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Introduction to Banking
History of bank is as old as human society. Forever since man came to realize the
importance of money as medium of exchange, the necessity of a controlling or regulating
agency or institution was naturally felt.

The work ‗BANK‘ is derived from the word „BANCUS‟ or „BANQUE‟ which means a
bench. Other authorities hold the opinion the work ‗BANK‘ is derived from the German
word ‗BACK‘ which means ‗joint stock fund‘. Later on, when the Germans occupied
major part of Italy, the work „BACK‟ was Italianized into „BANK‟

What is Bank:-
There are many definitions of the word "bank" even the standard encyclopedia and law
books find it difficult to state exactly what a bank is.
There have been many attempts by different writers to explain the exact significance of
the term ―bank‖. Here some of the definitions are quoted as follows.

According to Negotiable Instruments Act (1881) defines:-


“Bank is an institution transecting the business of accepting, for the purpose of lending or
investment, of deposits of money from the public repayable on demand or otherwise, and withdraw
able by cheques, draft order or otherwise and includes any post office saving bank”.

According to Banking Companies Ordinance 1962 defines:-


“Banking means the accepting for the purpose of lending or investing of deposits of money from
the public repayable in demand or otherwise and withdrawble by cheques, draft order or
otherwise.”

According to Kent:-
“An organization whose principle operations are concerned with the accumulation of the
temporarily idle money of the general public for the purpose of advancing to others for
expenditures.”

According to Dr. Harts


“A banker is one who in the ordinary course of his business, receives money which he repays by
honouring cheques of persons from whom or on whose account he received it.”

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So the comprehensive definition of bank is:


A bank is a financial institution, which deals with money and credit. It accepts deposits from
individuals, firm and companies at a lower rate of interest and gives at a higher rate of interest
those who need them. The difference between the terms at which it borrows and those at which it
lends from the source of it profit. A bank, thus, is a profit earning institution.

Commercial Banking in Pakistan


Evolution of Banking in Pakistan:-
The Indian society was quite familiar with the banking, right for the beginning. There is
also sufficient evidence to show that during 5th century people were accustomed to use
honds as a credit investment. Loans were given to the people against personal and other
securities such as ornaments, goods and other immovable properties.

Commercial Banking in Pakistan:-


First Phase (1947-1974)
Establishment of Commercial Banking System:-
At the Time of Independence, Commercial facilities were provided
well. There were 487 scheduled banks. A new country without
resources it was very difficult for the Pakistan to run its own banking
system. Therefore according to Indian Independence Act in 1947, an
expert committee was appointed to study the issue .The Reserve
Bank of India should continue to function in Pakistan until 30th
September1948.

In March1947, there were 487 offices of banks situated in the area which now comprises
Pakistan, but soon after Independence many banks closed their branches and offices. On
June 30, 1948 there were only 195 bank branches left in Pakistan. This situation posed a
great threat to the economic position of Pakistan.

There were 19 non-Indian foreign banks in Pakistan at the time of independence with
the status of small branch network, whose policies and operations were controlled by
their head offices abroad. These banks were solely engaged in export of crops from
Pakistan. There were only two banks in Pakistan at the time of partition i.e. Habib bank,
which had transferred its head office from Bombay to Karachi after the announcement of
the partition and Australasia bank which have been working in Pakistani territories
prior to June 1947.The Govt of Pakistan tried hard to eliminate the banking crises.

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The Indian Govt withheld Pakistan's share of 750 million in cash balances held by her
at the time of independence. The forgoing developments clearly brought home the
urgency of assuming the control and currency in Pakistan and brought to the force the
need to setup a central banking institution to take the place of reserve bank of India.
Therefore it was agreed between the Govt of India and Pakistan to authority of Pakistan
from 30th September 1947 to 30th June 1948.

In order to make necessary arrangements of the establishment of the central bank of


Pakistan a committee was appointed to recommend the necessary steps.
Consequently the Governor General of Pakistan and father of the nation
Quaid-e-Azam Muhammad Ali Jinnah inaugurated the State bank of
Pakistan of 1st July 1948.After the SBP order was promulgated on 12th
May 1948.

When it assumed full control of banking and currency in


Pakistan the first important task before the SBP was to issue of
currency notes and withdrawal of reserve bank of India which
had been in circulation in Pakistan so far. New bank notes and
coins were issued in 1948

Second Phase (1974-79)


Meaning of Nationalization:-
Nationalization means the transfer of any property or institution from private to state
ownership. It refers to the process whereby through legal and legislative approach, the
private institutions are taken up state or government .The government then manages and
control such institutions and they are run in the best interest of nation.

Nationalization of Banks:-
The banking reforms turned out to be a transitional and temporary step and hardly after
18 months, the government nationalized the banking system. Thus through the
nationalization bank act 1974, SBP and all commercial banks incorporated in Pakistan
and carrying on business in or outside the country were brought under the government
ownership with effect from January 1974.Thie ownership and management of all
Pakistan banks stood transferred and rested in the federal government .The shareholders
were provided compensation in the form of federal government bonds redeemable at par
any time with in a period of fifteen years. The amount of compensation was equal to the
break up value of the shares in case of commercial banks. For the SBP shares the amount
of compensation was estimated on the basis of average of the clearing quotations during
the 6 working days preceding nationalization.

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The chairman/ director and chief executive of various banks were removed from their
offices other than those appointed by the federal government and the state bank. The
central board of banks, managing committees and similar other bodies were dissolved. A
Pakistani banking counsel was established for nationalized commercial banks to co-
ordinate their activities. As a result of merger of banks the following 5 major banking
companies were formed:
 National bank of Pakistan
 Habib bank limited
 United bank limited
 Muslim commercial bank limited
 Allied bank of Pakistan
The effects of Nationalization of the banking system were favourable to overall banking
industry because number of branches increased from 3397 on 31st December 1973 to 7306
by December 1982 and these numbered 8130 by 30th June 1998. Bank deposits also
increased from Rs. 19025 billion in 1973 to Rs. 117.05 billion in 1932, and these were
1000.72 in June 1998.
Foreign branches increased from 15 in 1973 to 95 in 1982 and by June 1998, these were
81

Third Phase (1979-91)


Introduction of Islamic Banking
In 1977 the Bhutto government was toppled. The martial law
government planned to reform the banking sector in a novel way.
The overall policy was to Islamize the economy and the banking
system, being based on interest was an important target of the new
policy. The most preferred form of Islamic bank financing profit and
loss sharing would receive banks to receive deposit without
guaranteeing and return.

The Islamic bank has to acquire a high degree of confidence of the


saver to make him deposit his money with them. Not even the return of the principal
amount if guaranteed. The Islamic bank cannot finance the project of an investor merely
on the furnishing of collateral. The bank will have to be a partner in the project. This will
require to careful security of the project and the assessment of risk involved because
profit are the functions of the amount of risk on the project. Honesty and trust from both
sides of the market are more important to the system of Islamic banking.

In 1985, commercial banks transformed their nomenclature stating all Rupee saving
accounts as interest-free, but the procedures adopted by the commercial banks were
declared unislamic by the Federal Shariat court. In 1997, Al-Meezan Investment Bank is
established with a mandate to pursue Islamic Banking, In January 2002, the State Bank of

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Pakistan granted Meezan Bank the nation's first full-fledged commercial banking license
dedicated to Islamic Banking. On 30 June 2007, 5 Islamic banks were operating in
Pakistan.

Fourth Phase (1991-2007)


Privatization and deregulation:-
The government headed by Prime Minister Nawaz Sharif was not fully satisfied with
the performance of nationalization. The areas, which were severely criticized, were the
falling standard of banking services .There were complaints about the services as delay in
home remittances, dispatch of cheques, drafts, inefficient counter services, overstaffing,
bad debts etc were on the increase. The government decided to privatize the banks. A
Privatization Commission was set up on 22 January 1991. The Commission transferred
four banks namely MCB, ABL, UBL and HBL by 2004.On 30 June 2007, 26 private Banks
were operating in Pakistan. On 13 August 2005, for the first time in the history of
Pakistan, currency note in the denomination of Rs.20 and on 27 May 2006 currency note
of Rs.5000 were issued. State bank of Pakistan has issued new currency notes in the
denomination of Rs.10 on 27 May 2006, Rs.100 & Rs 500 on 11 Nov 2006 and Rs.1000 on
26 Feb 2007 and currency paper is based on 100% cotton paper.

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Background of Bank Alfalah Ltd


Bank Alfalah Limited:-
Bank Alfalah has gone through different phases over the years. Its name and been
changed in the following sequence.
 Bank of Credit and Commerce and International (BCCI)—1972
 Habib Credit and Exchange Bank—1992
 Bank Alfalah—1997

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, Karachi, Lahore and Rawalpindi. The Lahore branch was opened on 15th
December 1978. This branch was opened at that time when some other international
banks like Citi Bank, Bank of America, and American Express etc. were already working.
But within a few years this branch crossed mostly all the other banks in case of deposits,
advances, imports and exports dealings, guarantees, traveler‘s cheque sales etc. In 1991,
the BCCI was banned, when it 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.

In July 1991, the branches of BCCI in Pakistan at that time were taken over by The
Ministry of Finance and SBP. All three branches were given under Habib Bank Limited
after valuation of its assets for 15 million dollars, which were named as Habib Credit and
Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited for
around about 10 months from 14 March 1992 to 31st October 1992.

Following the privatization in 1997, Habib credit and Exchange Bank


assumed the new identity of Bank Alfalah 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
5 overseas branches, 1offshore banking unit, 166 conventional banking branches, 23
Islamic banking branches in 74 cities, with the registered office at B.A.Building,
I.I.Chundrigar, Karachi. The bank is listed on the Karachi and Lahore Stock Exchange.

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Credit Rating of Bank Alfalah Ltd:-


PACRA, a premier rating agency of the country, has rated the bank
For long term „AA‟ (double A)
For short term A1+ (A one plus)
These ratings denote a very low expectation of credit risk, strong capacity for timely
payment of financial commitments in the long term and by highest capacity for timely
repayment in the short term, respectively. The ratings of first and second and third
unsecured listed and subordinated TFC issues of PKR 650 million, PKR 1,250 million
and Rs.1, 325 million have been maintained at AA- (Double A minus).

The Abu Dhabi Group, comprising prominent members of the ruling family and
leading businessmen of UAE, own the majority shareholding in BAL since its
privatisation in 1997. The chairman of the board, H.E. Sheikh Hamdan Bin Mubarak Al
Nahayan (holding 10.03% shares of BAL), is Federal Minister of Public Works, United
Arab Emirates. The chief executive of the bank is a career banker with over 43 years
experience both within Pakistan and abroad, and has been with the bank since its
incorporation. A team of experienced professionals assists him. BAL, operating the sixth
largest network of 195 branches in Pakistan has branches in Bangladesh and Afghanistan,
and is on the lookout for further regional expansion.

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 its
commitment to culture of innovation and seeks out synergies with clients and service
providers to ensure uninterrupted services to its customers. It perceives the requirements
of its customers and matches them with quality products and service solutions. During
the past ten years, it has emerged as one of the foremost financial institution in the region
endeavoring to meet the needs of tomorrow today.

The bank also entered into other dimensions of financial services – brokerage, asset
management, and insurance – through its subsidiaries, which are in their development
phase and would require sometime before emerging as material contributors to BAL‘s
revenue stream.

Subsidiary Companies of Bank Alfalah Limited:-

BAL has an effective shareholding in the following two entities


Alfalah securities (Private) Limited 76%
Alfalah GHP Investment Management Limited 56%

Bank Alfalah Limited has the following associates

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Warid Telecom (Private) Limited 16.38%


Alfalah GHP Value Fund 25.00%
Wateen Telecom (Private) Limited 20.00%
Alfalah Insurance Limited 30.00%

Bank Alfalah Ltd. is committed to the projection of Pakistan's rich cultural heritage. It
strongly believes that the all must fulfil its social responsibilities in addition to
achievement of the commercial objectives. A few examples set by Bank Alfalah are
Alfalah Square, Alfalah Mini Golf and the resurrection of Shahdin Manzil on the main
Mall road (Shahrah-e-Quaid-e-Azam), Lahore.

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Vision
“To be a Leading Financial Institution…..”

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.‖

Mission
“To maintain a competitive edge …..”

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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Corporate Philosophy

Bank Alfalah‘s core philosophy of honesty,


transparency of the customer dealing,
product innovation,
excellence in customer service,
and commitment of being a reasonable
corporate citizen pervades its business"

Bank Alfalah Believes:

 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

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BAL Culture:-
The culture at Bank Alfalah is diversity based. People come from various regions, they
don‘t directly come to Bank Alfalah as their first job, so they come from various other
organizations, so there is a pool of culture there. But after joining bank Alfalah they do
not find any difficulty in exercising their skills and practices and there is no obligation to
adopt and particular culture

They plan their work very properly as the top management direct their
employees in this case there is no biased planning for one group of people
and unbiased for others. All are equally treated. Praising element is found in
frequent and due to this the communication level also enhanced. Employees
can easily communicate with their managers without any fear.

Members having strong track record of honesty are held in high esteem, they are
honoured in every place. However, maintain controls and if the trust is breached,
withdraw it, and let the employee know. Friendliness is also a plus point in their culture.
As the supervisor shows fairness when dealing with its teams, and respects and adheres
to rule. Friendliness and trust should not be balanced so that there are not mistaken for a
sign of weak management. BAL develops employees by assigning them additional
responsibility where possible.

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Corporate Information of Bank Alfalah Limited (As at


February 28, 2007)

Board of Directors:-
H.E Sheikh Hamdan Bin Mubarak Al Nahayan Chairman
Abdullah Khalil Al Mutawa Director
Abdullah Naseer Hawaileel Al-Mansoori Director
Khalid Mana Saeed Al Otaiba Director
Ikram Ul-Majeed Sehgal Director
Nadeem Iqbal Sheikh Director
Mohammad Saleem Akhtar Chief Executive Officer

Board Advisory Committee:-


Khalid Mana Saeed Al Otaiba Director
Abdullah Khalil Al Mutawa Director
Bashir A. Tahir Member
Ganpat Singhvi Member
M. Iftikhar Shabbir Secretary

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Board Audit Committee:-


Abdullah Khalil Al Mutawa Director
Khalid Mana Saeed Al Otaiba Director
Bashir A. Tahir Member
Ganpat Singhvi Member
M. Iqbal Saifi Secretary

Board Credit and Finance Committee:-


Khalid Mana Saeed Al Otaiba Director
Abdullah Khalil Al Mutawa Director
Ganpat Singhvi Member
Bashir A. Tahir Member
M. Iftikhar Shabbir Secretary

Board Risk Management Committee:-


Khalid Mana Saeed Al Otaiba Director
Abdullah Khalil Al Mutawa Director
Ganpat Singhvi Member
Bashir A. Tahir Member
Shad Qureshi Secretary

Central Management Committee:-


Mohammad Saleem Akhtar Chairman
Parvez A.Shahid Deputy Chairman
Sirrajuddin Aziz Member
Mohammad Yousaf Member
Shakil Sadiq Member
Shahid M. Murtaza Member
Nadeemul Haq Member
Bakhtiar Khawaja Member
Adil Rashid Member
Ijaz Farooq Member
Arfa Waheed Malik Member
Adnan Anwar Khan Member

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Chief operating Officer:-


Sirrajuddin Aziz

Company Secretary:-
Hamid Ashraf

Chief Financial Officer:-


Zahid Ali H.Jmall

Auditors:-
KPMG Taseer Hadi& Co

Registered / Head Office:-


B.A. Building
I.I. Chundrigar Road, Lahore.

Website
www.bankalfalah.com

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Branch Network
Conventional Banking Branches

 Karachi  Sukkur
 Hyderabad  Nawabshah
 Quetta  Chaman
 Gawadar  Mirpurkhas
 Larkana  Lahore
 Islamabad  Rawalpindi
 WahCantt  Faisalabad
 Peshawar  Attock
 Hungu  Multan
 Sailkot  Rahin Yar Khan
 Gujranwala  Sahiwal
 Sargodha  Gujrat
 Mardan  Bahawalpur
 Chiniot  Daska
 Hafizabad  Chichawatni
 Arifwala  Pakpattan
 Dera Ghazi Khan  Mingora,Sawat
 Jhelum  Mian Channu
 Sheikhupura  Dera Ismail Khan
 Okara  Abbotabad
 Jhang  Toba Tek Singh
 Burewala  Kohat
 Sadiqabad  Mandi Bahauddin
 Lala Musa  Ahmedpur
 Daharki  Ghotki
 Haroonabad  Hasilpur
 Kharian  Gilgit
 Chakwal  Bhalwal
 Kasur  Mansehra
 Bannu  Chitral
 Hazro  Kotla
 Mirpur  Kallar Syedan
 Gujar Khan  Gojra
 Muridke  Jaranwala
 Bahawalnagar  Muzaffaegarh
 Khanpur  Haripur

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 Dinga  Wazirabad

Islamic Banking Branches

 Karachi  Lahore
 Islamabad  Rawalpindi
 Peshawar  Gujranwala
 Faisalabad  Multan
 Sialkot  Rahin Yar Khan

Overseas Branches

Afghanistan Bangladesh Kingdom of Bahrain


 Kabul  Dhaka  Manama
 Heart  Chittagong

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Oraganizational Structure: - (13, Bank square Central Commercial Market,


Model Town, Lahore)

Branch Manager

Manager Operations Manager Credits Car Financing


Department

Customer Service Accounts Dept. Account


Dept. Opening Dept.

Cash Dept. Clearing Dept.

Remittance Dept..

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Products & Services offered by Bank Alfalah Limited


1. General Banking
 Current Account
 PLS saving Account
 Royal Profit
 Basic Banking Account
 Alfalah kifayat
 Alfalah Mahana Amdan
 Lockers
 Remittance
 Hilal/Debit Card
 Alfalah Education

Current Account:-
Current account is usually opened by the businessmen, contractors and other concerns
who use their cash in daily operations.

Features of Current Account:-


 Minimum account opening requirement of Rs 10,000/=
only
 No zakat deduction
 No restriction on no. of deposits and with drawl
 Free debit/hilal card facility
 Non interest bearing account
 Service charges of Rs.100 if not maintaining average monthly balance
 24 hour ATM
 This account can be opened in other currencies also i.e. in Pound Sterling,
U.S.Dollar and Euro

If an accountholder of current accounts maintains an average monthly balance of


US$15,000 or eqv then following free services are provided by the Bank
 Online cash/cheque transaction
 Cheque return charges (inward/outward)
 Issuance of PO/DD (drawn on any Bank Alfalah‘s branch)
 Cancellation of PO/DD
 Hold mail arrangements
 Cheque book charges

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 Mailing of cheque book


 Duplicate statement of current account
 Free locker facility
 Stop payment instruction
 Balance confirmation certificate

PLS Saving Account:-


PLS saving account is designed to encourage the saving habit of the customer and lead
to a long-term banking or investment relationship. The profit on saving accounts is paid
on the basis of profit and loss. In case of PLS Term deposit the person can take 70% of
TDR as loan.

Features of PLS Saving Account:-


 Minimum account opening requirement of Rs 5,000/= only
 Saving account can be opened in other currencies also i.e. in Pound Sterling,U.S
.Dollar and Euro
 Zakat deduction is 2.5%
 Profit will be credited after every six months
 Service charges of Rs.50 if not maintaining average monthly balance
 Free debit/hilal card facility
 24 hour ATM
 No restriction on no. of deposits and withdrawl
 Overdraft facilities are not provided on saving account

If an accountholder of current accounts maintains an average monthly balance of


US$25,000 or eqv then free services are provided by the Bank are same as provided to the
current account holder mentioned above.

Profit rates for PLS Saving Deposit:- (from July0 7-Dec07)


Rates (P.A)%
Deposits Individual/corporate Financial
Institutions/NBFIs/DFI
On Balance upto 2.00% 1.00%
Rs 24,999
Rs 25,000 and above 5.00% 1.00%

PLS Term Deposit


1 Month 4.50%
3Months 5.00%
6 Months 5.25%
1year 5.50%

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2year 6.00%
3year 6.50%
4year 7.00%
5year 7.50%
*Term deposit shall be eligible for profit on the condition that it will not be withdrawn
before maturity date.

Royal Profit:-
Features of Royal Profit:-
 Minimum deposit requirement of Rs.50, 000/-
only
 High profit on high balances
 Profit will be credited on monthly basis
 No restriction on no of deposits and withdrawl
 Service charges of Rs50 in case of balance less than Rs.5000/=
 Zakat deduction at 2.5%

Profit rates for Royal Profit:-


Amount Proposed Rate(%)
From 50,000 to999,999 2.50%
From 1,000,000 to 4,999,999 3.50%
From 5,000,000 & above Contact BM

Basic Banking Account:-


Features of BBA:-
 Initial deposit for opening an account is Rs 1,000/= only
 No minimum balance requirement.
 Non interest bearing account
 No restriction on ATM withdrawl
 Maximum two deposits and two withdrawls are allowed through cheques
 Free debit/hilal card
 Service charges of Rs.50 per withdrawal in case of above two withdrawl per
month by cheque

Alfalah Kifayat Account:


Alfalah Kifayat account is on profit and loss sharing basis. Any
Pakistani resident over the age of 18 can open this account. This
account is for individual/joint customers only. Other customers

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like companies, corporate etc are not eligible for opening of this account. The rate given
on these kinds of deposits are more than given on other PLS accounts.

Features of AFA:-
 Only one account per customer will be allowed across all branchs of BAL
 Minimum balance requirement for opening this account is Rs. 10,000/- with a
maximum of Rs.1, 000,000/-
 Three debit transactions are allowed in a month either through cheques or Debit
Card.
 No restriction on deposit transactions.
 Free first cheque book of 25 leaves
 Debit card free of cost.
 Profit will be calculated on monthly minimum balance basis and will be credited
in the account on quarterly basis.
 No profit shall be payable for a particular month, if the minimum balance for any
particular day of said month falls below the amount of Rs. 10,000/-.
 Online facility
 Facility of personalized banking on Alfalah‘s sales and service centres
 Complementary Warid mobile connection
 Service charges of Rs.50 if not maintaining balance of Rs10,000/-
 Account statement will be generated on half yearly basis.

Profit rate for AFA:-


7.00%

Alfalah Mahana Amdan:-


Alfalah Mahana Amdan is a 3 year TDR .This term deposit will provide an
opportunity to individual/joint customers to enjoy higher returns that will
automatically be credited to his/her current/PLS/RP/BBA account on 1st
working day of each month. This facility is not available for business and
corporate customers.

Features of AMA:-
 Minimum placement limit is Rs. 100,000/- and maximum placement limit is
Rs.15,000,000/-
 Expected Rate of profit is 10% Per annum (as per PLS governing rules)
 Profit will be automatically credited on the 1st working day of each month into
customers Current/PLS/RP/BBA account
 Free Personal Accident Insurance coverage up to the deposit amount or Rs.
1,500,000/- whichever is lower.

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 No medical examination/health declaration required.


 In case of joint account holder the amount of joint insurance cover will be
proportionally divided among account holders.
 Customer can avail financing facility up to 90% of the deposit (as per banks
policy)
 Any Pakistani resident over the age of 18 can open this account.
 Alfalah Mahana Amdan term deposit can be maintained only at any one BAL
branch with a maximum cap of Rs. 15 Million. An undertaking shall be obtained
from the customer certifying that he/she is not availing Alfalah Mahana Amdan
Term Deposit Receipt facility from any other BAL branch.
 Alfalah Mahana Amdan TDR will be issued for three years tenure with auto
renewal facility of principal amount i.e. the facility will be renewed automatically
on maturity (i.e. 3 years)
 Alfalah Mahana Amdan TDR will be subject to Zakat, Withholding Tax as well as
any other applicable taxes.

Lockers:-
Bank Alfalah LTD provides lockers facility to its customers. The lockers are
issued only to the depositors. No lockers are issued to any unknown person or
non account holder. Bank provides safe deposit locker facility to its customers
for safe keeping of their valuables like documents, securities and jewellery etc.

Features of Lockers:-
 Various sizes to choose from small, medium & large.
 Annual locker rent ranges from Rs.1, 000/- to Rs.3, 500/-.
 Locker rent is waived for customers maintaining a minimum deposit of Rs.2
million in current account or above US $25,000/- in a current account or US
$50,000/- in a savings account.
 Key Deposit: Rs.1000/- (Refundable)
 The license fees lockers will be payable in advance every year and no part of the
same shall be refundable in any circumstances.
 All expenses incurred to open a locker resulting from customer negligence will be
bear by customer.
 Charges of lockers are same for the staff of bank.

Rate for Lockers:-


Lockers size Charges
small Rs 1000/-
Medium Rs 1500/-
Large Rs 3000/-

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Special Rs 3500/-

Remittance:-
Bank Alfalah provides direct and indirect foreign currency remittance facility around
the world through money gram and international correspondent banking relationships.

Money Gram:-
Bank Alfalah limited, in collaboration with MoneyGram, offers
remittance service to Pakistan. MoneyGram is person to person money
transfer service that allows consumers to receive money in just a few
minutes.

Features of Money Gram:-


 An extensive network of quality agents, linked by computer, will transfer money
safely and ensure that it is handled with care and without delay
 MoneyGram is available in over 154 countries and in more than 40,000 locations
worldwide.
 With MoneyGram ,money is transferred immediately and usually arrives at the
receiving end within 10 minutes.
 No need of bank account or a credit card
 Free message service

Hilal/Debit Card:-
Alfalah HilalCard is a debit card that gives an access to bank
account. Alfalah HilalCard allows customer to purchase goods
at merchant establishments across Pakistan and abroad and also
gives freedom to withdraw cash from any VISA/
Electron/PLUS ATMs in Pakistan and abroad, and all local
1-Link and MNET ATMs. It can also be used for the payments of utility bills and Alfalah
credit card bills.

Features of Hilal/Debit Card:-


 Comes with all current and saving accounts except non-resident account.
 The Alfalah HilalCard can be used electronically at any retail outlet or ATM that
accepts VISA cards
 Card is accepted at nearly 13 million physical locations in
more than 130 countries round the globe with above 14,000
major establishments in Pakistan.
 24 hours customer service
 No minimum Income requirement
 Zero loss liability

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 ATM facility
 Immediate payment from bank account
 In case of Classic HilalCard daily transaction limit is up to Rs. 50,000/- on cash
and Rs. 50,000/- on retail transactions
 In case of Gold HilalCard, daily transaction limit is up to Rs. 1,00,000/- on cash
and Rs. 1,00,000/- on retail transaction
 In case of card stolen, a new card will be issued within 1 week of reporting the
loss with replacement charges of Rs.200
 Alfalah HilalCard is valid for 3 years from the date of issue

Alfalah Education:-
Alfalah Education is the unique Term Deposit that not only
provides competitive profit on deposit but in case of the death
of depositor, ensures monthly tuition fee payment of children,
for upto 15 years of schooling fee absolutely free. Alfalah
Education term deposit is issued as a one year TDR, renewable
at maturity, make available to individuals/joint accounts only.

Features of Alfalah Education:-


 Deposits can be placed in multiple of 100,000 units with maximum 3 units allowed
per depositor, i.e. a maximum deposit per customer of Rs. 300,000 across all BAL
branches.
 All 3 units can be purchased for 1 child or each for up to 3 children.
 No medical examination/health declaration is required.
 Premium cost for each deposit unit of Rs. 100,000 would be Rs. 85 per month and
borne by the bank.
 Premature encashment is allowed at any time upon the request of the customer In
case of any premature encashment upon customer request, prevailing premium
rate (i.e. Rs. 85/- per deposit of Rs. 100,000/-) shall be recovered from the
customer for the remaining months will be deducted from the principal amount.
 Benefit payment increases with age/class of the child.
 The product will be offered as a 1 year term deposit at upto 7 % profit, Zakat and
WHT would apply on the deposit.
 Profit will be credited semi-annually
 Monthly payments set forth will be paid directly to the mother/guardian,
regardless of the actual school fee.
 Premium will be paid to ALICO (Alfalah Insurance Company) by BAL on
monthly basis.

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2. Consumer Banking:-
As financial institutions offer diversified and attractive products and service packages
for the consumers, consumer Banking in Pakistan is becoming a challenging industry.
However because of the prudent financial policies and clear understanding of the market
scenario, Bank Alfalah has been able to maintain its position among the leaders in
consumer banking in Pakistan. BAL‘s responsive and alert teams, spread in branches all
over the country provide timely and accurate information to the consumers. This unique
personalized service has transformed the status of the Bank into the „Caring Bank‟.
Products offered by Bank Alfalah are,

 Credit cards
 Agriculture Finance
 Auto /Vehicle loans
 Home Loans

Credit Cards:-
Bank Alfalah Credit Card is globally accepted and welcomed at
locations displaying the VISA logo. It is accepted at nearly 30 million
locations in more than150 countries around the globe and over 22,000
Bank Alfalah‘s establishments in Pakistan. Alfalah VISA lets its
customers pay for shopping, travel, entertainment, meals and much
more. Card members are facilitated through a number of promotions from time to time.
In addition, there are a number of strategic business partnerships with leading local and
international brands for purchase of home appliances at exciting Step-BY-Step (SBS)
monthly installment plan with free home delivery at lowest interest rates.

Features of Alfalah Credit Cards:-


 No joining/annual/renewal fee
 Electricity, Sui Gas, PTCL and Warid bills payment through 24 hour
 SMS for card usage, mini statement, payment receipt confirmation, etc
 Cash withdrawal at all 1LINK ATMs
 Balance transfer facility (at 1.5% per month)
 Global acceptability
 Cash advance facility(up to 75% of credit limit)
 Option of paying only 5% of your outstanding balance by the payment due date
 Free supplementary card (up to 6)
 Card expiry period of 3 years
 Zero loss liability

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 Offers a comprehensive cover up to Rs. 3.5 Million on Alfalah VISA Gold Card in
case of an accident, while traveling on any common carrier
 Utility bills payment
 24 hours phone banking service
 In case of late payment, charges are Rs.600 or 10% of minimum amount whichever
is high
 Service charges of 3% per month on cash advance and retail transactions
 In case of card stolen or lost, replacement fee is Rs500

Types of Alfalah Credit Cards:-


 Platinum Card
 Gold & Silver
 Young Professionals
 Women Exclusive
 Student Card
 Supplementary Card
 Visa Mini
 Awami Card

Agriculture Finance:-
Bank Alfalah Limited acknowledging the vital
role of a agriculture in the economic
development of Pakistan has designed Rural
Finance Program named as "BANK ALFALAH
ZARIE SAHULAT‖, which offers finance
facilities covering entire spectrum of Farm and
Non-Farm activities both for production and development purpose. Alfalah ZARIE
SAHULAT is available for short, medium and longterms.

Features of Agriculture Finance:-


 Facilitate all categories of farms individuals / corporate entities engaged in Agri
production, processing, packing, transportation, marketing, storage and export of
Agri farm commodities as per list of eligible items prescribed by State Bank of
Pakistan
 There is no minimum land holding limit to apply for agricultural finance
 There is no fixed maximum limit for the credit facility

Eligibility Criteria:-
An eligibility criterion for various products of Bank Alfalah Zarie Sahulat is:

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 The applicant is an individual /entity engaged in Agri activities identified in the


foregoing paragraph
 The applicant is not a defaulter of the banking system
 The applicant must be able to produce proper securities pass book acceptable to
the Bank. The applicant (individual / entity) shall be Pakistani / registered in
Pakistan
 The minimum and maximum age shall be 18 years and 65 years respectively
(upper age limit relaxation considered on case to case basis)

Documentation:-
 Copy of CNIC
 Rural Finance Application form which is available at Bank Alfalah Branches /
Website
 Pass Book issued by Revenue Authority
 Copy of Khasra Gardawari (if applicable)
 Proof of leased in land (if any)

Alfalah Car Financing:-


BAL‘s car financing gives the customers a
chance to own an automobile of their own
choice with the lowest mark-up rate in the
market at conditions, which gives Alfalah
Car Financing number one positioning in the
industry.

Features of Alfalah Car Financing:-


 Quickest processing
 Easily affordable & flexible instalments
 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
 Tenure period ranging from 1 to 5 years
 Financing of all brand new locally assembled vehicles and used cars.
 Financing limit ranging between Rs. 200,000/- to Rs. 2000,000/- for brand new cars
 insurance premium in advance at the time of down payment
 Down payment is 10% of the value of car
 Documentation and processing charges including first year insurance premium is
Rs 4,000/- only
 The car will be hypothecated in favour of bank

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Home Loan:-
Bank Alfalah Limited (BAL) with the objective to touch
every aspect of their customer‘s life, and encouraged by
the successful launching of a number of consumer finance
proposition, which have been well received in the market,
has launched ―HOUSE FINANCE‖

Features of Home Finance:-


 A Term Loan facility repayable in monthly instalments and secured by equitable
or registered mortgage over real estate property.
 Facility is to finance purchase, construction, improvement, extension and
renovation of private residential or commercial real estate property.
 The finance shall be extended for all types of real estate properties, that is, houses,
apartments, bungalows, town houses, office premises etc.
 The target customers for Home Finance are salaried (including professional
contract employees)/self-employed individuals, businesspersons including
permanent staff of BAL
 In case of home buyer, home finance and home BTF -debt equity ratio=80:20
 In case of home construct where a customer already owns a plot, debt equity ratio
is 70:30 and if plot is finance by bank then debt equity ratio is 50:50processing fee
ranges from Rs5000 to Rs 15000/-
 No penalty on early settlement of loan with no time limit for early settlement

Types of Home Finance:-


 Alfalah Home Buyer
 Alfalah Home Construct
 Alfalah Home Improve
 Alfalah Home Start
 Alfalah Balance Transfer Facility

Tenor:-
Product Minimum Tenure Maximum Tenure
Alfalah Home Buyer 3 years 20 years
Alfalah Home Construct 3 years 20 years
Alfalah Home Improver 3 years 10 years
Alfalah Home Start 10 years 20 years
Alfalah Balance Transfer
3 years 20 years
Facility

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Limit of Financing:-
Minimum limit
Product Maximum limit (M)
(M)
Alfalah Home Buyer .5 20
Alfalah Home Construct .5 20
Alfalah Home Improver .1 3.5
Alfalah Home Start .5 20
Alfalah Balance Transfer
.5 20
Facility

Mark-up rates for home finance:-


For salaried person 11.50% p. a
For self employed professionals 13.50%p.a

Eligibility Criteria:-
 A Pakistani National.
 Age is between 23 and 60 years at the time of application. (Subject to maximum
age of 65 at the time of maturity).
 In continuous employment in a permanent position for the last 2 years or more.
OR
 Have existing 3 years (or more) of business or professional experience.
 Gross annual income is Rs: 240,000/-or more (Spouse‘s income up to 50% can also
be combined with him).
 Requires a financing requirement starting from at least Rs. 500,000/-
 Have been a Bank Alfalah‘s borrower for past one year with clean payment
record.

3. Financial Services:-
BAL provides following financial products:
 Structured Finance
 Foreign Trade & correspondent banking
 SME Financing
 Lease Finance

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Structured Finance:-
BAL‘s SFU‘s activities cover advisory assignments, such as
privatization, Mergers & Acquisitions (M&As), domestic

listings, IPOs and restructuring. Structured Finance


department of bank comprises a team of hand picked
professionals, dedicated to syndicated loans and structured
products. The team‘s expertise is well known in the
marketplace with its capability to assist public & private
sector entities, major financial institutions, multinational corporations, domestic &
international institutional investors in innovative financing including underwriting &
private placements. During the past few years, SFU has been successful in sourcing and
participating in a number of prestigious transactions involving large amounts.

Services offered by SFU:-


Some of the value added services offered by SFU include the following :
 Loan syndication
 Public floatation of Term Finance Certificates (TFCs) and equity
 Private placement of Term Finance Certificates (TFCs) and equity
underwriting
 Guarantee syndications
 Financial restructuring
 Mergers & Acquisitions (M&As)
 Fostering joint ventures
 Privatization – Sale side and buyers side advisory
 Structuring new financial instruments

Foreign Trade & Correspondent Banking:-


BAL‘s persistence during the past four years allowed bank to make significant inroads
into the arena of correspondent banking. Large international banks,
after critically evaluating the performance of the bank agreed to enter
into relationship. During 2002, 81 banks to our network of
correspondents, bringing the total number over 170. Of these
relationships, there are now several banks that rank amongst the top
financial institutions in the world. BAL‘s geographical coverage now
extends to over 100 countries, which is adequately compatible with bank‘s trade flows.
BAL‘s correspondents, during the year extended bank an unqualified support, which
enabled it to undertake a healthy quantum of foreign trade business. There are many
challenges ahead for the bank, in the coming year, bank will not only continue to review
its efforts on existing correspondents to make the relationship more beneficial, but will

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also add more correspondents to establish a comprehensive international networking to


facilitate its customer‘s transaction as well as the Bank‘s proprietary needs.

SME:-
Realizing its corporate social responsibility and carrying forward the
image of "The Caring Bank", Bank Alfalah started a separate department at
the Head Office level in early 2004. The SME Department was established
with a mandate to foster SME finance at BAL, explore opportunities for
developing structured product programs for SMEs, introduce the concept of
Dedicated SME officers and finding market based solutions to fill the
financing gap to this important and under-served business segment.
Bank Alfalah believes in innovation, simplification of procedures, and
reduction in turnaround time and customer friendly service. To accomplish this resolve,
the SME Department is supported by 86 dedicated officers in 57 branches of the bank
who are nurturing valuable relationships in the SME sector.

Products of SME:-
 Alfalah Karobar Finance
 Alfalah Milkiat Finance

Alfalah Karobar Finance:-


Bank Alfalah‘s first SME product Alfalah Karobar Finance is a running
finance facility based on projected cash flows. Under AKF, bank offers
working capital finance (Rs.0.5 million to Rs. 10 million) to SME‘s at highly
competitive rates. BAL has a team of professional credit officers who provide
expert financial advice along with customized packages to a diverse range of
business clientele. The product is available to SMEs through 86 branches in 38
cities.

Alfalah Milkiat Finance:-


Bank Alfalah took another step towards addressing the needs of the industry by
introducing Alfalah Milkiat Finance. AMF is aimed at strengthening the Small and
Medium Enterprises viz a viz their business premises. Alfalah Milkiat Finance offers
comprehensive and flexible financing packages from Rs. 0.5M up to Rs. 20 million for
the purchase, renovation and expansion of business premises.

Lease Finance:-
In modern days leasing has now become an economic and financial reality of primary
importance. It is the originality of the leasing techniques and its economical advantages,

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which has enabled it to enter the world of industrial investment in Pakistan and on the
international scene.

Lease finance provides a significant source of funds for companies to


acquire or use assets. Leasing provides additional earning opportunities
to acquire assets and to get the inflows simultaneously out of the
operations of the same assets. The ownership of the asset is vested with
the Bank (lesser) and in return for rental payments , the client (lessee) has
full use of the asset. Being a medium to long term mode of financing, it
allows the lessee to use the funds for other profitable purposes which
otherwise would have been tied up in case of immediate payment for
purchase of the asset.

BAL works closely with its existing and prospective business partners to deliver most
comprehensive and tailored leasing solutions to meet all asset needs. BAL offers the most
competitive and flexible terms & conditions for lease concerning choice of assets,
repayment, pricing, and tenor which range between 3 to 5 years commensurating with
the specific requirement of the lessee, useful life of the assets and client‘s ability to repay
the lease rentals.

BAL offers two types of lease finance facilities, i.e., Direct Lease and Sale & Lease
Back. In the case of direct lease, direct payment is made to the vendor/supplier/indenter
for the purchase of asset(s). While in the case of sale and lease back, the client having
bought the asset(s) from his own funds may refinance and the payment is made to the
client.

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Field of Activities
This section of report provides and comprehensive view of functions of different
departments in Bank Alfalah. In this part of report I have discussed about every aspect of
the bank which I observed and perceived during my internship programme. Bank
Alfalah limited Model Town Branch is newly opened branch (open in 2006), and yet not
offering many products of bank like house finance, lockers, agriculture finance. But
branch has strong deposit base of 1.2 billion as on 31 June, deposits are mainly consists
of TDR (term deposit receipts) amounting Rs.600million, current accounts Rs.250
million and others(saving, basic banking account and kifayat account) Rs.350 million, on
the other hand advances are on the lower side around of 200million only. Moreover
there are about 1100 current accounts, 150 saving accounts, 150 royal profit, and 100
foreign currency accounts.

There are mainly 7 departments in Bank Alfalah Ltd. (13, Bank square Central
Commercial Market, Model Town, Lahore)
1. Customer Service
2. Account opening
3. Accounts
4. Clearing and Remittance
5. Credit
6. Car Financing
7. Cash

Customer Service Department


Functions performed by customer service department:-
 General Client Dealing
 Cheque book issuance
 Balance confirmation
 Issuance of statement
 Filling deposits slips on request of customer
General Client Dealing:-
When the customer enters into the BAL premises, he went to the customer services
officer who provides him the guidance and basic information which he wants. CRO then
sends the client to his respective department about which he wants to get the
information.

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Cheque Book Issuance:-


Procedure for the Issuance of cheque book:-
1. A requisition slip is given to the customer to sign it so that the customer can get the
cheques book.
2. The Cheque book is issued after one days of receiving the requisition slip. After
receiving the requisition slip, bank officer verify the title of an account, account
number, type of currency, no. of leaves and signature of an authorize signatory and
affix‖ signature verified‖ stamp.
3. After receiving the request for issuance of cheque book, officer send all request to
an area office for the issuance of cheque book with a list of accounts, same list is fax
to the area office.
4. Branch Officer verifies cheque book numbers printed over the requisition slip with
the cheque books received.
5. It is assured by the Officer that series of the cheque book is in order, name of the
account holder is written on the cover of the cheque book.
6. Every leave of a cheque book contains name of an account holder, account number
and leave number
7. The cheque book is delivered to the customer after receiving signatures, one on
requisition slip and one on the record register with date, time and signature.
8. 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, CNIC number and signature of that person on requisition and
cheque book issuance register.
9. Customer signature and /or representative‘s signature on the acknowledgement
are verified before delivery of the cheque book.
10. Issued cheque books are entered immediately in the system indicating details
(serial numbers of cheques, no of leaves customer account number / name, date
received, date delivered and charges for the issuance of cheque book).
11. Bank Alfalah limited Issues the following cheque books
Saving account- 25, 50 leaves
Current account - 25, 50 leaves
Foreign currency-25 leaves
12. Following entries are made in the system after issuance of cheque book
For 25 leaves
Customer a/c Dr Rs.132/-
Chq. Book charges received Cr Rs.125/-
Excise duty received Cr Rs. 07/-
For 50 leaves
Customer a/c Dr Rs.263/-

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Chq. Book charges received Cr Rs.250/-


Excise duty received Cr Rs. 13/-

Note:-if the customer of current accounts maintains an average monthly balance of


US$15,000 or eqv and in saving account US$25,000 or eqv. No charges are
deducted from an account.
13. Stock of Cheque books are balanced at the end of each day and kept under safe
custody.
14. In case of misplacement of cheque book “Form B” is filled. The signatures are
verified. A new cheque book is issued after cancelling the old one. A fee of Rs.100
per booklet is charged. In case of foreign currency account no fee is charged.
15. In the case if the customer do not come to receive his cheque book within a week,
designated officer call him and send reminder to inform him that his cheque book
is in the bank .Three reminders are send to the customer, if there is no response
from the customer, with the prior approval from the branch manager designated
officer destroys the cheque book with the acknowledgement of manager
operations. Half leaves are destroyed by burning them and rest is kept in record
file along with the approval sheet.
16. Every cheque leave contains,
 Account title
 Account number
 Cheque number
 Address of branch

Balance Confirmation:-
The Customer relationship officer is responsible to provide answer to inquiries about
balance on telephone as well as personal visits of the customers. Customer service
department also issues balance confirmation certificate on request of customer and
charges of Rs.250/- are debited from customer account.

Issuance of Statements:-
The bank provides statements of accounts on the requirement and instruction of the
customers. Normally the bank sends the statement of account after every six months but
if desired by the customer the statement can be sent on quarterly basis monthly basis or
even weekly basis.

Account Opening Department


Functions performed by Account Opening Department:-
 Opening of account
 Stop payment Instruction

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 Closing of an account
 Issuance of lockers

Opening of an Account:-
The opening of an account is a contractual agreement between the bank and the
customer, after which both indulge in a mutually beneficial business relationship.
Process of account opening is the first contact which the customer establishes with the
bank and vice versa. But a branch will exercise maximum care while opening a new
account and it should not violate,
 SBP rules and regulations
 Applicable local laws
 Bank‘s Internal Policy

For an account opening the client is required to provide the following information. The
first part establishes the currency in which the account is to be maintained/ operated.
The currencies include
 Pakistani rupee.
 U.S. dollar
 Pound sterling
 Euro

The second part then establishes the preference regarding the type of account to be
maintained. The various choices offered are
 Profit & Loss / Savings account.
 Current account.
 Foreign currency Account.
 Royal Profit Account

Things to Know Regarding Each Product


 Minimum Balance Requirement for each account
 Nature of each account
 Documents Required in various accounts e.g.: Individual Accounts, Joint
Accounts, Private Limited Company, Public Limited Company, Trust accounts,
Sole Proprietorship Accounts, Clubs, Associations etc

Things to be Examine before Opening of an Account:-


 Identification and screening of customer.
 Completion of all relevant columns of account opening form.
 Proper completion of documentation.
 Verify the genuineness of introduction.
 Account should be opened after seeing the originals
 documents like NIC, Passport, Partnership Deed, etc

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Requirements for Opening of an Account:-


1. Individual/Joint Account:-
 Account opening form duly completed and signed by customer(s).
 Title of an account must be same as on CNIC.
 Photocopy of CNIC/valid passport which must be original seen with complete
signature not by an initial.
 Employer‘s letter/ID card in case of salary person
 Business card in case of businessman and nature of business in AOF(occupation
and professional)
 Indemnity in case of signature other than CNIC
 Indemnity for NADRA CNIC verification
 Introduction from existing BAL client
 In case of illiterate account, male customer‘s left hand thumb impression, and
female customer‘s right hand thumb impression on S.S card.
 Passport size photograph in case of illiterate account.
 Vernacular form in case of signatures in language other than English.

2. Sole Proprietor Account:-


 Covering letter (letter-head) requesting for opening of an account with BAL,
Model Town, Lahore.
 Account opening form duly completed (corporate section also be filled), signed
and stamped by customer.
 Photocopy of CNIC/valid passport which must be original seen with complete
signature.
 Sole proprietor declaration on the bank‘s prescribed form required on the Letter-
Head.
 Photocopy of NTN certificate/ Assessment order.
 Vernacular form on stamp paper of Rs.100/- in case of customer‘s signature is
other than english.
 Title must be same as on AOF, Letter Head and Company Stamp.
 Stamp must contain the word ―Proprietor‖.
 Indemnity in case of signature other than CNIC.
 Indemnity for NADRA CNIC verification.
 Introduction from existing BAL client.

3. Partnership Account:-
 Covering letter (letter-head) requesting for opening of an account with BAL,
Model Town, Lahore.
 Account opening form duly completed (corporate section also be filled), signed
and stamped by all partners.

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 Photocopy of CNIC/valid passport of all partners which must be original seen


with complete signature.
 Partnership deed duly notarized and signed by all partners.
 Partnership mandate with clear instructions signed and stamped by all partners
that also be witnessed (as per bank format).
 A letter duly signed by all the partners containing the operating instructions of the
account also has to be taken.
 Photocopy of NTN certificate/ Assessment order.
 Photocopy of registration certificate (Form-C).
 Title must be same as on AOF, Letter Head and Company Stamp.
 Stamp must contain the word ―Partner‖.
 Indemnity in case of signature other than CNIC.
 Indemnity for NADRA CNIC verification.
 Introduction from existing BAL client.

4. Private/Public Limited Company Account:-


 Covering letter (letter-head) requesting for opening of an account with BAL,
Model Town, Lahore.
 Account opening form duly completed (corporate section also be filled), signed
and stamped by all authorize signatories.
 Authorization from all directors for NADRA CNIC verification.
 Specimen signature card (in duplicate) signed and stamped by the authorize
signatories only.
 Photocopy of CNIC/valid passport of all directors duly attested by the company
secretary/CEO.
 Board resolution attested by the company secretary/CEO resolving to open an
account with the respective branch along with the signing instructions of the
authorize signatories to operate the account.
 The resolution must bear the company embossing seal, which must be signed by
two directors as per the clause of memorandum and AOA.
 List of directors.
 Photocopy of NTN certificate/ Assessment order duly attested by the company
secretary/CEO.
 Memorandum and AOA duly attested on all pages by the company
secretary/CEO.
 Certificate of incorporation duly attested by company secretary/CEO.
 Latest copy of Form-29 duly certified by SECP and attested by company
secretary/CEO.
 Certificate of commencement of business in case of public limited company.

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5. Trust, NGO, and Society Account:-


 Covering letter (letter-head) requesting for opening of an account with BAL,
Model Town, Lahore.
 Account opening form duly completed (corporate section also be filled), signed
and stamped by all authorize signatories.
 Photocopy of CNIC/valid passport of all trustees duly attested by the company
secretary/CEO.
 Board resolution attested by the company secretary/CEO resolving to open an
account with the respective branch along with the signing instructions of the
authorize signatories to operate the account.
 The resolution must bear the company embossing seal, which must be signed by
two directors as per the clause of by laws.
 .List of trustees.
 Trust deed.
 Photocopy of NTN certificate/ Assessment order duly attested by the company
secretary/CEO.
 Latest copy of Form-29 duly certified by SECP and attested by company
secretary/CEO.
 Registration certificate duly attested by company secretary/CEO.
 Indemnity for NADRA CNIC verification of all trustees.

Information to be filled in Account opening Form:-


1. Title of the account is to be written in block letters. By title of an account we mean
the name (either of the individual or of the business concern) with which the
account is to be opened and operated.
2. The client is supposed to provide the information whether the account would be
maintained singly (only one person operates the account) or jointly (two or more
than two persons maintain the account).
3. Name of the person who intends to operate the account is to be provided.
4. Provision of either Father‘s or the Husband‘s name is also a pre-requisite.
5. Occupation of the prospective account holder is also to be written.
6. Name and complete address of the employer is to be written.
7. Nationality is to be provided.
8. Country of residence is to be specified.
9. Telephone number is must.
10. The national identity card,
11. Passport number, if the prospective client has got one.
12. Another requirement is the date and place of issue of the national identity card.
13. The prospective client also has to provide the name, address and relationship of
any one of his/her close relatives in order to facilitate the communication
problem. The clients often have a misconception that there next of kin might, if

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14. some peculiar circumstances arise, get the profit out of his account but this is not
the case. The name and address of a close relative is only recorded in order to
undertake necessary communication when needed.
15. In case of a business concern there are two more things that are to be provided by
the business.
16. Type of organization. The various types of organization which are present in
Pakistan at present are
i. Limited company
1. Public
2. Private
ii. Partnership
iii. Association/Club/Society
iv. Sole-Proprietorship
17. The business concerns also have to give their full name, brief description of the
business, date of incorporation, and place of incorporation, national tax number,
telephone number and fax number.
18. Nature of an account.
19. The choice of either the deduction or non-deduction of zakat also needs to be
highlighted. Zakat is deducted out of PLS / saving account.
20. Details of other account/s maintained with other branches of BAL or other banks
are also to be given.
21. The name, signatures, and account number of the introducer. The introducer is a
person who already has an account in the same branch. It can also be a person
from the staff of the branch as well.
22. Then the client also has to put forth the instructions regarding as to whether the
account would be maintained on the basis of ‗either or survivor‘, ‗jointly‘ or ‗any
one of us‘.
23. After this three signatures of the client are needed and if it is an account of a
business concern then the rubber stamp of the company/organization is also
needed below the three signatures.
24. In case of a joint account all the persons unanimously might give the right to
operate the account to one person. This right is also termed as mandate for joint
account. If the mandate is given to a person all join account holders must sign as
an evidence of their approval.

General Observations:-
 Personal Information must be same as on CNIC no abbreviation will be used.
 In case of cutting over writing must be signed by authorized signatory.
 Online indemnity in case of online account.
 Notarized vernacular form on stamp paper of Rs.100/- in case of customer‘s
signature is other than English/thumb impression.

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 In case of CNIC doesn‘t contain a photograph, copy of CNIC attested by gazette


office/nazim along with undertaking having no other document containing
picture on notarized stamp paper required.
 QA-22 in case of foreign national opening PKR account
 If business account, customer bring company stamp at the time of opening of an
account.
 Specific business is to be mentioned in occupation column.

Procedure for Opening of an Account:-


Step 1-Account Opening Form
When a client comes to the bank, and makes a request for opening of an A/C. The
officer says that first fill up a prescribed application form. If he/she wants to open a PLS
A/C, then he/she has to fill a form according to the account.

Step 2-Completion of Form


The name, occupation, and complete address of the person opening the account are
written in the columns are provided in the form. One signature of the person is taken on
the ―rules and regulations‖ column and one is taken on the backside. These signatures
should be usual signatures and he would operate the account with them future.

Step 3-Introducion
The introduction of a current account holder is accepted for the opening of either a
current account or a saving account. The signature of the account-holder introducing the
account is obtained at the place provided for in the account opening form.

Step 4-Specimen Signature Card


The signatures of the client are obtained on a specimen Signature card. These cards are
obtained in duplicate with two signatures on each card from the customer. Every time a
cheque is received for a payment from the client, the signature on the cheque are verified
by comparing them with the S.S. Card. In case of account of illiterate person, the attested
photograph will be attached to the S.S card and the designated officer will duly admit the
S.S card in respect of all the details.

Step 5-Account Number


When all the formalities are completed then the final approval of account has to be
taken from the Branch Manager. After obtaining approval of the branch manager an
account number is allotted to the customer all the information is entered into the
computer. Then that account number is printed on the Cheque Book, S. S. cards and
account opening form.

Step 6-Issuance of Cheque Book


After opening an A/C with the bank, the A/C holder once again makes a request in the
name of bank for the issuance of a cheque book. The A/C holder mentions title of A/C,

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A/C number, sign it properly and mentions the no of leaves he requires. Normally BAL
issues a cheque book having at least 25 leaves. Every cheque book also contains one leaf
that is used for another issue of a cheque book.

Step 7-Scanning of S.S card and AOF


After completing all the formalities, the forms are send for scanning of S.S cards and
AOF. After scanning, AOF are send to the Head office Karachi because BAL has
centralized system for account opening.

Step8-Filling of KYC
For current, saving and basic banking account, separate files are maintained in which
the KYC is punched in numerical order and kept under lock and key in fireproof steel or
safe. KYC should contain the signatures of Operation manager and account opening
officer.

Step 9-Mainting the Computer Record


After opening of account, all information regarding the account is entered into the
computer. Record of all the transactions regarding the account of a customer is kept
updated in the computer.

Step 10-ThankYou Letter


After opening the account ―A Letter of Thanks‖ is send to the customer in order to
thank the customer for opening an account in the Bank. This letter tells all the
information regarding his/her accounts, which are kept very confidential.

If letter of thanks return undelivered following procedure will be adopted,

Stage 1
Branch have to mark the special condition of (WHUN) i.e. where about of the customer
unknown condition on system, immediately on the same day of receiving intimation
from centralized account opening. In such cases all the debit transactions are to be
referred to the OM / BM.

Branches to confirm the status to centralized account opening that the special condition
of WHIJN has been duly marked against these accounts.

On marking the condition, it is to be ensured that if the customer visits the counter at
the branch, he is referred to OM for address confirmation. In case if the customer does
not visit and seven days of marking the condition have lapsed then stage 2 is to be
followed to contact the customer.

Stage2

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Operations Manager to assign the resource to contact the customers on the given land
line or mobile numbers and obtain the correct address informing the reason of call to the
customer.

Stage3
If the customer is not traceable at the given contact numbers then Introducer of the said
account is to be contacted and correct details of the said customer address to be obtained.
Even if the introducer is not traceable or does not have the required information then the

Stage4
In case if the customer is not traced and the correct address can not be obtained, then
the account is to be closed by branch by giving 14 days notice with the prior approval of
BM. On closure of account if customer visits the branch, unutilized cheque book and
ATM cards are to be withdrawn.

Different Series of Account Numbers:-


Sr. No. ACCOUNT TYPE SERIES
1 Saving (PKR) 0200
2 Saving (FCY) 0280
3 Current (PKR) 0100
4 Current (GBP) 0187
5 Current (USD) 0180
6 Current (Euro) 0185
7 Royal Profit 0290
8 Basic Banking A/c 0189
9 Kafayat 0599

Stamps Use for Opening an Account:-


1. Signature Admitted
2. Signature Verified
3. Original Seen
4. Received copy of AOF
5. Cutting confirm (in case of any cutting on AOF)
6. Confirmation of integrity of customer (introducer column)
7. Drawing in person (in case of illiterate person account)
8. Account closed
9. Posted

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Stop Payment Instructions:-


Procedure for Stop Payment Instructions:-
1. Customer makes a request for stop payment either on telephone or fax, officer
note the details and ask customer to confirm in writing as soon as possible.
2. Account officer verify the customer signature on letter and affix ―signature
verified‖ stamp.
3. Review of the account to determine that cheque has not been paid before receipt of
instructions.
4. If paid than advice customer, details of payments and express inability to follow
the given instructions.
5. Check and authorize acknowledgement of stop payment instructions.
6. File customer letter and copy of acknowledgement letter in ―stop payment order
not executed file‖.
7. If unpaid, input stop payment instructions in the system in customer account.
8. File customer letter copy of acknowledgement letter in stop payment order in date
received order.
9. Fee of Rs.200 per cheque will be charge for stop payment.
10. For stop payment of lost cheque book charge Rs.500/-

Procedure for Deletion of Stop Payment Instructions:-


1. Receive letter from customer.
2. Affix date and time received stamp on letter.
3. Verify customer signatures and affix ―signature verified‖ stamp.
4. Retrieve customer letter from stop payment order file.
5. File both letters, original instructions and cancellation in stop payment expired
file.

Closing of an Account:-
Procedure for Closing an Account:-
1. The client who wishes to close an account first has to give an application, duly
signed on the pre-printed application of the bank. The client has to attach this
application with the liability form (explained below). The client can also give an
application on a plain paper, but correct signatures are very necessary. The
request for closing of an account specify,
i. Account Number
ii. Account Title
iii. Reason for closure of account
iv. Customer Name

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v. Customer signature
vi. Verifying officer (name and signature)
2. After receiving a request from the customer, an officer mention,
i. Date and time of receiving the request for closing.
ii. Account opening date
iii. Status of cheque book and ATM card
iv. Clearance received from various departments
v. Name of the officer who close account on system
3. All account holders should sign the request for account closure.
4. In case of corporate account, resolution should be obtained.
5. A charges of Rs.150( except PLS saving account) will be debited from customer
account and following entry will be pass in the system,
Customer account Dr Rs.150/-
Other/Miscellaneous income a/c Cr. Rs.150/-
6. Along with the application to close the account client‘s Cheque book is also
received from him and then it is destroyed in order to prevent any misuse in the
future.
7. A liability form is filled and sent to the Trade Finance Department and Credit
Department in order to Cheque that the customer does not owe the bank a single
penny in any regard. A debit voucher and a credit voucher are also attached to the
liability form.
8. When both of these departments approve that the customer does not owe any
money to the bank and the form is returned to the account opening department
and the account is marked ‗account closed‘ along with the date on which it is so
marked. One thing has to be taken into immediate consideration that the account
number allotted to the client (who has closed his account), after closure of the
account becomes useless and is not allotted to anyone in the future.
9. After approval of the liability form, it is sent to either the Foreign Currency
Accounts Departments or the Cash Department, as the case may be so that the
officer who scanned it in the first place could return the specimen signature card
to the account-opening department.
10. Once the S. S. Card is received back from the concerned official then the liability
form, the client‘s application along with the specimen signature card is pasted in
the ledger right alongside. In the computer as well all the entries and records
related to that particular account are permanently deleted by using the ‗close
account‘ option.

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Issuance of Lockers:-
Procedure for Issuance of lockers:-
1. Customer who wants a locker, request by filling an ―application for renting safe
deposit lockers‖, which specify:
i. Name
ii. Signatures
iii. Size of locker
iv. Fee for locker
v. Special instructions for locker operation if any (provide power of
attorney)
vi. Address of customer
vii. Telephone Number
2. Bank officer provides S.S card to customer for completion.
3. Officer receives complete documents, if non customer also letter of introduction.
4. In case of Limited company, obtain resolution indicating official authorize to
operate the locker.
5. Assign locker number and assign details in record of lockers
6. Retrieve sealed envelope containing keys for the locker being rented, handover
envelope to the customer against an acknowledgement on agreement form.
7. Accompany customer to locker to test keys
8. Record of visits by customer to the lockers will be maintained through customer
visit register.

Page# Key# Locker# Date Name Rent Rent Size A/c # Remarks
let out recovered recoverable
up to

Access to Lockers:-
1. Receive customer (or attorney, if power of attorney has been granted by customer,
obtain Customer S.S card.
2. Verify customer signature from S.S card.
3. Accompany customer to locker. Apply master key to enable the customer to use
his key to open the locker.
4. Upon departure of customer ensure locker is locked. Record departure time in
record of customer visit register.
5. Access to lockers can be blocked under instructions from legal authorities‘ i.e.
income tax, court order. The block will only be lifted when instructions are
received from the authority who has issued the original order.
6. In case of deceased locker holder, upon receipt of the notice of death of customer
access to the locker blocked until the executor of the deceased estate or authorize

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7. person appointed by court or legal heirs complete all formalities required under
law.

Collection of Rentals:-
1. Lockers rental should be collected in advance for minimum of one year at a time.
2. Review diarizing cards one month in advance to identify rental due date, for
collection of rent debit customer account if debit instructions.
3. If there is no debit instruction from customer, send reminder to customer for
rental payment.
4. On due date where attorney to debit account held or on receipt of rent, prepare
voucher and entry pass in the system
Customer account Dr
Rent on lockers Cr
5. If rentals are still outstanding, send another reminder.
6. If rentals are remain unpaid, bank has an authority to break the locker after
sending customer a notice for breaking/open the locker

Surrender of Locker:-
1. Customer request through written notice for surrendering locker
2. Verify customer signature on notice
3. Verify that customer has paid all rent due,
4. Record customer visit to the locker and allow customer to empty contents from
lockers
5. Receive locker key from customer, check locker in the presence of customer to
ensure that the locker is empty.
6. Refund key deposit of Rs.1000/- to customer
7. Indicate refund of key deposit on record of lockers.
8. Drop the key into the locked box
9. At end of day, retrieve keys from locked box, place key in an envelope, seal the
envelop and indicate locker number, relock the box.

Re-possession of Locker:-
Re-possession of lockers should be carried out in the presence of witnesses comprising
of locker custodian, designated officer and court appointed official. A list of the contents
signed by all witnesses and contents along with list will be placed into the sealed
envelope.

Other functions performed by Account Opening department includes,


 Change in customer Address
 Power of attorney/mandate
 Addition/deletion of authorize signatory

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Accounts Department
Functions performed by Accounts Department:-
The predominant functions performed by the accounts department are,
 Budgeting
 Reporting
 Daily activity checking
 Report generation
 Maintenance & depreciation of fixed assets

Budgeting:-
Procedure for Budgeting:-
The budget is based on forecasting through past performance
1. First of all, the bank reviews what are its sources of funds and where it can utilize
these funds?
2. The main sources of the bank are deposits, securities issued by the bank,
borrowing from other banks, borrowing from SBP, bank‘s paid-up capital, its
reserve fund, profit generated by the bank.
3. The bank may employ these funds in lending to others at a high rate of mark-up.
Investment in securities, placement in inter-bank markets etc.
4. It also takes into account the income from other sources, cost of funds,
administrative expenses, and utilities expenses.
5. Then the budget is submitted to the head office for recommendation and
modification.
6. Monthly budget meeting is held by branch managers to analyze the monthly
performance, review of budget and performance is done on 3 rd of every month.
Budget and actual performances are employed and variance is computed for
analysis.
7. Variance can be negative or positive. Variance does not mean that it will have
positive effect on the overall profitability e.g. positive increase in deposits is not
always coupled with positive increase in advances.
8. The management will then drive the reasons for the variance and take remedial
measures to achieve the targets.

Reporting:-
The accounts department, in the form of reports, compiles the details of various
departments together. Each and every minute detail is provided in weekly, monthly and
annual reports. The repzorts are submitted to head office, SBP and to the government.
Accounts department prepares the following reports.

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1. Statement Of Affairs
2. Income & Expenditure
3. Foreign Currency Report
4. Royal Profit Report
5. Currency Wise Deposits Report
.
Daily Activity Checking:-
All the operations performed in various departments of BAL are computerized. In
order to facilitate double-checking of all the transactions done, every concerned official
also passes vouchers manually. At the day end all the vouchers passed by various
officers working in different departments are given to the Accounts Department.
Furthermore the I.T. department also gives a detailed report to accounts department
which constitutes of the computer print outs of all the transactions / entries which have
been fed into the computer system of the branch that day, accounts department tally the
transactions with the computer generated report. The report of activity checking has the
following columns,

Operator Scroll Chq/voucher# Local Amount Narration Value Exchange Supervisor


amount (FCY) date rate

Moreover account department pass the entries of the vouchers regarding bank expense
(stationery, amount given to the employee of bank for fuel etc), bank income
(commissions, postage charges, on-line transaction charges), payment to government
institution (taxes, excise duty etc)

Report Generation:-
The exact number of reports generated by the accounts department on a daily, weekly,
monthly, bi-yearly and yearly basis is somewhere in the bracket of 500. From these
statements, five reports carry extreme importance. The five reports are
1. Daily position of advances and deposits
2. Statement of affairs

1. Daily Position of Advances and Deposits:-


This particular report gives put forth a detailed breakup of the Advances and Deposits
on a daily basis. The report covers all the heads of advances and deposits which assists to
determine as to increase or decrease in which head(s) has caused the overall increase or
decrease.
The various heads of deposits covered by this particular report are as under

 Foreign currency deposits – old accounts.


 Foreign currency deposits – new accounts.

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 Local currency deposits.


 Alfalah car Financing
 Foreign currency advances
 Other advances
 Staff finances

The various columns included in this particular report are position at the end of
previous year, expected at the end of month, yesterday‘s position, present day‘s position,
and the variance in the yesterday‘s and present day‘s position. The basic purpose of
generating this report is to manage the available funds in a proper manner and also to
maintain a healthy liquidity position.

All commercial banks are supposed to maintain 5% of their time and demand liabilities
with SBP. When all the branches of Bank Alfalah Limited send this report to the head
office head office consolidates the reports of all the branches and sends the consolidated
report to SBP. SBP, after analyzing the deposit position of the bank checks whether the
amount deposited with it is sufficient to meet the 5% requirement or not. Head office
after sending the report to SBP also calculates the 5% requirement amount for every
branch separately; if a branch is contributing an amount which is in excess of what is
required of that branch the head office gives an interest to that branch on the excess
amount, and if a branch is short of the its required amount then that branch has to pay
interest on the shortage to the head office..

2. Statements of Affairs:-
Statement of affairs is basically the balance sheet of BAL that is generated by the
accounts department on a monthly basis. But when we take into consideration the
standard contents of a balance sheet we have to make an exception in connection with
this statement as their no head such as equity in this statement, this statement gives the
complete detail of all the assets and liabilities on a monthly basis. When head office gets
this statement from all the branches it consolidates these statements in order to have a
picture of assets and liabilities of the bank. Other important statements maintained by
account department are,
 Statement of review of performance
 Statement of deposits maintained by financial institutions
 Tax statement
 Statement of assets and liabilities
 Daily exchange position report

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Maintenance of Fixed Assets and their Depreciation:-


Accounts department maintains the record of all the assets and charges depreciation
on them. The bank normally uses the straight-line method to compute the depreciation.
The accounts department prepares asset purchase report and asset sale report after every
6 months that helps in changing the depreciation. It is calculated on monthly basis and
charged yearly. Bank not only depreciates the existing assets but also the assets
transferred in and transferred out.

Clearing Department
Functions performed by Clearing department:-
 Inward Clearing
 Outward Clearing
 Inward bills for collection
 Outward bills for collection

Inward Clearing:-
Procedure for Inward Clearing:-
1. Inward clearing, in which the cheque are drawn by BAL customer in favour of non
BAL customer.
2. In the morning, the bank receives its own cheques, which have been presented by
the customers in some other bank to be deposited in their account
3. N1FT provides the facility of bringing cheques for inward
4. Bank makes clearing in computer by checking the balances of the respective
customer
5. If their balances are up to the mark then that cheques is cleared than pass in the
system
Customer account Dr
H/O account clearing Dr
Balance with Central bank Cr
6. If the balances are short then that cheques is bounced back to the related bank
with memo and cheque return charges are deducted from customer account.
Customer a/c Dr Rs.300
Cheque return charges Cr Rs.300
7. At day end, report through IBCA (inter-branch credit advice) is send to main
branch (LDA plaza, Lahore) with description of number of cheque returned and
total amount of cheques returned.
8. Entry in cheque return register showing the following columns

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Date a/c title A/c # Chq.# Reason to Supervisor


return

Reasons for returning cheques:-


 Refer to drawer: It means he should contact with drawer because amount is not
available.
 Not arranged for: Amount is not sufficient in his account.
 Effects not cleared. May be presented again: It means cheque is in transit.
 Exceeds arrangements: Amount is less than written amount
 Full cover not received: full amount not received.
 Payment stopped by drawer.
 Payee‘s endorsement irregular / illegible / required.
 Drawer‘s signature differs / required.
 Alterations in dates / figures .words required drawer‘s full signature.
 Cheque is post dated / mutilated.
 Crossed cheque must be presented through a bank.
 Clearing stamps are required / requires cancellation ‗
 Additional to bank‘s discharge should be authenticated.
 Cheques crossed ―Account Payee only‖.
 Collection bank‘s discharge irregular.
 Cheques and schedule amount differs.
 Not drawn BAL.

Outward Clearing:-
Procedure for Outward Clearing:-
1. Outward clearing, in which cheque is drawn in favor of BAL customer
2. Bank officer receives cheque from customer along with pay-in-slip.
3. The officer affix the following stamps,
 Crossing stamp
 Clearing stamp (clearly specify date and branch name)
 Endorsement stamp
4. Every stamp except crossing is authorized by an officer.
5. The details of the cheque i.e. the amount, cheque number, the account number and
the name of the drawee bank are entered into the system
6. Send cheques through NIFT. a sheet and bundle covers along with the cheques to
ensure that all the cheques are being entered and sent through NIFT
representatives.
7. Credit the customer account, when know that all cheques are clear.
8. Entry pass in the system,

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Customer account Cr
Balance with Central bank Dr
9. At day end, report through IBDA (inter-branch debit advice) is send to main
branch (LDA plaza, Lahore) with description of number of cheque logged in
outward clearing.

Inward Bills for Collection:-


Inward bills for collection includes
 Cheque/ instrument drawn on BAL at any of BAL outstation branch
 Cheque/instrument drawn on a local bank presented at BAL outstation branch

Procedure for Inward Bills for Collection:-


1. Cheque received by the designated office handling IBC‘s from respective banks on
which the cheque is drawn.
2. Particulars are entered into the IBC register as date, cheque number, amount, date
of payment, Initials, name of bank on which cheque is drawn.
3. If cheques drawn on BAF branch, voucher is prepared in which customer a/c is
debited, and head office a/c credited.
4. If cheque is drawn on other bank, and respected branch of the bank logged cheque
in clearing, the same process of inward clearing will be followed.
5. If cheques are dishonoured cheque are returned to respective branch.

Outward Bills for Collection:-


Outward bills for collection includes cheques and instruments drawn on outstation
branches of BAL and other banks but presented locally.

Procedure for Outward Bills for Collection:-


1. Cheques are received by the bank officer along with pay-in-slip from customer.
2. Particulars on cheque are compared with details on pay-in-slip
3. Details are entered into the OBS register as, date, cheque number, bank name on
which the cheque is drawn
4. Cheques are given OBC# from OBC register
5. Affix the following stamps
 Crossing stamp in favor of BAL
 OBC # stamp
 Discharge stamp
6. ―OBC FORWARD SCHEDULE‖ is prepared and sent to the cities where the banks
are located on which these cheques are drawn. All of the checks are forwarded to
the MAIN BRANCHES of BAL in the respective cities.
7. If a cheque is meant for a city where BAL has no branch then it is directly
forwarded to the branch of bank on which it is drawn.

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8. A copy of forwarding schedule and cheque is retained as record


9. Debit postage charges from customer account.
10. On realization, IBCA is received from branch.
11. If return unpaid than entry will be made in OBC register and cheque return
register.

Remittance Department
Remittance department of BAL (Model Town) deals in two instruments,
 Demand Draft
 Pay Order

Demand Draft:-
DD is an unconditioned instrument in writing drawn by a bank in favour of any person
on a branch of its own bank or any other bank to pay a certain sum of money to his order
for value received. Demand Draft can be issued to customer as well as to non-customers
against cash receipt, cheque and against letter of instruction.

Procedure for Issuing Demand Draft:-


1. Customer fills up an application form, along with a cheque for the total amount of
DD.
2. On draft application form date, cheque number, beneficiary name, name of issuing
branch, and amount in figures and word is written.
3. In case of DD against cash, affix ―cash received‖ stamp.
4. The designated officer verifies all the particulars and signatures.
5. Customer balance will be verified through online system.
6. In case of insufficient funds the cheque is either return or refers to higher authority
for approval.
7. Entries will be made in the system and DD number is allotted to an instrument for
identification. Also record in the DD issued register.
8. DD application form is authorize by two authorize signatories after ensuring the
correct posting.
9. Service charges are deducted from the customer account and they vary with the
amount of DD.
10. All cheque issued should be crossed with ―A/c payee only‖
11. Original copy of DD will handed over to customer, one copy is retained by
designated officer with an acknowledgment of the receipt of the original.
12. File DD copy in serial wise date order.

Making of Demand Draft:-


Suppose a customer requests his Bank Alfalah Limited, Model Town Branch, Lahore to

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provide him a DD made on his account for a particular city like Islamabad. Then, after
having the total amount (including commission and advance tax) to be deposited with
application form, demand draft is issued in favour of the specified person in Islamabad
(supposed) and is drawn on Bank Alfalah Limited, Islamabad Branch. So, when this
demand draft is presented by payee in any bank, it constitutes the inward clearing of
Bank Alfalah Limited, Islamabad Branch.

Due Diligence Form:-


It is required to fulfil due diligence form when amount of DD exceed the following
limits
For account holder RS 500,000/-
Non account holder RS 200,000/-
Due Diligence contains an information about the account number, and if person is not a
customer of bank then customer name, CNIC number, address, occupation, purpose of
remittance, relationship with beneficiary. This form is duly signed by the remitter.

Pay Order:-
PO is an order to pay. It is a facility provided to customers. It contains instructions for
payment to certain person whose name is written on pay order or in whose name/favour
pay order is prepared.

Procedure for Issuing Pay Order:-


Procedure adopted for Issuance of pay order is same as of demand draft.

Making of PO:-
Suppose a customer requests his Bank Alfalah Limited, Model Town Branch, Lahore to
provide him PO made on his account on a name of a particular person within a city.
Then, after having the total amount (including commission and advance tax) to be
deposited with application form, PO is issued in favour of the specified person in Lahore.
So, when this PO is presented by payee in any bank, it constitutes the inward clearing of
Bank Alfalah Limited, Lahore Branch.

Cancellation of DD/PO:-
A customer can request for cancellation of PO/DD by writing a request for
cancellation and returning original copy to the issuing bank, the bank officer will verify
the signature and cancel the cheque and after deducting the cancellation charges of
Rs.200, the remaining (net) amount is paid to the customer through Cash Payment
Voucher.

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Replacement of Stolen/ Lost DD/PO:-


In case of lost, stolen instrument, a customer requests in writing for the replacement of
DD/PO. The bank officer will verify the signatures and after the approval of head of
department or managers operations and indemnity signed by customers is obtained,
DD/PO is issued in duplicate and cheque carry a notation ―DUPLICATE ISSUED IN
LIEU OF......(earlier cheque serial number) DATED..... and charges of Rs.200/- is debited
from customer account.

Credit Department
Functions performed by Credit Department:-
 Lease Finance
 Credit facilities
 SME Financing

SME Financing:-
Products of SME:-
1. Alfalah Karobar Finance
2. Alfalah Milkiat Finance

Alfalah Karobar Finance:-


Eligibility Criteria of AKF :-
 Resident Pakistanis.
 Aged up to 60 years.
 In business for the last three years
 Could offer mortgage urban residential/commercial/industrial properties.

Features of AKF:-
 Finance Facility for procurement of raw material, finished goods and other
working capital requirements of the business.
 Amount ranges from 0.5M to 10 M.
 Quarterly mark-up payable within 15 days of its becoming due.
 Mark-up varies in line with money market trends
 Processing time 20 working days from the date of receipt of complete Loan
Application Form along with required documents.

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 Customer can avail other credit facilities with AKF if there is cushion in the
security offered and the projected cash flows of your business.

 Processing fee is Rs.2000/-


 Business and financial appraisal charges are Rs.4000/-
 Documentation, legal and valuation charges (actual and approved charges) will
bear by customer.
 Loan entitlement calculated on the bass of 40% debt burden in cash flow
projections or 60% of assessed normal market value of property or 35% of annual
sales.
 AKF do not require stock report, letter of hypothecation or insurance of stock.
 Only 25% clean up requirement every 6 months as against 100% in most CF
facilities.
 Renewals shall be subject to regular mark-up payments, clean-up requirement and
healthy turnover in AKF account.

Documentation:-
 Copies of last three years income and wealth tax returns/statements of
partners/proprietor/director.
 Copy of title documents and other supporting documents of property to be placed
with bank as security.
 Copy of payment receipt of last property tax.
 Certificate from existing banker indicating the constitution of firm, name of
proprietors/partners and date since account is being maintained.
 Copy of current professional association/trade body membership.
 Copy of any latest utility bill received at residential address of proprietor and
partner.
 Copy of any latest utility bill of business place.
 Two recent passport size photograph of the partners/proprietor.
 Copy of CNIC.
 Rent agreement of business place.
 Proprietorship declaration or partnership deed.
 Bank statement of business/borrowing account for last six month.
 Financial statements of last six months (in case of limited companies F.S shall be
audited).
 Basis factsheet.

Information to be filled on AKF application form:-


1. Title of business
2. Type of organization/legal entity
3. Type of business

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4. Sector in which business is operating


5. Brief description of business
6. Business Address
7. Purpose of finance
8. Amount of finance
9. NTN number
10. Any business association‘s membership
11. Date of establishment of business
12. No. of employees
13. Total assets (as per latest F.S)
14. Sales (as per latest F.S)
15. Professional experience in line of business
16. Detail of any litigation in which borrower involved
17. Amount of fixed assets (excluding land and building)
18. Personal details of partners/directors/members/senior management
19. Banking relationship in name of company/partner and directors (with all details
of borrower, type of facility, monthly installments, security offered etc)
20. Detail of property to be mortgaged
 Address of property
 Area of land
 Constructed area
 Ownership
 Approximate vale
21. Information about top four buyers
22. Information about top four suppliers
23. Undertaking from the customer that he or his any family member is not CEO or
employee or director of bank.

Alfalah Milkiat Finance:-


Alfalah Milkiat Finance (AMF) is a unique long term financing facility offered to SMEs
to purchase, renovate or expand their business premises. It is being offered keeping in
mind requirements of the small business owner who needs to take his/her business to
the next level. AMF shall not be provided for personal asset building or for purchase or
renovation / construction for onward sale or rent purpose.
AMF is grouped into four sub categories to identify which arrangement suits customer
needs best. .
AMF-1: Acquisition of rented commercial/ industrial property by present tenant.
AMF-2: Construction on owned and in possession commercial/ industrial premises/
plot.
AMF-3: Purchase of constructed commercial/ industrial property.
AMF-4: Renovation of owned and in possession commercial / industrial property.

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Eligibility Criteria of AMF :-


 Amount of finance needed is between Rs 0.5 Million to Rs 20 Million under AMF
1, 2 & 3 or a maximum of Rs 3.5 Million for AMF 4.
 Should be resident Pakistani(s).
 Can be individuals, sole proprietorships, partnerships, private limited companies
& public limited companies.
 Age of the prospective customer (individuals/proprietor) should not exceed 65
years at the maturity of loan.
 Customers should be operating the existing business at least for the last 3 years.
 For availing AMF the commercial/industrial property must be within the
municipal limits of the designated cities.

Features of AMF:-
 AMF 1, 2 & 3 shall be repayable in 2-12 years whereas AMF-4 shall be repaid in 2-
4 years.
 Monthly installments will be hassle free through post dated cheques
 The security against Alfalah Milkiat Finance should be mortgage of urban
commercial/industrial property
 The property being financed shall be mortgaged in favor of the bank.
 Processing fee is Rs.5000/- or 1% of loan whichever is high
 Business and financial appraisal charges are Rs.5000/-
 Documentation, legal and valuation charges (actual and approved charges) will
bear by customer.
 Minimum equity participation of the SME shall be 30% under AMF 1 & AMF 3.
No equity participation required for AMF 2 & AMF 4.
 Repayment through equal monthly installments. .
 Disbursement within one month after completion of documentary requirements
by the customer
 Market based mark-up (SBP discount rate + 4%) shall be charged on the
outstanding principal balance.
 Full and final early repayment from own sources shall not attract any penalty,
once a year partial repayment shall be allowed without any penalty however
 In case the outstanding liability is swapped by another bank 5% of the
outstanding principal balance shall be charged.
 Under AMF-2 a grace period can be allowed for a period not exceeding 9 months
inclusive in the total tenor of facility.
 Monthly mark-up shall be serviced during the grace period.
 In case of individual/sole proprietor, life insurance of the borrower shall be
obtained with Bank as loss payee in both cases. Insurance premium shall be built
in the installment amount.

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Documentation & Information to be filled on AKF application form:-


Same as of AKF explained previously

Things to be Considered before Granting any Credit facility:-


1. Know your customer; the branches should very well know their borrowers
as the borrower‘s integrity and ability to conduct business are of
paramount importance. Well reputed past performance, good trade
experience and financial control are the attributes that should be weighed
before processing an advance.

2. Purpose of facility; the purpose of an advance should be determined that it


is within the parameters defined by the Bank‘s Policy and does not breach
local laws / regulations. Secondly it should be evaluated that the advance
is in proportion to the borrower‘s business and is not being taken for
speculative purposes.

3. Profitability; apart from a mark-up rate charged to the borrowers,


branches should also view other allied businesses that may be received for
enhancing the profitability.

4. Source of repayment; cash flow projections should be critically examined


as they play a vital role in devising a repayment schedule.

5. Security; all advances will be made against adequate security and with the
completion of modalities to enable the bank to either have possession or
undisputed title of the securities. The basis of security valuations will be
third party assessment viz. a viz. current market price and forced sale
value.

6. Tenor of the facility; bank officer should know the tenor of the facility
being granted.

Procedure:-
1. Interview borrower in the presence of credit manager.
2. Receive request stating the amount, type, tenor, and purpose of facilities as well as
securities offered.
3. Prepare visit report to access whether borrower is good credit risk.
4. The potential and growth of the business and client is verified through evaluators.
5. Get verification report from evaluators.
6. Where proposal is not viable refuse request.
7. Where proposal is viable assign task to credit officer.
8. Request CIB and other credit reports from other banks.

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9. If any irregularity found return proposal to customer for regularities, if not


regularized decline proposal.
10. If no irregularity found, prepare CLP providing all the necessary details.
11. Perform comparative analysis of audited financial statement over the past three
years.
12. Check proposal for compliance with prudential regulations and mention the
applicable prudential regulation
13. After compiling prudential regulations with, credit officer gives his approval by
signing on it and forward to credit/branch manager.
14. After crosscheck of information in CLP and financial analysis and discussion with
credit manager, branch manager sign and forward the document to BCC.
15. After analyzing the proposal and CLP, where consensus obtained approve
sanction and forward it to concern credit officer.
16. After getting ―sanction advice‖, prepare an offer letter and send it to customer
which reflects the detail of sanction.
17. Generally offer letter prepare in two original, one is retain by customer and second
is return to bank after acceptance. Offer letter has following particulars,
 Type of facility
 Amount of facility
 Security
 Description of an asset
 Tenor of facility
 Documentation charges
 Mode of payment
 Purpose of facility
 Repayment terms of facility
 Securities and margins
 Standard terms and conditions
18. Every page of an offer letter should be sign by customer.
19. All finance and security documents are taken from the customer before releasing
facility.
20. Facility is extended to the customer/make payment to vendor.

Things to be Considered before Accepting Security:-


1. Availability of security should not be the prime consideration for granting a facility.
Basic viability of each facility proposal and the repayment capacity of the customer
independent of the security must be independently established.
2. Legal implications of each type of security should be kept in mind while accepting
any security. Also, the formalities required with the creation of the security must
be carefully observed.
3. The value of the security should be determined, if necessary with the help of bank
approved property valuer/surveyors. The security should be valued on the basis

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laid down in Policy 4.6 and where so considered necessary, at more frequent
intervals. The object of the exercise is to ensure that there is no deterioration in the
value of the security, which will call for immediate corrective measures by way of
additional security, reduction in Bank's exposure etc.
4. The Bank's charge over a security must be supported by proper documentation as
prescribed by the Bank. Where so necessary, (like pledge of goods, floating charge
over goods / receivables etc.), periodical declarations from the customer showing
the details and value of the security should be obtained. The security under the
Bank's charge but not in Bank's possession (as in case of hypothecation) should be
inspected according to the prescribed intervals laid down by the Head Office from
time to time.
5. The expiry/renewal date of the charge created on a security should be carefully
diarized so that such charge is not allowed to expire thereby preventing the Bank
from having access to the security. The matter regarding extension in the validity of
the charge or the security itself must be taken up with the customer sufficiently in
advance unless the Bank is already authorized by the customer to effect such
amendments.
6. No security charged to the Bank should be released by the Branch Manager (even
when the debt has been repaid) without checking with the Credit Division to ensure
that no other liabilities exist against the customer at other branches.

Verification Report:-
Verification report obtain from evaluators has following contents,
1. Introduction of management and business.
 About company (category)
 Business detail (employee number, key buyers, key suppliers)
 Principle address
 Management structure (information about the accounting system, operational
details of business, detail about applicants)
2. Business assets and net worth.
3. Applicant‘s net worth.
4. Operations and profitability
 Expenses
 Financial statements
5. Applicant‘s personal expenses and data
 Personal expenses (information regarding bills, education, household and
conveyance)
 Personal data (address, vehicle, ownership)
 Credit card (bank, limit, number)
 Detail bank relationship
 Borrowing (bank, type of loan, tenure, installments)

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6. Applicant‘s business cash flow from operating activities.

7. Sensitivity test ( risks associated)


8. Market reputation of company
9. Purpose of loan
10. Debt stress (amount of loan, years, rate)
11. Confidence on estimation

Credit Line Proposal:-


Credit line proposal contain information regarding,

1- BORROWER
The name / title of the borrower should be correctly stated and spelt and should be
same as appear on account opening form (every page of CLP should mention the name
and title of the borrower)

1.1 BRANCH
Name of the branch with address.

1.2 CUSTOMER'S RISK GRADING


Mention current grading as well as previous grading
Grade1: it includes undoubted borrower e.g. government, corporation, multinationals,
very good quality borrowers e.g. large and well establish corporations, good quality
borrowers e.g. medium to large local business both manufacturing and trading.
Grade 2: it includes the borrower who lacks audited financial statements and
incomplete security documentations, have excess over dues and new ventures.
Grade 3: it includes an account that shows possibility of future loss by reason of adverse
trend in financial statements, managerial or economic nature or due to significant
weakness in security, and accounts experiences prolonged irregularities.
Grade 4: it includes account where full recovery appears doubtful on the basis of
information available and therefore some loss is likely (e.g. customer attains a negative net
worth and the weakening of security).
Grade 5: it includes accounts where no further recovery can be expected (full
provisioning has been made)
The same should be mentioned.

1.3 LEGAL STATUS.


The legal status of the borrower could be any one of the following:
 Individuals.
 Proprietorship & Partnership ( Registered or Unregistered)
 Private Limited Company (foreign or local)
 Public Limited Company (Listed or Unlisted) [foreign or local]
 Corporations

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 Local Authorities / Statutory Undertaking

 Non- Banking Financial Institutions


 Trusts / Clubs / Associations

1.4 NEW/RENEWAL/REVISION
It shows whether proposal is submitted for first time or submitted to renew existing
facilities or to enhance/reduce existing facilities.

1.5 GROUP
Mention name of group ( if applicable)

1.6 KEY PERSON


It shows name(s) of person(s) and designation(s) who is (are):
 Running the business being financed on day-to-day basis, or
 The person(s) with whom the Bank will be dealing on a day-to-day basis and who
will be responsible for drawing the line of credit as well as be called upon by the
Bank to adjust them.
 In case of Proprietorship or Partnership concerns, the key person will be the
proprietor and the active partner.
 For limited liability companies, the person could be the main director or the senior
management executives running the business.

1.7 REGISTERED ADDRESS:


Address should be mentioned as it appears in the Bank‘s record.

1.8 NATURE OF BUSINESS/MAIN PRODUCT:


The exact nature of the borrower's business and the name(s) of main product items
dealt with should be stated.

1.9 BORROWING RELATIONSHIP SINCE:


Date on which the customer initially became borrower of branch.

1.10 DATE ESTABLISHED:


The year of establishment of the business/firm.

1.11 ACCOUNT NUMBER:


Number allotted to the borrower's account at the time of opening the account.

1.12 DATE ACCOUNT OPENED:


Date on which the customer opened the account with the branch.

1.13 CLP REFERENCE NUMBER:

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Mention the serial number allocated to the particular CLP, obtained from the register
maintained for this purpose e.g. BAL/MB/ACC/001 (Bank Alfalah Limited/Model town
Branch/Area credit committee/first proposal)

1.14 DATED:
It shows date on which the CLP is prepared.

1.15 OWNERSHIP/SHAREHOLDING:
Mention name of the person, complete residential address, CNIC number, age and
percentage of shareholding in a company.

1.16 EXISTING LIMITS:


The existing approved limits in detail is mentioned here.

1.17 OUTSTANDING AS ON:


Shows the balances outstanding on the date of the CLP (if any)

1.18 PRICING:
Mention the existing rate of Mark-up.

1.19 EXPIRY
Date the existing facility (ies) is/are expiring

1.20 PROPOSED LIMIT


Report the proposed limit(s) to the borrower. It is to be ensured that the limits
proposed are in line with the purpose of facility.

1.21 MATURITY
Mention future date upto which the proposed limit is available to the borrower.

1.22 PRICING
The proposed Mark-up for each facility is mention here.

1.23 TENOR
Mention the appropriate period of adjustment of the facility.

2. CUSTOMER PROFILE:
2.1 LEGAL STATUS/ PROPRIETOR/PARTNERS/DIRECTORS/ NIC NUMBER:
It mentions information about customer‘s legal status, name with CNIC number of
directors/partners.
2.2 GROUP EXPOSURE AT BAL:
Indicate existing and the proposed aggregate funded and un-funded exposure of bank
on,

 Subsidiary concerns of the borrower ( if the borrower is the parent company)

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 Sister concerns of the borrower (if the borrower is also a subsidiary of the same
parent company which owns the sister concerns).
 Concerns owned by the same owners.

 Concerns to which facilities have been guaranteed by the borrower.

2.3 TOTAL LIMITS AVAILABLE TO CUSTOMER AT OTHER BANKS/DFI's:


This section mentions the facilities (funded and unfunded) avail by customers from
other bank with the total limits available to borrower at other bank, outstanding balances
and securities being offered to other bank.

2.4 CIB:
Mention status of customer in CIB report.

2.5 PURPOSE OF EACH FACILITY AND REPAYMENT:


Mention list of facility (ies) proposed to be availed by the borrower, purpose of each
facility and time and source of repayment of credit extended to the borrower.

2.6 SECURITY STRUCTURE:


The security structure mentions the details of security presently held with bank along
with value and also proposed securities and type of property, address of property, nature
of mortgage on property, ownership details and value is clearly mentioned.

3. ACOOUNT MONITORING MEASURES/OTHER TERMS & CONDITIONS:


This section mentions that conditions are fulfilled regarding,
 Relevant State Bank of Pakistan requirements.
 Securing the credit facility (ies) as per Bank's requirements.
 Effective monitoring of the use of facilities by the borrower.
 Submitting of financial statements, stock reports, insurance policies with the
required clauses to bank.

3.1 CREDIT OFFICER / CREDIT MANAGER:


Signature of the Credit Officer / Credit Manager who has initiated and prepared the
CLP.

3.2 MANAGER / CHIEF MANAGER:


Signature of the Branch Manager/Chief Manager

3.3 ASSOCIATED CONCERNS:


A brief comment on the performance of the borrower's associated concerns at the CLP
initiating Branch and at other branch (es) of BAL.

3.4 COMMENTS ON CONDUCT OF ACCOUNT:


Comments about performance of business, if business commitments have been
fulfilled, the projected earnings from the account, deposits, if any, held by the Branch and

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other Branches of BAL, complied with State Bank of Pakistan requirements, financials
and any other relevant comments.

3.5 NATURE OF MAIN BUSINESS AND PRODUCTS:


The main business and products of the group should be stated along with names of the
major buyers of the exporter abroad.

3.6 HISTORY OF RELATIONSHIP/INTRODUCTION WITH THE BANK


Comment on the relationship with the customer from the date account opened and
from the date he started enjoying facility (ies) with BAL, also mention whether the
borrowing relationship has been satisfactory or not.

3.7 BRIEF INDUSTRY PROFILE AND MARKET POSITION:


Identification of the borrower by the industrial/commercial sectors to which they
belong. The comments on the sector should be supported by the latest facts and figures.
Secondly, the market share of the borrower with respect to the market / sector is mention
here.

3.8 BRIEF COMMENTS ON THE FINANCIAL PERFORMANCE OF THE COMPANY:


Analyze the latest balance sheet, preferably audited, of the borrowing company,
comments on the ratios as to whether the company is progressing or showing a
downward trend.

3.9 SUMMARY OF KEY FINANCIALS:


It gives detail about the sales, profitability, total assets, current ratio, net worth and
leverage ratio.

4. BACKGROUND OF PROPRIETOR/PARTNERS/DIRECTORS:
This section covers the aspects relating to the owner/managers, their background and
experience, managerial capability, integrity and market reputation. Additionally,
comments are made on the following:
 Owners/partners/directors and their relationship with each other.
 Main/active owners and their experience and expertise.
 Infrastructure facilities at office/factory/industry.

4.1 MANAGEMENT:
List strengths and weaknesses of business as well as brief comments on the financial
and managerial capabilities here. Some of these are listed for guidance:

4.2 LIABILITY DETAILS - ALLIED CONCERNS WITH BAL AND WITH OTHER
BANKS / DFIs

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Full details of facilities enjoyed by the allied concerns of the borrower at the initiating
and other branches of the BAL. Details are also to be provided of the facilities granted to
the allied concerns of the borrower at other banks and DFIs.

5. BRANCH COMMENTS/RECOMMENDATIONS:
Recommendations and comments about the growth and potential of business and on
the credit net worth and capabilities of management and directors. Recommendations
should be signed by the respective mentioned officers of the Credit Department / Branch
Management.

6. BRANCH CREDIT COMMITTEE COMMENTS / APPROVAL /


RECOMMENDATIONS

7. AREA OFFICE COMMENTS / RECOMMENDATIONS

8. ANNEXURES:
Annexure attached to CLP are,
 Ownership/shareholding of partners
 Details of associated concerns
 Conduct of account
 Summary of key financials
 Liability detail –allied concerns with BAL and other banks
 Certification
 Branch comments
 Credit Sanction Advice
 Risk index line
 Applicable prudential regulations

Credit File:-
A ‗Credit‘ file is maintained for every borrowing account which provides all the
relevant information when considering credit facilities. The file contains:
1. Application form duly filled by borrower.
2. CLP with sanction advice.
3. Customer profile
4. Irregularities
 Adverse CIB
 Past record (past dues, cheques return)
5. Correspondence

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 Correspondence with the customer regarding renewal, adjustment and
enhancement of facilities.
 Facility request letter from the customer.
6. Information reports
 Memorandum & AOA
 CIB
 Evaluation report

 Director‘s net worth


7. Credit documentation
 Sale invoices
 Pay order
8. Financials
 Financial statements
 CIB
 Credit reports from other banks
9. Audit

Car Financing Department


Eligibility Criteria:-
 Pakistani National Identity Card holder.
 Over 20 years of age (Maximum 60 years in case of salaried and 62 in case of a
business person at the time of maturity of the loan).
 Salaried, businessman or self employed (not preferably generalist, property
dealers, showbiz personnel, advocates, politicians, police department, farmers)
 For an installment payment debt burden should not be more than 33%.
Documentation:-
 Two passport size photographs.
 Copy of National ID card.
 Bank statement for the last six months.
 Copy of utility bills.
 Salary certificate {for salaried individual}
 Business proof {for a business person}.
 N.T.N Certificate.
 Co-borrower‘s NIC copy {if the car is to be in the name of the co-borrower}.

ADDITIONAL REQUIREMENTS FOR BUSINESS CLASS INDIVIDUALS


 Copy of rental/purchase agreement of business premises
 Sole proprietorship letter on relevant business letterhead

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 Partnership deed (if applicable)
 NOC from other partner (if applicable)
 Tax returns

ADDITIONAL REQUIREMENTS FOR SELF-EMPLOYED PROFESSIONALS


 Copy of rental/purchase agreement of business premises
 Copy of membership of respective institute/association

 Must be practicing /conducting for last 3years.


 NTN number

ADDITIONAL REQUIREMENTS FOR SALARIED PERSONS


 Certificate from employer showing permanent employment for the last 2 years.
 Original salary certificate.
 Take home salary should be three times of the proposed installment.
 Income of spouse can also be clubbed.

Information to be fulfilled on Car Financing Application Form:-


2. Personal Details
 Name
 Father‘s name
 Date of birth
 CNIN number
 NTN number
 No. of dependents
 Educational qualification
 Residential Address and telephone number and mobile number
 Residential status and no. of years since residing
 Information about existing car and car status
3. Employment Details ( for salaried person)
 Name of present employer with address
 Designation of person
 Years of being employed
 Business telephone number/ official mobile number
 Previous employers information (if less than 2 years at current employer)
4. Business detail ( for professional and self-employed person)
 Name of business
 Nature of business
 NTN number
 Business telephone number/mobile number
 Registration body
5. Income Details
 Monthly gross income

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 Guaranteed bonus (if any)
 Sources of other monthly income
 Average monthly savings
6. Bank Details
 Bank where a/c held
 Type of account
 Details of credit card

 Other credit facilities


7. Vehicle Details
 Vehicle price
 Colour
 Dealer‘s name
 Insurance company
8. Financing Details
 Down payment
 Financing required
 Tenor of financing
 Installment (deferred or advance)
 Amount of installments
9. Personal Details of Co-Borrower
same as (1)
10. References
11. Terms and conditions duly signed by applicant and co-borrower.

Procedure:-
1. A customer visits Bank alfalah branch and get the required information about the
Alfalah car financing.
2. The bank officer provides him criteria and required documents.
3. Customer fulfills ―Car financing Application Form‖ and provides all required
documents.
4. After completing all the formalities the case of the customer will sent to the Bank
Hub.
5. Approval will take minimum one week.
6. Car will be rented to customer.
7. A file of every customer is kept separately for each customer.
8. Customer pay minimum down payment of 10% of cost of vehicle.
9. Installment will be made monthly.
10. In case of non- payment of installment a plenty of Rs.500 plus Rs.100/- will be
charge from customer.
11. Bank charges of Rs.4410/- will be charjge as processing and documentation
charges.
12. 5% of outstanding principle is charge as plenty in case of early payment.

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13. If customer is referred by dealer, commission of Rs.8, 100 will be given to him.

Alfalah Car Financing also features Used Vehicles;-


In addition financing of new cars, BAL provide the unique opportunity of financing
second hand locally assembled vehicles as well, but the car should not be older than 5
years, mark-up charge at 17%.

Documents Kept for Record:-


The designated officer must maintain a file for every borrower to whom the facility of
car financing is extended. The file contain the following documents,
1. Borrower basic fact sheet
2. Customer undertaking for loans and facilities avail from other banks
3. Bank statement for last six month (calculate average balance per month by
calculating all credits and take 20% of total)
4. CIB report
5. Proposal send for approval
6. Quotation from dealer
7. Delivery order ( original document, acknowledgement)
8. Insurance note
9. Insurance policy
10. P.O on name of dealer

Mark-up Rates:-
Financing Product 1 2year 3year 4year 5year
year
Car loan for brand new vehicle 14% 14.50% 15% 15.50% 15.50%
Car loan for brand new imported vehicle 16% 16% 16% 16% 16%
Used car 17% 17% 17% 17% 17%

Security:-
Hypothecation of vehicle in the name of Bank Alfalah Limited.

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
the remaining in the subsequent equal monthly installment.

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Cash Department
Functions performed by cash department:-
 Accepting cash deposit
 Payment of cash
 Online cash/clearing/transfer transactions

Accepting Cash Deposits:-


At the time of accepting cash deposits from the customer, the following procedure is
to be followed,
1. Teller receives the cash along with pay-in-slip from customer across counter.
2. The officer ensures that the depositor fills pay-in-slip, verify details on slip
regarding account number, name, amount in words and figures. If any error
observe advice customer to correct.
3. Teller count cash by denomination and compare with pay-in-slip, write
denominations on the front of the pay-in-slip if it is not written by the customer.
4. Input details in the system from slip, write transaction number and affix ―cash
received‖ stamp.
5. Hand over counter foil to the customer.
6. In case of special condition like account closed/deceased/blocked refer to
department manager.

Payment of Cash:-
For the payment of cash/encashment of cheque following procedure is to be followed,
1. When depositor present at the counter , cashier check the following points,
 Pay-in-slip is completely filled.
 Cheque is not stale, post dated or has incomplete dated.
 Cheque is not mutilated.
 The cheque belongs to Alfalah and is not to be lodged in clearing.
 Amount should be written both in words and figures and should be the same.
 If any changes are to be made there must be signatures of the account holder
confirming the changes made.
 For the payment of cheque on counter the cheque must be a bearer cheque.
2. Verify the signatures of the account holder. Signatures on the cheque are matched
with the ―signature specimen card‖. If signatures are not matched then payment is
not made and cheque is returned.
3. After verification of signatures the operator at the computer terminal checks the
balance in the account and makes sure that there is adequate balance in the
account for the encashment of presented cheque.
4. If enough funds are not available the cheque is return to the customer along with
memorandum, and cheque return charges of Rs.200 will be debited from an
account.

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5. If funds are available and no other discrepancy found, obtain payee signature on
reverse of cheque, count cash, entre denomination on back, affix ―cash paid‖
stamp on face of cheque
6. If both payer and payee have account in the same bank and the cheque is also for
the same bank then simple ―bank stamp/transfer stamp‖ is used. It indicates the
transfer of funds from one account to that of other account. It leads to debiting the
account of payer and crediting the account of payee.
7. Handover cash to customer.
8. If withdrawal is against any facility availed by customer, an enquiry memo is
prepared and sent to the respective department for payment decision.

Online Cash/Clearing/ Transfer Transactions:-


This function includes the transfer of cheques drawn on the same branch or between
branches of BAL. One accountholder wants to transfer his amount to another , he will
give him a cheque. The cheque holder will attach with the paying slip, which is duly
filled with his account number, then he deposits on the counter. The bank transfers the
amount from one account holder‘s account to another‘s. Fee is charge from customer.
Charges are,
Online cash transaction
Rs. 100 from current account customer
Rs.150 from saving/royal profit customer

Online cash transaction


Rs.50 from current/saving/royal profit account customer

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Human Resource Management:-


Bank Alfalah Ltd. has worked hard to build its human resource team and ensure that
the quality of newly inducted staff is not comprised with growth. For recruitment and
selection bank‘s policy is to hire suitable candidates. By suitable candidates bank refers to
candidates having proper educational qualification, experience and background. It is the
policy of the bank that ―President‖ of the bank will be the representative of major
stakeholders/owners. Board of Directors is representative of sponsors. Bank is reluctant
in making direct appointment of senior executives. EVPs are promoted from lower levels.

Every year Bank Alfalah opens its doors for about 30 fresh post-graduates to join the
ranks of Management Trainee officers‘ with the Bank. The MTO scheme is a highly
competitive and sought after induction scheme, in which short-listed applicants appear
in a written test followed by a panel interview. Successful candidates then receive
comprehensive training in essential areas of branch banking at the Bank‘s state-of-the-art
training facility at Karachi, prior to their posting at various branch locations. Preferred
educational background for entry into the MTO scheme includes an MBA degree, MA
Economics or M.Com from reputable Pakistani or foreign institutions with GPA of 3
plus, or equivalent. Strong personal character, as well as communication and
interpersonal skills are essential pre-requisites to succeed as an MTO.

BAL prefers to hire candidates having MBA degree for credits. For relationship officers,
education qualification is not very important. Their family background and
communication skills are more important. Bank hires fresh MBAs from prestigious
Universities in batches of 20-25 officers. Bank hires officers in range 1. Then depending
upon their job performance they are promoted to next range. More facilities and
increments are given along with promotion. The bank gives a car to officers of range 5.
Bank‘s policy is to give cash rewards and salary increments for increasing the employees‘
satisfaction.

Human Resource team takes special interest in recruitment and training. Its training
and business philosophy is geared to provide professional, personalized and efficient
services to its clients. Alfalah provides both “In-house training” and “Outside the house
training” to its employees. To impart technical skills to its staff ―Training and
Development Center‖ offers programs in several skill areas, employees attend seminars
and courses offered by ―Institute of Bankers‖. Alfalah also offers various computer-
training courses to its employees. It is obligatory for each staff member of the bank to
attend a minimum number of training courses during the course of a year. Wherever the
Training Department is unable to provide focused training for certain groups of staff,
reputable external training providers are invited to fill the gap.

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All new employees of the Bank initiates preparation of their Job Description and get it
finalized with the help of their immediate supervisors within 30 days of joining at their
place of posting. The job Description duly signed and agreed by the new joiner, his/her
immediate supervisor and manager should be sent to HRD for record. Concerned Branch
Managers will be held responsible for non compliance of this requirement. The purpose
of the Job Description is to clearly define the job responsibilities of each employee and to
ensure that employees are made aware of and understand what is expected from them.

Periodic rotation of staff between various assignments is used by Bank Alfalah as a


means of broadening areas of expertise of concerned staff. This is also done to ensure
smooth transition from one job to another in case a staff member leaves the job, or is
transferred to another job or location .Staff members posted at branches rotated
periodically according to the following guidelines:
 For clerical, supervisory and officer level positions, rotation may be done upon
completing around two years in one assignment.

 For Departmental Heads or Managers the maximum period in one assignment should
not exceed five years.

For training and development of employees of bank an Annual Training Plan shall be
circulated by HRD in December for both Training and Development Centers, keeping in
view the requirements of various departments of the Bank identified through the annual
appraisal form and feedback from Audit Division. The plan would list all workshops,
courses & seminars to be offered during the next year.

It is obligatory for each employee of the Bank to attend at least two days of training in a
calendar year. Branches, Area Offices and Head Office Division/Departments are to send
their nominations for training courses in advance (as prescribed by the concerned
Training & Development Centre). Employees are encouraged to take initiative and get
them nominated through their supervising officers for training courses relevant to their
needs.

TDC organize full day induction sessions for new joiners, both at Lahore and Karachi.
These one day programs are aimed at giving a broad overview of Bank Alfalah‘s
corporate culture, values, norms, products and services to new employees. New joiners
are also briefed on employees‘ benefits as well as service rules. Heads of Branches and
Units must ensure that all newly inducted staff members attend these sessions,
preferably within the first three months of their joining.

As per the requirements, the Bank recruits batches of fresh graduates under various
schemes through a competitive process and offers them comprehensive training. Batch
Trainees may be asked to go through on-job training by way of structured rotation
programs. In order to enhance in-house training efforts, external training providers will
be utilized on a periodic basis, by nominating Bank Alfalah‘s employees to external

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courses. Alternatively, external training consultants may be invited to conduct training


programs exclusively for BAL employees, whenever deemed necessary.

Staff monthly salary is to be disbursed before the end of each month usually on 26th/27th
of the month. Salary & allowances of each employee is a confidential matter. Those
officials, who due to reasons of procedural expediency, are in the knowledge of salary
particulars of their colleagues, must treat such information as confidential. Their failure
to do so may result in disciplinary proceedings against them. In order to disburse salary
on time, branches are advised to ensure that all salary amendments must reach HRD
latest by 20th of every month. Review of salary and allowances, which is based on
previous year‘s performance, is carried out once a year during the first quarter of every
year.

Employees in need of funds for an emergency may be allowed advance against salary
for the current month to be adjusted in full on disbursement of salary. Since this facility is
only meant for emergencies, no staff member may be allowed to make a habit for
applying for such advance. Approval shall be obtained from the Departmental
Head/Branch Manager and forwarded to HRD. As a matter of policy, a staff member
may avail this facility only twice during a calendar year under the following conditions:-

 If the staff member is proceeding on leave and next payday falls during vacation
period.
 In case of emergency

Salary deduction on account of leave without pay will apply to the entire salary
package of the concerned employee, including allowances and perks. Moreover,
weekends and public holidays falling during this period will also be considered as part
of leave without pay.

At the discretion of the Bank‘s management, furnished or unfurnished accommodation


upto reasonable rental value may be provided to senior officers, transferred from their
permanent locations to fulfill the Bank‘s requirements.

The Bank‘s performance appraisal (PA) system is primarily based on goal setting in the
beginning of a year, monitoring by supervising officers on bi-annual basis and final
evaluation, using standardized performance appraisal forms at the end of the year. Some
weightage is also given to evaluation of enabling personal skills and personality traits, as
listed in the Appraisal Form. Appraisal exercise is done only for those employees who
have completed six month‟s service with the bank on 31st December and whose
appraisal forms have been received from their respective officers within the specified
time limit. To reward high performance during the period under review, performance
bonuses may be awarded to deserving officers based on their performance rating.

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All employees of the Bank, who are on Bank‘s payroll (whether in regular or
contractual employment), upto the age of 65 years, will be covered under the Group Life
Insurance, also medical services are provided to employees. Moreover BAL entitled to
provide the benefits of provident fund and gratuity fund. All permanent confirmed
employees are eligible for membership of Bank Alfalah Ltd. Employee Provident Fund
Scheme. An employee will contribute an amount equivalent to one month‘s basic salary
in a year (8.33% of monthly basic salary) towards the Provident Fund Scheme and an
equivalent amount will be contributed by the Bank. PF deduction will continue to be
made from monthly salary even if an employee has resigned and is working during
notice period. Membership of PF Scheme will be automatically cancelled on the last
working day of the notice period. For a gratuity payment if period of service is less than
05 years, no gratuity will be payable if period of service is 05 years and above, gratuity
will be payable equivalent to one month‘s salary (last drawn) for each completed year of
service.

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BAL Marketing:-
BAL provides different products and services to its customers as discussed earlier
which differentiate BAL from other banks , the pricing of products means the
commission to be paid by the customer in return of services provided by the bank. The
price paid for the services mainly include mark-up, bank charged and fees and bank
commission etc. These charges and commissions are prescribed on Schedule of Bank
Charges (SOC) that keeps on changing time-to-time, and issued by the bank periodically
(generally after six months).

Bank Alfalah‘s has been expanding its branch network to meet clients‘ needs. Bank is
well positioned and geographically poised, to cater for increased business demands, from
its existing potential clientele. BAL has 195 branches, spread all over Pakistan covering
major business centers and principle cities. Bank plans to add more branches to his
growing network in the ensuing years. At present, BAL has opened all its branches at
commercial and business areas or near to commercial areas so that the customers or
clients face no problem in reaching the bank. Head Office of BAL is situated in Karachi.

This is an age of competition. Numerous organizations are providing financial services


to the customer. These days everyone is facing pressure of competitors. In this world of
growing competition, the only way to survive and grow, for an organization, in the
market place is the proper marketing and
promotion of its products. Same is the case with
banking companies. There is large number of
foreign and local banks working in the country and
it has been noticed that they are emphasizing much
on their marketing strategies. In this scenario, the
key for a bank to succeed and attract its customers
is adequate promotion of its products &services. Bal
for the promotion of its new and existing products
invest heavily, it advertises its product through:

 Print media i.e. newspaper


 Electronic media i.e. television
 Billboards
 Business magazines
 Website

Bank Alfalah also gives a significant consideration not only to its product publicity but
also to the creation of public relations. Bank has proves its public goodwill by
contributing money and time to public service and activities. Bank as performing the
following activities in offer to create a good public image.

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 Sponsoring different events like cricket matches, basant and golf events in order
to increase the public trust.
 Giving heavy donations to human welfare organizations that support the needy
people
 Make heavy investment on overhead bridges.

The most prominent and important way to attract a large number of customers is the
advertisement of bank and its products/services. Bank Alfalah has adopted different
approaches for the accomplishment of this purpose. For example, formation of Alfalah
Mini Golf near Gulberg is a major step taken by BAL. It not only provides a source of
recreation to the people but it serves as a major source of marketing for the bank. Due to
Bank Alfalah‘s assistance for the construction of fountain in Liberty Market Square, it is
named as Bank Alfalah Square. BAL Square, for being situated in such a business and
commercial area has its unusual importance and has resulted into bank‘s promotion.
Construction of Shaahdin Manzil as main branch Lahore is going to be the revolutionary
step for BAL. It would not serve just as a main branch only, but it would also be a great
source of ever growing marking and promotion of bank.

Along with the advertisement, the bank is providing personal services to its clients with
maximum security as other banks provide.

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Financial Analysis
BALANCE SHEET
(Rupees in ‘000)

ASSETS 2006 2005 2004 2003


Cash and balances
27,859,360 24,798,625 19,708,518 8,423,399
with treasury banks
Balances with other
12,731,952 9,713,369 3,183,957 626,917
banks
Lending to financial
12,456,653 27,050,493 - 7,437,733
institutions
56,502,210 57,425,700 35,503,196 28,903,596
Investments
149,999,325 118,864,010 88,931,400 49,216,120
Advances
5,633,051 3,851,529 3,226,959 1,553,108
Other assets
Operating fixed
10,502,990 6,620,067 4,280,504 2,791,626
assets
- - - -
Deferred tax asset
275,685,541 248,313,793 154,834,534 98,952,499
Total Assets

LIABILITIES
3,091,135 3,733,124 2,233,671 1,208,671
Bills payable
Borrowings from
financial 8,394,130 5,844,389 12,723,830 13,127,754
institutions
Deposits and other
239,509,391 222,345,067 129,714,891 76,698,322
accounts
Sub-ordinated
3,222,106 3,223,355 1,899,480 649,740
loans
Liabilities against
assets subject to - - - -
finance lease
7,305,496 5,219,666 2,725,344 2,686,754
Other liabilities

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Deferred tax
1,921,338 484,066 275,834 323,010
liabilities
263,443,596 240,849,667 149,573,050 94,694,251

12,241,945 7,464,126 5,261,484 4,258,248


NET ASSETS
REPRESENTED
BY
5,000,000 3,000,000 2,500,000 2,000,000
Share capital
2,749,533 2,351,218 1,008,772 790,374
Reserves
Unappropriated
2,823,072 1,386,845 860,300 463,042
profit
10,572,605 6,738,063 4,369,072 3,253,416
Surplus on
revaluation of 1,669,340 726,063 892,412 1,004,832
assets
12,241,945 7,464,126 5,261,484 4,258,248

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INCOME STATEMENT
(Rupees in ‘000)
2006 2005 2004 2003
Mark-up/return/interest earned 21,191,470 12,246,811 5,620,203 4,033,380
Mark-up/return/interest
expensed 15,232,886 7,204,992 2,434,459 2,028,577
Net mark-up/interest income 5,958,584 5,041,819 3,185,744 2,004,803
Provision against non-performing
loans and advances - net (697,690) (402,298) (370,208) (87,091)
Provision for diminution in the
value of investments - 23,163 (2,165) -
Bad debts written off directly (1,537) (512) (351) (418)
(699,227) (379,647) (372,724) (87,509)
Net mark-up/interest income
after provisions 5,259,357 4,662,172 2,813,020 1,917,294
NON-MARK-UP/INTEREST
INCOME
Fee, commission and brokerage
income 1,804,998 1,158,747 675,868 399,383
Dividend income 37,393 52,014 52,539 112,017
Income from dealing in foreign
currencies 386,997 290,091 218,820 106,848
Other income 995,251 744,518 572,822 2,773,503
Total non-mark-up/interest
income 3,224,639 2,245,370 1,520,049 3,391,751
8,483,996 6,907,542 4,333,069 5,309,045
NON-MARK-UP/INTEREST
EXPENSES
Administrative expenses 5,874,745 4,313,023 2,677,635 1,799,490
Other provisions/write offs - 10,125 - 2,000
Other charges 43,306 21,104 1,700 1,875
Total non-mark-up/interest
expenses 5,918,051 4,344,252 2,679,335 1,803,365
2,565,945 2,563,290 1,653,734 3,505,680
Extraordinary/unusual items - - - -

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PROFIT BEFORE TAXATION 2,565,945 2,563,290 1,653,734 3,505,680


Taxation
For the year - Current 476,226 592,635 586,159 1,364,723
Deferred (100,874) 267,524 (3,663) (5,164)
For prior year - Current (7,000) (30,000) 22,887
Deferred 427,902 8,037 9,249 -
803,254 861,196 561,745 1,382,446
PROFIT AFTER TAXATION 1,762,691 1,702,094 1,091,989 2,123,234
Unappropriated profit brought
forward 1,886,845 860,300 963,042 250,050
Transfer from general reserve - - - -
Transfer from surplus on
revaluation of Fixed Assets - net
of tax 26,074 24,870 23,667 14,405
Profit available for appropriation 3,675,610 2,587,264 2,078,698 2,387,689

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HORIZONTAL ANALYSIS
Balance Sheet (%change)
ASSETS 2006 2005 2004
Cash and balances with
treasury banks 12.3 25.82 133.97
Balances with other banks 31.07 205.07 407.88
Lending to financial
institutions (53.95) - (100)
Investments (1.59) 61.72 22.83
Advances 26.11 33.66 80.70
Other assets
46.25 19.35 107.77
Operating fixed assets 58.65 54.66 53.33
Deferred tax asset - - -
TOTAL ASSETS 1.02 60.37 56.47
LIABILITIES & EQUITY
Bills payable (17.19) 67.12 84.80
Borrowings from financial
institutions (3.08) (54.06) (3.08)
Deposits and other accounts 69.12 71.41 69.12
Subordinated loans 192.34 69.70 192.34
Liabilities against assets
subject to finance lease - - -
Other liabilities 39.96 91.53 24.63
Deferred tax liabilities 296.91 75.49 14.61
TOTAL LIABILITIES 9.38 61.02 58.79
REPRESENTED BY
Share capital 25 20 66.67
Reserves 27.63 83.51 48.52
Unappropriated profit (10.67) 119.32 49.61
Surplus on revaluation of
assets (11.19) (18.64) 129.92
Total EQUITY 64.01 41.86 10.58

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Comments on Horizontal Analysis of Balance Sheet:


For computing horizontal Analysis, previous year is use as base year e.g. for 2004, 2003
is use as base year.

Assets:
The assets of the BAL have been growing very fast since its inception. This growth is
the result of the massive expansion policy the management has been following ever since
the inception of BAL. One of the important ingredients of any commercial bank‘s growth
is increase in most of current assets that is a good sign as it increases their liquidity. Let
us first have a look at the liquid assets. The increase in percentage is always a good sign,
but it is especially healthy sign when we take into consideration that it is increasing at a
very commendable rate, but it is observed that in 2006 lending to financial institutions is
decreased by 54% and also there is an decrease of 1.59 which shows remarkable increase
in 2005 of 67%, advances of bank shows increase but in decreasing rate. Therefore all the
assets of the bank shows increasing trend but in decreasing rate except fixed assets and
other assets, increase in fix assets might be because of expansion of bank‘s branch
network.

Liabilities:
As regards the liability section of the balance sheet chief liability of commercial bank is
its deposits it generates from its customer The ratio of increase in deposits in 2006 is
7.72% which is low as compare to increase in 2005 which is 69.12%, it is concluded that
the deposits are increasing but at decreasing rate. The other encouraging ratio we
observe in liability section is borrowing from financial institution which shows
decreasing trend in 2004 and 2005 but it shows an increase of 43& in 2006 which proves
financial strength and its credit worthiness in the money market. On the other hand the
subordinate loans that represent the TFC‘s are decreasing it‘s a good sign as bank is
paying off its long term debts.

Equity:
Bank‘s Share Capital is increasing at increasing rate as bank announce stock dividend
of 25% and in 2006 33.33 % as well as unappropriate profits are also increasing at a much
higher rate especially in 2005. So overall bank‘s equity is increasing at a satisfactory rate.

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Income Statement (%change)


2006 2005 2004
INCOME
Mark-up/return/interest
earned 73.04 117.9 39.34
NON MARK-UP
/INTEREST INCOME
Fee, Commission and
brokerage income 55.77 71.45 69.22
Dividend income (28.11) (0.99) (53.09)
Income from dealing in
Foreign currency 33.41 32.57 104.80
Gain on sale of securities (24.54) - -
Unrealized (loss) /gain on
revaluation of Investments (219.15) - -
Other income 66.76 (11.84) 79.34
Total Non mark-up/ Interest
income 42.15 49.24 (55.18)
TOTAL INCOME 68.21 103.29 (3.84)
EXPENSES
Mark-up/return/interest
earned expensed 111.42 195.96 20.00
Provision against non-
performing loans and
advances-net 73.43 8.67 525.18
Provision for the diminution
in the value of investments - (100) -
Bad debts written off directly 200.19 45.87 (16.03)
NON MARK-UP/
INTEREST EXPENSES
Administrative expenses 36.12 61.08 48.80
Other Provisions/Write Offs 100 - 100
Other charges 105.2 1141.4 (9.33)
Total non mark-up/ Interest
expenses 36.22 62.14 48.57
Extraordinary / Unusual
items - - -
PBT 0.10 55.00 (52.83)
Taxation
-Current (19.64) 1.10 57.04

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-Prior years (9827.48) (104.99) (166.09)
-Deferred 59.94 (7403.41) (73.21)
TOTAL EXPENSES 76.80 111.85 14.08
PAT 3.56 55.87 (48.57)

Comments on Horizontal Analysis of Income Statement:


For computing horizontal Analysis, previous year is use as base year e.g. for 2004, 2003
is use as base year.

Income:
The income of the BAL shows the increasing trend in 2005& 2006 but in 2004 the overall
income decrease by 3.84% as compare to 2003 which is mainly because of decrease under
dividend and other income head. Overall the income of the bank increases year by year
but we observe remarkable increase in total income in 2005i.e. raise by 103.29%, mainly
because of interest earned from loans to customer and from financial institutions.

Expense:
The expenses of the bank are increase as operations of the bank increase, like income in
2005 expense head shows higher trend as compare to 2006 and 2004 because penalties
impose by SBP raise from 1700 M to 21104 M.

Profit:
As increase in income is more as compare to increase in expense, so profit after tax
proves a high-quality financial performance of BAL.

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Vertical ANALYSIS
Balance Sheet (%)
ASSETS 2006 2005 2004
Cash and balances with
treasury banks 10.11 9.99 12.7
Balances with other banks 4.62 3.91 2.06
Lending to financial
institutions 4.52 10.89 -
Investments 20.49 23.12 22.9
Advances 54.40 47.87 57.4
Other assets
2.08 1.55 2.04
Operating fixed assets 2.76 2.67 3.81
Deferred tax asset - - -
TOTAL ASSETS 100 100 100
LIABILITIES & EQUITY
Bills payable 1.12 1.50 1.44
Borrowings from financial
institutions 3.04 2.35 8.22
Deposits and other accounts 86.88 89.54 83.8
Subordinated loans 1.17 1.29 1.22
Liabilities against assets
subject to finance lease - - -
Other liabilities 2.65 2.10 1.76
Deferred tax liabilities 0.70 0.19 0.18
REPRESENTED BY
Share capital 1.81 1.21 1.61
Reserves 0.99 0.75 0.65
Unappropriated profit 1.02 0.76 0.56
Surplus on revaluation of
assets 0.61 0.29 0.58
Total LIABILITIES
&EQUITY 100 100 100

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Comments on Vertical Analysis of Balance Sheet:

After analyzing the Balance Sheet, we can see that balances with other banks are
increased in percentage from 2.06 to 3.91 and then further to 4.62 that is a good sign for
management. There is a decrease in percentage of advances that is not a good sign.
Advances are decreased from 57.44% to 47.87%. But these have again increased to 54% in
the year 2006 which is a good sign. Here it is clearly examined that the major part os total
asset is advances.
On liability side, borrowings from financial institutions are also decreased that is very
positive sign as far as banks financial health is concerned. Borrowings are decreased by
8.22% to 2.35% but it has started increasing in year 2006 by 3.04%. More over there is an
increase in deposits from year 2004 to 2005 which shows the faith and trust of people on
BAL. Deposits are increased from 83.78% to 89.54% but decreased to 86% in the year 2006

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Income Statement
2006 2005 2004
Total Income 24416109 14515344 7140252
Total Expenses 6048263 12813250 6048263
Profit 1091989 1702094 1762691

(In %)
2006 2005 2004
INCOME
Mark-up/return/interest
earned 86.79 84.37 78.71
NON MARK-UP
/INTEREST INCOME
Fee, Commission and
brokerage income 7.39 7.98 9.47
Dividend income 0.15 0.36 0.74
Income from dealing in
Foreign currency 1.59 2 3.06
Gain on sale of securities 0.74 1.65 -
Unrealized (loss) /gain on
revaluation of Investments (0.11) 0.16 -
Other income 3.45 3.48 8.02
Total Non mark-up/ Interest
income 13.21 15.63 21.29
TOTAL INCOME 100 100 100
EXPENSES
Mark-up/return/interest
earned expensed 67.24 56.23 40.25
Provision against non-
performing loans and
advances-net 3.08 3.14 6.12
Provision for the diminution
in the value of investments - - 0.04
Bad debts written off directly .0067 0.0039 0.0058
NON MARK-UP/
INTEREST EXPENSES
Administrative expenses 25.93 33.66 44.27
Other Provisions/Write Offs - 0.08 -
Other charges 0.191 0.16 0.028

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Total non mark-up/ Interest
expenses 26.12 33.90 44.29
Extraordinary / Unusual
items - - -
Taxation
-Current 2.10 4.63 9.69
-Prior years (0.45) 0.008 (0.34)
-Deferred 1.89 2.09 (0.061)
TOTAL EXPENSES 100 100 100
PAT

Comments on Vertical Analysis of Income Statement:


The vertical analysis of income side of income statement demonstrate that major factor
of the total income is interest earned which contributes more than 75% in 2004 and 80%
in 2005 and 2006, whereas fee, commission and brokerage income makes major part of
total non-mark up interest income and its proportion to total non-mark up
interest/income is decreasing every year, here we observe that except interest earned,
other heads in income in decreasing is good sign for the bank as bank is earning more
from its primary functions.
Non- mark up interest expensed is the major component of total expense in 2004, and in
non mark p expense admin expenses contribute 44.27%. But in 2005 and 2006 like interest
earned, interest expensed in the major part because the deposits of the banks shows
increase and bank has to pay on interest bearing liabilities.

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RATIO ANALYSIS

1. Average Rate of Lending = Mark up /interest/return earned * 100


Advances+ Investment +l ending to Financial
Institutions

2004 2005 2006


Return earned 5,620,203 12,246,811 21,191,470
Adv +Inv + 124,434,596 203,330,758 218,958,188
lending to F.I
Avg. Rate of lending 4.52 6.02 9.68

12

10 9.68
8

Percentage 6 6.02
4.52
4

0
2004 2005 2006

Interpretation:
This ratio relates the earning of the bank with the assets. it indicates the rate of return
earned by the bank on the assets. This ratio is gradually increasing over the years
indicating a healthy sign because the operation/business of the bank is increasing, and
also shows good image of the bank that people and financial institutions are agree to take
advance from bank. Average rate of lending is increasing at a increasing rate because the
increment in return is higher than the increment in assets.

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2. Average Rate of Borrowing = Mark up /interest/return expensed * 100


Deposits+ sub-ordinated loans +borrowing from
Financial Institutions+ liability against lease

2004 2005 2006


Return expensed 2,434,454 7,204,992 15,232,886
Dep +subordinated
loans +borrowing 144,338,201 231,412,811 251,125,627
from F.I+ liab
against lease
Avg. Rate of 1.69 3.11 6.06
borrowing

7
6 6.07

5
4
Percentage
3 3.11

2
1.69
1
0
2004 2005 2006

Interpretation:
This ratio determines the cost of funds borrowed by the bank. Though this ratio is
increasing over the year at an increasing rate but yet it is better because when we
compare it with the return earned by the bank , the bank‘s margin is increasing at
increasing rate.

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3. Spread = Interest Earned - Interest Expensed


Average interest bearing assets Average interest bearing liabilities

2004 2005 2006


Return earned 5,620,203 12,246,811 21,191,470
Avg Interest bearing 104,996,022 163,882,677 211,144,473
Assets
Return expensed 2,434,454 7,204,992 15,232,886
Avg Interest bearing 117,407,008 187,875,506 241,269,219
Liab
Spread 4.98 3.64 3.75

5 4.98

4
3.64 3.75
Percentage 3

0
2004 2005 2006

Interpretation:
Spread is basically the margin of the bank between its lending and borrowing, as
compare to 2004 the spread is decrease by 1.34 points but increase in 2006 by 0.11 points
which is good because it shows that the cost of deposits are less than the cost of
advances. Higher the spread, favourable for the bank because of low cost of deposits.

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4. Cost of Admin Expense = Admin Expense * 100


Deposits

2004 2005 2006


Admin Exp. 2,677,635 4,313,023 5,874,745
Deposits 239,509,391 222,345,067 239509,391
Cost of Admin Exp. 2.06 1.94 2.45

2.5 2.45
2 2.06
1.94
Percentage 1.5

0.5

0
2004 2005 2006

Interpretation:
It measures the cost which the bank has to incur to generate the deposits. The above
ratio is good over the year because it should not 3% of the deposits, here increase in ratio
is not termed as negative sign for the bank because bank is expanding its branch
network, and in 2006 the branches of BAL increase from 128 to 166 and also no. of
employees‘ increases.

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5. Infection Ratio = Classified Advances * 100


Gross Advances

2004 2005 2006


Classified Adv 2,934,413 1,059,955 2,308,668
Gross Adv 90,291,457 120,416,991 152,235,781
Infection Ratio 3.25 0.88 1.51

3.5
3.25
3
2.5
2
Percentage
1.5 1.51
1 0.88
0.5
0
2004 2005 2006

Interpretation:
The infection ratio determines the percentage of classified advances of the bank. This
ratio is below the ideal ratio for the banking industry because ideal ratio is 6%.especially
on 2005 classified advances are only 0.88 % which increase to 1,51% but still the ratio is
satisfactory. It might be due to the prudent lending policy followed by bank.

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6. Liquidity Ratio = Cash & Balances with treasury banks * 100


Deposits

2004 2005 2006


Cash & Bal with 19,708,518 24,798,625 27,859,360
treasury banks
Deposits 239,509,391 222,345,067 239509,391
Liquidity Ratio 15.19 11.15 11.63

16
15.19
14
12 11.63
11.15
10
Percentage 8
6
4
2
0
2004 2005 2006

Interpretation:
The liquidity ratio is also known as cash reserve ratio, every bank has to maintain a
certain percentage of its time and demand liability with a central bank, the liquidity
ratios of BAL is good over the years it shows the decreasing trend in 2005 but again in
2006 increase from 11.15 to 11.63 which is satisfactory .

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7. Statutory Liquidity Ratio = Investment in Govt. Approved Sec * 100


Deposits

2004 2005 2006


Invt in Govnt 31,622,670 51,906,092 49,390,810
Approved Sec
Deposits 129,14,891 222,345,067 239509,391
Statutory Liquidity 24.38 23.34 20.62
Ratio

25
24.38
24
23.34
23
22
Percentage
21
20.62
20
19
18
2004 2005 2006

Interpretation:
The statutory liquidity ratio shows the liquidity of the bank, the ratios shows that the
investment of the bank in government approved securities is decrease over than year as
compare to the increase in deposits, downward trend is also because of decrease in the
investment in government bonds.

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8. Cash Ratio = Cash & Balances with treasury banks+


Balances with Other banks * 100
Deposits

2004 2005 2006


Cash & Bal with
treasury banks+ Bal 22,892,475 34,511,439 40,591,312
with other banks
Deposits 239,509,391 222,345,067 239509,391
Cash Ratio 17.64 15.52 16.94

18
17.5 17.64

17 16.94
16.5
Percentage 16
15.5 15.52
15
14.5
14
2004 2005 2006

Interpretation:
This ratio indicates the liquidity of the bank. It indicates a normal trend, bank has
enough money invested in the most liquid assets, so it a healthy sign.

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9. Advance to Deposit Ratio = Advances * 100


Deposits

2004 2005 2006


Advance 88,931,400 118,864,010 149,999,325
Deposits 239,509,391 222,345,067 239509,391
Adv to Dep Ratio 68.56 53.45 62.63

80
70 68.56
60 62.63
53.45
50
Percentage 40
30
20
10
0
2004 2005 2006

Interpretation:
This ratio indicates the amount which the banks advance from its deposits. It shows an
increasing trend except 2005. The bank has advance a good amount of its deposits so
earning a higher return. This ratio should not be more than 80% of total deposits, the
advance to deposit ratio of BAL is satisfactory.

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10. Mark up Income to Non-Mark up Income Ratio = Mark-up earned * 100


Non-Mark up income

2004 2005 2006


Mark up Income 5,620,203 12,246,811 21,191,470
Non-Mark up 1,520,049 2,245,370 3,224,639
Income
Mark up Income to 3.69 5.39 6.57
Non-Mark up
Income Ratio

7
6.57
6
5.39
5
4
Percentage 3.69
3
2
1
0
2004 2005 2006

Interpretation:
This ratio indicates whether the bank is earning from its primary function and has
permanent source of revenue or from its secondary function, the above calculation shows
that the major source of bank‘s earning is from the investments and advances which is
positive sign for the image and position of bank.

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11. Time Deposits to Total Deposit Ratio = Time Deposits * 100


Total Deposits

2004 2005 2006


Time Deposits 21,892,081 80,167,779 88,851,222
Total Deposits 239,509,391 222,345,067 239509,391
Time Dep to Total 16.87 36.05 37.09
Deposit Ratio

40
36.05 37.09
35
30
25
Percentage 20
16.87
15
10
5
0
2004 2005 2006

Interpretation:
This ratio shows the percentage of time deposits in the total deposits .The time deposit
are less as compared to demand deposit. The greater the time deposit more will be the
cost of funds, as the percentage of time deposit is less than the demand deposit so the
bank bears low cost of funds.

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12. Capital Adequacy Ratio = Paid up capital * 100


Sum of Balance Sheet

2004 2005 2006


Capital Adequacy 8.16 8.66 9.48
Ratio

10

9.5 9.48

9
Percentage 8.66
8.5
8.16
8

7.5
2004 2005 2006

Interpretation:
It is similar to debt to equity ratio. For the interest of deposits SBP requires every bank
to maintain a minimum capital requirement which should not be less than 8%.This ratio
is also useful from auditor‘s point of view. The ratio is quite satisfactory in case of BAL.

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13. Return on Average Equity = Net Profit after Tax * 100


Average Equity

2004 2005 2006


NPAT 1,091,989 1,702,094 1,762,691
Average equity 4,061,244 5,553,567 8,655,334
ROE 26.89 30.65 20.37

35
30 30.65
26.89
25
20 20.37
Percentage
15
10
5
0
2004 2005 2006

Interpretation:
ROE measures the rate of return on the shareholders' equity. It measures a bank‘s
efficiency at generating profits from every rupee of net assets. The ROE of the bank
increases in 2005 but decrease in 2006 because increase in share capital is more as
compare to increase in profits.

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14. Return on Average Assets = Net Profit after Tax * 100


Average Asset

2004 2005 2006


NPAT 1,091,989 1,702,094 1,762,691
Average Asset 126,893,516 201,574,163 261,999,667
ROA 0.86 0.84 0.67

1
0.9 0.87
0.86
0.8
0.7 0.67
0.6
Percentage 0.5
0.4
0.3
0.2
0.1
0
2004 2005 2006

Interpretation:
ROA of BAL is deceasing over the year because the profit earn is not increase in the
same proportion as increase in total assets of banking company.

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15. Earning per share = NPAT * 100


No of shares outstanding

2004 2005 2006


NPAT 1,091,989 1,702,094 1,762,691
No.of shares 250,000 300,000 500,000
outstanding
EPS 4.3 5.6 3.52

6
5.6
5
4.3
4
3.52
EPS 3

0
2004 2005 2006

Interpretation:
Earning per share shows profit to bank from paid up capital. Earning per share is
decreasing in 2006, which is not a healthy sign.

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16. Book Value = Equity * 100


No of shares outstanding

2004 2005 2006


Equity 4,369,072 6,738,063 10,572,605
No.of shares 250,000 300,000 500,000
outstanding
Book value 17.47 22.46 21.15

25
22.46
21.15
20
17.47
15
Book value
10

0
2004 2005 2006

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SWOT Analysis & Recommendations


Strengths:-
 The bank is financially strong and has a huge deposit reserve.
 Personnel of Alfalah are well trained and highly skilled .Majority of employees
has many years of experience in banking sector and is an asset for the bank.
 Bank Alfalah has a wide network of branches at the ideal locations, catering the
financial needs of its clients.
 Foreign Trade is the focus of bank. It has become an ideal bank for the exporters
and importers.
 The management of the bank is very much concerned with the development and
improvement of the working environment. The bank has state of the art and
purpose built branches where all the modern technologies are provided to get the
efficiency of the workforce and the customer satisfaction.
 Compassionate customer service
 Highly Professional Human Resource Department.
 The bank is one of the pioneers of the commercial banks who have started the
Islamic Banking along with their conventional banking. The bank has a separate
network of its Islamic Banking Division which has 23 branches across the country.
 The allocation of the duties and tasks is done in such a way that if there is no
disturbance, every employee can complete the assigned tasks well in time without
any difficulty
 The environment of the bank is caring for the customers and every customer is
dealt with proper care and attention. All the employees have very professional
attitude and know the worth of the customer for the business.
 Proper supervision system to check and evaluate the performance of each
employee. It is the duty of Operations Manager to make sure that every employee
is giving the desired performance.

Weaknesses:-
 Majority of the workforce consists of young professional, they lack in their
experience. And sometimes lack of experience becomes a hurdle while serving to
the customers. It is the point where they feel difficulty while competing the other
bank, which have a very experienced workforce.
 It was observed that at present the motivation level of the employees is not very
much
 Due to the new regulations of the state bank to deduct 0.02 % tax on every check
amounting to more than Rs. 25000, the customers started issuing too many checks

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to avoid this tax. As a result the overall work load on employees has been
significantly increased.
 The increased workload has resulted in the reduced efficiency of the employees.
Because now the time required for completing the tasks for a single customer has
been increased. As a result the environment of the branch has become very messy.
 Bank‘s marketing department is not very strong .Advertising done by the bank is
less than the requirement.
 Lack of communication between employees

Opportunities:-
 Extension of local branch network.
 Establishing foreign branch network
 Unexplored market of multinational corporations
 As the increase in overall business activity in the country, the investors are
launching various types of Mega Projects especially in housing and textile the
bank has a great opportunity to finance these projects at very profitable term.
 The increase in per capita income and overall economy has resulted into a great
demand for the consumer financing especially for home finance and car financing
and it is said that this trend will increase more in future. The bank can earn a lot
by focusing on its consumer financing sections.
 After the privatization of United Bank Limited, the management of the BAL has
purchased the majority shares of the UBL, and it is planning to merge these two
banks. As UBL is the second largest bank in the country, this merger can make the
bank the largest bank of the country.
 There is a very good growth trend in the Islamic banking in the country and in the
world as well. BAL has the advantage of having Islamic Banking network and the
growth in this particular field can be very fruitful for the bank, bank has an
opportunity to introduce new products and services in Islamic banking.
 As the Pakistani‘s are known for their extravagant practices, and to fulfill their
funds requirements they don‘t hesitate from getting loans from banks. Thus there
is a very good scope for the bank to run successful business in such circumstances.

Threats:-
 Private sector banks
 Network expansion by foreign banks
 Although the economy is growing at a good pace, but there are many factors
which results in the uncertain position of the economy. Such as political
uncertainty, increase in poverty etc. etc. As a result there are permanent threats of
future risks and losses for the bank.

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 The inflation rate of the country has gone very high. This can result into an
unfavorable situation for the bank. And especially when the ownership of the
bank is UAE based, the net spread for them can substantially decrease.
 There is a trend of mergers among the banks to become prominent in the market
and to get the maximum market share. This trend can result into the union of
some leading banks which can give tough time to the bank and it will become
difficult for the bank to compete with them.
 There is a trend of launching mega projects in the country. And every one is
involved in this trend without taking any measure for the successfulness of these
projects. This can result into the failure of this project which can make it difficult
for the banks to recover their funds from these defaulters.

Recommendations:-
 The employees should be given more financial as well as non financial rewards so
that they remain motivated.
 Bank Alfalah Ltd should continuous to expand its business, by increasing its
deposit portfolio through aggressive market penetration strategies.
 Human resources constitute the most valuable asset for an organization. To
improve the professional skills and quality, BAL has started six-months
comprehensive training program, BAL should conduct some training programs
for existing employees to improve their proficiency.
 Bank Alfalah Limited needs to use more marketing channels to make the public
aware of its products and services. In the presence of intense competition Bank
Alfalah Limited has to realize the importance of marketing.
 The number of women hired by the bank is very less. Alfalah should employ more
women. Moreover it should also recruit women for working in ―Credits‖.
 Management should distribute work equally among different employees. Some of
the employees are overburdened while some sections are overstaffed.
 There are disproportionate numbers of seasoned bankers in top management who
have the responsibility of making strategic decisions. This think tank should also
include a reasonable proportion of young bankers whose mindsets teem with new
creative ideas, which might prove to be invaluable for Bank Alfalah Limited.
 The top management should immediately start thinking in terms of rotating the
employees in various departments, as this transforms work force into human
capital, if a particular individual keeps on employing his\her efforts in one sphere
of banking it would not only create a sense of monotony, but also not help
improving the skills of Bank Alfalah Limited employees.
 Bank Alfalah Limited should embark upon an even more aggressive management
strategy of expansion of branch network not only in the local market (Pakistan),
but also in foreign markets because that is a huge opportunity for Bank Alfalah
Limited.

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 By analyzing the financial statements of the organization, we found that the


decreasing rate of profit is mainly because of the unbalance between the non-mark
up income earned and the non-mark up expenses. In the current year non-mark
up income has been decreased by 55% in 2004, but on the other hand the non-
mark up expenses has been increased by 48%. This is very alarming situation. We
recommend to creating balance between these two items either by increasing the
non-mark up profit or by decreasing the non-mark up expenses in order to
increase the profit.
 Bank Alfalah Limited should evolve a very serious management policy to attract
multinational corporations as its clients. This action, if actualized, would not only
prove to be highly profit generating, but it would also contribute a lot towards
BAL‘s image building.
 Presently, like most of the commercial banks working in Pakistan, a high
percentage of Bank Alfalah‘s credit client hail from two or three industrial sectors.
In the near future the management of Bank Alfalah Limited should try its level
best to diversify as regards the mix of its advances; reason being over reliability on
one sector of the economy could hurt the financial soundness of the bank if any
adverse change in the external environment takes place.

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______________________________________________________________the Caring Bank_ __

Overall Conclusion
Let’s Look Ahead Towards a
Brighter Future Together”

A generation ago the world of banking seemed much simpler and less burdened with
risk than it is today. Regulations are severely limiting the range of bank management
decision making, but it is also tending to shelter the industry from the risk of the
financial market place.

It has been said that banking in an earlier era was concerned mainly with the prudent
management of assets and liabilities and the achievement of satisfactory returns for bank
stockholders. Banking in the modern era, on the other hand, is immensely more
concerned with risk-how to manage risk and still earn enough returns to retain owner‘s
capital and remain viable. In Pakistan, the banking sector continued to support the
financing needs of the country.

In short Bank Alfalah (BAL) since its inception 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 growing client base is a sign of
its recognition in the market place. It made a significant progress despite the keen and
challenging business environment. It made notable progress in business volume,
efficiency and profitability following its increased involvement in trade finance,
commercial lending, and foreign exchange and money market operations. Moreover the
financial statements of the bank show strong financial position and trust of the people on
bank, Bank Alfalah Limited truly proves to be, the caring bank.

_____________________Hailey College of Banking & Finance_________________ 113


______________________________________________________________the Caring Bank_ __

References:-
www.bankalfalah.com

www.sbp.org.pk/fsr

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