final file mba project
TRANSCRIPT
FINAL PROJECT ON
BANK ALFALAH LIMITED
Submitted By:
RAJA FAHEEM ANWAR
Department of Business
Administration
College of Information Technology,
Lahore
2003-2006
FINAL PROJECT ON
“BANK AL-FALAH”
By
Faheem Janjua
A Project submitted in partial fulfillment of the requirements for the Degree Program
BBA(Hons) (Bachelor in Business Administration)
AL-KHAIR
University of Azad Jammu & KashmirAffiliated Campus C.I.T.5/68 Usman Block New Garden Town Lahore
2003-2006
Approved by Mr. Javed Warraich
Principle College Of Information
Technology
A C K N O W L E D G M E N T
I HAVE NO WORDS TO EXPRESS OUR DEEPEST SOURCE OF GRATITUDE TO ALMIGHTY, COMPASSIONATE, SUPREME ALLAH, WHO ENABLE ME TO COMPLETE THIS PROJECT WORK. I FIRMLY BELIEVE THAT GOD NEVER SPOILS ANY EFFORT. EVERY PIECE OF WORK IS REWARDED ACCORDING TO THE NATURE AND DEGREE OF DEVOTION FOR IT. I OFFER MY HUMBLEST WORDS OF THANKS TO HIS HOLY PROPHET (PEACE BE UPON HIM) WHO IS FOREVER SOURCE OF GRATITUDE.
ORDINARY WORDS OF GRATITUDE ARE NOT ENOUGH TO ACKNOWLEDGE THE LOVE AND GUIDANCE PROVIDED BY MY FAMILY MEMBERS, ESPECIALLY BY MY PARENTS. THEIR LOVE AND PRAYERS ENABLE ME TO COMPLETE OUR WORK.I ALSO EXPRESS MY GRATITUDE TO MRS. BINA SAAD (PROJECT DIRECTOR), MISS KANWAL FAYAZ (HEAD OF EXAMINATION DEPARTMENT), AND ESPECIALLY MY BEST FRIEND MR. IMRAN KHURSHID FOR THEIR GREAT COOPERATION FOR COMPLETION OF WORK AND PROJECT REPORT.
I AM VERY THANKFUL TO PROFESSOR MR. JAVED WARRAICH (PRINCIPLE C.I.T LAHORE).WHO HELPED ME THROUGHOUT IN DEVELOPMENT AND ADVICE ME IN EVERY PORTION OF THE PROJECT.
I WISH TO ACKNOWLEDGE THE ADVICE, HELP AND ENCOURAGEMENT GIVEN TO ME BY MR. RAJA TAHIR MAHMOOD (EXECUTIVE DIRECTOR LINE CRAFT, LAHORE, MISS SADIA NOREEN ANWAR (FIELD EXECUTIVE AC NIELSEN PAKISTAN), MR. ASAD IMRAN JANJUA (FINANCE DEPARTMENT BEACONHOUSE SCHOOL SYSTEM), AND MR. FAISAL HAYAT ADVOCATE (BANDIAL & ASSOCIATES).
I AM GRATEFUL TO MY I.T. FACULTY FOR PROVIDING A NICE CHANCE TO WORK IN SUCH KIND OF ENVIRONMENT AND FOR HIS GUIDANCE AND HELP FOR ME.I AM AGAIN VERY THANKFUL TO MR. JAVED WARRAICH (PRINCIPLE CIT LAHORE) FOR HIS GREAT HELP AND VALUABLE TIME HE SPENT WITH ME.
REST PRAISE IS AGAIN TO ALMIGHTY ALLAH, BLESSINGS AND AFFECTIONS OF WHOM THIS WORK IS FINISHED. WE ARE PRAYERFUL TO MY PARENTS, TEACHERS, BROTHERS, SISTERS FOR THEIR LONG LIFE. WE ARE PRAYERFUL TO ALL MY FRIENDS FOR THEIR SUCCESSFUL FUTURE WITH HOPE THAT WE WILL NOT FORGET EACH OTHER.
_______________________Group Members
may not spare them to
Scope of Study
The scope of study at of the motion is limited only to the
preparation of the final project about “Al-Falah”. But by
searching on net and books and benevolent help of my
colleagues and staff of Bank Al-Falah Pakistan. I am able to
complete this project and most of all by visiting various web
sites, banking policies and by comparing bank Al-Falah with
other institutes. I am able to make this project well and these
methods are helpful for me.
College of Information Technology Al-Khair University
5/68 Usman Block New Garden
IN THE NAME OF ALLAH THE
MOST GRACIOUS AND MOST
MERCIFUL
Faheem Janjua
To
All mighty “Allah”
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E
II NN T T H EH E N N A M EA M E O O FF A A L L A HL L A H
SS U B H A N A H UU B H A N A H U , T, T H EH E M M O S TO S T GG R A C I O U SR A C I O U S
TT H EH E M M O S TO S T MM E R C I F U LE R C I F U L ……
9
TT A B L EA B L E O O FF C C O N T E N T SO N T E N T S
........................................................................................................................................................................7
IN THE NAME OF ALLAH SUBHANAHU, THE MOST GRACIOUS THE MOST MERCIFUL…7
TABLE OF CONTENTS............................................................................................................................7
SECTION ONE............................................................................................................................................7
INTRODUCTION........................................................................................................................................7
CHAPTER ONE: INTRODUCTION TO THE REPORT......................................................................................7
CHAPTER TWO: THE BANK........................................................................................................................7
CHAPTER THREE: THE BRANCH.................................................................................................................7
CHAPTER FOUR: AN INSIGHT INTO BANKING............................................................................................7
SECTION TWO...........................................................................................................................................7
CORE PHILOSOPHIES.............................................................................................................................7
AT..................................................................................................................................................................7
BANK ALFALAH LIMITED.....................................................................................................................7
INTRODUCTION........................................................................................................................................7
THE VISION................................................................................................................................................7
THE MISSION.............................................................................................................................................7
SECTION THREE.......................................................................................................................................7
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0
MANAGEMENT STRUCTURE OF.........................................................................................................7
BANK ALFALAH LIMITED.....................................................................................................................7
CHAPTER ONE: INTRODUCTION..................................................................................................................7
CHAPTER TWO: TOP MANAGEMENT HIERARCHY......................................................................................7
CHAPTER FOUR: MANAGEMENT LEVELS...................................................................................................7
CHAPTER FIVE: SIGNIFICANT MANAGEMENT POLICIES.............................................................................7
CHAPTER ONE: THE ACCOUNTS DEPARTMENT.........................................................................................7
CHAPTER TWO: THE ACCOUNT OPENING DEPARTMENT...........................................................................7
CHAPTER FIVE: THE CLEARING DEPARTMENT..........................................................................................7
OUTWARD CLEARING............................................................................................................................7
INWARD CLEARING................................................................................................................................7
CHAPTER SIX: ONLINE TRANSACTIONS.....................................................................................................7
CHAPTER SEVEN: ALFALAH CAR FINANCING............................................................................................7
CHAPTER EIGHT: CREDITS DEPARTMENT..................................................................................................7
SECTION FOUR.........................................................................................................................................7
FINANCIAL ANALYSIS............................................................................................................................7
OF..................................................................................................................................................................7
BANK ALFALAH LIMITED.....................................................................................................................7
A) FINANCIAL STATEMENTS......................................................................................................................7
B) RATIOS...................................................................................................................................................7
1998 - 2002....................................................................................................................................................7
C) FINANCIAL RATIOS ANALYSIS......................................................................................................7
1998 - 2002....................................................................................................................................................7
ACCOUNTING POLICIES........................................................................................................................7
SECTION FIVE...........................................................................................................................................7
MARKETING MIX.....................................................................................................................................7
OF..................................................................................................................................................................7
BANK ALFALAH LIMITED.....................................................................................................................7
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1
MARKETING MIX........................................................................................................................................7
PRODUCTS & SERVICES........................................................................................................................7
PRICE...........................................................................................................................................................7
PROMOTION..............................................................................................................................................7
PLACE..........................................................................................................................................................7
SECTION SIX..............................................................................................................................................7
SWOT ANALYSIS & RECOMMENDATIONS......................................................................................7
CHAPTER ONE: SWOT ANALYSIS.............................................................................................................7
CHAPTER TWO: RECOMMENDATIONS........................................................................................................7
ANNEXURES...............................................................................................................................................7
Annexure One: Borrowers’ Basic Fact Sheet-For Corporate....................................................................7
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2
S E C T I O N O N E
I N T R O D U C T I O N
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3
C H A P T E R O N E : I N T R O D U C T I O N
T O T H E R E P O R T
The basic purpose behind the preparation of an internship report is to make the
student jot down the experiences of the internship and discuss the understanding of
the operations of the organization.
The following pages discuss my experiences at Bank Alfalah Limited, Township
Branch, Lahore. Nevertheless, before I proceed, I would like to mention that the
experience of working in a small, newly established branch was in itself a treat. All
the employees were extremely cooperative and accommodating. It was for the
first time that the branch had the experience of interns and as much as I was
learning, all the employees under whom I worked were learning from the
experience as well.
This internship report is based on the format that the first section discusses the
bank and its history, its current status and its future outlook.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4
C H A P T E R T W O : T H E B A N K
B A N K A L F A L A H L I M I T E D
Bank Alfalah Limited was incorporated on June 21, 1997 as a Public Limited
Company under the Companies Ordinance 1984. Its banking operations
commenced from November 1, 1997. The bank is engaged in commercial banking
and related services as defined in the Banking Companies’ Ordinance, 1962.
Since its inception, as the new identity of H.C.E.B. after the privatization in 1997,
the management of the bank has implemented strategies and policies to carve a
distinct position for the bank in the market place.
Strengthened with the backing of the Abu Dhabi Group and driven by the
strategic goals set out by its board of management, the Bank has invested in
innovative technology to have an extensive range of products and services.
Currently Bank Alfalah Limited has thirty-five branches (45 branches covering 21
cities in 2003) spread all over Pakistan. In the coming years, the bank plans to open
a number of new branches to ensure that its customers get the benefit in the form
of extended branch network and comprehensive products and services.
PURSUIT OF EXCELLENCE
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.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5
These achievements have been preceded by concerted effort
to provide highest levels of service and value to our
customers. The bank aims to further enhance performance
standards through implementation of innovations in both
products as well as customer care, by discovering newer
avenues of client benefit. This customer focused strategy has
enabled Bank Alfalah Limited to evolve as a single source
financial service provider of corporate and retail banking
services.
DEDICATED PROFESSIONALS
The Bank Alfalah Limited team comprises of dedicated
professionals equipped with a diverse array of skills, vast
experience and pro customer attitudes. The management
concentrates its energies on making informed economic
decisions, translating it into greater returns for our investors
and customers. This prudent attitude has created a
synergistic organizational structure leading to improvements
in profitability and a sustainable competitive advantage for
the bank.
A HIGHLY RESPONSIVE PRODUCT
PORTFOLIO
Not only comprehensive but also customizable to match the
needs and preferences of the customers. These strategic
characteristics of the portfolio have helped Bank Alfalah
Limited to face challenging economic conditions. The product
lineup continues to fulfill and satisfy the banking
requirements of not just the conventional consumer, but the
demanding financial needs of the corporate sector as well.
The lineup includes:
Car Financing
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6
Rupee Travelers Cheques
Anmol Saving Certificates
Home Loans
On–Line Banking
MoneyGram Remittance Services
Monthly Income Plan
Credit Cards
ATMs
A N O V E R V I E W O F T H E I N D U S T R Y
Bank Alfalah Limited is in the initial stages of growth. It has to face intense
competition from the well-established banks like Prime, Union, Askari, Muslim
Commercial Bank, PICIC, Bank Al-Habib etc. General trend in the market is that the
private banks are increasing there paid-up capital. Banks are expanding their
branch network.
A brief detail of some leading banks is given below:
BANK ALFALAH
During FY 2001 Alfalah has shown a positive trend of growth. Its deposits increased
by 48% and advances increased by 25%. The profit for the year has also risen.
Bank’s success in a few years of operations is appreciable. In spite of the intense
competition performance of bank is remarkable.
PRIME COMMERCIAL BANK
It was a profitable year for Prime Commercial Bank. Its profit before tax went up to
Rs. 241 million from Rs. 158 million of the last year. Instead of announcing the
dividend management opted to increase the bank’s reserves, which will have a
good effect on the profitability in the long run.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7
UNION BANK
It is one of the major competitors of Bank Alfalah. FY 2001 was not a very profitable
year for the Union Bank. Profit before tax was very low. Major causes of low profit
were sky-high administrative expenses. Provisions against non-performing loans
were very high.
The above comparison reveals that in spite of being new
bank, Bank Alfalah’s performance has been much better
than i ts competitors.
Following tables will reveal the position of Bank Alfalah as compared to its
competitors.
DEPOSITS (RS. IN MILLION)
Banks 2001 2000
Bank Alfalah 30,207 20,482
Union 20,721 17,171
Prime 10,367 8,264
ADVANCES (RS. IN MILLION)
Banks 2001 2000
Bank Alfalah 19,131 15,242
Union 13,689 13,346
Prime 6,853 6,794
An overview of industry shows that Bank Alfalah is among the top banks of the
country. In fact Bank Alfalah can be ranked second after Askari Commercial Bank.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8
C H A P T E R T H R E E : T H E B R A N C H
T O W N S H I P B R A N C H L A H O R E
The Township Branch is strategically located at the intersection of three big towns
of the city. It is located adjacent to Akbar Chock, which forms the junction of
Township, Faisal Town and Johar Town. It is spread over an area of more than 4
canals. It has ample of parking space and due to the attention and interest of the
branch manager, Mr. Rizwan; the exterior of the branch has been delightfully
decorated with flowerbeds, grass and trees.
At the time of my internship, the branch was passing through the initial one year of
its existence and therefore had a small number of staff members. It has a total of 24
employees, ranging from the Bank Manager to the Tellers. Other than these
officers, there were about eight workers ranging from the Security Guard to the
Cleaning Boys to the Incharge of the kitchen etc.
The main reason of the bank’s existence is the acceptance of people’s money to
keep safe until they need it back and extending money on interest to those who
need it for investment purposes. At the first day of my internship, the Township
Branch had crossed the Rs. 398 million mark for deposits but had extended credit of
only Rs. 34 million. Out of the total deposits, foreign currency deposits were around
Rs. 35 million whereas the local currency deposits were around Rs. 362 million.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 9
CHAPTER SIX: THE FUTURE OF BANK ALFALAH LIMITED
“ O“ O U RU R C C O R EO R E P P H I L O S O P H YH I L O S O P H Y O O FF H H O N E S T YO N E S T Y ,,
TT R A N S P A R E N C YR A N S P A R E N C Y I I NN C C U S T O M E RU S T O M E R D D E A L I N G SE A L I N G S , P, P R O D U C TR O D U C T
II N N O V A T I O NN N O V A T I O N , E, E X C E L L E N C EX C E L L E N C E I I NN C C U S T O M E RU S T O M E R S S E R V I C EE R V I C E ,,
AA N DN D O O U RU R C C O M M I T M E N TO M M I T M E N T T T OO B B E I N GE I N G A R A R E S P O N S I B L EE S P O N S I B L E
CC O R P O R A T EO R P O R A T E C C I T I Z E NI T I Z E N P P E R V A D E SE R V A D E S T T H I SH I S B B A N KA N K ””
These are the words that the Chairman His Highness Sheikh Nahayan Mabarak
Al-Nahayan uttered for the commitment of the bank towards providing satisfaction
to its customers. Confronted with a more open financial market but tougher
competition, Bank Alfalah Limited, with its professional outlook and commitment,
maintained healthy growth in resource mobilization and financing of foreign trade.
The management at the bank feels that in the coming years, the bank would
expand more to provide their customers an easy to use network of branches in all
major cities of the country. The chairman of the bank feels the bank has managed
to establish a name for it self in the financial markets and will continue to institute a
strong foothold in the minds of the customers as well.
Here I would like to mention that after the privatization of United Bank Limited
(UBL) by the Privatization Commission Of Pakistan and the takeover by the
consortium of Best Way Group and Abu-Dhabi Group, the Chairman of Bank Alfalah
Limited H. H. Sheikh Nahayan Mabarak Al-Nahayan has been given the
charge to run UBL as its chairman, while his younger brother, H.E. Sheikh
Hamdan Bin Mabarak Al-Nahayan has been appointed as the New Chairman
of Bank Alfalah Limited. Here I would like to cite some portions of the new
chairman’s review in order to make clear the future targets of Bank Alfalah Limited
under his leadership.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 0
At the close of the sixth year of operations after its privatization in 1997, Bank
Alfalah Limited has been steadily reaching higher standards of service excellence
and performance despite many challenges.
The year 2002 has seen Bank Alfalah Limited achieving significant success both in
terms of product portfolio and customer service. The unfortunate “9/11” incident
caused economic uncertainty and political turbulence. However, Bank Alfalah
Limited was able to face these challenges valiantly and courageously.
Consequently, the size of the bank’s client base was increased that showed the
favorable reputation Bank Alfalah Limited enjoys in the market.
THE POLITICAL AND ECONOMIC LANDSCAPE:
President Musharraf’s government fulfilled its promise and a democratic
government was instituted in the country. The new government has presented a
very favorable agenda for the country, both in terms of economic and social
reforms. The State Bank of Pakistan revised down the interest rates in order to spur
economic development and investment activity in the country. This, coupled with an
impressive increase in foreign reserves of over $ 10 Billion, augurs well for the
country’s economic revival. The government is also committed to the concepts of
deregulation and privatization, which is a positive sign for the economy.
FINANCIAL HIGHLIGHTS:
The operating results show an impressive improvement compared to the last
financial year.
The bank earned a pretax profit of Rs. 894.65 Million, a significant growth of
70.68 % over the last year.
The improving Return on Assets (ROA) suggests the increasing operational
and administrative efficiency.
The Return on Equity (ROE) indicates that returns to investors have
continually improved signifying the overall enhancement in the bank’s
performance.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 1
Deposit mobilization remained an area of key focus and the deposit base
stood at Rs. 51.68 Billion at the close of December 2002, which signifies an
increase of 71.10 %.
This improvement is, along with other factors, attributed to the bank’s high customer value product offerings in the form of branded deposit schemes and certificates.
The loan and advances portfolio too has increased by 45.59 % to Rs. 29.43
Billion.
The strategy in this arena has been one of revenue maximization coupled with well-managed and quality credit expansion.
BRANCH NETWORK:
Over the years, the bank’s 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. Bank Alfalah Limited’s strategy is to maximize
the synergies of branch network through an optimal allocation of financial, human
and other resources in order to meet the dynamic challenges of present financial
environment. In the year 2001, the branch network increased to 32 branches,
making the reach to customers in 17 cities. Currently, the bank has successfully
opened 45 branches in 22 cities nation-wide.
CREDIT PORTFOLIO:
To capture good quality risk assets there is intense competition within the financial
industry, given the declining interest rate regime. Despite that, Bank Alfalah Limited
still follows a policy of prudent lending being mindful of the fact, that is not only a
custodian of its customers and well-wisher’s money, but also their trust.
It is a matter of great gratification that Bank Alfalah Limited’s non-performing
portfolio has decreased considerably since July 1997. While risks cannot be
mitigated entirely, formal credit approval process along with inbuilt system of
checks and balances has been put in place to achieve highest quality in the Loan
and Advances portfolio.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 2
CONSUMER BANKING:
Bank Alfalah Limited continually strives to improve and add to the consumer
banking services. In the endeavor to provide best returns to the clients, an
impressive product portfolio has been designed to provide reasonable returns to
them, coupled with security of their capital.
AUTOMATION AND TECHNOLOGY:
Information technology and its optimum use greatly facilitate work and increase
performance potential. Bank Alfalah Limited is in the forefront of providing
customers online and timely services. For this, automated and technologically
sophisticated work flows and systems are a prerequisite.
Bank Alfalah Limited continually invests in upgrading these systems and similarly
training the human resource. The ultimate aim is to achieve both service and cost
optimization.
The in-house developed software BankSmart has been successfully installed in all
the branches and has been well received. Plans are underway for the installation of
ATMs and joining a Switch Group of other prominent banks.
FOREIGN TRADE AND CORRESPONDENT BANKING:
Bank Alfalah is a trade focused Bank. It places special emphasis on maintaining a
synergistic correspondent banking network, with a view to give customers, greater
global access. Bank Alfalah Limited works closely with its correspondents in the
areas of mutual interest and benefit. Today it enjoys mutually beneficial relationship
with over 170 correspondents reflecting favorably not only on its reputation
domestically but also globally. This network has facilitated in handling a trade
volume of RS. 66.93 billion in the year.
CREDIT RATING:
Pakistan Credit Rating Agency-the leading credit agency in the country-has rated
Bank Alfalah Limited very favorably. The bank has been awarded an AA- (double a
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 3
minus) and an A1+ (A one plus) in the long and short term respectively. These
ratings denote very high credit quality and very low expectation of credit risk.
The bank also issued Term Finance Certificates in the year 2002. These were very
well received in the market and were oversubscribed by 6 times. PACRA award an
A+ (A plus) rating to these certificates.
TRAINING AND DEVELOPMENT:
Bank Alfalah Limited is committed to the personal welfare and professional
development of all its team members. It realizes that proper training of human
resource is essential, not only for a more productive and satisfied work force but
also for a homogeneous corporate culture.
The bank continues to follow its strategy of hiring batches of young and energetic
management trainees who are sent to a Training and Development Center for
training in all areas of banking. The Training and Development Center is a state of
the art facility with an impressive faculty. At the same time short courses are
continually conducted for other team members to only enhance their skill levels but
also increase their performance potential.
FUTURE OUTLOOK:
The economic future for the country seems brighter with many key indicators
moving in a favorable direction. Investor’s confidence is recovering and
entrepreneurial activity has gained momentum. Amidst these positive
developments, Bank Alfalah Limited will continue to follow a strategy based on
business and deposit enhancement and network expansion.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 4
C H A P T E R F O U R : A N I N S I G H T I N T O
B A N K I N G
B A N K
There are various viewpoints about the origin of the word ‘Bank’. One point of view
is that it is derived from the word ‘Banc us’ which means a bench. The other
viewpoint is that it has originated from the German word ‘bank’ which is called ban
co in Italian language. It is a German word and means a joint stock fund.
C O M M E R C I A L B A N K
A bank or banker is a dealer in credit or more properly a dealer in money. It is an
intermediate party between the borrower and the lender. It borrows from one party
and lends to another. The difference between the term on which it borrows and that
on which it lends forms the source of his profit. The bank therefore, can be called a
financial intermediary that operates for profit motive.
C L A S S I F I C A T I O N O F B A N K S
The commercial banks are classified into various types on the basis of their spheres
of activities, ownership, domicile etc. The main types of banks are: -
Classification on the basis of functions
Classification on the basis of ownership
CLASSIFICATION ON THE BASIS OF FUNCTIONS
Central Bank
Commercial Banks
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 5
Exchange Banks
Saving Banks
Agricultural Banks
Industrial Banks
CLASSIFICATION ON THE BASIS OF OWNERSHIP
Public sector banks
Private sector banks
Cooperative banks
CLASSIFICATION ON THE BASIS OF DOMICILE
Domestic Banks
Foreign Banks
F U N C T I O N S O F C O M M E R C I A L B A N K S
The functions of commercial banks are classified as:
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 6
FUNCTIONS
PRIMARY OR BASIC FUNCTIONS
SECONDARY OR SUBSIDIARY FUNCTIONS
Accepting DepositsMaking Loans &
Advances
Agency Functions &
ServicesUtility Functions
Fixed or time
deposits
Purchasing and
discounting of bills
Collection of
checks, bills,
interest etc
Foreign exchange
business
Saving deposits Drafts
Execution of standing Orders,
payment of Orders, payment of
Act as referee
Current deposits Cash creditsPurchase and sale
of securities
Issuance of
travelers checks
- Loans Transfer of fundsSupply of trade
information
- - Acting as trustee Export promotion
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 7
S E C T I O N T W O
C O R E P H I LO S O P H I E S
AT
B A N K A L FA L A H L I M I T E D
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 8
II N T R O D U C T I O NN T R O D U C T I O N
To succeed in today’s volatile, interconnected and ultra-competitive markets, banks
need rapid access to timely information, flexible financial solutions and their alert
execution. Bank Alfalah follows the core philosophy of satisfying its customers
through effective branch network, efficient human resource and economical
products.
Over the years, the management has succeeded in establishing an ideological base
for the employees to build the bank upon: customer loyalty, service with dedication
and development of a wide range of products for the customers to choose from.
Some of the Fundamental Philosophies followed at the bank are:
Excellence in Service
Quality Performance
Product Innovations
S P O T L I G H T O N T H E C U S T O M E R
The customers include small depositors to corporations who are at various stages of
development - from start-ups to multinationals working in Pakistan. The client
coverage and service structures preserve and build on strong customer
relationships.
As the bank continues to develop, internal processes and support system are being
upgraded and integrated to create seamless and efficient service for each
customer, regardless of how many different businesses; client subsidiaries or
locations are involved.
T H E “ K N O W Y O U R C U S T O M E R ” D R I V E
“Know Your Customer” (KYC) is very well known tern for its effectiveness in
marketing of financial services. It is also essential for prudent banking. The KYC
program is international in origin. Under KYC, at the inception of relationship with a
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 2 9
bank, a comprehensive identification of the customer is required and thereafter
transactions in the customer’s account are monitored. Anyone who does not provide
identification will not be allowed access to banking services. Its purpose is to
prevent and detect relationship with unscrupulous elements including prevention of
money laundering. For the purpose of keeping a database of the customer, special
forms have been distributed amongst the branches. The forms serve as a checklist
and allow the interviewer an opportunity to tactfully document all required
information from the customer regarding his source of funds.
B R O A D P R O D U C T C A P A B I L I T I E S
As the bank works with the clients to help them achieve their goals, it can offer all
the products and services they need to obtain appropriate liquidity, diversification
of funding sources, reduced capital costs and stronger balance sheets. Bank Alfalah
Limited is able to execute transactions of almost any size, of every level of
complexity and in multiple currencies. Products ranging from: The Royal Profit
Account to Car Financing, from Savings Certificates to Credit Cards, from On Line
Banking to a wide network of ATMs, and from Remittance Services to Monthly
Income Plans, Bank Alfalah has it all available under one roof.
C R E A T I O N O F A B R I G H T F U T U R E
Bank Alfalah Limited works for the attainment of the contentment of the society
through the satisfaction of its customers. It places high priority to the attainment of
the financial and social growth of the nation. Through this vision, the bank sees a
bright future for the nation and itself.
G R O W T H S T R A T E G Y
Bank Alfalah Limited’s objective has been to expand its own branch network to
meet client’s needs so that it may better preserve its organizational culture,
efficiency, quality and image. The bank is well positioned and geographically
poised, to cater for increasing business demands, from its existing and potential
clientele. Presently the branches are spread all over Pakistan and they cover major
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 0
business centers and principle cities. Bank Alfalah Limited plans to add more
branches to its growing network in the ensuing years.
C O M M U N I C A T I O N A M O N G S T T H E
E M P L O Y E E S
A good deal of verbal interchange takes place in bank each day. It is a two-way
thoroughfare. The officers discuss rather than direct, listen as well as interact . The
bank makes the communication channel more effective by staff meetings that are
an extension of the conversational or discussion technique but embraces a larger
segment of the bank. Such meetings are regular features of the bank and take a
wide variety of forms, ranging from daily or weekly officers meetings to annual
weekend conferences.
The major portion of communication necessary for the day-to-day operations of a
bank consists of simple person-to-person conversation more complex ideas,
however, gain clarity if they are put in writing. Thus the bank is talented in the
ability to write clearly which is an invaluable management talent that needs
constant practice and development.
M E N T O R I N G P R O G R A M
A mentoring program has been implemented through out the bank. The initiative is
aimed at helping freshly inducted staff members in the bank to integrate and settle
down in their respective assignments as happy and productive employees. For this
purpose, 10 commandments of “Mentoring” have been laid down. They are:
Induction and orientation of the new employees
Coaching in basic workplace manners
Job description and career orientation
Identifying training and development needs
Sponsorship, projection and recognition
Explaining the appraisal process
Culture building and socialization
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 1
Guiding and coaching
Counseling
Systematic interaction with new joiners
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 2
“Our vision is to be a leading
financial institution, with a niche in
areas where we have a competitive
advantage with complete banking
solutions. Our focus is on improving
performance in each of our
businesses to achieve consistent
and superior returns for our highly
valued clients and shareholders.”
TT H EH E V V I S I O NI S I O N
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 3
“Our mission is to maintain a
competitive edge in quality
banking, customer service and
profit performance. Our activities
are geared towards making Bank
Alfalah a responsible Corporate
Citizen. The emphasis on ‘Quality
and Innovation’ will remain our key
mission statement. We will continue
to strengthen our position as the
leading provider of quality financial
TT H EH E M M I S S I O NI S S I O N
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 4
S E C T I O N T H R E E
M A N A G E M E N T S T R U C T U R E
O F
B A N K A L FA L A H L I M I T E D
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 5
H. H. Sheikh Nahayan Mabarak Al-Nahayan
C H A P T E R O N E : I N T R O D U C T I O N
Bank Alfalah is proud of its Human Resource, as almost all the employees have
been hand picked by the management. However, in this section, I would discuss
those people who are responsible for hiring such a bright staff and establishing such
a magnificent bank. They are the higher management of Bank Alfalah Limited.
T H E C H A I R M A N ( O U T G O I N G )
H. H. Sheikh Nahayan Mabarak Al-Nahayan is an important and prominent member
of the ruling family of Abu Dhabi. After the culmination of his studies at Oxford, he
returned to shoulder important responsibilities in the state administration. In 1988,
he was appointed the President of the higher colleges of Technology comprising of
eight colleges throughout the UAE – a responsibility he fulfilled with distinction. In
1990, he was appointed Minister of Higher Education and Scientific Research.
Presently he also holds the presidency of the Society of the Natural History and
National Heritage. In 1992, he became the Chairman of the Union National Bank and
has since remained involved in strategic management of the institution.
T H E C H A I R M A N ( N E W )
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 6
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan
T H E B O A R D O F D I R E C T O R S
H. H. Sheikh Nahayan Mabarak Al-Nahayan - Outgoing Chairman
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan - New Chairman
Mr. Mohammad Saleem Akhtar - Chief Executive
Officer
Mr. Abdullah Khalil Al-Mutawa - Director
Mr. Omar Z. Al-Askari - Director
Mr. Abdullah Naseer Hawaileel Al-Mansoori - Director
Mr. Nadeem Iqbal Sheikh - Director
Mr. Ikram Ul-Majeed Sehgal - Director
B O A R D A D V I S O R Y C O M M I T T E E
Mr. Omar Z. Al-Askari
Mr. Abdullah Khalil Al-Mutawa
Mr. Ganpat Singhvi
Mr. Bashir A. Tahir
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 7
E X E C U T I V E C O M M I T T E E
Mr. Mohammad Saleem Akhtar - Chairman
Mr. Pervaiz A. Shahid
Mr. Ikram Ul-Majeed Sehgal
Mr. Mohammad Yousaf
Mr. Tanveer A. Khan
Mr. Sirajuddin Aziz
Mr. Mahmood Ashraf
C O R P O R A T E I N F O R M A T I O N
Mr. Hamid Ashraf - Company Secretary
A. F. Ferguson & Co. (Chartered Accountants) - Auditors
B A Building, - Head Office
I. I. Chundrigar Road,
P. O. Box 6773, Karachi.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 8
C H A P T E R T W O : T O P M A N A G E M E N T
H I E R A R C H Y
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 3 9
C H A P T E R F O U R : M A N A G E M E N T
L E V E L S
Management must adopt some administrative style to get all the activities done
effectively and efficiently. As far as the management style at Bank Alfalah Limited
Township Branch is concerned, there is centralization to a certain extent and
decentralization in some other areas.
Administrative style of the Township Branch Manager Mr. Rizwan Ul-Haq was not at
all authoritative. His non-authoritative style was the requirement of the new branch.
For the implementation of strategies and getting all the activities to be done
properly with an organized environment, cooperation was the requirement of the
time. He used to take all important decisions after consulting the Manager
Operations Mr. Farooq Shehzad and the Manager Corporate Banking Mr. Osman
Latif.
Management refers to the universal process of effectively and efficiently getting
activities completed with and through other people. It is a process by which certain
basic functions, that are planning, organizing, leading and controlling, are
performed to achieve the desired objectives of the organization. These functions are
being performed at three levels in Bank Alfalah.
B O A R D O F D I R E C T O R S
At the top of the human resource hierarchy sits the Board of Directors and The
Executive Committee. The most important task of this level of management is
strategic planning, determining the goals and objectives and to formulate the
policies.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 0
T O P M A N A G E M E N T
Top management mostly involves strategy formulation, technical planning,
determining how to best get the job done and control. Chief Managers and Branch
Managers are included in this level. They define and interpret the objectives and
vision and then formulate policies for their completion.
M I D D L E M A N A G E M E N T , S U P E R V I S O R S
A N D E M P L O Y E E S
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’ activities are monitored and controlled according to the desired
objectives.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 1
C H A P T E R F I V E : S I G N I F I C A N T
M A N A G E M E N T P O L I C I E S
P O L I C Y F O R M U L A T I O N P R O C E S S
At Bank Alfalah Limited, polices are formulated at the top level. Board of Directors
and Executive Committee of the bank formulates policies keeping in view the
mission and the objectives of the bank. So far the policies formulated by the top
level have been very successful as indicated by the success pattern of the bank.
These policies are then implemented according to the guideline of top level of
hierarchy. Top management and middle management are given powers to carry out
the operations for the achievement of long-term objectives. They encourage the
views and suggestions of bank officers as well. It helps in the effective
implementation of the formulated strategies.
Meetings are regularly held weekly at the branch level. However in case of some
urgent problem or issue meeting is called as well. For the solution of a problem
suggestions are always welcomed. It has a healthy impact on the morale of
employees.
I N D U C T I O N
The human resource is the most expensive asset of any organization. This factor
can change the future outlook of any organization within months. The human
resource can either lift the organization through its hard work or destroy the image
of the organization through sluggishness and lethargy. The top management of
bank Alfalah Limited is very much aware of this fact and therefore has started an
MTO induction program. The Management Trainee Officers are chosen from
amongst the best management students from the country’s best institutions. The
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 2
Human Resource department conducts a test every year to choose this batch of
around 35 students.
T R A I N I N G
The batch of MTO’s selected every year has to go through a 6-month thorough
training period at the purpose built Training Institute at the bank’s Head Office in
Karachi. Bank Alfalah’s training academy is equipped with the latest audio-visual
training aids, which facilitate in the dissemination of knowledge and skills. This is
done to give an orientation to the employees about the bank and it’s working.
Another purpose of this training program is to upgrade the knowledge base of these
already bright students and to polish their abilities as good bankers so as to bring
their skills at par with those of international banks in developed countries.
P R O M O T I O N
Each year, the superior officer prepares a review of each employee and then,
instead of sending it directly to the Head Office, it is first discussed with the
employee. This is done to incorporate a sense of confidence between the senior and
junior employees. It is also done to give the employee a chance to know his
weaknesses so that he may work hard to improve his abilities and skills the next
year. On the basis of this report, the promotions are made and bonuses are given.
Sometimes other factors are considered such as length of service, education,
training courses completed, previous work history and the like.
S A L A R Y ( P A Y S C A L E S )
The principal criteria for a well-considered and reasonable salary policy are
First, the relationship of the bank’s salary scale to salaries paid for
comparable jobs in the community and the industry and,
Second, the relationship of the salary paid to one person to that paid to
others for jobs of comparable difficulty within the bank.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 3
The salary management of Bank Alfalah Limited is reasonable as many factors
contribute towards the working conditions - job security, prestige and opportunity
for advancement - all enter into the competitive package.
Bank provides fringe benefits to or better than those offered in other industries.
Hospitalization and group life insurance are the rules prevailing in the bank. A more
effective incentive is well-designed bonuses plan with benefits that varies from year
to year and employee to employee in direct proportion to the financial success of
the bank’s operations.
M O T I V A T I O N L E V E L
Job design for motivation is another personnel approach that has been increasingly
emphasized in recent years. Job contents, methods and relationships are structured
not only to satisfy technological and organizational requirements but also to
accommodate human needs for meaningful and self-fulfilling work. Jobs are being
designed to fit the people who hold them in the hope that greater employee
motivation (which is essential to higher productivity) will result.
G R O W T H O P P O R T U N I T I E S
Bank Alfalah Limited provides growth opportunities to its employees and officers.
The bank has a huge number of clients of business class and allows certain relief
and incentives to its employees thus making job more efficient and effective.
J O B S A T I S F A C T I O N
During my internship program, I worked with different employees in different
departments. I observed their working and also their level of satisfaction regarding
their jobs and reward system.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 4
Almost all the employees were satisfied with their jobs, as far as the quality of work
and rewards were concerned. All the employees were highly motivated and sincere
with their jobs. However, one common complaint was the quantity of work. Much
were overloaded with the huge work and even had to work till 9 or 10 pm.
I M P A C T O F M A N A G E M E N T S T Y L E S O N
E M P L O Y E E S ’
Motivation:Motivation: The term motive implies action to satisfy a need. Motivation can
be defined as a willingness to expend energy to achieve a goal or a reward.
The management styles adopted by the bank affect greatly, and employees
are motivated in order to enhance their performance and achieve the derived
goals.
Morale and Productivity:Morale and Productivity: The employees of the bank possess high morale,
and thus exhibit high productivity. The employees are happy and are also
productive workers. Job attitudes and morale are quite positive for two
reasons. Firstly employees gain social satisfaction from interactions at the
work place. Working conditions and supervision are good; secondly high
morale results from high motivation to produce. In other words we can say,
that management should put its eggs in the basket that creates a high-
motivated work force.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 5
C H A P T E R O N E : T H E A C C O U N T S
D E P A R T M E N T
I started my endeavors from the Accounts Department at the Township Branch of
Bank Alfalah Limited. It is probably the only department in the entire bank where
there is almost no direct customer dealing. This department was composed of two
personnel
Manager Accounts - Mr. Tauseef Ahmed, and
Officer Accounts - Mr. Abdul Latif.
INTER-BRANCH ACCOUNTS
Like other commercial banks, Bank Alfalah Limited has a network of branches all
over the country. These branches in different cities are interlinked with each other
through their correspondent accounts in other branches.
In case, there are more than one braches of a bank in a city, the main branch deals
with other city branches through their correspondent accounts. The Head Office
Karachi has this responsibility. Similarly, in one city, all branches of a bank have
their corresponding accounts with each other. So, all payments from one branch to
another branch (in the same city or another) are made by debiting and crediting
these inter-branch accounts.
INTER-BANK ACCOUNTS
Like inter-branch accounts of a bank, different banks have correspondent accounts
with each other. Main branches of banks in a city maintain these inter-bank
accounts. So, money is transferred from one branch of a bank to another bank’s
branch through these inter-bank and inter-branch accounts.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 6
A C T I V I T I E S
The accounts department deals with various routine activities for the bank. The
main activities performed by it are
Budgeting
Reporting
Maintenance & depreciation of fixed assets
Miscellaneous functions
BUDGETING
Accounts department of a bank, for a year makes budget of every branch. Fiscal
year of bank starts from January 01 and ends on December 31. The accounts
department starts preparing budget from October for the next year.
Procedure
The budget is based on forecasting through past performance
First of all, the bank reviews what are its sources of funds and where it
can utilize these funds?
The main sources of the bank are deposits, securities issued by the bank,
borrowing from other banks, borrowing from SBP, bank’s paid-up capital,
its reserve fund, profit generated by the bank.
The bank may employ these funds in lending to others at a high rate of
mark-up. Investment in securities, placement in inter-bank markets etc.
It also takes into account the income from other sources, cost of funds,
administrative expenses, and utilities expenses.
Then the budget is submitted to the head office for recommendation and
modification.
Monthly budget meeting is held by branch managers to analyze the
monthly performance. Budget and actual performances are employed
and variance is computed for analysis.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 7
Variance can be negative or positive. Variance does not mean that it will
have positive effect on the overall profitability e.g. positive increase in
deposits is not always coupled with positive increase in advances.
The management will then drive the reasons for the variance and take
remedial measures to achieve the targets.
REPORTING
The accounts department, in the form of reports, clubs the details of various
departments together. Each and every minute detail is provided in weekly, monthly
and annual reports. The reports are submitted to head office, SBP and to the
government.
The accounts department prepares many reports, of which the most common are
Statement Of Affairs
Income & Expenditure
Foreign Currency Report
Royal Profit Report
Outstand Receipt Report
Subsidiary Statement
Currency Wise Deposits Report
Following are the reports that are prepared on the basis of reports granted from
mainframe. These are very important for proper analysis and feedback.
MAINTAINING OF FIXED ASSETS & THEIR DEPRECIATION
Accounts department maintains the record of all the assets and charges
depreciation on them. The bank normally uses the straight-line method to compute
the depreciation.
The accounts department prepares asset purchase report and asset sale report
after every 6 months that helps in changing the depreciation. It is calculated on
monthly basis and charged yearly. Bank not only depreciates the existing assets but
also the assets but also the assets transferred in and transferred out.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 8
MISCELLANEOUS FUNCTIONS
The accounts department also performs some other miscellaneous functions like
Reconciliation Statements
Test Keys
Closing Entries
Foreign Exchange Forward Transaction
Reconciliation statements
The bank prepares reconciliation statement with head office and SBP.
Head Office
Reconciliation with head office is done in reconciliation department. The
branches send their reports to the head office. They check the posting of all
the entries if outstanding, which has not been posted by branch or head office.
The reconciliation is carried out in the head office and accounts department
handles quarries.
State Bank of Pakistan
The SBP keeps the record of every scheduled bank. The bank statements and
statements of SBP are reconciled on daily basis. Reconciliation is basically
setting of outstanding entries. The reconciliation statement contains two sides.
One contains entries originated from bank but not responded by SBP and on
the other side entries originated by SBP but not responded by bank.
Test Keys
Test keys are used to authenticate and secure the transaction. These keys are used
for both inward and outward transactions. In local transfer double coding is used
while in foreign transaction single coding is used. Each bank to arrive at the code
uses separate test keys. The basic purpose of test is to secure the transaction. Four
things must be carefully checked because code is based these four items
Branch name
Date
Currency
Amount
Closing Entries
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 4 9
Accounts department also passes the closing entries on monthly, 6 monthly and
yearly bases to calculate the profit and analyze the overall performance for a
certain period.
Foreign Exchange Forward Transaction
In the past, the banks had to keep their foreign exchange with SBP on the
agreement that SBP will purchase the foreign exchange on book rate and charge a
fee for covering the risk. This whole transaction was known as foreign transaction.
Now this facility is not available.
Now banks can avail it by renewing their limit on old accounts with SBP.
Bank carries out this transaction through Treasury has two options but it is up to
treasury where to invest foreign exchange.
They can invest foreign exchange in the international market but they will
have to pay high-risk fee.
They can also deposit with SBP that will offer 3.15% on these new foreign
currency accounts. The bank offers 2.25% to its customers; net saving by
the bank is almost 0.9%.
S T A T E M E N T S
The predominant functions performed by the accounts department can be
categorized into two broad categories.
Daily Activity Checking
Report Generation
DAILY ACTIVITY CHECKING
All the operations performed in various departments of Bank Alfalah Limited
Township branch are computerized. The functions are performed through the
customized software of the bank called Bank Smart. In order to facilitate double-
checking of all the transactions done, every concerned official also passes vouchers
manually. At the day end all the vouchers passed by various officers working in
different departments are given to Mr. Abdul Latif in the Accounts Department.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 0
Furthermore the I.T. department also gives a very bulky report to Mr. Latif which
constitutes of the computer print outs of all the transactions / entries which have
been fed into the computer system of the branch that day. When both of these
things are at the desk of Mr. Latif, he performs the job of tallying the daily activity
report with all the corresponding vouchers, in order to track down any discrepancy.
REPORT GENERATION
The exact number of reports generated by the accounts department on a daily,
weekly, monthly, bi-yearly and yearly basis is somewhere in the bracket of 500. It is
neither necessary nor possible to get acquainted by all of these reports in a short
period of time. Some of the common reports are
Daily Advance And Deposit Position
Daily Exchange Position
Daily Fund Management
Closing Reports
Monthly Assets & Liabilities
Monthly Budget Review Report
Monthly Monitory Statement
Monthly Performance Review Report
Schedule Of Maturity Distribution
From these statements, five reports carry extreme importance. Mr. Tauseef Ahmed
helped me understand the purpose and method of preparation of these reports. The
five reports are
Daily position of advances and deposits
Statement of affairs
Daily exchange position report
Fixed assets statement
Month review of performance.
Now I shall explain each of these reports separately.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 1
DAILY POSITION OF ADVANCES AND DEPOSITS:
This particular report gives put forth a detailed break up of the Advances and
Deposits on a daily basis. The report covers all the heads of advances and deposits
so that the reader must be able to ascertain as to increase or decrease in which
head(s) has caused the over all increase or decrease.
The various heads of deposits covered by this particular report are as under
Foreign currency deposits – old accounts.
Foreign currency deposits – new accounts.
Local currency deposits.
The various heads of advances covered by this repot are as under
Foreign bills purchased
Export refinance
Export related advances
Import related advances
Alfalah car finance
Foreign currency advances
Other advances
Staff finances
An enlisting of the columns against these heads would give the reader a fair idea of
the amount of information generated by this report on a daily basis. The various
columns included in this particular report are position at the end of previous year,
expected at the end of month, yesterday’s position, present day’s position, and the
variance in the yesterday’s and present day’s position. The basic purpose of
generating this report is to manage the available funds in a proper
manner and also to maintain a healthy liquidity position.
All commercial banks are supposed to maintain 5% of their time and demand
liabilities with SBP. When all the branches of Bank Alfalah Limited send this report to
the head office head office consolidates the reports of all the branches and sends
the consolidated report to SBP. SBP, after analyzing the deposit position of the bank
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 2
checks whether the amount deposited with it is sufficient to meet the 5%
requirement or not. Head office after sending the report to SBP also calculates the
5% requirement amount for every branch separately; if a branch is contributing an
amount which is in excess of what is required of that branch the head office gives
an interest to that branch on the excess amount, and if a branch is short of the its
required amount then that branch has to pay interest on the shortage to the head
office. The second predominant purpose of this report is to have a bird’s
eye view of the advances position on a daily basis.
STATEMENT OF AFFAIRS:STATEMENT OF AFFAIRS:
Statement of affairs is basically the balance sheet of BAL, Township Branch that is
generated by the accounts department on a daily basis. But when we take into
consideration the standard contents of a balance sheet we have to make an
exception in connection with this statement as their no head such as EQUITY in this
statement. Apart from this, the statement gives the complete detail of all the
assets and liabilities on a daily basis. When head office gets this statement
from all the branches it consolidates these statements in order to have a picture of
assets and liabilities of the bank on a daily basis and this is precisely the purpose
this report fulfills.
DAILY EXCHANGE POSITION:
This particular statement is basically aimed towards ascertaining as to how much do
we own in terms of foreign currency and how much do we owe in terms of foreign
currency at a particular date. In simple terms, this statement gives us an overview
of the fact as to what are our assets and liabilities in terms of foreign currencies at a
particular point in time. Moreover this statement also gives us the local equivalents
of the assets and liabilities.
FIXED ASSETS STATEMENT:
This particular statement is generated on periodic basis and contains information
regarding the following items
Furniture
Equipment
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 3
Vehicles
Real estate
Moreover this statement also contains information regarding the nature of fixed
assets, particulars of items purchased during the period, date of purchase, the
purchasing price, and name of the supplier. The total amount of fixed assets
purchased must tally with the total amount reported in the Statement of Affairs.
MONTHLY REVIEW OF PERFORMANCE STATEMENT:
This particular six-page statement is generated on a monthly basis. The statement
includes a detailed overview of assets and liabilities of the branch. In order to
facilitate comparison for complete understanding of events and affairs, this
statement also includes the figures for the previous month.
The basic utility / purpose of this statement is that it provides us with the cost of
deposits (the average total interest Township Branch is paying on its deposits),
and administrative cost as a percentage of deposits. When we add the cost of
deposits and the administrative cost we get the cost of funds.
Another predominant utility of this statement is that it provides the reader with the
percentage return on funds that Township Branch is receiving either from the head
office or from its clients. At this point it is relevant to mention that return on funds is
only for the fund-based facilities, the return on non-fund based facilities is
separately calculated and then is added into the return on fund-based facilities in
order to arrive at the total return on funds. If we subtract the cost of funds from
the total return on funds we get the monthly profit generated by Township Branch
as a percentage of deposits.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 4
C H A P T E R T W O : T H E A C C O U N T
O P E N I N G D E P A R T M E N T
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 second department that I was rotated to
during my internship at Bank Alfalah Limited, Township Branch Lahore.
I really enjoyed my stay at this department as I got to interact with the customers
directly for the first time. I was given a desk on the ground floor next to the desk of
Ms. Sadia Kalsoom, who was a Customer Services Officer (CSO) and Officer
Accounts Opening. During my stay at this department I got to fill the forms of
individuals who wanted to get their accounts opened at Bank Alfalah Limited, fill the
cheques and deposit slips of customers who were not literate enough or needed
instructions, and I also got the opportunity to give advice to the customers
regarding the requirements of account opening and the benefits of opening an
account with Bank Alfalah Limited.
The incharge of Account Opening department was Mr. Ammar Raza, who was a
Business Development Officer (BDO). He also provided his full support towards me
during my stay at this department.
The main document in this department is, of course, the Account Opening Form.
D E T A I L S O F T H E A C C O U N T O P E N I N G
F O R M
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.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 5
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
Profit and loss sharing/Savings account
Current account
Royal profit account. (Own product of Bank Alfalah.)
D I S T I N C T I V E F E A T U R E S O F T H E
V A R I O U S T Y P E S O F A C C O U N T S
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. In theory 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.
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 with
drawl the only reason we could think of is that current account facilitates online
banking which saves time (which in this ultra competitive business world the most
precious resource) to a considerable extent. In case of a current account the client
does not earn any interest. Current account enables the client to do cash
transactions in a more efficient manner.
Royal profit is an original product of Bank Alfalah. The minimum amount to be
maintained in a Royal Profit account is Rs.50,000. Various types of Royal profit
accounts and available. The slab rates offered at the opening of such an account
are:
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 6
ROYAL PROFIT (PROFIT BEARING CURRENT ACCOUNT)
Projected profit rates (per annum)
(For the period from 1st May’ 2002 to 30th June’ 2002)
Amount Profit*
From Rs.50, 000 to 999, 999 6.00%
From Rs.1, 000, 000 to 9, 999, 999 6.50%
From Rs.10, 000, 000 to 49, 999, 999 6.75%
From Rs.50, 000, 0000 to 149, 999,999 7.50%
From Rs.150, 000,000 & above To be quoted by treasury
* Profit is paid monthly.
ROYAL PATRIOT (SPECIAL TERM DEPOSIT)
Projected profit rates (per annum)
(For the period from 1st Feb’ 2002 to 30th June’ 2002)
Tenure 1Month 3 Month 6 Month 12 Month 24
Months
Amount (Rs.)
25,000 – 999,999
1000000-
4999,9999
5,000,000 &
above
The information to be provided in the account opening form is as follows
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.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E
6.00% 7.00% 7.50% 8.00% 8.00%
6.10% 7.10% 7.60% 8.10% 8.25%
6.20% 7.20% 7.70% 8.20% 8.50%
5 7
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).
Name of the person who intends to operate the account is to be provided.
Provision of either Father’s or the Husband’s name is also a pre-requisite.
Occupation of the prospective account holder is also to be written.
Name and complete address of the employer is to be written.
Nationality is to be provided.
Country of residence is to be specified.
Telephone number is must.
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
Limited company
» Public
» Private
Partnership
Association/Club/Society
Sole-Proprietorship
The business concerns also have to give their full name, brief description of
the business, date of incorporation, place of incorporation, national tax
number, telephone number and fax number.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 8
The choice of either the deduction or non-deduction of zakat also needs to be
highlighted. Zakat is deducted out of a Profit and Loss Sharing account and a
Royal Profit account maintained in Pak Rupee and not out of any account
maintained in any other currency. Moreover exemption from zakat would only
be granted if proper proof of exemption under a law presently enforced in
Pakistan is provided.
Details of other account/s maintained with other branches of BAL 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.
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.
In case of account opened by a business concern there are some documents that
are needed to be attached with the account opening form. The details of these
documents are given below.
LIMITED COMPANY:
Copy of certificate of incorporation
Memorandum of Association
List of Director’s
Copy of board resolution
Certificate of Commencement of Business
Copies of NIC of Director’s
Latest copy of Form-29
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 5 9
PARTNERSHIP:
Partnership deed certified copy
NIC photocopies of all partners.
Partnership mandate for account signed by all the partners
A letter duly signed by all the partners containing the operating
instructions of the account also has to be taken.
CLUB/SOCIETY/ASSOCIATION:
Copy of rules/ by-laws
Copy of registration (if applicable)
List of Executive member management committee/management board
etc
Certified copy of Resolution
NIC of all members of the management body
SOLE PROPRIETORSHIP / INDIVIDUAL:
NIC/ Passport photocopy
Letter from Proprietor confirming “sole proprietorship”
There are two things that always accompany an account opening form;
Signature Specimen Card.
Cheque Book Requisition.
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.
Cheque Book requisition basically serves as an application to issue a Cheque book.
The client also fills it up and submits it along with the account opening form as a
result of which he is issued a Cheque book once his account is approved. As regards
the Cheque book one of the most important entries in a Cheque book requisition is
the series number of Cheques that correspond with the numbers of the cheques
contained in the Cheque book issued to the client.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 0
P R O C E D U R E O F O P E N I N G A N A C C O U N T
Step 1-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.
Step II-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.
Step III-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.
Step IV: Specimen Signature Card (S. S. Card):
The signatures of the client are obtained on a specimen Signature card. These cards
are obtained in duplicate with two signatures on each card from the customer.
Every time a cheque is received for a payment from the client, the signature on the
cheque are verified by comparing them with the S.S. Card.
Step V-Account Number:
When all the formalities are completed then the final approval of account has to be
taken from the Branch Manager. After obtaining approval of the branch manager an
account number is allotted to the customer all the information is entered into the
computer. Then that account number is printed on the Cheque Book, S. S. cards and
account opening form.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 1
Step VI- Issuance Of A Cheque book:
After opening an A/C with the bank, the A/C holder once again makes a request in
the name of bank for the issuance of a cheque book. 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 cheque book having at least 25 leaves. Every cheque book
also contains one leaf that is used for another issue of a cheque book.
Step-VII Entry Of A cheque book:
Before issuance of a cheque book, the employee performs certain functions. They
include:
Stamping every leaf with specific A/C number.
Enters it in the cheque book issue register.
Check whether or not a senior officer has verified the signatures, if no
then first he gets them verified.
After entry in the manual register, the employee issues the cheque book to the A/C
holder after his/her signature on the register.
Step-VIII 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.
Step-IX 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.
P R O C E D U R E F O L L O W E D I N O R D E R T O
C L O S E A N A C C O U N T
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 2
The procedure followed for the purpose of closure of an account is described in the
following steps
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,
Royal Profit, or Foreign Currency Account then the account balance before
closing should be zero. In case of these three 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 client’s Cheque book 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 Trade Finance Department and 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 both of these departments approve that the customer does not owe
any money to the bank and the form is returned to the account opening
department then the original account opening form pasted in the ledger
when the account was opened is marked ‘account closed’ along with the date
on which it is so marked. One thing has to be taken into immediate
consideration that the account number allotted to the client (who has closed
his account), after closure of the account becomes useless and is not allotted
to any one in the future.
After approval of the liability form, it is sent to either the Foreign Currency
Accounts Departments or the Cash Department, as the case may be 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 client’s application along with the specimen signature card
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 3
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 are permanently deleted by using
the ‘close account’ option.
V A R I O U S T R I B U L A T I O N S T H A T M A Y
A R I S E
If client’s signatures are not mature enough
In this particular case in order to facilitate proper recognition of the client a picture
account is opened and two pictures of the client are taken; one is affixed on the top
left of the account opening form and the other is affixed on the Specimen Signature
card. The stamping of such an account opening form is also somewhat different. On
every picture a round stamp of Bank Alfalah Limited is affixed. The stamp is put in
such a manner that it covers both the picture and the account opening form or the
specimen signature card whatever may be the case. Another stamp is put on the
account opening form that says all cheques to be signed in the presence of the
bank officer.
If a client wants to change his/her signatures
In this specific situation the staff of the account opening form has to ask the client
to give an application requesting a change in the operating signatures. This
application should contain the old signatures which function as a proof that this is
the very client and no one else is changing the signatures on his behalf. The
application should also contain the new signatures with which the account would be
operated in the future. The staff after verifying the old signatures from the
computer gets a new Specimen Signature card signed by the client (the client puts
his new signatures on the S. S. Card). The new signatures are approved, admitted,
scanned and properly stored for future reference.
The account of a minor.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 4
In case a minor wants to open an account with the bank then a relatively different
procedure is followed, reason being that the minors do not possess their National
Identity Card. So, the staff of account opening department requires the national
identity card of the father / guardian. Along with the national identity card of the
minor the bank staff will also require the minor’s form-B. The guardian would sign
the account opening form, he would also give his signatures in the specimen
signature card, and he would also sign the Cheque book requisition i.e. the bank
would first admit and later on verify the signatures of the guardian and not the
minor. The cheques would be cashed with the signatures of the guardian. In the title
of the account first the name of the minor would be written and then the name of
the guardian will follow. Thus practically the account would be run / maintained by
the guardian. But there is a provision that when the minor becomes a major and
gets hold of his N.I.C. then, upon his application the account could be transferred in
his name.
Issuance of a cheque book.
Cheque book issuance is of considerable significance as it is through cheques that
the withdrawal of money becomes possible. When a prospective client is handed
over the account opening form, he is also given the cheque book requisition. A
Cheque book requisition basically serves as a request performa, in which the client
asks for the issuance of a new Cheque book, writes the account title, gives the
account number and also specifies as to whether he requires a Cheque book
consisting of twenty five, fifty, or hundred leaves.
File update.
All the entries, which the staff of the account-opening department makes in the
computer system, are corresponded to them the next day in printed form by the
computer department. The entries, which the staff of the account-opening
department makes, are namely
Entries related to opening of a new account.
Entries related to issuance of a Cheque book.
Entries necessary to record any alterations which may take place in the
clients data.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 5
This feedback is given to the account-opening department so that they could
scrutinize the data fed by them for any possible mistake. For example the there
could be some mistakes in the spellings or there could be some mistakes in the
addresses of the clients or the telephone number might be missing etc. If the print
outs show any mistake that is corrected and if every thing is satisfactory then these
print outs are filed for future records and reference.
O T H E R T Y P E S O F A C C O U N T S
TERM DEPOSIT ACCOUNTS:
Term deposit account is essentially a fixed deposit account. It is opened if a
customer is willing to deposit his funds with the bank for a period within which he
cannot withdraw his money. In case a customer withdraws his amount then he is
given no interest at all on the principal. Normally people tend to fix their deposits
with the bank for a relatively longer period of time (3 years, 5 years etc.) although
the facility of opening a term deposit account is also offered for short tenors like 7
days, 30 days etc. reason being that as there is a positive relationship between the
tenor and the rate of interest i.e. longer the tenor higher would be the rate of
interest. Customers benefit by opening a fixed/term deposit account as they earn a
higher rate of interest which cannot be earned if you are operating, say for example
a savings account. At this point one thing must be taken into immediate
consideration that only those people will fix their money that do not face any
problem regarding liquidity, people having one would feel contend with a lower rate
of interest but would certainly go for some other account like royal profit or savings
account. Banks benefit by opening a term deposit account as funds are placed with
them for a longer period of time and the bank can earn a lot by advancing these
funds more than once, specifically if the advancing is short or medium term.
At Bank Alfalah Limited, fix deposit accounts can be categorized into two types;
Classic PLS deposits.
Royal Patriot (Special Term Deposits).
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 6
The nature of both of these accounts is similar i.e. both are fixed deposit accounts,
but the only difference is regarding the rate of interest. In case of Classic PLS
deposit accounts the rate of interest that is offered is not related to the magnitude
of the amount that is being deposited rate of interest is only correlated with the
tenor for which the amount is being deposited.
CALL DEPOSIT RECEIPT:
Issuance of call deposit receipts is basically a free of cost facility offered by Bank
Alfalah Limited not only to its own customer’s but also to walk in clients. When
government organizations, or for that matter non government organizations float
tenders for execution of a particular task, they require that the organizations who
are participating in that tender i.e. organizations who have applied for the tender
should, along with other documents, also submit a monetary guarantee certifying
that they will definitely perform the required task upon acceptance of their offer.
This requirement is basically put forth in order to safeguard the government
organization from facing a situation in which the participants show inability or
inadequacy to perform the required task after acceptance is granted in their favor.
Such a situation generally is not desirable as the government organizations have to
under go the procedural steps of floating and accepting the offers and in the
process they have to incur additional costs. For this purpose the call deposit
receipts is issued which is a monetary guarantee that if the organization
does not work as per the tender requirements the government
organization can en-cash the call deposit receipt and recover its losses.
S O M E I M P O R T A N T D O C U M E N T S U S E D I N
T H E A C C O U N T O P E N I N G D E P A R T M E N T
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.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 7
Account Statement Request Form
This small form is used to request for the account statement for the desired period.
The client gets this Performa from the account-opening department and then, after
filling it up, gives it to the computer section that gives the statement to the client in
printed form.
Vernacular Form
This form basically functions as a thank you letter (and also as a request) on behalf
of the customer if he wants to operate his account by doing signatures in a
language other than that of English. In this particular form the client gives his
assurance in writing that he would indemnify the branch against any loss that may
be caused by reason of his signing in a language other than that of English.
Issuance Requisition
This requisition is used by the staff to order for any thing (e.g. stationary) they
need. They write the type and quantity of the stationary they need, get it signed by
the Manager Operations, give it to the person in-charge of issuance of stationary
who on receipt of this requisition (duly signed) issues the stationary.
Debit And Credit Vouchers
These two vouchers are basically used when an account has to be closed. The debit
voucher shows as to how much amount has to be taken from the client’s account
and the credit voucher shows as to hoe much amount has to be credited as Bank’s
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
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 8
with the bank and receive all the notices, statements and other necessary
document which the bank might send through mail depending upon the
circumstances.
Mandate Form Used By An Individual To Enable A Third Party To Operate The
Account
An individual to enable another individual to operate hi/her account without
changing the title of the account uses this form. In this form the account holder
certifies that the person to whom he is giving the mandate shall be fully authorized
to embark upon all possible transactions with regard to this account unless and until
otherwise specified. The original account holder writes his account number, the title
of the account, and puts his signatures. The signature specimen card to be filled by
the person who is being given the mandate is attached with this form. That
individual fills it up and his signatures are also scanned and entered into the
computer system for future reference in similar fashion as the signatures of a new
client are scanned and entered into the computer system.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 6 9
CHAPTER FOUR: THE COLLECTIONS
DEPARTMENT
When cheques and other negotiable instruments drawn upon other banks outside
the city (Lahore) are presented in Bank Alfalah Limited, Township Branch, Lahore to
deposit in payee’s accounts, then instead of clearing, these instruments are lodged
in collection and constitute outward bills for collection.
Cheques of cities, where Bank Alfalah Limited branch exists (e.g. Islamabad,
Faisalabad etc.) are sent to that branch where these cheques are lodged in outward
clearing. Otherwise, they are directly sent to the drawee bank. Postage & other
charges are deducted on account of payee according to Schedule of Charges.
As Bank Alfalah Limited, Township Branch, Lahore did not have enough workload,
Mr. Mersab Ahmed was given the task of accepting the outward bills for collection.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 0
C H A P T E R F I V E : T H E C L E A R I N G
D E P A R T M E N T
One of the basic economic function of commercial banks is to receive deposits and
to honor cheques drawn upon them. So, cheque is a most commonly used
instrument for making payments by account holders. Along with the cheques, there
are some other negotiable instruments that are used for making payments and are
drawn upon a bank. But cheque holds prime importance in banking.
Now the question arises that how these cheques & other negotiable instruments
drawn on one bank are deposited in other banks and money is transferred from one
bank to another. Clearing House has provided this facility. Clearing house
facilitates different banks to get their cheques drawn upon other banks to be
cleared.
Cheques lodged in clearing constitute two types of clearing
Outward Clearing
Inward Clearing
OO U T W A R DU T W A R D C C L E A R I N GL E A R I N G
When cheques and other negotiable instruments drawn upon other banks like MCB,
ABN-AMRO of the same city (as Lahore) are presented in Bank Alfalah Limited to
deposit them in the respective payee’s accounts, these instruments are lodged in
outward clearing of Bank Alfalah limited.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 1
S T A M P S P U T O N T H E C H E Q U E S
When the cheques are presented in BAL to be deposited in their respective payee’s
accounts, different stamps are put on cheques before their lodgment in outward
clearing.
CROSSING THE CHEQUES
Crossing means two parallel transverse lines, drawn across the face of the cheques
with or without words written in between them. Crossing may be general or special.
In clearing, cheques are crossed specially. Cheques are stamped with bank’s name
between two transverse parallel lines to constitute special crossing. After the
cheques have been crossed specially, the holder cannot receive payment except
through the banker named on the cheque. Basic advantage of crossing is to save
the instrument to go it from illegal hands. If, a crossed cheque is lost or stolen,
there is no risk of wrong payment. So it is an effective means of minimizing the risk
of loss or forgery.
CLEARING STAMP
After the cheques have been crossed specially, clearing stamp is put on the
cheques and other instruments, with the following day’s date, as these cheques
would have to be presented in their concerned drawee banks on the subsequent
day.
ENDORSEMENT STAMP
The word endorsement is derived from Latin word ‘indorsum’ that means ‘on the
back’. Ordinarily, it means anything written or printed upon the back of an
instrument. So, at the end, the cheques are endorsed in full (endorsed specially) by
putting the stamp with words describing “ Payee’s account Credited in Bank Alfalah
Limited, Township Branch, Lahore”.
After putting these three stamps on cheques & other negotiable instruments, they
are sent to NIFT (National Institutional Facilitation Authority) with Add List.
NIFT after segregating the cheques of different banks delivers them to their
concerned banks, which constitute the inward clearing for those (drawee) banks.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 2
II N W A R DN W A R D C C L E A R I N GL E A R I N G
Cheques and other negotiable instruments (PO, DD, PS, CDR etc.) drawn Bank
Alfalah Limited, Township Branch, Lahore, sent by other banks, constitutes the
inward clearing of Bank Alfalah Limited. After having all the stamps and dates of
cheques confirmed, the concerned drawer’s accounts are debited (in Bank Alfalah
Limited, Township Branch, Lahore) and main branch’s account is credited by the
total amount.
R E T U R N I N I N W A R D C L E A R I N G
In case of cheques dishonored (returned) due to some deficiencies, the main
branch’s account is debited by the amount of cheques returned.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 3
C H A P T E R S I X : O N L I N E
T R A N S A C T I O N S
During my rotation to the Remittances department, I used to spend some time in
the evening with Mr. Muhammad Jahangzeb, who was the incharge of the online
transactions. He was an M. Com. graduate of Hailey College of The University of the
Punjab and, as we were University fellows, helped me understand the functioning of
the Online Transactions between branches of Bank Alfalah Limited.
Online transaction is a facility which is being provided to those account holders of
Bank Alfalah Limited who maintain a current account with he bank and also
maintain a minimum balance of Rs.100,000 at all times. If a person fulfills these two
conditions then he has to fill up a request form in which he requests that his name
should be added in the list of clients to whom this facility is presently being
extended. He also gives his account number, and the branch or branches with which
they want to initiate online transaction. With the help of online facility it is possible
for clients that they can get cash from their account in e.g. Islamabad while
standing at the counter of Lahore Branch or they can deposit money in a person’s
account in Main Branch Karachi to whom they have to make a payment, while
standing at the counter of Multan Branch. All this has been possible due to the use
of centralized MIS system and Bank Smart Software, along with a network of highly
sophisticated servers at all branches through out the country.
The very first thing the concerned official does, when he receives a request by the
customer, is that he verifies the client’s signature by comparing them with the
signatures which are there in the bank’s records. If there is nothing wrong with the
signatures then the case has to be approved by the manager. After his approval the
officer writes a letter addressing the branch (supposing that the person wanted
online facility with only one branch), requesting the branch to add that person in
their online client’s list. In this letter we would mention the person’s name and
account number. Suppose the branch with which the client wanted to have online
transactions was Bank Alfalah Limited, Multan Branch. Now if some person (who has
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 4
his account in Multan Branch) has to make a payment to our client who has his
account in Bank Alfalah Limited, Township Branch, Lahore, he would present the
Cheque at Multan Branch and direct them to deposit it in account # ____ at
Township Branch, Lahore through online transaction.
Multan Branch would inform Township Branch, Lahore through an I.B.C.A. (Inter
Branch Credit Advice) that would be faxed to Township Branch, Lahore.
Before I go any further it would be pertinent to mention here that the amount with
which online transaction is being done should be greater than Rs.50,000 in order to
make the transaction cost free. If the amount is less than Rs.50,000 then Rs.100
would be deducted as charges from the account which is being credited as a
consequence of the online transaction. Moreover another pre requisite of online
transaction is that all the cheques involved in an online transaction have to be cash
cheques.
Now suppose the Cheque is of Township Branch, Lahore and the person wants to
get it en-cashed at Faisalabad Branch. He would hand over the cheque to the
concerned official at Faisalabad Branch and direct him that he wants the cash
through an online transaction. The concerned official would fill a request form the
contents of which are; date on which the request form is being filled, date which is
written on the Cheque handed over to him, the title of the account, the account
number and the Cheque number. After filling in the online transaction request form
they would paste the Cheque at the request form and fax it to Township Branch,
Lahore. The concerned official upon receipt of this fax would first of all verify the
person’s signatures on the Cheque (as his account is with Township Branch,
Lahore).
When the official does this, the computer system would generate an IBCA that will
be faxed to the Faisalabad Branch. Faisalabad Branch would make sure that the
dates; the amount and the Cheque number are the same as in the request form and
Cheque faxed by them. Two officers holding power of attorney would also sign the
IBCA sent by Lahore Branch. Faisalabad Branch would verify the signatures of the
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 5
two officers by comparing them with the signatures in Bank Alfalah’s Specimen
Signature Book.
After crediting the party’s account the concerned official would again debit that
account and would hand over cash to the person who initiated the online
transaction (i.e. he would credit cash).
At day end the online personnel of every branch has to make two separate lists of
all the debits and all the credits which were executed as a result of various online
transactions. Both of these statements are faxed to the reconciliation department of
Head Office that very evening or the next morning. The contents of these lists are;
serial number, IBCA number, city with which online transaction was done, amount,
date, and whether the branch was the Originating Branch or the Responding
Branch.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 6
C H A P T E R S E V E N : A L F A L A H C A R
F I N A N C I N G
After the remittances department, Mr. Farooq Shehzad handed me over to Mr.
Osman Latif, who was the Manager Credits of the Township Branch. Mr. Osman,
after consultation with me, decided to let me spend some time in the Car Finance
Department. Two officers of this department, namely Mr. Abdul Khaliq and Mr.
Farrukh Naeem sat on the first floor of the branch building.
Although the Township Branch was a small and emerging branch, still the demand
for financed cars through Bank Alfalah lead this department to prosper a lot. This
department handles a large number of customers daily and, without overstatement;
this department is the second “busiest” department after the Account Opening
Department. It requires constant customer interaction and requires high level of
intelligence to screen the validity of the customers.
Where as sound marketing skills are required to actually force the walk-in customer
to select Alfalah Car Financing, still stronger skills are needed to scan the incoming
customer for validity and long-term liquidity. This is because the client has to pay
only 20 % of the actual price of the car (minimum) where as the bank has to put in
the rest 80 %. He rate charged by Bank Alfalah for the car financing is 17% (this
rate was one of the lowest in June – August 2002, where as most recently the rate
has been reduced steadily to 8.9 % and 9.5 % for Pak- Suzuki manufactured cars
and for all other brand cars respectively). Another thing to note here is that Bank
Alfalah Limited only finances brand-new cars. It does not finance second hand
cars because of the concern of exploitation or improper ownership at the time of
sale.
I spent only 2 – 3 days in this department. This time period was quite enough to get
the knowledge of the working of this department. Although there are some points
where my knowledge is limited, in most of the instances I have tried to give an all-
inclusive outlook of the department.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 7
The procedure followed to finance a car is briefly discussed in the following lines:
STEP ONE: THE CLIENT SUBMITS APPLICATION AND
REQUIRED DOCUMENTS
The very first thing the client has to do is that he has to give an application
requesting the bank for financing of a car. Along with the application the client is
suppose to attach some documents which are
Copy of N.I.C
Copy of Utility Bill(s)
Bank Statement for last six months (from the date of application)
Signature Verification Form
Proof of Proprietorship/Partnership
The application form along with the personal data also contains the home address,
the address of the place of business (if the client is a business man), and two
references. These three things are of immense significance for the verification
officers. Moreover in the application form the client has to mention how much down
payment he is going to make. It is a policy matter of Bank Alfalah that the minimum
percentage of down payment is 20 % i.e. the client must at least pay 20 % of the
sale price as the down payment. If a client feels like paying a higher percentage as
down payment than there is no higher limit; he can pay as much he wants to,
provided that after he pays his down payment the amount to be financed by the
bank does not go below Rs.200,000. The down payment apart from 20% (minimum)
of sale price also includes
Processing charges
Advance first month’s installment (this is not included if the client opts for
deferred installment)
First year’s insurance premium
Registration charges
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 8
The I.R.R. (internal rate of return) Bank Alfalah offers is one of the minimum in the
market at this point in time i.e. 17%. A list of IRR’s offered by various banks is as
under;
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 7 9
ORGANIZATIONMARKUP
(JUNE – AUGUST 2002)
City Bank 18%--19%
Askari Bank 18%--19%
Standard Chartered Bank 18%
Faysal Bank 16%--18%
Union Bank 17%
Another important thing that is relevant to mention is that Bank Alfalah provides the
facility to the clients that they can get a package of loan repayment period of any
thing in between one year and five years.
STEP TWO: VERIFICATION PROCESS BY THE VERIFICATION
OFFICERS
This step embodies immense significance as the results of this very step reveal
whether the client is genuine and trustworthy and whether all the details provided
by him are true or not. What the verification officers do is that they first visit the
house of the client and certify that the client has provided the bank with the correct
residential address. Then they inquire about the conduct, character, behavior,
occupation, and other activities of the client from at least two of his/her neighbors.
After being satisfied the verification officers visit the place of business (if the client
is a business man). There they first make sure that the said business actually exists
and the factory/organization/company actually is situated at the said place. The
verification officer also makes sure of the following things
A satisfactory number of workers are there at the place of business
A satisfactory number of machines are there in working condition
The covered area is in logical compliance with the nature of business
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 0
Then the verification officers either visit or call any one or both of the references
given by the client in the application form. Questions of similar nature are put forth
to these individuals. When all aspects of the verification process are complete then
what the verification officers do is that they prepare four reports namely
Business office verification report
Residence verification report
Reference verification report
Telephone verification report
These reports are than filed in the proposal file and these constitute an integral part
of the proposal.
STEP THREE: PREPARATION OF THE PROPOSAL FILE
Once the customer’s credibility is verified then the file is prepared for
acceptance/approval by the branch Credit Committee and subsequently by the
Head Office. This preparation calls for attachment of certain documents apart from
those that were provided by the client along with the application. These documents
are
Borrower’s Basic Fact Sheet
The Proposal Sheet
A Check List
Credit Information Bureau Report
Verification Reports
Printed Statement of Customer Inquiry Generated by the System
STEP FOUR: EXECUTION OF LEGAL DOCUMENTS
After the approval stage the client is called to the branch and the process of legal
documentation is under taken. For this purpose the operations personnel gets the
signatures of the client on all the legal documents including the offer letter which is
of prime importance. The list of legal documents the client has to sign is as follows;
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 1
The account opening form as a result of which the client (if he wants a
current or PLS account with Bank Alfalah) could give the post-dated cheques
for payment of installments
The letter in which the client acknowledges the Finance Limit that has been
provided to him by the bank
The agreement for financing the motor vehicle on Morabaha Basis
The schedule to Morabaha agreement
Letter of hypothecation of motor vehicle
Irrecoverable power of attorney
Letter of authorization to take possession of motor vehicle
Bill of exchange without recourse to the drawer
Delivery acceptance form
Transfer letter
Promissory note
Letter of hypothecation of movables
Apart from these legal documents one of the most important documents is the
offer letter. The offer letter basically consists of a brief description of the
following;
Amount Of Finance Facility
Mode Of Financing
Period Of Finance Facility
Purchase Price Payable
Markup / Pricing
Payment Schedule Of Purchase Price
Insurance Premium
Prepayment
Documentation
Down Payment
Administration Fee / Processing Fee
Availability
Cancellation
Purchase Of Motor Vehicle
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 2
Disbursement Of Purchase Price
STEP FIVE: RECEIPT OF DOWN PAYMENT AND POST DATED
CHEQUES
When all the legal documents are properly signed then the customer is asked that
his share of financing (the down payment) is required. As I mentioned above that
the down payment apart from 20% of the sale price also includes the processing
charges, the registration fee, the insurance premium of first year, and Advance first
month’s installment (if the client opts for advance installment). The customer
comes to the bank deposits this amount and also gives the bank post dated
cheques, duly signed. These cheques are of the amount of installment due to the
customer on monthly basis.
STEP SIX: GETTING THE CAR INSURED
Now comes the step to insure the car for which the financing is done. The bank has
to get the car insured, as it is a part of the car financing agreement that the car has
to be fully insured. What the bank does is that it issues a letter addressing the
insurance company specifying all the details of the car to be insured and also
communicates this to the insurance company as to which show room the insurance
inspector will have to go to locate the said car. The inspector goes to that particular
show room and, after duly inspecting the car makes an inspection report. The
preparation of inspection report serves as an informal guarantee of the preparation
of the insurance policy. After two or three days of the preparation of the inspection
report the representative of the insurance company comes and hands over the
insurance policy to the bank. This insurance policy is in the name of the respective
client, but care of Bank Alfalah Limited is vividly marked.
STEP SEVEN: ESTABLISHMENT OF DELIVERY ORDER AND
DEMAND DRAFT (IN THE NAME OF THE MANUFACTURER)
When bank has got physical possession of the insurance policy the car dealer is
suppose to send the bank a quotation of the car being sold, on his official letter
head. On the basis of that quotation we make the delivery order, which contains the
instructions for the dealer that now he, should hand over that car to the customer.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 3
The bank will not pay to the dealer the bank would make a Demand Draft in the
name of the manufacturer and hand it over to the dealer and the dealer would give
it to the manufacturer. Now the question arises as to why the bank not makes a
demand draft in the name of the dealer. If we are issuing a demand draft in the
name of the manufacturer it serves as a guarantee that we are buying a new zero
meter car of 2002 model as manufacturers have no car with them other than the
latest version. Moreover it is a policy matter of the bank that no demand draft of car
financing department would be issued to a person/organization other than the
manufacturer.
STEP EIGHT: GETTING THE VEHICLE REGISTERED
When the manufacturer gets the payment against the demand draft then he sends
the Invoice to the bank. This invoice contains all the details of the vehicle namely;
price, customer name, bank name, color of the vehicle, mode of payment etc. If the
car is completely ready for the delivery this invoice will also contain the engine
number and the chassis number, but if the car is not ready for delivery i.e. it is in
the booking process than the invoice will not contain these two items. The bank
gets the vehicle registered with the help of its private agents on the basis of this
invoice. The agents get Rs.1100 per car they get registered.
STEP NINE: RECEIPT OF MONTHLY INSTALLMENT
Now when the car is with the customer and he is fully enjoying it what the staff of
car financing has to do is that it has to present the pre-signed post dated cheques
on monthly basis, and if a Cheque bounces the recovery staff has to get the money
from the customer. If three cheques of a particular client bounce on a trot and the
client also does not bother to make payment through cash or via issuance of
Cheque of another account then Bank Alfalah, as per the signed legal documents
has the right to repossess the car, which it does.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 4
C H A P T E R E I G H T : C R E D I T S
D E P A R T M E N T
Credits Department is one of the most important departments of any commercial
bank. Credits Department is the department where the top-notch officers perform
their duties in every bank.
The last part of my internship rotated me to the Credits Department, where I spent
almost three weeks. It constituted of only one officer in the beginning but, as the
branch was expanding at a very healthy rate, the branch manager requested the
appointment of a Manager Credits. Thus Mr. Osman Latif was appointed as
Manager Credits (Corporate and Consumer) to help out Mr. Zubair Baig (Officer
Corporate & Consumer Banking). Mr. Zubair was working in the branch from its
initial days and had seen the branch go through good and bad days.
Every fresh inductee of any commercial bank dreams of starting his career as a
credit officer. Certainly, the effectiveness and efficiency of credit officers also
directly impacts the income generating capacity of a commercial bank. This is
because these individuals earn the income for the bank. The deposits that a bank
receives are its liabilities and on that it has to pay a certain amount of profit as
return. Whereas, the advances that a bank makes through the credit department
are its assets and it receives certain return on them. This is the main income of any
commercial bank. The bank receives money on lower rates and advances them on
considerably higher rates, thus keeping the spread for itself as its income.
C R E D I T P O L I C Y O F T H E B A N K
The credit policy of any banking institution is the combination of certain globally
and locally accepted time standards and other dynamic factors dictated by realities
in ever-challenging market and industry.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 5
“The extension of a credit facility should add value to the bank’s assets” should be
borne by the bankers. For this purpose the bank takes special care for judging the
Ability to repay
Willingness to pay
Ability to pay
The ability of a client to repay can be judged by the financial statements of the
customer’s company. To avoid the danger of fake statements the SBP has put on
some regulations on all the banks, which are called as prudential regulations. Every
financial institution is bound to follow these rules in advancing loans, e.g. all the
credit institutions is bound to lend the customers having current ratio of their assets
equal to minimum 1:1.
Willingness to repay
The willingness to repay can be determined by verbal discussion with him or CIB
(Credit Information Bureau) report.
B A S I C P H I L O S O P H Y O F B A N K A L F A L A H
L I M I T E D
The basic philosophy followed by the Credits Department at Bank Alfalah Limited is
TT H EH E E E X T E N S I O NX T E N S I O N O O FF A C A C R E D I TR E D I T F F A C I L I T YA C I L I T Y S S H O U L DH O U L D
AA D DD D V V A L U EA L U E T T OO T T H EH E B B A N KA N K ’’ SS A A S S E T SS S E T S
Defining items like
Extending credit facilities for trade finance and construction / contractor
financing for short term to medium term and on self liquidating basis,
supported by cash flows and acceptable collateral
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 6
Providing finance for working capital in the fields of manufacturing, assembly
and processing of goods and commodities for domestic and / or export
markets, provided it is adequately secured
Well established traders dealing in particular products range with established
market presence, experience and track record
Highly valued Multi-National Companies and local Corporate Group
Joint ventures of established local groups and reputed foreign companies
During the time of my internship (June – August 2002), Bank Alfalah Limited was
only indulged in Corporate Credits and did not provide Consumer Financing.
Recently, Bank Alfalah Limited has started Consumer Financing as well. It is
providing financing for items like
Televisions
Music Systems
VCD Players
DVD Players
Monitors
Refrigerators
Deep Freezers
Microwave Owens
Washing Machines
Ceiling Fans
Pedestal Fans
Room Coolers, etc.
The consumer financing facility is available for products of companies like Philips
Haier
Super Asia, etc
D E P A R T M E N T A L I Z A T I O N
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 7
Credits department at developed branches of Bank Alfalah Limited is usually
segregated into
Credit marketing
Credit administration
CREDIT MARKETING
The principal responsibility of credit marketing is to attract good customers to avail
credit facility from Bank Alfalah limited. The people who constitute the credit-
marketing segment of the credits department are termed as the credit officers.
Credit Officers are supposed to be really good at assessing and determining the
financial soundness of a company or an individual.
CREDIT ADMINISTRATION
The major responsibility of the people working in the credit administration is to
issue Guarantees, monitor the periodic disbursement of Pledged Commodities, and
perform the job of providing finance against Imported Merchandise and finance
against Trust Receipt.
Due to the small amount of work of the Township Branch as compared to the
established branches in Lahore like the LDA Plaza Branch and the Gulberg Branch,
no distinction was made between the officers for Credit Marketing or Credit
Administration.
T Y P E S O F B O R R O W E R S
Before a bank starts lending, it has to classify its target customers in to groups of
similar ones in order to simplify the provision of credit to them. Bank Alfalah Limited
has divided its clients into the following heads
Individuals
Existing account holders
Staff members
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 8
Close relatives of staff members
Business sponsored by staff members
Employees of other banks
Joint accounts
Business entities
Sole proprietorship
Partnership
Limited liability company
Joint venture
Group accounts
Others
Clubs and associations
Federal, provincial and local government bodies
Traders
Contractors / construction companies
Transport, storage and warehousing
Property dealers
Manufactures
K I N D S O F C R E D I T – G E N E R A L
O V E R V I E W
Now I shall discuss the basic kinds of credit offered at commercial banks. Bankers
do not decide about the time span for which he amount is going to outstand. The
time span is related to the purpose for which the loan is taken for, and the rate of
interest charged is in turn related to the time span. The three basic kinds of credit
have been transformed in to various credit facilities/products by commercial banks.
The main kinds of credits are
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 8 9
SHORT TERM CREDIT
Short-term credit is that type of credit that is to be repaid with in a time span of
one year. Short-term credit requirement is usually seasonal in nature. There are
four predominant purposes for which short term credit is availed. These purposes
are
Creation of current assets
Meeting of working capital requirement
Purchase of raw material
Repayment of current liabilities
Short-term credit secured by 100% cash margin is considered to be the ideal way to
extend this type of credit.
MEDIUM TERM CREDIT
In this age of contemporary banking, it really is very difficult to separate medium
term credit from long term credit when we talk with respect from the view point of
the purposes these two kinds of credits fulfill. Medium term credit is a credit facility
that is usually extended for a time span of some where between one to three
years. Business concerns normally utilize this type of credit for the purposes of
purchase of furniture, fixtures, and small-scale machinery.
LONG TERM CREDIT
Long term credit, theoretically speaking, is a type of credit that is extended for a
relatively long time (which may extend to ten years), but practically speaking long-
term credit facility is extended for a time span of not more than five years. The
purposes for which long term credit is availed are
Capital Expenditure / Expansion of plant
Balancing, Modernization, and Replacement (BMR)
Purchase of Fixed Assets
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 0
K I N D S O F C R E D I T O F F E R E D B Y B A N K
A L F A L A H L I M I T E D
OVER DRAFT (OD)
Over Draft is a credit facility which functions with the help of the ‘debit and credit
mechanism’ of the respective customer’s account. A particular customer on the
basis of his individual track record is assigned a particular limit, which is termed as
an Over Draft limit. Now by virtue of sanction of OD limit the customer can with
draw a particular amount from his account even in excess of the credit
balance in his account. This excess with-drawl allowed is the real facility. But the
extent of excess with-drawl cannot exceed the amount of the OD Limit approved. As
long as the excess amount remains in the debit balance (i.e. as long as customer
utilizes that amount), interest is charged on the outstanding amount on daily
product basis. When the amount is returned charge of interest is ceased. If over
draft credit is a guaranteed one than interest is charged on the entire amount
approved as OD limit, whether utilized or not.
CASH FINANCE (CF)
Cash finance is a very popular form of short-term credit. The predominant purpose
for this kind of a credit, as has been discussed above, is fulfillment of the
working capital requirement. Preferably bankers love to extend this kind of
credit facility if secured against hundred percent cash margin. But this fact certainly
does not mean that cash finance is not extended against pledge of goods or
hypothecation of machinery etc. It all depends on the credibility of the customer. In
case of cash finance a certain limit is approved and the customer is allowed
to avail the amount whether all at once or as and when needed . One basic
reason for the popularity of cash finance is that interest is charged only on he
utilized amount not on the entire amount which has been approved for use.
LETTER OF CREDIT (L/C)
Letter of credit is a short-term non-fund based finance facility. LC is a bank’s
written undertaking given to the exporter for payment of a certain sum of
money on behalf of the importer, provided the exporter tenders to the bank,
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 1
or its overseas agents, the specified documents within a specified period in
accordance with the terms of the undertaking.
LETTER OF GUARANTEE (L/G)
Apart from letter of credit Bank Alfalah Limited also extends another non-fund
based credit facility for its customers i.e. Letter of Guarantee or more commonly
known as Guarantees. The basic difference between a letter of credit and a letter of
guarantee is that in case of L/G the liability has to be retired four or five days before
the actual date of maturity, but in case of L/C the customer can retire his liability
after maturity after paying some amount as interest. The various types of
guarantees given are Bid Bonds, Performance Bonds, and Shipping Guarantee etc.
FINANCE AGAINST IMPORTED MERCHANDISE (F I M)
In case of finance against imported merchandise, the importer gives the imported
goods into the effective pledge of the bank and avails the credit facility against the
pledged goods. There is a slight technical difference between ‘pledge’ and ‘effective
pledge’. In case of pledge the imported goods come under the banks ownership
when they reach the desired godown that is under the supervision of the
Muqadams, appointed by the bank. But on the other hand in case of ‘effective
pledge’ the goods are under the ownership of the bank even when they are being
transported from the port to the godown. So, in case of effective pledge the bank
must make sure that the goods are comprehensively insured.
FINANCE AGAINST TRUST RECEIPT (F A T R)
The mechanism with which Finance Against Trust Receipt works is identical to that
of Hypothecation. The logical rationale behind FATR is that all the imported goods
cannot, by nature, be given to the effective pledge of the bank; imported goods
could be of perishable nature or they could be of central importance for the
operations of the business concern. In such a case the goods are hypothecated and
finance is extended.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 2
LOCAL BILLS PURCHASED --- DOCUMENTARY (L B P – D)
This particular type of credit is again aimed toward helping out business concerns
with their working capital requirement. Suppose company A sells goods to company
B on a credit of 90 days. Now the remuneration for these goods is going to be
received after a time span of 90 days, and during these 90 days company A needs
money for its working capital. What company A does is that it draws a bill on
company B negotiates that bill with the bank i.e. Bank Alfalah Limited purchases
that bill and receives the amount, after 90 days from the company B. This kind of a
credit facility is LBP – D for company A.
C R E D I T P R O P O S A L
In order to avail any of the credit facilities a proposal (case) has to be made, and
also approved, by the Branch Credit Committee and then subsequently by the
Credit Division at the Head Office. The credit proposal can be categorized in to two
types
CREDIT LINE PROPOSAL (C L P)
A credit line proposal is made for those clients whose credit limit has been approved
by the banks’ credit department.
ONE TIME TRANSACTION (O T T)
An OTT is prepared for a client who has no approved credit limit, but the bank is
doing business with that client on a one-time basis.
L E N D I N G P R I N C I P L E S
PRINCIPLES
The principles laid down by the Credit Division at the Head Office are as under
Know your customer
Know the purpose of the facility
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 3
Know the profitability of the applicant
Know the source of repayment
Asses the securities
Tenor of facility
SBP REGULATIONS
The state bank of Pakistan has laid down some principles in regards the lending of
credit to customers. Prudential regulations form the backbone of such regulations.
Prudential regulations forbid the banks to take up exposure to a single borrower or
a group of related borrowers in excess of 30 % of the bank’s equity base of which
Fund Based (Cash Finance or Term Finance) should not exceed 20 % of the
bank’s equity
Non Fund Based (e.g. Letters of Credit, guarantees) can be allowed to any
extent within the parameter of 30 %.
A T T R I B U T E S O F A G O O D / T A N G I B L E
S E C U R I T Y
I would like to put forth a detailed analysis of the major kind securities as follows
that are kept while extending loans i.e. banker’s lien, pledge, hypothecation,
and mortgage. A good banking security should have most, if not all of the
following attributes
Transferability
Ascertain ability of value
Stability of value
Marketability
Liability
Storability
Durability
Transportability
Superior yield
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 4
SECURITY ANALYSES
Sound bank lending is based on the understanding that the borrower is willing and
able to repay the advance within a reasonable time from trading receipts and
profits or from other sources. Nevertheless, because the bank is lending its
depositors’ funds, prudence demands that security should be taken so that the bank
may realize them to liquidate the advance in case through unforeseen difficulties,
repayment from normal sources is not forthcoming. There are several methods by
which a charge may be created on an asset by the borrower in favor of a lender,
both formal and informal.
BANKER’S LIEN
Lien is the right of a creditor, who is in actual or constructive possession of his
debtor’s property, to retain such property until the debt due to him has been repaid.
The borrower is still the owner of the property, but the lender has possession of the
property.
A lien may be either
A particular lien, which arises from the particular transaction, connected with
property subject to lien e.g. a carrier’s lien for his charges on goods carried.
General lien, which arises out of general dealings between the two parties
e.g., bank’s lien.
A banker’s lien is a general lien on all goods and securities that come in to his
possession as a banker, unless there is an express or implied contract inconsistent
with a lien. To be subject to lien the property must come in to the hands of the
banker to be dealt with in his ordinary course of business as a banker. Securities
deposited with a banker for safe custody are not subject to lien. Where the holder of
a bill has a lien on it he is deemed to be a holder for value to the extent of the sum
which he has lien, and in such circumstances the banker could sue on the bill in his
own name A banker has lien on all bills, cheques and notes sent to him by a
customer for collection, where the customer is indebted to the banker. A banker’s
lien has been defined as an implied pledge, whereas ordinary lien does not imply a
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 5
power of sale, a pledge does. Accordingly a banker has a power of sale over such
securities on which he has a lien, subject to reasonable notice to his customer.
P R O C E S S I N G O F L O A N A P P L I C A T I O N
Whatever money the banker holds is that of his customers who have entrusted the
bank only because they have full confidence in the expert handling of money by
their banker. Therefore, the banker must be very careful and ensure that his
depositors’ money is advanced to safe hands where the risk of loss does not exist.
So, 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 character, capacity, capital and market conditions help
a banker in arriving at a conclusion regarding the safety of advances.
Character
It is the most important factor in determining the safety of advances, for there
is no substitute for character. 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 bakers usually try to avoid such a customer.
Capacity
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 property capital of the borrower. This property can
be kept as a security of loan. In other words if the businessman’s financial
condition is sound then can be given certain amount of credit, otherwise not.
CIB Report
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 6
Bank cannot sanction any credit to a customer, unless it gets Credit report
from CIB (Credit Information Bureau, SBP). Before making any decision about
the client, bank needs a CIB report. Therefore, first of all, the banker requests
CIB to provide him the credit report of client. This report indicates all the credit
facilities (outstanding) availed by the client. It is to be obtained compulsarily
whenever the amount of loan exceeds Rs. 500,000.
S T E P O N E : I D E N T I F I C A T I O N O F R I S K S
The first and foremost procedural step in the loan processing process is
identification of various kinds of risks. The essential responsibility of a Credit Officer
is ‘Safe Placement Of Funds’ and in order to serve this purpose all sorts of risks
are to be first identified, which by no means a easy job to do, and then after
identification if not all majority of these risks should be minimized to such a level
that bank’s basic purpose is fulfilled i.e. timely repayment of the entire principle
amount along with the interest.
For risk analyses I would like to include in my internship report an extract from a
article written by Mr. Ahmed Nauman (Course Coordinator, Staff College, MCB-
Published in the Journal of Institute of Bankers Pakistan, April 2002), which was
circulated by Bank Alfalah’s Head Office in the Credit Department of all of its
branches at the time I was in the Credits Department at Township Branch, bank
Alfalah limited, Lahore.
“The General Risk Equation Encompasses The Combination Of One
Or All Of The Following Risks”
Business Risk
Organizational Risk
Financial Risk
Collateral Risk
Documentation Risk
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 7
One dominant risk factor may disturb the overall credit risk management matrix
and in the assessment of the general risk, each factor requires an in depth analysis.
BUSINESS RISK
This essentially translates into industry risk, market risk and supplier risk.
Industry Risk
Concentration of sales on any one industry enhances risk.
Product life cycle the shorter it is, the higher is the risk.
Existing and anticipated Government Policies / restrictions may increase
or reduce risks in a given sector.
Current levels of competition can result in reduction of existing profit
margins.
Planning of any big international or national player may change the whole
scene.
Market Risk
Concentration of sales on a single geographical area.
Single buyer focused sales.
Reputation of buyers.
Supplier’s Risk
Calculation of real costs from each supplier includes freight and handling
charges, length of time in transit, working capital and space tied up in
inventory because of large minimum order required to obtain a good
quotation or time to assure delivery on recorders and all other carrying
charges, ought to be considered in comparing suppliers.
Are there any discounts for cash? What is firm’s policy on issue?
Concentration of purchases from single geographic location.
Concentration of purchase from a single supplier. A breakdown or strike
in a supplier’s plant could force to major operational disturbance.
Single currency exposure in respect of purchase.
Reputation of key supplier (s).
Ranking of suppliers in competition.
Seasonality of products.
Volume of sales wholesaler / retailer details.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 8
Borrower’s market share.
Borrower’s marketing strategies of products.
Details of distribution channels.
ORGANIZATIONAL RISK
Management
The quality of management and shareholders
Is the management professionally sound
Is the management academically qualified enough to identify and handle
problems.
Attitude of the management, is it conservation, aggressive or speculative.
Previous experience of the management in the same business, if any.
HRM analysis of the firm. Sometimes, due to one-man show, the most
performing individual may leave the organization that may adversely
affect the repayment capacity of the borrower.
Are directors resident, a non-resident director may easily walk away from
commitment?
Shareholders commitment to fund expansion of business. A continuous
high dividend policy is a danger signal.
Relationship with the Bank
Their track record indifferent lines of business.
Any default history? With the bank/other banks?
Length of relationship with the bank?
Major historical changes or problems?
Product acceptability/demand in the market?
The experience of other banks with the client sister concerns?
Evaluate existence of any un-due reliance on key individuals. Would
succession management be easy? Key questions include: is the
organization a one-man show? Or does a team of profession run it?
The existence and quality of internal control system.
Poor control systems re reflected in over stocking invoicing which can
lead to both errors and frauds.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 9 9
FINANCIAL RISK
What will be the initial costs for plant & equipment, materials & supplies,
insurance, fees, tax depots, installation costs, organization expenses etc.
investment Vs future income forecasting, scale of operations are also to be
looked upon.
Who will bear the cost/taxes of imported equipment? Component of FCY/LCY
in imported machinery?
How much additional cash or credit will be required to carry the business until
cash receipt equal or exceed cash outlays? This involves both an amount and
a time calculation of working capital flowing thought the following sequences:
a) Material, wages, operating supplies and expenses (b) work in process, (c)
finished product (d) sales (e) collections, which return cash to be placed back
into the system.
In addition, contractual payments on mortgage or any other loan and on
equipment purchases coupled with such things as contingent liabilities have
to be calculated. There may be drain on cash until collections equal outlays.
Interest and exchange rate sensitivity analysis to both assets and liabilities.
Balance sheet and capital structure. Examine closely gearing i.e. debt equity
ratio. Is the borrower seeking to borrow all for the operational needs of the
business OR only a portion.
The firms should be supported by substantial capital to bear any external
shocks. Insufficient capital to absorb marker shocks may be a negative signal
as in case of any adverse change the firm may collapse.
In relation to industry standards, following ratios need to be analyzed.
Stock turnover
Debtor’s turnover
Current ratio
Liquidity ratio
Profitability ratios
Quality of fixed assets and their ageing status
Contingent liabilities
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 0
Analyze quality of the financial data. Quality may be assessed by a number of
variables such as rating of the auditor’s firm examining accounting standards
and practices and availability.
Purpose of finance: Matching principle? Working capital fund put to LT assets
buying use? Many a times, due to mere mismatching of assets and liabilities,
firm goes bankrupt. Long terms assets should preferably be financed by long
term liabilities and short term financing needs should be met only through
creation of short term liabilities.
Financial discipline standards within the company to ensure maximum
judicious use of funds employed.
Is the firm in the process or plans of acquiring any international rating or
standards like ISO-9000 certification?
Does the company possess any room for contingencies. Some analysis argue
additional allowance for at least one major blunder during first two years of
operations of a newly established firm.
Tax Policy: is the firm paying taxes regularly or concealing. Taxes? If
concealing To what an extent?
Failure to control budget expenditures. Does any planning or forecasting,
(even rough estimates) exist? In absence of strategic planning, there are
increased risks of financing mismanagement and frequent (EOL) excess over
limits requests.
COLLATERAL RISK
Owing to a multiple dimensional problems of suitable foreclosure laws, it is
imperative to identify collateral risk to its fullest extent. Following queries will
assist the credit manager.
Way-out analysis: Would the borrower be able to meet payment schedule
Primary Security: Hypothecator/pledge of stocks
Real ownership to be ascertained.
Stock turnover to be assessed.
Inventory control management system to be closely reviewed. Are there
any inventory control system is place? If yes compare with the prevailing
market standards?
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 1
Marketability of the pledged stocks? Who is the customer, what are the
profit margins? The credit manger to avoid a significant loss, in case of
forced sale negotiating the transaction, may also ascertain competition,
outlets available, distributor’s margin etc.
Collateral security
Clear title is to be ascertained.
Title to be preferably in the name of the borrower.
Value reasonable to cover our exposure.
Locality of the security to be preferably urban.
DOCUMENTATION RISK
Blank documents invite trouble.
Incomplete or wrongly filled documents have no legal remedy.
Documents not properly witnessed are considered complete.
Documents not legally vetted by the internal/external legal counsel/auditor
may carry some flaws.
Check whether borrowing powers are in order and in accordance with
comp[any laws.
Any condition(s) of security mentioned by the approving authority at the time
of last approval has bee met fully.
S T E P T W O : E A R L Y W A R N I N G S I G N A L S
Second most important phase of credit risk management begins after the
disbursement of finance. For convenience of monitoring at the branch levels,
monitoring may be segmented further into five distinct sections enabling the credit
manager to continuously monitor the health of the asset portfolio. They include
Internally colleted account status signal
Externally received business status signals
Security review
Stock review
Monitoring of behavior vis-à-vis branch and the client. Do they extent
favor beyond the established norms and defined boundaries?
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 2
Like speed breakers, continuous monitoring provides us some red signals to stop
further lending and review the entire relationship with the client. Following addition
swings may further augment credit manger’s resolve to monitor the loan account
prudently. Another exhaustive list is list is also followed identifying the deficiencies
commonly observed at the branch level resulting into classification of finances.
Cash Position Of The Company
A downward cyclical trend in cash position may be considered OK but a sudden
fall may be a harbinger of severe cash flow problem. The sponsor, in order to
meet cash requirements elsewhere, will default on payments of due principal
and markup.
Receivable Collection Period
If cash collected against receivable is slow, the loan repayment is going to get
slow. The sponsor may justify this trend by showing them in his assets but
some of the accounts receivable may never recover.
Inventory Turnover
A slowdown in inventory turn over is a cause for serious concern. It reflects
poorly on management of the company and its operations. It may also imply
too much concentration of funds being stuck in the obsolete inventory.
Non Current Assets
A sudden jump in the amount of non-current assets, such as notes receivable,
machinery and equipment, land, advances to subsidiaries, etc, should be
noticed as this is going to lead to cash problems in near future.
Current Liabilities
Credit Manager should be alert to sudden jumps in current debts and notice if
these debts are financing non-current assets. It also holds true in spirits of
matching principle whereby short-term lending needs are met by short-term
assets.
Worsening Ratios
Debt/Equity ratio, current ratio, gross profit margin ratio, various inventory
ratios etc indicate the financial health of the firm.
Uneven Patterns Of Borrowing
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 3
This situation specially applies to working capital finance. A player in the
beverage industry seeking loan in winter may be utilizing it for some other
purpose other than meeting his short term financing needs. Similarly, an
agricultural loan requested in off-season may be skeptical.
Some Other Key Warning Signs
In addition, there are certain non-financial symptoms of a problem project.
Credit officers should keep their eyes open for the following additional signals.
Evidence of any legal action and income tax enquiry
Information of utility bills default, deferred payments
Deteriorating relationship with trade suppliers
Sudden rise in request for NOCs
Notice of insurance cancellation or failure to pay premiums on time
Turnover of key performing employees
Inability to obtain financial statements timely
Personal/family problems of directors/sponsors
Failure to furnish the requested information
Changes in communication habits (telephone and letters)
S T E P T H R E E : P R E P A R A T I O N O F T H E
C R E D I T P R O P O S A L
Credit proposals can be classified into two categories
Credit line proposal (CLP)
One Time Transaction (OTT)
A Credit Line Proposal is made for those customers for whom the bank has
approved a regular credit line, and OTT is made for those customers with whom the
bank is doing business on a one-time basis and they have no regular credit line
approved with the bank.
CREDIT LINE PROPOSAL (CLP)
In a CLP, all information regarding the client and his business is stipulated as:
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 4
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
Documents (reports) attached with proposal
For having the complete information regarding the client, his business and the
securities offered for advances, different documents are prepared by the Credit
Officers. All these documents are attached with the proposal to get approval. These
documents are as follows:
GRADE APPROVAL SHEET
Grade Approval Sheet forms an integral part of a Credit Line Proposal (CLP). Its
purposes are to segment bank loans by way of their risk profile, to bring to
attention of credit officers & senior management specific accounts in which
adverse features or deviations from established standards (industry trend)
have been noted so as to propose remedial measures, and to report in
aggregate the resulting amount and degree of risk in bank’s existing portfolio.
Accounts may be categorized in 5 different grades assigned on the basis of net
worth (from 1A to 1E on the basis of decreasing net worth). Accounts that do
not have audited financials are placed in Grade 2 and those with irregularities
in the past (like over dues, etc) are placed in Grade 3.
BASIC FACT SHEET
Basic fact sheet is a document that is aimed towards listing down all the fact
regarding the customer, his business, his corporate status, his taxation
number and every thing that is there to be known about the person and the
business. The format of basic fact sheet, which is given to all the commercial
banks by State Bank of Pakistan, gives a clear-cut idea as to what other
information is there to be recorded in the Basic Fact Sheet. The format in given
in annexure one of this report.
VALUATION SURVEY REPORT
This report contains the fact about the judgment of the credit officer after the
property / an independent valuator has valued security.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 5
PROPERTY VISIT REPORT
Every credit officer writes this report after he visits the client’s residence and /
or place of business.
SECURITY ANALYSIS REPORT
Security analysis report views the security structure (offered by the client)
against which the limits are collateralized, after applying SBP margins, like in
case of cash (near cash) security this margin is 25%. PS analyzes the overall
profitability from the transaction; this includes return from average facility
utilization, reciprocal business (like imports, LGs, etc), spread on cash
securities (if any), etc.
RISK INDEX LEVEL (RIL)
BAL Risk Index is based on a scale of 1 to 10, where 1 represents a lower and
10 a higher percentage of observed Business Failures. Ownership structure,
position in the industry, experience, liquidity & profitability ratios, account
history, etc contribute to the points, where an account can have a maximum of
100 points and a minimum of 10 points; accordingly RIL is awarded.
PRUDENTIAL REGULATIONS CHECKLIST (PRC)
Bank Alfalah Limited’s PRC comprises of various SBP’s prudential regulation.
Where SBP prudential regulations are quite detailed, Bank Alfalah Limited’s
credit PRC includes lending related regulations whose compliance is
compulsory. These regulations include financial ratios requirements, limit of
Bank Alfalah Limited’s exposure on clients on the basis on Bank Alfalah
Limited’s net worth & client’s net worth, etc.
STATEMENT OF ACCOUNTS
This refers to clients past bank account statements.
FINANCIAL STATEMENTS
This refers to audited financial statement of the corporate entity.
When all of these documents are attached to the credit line proposal / OTT the file is
presented to the Branch Credit Committee of Bank Alfalah Limited, Township
Branch, Lahore. This committee consists of the Branch Manager, Manager
Operations, Manager Credits Department, and the Manager of the Accounts
Department. When the branch Credit Committee approves the proposal the
proposal is sent to the credit division functioning in the Head Office. When they
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 6
approve the proposal the customer is made to sign the offer letter and
disbursement is made.
O T H E R F U N C T I O N S P E R F O R M E D B Y T H E
C R E D I T S D E P A R T M E N T
The predominant functions performed are
Extension of Finance Against Imported Merchandise
Extension of Finance Against Trust Receipt
Purchase of Local Bills – Documentary
Issuance of Guarantees on behalf of customers
FINANCE AGAINST IMPORTED MERCHANDISE
When the imported goods come to the importer’s country (Pakistan) he might no be
in a position to provide the required amount of money to his bank so that his bank
could pay to the exporter. Under these circumstances the importer might give the
imported goods into effective pledge of the bank, and then the importer’s bank
pays to the advising bank or the reimbursing bank on behalf of the importer, but the
importer is suppose to get the goods released and pay his bank (Bank Alfalah
Limited) the required amount along with the interest as the bank’s funds have been
involved for a specific time span. This kind of a facility is basically a post L/C
financing for meeting working capital requirement.
When the goods reach the godown the Muqadams are suppose to send Bank Alfalah
Limited a stock report the predominant contents of this stock report are
The description of commodity
Quantity of that commodity received
The date on which the Muqadam received the consignment.
The name of the premises at which the goods were received
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 7
Once the goods come under the effective pledge of the bank, the customer is
suppose to get the goods released after making the due payment in the specified
time period. FIM is normally extended for a time span of 30, 60, 90, or 120 days.
The mechanism through which the goods are released
At this point it is pertinent to give an overview of the mechanism through which the
goods are released. When the facility of FIM is extended the concerned official at
Bank Alfalah Limited, Township Branch gives a certain quantity of Delivery Orders to
the client. These delivery orders are used to get the goods released. Delivery order
basically is a performa that contains the following information
Date
Description of goods
Quantity which is to be released
The per unit rate of the commodity and also the total value
The L/C number under which the transaction is done
The FIM number
Accounting transactions regarding the entire FIM transaction
Lodgment of FIM
Debit: Finance Against Imported Merchandise Account
Credit: Payment Against Documents Account
When customer (importer) repays the amount.
Debit: Importer’s Account
Credit: Finance Against Imported Merchandise Account
For receiving interest payment following entry is passed
Debit: Importer’s Account.
Credit: Interest Earnings on Finance Against Imported
Merchandise Account.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 8
S E C T I O N F O U R
F I N A N C I A L A N A LY S I S
O F
B A N K A L FA L A H L I M I T E D
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 0 9
A ) F I N A N C I A L S T A T E M E N T S
B A L A N C E S H E E T
ASSETS
1998 1999 2000 2001 2002
Liquid Assets
Cash in hand / Cash at Banks 721,285 1,687,256 2,044,825 3,885,612 4,540,486
Government securities (net) 3,224,044 4,759,913 4,578,08010,930,33
5
20,463,56
9
Marketable securities (net) 34,970 32,512 219,680 441,836 1,524,990
Balances with other banks 386,211 1,161,434 1,797,986 1,081,208 232,728
Lending to financial institutions 248,000 100,000 2,260,315 1,698,969 4,634,398
Total liquid assets 4,641,510 7,741,11510,900,88
6
18,037,96
0
31,396,17
1
Financing / Advances
Government /Public - 747,089 841,748 2,460,626 1,680,100
Private - 9,580,23514,400,56
9
16,870,86
8
26,639,30
1
Total Advances-Net of Provisions 7,767,70810, 327,
324
15,242,31
7
19,131,49
4
28,319,40
1
Other Securities
Term Finance Certificates-
Unquoted 147, 500 200,610 71,215 18,720 12,475
Other Investments (Shares of Pakistan Export finance)
5, 725 5, 725 5,725
Total other securities 147,500 200,610 76,940 24, 445 18,200
Operating Fixed Assets 263,760 1,153,607 1,287,355 1,424,883 17,607,74
Other Assets 1,537,629 1,596,652 1,347,134 1,436,991 9,848,47
Total Assets14,321,10
7
21,019,60
8
28,854,63
2
40, 098,
095
65,167,03
1
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 0
LIABILITIES AND EQUITY
Deposits
Demand Deposits 7,528,67310,392,62
4
13,735,56
8
22,472,08
4
40,601,05
7
Time Deposits 4,349,548 5,427,849 6,746,000 7,735,24011,083,92
7
Total Deposits11,878,22
1
15,820,47
3
20,481,
568
30,207,32
4
51,684,98
4
Borrowings from Financial
Institutions1,348,313 2,972,240 5,916,603 6,709,054 60,375,76
Bills Payable 51,737 120,868 106,353 305,558 758,961
Other Liabilities 184,030 379,747 632,006 716,475 11,963,42
Total Liabilities13,462,30
1
19,293,32
8
27,136,53
0
37,938,41
1
61,514,36
4
Net Assets 858,806 1,726,280 1,718,102 2,159,684 36,526,67
Represented By
Share Capital 600,000 600,000 600,000 750,000 1,000,000
Reserves 255,094 286,399 299,469 361,591 365,727
Unappropriated Profit 3,712 8,931 1,211 249,701 250,050
Share Holder’s Equity 858,806 895,330 900,680 1,361,292 16,157,77
Surplus/(Deficit) On Revaluation of Assets
- 830,950 817,422 798,392 2,036,890
Total 858,806 1,726, 280 1,718,102 2,159,684 3,652,667
Contingencies and Commitments
Contingencies 1,302,022 2,711,578 8,108,694 7,126,53614,570,72
5
Commitments 3,770,381 2,199,48210,532,12
6
15,976,73
9
15,548,67
4
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 1
I N C O M E S T A T E M E N T
1998 1999 2000 2001 2002
Mark up / return / Interest earned 1628697 1905908 2261828 3391935 4630494
Mark up / return / Interest expensed 1313564 1474343 1724041 2515074 3112313
Net Mark up/ Interest income 315133 431565 537787 872303151818
1
Provision against non performing loans (94756) 136076 103950 13705 (53619)
Provision For diminution in the value of Investment
- - - - -
Bad Debts written off directly (175) - - (1447)
(94756) 143870 103950 13705 (55066)
Net Mark up / Interest income after provision
220377 567466 641737 890566 1463115
Non mark-up interest income
Fee, Commission, Brokerage Income 39438 58043 103838 147277 316368
Dividend Income - - 8951 41910 62077
Income from dealing in foreign currency 121754 77925 69195 113923 95165
Other Income 23614 53540 87504 74756 141808
Total Non Mark-up Income 184806 189508 269488 377866 615418
Total 405183 477103 911225 1268432 2078533
Non Mark-up / Interest expense
Administrative Expenses 337447 402559 503028 743602 1182887
Other provisions/ written offs - - 7619 - -
Other charges - - 228 666 993
Total Non Mark-up / Interest expense 337447 402559 510875 744268118388
0
Extra ordinary unusual items - - - - -
Profit Before Taxation 67736 354415 400350 524164 894653
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 2
Taxation Expense (77629)(197891
)
(185000
)(213552) (448974)
Profit After Tax 145365 156524 215350 310612 445679
Unappropriated Profit brought forward 2420 3712 8931 1211 249701
Profit available for appropriation 147785 160236 224281 311823 839186
Appropriations
Transfer to statutory reserve (29073) (31305) (43070) (62122) (89136)
Transfer from revenue reserve(115000
)- 30000 - -
Issue of Bonus Shares – Interim @ 33.33 % (In 2002)
- - - - (250000)
Dividend (@ 25 % In 2002) -(120000
)
(210000
)- (250000)
Unappropriated Profit Carried Forward 3712 8931 1211 249701 250050
Basic & Diluted EPS 2.42 2.61 3.59 3.65 4.46
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 3
B ) RB ) R A T I O SA T I O S
1 9 9 8 - 2 0 0 21 9 9 8 - 2 0 0 2
SR.
NO.RATIOS 1998 1999 2000 2001 2002
1 Net Income/Capital 16.9% 9.1% 12% 14%12.21
%
2 Net Income/Total Assets 1.0% 0.7% 0.7% 0.8% 0.68%
3 Net Income/Risk Assets 1.87% 1.52% 1.41% 1.62% 1.57%
4 Operating Expenses/Revenue20.72
%
21.12
%
22.59
%
21.97
%
25.57
%
5 Quick Assets/Total Deposit38.85
%
48.93
%
53.22
%
59.71
%??? %
6 Total Financing/(Deposits + Borrowed Funds)
60.53
%
55.49
%
63.88
%
56.43
%
57.10
%
7 Total Financing/Total Deposits67.40
%
65.91
%
85.46
%
68.96
%
63.76
%
8 Due To Banks/Total Deposits11.35
%
18.79
%
28.89
%
22.21
%
11.68
%
9Borrowed Funds/Total
Financing
16.84
%
28.50
%
33.80
%
32.21
%
18.32
%
10 Due From Banks/Total Assets 0.43% 6%14.06
%6.93% 7.47%
11Due From Banks/Due To
Banks
47.03
%
42.44
%
68.59
%
41.43
%
80.61
%
12 Capital Funds/Total Assets 5.99% 8.21% 5.95% 5.39% 5.61%
13 Capital Funds/Risk Assets11.07
%
16.72
%
11.27
%
11.29
%
12.90
%
14 Capital Funds/Total Financing10.73
%
16.56
%9.82%
10.38
%
11.08
%
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 4
15Demand Deposit/Total
Deposits
63.38
%
65.69
%
67.06
%
74.39
%
78.55
%
16 Time Deposit/Total Deposits36.62
%
34.30
%
32.94
%
25.61
%
21.44
%
17 Cost Of Funds12.48
%10% 8.87% 8.82% 7.44%
18 Return On Investments10.19
%8.08% 6.92% 7.00% 6.26%
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 5
C ) FC ) F I N A N C I A LI N A N C I A L R R A T I O SA T I O S A A N A LY S I SN A LY S I S
1 9 9 8 - 2 0 0 21 9 9 8 - 2 0 0 2
N E T I N C O M E / C A P I T A L
This rat io shows the relat ionship between income earned
and the owners’ capital that is how much the bank has
earned by using i ts own resources.
I t is the return earned on owners’ investment.
The rat io s ignif ies as to how eff ic ient ly are we using our
capital to earn net income.
By looking at the ratios calculated for the years 1998 – to - 2002 it is clear that the
ratio has had a normal growth over the years from 1999 to 2001, while it declined in
2002 to 12.21 %.
One of the reasons for the decline in the ratio in the year 2002 was that although
there is an increase in the net income but the increase is less in terms of the total
capital used when compared to the previous year i.e. this year Bank Alfalah Limited
used comparatively more capital to earn comparatively less income, although there
is a increase in net income in absolute terms.
Another reason of the decline in Net Income/Capital in the year 2002 was instable
situation of the whole country. The shift towards democracy has had an immediate
effect on the country’s financial sector.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 6
A gradual increase in the ratio would show that Bank Alfalah Limited is efficient in
use of its capital for the generation of net income. A downward trend would show
otherwise.
N E T I N C O M E / T O T A L A S S E T S
This rat io shows the relat ionship between income earned
and the total assets.
This rat io portrays net income as a percentage of total
assets.
For the calculation of this ratio total assets figure is taken which includes all of the
resources.
The ratios calculated for the year 1998-2002 show a handsomely positive trend. It is
a healthy sign and shows how effectively bank is utilizing its assets. Bank has
employed all of its assets in an appropriate way. These assets are contributing to
the profitability of the bank.
There is a direct relationship between the net income and the total assets. In case
of a bank the total assets figure is greater than the capital figure as most of the
assets created are by using the borrowed finance (mostly deposits). Even though
bank recently started its operations after privatization but still it is able to increase
this ratio. This shows the efficiency of the new management of the bank.
Slight fluctuations in this ratio (e.g. from 0.8 % in 2001 to .068 %) do not show that
the bank has performed badly because it is not the matter of thousands but millions
and for a bank, slight changes do not matter much.
N E T I N C O M E / R I S K A S S E T S
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 7
This rat io shows how wel l the bank is using i ts r isk assets.
For the calculation of the risk assets, all the advances given to private sector are
included and banks and government sector is excluded.
A bank’s risk assets are its advances; the money it has lent to various classes of
borrowers. This ratio can be understood from two dimensions.
The first dimension is that this ratio portrays as to how efficient is the lending
mechanism in connection to generation of net income.
The second dimension is as to what extent the ‘spread’ contributing to net
income. Here by spread I mean the difference between the cost of funds (the
rate of interest the bank has to pay to the depositors) and the interest rate
the bank is charging to the lenders.
If this ratio is improving this means that the bank’s management is using the
advances mechanism very efficiently as regards generation of net income, which in
turn means that the percentage of spread in the net income is improving.
Alfalah started its operations in the year 1997 and during the initial stage of its
business it had to face unstable economic situations. Banking Companies suffered
the most due to “Nuclear Tests” in May 1997. The economic activity in the country
slowed down as a result the interest on lending was also lowered. Another
contributor to the less efficient utilization of risk assets was the non-performing
loans, which Alfalah took over along with other things at the time of privatization. As
a result of high provisioning income of the bank fell. However the new management
made efforts to recover the loans and to put the bank on the right track. It had been
successful in its efforts. Their non-performing loans have decreased to 8% in the
year 2001 from 23% as at the time of privatization. As a result of following
conservative credit policy the ratio has improved in year 2002 to 1.57%.
O P E R A T I N G E X P E N S E S / R E V E N U E
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 8
This rat io gives the percentage of the total revenue spent
on operat ing expenses.
This rat io basical ly is geared towards assessing the
effect iveness of the cost control mechanism of Bank Alfalah
Limited
These operating expenses include both administration costs such as salaries, rent,
stationery etc and Selling and Marketing costs. This ratio depicts the operating
expenses as a percentage of the total revenue.
By looking at the trend of this ratio over the last five years we find that percentage
of operating costs to revenues has been increasing with the exception in the year
1999 especially in the year 2002, it has increased tremendously to 25.57 %. But still
the trends portrayed by this ratio can be termed as satisfactory to a marked extent
The increase in this ratio in year 1998 is understandable as the increase was
expected because of initial period of privatization. Huge costs were incurred as
administration expenses which around 20.72% of the earned mark-up.
However the decrease in this ratio by 6.27% in the year 1999 shows the efficiency
of the new management. Bank was able to control its costs in the third year of its
operations. Another reason of the improvement in this ratio is the increase in the
profit in the year 1999.
The ratio showed an upward trend during the years 2000 to 2002 and was 22.59%,
21.97% and 25.57 % respectively. This increase was due to the expansion programs
of the bank. Its branch network increased to 44 branches by the end of year 2002.
Due to the increase in the branch network the increase in operating costs was
unavoidable.
The costs incurred today wi l l contr ibute towards long-term
prof itabi l i ty of the bank.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 1 9
Q U I C K A S S E T S / T O T A L
D E P O S I T S ? ? ? ? ? ?
This ratio shows the liquidity position of the bank. It shows how well bank can meet
its liquidity requirements and fulfills the cash demands of its customers.
This ratio shows what percentage of total deposits the bank keeps as liquid assets.
Alfalah’s Quick asset/total deposit ratio has showed a positive trend over the years.
It was 38.85% in the year 1998 and 59.71% in the year 2001. The high percentage
of total deposits kept as liquid assets for the year 2001 is justifiable for the reason
that out of the total deposits about 74% are demand deposits. These depositors can
ask for their money at any point of time without giving any notice to the bank. To
avoid risk and maintain a satisfactory liquidity level bank has opted to maintain
59.71% as liquid assets. According to prudential regulations at least 20% of the
total deposits should be in the form of quick assets. The bank has followed this in
the last 4 years. However to increase profitability bank can lend some percentage of
the liquid assets as 30 to 35% of deposits invested in liquid assets is satisfactory for
any bank.
T O T A L F I N A N C I N G / ( D E P O S I T S &
B O R R O W E D F U N D S )
This rat io shows the total f inancing as the percentage of
deposits and borrowed funds. This rat io s ignif ies how wel l a
bank is ut i l iz ing i ts avai lable funds. Therefore this rat io
should have a posit ive trend over the years.
Deposits plus the borrowed funds are the total pool of funds at the disposal of
a commercial bank.
Borrowed funds primarily consist of borrowings from financial institutions.
Total financing depicts that amount, which we have lent out of our total pool
of funds.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 0
For the past four years the government has been trying to give a real boast to the
economy, but the economy has not responded with the desirable results. As a
consequence total loans advanced by banking sector have been increasing at a
decreasing rate, as people are not investing with great deal of zeal.
On the other hand as savings are increasing the deposit portfolio is increasing at a
decreasing rate. This is the reason a considerable magnitude of funds is being
directed toward liquid securities / investments rather than hard-core lending to
clients.
For Alfalah there have been ups and downs in this ratio. It fell in the year 1999 from
60.53% to 55.49%. Many factors were responsible for this decrease. Bank was in
the establishment stage. Management was new and was trying to control the
situation. Along with other difficulties faced by the management, bank had to
survive under the unstable economic situation.
Banks were severely hit by the incident of Atomic tests of May 1998. After these
tests Government froze the foreign currency accounts and public lost confidence in
banks. There was a depression in the economy. Due to slow business activity the
overall demand for advances declined.
Moreover new management followed a conservative credit policy as it already had
huge non-performing loans portfolios, which were, inherited, by the bank after
privatization. As a result although the advances are increasing over the years but
the percentage increase in advances/financing is less than the percentage increase
in total deposits and borrowed funds.
In the year 2000 the ratio improved. One of the reasons for rise was the
improvement in the economic situation in the country. Because of take over of
Government by President Musharraf public was hopeful and there was a positive
impact on the economic activity.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 1
By the end of year 2001 the ratio again declined, as expectations of business sector
were not met and no major changes took place.
The decl ine in this rat io is not a healthy s ign as i t reduces
the prof itabi l i ty of the bank as i t indicates ineffect ive use
of the avai lable funds.
But in the presence of unstable political and economic situation and increased
competition among the banks it is a little difficult for the bank to improve this ratio.
Currently, in the year 2002, the ratio has shown an improvement as it has increased
from the past year to 57.10 %. It is hoped that the bank will be able to maintain this
increasing trend as the economy and the management has settled down.
T O T A L F I N A N C I N G / T O T A L D E P O S I T S
This rat io indicates the total f inancing as the percentage of
total deposits. I t shows the effect iveness of bank in using
i ts avai lable deposits.
Through this rat io we are able to analyze the fact as to how
eff ic ient ly is Bank Alfalah Limited is lending the funds i t
receives direct ly from its c l ients apart from the funds i t
receives from f inancial inst itut ions.
The trend of this ratio over the years has been similar to that of the total
deposits/deposits and borrowed funds. Advances have shown a slow positive trend
over the years. This increase in advances has contributed to the total revenue of
the bank. However the percentage increase in advances has been less than the
percentage increase in total deposits.
The ratio has had more of a steady tour so far. Other that the year 2000, when it
increased considerably, it has had a steady course so far till the year 2002.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 2
D U E T O B A N K S / T O T A L D E P O S I T S
This rat io shows “due to banks” as the percentage of the
total deposits.
Due to banks represent the borrowings from the financial institutions. Preferably
due to banks should be less than total deposits.
I t is preferred that this rat io should decrease or should be
consistent.
When it comes to the total pool of funds for commercial banks there are two
predominant constituents
Deposits
Money market
Money market is the place where banks lend to each other, and in this market the
bank that is in need of funds is assessed as a credit client by the bank that is to
advance a particular sum of amount.
In this regard the foreign banks functioning in Pakistan are reckoned as A+ credit
clients. Bank Alfalah Limited’s credit rating in the money market was, naturally not
that established at its inception but, as time passed, Bank Alfalah Limited’s massive
growth made the Corporate sector realize the fact that this particular bank could be
dealt with as a trust worthy credit client. This fact as been evidently shown by this
ratio, as it has been quite consistent over the past five years
B O R R O W E D F U N D S / T O T A L F I N A N C I N G
This part icular rat io is basical ly geared towards assessing
the fact as to how eff ic ient ly Bank Alfalah Limited is
advancing the funds that i t has received from sources other
than i ts depositors
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 3
By this rat io we can f ind out the percentage of total
f inancing done by borrowed funds
An increase in this rat io would depict that Bank Alfalah
Limited is quite eff ic ient in lending i ts borrowed funds and
covering the interest rate i t is paying on the borrowed
funds.
This ratio has a positive trend over the years till the year 2002, when it dropped
considerably. An increase in this ratio is a positive sign because cost of funds
borrowed from other financial institutions is less than the cost paid on the deposits.
The increase in the percentage of borrowed funds used in financing results has
increased the profit of the bank reducing its costs.
For Bank Alfalah Limited, the ratio has dropped to an almost record low. This is
because the borrowed funds have actually declined from the past year whereas the
total financing has increased tremendously. Bank Alfalah Limited has adopted the
policy to utilize its own funds and reserves instead of borrowing from the market.
Bank Alfalah Limited has also issued share in the year and thus has financed the
lending through the equity instead of borrowing from the financial institutions.
D U E F R O M B A N K S / T O T A L A S S E T S
Due from banks represents that amount of money that Bank
Alfalah Limited has lent to other commercial banks.
This rat io shows the percentage of total assets that bank
has lent to other f inancial inst itut ions.
It is a secure advance but it results in the lower rates of returns because lending to
financial institutions is done at lower rates as compared to other advances. Due
from banks includes balances with other banks and lending to financial institutions.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 4
Now the question arises as to whether or not a relatively rising trend in this
ratio is good or not. The answer is yes, as the rise in this ratio represents that
after extending loan to A+ clients Bank Alfalah Limited did not move towards clients
of a lesser degree, rather it directed its funds towards the money market.
Alfalah’s position is satisfactory in this case. The bank is maintaining a reasonable
level of lending to other financial institutions. Bank also maintains a large
percentage of total assets as invested in government securities, which is a secured
way of earning returns. The percentage of other advances is much greater than
percentage of “due from banks”. It has a positive impact on the bank’s profitability.
D U E F R O M B A N K S / D U E T O B A N K S
This part icular rat io is geared towards assessing the fact as
to what percentage of money is Bank Alfalah Limited
lending to other banks out of the amount i t has borrowed
from some other f inancial inst itut ions or even the same
commercial banks
This ratio shows whether the bank has to receive more from the other banks or pay
more to the other banks. Every bank has to maintain a balance between the
numerator and denominator. Increase in “due to banks“ if properly used for
financing increases the profitability by reducing the cost. But again bank has to
maintain a balance between total deposits and borrowings from financial
institutions. Similarly although the amount “due from banks” is secured but it is less
profitable as the returns on money advanced to financial institution are low.
There is again no hard and fast rule, as to whether ‘due
from banks’ should be greater than ‘due to banks’ or v ice
versa. I t a l l depends upon the prevalent c ircumstances and
the management pol ic ies of the commercial bank under
considerat ion
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 5
Alfalah is maintaining a right level of both “due to banks” and “due from banks”
although the ratio has reached a very high level. This is because, as explained
earlier, Bank Alfalah Limited has not borrowed much from the financial institutions
but has advanced a big amount to them. The “due to banks” figure has declined
whereas the “due from banks” figure has almost doubled depicting that Bank
Alfalah Limited enjoys good credibility in the financial sector as banks prefer to
borrow funds from it.
C A P I T A L F U N D S / T O T A L A S S E T S
I t s imply shows the percentage of assets that are equity
f inanced i .e. the percentage contr ibution of equity in
creat ion of total assets
This rat io shows the percentage of owners’ money used in
the creat ion of assets.
Usually a commercial bank’s equity is quite small as compared to its assets figure,
as most of thee assets are created through the deposits (a liability) a commercial
bank generates. So equity’s role is predominantly limited to creation of operating
fixed assets. That is why thee values assumed by this ratio are quite small.
Although the percentage fluctuated between 5% and 8% but the increase in the
capital in absolute terms gives a sense of satisfaction to the financial analyst.
C A P I T A L F U N D S / R I S K A S S E T S
This rat io shows the percentage of owners’ money invested
in r isk assets.
This rat io depicts as to what percentage of advances
consists of equity (owner’s money) i .e. what percentage of
equity has been given to credit c l ients over the years.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 6
Naturally this percentage would assume smaller values, as banking is not about
accumulating money (i.e. creation of huge piles of equity finance); rather it is about
management of money (i.e. getting money from one class of individuals /
companies (depositors) and extending it to the other class (investors) and earning a
margin in between).
Nevertheless the values assumed by this ratio are considerably healthy, especially
when equity is increasing manifold every year. Lending to private entities is risky
therefore bank prefers to lend out of the deposits and borrowing from other
financial institution instead of its own capital. For last four years this ratio has been
around 11 – 13 %.
C A P I T A L F U N D S / T O T A L F I N A N C I N G
This rat io shows the percentage of capital funds in the total
f inancing
This ratio would assume smaller values, the rationale being that the bank would
be least interested in lending out its equity, it would love to lend its deposits, it
would love to lend the amount received from other commercial banks, but it would
expose a very less percentage of its equity to credit clients, and this is adequately
depicted by the values this ratio assumed for the past five years.
The ratios calculated for the last five years from 1998 to 2002 shows that to avoid
risk bank prefers to lend out of the depositors’ money and borrowing from other
financial institutions. This ratio has been around 10 – 12 % for Bank Alfalah Limited.
It is recommended that bank should increase its capital by increasing its reserves.
In this way it will also obtain the trust of its creditors.
D E M A N D D E P O S I T S / T O T A L D E P O S I T S
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 7
This rat io shows the percentage of demand deposits in the
total deposits. With the help of this rat io bank determines
the required level of l iquidity. Higher is this percentage
more wi l l be the l iquidity required.
Demand deposits are those liabilities of a commercial bank which are payable to the
customer / whenever he demands it. On the contrary time liabilities of a commercial
bank mean those deposits which are to be paid back after the lapse of a pre-
decided time period. Now there is no hard and fast rule as to whether time liabilities
should have a greater proportion in the total deposit pool or demand liabilities
should have a greater proportion.
Bank prefers demand deposits because they result in decrease in the cost as no
return is given on current assets and rates of return on saving accounts are less
than that of long-term accounts. Moreover banks prefer to give short-term advances
therefore they prefer demand deposits.
From the year 1998 to the year 2000 there had been a massive increase in the total
deposits, but only a consistent 2% increase in the ratio. This meant that the
contribution of time liabilities towards the build up of the total deposit pool was
greater than the contribution of demand deposits. This was basically a result of
massive expansion and a policy to even welcome high cost deposits.
But in the year 2001 policy was changed, high cost deposits were shred, and as a
consequence the ratio had a great improvement of 7%, specially when there was a
great increase in the deposit pool itself. The year 2002 saw a similar trend when the
ratio improved further to 78.55 %.
T I M E D E P O S I T S / T O T A L D E P O S I T S
This rat io shows the percentage of t ime deposits in the total
deposits.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 8
The time deposits are less as compared to the demand deposits. This is because of
the reasons mentioned in the previous ratio. Greater the time deposits more will be
the cost of funds.
C O S T O F F U N D S
I t shows the cost that bank has to incur on the f inancing
from various sources i .e. the depositors money as wel l as
borrowings from other banks.
It is the over all cost incurred by the bank. The cost of funds has been decreasing
for the last 5 years. This shows the efficiency of the management. Management has
been able to control the cost by recovering the non-performing loans in the year
1999 and 2000. Moreover the rates of return on saving and term accounts have
declined lowering the cost of funds. As a result bank has more leverage available for
lending. The rate has achieved a record low point of 7.44 % in 2002.
R E T U R N O F I N V E S T M E N T ( R O I )
This rat io shows the return earned by the investors
Bank Alfalah Limited has shown a slight decline in the ROI as it decreased from
10.19 % in the year 1998 to 6.26 %in the year 2002. The fall in the ROI is due to
the increase in total liabilities. It should be greater than cost of funds but here it
is less than the cost of funds. It is due to the increase in bank’s borrowings. This
needs attention of the management.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 2 9
A C C O U N T I N G P O L I C I E SA C C O U N T I N G P O L I C I E S
STATUS AND NATURE OF BUSINESS
Bank Alfalah limited was incorporated on June 21, 1992 as a public limited company
under the Companies’ Ordinance, 1984. It commenced banking operations from
November 1, 1992. The bank is operating through 44 branches with the registered
office at B. A. building I. I. Chundrigar Road, Karachi
BASIS OF PRESENTATION
In accordance with the directives of the federal government regarding shifting of
the banking system to Islamic modes, the state bank of Pakistan (SBP) has issued
various circulars from time to time. Permissible forms of trade related modes of
financing include purchase of goods by the banks from their customers and
immediate resale to them at appropriate mark-up in price on deferred payment
basis. The purchase and sale arising under these arrangements are not reflected in
these accounts as such but are restricted to the amount of facility actually utilized
and the appropriate portion of mark-up thereon.
STATEMENT OF COMPLIANCE
The financial accounts have been prepared in accordance with the directives issued
by SBP, the requirements of the banking companies ordinance, 1962 companies
ordinance, 1984 and the accounting standards issued by the international
accounting standards committee (IASC) and interpretations committee of the IASC,
as adopted in Pakistan.
BASIS OF MEASUREMENT
These accounts have been prepared under the historical cost convention, except
that certain investments and fixed assets have been included at revalued amounts
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 0
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash And Cash Equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise
balances with less than 90 days maturity including:
Cash and balances with treasury banks
Balances with other banks
Call lending
Revenue Recognition
Mark-up/return on advances and investments are recognized on accrual basis. Fee,
commission and brokerage except income from guarantees are accounted for on
receipt basis.
Advances
These are stated at cost less provision for bad and doubtful debts. The provision for
bad and doubtful debts is made in accordance with the requirements of the
prudential regulations issued by SBP.
Investments
The investments of the bank are classified in to the following three categories:
Securities Held For Trading
These are investments acquired principally for the purpose of generating
profits from short-term fluctuations in price or dealers margin.
Securities Held To Maturity
These are investments with fixed or determinable payments and fixed maturity
and the bank has the positive intent and ability to hold them till maturity.
Available For Sale
These are investments that do not fall under the trading or held to maturity
categories. In accordance with the requirements of SBP quoted securities are
valued at market values and surplus/deficit arising thereon is kept in a
separate account shown in the balance sheet below equity. Unquoted
securities are stated at cost less provision for impairment. Gains or losses on
disposals during the year are taken to profit and loss account.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 1
Operating Fixed Assets And Depreciation
Capital Work In Progress
Capital work in progress is stated at cost.
Property And Equipment
Office premises are shown at cost/revalued amount less accumulated
depreciation. All other assets are stated at cost less accumulated depreciation.
Depreciation is charged to income applying the straight-line method.
Maintenance and normal repairs are charged to income as and when incurred.
Major renewals and improvements are capitalized. Gains or losses on disposal
of fixed assets are taken to profit and loss account.
Intangible assets
Intangible assets are stated at cost less accumulated amortization. The assets
are amortized using the straight-line method over their useful lives.
Taxation
Taxation charge in the accounts is based on the taxable income at the current rates
of taxation. The bank accounts for deferred taxation on timing differences using the
liability method.
STAFF RETIREMENT BENEFITS
Defined Benefit Plan
The bank operates an approved funded gratuity scheme for officers and executives.
Contributions to the fund are made on the basis if actuarial valuation. Actuarial
valuation of the scheme was carried out as at January 1, 1999 using the projected
unit credit method. The fair values of the funds assets and liabilities as at that date
were Rs. 15.00 million and Rs. 28.88 million respectively. The bank is recognizing
the transitional obligation of Rs. 13.88 million over a period of five years beginning
from 1999 on a straight-line basis. The bank also operates an unapproved unfunded
gratuity scheme for its clerical staff that have completed the qualifying period of
service under the scheme.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 2
Defined Contribution Plan
The bank operates a recognized provident fund for all its permanent employees to
which equal monthly contributions are made by both the bank and the employees
at the rate of 8.33% of basic salary
FOREIGN CURRENCIES
Assets and liabilities in foreign currencies are translated in to Pak rupee at the rates
of exchange approximating those prevailing at the balance sheet date. Foreign
currency transactions are converted at the rates prevailing on the transaction date.
Forward contracts other than contracts with SBP relating to foreign currency
deposits are valued at forward rates applicable to the respective maturities of the
relevant foreign exchange contract. Forward purchase contracts with SBP relating to
foreign currency deposits are valued at the spot rate prevailing on the balance
sheet date. The forward cover fee payable on such contracts is amortized over the
term of the contracts. Exchange gains and losses are included in income currently.
DEFERRED COSTS
These are amortized over a maximum period of five years commencing from the
year in which these are incurred.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 3
S E C T I O N F I V E
M A R K E T I N G M I X
O F
B A N K A L FA L A H L I M I T E D
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 4
M A R K E T I N G M I X
Marketing Mix can be defined as the set of marketing tools that the firm uses
to pursue its marketing objectives in the target market.
Two basic pillars of this basic concept are:
Target Market
Bank Alfalah Limited’s target market consists of individual clients as well as a
number of business organizations. Due to different market segments, Bank Alfalah
Limited’s different branches have their target markets. Due to specialized services
provided by Bank Alfalah Limited and its highly competitive foreign exchange rates,
most of the major importers in this area deal with Bank Alfalah Limited.
Consumer Needs
Assessment of the needs and wants of consumers is an on going process at Bank
Alfalah Limited that helps it to continually develop new products and services. At
Bank Alfalah Limited, the philosophy is that the bank should go to all possible limits
to satisfy the customer needs. The officers of the Import Department, for
example, try to get the minimum possible exchange rates for their clients. Those in
Cash Department do not look at the clock while honoring the cheques.
The bank is continuously formulating new products and services for the growing and
diversified needs of its ever-expanding client base. The bank’s commitment to its
customers is evident from its mission statement:
“To provide innovative and high quality products to its customers at
the lowest possible rates. To achieve all set goals regarding service,
performance and goodwill.”
T H E F O U R P S O F M A R K E T I N G M I X
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 5
The major task of marketing management is to utilize the marketing mix
variables properly. These variables are the product that is to be marketed, its
price, the channel of distribution that is to be used to get the product to the
consumer (place) and its communication to the consumer in the form of
promotion. These are called as the four P’s of marketing. These variables
represent the decisions over which the marketing manager can exercise the most
control. Infact these are the controllable marketing variables.
Bank Alfalah Limited recognizes the importance of all of these variables in their
environment and thus has accordingly formulated a number of strategies. Bank
Alfalah Limited believes that training and development, both personal and
professional, are crucial to their organization. They are proud to offer exceptional
training programs, a wide variety of career path options, and a work environment
that emphasizes coaching as a basis for learning and growth. They hire talented
individuals who take pride and ownership in the business by striving to be the best.
They hire the Team members who believe the Company’s success is in their hands.
To encourage development, Bank Alfalah Limited has defined the skills, knowledge
and training required for each position and this information is communicated to
each employee through specific and thorough job maps. Every employee has the
opportunity to advance based upon his or her performance and potential. Their
program includes annual performance appraisals designed to let employees know
exactly what the expectations are and what opportunities exist for improving.
They have created a progressive banking career path with career opportunities
designed to enable each employee to achieve his or her personal best. Many of the
Senior Management began their careers as small level officers in BCCI. These
opportunities also include unique developmental assignments in field training,
staffing, marketing, facilities management, and in operations positions at Bank
Alfalah Limited.
In the rapidly changing world of today, product innovation is necessary. Consumers’
needs and wants change rapidly. Technological advancements make product
changes possible. A big factor in forcing the organizations to innovate is the
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 6
constant innovations in competitor products, thus making the organization exposed
to the fact of loss of customers. The process of new product development consists
of a number of steps. Bank Alfalah Limited constantly strives to improve its
products, and thus giving its valuable customers value for their money. Bank Alfalah
Limited management has always strived to attain the highest level of satisfaction
amongst its customers. In addition, this property has made them less vulnerable to
sudden changes in consumer trends and tastes.
C O R E P H I L O S O P H Y - B A N K I N G O N
C O N S U M E R S
As Bank Alfalah Limited threads its ropes to be the leader in Consumer Banking in
Pakistan, its operating strategy has been aligned with key consumer need highest
value and expert service. As custodians of financial services, Bank Alfalah Limited
feels duty bound to do more than conventional banking services. As an extra step
towards financial security and freedom for the consumers, Bank Alfalah Limited
constantly devises safety management regimes to maximize returns on hard
earned savings and investments. These values form a prime directive that is
evident in its responsive teams, present at their nationwide branches, ready to
provide all the clients timely assistance.
Cognizant of the continually changing customer need environment, Bank Alfalah
Limited has devised a product portfolio to stay ahead of the emerging consumer
patterns.
M A R K E T I N G G U I D E L I N E S
The marketing management has made some core policies for better service and
consumer satisfaction. They can be summarized as
Identification of consumers wants and needs through marketing research
Development and management of these wants and needs
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 7
Promotion of the products developed for the customers
Establishment and maintenance of the meaningful relations with the
customers and special groups
Coordination of the marketing as an integral part of all the banking activities
It is the function of the organization to keep the constant touch with the consumers,
their needs, develop products, that meet their needs and build the aim which
express organization purpose. Thus the customers, employees and investors fall
into the category of bank’s market. Marketing means making exchange of
goods and services possible. Once a banker identifies its prospective customers,
his marketing strategy becomes easy. The next step to find out the banking
requirements. Bankers also try to locate there past customers for offering the more
facilities to them.
M A R K E T I N G P R I N C I P L E S E V O L V E D B Y
B A N K A L F A L A H L I M I T E D
For providing marketing services to the clients, Bank Alfalah Limited has formulated
certain principles. Bank Alfalah’s target market consists of individual clients as well
as a number of business organizations. Due to different market segments, Bank
Alfalah Limited’s different branches have their target markets. The principles are
We should have full knowledge about the business background, behavior and
the life style of our clients.
We should have full knowledge about our self and about the bank where we
work
Make maximum use of the information provided by the management
information systems and once a contact is established with the client, always
try to pursue on the call of the client any time, the approach of the marketer
should be friendly rather than a business like.
We should frame a definite program about the areas to be covered.
We should know what is going around us. Who are our competitors, what
product and services they are offering and at what rates
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 8
We should have a sound knowledge about our profession, current rates of
interest and market trends.
We should try to work with team spirit
We should not be too internally focused view on unlimited prospects but to
widen our perspective.
We should render quick, efficient, and personalized service to our customers.
Be always ready to react and readjust to a change in the market and
customer’s attitudes
Assessment of the needs and wants of consumers is an on going process at Bank
Alfalah Limited, which helps it to continually develop new products and services. At
Bank Alfalah Limited, the philosophy is that the bank should go to all possible
limits to satisfy the customer needs.
THE FOUR PS OF MARKETING WITH REGARDS BANKS ARE
Product – Products and Services Provided by a Bank
Price - Commission and Bank Charges Received
Promotion - Promotion of products and Services
Place - Placement of Services i.e. Network of branches
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 3 9
PP R O D U C T SR O D U C T S & S & S E R V I C E SE R V I C E S
A Product or a service creates a bundle of form, possession, time, place,
information and image utilities that have potential need-satisfying capabilities
for individual and organizational customers.
True to its strategy of becoming a highly effective financial supermarket, Bank
Alfalah Limited provides a complete range of products to its customers; the
corporate clients, commercial enterprises and the small consumers. At Bank Alfalah
Limited, the primary commitment is to understand and support its client’s business
objectives and financial needs. All this is ensured through constant R & D focus and
training & development of staff. Bank Alfalah Limited provides a wide range of
products/ services to its customers, which can be compared with any foreign, or
national bank in terms of quality and reliability.
The products and services Bank Alfalah Limited is presently offering come under
four main heads i.e. Corporate Banking, Consumer Banking, Consumer
Finance and Electronic Banking. The various items that fall under these four
heads can be summarized as
CORPORATE BANKING
Current Account (Pak Rupees)
Foreign Currency Accounts
Clearing And Fund Transfer
Trade Services
Overdraft Facilities
Term Loans
Project Financing
CONSUMER BANKING
Current Account (Pak Rupees)
PLS Account
Royal Profit Account (Pak Rupees)
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 0
Royal Patriot Account
Anmol Deposit Certificates
Monthly Income Account
Money Gram
Rupee Traveler Cheques
Saving Deposit Lockers
CONSUMER FINANCE
Current Account (Pak Rupees)
Car Finance
Personal Loans
Housing Finance
Monthly Income Account
Foreign Currency Account
Money Gram
Rupee Traveler Cheques
E-BANKING
ATMs
Online Banking
Phone Banking
Internet Banking
A C C O U N T S O F F E R E D B Y B A N K A L F A L A H
L I M I T E D
One of the basic functions of a commercial bank is to receive deposits and to honor
cheques. Accounts offered by the banks for the deposits of customers constitute the
basis of their operations and develop the basic relationship between a banker and
customer. Bank Alfalah Limited has formulated a number of accounts for the
deposits of customers, with unique features, to facilitate them. These are:
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 1
ROYAL GROUP
Royal Group is a joint investment account that provides a way to the customers to
have their joint accounts directing them towards more benefit. Minimum number of
people required to form a group is just 2. So, in this way, two or more people get
their joint account in the bank and can earn higher rates of return. Profit is
calculated on daily basis and disbursed monthly. It also provides an opportunity to
employees to get their salary disbursed through this account as it provides better
arrangements for secured collection of cash/ checks. The Important Features are
It is a joint investment plan
Minimum group Bank Alfalah Limited balance required is Rs. 100,000.
Minimum number of members required to form a group is 2
Profit is calculated on daily basis
Profit is disbursed on monthly basis
Each member of the group is assigned a PLS savings account
Each member is provided with a separate checkbook
ROYAL PROFIT
Royal Profit is a profit bearing current account. In Royal Profit account, a customer
enjoys a higher rate of return that increases with savings. Account holder has the
comfort of unlimited transactions and there is no restrictions regarding the
withdrawals, which mean all time accessibility to the account.
It gives two advantages
Access to the funds at all times
Lucrative profit rates that increase with savings
The Important Features are
Optimum Daily Balance
With Royal Profit you earn optimum profit on your daily balance.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 2
Higher Savings
Incorporating a slab system, Royal Profit gives higher savings.
Convenience Of Current Account
Royal Profit provides the convenience of current account.
Unlimited Transactions
There are no restrictions on the number of transactions and withdrawal
can be made without any notice.
Disbursement Of Profit On Monthly Basis
Low Min Balance
For availing the above benefits a minimum balance is to be maintained.
Every individual has to maintain balance of Rs. 50,000.
Companies have to maintain a minimum balance of Rs. 250,000.
ROYAL PATRIOT
Royal Patriot is a special term deposit account offering attracting profit rates that
improve with tenure and amount. Customer has a choice to deposit his amount for
terms of 1, 3, 6, 9, 12 & 24 months with a minimum Bank Alfalah Limited balance of
Rs. 25,000 only. There is no penalty in case of premature encashment (Profit will be
calculated according to the last tenure completed), & moreover, no prior notice is
required before withdrawals. The Important Features are
It is a special term deposit
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E
From 150,000,000 & Above
7.00From 50,000,000 To
149,999,999
6.75From 10,000,000 To
49,999,999
6.50From 1,000,000 To 9,999,999
6.00From 50,000 To 999,999
RATE (P.A.) %AMOUNT
1 4 3
Choice of terms 1, 3, 6, 9, 12 and 24
Profit on 1 and 2 year deposits is paid on half yearly basis
No penalty in case of premature encashment
No prior notice is required before withdrawal
Minimum Bank Alfalah Limited balance of only Rs. 25,000 is required
ANMOL DEPOSIT CERTIFICATES
The Important Features are
These certificates are available in the denominations of Rs. 10,000, Rs.
25,000, Rs. 50,000, Rs. 100,000, and Rs. 500,000.
Profit up to 18 % per annum is offered on these deposit certificates, thus the
amount gets doubled in six years.
Profit is calculated on daily basis. So in case of encashment, the customer
can get the profit of the number of days the certificate has been held.
The certificates can be en cashed prematurely without any penalty.
These certificates can also be purchased in the name of a minor.
Short-term loans are also granted against these certificates.
OTHER CLASSIC PLS DEPOSITS
Along with the above stated special Royal accounts and Anmol Deposit Certificates,
the bank also have formulized the Classic PLS Deposits. They are
Current Account
Savings Account
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E
8.508.258.002 year
8.208.108.001 year
7.707.607.506 months
7.207.107.003 months
6.206.106.001 month
5,000,000 &
ABOVE
1,000,000-
4,999,999
25,000-
999,999
TENURE
1 4 4
9.25PLS Term Deposit Five Years
9.00PLS Term Deposit Four Years
8.50PLS Term Deposit Three Years
8.00PLS Term Deposit Two Years
7.50PLS Term Deposit One Year
7.00PLS Term Deposit 6 Months
6.00PLS Term Deposit 3 Months
6.00PLS Term Deposit 1 Month
4.60PLS 30 Days Notice Deposits
6.50PLS 7-29 Days Notice
Deposits
Deposit Rate (P. A)%PLS Saving Deposits
Notice Deposit
Term Deposit
Foreign Currency Accounts
The key features of these accounts are as under:
Current Account
No profit is paid on this account.
Amount can be withdrawn at any time without any prior notice.
A very low minimum Bank Alfalah Limited balance is required.
This account can be opened in other currencies also, i.e. in Euro, Pound
Sterling, U.S. Dollar and Euro.
This account can be opened with PKR 10,000.
Savings Account
Minimum Bank Alfalah Limited balance required is Rs. 7000.
Profit is paid on half-yearly basis.
The profit rate offered and paid half-yearly is 8.00 %.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 5
Savings account can be opened in other currencies also, i.e. in Euro,
Pound Sterling, U.S. Dollar and Euro.
Account can be opened with PKR 25,000.
Notice Deposit
These are the short-term deposits of customers.
Interest is paid on daily basis.
Notice has to be given to the bank prior to the withdrawal of the amount.
Term Deposit
It is a fixed PLS account.
Profit Rates are given in the following table
1 Month 7.50 %
3 Months 8.50 %
6 Months 9.00 %
1 Year 9.50 %
3 Years 10.50 %
5 Years 11.00 %
Foreign Currency Accounts:
Due to the increasing globalization, all leading commercial banks have been
offering foreign currency accounts to their customers. Bank Alfalah Limited has
done it by facilitating its customers to have their foreign currency accounts opened
in the bank. At present, Bank Alfalah Limited offers US Dollar, UK Pound and EURO
accounts.
O T H E R C O N S U M E R P R O D U C T S A N D
S E R V I C E S O F F E R E D B Y B A N K A L F A L A H
L I M I T E D
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 6
ON-LINE BANKING
Bank Alfalah provides on-line services to its customers. At present, this service
facilitates the customers to deposit and transfer their amounts from one branch to
another of Bank Alfalah Limited. It is being planned to launch a universal account to
update this facility and make it more extensive.
ALFALAH CAR FINANCING
Alfalah Car is a consumer-financing scheme that enables a customer to own his
desired car at easily affordable and flexible installation with minimum down
payment and insurance. All businessmen, Corporate
Employees, Salaried and self-employed professionals
having net take home income in excess of three times
the monthly installment are eligible to take the
advantage of this scheme. The salient features of this
scheme are
Lowest Financing cost available in the market
Tenure of 1 to 5 years as per requirement of customer
Quickest processing
Minimum documentation required
Down payment requirement of 20%
Repayment through monthly installments
Lowest insurance rates available from bank’s approved insurance companies
On of the lowest markup in the market i.e. 19 % (this has been reduced to 8.9
% and 9.5 % in 2003 for Suzuki brand cars and other brand cars respectively)
RUPEE TRAVELER CHEQUES (RTCs)
Bank Alfalah Limited issued its own rupee travelers Cheques with highest
denominations, during the course of my internship with the bank. Bank Alfalah
Limited TCs have been presented with ultimate combination of features, which
allows the customers the best way to make and accept payments (as it is called
safe cash), or to save in a rewarding way. The salient features are
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 7
Features Of Rupee Traveler Cheques
Highest Denominations Available
Bank Alfalah Limited offers Rs. 5000
and Rs. 200,000 RTCs.
Widest Range:
Bank Alfalah Limited offers RTCs
following denominations
Rs. 1000
Rs. 5000
Rs. 10,000
Rs. 20, 000
Rs. 50,000
Rs. 100,000
Rs. 200,000
Rs. 500,000
Rewards
Customers can earn daily points and win great gifts.
Encashment Commission
A commission of 0.15% is given on encashment of RTCs at any branch of
Bank Alfalah Limited.
Security Features
The special embossed printing in UK, Alfalah security thread and Bank
Alfalah Limited watermark are some of the features that make RTCs
secure.
Easily Refundable
RTCs can be refunded without any penalty or loss.
Transferable And Endorsable
They can be transferred and endorsed to anyone.
Unlimited Validity:
Bank Alfalah Limited RTCs will always remain en-cashable.
No Account Needed
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 8
One does not have to be an account holder to get the benefit of Bank
Alfalah Limited RTCs.
ALFALAH LOCKERS
The client can also avail the facility of rent-free safe deposit lockers for their
valuables. The distinguishing features of these lockers are:
Highly effective security system
Fully refundable security deposit
Convenient locations
Flexible operating hours
BANK ALFALAH LIMITED HOME LOANS
Alfalah Home Loan is specially designed for those NRIs
in UAE whose families live in Pakistan. Bank Alfalah
Limited provides following types of Home Loans:
To purchase a new house
To renovate the existing house
To construct a house
ANMOL SAVING CERTIFICATES
Anmol saving certificates is a special product of Bank Alfalah Limited. It gives Sky
High Profits from the date of purchase.
Denominations
Rs. 10,000
Rs. 25,000
Rs. 50,000
Rs. 100,000
Rs. 500,000
Encashment
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 4 9
Anmol Certificates can be en-cashed any time without paying any penalty. It means
they can be en-cashed before maturity. Profit is earned till the last day. It gives the
flexibility to save short and long term and the profit continues to grow every day.
Security
ANMOL deposit certificates are fully secured by Bank Alfalah Limited. In case of loss
of certificates Bank Alfalah Limited re-issues them without any cost. The bank also
provides free custodial service.
MONTHLY INCOME ACCOUNT
Bank Alfalah Limited’s Monthly Income Account offers more profit and ensures a
steady stream of monthly income for the customers.
It gives monthly profit of Rs. 855.
The variable terms are 1, 2, and 3 years.
Profit is directly credited to the customer’s
account.
A minimum deposit of Rs. 25,000 is required.
Loan facility is also provided on the basis on this account.
TENOR OF DEPOSIT MONTHLY PROFIT PAYMENTS ON RS. 100,000
One Year Rs. 650/- @ 7.80%
Two Years Rs. 670/- @ 8.04%
Three Years Rs. 730/- @ 8.76%
MONEY GRAM
Bank Alfalah Limited in collaboration with
MONEYGRAM offers remittance service to Pakistan. It is
a person-to-person money transfer service that allows
consumers to receive money in just a few minutes.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 0
Security
Money Gram service is already being used all over the world because of the secured
and quick transfer of money, which is possible through an extensive network of
quality agents, linked by computer.
Convenience Of Customers
It is available in over 154 countries and in more than 40,000 locations worldwide.
Therefore money is transferred immediately and arrives at the receiving end within
10 minutes. One does not have to be an account holder neither needs a credit card
to avail this facility.
Free Message Service
A 10 words message can be received from the sender with every transaction
without any extra cost.
L E N D I N G P R O D U C T S O F F E R E D B Y B A N K
A L F A L A H L I M I T E D
Bank Alfalah offers many lending products to its customer. They can get running
finance for their working capital requirements as well as trade finance for importing
their merchandise. The complete detail of all of these lending products is given in
the Credits section of this report. Some of the major lending products of Bank
Alfalah Limited are:
Overdraft
Cash Finance
Finance Against Trust Receipt
Finance Against Imported Merchandise
Export Bills Discounting
Letter Of Credit
Local Bills Purchased
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 1
C O N S U M E R F I N A N C I N G A T B A N K
A L F A L A H L I M I T E D
During the time of my internship (June – August 2002), Bank Alfalah Limited was
only indulged in Corporate Credits and did not provide Consumer Financing.
Recently, Bank Alfalah Limited has started Consumer Financing as well. It is
providing financing for items like
Televisions
Music Systems
VCD Players
DVD Players
Monitors
Refrigerators
Deep Freezers
Microwave Owens
Washing Machines
Ceiling Fans
Pedestal Fans
Room Coolers, etc.
The consumer financing facility is available for products of companies like
Philips
Haier
Super Asia, etc
E L E C T R O N I C B A N K I N G A T B A N K
A L F A L A H L I M I T E D
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 2
ALFALAH ATMs
Bank Alfalah Limited also provides the facility of ATMs to its customers. Using this
facility customer can withdraw cash at any time avoiding the lengthy procedure of
cash withdrawal.
ONLINE BANKING
Bank Alfalah Limited is one of the few banks in Pakistan that offers On-line Banking
facilities. Customers have the convenience of walking into the nearest branch of
Bank Alfalah in any of the 22 cities of Pakistan and operate their accounts.
PHONE BANKING
Bank Alfalah Limited is planning to introduce Mobile banking facilities to its
customers in near future.
E-BANKING
Bank Alfalah Limited is also going to introduce e-banking to facilitate its valued
customers.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 3
PP R I C ER I C E
“The amount of money the customers pay for the product of a
company”.
Bank Alfalah Limited provides different products and services to its customers,
which have been discussed in previous section. Pricing of products means the
commission to be paid by the customer in return of services provided by
the bank. The price paid for the services mainly include:
Mark Up/ Interest
Bank Charges
Fees and Bank Commission etc.
These charges and commissions are prescribed on Schedule of Bank Charges
(SOC) and keep on changing from time-to-time, and are issued by the bank
periodically (generally after six months). The price charged for all the products and
all the services is given in complete detail in the schedule of bank charges that is
given below.
SCHEDULE OF BANK CHARGES
FOR THE PERIOD JAN 01, 2001 TO JUNE 30, 2001
D O M E S T I C B A N K I N G
REMITTANCES (DOMESTIC)
Pay Order (A/c Debit) Rs. 10 (flat)
Pay Order (Against Cash) Rs. 10 (flat)
Cancellation of Pay Order Rs. 100 (flat)
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 4
Issuance of Duplicate Pay Order Rs. 100 (flat)
Issuance of Drafts, MTs, & TTs
Up to Rs. 10,000
From Rs. 10,001 to Rs. 100,000
From Rs. 100,001 to Rs. 1,000,000
From Rs. 1,000,001 to Rs. 2,000,000
Over Rs. 2,000,000
0.25% Minimum Rs. 25
0.20% Minimum Rs. 40
0.10% Minimum Rs. 200
0.075% Minimum Rs.
1000
0.060% Minimum Rs.
2000
If a Party is Maintaining Average Balance of Rs.
100,000 in Current Account then charges will be
deducted for the issuance of PO and DD, drawn on any
Bank Alfalah’s branch.
Cancellation of DDs / TTsRs. 100 (flat) per
cancellation
Issuance of Duplicated DD Rs. 100 (flat) per item
Issuance of SBP Cheque (if permissible by SBP) Rs. 500 per Cheque
MISCELLANEOUS CHARGES - COMMUNICATION
Courier Charges
Inland
Foreign
Rs. 150
Rs. 1250 or actual
whichever is higher
E-mail charges Rs. 50 per e-mail
Internet access charges Rs. 50 per hour
Fax charges
Inland
Foreign
Rs. 150 or Actual, which
ever is higher
Rs. 250 or Actual, which
ever is higher
Telex charges
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 5
InlandRs. 200 or Actual
whichever is higher
Foreign Rs. 500 or Actual
whichever is higher
Postage Charges
Inland Rs. 100
Foreign Rs. 200
OTHER CHARGES
Account Closing Rs. 150 (Except PLS.
Saving Account)
Out of pocket Expenses (not covered by Schedule of
Charges)Actual
Standing Instructions Rs. 100 per instruction
Online Cash transactions (not maintaining minimum
balance)Rs. 300
FINANCES / ADVANCES
ADVANCES
Charges for Advances in Addition to Mark-up/Profit on
Investment
Project examination fee (where applicable) 1.00% of project facility
requested
Interim Review / Processing Fee Rs. 1000 (flat) Where
applicable
Renewal of facility / New Facility Initiation (where
applicable)
Commercial borrower
Individual / non-commercial borrower
Rs. 2,500 (flat)
Rs. 750 (flat)
Commitment Fee / up-front fees (where applicable)0.50% - 1.00% (on sanction/
renewal)
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 6
Legal & Administrative fee 0.50% Minimum Rs. 1000
Miscellaneous Charges (documents, evaluation of
security, and maintenance there to)Actual
Replacement of securities (interim) Rs. 1000 (flat)
To mark lien on securities not issued by us Rs. 250 (Services Charges)
Registration of Charge with Registrar of Joint Stock
Companies Rs. 500 plus Actual
Charges for Advances Against Pledge/Hypothecation
Godown Rent Actual
Staff Salaries Actual
Godown Inspection Charges (where applicable)
Within municipality limit or within a radius of 5km
from Branch
Out side, District limits
a) Rs. 500 up to Rs.
10M Facility
b) Rs. 1000 over Rs.
10M Facility
Rs. 1000 + Traveling
Expenses (outside
municipality)
Other incidental expenditure, e.g. insurance, legal,
etcActual
Collection of coupon (on Government certificates
issued by other bank/saving centers under lien to
us)
Rs. 250 per coupon
Issuance of Delivery Orders against Finance
against Imported Merchandise, Cash Credit and all
goods under pledge.
Rs. 500
Issuance of NOC (customer’s request) on request
of customers/clients for creating additional / pari-
passu charge/second charge on their fixed assets
for acquiring further project finance from other
Rs. 5000
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 7
Banks/Financial Institutions.
Service Charges on over due amount (where
customer fails to pan obligation on agreed / due
date) including Payment Against Documents /
Finance against Imported Merchandise / F.T.R /
Acceptances & Mark-up Advances
0.50% of overdue amount in
addition to the mark-up
Business Commitment & Compensatory
Commission
If a party fails to pass on
committed business in
writing while getting the
credit Line sanctioned in its
favor, the bank reserves the
right to recover
compensatory commission
maximum at the rate of
5.00%, to the extent of
shortfall in business so
committed to be routed
through us.
GUARANTEES
Guarantees issued to shipping companies in
lieu of Bills of Lading, Airways Bill and Railway
receipt
Rs. 800 (flat)
Guarantees issued to Collector of Customs in
lieu of payment of Export duty, which remains
valid for 6 months
0.50% per quarter or part
thereof Minimum Rs. 1000
Guarantees secured against Cash 0.20% per quarter or part there
of Minimum Rs. 500
Other Guarantees: Where total value of Guarantee
business of a customer during a
period of limit or calendar year
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 8
Up to Rs. 3M
Above Rs. 3M to Rs. 5M
Above Rs. 5M to Rs. 10M
Above Rs. 10M to Rs. 20M
Above Rs. 20M to Rs. 50M
Above Rs. 50M to Rs. 100M
Above Rs. 100M
0.50% per quarter Minimum Rs.
750
0.45% per quarter or part
thereof
0.40% per quarter or part
thereof
0.35% per quarter or part
thereof
0.25% per quarter or part
thereof
0.15% per quarter or part
thereof
Subject to negotiation while
confirming with SBP directives
Issued at Other Bank’s request in Pakistan 0.25% per quarter or part
thereof Min Rs. 750
Against Foreign Bank’s Guarantees 0.25% per quarter or part
thereof Min US$ 15
Amendments of Guarantees
Increase in amount and or Extension in period
Rs. 300 per amendment
Commission as per item 1.d)
above
Administrative fee (expired guarantees)
Rs. 75 per quarter until the
original guarantee is returned to
the bank (not to be charged if
100% collateral is held)
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 5 9
C O N S U M E R B A N K I N G
SALE/PURCHASE OF SECURITIES, SAFE CUSTODY,
ARTICLES IN SAFE DEPOSITS AND SAFE DEPOSIT
LOCKERS
SAFE DEPOSIT LOCKER
Fee for safe deposit lookers (to be recovered
in advance or at commencement of the
period yearly/half yearly/quarterly as the
case may be)
Small
Medium
Large 1
Large 2
Extra Large
Rs. 150
Rs. 1250 or actual whichever is
higher
Rent
Rs. 1000 per annum.
Rs. 1500 per annum.
Rs. 2500 per annum.
Rs. 3000 per annum.
Rs. 3500 per annum.
Locker fee will be waived if an interest free
Deposits as mentioned is maintained during
the tenancy of lockers with a minimum
period of one year.
Small
Medium
Large 1
Large 2
Extra Large
Deposits
Rs. 10000
Rs. 15000
Rs. 25000
Rs. 30000
Rs. 35000
Key Deposit (in advance to be refunded on Rs. 1000 per locker
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 0
termination)
Breaking Rs. 2500 per Locker
Late Fee (Locker Rental)
Small
Medium
Large 1
Large 2
Extra Large
Rs. 20 per month
Rs. 30 per month
Rs. 50 per month
Rs. 60 per month
Rs. 70 per month
Locker facility for staff of Bank Alfalah Ltd. At 50% discount on rates & no key
deposits
SALE / PURCHASE OF SECURITIES
Sale / Purchase of shares
0.125% on the first Rs. 10,000 of
purchase price or cost thereof.
Minimum Rs. 50 and 0.10% on
amount exceeding Rs. 10,000 or
Minimum Rs.75
Withdrawal fee
Withdrawal fee on shares/securities held in
safe custody (to be recovered at time of
withdrawal)
Withdrawal fee on Govt. securities where
shares and/or securities sold are from
against item 2.a) OR
Withdrawal fee, as shown against item (2b)
(i) and (ii) whichever is higher, will be
charged.
0.50% on the first Rs.10,000 of the
paid up value Minimum Rs. 50 and
0.15% on amount exceeding
Rs.10,000 Minimum Rs. 100
Rs. 5 per scrip
Collection of profit/return and dividend 0.5% on the amount of interest/
return/dividend collected/paid
including deposit certificate Issued
by Government agencies Minimum
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 1
Rs. 50
Handling charges for (conversing
renewal/consideration/subdivision of Govt.
Securities).
Rs. 25 per scrip. Rs. 50 (flat) in
case of Deposit Certificate issued
by Government agencies
ARTICLES IN SAFE CUSTODY
Share custodial services of Central
Depository Company of Pakistan Ltd.
Actual charges charged by CDC,
plus 1.0% of share value on the
first of every month or Ps. 5 per
share each month, which ever is
higher (payable up-front, in
advance)
Boxes & Packages
Rs. 1.00 per 100 cube inches or
any part thereof with a Minimum of
Rs.200
Envelopes
Rs. 0.50 per 25 square inches or
any part thereof with a minimum of
Rs. 100
ISSUANCE OF CERTIFICATE FOR SAFE ITEMS
Issuance of Duplicate Securities Rs. 1000 (flat)
INWARD / OUT WARD REMITTANCE AND CHEQUE
PURCHASE
Outward T.T. through Debit of Account
Against Surrender of Foreign Currency notes
US$ 15 or equivalent PKR
US$ 15 Plus 0.50% Minimum $ 5 or
equivalent PKR
(Also applicable if the Foreign Currency
Account is funded with cash for onward
remittance)
Demand Draft through Debit of Account
Against surrender of Foreign Currency notes
US$ 5 or equivalent PKR
US$ Plus 0.5% Minimum US$ or
equivalent PKR
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 2
(Also applicable if the Foreign Currency
Account is funded with cash for onward
remittance)
Issuance of duplicate FDD
Cancellation of FDD/FTT/FMT
Rs. 200 plus Actual Fax, Telex and
Postage charges
Rs. 200 plus Actual Telex and Postage
charges.
Inward:
If proceeds are credited to an account
maintained with us
Others
Nil
US$ 5 or equivalent
Received from abroad or local bank’s branches
& where payment is demanded in Foreign
Currency
Minimum US $3 – Maximum US $6 plus
Actual Postage / Telex charges are
recoverable from collecting bank.
Home Remittance Nil, if proceeds are credited to an
account with us
Other Rs. 10 plus Money order / Telegram
charges
FOREIGN BILLS PURCHASED / COLLECTION
Purchase (Short Tem Receivable) 0.5% Min Rs. 300
Encashment 0.4% Min Rs. 300
Issuance 1%
FCY Cheques / Drafts / TC ’s sent on collection 0.20% plus postage @ Rs. 50/-
(correspondent bank charges will be
extra, if any)
Foreign Exchange Permits
Family Maintenance Rs. 1000 per transaction
Studies Abroad Rs. 1000 per transaction
SBP approvals for capital transfers, dividends, Rs. 1500 per transaction
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 3
freight
Other Approvals from SBP Rs. 1500 per transaction
OTHER
Unpaid Items RS. 200 or US $5
Correspondence Charges Actual (if any will be recovered
Foreign Currency (cash handling services)
under FE-25 (SBP) 0.5% on cash deposit
Postage Rs. 150 or Actual, whichever is higher.
Counter Service Rs. 1250 or Actual, whichever is higher
Long Telex per Swift Rs. 1500 or Actual, whichever is higher
Short Telex per Swift Rs. 500 or Actual, whichever is higher
INLAND LETTERS OF CREDIT
Issuance
Annual Letter of Credit volume up to Rs. 25M.
Annual Letter of Credit volume up to Rs. 50M.
Annual Letter of Credit volume in excess of Rs. 50M
First Quarter Subsequent Quarter
Minimum
(or part there of ) (of Part thereof) Rs.
1000
060% 030%
050% 0.25%
040% 0.20%
Amendments
Amendment involving increase in amount and or
extension in period of dispatch / delivery /
negotiation.
Rs. 400 (flat) per amendment
Rs. 400 per amendment plus commission as
per item number. 1a) above
Acceptance Commission
a) Rs. 500 (flat) per Bill charged at the time of
retirement of bill
b) In addition commission at the rate of
0.1245% per month for any period beyond the
validity of Letter of credit Minimum Rs. 150
Confirmation 0.25% per quarter of part thereof Minimum Rs.
300
Collection
Documentary
Through branches of our bank
0.30% Minimum Rs. 200
0.25% Minimum Rs. 100
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 4
Clean (including cheques)
Through branches of our bank
0.15% Minimum Rs. 300
0.15% Minimum Rs. 50
Purchase of Bills other than those drawn against
Letter of Credit
Through branches of our bank
0.35% Minimum Rs. 150 plus Mark up (From
date of purchase to date of realization)
0.25% Minimum Rs. 100 plus Mark – Up
(From date of purchase to date of realization)
Purchase of usance Draft under usance
Letter of Credit
Mark up if retired up to 21st day
Mark up if retired during next 210 days
0.30% Minimum Rs. 100 plus mark-up
Ps. 51/1000/day
Ps. 52/1000/day
Dividend Warrants etc. 0.60% Minimum Rs. 50
Negotiation at Sight
Collection Charges for Usance Bill
Minimum Rs. 300
0.40% Minimum Rs. 200
Unpaid
Returning Charges:
Documentary Bills
Clean Bills
Rs. 100 per bill
Rs. 50 per bill
Other charges
Collection agent charges Actual
Postage Rs. 100
Telex Rs. 500 (full)
Storage charges Rs. 50 per pack per day
I N T E R N A T I O N A L B A N K I N G
IMPORTS
Registration with EPD
Registration of New import Registration Rs. 1200 application
Processing of new import Registration Rs. 500 per application
Renewal of category pass book and Rs. 300 per application
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 5
supply
Endorsement on category pass book
(transfer of photocopy) thereof
NOC/Transfer of pass book to other banks
Holding Expired category pass book
Rs. 200 (flat)
Rs. 1000 (flat)
Rs. 500 per annum
Import on Consignment Banks
Handling Charges 0.25% (flat) of value Minimum Rs. 750
OTHER CHARGES
Postage Rs. 150 or actual whichever is higher
Courier Service Rs. 1250 per application
Telex Messages
Full Telex of Letters of Credit
Brief Telex of Letters of Credit
Brie Telex / Fax amendment of LC’s
Rs. 1500 or Actual whichever is higher.
Rs. 500 or Actual which ever is higher.
Rs. 500 or actual which ever is higher
Obtaining credit reports on suppler Rs. 500 per report
Correspondence Charges, if any will be
recovered. Actual
Service charges against import
transactions i.e. import bill (PAD), Usance
bills under Letter of Credits, collection and
condiment basis
0.10 (flat) Minimum Rs. 300
Handing of discrepant documents
presented under L/C US$ 25 (to be recovered from presenting bank)
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 6
PP R O M O T I O NR O M O T I O N
“All activities that a company undertakes to communicate and
promote its products”
This is an age of competition. Numerous organizations are providing financial
services to the customer. These days every one is facing pressure of competitors. In
this world of growing competition, the only way to survive and grow, for an
organization, in the market place is the proper marketing and promotion of its
products.
It is the case with Banking Companies. There is large number of foreign and local
banks working in the country and it has been noticed that they are emphasizing
much on their marketing strategies. In this scenario, the key for a bank to succeed
and attract its customers is adequate promotion of its products &services.
The bank can attract and retain its customers through:
Sales Promotion
Advertisement
Direct Marketing
Public Relations
Bank Alfalah Limited does not carry out aggressive marketing for any of its
products. Its promotional tactics are designed for to be beneficial to the bank on the
whole than to any specific section or product of Bank Alfalah Limited. Bank Alfalah
has adopted different approaches for the accomplishment of this purpose. Along
with the advertisement, the bank is providing personal services to its clients with
maximum security as other banks provide. Bank also encourages the public relation
policy of marketing. Some brochures and promotional material has been printed but
it is distributed mainly through the clients who visit the branch for their day-to-day
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 7
business or through the customers who come to get information about new
schemes launched by the bank.
P R O M I N E N T T A C T I C S / C A M P A I G N S
ADVERTISEMENTS IN THE PRESS
Once in a while, Bank Alfalah Limited gives advertisements for its products and
services in some of the leading newspapers. Advertisements for Job Opportunities
are also placed in the daily newspapers and magazines.
Also, some fascinating advertisements have been printed on Daewoo City Busses,
which serves as a dynamic source of marketing
Nowadays we see that Bank Alfalah Limited has sponsored a sports news program
on Ten Sports that is aired a few times daily.
BILLBOARDS
A large number of billboards have been affixed on the light poles around the city.
According to their promotional policy, billboards are placed in places where they are
most likely to gain attention of potential businesses and customers.
The marketing company of Bank Alfalah Limited after consultation with the officials
has also placed small “mopies” (signboards) that are light from the inside on the
green belts on roads on different parts of the city.
For example on the way to the New Airport, you can see the signboards of Bank
Alfalah Limited on the light poles.
BANK ALFALAH SQUARE
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 8
Due to Bank Alfalah’s assistance for the construction of fountain in Liberty
Market Square, it is named as Bank Alfalah Square.
Bank Alfalah Square, for being situated in such a business and commercial area and
in the heart of the most posh and frequently visited area of Lahore has its unusual
importance and has resulted in successful promotion of Bank Alfalah Limited.
ALFALAH MINI GOLF
Lahories are a fun loving clique. They thrive on good sources of entertainment and
Bank Alfalah Limited has made it possible by formation of Alfalah Mini Golf near
Gulberg. It not only provides a source of recreation to the people but it serves as a
major source of marketing for the bank.
SPONSORSHIP OF EVENTS
Bank Alfalah Limited regularly sponsors various functions and events and
tournaments, which bring much good name to the bank.
Recently Bank Alfalah Limited sponsored Gymkhana Golf Tournament held in
Lahore. Some time ago Bank Alfalah Limited sponsored an International Squash
Tournament held in Lahore.
Bank Alfalah Limited has also on numerous occasions sponsored various fund
raising campaigns and concerts.
WEBSITE
Keeping abreast of the need of the day, Bank Alfalah Limited maintains a very
informative website. The website is updated regularly and provides information on
all aspects of the bank and its products.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 6 9
SHAAH DIN MANZIL
Construction of Shaahdin Manzil as the Main Branch Lahore is going to be the
revolutionary step for Bank Alfalah Limited. It would not serve just as a main branch
only, but it would also be a great source of ever growing marking and promotion of
bank. This is because it is located on the Sharah-e-Jinnah (The Mall Road) that is the
hub of business activity in the city.
M I N O R D R A W B A C K S
One drawback or shortcoming is that, Bank Alfalah Limited has formulized a lot of
products and services for its customers, even more than other commercial banks,
but any advertisement on electronic media has not been seen.
Bank Alfalah Limited’s major competitor Union Bank Limited has started large
media campaign, so keeping in view these threats, Bank Alfalah should emphasize
more on its advertisement.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 0
PROPOSED MAIN BRANCH, LAHORE – SHAAH DIN
MANZIL
PP L A C EL A C E
“The activities a bank undertakes to make products and services
easily available or accessible to the customers”.
Bank Alfalah Limited’s objective has been to expand its branch network to meet the
clients’ needs. The bank is well positioned and geographically poised, to cater for
increased business demands, from its existing potential clientele. During last year
under review, Bank Alfalah Limited opened eleven new branches and has thirty-
five branches, spread all over Pakistan covering major business centers and
principle cities. Bank Alfalah Limited plans to add more branches to his growing
network in the subsequent years.
At present, Bank Alfalah Limited has opened all its branches at commercial and
business areas or near to commercial areas so that the customers or clients face no
problem in reaching the bank.
The cities in which Bank Alfalah has penetrated to date is presented in alphabetical
order
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 1
Bahawalpur
D.G. Khan
Fisalabad
Gujranwala
Gujrat
Hyderabad
Islamabad
Jehlum
Karachi
Lahore
Manshria
Mardan
Mingora Sawat
Multan
Peshawar
Quetta
Rawalpindi
Rahim-yar-Khan
Sahiwal
Sialkot
Sargoda
Sukkar
P R O M I N E N T B R A N C H E S
BAHAWALPUR
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E
Branch Code 0085
Branch Address B-v/912, Circular Road Bahawalpur
Telephone Number 0621-889871-2,889922-5
Fax Number 889874
E-mail [email protected]
1 7 2
DERA GHAZI KHAN
Branch Code 0641
Branch Address Liaquat Road Dera Ghazi Khan
Telephone Number 0641-468105
FAISALABAD
Branch Code 0036
Branch Address Statelife Building Liaquat Road Faisalabad
Telephone Number 041-617433,617436-9
Fax Number 041-617432
E-mail [email protected]
GUJRNWALA
Branch Code 0053
Branch Address B-XII-75-145 Karishan Nagar G.T. Road Gujranwala
Telephone Number 0431-255516-255556
Fax Number 0431-255295
E-mail [email protected]
GUJRAT
Branch Code 0081
Branch Address 15/231, Circular Road Opposite Rampiari Mahal Gujrat
Telephone Number 0433-530068-530072-530219
Fax Number 0433-530319
E-mail [email protected]
HYDERABAD
Branch Code 0045
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 3
Branch Address Near Hotel Faran Saddar, Hyderabad
P. O. Box 10123
Telephone Number 0221-786020-2 & 786881
Fax Number 0221-786023
E-mail [email protected]
ISLAMABAD
Branch Code 0035
Branch Address 1-B, Awan Arcade Jinnah Avenue, Blue Area Islamabad
Telephone Number 051-2206986-2206987
Fax Number 051-279897
E-mail [email protected]
KARACHI
Cloth Market
Branch Code 0027
Branch Address Laxmidas Street Cloth Market Karachi
P. O. Box 13342
Telex No 021-29257
Telephone Number 021-2401621-6
Fax Number 021-2401627
E-mail [email protected]
Gulshan-E-Iqbal
Branch Code 0011
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 4
Branch Address Plot No. SB-15/I, II, III, Block-13-B Gulshan-E-Iqbal
Karachi
Telephone Number 4984904 & 4984937
Fax Number 4984971
E-mail [email protected]
Jodia Bazar
Branch Code 0026
Branch Address Gulzar Manzil, NP/12/49-50, Mohammad Shah Street,
Jodia Bazar, Karachi
Telex No 021-7532483-4
Telephone Number 7532483-4
Fax Number 7532485
E-mail [email protected]
Korangi
Branch Code 0023
Branch Address Aiwan-e-Sanat,ST-4/2 Korangi Industrial Area Karachi-
P. O. Box 74900
Telephone Number 021-5065702-5050387-5050968-5050653-505096-4
Fax Number 5050623
E-mail [email protected]
M.A. Jinnah
Branch Code 0015
Branch Address Plot No.23/1, Zelin Palace M.A.Jinnah Road Karachi
Telephone Number 021-7750627-7750628-7750630
Fax Number 7750629
E-mail [email protected]
I. I. Chundrigar
Branch Code 0005
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 5
Branch Address B. A. Building I. I Chundrigar Road Karachi
P. O. Box 6773
Telex No 29823 FALAH-PK
Telephone Number 021-2414030 to 39
Fax Number 021-2417006
E-mail [email protected]
Main Branch
Branch Code 0005
Branch Address B. A. Building I. I Chundrigar Road Karachi
P. O. Box 6773
Telex No 29823 FALAH-PK
Telephone Number 021-2414030 to 39
Fax Number 021-2417006
E-mail [email protected]
North Karachi Industrial Area
Branch Code 0009
Branch Address Plot No. SA-1 (ST 1/1) Sector 12-b, Gabol Town North
Karachi
Telex No 021-6987690
Telephone Number 021-6987644 &051
Fax Number 021-6986051
E-mail [email protected]
North Napier Road Karachi
Branch Code 0003
Branch Address A/26/5, North Napier Road Karachi
Telephone Number (021) 7540065
Fax Number (021) 7540066 & (021) 7540067-68, 7544021-24
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 6
Paper Market Branch
Branch Code 0018
Branch Address S.R. 7 / 23, Campbell Street Paper Market Karachi.
Telephone Number 021-2211357-8,2211242-2211242-3,2211353
Fax Number 2626891
E-mail [email protected]
S. I. T. E. Karachi
Branch Code 0019
Branch Address D-38, Habib Oil Mills Compound Near Siemens Chowrangi S.I.T.E. Karachi
Telephone Number 021-2582114-to 16 &2582990-2
Fax Number 2582113
E-mail [email protected]
Shahrah-E-Faisal
Branch Code 0030
Branch Address 43-11 A, P. E. C. H. S. Block-6 Main Shahrah-e-Faisal
Karachi
Telex No 021-4313536-8 & 021-4522460-4
Telephone Number 021-4313536 – 7
Fax Number 021-4313539
E-mail [email protected]
Stock Exchange
Branch Code 0012
LAHORE
Allama Iqbal Town
Branch Code 0042
Branch Address 36 College Block Allama Iqbal Town
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 7
Telephone Number 042-5432961
Fax Number 5432960
Badami Bagh Lahore
Branch Code 0041
Branch Address 110- Grain Market, Peco Road Badami Bagh Lahore
E-mail [email protected]
Manager
Name Mr.Sardar Ahmed
Tele Phone Number 042-7722274
Circular Road
Branch Code 0037
Branch Address 43-A Main Circular Road UPP:Mazar Hazrat Snan Manammad Ghous Lahore
Telephone Number 042-7638256-8
Fax Number 042-7653384
E-mail [email protected]
Manager
Name Mr.Malik Riazul Haque
Tele Phone Number 042-7656744
Defence Branch
Branch Code 0033
Branch Address 9-G, Commercial Area LCCHS, Phase-I Lahore Cantt
Lahore
Telephone Number 042-5729722-6
Fax Number 042-5729727
E-mail [email protected]
Manager
Name Mr.Saleem Javed Mirza
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 8
Tele Phone Number 042-5729722/26
Gulberg Branch
Branch Code 0028
Branch Address 125-E/5, Gulberg-III Main Boulevard Lahore
P. O. Box 10123
Telephone Number 042-5877800-6 & 5757793-95
Fax Number 5754900
E-mail [email protected]
Manager
Name Mr. Arfa Waheed Malik
Tele Phone Number 042-5764856
LDA Plaza Branch
Branch Code 0006
Branch Address Ground Floor Kashmir Road Lahore
Telephone Number 042-6306201-5
Fax Number 042-6368905
E-mail [email protected] and [email protected]
Manager
Name Mr. A. Zaheer Piracha
Tele Phone Number 042-6303716
Township Branch
Branch Code 0039
Branch Address 47-B-1, Block-10 Akbar Chowk, Township Lahore
Telephone Number 042-5114722-5114733 & 5152831-5152833
Fax Number 042-5113716
E-mail [email protected]
Manager
Name Mr. Rizwan–Ul-Haq
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 7 9
Tele Phone Number 042-5114733
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 0
S E C T I O N S I X
S W O T A N A LY S I S &
R E C O M M E N D AT I O N S
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 1
C H A P T E R O N E : S W O T A N A L Y S I S
Bank Alfalah Limited is one of the most thriving commercial banks at present in
Pakistan. The organization is in the process of building itself into a force to consider.
The bank is doing all sorts of new things in order to accumulate a set of distinctive
competencies that could later on be transformed into a competitive advantage of
considerable value. In this process of developing, striving, facing minor set backs
and striving with even more zeal, the bank enjoys some strengths, needs to
improve upon some weaknesses, can exploit some opportunities and is hampered
by few threats.
This SWOT analysis of Bank Alfalah Limited takes into consideration the external as
well as the internal environmental structure of the bank.
S T R E N G T H S
The predominant strengths of Bank Alfalah Limited are
Humble Management
Strength And Commitment Of Sponsors
Efficiency
Phenomenal Growth
Vastly Experienced Management
Highly Professional Human Resource Department
Crucial Location Of Branches
Image Building Activities
Bank is financially strong and has a huge deposit reserve
Its cost of funds is less as compared to many of its competitors
Personnel of Alfalah are well trained and highly skilled. Majority of employees
has many years of experience in banking sector and are an asset for the bank
Bank Alfalah has a wide network of branches at the ideal locations, catering
the financial needs of its clients
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 2
Foreign Trade is the focus of bank. It has become an ideal bank for the
importers and exporters
W E A K N E S S E S
The chief weaknesses are
Small Size
Less Efficient Computer And I. T. System
Disproportionate Presence Of Old Staff In The Upper Management Hierarchy
Skill Set Of Employees Is Not Up to The Mark As There Is No Job Rotation
Foreign Banks Still Are A Little More Prestigious
Bank Alfalah Limited Does Not Possess Foreign Network
No Advertising In Electronic Media
It is a step behind in using new technology as compared to other banks
Most of the employees are overloaded with work. There is uneven distribution
of work and promotions are not very timely
It is slow in the introduction of new services
O P P O R T U N I T I E S
The opportunities on which bank Alfalah can capitalize upon are
Extension of local branch network
Establishing foreign branch network
Capitalizing on information technology
Unexplored market of multinational corporations
Growth in textile sector
Adopt E-banking
T H R E A T S
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 3
The predominant threats Bank Alfalah is facing at the moment are discussed in the
following lines.
Private sector banks
Heavy reliability on only one market segment i.e. Textile.
Network expansion by foreign banks
If Pakistani banks (especially state owned banks), backed by huge network
improve the service they give and their employee skill set
Terrorist image of the country
Inconsistency in government policies
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 4
C H A P T E R T W O :
R E C O M M E N D A T I O N S
In the light of above given SWOT analysis, in the following lines I shall put forth
some of the measures Bank Alfalah Limited should necessarily take in the near
future. The following recommendations include short term as well as long-term
issues.
Bank Alfalah Limited should continue to expand its business, by increasing its
deposit portfolio through aggressive market penetration strategies.
Bank Alfalah Limited needs to use more marketing channels to make the
public aware of its products and services. In the presence of intense
competition Bank Alfalah Limited has to realize the importance of marketing.
Bank Alfalah Limited should immediately improve its Information Technology
System. The soft wares currently in use should be made error free, online
banking should be launched as soon as possible, as it is the need of the hour,
and integrated data interchange should be inculcated to enable top
management to monitor all activities going about in all branches through
generation of special purpose reports.
Management should distribute work equally among different employees.
Some of the employees are overburdened while some sections are
overstaffed.
There are a disproportionate number of seasoned bankers in the top
management who have the responsibility of making strategic decisions. This
think tank should also include a reasonable proportion of young bankers
whose mindsets teem with new creative ideas, which might prove to be
invaluable for Bank Alfalah Limited.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 5
The top management should immediately start thinking in terms of rotating
the employees in various departments, as this transforms work force into
human capital. If a particular individual keeps on employing his / her efforts
in one sphere of banking it would not only create a sense of monotony and
boredom, but also not help improving the skill set of Bank Alfalah Limited
employees.
Bank Alfalah Limited should embark upon an even more aggressive
management strategy of expansion of branch network not only in the local
market (Pakistan), but also in foreign markets because that is a huge
untapped opportunity for Bank Alfalah Limited.
Bank Alfalah Limited needs to introduce new products like credit cards for its
customers. It should also avail the facilities of E-Banking.
One of the most pressing needs of the time is to advertise Bank Alfalah
Limited in the electronic media. Bank Alfalah Limited has not, till date,
employed advertisement in electronic media as a full fledge marketing tool. I
think it is high time that BAL does this.
Bank Alfalah Limited needs to improve its website. More information relating
to financial performance of the bank should be available on the website.
Bank Alfalah Limited should evolve a very serious management policy to
attract multi national corporations as its clients. This action, if actualized,
would not only prove to be highly profit generating, but it would also
contribute a lot towards Bank Alfalah Limited’s image building.
The number of women hired by Bank Alfalah Limited is very less. Bank Alfalah
Limited should employ more women. Moreover it should also recruit women
for working in “Credits”
Presently, like most of the commercial banks working in Pakistan, a high
percentage of Bank Alfalah’s credit client hail from two or three industrial
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 6
sectors. In the near future the management of Bank Alfalah Limited should
try its level best to diversify as regards the mix of its advances; reason being
over reliability on one sector of the economy could hurt the financial
soundness of the bank if any adverse change in the external environment
takes place.
Bank Alfalah should make makes work teams in Credits like other banks such
as ABN AMRO and City Bank. It will have a positive impact on the morale of
employees. Their performance will improve as a result of distribution of work
and responsibility. And it will also enable the bank to hire talented women in
the Credits as well.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 7
A N N E X U R E S
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 8
A N N E X U R E O N E : B O R R O W E R S ’
B A S I C F A C T S H E E T - F O R
C O R P O R A T E
Date of Request_______________
(TO BE COMPLETED IN CAPITAL LETTERS OR TYPE WRITTEN)
1 BORROWER’S PROFILE:Name Address
Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax # Sales Tax #
Import Registration #
Export Registration #
Date of:
Establishment Opening of A/c
2. DETAILS OF DIRECTORS/OWNER/PARTNERS:Name Address
Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax #
Share holding Amount % of Shareholding
Name Address
Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax #
Share holding Amount % of Shareholding
Name Address
Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax #
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 8 9
Share holding Amount % of Shareholding
Name Address
Phone # Fax # E-mail AddressOffice Res.National Identity Card # National Tax #
Share holding Amount % of Shareholding
3. MANAGEMENT: A) EXECUTIVE DIRECTORS/PARTNERSName Address NIC # Phone #12B) NON-EXECUTIVE DIRECTORS/PARTNERSName Address NIC # Phone #12
4. CORPORATE STATUS:Sole Proprietorship Partnership Public/Private Limited
Company
5. NATURE OF BUSINESSIndustrial Commercial Agricultural Services Any Other
6. REQUESTED LIMITSAmount Tenor
Fund BasedNon-Fund Based
7. BUSINESS HANDLED/EFFECTED WITH ALL FINANCIAL INSTITUTIONS DURING THE LAST ACCOUNTING YEAR:
Imports Exports Remittances effected (if any)
8. EXISTING LIMITS AND STATUS:Amount Expiry Date Status
Regular Amount Overdue (if any)
Fund BasedNon-Fund
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 9 0
Based
9. ANY WRITE-OFF, RESCHEDULING/RESTRUCTURING AVAILED DURING THE LAST THREE YEARS:
Name of Financial Institution
Amount During 1st
YearAmount During 1st
YearAmount During 1st Year
Write-off Rescheduled/Restructured
Write-off Rescheduled/Restructured
Write-off
Rescheduled/Restructured
10. DETAILS OF PRIME SECURITIES MORTGAGED/PLEDGED:A) AGAINST EXISTING FACILITIES Name of Financial Institution
Nature of Security
Total Amount Rank of Charge
Net Realizable Value
B) AGAINST REQUESTED/FRESH/ADDITIONAL FACILITIES Name of Financial Institution
Nature of Security
Total Amount Net Realizable Value
11. DETAILS OF SECONDARY COLLATERAL MORTGAGED/PLEDGED:
A) AGAINST EXISTING FACILITIES Name of Financial Institution
Nature of Security
Total Amount Rank of Charge
Net Realizable Value
B) AGAINST REQUESTED/FRESH/ADDITIONAL FACILITIES Name of Financial Institution
Nature of Security
Total Amount Net Realizable Value
12. CREDIT RATING (WHERE APPLICABLE)Name of Rating Agency Rating
13. DETAILS OF ASSOCIATED CONCERNS (AS DEFINED IN COMPANIES ORDINANCE, 1984):
Name of Concern Name of Directors
Shareholding % of Total Share Capital
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 9 1
14. FACILITIES TO ASSOCIATED CONCERNS BY THE CONCERNED FI: Name of Concern
Nature & Amount of Limit
Outstanding as on _________
Nature & Value of Securities
Over dues Defaults
15. DETAILS OF PERSONAL GUARANTEES PROVIDED BY THE DIRECTORS/PARTNERS ETC TO SECURE CREDIT:
Name of the Guarantors
Institutions/ persons to whom Guarantee given
Amount of Guarantee
Validity Period
NIC # NTN Net-worth
16. DIVIDEND DECLARED (AMOUNT) DURING THE LAST THREE YEARS:
During 1st Year During 2nd Year During 3rd Year
17. SHARE PRICES OF THE BORROWING ENTITY:Listed Company Break-up Value of the Shares in
case of (Pvt.) Limited CompanyCurrent Price Preceding 12 Month
Average
18. NET WORTH PARTICULARS OF ASSETS OWNED IN THEIR OWN NAMES BY THE DIRECTORS/PARTNERS/PROPRIETORS):
Owner’s Name Particulars of Assets
Market Value Particulars of Liabilities
19. DETAILS OF ALL OVER DUES (IF OVER 90 DAYS): Name of Financial Institution Amount
20. Details of payment schedule if term loan sought.
21. Latest Audited Financial Statements as per requirements of Prudential Regulation-IV/NBFIs Rule 7 to be submitted with the Loan application form
22. Memorandum and Articles of Association, by laws etc, to be submitted by the borrower along with the request.
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 9 2
I certify and undertake that the information furnished above is true to the best of my knowledge
COUNTERSIGNED BY:____________________________________
CHIEF EXECUTIVE’S/BORROWER’SSIGNATURE & STAMP
___________________________________________
AUTHORIZED SIGNATURE & STAMP(BANK/NBFI OFFICER)
C O L L E G E O F I N F O R M A T I O N T E C H N O L O G Y , L A H O R E 1 9 3
BIBLIOGRAPHYBOOKS
Principles of marketing by Kotlar Armstrong 9th Edition
Chapter 2nd.
Strategic Management by Fred R David
Principles of Marketing by Bober 9th Edition Chapter 2nd.
Research Methodology Eztel Walker Stanton 11th edition
chapter no 3.
REPORTS
Consumer and Market Trend Report by Bank Al-Falah.
Data integration reports by Bank Al-Falah.
Bank Al-Falah Home scans Asia Pacific.
INTERNET
http://www.bal.com/home
http://www. bal .com/ history
http://www. bal .com/products
http://www.bal/services
http://www.bal.com/branches
www. cfdccariboo.com/stretegies.htm
www.crfonline.org/orc/swot/m.html
abacus.bates.edu/admin/offices/career/webx/field_def.html
www.ump.kiev.ua/eng/gloss.html
www.indiainfoline.com/bisc/jmfm.html
www.marketconscious.com/dict3.htm
www.en.wikipedia.org/wiki/Qualitative_marketing_research
www.en.wikipedia.org/wiki/Quantitative_marketing_research
http://www.research.com
http://www.thenews.com/articles
http://www.articles.com/marketingforces .html
http://www.worldaffairs.com/conceptandcases.html
http://www.smeda.com/casestudies/marketingresearch.html
http://www.smeda.com/casestudies/markettrends.pdf
PDF RESEARCH FILES
2003_privatelable by Bank Al-Falah
2005_june_ap_insight by Bank Al-Falah
2005_q2_ci_trendwatch by Bank Al-Falah
2005_q3_ci_000 Bank Al-Falah
VISITS
Visit personally Bank Al-Falah at Shahdin Manzil The Mall
Lahore Lahore.
Visit at Bank Al-Falah at barket market main boulevard
Lahore.
Visit for collecting information about market research of
Bank Al-Falah and compare with other banks.
THE INSTITUTES AS BELOW
MCB Bank Lahore.
Askari Bank at Barkat Market Lahore market main
boulevard Lahore.
Bank Al-Habib at Barkat Market Lahore.
BRUSHERS
Collecting brushers from Bank Al-Falah.
Collecting brushers about products and history from
Bank Al-Falah.
Collecting products information from Bank Al-Falah
Barkat Market.
Collecting banking information from MCB Bank.
1,5,7,8,9,10,11,15,19,34,35,144,145,147,148,149,169,170