INTERNSHIP REPORT ON

BANK ALFALAH LIMITED

BRANCH HARIPUR

BY M. JUNAID KHAN Roll No: 13160

BBA HONS (FINANCE) SESSION 2007-2011

DEPARTMENT OF MANAGEMENT SCIENCES HAZARA UNIVERSITY HAVELIAN CAMPUS

INTERNSHIP REPORT ON

BANK ALFALAH LIMITED

BRANCH HARIPUR

Internship Report submitted to the Department of Management Sciences In partial Fulfillment of the Requirements for the Degree of Bachelor of Business Administration

DEPARTMENT OF MANAGEMENT SCIENCES HAZARA UNIVERSITY HAVELIAN CAMPUS

APPROVAL SHEET
It is certified that Mr. M.Junaid Khan Student of BBA HONS (Finance) has submitted report to department of Management Sciences, Hazara University Havelian campus as required by the university.

Internal Supervisor: Signature: Name: ___________________________ ___________________________

Designation: ___________________________ Organization: ___________________________

External Examiner: Signature: Name: ___________________________ ___________________________

Designation: ___________________________ Organization: ___________________________

ACKNOWLEDGEMENT

First of all I would like to thank Almighty Allah who made me able to complete this internship report by utilizing my skills and knowledge. I am also thankful for giving me spirit of patience, consistency and courage during my internship.

I acknowledge my thanks to my report supervisor Ms. Tahira Qureshi Department of Management Sciences. As a supervisor his constructive and critical guidance, enable me to complete my report. I am also grateful to the faculty of Management Department, especially my respected teachers for their assistance, cooperation and guidance to furnish my academic career and also for giving me chance to show the best of my abilities during the period of my internship.

At Bank Alfalah, I would like to thank Sir.Anees Ur rehman (Manager operation) who provided me full opportunity to start internship and accumulate first hand comprehensive information during my internship. I offer my heartiest thanks to my respected parents who encouraged and supported me to achieve this target. Whose valuable guidance and persistence help remains with me in every field of life.

Last but not the least, I express our deepest gratitude to all those who contributed directly or indirectly to bring this report to this original format, because I would never have been able to achieve this by my self.

M.Junaid Khan

CHAPTER: 1
INTRODUCTION TO STUDY
1.1 Background of the Study Banks play a vital role in strengthening economy of any country. They help in mobilizing savings and provide capital for trade, commerce and industry. In Pakistan banking sector has always shown remarkable results in the past and is carrying on with it. BAL is one of the leading banks in Pakistan, and had played a key role in the development of the country. The opportunity has been provided to understand the bank operations during six weeks internship in Haripur Branch as the requirement for fulfillment of MBA degree. In this report different aspect of the banking sector in general and BAL in particular with especial emphasis on account opening, clearing and remittances have been covered. 1.2 Purpose of the Study: The purpose of the study is to give a comprehensive review of the BAL and to analyze its financial aspects. Besides that, the purpose of the study is: 1) To compare the theoretical knowledge with the actual practical work. 2) To study operations of the banks, and to analyze the strength and weaknesses of the organization. 3) To analyze its financial performance. 4) To recommend the measures to improve overall performance. 1.3 Methodology of Study: For writing this report the information has been collected by following ways. There are two types of data used for report writing. 1.3.1 Primary Data: The data, which is collected for the first time and exist in raw form, is called primary data. It includes: i. ii. iii. Personal observation Discussion with staff Informal interviews with branch manager

1.3.2 Secondary Data: The data gathered from existing sources are called secondary data. They are in processed form. The main sources of secondary data of BAL are: i. ii. iii. iv. v. vi. 1.4 Annual reports of BAL BALs website/ internet Manuals Brochures Relevant books Circulars Limitations of the Study: 1.4.1 Lack of Time: A time period of 3 weeks is not enough to study the operations of such a large organization like bal. so the study had to be restricted to certain specific areas only. Hence, we can term the time factor a big limitation of the study. 1.4.2 Lack of Information: The lack of information was another limitation of the study. The only source of information about the financial performance of the overall organization was its annual reports, which was also not available at the branch. Also annual reports of other banks were not available for the same year, so cross sectional analysis was not possible. 1.4.3 Burden on Employees: Due to large volume of work handled by due to, the workload on the employees was too much due to which they could not properly share their views about the organization. 1.5 Scheme of the Report: The report has been divided into four sections, each section having sub-sections in it. The scheme of the report is as follows. 1.5.1 Section One: This section includes the introduction of the report, the background of study, purpose of study, scope of work, methodology of research and tells about the scheme of the entire report.

1.5.2

Section Two:

This section presents a comprehensive review of the bank. It includes history of BAL, its organizational structure, departmentation, human resource policies and advances. 1.5.3 BAL. 1.5.4 3. Section Four: It summarizes the findings and recommendations based on the analysis in section Section Three: This section contains critical analysis, SWOT analysis and financial analysis of

CHAPTER 2:
OVERVIEW OF BANK ALFALAH IN PAKISTAN
2.1 Introduction to bank Alfalah Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited company, under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in Islamic banking, commercial banking and related services as defined in the Banking Companies Ordinance, 1962. The Bank is currently operating through 200 branches in 90 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Management of Bank Alfalah accepted the challenge to transform this bank into a highly professional, most efficient & service oriented institution. The management has been successful in fulfilling the undertaken challenge. It has been successful in making a significant contribution to both corporate and retail banking in Pakistan. Over the years, its emphasis on growth has resulted in a strong entity capable of offering high quality services to a wide spectrum of clients, in a highly challenging business environment. Its strategy is to maximize the synergies of branch network through an optimal allocation of financial resources in the face of dynamic challenges of present financial environment. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates their commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. The bank perceives the requirements of its customers and matches them with quality products and service solutions. During the past ten years, we have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today. Bank Alfalah Limited has continued its upward climb in pursuit of excellence. Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals set out by its Board and management, Bank Alfalah Limited increasingly inspires trust and confidence of all its

clients. Within a short span of time the bank has carved a significant niche for itself in the banking industry. 2.2 History and Present Status of bank Alfalah Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its 3 branches in Pakistan. In 1991, the BCCI was banned, when was accused by European countries that the bank was involved in some illegal operations with Gulf countries. The major reason behind European accusation was that BCCI was of Islamic mode. Therefore, the bank was closed due to international pressure. Then, its 3 Pakistani branches were taken over by the Government of Pakistan, which were named as Habib Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited. Following the privatization in July 1997, Habib credit and Exchange Bank assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as the family of H. E. Sheikh Hamdan Bin Mubarak Al-Nahayan purchased 70% of its shares and 30% shares remained with Habib Bank on behalf of Government of Pakistan. Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the management of the bank has implemented strategies and policies to carve a distinct position for the bank in the market place. 2.3 The Mission To develop & deliver the most innovative products, manage customer experience, deliver quality services that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank 2.4 The vision To be the premier organizations operating locally and internationally that provides the complete range of financial Services to all segments under one roof. 2.5 Objectives of bank Alfalah To please their customers by fulfilling the financial needs as best as possible, they believe in placing the client at the center of business and all of the products and services. For this the management has adopted the strategy of The objectives of Bank Alfalah are as follows:

Caring for you Our Customers

To get maximum share of the market To price the products optimally To expand more the network of branches in several other cities of Pakistan as well as in the other countries of the world. To reinforce a corporate culture that fosters learning, creativity and flexibility. To invest further in banking innovations which include Islamic banking, SME, Home Loans and other areas of product development to provide higher levels of services and value to the clients.

2.6 Company Management System Management means the administration and the governing body that is concerning the whole organization. All the decision and strategies are been proposed and evaluated the management of the organization. At Bank Alfalah, the management is pretty strong and there is lot centralization in the whole network of the bank. The management at Bank Alfalah has been divided into 3 major parts. i-e, Board of Directors, the Top management, and the group of middle managers, supervisors and the employees. 2.6.1 The Board of Directors: The upper most part of the management is the Board of Directors or the Executives. The Board of Directors are responsible for the first phase of the management process, i-e, planning. So, all the decisions and the strategies are being proposed and implemented under the instructions and the supervision of the board of directors or the executives. Also the policies and the overall objectives of the Bank are being proposed at this level of the organization. 2.6.2 The Top Management: The top management involves the branch managers and the chief managers of the bank including the operations managers as well. The major responsibilities include the strategy formulating for the bank and supervising the whole staff at the branch. They define and interpret the objectives and vision and then formulate policies for their completion.

2.6.3

The Middle Management, Supervisors and the Employees:

Departmental heads constitute this level of management at Bank Alfalah. They are directly responsible for planning and controlling the activities of officers. Finally, the employees whose activities are monitored and controlled according to the desired objectives. 2.6.4 The Overall Management - Chairman - CEO - Director - Director - Director - Director - Director

2.6.4.1 Board of Directors H. E. Sheikh Hamdan Bin Mubarak Al-Nahayan Mr. Mohammad Saleem Akhtar Mr. Abdullah Khalil Al-Mutawa Mr. Omar Z. Al-Askari Mr. Abdullah Naseer Hawaileel Al-Mansoor Mr. Nadeem Iqbal Sheik Mr. Ikram Ul-Majeed Sehgal 2.6.4.2 The Core Group Board Advisory Committee Mr. Abdullah Khalil Al Mutawa Mr. Khalid Mana Saeed Al Otaiba Mr. Ganpat Singhvi Mr. Bashir A. Tahir Central Management Committee Mr. Mohammad Saleem Akhtar Mr. Pervaiz A. Shahid Mr. Sirrajuddin Aziz Mr. Mohammad Yousaf Mr. Ijaz Farooq Mr. Bakhtiar Khawaja Mr. Arfa Waheed Malik Mr. Adil Rasheed Mr. Shakeel Sadiq - (Chairman)

Mr. Adnan Anwar Khan Mr. Shahid M. Murtaza Mr. Nadeem ul Haq 2.6.4.3 Corporate Information Mr. Hamid Ashraf Mr. Zahid Ali H. Jamal Taseer Hadi Khalid & Co. (Chartered Accountants) B A Building, I. I. Chundrigar Road, P. O. Box 6773, Karachi. - Company Secretary -CFO - Auditors - Head Office

2.7

Organizational charts

The source of these organizational charts is the official website of BAL. www.bankalfalah.com. Chart No 2.1 organizational Charts 1

Chart No.2.2 Organizational Chart 2

2.7 Organogram The source of this chart is Mr.Shoib Khan Credit/SME officer. This is organizational chart of all employees with their designation, working in BAL Haripur Branch

BRANCH MANAGER Imdad Khan Jadoon

Credit/SME Officer Shoaib Khan

Credit/SME Officer Sajid Iqbal

Accounts Officer Umair Ud Din Farooqui

Manager Operations Anees Ur Rehman

CD Incharge Razaib Khan

IT Officer Shoaib Khan

DMS Daniyal Akhtar

Operations Officer Kazi Hammad Masood

Cashier Muhammad Zubair

Outsourced Khurram Shehzad M Irfan (sweeper) M Zahid (Cash sorter)

Outsourced M Kamran M Ahsan Khan Khurram Rafique M Khalid

CRO Sadia Khyber

Cashier Muhammad Ashfaq

Branch Sales Supervisor Muhammad Nadeem

2.8

Fields and Activities

A support functions Group, mainly responsible for development of systems and procedures, process-re-engineering, automaton and credit management. The Group is organized in three divisions i.e. Systems and Operations Division, Human Resource Division and the Credit Division. 2.8.1 Credit Division Providing extensive support to branches for credit administration, control and monitoring, the Division has played a pivotal role in helping the Bank achieve a remarkable loan growth of with well-diversified risk exposure. Most of the loans are for short-term trade financing on a secure and self-liquidating basis. The Division has a special Assets Management team, which is responsible for ensuring low ratio of bad debts, effective monitoring of delinquent advances and close follow-up for recoveries. Banks Head Office Credit Committee (H.O.C.C) reviews the credit quality and pricing on regular basis not only to ensure healthy credit growth but also the management of Banks risk assets in a most prudent and profitable manner. 2.8.2 Systems and operations division This Division has been instrumental in developments of procedures and manuals for various operating requirements of the Bank. After careful mapping of existing process flow, the Division recommends automation and re-engineering requirements to improve transaction efficiencies. The Division is active in providing equipment procurement support and development of new branches. This Division, as a direct function also manages the protection of fixed assets of Bank. 2.8.3 Technological innovation: Modern science is not an option, it is an obligation Technology is rapidly changing the way we think, act and do business. Is has played pivotal role in enhancing customer expectation, particularly with respect to speed and quality of service. Alfalah bank enjoys a strategic competitive advantage overall domestic players by virtue of its leadership in technological innovation. Phone banking service and

Internet banking facility allows customer to enjoy routine banking services from anywhere in the world. 365 days a year, 24 hours a day. 2.8.4 Credit Card Division The Banks product portfolio is designed to remain flexible and adapt itself to changing customer needs. Bank endeavor in this regard is to actively explore newer avenues of offering higher values to our clients, whom bank feel, deserve nothing less. Bank Alfalah has launched various unique credit card schemes to cater to numerous segments. 2.8.5 Human Resource Division Strategically, perhaps the most important Division at the Head Office is responsible for human resource management, including recruitment, staff training and evaluation. This division is also handles matters relating top administration. This Division operates on a future oriented strategy focusing on employees personal and professional growth. Staff development activities are reared to enhance their capabilities for applying the knowledge and fats towards development of practical solutions. Under our Human Resource management policy, Alfalah develops and grooms the management personnel for position of greater responsibility analytical, interpersonal, and conceptual and specialization skills to enable them to understand the cause-and-effect relationships and to think logically. 2.8.6 Dedicated professionals: Unusual efforts on the part of the employees who are apparently ordinary workers is one of the key indicates of the superior enterprise Staff is the most valuable asset of any organization. The human resource philosophy at Alfalah bank focus on multi-talent hiring, professional grooming, requisite training and meritocracy based reward system. Staff welfare has been a priority. Employee productivity enhancement is organized through in-house and external training programs. Bank continues to offer opportunity for people to develop their knowledge, skills and personalities, thus ensuring greater self-fulfillment and progression in the organization.

In short bank Alfalah team comprise of dedicated professionals equipped with a diverse array of skills and vast experience. The management concentrates its energies on making informed economic decisions, translating it into greater returns for our investors and customer. The prudent attitude has created a synergistic organizational structure leading to improvements in profitability and a sustainable competitive advantage for the bank. 2.8.7 Training & development: Bank Alfalah is committed to the personal welfare and professional development of all our team members. Proper training of human resource is essential, not only for the more productive and satisfied work force but for also homogenous corporate culture. The bank continuous to follow its strategy of hiring batches of young and energetic Management Trainees who are sent to our Training and Development Center for training in all areas of banking. Our 2.8.8 Ethical values: Training and Development Center is a state of the art facility with an impressive faculty. Professionalism without integrity is like a book without pages Because the right may not always be obvious, we must be guided in our every action by set of well-defined values, governing our decision. Alfalah bank understands that its commitment to satisfy customer needs must be fulfilled within in a professional and ethical framework. 2.8.9 Finance division Finance Division is responsible for bookkeeping and accounts. This Division is the head office and manages all financial returns and the MIS through its Management Reporting Wing. The Division is actively involved in preparing market comparative analysis, consolidation of Banks budgets, monitoring and constant review of various financial indicators. Financial Division works as the backbone for Banks operations. The Division, which reports directly to the President And Chief Executive of the Banks, has been instrumental in preparation of Banks business plans and future stratigies.the budgetary performances are constantly reviewed and trough a sophisticated

Monthly Performance Report (MPR) which is a computer based program, the Division provides feedback to the senior management on strategic issues like reasons for budgetary variances and methods to arrest negative performance factors. Preparing the Banks Annual Accounts and coordinating external audits is a direct function of the Finance Division. Through the dedicated efforts of staff at this division, the Bank has been winning various awards for the Best Presentation of its Annual Accounts and also the management has been able to monitor and review the Banks performance in procreative manner. 2.8.10 Audit division The Audit Division reports directly to the Board through the Executive Committee-which are also the Audit Committee. The Audit Division acts completely independent of the management and is responsible for checking and reporting on the Managements compliance with the Boards policies and directives, as also the Prudential Regulations and other directives of the SBP. However, their role is not intended to be just that of faultfinding; but also guiding and assisting branches in improving their operations. 2.9 Policy formulation and process meeting At Bank Alfalah, policies as mentioned earlier, are been formulated at the Executive level of the organization. Policies for any organization constitute a major part in the overall long term functioning of the bank. In short we can say that policies and the objectives are the lifeblood of the organization in long run. Though policy formulation is in the prescribed hands yet the policies formulated by the top level have been very successful as indicated by the success pattern of the bank so far. Then these policies are transformed into the hands of the top-level management. The top management is been suggested to make the policies implemented keeping in view the long-term objectives of the organization. Also the views from the middle managers and employees are encouraged as well for the purpose of removing flaws form the system. For these very purpose meetings arte held almost weekly at the branches level and also in case of any contingent dispute resolving the meeting scan be called at any time during the branch timings.

2.9.1

Lending Policy

Bank Alfalah pursues a conservative yet dynamic credit policy. This strategy has enabled the bank to have a high quality risk portfolio. Bank prefers to finance exporters because of less risk involved. Bank Alfalah manages the credit risk, liquidity risk, market risk and other operational risks very efficiently. For this very purpose Bank Alfalah has got an effective credit line proposals system to be sanctioned to the clients on demand. 2.9.2 Selection of Clients Management is very selective of clients. All of the references are carefully checked to learn about a potential client before establishing a relationship. References are excellent sources of new accounts as they give an opportunity to learn about a potential client before establishing a relationship. This policy helps in protecting the integrity of the bank. It ensures good relationship with the clients 2.9.3 Services and Product Polices Bank Alfalah provides a vast variety of services to its clients. Some of those policies are discussed below: Credit Facility In this service the loans are provided to the customers by the bank to meet revenue shortfalls. Stop Payment Instructions It is one of the most important services provided by the bank to its clients. In case the account holder has lost his/her cheque he can issue the stop payment instructions to the bank. The bank till further instructions will not honor the cheque. Deposits The bank offers different types of Deposits to its account holders. Alfalah Musharakah Saving Account Current Account Musharakah Time Deposits On PLS Basis

Drafts, Telephonic Transfers, Pay Orders

These are the facilities that the bank offers its customers and, at times, to the people who do not maintain an account with the bank, that is, ordinary people. For offering these services the bank charges commission besides the government taxes and duties. 2.9.4 Trade Department Policy Bank Alfalahs focus is on Foreign Trade as its primary market of business. It maintains high emphasis on enlarging its Correspondent Banking network besides aiming to enhance the scope and level of cooperation with existing correspondents. The Trade finance department has efficiently done management of the changing trade policies by the central bank over there. 2.9.5 Marketing Policy Bank Alfalah inverts heavily for the marketing policies and orientation, for the publicity of its new products/services. It uses television advertisements, newspaper as well as various promotional schemes to attract customers. The Bank sponsors a number of sporting and community development initiatives to play its part as a responsible corporate citizen. 2.9.6 Promotion and Incentive Bank hires officers in range 1. Then depending upon their job performance they are promoted to next range. More facilities and increments are given along with promotion. The bank gives a car facility to the officers of range 5. Banks policy is to give cash rewards and salary increments for increasing the employees satisfaction. Also with the expansion of the branch network growth in the current era, more and more opportunities have been provoked not only for the young generation but also for the employees of the bank. 2.9.7 Accounting Policies Bank Alfalah has adopted almost the same accounting procedures that other financial institutions are adopting at this time. These accounting procedures or Accounting policies are made according to Generally Accepted Accounting Principles, the GAAP. The process flow and the usage of the policies in the day

wise routine are mandatory for all the employees working in the specified departments at the branch. 2.9.8 Recruitment Policy Hiring is mainly of two types i.e. direct hiring and promotion from lower levels. Banks policy is to hire suitable candidates. By suitable candidates bank refers to candidates having proper educational qualification, experience and background. It is the policy of the bank that President of the bank will be the representative of major stakeholders/owners. Board of Directors is representative of sponsors. Bank is reluctant in making direct appointment of senior executives. EVPs are promoted from lower levels. Every year Bank Alfalah opens its doors for about 30 fresh post-graduates to join the prestigious ranks of Management Trainee officers with the Bank. The MTO scheme is a highly competitive and sought after induction scheme, in which short-listed applicants appear in a written test followed by a panel interview. Successful candidates then receive comprehensive training in essential areas of branch banking at the Banks state-of-the-art training facility at Lahore and Karachi, prior to their posting at various branch locations. Preferred educational background for entry into the MTO scheme includes an MBA degree, MA Economics or M.Com from reputable Pakistani or foreign institutions with GPA of 3 plus, or equivalent. Strong personal character, as well as communication and interpersonal skills are essential pre-requisites to succeed as an MTO. 2.9.9 Training and Development Policy Bank Alfalahs policy is to take special interest in recruitment and training. This training is been given in two instances, i-e, the Off-job training and the On-job Training. To impart technical skills to its staff Training and Development Center offers programs in several skill areas. Its employees attend seminars and courses offered by Institute of Bankers. Alfalah also offers various computertraining courses to its employees. It is obligatory for each staff member of the bank to attend a minimum number of training courses during the course of a year. Wherever the Training Department is unable to provide focused training for

certain groups of staff, reputable external training providers are invited to fill the gap. 2.9.10 Quality assurance services Service excellence is one of the priorities of Bank Alfalah. A separate quality assurance department is to be established as well very soon for the removal of little flaws that are still prevailing at some of the branches regarding facilities for the consumers. The focus of the bank is to develop new areas of activities along with traditional banking activities of resource mobilization and credit disbursement. 2.9.11Growth Policy Bank Alfalah emphasizes on growth along with providing best quality customer service. Banks policy is to maximize the synergies of branch network through optimal allocation of financial, human and other resources to compete in the marketplace. 2.9.12 Liquidity Policy Bank Alfalah maintains positive and healthy liquidity. Banks policy is to keep surplus liquidity in fixed income securities issued by the Federal Government of Pakistan. If necessary it can be easily converted into cash. 2.9.13 Investments Policies Bank Alfalah investment policies are based on federal and provincial securities, debentures, and participation term certificates treasury bills and blue chip share of joint stock companies.

CHAPTER: 3
DEPATRMENTATION
3.1 The Account Opening Department: Borrowing funds from different sources has become an essential feature of todays business enterprises. But in the case of bank borrowing funds from outside parties is more vital because the borrowed capital of a bank is much greater their own capital. Banks borrowing is mostly in the form of deposits. These deposits are lent out to different parties such deposit creation is done through open an account in the bank. The department that is responsible for opening and closing an account assumes immense significance and holds a central place in the basic banking operations. The Account opening department was the very first experience of my practical life being working with a bank, during my internship with Bank Alfalah Ltd. This department is the best way to start with the banking career or training. This is because the ways you deal with the customers give a lot exposure to you for the coming days in banking because the bankers are always in contact with customers as customers are the biggest source of assets for the bank. Types of Account Current Account. Saving Account. Term Deposit. Current Account

3.1.1

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

There is no interest on these accounts. It is only for transaction purposes. They paid on demand. Where a banker accepts, paying all checks drawn against him to extend of the balance in the accounts. As there is no profit paid on this account, it is also called checking account because cheque can be drawn on it. Current account is mostly opened for business. The minimum balance requirement for opening the current account is Rs. 10,000. Basic banking account: Initial deposit for account opening is Rs. 1,000 with no minimum balance requirement. Non interest bearing checking account. Maximum 2 deposits & 2 withdrawals through cheque are allowed. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. No restriction on ATM withdrawal. The PLS Savings Account: 3.1.2

The purpose of this account is to introduce the habit of saving individuals in the neighborhood. The profit on saving accounts is paid on the basis of profit and loss sharing at 2 % per month. The minimum balance requirement for opening the account is Rs.5000. The PLS savings Account is meant for those people who have got an aptitude towards earning some profit on their amount deposited for sometime with the bank. Individuals who wish to earn profit/interest on their investment normally maintain the profit and loss sharing account but in order to earn interest the client is required to keep his/her deposits with the bank for some time. For this purpose, there are some restrictions on withdrawal of money from a Profit and Loss sharing account but in general banking practice there is no restriction on any with drawl from a Profit and Loss sharing account. The interest/profit is paid half yearly.

3.1.3 Term Deposit A term deposit is a deposit that is made of a certain period of time. At the end of specific period the customer is allowed to with draw the principal amount. The rate of return of this account varies from 3.25 % to 6.50 %. The term deposit account varies from one month to 3 years and the minimum balance requirement is Rs. 50,000. Particulars at the Account Opening Form: In the account opening form the client is required to provide the following information. The first part establishes the currency in which the account is to be maintained / operated. The currencies include Pakistani rupee. U.S. dollar Pound sterling Euro

The second part then establishes the preference regarding the type of account to be maintained. The various choices offered are Savings account Current account. Royal profit

For the chequing account, there are different types of account holders are required for all these types of account holders. The operation/procedure requirement that is needed for Individual Account differs greatly from the Joint Accounts proprietorship A/C, Partnership A/C, Private Limited Company A/C and Public Limited Company A/C. Now, during my internship at the Account Opening department at Bank Alfalah Ltd. Garden Town Branch, I found out the following documentation and writings are required in order to open an account with us: The first thing mentioned at the account opening form is the Title of the account. Title of the account is to be written in block letters. By title of an

account we mean the name (either of the individual or of the business concern) with which the account is to be opened and operated. The client is supposed to provide the information whether the account would be maintained singly (only one person operates the account) or jointly (two or more than two persons maintain the account). The name of the person who intends to operate the account. Provision of either Fathers or the Husbands name is also a pre-requisite. Occupation of the prospective account holder. The name and complete address of the employer. Nationality of the Account opener Country of residence is to be specified. Contact numbers both the cellular and the landline numbers are to be provided in addition to the segregation of the residential and the office phone as well. The national identity card, of course is an integral part of the account opening application. Passport number, if the prospective client has got one. Another requirement is the date and place of issue of the national identity card. The prospective client also has to provide the name, address and relationship of any one of his/her close relatives in order to facilitate the communication problem. The clients often have a misconception that there next of kin might, if some peculiar circumstances arise, get the profit out of his account but this is not the case. The name and address of a close relative is only recorded in order to undertake necessary communication when needed. In case of a business concern there are two more things that are to be provided by the business. Type of organization The various types of organization which are present in Pakistan at present are: Public Limited Company Private Limited Company

Partnership Association/Club/Society Sole-Proprietorship

Some special documentation is also required like the certifications regarding the incorporation and commencement of business and the Form 29. The business concerns also have to give their full name, brief description of the business, date of incorporation, and place of incorporation, national tax number, telephone number and fax number.

The choice of either the deduction or non-deduction of Zakat also needs to be highlighted. Zakat is deducted out of a Musharakah savings account and not in the case f the current accounts...

Details of other accounts maintained with other branches of Bank Alfalah Ltd. or other banks are also to be given. The name, signatures, and account number of the introducer is a very essential prerequisite in order to facilitate the opening of an account. The introducer is a person who already has an account in the same branch. It can also be a person from the staff of the branch as well. This introduction is the mandatory requirement in order to open an account in order to trace out the defaulter in case of defaults.

Then the client also has to put forth the instructions regarding as to whether the account would be maintained on the basis of either or survivor, jointly or any one of us.

After this three signatures of the client are needed and if it is an account of a business concern then the rubber stamp of the company/organization is also needed below the three signatures.

In case of a joint account all the persons unanimously might give the right to operate the account to one person. This right is also termed as mandate for joint account. If the mandate is given to a person all join account holders must sign as an evidence of their approval. The names of persons are written on the title of A/C and on S.S. card.

3.2

Individual account

Any individual or proprietor of business can open an individual account at BAL. PLS (profit and loss sharing) saving accounts can be opened with the minimum balance Rs. 5000/- with expected profit rate is 2% on Rs. 25,000 or above. Following requirements has to be fulfilled for this account. 3.3 Signature of customer on back of AOF. Mention next of kin (nominee) Name and A/C # of introducer. Verified sign of introducer. Customer signature admitted by officer. N.I.C photocopy attached. Letter of thanks.

Joint account

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

In case of account opened by a business concern there are some documents that are needed to be attached with the account opening form. The details of these documents are given below. 3.4 Limited Company: Copy of certificate of incorporation Memorandum and Articles of Association List of Directors

 3.5 3.6

Copy of the board resolution Certificate of Commencement of Business Copies of CNICs of Directors Latest copy of Form-29 Partnership deed certified copy NIC photocopies of all partners. Partnership mandate for account signed by all the partners A letter duly signed by all the partners containing the operating instructions of the account also has to be taken.

Partnership:

Sole proprietorship / Individual: NIC/ Passport photocopy Letter from Proprietor confirming sole proprietorship

3.7

Term and conditions governing the account 3.7.1 Account Each Account will be allotted a distinctive number, which should be quoted in all correspondence with the bank relating to the account. The account should be subject to the applicable laws of Pakistan and prevailing rules, regulations and directives of the State Bank of Pakistan. 3.7.2 Minimum Balance Subject to the regulations of State Bank of Pakistan, the customer should maintain a minimum credit balance in the account as may be prescribed by Bank from time to time. The bank reserves the right to close the account after giving 14 days notice if the customer fails to maintain the required minimum balance in the account. 3.7.3 Deposits All deposits in the account should be accompanied by pay in slip showing the correct title & account number to be credited. If the amount indicated on the deposit slip differs from that later cash account the banks count shall be final and conclusive.

Proceeds of a cheque deposited in the account for collection will be value dated after receipt of the proceeds thereof. In receiving cheque/instruments the bank acts only a collective agent of the customer & assumes no responsibility for the realization of such cheques/instruments. The bank may refuse to accept such cheques/instruments drawn in favor of third party. The customer shall not draw against unclear cheques/ instruments though credited.

The bank shall recover return cheque charges at the rate fixed by the bank by dividing the account on every cheque deposited for collection and return unpaid.

The bank is realizes the services of other bank, customer do so for account and the sole risk of the customer. The bank assumes no liability should the instruction is transmits is not carried by such banks.

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

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

will inform the bank, if he will not then he will be himself responsible for any loss. 3.8 Minors Account

In respect of an account opened in the name of a minor, the bank shall be entitled to act on the instructions received from the guardian name on the account opening form, irrespective of whether the minor account holder continues to be a minor or not unless the bank receives written instructions from the guardian or a notice to the contrary from an appropriate authority. 3.9 Statement of Account The bank shall quarterly or at such other interval as it may deem fit send to the customer statement of account and the customer shall check the entries made therein. In case of any discrepancy or error in the statement of account, the customer will notify the bank within 14 days of receipt of the statement. 3.9.1 Hold Mail Facility Upon written request of the customer, the bank may in its sole discretion provide a hold mail facility. The customer hereby waives his right to question any detail appearing in the hold mail communication or statement of account irrespective of their actual receipt. The customer accepts all risks and responsibilities in this regard. 3.9.2 Stop Payment Instructions The bank may, in its absolute discretion, accept stop payment instructions from customer if a cheque is reported lost or stolen, provided the necessary details of the lost/stolen cheque given by the customer. 3.9.3 Death of a customer In case of death of individual customer, the bank will permit no withdrawal from that account after receiving notice of customers death, except on production of a succession certificate or other court order from a court of competent jurisdiction. Now, there are some documents that are always there with the account opening forms. These things need to be filled in by the customers efficiently and carefully. These are:

Signature Specimen Card. Cheque Book Requisition.

The Signature specimen card basically contains information that is basically a repertoire of information given in the account opening form, but in this card the client vividly puts his signatures as a specimen, which are scanned and stored in an intelligent terminal for future use and reference. The Cheque Book requisition basically serves as an application to issue a Chequebook. The client also fills it up and submits it along with the account opening form as a result of which he is issued a Chequebook once his account is approved. As regards the Chequebook one of the most important entries in a Chequebook requisition is the series number of Cheques that correspond with the numbers of the cheques contained in the Chequebook issued to the client. 3.9.4 Procedure of Opening an Account The Account Opening Form:

When a client comes to the bank, and makes a request for opening of an A/C. The officer says that first fill up a prescribed application form. If he/she wants to open a PLS A/C, then he/she has to fill a form according to the account. Completion of the Form: The name, occupation, and complete address of the person opening the account are written in the columns are provided in the form. One signature of the person is taken on the face of the form and one is taken on the backside. These signatures should be usual signatures and he would operate the account with them future. Introduction: The introduction of a current account holder is accepted for the opening of either a current account or a solving account. The introduction of saving bank account is accepted only for saving bank accounts. The signature of the account-holder introducing the account is obtained at the place provided for in the account opening form. Specimen Signature Card (S. S. Card) It is card on which specimen of applicants signature are taken for future reference. Every time a cheque is presented for payment, the signature on the

cheque is verified by comparing it with S.S Card. In case of joint account two applicants can sign on one SS card. In case of more than two joint account holders more than one SS card are required. Account Number: As now a days Bank Alfalah has acquired centralized banking system where all the branches are directly connected to Head office. When customers give all the information about him, this information is entered into centralized data base. When this procedure is completed, the system automatically generated the account number of that customer. Due to this system the process of account opening becomes fast and also there is no chance of any mistake. The account numbers of various accounts start with the following series Table no.3.1 Account Number Series Account Title Current account Saving account Royal profit account Term deposit account Car finance account Issuance of Cheque Book: Account Number 01 02 029 03 0191

After opening an A/C with the bank, the A/C holder once again makes a request in the name of bank for the issuance of a chequebook. The A/C holder mentions title of A/C, A/C number, sign it properly and mentions the no of leaves he requires. Normally BAL issues a chequebook having at least 25 leaves. Every chequebook also contains one leaf that is used for another issue of a Chequebook Bank Alfalah issues the following cheque Books Saving account - 25 leaves Current account - 50 leaves Current account - 25 leaves

Loose cheques are also issued in some cases.

Entry of cheque book:

Before issuance of a chequebook, the employee performs certain functions. They include: Stamping every leaf with specific A/C number. Enters it in the chequebook issue register. Check whether or not a senior officer has verified the signatures, if no then first he gets them verified. If the check book is of photo account then be sure that each and every leaf of cheque book should carry photo account stamp Filling of Account Opening Forms: For current and saving account, separate files are maintained in which the forms are pasted or punched in numerical order and kept under lock and key in fireproof steel or safe. This is because these forms are the basic documents of the contract with the customer. Maintaining the computer record: After opening of account, all information regarding the account is entered into the computer. Currently, a program named Bank Smart is being used for this purpose. Record of all the transactions regarding the account of a customer is kept updated in the computer. 3.9.5 Procedure followed in order to close an Account: Now, coming towards the procedure for the closing of an account at Bank Alfalah, the following steps will be followed. The client who wishes to close an account first has to give an application, duly signed on the pre-printed application of the bank. The client has to attach this application with the liability form (explained below). The client can also give an application on a plain paper, but correct signatures are very necessary. Then it has to be made sure that if the account to be closed is a saving or Royal Profit then the account balance before closing should be zero. In case of these two types of accounts the bank does not take any closing charges. If a client wishes to close a current account then the bank charges Rs.150, so at the time of closing the balance should be Rs.150.

Along with the application to close the account clients Chequebook is also received from him and then it is destroyed in order to prevent any misuse in the future.

A liability form is filled and sent to the Credit Department in order to Cheque that the customer does not owe the bank a single penny in any regard. A debit voucher and a credit voucher are also attached to the liability form.

When the Credit department approves that the customer does not owe any money to the bank and the form is returned to the account opening department then the original account opening form pasted in the ledger when the account was opened is marked account closed along with the date on which it is so marked.

After approval of the liability form, it is sent to the Cash Department so that the officer who scanned it in the first place could return the specimen signature card to the account-opening department.

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

3.9.6

Important documents used in the Account Opening Department Liability form This particular form is used when an account is to be closed. The staff of account opening department, after filling in the name and account number of the client forwards this form to the credit department and the trade finance department who upon receipt of such liability form make required scrutiny so as to check whether or not the customer owes some money to the bank or not.

Account statement request form

This small form is used to request for the account statement for the desired period. The client gets this Performa from the account-opening department and then, after filling it up, gives it to the computer section that gives the statement to the client in printed form. Vernacular Form This form basically functions as a thank you letter (and also as a request) on behalf of the customer if he wants to operate his account by doing signatures in a language other than that of English. Issuance Requisition This requisition is used by the staff to order for any thing (e.g. stationary) they need. They write the type and quantity of the stationary they need, get it signed by the Manager Operations, give it to the person in-charge of issuance of stationary who on receipt of this requisition (duly signed) issues the stationary. Debit And Credit Vouchers These two vouchers are basically used when an account has to be closed. The debit voucher shows as to how much amount has to be taken from the clients account and the credit voucher shows as to how much amount has to be credited as Banks income, in order to facilitate the account closing process. Application To Close The Account This is a pre printed application of the bank in which the client fills in the account number, the title of the account and the type of account and requests the branch manager to close his account with the Bank. Application To Change The Address This is again a pre printed request form in which the client fills in his name, account number, telephone number/s and the new address so that he could communicate with the bank and receives all the notices, statements and other necessary document which the bank might send through mail depending upon the circumstances.

Discrepancies: If there is fond any discrepancy in any of the following particulars then the form will not be entertained: Table no.3.2 Discrepancies that should avoided 1. Date of account opening 2. Account opening Approval 3. Customer Name 4. Joint Name (in case of joint account) 5. Mailing Address 6. Alternate Mailing Address 7. Telephone Number 8. Nationality 9. NIC / Passport 10. Currency of Account 11. Related Account Information 12.Zakat Deduction Authorization 3.10 Remittances Remittance is transfer of funds from one place to another or from one person to another. A Remittance is an important service provided by banks to customers as well as noncustomers. Since it is not a free service it is a source of income for the bank. Parties involve in remittances. Four parties involved in remittance: Remitter Remittee Issuing Bank Paying Bank 13. Hold Mail 14.Either or Survivor Instructions 15. Next of Kin Information 16. Proof of Guardianship in case of Minors Account 17. Thirty Party Mandate 18. Specimen Signature Card 19. Check Book Ordered 20. Introducers Name and Account number 21. Introducers Signature Verification 22. Segment Code mentioned 23. Signature on Banks Terms and Conditions 24.Account Type

Remitter

One who initiates, or requests for a remittance. The remitter comes to the issuing or originating branch, asks for a remittance to be made, and deposits the money to be remitted. The bank charges him a commission for this service. He may or may not be

the branchs customer. Remittee A Remittee is also called the beneficiary, or the payee. The person in whose name the remittance is made. A remittee is also the one who receive the payment. Issuing Bank The bank that sends or affects the remittance, through demand drafts, telegraphic transfers, or Mail Transfers. Paying Bank Paying Bank also knows as the drawee branch. The branch on which the instrument is drawn. It has to make the payment (usually located in a different city country). Kind of remittances Transfer within the branch Transfer from one branch to another Transfer from one bank to another bank in the same city

Transfers from one bank to another bank in two cities Principal duties The principal duties this department is performing are as follows 1. Pay Slips 2. Pay orders 3. Demand Drafts (DD) 4. Rupee Travelers Cheque (RTC) 5. Money Gram 3.10.1 Demand drafts Demand Drafts (DD) are a bill of exchange. It is an instrument in writing signed by the banker containing an unconditional order to pay certain amount to or to the order of certain person for payment on demand or otherwise as future determinant time. It consists of four copies. 1) 2) 3) 4) Original copy which is given to account holder. DD advice is sent to the central branch. Third copy is for reconciliation. Last copy is sent to head office for reconciliation.

Purpose As the name subjects DD is made on the request of the customer (which may or may not be the accountholder of the Bank) in favor of another customer or party in some other city. Thus it is a mode of payment used by one customer to pay another who must be residing in some other city. Payment Payment of DD can be made through all modes i.e. transfer, cash, cheque collection (all branches in Pakistan) etc. Record No manual record of the demand draft is kept; only the record is saved in the computer at the time of making the demand draft. Computer Entry In the system enter into the DD section then enter the Name of the person who is being favored Branch code at which draft will be drawn Bank code of that branch Name of the person to whom the draft is being issued The account no of the issues (if he/she has an account with our branch) The total amount of the demand draft is entered The commission charged is entered (computer usually perform this job automatically) The DD number appears at the end which is entered on the demand draft application form for record purpose. Now press yes for the print of DD, which is in two, parts both are given to the customer. When the computer record has been saved now the advices are made in the favor of the bank on which DD will be drawn. The advices for BAL branches are sent directly to that branch through mail. 3.10.2 Pay order Pay order is also a bank instrument a bill of exchange. The pay orders are usually used for the payment within the city. The pay orders issued from one branch of

bank can only be drawn at the same branch, thats why it is generally referred to as Bankers cheque. There is a separate slip for the pay order application. All the procedures for the pay orders are similar to the demand drafts except the charges and the record keeping which are given below Record keeping: The record of the pay orders is kept in both the computers and manually in registers. The computer record keeping system is similar to that of the demand drafts. Where as in register you enter the Date on which the pay order is issued. Pay order number. Payee, to whom the pay order is being issued. Amount of pay order is entered then the officer signs it. Date of the payment and the remarks are taken.

3.10.3 Pay slips The bank for the settlement of its own payment uses this instrument. There are no charges for the pay slips. They are used to meet the miscellaneous expenses of the bank. The pay slips can only be drawn on the same branch of the bank. No manual or computer record of the pay slips is kept. Only the record of the counter file of the slip is maintained as a record at the bank of which two signatures of the beneficiary are taken. On the pay slip Enter the name of the party as Messrs. The reasons of payment i.e. repair, releases of security etc are written as on account of. Signs and stamp of the beneficiary are taken. The payment of the pay slips can be made through any of clearing, transfer (same city branches), cheque, and cash. Collection (all branches within Pakistan) the pay slips can issue to both minors and majors. On the slip the signatures of two authorized bank officials are must. 3.10.3.1 Rupee Travelers Cheques

These are the banks instruments issued to only major account holders of the bank. TCs are issued to the facilities the customers during the travel. There are the three copies of the travels cheque application. The white copy, which is also known as agreement, remains with the customer with the agreement at the back of it. This copy is must to be shown lost for the reimbursement. The yellow copy is for the record and the blue one is for the head office. According to the government policies only the RTCs of rupees 10,000 & 5,000 are being offered to the customers .The amount in the RTC (the application for rupee travelers cheque) is entered in multiples of 10000 as per request of the customer but separate cheque are issued against it each of RS. 10,000 or in multiples of 5,000 as per request of the customer but separate cheque are issued against it each of RS. 5,000. All the travelers cheque is credited by the head office HO accounts. The payment mode used for the travelers cheque can be cash. Transfer, authority letters, collection (all branches in Pakistan), the president of the bank and it already signs cheque is also signed by an authorized person at the bank. Issuing branch The branch that is issuing the TC will take the signs of the customer on upper part of the cheque.The issuing bank send one copy of RTC application to head office and keeps other with it after entering all the account opening conditions i.e. NIC.no, NTC.no, address, phone no, name etc into the system. Paying branch: On the next date when the cheque is presented in the paying branch (any BAL branch in PK) same signatures on the lower part of the cheque are taken and the bank officer cheque whether they match or not.

3.10.4 Money gram Bank Alfalah Limited, in collaboration with money gram offer remittance services to Pakistan.

Its basically a person to person money transfer service that allows consumer to receive money in just a few minutes. 3.10.4.1Procedure 3.11 Person must have reference no. Person must tell reference no. and compute the simple form. Person has to show NIC and tell compute introduction after that he can obtain money. Collection: All the cheques under collection are called cheques under collection in Bank Alfalah Limited. There are two types of bills for collection:

Outward bills for collection Inward bills for collection

3.11.1.1 Outwards Bills for Collection (OBC): All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for bank Alfalah on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. Cheques for local clearing are entered in clearing register, whereas cheques for collection are entered in OBC register and handed over to the bills department for collection. OBC number is allotted to the cheque from OBC register. Special crossing and bank endorsement stamps are affixed on the cheque. OBC schedule is attached with the cheque and dispatched to the main branch of that city for collection. If they do not have any branch in that city, then cheque will be sent to the collecting agent of bank Alfalah for that city, and if they do not have any collecting agent even, then cheque can be sent directly to the drawing branch. Instructions are given on the OBC schedule for the payment of that cheque. Contra-liability vouchers are also posted in the system. When OBC is realized, collection bank pays the amount through IBCA if it is the same bank or through DD if it is another bank. If DD is received against OBC, it is presented in

the clearing for collection. If IBCA is received from the branch for the payment of OBC, certain vouchers are posted in the system. 3.11.1.2 Inward Bills for Collection (IBC): If any other bank sends a cheque of bank Alfalah limited, it is inward bill for collection. Bank Alfalah remits money after checking the Balance of the customer account. The process of collection starts when the cheques of Bank Alfalah Ltd. are received from other banks. Then these cheques are sent to the head office Karachi, which sends the cheques to sbp for clearing and get the confirmation of cheque and credit advice. Main activity of clearing is performed by head office, which contacts other banks through SBP.

CHAPTER: 4

FINANCIAL ANALYSIS
Purpose: Financial analysis of the organization involves the evaluation of the financial performance as depicted in the financial statements of the organization. To improve the quality of decision making, proper analysis of these statements helps a lot. Financial statement analysis helps in determining the financial conditions at any particular point in time and effectiveness of operations of a firm during a specific period. The BAL provides this information in the shape of its annual report for every financial year containing financial as well as non-financial information. The financial data of BAL is analyzed in the following two ways The given below types of analyses are used to measure firms performance over time. In the common size analysis we use the balance sheet and income statement and measure their performance as compared to other years and in the same year, by generating a percentage increase or decline. The following types are as follows: 4.1 Common size analysis Financial ratio analysis Common size analysis

Common size analysis expresses comparison in percentage. For example, if cash is Rs 30,000 and the total asset is Rs 1, 00,000 then cash represents 30% of total assets. The use of common size analysis makes comparisons of firms for different sizes mush more meaningful. A small change in amount can results in a very substantial percentage change. This is the analysis where total assets are divided by all balance sheet items, and all income statement items are divided by net sales or revenue is called common size analysis. Common size analysis can give analyst valuable approaching into changes that have occurred in a firms financial condition and performance. As common size analysis gives us relative percentage of an item with respect to total, so the growth or decline in various items of balance sheet and income statement cannot be detected from common size percentages. It has the following types: Horizontal analysis

 4.1.1

Vertical analysis Horizontal analysis

Horizontal analysis compares each amount for a selected base year or we take each item of base year as 100% and compare with other items. 4.1.1.1 Horizontal analysis of balance sheet Table no.4.1. Horizontal analysis of balance sheet 2008 Assets Cash and balance with treasury bank Balance with other banks Lending to Financial Inst Investments Advances Operating fixed assets Deferred tax assets Other assets Total Assets Labilities Bills payable Borrowings Deposits and other accounts Deferred tax lease Other liabilities Total liabilities Net Assets Shareholders equity Share capital Reserves Unappropriated profit Total equity Total liabilities and Total equity Surplus 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 2009 111.04% 117.41% 96.04% 85.85% 112.54% 115.52% ---149.49% 106.11% 83.41% 64.48% 110.08% 15.10% 118.45% 106.16% 105.08% 123% 131.10% 71.05% 106.11% 106.16% 105.08% 2010 119.09% 123.62% 433% 112.05% 109.83% 121.55% ---243.62% 118.29% 91% 97.28% 118.88% 13.03% 104.98% 117.35% 136.45% 207.56% 148.58% 55.45% 143.60% 118.46% 136.45% 2009 % change 11.04% 17.41% -3.96% -14.15% 12.54% 15.52% ---49.49% 6.11% -16.59% -35.52% 10.08% -84.9% 18.45% 6.16% 5.08% 23% 31.10% 28.95% 6.11% 6.16% 5.08% 2010 19.09% 23.62% 333% 12.05% 9.83% 21.55% ---143.62% 18.29% -9% -2.72% 18.88% -86.97% 4.98% 17.35% 36.45% 107.56% 48.58% -44.55% 43.60% 18.46% 36.45%

Since we are measuring the change between 2008, 2009 and 2010, the rupee amounts for 2008 become the base figure for expressing these changes in percentage form. For example, Cash and balance with treasury bank increased by figures Rs. 3,250,957

between 2008 and 2009. This increase expressed in percentage form is computed as follows

Other percentage figures are computed by the same formula. Conclusion: Total assets of BAL are increased 10.04% in 2009 and 19.09% in 2010 from 2008(base year). This increase is due to the major increase in Operating fixed assets. Cash and balance with treasury bank. Total assets increases more in 2010 as compared to 2009 from the base year. Lending to Financial Inst decreased by 3.96% in 2009 and increased by 333% in 2010. Total liabilities and Total equity increased by 6.16% in 2009 and 18.46% in 2010, and share capital of BAL increase to 23% in 2009 and 107.56% in 2010. Share capital increases more in 2010 as compared to 2009. 4.1.1.2 Horizontal analysis of income statement Table no.4.2 Horizontal analysis of income statement 2008 2009 2010 2009 % change Markup Revenue Markup Expense Gross Profit Margin Provision for Advances Bad debts written off directly Total Provision Net Markup after provision Non-Markup/ Interest Income Fee and Commission Dividend Income Exchange income Gain on sale 100% 100% 100% 100% 100.40% 464.9% 192.79% 20.59% 78.73% 283.51% 214.90% 33.44% 0.04% 364.9% 92.79% -79.41% -21.27% 183.51% 114.90% 66.56% 100% 100% 100% 100% 100% 100% 100% 120.41% 122.32% 116.94% 85.87% 484.22% 149.08% 105.68% 137.92% 148.33% 119.03% 155.83% ---171.30% 100.72% 20.41% 22.32% 16.94% -14.13% 384.22% 49.08% 5.68% 37.92% 48.33% 19.03% 55.83% ---71.30% 0.72% 2010

Other Income Total non mark-up income Total non-markup expense Profit Before Tax Taxation Profit After Tax Conclusion:

100% 100% 100% 100% 100% 100%

120.97% 96.82% 128.15% 39.57% 35.11% 41.57%

126.96% 93.70% 132.72% 22.40% 8.48% 28.65%

20.97% 21.19% 28.15% -60.43% -64.89% -58.43%

26.96% 40.46% 32.72% -77.6% -91.52% -71.35%

The Trend analysis that we conclude from the above table gives us a clear view of the banks income statement. Here we find an absolute increase in the gross profit. Gross profit increases by 16.94% in 2009 and 19.03%% in 2010. There is more increase in 2010. This is mainly due to the fact that BAL has a good control over its markup expenses, in relation to its total markup revenue. As we can see that markup expenses are gradually being increased, that ultimately gives boost to the gross profit of the bank from the base year. The markup expense stands as the cost of sales. The increase in the gross profit shows that the management has been able to gain control over the markup expenses then previous year this shows that the bank is moving in a trend where it would lead into the achievement of the goals it has set. The total income of the bank has increased from the base year mainly due to the fee and commission reduction, as they kept on an increase from the past few years. The bank tackled the situation, by reducing the markup expense, that balanced the effect and ultimately the profit after tax has increased. The ultimate increase in the profit after tax also comes due to the fact that BAL has relieved itself from the provisions against the balance sheet liabilities, which have reduced the expenditure

4.1.2

Vertical analysis

Vertical analysis compares each amount with a base amount selected from the same year. Simply, we compare the items of balance sheet or income statement vertically by taking one item as 100%.

4.1.2.1 Vertical analysis of balance sheet Table no.4.3 Vertical analysis of balance sheet 2008 Assets Cash and balance with treasury bank Balance with other banks Lending to Financial Inst Investments Advances Operating fixed assets Deferred tax assets Other assets Total Assets Liabilities Bills payable Borrowings Deposits and other accounts Subordinate loans Deferred tax liabilities Other liabilities Total liabilities Shareholders equity Share capital Reserves Unappropriated profit Total equity surplus Total liabilities and Total equity 8.95% 5.85% 1.05% 26.90% 52.05% 3.62% ---1.83% 100% 1.26% 6.45% 83.05% 0.98% 0.42% 2.90% 95.06% 1.97% 0.73% 1.47% 4.18% 0.74% 100% 2009 9.37% 6.18% 0.95% 21.77% 55.21% 3.94% ---2.57% 100% 1.00% 3.92% 86.17% 0.74% 0.06% 3.23% 95.12% 2.29% 0.91% 0.98% 4.18% 0.70% 100% 2010 9.01% 5.84% 3.84% 25.49% 48.33% 3.72% ---3.77% 100% 0.97% 5.30% 83.47% 1.95% 0.05% 2.57% 94.31% 3.47% 0.92% 0.69% 5.81% 0.60% 100%

Each asset in balance sheet is expressed in terms of total assets, and each liability and equity account is expressed in terms of Total liabilities and Total equity. For example, the percentage figure above for Cash and balance with treasury bank in 2009 is computed as follows:

Other percentage figures are computed by the same formula. Conclusion:

Vertical analysis shows the proportionate percentage of different items of the balance sheet with respect to Total Assets. The vertical analysis of BAL shows that there are different assets and liabilities over the time period. This is due to many reasons. First of all the assets have changed and increased over the time period. The change in assets affects the overall vertical analysis as the change is analyzed with respect to assets. The major components in the balance sheet of banks are deposits, advances and investments, as the major expense and income occurred due to these respectively. So looking closely to these items investment increased from 2009 to 2010. On other hand the advances decreases in 2010. This is due to high interest rates in 2009 and lower interest rates in 2010. Investments, as being a non-interest source of income are more promising than advances that are becoming more profitable due to inclining interest rates. Bankers prefer to give advances when the interest rate was high but then prefer to invest in no interest income in 2010 when the income from investment was higher than the interest rate. The deposits are approximately same in both years. Only slightly increase in 2010. The cash in hand is decreasing from 2009 to 2010. Thus showing that now the bank is more liquid, and liquidity is inversely proportion to profit. The cash in hand should be invested in short term investments, so that the organization can earn profit on idle money. Now coming to the share holders equity, the equity has been increased from 4.18% to 5.81% in 2010 of total asset over the time period. This shows that more people are interested to invest in the BAL in 2010. In BAL share holder equity the major cause of increase is the revaluation of assets and increase in inappropriate profits. Reserves have decreased over the time period and share holder equity increased a little with respect to assets.

4.1.2.2 Vertical analysis of income statement Table no.4.4 Vertical analysis of income statement 2008 Markup Revenue Markup Expense 100% 64.46% 2009 100% 66.18% 2010 100% 69.33%

Gross Profit Provision for Advances Provision for Investments Bad debts written off Net Markup Income Non-Markup Income Fee and Commission Dividend income Exchange income Gain on sale Unrealized gain Other Income Total non-markup income Total income Non-Markup Expenses Admin Expenses Other provisions Other charges Total non-markup expense Profit Before Tax Provision for Taxes Profit After Tax

35.54% 9.15% ---0.02% 26.31% 9.42% 0.25% 1.84% 8.00% 0.08% 4.00% 23.42% 49.74% 32.08% 0.02% 0.04% 32.15% 17.60% 5.45% 12.14%

33.82% 6.51% 4.78% 0.10% 22.37% 6.83% 0.97% 2.95% 1.37% 0.58% 4.03% 15.57% 37.95% 31.66% 0.09% 0.40% 32.15% 5.79% 1.59% 4.20%

30.67% 10.38% 0.9% 0.7% 19.22% 5.38% 0.70% 2.87% 1.94% ---3.68% 14.57% 33.79% 30.71% ---0.22% 30.93% 2.86% 2.52% 9.69%

Conclusion: The Vertical Analyses of Income Statement of BAL as given in the above table is showing a percentage change with respect of the sales or markup income. There is a consistent decreasing trend in 2010 in the banks gross profit. The main reason behind this is that the bank has not controlled its markup expenses in relation to total markup revenue. In simple words we can say that increase in the markup expenses resulting in the

decrease gross profit. This can be because of decreasing interest rate on advances or decreasing interest rate on deposits to encourage savings. Markup expenses are actually cost of sale in case of a bank. Furthermore this decreasing trend in gross profit shows the banks management is not efficient in controlling markup expenses. So this decreasing trend of gross profit is a negative sign and the banks management should consider it and take some more actions to improve its position. Now if we take a look at the figure of total income of the bank, there is consisting decrease in it as well. As total income is the summation of both markup income and the non markup income. This decrease in total income is due to the decrease in the markup income. Many organizations total non markup income consists of fees and commissions, dividend income, exchange income and other income. If the look at the figure of non markup expense there is a decreasing trend and this increasing trend in these expense is due to the decrease in administrative expenses. Furthermore, the taxation percentage was high for 2009 but for 2010 the taxation percentage decreases due to decrease in profit before tax. The combine effect of all of these has resulted in lower percentage increase in the net profit as compare to decrease of gross profit. 4.2 Financial ratio analysis A financial ratio is an index that relates two accounting numbers and is obtain by dividing one number by other. One may consider that why there is a need to mingle with these ratios and not take the actual figures straightforwardly. Among various reasons one strong reason can be put forward that ratios help in comparison. When analysis is two compare the internal performance of the organization in relation to time, only ratios analysis is the viable option for them. Along with it, comparison with the other competitors in the same industry can only be carried out with the help of financial ratios. The number of financial ratios might be created in virtually unlimited, but there are certain basic ratios that are frequently used specially for measuring the banks performance. There are some ratios that are used for the analysis of the banks these are: 1. Earning assets to total assets 2. Return on earning assets 3. Interest margin to average earning assets

4. Loan loss coverage ratio 5. Equity capital to total assets 6. Deposit times capital 7. Loan to deposits 4.2.1 Earning assets to total assets Earning assets includes loans, leases, investment securities, and money market assets. It excludes cash and non earning deposits plus fixed assets. This ratio shows how well bank management puts banks assets to work. High performance banks have a high ratio. Graph no.4.1

2008 = 263142615 = 0.80 = 80% 328895152 2009 = 271959907 = 0.78 = 78% 348990765 2010 = 302149830 = 0.77 =77% 389070055 This represents the earning assets to total assets ratio which decreases from 0.80 to 0.78 in 2010 and decreases to 0.77 in 2010, which is the slight decrease. 4.2.2 Return on earning assets Return on earning assets, computed by dividing net income by average earning assets, is a profitability measure to be viewed in union with return on assets and return on equity. Graph no.4.2
8% 0 7% 9 7% 8 7% 7 7% 6 7% 5 20 20 21 08 09 00
Earning assets to total assets

2008 = 3130299 263142615

= 0.119 = 1.19%
1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 2008 2009 2010
Return on earning asets

2009 = 1301301 = 0.004 = 0.47% 271959907 2010 = 897035 = 0.002 =0.29% 302149830

This ratio is decreased moderately in 2009 and 2010. 4.2.3 Interest margin to average earning assets This is the key determinant of bank profitability for it provides an indication of management's ability to control the spread between interest income and interest expense.

Graph no.4.3 2008 = 9162908 = 0.034 = 3.48%

4 0 .0 % 3 0 .8 %

263142615 2009 = 10715389 271959907 2010 = 10907132 302149830 = 0.036 =3.61% = 0.04 = 4%

3 0 .6 % 3 0 .4 % 3 0 .2 % 20 20 21 08 09 00

In terest m in arg to averag e earn g in

This ratio shows the increase in profitability in 2009 and decline in 2010. 4.2.4 Loan loss coverage ratio This ratio is computed by dividing pre-tax income plus provision for loan losses by net charge offs, and helps determine the assets quality and the level of protection of loans. Graph no.4.4

2008 = 453552+2370867 = 1182 5844 2009 = 1794720+2035997 28298 2010 = 1016316+3694546 59817 = 135.4 = 78.75

10 20 10 00 80 0 60 0 40 0 20 0 0 20 08 20 21 09 00
loan loss coverag ratio e

This Ratio decreases from 2008 to 2010.

4.2.5

Equity capital to total assets

This ratio, also called funds to total assets measures the extent of equity ownership in the bank. This ownership provides the cushion against the risk of using debt and leverage.

Graph no.4.5
6.00% 5.00%

2008 = 13766673 328895152 2009 = 14608523 348990764 2010 = 19770260 389070055

= 0.041 = 4.18% = 0.041 = 4.18% = 0.05 = 5.08%

4.00% 3.00% 2.00% 1.00% 0.00% 2008 2009 2010

Equity capital to total assets

This ratio is same in 2008 and 2009, and increased in 2010. 4.2.6 Deposit times capital

This ratio concerns both the depositor and the stockholders. To some extent, it is a type of debt, equity ratio, indicating a banks debt position. More capital implies a greater margin of safety, while larger deposit base gives a prospect of higher return to stock holders since more money available for investment purposes.

Graph no.4.6 2008 = 273173841 6500000 2009 = 300732858 7995000 2010 = 324759752 13491563 = 24.07 = 37.61 = 42.02

60 40 20 0 2008 2009 2010

D eposit times capital

Deposit times capital in 2008 is 42.02 and in 2009 is 37.61. Which shows that ratio is 4.41 times smaller in 2009. 4.2.7 Loan to deposit Average total loans to average deposits are a type of assets to liability ratio. Loans make up a large proportion of the banks assets. And its principle obligations are the deposits that can be withdrawn on request with in time limitations. This is the type of debt coverage ratio and it measures the position of the bank with regard to taking risk.

Graph no.4.7 2008 = 3452059 2009 = 3315500 3007332858 2010 = 14947435 = 0.046 = 4.60% 324759752 This ratio shows that loan to deposit decreased in 2009 and increased in 2010. = 0.012 = 1.26% = 0.011 = 1.10 %
5% 4% 3% 2% 1% 0% 2008 2009 2010
loan to deposit

273173841

CHAPTER: 5
SWOT ANALYSIS
THE SWOT ANALYSIS OF BANK ALFALAH LTD 3.1 Strengths The predominant strengths of Bank Alfalah Limited are 5.1.1 Humble Management The senior management of Bank Alfalah Limited is considerably humble. Their humility is an integral part of the organizational culture of the bank. The modern management techniques have discarded the bureaucratic style of management in which employees

were treated as servants if not as slaves. In the contemporary business world employees are said to be the biggest and the most crucial assets of a business concern, specifically if we are talking about a service industry and this is precisely the management policy Bank Alfalah Limited follows. The humility of the management serves as a big morale booster and encouragement catalyst for all employees in general and new inductees in particular. 5.1.2 Strength And Commitment Of Sponsors Bank Alfalah Limited is a project of Al-Nahayan family, which is a renowned Abu Dhabi based investor family. The first project of this particular family was Bank of Credit and Commerce International (which later on became on of the most renowned banks of the Muslim world). BCCI was acquired by Habib Bank Limited (a nationalized bank) and as a result BCCI became Habib Credit and Exchange Bank (H.C.E.B). The bank functioned under this particular name for six years and then Al-Nahayan family bought 70% of its shares from Habib Bank Limited and renamed the institute as Bank Alfalah Limited. Thus in real terms the same family reinvested in their lost project and tried to rejuvenate their brainchild. This reinvestment shows the investors trust, commitment, and perseverance to transform Bank Alfalah Limited into one of the strongest financial houses of Pakistan. The Al-Nahayan family is a royal family and this fact further adds to the banks inherent strength. 5.1.3 Kaizan Kaizan is a process of continuous improvement in production and every aspect of value added (Japanese). In a very short time span the management of Bank Alfalah Limited has been able to develop its image in a very effective and efficient manner. Through the laborious efforts of the top management and the employees, the entire organization as a whole has been able to continuously add its prestige as a reliable, service oriented, and flourishing financial institution. When we compare the image of Habib Credit and Exchange Bank with that of Bank Alfalah Limited we find a world of difference, and when we compare the image of Bank Alfalah Limited at its inception with its present image we find an even greater difference. This fact proves the thesis that there has been continuous value addition. The number of individuals and corporate entities that feel comfortable while dealing with Bank Alfalah Limited is increasing on a daily basis. 5.1.4 Phenomenal Growth in Profitability, Branch Network And Deposit Portfolio

In the very first year of its inception Bank Alfalah Limited closed its operations at a deposit portfolio of Rs. 7 billion, at the end of the second year the deposit portfolio had risen to Rs. 14 billion. Thus Bank Alfalah Limited is growing at a multiplier rate of 50%. The profit before provisions and taxation of your bank for the year 2007 stood at Rs. 3.264 billion which was 10% higher than that of last year. The deposit grew by 7.7% and stood at a figure of Rs. 239.509 billion while advance portfolio grew by 26% and showed a figure of Rs. 149.999 billion. When Bank Alfalah Limited started its operations it only had three branches and in a short time span the branch network has expanded to 195. 5.1.5 Vastly Experienced Management The people who occupy the top positions in Bank Alfalahs management hierarchy are certainly no mugs at what they do. Rather they are as capable and as competent as they come. Their superior management skills certainly do create a synergistic effect when coupled with the enormous amount of trust sponsors have put in the management. One of the most evident proofs of above average management expertise are the deposit portfolio growth, profitability growth, and branch network growth figures shown under the previous heading. 5.1.6 Highly Trained Human Resource Department; Transformation of Work Force into Human Capital One of the most significant catalysts, management of BAL had incorporated---and it still is incorporating---in the organization, when H.C.E.B was transformed into Bank Alfalah Limited, was induction of young and energetic business graduates. This was done in order to achieve quite a few objectives; one was to raise the overall skill level of the work force so that service provision could be improved and the second objective was to reduce the average age of Bank Alfalah Limiteds employees so that an overall sense of change is trickled down to the grass root level of the organization. Bank Alfalah Limited has an excellent selection / recruitment and training program which are undertaken at its Training and Development Center, Human Resource Division Karachi. 5.1.7 Superior Consumer Finance In contemporary banking consumer finance has assumed immense significance, as it is that department of a commercial bank whose personnel directly and extensively deal with the client body. One of the most predominant sub departments of consumer finance is

Alfalah Car Finance. The customer interface is greater in the consumer finance department, and the diligent staff of Bank Alfalah limited enriched with its superior service and relationship skills attracts / persuades these clients to develop relationship with Bank Alfalah Limited in the arena of corporate banking as well. Thus a strong consumer finance department really helps the bank to expand its corporate banking business. 5.1.8 Crucial Location Of Branches All the forty five branches of Bank Alfalah Limited are located at extremely crucial and vital locations, which is indeed a very significant factor towards earning more profit. Moreover all of the branches are very well furnished which is an integral characteristic of a good bank in this age of consumerism. 5.1.9 Image Building Activities Activities such as building of Alfalah Square at Liberty Lahore, the China Khan at the Alfalah Square, Alfalah Mini Golf Course, and Shahdin Manzil (proposed main branch, Lahore at The Mall, under construction) have really contributed a lot towards the image building process of Bank Alfalah Limited. Such activities also make people aware of the rejuvenation process of Bank Alfalah Limited. Such activities are classified as strength because they involve people in the change process that contributes a lot towards building customer loyalty.

5.2 5.2.1

Weaknesses Small Size

The chief weaknesses are enlisted as under Bank Alfalah Limited is small in size; there is no doubt about this fact. Although, as I mentioned in the strengths section, the branch network is expanding at a phenomenal rate but still the size is not big enough as compared to some of the big banks present in the market. Bank Alfalah limited has 189 branches in the whole of Pakistan. A huge branch network is always an invaluable asset for any bank. Customers simply love it when they could see another branch of their own bank at every turn they take. Extensive branch

network might reduce per branch profit but it is very likely to raise the overall profit figure for the entire organization as a whole. 5.2.2 Lack of Research Cell There should be a research cell in the bank, which should be engaged in gathering the information about the present actions of its competitors 5.2.3 Uneven treatment with customers Customers having accounts with small amounts are not given same services and dealing given to those with high accounts. 5.24 Kill set of employees is not up to the mark as there is no job rotation. The contemporary banking all over the world has taken a unique turn i.e. they have made job rotation an integral part of their management philosophy. Job rotation adds value to every single employee, as he is able to perform a variety of jobs related to banking profession. Moreover job rotation increases the human capital pool of the organization as every one is trained in more than one sphere of banking. Bank Alfalah Limited completely lacks this. 5.2.4 Foreign banks still are a little more prestigious Although Bank Alfalah Limited is continuously adding to its prestige, but still it can not be rated as a bank with the same repute as International Banks functioning in Pakistan, for instance ABN AMRO Bank, Citi Bank. Banks function as custodian of peoples possessions, act as their agents, represent clients in trade dealings outside the country, and give different types of guarantees and in all of these transactions repute plays a central role. And when it comes to repute foreign banks have a little more of it as compared to Bank Alfalah Limited. 5.2.5 Bank Alfalah Limited does not possess foreign network in Europe countries Foreign banks and some local banks having international network have this edge over Bank Alfalah Limited. Banking transactions regarding trade finance constitute a very important part of contemporary banking and moreover they are said to be the bread and butter for the commercial bank. Bank Alfalah Limited, for such transactions has to rely on its correspondents and agents in other countries, and naturally has to pay them some remuneration --- an expense banks having foreign network do not have to incur.

5.2.7

No advertising in electronic media

Bank Alfalah does embark upon occasional sales promotion activities, it also gives advertisements in the print media, but it has never flashed an advertisement on the television screen, which is said to be the strongest of all Medias. Some other commercial banks are really capitalizing on the power of this media; examples are Askari commercial bank, Muslim commercial bank, Habib Bank Limited etc. 5.3 5.3.1 Opportunities Extension of local branch network The opportunities on which bank Alfalah can capitalize upon are delineated as under. One of the biggest opportunities for bank Alfalah Limited is to extend its branch network in Pakistan. The essential pre-requisites for a vast branch network are all there; sponsors have the money, managerial expertise are available, and last but not the least any bank with Bank Alfalah Limited written in blue at its front is accepted in the market. 5.3.2 Establishing foreign branch network Going global could have been termed as a fad a few years ago, but now for those business organizations that want to survive and thrive globalization has become the order of the day. In order to increase the bottom line figure, it really is crucial. But the senior management would start implementing this course of action once they feel that they have got a strong hold in Pakistan.

5.3.2

Capitalizing on information technology

The information revolution has certainly made its inroads in almost all human functions. If Bank Alfalah Limiteds senior management and the IT division make a concerted effort to make best possible use of this miracle of human mind it would enable Bank Alfalah Limited to harness unexplored benefits of immense magnitude. 5.3.4 Unexplored market of multinational corporations Unfortunately in spite of unprecedented image building efforts, Bank Alfalah Limited still is an unattractive bank for big multi nationals functioning in Pakistan. If the management is able to develop a strong relationship with such MNCs then it would open doors of huge and unimaginable opportunities for Bank Alfalah Limited. If even a single

MNC becomes a corporate client of Bank Alfalah Limited i.e. it deposits its revenue with Bank Alfalah Limited, pays its salaries through Bank Alfalah Limited, does trade dealings through Bank Alfalah Limited, and avails credit facilities offered by Bank Alfalah Limited, it would make a world of difference to Bank Alfalah Limited. 5.3.5 Customers are more willing Muslims are more consciously differentiate the Islamic-base banking from interest-base banking. That is why there is large caution of expansion. 5.4 Threats The predominant threats Bank Alfalah is facing at the moment are discussed in the following lines. 5.4.1 Private Sector Banks Bank Alfalah Limited is at present facing really tough competition from not only the first line international banks (ABN AMRO, Standard Chartered, Citi Bank) but is also having a neck to neck race with other privatized banks such as Askari Commercial Bank Limited, Union Bank, Prime Commercial Bank, Faysal Bank Limited, Bank Al-Habib Ltd etc. All the new schemes launched by these banks and their plans to expand branch networks are a real threat for Bank Alfalah Limited. 5.4.2 New Trade Polices Introduction of new trade policies and laws are also been a source of threats to the organization due to the imposition of new rules and terrifies, previous maintained regulations have to be amended. 5.4.3 Network Expansion By Foreign Banks Foreign banks have a lot of plus points as compared to Pakistani banks (state owned and private); they have better products, better and personalized service, desirable interest rates, foreign branch network, but they definitely lack in local branch network (in Pakistan). Literary no foreign bank has been able to expand its network to far-fetched places of Pakistan. Pakistani banks (private banks in general and state owned banks in particular) are spread all over Pakistan. This is an intangible asset for Pakistani banks. But if any of the foreign banks expands it network, backed by their traditional powerful service, then it might prove to be the start of downfall for Bank Alfalah Limited, unless

and until Bank Alfalah Limited raises its level of service and product feasibility to the international standards. 5.4.4 If Pakistani banks (specially State Owned Banks), backed by huge network improve the service they give and their employee skill set State owned banks like National Bank of Pakistan and Habib Bank Limited have huge networks, they have the experience, but the only set back they have is below par service and lack of motivation amongst the employees. If their corporate strategy is altered, and the managerial policy is revitalized, enabling them to improve upon the service they give and enabling them to convert their work force into human capital then such financial institutions backed up by their huge networks pose a potential threat to Bank Alfalah Limited. So, Bank Alfalah Limited should endeavor to expand their branch network as efficiently as possible and as soon as possible. 5.4.5 Terrorist image of the country After the 9 / 11 incident every kind of transaction that uses to take place with the outside world has assumed a different mode. The trade finance transactions are the bread and butter for the commercial bank, were also hampered by that terrorist attack on 11 th of September i.e. the magnitude of orders the exporters were receiving decreased by a great deal, but as far as our image in the international community is concerned there is still a considerable room for improvement. If this situation further aggravates rather than improving, the trade finance business would really be hampered, and one of the major earning avenues for Bank Alfalah Limited will loose its footings. This fact poses a real threat to the sanctity of Bank Alfalah Limited. 5.4.6 Inconsistency in government policies This is a phenomenon that could hamper smooth functioning of any organization working in a particular country. Although the sponsors of Bank Alfalah Limited --- Al-Nahayan Family --- are really committed to invest more and more in the country but still any drastic change in either the economic policies like increase in taxation rates, or any change in the foreign policy, which could hurt Pakistans image could also shake the investor confidence and also could lead to a decrease in the repute of the entire banking sector of Pakistan. Recommendations and conclusions

Recommendations It was an interested experience to do internship in Bank Alfalah Limited. The staff was highly cooperated and due to their help I learned big deal about modern banking. I suggest that such an internship program highly integrative for the students of commerce education so that the students should be enquired with the knowledge of practice world .I do summarize that it would be a great help to me in selection of job or future field of work. Here I am putting some suggestions, which will enable the bank to compete with other banks more effectively & efficiently. It is observed that the employees were overburdened so they have to stay at branch till late at night. The employees should be signed jobs for specific period and than they should shifted to other department so that they gain knowledge of other jobs. Bank Alfalah Limited should properly advertise and Communicate to public about the services provided by it, so that more customers will be attracted. The banks management should give more incentives and pay scale of officers should be revised & improved. System and operations should be more defined and organized. IT draw backs should be improved. Administration drawbacks should be improved by the strict control of general issues. Audit should be held internally. Rather there should be an Audit Department in the branch to make audit on daily basis. Expenditures must be control, which are very high. Conclusions If I have to express my experience of internship in Bank Alfalah Limited GT road Branch Haripur I would briefly say: Bank Alfalah is a good Organization in the way that anybody can join it for his/ her longterm career. Overall working environment is comfortable. Management of branch cares a lot of its employees and considers them as the Asset of bank. Behavior of senior executive of bank is very polite and they are caring about the individuals career and their

growth. However management is very demanding about the targets but good reward at the achievement of assigned targets is awarded. Employees at Bank Alfalah are quite efficient. Employees have to bring their bank among the list of good banks. Therefore, they work more than their working hours and it is all according to their will. It also shows their loyalty, commitment to organization. All the customers are entertained individually. Same kind of behavior and attention is given to all the customers. Getting ideas for improvement from customer side is a new idea and that is working very well in Bank Alfalah Ltd. All the customers are asked to fill a suggestion form and the standards of the bank are improved through them. Prioritizing its product portfolio in line with its corporate and consumer needs and wants the bank is committed to develop products that give more value to its customers in both the sectors. In bank, all the work is done on computers. All the entries are made in computer. Balance is fed into the computer. This increases efficiency of the bank. I found my internship training at Bank Alfalah Limited Branch Haripur to be a very rewarding experience. The training was beneficial because it helpful me to aware a real life working environment. So far my learning is concerned; all the employees at branch were quite cooperative. They helped me to understand the activities of a bank to possible extent. Their good attitude gave me more confidence to learn more and to ask if I have any query in my mind. Besides their ever going activities they never get irritant by my questioning. I had made an honest efferent to present the working & operation of Bank Alfalah Limited Branch Haripur in simplest way. I feel pleasure that I have really gained a lot during 6 weeks & enjoyed working with experienced cooperative & intelligent staff.