ABL

INTRODUCTION TO BANKING

“BANK” AND ITS ORIGEN

Even the standard encyclopedia and the books of laws find

it very difficult to state exactly that what is bank, there are

many definitions of the word bank. Following are the

different attempts made by different writers to explain the

word bank.

According to Gilbert:

“A bank is a dealer in capital or dealer

in money. He is an intermediary party

between the borrowers and lenders.”

According to Samuelson:

“Commercial banks provide certain

services for customers and in return

receive payments from them.”

According to Holder:

“The modern banker is primarily a

dealer in credit.”

Hailey College of Commerce 1

According to Crowther:

“Bank is a dealer of debt, his own and

of other people.”

IMPORTANCE OF BANKING

Banks play very important role in the economic life of a

nation. The growth of the economy is dependent upon the

soundness of its banking system. Although banks do not

create new wealth but borrow, exchange and consume.

These make generation of wealth. In this way they become

most effective partners in the development of that country.

To encourage the habit of saving and to mobilize these

savings is its basic purpose. Banks deposit surplus from the

public and then advances these surpluses in the form of

loans to the industrialists, agriculturists, businessmen and

unemployed people under different schemes so that they set

up their own business. Thus banks help in capital

formation.

If there are no banks, then there would be

concentration of wealth in few hands and great portion of

wealth of a country would be idle. We can take bank just

like a heart in the economic structure and capital provided

by it is like blood in it. As long as the blood is in circulation,


the organs will remain sound and healthy. If the blood is

not provided to any organ then the organ would become

useless. So if the finance is not provided to agriculture

sector or to industrial sector, it will be destroyed.

Loan facility provided by bank works as an incentive to

the producer to increase production. Banks provide

transfer of payment facility, which is cheaper, quicker and

safe.

HISTORY OF ALLIED BANK OF PAKISTAN

Establishment of Australasia Bank

The Australasia Bank (the old name of allied bank) was

established in 1942 in a motor garage in Lahore with a staff

of three. Initially, it was little more than an agency for the

collection of rents from the family estate. Then, the tenants

began to open accounts and the bank to make advances

against gold, insurance policies, and merchandise

Management of family properties led to the business of

managing other people's estates and the new bank soon

encountered opposition from the established banks.

Discrimination took the form of a collection charges applied

to local cheques, on the grounds that the new bank. was not


located in the 'Bank Square', The Australasia Bank was at

that stage a non-scheduled bank, but it was claimed that at

this time it was not accorded the facilities available even to

that class of bank. The Reserve Bank of India was loath to

grant facilities for the exchange of notes or the grant of

accommodation. After two years, the bank was moved to a

new building. It did the same business as before though on

an Increased scale, A number of branches were opened. In

due course it applied for inclusion in the Schedule and was

accorded the status of a scheduled bank in the financial

year 1946-47. After Partition the bank was entrusted with

the collection of Treasury revenues and payments on behalf

of the Government in certain centers. Subsequently, it was

granted a license to undertake foreign exchange business,

and further branches were opened. The bank is still small,

though included in the Schedule, but it does a business

comparable in quality and scope with larger and longer-

established banks. If any proof wore needed that the

Muslim is capable of the initiative and persistence to

embark upon the complex business of banking, this case

study should provide useful evidence.

Allied Bank’s 60 Years of Progress

Allied bank of Pakistan Limited (formerly Australasia

Bank Limited) has witnessed and experienced all political,

economic, financial and technological changes which have


taken place in the South Asian region since it was

incorporated in 1942 at Lahore. Allied Bank of Pakistan is

the first Muslim bank established on the territory that

became Pakistan established on December 3, 1942 as the

Australasia Bank at Lahore under the chairmanship of

Khawaja Bashir Bux.

In 1942, the situation was as follows:

Paid up share capital

Rs. 0.12

million

Deposits

Rs. 0.431

million

Total assets

Rs. 0.572

million

In 1947, when the bank was in nascent age, it had to

undergo a traumatic event, which divided Asian Sub

Continent into two independent states, namely, Pakistan

and India. Allied Bank, being the only Muslim bank on the

soil of Pakistan, lost over 50% of its operations and its

assets, which were on the soil of India. The management

faced the multiple challenges resulting from huge human

and financial losses on the one hand and the task of

providing the newly emerged nation with efficient and


effective payment system and bank facilities to all sectors of

economy on the other hand.

The bank rendered valuable treasury services for the

government of Pakistan and despite many constrains played

an effective role in socio-economic uplift of the country.

In 1965 the Bank shifted its operational head quarters

from Lahore to Karachi. In 1971, the Bank lost more than

half of its assets and network due to cessation of East

Pakistan. The bank not only survived this crisis but also

regained its financial strength maintaining the growth rates.

In 1974, the government of Pakistan nationalized all

financial institutions in the country. Releasing the robust

financial strength of Australasia Bank Limited among all the

nationalized financial institutions, the government decided

to merge three financially weak institutions, namely, Sarhad

Bank Limited, Lahore Commercial Bank Limited and Pak

Bank Limited into Australasia Bank Limited and renamed it

as Allied Bank of Pakistan Limited.

During 1974

Financial EquityRupees in

Million


Subscribed paid up capital 13.46

General and other

reserves6.73

Deposits and Advances

Private sector 570.46

Public sector 110.14

Investment 152.01

Net pre tax profit 4.46

Number of branches 265

Number of staff 3,256

Number of accounts 2,90,732

Allied Bank remained in the public sector for

seventeen years, during which the quality of its assets

remained comparatively better among its peer. During this

period the bank expanded its domestic network and opened

its first foreign branch at London, UK in 1977. The

performance of the domestic and foreign operations of

Allied Bank, during nationalized period, was so good that in

1989 UK operations of Muslim Commercial Bank were

merged into Allied Bank of Pakistan Limited. Because of

privatization in September 1991, Allied Bank entered in a

new phase of its history, as world’s first bank to be owned

and managed by its employees.


After privatization, Allied Bank registered and

unprecedented growth to become one of the premier

financial institutions of Pakistan. Allied Bank enjoys an

enviable position in the financial sector of Pakistan. As on

date the quality of assets of the bank is one of the best

amongst the major banks of the country.


EMPLOYEE STOCK OWNERSHIP PLAN

A New Beginning

In September 1991, Allied Bank entered in a new

phase of its history, as world's first bank to be owned and

managed by its employees. Mr. Khalid Latif, an employee of

the bank since 1971, had anticipated that an opportunity

would emerge for the workers to take management control

of the Bank. He proceeded on long leave in November, 1990

to make an in-depth study of the concept of Employees

Stock Ownership Plan (ESOP). He was thus well prepared

when in May 1991, the Privatisation Commission announced

the impending privatisation of Allied Bank and invited pre-

qualification bids.

During May/June 1991, almost all the officers, staff

members and CBA unions had given a mandate to Mr.

Khalid Latif to acquire Allied Bank for employees through

the Allieds Management Group which had been formed

specially for this purpose,

Mr. Khalid Latif was thus in a strong advantageous

position when he met the Cabinet Committee on

Privatisation in August 1991 to present his plan for

acquisition of Allied Bank within the context of an


Employees Stock Ownership Plan (ESOP). The meeting

examined the plan in detail and concluded with the Finance

Minister's announcement that the Government had

accepted the Allieds Management Group's bid.

Within a week the formal letter of acceptance of this bid

was handed over by the Prime Minister of Pakistan to Mr.

Khalid Latif. The executives, officers and representatives of

all CBA unions confirmed Mr. Khalid Latif as Chairman of

the Allieds Management Group. In September 1991, the

Board of Directors approved the transfer of 26 percent of

the Bank's shares to the Allieds Management Group. The

Board of Directors was reconstituted. It elected Mr. Khalid

Latif as its chairman and Chief Executive of the Bank. The

State Bank of Pakistan also approved this decision.

BASIC PRINCIPLES

The basic principle and features underlined by

Mr. Khalid Latif when he launched this scheme

countrywide and positive response of the government, press

and public at large.

1. ESOP means employee stock ownership plan.

2. ESOP combines knowledge, experience and efforts of

the people.


3. ESOP gives employee job security, better prospectus

for the career, family feeling and sense of loyalty and

share in the progress and prosperity of an entity.

4. 7500 people spread over more than 750 branches

raised the slogan of ESOP.

5. ESOP is customer oriented.

6. ESOP is motivational tool, which disciplines the people,

prevents wastage of resources and ensures better and

efficient customers service standards.

7. ESOP envisages management control and ownership of

the enterprise for the employee, by the employees and

of the employees.

8. ESOP provides protection to the family retirement. It

is an umbrella, which automatically opens as soon as

there is a rain. ESOP shows loyalty to the

organization.

9. ESOP is a team work.

How ESOP was accomplished :

Privatization of the Allied Bank under the concept of

employee stock ownership plan (ESOP) is a singular success

story anywhere in a world. Dynamic leadership was the


singular factor in getting the dream of Allied Bank

translated into reality.

At the commencement of the privatization process in

the country Mr. Khalid Latif prepared a working paper

on employee stock ownership plan. Management and staff

members numbering over 7500 joined together and united

to form Allied’s management group. On 3rd August 1991

Mr. Khalid Latif discussed with the cabnit committee on the

privatization the concept of employee stock ownership plan

with particular reference to the ownership of the Allied

Bank to it employees. The deal was finalized after in a

depth study of ESOP.

On 11 August 1991 Allied management group

deposited sale price of 26% share in State Bank of Pakistan.

In its meeting on 10th September 1991, board of director of

the bank approved sale of 26% shares of the bank to the

employees and there after vacated their seats for the new

nominees of Allied management group. In its very first

meeting the new board of directors elected Mr. Khalid Latif

as its Chairman and Chief Executive. The Govt. of Pakistan

in its notification dated 12th September 1991, transferred

the management of the bank to its employees through their


nominees on the board of the Directors. New board of

directors constituted.

MANAGEMENT STRUCTURE OF

ALLIED BANK OF PAKISTAN

This bank is owned and controlled by

shareholder who elects board of director to over seas bank.

The bank has six directors, the chairman and a company

committee that has a president and members of a bank are

seven, both from board of director and employees of the

bank and sectaries.

Board of director

Khalid A Sherwani

Chairman

(Ex-President UBL)

Mehmood Akhtar

Director

(Point Secretary Ministry of Finance)

Shaukat Hayat Durrani

Director

(Point Secretary Ministry of Finance)


Muhammad Sami Saeed

Director

(Secretary Excise & Taxation Govt. of Punjab)

Mozaffer Iqbal

Director

(Ex-Director NBP)

Justice Retd. Amir Raza Khan

Director

(Retired Justice of Supreme Court)

Iqbal Mustafa

Director

(Chairman SMEDA)

Asif Bajwa

Director

Muhammad Yaqoob

company secretary

EXECUTIVE COMMITTEE

CHAIRMAN

Khalid A Serwani


MEMBERS

Shukat Hayat Durani

Swami Saeed

Mohd. Akhtar

Naveed Masod

Bilal Mustafa

Justice Retd. Amir Raza Khan

Iqbal Mustsfa

Muzafar Iqbal

Asif Bajwa

SERETARY

Shariq Umar Farooqi

ORGANIZATIONAL HIERARCHY

President

Senior executive vice president

Senior vice president

Vice president


Asst. vice president

Officers

Assistants

Cashier

Peon

ORGANIZATION SET UP

Central office Karachi

PROVINCIAL HEADQUARTERS

Punjab Lahore

Sindh Karachi

N.W.F.P& Azad Kashmir Peshawar

Balouchistan Queeta


Organizational and Functional Chart


Chairman & Chief Executive

Central Office / Head Office

SEVPSEVPSEVP

Islamic Banking Division

Credit Monitoring

Division

Maintenance Engg. Protocol and

Stationary Division

Agriculture & Small Finance

Division

Computer & MIS Division

Business Promotion, Marketing Planning

Division

Recovery Division

General Services Division H.O.

Lahore

Credit & Corporate Division

Admin & Human Resource Division

Audit & Inspection Division

Customer Services Division

President’s Secretarial & Board

Affairs

10 Credit Audit Offices Located 4

Provinces

Research & Development

Division

Credit Processing Division

International Division

Finance Division

Environmental Protection Division

Legal Affairs Division

Overseas Operation

(UK Branches)

Investment & Fund Management

Division

Training Division Academies in Karachi, Lahore, Islamabad &

Peshawar

Sports Division H.O. Lahore

Shares Division

PHQSINDH

PHQNWFP/AK

PHQPUNJAB

PHQBALOCHISTAN

REGION-WISE BRANCHES

Central Office

Khayaban-e-Iqbal, Main Clifton Road, Bath Island, Karachi-75600

Tel: (UAN) 111-110-110,

(PABX): (021)5860052

Registered Office

8 - Kashmir / Egerton Road, Lahore

Ph: (042) 6360076, 6370202

REGION WISE BRANCHES

REGIONAL OFFICENO. OF

BRANCHES

ABBOTABAD

517-Mansehra Road, Abbottabad 2201

Tel: 0992-334794, 334795 Fax: 0992-334762

24

BAHAWALPUR

Outside Farid Gate, Circular Road, Bahawalpur 63100

Tel: 0621-877131 Fax: 0621-876516

41

FAISALABAD

Sitara Tower, Mezzanine Floor, Bilal Chowk, New Civil Lines,

Faisalabad 38000

Tel: 041-618144, 618202 Fax: 041-617987

76

GUJRANWALA 38


2nd Floor, Chamber Plaza, GT Road, Gujranwala 52250

Tel: 0431-9200470,9200316 Fax: 0431-9200319

HYDERABAD

10/A, GOR Colony,Hyderabad 71000

Tel: 0221-784662 Fax: 0221-784345

68

ISLAMABAD

2nd and 4th Floor, ABL Building, Blue Area, Islamabad 44000

Tel: 051-2820556,2820558 Fax: 051-2823817

101

KARACHI

4-Banglore Town, Main Sharea Faisal, Karachi 75350

Tel: 021-4311129,4311130 Fax: 021-4311124

107

LAHORE

199 - Upper Mall, Lahore 54000

Tel: 042-5750227 Fax: 042-5754044

71

MARDAN

204 - I Sector, Sheikh Maltoon Township, Murdan 23200

Tel: 0931-68103 Fax: 0932-68493

35

MIRPUR

Main Post Office, Banks Squre(NANGI), Mirpur 10250, Azad

Kashmir

Tel: 058610-42045,44058Fax: 058610-42303

62

MULTAN

90- Aziz Shaeed Road, Multan Cantt 60000

Tel: 061-580166,510766 Fax: 061-584196

63


PESHAWAR

1st Floor, Statelife Building, The Mall, Peshawar Cantt 25000

Tel: 091-276209,278248 Fax: 091-271579

69

QUETTA

CC & I Building, Zarghoon Road, Quetta Cantt 87300

Tel: 081-821949,825114 Fax: 081-821067

36

SARGODHA

Liaquat Market, Block No. 01, Sargodha 40100

Tel: 0451-711744,700155Fax: 0451-712459

39

SIALKOT

Goolam Kadir Arcade, Aziz Shaheed Road, Sialkot Cantt 51300

Tel: 0432-273616,265045Fax: 0431-265045

42

SUKKUR

Minara Road, Mohammad Bin Qasim Park, Sukkur 65200

Tel:071-24355 Fax:071-24221

35

FUNCTIONS OF MANAGEMENT

The top management of ABL is performing the various

managerial functions I order to make good planning,

organizing, leading and controlling the activities to middle

and lower management. There are seven senior executive

vice presidents (SEVPs) who control these functions.


A SEVP has to control the Islamic banking, credit

monitoring, maintenance protocol and stationary,

agricultural and small finance, computer and MIS, business

promotion and marketing division, the management make

the banking policies in the light of values of Islam and they

are tying to eliminate the elements of interest and they

introduce the mark up system and up to some extent

Mudarbah and the Musharkah schemes. The credit

monitoring division emphasizes on the credit extenuation

made by the bank

among different sectors. The function is the maintenance

engineering, protocol and stationary of the bank to the

PHQs and circle and zonal offices and to the branches and

also the maintenance of the bank equipment and furniture

and buildings. Agricultural and small finance division

provides the loans to small manufacturers and the farmers

in the rural areas in order to increase the growth of

agriculture and trade. The function of computer and MIS

division is to computerize the PHQs and circle and zonal

offices and as well branches. But now-a-days majority of

branches of the bank are computerize. The other

important role of this division is to call the daily, weekly and

monthly progress and compile in the prescribed manner and

send to other divisions e.g. financial and audit division for

the analysis purpose.


The second SEVP manages and controls the activities

of human resources and inspection, customer services,

research and development, credit processing division and

also manages the affairs of the president and board

secretariat office. The task of this division is recruitment of

adequate and skilled staff for the bank. This division also

keeps the individual record of each staff member and

promotes the skilled and efficient staff to next grade with

proper rules and regulations.

The audit inspection division audits the circle and

zonal offices time to time and find out regulation and take

the necessary corrective actions and also inform to the top

management about the “working of circle and zonal offices.”

The customer services division makes the policies in

order to increase the bank dealing with general public. For

this purpose they issue the credit cards of ABL in 1996 and

also issued the travelers cheque for easy transfer of money

from one place to another place.


The credit processing division with the help of

monitoring and recovery divisions forms the policies for the

sanction of loan and also sets the limits of loan in different

sectors of the economy under the guidance of State Bank of

Pakistan.

The third SEVP is head of the international division,

investment and funds management, environment protection,

training division, legal affairs, sports division and share

division.

The function of the International division is to provide

the banking facilities of ABL in UK and these are working

successfully. They motivate Pakistanis in UK to send the

foreign exchange through the local bank of Pakistan. The

finance division’s function is to anticipate, acquisition of

funds and also allocation of these funds in the profitable

channels. This division also prepares the budget of the

bank and also checks the performances of the branches

with the help of the weekly and monthly reports. This

division also provides the guidance to the audit division.

The success of any organization depends upon the

trained and efficient employees. For this purpose the

function of the training division is to provide the training to

exiting and newly appointed staff in the PHQs. This division


provides the modern banking training to the staff. For this

purpose they established academies in different provinces

and different cities. They also trained the managers and

other clerical staff. The refresher courses are also provided

to the staff according to their skills and seniority basis and

the nature of work. The function of the legal affairs division

capes with the help of recovery division controls all the

legal affairs of the bank with respect to the recovery of loan.

The sports division makes arrangement of games and

the tournaments of cricket and other games. The players of

ABL also participate in Wills Cup cricket tournaments.

All the PHQs of the bank are supervised by SEVP.

They also receive the information and regulations from the

relevant division and also send the suggestions to the

relevant division for improvement. The PHQs controls the

activities of circle and zonal offices, and the circle and zonal

offices control the branches which are falling in their

respective goals.


FIELD OF ACTIVITIES

The functions performed by the ABL are divided into

the following departments.

1. Deposits Department

2. Clearing Department

3. Advance Department

4. Foreign Department

5. Bills Department

6. Accounts Department

7. Remittance Department

1. DEPOSIT DEPARTMENT

The function of deposits department is to collect

deposits from customers. Following types of deposits are

offered by Allied Bank.

i. Current Deposits

ii. Saving Bank Deposit

iii. Profit and Loss Sharing Deposits

iv. Fixed Deposits


v. Call Deposits

vi. Short notice term Deposits

vii. Foreign currency deposit

i. Current Deposit

In this type of account the customer is allowed to deposit

and withdraw money as much and when he likes. He

performs this function for several times a day. This facility

greatly appeals to the businessmen.

Features

Open with a minimum amount of Rs.

No profit is paid and operation is allowed for

any number of cheques.

Cheque book provided comprises of 50 leaves.

Rs. 2.00/= is charged per leave.

ii. Saving deposit:

These types of accounts are offered to those people who

want to make small savings. This type of can be opened with

Rs:200. in this case deposit can be only made up to a

costing amount and withdrawals are allowed twice a week .


iii. Profit and Loss Sharing Accounts

These types of accounts are one step towards the

Islamization of Banking system in the Pakistan. Under such

types of accounts the bank allows no interest to the

customers. The executive board of the bank declares profit

or loss every year. PLS saving account having a running

minimum credit balance of Rs. 100 would be eligible for

sharing profit/loss of the bank. The rate of profit or loss on

PLS saving accounts shall be determined by the bank at the

close of each half year, in its sole discretion and the banks

decisions shall be final and binding on the PLS account

holder.

iv. Fixed Deposit

In the type of account a certain amount is deposited for

a certain, period such as six-month, two years or longer. A

fix deposit receipts is issued in the same of the depositor.

The officer incharge and the bank manager sign the receipt.

A notice is given to the depositor requesting the depositor

to withdraw his money or to renew this deposit. The interest

allowed on fixed varies with the period for which the

deposits are made.

v. Call Depostis


Call deposits are the sorts of deposits, which are

deposited with the banker against any tender. This is

without interest deposits, this may be with interest provided

the depositor has agreed to keep its amount with the banker

for some fixed period.

vi. Short Notice Term Deposit

This kind of deposit is for a short period. The depositor

may withdraw his deposit at any time by giving seven days

notice to the banker. In this type of deposit facility the

trader is allowed to withdraw his amount with interest of

the deposited period.

vii. Foreign Currency Deposit:

Foreign currency account is opened by depositing

foreign currency. In ABL, you can open foreign currency

account in:

1. Us Dollar

2. Pound Sterling

3. Japanese Yen

4. Euro

2. CLEARING DEPARTMENT


Every bank acts in two way i.e.

1. Paying Bank

2. Collection Bank

Here in theory there is no legal obligation on a banker to

collect cheques, drawn up to other banks for a customer. It

is, however, an important function of crossed cheques. A

large part of this work is carried out though the bankers

clearing house wherever it is established.

Clearing House

A clearing house is the place where representatives, of

all the banks get together for the purpose of off setting the

inter bank indebtedness arising from the transfer of

deposits by a customer of a particular bank to another bank.

Advantages of Clearing House

The advantages are manifold. It prevents the cost and

waste involved in collection each and every cheque and

claim. Which a banker holds against another, across the

counter with all the danger of loss in the transit incumbent

upon it. Great economy is also achieved in the employment

of liquid cash by setting the difference by simpler transfer

of credit from one account to another,


there by minimizing the necessity of holding large wash

balances, clearing house works under the control of State

Bank of Pakistan. A banker has no legal obligation to collect

cheque drawn upon other banks for the customers, though

modern banks have assumed this important function of their

own choice. Therefore, it is very important that since they

have assumed this function, the banker should be very

careful in their performance, otherwise they will face more

difficulties. So, if they provide this facility when the cheques

are crossed.

Functions of Clearing Department

The following are the main functions of clearing

department.

1. To accept transfer deliveries and clearing cheques from

the customer of the branch and to arrange for their

collection.

2. To arrange the payment of cheque drawn on the branch

and given for collection to any other branch of Allied

Bank of Pakistan or any other members, or sub-members

of the local clearing house.

3. To collect amounts of cheques drawn on members, sub-

members of the local clearing house, sent for collection

by those Allied Bank Limited branches which are not

represented the local clearing house.


Procedure of depositing cheque in Clearing

Department

Whenever a customer wants to deposit cheque, etc, he

fills a pay in slip and hands it over the counter along with

the instruments he wants to deposit with bank. As far as

possible, the customer desire that on of the staff member fill

in a slip for him, he should be obliged promptly.

Types of cheques collected by clearing department

1. Transfer Cheques

Transfer cheques are those cheques, which are collected

and paid by the same branch of bank.

2. Transfer Delivery Cheques

Transfer Delivery cheques are those cheques, which are

collected and paid by two different branches of a bank,

situated in the same city.

3. Clearing Cheques

Clearing cheques are those cheques in which the payee

(Person who deposit cheques for collection) and the drawer

of a cheque maintain the account with different banks.

Scrutiny of Cheque


When the cashier receives the cheques, which are to

be deposited for clearing purpose the following points must

be verified.

1. The instrument should be neither stale nor post dated.

2. If the instruments is crossed, not negotiable, it can be for

the third party (can be endorsee of an order cheque, or a

holder of bearer cheque)

3. The instrument should not bear any unauthorized

alteration.

4. The amount in words and figures should be the same.

5. The instruments should be drawn on a member, or any of

local branches.

6. If the cheque is crossed “Account payee’s” “Account

payee only” or “Payee’s Account”, it should be accepted

for collection for the payee’s account.

7. The cheques or drafts should not be crossed specially to

any other bank.

8. A cheque payable to one of the joint account holder

should not be collected for the joint account without the

payee’s endorsement, or consent.

9. A cheque payable to a firm should not be accepted for

credit to a partner’s account.


10. A cheque drawn by a customer in the capacity of an

agent. Attorney, or Manager of his company or firm,

should not be collected for credit to his personal account.

11. Pay orders, although negotiable, should not be

collected for third parties.

12. Do not collect an instrument in the account of an

agent, or of the servant of the payees of endorsee of the

instruments.

13. Mail transfer Receipts pay ships and treasury receipt

should not be collected for persons other than the payee.

14. If an account is new, or the balance or operation of the

account is not satisfactory, satisfy yourself about the

titles of the customer to the instruments before the titles

of the customer to the instrument before accepting the

deposit.

15. Brach agent’s permission should be obtained before

accepting a third party cheque or draft for creditor the

account of the staff member.

16. If the payee is a government department, government

official, or a trust account, the instrument cannot be

collected, but of the payee’s account.

17. If the payee of an instrument is Allied Bank Limited, it

can collected for credit of the drawer’s account, or the

amount of the instrument may be utilized as desired be

the drawer in writing.


18. Cheque payable to a trust, account should not be

collected for credit to at trustee account.

19. All the endorsement should be regular, and on

endorsement should be missing. After the cashier

scrutinizes the cheques he must also scrutinize the pay in

slip.

Scrutiny of Pay-in-slip

The following steps are involved in the scrutiny of pay in

slip.

1. On both the counterfoil and the pay in slip following

should be checked.

I. Date of Deposits

II. Account number

III. Title of the account

IV. The cheque number and the drawer bank name.

V. Total amount in words and figures

2. Customer should use separate pay in slip for transfer,

transfer delivery, and clearing cheques.

3. The amount noted should be the same as the amount of

the instruments, and the amount in words and figures

should be same.

Procedure after scrutinizing


After scrutinizing the cheques and other deposit

instruments and paying slip at the counter the following

procedure is under taken by cashier if he is satisfied.

1. Fixing the stamp.

2. Scrutiny, and receipt by the authorized officer

3. Returning the counter foil to the depositor.

4. Certificates and confirmation by the officer-incharge of

the department.

5. Separating the cheque into transfer delivery, and

clearing cheque.

Procedure Of Clearing At Clearing House

The mechanism of setting inter bank indebtedness

operates as follows.

Clerks representing various banks meet at a common place,

The Clearinghouse, everyday. Every clerk then delivers to

the others the cheques and the other claims which their

respective banks hold against his banks hold against his

bank cheques and other documents dishonored will be

returned to the representative of the respective bank. The

various amounts of receipts and deliveries are now added

up and a balance is struck there in and the final settlement

is effected by the supervisor of the clearing house by

transferring balance kept and the central bank by these

various clearing banks.


3. ADVANCES DEPARTMENT

The function of advances department is to lend in the

form of clean advances, against promissory notes, as well as

secured advances against tangible and marketable

securities. According to the Prudential Regulations of the

State Bank of Pakistan, No bank can issue a clean advance

of more than Rs. 100,000/-. The bankers prefer such

securities that do not run the risk of general depreciation

due to market fluctuations.

SECURITIES

Common Securities for the banker’s advances are as under:

Banker’s Lien

Lien is the banker’s right to withhold property

until the claim on the property is paid. The banker’s look at

their lien as a peotection against loss on loan or over draft

or any other credit facility. In ordinary lien the borrower

remains the owner, but the possessions of the property is

with the creditor. Unless it is the banker’s lien there is, in

most cases, no right of sale.

Guarantee

When an application for advance cannot offer any

tangible security, the banker may rely on personal


guarantees to protect himself against loss on advances or

overdraft to the applicant.

Mortgage

A mortgage is the transfer of an interest in specific

immovable property for the purpose of security the payment

of money advanced or to be advanced by; way of loan, and

existing or future debt, or the performance of an

engagement which may rise to a pecuniary liability. The

transfer is called a mortgagor, the transferee a mortgage.

Hypothecation

When property in the shape of goods is charged as

security for a loan form the bank the ownership and

possession is left with the borrower, the goods are said to

be hypothecated. The essence of hypothecation is that

neither the property in the goods not the possession of them

are possessed by the lender, but the security is granted by

means of letter of hypothecation, which usually provides for

a banker’s charge on the hypothecation goods.

Pledge

In a pledge the ownership remains with pledge, but the

pledgee has the exclusive possession of property until the

advance in repaid in full. While in case of the default the

pledgee has the power of sale after giving due notice.


Promisory Note

Sometimes promissory note is also accepted as a

security, “A promissory note is an instruments in writing

containing an unconditional undertaking signed by the

maker, to pay ;on demand or at a fixed or determinable

future time a certain sum of money only, to or to the order

of certain persons, or to the bearer or the instrument.” A

promissory note is incomplete until has been delivered to

payee or the bearer. Moreover, the sum promised in a

promissory note may be made by two or more makers who

may be liable there on jointly and severally.

Types of Advances

The advances which are given by Allied Bank Limited are

as under:

I. Demand Finance:

Demand Finances are those advances, which are

allowed in lump sum for a fixed period and payable lump

sum or gradually in installments. Its types are as under

a) Demand Finance (Packing Credit)

b) Ordinary Loan (Demand Finance to Students)

c) Demand Finance for staff


II. Running Finance

Running finance (old name overdraft) are advances,

which are generally given to meet temporary requirements

of customers. A good customer uses the bank’s running

finance limit as mean of protecting its credit in market and

as a line of security defense to meet his commitments. The

types of running finance are as under.

a) Unsecured

b) Secured

III. Cash Finance

These types of loans are given against following

a) Against locally manufactured goods

b) Cash finance against Rice and Paddy

c) Against pledge

d) Against Commodities

Besides advances against the above commodities

parties of other commodities may reach to the bank

for the purpose of loan.

e) Against trust receipts

To obtain adjustment of an overdue account or to

facilitate the borrower to sell the pledged goods it is

some times necessary to deliver a portion of the

goods; against the trust receipt and promise cfrom


the borrower to deposit against trust receipt the

sale proceeds with bank.

IV. Finance against Foreign Bills

This advance facility is available to both local and

foreign bills

1. FAFB (local) advance against Railway receipts

and truck receipt, a company with bills of

exchange and invoices, are given under this

head.

2. FAFB (foreign) advances against foreign bill

covering bills of exchange, bills of lading airway

bills of exchange etc.

V. Agricultural Loans

Loans to the farmers with holding up to 25 acres for

meeting their short term, medium and long term

agricultural production requirements, such as:

1. Agricultural inputs

2. Tube Wells

3. Live Stock Framing

4. Land improvements

VI. Industrial Loans


Besides the short-term loans which play an important

part in working capital requirements, medium and long-

term loans are also given to industrial sector for purchases

of machinery and other capital nature goods for their

working.

4. Foreign exchange Department

International trade is growing and with the growth of

international trade the importance of this department

increases . it is very important for developing countries . it

he need of time that the country should conserve its

resources.

MEANING OF FOREIGN EXCHANGE

The term foreign exchange refers to the pricciple that

determine the rate of exchange. It cover the following three

sences

1. The mechanism or system by which international

obligation or indebtedness are be fulfilled

2. the currency of one countrty is exchange for the other

country

3. the principle on which ht epeople of the world settle

their debts to one another

FOREIGN EXCHANGE TRANSACTION


The foreign exchange transaction are usually of three

types .

1. current accopunt transaction

It is classified are as under

a .Marchandise transaction

this consist of visible imports and exports i.e

the purchase of goods from abroad and sale of

goods to abroad

b. Service transaction

these represent the inward and outward

payment in respect of shipping ,insurance,

banking and travelers services

c. Unrequited transaction

It indicate the receipts and payments from

foreign countries in shape of such items as

home remittance by work abroad, gift

and aids etc

2. Capital account transaction

It include

a. Long term cspital transaction

Those transfers whereby resident of one

country acquire securities and tangible asset


in foreign countries in order to earn profit in

future

b. short term capital transaction

those transaction which moves relative

quickly from country to country

i) for speculative purpose

ii) to take dvantage of difference in

interest rate

iii) as balancing items where a country

has a debt or credit balance

5. BILLS DEPARTMENT

The bills department receives the following types of

different bills.

I. Inward Bills for Collection:

These are bills or cheques etc. which is collected

locally. These are received from outstation branches banks

and parties.

II. Outward Bills for Collection:

There are four types of outward bills for collection

which are explained in the following

a)Clean Bills


These are negotiable instruments, drawn on

outstation branches, bills sent for collection on behalf

of the customers i.e. cheques, drafts or treasury bills

etc.

b)Documentary Bills

These are bills accompanied by documents such

as R.R.T.R. Bills of lading etc. having title to goods,

collected by the bankers on behalf of their customers.

c) Pay Slip

Pay slip is an instrument in receipt, issued by the

bank in the following cases:

On account of expenditure incurred by the

bank.

On account of refund of a payment to a

persons under certain circumstances.

d)Pay Order

Pay order is issued to other banks for collection of

payments as said.

III. Demand Draft:

It refers to the payment of money on demand of the

holder of draft. Demand draft includes DD issues and DD

payable.


6. ACCOUNTS DEPARTMENT

Usually accounts are maintain in two ways

1 . Journal system

some commercial industrial institution adopt journal

system.

In journal system entries are reported in journal books and

posted to ledger

2. Vouchers system

Voucher system is used for ever transaction. Voucher have

to be prepare in cash or in transfer or in clearing. The sheet

upon which these voucher are summaries trasaction wise

and consolidated into a figure is checked supplementary. Its

type are as under

a) debit supplementary

b)credit supplementary

bebit supplementary is used for debit vouchers & credit for

crdit vouchers books and reeeeegister are maintained by

bank as follow

i. general ledger

ii. statement of dailey affairs


iii. cash book

iv. transfer book

v. income and expenditure ledger

7. REMITTANCE DEPARTMENT

Home Remittances

The bank having a network of above 900 branches all

over the country, undertakes to provide safe and instant

payment of remittance from expatriates routed through

designated foreign exchange companies and correspondent

banks with whom special arrangements have been made in

this regard. Through the Allied Express Service, ABL

ensures that beneficiaries accounts in ABL branches are

credited within 48 hours of receiving home remittance

information from overseas.

Inter Branch Remittances

Allied Bank can transfer funds to the remotest part of

the country for payment or credit to the customer himself or

a third party , through telegrams, telex for payment, credit


on the same or next day. Telegraphic transfers can also be

made abroad in foreign currency.

Remittance department deals with the following

instruments used for remittance purposes

Mail Transfer:

When a customer requests the bank to transfer his

money from one branch of bank to another branch of the

same bank or from one city to another city to the same bank

or any other bank, customer fills the form given by bank. If

the customer has an account with that amount as mentioned

in the application form then concerned officer will

undertake the following procedure to make the mail

transfer complete.

1. Branch Mail transfer form

2. Receiving Branch Register copy

3. Issuing branch register Copy

4. beneficiary advice

5. advice to customer

In case where the customer is not account holder of

the bank then the customer will have to deposit the amount

which he wants to transfer under Mail. Then the above said

procedure will be done.

Telegraphic Transfer:


This type of transfer is simple. After filling the

application form the concerning officer shall fill the

telegraphic transfer form. Then it is sent to the required

bank which on receiving it immediately makes the payment

to the customer and afterwards the voucher are sent to that

bank by ordinary mail.

Demand Draft:

We can differ these type of drafts in two more types,

which are explained as under

a. Local Demand Draft:

Demand draft is just like cheques and issued

when the customer wants to take cash with him

personally. The idea behind is to avoid the risk and

burden of currency notes in huge quantity. Demand

draft can easily be handled whatever amount it has and

the money can easily be taken from the bank when it is

presented. In fact, the bank persuades the customer to

transfer money by drafts and avoid the risk of frauds

involves in MT and T.T. Draft is only issued when the

bank knows customer and bank has the confidence in

him

In case of transfer of money by drafts, the customer

has to fill an application form. Then the concerned

officer fills the following forms:


1. Customer’s advice

2. Customer’s debit form

3. Register copy

4. Cover Advice

A foreign bank uses the cover advice if draft is issued

to National Bank of Pakistan.

b. Foreign Demand Draft:

The foreign bank only uses the cover advice if draft is

issued to National Bank of Pakistan. Foreign Demand

Draft is just like the demand draft. The only difference

is that a bank issues Foreign Demand Draft to the

bank of another country. It requires foreign exchange

and it involves seven forms, which are to be filled.


OTHER PRODUCTS AND SERVICES

Allied bank of Pakistan provides its customers with

various products and services, to cater their needs of

investments, and other social or business requirement.

These products and services offered by bank are as follows.

1. Allied Tahaffuz Deposit Scheme

Brings unparalleled life insurance cover along with

profit.

Minimum deposit amount to Rs. 50,000/= or multiples

thereof. Insurance cover upto Rs. 5,000,000/=.

Competitive rate of profit.

Payment of profit on monthly basis. Automatic renewal

on face value.

Life insurance upto 5 times of your deposits amount

with no extra cost.

Premium shall be paid by the bank.

Eligibility age is 18 to 64 years.

No medical examination is required for

Deposit upto Rs. 500,000/= and age upto 60.


Deposit upto Rs. 100,000/= and age above 60 and upto

61.

Allied Tahaffuz Deposit Certificate cceptable as

collateral.

2. Master Cards

Allied Bank master cards helps to pay with out the

complication of cash and cheques.

Convenience at no extra cost

It doesn’t cost anything if we pay in full within the due

date, but if decide to spread out payments over several

months a service charge @2.5% per month is charged.

Allied Bank master card is safer than cash and simpler than

cheques.

How the Allied Bank Master Card works

We have to be an account holder with the Allied Bank

to apply for the Allied Bank. Master card which will be

available for an initial fee of Rs. 2000/= (Rs.

500/=membership fee + Rs. 1500/= annual fee). Once we

obtain card, we simply present it at shops, supermarkets,

hotels, pharmacies, nursing homes, restaurants, petrol

pumps and hundreds of other establishments which display

the familiar master card sign throughout Pakistan and


abroad. Once purchases are made, we sign a voucher and

that’s it.

Billing is easy too

Every month you will receive a statement showing

details of transactions, outstandings and the minimum

amount due. The statement will also give the last date for

payment-so you can avoid paying service charges.

Payment options

Settle in full within 15 days of statement date. Pay just

the minimum payment required. Service Charges are

calculated on a daily product basis on extended credit

(much like an overdraft) @ 2.50% per month.

Mimimum payment requirement

In order to avoid disruption in use of the card, it is

essential that at least minimum payable amount of the bill is

paid regularly. In case the required payment is not received

the operation of the Master Card is automatically,


suspended by the system. In such case, the card is activated

after receipt of overdue payment only.

3. All time banking

Allied Bank is now introducing the AlliedCash+ also

referred to as ATM card. You will now have the convenience

of withdrawing cash from any of our multiple ATMs ("All-

Time Banking" locations) conveniently located in major

cities like Karachi and Lahore at any time of the day or

night even on closed days/holidays. Other services include

customer being able to inquire about the balance of his/her

account or printing an abbreviated (mini) statement

showing the most recent eight transactions up to the

previous working day.

How to obtain

In order to obtain an AlliedCash+ Card, you simply

have to fill out the prescribed Application form available at

selected Allied Bank Branches in Karachi and Lahore. The

duly filled form should be handed over to the Manager of

the Branch where you are maintaining your account. Non-

account

holders would first have to open an account with Allied

Bank to have access to this facility. You can feel absolutely

safe about your AlliedCash+ Card because it can only be


http://www.abl.com.pk/atmLocations.htm

used with the Personal Identification Number (PIN) which is

given to you by the bank. As a security measure, you should

keep this number absolutely Confidential.

How to use

The instructions appearing on the screen of ATMs have

been designed to help the customer in using the facility.

Graphical representations have been employed, where

appropriate, for ease of understanding the following simple

guidelines would also be useful.

Inserting the card

Please insert your AlliedCash+ Card in the Card Slot

located at the front of the machine. The Card must be

inserted with its face up as indicated on the machine.

Entering PIN

The PIN has to be keyed in using the Key Pad located

just below the screen. Please note that the PIN is not

displayed on the screen as it is keyed in. This is to keep the

PIN confidential from onlookers. A precaution to keep in

mind is that the Key Pad should not be directly visible to

any other person when you enter your PIN. This is easily

accomplished by positioning yourself in such a way that you

stand close to the machine directly in front of the Key Pad.


Changing PIN

When changing your PIN, you would be asked to key in

your existing PIN once, and new PIN twice to ensure that

you did not make a mistake while entering your new PIN.

Menu selection

Most of the options available on ATM screens are to be

selected by using the eight Menu keys located on the sides

of the screen, or on each side. You will notice that options

appear on the screen by dividing the screen into boxes. For

selecting the desired option, press the Menu Key next to the

appropriate box.

Fast cash and cash withdrawal

Fast Cash option allows you to select predetermined

amounts for withdrawal by simply using a Menu Key.

Choosing Cash Withdrawal, on the other hand, will permit

you to specify the exact amount (in multiple of Rs. 500 upto

maximum of Rs. 10,000) by using the key Pad below the

screen.

Cards capture

ATMs automatically capture cards that have been duly

reported as lost or have been cancelled. Similarly, if you fail

to enter your correct PIN in 3 repeated attempts, the

machine will capture the card. Also any cards unrecognized


by the ATM may be captured. In all such cases, ATM

services will not be made available. In case your Card is

captured, please contact the manager of bank branch where

the Card has been captured.

Time out

In order to provide added security, ATMs are

programmed to capture the card if the customer forgets to

take it back after a transaction. Similarly, if you forget to

take the cash within a pre-set time limit, the machine will

take it back. Typical time for recapture of the card/cash is

20 seconds. You should, however, be careful to take both

your card and the cash before moving away from the

machine as it cannot be guaranteed that the machine will

recapture them before they are taken away by the next user

or a passer by.

Out of service

Occasionally, a particular ATM may be out of service.

This would be indicated on the screen displaying the status

of the machine. Various factors could cause this condition,

which includes telecommunication problems, hardware

breakdowns, power shutdowns, insufficient cash in the


machine, etc. If you encounter an out of service ATM,

please proceed to the nearest available ATM for service.

Loss of card

In case you lose your AlliedCash+ Card or the Card is

stolen, the matter should invariably be bought to the notice

of the Bank personnel as soon as you discover the loss. For

this purpose, the Branch Manager must be notified in

writing immediately.

In continuation of ALL TIME BANKING services, with

the country wide network of 165 branches, ABL is pleased

to announce that we have enhanced ATM services by

joining the "1-Link Switch" which has following members

Banks:

ABN Amro

Habib Bank Limited

Askari Bank

Bank Al Habib

Union Bank

Soneri Bank

The card holders of our bank will thus be able to

access member banks ATMs for balance inquiry and can

withdrawal simultaneously vice versa. The card holder's

member banks will access our bank ATMs.


http://www.abl.com.pk/SonerBankLtd.htm

http://www.abl.com.pk/UnionBankLtd.htm

http://www.abl.com.pk/BankAlHabib.htm

http://www.abl.com.pk/AskariCommerical.htm

http://www.abl.com.pk/HabibBank.htm

http://www.abl.com.pk/ABN.htm

4. Allied Umrah Aasan

This unique scheme facilitates those persons, who

cannot afford to incurr the lump sum expense. It allows the

intending pilgrims to make payment of Umrah charges in

monthly installments.

It is free of interest and markup.

Using this scheme family, relatives and household

servants can also be sent for Umrah.

Azmeen-e-Umrah will depart from Karachi, Lahore and

Islamabad. Umrah departure can also be arranged

from Peshawar based on number of Aazmeen.

Best services will be provided during the stay at the

holy city. Tour operators will guide every group of

Azmeen-e-umrah.

Azmeen can also apply for ABL Master Card.

Aazmeen will be chosen through a monthly draw.

All applicants will be definitely sent for Umrah.

Around 2500 Azmeen will be sent for Umrah every

month.

Lucky winners of the draw will be duly informed by

their respective branches.

Total package for Azmeen from Karachi will be Rs.

30,000. Azmeen from Lahore and Islamabad will have

to pay an extra Rs. 3,000 for Airline fare.

Umrah package will be of 10 days duration. The

charges include Airline return ticket, Visa fee, family


accommodation and traveling within Saudi Arabia

(Jaddah to Makkah, Makkah to Madina and Madina to

Jaddah).

Application for whole Family/Group will be filed

through a single Application Form. All applicants of a

family/group will be sent for Umrah even if only one

member of that family/group is declared successful in

the draw.

Due to any reason if Umrah Applicant needs to

withdraw his/her application, he/she will get a refund

of all money deposited through instalments till that

time.

At the time of submitting the application Azmeen will

have to deposit Rs. 2,000 per person as first

installment. Rest of the money will have to be

deposited through monthly installments of Rs. 2,000

per person on every 5th day of the month.

If an Umrah Applicant wins in the draw he/she will be

required to pay the balance amount through monthly

installments on returning from Umrah.

Azmeen will have to submit a copy of their NI Cards

and Passports with the application.

Applicants will deposit the monthly installment using

deposit slips till 5th of every month. Defaulters will not

be included in the draw.

5. Hajj Services


The Bank serves the intending pilgrims by helping

them in performing this religious obligation. The Hajj forms

and other related services are provided by the bank.

However, the terms and conditions for accepting the Hajj

forms from intending pilgrims are in accordance with the

Hajj Policy announced by the government, each year. Hajj

applications are available with all branches during Hajj

season, immediately after the Hajj policy is announced by

the Government of Pakistan.

6. Lockers

Allied Bank Lockers are available in three different

sizes Small, Medium and Large on a yearly fee. Locker

holders need not have an account in the Bank.

7. Rupee Travellers Cheques

Carrying cash to strange alien location can prove to be

risky as a single incident can render one without monetary

backup of any sort. Hence travellers cheques are introduced

by banks in order to protect against any contingency.

8. Utility Bills

All branches of the Bank collect utility bills of

electricity, gas and telephones. For convenience of the

customers, Utility Bills are collected by the branches during

banking hours and also in the evening-banking on all


working days. Bills can be paid through cash or cheques.

Consumers may drop bills with

crossed cheques into a drop box available at the branches

under "Cheque Drop-in" system.

9. ALLIED MAHANA AMADANI SCHEME

Salient Features

1. Minimum investment Rs. 25000/-

2. Maximum investment Rs. 1,000,000/-

3. The maturity period for Mahana Amadani Certificates

is 5/10 years

4. Investment can be done by :

I. Individuals singly or jointly

II. Proprietary/partnership Concerns or Companies in

their names

5. It carries special attraction for:

I. Retired Civil & Armed Forces Employees

II. Windows and children being brought up by

guardians

III. Expatriates looking for permanent monthly income


Rate of Return

The estimated minimum rate of profit will be 1166/- per

month

The monthly return on various amounts would be as follows

Amount Monthly Profit

Rs. 1,000,000/- Rs. 11,666/-

Rs. 5,000,000/- Rs. 5,830/-

Rs. 100,000/- Rs. 1,166/-

Rs. 50,000/- Rs. 583/-

Rs. 25,000/- Rs. 291/-

If the profit declared by the bank is higher, additional profit

shall be paid to the depositors

Mode of Payments

I. You will enjoy the facility of receiving the profit

through Payment Order/Demand Draft/Postal Money

Order every month of your door steps

II. At your discretion you or your authorized receivers can

also receive the profit through Cash/Pay Order,

Demand Draft

Since the profit shall be payable by the branch where you

will open your account under the “Allied Mahana Amadani

Scheme”, your profit can also be credited to your account

every month


10. ALLIED SUPER PREMIUM TERM CERTIFICATES

Salient Features

1. Allied Super Premium Term Certificates are of the

following denominations.

Rs.

10,000/-

Rs.

100,000/-

Rs.

500,000/-

Rs.

1,000,000/-

2. Certificates of Rs. 10,000/- have been issued to

accommodation customers investing in fractions but above

Rs. 100,000/-.

3. Super Premium Term Certificates have been categorized

as A, B and C referring to quarterly, half yearly and yearly

profit payment respectively.

4. Super Premium Term Certificates will bear the names of

respective account holders

Rates of Profit

Allied Super Premium Term Certificates carry the profit of

the estimated rate of:

151/2% Per annum on quarterly

payment

16% Per annum on half yearly

payment


161/2% Per annum on yearly

payment

1. Net payment on an investment of Rs. 100,000/- is being

illustrated hereunder. Similar pattern will be followed in

case of other sums of investments:

Principal Amount Rs. 100,000/- Estimat

ed Profit

Quarterly Payment @

151/2% PA

3,875/-

Half Yearly Payment @ 16%

PA

8,000/-

Yearly Payment @

161/2% PA

16,500/-

Mode of Profit Payment

The valued customers will enjoy the facility to

receiving their profit through Cash/Postal Money

Order/Demand Draft/Pay Order or by transferring it to their

usual Current/Saving Bank Account as per their written

instructions, and addresses provided by them.

11. ALLIED OVERSEAS SAVERS ACCOUNT


Overseas Pakistanis are playing an important role in

the economic development of the country. Allied Bank is

always greatly concerned about the due recognition of these

stalwarts for making a singular contribution to the progress

and prosperity of the nation. We are always in the lead to

offer greater banking facilities to Pakistanis working

overseas.

Most of our schemes pay special attention to the fact

that overseas Pakistanis, working their hearts out, should

get all the facilities possible for not only remitting their

earnings home but also getting better value of their savings.

The beneficiaries receiving the remittances through Allied

Overseas Savers Account will not only be able to earn a

higher rate of profit but the remitters will also feel that the

money being sent to their kith and kins will remain safe,

secure and growing

Salient Features

1. This is the easiest, fastest and safest way of sending

remittances home.

2. The amount in your account will get 3% extra profit in

the first year.

3. Account holders get all the professional services and

facilities offered by Allied Bank.


4. Money saved from domestic expenses not only

remains safe but also earns profit continuously.

5. Unlike other Savings Accounts, you can withdraw as

much money as you want from Allied Bank Overseas

Savers Account without giving any advance notice.

Remittances can be received in any currency. The amount

received is converted into Pakistani Rupees on the

conversion rate applicable on the date of receipt and

deposited into your account

12. YOUNG SAVERS CERTIFICATES

1. Children and individuals of all age groups are the

investors/customers of the scheme.

2. There is no age limit.

3. The children will open and operate their accounts

through their parents/guardians.

4. The investors will be provided certificates against their

investments.

5. The certificates shall be of the following denominations.

6. Rs. 1000/- 7. Rs. 3000/- 8. Rs. 5000/-

9. Rs.

10,0000/-

10. Rs.

50,000/-

11. Rs.100,0

00/-

12. Maturity period of the Certificates will be 10 years.


The average expected rate of profit for 10 years will be 15%

13. ALLIED KARSAZ SCHEME

Allied Bank moves a step forward towards interest free

banking by introducing Allied Karsaz Scheme. The aim of

this scheme is to provide an opportunity to the depositors to

take advantage of a real Riba Free economic environment

and avail Interest Free and Mark-up Free Finance at the

time of need to meet their business, trade and agricultural

financial obligations.

1. Prospective client who will maintain a return free deposit

for at least 3 months shall be eligible to avail interest

free/mark-up free finance.

2. Deposit amount, Rs.100,000/- and multiples thereof.

3. Minimum deposit period, 3 months with automatic

rollover facility.

4. Premature encashment allowed, without any

penalty/charge.

5. Eligible depositors may avail finance individually or for

the companies wherein they have financial interest/stake.

6. Minimum deposit period for eligibility of finance, 3

months.

7. Maximum period of finance, 6 months.


8. Maximum period to avail finance 12 months from the

maturity of deposit.

9. Every month (30 days) completed by the deposit shall be

taken into accounts for calculation of entitlement of

finance.

10. Finance will be allowed to the eligible clients, only on

providing adequate securities acceptable to the bank and

fulfillment of other requirements.

11. Finance proposal processing fee Rs. 100/- (non-

refundable) plus documentation cost on actual basis.

12. In case of default/delay in repayments, penalty @

0.055% per day (20.075% p.a.) to be placed in charity

A/C.


WORK DONE

I started my internship from 1st July to 31st August

2003 at Allied Bank of Pakistan Civic Centre Karim Block

Allama Iqbal Town Lahore. The work done in different

departments is as follows

General Department

Accounts department

Cash department

General Department

I spend my 1st month in this department and I

performed different tasks which can be divided into

different classes discussed as under

1. Token Book

2. Cheque Return Register

3. Mail Inward Register

4. Mail outward Register

5. Clearing Inward Register

6. Clearing outward Register

7. Sorting of Cheques


8. Account Opening Forms

9. Vouching

Token Book

On my 1st day of internship I maintained this book. The

procedure for the maintenance of the book is here after.

When a customer of a bank wants to withdraw any amount,

he draws a cheque and gives to relevant officer who enters

this cheque in token book. The officer notes the kind of

account, number of cheque, account number and amount of

cheque. The officer stamps the cheque and gives the

relevant token to the customer.

On the credit side of the token book the officer records

all the receipts of the day, and a the end of public dealing

time the token book is closed and total of both sides must

tally with cashier’s book. I performed this duty for 10 days.

Cheque Return Register

When there is not enough balance in the credit of the

customer or the signature of the account holder does not

tally with the specimen signature available in the branch

the cheque is returned to the cheque holder and an entry is

made in the Cheque Return Register after taking the

signature of the holder. This book is maintained

simultaneously with the token book.


Mail Inward Register

The 11th day I was assigned with the duty of

maintaining the mail inward register and after that it was

my duty to record the daily inward mail in this book. In this

register any letter of instruction received by any branch is

recorded. In this register serial number, from which the

mail is received, object of mail and date of receiving is also

written.

Mail Outward Register

In this register the serial number, the purpose of mail,

addresses and date of letter issue to the other branches and

head office is written. This register is quite the same as the

inward register and it also was included in my daily

responsibilities from the 11th day.

Clearing Inward Register

The next task assigned to me after successfully

maintaining the token book was the clearing inward

register. The clearing inward register shows all the sums,

which are received from other branches and other banks.

In this register the serial number, date of clearing, date of

instrument issued, amount of instrument and name of other


branches and banks to whom the funds are transferred are

recorded. I performed my services to this department for

one week.

OBC Register

In the mid of third week my duty was to maintain the

OBC register. The OBC register shows all the sums, which

are received by the branches from the same bank and the

other banks on the behalf of its customers. In this register

the serial number, date of the instrument, name of drawee

(branch of same bank or other bank) and amount of

instrument is also recorded. This register contain all the

instrument received by the branch other than the cities of

Lahore, Karachi, Rawalpindi, Islamabad.

Sorting of Cheques:

This was the duty included in my daily responsibilities.

While performing this duty I had to sort all the cheques

received by the branch separately showing the nature of

account and the pay-in-slips as well.

Account Opening:


I spent one week (starting from 25th July) of my

Internship Training in Account opening. Bank’s customers

may be individuals (Single or Joint), firms

(partnership/proprietorship), Autonomous corporations,

Limited Companies, Charitable Institutions, Associations

Educational Institutions or Local Bodies. ABL normally

opens following types of accounts.

Current account

Saving account

Brief explanation of these accounts is as follows:

Current Account:

Current A/c is basically used to meet the daily transactions.

Current account provides safety to the customer’s money,

gives the advantage for paying debts by the convenient and

safe means of sending cheques through the post thus

avoiding the trouble and loss.

Saving Account:

In case of saving accounts, account holder gets profit. In

Allied Bank of Pakistan Ltd. saving a/c is operated just like a

current a/c and there is no main difference between current

& saving account except profit.

Basic information required to open an account:


The opening of an account is the establishment of

banker customer relationship. By opening an account at a

bank a person becomes a ‘customer’ of a bank.

Following are the steps involved in the opening of new

accounts

Introduction and preliminary investigation:

Before a banker opens a new account he should

ascertain whether or not the person desirous of opening the

account is a desirable customer. The banker should

determine the prospective customer’s integrity,

respectability, occupation and the nature of business by the

introductory references given at the time of account

opening. Negligence in this informal preliminary

investigation may result in serious consequences not only

for the banker concerned directly but also for other bankers

and the general public who may be affected indirectly. In

Ladbroke & Co. V Todd (1914), the banker did not obtain

introduction at the time of opening the account, and it was

construed a negligence within Section 82 of the Bills of

Exchange Act 1882.

In order to further strengthen and streamline this

process, the Federal Ombudsman of Pakistan, vide his

ruling on complaint No. II/31/5186, has directed the banks

to retain with the account opening form a Photostat copy

each of the National Identity Cards of the person desiring to


open an account as well as that of the introducer. As per

these directions, the concerned Branch Managers are

required to obtain the original National Identity Cards along

with their Photostat copies and then return the original

after attesting the authenticity of the retained copy.

Specimen Signature:

When an account is opened with a banker customer

gives the banker a specimen of the form of signature which

would appear on all his cheques to express his authority for

the payment of cheques drawn on his banker. This specimen

is taken generally on a card specially designed for the

purpose, and rule for the customers, full name, and account

number are entered on it.

If the we have reasons to doubt the genuineness of a

signature, we should either get it confirmed for his

satisfaction or return the cheque with the remark

‘Signature differs’. Because If the signature of the customer

is forged the banker cannot escape his liability because he

has acted on his customer’s mandate.

Illiterate Person:


A person is not disqualified to become a customer of

the bank merely because of his illiteracy. The extra

precautions to be taken in this case are as under:

As a matter of Rule I used to obtain 2 or 3 passport size

photographs of the prospective customer. One copy is

pasted on the account opening form, the other copy is

pasted on the specimen signatures card, and the third copy

of photograph is pasted with the cheque book.

Instead of specimen signature, the left hand thumb

impression from male, and right hand thumb impression

from female account holders is taken on the cards as well as

on the account opening form.

An illiterate customer must come personally to operate his

account, because he must put his thumb impression on the

cheque in the presence of the bank officer attesting his

thumb impression.

An illiterate account hold should be advised not to issue

cheques payable to other persons either for cash payment

or for collection and clearing.

Vouching:


The other responsibility of the accountant other than

account opening is of vouching different instrument

received in the branch i.e. DDs, TTs, DACs etc. While

performing duties with the accountant I helped him in the

preparation of vouchers as well.

Accounts Department

In the second month I served for the accounts

department. Work done in accounts department is divided

into different classes

1. Salary Register

2. Demand Draft Issued Register

3. Demand Draft Payable Register

4. Telegraphic Transfer Issued Register

5. Telegraphic Transfer Payable Register

6. DAC Register

7. Cheque Book Issue Register

Salary Register

At the start of the second month the accountant told

me the procedure of maintaining salary register at the end

of the month. In the salary register the salaries of all the


employees are recorded. In salary register the basic salary

and all the facilities are recorded e.g. accommodation,

conveyance, utilities and provident fund recorded. In salary

register the amount of tax deducted at source on salary are

also recorded.

Demand Draft Issued Register

I worked in the department for another 7 days and for

these days I maintained different registers. The detail for

all of these is given ahead. On the second day I maintained

the DD issued Register. When a person wants to transfer

some amount form one place to another place he can

transfer it through draft. The branch orders to another

branch or bank to pay certain sum of money according to

the apparent tenure of the instrument. The bank charges

commission against this facility. In demand draft issue

register the date of draft issue, name of payee, name of

drawee and the date of issue is written. The bank issues

the advice to the drawee branch against the issuance of

draft.

Demand Draft Payable Register

In demand draft payable register the bank record of all

the particulars of the demand draft payable. The bank only

pays that demand draft against which advices have been

received.


Telegraphic Transfer Issued Register

In telegraphic transfer issue register all the particulars

of telegraphic transfer e.g. drawee branch, the name,

number of beneficiary and amount of telegraphic transfer

are recorded.

Telegraphic Transfer Payable Register

When the branch receives the advice from other bank

it also records it in telegraphic transfer register with all the

particulars e.g. date, name of drawee, amount and name

and account number of the beneficiary also is recorded.

DAC Register

In DAC register the bank records all the relating

matters of deposit at call.

Cheque Book Issued Register

I maintained the cheque book register for three days in

the second month. When the customer of a bank wants to

withdraw his funds from the bank he/she uses cheque. For

this purpose he gives the application to the manager. The

officer and manager verify the application, and then the

cheque book is issued. In cheque book register the date of

issue of cheque book, kind of account, number of leaves,


and account number of the customer is recorded. The

signatures of the receiver are also taken on the cheque book

issue register.

Cash Department:

In the last week of my internship period I performed

two duties in Cash department i.e.

Scrolling

Cashier Book

Scrolling:

Scrollng is a procedure of recording the bills received

the branch throughout the day. I made different scrolls for

different bills that include electricity, telephon, suigas and

water and sanitation. Four copies are prepared by the

branch. Out of these one is kept by the branch and other

are given to the concerned offices.

Cashier Book:

It was the final task of my duties and show my good

zeal to perform this task efficiently and effectively upto my


optimum level for the betterment of the branch. In

response I got the reward from the manager of the bank

that he give me a good party. The procedure that is

adopted to maintain the cashier book is very simple. I just

enter the cheques alongwith its particulars in the book and

made a total of the amount at each and every page and get

grand total matched with the token book.


Financial Analysis

Allied Bank of Pakistan Ltd.

Balance sheet

As on december 31, 1999

2005 2006 2007

Assets

Cash 8,601,193 7,646,937 6,316,337

Balance with other Banks 1,757,510 1,878,796 1,380,840

Money at call and short notice. 300,000 100,000 450,000

Investments 26,774,766 25,605,470 20,192,699

Advances net of provisions 55,263,762 42,719,179 36,231,357

Operating Fixed Assets 3,062,045 2,488,619 872,730

Capital work in Progress 44,246 37,472 33160

Net investments in Finance Lease 34,415 53,707 43,755

Other Assets 11,088,394 8,827,987 6,882,772

total assets 106,926,331 89,358,167 72,403,650

LIABILITIES

Deposits and other accounts 93,107,291 76,541,153 63,429,709

Borrowings from other bank agents etc. 7,144,163 6,243,517 4,914,558

Bills Payable 1,073,491 1,084,151 802,367

Other Liabilities 2,588,936 2,487,440 1,741,598

total liabilities 103,913,881 86,356,261 70,888,232

Share capital 1,063,156 1,063,156 1,063,156

Reserve fund and Other Reserves 480,760 455,760 451,760

Unappropriate profit 1,638 16,094 502

Surplus on revaluation of Fixed Assets. 1,466,896 1,466,896 0

Shareholders equity 3,012,450 3,001,906 1,515,418

106,926,331 89,358,167 72,403,650

MEMORANDUM ITEMS

Bills for collection 8,142,388 10,910,897 10,062,812

Acceptances endorsements and other obligations 18,360,244 13,354,826 13,622,536

contingent liabilities and commitments 0 0 0

Allied bank of PakistanProfit and loss account


For the year ended december 31, 1999Particulars 2005 2006 2007

Mark up interest and discount or return earned 7,287,432 6,059,060 5,026,784Less Cost/Return on Deposits, borrowing etc 6,953,006 5,289,971 4,639,053

334,426 769,089 387,731Free commission and brokerage 358,997 426,229 361,322Profit from dealing securities 1,172,040 1,033,310 1,130,242Profit from investment securities 971,940 755,170 564,453Dividend Income 21,791 14,401 18,398Other operating income 995,310 607,820 1,191,176

3,520,078 2,836,930 3,265,5913,854,504 3,606,019 3,653,322

OPERATING EXPENSES Administrative Expenses 3,772,889 3,396,340 2,960,699Provision written back and against non performing Advances

-53,131 -254,885 712,492

Loss from diminution value of investments 0 218,398 -9,649Other provisions 0 36,587 33,157

3,719,758 3,396,440 3,696,699134,746 209,579 -43,377

Other Income 64,356 88,017 104,144199,102 297,596 60,767

Other charges 128,004 128,004 32,001Profit before taxation 71,098 169,592 28,766Taxation – Current 60,554 150,000 335,125Deferred 0 0 -320,023

60,554 150,000 15,102Profit after taxation 10,544 19,592 13,664Unappropriated profit brought forward 16,094 502 338Profit available for appropriation 26,638 20,094 14,002AppropriationsTransfer to statutory reserve 25,000 4,000 13,500Unappropriated profit carry forward 1,638 16,094 502


Horizontal Analysis

Balance Sheet

Increase/

decrease in

2005

Chang

e in%

Increase/

decrease

in2006-

2007

change

in%

Assets

Cash 954,256 12.48 1,330,600 21.07

Balance with other Banks (121,286) 6.46 497,956 36.06

Money at call and short

notice. 200,000

200.0

0 (350,000) 77.78

Investments 1,169,296 4.57 5,412,771 26.81

Advances net of provisions 12,544,583 29.37 6,487,822 17.91

Operating Fixed Assets 573,426 23.04 1,615,889 185.15

Capital work in Progress 6,774 18.08 4,312 13.00

Net investments in Finance

Lease (19,292) 35.92 9,952 22.74

Other Assets 2,260,407 25.61 1,945,215 28.26

total assets 17,568,164 19.66 16,954,517 23.42

Liabilities

Deposits and other accounts 16,566,138 21.64 13,111,444 20.67

Borrowings from other bank

agents etc. 900,646 14.43 1,328,959 27.04

Bills Payable (10,660) 0.98 281,784 35.12

Other Liabilities 101,496 4.08 745,842 42.83

total liabilities 17,557,620 20.33 15,468,029 21.82

Share capital

Reserve fund and Other

Reserves 25,000 5.49 4,000 0.89

Unappropriate profit (14,456) 89.82 15,592 3105.98


Surplus on revaluation of

Fixed Assets.

Shareholders equity 10,544 0.35 1,486,488 98.09

17,568,164 19.66 16,954,517 23.42

Horizontal Analysis

Profit and Loss Account

Particulars

Increase/

Decrease in

2005-2006

Change in

%age

Increase/

Decrease in

2006-2007

Change in

%age

Mark up interest and discount or return earned 1,228,372 20.27 1,032,276 20.54

Less Cost/Return on Deposits, borrowing etc 1,663,035 31.44 650,918 14.03

(434,663) 56.52 381,358 98.36

Free commission and brokerage (67,232) 15.77 64,907 17.96

Profit from dealing securities 138,730 13.43 (96,932) 8.58

Profit from investment securities 216,770 28.70 190,717 33.79

Dividend Income 7,390 51.32 (3,997) 21.73

Other operating income 387,490 63.75 (583,356) 48.97

683,148 24.08 (428,661) 3.13

248,485 6.89 (47,303) 1.29

OPERATING EXPENSES

Administrative Expenses 376,549 11.09 435,641 14.71

Provision written back and against non

performing Advances 201,754 79.15 (967,377) 135.77

Loss from diminution value of investments (218,398) 100.00 228,047 2363.43

Other provisions (36,587) 100.00 3,430 10.34

323,318 9.52 (300,259) 8.12

(74,833) 35.71 252,956 583.16

Other Income (23,661) 26.88 (16,127) 15.49

(98,494) 33.10 236,829 389.73

Other charges 96,003 300.00

Profit before taxation (98,494) 58.08 140,826 489.56

Taxation – Current (89,446) 59.63 (185,125) 55.24

Deferred 0 0 320,023 100.00

(89,446) 59.63 134,898 893.25

Profit after taxation (9,048) 46.18 5,928 43.38


Unappropriated profit brought forward 15,592 3105.98 164 48.52

Profit available for appropriation 6,544 32.57 6,092 43.51

Appropriations

Transfer to statutory reserve 21,000 525.00 (9,500) 70.37

Unappropriated profit carry forward (14,456) 89.82 15,592 3105.98

Comments on Horizontal Analysis:

Although the bank’s total assets have increased by

23.42% in 1997-1998 and 19.66% in 1998-1999 but the

management of ABL should take notice of its balance

with other banks. ABL balance with other banks have

been increase by 36.06% in 1997-1998 but decrease

by 6.46% In 1998-1999 which is not positive sign for

the management of allied bank of Pakistan.

The investment made by allied bank of Pakistan

increase by 26.81 in 1997-1998 and 4.57% in 1998-

1999. No doubt the investment decreases from the

previous year due to atomic blast even though the

investment in 1999 has increased by 4.57% from 1998

that is a good sign for the management of the Allied

Bank of Pakistan .

In order to meet the expansion plans, the fixed assets

have been increasing at a continuous pace and

although that the borrowing from other banks that

represent long term liabilities have increased but there


is also a corresponding increase in the fixed assets of

the bank as well.

The management of Allied Bank should take a notice of

the increased trend of required working capital in

order to meet the expansion plans.

The bills payable had increased in 1997-1998 by

27.04% and have increased in 1998-1999 by only

14.43% which is a good sign that reflects

the decreasing trend in the short term liabilities. So

the performance of Allied Bank in this field is good.

Allied Bank has been successful in maintaining a

handsome amount of Reserve Account to meet the

emergency requirements. And the balance has been

continuously increasing for the past two years.

The management of Allied Bank should take the notice

of the fact that the Commission and Brokerage earned

by the bank has been decreased by 15.77% from the

previous year. So the management should take active

measures to overcome this problem.


The Dividend earned position was not satisfactory in

1997-1998 because there was decreasing trend in

Dividend by 21.73% but due to effective management

the Allied Bank of Pakistan has become able to earn

handsome dividend in 1998-1999 i.e. 51.32% which is

much more than the past years.

The management should be careful about

Administrative Expenses which are increasing

continuously.

Tax is a statutory requirement of the company but

there is a decreasing trend in the Tax liability of the

company it means that the management of Allied Bank

is enjoying a relief in its tax liability.

Another reason of the low profit of ABL is that the

other incomes earned by the bank have decreased

from the previous years as well as the expenses are

increasing. So the management of Allied Bank must

take notice of the fact and it should adopt the better

cost control methods in order to eliminate the

administrative expenses in order to generate more

profit.

Vertical Analysis

Balance Sheet

%age (2005) %age (2006) %age (2007)


Assets

Cash 8.04 8.56 8.72

Balance with other Banks 1.64 2.10 1.91

Money at call and short notice. 0.28 0.11 0.62

Investments 25.04 28.65 27.89

Advances net of provisions 51.68 47.81 50.04

Operating Fixed Assets 2.86 2.78 1.21

Capital work in Progress 0.04 0.04 0.05

Net investments in Finance Lease 0.03 0.06 0.06

Other Assets 10.37 9.88 9.51

total assets 100.00 100.00 100.00

Liabilities

Deposits and other accounts 87.08 85.66 87.61

Borrowings from other bank agents

etc. 6.68 6.99 6.79

Bills Payable 1.00 1.21 1.11

Other Liabilities 2.42 2.78 2.41

total liabilities 97.18 96.64 97.91

Share capital 0.99 1.19 1.47

Reserve fund and Other Reserves 0.45 0.51 0.62

Unappropriated profit 0.00 0.02 0.00

Surplus on revaluation of Fixed

Assets. 1.37 1.64 0.00

Shareholders equity 2.82 3.36 2.09

total liabilities and shareholder

equity 100 100 100

Vertical Analysis

Profit and loss Account

Particulars%age

(2005)

%age

(2006)

%age

(2007)


Mark up interest and discount or return earned 100 100 100

Less Cost/Return on Deposits, borrowing etc 95.41 87.31 92.29

4.59 12.69 7.71

Free commission and brokerage 4.93 7.03 7.19

Profit from dealing securities 16.08 17.05 22.48

Profit from investment securities 13.34 12.46 11.23

Dividend Income 0.30 0.24 0.37

Other operating income 13.66 10.03 23.70

48.30 46.82 64.96

52.89 59.51 72.68

OPERATING EXPENSES

Administrative Expenses 51.77 56.05 58.90

Provision written back and against non performing Advances0.73 4.21 14.17

Loss from diminution value of investments 0.00 3.60 -0.19

Other provisions 0.00 0.60 0.66

51.04 56.06 73.54

1.85 3.46 -0.86

Other Income 0.88 1.45 2.07

2.73 4.91 1.21

Other charges 1.76 2.11 0.64

Profit before taxation 0.98 2.80 0.57

Taxation – Current 0.83 2.48 6.67

Deferred 0.00 0.00 -6.37

0.83 2.48 0.30

Profit after taxation 0.14 0.32 0.27

Unappropriated profit brought forward 0.22 0.01 0.01

Profit available for appropriation 0.37 0.33 0.28

Appropriations

Transfer to statutory reserve 0.34 0.07 0.27

Unappropriated profit carry forward 0.02 0.27 0.01

Comments on Vertical Analysis


In the year 1999, cost of deposits and borrowing is

representing a soaring figure of 95.41% of mark up or

interest owned by Allied Bank of Pakistan while it was

87.31% last year. The management of ABL should take a

notice of it and make arrangements of investing and

depositing I more profitable avenues.

Net profit before tax of ABL for the year 1999 is only

0.96% of markup or interest earned, as compared to 2.80%

in the year 1998. The authorities of ABL should take notice

of cost on deposit first of all. Secondly fees, commission

and brokerage earned by ABL during 1999 has decreased as

compared to 1998.

Vertical analysis reflecting the fact that although

operating expenses are decreasing to last year but along

with this operating income is not increasing at a good pace.

Management of ABK should make sincere efforts to increase

its operating income at a good rate.


Ratio Analysis:

Ratio simply means one number expressed in term of

another. A ratio is a statistical yardstick by means of which

relationship between two or various figures can be

compared or measured. The term accounting ratio is used

to describe significant relationship between figures shown

on a balance sheet, profit and loss account or in any other

part of accounting organization. Accounting ratio thus

shows the relationship between the accounting data.

A. Return on Total Assets:

Net profit After Tax X 100

Total Assets

2005 2006 2007

Profit After Tax 10544 19592

13,664

Total Assets 106926331 89358167

72,403,650

Return on Total Assets 0.0099% 0.0219%

0.0186%

Comment:


In 1998 the ratio has increased from 0.0186% to 0.0219%.

This is due to increased in net profit after tax but in 1999

the ratio has declined to 0.0099%. there are two reasons.

One reason is due to decline in net profit and second reason

is increase in total assets. Net profit after tax is decreased

by 46% and this decrease is due to increase in

Administrative Expenses i.e. 11.09%.

B. Return on Shareholders Fund:

Net profit After Tax X100

Shareholder Equity

2005 2006 2007

Net Profit After Tax 10544 19592

13664

Shareholder Equity 3012450 3001906

1515418

Return on Equity 0.35% 0.66%

0.90%

Comments:

Return on Shareholder Fund is decreasing

continuously from 2006 to 2007. If this ratio decreases due

to decrease in Profit, it is not a positive sign, but if the ratio


decreases due to increase in shareholders’ equity, it is not

bad. In this case the net profit of year is more 2006 then

that of year 2007, but the ratio decreased due to increase in

the shareholders’ equity, which is resultant of increased

reserves. The sharp decline in year 2007 is due to decrease

in profits.

C. Net Profit Margin:

Net Profit After Tax X100

Interest and Discount

2005 2006 2007


13664

Interest and Discount 7287432 6059060

5,026,784

Net Profit Margin 0.1447% 0.3234%

0.2718%

Comments:

Net profit as percentage of Interest received increased

a little in 1998 (from 0.2718% to 0.3234%), but it is very

low and has a decreasing trend in year 1999 it decreased to

0.1447% from year 1998 i.e. 0.3234% the decrease in the


profit from year 1998 to year 1999 is too much than an

increase in profit volume from year 1997 to year 1998. The

decreasing Net Profit trend shows the management’s

inefficiencies to control the operating costs and maximize

the profit.

D. Earning Per Share

Net Profit After Tax X

No. of Outstanding Shares

2005 2006 2007


13664

No. of Outstanding Shares 106316 106316

106316

Earning Per Share 0.0992 0.1843

0.1285

Comments:

Because there is no issuance of share capitals in year

1998 and year 1999. The profit increased in year 1998, but

it has decreased in 1999 and that is why earning per share

has also decreased to 0.0992. This ratio has a great


importance for the shareholders point of view. The

shareholders want a higher return on their investment.

E. Loan to Deposit Ratio:

Total Loan X 100

Total Deposit

2005 2006 2007

Total Loan 55,263,762

42,719,179 36,231,357

Total Deposit 93,107,291 76,541,153

63,429,709

Loan to Deposit Ratio 59035% 55.81%

57.12%

Comments:

This ratio shows a relationship between loans and

advances and reveals how much productively the deposits

are used. Analysis shows an increase in loan to deposit

ratio, this is because of Govt. has decreased lending rate

that is why borrowing is more in 1999 as compared to in

1998 on the other hand bank’s deposits are also increasing

sharply if deposits increase by higher rate than an increase

in loan then bank has to face difficulty to pay its borrowing

cost to the lender.


F. Loan to Asset Ratio:

Total Loan X100

Total Assets

2005 2006 2007

Total Loan 5526376242719179

36231357

Total Assets 106,926,331

89,358,167 72,403,650

Loan to Asset Ratio 51.68% 47.81% 50.04%

Comments:

Total assets of the bank increased from Rs.89 (billion)

to Rs.107 (billion) in 1999 (72 billion to 89 billion in year

1998) and advances/loans net of provision have increased

from Rs.43 (billion) in 1998 to Rs.55 (billion) in 1999. We

have 22% increase in assets and 28% increase in total

assets is lesser than the increase in total advances which

has resulted in an increase in loan to assets ratio from

47.81% in 1998 to 51.68% in 1999.

G. Cash To Deposit Ratio:


Cash X 100

Deposits

2005 2006 2007

Cash 103587039525733 7697177

Deposit 93,107,291 76,541,153

63,429,709

Cash to Deposit Ratio 11.13% 12.45%

12.13%

Comments:

This ratio shows that how much cash is available to

meet the obligations of the depositors. In 1999 the ratio is

11.13% while it was 12.45% in 1998. This decrease shows

that the increase in cash is less than the increase in

deposits i.e. the increase in cash is 12.48% while the

increase in deposits is 21.64% as a result of which the ratio

has declined.

H. Equity Ratio:

Total External Debts

Total Internal Debts

2005 2006 2007

Total External Debts 103,913,881

86,356,261 70,888,232

Total Internal Debts 3,012,4503,001,9061,515,418


Equity Ratio 34.49 28.77

46.78

Comments:

Equity Ratio shows the relationship between the

external debt and the total internal debts. In 2005 the ratio

decrease as companred to 2006 to 28.77. This shows that

the increase in external debts is less than the increase in

internal debts. But in 2007 we see that the ABL relied on

external debts i.e. Rs.104 Billion to meet the obligations.

I. Proprietary Ratio:

Shareholder Fund X 100

Total Assets

2005 2006 2007

Shareholder Fund 3012450 3001906

1515418


89,358,167 72,403,650

Proprietary Ratio 2.82% 3.36%

2.09%

Comments:

This ratio explains that participation in the assets by

the shareholders funds is limited by outsiders fund but


when we take year under review (2007) we see ratio has

further decreased in 2005 as compared to the year 2006

that was increased in year 2007. Reason behind this is that

increase in assets in financed by outsider’s fund rather than

the fund provided by the shareholders because there is

lesser increase in shareholders fund as compared to

increase in total assets.

J. Fixed Assets to Long Term Debt Ratio:

Net fixed Assets X 100

Long Term Debt

2005 2006 2007

Net Fixed Assets 3,062,0452,488,619

872,730

Long Term Debts 100251454 82784670

68344267

Fixed Assets to L.T. Debt Ratio 3.05%

3.01% 1.28%

Comments:

This ratio shows the relationship between the total

debts to be taken to getnerate the fixed assets. Here my

analysis shows that this position is favorable for the Bank

because it does not rely on external funds.


K. Return on Equity Capital:

Net Profit After Tax X100

Equity Capital

2005 2006 2007


13664

Equity Capital 1,063,1561,063,1561,063,156

Return 0.99% 1.84%

1.29%

Comments:

Calculation made on the base of data available shows

that profit earning after taxes in 1999 has decreased due to

increased financial cost of funds for which expected

investment avenues did not open up the situation rather

worsened with reduced return on lending. Here in this ratio

we see that ratio is disturbed by the single factor of

reduction in profit as there in no further flotation of share in

the stock exchange in current year.

L. Operating Ratio:


Operating Costs X100

Interest Earned

2005 2006 2007

Operating Costs 3,719,7583,396,440

3,696,699

Interest Earned 7,287,4326,059,060

5,026,784

Operating Ratio 51.04% 56.06%

73.54%

Comments:

As the ratio shows the operating costs are decreasing

year by year. In year 2007 it was 73.54 % of the interest

earned and it decreased in year 2oo6 to 56.06% in the next

year it again decreased to 51.04% of the interest earned.

The decreasing trend of the operating costs shows the

efficiency of the management to control the operating costs.

But the Operating costs itself as a percentage of the interest

earned is very heavy although the management is trying to

control these costs; these are still a very huge percentage of

interest earned.

M.Equity Capital to Assets:

Equity Capital X 100


Total Assets

2005 2006 2007

Equity Capital 1,063,1561,063,1561,063,156


89,358,167 72,403,650

Equity Capital to Assets 0.99% 1.19%

1.47%

Comments:

In current year bank’s assets have been increased from

Rs.89 billion to Rs.107 billion there by increase @ 20% over

the last year (year 2005: 23.42% increase). On the other

hand bank’s equity has not increased and remained

unchanged during the year 2006, so this is the reason that

equity to assets ratio has decreased from 1.19% in 2006 to

0.99% in 2007. Denominator total assets have increased

substantially during the year 2007 but no increase in equity

capital resulting in decreasing ratio.


Problems and Recommendations

Normally when we study the performance of ABL it is

considered that on the whole the bank is contributing a lot

toward the industrial development and capital formation in

the country. As it is exhibited from the data regarding the

banks financial performance as hsown in the report that the

bank is sharing major banking business in the country.

Further the policies and schemes as are introduced and

carried on the bank are of great source of help in industrial

and trading growth. All these things reflect the great and

valuable efforts on the part of executive command of the

bank, which is finally responsible for the productive

performance of the bank.

So Far my own observation is concerned, I have

concluded a major drawback in the inner system of ABL, in

addition to that I have also learnt some disciplinary wrong

practices on the part of staff of the bank. I will discuss

these problems one by one.

Problems:

No doubt that bank enhance and finance facilities to

persons and parties seeking financial assistance for the


establishment of industries, trading units, enhancement of

the existing projects etc. But some times the bank

managers and employees provides loans to their relatives

and friends without any securities and other things which

are necessary for getting the loan.

Sometimes some persons who are not financially

strong and having no arrangement of securities chalk out a

very useful and sould plan. But the bank rjects their

application. In this way a talented person of the country is

discouraged.

The aforesaid issue was an important one and hence

needs the attention of the executives of the bank. The other

irregularities, which I observed, are as under.

1. It is usually observed that the staff members waste lot

of valuable time while performing their duties. In

other words they cause unnecessary delay and take

extra time in accomplishing their task.

2. There are certain shortcomings charged to the

executive’s management of the bank who is

responsible for maintaining discipline I the bank

branches. They shold regulate such rules and orders.

Which may ensure the maximum output with minimum

imput by eliminating irregular and disciplinary

practices.

3. The bookkeeping and filing system of the bank are so

lengthy and time taking.


4. The attitude of the bankers with all their customers is

not same. They pay mare attention to some of the

customers and neglect the others. Some of the

customers approach the bank officials and get their

work done before the other customers. This is not a

good practice.

5. There are so many customers who don’t know how to

full the cheque, pay-in-slip, application form etc. they

waste lot of time of the bank staff.

6. The government should advise all the customers who

submit electricity, telephone, gas and water bills in the

bank should open their accounts I the branches of the

bank near to their homes. In this way the government

will get the payment of the bills prompltly and

customers will not waste their time.

7. During my internship I fee that the security system to

safeguard the deposit of the bank are not good. The

gunmen of the bank are busy in doing some irrelevant

jobs.

8. The officials who come to give and collect cash from

the branches are and put there weapons here and

there in the branch and get then in taking their friends

I the branch. So the bank should take step to improve

their security system.

Recommendations/Suggestions

1. With reference to Analysis


2. General

With reference to analysis

■ Pre tax profit decreased from Rs. 170 million in the

2005 to Rs. 71 million in 2006. Analysis has done on

the last pages reflect the fact that the factor

responsible for this reduction in the profitability of the

bank is increase in the financial cost of the funds. In

my opinion the management of the bank should

explore new and more profitable investment avenues,

for investing these funds.

■ Fees, commission and brokerage earned by the bank

have been reduced by approximately 16% in 2007 as

compared to 2006. In this highly competitive

environment, bank can charge higher commission only

by providing efficient services to its customers and by

developing good banker customer relationship.

■ Horizontal analysis done on last pages shows that the

total operating expenses of the bank has been

increased is infect an increase of 11.09% in

administrative expenses. For reducing the cost in the

administrative expenses the banks management will

have to follow the policy of “Down Sizing” besides

taking the other measures.


■ Bank’s borrowing from banks and agents has increased

in 2007. This is not a good sign. The bank should try

to generate the funds by introducing its own schemes.

General:

■ The Bank should spread its branch network throughout

the world especially in the countries involved in

international trade with Pakistan.

■ In order to complete with the other banks ATM

services should be expanded throughout the country.

■ All branches should be linked through network that

can better help to meet the daily transactions. In this

regard Internet, E-mail and Fax Services should be

provided at least in the main branches of each region.

■ Some of the schemes are not profit making where as

the bank is an institution that earn earns from them, so

those unprofitable schemes should be finished as

Karsaaz Scheme.

■ Separate counters must be set up to give the facility of

bills collection of all utilities like WAPDA, SUI GAS,

and TELEPHONE.

■ There should be separate cashiers for the Receipts &

Payments in the each branch office.


■ Door to door marketing in this regard especially media

and electronic marketing should be promoted in order

to acquire handsome share of banking sector.

■ Bank branches must be beautified internally and

externally by providing appropriate interior decoration.

■ As we know that only 15% of the people have their

bank accounts, so it is the need of the time to open the

branches in rural areas as well.

■ The bank should acquire the services of the highly

qualified people accompanied by lucrative incentives to

promote its status as desirable in the next millennium.

■ In order to market its products as Allied Tahaffuz

Deposit Scheme, it should accentuate to give

advertisements on both print and electronic media.

■ The bank should develop healthy relationships with the

renowned banks of the work in order to expand its

operations globally.

■ The individual efficiency of worthy employees should

be rewarded in the form of proper increments and

promotion in grades.


Concluding Remarks

In nutshell, it can be concluded that bank’s overall

performance is quite satisfactory. ABL’s total advances,

assits, investments, deposits and equity has increased, but

the profitability has decreased by a soaring percentage of

58.23%. The reasons, which I have traced out of my

analysis, are as follows:

1. Increased financial cost of funds for which the

expected investment avenues did not open.

2. Return o linding has been reduced.

3. Bank has increased its classified advances by 35% to

fulfill the requirement of the prudential regulation.

The fresh increase is mainly 51% in the other assets

especially mentioned (OAEM) classification. According

to the prudential requirement, accrued markup cannot

be credited to the incomes but to the suspense

account. Entry Passed is

Dr. Accrued income A/C

Cr. Suspense A/C

In spite of

Dr. Accured income A/C

Cr. Income A/C


This has adversely affectied the profitability of the

bank.

4. During the year 2007, the economy of the country

remained sluggish in spite of the various policy

measures initiated by the government for the

confidence builing of the domestic investors and steps

taken such as:

Creation of small and medium enterprises

development authority (SMEDA).

Financing under the Prime Minister’s self

employment scheme.

Launching of Mera Ghar scheme.

For the revival of the economy, the expected

investment environment could not be created and

economy did not pick-up.

5. The large number of non-commercial banking

institutions also competed for limited resources and

investment avenues. Thus further narrowing the

spread of the banking industry.


ABL

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