An Internship Report On: Submitted To

Report on BANK ALFALAH LIMITED
An Internship Report On
Submitted To:
Incharge Internship Program

Sir Karamat Ali
Submitted By:
Madiha Fakhar
Roll No. 56
MBE (After Noon)
Session 2006-08
1
PREFACE
Internship, a practical training, is an integral part of MBE study. For
internship I was sent to Bank Al-Falah Limited, Circular Road Branch,
Bahawalpur. It is a six weeks training period in which I tried my best to get
complete knowledge and training in different sections of the branch. This report
contains the necessary information about the sections and functions of BAL.
This report is prepared in simple and understandable format so that ordinary
person can also take benefit from this report.
Madiha Fakhar
Roll No. 56
MBE (After Noon)
Session 2006-08
2
ACKNOWLEDGEMENT
With the name of Allah who is the most beneficial & merciful. I am very
thankful to Allah for his unlimited blessings for me. I have completed this task
with the help of my Allah, my parents & my teachers especially Dr. karamat Ali
(In-charge Internship). I am very thankful to the staff members of BAL ST
branch for their cooperation & kindness.
They provide me a lot of information & knowledge of foreign exchange with in
very short period of time. I cannot forger their cooperation & kindness, many
regards to them.
I have gain practical knowledge of banking functions & their processes
during my internship. I have tries to get more & more information &knowledge
about banking from senior & experienced employers of BAL during my
internship period.
Madiha Fakhar
ROLL NO 56
MBE ( After Noon)
Session 2006-08
3
To my parents & teachers, I cannot forget their
cooperation and sacrifices.
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♦ Executive Summary 06
♦ Introduction of Banking 07
♦ History of BAL 09
♦ Mission/Vision and Objectives 11
♦ Branch network 12
♦ Departments at BAL,RWP 13
 Accounts opening 14
 Clearing 21
o Online banking facility 23
 ATM facility 23
 Remittances 24
 Accounts Department 27
 Trade Finance 29
 Car finance 33
 Credits 38
 Agri Finance 44
 Credit cards 46
♦ Financial Analysis 49
♦ Financial Ratios 52
♦ SWOT Analysis 65
♦ Conclusion 71
♦ Recommendations 73
♦ Branch Suggestions 77
♦ Annexure 78
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EXECUTIVE SUMMARY
It’s better to say this report is all about our 1st practical learning (internship program)
with Bank Al-Falah Ltd. In all-inclusive report we have discussed every aspect
relevant to bank, which we observed during our internship program. In this report you
will find detail about the bank right from its incorporation to current position. Along
with it, the processes, policies and procedure of the bank are also discussed in detail.
During our internship we mainly work in three departments’ credit, auto financing and
general banking. But I discussed all departments’ procedure and policies in detail
here.
The main purpose of internship is to work in practical environment and apply what
you have learned ding your studies, these help us to tackle the problem in the real
world scenario using knowledge and skills which we have learned during academic
progress, in this report detailed analysis of the organization has been done and all the
financial, managerial, technical, and strategic aspects has been evaluated to analyze
the current position of organization.
At the end SWOT analysis we done from both organizational point of view as well we
also emphasis this analysis from each departmental point of view also. The conclusion
and recommendation section include the conclusion of overall report in
recommendation we give it from organization as well as branch point of view
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INTRODUCTION OF BANKING
Origin of Banking:-
It has not so far been decided as to how the word 'Bank' originated. Some authors
opine that this word is derived from the words 'Bancus' or 'Banque’ that mean a bench.
The explanation of this origin is attributed to the tact that the Jews in Lombardy
transacted the business of money exchange on benches in the market place; and when
the business failed, the ‘Banco’ was destroyed by the people. Incidentally the word
'Bankrupt' is said to have been evolved from this practice.
Other authorities hold the opinion that the word 'Bank’ is derived from the German
word 'Back' which means joint stock fund. Later on, when the Germans occupied
major part of Italy, the word 'Back' was Italianized into 'Bank’.
It is, therefore, not possible to decide as to which of the opinions is correct, for no
record is available to ascertain the validity of any of the opinions.
HISTORY OF BANKING IN PAKISTAN:--
At The Time of Independence:-

At the time of independence there were only 487 branches of scheduled banks in
Pakistan. It was impossible for Pakistan to establish a “Central Bank” due to scarcity
of resources and lack of specialized people. So “Reserve Bank of India” continued to
function as the central bank of Pakistan. “State Bank of Pakistan” was established
almost one year after independence that is on July 01, 1948.
Some Important Facts:-

By June 1948, the number of branches in Pakistan declined from 487 to only 195 due
to huge transfer of assets and deposits across the border. The number of non-Indian
banks were 19 all having small branches in large cities. Their main function was to
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enable Pakistani exporters to send out their crops for export to different countries. At
that time there were only two Muslim banks, namely.
1. Habib Bank Limited
2. Australasia Bank
In 1947 act ordinance, the banking company’s ordinance was passed to safeguard the
interest of customers and bankers. One Indian bank the Imperial Bank of India that
was the representative of the Reserve Bank of India in Pakistan was asked to close its
branches because it was involved in activities against the state and a huge amount (70
corers) was with hold by Indian government.
STATE BANK OF PAKISTAN:-

State Bank of Pakistan was promulgated on May 12, 1948 and on July 1948 the State
Bank of Pakistan was actually inaugurated. The first Pakistani note was issued in
October 1948. The State bank of Pakistan had to concentrate on creating a banking
system in the country so that Pakistan can come out of the financial crisis as early as
possible. To achieve this goal another bank i.e. National Bank of Pakistan was
established in 1949. This was a commercial bank and an agent of State Bank of
Pakistan.
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HISTORY OF BANK ALFALAH Ltd:
Bank Al-Falah Limited (BAL) was

incorporated on June 21st, 1997
as a public limited company under
the Companies Ordinance 1984.
Its banking operations commenced
from November 1st, 1997.
The bank is engaged in commercial
banking and related services as defined in the Banking companies ordinance, 1962.
The Bank is currently operating through 45 branches in 21 cities, with the registered
office at B.A.Building, I.I.Chundrigar, Karachi.
Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the
management of the bank has implemented strategies and policies to carve a distinct
position for the bank in the market place.
Strengthened with the banking of the Abu Dhabi Group and driven by the strategic
goals set out by its board of management, the Bank has invested in revolutionary
technology to have an extensive range of products and services.
This facilitates their commitment to a culture of innovation and seeks out synergies
with clients and service providers to ensure uninterrupted services to its customers. It
perceives the requirements of their customers and matches them with quality products
and service solutions. During the past five years, It has emerged as one of the
foremost financial institution in the region endeavoring to meet the needs of tomorrow
today.
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The year 2002 has seen BAL achieving significant success both in terms of port folio
and customer service. The unfortunate “September 11” incident caused economic
uncertainty and political troubleness, however by the grace of almighty ALLAH it has
seen a sizeable increase in the banks client base reflecting the favorable reputation that
bank enjoys in the market place.
 BOARD OF DIRECTORS
H.E Sheikh Hamdan Bin Mubarak Al Nahayan (Chair Man)

Mr. M Saleem Akhtar (Chief Executive Officer)
 Mr. Abdullah Nasser Hawalilee Al –Mansoori
 Mr. Abdullah Khalil Al-Mutawa
 Mr. Ikram Ul-Majeed Sehgal
 Mr. Khalid Mana Saeed Al Otaiba
 Mr. Nadeem Iqbal Sheikh
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VISION
To be the premier organizations
operating locally and internationally
that provides complete range of
financial services to all segments
under one roof.
MISSION
To develop and deliver the most
innovative products, mange customer
experience, deliver quality service
that contributes to brand strength,
establishes a competitive advantage
and enhances profitability, thus
providing value to the stakeholders of
the bank.
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 BRANCH NETWORK
An efficient branch network is essential for achieving its target. Its plan to open 25
more branches in the year 2009, at different location in the country increasing its
network to 215 branches covering over 22 cities. Bank follows a strategy of optimum
financial and quality human resource location in order to enhance the performance
potential of all its branches.
 Conventional Branches
 Islamic Banking Branches
 Overseas Branches
 FUTURE OUTLOOK
The economic future for the country seems brighter with many key indicators moving
in a favorable direction. Investor’s confidence is recovering and entrepreneurial
activity has gained momentum. They will continue to follow strategy based on
business and deposit enhancement and network expansion.
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 DEPARTMENTS AT BANK ALFALAH LIMITED,

BAHAWALPUR
Given below is the list of departments in Bank Al-Falah Limited BAHAWALPUR, which was
the branch under study:
DEPARTMENTS
 Operations Department
 Remittance Department
 Trade Finance Department (FOREX)
 Credit Cards Department
 Accounts Department
 Home Finance Department
 Car Finance Department
 Agri Finance Department
 Credit Marketing Department
 Credit Administration Department
PRODUCTS
 Car Finance
 Agri Finance
 Credit Card
 Other Financing Schemes
 Royal Profit
 Royal Group
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 Trade Finance
MAJOR FUNCTIONAL AREAS WHERE

THE INTERNSHIP WAS CARRIED OUT
Since there exists a number of department in the bank, but as per requirement and
need of the degree and nature of education, following is the list of departments where
I was rotated.
 Operations Department (front office)

 Accounts Department
 Trade Department
 Car Finance & Leasing Department
 Credit Administration Department
OPERATIONS DEPARTMENT
Operation Department has following segments.
 Account Opening
 Clearing
 Remittance
 Cash
Operations department of the Bank Al-Falah Limited is responsible for the overall
operations of the bank.
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 ACCOUNTS OPENING
Most important front line department of bank. As an account in charge you should
know the banks products, profit rates, incoming and existing products. Account
department is also sensitive in term of data or personal information of clients does not
logout. If they do soothe the customer will annoyed and will loss the confidence. So
accounts department play its role to secure the customer information.
Basic Types Of Account
1) Personal Account
2) Business Account
Phases In Personal Account Opening

For coming customer who wants to open the account will pass through different
phases of account opening.
Currency of account
There are five types of currencies PKR,USD,GBP,EURO,JPY in which customer can
open an account. He will select only one currency.
TYPES OF ACCOUNTS
There are following types of accounts;
 Current account
 PLS /Saving account
 Royal profit account
 Royal patriot
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o CURRENT ACCOUNT: The depositors can withdraw the money deposited

in current accounts at any time. Basically the profit is very low on current
account.
o SAVING ACCOUNTS: Saving account is generally popular with middle

income groups. The bank undertakes to repay the money to the depositors up to
a certain limit fixed by the rules of the banks. The saving bank account carries
a considerable more interest on it.
o ROYAL PROFIT ACCONUT: In this account customer deposit and

withdraw money in his own choice. It works on both like current and saving
accounts. The profit is obviously more than the current and saving account.
• Title of account
It includes the name of the person who wants to open the account. Name must be
written in block letters.
• Address
It includes the address of the person who is going to open the account.
• Personal Account
There are two types of personal account.
a. Individual b. joint
i) Individual: If only single person wants to open the account then he
will tick only on Individual box.
ii) Joint: When more than one person wants to open the account then
he will tick on Joint box. Both individual and joint provide their personal
information like
i) Name
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ii) Father name

iii) Country of residence
iv) Telephone number
v) N.I.C / Passport number
vi) Date and Place of issue
• Nominee / Next of Kin
That portion is important. In case of death or any incident like accident etc. In
order to make money more secure the person who wants to open the account he
tell the name of the person who will owner of his or her money in case of any
incident. After death of that person the bank will contact with that nominee and tell
them that now you are the owner of the money the person who wants to open the
account leave blank that portion than after the death the money will become
ownership of bank.
• ZAKAT DEDUCTION
If the person wants that bank deduct the Zakat in his account then he tick on
Yes box. And if he wants “no”, then submit attested copy of affidavit or
Declaration.
• Introducer (Introduction of new accounts)
As per existing procedure, an introduction is obtained from a customer of the

branch/bank in the account opening form. The signature of introducer is also
verified/ authenticated from bank’s record.
Further steps to be taken and additional inquires are to be made as

under:-
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i. Introduction preferably be obtained in person to establish the authenticity
of introduce otherwise, between introducer and new customer.
ii. Original NIC along with photocopy of the same be obtained and original be
returned after authentication/ certificate photocopy. However, extensive use of
NIC be applied wherever it is applicable.
iii. Other official papers document such as passport, Driving license and Service
identity card bearing signature and photograph of applicant for an account are to
be checked, wherever possible.
iv. Name, address, signature and other particulars mentioned in Account
Opening Form are tailed with that of appearing in any of the above
documents.
v. Current account is opened on proper introduction preferably by the
Current account holder.
vi. Managers and other holders holding power of Attorney/ IBS /AS May
introduce accounts only for those who are personally known to them and
whose credentials are absolutely clean.
•Applicant Signature:
• Initial Deposit
Initial deposit must be in cash. Cheque may only be accepted, as part of Initial deposit
in the case of undoubted parties and on the personal responsibility of Manager. In all
such cases, the cheque when tendered if uncrossed should be crossed by
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customer before being lodged for collection. Cheque should only be issued after the
proceeds of crossed cheque have been actually realized.
Phases in Business Account
1) Currency of Account
2) Type of Account
3) Title of Account
4) Business Address
5) Name
6) Father Name/Husband Name
7) Designation
8) Nationality
9) Country of Residence
10)Contact Number
11)NIC number
12)Type of Organization
i) Sole proprietorship
ii) Partnership
iii) Limited Companies
iv) Club / society
13)Detail of Other Bank Account
14)Introducer
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• Custody of cheque books
The cheque books are most sensitive item of the security stationery and due care
should be exercised in their issue process as well as management of their stock.
Custody of cheque books:-
i) Stock of cheque books must be kept in joint custody of Manager /
Accountant or Second Officer.
ii) Stock of the cheque books must be placed in the Fire Proof Safe.
iii) Cheque book for New Accounts
Cheque book for Existing Accounts Apart from new / fresh Accounts, all subsequent
cheque books shall be issued against the Cheque Book Requisition Slip extracted from
previous cheque book issued to the account holder.
REQUIREMENTS OF OPENING AN ACCOUNT
ACCOUNTS MINIMUM AMOUNT

Current account Rs. 10,000/-
Saving account Rs.5,000/-
Royal profit account Rs.50,000/-
DOCUMENTS REQIURED
 National Identity Card.
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 Introducer.
 Business and residential telephone numbers and addresses.
 Required limit of the amount.
 CLEARING
The process, by which Cheques are exchanged between the collecting and the paying
bank, and the financial settlement, is called “clearing”. In these section two types of
clearing takes place.
 Outward clearing
 Inward clearing
INWARD CLEARING
Cheques drew by BAL customer in favor of non-BAL customer. If dishonored the
cheque will be treated as return. Following steps are taken for inward clearing
1. The clearing dept. officer along with the NIFT/Clearing Schedules attached
receives Cheques from NIFT.
2. Cheques are sent separately to the concerned dept.
3. The designated officer verifies all particulars from the instruments and the system
for sufficient balance etc. if any technical faults are found; the officer sends back the
instrument with a memorandum stating the reason for return.
3. A copy of the memo is retained as record.
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4. If no discrepancy or technical fault is found, the officer at the system posts the
Cheques into the system.
5. Accounts are adjusted accordingly.
6. Cheques returned data is entered into the “O/W return of Inward Clearing”
register.
This register reflects particulars such as:
 Date
 Account no.
 Cheque/bill no.
 Drawn on
 Amount &
 Reason
6-a. returned cheque is given back to NIFT/Clearing Rep. from where they are
delivered back to the original source.
OUTWARD CLEARING
Cheque drawn by non-BAL customers in favor of BAL customer and deposited at one
of our branch. If cheque dishonored it will be treated as return. Following steps are
taken for outward clearing.
1. Customer approaches the counter with the instrument and fills in the pay-in-slip at
the counter.
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2-3. Cheques and pay-in-slips bear handed over by the customer to the designated
officer at the counter. After verification officer affixes crossing clearing stamp on the
instrument.
3-a. The counter slip is handed over to the customer, for record and reference.
4. The officer feeds the data into system. The posting no (OBC #) thus assigned is
written at the back of the cheque and pay in slips.
5. The instruments are received back by the clearing dept. after approval, where they
are arranged in bundles of 100 each. A ticket of NIFT is filled with the total amount of
the bundle is also attached with the same. The bundle is also handed over to NIFT.
 OTHER SERVICES
 Product information
 Deposit interest rates
 Car Financing
 Consumer Durable Financing
 Account Opening procedure
 Lockers
 ONLINE BANKING
Bank Al-Falah now offers the facility of on-line banking to its customers through its
countrywide network of branches. Customers can use the ATMs or the banking
counters of any branch for day-to-day banking needs, irrespective of branch where
they maintain their accounts.
 ATM
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Bank Al-Falah through its commitment to provide superior and improved services to
its valued customers has a nationwide network of ATMs. For customer’s
convenience, they now have access to instantaneous cash availability, 24 hours a day,
7 days a week. Its ATM network is geared up to exploit the latest technology, and is
equipped to meet the highest standards of security and efficiency.
With new ATM card customer can now:
 Withdraw Cash
 Use their convenient, user-friendly fast cash option
 Make a Balance Inquiry.
 Get an instant printout of account balances
 Get a printout of last transactions (Mini-statement) on the spot.
 Change your PIN (Personal Identification Number).
 REMITTANCES
Transferring of funds from person to person, and from place to place, constitute the
concept of a remittance. Remittance is very important service provided by banks to
customer as well as non-customer. It is not a free service hence is a continuous source
of income for the bank.
PARTIES TO A REMITTANCE
1) REMITTER
One who make a remittance. He comes to the issuing or originating branch, ask for a
remittance to be made, and deposits the money to be remitted. The bank charges him
for the remittance. He may or not be the bank’s customer.
2) REMITEE
Also sometimes called the beneficiary, or the payee. The person to whom the
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remittance is made. The one who receives the payment.
3) ISSUING BANK
The bank that affect the remittances, through the Demand Drafts, Telegraphic
Transfer, or Mail Transfer.
4) PAYING BANK
Also known as the drawee branch. The branch on whom the instrument is drawn. It
has to make the payment. (usually located in a different city or country)
Remittances are fund transfer either in local or foreign currency which can be affected
by way of a TT (telegraphic transfer) and DD (demand draft) etc.
TYPES OF INSTRUMENTS
There are three types of instruments that are used in funds transfer these are:
 Payment order (PO)
 Demand draft (DD)
 Telegraphic transfer (TT)
 Pay Slip
 Rupee Traveler Cheque
 Mail Transfer
PAYMENT ORDER: It is use within the city.

Payment order is meant for bank’s own payments but in practice these are
also issued to our customer for making payments. Following are the parties
to a pay order:
i) Purchaser: Is a person, firm, company or local authority
ii) Issuing / paying branch: which issues / pays on presentation?
iii) payee: Is a person named therein.
DEMAND DRAFT:
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 Demand draft is a written order, drawn by one branch of a bank upon another
branch of the same bank, or upon another bank under special arrangements to
pay a certain sum of money to or to the order of a specified person.
 Demand draft is a negotiable instrument.
 Demand draft is neither issued payable to bearer nor drawn on branches
situated within the same city.
 Legal provision as to crossing, endorsement, collection and payment in due
course are similar to those as for Cheques and other negotiable instrument.
 It is to be insured that the purchaser of Demand Draft is able to at least sign his
name. Thumb impression is not to be accepted on DD. A person unable to sign
and not having an account may be advised to apply for DD through a literate
person to sign on his behalf. To avoid complications DD are not to be issued to
Minors.
The followings are the parties to a Draft:
 Purchases: Is a person, firm, company or local authority.
 Issuing or Drawing Branch: Which issues a draft on another branch?

 Drawee Branch: Is one on which a draft is drawn.
 Payee: Is a person named in the Demand Draft to whom or to whose order
the money is directed to be paid.
TELEGRAPHIC TRANSFER: It is also for outstation mean outside the city. The
more advantage of TT is it has a fast speed as compared to DD and obviously the
charges of TT are high as compared to TT.
 Transfer of funds from one branch to another branch of the same bank or
upon other bank under special arrangements for the payment to the
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beneficiary through Telegram / Telex / Fax is called a Telegraphic Transfer
(TT).
The followings are the parties to a TT
i) Applicant: A person, firm, company, or local authority etc who desire to
remit funds from one branch to another branch.
ii) Remitting or drawing branch: Which remits the funds on another
branch.
iii) Drawee branch: On which TT is issued.
iv) Beneficiary / payee: The person named in the TT whom the money is
payable.
MAIL TRANSFER : Transfer of funds from one branch to another branch

of the same bank within or outside the city or upon other bank under special
arrangement for the payment to the beneficiary through Mail/ Courier services
is called MAIL TRANSFER.
 Mail transfer is not negotiable.
 The funds remitted by Mail transfer are not payable to bearer.
 Like TT, funds can be remitted by MT for the credit of the payee’s Account or the payee /
beneficiary can be advised to receive the amount from the drawee branch either on cash on proper
identification.
ACCOUNTS DEPARTMENT
One of the most important departments in Bank Al-Falah is the accounts department.
Every documents end point is the accounts department to make it safe.
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Any charges / expenses occurring anywhere within the branch are paid through this
department and the payments are sent to the respective payees by debit and credit
vouchers. The credit voucher includes total amount received by bills and a debit
voucher contain s information of the tax deductibles ant hen final credit voucher is
prepared that contain total payable amount. This credit voucher is signed by incharge
accounts and manager operations or manger consumer banking.
One of the main tasks of the accounts department is to sort out the Cheques, deposit
slips, debit/credit computer vouchers and then match the hard with the soft copies.
The hard copy are all those vouchers which were given to accounts department by the
cashiers and those cashiers made an entry of cash deposit or withdrawal the sheet of
these entries are given to the accounts department as well.
All the entries done by the cashiers are entered into the database of the bank and then
prints out of one-day transactions are given to the accounts department and they then
consult it and match the records. They check the dates, amounts, account numbers,
account titles, stale, outdated, expired and post dated Cheques. After they have tackled
it they make bunches of those hard copies and stores them. They keep it for 2 months
in their cupboards and they shift it date wise in their storeroom in the form of bunches.
The department works in four levels.

 Data Retrieving
 Data Controlling
 Data Monitoring
 Reports Generation
DATA RETRIEVING
Basically, the data retrieving is a function of the accounts department in which they
are to retrieve data as per requirement quickly. They store the data and information
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(i-e) hard copies and soft copies of vouchers, reports, Cheques and etc after they have
done all the processing required. They are also liable to retrieve and provide that data
and information to the other departments and to the management as required.
DATA CONTROLLING
Controlling in a sense that they control the errors and flaws in the data and the
procedures conducted in other departments especially at the cash counters, where the
money is deposited and withdrawn. The department is provided with the Cheques,
credit vouchers, debit vouchers, and etc and a soft copy of the computer generated
report. Against all the transaction, the cashiers are supposed to make a computer entry.
The report is prepared by those entries and then sent to the department. It is then
checked and verified, reported and stored by the accounts department.
DATA MONITORING
Forecasting and budgeting of expenses and profits is the task of the accounts
department and this activity is performed twice a year. The area manager or the chief
manager requires this information only.
REPORTING
A hefty important and very basic task accounts department has to perform is reporting.
Reporting is done on daily, weekly, monthly, quarterly, semiannually, and annual
basis.
Some of these reports are required in the branch only, some are required in area office
only and some are to send to the head office Lahore or Karachi. Different types of
reports are prepared on daily basis, weekly and so on.
O DAILY REPORTS
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O WEEKLY REPORTS
O MONTHLY REPORTS
O QUARTERLY REPORTS
O ANNUAL REPORTS
TRADE FINANCE DEPARTMENT

Trade finance department is also called as the Trade Service Unit. The transfer of
credits to a foreign country to settle debts or accounts between resident of home
country and those of the foreign country or the foreign bills currencies etc used to
settle such accounts.
Foreign exchange department deals within exports and imports. The bank acts as
exporter as well as importer bank for different parties who are in the business of
export and import. The basic dealing of the department is under three heads:
 Imports
 Exports
 Financing
IMPORTS
All goods and services brought into a country that were purchased from organization
located in other countries. Financing of the imports is done at
 Post Shipment
 Own Source
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Post shipment means when the goods are received. The goods are at the port and now
the customer could not pay to receive those goods. Bank take the mortgage documents
and then if eligible collects those goods and place them in Godams Customers
gradually and slowly keep on paying the relevant amount and equal to the paid
amount bank handed him over the equivalent goods quantity.
At own source the bank will provide loan to the importers. This loan could be in local
currency where there will be a markup depending upon the bank. It could be 10% to
14% or it could be in foreign currency. The interest rate charged on foreign currency
will be applied under LIBOR (London Inter Bank Offered Rate) rate.
EXPORTS
All goods and services sent from one country to another country. Financing of exports
could be done in three ways:
 Pre Shipment
• Own Source
• ERF
 Post Shipment
• Own Source
• ERF
 FE-25
Loan is given before the goods are shipped.
Own source means the bank will provide the loan to the customers and the mark up
will be charged depending upon the management and rates defined by the bank. It
may be 13 to 14% more or less.
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ERF (Export Refinance) is provided by the SBP, it is another option for the customers
who need loans, SBP proved an opportunity to the customers to take loan less than the
markup offered by the bank for example 14% was offered by the bank, then SBP will
offer ERF @ 9%, 1.5% of which will be the income for the bank and the rest of 7.5 %
will be the part of SBP.
Post shipment means when the goods are received. The goods are at the port and now
the customer could not pay to receive those goods. Bank take the mortgage documents
and then if eligible collects those goods and place them in godams. Customers
gradually and slowly keep on paying the relevant amount and equal to the paid
amount bank handed him over the equivalent goods quantity.
At own source the bank will provide loan to the importers. This loan could be in local
currency where there will be a markup depending upon the bank. It could be 10% to
14% or it could be in foreign currency. The interest rate charged on foreign currency
will be applied under LIBOR (London Inter Bank Offered Rate) rate.
For the exports E-forms are used. Any exporter for exporting the goods should have to
fill the E-form. This is a legal way to export goods. Banks take part in this activity
between exporters and importers as the State need to keep the record of what is going
out and what is coming in. These E-forms have four parts named as:
 Original
 Duplicate
 Triplicate
 Quard-duplicate
Carbon paper E-form is filled by the customer (exporter) whose original copy is
submitted to the Custom office. Duplicate and the triplicate copies of the form are
submitted to the bank. And the quard-duplicate portion of the form is kept by the
32
customer himself. After the procedure from the customer side is complete the
triplicate copy is sent to the SBP and then the custom and SBP compare the document
for validity and checking.
FINANCING
Financing is done for the industries and companies doing imports and exports. Both
types of financing is provided by the bank to its customers whether they are exporting
or importing in any local location or abroad. The account may be in local or foreign
currency. Nostro and Wostro accounts are used on banks level to perform this task.
L / C (LETTER OF CREDIT)
Another document involved in trading. ICC (International Chamber of Commerce) is

a plat form to deal with imports and exports. S.W.I.F.T (Society for Worldwide Inter
Financial Transaction/ Telecommunication). It is another platform which defines
certain rules and regulations and codes related to IC. Normally, every L/C contains
information required for trading under certain head codes. L / C’s are of two types:
 Revocable
 Irrevocable
More or less 5 banks are involved in any transaction in which L/ C is used.

 Issuing Bank
 Correspondent Bank
 Beneficiary Bank
 Advisory Bank
 Reimbursing Bank
CAR FINANCE & LEASING DEPARTMENT
33
The major functions this Car Finance department has to perform in the bank are the
processing and completion of documents for car finance shall be based on the
respective branch. Upon approval of the car finance facility the borrower shall contact
the concerned car finance department for down payment and submission of post dated
Cheques.
The car finance department shall obtain all securities and finance documents from the
customer and ensure its completion. The physical control and safe custody of
securities and documents is vested in car finance department at the respective branch.
Car finance department shall arrange vetting of documents and completion of all legal
formalities in respect of car to be financed.
Car finance department shall ensure that the bank’s approved surveyor and insurance
company surveyor completes valuation of the second hand car and the original
comprehensive valuation reports are obtained. The customer shall obtain
comprehensive insurance policy with all required clauses from the insurance company
on the bank’s approved list for the market value of the car.
Purpose of the car finance department is to facilitate the individual borrowers to

purchase:
 New Cars
 Second Hand Cars
 Facilitate Balance Transfer From Other Banks and Within BAF
Bank does not finance the Cars and other vehicles rather it also lease these products
for the better services and convenience of the customers. A lease is a contract whereby
the owner of an asset (the lesser) grants to another party (the lessee) the exclusive
right to use the asset, usually for an agreed period of time, in exchange for a periodic
fee called rental.
TYPES OF LEASING
34
 Finance Lease
• Direct Lease
• Sale & Lease Back
 Operating Lease
 Ijara (Islamic mode)
DIRECT LEASE
In order to secure a lease following are strictly followed:

 Payment should directly be made in the name of the manufacturer
 The invoice should be raised in the name of the BAF by the manufacturer
 The asset should directly be registered in the name of BAF only
SALE & LEASE BACK
Sale and lease back transaction can compensate the following limitations:
 Payment only to manufacturers
 Leasing restriction up to invoice value of Rs.1.0 M Sale and lease back
transaction can compensate the following limitations:
 Payment can be made in the name of the supplier/seller/customer.
 No deduction of WHT if the payment is made is mad to the client.
 CAR FINANCE
It is not a new product in the market. It has gained importance because of increasing
inflation and increase in the price of motor vehicle. The purchasing power of
consumers is continuously declining; most of the banks are offering car financing. It
helps especially for those borrowers who are able to pay smaller amount by way of
monthly installments of total cost of the motor vehicle. The risk of losses for the bank
35
is also minimized due to comprehensive insurance cover. Bank allows the vehicles to
be registered in the borrower’s name.
BENEFITS AND FEATURES

 Quickest processing
 No hidden charges
 Minimum down payment
 Complete repayment at any point of time
 Balance transfer facility (BTF) for existing as well as new clients from other
Banks
 Tenor period ranging from 1 to 5 years.
 Financing of all brand new locally assembled vehicles.
 Financing limit ranging b/w Rs.200,000/- to Rs.2000,000/-
CORPORATE & INDIVIDUAL CAR LEASING

BAF’s recently introduced car-leasing facility for individuals and corporate sector has
set new dimensions for the product. Now they are provided with the option of either to
get the vehicle leased or financed.
INSURANCE
Renowned and reliable Insurance companies are offering the competitive rates of
Insurance. Pay year insurance premium in advance (at the time of down payment) and
remaining in the subsequent equal monthly installment.
MARK-UP
offering lowest rate of markup of 15% on Suzuki manufacturing and 16% on other
vehicles, (per annum), BAL has captivated a major market share and so is the plan for
future.
36
REPAYMENTS
Easily affordable installments on monthly basis in the form of postdated Cheques will
set free of depositing rental Cheques every month.
SECURITY
Hypothecation of vehicle in the name of the Bank Al-Falah Limited.
CO-BORROWER
Acting as a co borrower, will enables family members (spouse, children- 18 year and
above) to avail the financing facility and can get the car registered in their names as
well.
DOCUMENTS REQUIRED
 Copy of NIC
Last six months bank statement
Salary certificate (in case of salaried individual)
 Business proof (in case of self employed )
 Copy of utility bill
 Co borrower NIC copy ( if it is a co-borrower case)
WORKING
Following steps are taken by the bank for providing the loan.
The customers fill the forms.
 After completing the documents bank branch verify all these documents.
 The data provided by the borrower verify (physically) through visits by the
verification officer.
 Then proposal is to be made.
 All the data goes to credit committee for the approval.
37
 Documents send to the head office Karachi for checking that either he is a
defaulter of any other bank or not.
 After stamping of data check clear bank call customer for down payment and
signature etc.
 After completing all the documentation letter fax to the insurer and he insure the
car.
 Bank get keys and original documents and sends the delivery order to the
showroom.
 The documents send to ETO (Excise and Taxation Office for registration).
 Car and the registration copy hand over to the customer and the remaining
documents remain in the custody of the customer.
 NOC gives to the customer after completing all the installments.
ELIGIBILITY
A customer is eligible to apply for a car loan if:
 He is between 21_55 years.
 The income should be in excess of three times the monthly installment of the
borrower.
 In case where spouse also working, the income of both of them may be combined but the loan burden
should not exceed 33% of the income.
CREDIT ADMINISTRATION DEPARTMENT

Credit means belief or trust. “The quality of being credible or trustworthy”. Another
words we can define credit as “trust in one’s integrity in money matters and ones
ability to meet payment when due”.
The earning of BAL is chiefly derived from interest charge and discounts. This
department is the revenue generating department. Credit department basically has
three segments.
38
 Credit marketing department

 Credit administration department
 Trade finance services department
Credit and advance department deals with extending loans (credit facility) to
customers. State Bank of Pakistan (SBP) has prescribed regulations which are called
“PRUDENTIAL REGULATIONS”. Every bank has to follow these regulations. If
any bank violates the regulations it should be liable for penalties under the core spirit
of SBP PR(S).
The Bank Al-Falah limited credit is extended on the basis of these rules and
regulations. These regulations tells the term and conditions under which you can
extend loans to the borrower and to what extent.
CREDIT FACILITIES
At BAL there are two types of credit facilities

 Funded facilities
 Non funded facilities
FUNDED FACILITIES
These are the facilities in which there is direct involvement of cash fund. Following
are the funded facilities.
 Current finance CF
 Term finance TF
 Finance against foreign bills “FAFB”
 Finance against packing and credit “FAPC”
 Finance against imported merchandise “FIM”
39
 Finance against trust receipt “FATR”

 Payment against document “PAD”
CURRENT FINANCE (CF)
The extensively used financing mode at BAL is current finance (CF) current finance is
used to finance both individuals and industries.
Individual take current finance for their personal use while in industries. It is taken for
fulfilling the requirement of working capital.
TERM FINANCE (TF)
Term finance is for specified time period. Term finance is given for fixed asset
financing.
FINANCE AGAINST FOREIGN BILLS (FAFB)
In FAFB facility exporter take loan from bank on the behalf of their foreign export
bills. Like exporter sends shipment but at that time he needs fund for the operation of
the business. He may go to the bank and surrenders all the documents including L/C,
Bill of lading etc.
FINANCE AGAINST PACKING AND CREDIT (FAPC)
FAPC is taken for the preparation of consignment. It has two forms.

 Pre shipment
 Post shipment
PRE SHIPMENT
40
Pre-shipment loans are export related working capital financing.
POST SHIPMENT
Post shipment financing is essentially the receivable financing to the exporters till the period
he is out of cash after the shipment.
FINANCE AGAINST IMPORTED MERCHANDISE (FIM)
This facility is allowed against the commodities imported from other countries usually
through letter of credit. Some time importer does not have enough amounts for paying
the imported merchandise therefore. He request to the bank to pay all dues to the
exporter against the security of imported merchandise. Bank pays the amount and
releases the goods, when the importer pays off its liability partially / fully.
FINANCE AGAINST TRUST RECEIPT (FATR)
Finance is extended upon the trust receipt signed by borrower. Importer has to import
the product. There are three conditions.
 Pay money and get thing

 Get fine facility
And third is that if that client is trust worthy for bank believing on him based upon his
past record. He releases the goods against the trust receipt. Trust receipt is given to
the bank by the customer. The customer in turn commits that I will pay on such and
such date. Banks pays all taxes and get merchandise and then give it to client. Bank do
charges markup against such financing. FATR is for specific period of time. If client
do not pay with in specified time then bank charges higher per day markup.
41
PAYMENT AGAINST DOCUMENT (PAD)
Payment against document is made by the banks as payment against L/C comes due
payment is made for imported documents. For example when exporter sends all the
document to importing bank as document reached, importing bank has to make
payment within 24 hrs if the importer does not pays then bank charges markup per
day.
NON FUNDED FACILITIES
The facilities where there is no direct involvement of banks fund. Following are the
non funded facilities.
 Letter of credit L/C
 Letter of Guarantee L/G
LETTER OF CREDIT
Importer bank issues a document on request stating that it will pay the exporter when
exporter fulfill the terms of letter of credit L/C is off two types.
 Sight L/C
 Usance L/C
SIGHT L/C
Requires the importer / importing bank to pay as soon as it receives the clean
documents from exporter.
USANCE L/C
It extends time period (typically 60, 90, 120 days) to importing bank for payment.
After specified time period importer have to pay.
Letter of guarantee “L/G”. Bank gives guarantee in the behalf of person that I will pay
in case of default.
42
Taking cognizance of the sustained progression of the bank’s business and inherent
risk factors attached to the expansion, the management felt a need for setting up an
independent Credit Administration Department in the branches. Its main purpose is to
stream line the working of CAD to moderate the chances of losses arising from
incomplete security and documents covering advances.
It is suggested that CAD, headed by a manager is to be set up in branches meeting the

following criteria: aggregate funds and non-fund based credit port-folio of Rs.500 M
and above and the minimum number of borrowing customers being twenty five. The
personnel of CAD are further advised to keep themselves abreast of the latest
instructions/regulations issued from time to time by the head office, SBP and other
regulation bodies.
The overall objective of the department is to provide independent assurance to branch

management and head office credit monitoring divisions that lending activities are
properly controlled and monitored.
Job purpose of a credit administration officer is to ensure that legally enforceable

facilities and security documentation have been obtained and placed under lock and
key monitor credit portfolio through system generated reports and identify and report
exceptions to the monitoring division and ensure approval conditions are met.
In order to minimize the risks involved with the different types of securities covering
advances, certain policy guidelines in this respect have been conveyed through the
means of various circulars and manuals. Some of the significant aspects pertaining to
higher risk securities are elucidated.
CREDIT MARKETING
43
In this department I have not practiced during my internship. Anyhow this is the most
valuable and important part of the bank. Credit marketing department is basically the
department to deal with the business and the business on the corporate level. They are
not supposed to deal with the individuals. For example if some other organization
want to give credit cards facility to their employees and that organization want to get
the credit cards from the Bank Al-Falah then they must have to contact with the credit
marketing department of Bank Al-Falah in this context. This department is called
credit marketing due to the reason that the personnel working over here in this
department of the bank mostly do the field work in searching for the big organization
to buy their products and they introduce to those organizations the new products and
services bank can offer to them.
The focus of this department is how to sell the products. In fact there is only one item
for one individual customer but there is a bulk of items for an organizational entity. So
the bank teams are more curious in finding the potential borrowers from the market
and usually those are the big business entities.
This department deals in enterprise banking. Meaning that they have to deal basically
with the organizations. Now according to the nature and type of organization the rules
and policies are varying. Business organizations are:
 Sales
 Partnership
 Corporation
There are different policies and business rules for the different type of organizations.
To these types of organizations the bank offers the lease, project finance, credit cards,
or finance. The corporate level lending / borrowing / financing money markups are
low as compared to that of the SME’s.
The major sections of the Credit Marketing Department are:
44
 SME (Small and Medium Enterprises)

 Corporate Banking
 Lease Finance
SME’s are those organizations that have financial turn over of less than
Rs.300, 000,000 as per State Bank of Pakistan rules, and the other assumption of the
SME’s are that they have less than 50 employees working in the organization etc.
And the organizations having annual turn over more than Rs.300, 000,000 and having
more than 50 employees working, are supposed to be the corporate business entities
are per decided under the rules presented by the State Bank of Pakistan.
AG RI F INANCE DE P ART M E NT
This department as the name implies is to facilitate the landlords and farmers of our
country. They need money for their crops development and many other purposes
related to agriculture. This department of the Bank Al-Falah provides finance to those
needy people so that their crops should be cultivated properly.
The style and procedure of financing the landlords or farmers is the same as that of the
car financing and other financing schemes of the bank except that here there is need to
survey the land (Arazi) of the person who need finance. If the team feels him eligible
for the said loan they after basic requirements and processing the loan to the party /
customer otherwise the applicant are refused.
This department is no more stick to finance money to the landlords or farmers rather
they have started a new scheme of financing for the tractors, for the units that produce
good quality seed, for the irrigation items, for the wells, for the solar energy plants and
for plantation farms as well. This has given the bank more cutting advantage over the
45
other commercial banks and financial institution of the town. The very basic types of
financing they offer to their customers are:
 Financing for the crops
 Short and long term finance
 Non crop financing
In crop financing simply the finance is provided for the prosperity and well production
of the crops. In short and long term financing, the finance is provided for the irrigation
tools, for the wells digging, for the spray machines, for the tractors and other tools and
machines used in cultivation process. While in non-crop financing, finance is provided
for the animals farms (their artificial reproduction centers, and fist aid centers etc), for
the fishermen.
IMPORTANT DOCUMENTS REQUIRED FOR THE LOAN
 NIC copy of the applicant

 Fresh Photograph of the applicant
 Pass Book Issued From The Food Office
 Two Witness with NIC Copies
 Two References With Telephone Numbers and NIC Copies
Services provided by Bank Al-Falah Ldt.
 CREDIT CARDS
It is plastic money that is used instead of cash.

It is accepted in more than 130 countries around the globe.
46
It provides ease to the customers.
FEATURES OF CREDIT CARDS

Following are the characteristics of BAL VISA Credit Card:
 No joining fee
 No annual fee/renewal fee
 Lowest markup rate
 Cash withdrawal
 Global acceptability
 Revolving credit
 Balance transfer facility
 Free supplementary cards
 24 hour customer service
 All billing in Pakistani rupees
 Reward points
1) NO JOINING FEE: It’s an advantage for the customers that they enjoy free
facility of BAL VISA Credit Card.
2) NO ANNUAL /RENEWAL FEE: It has a competitive advantage upon all other

credit cards in Pakistan that it has no annual/renewal fee.
3) LOWEST MARKUP RATE: It has a lowest markup rate of 2.25% per month.
4) CASH WITHDRAWAL: Customer is allowed to withdraw 75% of the assign
credit limit from the BAL credit card. With drawl charges are 3% or 300 whichever is
greater.
5) GLOBAL ACCEPTABILITY: BAL VISA credit card is almost acceptable in

more than 130 countries so it’s a globally accepted.
47
6) REVOLVING CREDIT: Revolving credit means a customer must pay

minimum 5% or Rs. 500/- of the out standing balance and the remaining amount will
be transferred to next month. If the customer pays partially or minimum then only
markup is to be hit and he will not pay late charges (Late Charges are Rs. 300). Late
charges will hit if customer is not paying any thing.
7) BALANCE TRANSFER FACILITY: Balance Transfer Facility (BTF) means

you can transfer an amount from any other credit card to BAL VISA credit card and
only 1.5% mark up is to be hit on that amount for the initial one year. Balance transfer
amount should not exceed the limit of the credit card.
8) FREE SUPPLEMENTARY CARDS: Only ALFALAH VISA card provides

you 6 free supplementary cards for your spouse, children, siblings and parents who are
more than 18 years. It is just like a joint account. Supplementary always shares with
the basic cardholder. Basic cardholder has a choice to specify the limit for
supplementary and the most important thing is that bill always be paid by basic
cardholder in case of supplementary.
9) 24-HOUR CUSTOMER SERVICE: Our 24-hour service helps you and assists
you in activating a card; answering your queries and reporting have stolen cards.
10) ALL BILLING IN PAKISTANI RUPEES: Whether you make transactions
in dollars or whatever for the convenience of customers always paid bills in Pakistani
rupees.
11) FORTUNES: Al-Falah visa offers you fortunes, a reward point that allows you
to earn points on every rupee you spends on your card. You can accumulate and
exchange the fortune points earned for gifts of your choice from a deliver range of
item to match your lifestyle.
12) PROCESS FOR CREDIT CARDS
48
Following is the procedure that is to be followed:
The sales executive must ensure that the application meets the criteria as per BANK
49
Financial Statements
50
51
52
53
RETURN ON ASSET
Formula:
Net profit/ total assets *100
Year 2003 2004 2005 2006 2007

ROA 2.15% 0.7% 0.69% 0.64% 0.95%
ROA
2.5
2
1.5
1
0.5
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio shows the relationship between net profit and total assets. This ratio is
almost similar except in year 2003 where the profit has been much higher as compared
to assets.
54
RETURN ON EQUITY
Formula:
Net profit/ equity *100
Year 2003 2004 2005 2006 2007

ROE 49.86% 20.75% 22.68% 16.68% 22.74%
ROE
60
50
40
30
20
10
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing volatile trend. In 2003 the return equity was very high due to the
much higher rate of profit as compared to equity. But in upcoming years, this ratio has
been decreased due to higher increase in equity as compared to Net Profit.
55
ADVANCE TO DEPOSIT RATIO
Formula:
Advance / deposit *100
Year 2003 2004 2005 2006 2007

ATD 64.17% 68.56% 53.46% 62.63% 62.67%
ATD Ratio
80
60
40
20
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing stable trend. This ratio is lowest in year 2005 due to the fact that
bank has advanced less loans in this year as compared to the Deposits.
56
EQUITY TO ASSETS RATIO
Formula:
Equity / total assets *100
Year 2003 2004 2005 2006 2007

EAT 3.29% 2.80% 2.70% 3.84% 4.19%
EAT Ratio
5
4
3
2
1
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing decreasing trend up to 2005 & then increasing trend. This ratio is
highest in year 2007 because equity is greater than Total assets.
57
EQUITY TO DEPOSIT RATIO
Formula:
Equity / total deposit *100
Year 2003 2004 2005 2006 2007

ETD 4.1% 3.42% 3.47% 4.41% 5.04%
ETD Ratio
6
5
4
3
2
1
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing decreasing trend up to 2004 & then increasing trend. This ratio is
highest in year 2007 because equity is more than deposit.
58
DEPOSIT TO TOTAL LIABILITY RATIO
Formula:
Total deposit / total liabilities *100
Year 2003 2004 2005 2006 2007

DTL 80.99% 86.62% 92.32% 90.91% 87.37%
DTL Ratio
95
90
85
80
75
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing increasing trend up to 2005, but a decrease come in year 2006.
This ratio is highest in year 2005 because deposit were highest in this year than
liabilities.
59
INVESTEMENT TO TOTAL ASSETS RATIO
Formula:
Investment / total assets *100
Year 2003 2004 2005 2006 2007

ITA 29.2% 22.9% 23.12% 20.50% 26.91%
ITA Ratio
35
30
25
20
15
10
5
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is quite stable. This ratio is highest in year 2003 because investment is
highest in this year as compared to the Total Assets, but in next years total assets
increased at a higher rate than Investment.
60
ADVANCE TO ASSETS RATIO
Formula:
Loans (Advances) / total assets *100
Year 2003 2004 2005 2006 2007

ATA 49.74% 57.44% 47.87% 54.40% 52.05%
ATA Ratio
60
58
56
54
52
50
48
46
44
42
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing volatile trend. This ratio is highest in year 2004 because bank
given more advances as compared to the increase in Total Assets.
61
DEBT RATIO
Formula:
Total liabilities / total assets *100
Year 2003 2004 2005 2006 2007

DEBT 95.7% 96.69% 96.99% 95.55% 95.07%
DEBT Ratio
97.5
97
96.5
96
95.5
95
94.5
94
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing increasing trend up to 2005 than starts decreasing. This ratio is
highest in year 2005 because liabilities are higher increase than assets.
62
EARNING PER SHARE
Formula:
Net profit / total no. of equity shares
Year 2003 2004 2005 2006 2007

EPS 4.49 3.90 3.92 2.91 4.82
EPS
6
5
4
3
2
1
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing volatile trend. There is a huge increase in EPS during year 2007
because of Net Profit.
RATE OF RETURN ON LOAN
63
Formula:
Interest income / total loans *100
Year 2003 2004 2005 2006 2007

ROL 8.19% 6.32% 10.4% 14.12 % 15.06%
ROL
16
14
12
10
8
6
4
2
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio has decreasing trend up to 2004, but this ratio is increasing in 2005 because
interest income starts to increase.
EQUITY RATIO
64
Formula:
Equity / total assets *100
Year 2003 2004 2005 2006 2007

EQUITY 4.3% 3.4% 3.0% 3.83% 4.18%
EQUITY
0
2003 2004 2005 2006 2007
Years
Interpretation:
This ratio is showing decreasing trend up to year 2005 & then increasing. This ratio is
lowest in year 2005 because equity is lower increase than assets.
65
SWOT ANALYSIS
STRENGTHS
 Study leave provisions are made
 Experienced management
Proper internal audit based at head office in accordance with SBP requirements
BAL audit policy is duly approved by board of directors of SBP
MIS with respect to audit reporting in place
WEAKNESSES
 Poor reward system
 Lack of delegation of authority
 Lack of decentralization
 Lack of proper job rotation
 Generally no sense of belonging among the employees
 Lack of organizational loyalty among employees
 Lack of effective motivation
 Lack of team work
 Generally fewer right men for the right job
 Promotions generally on seniority basis
 Secretive management
 Great difference in perks of executives and other officials
 Attitude of senior managers at head office has to change towards junior staff
 Delegation of authority and responsibility specially in international division
needed
 No foreign exchanges manual due to which there is lack of uniformity in the
branches
Lack of professionally trained staff at head quarters
 Lack of adequately trained CA’s
66
 Competent staff unwilling to serve in the audit due to an absence of firm rotation
policy
 Audit staff has a tendency to be overconfident leading to attitude problems due to
the absence of firm rotation policy
 Professional training of audit staff lacking
OPPORTUNITIES
 Globalization, i.e., barriers will be removed and good uses can be made from it.
 Free staff training facilities offered by foreign correspondents should be taken up
 Greater profitability can be achieved through strong internal control
 Elimination of risk of fraud through professional training
 Reduction of communication gap between audit and banking staff through rotation
policy
 Improvement of overall quality of audit through incentives. E.g. mandatory audit
service in career planning process.
THREATS
 There is a threat of brain drain

 Restructuring of privatized banks
 Tough competition by foreign nationalized and privatized banks in foreign trade
business
 Government policies
 Adverse economic conditions
 Further outward flux of competent staff from audit due to absence of firm rotation
policy
 Lack of professional training of audit staff may result in weakening of internal
control mechanisms of the bank.
67
DEPARTMENTAL ANALYSIS
1) CREDITS
STRENGTHS
 Strong capital adequacy ratio
 Self liquidating short term advances
 Blend of experienced and young qualified staff
 Strong technological based support system
WEAKNESSES
 Lack of proper credit risk management system
 Lack of credit marketing
 Improper loan recovery plan. Tendency towards rescheduling and restructuring
 No loan to area specific business, like cotton , ginning in Multan
 Excessive centralization and concentration of authority
 Credit policy is extremely conservative
 Credit portfolio not well diversified
 Lack of coordination between credit division and international division regarding
exports and imports financing
 Inflexible credit policies
 High ration of non performing loans
 Staff loans are centralized and delayed processing
 No sectoral studies or guidelines about lending to priority sectors provided to
branches.
 Low credit rating
68
OPPORTUNITIES
 Consortium financing area offers a lot of opportunities
 Shift in Govt. policy towards SME financing
 Loans to women entrepreneurs prove to be less risky and this can be attracted
 Consumer financing is very lucrative
 With the rescheduling of loans by IMF/World bank, economy is expected to pick
up which will result in increased demand for credit
THREATS
 Credit portfolio expansion in BAL is very slow which could result in opportunity
loss to other competitors
 Government’s inconsistent policies
 Pressures on lending rates as competitors are reducing their lending rates
 Aggressive banking by private and nationalized banks
 Default culture in the country
 Poor legal system and flaws in recovery laws
2) OPERATIONS AND CUSTOMER SERVICES
STRENGTHS
 Availability of staff with a blend of experience and young staff members
 IT capability
 The internal décor of the branch reflects a modern and progressive image
 Market reputation and financial standing
 Strategic location of branches in the hub of commercial activity
 Availability of required office equipment and IT system
69
WEAKNESES
 Lack of uniformity in procedures across the branches
 Updated operational manuals not available
 Slow response time
 Front line employees not groomed to handle difficult customers under stress
conditions
 Delay in information with respect to change in internal/ external policy
 Lack of employee knowledge about banks products /services/systems
 Interdepartmental work flow problems and delays
 Absence of efficiency and quality standards
 Information flow and circulation to staff members not properly/ timely available
 Specific and uniform job descriptions not available
 Low motivation of staff
 Non availability of timely information to the customers
 Lack of customer advisory services
OPPORTUNITIES
 More ATM’s to attract deposits/ to minimize load on the counters
 With the improvement of quality of service growth in corporate customers can be
improved
 BAL has good name that can be exploited for business growth with increased
number of branches
 Further enhancement of IT capabilities and its application for becoming a modern
technology bank to move ahead of competitors
 Poor customer service by nationalized banks in small cities like Sialkot, Rahim
Yar Khan Etc, it offers opportunities to expand its services.
70
THREATS
 Increasing competition posed by other banks,
 New banking product gimmicks introduced by banks are wading off customers
 Customers have to become more educated and demanding
 Larger banks are reorganizing their systems focussing on better customer services
 Increasing inflationary tendencies making it difficult to incur appropriate costs
towards maintenance branches/ training, promoting requisite service delivery
systems
3) ONLINE SYSTEMS
STRENGTHS
 Edge in banking technology
 Internet transaction system
 Satellite/radio frequency network
 File transfers
 Fax’ emails
WEAKNESES
 Voice / video conferencing facility not available
 No proper publicity of online facility
OPPORTUNITIES
 Proper publicity of online banking
THREATS
 Security risk is involved as bank provides financial services
71
CONCLUSION AND RECOMMENDATIONS
CONCLUSION:
BANK ALFALAH has continued its upward climb in pursuit of excellence.
Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals
set out by its Board and Management, Bank Al-Falah increasingly inspires trust and
confidence of all its clients. Within a short span of time the bank has carved a
significant niche for itself in the banking industry.
These achievements have been preceded by the concerted efforts to provide highest
levels of service and value to their customers. The bank aims to further enhance
performance standards through implementation of innovations in both products as
well as customer care, by discovering newer avenues of client benefit. This customer-
focused strategy has enabled Bank Al-Falah to evolve as a single source financial
service provider of corporate and retail banking services.
The present political structure of the government is determined in adopting the

policies and reforms introduced by the last regime especially in privatization and
deregulation of the government controlled sectors. Continuation of these policies
would guarantee the measure in foreign investment and result in restoration of
investor’s confidence (both local and foreign) in government plans and their
continuity.
In spite of unsettled economic condition at home and globally during 2002, bank has
shown an impressive performance and the financial strength has greatly enhanced.
Confronted with a more open financial market but tougher competition, bank with its
professional outlook and commitment, maintained steady growth in resource
72
mobilization and financing of foreign trade. The bank has increased its branch
network from 145 to 185 during the year. The expansion program is in line with
strategic business plan.
Bank Al-Falah aspires to evolve as the premier banking institution in the country. The
path towards this goal is challenging but realistic. Strategic alternatives are continually
evaluated so that their corporate strategy remains relevant to emerging trends in the
market. This adequately prepares the organization to cope with unexpected challenges
to deliver products and services more efficiently.
Customer satisfaction should always remain the number one benchmark as they move
forward towards attaining their goals. They employ and retain an unparalleled
workforce of highly motivated, energetic, well-trained and productive employees.
They offer an inspiring work environment, competitive salaries, excellent benefits and
caring leadership.
They try to achieve superior financial performance, to be considered a lending bank in

Pakistan by reputation and performance, and to be a good corporate citizen of the
communities they serve.
They promote strong and ethical business practices in the in the industry by focusing
more on effective collaboration with their stakeholders. Team members remain aware
of the organization’s commitment to them as well. They cultivate a sense of
ownership, amongst the employees, with the overall business plan and the direction in
which their organization is headed.
Their corporate strategy focuses on the striking the optimum balance in organizational
workflow and processes. The dynamic environment in which they operate impels
them to remain poised for the unexpected as competitive pressures mount.
73
Consequently business process reengineering and benchmarking remain notable

guidelines for strategy development. This requires flexibility in operations, as well as
management thinking. Also quality control in all facets of operations remains an area
of focus. Information technology remains an indispensable tool to empower more
effective decision making and stream line workflow.
Basically its mission is to maintain a strong grip in market for professional banking,
customer service and profit performance. And for their challenging trek towards
realization of their goals, Service Quality and Innovation will be their preferred tools.
Its core objective is to offer both traditional and innovative products, and to deliver
unparalleled personalized service to their customers. Its primary focus is on taking
service excellence to new heights.
At the end of this report there are some recommendations, it is hoped that the
successful implementation of these guidelines will be of mutual benefit to
organization.
RECOMMENDATIONS:
BAL is an international banking organization that has its operations spread all over the
globe. All the practices and procedures implemented in the bank have been adopted
after careful thought by very experienced financial experts from around the world.
Considering this, it might sound somewhat strange to give in suggestions to BAL
regarding its business, especially when the recommendations come from student level.
It should, however be noted that the exhortations that follow are not about the
technical aspects of BAL operations, but are merely about some of the routines
observed daily that, if improved, could enhance the work efficiency at the Islamabad
branch.
74
WORKSHOPS
The bank should examine the possibility of designing a structured series of workshops
offered at regular intervals that lead to a certificate or diploma. To date,
workshops offered at the conference have been dependent upon conference
proposals from the membership; the bank should work to reevaluate the
system. The bank should strongly consider taking a more active role in
workshop development and consider the survey respondents' comments and
suggestions. The bank should examine the possibility of offering workshops
in alternate locations and co-sponsoring workshops with other organizations.
SCHOLARSHIP PROGRAM
The scholarship program has strong support for employees who want further studies
to become a qualified and professional employee.
INDIVIDUAL CAREER COUNSELING

Individual career counseling should be provided to each employee. It is recommended
that bank must develop an individual development plan for each employee and
should receive reports periodically during the year. A written summary report
should be receive from the employee that will help the bank to circulate that
summary to other employees that will extend the value of training without
additional cost. So it is a posttest in the form of summary report and it is
necessary that the bank must take a posttest of employees.
NO DISCRIMINATION
There should be no discrimination between the contractual and the permanent
employees for training and promotion purposes. Even discrimination should not take
place in anywhere. So training not only given to the front-end employees but also to
backend employees so that at the time of job rotation they are equally compatible.
75
INNOVATIVE PRODUCTS
The products are mostly copied of other products. It should try to introduce innovative
products that give more profits to them because customers are more attract towards
these products.
PROPER EMPHASIS ON HUMAN RESOURCES POLICIES

Trained staff is the most valuable asset in an organization particularly in the services
sector. Improper human resource policy can lead to deficiency of this valuable asset
resulting in high staff turnover causing financial and other loses. De-motivated staff is
the most dangerous threat to a service oriented organization like bank .BAL should try
to restore the confidence of its staff in management by altering its human resources
policy in such a way that employee motivation is achieved.
INFORMATION TECHNOLOGY
Although BANK ALFALAH is giving enormous emphasis on information technology
yet there is a lot of potential for further developments in this sector. In this century
those people will be won by those who are well prepared for it in terms of
advancement in the information technology and computerization of their operations.
The development of effective computerized and technically advanced information
system will ensure BAL’s success.
INCENTIVES
Motivated employees are the biggest assets of an organization. The incentive policies
can greatly alter the motivational level of employees within an organization. BAL by
effective utilization of motivational techniques and restructuring of its employee
award policy can increase productivity considerably.
76
PROPER MARKETING
Marketing is the key factors, which plays an important role in achieving its goals
efficiently and effectively. Bank should emphasis on the marketing policies and it
hires a specialized market force at all levels. It should provide higher commission to
them so that they attracted towards them.
PROPER COMMUNICATION
There should be a proper communication between the boss and employee and even
between employee and customer. Bank should adopt such a culture in which
employees don’t hesitate to interact with each other. If this style of communication is
adopted then there is no communication gap between the employees and they achieve
their goals easily.
The above suggestions have been formulated after careful observation of the processes
and conditions prevailing in BAL. If they are implemented, the bank will surely
benefit from them, both in terms of efficiency as well as output.
77
BRANCH SUGGESTIONS
• For promotion of employees on the basis of professional justice.
• Political influences on the banking operations should be eliminated
• Bank should increase the number of branches in the country
• There should be a proper training system for internees.
• Establish effective relationship between top-level management and executives.
• HRD of BAL should be improved.
• Recruitment system should be improved by decreasing personal biases.
• HRD should introduce new ways to gain employee commitment.
78
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Report on BANK ALFALAH LIMITED

Incharge Internship Program

Internship, a practical training, is an integral part of MBE study. For

internship I was sent to Bank Al-Falah Limited, Circular Road Branch,

Bahawalpur. It is a six weeks training period in which I tried my best to get

This report is prepared in simple and understandable format so that ordinary

person can also take benefit from this report.

MBE (After Noon)

(In-charge Internship). I am very thankful to the staff members of BAL ST

branch for their cooperation & kindness.

They provide me a lot of information & knowledge of foreign exchange with in

I have gain practical knowledge of banking functions & their processes

about banking from senior & experienced employers of BAL during my

MBE ( After Noon)

To my parents & teachers, I cannot forget their

cooperation and sacrifices.

HISTORY OF BANKING IN PAKISTAN:--

At The Time of Independence:-

Some Important Facts:-

STATE BANK OF PAKISTAN:-

HISTORY OF BANK ALFALAH Ltd:

Bank Al-Falah Limited (BAL) was

H.E Sheikh Hamdan Bin Mubarak Al Nahayan (Chair Man)

 DEPARTMENTS AT BANK ALFALAH LIMITED,

MAJOR FUNCTIONAL AREAS WHERE

 Operations Department (front office)

Phases In Personal Account Opening

o CURRENT ACCOUNT: The depositors can withdraw the money deposited

o SAVING ACCOUNTS: Saving account is generally popular with middle

o ROYAL PROFIT ACCONUT: In this account customer deposit and

ii) Father name

As per existing procedure, an introduction is obtained from a customer of the

Further steps to be taken and additional inquires are to be made as

i. Introduction preferably be obtained in person to establish the authenticity

of introduce otherwise, between introducer and new customer.

returned after authentication/ certificate photocopy. However, extensive use of

NIC be applied wherever it is applicable.

be checked, wherever possible.

iv. Name, address, signature and other particulars mentioned in Account

v. Current account is opened on proper introduction preferably by the

Current account holder.

whose credentials are absolutely clean.

Phases in Business Account

• Custody of cheque books

Custody of cheque books:-

i) Stock of cheque books must be kept in joint custody of Manager /

Accountant or Second Officer.

iii) Cheque book for New Accounts

REQUIREMENTS OF OPENING AN ACCOUNT

ACCOUNTS MINIMUM AMOUNT

receives Cheques from NIFT.

2. Cheques are sent separately to the concerned dept.

instrument with a memorandum stating the reason for return.

3. A copy of the memo is retained as record.

Cheques into the system.

5. Accounts are adjusted accordingly.

This register reflects particulars such as:

delivered back to the original source.

written at the back of the cheque and pay in slips.

remittance is made. The one who receives the payment.

PAYMENT ORDER: It is use within the city.

i) Purchaser: Is a person, firm, company or local authority