banks provided efficient professional management to expand banking services in every nook and corner of the country. Banks laid full emphasis on their lending policies on priority sector and national building projects, which discouraged nonproductive and unhealthy activities like speculation and hoarding, there was also a recorded increase in the number of foreign branches of Pakistani banks. The growth of Pakistani banking system was significant. The banking facilities expanded in the rural areas. The bank credit increased sharply especially in the public sector. A part from this expansion the banking systems activity seeking to gain credit targets laid down by National Credit Consultative Counsel (NCCC).

Third Phase (1979-91) Introduction Of Islamic Banking In 1977 the Bhutto government was toppled. The material law government planned to reform the banking sector in a novel way. The overall policy was to Islamize the economy and the banking system, being based on interest was an important target of the new policy. The most preferred form of Islamic bank financing profit and loss sharing would receive banks to receive deposit without guaranteeing any return. The Islamic bank has to acquire a high degree of confidence of the saver to make him deposit his money with them. Not even the return of the principal amount if guaranteed. The Islamic bank cannot finance the project of an investor merely on the furnishing of collateral. The bank will have to be a partner in the project. This will require to careful security of the project and the assessment of risk involved because profits are the function of the amount of risk in the project. Honesty and trust from both sides of the market are more important to the system of Islamic Banking. Fourth Phase (1991-2000) Privatization and De-Regulation The government headed by Prime Minister Nawaz Sharif was not fully satisfied with the performance of nationalized. The areas, which were severely criticized, were the falling standard of banking services and common red-tapism. There were complaints about the services as delay in home remittances, dispatch of cheques, drafts, inefficient counter services, bad debts of the banks etc. were on sector application for privatization of other banks namely UBL and HBL were also invited but the bidding response was quite poor. The privatization of these banks is under consideration. Legislation was enacted to permit the establishment of new banks and the government approved 10 application from the private sector for the grant of commercial bank licenses by SBP, out of these 9 new banks have since been incorporated. Till March 1994 there were 20 domestic scheduled banks with 9825 branches and 21 foreign banks with 66 branches in operation in the country. Overall investment of the scheduled banks rose to 76.7%. At present there are 24 domestic scheduled with 8137 branches and 19 foreign banks with 71

branches are in operation in the country. Total assets of domestic scheduled banks amounting to Rs.1563.73 billion on 30th March 1996.

INTRODUCTION OF BANK ALFALAH LIMITED

MISSION STATEMENT To develop & deliver the most innovative products manage customer experience, deliver quality service that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank. VISION To be premier organization operating locally & internationally that provides the complete range of financial services to all segments under one roof

Historical Overview

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking Companys ordinance, 1962. The Bank is currently operating through 104 branches in 36 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. 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. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates our commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. They perceive the requirements of customers and match them with quality products and service solutions. During the past five years, they have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today Since the inception of Bank Alfalah, by the grace of the Almighty, They have moved rapidly in expanding their branch network and deposit base, along with making profitable advances and increasing the range of products and services. They have made a break-through in providing premier services At an affordable cost to our customers. Keeping in view valued clients and the need for constant and effective communication of information, As They pursues the path of excellence, and customer satisfaction remains their priority. It is only when we know our customers better, can we deliver a higher quality of services, thereby adding synergy to existing management expertise, financial strength and profitability. This is yet another channel of communication for the delivery of quality products and services that enhance value to banks stakeholders.

BRANCH NETWORK OF ALFALAH

The Bank is fully aware that the branch network has direct implications on the services that it provides to its customers. They offer services through a network of 149 branches and 59 state of the art ATM machines. Conventional Branches Islamic Banking Branches Overseas Branches ATM Machines Following us the description of bank Alfalah branches KARACHI Bahadurabad branch Clifton branch Cloth market Defense branch Karachi Gulshan-e-Iqbal branch Jodia bazaar branch Korangi industrial area branch M.A jinnah road branch

 LAHORE

Main branch North Karachi industrial area North Napier branch Paper market branch S.I.T.E branch Sharah-e-Faisal branch Stock market branch Timber market branch

Allama Iqbal town Badami bagh branch Circular roadm [ Credit card center Defense branch Gulberg branch LDA plaza branch Shahalam market COUNTRYWIDE Bahawalpur D.G.Khan Faisalabad Gujranwala Gujrat Head office Hyderabad Islamabad Jehlum branch Mardan Multan Peshawar Quetta Rawalpindi Rahimyar khan Sahiwal Sialkot Sargodha
Township branch

 Sukkar

CHAIRMANS REVIEW

Since the inception of Bank Alfalah, by the grace of the Almighty, we have moved rapidly in expanding our branch network and deposit base, along with making profitable advances and increasing the range of products and services. We have made a break-through in providing premier services at an affordable cost to our customers. Keeping in view our valued clients and the need for constant and effective communication of information, we have designed this website to be as userfriendly as possible. As we pursue the path of excellence, customer satisfaction remains our priority. It is only when we know our customers better, can we deliver a higher quality of services, thereby adding synergy to our existing management expertise, financial strength and profitability. This. Is another. Channel of communication for the delivery of quality products and services that enhance value to our stakeholder

MANAGEMENT HIERARCHY IN DASKA BRANCH

CHIEF MANAGER

MANAGER OPERATIONS Manager Accounts Manager Credits

Manager Administration

Manager SAM*

Manager Foreign Currency Accounts

Manager General Banking Manager Marketing

Manager International Banking Accounts

* SAM (Special Asset Management)

STRUCTURE OF VARIOUS DEPARTMENTS

1. ACCOUNTS DEPARTMENT

MANAGER ACCOUNTS

Officer (1)

Officer (2)

Officer (3)

Officer (4)

BRIEF DESCRIPTION OFFICER (1) Is principally engaged in following three types of functions: Daily funds management Various type of reporting Monitoring of new and old foreign currency forward contracts with SBP. OFFICER (2) Is responsible for daily activity checking OFFICER (3) Is responsible for making daily weekly and monthly reporting to different types of Banks operation. OFFICER (4) Is responsible for applying test keys for security of foreign remittances

2.

CREDIT DEPARTMENT

MANAGER

CREDIT MARKETING

CREDIT ADMIN

Credit Officer (1)

Credit Officer (2)

Office In charge

Credit Officer (3)

Credit Officer (4) Officer (1) Officer (2)

Credit Officer (5)

BRIEF DESCRIPTION I. II. III. CREDIT MARKETING : In credit marketing there are five officers who work jointly and are responsible for: Marketing activities Making credit proposals to send to head office for sanctioning CREDIT ADMIN: In credit admin there are two officers one of them is responsible for scrutiny of loans, which are to be dispersed, and other one is monitoring of repayments schedules as monitoring accruals of markup etc.

3.

FOREIGN CURRENCY ACCOUNTS

Head of Department

Officer 1

Officer 2

Officer 3

BRIEF DESCRIPTION: OFFICER (1) Is responsible for cancellation of cheques drawn on foreign currency accounts and deposit of foreign currency. OFFICER (2) Is responsible for foreign remittances both inward and outward OFFICER (3) Is responsible for cases of Special US Dollars Bonds

4.

TRADE FINANCE

HEAD OF DEPTT.

EXPORT

IMPORTS

E-Form Checking

Collection Officer

LC Opening Officer

LC Return Officer

Export Refinance Officer

Negotiation

Scrutiny & Lodgment of Documents

Scrutiny & Lodgment of Documents

BRIEF DESCRIPTION Imports section imports section there are two Officers one of them is responsible for LC opening and other is for LC return Exports section In exports there are six officers as follows First one is responsible for E-form certification and LC advising Is responsible for realization of exports Is responsible for collection of document under/without LC Is responsible for exports refinance Is responsible for scrutiny of lodgment of negotiable documents Is responsible for realization of negotiable document

SERVICES AT BANK ALFALAH

BRANCH BANKING Safe Deposit Lockers Bank Alfalah provides safe deposit lockers facilities to its customers for safe keeping of their valuables like documents, securities and jewellery etc. Important features of lockers facility are as follows: Various sizes to choose from small to extra large: small, medium & large. Annul locker rent ranges from Rs.1, 000/- to Rs.3, 500/-. Locker rent is waived for customers maintaining a minimum deposit of Rs.2 million. Current account or above US $25,000/- in a current account or US $ 50,000/- in a savings account

Deposit Rates: Royal Profits Amount Proposed Rates (P.A) Tenure 25,000-999,999 1,000,000-4,999,999 5,000 & Above % Deposits For individuals For Financial Institutions, 1 MonthFrom 50,000 To 999,999 3.00% 3.10% 3.50% 2.25% and Corporate NBFIs and DFI's 3PLS From 1,000,000 To 9,999,999 3.60% Month 3.50% 3.70% 3.00% Saving Deposits 6 Months 10,000,000 To 49,999,999 4.10% 4.00% 4.20% From 3.50% On Balance up to 2.00% 1.00% 1 Year 50,000,000 To 99,999,999 4.60% 4.50% 4.70% From 4.00% RS.24,999 2 Year 5.50% 5.70% From 100,000,000 & Above 5.60% Contact On Rs.25, 000/- and 2.00% 1.00% above PLS 7-29 Days Notice 2.00% 1.00% Deposits PLS 30 Days Notice 2.00% 1.00% Deposits PLS Term Deposit 1 3.00% Contact Alfalah Month PLS Term Deposit 3 3.50% Contact Alfalah Months PLS Term Deposit 6 4.00% Contact Alfalah Months PLS Term Deposit One 4.50% Contact Alfalah Year PLS Term Deposit Two 6.00% Contact Alfalah Year PLS Term Deposit 6.50% Contact Alfalah Three Year

Royal Patriot

CONSUMER BANKING 1) 2) 3) 4) 5) 6) Debit Card Credit card RTCs Home loans Auto loans Money Gram

Debit Card It gives an unlimited access to current/savings account with a simple swipe, at millions of retail

shops and ATMs, worldwide. It is easy to operate and it can be used where visa is accepted, locally and internationally. No more hassle of remembering PIN and no need to go to the ATM for cash withdrawal, one swipe and the transaction is complete. Alfalah Hilal Card is a debit card that gives access to bank account of customers. Alfalah Hilal Card allows customers to purchase goods at merchant establishments across Pakistan & abroad and also give the freedom to withdraw cash from any VISA/ Electron/PLUS ATMs in Pakistan and abroad, from all Local Bank Alfalah and 1 Link ATMs. Credit Card Bank Alfalah Credit Card is partner everywhere and is globally accepted and welcomed at locations displaying the VISA logo. It is accepted at nearly 30 million merchants and 1 million ATMs in more than 150 countries around the globe and over 10,000 establishments in Pakistan. Alfalah VISA lets customers 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. Women Exclusive card: This card has basically designed for household and workingwomen for purchasing household goods for themselves or their family. Now for the first time in Pakistan, Bank Alfalah has introduced a credit card exclusively for women. This card has its unique features, which have been tailor-made for the women in Pakistan. Liability The liability of this card depends on what basis this card has been applied for:
If the female is applying on her own income basis, she herself will be

liable to pay for the amount spent through the card(s). If the female is a house wife and does not have any direct income source, she can apply for the card through the person responsible for

the household (i.e. husband, parent, bother or sister) who will sign an undertaking to be responsible for the amount spent through all the card(s) issued under this scheme. Classic Blue card: It is the first card of its type in Pakistan for professionals who do not qualify for other credit cards. With the minimum requirement of a graduation degree customers have been provided a chance to have credit cards at the start of their careers. staff card: House staff card designed to be used by household and other servants. This saves time of their masters.

Son & daughter card:

Offered with all other credit cards but with minimum age criterion of 13 years. The main aim is to give knowledge to the younger customers about the use of plastic money. Its limit can be a low as Rs.5, 000 Student cards Bank Alfalah has recently launched its student credit cards to the customers with 14 years of education and currently enrolled in a professional college. For the first time in Pakistan, Bank Alfalah introduces a credit card for Students. This card is for customers if they are enrolled in a professional university (as per Bank Alfalahs approved list) with 15 years of schooling experience. Now people can pay your fee, buy books with Alfalah VISA. Not only this but they will also earn reward points and can redeem them for a TV, Mobile Phone, CD player & DVDs etc. Requirements: The applicant must be a graduate with 14 years of schooling and must be currently enrolled in a professional college/University.
Clear Copy of NIC Clear Copy of Fathers/Guardian's NIC.

 Father's/Guardian's sign as Guarantor. Minimum age should not be less than 17 years. Copy of Result Card of 1st year of professional education or

equivalent semesters/terms. Copy of Last Fee Deposit Slip in the current institution. College/University roll number, section & department. Visa Mini Card Easily attachable to customers key chain, mobile phone or any other household device. Visa Mini is a practical and convenient part of everyday life - whether they go for shopping, dine out, buy grocery, want to go for holidays or feel like buying something of interest while we are out just for a jog! Customers can take it anywhere they like with no hassle as it has a perforated hole in the bottom left corner making it attachable to key chain, mobile phone or other day-to-day carry along device.
43% smaller than the regular sized credit card with the same features

and the benefits Accepted at over 13 million merchants worldwide and around 7000 establishments in Pakistan (used on electronic POS terminals only). Has the same security feature as the regular sized Alfalah VISA credit card. Rupee Traveler Cheques: Bank Alfalah presents Rs.1, 000, 5,000 and 10,000 denominations of travelers cheques, making it very convenient to carry money while traveling or keeping emergency cash safe. Bank Alfalah travelers cheques are best travel companion as they provide the most benefits that no other travelers cheques offer. Alfalah TCs have unmatched security features Plus, no need to have an account holder. Free from the risk and hassle of carrying cash during travel, Bank Alfalah TCs ensure safe and smooth travel. An excellent combination that no other TC can contest. The maximum-security features: Lithographic security features, invisible UV printing, high-definition microlines, anti-scanner effect, mould based paper,

Alfalah watermark and printing in the UK, are just some of the security features of our TCs which prevent counterfeiting. Just in case customers are still not convinced, bank refund the money in case of loss or theft of TCs.
3) Home Finances:

BAL has priced Home Finance Plans with a wide variety of rate options to suit pocket, and budget. These rates will indicate just how competitive they are! So whether people are buying their first home, moving to a new property, or looking to switch from current lender, with Bank Alfalah its easy to make mortgage arrangements that are really right for people. 1) 2) 3) 4) Buy home Renovate home Build home Make an easy transfer

Buy home BAL provides customers up to 70% of the purchase price of the property (whichever is less), so that they can realize dream of people and enter the reality of owning a home! I. Renovate home If people already own a home, but need extra space for a growing family. They can simply apply for financing of up to Rs. 3.50 million or 40% of the surveyed value of home and get the extra space! Build home People have a plot and need finance to construct a home, which excites everyone in family! No problem. BAL will provide 70% of the estimated value of constructed property to enable people to say good-bye to rent forever! Even if they don't have a plot, BAL will provide them up to 60% of the value of the plot that they have selected to purchase! II. Make an easy transfer Does customers existing installment on a home finance leave them with nothing to spend? They need not worry any more because BAL have

genuinely low rates and payment options that could leave more funds with them each month. Transfer up to 100 % of the existing finance. The Eligibility Criteria People may apply for Bank Alfalah Home Finance, If they are a Pakistani National. If they age is between 23 and 65 years. If they are in continuous employment in a permanent position for the last 2 years or more. OR
If they have existing 3 years (or more) of business or professional

experience. If their gross annual income is Rs: 240,000/ or more [their spouses income (up-to 50%) can also be combined If they require a financing requirement starting from at least Rs: 500,000/ o If they have been a Bank Alfalah borrower for past one year with clean payment record. People may apply for Bank Alfalahs Home Finance for minimum period of 3 years and a maximum period of 20 years Documents Following documents are required to be submitted by an applicant with the completed application form For Salaried Persons For Resident Pakistanis 2 passport size photographs. Copy of new NIC Up to date Bank Statement for the last 6 months. Copies of latest 6 months credit card bills. Copies of last Salary / Pay Slip duly attested by the HR department. Salary Certificate (original) from the employer, showing the gross salary and deductions. Employment verification form from the employer Non-Resident Pakistanis - Additional documents

 Copy of Pakistani Passport valid for at least next 1 year. Copy of Contract / Work Permit / Iqama / Residence Permit / etc. Copies of last 3 years Tax Returns (Not Applicable for Middle

Eastern Countries) Personal Guarantee of a relative based in Pakistan and acceptable to Bank. For Businessmen / Self-Employed Individuals 2 passport size photographs. Copy of NIC. Certified Copy of last Six Months bank Statement. Copy of current professional association membership / trade body membership certificate (if Applicable). Sole partnership deed letter Copy of Latest Form 29 duly attested by the company secretary Letter from company secretary confirming the status and share holding (where applicant is director of company) 4) Auto loans Benefits And Features Quickest processing No hidden charges Minimum down payment Complete repayment at any point of time Balance transfer facility {BTF} for existing as well as new clients from other Banks Tenure period ranging from 1 to 5 years. Financing of all brand new locally assembled vehicles and used cars. Financing limit ranging b/w Rs. 200,000/- to Rs. 2000,000/- for brand new cars Corporate & individual Car Leasing BALs recently introduced car leasing facility for individuals and corporate sector has set new dimensions for the product. Now people are provided with the option of either to get the vehicle leased or financed. Insurance

Renowned and reliable Insurance companies are offering the competitive rates of Insurance. Pay year insurance premium in advance (at the time of down payment) and remaining in the subsequent equal monthly installment How much extra money being paid Bank Alfalah's mark-up rates are as follows: Pak Suzuki Cars 12.9 % All other local assembled 13.9 % Cars Imported Cars 15.9 % Repayments Easily affordable installments on monthly basis in the form of postdated cheques will set free of depositing rental cheques every month.

Security Hypothecation of vehicle in the name of the Bank Alfalah Limited Act as a co borrower Acting as a co borrower, will enables customers family members {spouse, children- 18 year and above} to avail the financing facility and can get the car registered in their names as well. Eligibility We can get a car loan form bank Alfalah to purchase a brand new car if we are: Pakistani National Identity Card holder. Over 20 years of age (Maximum 60 years in case of salaried and 62 in case of a business person at the time of maturity of the loan). Salaried, Businessman or self employed.

Requirement Two passport size photographs. Copy of National ID card. Bank statement for the last six months. Salary certificate {for salaried individual}. Business proof {for a businessperson}. N.T.N Certificate. Co borrowers NIC copy {if the car is to be in the name of the coborrower}.

Money Gram 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. Secure and reliable An extensive network of quality agents, linked by computer, will transfer money safely and ensure that it is handled with care and without delay. Thousands of people already use the Money Gram service all over the world. It is trusted for its reliability and security. Convenient and fast Money Gram is available in over 154 countries and in more than 40,000 locations worldwide. With Money Gram money is transferred immediately and usually arrives at the receiving end within 10 minutes while other services can take days or weeks. There are no complicated procedures and

we do not need a bank account or a credit card. Whats more, the receiver is handed the cash immediately. Free message service (for senders): There is also an added personal touch-we can receive a 10 word message from the sender with every transaction at no extra cost Easy to receive! Simply follow these steps: To receive money Ensure that the sender has given you the Money Gram reference number. Go to any Bank Alfalfas authorized branch, taking some form of identification (e.g. NIC/passport). Provide the reference number and complete a simple form. Bank will be given the money immediately, in our local currency.

ELECTRIC BANKING 1) Phone Banking 2) ATM 3) Online banking Phone Banking "Alfalah Phone Banking is available to all customers on a countrywide basis. Customers can dial 111-225-111 (without any city code/prefix) from their respective cities i.e. 21 cities where Bank Alfalah is present, and get prompt services from the Centralized Phone Banking Services. Customers enjoy 24x7 Round the Clock Phone Banking Services. Bank Alfalah is the first bank in Pakistan to offer Centralized UAN connectivity from 21 cities to its Call Centre. 1) ATMs.

Bank Alfalah through its commitment to provide superior and improved services to its valued customers, has unveiled a nationwide network of ATMs. For customer convenience, customers now have access to instantaneous cash availability, 24 hours a day, 7 days a week. ATM network of BAL is geared up to exploit the latest technology, and is equipped to meet the highest standards of security and efficiency. With new Hilal Card customers can now: Withdraw Cash Use our convenient, user-friendly fast cash option Make a Balance Inquiry Get an instant printout of account balances Get a printout of last transactions (Mini-statement) on the spot. Change PIN (Personal Identification Number). Bank Alfalah is pleased to introduce 55 state of the art ATMs, deployed at the most convenient and accessible locations. Bank Alfalah is a founder member of the 1-Link Switch, thus making a countrywide network of ATMs available.

CORPORATE BANKING Trade finance Inspired by a challenging spirit and an unyielding desire to create a sound and reliable networking of correspondent relationships, the bank has placed great emphasis towards it growth. Accomplishing something for the first

time requires a special focus. It demands foreseeing possibilities. To do so, BAL successfully surmounted problems and difficulties arising out of issues relating to weak economic conditions of the economy and a continuous deteriorating status of country risk. The incertitude and skepticism of the international banking community towards financial institutions from emerging markets remained intact. BAL persistence during the past four years allowed us to make significant inroads into the arena of correspondent banking. Large international banks, after critically evaluating us, agreed to enter into relationship. During 2002 they added 81 banks to their network of correspondents, bringing the total number over 170. Of these relationships, there are now several banks that rank amongst, the top financial institutions in the world. Geographical coverage of BAL now extends to over 100 countries, which is adequately compatible with trade flows. Banks correspondents, during the year extended unqualified support, which enabled it to undertake a healthy quantum of foreign trade business. There are many challenges ahead for the bank, in the coming year, bank will not only continue to review its efforts on existing correspondents to make the relationship more beneficial, but will also add more correspondents to establish a comprehensive international networking to facilitate its customers transaction as well as the Banks proprietary needs. They have provided against the list of correspondents their world and country ranking. These ranking have been taken from The Bankers Almanac July 2001 issue. BAL would like to emphasize that correspondent arrangements do not necessarily imply the existence of account relationship. BAL is in the process of rationalizing current nostro account relationships. They shall continue to open new accounts in various currencies based on trade flows and business requirements. Structured Finance Established in 1998 in order to provide innovative investment banking services to valued clients. A team of hand picked professionals, dedicated to syndicated loans and structured products. The teams expertise is well known in the marketplace with its capability to assist public & private sector entities, major financial institutions, multinational corporations, domestic & international

institutional investors in innovative financing including underwriting & private placements. The scope of SFUs activities also encompasses advisory assignments, such as privatization, Mergers & Acquisitions (M&As), domestic listings, IPOs and restructuring. During the past few years, SFU has been successful in sourcing and participating in a number of prestigious transactions involving large amounts. Some of the value added services offered by SFU include the following: Loan syndication Public floatation of Term Finance Certificates (TFCs) and equity Private placement of Term Finance Certificates (TFCs) and equity underwriting Guarantee syndications Financial restructuring Mergers & Acquisitions (M&As) Fostering joint ventures Privatization Sale side and buyers side advisory Structuring new financial instruments In the future, SFU is envisaged to supplement the enhanced profile and profitability of Bank Alfalah Limited through its value added services, through both asset building and income generating aspects

PRACTICAL PORTION

DEPOSIT DEPARTMENT

DEPOSIT DEPARTMENT

Customer is a person who has some sort of account, either deposit or current or some similar relation. A person becomes a customer the moment the bank receives the money or cheques and agrees to open an account. It is contractual agreement between bank and customer after which both concerned parties indulge in a mutually beneficial business relationship. "Deposits are the blood of a Bank" Acceptance of deposits is the real source of income of a bank. Deposits department is the backbone of corporate banking. Deposit is often used to describe the money, which customers of all kinds leave with the banks. Deposits account can be defined as an account, which is opened to earn interest. The term deposit is highly misleading. It is not something deposited for safe keeping, like currency in a safe deposit box. Bank deposits are not like that. When one brings currency to a bank for "Deposit" the bank does not put the currency in a vault. It may put a small fraction of the currency in the vault as "Reserves" but it will lend most of deposits to some one else or buy an investment. The entire banking system is based upon borrowing. Like all banks, deposit department has acknowledged its worth as the most important. Almost all the operations generate from the deposit department and with due course of time reflect back to the deposit department. In order to attract funds, bank has introduced various types of deposits schemes that may suit the needs and tastes of a large body of depositors. TYPES OF DEPOSIT FACILITY Deposits are broadly classified into the following categories. Current Account Savings Account Term/Fixed deposit Royal Profit Now I am going to discuss above deposit schemes offered by BAL Current Account
Current A/c is basically used to meet the daily transactions. Current account provides safety to the customer's money, gives the

advantage of paying debts by the convenient and safe means of sending cheques through the post thus avoiding the trouble and loss that might be involved if payments had to be made in notes and coins.

All payments in and out are the record of financial transactions. Interest is not allowed on these accounts. No interest is paid on current accounts In case of current a/c customers can draw money at any time when customer need it. There is no restriction that customer cannot draw money before such & such time so we can say there is no time limit. Limited company, partnership firm, club, society or association joint and sole proprietorship can open this account. Minimum balance acceptable by the bank to maintain the account is Rs.10000/-.

PLS
In case of saving accounts, account holder gets profit. In Bank Alfalah Limited saving a/c is used as current a/c, & there is

no main difference between current & saving account except profit. Limited company, Partnership Company, joint & sole proprietorship, can open this account. Balance acceptable by the bank to open this account is Rs.5, 000. The profit is given to the customers at minimum balance during the month 2% zakat is deducted at 1st Ramazan Term / Fixed Deposit When customer places money with a banker for a fixed period a deposit is termed as fixed/term/time deposit. Some important features that I have done in practice is that: No cheques-book is required. Time period varies from 3 months, 6 months to 1 year & up to 5 years. The profit rate varies according to the time period for which it is deposited. The term deposit is renewed automatically on the date of maturity at the SBP's applicable rolling rate of interest, the acknowledgement of receipt of money is taken on the letter of authority after its proper identification. If a deposit receipt is lost or stolen a duplicate receipt is issued after obtaining an indemnity. It is necessary to obtain a duplicate receipt if original is lost because it is so worded that banker undertakes to repay the amount on the presentation of duly discharged receipt. Deposits on joint names are payable to conditions agreed at the time of their acceptance.

 On expiry the depositor presents the deposit receipt (advice) dully

stamped and gets the money in cash or transfer to his account. It is legally, a depositor cannot demand the payment of his fixed deposit before the expiry of the stipulated period but generally to oblige the customer, banker allows them to withdraw their fixed deposit before maturity. In these cases customer are asked to forgo interest. Deposit receipts issued is called fixed deposit receipts. Royal profit Royal profit has following features In this account minimum requirement is Rs.50, 000. It has some features of saving account and current account. Monthly profit is calculated on average deposit during the month.

CASH DEPARTMENT

CASH DEALING DEPARTMENT

Cash department of BAL is given the complete responsibility of handling all receipts & disbursement of cash, as a result of transaction in both local & foreign currencies, & near cash items such as traveler cheque etc (when they are issued against cash). As a consequence it is also responsible for the book-keeping of these transactions & the safe custody of cash & near cash securities. Following are the major functions of the cash dealing department of BAL I. Cash receipts (or receive deposits) II. Encashment of cheque Cash department of BAL is a separate close part covered with glasses. No one other than cash department's employee is allowed to enter into that area. Thats why I did not work in this department but I have gained knowledge about it from teller of BAL.

I.

Cash Receipt

The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount. Information required All the details are required regarding date, account number, and amount in words & figures, title of account & signature of depositors. Procedure The cashier first verifies all the requirements of the cash deposit slip that whether these are fulfilled or not & verifies the amount written in words & figures. The deposit slip is stamped, cash is received & second copy is given to the depositor. Encashment Of Cheque Cheque encashment involves following four main steps. These steps are: Accepting of cheques Affirmation of signatures Entry into system Payment of cash

II. Encashment of a Cheque Requirements to Encase a Cheque Following requirements are essential to encash a cheque. 1. No Stop Payment Instruction No stop payment instruction is presented for the account. 2. Instrument in Writing It must be in writing. However, there is no bar on writing material but the cheque written with lead pencil is not honored by the bank in practice because unauthorized alternations can also easily be made are difficult to detect so a cheque should be pen written.. 3. Cheque must not be crossed The cheque, which could be presented to the drawee bank for encashment over the counter, should not be crossed whereas crossed cheques are deposited into account. 4. The sum of money must be certain A cheque must contain an order to pay a certain sum of money only amount in figures and words must be same. 5. Drawers Signature The document in order to be validly called a cheque must bear the drawer's (account holder) signature or that of his authorized person. At the time of opening an account a customer provides a banker with a specimen of his signatures, so the signature on the cheque must tally with that. 6. Sufficient Balance Sufficient balance should be present in the customer's (drawer's) account to encash cheque. Stop Payment Instructions

If a customer lost his cheques book he would make stop payment instruction to cash department of BAL stop payment instructions can be made in two ways. Verbal Written The customer informs the cash department on telephone or face-to-face meeting to stop payment, but later a written instruction must be made on a prescribed form. If customer make stop payment instruction to the bank and bank make payment to some one else after lodgment of stop payment instruction in the computer, Bank would become liable for this fault. Acceptance of Cheque The cash is paid against the cheque of the client. The following points are kept in mind while receiving the cheque from the client. Cheque should be drawn on BAL. It should not be post dated. It should be a bearer cheque so the word bearer should not be crossed. The drawer does not stop payment. Amount in words & figure should be same. Alternation in date/figure/word require drawer's full signature, with signature on the cheque. If signatures are not the same then it is returned back otherwise forwarded to computer terminal. Affirmation of Signatures After receiving the cheque the officer verifies the signature of the account-holder with the signature on the cheque. If signatures are not the same then it is returned back otherwise forwarded to computer terminal. Computer Terminal Process Now the teller checks the balance of the account holder. The teller also sees whether the stop payment instructions are received from account holder or not. After considering these two points teller posts the cheque in account holder ledger. Payment Of Cash The cashier enters the entry cheque in computer & pays against the second signature of the receiver on the back of the cheque.

Remittance Department

REMITTANCE DEPARTMENT When money is transferred from one place to another place or from one country to another country to fulfill the requirements of the customers by the order of the customer, it is called remittance. I worked in this department and realized that Bank remits money in different ways. Some of these ways are as under:

Pay Order Demand Draft Telegraphic Transfer Mail Transfer Rupee Traveler Cheques

During my stay at BAL (Daska Branch) I have learned about first three modes of remittances

Pay order Pay order is also a cheques drawn on the bank but it is payable in the same city. The bank also charges nominal charges for its issuance. Transfer through Pay Order Pay order is also called as cashier order, manager's cheque, & banker's cheque, & cheque on services .Pay order is an instrument through which payment can be made from one bank to another bank within city. In case of Bank Alfalah Limited, pay orders are also used, instead of demand drafts; outside the city where Bank Alfalah Limited does not have its branch.

First of all it is not necessary that the person who wants to issue pay order, should be the customer of the bank. So anybody either he is customer of the bank or not can issue pay order. Case 1 For example, if person A wants to pay some amount to person B, in case when both of them are not the customers of the Bank Alfalah Limited Then person A will come to bank, fill the application or form, pay the money with Rs.500 charges, excise duty & tax. The pay order is then prepared by the employee of remittance department & is given to the person A. So that he could give this pay order to person B by himself or in other case person B will himself receive this pay order from the bank. The banks employee on the voucher while giving him the pay order will take signature of the person.

Case 2 If the person A is customer of the bank then instead of giving cash amount he can request for debiting his a/c by that amount for which pay order has to be made. Case 1 & 2 are for the situation when both the remitter & the receiver of money are in same city. Case 3 In other case, if payment has to be made by person A to person B, who is out of the city Lahore pay orders are also issued. Although pay orders are also issued locally but for the city in which Bank Alfalah Limited does not has its branch pay orders can be issued. Demand Draft DD (Demand Draft) is a cheques issued by the bank drawn on the same banks outstation branch. The bank charge nominal commission on issuance of demand draft. If lost the holder must in personal request the bank in

writing for the duplicate. The bank if satisfied can issue a duplicate demand draft after getting the indemnity. Process For Outward Demand Draft Through Cash When DD is made at customers request on cash the process goes as under: First customer comes to bank and fills the DD application form. Designated officer verifies the signature and particulars of Application. Designated officer then fills in the charges/commission on application form. Customer then deposits the money and gets the application stamped and signed by the cashier. Cashier then make the entry and credits the Transit account in GL. Cashier sends the application back to designated officer who makes the DD by debiting Transit. After Preparing DD two-attorney holder signs it. Three copies of DD are prepared Original goes to customer Office copy retains with designated officer for reconciliation. One copy sent as an advice to drawee bank. Process For Outward Demand Draft Through Account
When an account holder of Bank through his cheque makes DD then

first customer comes to bank and fills the DD application form. A cheque is also required of the minimum amount of the DD. Designated officer verifies the signature and particulars of Application and verifies its validity with the cheque. Designated officer then fills in the charges/commission on application form. Designated officer after verification on particular of cheque such as balance, signature, date, figure in words and digits etc. debits customer and credits the transit account. In next step officer debits the transit and makes DD. After Preparing DD two-attorney holder signs it. Three copies of DD are prepared Original goes to customer Office copy retains with designated officer fro reconciliation. One copy sent as an advice to drawee bank.

Process For Inward Demand Draft When some other bank draws DD or branch on our branch process goes as under. First the Branch receives the Advice from the issuing branch by courier. Following particular are verified. Name Date Attorney Holders Signature Amount in words and figures Cutting etc. The designate officer after verification enters the particulars in DD register and makes the entry in system by giving credit to DD payable. In next part the officer through clearing receives the original instrument or non-account holder physically presents the instrument. Officer again verifies the particulars and if the DD is received through clearing then designated officer enters it in DD register and giver credit to customer by debiting DD payable. If the customer needs the amount in cash then it is verified that the instrument bears the NIC no of the beneficiary on it The instrument is marked as PAID and amount is paid to customer.

Telegraphic Transformation TT stands for telegraphic transfer and MT stands for Mail transfer. In BAL I observed that the TT is normally faxed to the other branch and then the original copy is sent by mail. Process For Outward Tele Transfer When TT is made at customers request on cash the process goes as under:
First customer comes to bank and fills the TT application form. Designated officer verifies the signature and particulars

of

Application. Designated officer then fills in the charges/commission on application form.

 Customer then deposits the money (if TT is made against cash) or

gives a cheque (if it is made from his account when the customer is an account holder of bank) and gets the application stamped and signed. Cashier/Officer then makes the entry and credits the Transit account in GL and. (At this step cashier debits cash and officer debits customer account against cheque.) Officer then make the entry in TT issued register and assign a TT No. Which must be next to the last TT drawn on the branch. TT must be entered in register as Credit or Pay. (A TT will be prepared as Credit when it is to be credited to an account holders account maintained in the bank at which TT is drawn or another bank through clearing, on the other hand when customer did not have account in the bank TT is drawn as Pay. Now TT is not credited in customers account, as he does not have an account but it is paid cash to him after prior verification of his name and NIC no. This is written on TT mad as Pay). Then officer prepares TT through inter branch credit advice. (IBCA). Simultaneously officer makes entry in system by debiting Transit A/c (credited by cashier/officer at the time of receiving cash/cheques. After Preparing TT two-attorney holder signs it. Four copies of IBCA are prepared. Original copy and responding copy along with a Telex Message goes to the branch at which TT is drawn by mail (also called Mail Transfer/MT) or by telegraphic transformation (Fax). M.O. copy retains with designated officer for reconciliation. Office copy is attached with the voucher where H.O. is credited after debiting Transit. Process Of Inward Tele Transfer When some other bank draws TT or branch on our branch process goes as under. First the designate officer receives the tested telex (TT). Following particular are verified. Date Beneficiaries name and NIC (if any) Remitting Bank or Branch Disposal instruction (Credit or Pay) TT No (Which should be next to the last one received). Attorney Holders Signature Amount in words and figures

Cutting etc. The designated officer after verification enters the particulars in TT Payable register and makes the entry in system by giving credit to TT payable. Now if inward TT is drawn as Advice & Credit the TT payable is debited and Credit is transferred to customer account. On the other hand if inward TT is drawn as Advice & Pay then TT payable is debited and credit is transferred to H.O. when customer whose name and NIC no. is on the TT arrives at counter to receive cash. The copy of NIC is kept as record. In case if inward TT is drawn on other bank a TTR is prepared for onward transfer.

Clearing

Department

CLEARING DEPARTMENT Clearing is the system by which banks exchange cheques and other negotiable instrument, drawn on each other, within the specified area, and secure payment for their clients through clearing house specified time by book entries i.e., State Bank of Pakistan.. Nearly all the banks provide a wide variety of services to their depositors. One valuable service provided is that of clearing. Clearing department also plays an important role in performing the activities of the bank. The basic function of clearing department is to provide services to customers in collection of their cheques of other banks, whether they are in city or outside the city. The customer can get the money in his account at Bank Alfalah Limited from the cheques drawn on another bank. The bank accepts the cheque in the clearing department & later on collects these cheques from the bank on which it is drawn through the clearing house Every bank acts in two ways i.e.,
1) Paying Bank

(The bank, which pays the cheques of his customers, presented by other banks.) 2) Collection Bank (The bank, which collects the fate of cheques on the behalf of customers, presented by other banks.)

DIFFERENT MODES OF TRANSFERRING THE MONEY ARE FOLLOWS AS Transfer Clearing Collection

Transfer A method which means simply we transfer amount from one account to another account is called transfer. Clearing. A system through which funds are transferred from one bank to another in (same city) clearing house. It may be within city or outside the city. A process by which cheque is exchanged between the collecting bank and paying bank and the ensuring financial settlement is called clearing. Clearing-house Clearing house is a place where representative of the member bank meet at given timings every day, to exchange cheques and other instruments drawn on each other. Representative of the banks take all the cheques and the instruments such as PO, DD etc drawn on banks in the city, to the clearing house and bring back cheques and other instruments drawn on our bank which are payable by us. Classification of clearing 1) Outward clearing 2) Inward clearing O/C Procedure I have done following process in O/C Receive cheque on the counter and scrutinize it on the following lines Cheque is drawn on a bank that is a member of clearing-house It is deposited in an account that is being maintained in the branch

 It is in order as to the name of payee, date, amount in words and

figure and correctly endorsed where required. Check the pay-in slip and counter foils are correctly filled in. Put the banks special crossing stamp & clearing stamp of the next day. Detach cheque from pay-in slip Sort out cheque bank wise and branch wise. Input in system for each bank Prepare clearing schedule Attach the cheques with clearing schedule Handover the instruments to NIFT Realization entries, if the branch is online then the fate of your collection automatically transferred. If branch is not online then the entry will be Dr Account with main branch Cr Branch accounts In case of return we will have to mark reversal of entry. In case of online branch the entry must pass because system will give credit to the account and your return will be settled. Stamps Special Crossing Clearing stamp of next working day. A/C payees only Payee endorsement confirmed Outward Return Cheque returned will be treated as inward cheque In the case of cheque is returned because of wrong presentation e.g., clearing stamp not affixed or wrong discharge given on the cheque etc. it should be relodged in the next day clearing after rectification of the mistake. If cheque is returned for any other reason then Enter the cheque in cheque return register, mentioning the reason as appearing on the cheque return memo received from the paying bank Advice the customer about fate Return the cheque to the customer after getting sign on register Collect the cheque return charges as per S.O.C

Inward clearing Receive instrument payable by us in inward clearing Time is the essence of clearing, if not returned unpaid then it is presumed to be paid Check the total number of instrument matches with the clearing schedule and get signature on it. Secrutinize the cheque on following lines Signature verification Proper presentation The cheque is in order as to the name, date, amount in the words and figure Cheque is not damaged or torn nor post dated or stale, alteration, correction and cutting have been authenticated with full signature of the customer. Display customer account on the screen and observe Sufficient balance Stop payment instruction Cheque is from a series of cheques that has been issued to that particular customer. Post Cheque Cancel the cheque If limit account refer to the credit department PO, DD to respective department for processing and payment (enter in the DD Payable and Pay order payable register) Inward return Return may be of any reason. For example Clearing stamp not affixed Defect in cheques i.e., post dated cheque Insufficient balance Once the decision is made to return the cheque so deliver to NIFT. Collection

Clearing department deals with money transfer form on place to another. It uses various instruments for remittance purposes. These instruments are: 1) OBC 2) IBC I. OBC: Outward Bill for collection, the cheques drawn on the bank that is out of city. These cheques are not collected through NIFT. The banks clear these by sending them to the relevant branch through mail. This service includes all activities involved in collecting their claims on customers of the other branches of same bank or of the other banks, located outside the clearinghouse area.

Procedure Receive instrument, this instrument

It is in the name of the account holding customer Must not be post dated or stale Must have same amount in words and figure Affix special crossing stamp on the face of instrument Affix OBC stamp on the instrument, and on pay-in slip Entry in OBC register Write OBC# on the instrument Prepare outward bill for collection schedule

Role of Schedule It is pre-printed covering letter of collecting/paying bank

OBC#

 Cheque# Name and location of drawee bank Amount

OBC Realization
Enter realization particular in the OBC register If paid IBCA received from our collecting branch Deduct commission and courier charges. These charges vary bank

to bank as per rules of banking policy division of the S.B.P. Bank Alfalah deducts .15% commission on the amount of IBCA or DD but courier charges are flat i.e. Rs.150 Realization Entries Dr Cr Dr Cr Dr Cr Cr Banker Liability Customer Liability H/o Treasury Customer Account Customer Account commission courier charges

II. IBC The cheques drawn on the bank when comes from outstation, it is called inward bills for collection. Cheques are entered in inward bills for collection register. The date, signature, crossing etc. is checked and if all things are in

order the amount is realized to the relevant bank. This cheques should have the stamp by the branch i.e. our branch endorsement is confirmed Procedure Receive instrument through mail and scrutinize the instrument
Must be drawn on a customers account Must not be mutilated Must not bear unauthenticated corrections Must not be post dated or stale Must bear regular endorsements, if any Must have the same amount in words and figure Entry in IBC register

CREDIT

DEPARTMENT

CREDIT DEPARTMENT Credit comes from the Latin word "creditus" which means, "to believe." Credit allows us to buy things, which might not be able to afford all at once by letting us pay over a period of time. But to obtain credit, creditor believes that bank is trustworthy and responsible. During my stay at BAL (Daska Branch) I observed that Bank does not dish out the money to everybody. For bankers it is a matter of
Trust, faith, belief Trust that money lent will come back

 That the transaction booked will prove rewarding for the bank

This trust comes through Ability & integrity of credit officer Good repute of the borrower Honesty & intention to repay Ability Solvency What differentiates a bank from its competitors is the quality of its loan officers, lending policies and strategies. Credit policy of a bank is usually combination of globally accepted time tested standards relating to Safety Liquidity Profitability Most of their loans are made to businesses so loan officer has understanding of Nature of businesses, industries and their products Laws relating to these businesses Followings are responsibilities of credit officer Sound judgment and evaluation Accurate reporting to the management for their decision making Credit maintenance as per banks policy Periodical re-evaluation and ratings of borrowers Timely problem identification and taking appropriate remedial steps Credit Process The function of credit department is to lend in the form of clean advances, against promissory notes, as well as secured advances against tangible and marketable securities. According to the Prudential Regulations of the State Bank of Pakistan, No bank can issue a clean advance of more than Rs.100, 000/-. The bankers prefer such securities that do not run the risk of general depreciation due to market fluctuations. Types Of Securities Securities are Stock Exchange Securities Immovable property or fixed assets Goods & products Various forms of deposits Life insurance policies

 Vehicles

METHODS OF CHARGING SECURITIES Charge on collaterals can be created through: Mortgages Pledges with conferring possession of assets Hypothecation Lien Assignment Common Securities for the bankers advances are as under. Guarantees When an application for advance cannot offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant. Mortgage A mortgage is the transfer of an interest in specific immovable property for the purpose of security the payment of money advanced or to be advanced by; way of loan, and existing or future debt, or the performance of an engagement, which may rise to a pecuniary liability. The transfer is called a mortgagor, the transferee a mortgage. Promissory Note Sometimes promissory note is also accepted as a security, A promissory note is an instruments in writing containing an unconditional undertaking signed by the maker, to pay; on demand or at a fixed or determinable future time a certain sum of money only, to or to the order of certain persons, or to the bearer or the instrument. A promissory note is incomplete until has been delivered to payee or the bearer. Moreover, the sum promised in a promissory note may be two or more makers who may be liable three on jointly and severally. Pledge A formal contract whereby the borrower agrees to deposit goods/ documents with the creditor on the condition that those will be redelivered to the depositor if the debt is repaid or can be sold by the creditor if the borrower defaults. After recovery of dues from sale proceeds the surplus if any is paid back to the borrower Possession passes to bank, ownership remains with borrower

Lien Right of a person in possession of the securities or goods of another person to retain them until the owner discharges his debt or meets other obligations towards the possessor. Lender can dispose off the goods/securities for recovery of debt after serving proper notice Banks have a right of General Lien also which they can apply towards recovery of amount. This right is not applicable in certain situations. Hypothecation When moveable property/ goods are charged with the amount of debt but neither the ownership nor the possession is passed to the lender. It is said to be hypothecated. By virtue of letter of hypothecation bank can take possession of hypothecated goods in case of default of the borrower.

FLOW CHART IN PROCESS OF LENDING DECISION

Structuring of finance 1. Type of faculty 2. Amount 3. Period 4. Supporting documents

Preparation of CLP & Presentation to BCC

Credit manger to 1. Receive securities 2. Completion of documents

Sanction/ recommendation to higher-level committee

Sanction Advice

CAC to ensure completion Of formalities & Issue DAC

Disbursement/release of facilities/feeding the system

ACCOUNT OPENING In this department, I gain the practical knowledge about opening account. This department deals with opening several kinds of Accounts though they are not common every where and all matters regarding thereof. These are

Current Account PLS Account Fixed Account Salaried/ Pension Account Zakat Account

Individual / Joint account for PLS / Current / Joint Account Firm Company Trust Staff Others Special Accounts Salaried Account The salaried account is opened for an individual person where it is opened for govt. employee (Railways, WAPDA, PTCL, LDA, etc) on providing the certificate of job. This account is exempt from the deduction of charges Rs.50 p/m against minimum balance limit. The rest of the opening procedure is normal. This account is exempt from zakat.

Zakat Account The Zakat account is opened for the poor people having the certificate of FSP (Food Support Programme) from the Nazim of the respected are which is thereafter confirmed by Bait-ul-Mall , after getting the certificate and booklet the documents are complete. This is special kind of account opened by Rs.100 this is exempt from Zakat and minimum balance limit.

MY Work

OPENING PROCEDURE In order to open an account, first of all the customers have to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening the account. Introducer may be the person who has any account with BAL. Some important information regarding introducer e.g. the name and account number of the introducer is written on the space provided on the specimen signature card. Then in order to find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that anything wrong may come into notice. There are different requirements for different types of accounts and accountholders.

Documents Required 1- CNIC Copy for a- Account Operator b- Introducer c- Kinship 2- Utility Bill copy any where he / she living currently 3- Zakat Copy ( Provided by Bait-ul-Maal) ( If applicable) 4- Letter from Bait-ul-Maal ( If applicable) Procedure 1- Checking the area of permanent address if valid then process 2- Stamping the form and SSC

MY Work

I have opened more than 50 different accounts there .

CASH DEPARTMENT The most important department of National BAL which deals in money (receiving deposits at lower rates and lend them out at higher rates of interest). This department also called as Chest Department and manager of it is called Cash Manager or Chest Manager. In those branches where this

department is not separately existed, the branch manager performs the duties of the Chest Manager. The excess cash (More than its insured limit by the insurance company) of the branches of the region is collected by the main branch. The main branch is also bound to send its excess cash (more than its insured limit) to the State Bank of Pakistan. No branch can have cash its safe more than its insurance at any time at the time of closing cash, if it is so the manager will be responsible (not the insurance company) whether or not he informed to the regional office (exception to the limit which is insured for the day). New Notes and Prize Bonds are also part and parcel of the Cash Management. Keys of the Safe lockers are with the three authorized persons each one of them is responsible for cash as at the time of closing the cash the officers including Cash officer presented and lock the safe after counting and scrutinize the cash. The cash officer maintain its daily cash book with specification of notes (Bonds are also recorded in the books in relation with cash) and other vouchers, after being satisfied the manager authenticates the books and vouchers regarding cash with stamp and signature. at the end I would like to conclude that the cash management is being done in the BAL very effectively.

MY Work

ADVANCES DEPARTMENT

The following documentation is made for loan. An application or request letter for loan by the customer Legal opinion of the legal advisor of the bank (for the title deeds) Consent letter from the regional office Vetting Certificate (includes consent No., Facility whether fund based or no-fund based, addresses etc.) Valuation of property any consultant or any panel of consultants approved by State Bank of Pakistan Affidavit General power of attorney (made by advocate for the person/owner taking loan for the company) Mortgage deed Mutation document made Verification of the property by the bank from the competent authority Hypothecation of stock certificate (Running is to be given against 75% margin of stock) IB-25R Letter of hypothecation (duly signed by the party) IB-12 , DP Note/Promissory Note (Bank prepared itself, duly signed by the party, revenue stamps of Rs. 100 put on it) IB-6R Agreement of finance mark up (Contract with party for taking mark up on quarterly basis) IB-24 (used for title deed) IB-29 (used for guarantee from party) IB-26 (used for pledge of stock, margin is different for different goods) No. IB-28 (used for lien) etc.

MY Work

Original title deed or sale deed

After that Loan is sanctioned to the party fulfilling all the terms and conditions for the purpose. The procedure given above is for both short and long term loans. The thing which is most important here is that the banks first keeps in mind and analyzes according to the rules prudential regulations of the State Bank of Pakistan. Following finances in which DASKA Branch is dealing. Running Finance Cash Finance (Against Pledge of Stocks of wheat & rice) Demand Finance (against Lien On DSCs) Tractor Finance Foreign Bills Purchased Finance Against Foreign Bills Export Refinance I Export Refinance II I have learnt about the documentation required for the financing. Major focus on the financing is depending on the account turnover and collateral offered. While financing to the fresh client the credit proposal of the client is elevated to the higher office. The banks official get the applications form the customer and prepare the case for getting approval for the higher office.

SECURITIES HELD AGAINST FINANCING FOR RUNNING FINANCE

MY Work

Hypothecation of Stocks (50% Margin) Collateral security (house, land, factory etc...) FOR CASH FINANCE Pledge of stocks (20 to 25% Margin) Collateral security (house, land, factory etc...) FOR DEMAND FINANCE Lien over Defense Savings Certificate Lien over Foreign Currency deposits FOR TRACTOR FINANCING Joint ownership of the Tractor Collateral security (Agri land) Lien over Deposits (TDR)

FOR EXPORT REFINANCE PART I Lien over export bills drawn under firms order or contracts Collateral security (house, land, factory etc...) FOR EXPORT REFINANCE PART II Hyp & Pledge of Stocks Lien over EE statement Collateral security (house, land, factory etc...)

FOR FOREIGN BILLS PURCHASED Lien over export bills drawn under LCs

MY Work

Collateral security (house, land, factory etc...) FOR FINANCE AGAINST FOREIGN BILLS Lien over export bills drawn under firm order and contracts Collateral security (house, land, factory etc...) FOR BANK GUARANTEE Cash Margin (As Per Approval of Finance)

MY Work

CLEARING DEPARTMENT Issuance of Demand Draft (DD) Cheque book Mail Transfer (MT) Telegraphic Transfer (TT) Maintaining the Registers ( Paid for out stations) Through Mail Through Telephone (Fax)

MY Work

DD , MT , TT issue register Cheque book register Cheque book requisition slips TT paid register

Sending requisitions for Cheque books etc

FINANCIAL ANALYSIS OF BANK ALFALAH

BALANCE SHEET(As At Dec 31, 2005) INCOME STAEMENT (As At Dec 31, 2005)

CASHFLOW STAEMENT (As At Dec 31, 2005)

FINANCIAL STATEMENT ANALYSIS

"Financial statement analysis is the process of identifying of financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit &loss account," and it is done through ratio analysis. RATIO ANALYSIS Ratio means one number expressed in term of another a ratio is statistical yardstick by mean of which relationship between two or various figures can be compared or measured. Here we are going to explain the ratio analysis of MCB (bank) which is little bit different from other organizations.

Financial ratios can be divided into the following six parts. A. B. C. D. E. F. Liquidity ratios Activity ratios Leverage ratios Profitability ratios Investor ratios Bank special ratio

A. Liquidity ratios Current ratios Quick ratios Absolute Liquid ratio B. Activity ratios Inventory turnover ratio Average collection period Average payment period Total assets turnover ratio C. Leverage ratios Proprietary ratio

Ratio Analysis

Debt ratio Debt to Equity ratio Debt to Tangible net worth ratio Debt to Funds ratio External-Internal Equity ratio

D. Profitability ratio Return on total assets Return on-equity Return on investment Return on fixed assets Average profit per branch Net profit Margin Interest income to total income Interest expense to total expense E. Investor Ratios Earning per share P/E ratio Dividend per share Dividend yield ratio Dividend payout ratio Break up value/Book value per share M/B ratio F. Bank special Ratios Earning assets to total assets Return on earning assets Net margin to earning assets Loan loss coverage ratio Equity to total assets Deposit time equity G. Cash Flow Analysis Operating cash to CM long term debts + payables Operating cash per share Operating cash to cash dividend

Ratio Analysis

 Operating cash to Total debts Because here we are discussing ratio analysis of bank, therefore we will not discuss A & B category of ratios.

SOLVENCY ANALYSIS Solvency analysis of a firm indicates the amount of the other peoples money being used to generate profit. In general, these analyses are more concerned with long term debts, because these commit the firm to a stream of payments over the long run. Solvency analysis includes: Proprietary ratio Debt ratio Debt to Equity ratio Debt to Tangible net worth ratio Debt to Funds ratio External-Internal Equity ratio

Ratio Analysis

Solvency Analysis Proprietary Ratio Debt Ratio /Solvency Ratio Long Term Debt to Equity Ratio External Internal Equity

2005 0.03 0.97 1.195 48.28

2004 0.033 0.967 0.93 32.26

INTERPRETATION Debt to Equity The Debt position of a firm indicates the amount of other peoples money being used to generate assets. Measures the proportion of owners interest and outsiders in bank. Explains the long term solvency as More Debts lead towards less solvency. Debts of the bank are tremendously increasing which shows worst trend and greater risk. Long-term Debt to Equity Measures how much long term Debts can be paid by shareholders fund. Here the ratio in 2005 is worst as compared to standard and previous years. The more the less is the ratio, the more it is favorable. Proprietary Ratio Explains the share of owner in the Total resources of the organization. This ratio is not good as compared to industry average. Also, there is a slight decrease as compared to in 2004 It shows that 30% of Assets are financed by Equity and 70% are by Debt whereas the standard is 40:60.

PROFITABILITY ANALYSIS Profitability analysis of a firm indicates the overall efficiently of the management. Without profit a company can not attract the outside capital. Profitability analysis includes: Return on total assets Return on-equity Return on investment Return on fixed assets Average profit per branch Net profit Margin Interest income to total income Interest expense to total expense Return on advances

Ratio Analysis

Profitability Analysis Return On Total Assets Return Of Equity Return On Investment Return On Fix Assets Net Profit Margin Interest Income To Total Income Interest Expense To Total Expense

2005 0.006 0.228 0.006 134.43% 0.021 61.46% 47.39%

2005 0.007 0.207 0.007 67.32% 0.222 62.37% 42.38%

INTERPRETATION Return on Investments It measures how effectively assets are used to generate return. This ratio is not favorable as compared to standard ratio. The more the ratio, the more it is beneficial instrument to increase profits and returns. In 2005, this ratio decreases as compared to year 2004. Return on Equity Determines the return on your investments in the business. It shows the hard fact about the business-whether the business is making enough profit to compensate for risk. It measures the Banks overall performance in return on Equity. From analysis of two years, it is better in 2005 with respect to 2004, but it still needs improvement and increase in profits to meet the standard. Return on Assets This Ratio shows return from total assets means that how much we get from assets or Deposits and it measures the overall effectiveness of management in generating profits with its available assets. If I compare it with previous year ratio there is slight decrease in it but it is poor as compared to standard.

INVESTOR ANALYSIS Investor analysis or market analysis are related to firm market valve, as measure by its current share price to certain accounting values. Investor analysis includes: Earning per share P/E ratio Dividend per share Dividend yield ratio Dividend payout ratio Break up value/Book value per share M/B ratio

Investor Analysis Earning Per Share Price Earning Ratio (P/E) Dividend Per Share Dividend Yield Ratio Dividend Pay Out Ratio Book Value Per Share

2005 5.75 7.33 1.216 0.28 2.21 25.21

2004 3.89

18.76

Ratio Analysis

INTERPRETATION BAL has also has good investment opportunities for the investors. This bank has more attraction for investors as compare to previous year. Earning per share is increased due to increase in profit. Book value and market valve of one share in also increased as compare to 2004.

BANK SPECIAL ANALYSIS Bank ratio analysis is little bit different from other organizations and if we want to see the real picture of a bank we have to focus on given special ratios. Earning assets to total assets Return on earning assets Net margin to earning assets Loan loss coverage ratio Equity to total assets Deposit time equity

Ratio Analysis

 Loan to deposit ratio

Bank Special Ratios Earning Asset to Total Asset Return on Earning Asset Loan Loss Coverage Ratio Equity Capital to Total Asset Deposit Time Capital Loan to Deposit

2004 0.951 .0216 5772.3 8 .028 32.60 .62

2005 0.957 .0211 5792.16 .027 33.86 .63

INTERPRETATION Earning Asset to Total Asset It describes effectiveness of management of banks funds. Higher ratio will indicate that bank puts its asset in a better way to earn maximum return. State bank of Pakistan has fixed a certain limit of reserves, which should be, consider in evaluating this ratio. In context of Bank Alfalah, the difference is slight in comparative year so this ratio is showing effectiveness of funds and management. This ratio is representing good position of the bank. As the results are showing that there is increase in earning asset and total asset as compare to last year (2004). If we analyze the total assets of the bank it come to know that there is an increase in both the years that means the bank is marinating a good level of growth in the assets Because it has increased its advances and lending to financial institution from where they are earning profit.

Ratio Analysis

Total Asset 300000 Rupees in Million 250000 200000 150000 100000 50000 0 2000 2001 2002 2003 2004 2005 Years Total Asset

Return on Earning Asset This ratio describes the effectiveness of investment of earning asset. Higher the ratio betters the results. This is also known as profitability ratio of the bank. It is pleasure to present performance of bank for year 2005. This year was an eventful one for the bank amidst significant and promising economic and political developments in the country, which had direct implications for financial industrys operating environment. This ratio of the bank is improving year by year. This is a very favorable signal for the bank. The spread of the bank (difference in the markup of deposits and advances) is increasing.
Investment 70000 Rupees in Million 60000 50000 30000 20000 10000 0 2000 2001 2002 2003 2004 2005 Years Investment

Ratio Analysis

40000

Loan Loss Coverage Ratio This ratio explains the capacity of the bank to cover its loan loss through its yearly income. Higher the ratio betters the result. This ratio also explains the level of protect6ion for all depositors who are involve in the funds of bank or prospectively wants to involve in the funds of bank. Firstly this provides protection to outsiders secondly it provides, quality of loan and efficiency of management. Here the results are showing that there is insignificant change in 2005 as compare to 2004. The better ratio is showing that debtors are reliable because management is working efficiently. Equity Capital to Total Asset This ratio explains the contribution of owner in total earning asset of bank. Higher the ratio lesser the risk. When we compare yearly performance of Bank Alfalah then one thing is clear to us that there is no major change in results. Here the results are showing that there is insignificant change in results of both years so we can say that bank is in good position. But if we consider shareholders equity by following graph then one thing is clear that equity has increased during six years.
Shareholder's Equity 8000 Rupees in Million 7000 6000 5000 4000 3000 2000 1000 0 2000 2001 2002 2003 2004 2005 Shareholder's Equity

The present authorized capital of the Bank is Rs 4,000,000,000 and by issuance of 100 Million Bonus Shares of Rs 10/-each the paid-up capital will reach Rs 4,000,000,000. The Directors of the Bank are of the view that this

Ratio Analysis

Year

Ratio Analysis

leaves no room for induction of additional capital. It is, therefore, proposed that the authorized Capital of the Bank be increased to Rs8, 000,000,000 (Rupees Eight Billion) so that additional capital induction may be undertaken in future for strengthening the Banks competitive ability within Pakistan and helping the Bank in establishing its presence in other locations outside Pakistan. The increase in authorized capital will also enable the Bank to meet SBPs future requirement of capital adequacy. Deposit Time Capital It indicates the portion of debt with reference to the equity. If ratio is lesser then it provides a caution to the bank having more solvency. Higher ratio indicates that higher debts can generate high return. The higher results are showing that bank can generate higher returns from higher debts. It is in favor of bank that shows that management is putting great effort to take high returns.

Deposits 250000 Rupees in Million 200000 150000 Deposits 100000 50000 0 2000 2001 2002 2003 2004 2005 Years

Loan to Deposit This ratio explains the contribution of liabilities in total earning assets. It measures the position of a bank with regard to taking risk.

Ratio Analysis

Higher the ratio indicates that higher risk is involved in banks operation because debt definitely has certain operating cost. Again central bank will determine opportunity cost of debts. As results are showing insignificant change in both years we can say that it is working well in risky environment to earn more because high risk leads to high return Last year Bank issued a subordinated debt worth Rs. 1.325 billion (Rs. 900million Pre-IPO and Rs. 425 million IPO) to support banks equity under tier II capital in compliance with SBPs

TREND ANALYSIS In trend analysis we done two types of analysis, these are Horizontal Analysis It is conducted by setting consecutive balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in individual categories on a year-to-year or multiyear basis. A comparison of statements over several years reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is done by restating amount of each item or group of items as a percentage.

Vertical Analysis Like horizontal analysis this can also done for balance sheet and income statement. Here we assign 100% value to any key item of balance sheet or income statement and then see portion of other items in this percentage.

Net profit After Provisions Non markup/Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Other income Total non markup interest income Total income Non markup/interest expences Administrative Expences Other provisions/write offs Other charges Total non-markup interest expense

2002 % 100 100 100 100 100 100 100 100 100 100

2003 % 138.54 126.2 180.44 122.2 1255.1 488.31 255.4 152.13 188.8 152.32

2004 % 203.2 213.63 84.63 229.9 259.27 218.8 208.46 226.36 171.19 226.31

2005 % 336.8 366.26 83.78 304.82 336.9 323.26 332.32 364.61 2125.27 366.95

Profit before taxation Taxation Profit after taxation Inappropriate profit brought forward Transfer from general reserve Transfer from surplus on revaluation of fixed assets: Prior year Current year-net of tax Profit available for appropriation

100 100 100 100 100 100

391.84 307.9 476.40 100.1 69.56 284.5

184.8 125.1 245.01 385.6 114.28 247.70

286.5 191.87 381.91 344.53 120.09 308.3

ANALYSIS Mark Up Horizontal analysis of years 2002-2005 shows a continuous increase in mark up because the bank has been increasing its advances due to which mark up recovered has increased. Also there is expansion in business line. Non Markup Interest Income Non-markup interest income is also in continuous increase from 2002-2005 and also there is a rapid and huge increase in the profits in 2005. This increase is mainly contributed by:o Dividend o Income from foreign currency and other income. o Fee and commission Non Markup Interest Expense

As markup and non markup income of the bank has been increase year by year so there is also a speedy increase in interest expense. Cost on Deposits is continuously increasing because the Bank Deposits are increasing. The increase in revenue has been in higher percentage as compared to cost, which is an encouraging feature. Administrative Expenses The Admin Expenses have been on consistence rise from 2002-2005. This is not a bad sign and shows the expansion in the business, but only if the Deposits have also been increasing along with expenses, which is true in case of BAL. Profit Before Tax The PBT in the years 2002-2005 show variation due to the happening of some uncertainties. In the year 2003, this percentage increased very much or we can say there is marvelous increase. The bank was going with less profits in 2002. After 2003, due to certain happening this percentage rapidly declined in 2004 and this decline is of 207%. But now in 2005, the Bank improves a lot and double the percentage which shows the BAL ability to survive even in mysrious situations and to with stand With. Profit After Tax The same situation is with PAT. In 2003, this percentage is excellent but in 2004 there is a sharp decline. But after a sharp back the bank withstands and improves in 2005.

2002 % Assets: Cash Balances with other banks Money at call and short notice Investments Advances net of provision Operating fixed assets Other assets Deffered tax assets Liabilities: Deposits and other accounts Borrowing from other banks Bills payable Sub ordinated loans Liabilities against assets subject to finance lease Other liabilities Differed tax liability Net Assets Represented by: Share capital Reserve fund and other reserves Unappropriated profit Shareholders equity Surplus/(Deficit) on revaluation of investment Surplus on revaluation offixed asset 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

2003 % 185.5 269.37 160.48 118.11 173.78 126.81 158.54 151.84 148.39 217.4 159.25 99.96 224.58 27.22 153.93 116.57 200 216.1 185.17 201.35 49.33 116.57

2004 % 434.06 1368.1 145.08 314.02 266.92 243.10 237.59 250.97 210.74 294.306 292.22 227.8 23.24 243.15 144.0 25 275.5 344.05 270.4 43.81 144.04

2005 % 545.9 4173.7 583.6 234.6 419.7 318.58 375.9 381.0 430.19 96.8 491.872 495.9 436.3 40.79 391.53 204.34 300 642.8 554.6 417 35.64 204.35

ANALYSIS Assets Cash The level of cash in 2002-2005 has been increasing at a marvelous speed, which shows the better liquidity position of the Bank. The reasons behind this: Opening of New branches Recovery of non-performing Loans Increase in local currency in cash These all took the level of cash up with them and which is because of expansion in Branch network of the Bank. Balance with Other Banks Shows a constant increase In 2004, Drastically increase with a percentage of 1099% whish is 4 times more than in 2003. In 2005, this sharp increase leads to marvelous increase in percentage of 2805% which is double of percentage in 2004. Investments Investments of the Bank have also increased in 2002-2005. This increase is due to the heavy investments in Federal investment Bureau and Treasury Bills of the Government. Advances Analysis shows that advances are also in constant increase in 2002-2005. In 2004, there is double increase in percentage as compared to 2003 which shows excellent operations of the bank. Also in 2005, there is an increasing trend.

LIABILITIES Deposits Deposits have been increased at a favorable rate in 2002-2005 and increase in 2005 is 431% This increase is due to the expansion of Branch Network of the Bank and this increasing trend is very encouraging for the bank that it is a positive sign for the bank business. Borrowing from Other Banks Borrowing from other Banks is Decreasing year by year which is a positive sign for the Bank business. In 2003 : 217.4% 2004 : 210.74% 2005 : 96.8% The figures show a decreasing trend particularly in 2005. It shows that the bank is now getting control over its borrowings and emphasizing more on Deposits. This shows better management policies of bank in order to decrease cost of funds even in the period of expansion. Equity Equity position of the bank is favorable and it is increasing with smooth percentage in 2002-2005.

Non mark up interest income after provision Non markup/Interest Income Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Other income

2003 % 100 20.83 5.84 5.57 144.66

2004 % 100 24.02 1.87 7.78 20.36

2005 % 100 24.85 1.12 6.22 15.97

Total non markup interest income Total income Non markup/interest expenses Administrative Expenses Other provisions/write offs Other charges Total non-markup interest expense Profit before taxation Taxation Profit after taxation Inappropriate profit brought forward Transfer from general reserve Transfer from surplus on revaluation of fixed assets Prior year Current year-net of tax Profit available for appropriation

176.9 276.9 93.85 10.1 0.098

54.04 154.04 95.19 0.06

48.16 148.16 92.51 0.22 0.45 (93.18) 54.98 (18.47) 36.51 18.45 0.53 0.59 56.08

(94.06) (95.25) 182.84 58.79 (72.1) 110.74 13.04 0.75 124.53 (19.97) 38.82 34.24 0.84 0.6 74.5

2002 % Assets: Cash Balances with other banks Money at call and short notice Investments Advances net of provision Operating fixed assets Other assets Deffered tax assets Liabilities: Deposits and other accounts Borrowing from other banks Bills payable Sub ordinated loans Liabilities against assets subject to finance lease Other liabilities 6.97 0.36 7.11 38 43.46 3 1.51 100 79.31 9.26 1.16 0.99 1.83

2003 % 9 0.63 7.52 29.21 49.74 3 2 100 78 13 1 1 3

2004 % 12.73 2.056 22.93 57.43 2.08 2.76 100 83.76 8.217 1.44 1.23 1.76

2005 % 9.98 3.9 10.89 23.13 47.87 1.55 2.67 100 89.54 2.35 1.5 1.29 2.10

Deffered tax liability Net Assets Represented by: Share capital Reserve fund and other reserves Unappropriated profit SShareholders equity Surplus/(Deficit) on revaluation of investment Surplus on revaluation offixed asset

1.82 94.39 5.6 1.53 0.56 0.38 2.5 3.1 100 5.6

0 96 4 2 1 0 3 1 4

0.17 96.6 3.39 1.614 0.65 0.556 2.861 0.576 3.39

0.19 96.97 3.02 1.12 0.95 0.56 2.713 0.292 3.02

Vertical Analysis of Cash

9.98 Cash 6.97 0 5 10 15 12.73 9 2005 2004 2003 2002

Vertical Analysis of Investments

40 30 20 10 0 Investments 38 29.21 22.93 23.13 2002 2003 2004 2005

Vertical Analysis of Liabilities

96.97 Analysis of Liabilities 94.39 93 94 95 96 97 98 96.6 96 2005 2004 2003 2002

VERTICAL ANALYSIS OF B/S Assets The advances and investments constitute the major portion of total assets. This is typical for a bank, as banks do not have considerable fixed assets. In 2002, investments are 28% but these are decreased to 29.21% in 2003 and 22.93% to 2004, it is because of the deficit on revaluation, which has resulted due to the decrease in the value of Government securities and shares

of public limited companies when BAL had invested. In 2005, trend is increasing to some what as this rise upto 23.13%. Liabilities On liability side, deposits are major accounts. The percentage of deposits is increasing whereas percentage of borrowing is decreasing. This shows that the Bank is now relying on Deposits and getting control over its borrowing even in the stage of expanding Branch Network. It shows a healthy trend. Equity One Equity side, Equity is decreasing from 2002-2005. This shows that Debt position of Bank is strong as compared to Equity position and Bank has financed its assets more with Debt.

SWOT ANALYSIS

SWOT ANALYSIS For any institute or organization, its environment contains certain opportunities & threats. So in this situational analysis, I try to match organizational strengths and weaknesses with the environmental opportunities and threats to determine the organization's right niche. SWOT stands for strengths, weaknesses opportunities and threats. Strengths Bank Alfalah Limited is making an efficient use of latest computer & telecommunications terminology for facilitating the international banking transaction as well as external & internal banking procedure. Bank Alfalah Limited has a well-established reputation. It has a wide range of products/services to attract the customer or clients. The bank has highly trained & motivated pool of human resources. It is the effectiveness & efficiency of the employees at all levels which cause the success of the bank. The bank has a deep knowledge of market. Bank Alfalah Limited provides high quality & personalized services to its customers. The office set up is calm & environment is very friendly. Such an environment of bank helps a great deal in enhancing the performance of the employees.

 In order to update the knowledge of employees & enhance their

understanding to job, training facility is also provided to them. So it can be said that it has a deep knowledge of management. Weaknesses Lack of innovation in products. Services are expensive as compared with the local commercial banks. No doubt there are trained employees at BAL but these employees are lacking in having complete knowledge about their products that are offered to customers then how can they sell them effectively to the customers. During my stay at BAL (Daska branch) I realized that online banking is not working properly due to which they are loosing customers. On other side ATM creates problems for the customers and discourage to customer in getting their money. Opportunities Pakistan with the new government in power now is going to move towards industrialization and this will thus result in the development of the country. This will generate a new client base for the Bank. The bank will experience a lucrative market in both the corporate and consumer banking. At present they have 15 specially designated Islamic Banking branches operating in the market, which cover 9 major cities. Consequently they have designed formal training modules for their team members in Islamic Banking and are committed to developing their skill and confidence levels for optimum performance. They should introduce Islamic branches where they dont No doubt its network has expanded all over the country but opportunities always exist so it should expand its network in those areas where it is lacking due to increase in competition all over the country. There were days when organizations come with quality products and succeed in the market without taking any change in products with time but times have surely changed now the organizations have to introduce new innovative products with high quality to sustain its position in market. So BAL should introduce new innovative products to sustain its position in market.

 One of the opportunities that bank BankAlfalah has been provided

by its competitors is that it has become very much possible for BankAlfala to develop and target a certain market and catch the customers for earning long term profitability. Financial strength is providing to be an effective tool for winning the customers. The major opportunity, which I realized is that it, should consider more on its promotional activities to target profitable customers as well as attract competitors customers, which is major achievement of any organization. Threats In Pakistan new banks are constantly coming with new innovative products having high quality so this will result of competition in the banking sector. Another threat is that banks are improving their customer services by incorporating new informational technology. The existing banks in the business are providing more innovative services to clients. This threatens the client base of Bank Alfalah Limited because the clients may switch to a bank offering more variety in the services. Today the banking sector is improving not only by the hard work of concerned persons but Government is also encouraging the ideas and policies banks implement for the improvement and development of strong financial institutes. As the competition is increasing banks all over the country are moving towards better techniques for collecting and transferring data within the branches and to the head office, as far as Alfalah is concerned this system needs attention and the present use of better IT technique in other banks is proving to be a serious threat for Alfalah. Competitors of Bank Alfalah Limited are banking an aggressive marketing program to get the mind as well as heart share of the Bank Alfalah Limited clients. As demand of banking services has increased, banks are moving towards expansion. They are trying to open more and more number of branches all over the country and thus this is a serious threat for Alfalah.

Recommendations for Improvement Bank Alfalah Limited is a well-known and successful financial institution in the banking sector, it is said, nothing is perfect in the world, and there is always space for deficiencies. Although the bank has a vast network of nationwide branches but it should spread its branch network throughout the world especially in the countries involved in international trade with Pakistan.

In order to compete with the other banks. ATM services should be excellent as we can see the growing competition among the banks.

The bank should acquire the services of the highly qualified people accompanied by lucrative incentives to promote its status as desirable in the next millennium.

In order to market its products it should accentuate to give advertisements on both print and electronic media.

The quality of human resource lies at the center of every organizations success and no doubt Bank Alfalah Limited is fully aware of the importance of a satisfied and well-trained work force that gives completive advantage but the problem which I have observed is that employees of Daska Branch dont have enough knowledge about their products. So the policy of the bank should be to continually encourage its employees for their knowledge enhancement about their products. The state of the art training and development center at Bank Alfalah should arrange workshops and seminars for employees at every level to empower them professionally.

Bank Alfalah Limited operates as progressive and adaptive organization maintaining dynamism and flexibility in all facets of its operations but in this era of stiff competition it should consider to launch new products to attract the customers.

Their aim should remain to provide customers with value pricing and to ensure that quality of their portfolio is never compromised despite market pressures.