Competitors

Despite notable economic uncertainties, the financial strength of Bank Alfalah Limited has greatly

enhanced during the previous years. The successful expansion program proved their capability and

commitment in comparison with the competition in the financial sector. The Banking structure in

Pakistan comprises of:

 Central Bank

 Commercial Banks

 Investment Banks

 Development finance Institutions (DFIs)

 Specialized Banks

 Foreign Banks
Bank Alfalah is a private commercial bank so the major competitors of Bank Alfalah
are the following:

 Muslim Commercial Bank

 Union Bank Ltd

 Soneri Bank Ltd

 Prime Commercial bank

 The bank of Punjab

 Bolan Bank Ltd

 Bank Al-Habib Ltd

 ABL

 Faysal Bank Ltd

 Platinum Bank Ltd

NETWORK OF BANK ALFALAH LIMITED IN PAKISTAN
11

The detail of Bank Alfalah Network in over Pakistan is as under:

Sr. No.
Branch
Phone Number
KARACHI
1.
Main Branch
B.A. Building, I.I Chundrigar Road, Karachi
111-777-786
021-2414030-9
2.
Clifton Branch, Karachi
021-583778-2
3.
Korangi Industrial Area Branch, Karachi
021-5065701-2
4.
Muhammad Ali Jinnah Branch, Karachi
021-7750627-30
5.
Sharah-e-Faisal Branch, Karachi
021-4313536-8
6.
Defence Branch, Karachi
021-5374330-5
7.
Gulshan-e-Iqbal, Karach
021-4984937
8.
Cloth Market Brach, Karachi
021-2401621-26
9.
Jodiah Bazar Branch, Karachi
021-7532482-84
10.
North Karachi Branch, Karachi
021-698760
11.
KESC Branch, Karachi
021-2417515-9
12.
Paper Market Branch, Karachi
021-2211353-8
13.
North Napier Road, Branch, Karachi
021-7540067-68
14.
S.I.T.E Branch, Karachi
021-2582114-16
15.
PECHS Branch, Karachi
021-4535861-2
16.
Timber Market Branch, Karachi
021-7750635-9
17.
Bahadurabad Branch, Karachi
021-4128578-81
LAHORE
18.
LDA Plaza Branch, Lahore
042-6306201-10
19.
Defence Branch, Lahore
042-5729772-6
12

Sr. No.
Branch
Phone Number
20.
Township Branch, Lahore
042-5114722-23
21.
Gulberg Branch, Lahore
042-5877800-8
042-5757791-2
22.
Circular Road Branch, Lahore
042-7638256-8
23.
Badami Bagh Branch, Lahore
042-7708291-5
24.
Allama Iqbal Brach, Lahore
042-5432961-3
25.
Shah Alam Branch, Lahore
042-7673401-6
26.
Shadman Branch, Lahore
042-7538116-8
27.
Mall Road, Brnach, Lahore
042-7350033-35
RAWALPINDI
28.
Main Branch, The Mall, Rwp.
051-5582288
051-566084-6
29.
Satellite Town, Branch, Rwp
051-4424080-5
ISLAMABAD
30.
Blue Area Branch, Islamabad
051-2275286

051-2270193

051-206986-7
Branches in Other Cities
31.
Liaqat Road Branch, Sargodha
0451-724138-9
32.
Sarwar Road Branch, Sahiwal
0931-73631-2
33.
College Road Branch, D.I Khan
0961-711730-3
34.
Saidu Sharif Road Branch, Mangora
0936-726745-6
35.
Saddar Branch, Hyderabad
0221-786020-2
36.
Islamia Road Branch, Peshawar
091-287051-5
13
Sr. No.
Branch
Phone Number
37.
Cantt Branch, Peshawar
091-287051-5
38.
Hospital Road, Nawabshah
0214-62127-9
39.
Liaquat Bazar, DG Khan
0641-468201-4
40.
Circular Road, Gujrat
0433-530219
41.
Bank Road Branch, Mardan
0931-73631-2
42.
The Mall Branch, Wah Cantt.
0596-539426-8
43.
Circular Road Branch, Bahulpur
0621-889922-5
44.
Cantt. Branch Jhelum
0541-610022
45.
Abdali Road Branch, Multan
061-546792-6
46.
Paris Road, Branch, Sialkot
0342-591741-43-44
47.
Liaquat Road Branch, Faisalabad
041-617436-39
48.
G.T Road Branch, Gujranwala
0431-255556-16
49.
Frefre Road Branch, Sukkur
071-28173-75
50.
Shahi Road Branch, Rahim Yar Khan
0731-84771-73-79
51.
M.A Jinnah Road Branch, Quetta
081-827567
ISLAMIC BANKING BRANCH NETWORK
1.
Islamic Banking Main Branch
66, Main Boulevard, Gulberg, Lahore
042-5715241-5
2.
Islamic Banking Y-Block Branch
93-Y, Phase-3-C, DHA, Lahore Cantt
042-5746191-95
3.
Islamic Banking Katchery Branch
Kutchyery Bazar, Faisalabad
041-603021-25
4.
Islamic Banking Jinnah Avenue Branch
REDCO Plaza, 8-E, Blue Area, Islamabad
051-2879589

5.
Islamic Banking Uni Tower Branch
UNI Tower, I.I Chundriger Road, Karachi
021-2472001
6.
Islamic Banking McLeod Road, Branch
Plot No. 13, McLeod Road, Lahore
042-7211640
7.
Islamic Banking Faisal Arcade, Branch
G.T Road, Gujranwala
0431-557301-5
8.
Islamic Banking Murree Road Branch
Near Ministry of Defence
15

ORGANIZAION STRUCTURE

Clerical
 Internship Program
I did internship at Bank Alfalah Limited. There I worked in different departments. I started up with

account opening, where I learned about different types of accounts, and how to open a new account,

etc. Here I worked with Mr. Shahid Rasheed Mirza

Then I was sent to Accounts Department where I Worked under Mr.Adnan Younas
After working in Accounts I worked in Credit department. The incharge of this

department is Mr.Rana Qaisar(Alumni of BZU).

Here I learned that how loan is advanced to the clients. And different types of facilities

the bank is providing to its customers. ..

14

2. Current Account
3. Royal Profit
1.PLS / Saving Accounts:
BAL provides the facility of saving account in both foreign and local currencies. These deposits are

an important source of funds for the bank. Customers earn profit on this account. The profit rate on

this type of account is 2.75% annually. Rs. 5000 can open this type of account and in foreign

currency this limit is 500.

2.Current Account:
In this account one can easily withdraw the money as bank only keeps the deposit and does not give

the profit / interest on the deposits. BAL opens current account in both foreign and local currencies.
3.Royal Profit Account:
This account is profit bearing current account. It has the characteristics of both PLS and Current

account. The minimum requirement of amount in this account is Rs 5,000 only. But the customer can

get monthly profit if he maintains Rs. 50000 in his account on average. The profit rate is 2.75%

annually. This is the bank’s own product.

 Requirements of Account opening
These type of accounts can be opened.

1. Individual Accounts

2. Partnership Accounts

3. Company Accounts
The requirements of these accounts are as follows
16 Individual Accounts

The NIC of the account holder is required. If the signatures of the account holder are very easy then

two passport size photographs are required also. This is called picture account. In case of sole

proprietor ship the letterhead of the proprietor is also required. If the account holder has got Passport,

then the copy of his Passport is also required.

2. Partnership Accounts
In this case the NIC of the partners, the partnership deed and
instructions to operate the accounts are required.
3. Company Accounts
In this case the following documents are required

Copies of NIC of Directors of the company

Certificate of incorporation of business

Certificate of commencement of business(in case of Public
Limited Company)

Article and Memorandum of Association

Latest copy of Form-29

List of Directors

Copy of Board Resolution

Procedure of opening the account
The procedure of opening the account is as follows.
1.Account Opening Form:
First of all, the customer fills the account opening form (AOF). Filling of account opening form

includes type of account, currency of account, name, address, signature of customer and signature

of introducer and attach a photocopy of

national identity card. He also signs an undertaking that he will follow the rules and

regulations of the bank.

2.Introduction:
The signature and account number of the account holder introducing the account to
the new person is obtained on the account opening form.
3.Specimen Signature Card:
The signature of the client is obtained on a specimen signature card (S.S Card). The card is

obtained with two signatures from the customer. Every time a cheque is received for payment from

the client, the signature on the cheque is verified by comparing it with S.S Card.
4.Requisition slip
A requisition slip for Cheque book is also given to the customer. The customer fills
it and give it to the account opener.
5.Know Your Customer Form
Every account holder fills this form. The basic purpose of this form is to get some
information about the customer.
6.Account Number:
When all the formalities are completed, an account number is allotted to the customer and all the

information is entered into the computer and register. Then that account number is written on S.S

Card and account opening form.

7.Depositing of amount in account:
The client deposit cash in the account. For this purpose cash pay-in-slip is used. The minimum initial

deposit is fixed for each account according to the nature of account. For example for PLS / saving

account the minimum requirement is Rs.5,000 only.

8.Issuance of a Cheque Book:
After opening an account with the bank, the account holder makes a request in the name of the bank

for the issuance of a cheque book. Such a request is known as Requisition Slip. BAL issues cheque

books of at least 25 leaves. When he used this book completely then he can apply for another. This

process takes a day because the Cheque books comes from Karachi head office.
9.Entry of Cheque Book:
Before issuance of a cheque book the bank stamp every leaf with the account number of the

customer, enter it in the cheque book register and computer and issues the cheque book to the

customer after his signature on the register.

10.Filing of AOF:
Account opening forms are basic documents of the contract therefore these are filed
in numerical order and kept for reference.
11.Letter of Thanks:
A letter of thanks is prepared. One letter is for the customer and one for the introducer. One copy is

send to the customer and the other copy is kept in the record along with other documents.
Amendments in Accounts:
BAL provides the facility of amendments in accounts, whenever required by the customers. Account

holder gives an application along with necessary documents to the bank. Then the amendments are

made in the account of the depositor. These amendments can be made by filling certain application

forms. These forms are as follows:

 Change of Address Form
To change the address of the account holder
 Change of signature form
To change the signatures of the customer.
 Liability / Inquiry Form

This form is used if some person has acquired loan from the bank and he wants to close his current

account , then he fills this form and this form is send to credit department. When the credit

department declares him free from any debt obligations then his account is closed.
 Vernacular Form
This form is used when some person wants to sign in any language other than
English.
 Mandate to the third party to operate the account
This form is used to enable any third party operate the account.
Closing of accounts
The procedure of closing of account is as follows.

 First of all the customer gives the request to close the account.

 His signatures are verified.

 He withdraws all his money from his account but in case of current account
Rs. 150 are deducted as a charge of closing the account.

 A liability form is send to the credit department if he has taken a loan from
the bank. If he is cleared from all the liabilities then further proceeds are
taken.

 Permission is granted by the authorized person (the manager).

 Account is closed in the computer system.

 Hic specimen signature card is attached with the account opening form and
marked closed.

Clearing
In the clearing I worked with Mr. Riasat. The basic function of the clearing department is to facilitate

the customer; it provides them the services in collection of their cheque in other banks. CLEARING
actually means the transfer of funds from one branch of bank to the other branch of the same bank

or the other bank on which the instrument is drawn, without involving cash through State banks

clearing house.
NIFT:
NIFT stands for National Institutional facilitation Technologies. Clearing House of SBP has shifted a

tiresome part of its work to a private institution named NIFT. NIFT collects cheques, demand drafts,

Pat orders, Travelers Cheques, etc. from all the branches of different banks within city through its

carriers and send them to the branches on which these are drawn for clearing. After the branches

approve the instruments drawn on them, NIFT prepares a sheet for each branch showing the

number for instruments and amount in its favor and drawn on it and sends it to each branch. A

similar sheet for each bank is also sent to clearing house of SBP where accounts of banks are

settled in the same manner.

The instruments are collected from the client. Following things are checked.
•

Cheque date (a cheque is valid for six months and it should not be post
dated).
Title
•

Amount in figures and words should be same

•

There should be no cutting and overwriting on the cheque.

•

Deposit should also match with the cheque.

Stamping Procedure:
In stamping procedure, the pay-in-slip counter foil the following three stamps are used. If the

cheques is for the same bank, and drawer and the payee both have the account in the same bank,

the simple bank stamp is used, and this stamp indicates the transfer of cheques from one account to

another account. This cheque is directly moves towards posting in computer terminal where the

computer operator debit one account and credit the account of another party. This stamp is known

as the Transfer stamp.

If the cheques are received from other bank and drawer’s account is not in the bank then cheques

received stamp is used. This cheque is represented in the clearing house, date is also mentioned on

the stamp.
If the cheques is from out of the city then it is send for the collection.
Stamping On Cheques:
After receiving the cheques and issuance of the counter foil to the client, stamping
process starts on the cheques, the following stamps can be used.
a) The name and branch name of the bank stamp is used on the front side of the cheques. This stamp is

used on all types of cheques. This stamp is known as crossing stamp.

b) The second stamp used is the clearing stamp on the front side of the cheques. It also indicates the

presenting date of the cheques. If the cheques is dishonored and deposited again for clearing, the

clearing stamp is used again with new date of presenting. So the clearing stamp is necessary

wherever the cheques are presented for clearing.

The third necessary stamp which is the endorsement indicates the paying bank to “payees account

credited”. It is the confirmation of outward clearing.

The whole clearing process requires about 2 days, after 2 days the customers’ account is
credited and the customer can make the transactions.

Remittance
In Remittances I learnt a lot from Mr. Asif Talib Remittance is transfer of funds from one city to

another city or within the city. For this purpose, most commonly used instruments are

1) Demand Draft

2) Pay Order

3) Telegraphic Transfer

4) Online Transaction
1.Demand Draft:
A demand draft is an instrument in writing drawn by one branch of a bank on another branch of the

same bank for a certain sum of money; payable on demand to the order of the payee mention

therein the draft.

Issuance of Demand Draft:
The customer makes a request to the banker for a demand draft. The banker gives him/her an

application form to fill and ask him to deposit the amount for which he needs draft. The client

mentioned the name of payee in the favor of which it is to be

paid, the name of branch on which it is drawn and amount of draft on the form and puts his signature
on it. Afterwards, he deposits the amount in cash with the bank. In case he is Account Holder of the
same bank, he can give cheques instead of cash upon which the banker transfers the amount from
his account. When all these formalities are fulfilled, banker issues him a demand draft. Bank takes
charges for demand draft that are different in different banks according to their schedules of
charges. In bank Alfalah, these charges vary with amount and are as follows: Upto Rs 10,000
0.25% Minimum Rs 25
From Rs 10,001 to 100,000
0.20% Minimum Rs 40
From Rs 100,001 to 1,000,000
0.10% Minimum Rs 200
From Rs 1,000,001 to 2,000,000
0.075% Minimum Rs 1,000
Over Rs 2,000,000
0.60% Minimum Rs 2,000

Internal Process:
After issuing demand draft, bank sends a credit advice to the bank on which it is drawn. Drawee

bank after receiving credit advice gives credit to DD payable Account. When DD is presented on the

cash counter, bank pays cash against it after checking N.I.C of payee and debits DD payable

account. If DD is crossed amount is transferred into payees account. Posting is also made in the

computer terminals for the purpose of record of the bank.

Issuance of Duplicate DD:
Bank can issue duplicate of demand draft on clients request after taking charges. The
charges are Rs 100.
Cancellation of DD:
In case, client wants to cancel the draft he has to make an application with his signature. Banker

checks the signature. Amount of draft is returned to client after deducting cancellation charges. The

cancellation charges are Rs 100.

2.Pay Order:
A pay order is an instrument in writing issued by bank for a certain sum of money payable on

demand to the order of the payee mention within the city, where as pay slip is used for bank’s

internal use.
Issuance of Pay Order:
The client makes a request to the banker for issuance of a pay order. The banker gives him an

application form to fill and ask him to deposit the amount for which he requires the pay order. The

client deposits the amount in cash with bank. If he is account holder of the same bank, he can give

cheque upon which amount is transferred from his account. After the fulfillment of all these

requirements banker issue the pay order to the customer. Bank takes charges for issuance of pay

order which varies from bank to bank. Bank Alfalah takes the following flat charges.
Pay Order (Account debit)
Rs 10 (Flat)
Pay Order (Against Cash)
Rs 10 (Flat)
Internal procedure:
After issuing Pay order, banker gives credit Sundry creditors account. Posting is made in the

computer terminal. When Pay order is presented on cash counter bank makes payment against it

after checking N.I.C of payee and Sundry creditors account is debited. If it is crossed, the amount is

transferred into the payees account.

Cancellation and Duplicate issue:
The procedure for cancellation and duplicate issue of pay order is same as that of demand draft and

the charges are also same. The charges for both the services are Rs.100.
Tax:
Government of Pakistan has levied 0.3% advance tax on the issue of Pay orders and demand drafts.

If the customer submits tax exemption form to the bank, he is not charges tax. But if customer does

not submit form, he has to pay 0.3% tax on the amount of pay order or demand draft.
3.Telegraphic Transfer:
Telegraphic Transfer is bank to bank, and branch to branch. The bank has settlement with other

banks according to which the banks can make the payments to the customer’s account mentioned

by the other bank in the TELEX. In this case proper authentication is must for this purpose.
Process:

 Customer obtain a requisition slip and fills it properly

 After filling the application from the concerning officer fills the TT form.

 This Telegram is send to he required bank.

 After receiving the telegram bank immediately makes the payment to the
customer and the vouchers sent to the issuing bank by ordinary mail.
 Bank debits the account of the customer or receives cash including charges of
the bank.
 TT is made through codes. Bank sent telegrams with codes and in banking
language using the words test.
4.Online Transaction:
For branch-to-branch transfer of funds on the same day, previously TT was used.
But now banks have adopted a new system known as Online Transfer.

In online transactions cheques of different branches can be paid, fro instance if a client has taken

Online Transaction facility and presents Multan’s cheque to Bank Alfalah Lahore, he/she can have

payment from Lahore. If the cheque has been cleared from Multan Bank Alfalah, a copy of cheque is
made and is faxed to appropriate branch; the branch then checks the client’s balance, date of

cheque and signature of client. If the cheque is given clearance from the respective branch then

payment is made to client, the branch is then debited and the branch that has made payment is

credited.

Accounts Department
In any Bank the accounts department plays a major role. In Bank Alfalah the burden of the accounts

department is largely reduced because of computerization. The use of the computer system

increases the efficiency and pace of the bank’s work.

Following activities are carried out in the accounts department:

 Budgeting

 Reports

 Funds management

 Activity checking

 Reconciliation

 Foreign exchange, old Account Contracts

 Maintenance of fixed assets and calculation of their depreciation

 Test Keys

Budgeting
The main task performed by the accounting department is the preparation of the budget. Budget is

based on forecasting and their own inspiration for future, whereas forecasting is based on past

performance. This is one important task on the basis of which funds are allocated to various

branches and also the targets are determined. The targets determined Deposits, Advances, and

revenues. Every branch prepares its own budget for the fiscal year and then budgets of all the

branches across the country are consolidated at the head office in Karachi. In this way a

consolidated budget is also prepared.

Fiscal year of the bank starts from January to December. Accounting department starts
preparing the budget from October for the next year.
Before the preparation of budget the bank reviews its sources and funds it has and the
uses of those sources.
The main sources of the bank are the follows:
 Deposits, Capital, Borrowing from other banks, etc
The main uses of a bank are the follows:
 Advances, Investment in securities, placement in interbank markets,
Other things which are undertaken into account while formulating the budget are:
 Income, Expenses, etc.

The revenue target is fixed keeping in view the past performance. The cost of generating these

revenues is also estimated. Then budget of each branch is submitted to head office for modifications

and for approval. After the modification and approval the budget for a specific branch is being set by

the head office. Monthly budget meeting is held to analyze the monthly performance by all the

branch mangers with head office. The actual performance is compared with the estimated and

variance is calculated. Variance can be negative as well as positive. If there is a negative variance,

this shows management’s inefficiency in controlling its expenses or incompetence in achieving the

desired revenue targets. Proper adjustments are made in the next month’s target according to the

previous month’s performance because sometimes the goals which are set by the head office are

unrealistic and unachievable.

Reports
In Bank Alfalah many types of reports are being prepared. These are daily, weekly, monthly,

semiannual and annual reports. These are generated from the main frame and are used for proper

analysis. The following reports are generated daily from the main frame which are being used by the

accounts department for the preparation of their own reports:

 Statement of affairs:
It includes information about assets, liabilities and their balance. Daily position of
deposit and advances are also calculated in this report.
 Subsidiary Statement:
This is a detailed report which includes all the information regarding the statement
of affairs.
 Income and Expenditure report:
It includes all the details regarding to both the heads of income and expenditure in
detail.
 Royal Profit Report:
It includes the details of the deposit of royal profit account.
 Currency wise report (ccy):
It provides the details of all the deposits currency wise.
 New Fcy report:
This report includes the information regarding only the new foreign currency accounts. The old

foreign currency accounts are those, which were at the time of nuclear explosions in Pakistan and

were being freezed by the Nawaz Sharif government.

 Sub 66 Report:
It contains income, expenditure, general ledger accounts and their balances.
Now following are the reports, which are being prepared with the help of the above
reports:
 Daily position of advances and deposits:
This report is being sent to the head office daily in which the detail is given
regarding the new accounts of deposits and advances.
 Statement of affairs:
This report includes assets and liabilities. Two copies of this report are made daily, one is sent to the

area office and one to the head office for analysis but the format is different for both of them.

Statement of Affairs also prepared at the weekend for the whole week as well as at the end of a

month.
 Monthly Budget Review Report:
This report is made to review the performance of the month by calculating the variance. And then if

the variance is in negative, positive actions are taken and reasons will also be mentioned in the

report.
Funds Management
Every bank in Pakistan has an account with State bank of Pakistan and has to maintain 5% of the

total deposit in the account with the State bank. Funds management is done only through the main

branch. If the bank has so many branches in a single city then only the main branch is responsible

for the funds management. Daily a report was prepared and reported to State bank.
The important factors that affect the report are as follows:

 Total Deposit (of all branches in a single city)

 Opening Balance (closing balance of the previous day)

 Inward Clearing

 Outward clearing
 Cheques issued by State Bank

 Cheques Deposited

After all the calculations, a result is obtained which signifies the cash in hand of the respective day. If

the cash in hand is sufficient to fulfill the needs of the State Bank, well and good other wise if the

cash is not sufficient then the other options are considered.

In case of shortage of funds, the main branch has the following options, which it

can adopt.

1. TT from Head Office:

2. Cover from Head Office

3. Funds from Other banks

1.TT from Head Office:
One solution of the problem is to contact and inform head office about our respective position and

demand for funds. However the most frequent reason, why this practice is not followed is that State

bank has allowed only one TT free of cost for all the branches in Pakistan.

Therefore we first have to confirm head office that whether or not it is sending TT to another branch

of bank Alfalah. If the head office sends us the TT then it cannot send any other TT to another

branch of Bank Alfalah without charges. The charges are also not negligible for example the charges

of TT for an amount of one hundred million is above 60,000. For this specific reason the TT is not

encouraged.
2.Cover from Head Office:
The most frequent option used is to inform Head office about the shortage and ask for cover. The

head office then maintains extra amount in its account with State bank. The extra amount will be the

shortage of main branch reported. The main branch will then pay interest to the head office on a rate

of 11.5% per day. The head office is paid on monthly basis.

3.Funds from Other banks:
In case of funds shortage another bank is contacted with whom the bank has settlement for instance

Emirates bank. If this option is taken the head office is informed and the head office then pays to the

Karachi branch of the respective bank from which funds are taken.
Activity Checking
Activity checking is the process of the entire banking, which has taken place. A report known as

activity report is prepared on daily basis. The report specifies every vouchering, which has taken

place. Sorting is made according to the mainframe- generated report. All the vouchers are checked

that whether they are properly posted or is there any transaction left to be posted. This checking

makes the working of the bank more efficient and avoids any loopholes.
Reconciliation
BAL prepares its reconciliation statements with
 Head Office
 State Bank of Pakistan
• Head Office Reconciliation:
All the debit and credit entries of the main office account are recorded in the statement. Then it is

checked with physical vouchers and if there is any problem, they reconcile it. Head office extract are

statements sent by branches to the head office. They check the outstanding entries, if there is any

entry posted by branch but not by head office they will send their query to the branch and branch will

respond to that query by sending the required document. Head office reconciliation is carried out in

the head office; accounts department handles inquiries.

• State Bank of Pakistan:
SBP maintains the account of every scheduled bank including bank Alfalah. The statement of

account reconciliation shows the entries that are passed during the month in both banks. Bank

Alfalah compares the statement with the ledger card of State bank of Pakistan in which all entries

are recorded done with SBP. If any amount debited by SBP and Bank Alfalah does not credit that

amount, it is added in the balance of the reconcile statement provided by the SBP to BAL.
Maintenance of Fixed Assets and Calculation
of their Depreciation
Account department maintains the record of fixed assets. The accounts department calculates the

depreciation the assets by using straight line method. Depreciation is the allocation of cost of the

asset over the useful life. Depreciation is accrued on monthly basis and charged at year-end.

Department prepares Asset purchase report and Asset sale report after every six months.
33

Depreciation is charged at the following rates:

Building
2.5%
Furniture
10%
Carpets & curtains
25%
Equipment
20%
Vehicles
25%
Test Keys
Test is a coding system used to authenticate money transactions between banks. Whenever money

is transferred through TT, the concerned officer requests the accounting department to apply test to

the message. The test is applied to the message; three copies of this message are prepared. One

goes to the test key department, one to the Telex/fax operator and the third one goes to the

department record. When the TT is received at the other end, this test is verified. The transaction will

be carried out if and only if the test matches with their own test.

Banks have arrangement with other banks with which they have quite a large volume of business

and it is beneficial to have a direct arrangement with these banks. This test arrangement can be with

banks within country and outside country. For example BAL has test arrangements with ABN Amro

N.Y, American express N.Y, Citibank N.Y, etc. When this arrangement is carried out a test key is

provided to the concerned bank, which contains codes. This test key is different for every bank. This

test key is also different for inward and outward TT.

In local transfer double coding is used and in foreign transfer single coding is used. Test key tables

are to arrive at the code. Separate key table are used for different banks. Twelve branches of BAL

have arrangement for local transfer and three branches are authorized for foreign transfer. Four

things should be carefully checked because code is based on four things:

•

Branch name
•

Currency
•

Date
•

Amount

Test can be applied on nil amounts. The purpose is to just secure the transaction. Another important

significance of test is agency arrangement, which bank built with other banks. Inquiries originated by

any bank regarding the delay of any message are also solved by the bank. They will check the

message and will respond to the query.

CREDITS
The basic function of a bank is to receive deposits (at low rate of return) and to lend money (at a

high rate of return). So, the lending operations of a bank constitute a vital part of its business. This

department is the source of income and earnings for the bank.

Bank’s funds comprises mainly of money borrowed from numerous customers on various accounts

such as saving accounts, current accounts, fixed deposits etc. Whereas the major part of total

income of a bank is generated through the utilization of these funds.

The credit department is further divided into two departments, which are as follows:
 Credit Marketing
 Credit Administration

Credit facilities in BAL

Bank provides two types of credit facilities to its customers. Following are those credit
facilities:
1. Funded
2. Non-Funded
1.Funded:
Funded facility is that facility in which the bank funds are physically involved. It is
further divided into following types:

 Current Finance (OD)

 Cash Finance (Pledge)

 Term Finance

 FAPC I

 FAPC II

 FAFB

 LBP

 FIM

 FATR
 Cash Finance (pledge):
This is also a very common form of borrowing by commercial and industrial concerns, and is made

available either against pledge or hypothecation of goods. This is also known as running finance. It

is utilized for the creation of current assets and to meet the permanent working capital requirements.

In this facility, the borrower is allowed to borrow money from the bank up to a certain limit, either at

once or as required. The borrower prefers this form of lending due to the facility of paying mark-up

charges only on the amount he actually utilizes not the whole limit amount

 Term Finance:
Term finance is for a fixed period of time, all the amount is transferred to the borrowers account right

in the beginning and interest is charged. The mark-up is received in the end on semi annually basis.

Term finance has to be paid within a limit and once it is paid it cannot be taken back by the client.
 FAPC I(Finance against packing credit):

Bank provides this facility against LC or sale contract (in favor of exporter). Bank takes 100%

security against this type of financing. This facility is also called Pre shipment finance. Afterwards

bank receives the payment of exports and adjusts the exporters account. This loan is disbursed by

the bank for the preparation of goods once the L/C is received.
 FAPC II (Finance against Packing credit):

This loan is also known as performance-based financing. This type of financing is against last

performance of the exporter. According to SBP exporter can have finance up to the half of amount of

previous year export but then the exporter should ensure that the exports he makes are equal to

double amount of the loan for one year. The mark-up is charged for the period the exporter has used

the facility and not for the whole limit.

 FAFB (Finance against foreign bills):
This facility is also known as post shipment finance. This facility is availed by the exporter after he

has shipped the goods and sent his documents for collection. The bank purchases the documents

form the exporter and give him this facility. He will take loan against these documents and pays fixed

mark-up rate on this facility.

 LBP (Local bills purchase):

Local bill purchase documentary is used for inland import export transaction. Other wise it is same

as finance against foreign bill purchased. This is also availed by the exporter after the shipment of

goods and the bank purchases the documents.

 FIM
(Finance
against
imported
merchandise):
Finance against Imported Merchandise (FIM) is a credit facility provided to the customer, in L/C

transaction. In FIM, bank itself makes the payment to the exporter and the goods are kept in the

possession of bank. Delivery order (DO) is issued by the bank for every time, when the importer

makes the payment, goods are transferred in the possession of importer.

 FATR (Finance against Trust Receipt):

The bank also offer credit facility FATR, against sight L/C’s, like FIM. Contrary to FIM, goods are

given in the possession of importer. This facility is provided to the customer having a credit rating

A+.
2.Non-Funded:
Non-funded facility is that facility in which the bank’s funds are not physically involved. A non-funded

facility can any time become a funded one. It can further divided into the following:
 L/C
 LG
However in Burewala Branch only L/G is issued
 L/C (Letter of Credit):
Letter of Credit, whether sight or usance is a non-fund based facility provided to the
customer. L/C can further divided into sight L/C and Usance L/C.
 L/G (Letter of guarantee):

Letter of Guarantee is also a non-fund based facility. Letter of guarantee involves three parties

namely buyer, the seller and the guarantor. The letter of guarantee is basically bank’s guarantee that

the respective person will perform his/her duties/services within the appropriate time other wise the

bank will pay the loan amount. When the bank takes the guarantee of the client, a commission is

charged from the customer.

Types of L/G:

 Bid Bond

 Performance Bond

 Security Deposit
 Repayment Guarantee

 Mobilization Advance

 Back to Back Guarantee

Securities for Advances
The advancing of credit involves a great risk for the bank. Therefore, to cover risk, the bank keeps

different tangible and non-tangible securities, before sanctioning the credit facility to a customer. The

bankers prefer those securities that carry less risk of depreciation due to market fluctuations and are

easily saleable, even under changing market conditions.

The securities used in advances are as follows:

1. Pledge

2. Mortgage

3. Hypothecation

4. Charge
5. Lien on Documents

6. Guarantees
1.Pledge:
Pledge is the actual delivery of the movable and tangible property to the lender, as a security for a

credit. In pledge, the possession of movable assets is with bank but the ownership remains with the

client. Pledge is considered to be the best security for the bank. The commodities which are being

pledged are normally raw material, consumables, finished goods and in certain cases work in

process (WIP).
Margin:
For every credit, the bank needs security with margin or cushion. The margin requirements are

different for every case. IF, there is 25% margin requirement then to obtain loan of Rs 1 million, the

security that is to be pledged should be have worth of Rs. 1.25 million.

The possession of the goods is with the bank, so bank keeps these goods in godowns
under the custody of Mucaddams.

People who look after the pledged goods are called Mucaddams. If rice is to be pledged with the

bank, it doesn’t mean that this cotton will be kept in bank, such type of goods is kept in the godowns
of the company. So to make these goods secure bank appoints its own men called Mucaddams to

take care of the stock and also bank has a board of its own name on the godown.
Precautions:
1. Nature of Commodity:
The banker must be aware of the nature of the property i.e. whether the commodity is a perishable

item. Also the commodity being pledged should be easily saleable, so that in case of default of

client, bank can easily sell it in the market.

2. Client:
In case of pledge, godowns are in the premises of the clients under the custody of Mucaddams,

whose honesty can be brought at any time. Therefore greater risk is imposed by the client. So the

bank must be satisfied with the honesty and credibility of the client.
3. Market Awareness:
A banker must have market awareness e.g. fluctuation in prices. Such commodities should not be

pledged that might have low demand in market and have many risks attached to it.
4. Suitability of Godown:
Suitability of godown depends upon the nature of the commodity. Banker must
be fully satisfied with the appropriation of the Godown.
5. Proper Valuation:
Whenever goods are pledged, the banker should be aware of the true cost of the product as the

client always overvalues his product. Sales taxes, excise duties are also paid on the finished goods.
6. Insurance:
The goods offered for security must be properly insured. Banker must analyze all the associated

risks of the goods. So, to cover these risks banker should decide about the insurance of the

commodity.
2.Mortgage:
In mortgage, immovable assets are offered as security. Mortgage means, to surrender the
proprietary rights of the property. The transferor of property is called a mortgagor and the transferee
(bank) is called a mortgagUsually two types of Mortgages are being created in the bank for the purpose of

collateral.
1. Equitable Mortgage
2. Registered Mortgage
1. Equitable Mortgage (E/M):
When a mortgage deed is attached with the title documents only and is deposited in the bank, it is

known as “Equitable Mortgage” or “Mortgage by deposit of title deed”. It is the most common form of

the mortgage created in bank.

2. Registered Mortgage (R/M):
When the mortgage deed is between the bank and the client is registered, it becomes a registered

mortgage. Mortgage deed is registered with the Registrar of the Companies. It is an expensive

mortgage and is created when the title documents are weak or the client is not much trustworthy.
Precautions:
1. Nature and value of the property:
The banker satisfy themselves that whether the property is suitable for security purposes and in case

of sale the bank will not suffer any loss. For this purpose, the bankers inspect the property and

properly visit report is prepared. Also the bankers hire the services of different valuators to assess the

right value of the property.

2. Investigation of Title:
The banker must be satisfied that his borrower has a good title to the property. The bankers,

therefore, conduct a proper investigation into the borrower’s title to the property, through their own

legal advisors.

3. Search for Prior Charges:

A search is made (with registrar of companies), to ensure that there exists no prior charge on the

property. If the title deeds of the property are in the name of more than one person, search should

be directed against the name of each person through whom the title is made. For this purpose, the

bank also gets fresh NEC i.e. Non-Encumbrance Certificate, issued by the registrar indicating that

no lien or charge has been created on property being mortgaged, upto a specific date.

After a banker is satisfied with the property offered for security, mortgage against his property is

created through “Mortgage Deed”. For this purpose, the original title documents are deposited in the

bank with the mortgage deed. Along with the title documents of property, the bank requires:
 Memorandum of Deposit of the Title Deed

 Agreement to create Mortgage

 General Power of Attorney (Registered)

3. Hypothecation:
When an immovable property is offered for security against credit but both the ownership and

possession is left with the borrower, the goods are said to be “Hypothecated”. Securities like

machinery, stock etc. are offered for hypothecation. Lending against hypothecation of goods is very

risky. The control of bank is weak so greater risk is involved in hypothecation.

In case of hypothecation
a) The banker reserves the right to inspect the goods hypothecated to him and
can ask for periodic stock reports, where necessary.
b) The banker, for his protection, may ask the borrower to insure. The banker
may himself do so and recover the expenses from the borrower.
c) The banker may ask the borrower to maintain a balance of goods sufficient
to fulfill the margin requirements.

For the creation of hypothecation, the bank gets the letter of hypothecation signed by the client. This

deed is got registered in case of both public and private limited companies, with the Registrar of

Companies (SECP).
4.Charge:
Charge means the legal right on the assets of the person (company). In case of limited companies,

banks generally create their charge on the assets of the company, as security. The charge is

registered with the Registrar of the companies (SECP).

Charge is of many types:
a. First Charge
b. Second Charge
c. Pari Passu Charge
a) First Charge:
The bank who has the first charge means that it has the first right on the assets of the company in

case of liquidation. If other banks also have charge against that asset then they have second charge

after the first one.

b)Second Charge:
Second charge means that the bank has the second right on the assets of the company, and then

afterwards third charge, fourth charge and so on have the right.

c) Pari Passu Charge
Pari Passu charge means that all the banks who have involved in the Pari Passu charge have the

equal rights. Pari Passu charge can be created for the first charge, or for the second or so.
5.Lien on Documents:
Like charge, bank creates its lien on the documents in its possession, as security. For example, in

case of import transaction under L/C, bank creates lien on import documents.
6.Guarantees:
Along with other securities, bank may rely on other guarantees like other bank
guarantees, to protect himself against the advances.
Processing of Loan
The banker must be very careful and ensure that his depositor’s money is advanced to safe hands

where risk of loss does not exist. When a customer requests his banker to facilitate him with different

credit facilities, the banker first assess the credibility of customer and the market conditions.
The elements of credibility, integrity, repayment, and market conditions help a
banker in arriving at a conclusion regarding the safety of advances.
Credibility:
It is the most important factor in determining the safety of advances, for there is no substitute for

integrity, honesty and trustworthiness. A borrower’s character can indicate his intention to repay the

advance, since his honesty and integrity is of primary importance. If the past record of the borrower

shows that his integrity has been questionable then the banker usually tries to avoid such a

customer.
Repayment:
This is the management ability factor, which tells how successful a business has been in the past,

and what are the future possibilities are. Before advancing loan a banker must be satisfied with the

sources of the repayment of the funds.

Capital:
The bankers also check the capital of the borrower. This can be kept as a security of a loan. In other

words, if the businessman financial Position is sound, only then he can be lended.
CIB Report:
Bank cannot sanction any loan to a customer, until and unless it gets credit report form CIB (Credit

Information Bureau, SBP). Before making any decision about the client, bank needs a CIB report.
Therefore, first of all the bankers requests CIB to provide the credit report of the client. This report

indicates all the credit facilities outstanding (availed) by the client.

Credit Line Proposal (CLP):
After being satisfied with the credibility and integrity of the applicant, the processing of loan

application starts with the preparation of Credit Line Proposal (CLP). It has the vital and most

important task assigned to the credit officers in BAL.

In a CLP, every information regarding the client and his business is stipulated as
follows:
 Total existing facilities (limit), their outstanding value and the securities that
were provided against these facilities.
 Total proposed limit of credit and the securities provided against it. The credit
officer does the analysis and verification of these securities.
Regular Credit Limit:
But if the client wants to route a regular business with the bank, then he requests for regular credit

limit of credit facilities for a specific period. Following things should be undertaken while preparing a

CLP and also being mentioned in the CLP.

 Customer’s background, his relationship with the bank (if he is an existing
customer), his relationships with other banks.
 Purpose of facility and terms and conditions regarding the client.
 Nature of his business and what are the market conditions and opportunities fro
the business.
 Reciprocal business is also stipulated on the proposal, which means expected
business that would be routed through the bank for these facilities. Bank
calculates his profitability on the basis of this business.
Financial Analysis:
Financial Analysis of the business of the customer constitutes the most important part of a proposal.

Banker makes an analysis on liquidity, leverage and profitability of his business.

Finally along with other information banker must himself gives his comments and
recommendations for the proposal.

Ratio means “one number expressed in terms of another “. Ratio is a statistical

yardstick by means of which relationship between two or more various figures can be

compared and measured. The ratio analysis can be done under

 LIQUIDITY RATIOS

 COVERAGE RATIOS

 ACTIVITY RATIS
 PROFITABILITY RATIOS

 SPECIAL BANK RATIOS

LIQUIDITY RATIOS
CURRENT RATIO
=Current Assets/Current Liabilities
2001
2002
1.02:1
1.03:1
This ratio tells us about short term solvency of the organization. This shows an
increasing trend. So it is good for the bank.
CURRENT ASSETS TO TOTAL DEPOSITS RATIO
=current Assets /Total Deposits
2001
2002
1.28
1.23
This ratio shows the availability of liquidity to meet its obligations i.e. deposits in case
of any contingency. This ratio has a slight decrease.
COVERAGE RATIO
DEBT RATIO
= total Liabilities /Total Assets
2001
2002
95.7%
94.3%
The debt ratio measures the proportion of total assets financed by the company’s credit.
The higher this ratio the greater is the amount of other people money being used in an
attempt to generate profits. So bank is using a great deal of people money to generate

profits.
ACTIVITY RATIOS
FIXED ASSET TURNOVER RATIO
=Markup interest/ Fixed Asset
2001
2002
1.97
2.63
fixed asset turnover indicates the efficiency with which the company uses its Assets to generate
sales. Generally the higher the company’s fixed asset turnover the more efficiently its assets have
been used. This ratio for the bank is favorable.
TOTAL ASSET TURNOVER RATIO
=Markup Interest/ Total assets
2001
2002
.08
.07
This ratio indicates the efficiency with which the company uses its total assets to generate sales.
The higher ratio is favorable for the company. This ratio is satisfactory for the bank.
PROFITABILITY RATIOS
NET PROFIT MARGIN
=Net Profit after Tax/ Total Revenue*100
2001
2002

9.16%
9.62%

The net profit margin is a profitability ratio which shows the combined effects of liquidity, asset

management, and debt on operating results. For the year 2001 and 2002, the net profit margin of the

bank shows an increasing effect which is encouraging for the bank , so the bank has enough caution

to meet its obligations.

RETURN ON EQUITY
=Net Income/ Shareholders Equity*100
2001
2002
22.82%
27.58%

the return on equity indicates the equity utilization of the company to produce profits. This ratio tells

the shareholders about their expected profits on their equity in business. The ratio indicates the

sharply increasing trend of net profit. This is very favorable for the shareholders.
RETURN ON TOTAL ASSETS
=Net Profit after Tax/ Total Assets*100
2001
2002
.9%
.85%

This ratio measures the total efficiency in generating profits with its available assets. The higher the

return on total assets, the better. The return on total assets of BAL is showing a slight decrease,

which is not favorable.

RETURN ON FIXED ASSETS

=Net Profit after Tax/ Fixed Assets*100
2001
2002
15.20%
25.31%
This ratio is also favorable for the bank.
EARNING PER SHARE
=Net Income/No. of Shares Outstanding
2001
2002
3.65

4.46

earnings per share are generally of interest to present or prospective stockholders and to

management. This ratio is favorable for the bank.

BANK RATIOS
TOTAL ADVANCES TO TOTAL DEPOSITS RATIO
=Total Advances/ Total Deposits*100
2001
2002
63.33%
54.79%
This ratio tells us how much of the bank has advanced. This ratio is not very much
favorable for the bank

TOTAL ADVANCES TO TOTAL ASSETS

=Total Advances/ Total Assets*100
2001
2002
48%
43%

this ratio shows the advances which the bank makes as the percentage of its total assets. If the

advances are increasing then the total assets then it is favorable for the bank. Because there are ore

advances, there is more income of the bank and respectively more profit. This ratio is showing

decreasing trend.
FIXE ASSETS TO TOTAL ASSETS
=Fixed Assets /Total Assets*100
2001
2002
4.23%
3.72%

in the bank fixed assts are comprised of equipment, furniture and buildings. These assets have great

importance or the bank in order to maintain the working conditions up to the mark. This ratio is

satisfactory for the bank.

Recommendations
After doing internship of two months in Bank Alfalah Limited, I have analyzed some
problem in the Bank. Following are my recommendations:
 Web Site:
Bank Alfalah limited has the web site, which has not been updated. The web site is very less

informative and it won’t leave a good impression on the visitor. So I suggest that it should be

updated to meet the requirements of the visitors.

 ATM Cards:

At the moment the bank has not introduced its ATM cards for all the customers. The bank should

start its credit card and ATM facility in order to highlight the value added features offered along with

the basic product. As the bank has the good image, they can use that image as a benefit in this

regard. To stay in the competition the bank should introduce its credit and ATM cards soon.
 Marketing:

Bank Alfalah is not very prompt in its marketing like its competitors. Most of the people in Pakistan

know nothing about the bank or its products so the bank should spend and concentrate more on its

marketing through various communication channels.

 Misdistribution of work:

In Bank Alfalah, there is misdistribution of work; some people are over burdened with the work. So I

suggest that there should be fair distribution of work in all the departments.
 Participative management:

Participative management concept should be adopted, where ideas from the employees should also

be taken, not only for developing products but also on service, efficiency, employee morale etc. in

order to improve them.

 Split Units:

Bank Alfalah is a very well established bank, but the number of air conditioners they have in the

whole bank is very less. Bank should increase the number of its Split units, because summer stays

longer in Lahore.
 Fax Machines and Photocopying Machine:
The number of Fax machines and photocopying machine in the bank are also less than they are

needed. For photocopying one has to go downstairs. So there should be more machines and also

their placement should be at the right place.

 Training programs
BAL should introduce more training programs for their employees. It will help less
educated and less experienced staff to grow and be a valuable part of the bank.

Conclusion
At present there is no such organization in the world that is free from problem and challenges. Every

concern has to strive and struggle a lot to be more profitable and to get more competitive edge.

The management of BAL is taking strategic steps to enable the bank to emerge as a strong and

progressive institution. It is continuing to make efforts to refine its products and operations to make

them more compatible. New deposit schemes have been introduced and an action plan to maintain

revenue growth in future.

As the business and economic conditions remain uncertain, BAL continues to develop
the new products like it has been doing in past.

Findings and Analysis

The findings and analysis of Bank Alfalah Limited is as follows:
 Good Image:

Bank Alfalah has the benefit of having better reputation and image because of having the strength of

Abu Dhabi consortium and under the leadership of His Highness Sheikh Nayan Mabarak Al-

Nahayan. People feel lesser risk for investing their money with the bank.
 World Class Services:
The bank is providing its customers world class and excellent services. This is the
main reason for the growth of the bank.
 Coordination:

Meetings are held very frequently which keeps the head-office well informed about the performance

of its branches and also provides officials with the opportunity to communicate, discuss and deals

with different situations as they arise.

 Employee Behavior:

The employees of Bank Alfalah Limited are very committed to their work. They are very hard working

and punctual but some of them have problems with he environment of the bank and they feel that

the branch environment is not very encouraging

B
Branch Network
ank Alfalah’s objective has been to expand its branch network to meet clients’

needs. They have embarked upon a rapid expansion program to make sure that their

services reach more and more people. The bank is well positioned and geographically poised, to
cater for increased business demands. During the year they have opened many new branches,

which spread all over Pakistan covering major business centers and principal cities. They plan to

add more branches to their growing network in the ensuing years. They are headed towards an ideal

network reaching all major urban centers and will soon go international.
Their head office is in Karachi, but presently they are having thirteen braches working
in Lahore. They are as follows:

 LDA Plaza Branch (Main Branch)

 Gulberg Branch

 Defence Branch

 Circular Road Branch

 Town ship Branch

 Badami Bagh Branch

 Allama Iqbal Town Branch

 Shah Alam Branch

 Tufail Road Branch

 Baghbanpura Branch

 Shadman Market Branch

 Stock Exchange Branch

 Ravi Road Branch

In total there are about 48 branches of Bank Alfalah countrywide.