Bank Alfalah Ltd Islamic Banking

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Bank Alfalah LTD.

TABLE OF CONTNTSTABLE OF CONTNTS .................................................................................................... 1

Evolution of Banking ................................................................................................ 7

Early Growth ............................................................................................................ 8

Development of Modern Banking ............................................................................. 9

Banking in Pakistan .................................................................................................. 9

The Vision ................................................................................................................. 16

The Mission ............................................................................................................... 17

The Philosophy ......................................................................................................... 18

Karachi ..................................................................................................................... 21

Lahore ...................................................................................................................... 22

Rawalpindi ............................................................................................................... 22

Peshawar .................................................................................................................. 23

Multan ....................................................................................................................... 23

Other Branches ......................................................................................................... 23

Salient Features ........................................................................................................ 27

Eligibility Criteria ....................................................................................................... 28

Daily Product Basis ................................................................................................... 34

................................................................................................................................ 34

Average Month Balance............................................................................................ 34

Minimum Month Balance ........................................................................................... 34

Saving A/C (05 Days _ Minimum Monthly Balance).................................................... 35

Cheque Book Issuance .............................................................................................. 41

Procedure ................................................................................................................. 41Receiving Inward Cheques ........................................................................................ 42

Procedure for Issuing DD ........................................................................................... 49

Procedure for Demand Draft Payable ........................................................................ 49

Inward Bills for Collection .......................................................................................... 51

Bills for Collection In 2007 ......................................................................................... 51

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1. Credit Principles .................................................................................................... 52

2. Credit Portfolio ...................................................................................................... 52

3. Credit Approval..................................................................................................... 53

4. Credit Administration ............................................................................................ 53

5. Credit Monitoring .................................................................................................. 53

Advances .................................................................................................................. 53

Funded Facilities ....................................................................................................... 54

Pre-Shipment ............................................................................................................ 54

Post Shipment ........................................................................................................ 54

Non Funded Facilities ............................................................................................. 55L/C Is Of Two Types: .................................................................................................. 55

Credit Cards .............................................................................................................. 55

Exporter .................................................................................................................... 56

Documents to Be Attached For Exports ..................................................................... 56

Form E .................................................................................................................... 57

Transport Document (Bill Of Lading, Airway Bill) ....................................................... 57

E-Form Certification .................................................................................................. 57

Form of Authorized Dealers Certificate ..................................................................... 58

Certificate of Origin ................................................................................................... 58

Covering Schedule .................................................................................................... 58

Beneficiary Certificate ............................................................................................... 58

E-FORM ..................................................................................................................... 59

E-Form Has Four Copies: ........................................................................................... 59

Payment from Importer Bank .................................................................................... 59

SWIFT ....................................................................................................................... 59

Bill Of Lading ............................................................................................................. 59

Bank Keep In Record ................................................................................................. 60

Imports ..................................................................................................................... 60

Necessary Requirement ............................................................................................ 60

Documents for Import ............................................................................................... 61

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Executive Summary

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The banking structure in Pakistan comprises of the following types, State Bank of Pakistan,

Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks, specialized

credit institutions. The state bank of Pakistan is the Central bank of the country and was

established on July 01, 1948. The network of bank branches now covers a very large segment of

national economy. The State Bank of Pakistan issues the shares of these periodically. Bank

employees and other common peoples can also purchase these shares and earn profit.

To open an account the customer has to meet the general banking manager with an introducer. The

procedure begins with the punching of account opening form to the customer file i.e. customers

master file. Before closing any account, bank send letter to the account hold for informing him that

his account is going to be closed. There is need an approval form higher authority to close any

account. Current deposits are those which are payable to bank whenever demanded by the

customer. Bank does not pay any profit on current deposits. The following are the financial

products/services of PLS Account, Saving Account, Term deposit and Foreign currency accounts.

In remittance department like any other BANK AL-FALAH also have instruments for transferring

of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and withdrawals

go side by side. This department works under the CD In charge and deals with cash deposits and

payments. This department maintains the following sheets, books, and ledger of account cash

received voucher sheet.

Cash paid voucher sheet, Paying-in-slip, Cheque Book, Cash balance book. The clearing in

Karachi at BANK AL-FALAH or other banks is being done through NIFT (National Institute of

Facilitation Technology).

Bank provides this facility to the people who need advance money to meet their requirement. Party

dealing with other banks financial condition of borrower business and as a first step credit proposal

is being made. BANK AL-FALAH provides advances, which are two types. Secured Advances,

Unsecured Advances. BANK AL-FALAH usually classified advances in to following types

Commercial Advances, Corporate/SMEs Advances, Agricultural Advances. Commercial

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Advances are of following types Demand Finance, Cash Finance, Export Refinance Part I (Pre

Shipment) & others. Banks Agriculture division deals with the agriculture advances. Bank

provides the Agriculture Advances in order to enhance and support the agriculture sector of the

country. Farm Credit & Non Farm Credit.

In foreign exchange, BANK AL-FALAH is dealing Foreign Currency Accounts, Foreign

Remittances, and Foreign Bills for Collection, Imports & Exports

Foreign currency accounts & the foreign currency department deals with the following types of

accounts, Current account, Saving bank account, Term deposit. Foreign accounts are convertible

on floating rate available to the bank. Letter Of Credit facility is being provided by BANK AL-

FALAH in foreign exchange.

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what is BANK?

According to Dr. Hart

Banker or bank is a person

or company carrying on business of

receiving money and collecting drafts for the

customers subject to the obligation of honouring cheques

drawn upon them from time to time by

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customers to the extends of

the amounts available

on their currents

accounts

In the words of G W Gilbert

A banker is a dealer in capital

or more properly a dealer in money.

He is an intermediate party between the borrower and lender.

He borrows one party and

lends to the

another

Evolution of Banking

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It has not so far been decided as to how the word Bank originated. The explanation of this origin

is attributed to the fact that the Jews in Lombardy transacted the business of money exchange on

branches in the market place and when the business failed, the people destroyed the Bank.

Incidentally, the word bankrupt is said to have been evolved from this practice. The opponents of

this opinion argue that it was so, then how is that the Italian money changers were never called

Banchierei in the Middle Ages

Other authorities hold the opinion that the word Bank is derived from the German word back

which means joined stock fund. Then Back was Italianize into Bank.

Early Growth

Banking in fact is as primitive as human society for ever since man came to

realize the importance of money as a medium of exchange. Perhaps it was the Babylonians who

developed banking system as early as 2000 B.C. It is evident that the Temples of Babylon were

used as Banks because of the prevalent respect and confidence in the clergy.

King Hamurabi (1728 1686 B.C), the founder of the Babylonian empire, drew up accede where

in he laid down standard rules of procedure for banking operations by temples and great landlords.

He got his code inscribed on the block of diorite about 8 feet tall, containing about 150 paragraphs

which deals with nearly all aspects of loans, interest, pledges, guarantees, natural accidents, loss,

theft etc. Later on Sumerians, Babylonians, Hittites and Assyrians standardized the values of the

goods in silver, copper and bronze.

It is not certain as to who invented money but history recess that king of Lydia castled electrum

ingots of identical shapes and of uniform weights with a triple emblem engraved on it as an official

guarantee of value in 687 B.C. In 1401 a German public bank was framed comprising the

operations of discounting and transferring of money. By the 16th century, some more public banks

were formed in Venice, Milan, Amsterdam, Hamburg and Nuremburg. In order to streamline

Banking organizations and techniques, conferences were held in Nuremburg from 1548 to 1551

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and it was agreed that the commercial interest of the time needed a bank with facilities of growth

and transfer but it should not be a bank run by private individuals. Ultimately in 1587, a State

Bank under the name of banco DI rialto was formed in Genoa. Later the bank of Amsterdam was

also formed in 1609. This Bank had a guarantee by the State and rendered valuable services to the

Netherlands traders up to the year 1795.

Similarly in 1690, the Bank of Hamburg came into existence in Hamburg with the business of

accepting deposits of fine silver or of foreign money and to run accounts on these deposits. This

Bank rendered great service to the merchants as well as countries it dealt with until 1873, when it

was merged with the Reich bank. By the year 1700, the bank of England was not only issuing

notes but also conducting accounts for customers. Its directors were conducting the business like

that of limited companies. The bank had the monopoly of issuing banking notes. Upto 1813 or

there about in England, the main profit of bank was derived from the circulation of notes.

Development of Modern Banking

In 1918 came into being eleven clearing banks of today. The effect of this historical

development of banking in England has been fairly wide. First, emergence of a small number of

large banks with wide network of branches. Second, increase in the popularity of bank accounts

and a large-scale use of cheques.

In 1946, the labor government nationalized the bank of England and transferred the existing stock

to the nominee of British treasury. In 1955, the British Banks made a departure from traditional

banking by undertaking hire-purchase finance for companies buying industrial plants and

machinery and took interest on hire-purchase finance.

Banking in Pakistan

At the time of independence, there were 631 offices of scheduled banks in Pakistan, of which 487

were located in West Pakistan alone. As a new country without resources it was very difficult for

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Pakistan to run its own banking system immediately. Therefore, the expert committee

recommended that the Reserve Bank of India should continue to function in Pakistan until 30 th

September 1948, so that problems of time and demand liability, coinage currencies, exchange etc.

be settled between India and Pakistan. The non-Muslims started transferring their funds and

accounts to India. By the end of June 1948 the number of officers of scheduled banks in Pakistan

declined from 631 to 225. There were 19 foreign banks with the status of small branch offices that

were engaged solely in export of crop from Pakistan, while there were only two Pakistani

institutions, Habib Bank of Pakistan and the Australasia Bank. The customers of the bank are not

satisfied with the uncertain condition of banking. Similarly the Reserve Bank of India was not in

the favour of Govt. of Pakistan. The Govt. of Pakistan decided to establish a full-fledge central

bank. Consequently the Governor-general of Pakistan Quaid-E-Azam inaugurated the State Bank

of Pakistan on July 1, 1948. Thus a landmark was made in the history of banking when the state

bank of Pakistan assumed full control of banking and currency in Pakistan.

The banking structure in Pakistan comprises of the following types.

1) State Bank of Pakistan.

2) Commercial Bank of Pakistan.

3) Saving banks.

4) Co-operative banks

5) Specialized credit institutions.

Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all over the

country and in some foreign countries through a network of branches. All these commercial banks

were nationalized in January 1, 1974, and were recognized and merged into the following five

banks:

1) National Bank of Pakistan

2) Muslim commercial bank limited

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3) Habib Bank Limited

4) United Bank Limited

5) Allied Bank of Pakistan

The state bank of Pakistan is the Central bank of the country and was established on July 1, 1948.

The separation of East Pakistan and its repercussion in the form of economic depression has

caused a lot of difficulties to the banking system in Pakistan. The network of bank branches now

covers a very large segment of national economy. The numbers of branches have increased

appreciably and there is now on branch of bank for every 3000 heads of population approximately.

There is done reasonable growth in deposits from the establishment of Pakistan. Besides this

growth, specialized credit and financial institutions have also developed over the years.

The Government of Pakistan in the late 90s introducing the need for the privatization of state

owned banks and companies. The private sector has accepted the challenge and most of the banks

are privatized today. The State Bank of Pakistan issues the shares of these periodically. Bank

employees and other common peoples can also purchase these shares and earn profit.

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Introduction to Bank Alfalah Ltd.

Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established

by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its

branches in 74 different countries of the world. It had its 3 branches in Pakistan. In 1991, the BCCI

was banned, when was accused by European countries that the bank was involved in some illegal

operations with Gulf countries. The major reason behind European accusation was that BCCI was

of Islamic mode. Therefore, the bank was closed due to international pressure. Then, its 3

Pakistani branches were taken over by the Government of Pakistan, which were named as Habib

Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited.

Following the privatization in July 1997, Habib credit and Exchange Band assumed the

new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as the family

of Sheikh Nahayan Mubarik Al-Nahayan purchased 70% of its shares and 30% shares remained

with Habib Bank on behalf of Government of Pakistan.

Charged with the strength of Abu Dhabi consortium, and under the leadership of His

Highness Sheikh Nahayan Mubarik Al-Nahayan, Minister of Higher Education and Scientific

Research, Government of Abu Dhabi, and a prominent member of Royal Family, the bank is

energized with the vision, envisaging the development of various sectors in Pakistan.

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Since the inception of Bank Alfalah, by the grace of the Almighty, we have moved rapidly in

expanding our branch network and deposit base, along with making profitable advances and

increasing the range of products and services. We have made a break-through in providing premier

services at an affordable cost to our customers.

Keeping in view our valued clients and the need for constant and effective communication of

information, we have designed this website to be as user-friendly as possible.

As we pursue the path of excellence, customer satisfaction remains our priority. It is only when we

know our customers better, can we deliver a higher quality of services, thereby adding synergy to

our existing management expertise, financial strength and profitability.

This is yet another channel of communication for the delivery of quality products and services that

enhance value to our stakeholders.

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Thank You for Visiting Our Site.

H.E.Sheikh Hamdan Bin Mubarak Al Nahayan

Management

Sirag-u-din Aziz

Chief Executive officer

Mr. Parvez A. Shahid

Executive Incharge

Strategic Planning & Global Marketing

Mr. Asad Jamil

Executive Incharge

IT Division

Mr. Bakhtiar Khawaja

Executive Incharge

Human Resources Division

Mr. Shakeel Sadiq

Executive Incharge

Corporate Banking & Home Finance.

Mr. Mohammad Yousuf

Executive Incharge

Credit Division

Mr.Mahmood Ashraf

Executive Incharge

Credit Monitoring Division

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Mr. Ather Shehab

Executive Incharge

Establishment & Administratration

Mr. Hamid Ashraf

Executive Incharge

Legal Affairs Division.

Mr. Shahid M. Murtaza

Executive Incharge

Business Development Division

S.A.M./ Car Finance/ Leasing

Mr. Zahid Ali H. Jamall

Executive Incharge

Finance Division

Mr. Mohammad Iqbal Saifee

Executive Incharge

Audit & Inspection Division

Mr. Ijaz Farooq

Executive Incharge

Islamic Banking Division

Mr. Adil Rashid

Executive Incharge

Cards Division

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The Vision

Our vision is to be a leading financial institution, with a niche in areas where we have a

competitive advantage with complete banking solutions. Our focus is on improving performance in

each of our businesses to achieve consistent and superior returns for our highly valued clients and

stakeholders.

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The Mission

Our mission is to maintain a competitive edge in quality banking, customer service and

profit performance. Our activities are geared towards making Bank Alfalah a responsible corporate

citizen. The emphasis on Quality & Innovation will remain our key mission statement. We will

continue to strengthen our position as the leading provider of quality financial services in Pakistan.

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The Philosophy

Excellence in service

Quality performance

Product innovations

Bank Alfalahs Slogan

Lets Look Ahead Towards A Brighter Future Together.

Bank Believes

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Every door leads to our customers.

The legacy of leadership stands as our guiding light. The strength of chain relies on the strength of each link.

A keen ear is a key to understanding. Achievement is nothing without target.

Time is our most valuable asset.

Performance is nothing without the ability to measure it.

Every drop counts.

Present Status:

Despite adverse economic conditions of country, the year 2000 was a

milestone for the bank, both in terms of growth and profitability. The banks pretax profit for the

year grew by 12.96% to Pak Rupees 20.48 billion, an increase of 29.50 %, with a balance sheet

footing of Pak Rupees 27.57 billion compared to previous years figure of Pak Rupees 21.02

billion.

After doing successful business in year 2000 to 2011, Bank Alfalah is now looking forward

positively towards the future and its management is confident to build on the gains realized during

2012. Currently bank is emphasizing on expanding its operations to meet clients needs and for

this purpose management has plans to add more branches to existing network in the coming years.

Bank has already started its working to go internationally and its future target markets include

UAE, Bahrain, Bangladesh and Sri Lanka.

Technological developments are opening up new vistas of solutions for distributing traditional

financial products. Concurrently, rapid change in customer preferences has resulted in a major

shift from manual to automated services. Information Technology today, is all pervading in the

corporate world. Bank Alfalah made heavy investments towards enhancing its capabilities in the

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area of automation and information technology. Information Technology department of bank has

successfully developed an advanced computer program namedBANK SMART.

Another success of bank is in the area of foreign trade. Bank has developed excellent business and

correspondent relations with renowned banks of the world whose support in terms of lines of credit

has enabled it to handle ever-growing trade volumes.

From above stated facts it is very clear that bank has made remarkable achievements within a short

period of time despite being in the nascent stage. With its key indicators of progress already

soaring to new heights, the bank is committed to put all its energies, resources and time to bring

higher value and satisfaction of its customers, employees and shareholders.

Competitors

Despite notable economic uncertainties, the financial strength of

Bank Alfalah Limited has greatly enhanced during the previous years. The successful expansion

program proved their capability and commitment in comparison with the competition in the

financial sector. The Banking structure in Pakistan comprises of:

Central Bank

Commercial Banks

Investment Banks

Development finance Institutions (DFIs)

Specialized Banks

Foreign Banks

Bank Alfalah is a private commercial bank so the major competitors of Bank Alfalah are the

following:

Muslim Commercial Bank

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Standard chartered

Soneri Bank Ltd

Prime Commercial bank

The bank of Punjab

Bank Al-Habib Ltd

ABL

Faysal Bank Ltd

NIB

Arif Habib Rupali Bank Ltd.

Branch Network

Bank Alfalah has its 383 branches including 73 Islamic banking branches in Pakistan. Detail is as

under:

Karachi

Main branch, B.A. Building, I.I. Chandigarh Road

Cloth market branch

Karachi Stock Exchange Branch

Clifton branch

Shahrah-e-Faisal Branch

P.E.C.H.S Branch

Timber Market Branch

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Defense Housing Authority Branch

Gulshan-e-Iqbal Branch

Jodia Bazar branch

Korangi industrial area branch

M.A. Jinah Road Branch

North Napier Road Branch

S.I.T.E Branch

Paper market branch

North Karachi branch

Lahore

Gulberg branch

Defense branch

Circular road branch

Township branch

LDA Plaza branch

Badami bagh branch

Allama Iqbal Town Branch

Shah Alam Market Branch

Rawalpindi

Mall road branch

Satellite town branch

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Peshawar

Peshawar Branch

Peshawar City Branch

Multan

Main Branch Abdali Road

Hussain Agahi Branch

Vehari Road Brach

Chowk Shaheedan Branch

Other Branches

Other branches are in:

Hyderabad

Sukhar

Rahim Yar Khan

Sialkot

Islamabad

Jhelum

Quetta

Mingora, Swat

Mian Channu

Faisalabad

Gujranwala

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Sargodha

Bahawalpur

Dera Ghazi Khan

Gujrat

Sahiwal

Sadiqabad branch

Mardan

THE BOARD

The list of Board of Directors of Bank Alfalah Limited is as under:

H.E.Sheikh Hamdan Bin Mubarak Al Nahayan

Mr. Abdullah Khalil Al-Mutawa.

Mr. Omar Z. Al-Askari.

Mr. Naeem Iqbal Sheikh.

Mr. Ikram-ul-Majeed Sehgal.

Mr. Muhammad Saleem Akhtar.

Organizational Charts

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Features

Bank Alfalah Limited is well established bank. It has some special features with the help of thoseit is growing rapidly.

Good Work Environment

As the work environment plays a great role in this competition age, so the bank has good

work environment. All the people work with cooperation; managers are so kind that each problem

can be discussed with them.

Efficiency

Employees at Bank Al-Falah are quite efficient. As Hussain Agahi branch is a new one, its

employees have to bring their bank among the list of good banks. Therefore, they work more than

their working hours and it is all according to their will. It also shows their loyalty, commitment to

organization.

Customer Services

All the customers are entertained individually. Same kind of behavior and attention is

given to all the customers.

Suggestions Asked From Customers

Getting ideas for improvement from customer side is a new idea and that is working very

well in Bank Alfalah Ltd. All the customers are asked to fill a suggestion form and the standards of

the bank are improved through them.

Employee Benefits

Employees are given the benefits like bonus, gratuity funds, loans, increments, house rent,

medical and conveyance.

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Computerized Working Environment

In bank, all the work is done on computers. All the entries are made in computer. Balance

are fed into the computer. This increases efficiency of the bank. All the branches are centrally

controlled through LAN settings. It helps them to co-ordinate more easily for making efficient and

fastest consumer services.

Finance Policy

Bank Alfalah finance on short term basis only against current assets to its customers in

both corporate and consumer sectors. They dont invest too much in fixed assets. Maximum credit

for short term is Rs. 50 Millions for one party, they dont go beyond five years financing.

Alfalah Car

Its a scheme that enables one to own his desired car at easily affordable and

flexible installments with a minimum down payment and insurance.

Salient Features

Lowest Financing cost available in the market

Tenure of 1 to 5 years as per individual requirement

Quickest processing

Minimum processing charges: Rs. 4500 payable once

Down Payment requirement of 15%

Repayment through monthly installments

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Lowest Insurance rates available from banks approved insurance companies

Eligibility Criteria

All Businessmen, Corporate Employees, and other salaried or self-employed professionals

having net take home income in excess of three times the monthly installment.

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Account Opening Department

Borrowing funds from different sources has become an essential feature of todays

business enterprises. But in the case of bank borrowing funds from outside parties is more vital

because the borrowed capital of a bank is much greater their own capital. Banks borrowing is

mostly in the form of deposits. These deposits are lent out to different parties such deposit creation

is done through open an account in the bank.

The Bank does not make payment of a cheques bearing a six-month or older date. If an

account is not operated in six months, it is called Dormant Account.

Types of Account

Current Account.

Saving Account.

Joint Account

Proprietorship Account

Partnership Account

Private Limited Account

Procedure of opening Account

The procedure of opening the account is as given under:

1. Account Opening Form:

First of all, the customer fills the account opening form (AOF). Filling of account opening

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

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and signature of introducer and attach a photocopy of national identity card. He also signs an

undertaking that he will follow the rules and regulations of the bank.

2. Introduction:

The signature and account number of the account holder introducing the account to the new

person is obtained on the account opening form.

3. Specimen Signature Card:

The signature of the client is obtained on a specimen signature card (S.S Card). The card is

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

from the client, the signature on the cheque is verified by comparing it with S.S Card.

4. Requisition slip

A requisition slip for Cheque book is also given to the customer. The customer fills it andgives it to the account opening Officer.

5. Know Your Customer Form

Every account holder fills this form. The basic purpose of this form is to get some basic

information about the customers business and source of incomes.

6. Account Number:

When all the formalities are completed, an account number is allotted to the customer and

all the information is entered into the computer and register. Then that account number is

written on S.S Card and account opening form.

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7. Depositing of amount in account:

The client deposit cash in the account. For this purpose cash pay-in-slip is used. The

minimum initial deposit is fixed for each account according to the nature of account. For

example for PLS / saving account the minimum requirement is Rs.5,000 only.

8. Issuance of a Cheques Book:

After opening an account with the bank, the account holder makes a request in the name of

the bank for the issuance of a Cheque book. Such a request is known as Requisition Slip. BAL

issues Cheque books from 25 leaves to 100 leaves. When he used this book completely then he

can apply for another known as subsequent Cheque Book. This process takes a day because the

Cheque books come from the Karachi head office.

9. Entry of Cheques Book:

Before issuance of a Cheque book the bank stamp every leaf with the account number of

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

the customer after his signature on the register.

Filing of AOF:

Account opening forms are basic documents of the contract therefore these are filed in

numerical order and kept for reference.

10. Letter of Thanks:

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A letter of thanks is prepared. One letter is for the customer and one for the introducer. One

copy is send to the customer and the other copy is kept in the record along with other

documents.

Amendments/Changes in Accounts:

BAL provides the facility of amendments in accounts, whenever required by the customers.

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

amendments are made in the account of the depositor. These amendments can be made by

filling certain application forms. These forms are as follows:

Change of Address Form

To change the address of the account holder

Change of signature form

To change the signatures of the customer.

Liability / Inquiry Form

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

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

credit department declares him free from any debt obligations then his account is closed.

Vernacular Form

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This form is used when some person wants to sign in any language other than English.

Mandate To The Third Party To Operate The Account

This form is used to enable any third party to operate the account.

Closing of Accounts

The procedure of closing of account is as follows.

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

His signatures are verified.

He withdraws all his money from his account but in case of current account Rs. 150 is

deducted as a charge of closing the account.

A liability form is send to the credit department if he has taken a loan from the bank. If

he is cleared from all the liabilities then further proceeds are taken.

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

Account is closed in the computer system.

His specimen signature card is attached with the account opening form and marked

closed.

Current Account

There is no interest on these accounts. It is only for transaction purposes. They paid on

demand. Where a banker accepts, paying all checks drawn against him to extend of the balance inthe accounts. As there is no profit paid on this account, it is also called checking account because

cheque can be drawn on it. Current account is mostly opened for business. The minimum balance

requirement for opening the current account is Rs. 10,000.

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Saving Account

The purpose of this account is to introduce the habit of saving individuals in theneighborhood. The profit on saving accounts is paid on the basis of profit and loss sharing basis.

The minimum balance requirement for opening the account is Rs.10,000.

Term Deposit

A term deposit is a deposit that is made of a certain period of time. At the end of specific

period the customer is allowed to with draw the principal amount. The rate of return of this

account varies from 5 % to 13 %. The term deposit account varies from one month to 5 years and

the minimum balance requirement is Rs. 100,000.

Profit Calculation Methods

Daily Product Basis

Deposited Amount Rate of return.

365 (No. of days in a year)

Average Month Balance.

Sum of daily end Balance Rate of return

No. of days in month

MINIMUM MONTH BALANCE

Anyminimum balance during the month is taken for calculating profit

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Saving A/C (05 Days _ Minimum Monthly Balance).

Minimum Balance of first 5 days is compared to the minimum balance of the minimum

balance of remaining 25 days. Less balance is calculated for profit.

The amount of profit is given to deposits in three ways:

Cash payment (only in case of term Deposits). Or as per customer requirement.

By sending bank draft to depositors home address or officers or whichever is

specified as mailing address.

The depositors account is credited at maturity.

Account Opening Procedure

For opening of an account, there are different types of account holders are required for all

these types. The operation/procedure requirement that is needed for Individual Accountdiffers greatly from the Joint Accounts proprietorship A/C, Partnership A/C, Private Limited

Company A/C and Public Limited Company A/C.

Individuals Account

When a single man or woman opens an account in his or her own name and has the right to

operate, it is called individual A/C.

Documentation

Copy of National Identity Card.

Proof of Income

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Proper Identification (Introduction).

Operations

The person place in the type of account and type of operation required in the

account opening form.

He/she fills in part 1 of the form, a fix his/her either two of four similar signature

( or thumb expression in the signature space ) and get it introduced and signed by a person

who already has an account with the bank and write his account number in the specific

rows in a specific space.

The person fills his or her father, mother, husband/wife or any other relatives

name, his/her address, phone number, his or her sign to certify this requirement. This

requirement is needed because in his/her absence bank can have correspondence with a

specific person.

The person deposits the initial amount for opening account onto the cash counter.

The person put his signature on form on two places in authorized Signature and fills in

the Title of Account space by writing his name.

If the person put his signature in Urdu or any other language other than English, he

signed a Vernacular Form.

If the person has changed its signature then he must have to sign the signature

change undertaking.

The next step is entering in compute r because the centralized account opening

structure and generation of account number.

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Joint AccountWhen two or more persons neither partners nor, trustees, open an account in their name is

joint account.

Documentation

Copy of N.I.C card.

Income proof of both

Identification (Introduction).

Operations

The person checks the type of account and type of operation required in the

respective box on the form.

The person fills the Part-1 and Part-II

Signature of box or all persons are obtained on the formed in the area specified for

signature.

In the title of account space names of all persons maintained.

Account holders specified in the form that they will operate the form singly or

jointly.

Proprietorship Account

When the owner of the firm operates singly, account is opened in his firm name.

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Documentation

Copy of N.I.C.

Status of the firm.

Copy of Sole Proprietorship Declaration.

NTN certificate

Proof of Business

Operations

All operation remains the same, except that the firm name is written in title of account

area and Signature of the proprietor in the specified area.

Partnership Account

The account is opened in the firm name and all partners designate one or two persons to act

behalf of the partnership firm all acts of the firm jointly and severely.

Documentation

Copy of N.I.C of all partners.

Status of the firm ( In case of registered firm ).

The attested copy of Partnership Deed (in case of registered firm ).

Operation of the A/C (as per deed).

Partnership mandate

Letter showing the authority of one or more partners to act on.

Form C for the registered firms

Operations

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All other requirements are same except that all partners dully sign the form, cards are

signed by all of those partners who will act on behalf of the firm.

Operating instruction is very important for the described case that who will be operating the

account.

Private Limited Company Account

Documentation

N.I.C of all partners.

Certificate of incorporation Certificate of commencement of business

Articles and Memorandum of association.

List of directors.

Corporate mandate duly signed by the directors

Copy of NTN certificate

Form (A) showing the changes in share capital and share holders

Account opening Request on letter head of the organization

Resolution of Board of directors

Power of attorney if any.

Certificate of Incorporation Form 29 (B) (Lasted Copy).

Companys letter head

Embossed seal

Company secretary will certify all these copies.

Operations

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The person authorized in the resolution of the board of directors put their signature

on the S.S Card.

Next of Kin requirement is not need in a case of Private Limited Company. Other

procedure is same.

After completing each and every formalities are signed by all partners who will act

on behalf of the firm.

Pubic Limited Company Account

Documentation

Copy of N.I.C of all partners.

Articles and Memorandum of association.

List of directors.

Resolution of Board of Directors.

Certificate of commencement of Business.

Operations

Operation is same as Private Limited Company

Responsibilities Of Account Opening Department

Documentation Intact. Proper Introduction.

Cheque Book Issuance

Receiving Inward cheques

Account Closing

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Every Day Posting

Account Closing

When a customer wants to close his account because of any reason, he has to give a hand

written application to the head of the Operations Department to close his account, plus remaining

leaves of the Cheque Book.

The Operations Manager first verifies the signatures of account holder, and then closing is done

from the registers on the computer where the account was opened. In the file of account holder, his

account opening form is also crossed.

For this closing, a fee of Rs. 150 is charged in Bank Alfalah.

Cheque Book Issuance

When the account is opened, then, the customer is given a Cheque book to sign upon and

en cash money. It is preceded as under.

Procedure

All the account opening formalities must be completed before, issuance of Cheque book.

Particulars of the Cheque Book requisition should be completed containing title of account,

account number, type of currency, number of leave and signature of the customer. Signature of, the

customer are verified on the requisition.

If customer is unable to collect his Cheque Book, then he can give authority to the 'third person to

collect his Cheque book' on his behalf by signing on the back of .the requisition. In such case, the

particulars of the third person are required like name of the person, NIC number and signature of

that person on requisition and Cheque Book issuance register.

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Cheque Book is taken out from the safe/locker. It is assured that series of the Cheque Book is in

order. Particulars are entered in the Cheque book issuance register. Account number is stamped on

every leaf of the Cheque book and those leaves are counted. Name of the account holder is written

on the cover of the Cheque book and requisition on the Cheque Book for further issuance is

properly filled stamped and signed by officer of the bank.

Cheque Book is delivered to the customer and his signature is taken on the cheque book issuance

register, cheque serial number is entered in the system (Bank Excel).

Stock of Cheque books are balanced at the end of each day and kept under safe custody. Cheque

book is charged according to the leaves of the Cheque book as per 5 Rupess per cheque

Bank Alfalah Issues the Following Cheque books.

25 leaves

50 leaves

100 leaves

Receiving Inward Cheques

Another responsibility &function of Account Opening Department is to receive Inward

cheques for collection of other banks. These cheques are sent to clearing official who clears these

cheques at SBP from other banks.

Every Day Posting

At the end of each day, Posting of cheque books is performed. The account opening

department makes credit vouchers of excise duty and provincial tax on cheque book leaves,

and posts it in the company.

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Cash Department

Mr. Kamran helped me in learning about Cash Department. Cash Department performs two

main functions and other subsidiary functions:

Cash Deposits

Cash Payments

Online Cash Receipts & Payments

Cash Deposits

Cash receiving officer receives cash along with pay-in slip from the customer. He checks if

the deposit slip is properly filled up containing title of account, account number, date and amount

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in word and figures. He also verifies signature. Detail on both counter file and cash receipt voucher

should be the same. Cash is received by the cash receiving officer, twice counted and matched

with the deposit slip. The cash details are written on the back of the deposit slip and are also

entered in cash receiving register. Cash received stamp is affixed on the face of the deposit slip

along with the signature of the cash receiving officer.

Deposit slip and cash receiving register is given to the officer in cash department. Again

proper scrutiny is made by the officer cash department both on cash receipt and cash receiving

register. Officer cash department signs both the deposit slip and register; Deposit slip is credited

and posted in the concerned account in the system.

Counter folio is given to the depositor as receipt. One consolidated cash debit voucher is posted in

the system to balance the cash.

Payment of Cheques

The process for payment of cheques for local and foreign currency is same. First the

customer presents the Cheque or holder to branch and the particulars of cheques are properly filled

in. Signature of the holder is taken on the back of the cheques. Cheque handed over to the officer

cash department for scrutiny where officer checks the date, amount in words and amount in

figures, payee's name crossing if any, account number, cheque serial number, any material

alterations, endorsements and signature of the customer. Account is debited and then the officer

cancels cheque. It is posted in the system and posting stamp and number is affixed on it. Cheque is

handed over to the cash payment officer for payment. One more signature on the back of the

cheque is taken from the holder to match with the first one, and then cash is paid to the payee.

Cash detail is written on the back of the cheque. Cash paid stamp is affixed on the face of the

cheque. Entry is passed in the cash payment register.

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If the payment is of Rs. 50000 the cashier can make it on its own. If the amount is greater

than Rs. 50000 the cashier and cash deposit Incharge will verify the check and will sing it. Then

the payment will be made. Otherwise the payment will not be made.

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Clearing Department

In clearing, Mr. Taimoor proved so helpful. The clearing process majority involves

receiving the cheques and making payments. This process can be inward or outward.

Clearing Process (Inward/Outward)

Here the local Cheques are received that are drawn on BAF. All the cheques are received

on one counter along with the paying slips duly filled in properly containing particulars of cheques

and account harder. Counter folio of paying slip is handed over to the customer by putting stampfor #cheque received for collection for Bank Alfalah' on it duly signed by officer. These Cheques

are scrutinized and cheques for local clearing are separated from OBC. These are then entered in

clearing register and cheques for collection, are entered in OBC register and handed over the Bills

Department for collection.

Clearing officer checks and verifies title of all the cheques deposited by the customers to

confirm the good title of the cheques. Cheques are scrutinized properly and paying slips are

separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the

cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then

entered into the clearing system of the bank. Print out of the clearing is taken and details are

attached with the cheques of each bank. Details of these banks are then entered into the clearing

schedule containing number of cheques presented and their total amount against the name of each

bank. Then total number of cheques presented to all banks and their total amount is written on the

foot of that schedule, which is tallied with the clearing register.

Next morning, these cheques are delivered to the respective banks through NIFT in

clearing house of State Bank of Pakistan between 9:00 to 9:30AM. In the same manner, other

banks present their clearing drawn on Bank Alfalah. Total number of cheques and their amount

delivered to other banks and received from them are written on the Clearing House schedule

branch for their payment. After proper scrutiny of cheques, verification of signatures and

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confirmation of balance in the account, the Officer Cash Department pays these cheques by

canceling and posting them in the system.

If any cheque is not passed due to insufficient balance or any other reason, Officer clearing

Department returns the same cheque by attaching a cheque return memo containing reason for

return. This cheque is entered into the cheque returned register and bank charges are deducted

according to the schedule of charges.

Second clearing is called at 2:30PM to check the fate of the cheques presented to other

banks in the morning. If any cheque is to return, that is delivered to the same bank in second

clearing. In the same manner, if any cheque presented by Bank Alfalah in first clearing is

returned, they receive it and once again give schedule of clearing figure to the Officer Clearing

House SBP containing number of cheques and their amount delivered and received unpaid.

Remittances Department

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The need of remittances is commonly felt in todays business. The main function of

remittance department in a bank is the transfer of funds.

Miss. Maliha in Bank Alfalah is the officer for Remittances Department. In remittances,

following banking instruments are used:

Pay order

Demand draft

Online transfer

Call deposit receipts

Traveling cheque

The procedure for dealing with all these under local as well as foreign currency in BAF is as

under.

Pay Order

A pay order is a written order issued by a bank, drawn upon & payable by itself, to pay a

specified sum of money to or to the order of a specified person.

Procedure for Pay Order

Application form is given to the customer to fill. Two signatures are taken on the form one

for request and other for receiving the instrument. All the particulars of application form are

checked and bank commission charges and withholding tax is written on the top of the application

form. If the customer is maintaining his account with the branch, he can give cheque for total

amount of instrument plus bank charges. Cheque and application from is then given to the officer

Cash Department for the payment of cheque. After proper scrutiny, Officer Cash Department

posts the cheque and signs the application form in token of payment received. If the customer

wants to pay cash, then cash is deposited by the customer along with the bank charges and

withholding tax.

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Application form is then given to the Remittances Incharge for issuance of instrument. He

enters all the particulars of the application form in the system and computer gives an Auto Control

Number to the instrument. Printout is taken on the block of payment Order. Two authorized

officers of the branch then sign it. Instrument is then protect graphed, and given to the customer.

When instrument is presented for payment, it is posted in the system and canceled by the

Remittances Incharge after proper scrutiny.

Demand Draft

A Demand Draft (DD) is an instrument, which is drawn by one bank upon another

bank for a specific sum of money payable on demand. It is made by the bank, given to the

purchaser against cash or cheque.

Parties Involved In DD:

Purchaser

Issuing Branch

Drawee Branch

Payee

Procedure for Issuing DD

Issuance procedure of Demand Draft is same as of pay Order.

Procedure for Demand Draft Payable

When DD advice is received, signatures of both signatory on the DD are verified. All the

particulars of the DD payable are entered in the system. Prints out of vouchers (DD payable) are

taken. When instrument is presented for payment, signatures of the attorneys are verified on DD

and after proper scrutiny; it is posted in the system and canceled by the Remittances Incharge.

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Online TransferSometimes, when the remittance is urgently required by the remitter, online Transfer is

made.

Collection

All the cheques under collection are called cheques under Collection in Bank Alfalah Limited.

There are two types of bills for collection:

Outward Bills for Collection

Inward Bills for collection

Outwards Bills for Collection

Al the cheques are received on one counter along with the paying slips duly filled in

properly containing particulars of cheques and account holder. Counter folio of paying slip is

handed over to the customer by putting stamp for cheque received for collection for Bank

Alfalah on it duly signed by officer. These cheques are scrutinized and cheques for local clearing

are separated from OBCs. Cheques for local clearing are entered in Clearing Register, whereas

cheques for collection are entered in OBC register and handed over to the Bills Department for

collection. OBC number is allotted to the cheque from OBC register. Special crossing and bank

endorsement stamps are affixed on the cheque.

OBC schedule is attached with the cheque and dispatched to the main branch of that city

for collection. If they do not have any branch in that city, then cheque will be sent to the

Collecting Agent of Bank Alfalah for that city, and if they do not have any collecting agent even,

then cheque can be sent directly to the drawing branch. Instructions are given on the OBC

schedule for the payment of that cheque. Contra-liability vouchers are also posted in the system.

When OBC is realized, collection bank pays the amount through IBCA if it is the same bank or

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through DD if it is another bank. If DD is received against OBC, it is presented in the clearing for

collection. If IBCA is received from the branch for the payment of OBC, certain vouchers are

posted in the system.

Inward Bills for Collection

If any other bank sends a cheque of Bank Alfalah Limited, it is Inward Bill for Collection.

Bank Alfalah remits money after checking the balance of the customer account.

The process of collection starts when the cheques of Bank Alfalah Ltd are received fromother banks. Then these cheques are sent to the Head Office Karachi, which sends the cheques to

SBP for clearing and get the confirmation of cheque and credit advice. Main activity of clearing is

performed by Head Office, which contacts other banks through SBP.

Bills for Collection In 2007

Payable in Pakistan Rs. 22,092,000

Payable outside Pakistan Rs. 1,964,738,000

Total Rs. 1,986,830,000

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Credit and Advance Department

Credit and Advances Department deals with the provision of loans (credit facility) to the

customers. At BAF, credit is given on the basis of a policy made by Board of Directors and is

called Credit Policy. This policy statement sets out the underlying principles from which the BOD

will determine the commercial credit activity of Bank Alfalah Ltd. The committee to approve

direct and review commercial lending of Bank and to ensure that credit policies are adhered to and

the credit operation is conducted in an efficient and effective manner.

Purpose of this policy is to set out the credit policies for the boar, which will be implemented

by the Credit Committee. The policies are described under the following readings:

Credit principles

Portfolio limits

Approval

Administration

Monitoring and review

1. Credit Principles

It includes principles to be adopted for lending authority, approval, monitoring and control

on a basis consistent with Bank Alfalah Ltd.

The operational objectives and business strategies regarding objectives, structure, performance

and administration are also included.

2. Credit Portfolio

These are the guidelines set down by Credit Committee regarding:

Total facilities

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Term facilities

3. Credit Approval

When the terms and conditions are set and both parties are agreed, the Credit committee

makes approval for the credit.

4. Credit Administration

The credit application when handed over to Credit Administration, then they critically

examine securities given by client to bank against credit facilities. Credit Administration keeps

liaison with lawyers, surveyors, valuators and other corporate bodies.

5. Credit Monitoring

The client can present his own account insurance policy as security for credit. When he

presents his own account as security, his account is blocked for the same amount, which the bank

is granting him. When the facility is adjusted at that time, the blocking is released from the

account. Clients can also use third partys account for getting credit. Shares can also be kept as

security in this case these are verified and duly signed. These are kept separate to avoid theft. The

company whose shares are used is informed that its shares are in the custody of the bank.

Advances

Following facilities in Advances Department are provided by bank:

Funded facilities

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Non-funded facilities

Funded Facilities

These are the facilities in which funds like cash fund are included.

Pre-Shipment

It provides to prepare consignment. Maximum tenor is about 150 days. Profit may be 16%

per annum. The repayment is generally from sale proceeds. This is for preparation of

consignment.

Post Shipment

During export process, funds are required for preparation of next consignment that is

provided by post-shipment facility. Maximum tenure is 150 days. Profit rate is about 15% per

annum.

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Non Funded Facilities

These facilities are on:

Letter of Credit

Letter of Guarantee

L/C Is Of Two Types:

Sight L/C for 90 days

Usance L/C for 120 days

Credit Cards

Bank Alfalah has credit card facility named as Alfalah Hilal cards.

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Bank Alfalah LTD.

Foreign Exchange Department

Foreign Exchanged Department deals within exports and imports. Mr. Adeel at BAF

supervises it. The bank acts as exporter as well as importer bank for different parties who are in

the business of export and import.

Exporter

When the bank becomes the exporter bank for a party then the market stability, reputation,

financial position of the exporter is first of all checked.

Documents to Be Attached For Exports

Invoice

Bill of lading

Packing list

(a) Total quantity

(b) Net weight/carton

(c) Gross weight/carton

(d) Total net weight/carton

(e) Total gross weight

Bill of exchange (original or draft)

E-form: Initial document on which total export proceeding is based. In this form,all the conditions are given, which are necessary for exports.

Letter of credit: It is written agreement between importer and exporter.

Beneficiary certificate

DHL certificate (TCS certificate)

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Form M

Certificate of Origin (Form A)

Form E

Government has provided facility to exporter in taking E-Form from any bank and he can

present it to any bank for negotiation.

Export Proceed Realization Certificate

SBP gives rebate to exporter against export after realization. It is paid according to

commodity wise and bill wise.

Claim period: 1 year.

Transport Document (Bill Of Lading, Airway Bill)

When insurance is done by importer, C&F (cost and freight) usually used.

FOB cost (free on board)

CIF (cost insurance and freight) when insurance is done by exporter, CIF is used.

Tenor (At sight) immediate payment by importer after receiving product.

Partial shipment: Product is sent partially.

Transshipment: Product is sent via any country

E-Form Certification

When export is done on C&F basis, so bank issues E-form certification to exporter and he

submits it to the custom officer along with E-form certification to certify E-form.

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Form of Authorized Dealers Certificate

State Bank permits exporter to issue Bill of Lading in the favor of E-form bank. But if

requirement of L/C is to issue Bill of Lading in favor of company then shipping company issues

bill of lading in favor of Exporter Company. Authorized Dealer Certificate is filled for this

purpose.

Certificate of Origin

This certificate shows that goods are from Pakistan.

Covering Schedule

If in covering schedule, it is given that please remit proceed to our Karachi Office A/C no.

5740734881 with ABN (Amro Bank New York), USA for onward credit to BAF Islamabad.

Beneficiary Certificate

If L/C requires some information as proof of anything from exporter then exporter has to

present beneficiary certificate for that proof.

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E-FORM

E-Form Has Four Copies:

One for custom officer

One for exporter

Triplicate copy for SBP

Duplicate copy for bank

Bank reporting or duplicate and triplicate is done by bank. Custom Officer (date is given on the

foot of form) should clear product.

Payment from Importer Bank

It is the choice of importer to open L/C from any bank and the bank from which L/C is

opened can also refer to some other bank for payment. So bill of exchange is sent to refer bank

and other documents are sent to L/C opening bank.

SWIFT

It is network among all banks. No other institute can get involved in it.

Bill Of Lading

Certificate from shipping company for loading documents. If requirement of L/C is toissue Bill of Lading in favor of L/C opening bank, then authorized dealer certificate will be

provided by bank in favor of L/C opening bank.

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Bank Keep In Record

Covering schedule

Invoice

Packing list

AWB

Certificate of Origin

E-form

Normally bank keeps photocopy of all documents in record. Negotiable documents(original documents).

Imports

L/C is opened by the importer. There are two types of L/C.

Revocable

Irrevocable.

Necessary Requirement

If place of issue and port of loading is different on Bill of Lading, then along with the

stamp of shipment on board, vessel name and port of shipment is written.

1) Issue date of Bill of Lading shipment on board.

2) There should not be cutting on bill of lading without authentication.

3) Bill of lading should show capacity of agent. If bill of lading can be taken by the agent of

Importer Company, then his name should be mentioned on bill of lading.

4) Original GSP should be presented.

5) If TT reimbursement is not acceptable, it means bill of lading is necessary.

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Bank Alfalah LTD.

When documents are received for export, do enter into lodgment register.

Documents for Import

Performa Invoice signed by importer

Category passbook copy attested by any bank

L/C opening application filled in by the customer

Import registration with export Promotion Bureau

Annexure

Verification of signature by S. S. Card

L/C issued on basis of L/C application form.

Insurance if covered by buyer.

Insurance cover note.

Insurance policy.

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Bank Alfalah LTD.

Accounts Department

Most important department of bank as it is concerned with:

Revenue

Expenses

Assets

Liabilities

These are the pillars of any business. This department is supervised by Mr. Israr Ahmed is in

this department, all the vouchers that are posted during one day are sent to the Account

Department next day. These vouchers are already posted to computer by the concerned

department. So computer also sends a report to the Accounts Department. The accounts

Department have to tell that all the vouchers are posted under the right head. Amount, date,

stamps, signatures all the requirements for cheques and vouchers are fully checked.

If any kind of renovation or construction or rebuilding is done, all is paid from the AccountsDepartment. Like petrol for the car of BM, stationery charges, medical allowance, etc. are all paid

by this department.

Daily Customer Movement List

All the changes that are made in accounts of customer are shown in the daily customer

movement list. By using this list, people of Accounts Department can prepare the vouchers.

Following activities are performed by Account Department:

Voucher preparation

Preparation of daily, weekly, monthly, and annual statement.

Budgeting and fixed assets

Employers benefit

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Expenditure approval.

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SWOT Analysis

Strengths

Bank has a belief in customer service

Backed by strong Abu Dhabi Consortium

Customer give suggestion for the improvement of bank and these suggestions are

listened carefully.

Manager & EVP has good coordination with staff members.

Environment is friendly.

Products are excellent

Expansion is consistent

Modernized banking (online + Internet)

Fully computerized, each department has to own PC.

Weaknesses:

Mixed Culture

New Setup

Staff is lesser.

Electronic funds transfer is only available from Alfalah to Alfalah only

Opportunities:

Information Technology.

Internet and mobile banking

Establishing Foreign Branches

Local Setup Expand

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Threats:

Competition by the settled bank like MCB and others

There is a possibility that in future the customers are too many to be handled by the

so small number of the employees.

Governmental policies may pose unpleasant role

Global issues like America Iran war and terrorism

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Ratio Analysis

Earning asset to total assets earning assets/total assets

2008 218,958,188/275,685,541 = 79.42%

2009 203,330,758/248,313,793 = 81.88%

Earning assets to total assets tell us about the efficiency of the management of the bank that how

efficiently the assets are used to get the return. Earning assets includes loans, investment securities

and money market instruments. Here the ratio is declining a little bit as compared to the last year

but if we see at the situation of the total assets they are increasing as compared to the last year.

This shows that bank Alfalah is going to expand its business more as a lot of new branches are

being opened this year.

Return on earning assets: net income/total earning ass

2008 2,565,945/218,958,188 = 1.17%

2009 2,563,290/203,330,758 = 1.26%

Return on earning assets can help us about the measurement of profitability. Better ratio shows the

efficient utilization of the earning assets by the bank management to earn profit. If we compare

this year ratio with the previous year we can see that it is declining. This shows the bank is

investing more on fixed assets rather than on earning assets this shows that bank may undergo anexpansion plan.

Loan loss coverage ratio: Pretax income /provision for loan loss

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2008 2,565,945/697,690 = 3.672009 2,563,290/402,298 = 6.31

The ratio describes the safety measure that the bank has adopted for the losses. The decrease is

caused by the low provision for the loan losses.

Equity capital to total asset: Average Equity/average total assets

2008 12,241,945/275,685,541 = 4.44%

2009 7,464,126/248,313,793 = 1.79%

There is another name of this ratio it is also called fund to total asset ratio. This provides the owner

a cushion against the risk of using Debt and leverages. The higher ratio the more cushion is there

and vice versa. Here we can see that the ratio has increased a lot as compared to the last year

which shows a lot of improvement in the shares that are floating in the market.

ROA Net income/total assets

2008 0.67%

2009 0.84%

Through that ratio we measure the ability of the bank to utilize its assets to create profit by

comparing profits with the assets that are generating them. The bank ratio has decreased a lot more

than the previous years. The reason behind this is inefficient use of the assets to produce profits.

ROE Net income/total equity

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2008 0.67%

2009 0.84%

Return on equity shows that what will be return for the share holders. As we can see that the ratio

has decreased. This may be due to that the profit is reinvested and the bank is following the

expansion phase.

Profit Before tax ratio PBT/Gross markup of income

2008 2,565,945/5,958,584 = 43.06%

2009 2,563,290/5,041,819 = 58.84%

For banking sector profit before taxation ratio is very important because large number of taxes are

deducted from the income. Here we can see that the profit before taxation has decreased a lot

more.

Earning Per Share

2008 3.86 Rupees

2009 3.92 Rupees

This ratio is more important for the stock holders and management too. This ratio tells that how

much rupees you can earn against one share that you have. This ratio has slightly decreased. But

can be said as a sustained value as compared to the initial years of the bank.

Book Value per share SHE/ Outstanding Shares

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2008 12,241,945/500,000 = 24.48

2009 7,464,126/300,000 = 24.88

This ratio tells us the original value of the shares outstanding in the books of accounts. Book value

is almost same as in the last years that show the sustained growth in the market.

Recommendations

Finally, there are some suggestions for Bank Alfalah Limited. These suggestions are based on

experience with the bank.

This is a routine practice that in order to give personalized services to the customer, bank staff

tries to fill all the columns of AOF with their own handwriting, which is wrong. AOF must be

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filled in by the customers. Bankers should avoid filling in the AOF because it can create

problem if the address, title of account or any other information provided by the customer has

not been written properly. Customer may be affected or he may claim that this information was

not provided by him, but if AOF is filled by the customer then banker cannot be held

responsible for any incorrect information provided by the customer.

Under no circumstances cheque book should be given to the customer if the account

formalities are incomplete.

There are two officers involved in cash deposit process, which is time consuming. Cashier

should be given certain powers to receive cash to provide prompt services.

Similarly, there are two officers involved in cheque payment process, which is time

consuming. Cashier should be given certain powers to pay cheques up to Rs. 50,000/- to

provide prompt services.

Cheques, which are drawn on Bank Alfalah Branch and returned unpaid in clearing, are not

reflected in the Statement of Account of the customers. These cheques must be reflected in the

accounts so that credibility of the customers may be assessed.

Audit should be held internally. Rather there should be an Audit Department in the branch to

make audit on daily basis. This can become as helpful as different banks are having this

department of their own.

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Marketing Practices Adopted By Bank

Nowadays marketing of products is of prime importance for any organization. In this

dynamic environment, every organization has its own Marketing Department, which is responsible

for creating the demand of its goods and services.

Nowadays banks also have their marketing departments, which are responsible for creating

demand of their products, i.e., their deposit schemes and increasing the deposit of the bank.

Bank Alfalah has its own full marketing Department at the Head Office, Karachi. This

department prepares different deposit schemes for its customers, time to time, in order to increase

the business of the bank. At branch level, the Operations Department follows marketing practices.

At each branch of bank, officers are available to provide marketing activities of their products.

They make customer calls and personally visit the potential customer to convince them to

invest. They make phone calls to customers and inform them about their schemes, profit rates.

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Conclusion

BANK ALFALAH under the leadership of Sheikh Nahayan Mabarak Al-Nahayan has

made significant in building of strengthening both the corporate and retail banking sectors in

Pakistan.

The Bank attained Number two (2) position in terms of its Balance Sheet size amongst the

private banks in Pakistan in 2000.

BANK ALFALAH views specialization and service excellence as the cornerstone of its

strategy. The people of bank innovation, creativity, reliability, customized services and their

execution are the key ingredients for their future growth. Based on this approach, their Treasury

Division and the Structured Finance Unit have been geared to provide specialized services to the

Corporate customers. Revenues from these activities have started yielding dividends and they

expect significant growth in these areas in the coming years. While building on their in-depth

familiarity with their customers needs and anticipated developments in the banking industry, the

Retail and Corporate areas of their operations will continue to provide a strong and stable base to

the business of the Bank.

They are aware that they have stepped into the 21st century and they must meet its

challenges by acquiring the highest levels of Technology. They will thus be accelerating their

enable them distribute their products and services through most efficient and high-tech means.

They say that they will invest in the modern tools and substantial allocation of resources will be

made to achieve this objective during the current year. Their programme to launch real time on

line Banking Services and introduction of ATMs at strategic locations have been firmed up and it

will be fully operational during the year 2001.

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Their focus would be to constantly seek out growth opportunities through increased quality

assets and by offering a wider range of products and services to their esteemed customers. There

are significant growth opportunities for BANK ALFALAH and they are confident in their ability

to grasp them. They are committed to enhancing the shareholders value and look forward with

greater optimism to a prosperous future for BANK ALFALAH

Based on the profit of Rs.354 million, the Board has proposed that a cash dividend at a rate

of Rs. 2.00 per share i.e. 20% of share capital be distributed among the shareholders.

Bank Alfalah Ltd Islamic Banking

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