BANK ALFALAH Ltd

TABLE OF CONTENTS

DECLARATION 2
ACKNOWLEDGEMENT 3
HISTORY AND BACKGROUND 4
MISSION STATEMENT 9
ORGANIZATIONAL STRUCTURE 11
* Organ gram 12
* The Board 17
OBJECTIVES, POLICIES AND PROCEDURES 19
* Objectives 20
* Policies 23
* Procedures 35
H.R.ISSUES 46
* Opportunities for new people 47
* Career development 49
* Employee development 51
* I.T Support 57
* Conflict of interest among employees 57
SWOT ANALYSIS 59
FINANCIAL OVERVIEW 64
* Financial Highlights 65
* Balance Sheet 66
* P/L Account 67
* Cash Flow Statement 69

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DECLARATION

The internship report is submitted to the Department of Business management Sciences,

The University of Lahore the partial fulfillment of the requirement for the degree of
M.B.A.

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ACKNOWLEDGEMENT

The whole praise is to almighty ALLAH, creator of this universe. Who made us the super creature with
great knowledge and able us to accomplish this work. I feel great pleasure in expressing our deepest
appreciation and heartiest gratitude to the faculty of Management Sciences and to the staff of Bank
Alfalah for their guidance and great help during the internship period.

I would like to express my deepest affection for my parents and other family members who prayed for our
success and encouraged us. We appreciate and acknowledge the patience, understanding and love
provided by them. It is of course the reward of their good wishes and kind blessings.

The acknowledgement will remain incomplete without special thanks to our friends for their excellent
cooperation and nice companionship.

Irfan Arshad

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HISTORY

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited company under the
Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is
engaged in commercial banking and related services as defined in the Banking Company’s ordinance,
1962. The Bank is currently operating through 45 branches in 21 cities, with the registered office at
B.A.Building, I.I.Chandrigar, and Karachi.

Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the management of the
bank has implemented strategies and policies to carve a distinct position for the bank in the market place.

Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals
set out by its board of management, the Bank has invested in revolutionary technology to have
an extensive range of products and services.

This facilitates the bank’s commitment to a culture of innovation and seeks out synergies with clients and
service providers to ensure uninterrupted services to its customers. Alfalah perceive the requirements of
its customers and match them with quality products and service solutions. During the past five years, they
have emerged as one of the foremost financial institution in the region endeavoring to meet the needs of
tomorrow today.

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BANK ALFALAH

Bank Alflah is a profit generating organization just like the other banks or organizations. The bank
borrows money at low rates and lends it on higher rates for generating profits and run the business. So
Bank Alfalah is also a profit generating organization but the most important thing and the principle, which
is followed in the bank, is the customer satisfaction. This is the main principle of Bank Alfalah. This
property categorizes it into a caring bank. So even it is the profit generating organization but the first
priority is the customers. That’s why from 9:00 am to 5:00 pm the bank is open for the customers. Even in
the lunch breaks the cash counters are open to provide the service. So the Bank Alfalah is a customer-
oriented organization.

Mechanics Of Generating Profit:

All the banks are supposed to earn the profit through mark-up or interest. The bank borrows money from
the people at low mark-up rate and lends it to others at higher mark-u rate. The difference of the mark-up
they earn is their profit.

There are many consumer products offered by the Bank Alfalah through which thy earn mark-up. The car
finance, home finance, credit cards, corporate finance etc are the products offered by the bank in the
consumer banking in which they earn their profit.

Comprehensive and Diversified Products:

With the mission to provide all encompassing banking to the customers. Bank Alfalah has a uniquely
defined menu of financial products. Currently they offer one of the most comprehensive portfolios of
personalized financial solutions that are custom-tailored to serve the requirements not only of
conventional customers but also fulfill the needs of the corporate sector:

 Car Financing
 Rupee Travelers Cheques
 Online Banking

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 SME Financing
 Money Gram Remittance Services
 Credit Cards
 ATMs
 Home Financing
 Corporate and Structured Financing

Working Environment:

The working environment of the Bank Alfalah is very cooperative and secure. All of the employees are
very cooperative with each other. The branch manages are very much concerned with the problems of the
employees ad try to response immediately towards the problems employees usually face in the bank.
Branch manager is at easy access to all the employees of the bank. Similarly all the other senior
employees are very cooperative with the junior employees and try to help them out in every possible way.
This concerned behavior of the senior staff towards the junior staff motivates the employees and make
them feel secure and easy to work.

In the bank branch manager plays a role of leader who is there to take initiatives. He/she has authority to
make decisions and deal the officers of range 1,2 and 3. Branch manager represents each and every
employee of the branch and that is why most of the time he performs the role of leader in the branch.

Marketing Style:

The marketing strategies are made in the head office and the bank follows these strategies and policies. In
every branch there are B.D.Os (business deelopment officers) who promotes the Bank Alfalah. They are
supposed to visit different firms and offices and bring the deposits for the bank. In other words Bank
Alfalah advertise its products and services by the help of these business development officers.

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The B.D.Os are initially given the targets during the probation, which they are supposed to achieve in six
months. The target is of 2 cars/month, 1 home and bringing the deposits of 50 million. The B.D.Os attract
the customers by highlighting the offers and benefits in Bank Alfalah.

The main purpose of the marketing is to attract the customer and increase the deposits. Bank use to
advertise itself through commercials at T.V channel, newspapers etc.

In Bank Alfalah the especial attention is given to the customer satisfaction. During their planning they
carefully plan such strategies, which increase customer and satisfaction and through which bank get
benefit. All of the branches of Bank Alfalah are in full communication with one another through fax,
telephones and online. These arrangements are made for providing services to the customers in an
efficient manner.

Competitors Of Bank Alfalah:

Bank Alfalah is facing a very tough competition in the market. Almost all of the local and foreign banks
are its competitors. The competition is based on the performance and as in the modern world it is more on
the basis of customer satisfaction.

Bank Alfalah has offered the wide range of products at lowest mark-up e.g. Car Finance of the Alfalah is
the best scheme at lowest mark-up i.e. 8.5 %. Similarly the credit cards scheme is the good one as it has no
joining fee and very low mark-up is charged for the credit.

That is how Bank Alfalah is competing in the market.

To fulfill the targets, Alfalah needs adequate resources. The problems of scarce resources vary from
branch to branch. In some branches, the location is not very good or the building is not large enough to
carry out all the activities in proper way, in some branches the staff is short and recruitment is requires. So
the problems do occur due to the inadequate resources but the management of the bank tries to come over
these problems as soon as they occur.

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MSSION STATEMENT

To develop and deliver the most innovative products, manage customer experience, deliver
quality service that contribute to brand strength, establishes a competitive advantage and
enhance profitability, thus providing value to the stake holders of the bank.

VISION STATEMENT

To be the premier organization operating locally and internationally that provide the complete
range of the financial services to all segments under one roof.

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ORGANOGRAM

CHAIRMAN

BOARD OF DIRECTORS

EXECUTIVE
INCHARGES

AREA MANAGERS

BRANCH MANAGER

CREDIT CARDS MANAGER CREDITS

OPERATIONS

CD INCHARGE
HOME COOPERATE CAR FINANCE
FINA FINA
NCE NCE
Sp.SEATS I.T OPERATIONS

TELLER CUSTOMER ACCOUNTS

REL
ATIO

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ORGANIZATIONAL STRUCTURE

Organizational structure represents the skeletal framework for organizational behavior. It

is more than boxes on a chart; it is a pattern of interaction and coordination that links.
Technology and human components to ensure that organization accomplishes its purpose.
Some characteristics of ideal organizational structure called Bureaucracy by Max Weber
is found in the organizational structure of the Bank Alfalh. For example:

• Positions arranged in a hierarchy

Each lower office is under the control and supervision of a higher one. This
bureaucratic principle helps the management of bank to control over every
member in the structure.

• A system of abstract rules

A continuous organization of official functions is bounded by rules. This
bureaucratic principle helps the management of S.S.C to ensure uniformity and
coordination of effort.

Bank Alfalah has been divided functionally into the following departments

 Customer relations Department

 Remittances
 Current deposits
 Operations
 I.T Department
 Credits Department
o Home finance
o Cooperate finance

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o Trade finance
o Car finance
 Marketing Department
 Accounts

VERTICAL STRUCTURE ANALYSIS

Vertical analysis concentrates on centralization versus decentralization and on flat

versus tall structuring.

CENTRALIZATION VS DECENTRALIZATION

The Bank Alfalh’s centralizations and decentralization can be discussed under

following headings.

Geographical

Geographic centralization means that the organization has all its operations under one
roof and geographic decentralization means the dispersion of organization operations
through the country.

Bank Alfalah is fully aware that the branch network has direct implication on the service
that it provides to its customers. In the year 2003, nine commercial bank branches and
five Islamic bank branches were added to the branch network of Bank Alfalah extending
their coverage to fifty-nine branches in 23 cities nationwide. They are confident that a
well-integrated branch network offers greater potential for serving a larger client base
through high value products. Its branches in many cities, which show that it is
geographically decentralized and all of the functions are being offered in every branch. In
other words in every branch each and every function is taking place.

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There are 59 branches of Bank Alfalah Ltd in following major cities of Pakistan:

1. Karachi (Head Office)

2. Lahore
3. Faisalabad
4. Rawalpindi
5. Islamabad
6. Hyderabad
7. Sukkur
8. Rahim Yar Khan
9. Sialkot
10. Mardan
11. Sargodha
12. Quetta
13. Gujrat
14. Gujranwala
15. Peshawar
16. Multan
17. Sahiwal
18. Mingora, Swat
19. Dera Ghazi Khan
20. Gawadar
21. Wah Cannt
22. Bahawalpur
23. Jhelum

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The head office of the bank is in Karachi where the board of director and executive
committee perform their duties. Every branch has its own circle executive who is the
head of the branch, and totally responsible. For all activities of the branch, a branch
manager works under the supervision of circle executive.

Functional

An organization has separate department that performs such as selection or training for
others is called centralized organization and if the various functional departments (for
example; marketing, production and finance) handle their own human resources functions
then it is considered decentralized organization.

In Bank Alfalah, there is main department at head office, which centrally controls
Personnel Functions of all other branches like recruiting, selection, marketing etc but the
manager has also some authority to hire the employee of grade 1,2 or 3 if required or
he/she can recommend an employee for his/her branch. Similarly marketing strategies
are planned at head office but all branches have B.D.Os who are responsible for
marketing.

Delegation

Centralization and decentralization commonly refers to delegation of decision-

making command. Within the bank, there is centralization to a greater extent as all
the major policies and decisions are made at head office so in this discipline the
Bank Alfalah is highly centralized.

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THE BOARD

H.E. Sheikh Hamdan Bin Mabarak Al-Nahayan (Chairman)

Mr. Mohammad Saleem Akhtar (Chief Executive Officer)
Mr. Abdulla Khalil Al-Mutawa
Mr. Abdullah Naseer Hawaileel Al-Mansoori
Mr. Khalid Mana Saeed Al Otaiba
Mr. Ikram Ul-Majeed Sehgal
Mr. Nadeem Iqbal Sheikh

EXECUTIVE INCHARGES

Mr. Parvez A. Shahid

(Strategic Planning & Global Marketing)

Mr. Sirajuddin Azi

(International &Treasury Division)

Mr. Bakhtiar Khawaja

(Human Resources Division)

Mr. Asad Jamil

(IT Division)

Mr. Mohammad Yousuf

(Credit Division)

Mr. Tanweer A.Khan

(System & Operation Division)

Mr. Ather Shehab

(Establishment & Administration)

Mr.Mahmood Ashraf
(Credit Monitoring Division)

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Mr. Shahid M. Murtaza

(Business Development Division S.A.M./ Car Finance/ Leasing)

Mr. Hamid Ashraf

(Legal Affairs Division)

Mr. Mohammad Iqbal Saifee

(Audit & Inspection Division)

Mr. Zahid Ali H. Jamall

(Finance Division)

Mr. Tajammal Farooq

(Corporate Banking, SME Financing & Home Loans)

Mr. Ijaz Farooq

(Islamic Banking Division)

Ms. Zoha Imam

(New Products & Service Quality Division)

Mr. Adil Rashid

(Cards Division)

CORPORATE INFORMATION

Company Secretary
Mr. Hamid Ashraf

Auditors
A.F. Ferguson & Co.
Chartered Accountants

Head Office
B. A. Building
I.I. Chundrigarh Road, Karachi.

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OBJECTIVES OF ALFALAH BANK LIMITED

No organization is complete without the objectives. It has no purpose if it has no

objectives. There is no survival for an organization if it has no clear objectives.
Objectives are the ends towards which all activities of the organization are directed.

Profit generation is main objective of any organization. The objective of Bank Alfalah is
also profit earning. Its main objectives are divided into two parts

 Funds based revenue

 Non-fund based revenue.

The main objectives of Bank Alfalah are

 To maintain a competitive edge in quality banking

 To develop and deliver the most innovative products
 To manage customer experience
 To deliver quality service that contribute to brand strength
 To establishes a competitive advantage and enhance profitability, thus
providing value to the stake holders of the bank
 To increase its deposits
 To lend loans to people from their deposits. Bank lends money to business and
industry and earns profit. In this way bank earn profit.

INCREASE IN DEPOSITS

Each bank try to increase its deposits either it is fund based or non-fund based and
therefore, they face a tough competition in the market. Deposits are main source of
income for any bank so Bank Alfalah also tries to get maximum number of deposits. It

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earns its profit by lending these deposits as loan and earns its profit in the form of
markup.

Normally current deposits are preferred in the bank, as bank has to pay no profit on the
current account. The bank earns on the current account in the from of services charges,
for keeping and maintaining accounts.

In Bank Alfalah three types of account are opened

 Current account
 P/LS account/ saving account
 Royal profit account

Current accounts are mostly opened by the business firms. They need money for the
business dealing and their money is normally in transaction so the companies or business
firms normally open the current account. Their opening limit is 25,000 minimums. Bank
does not give any profit on these accounts

Saving accounts are the opened initially by the 5000 rupees. These accounts are profit
and loss account. Bank pays profit on this account after six months. Bank Alfalah gives
1.5 % profit. The profit percentage is different in every bank. In this account the account
holder shares the profit and loss of the bank.

Royal profit account is opened on the 50,000 as initial deposit. The bank pays profit on
this account every month by the amount of 1.5%.

Following are the main objectives, which are fulfilled by the Bank Alfalah in order to
increase its performance

IMPROVEMENT OF SEVICES

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Bank Alfalah is continuously trying to improve its working and performance and making
its services efficient. This is the objective of Bank Alfalah to provide the best services to
its customers in order to make their customers satisfied. So they try to make their
working efficient.

PREFERENCE TO CUSTOMER

The bank always prefers its customers. They work on the formula that the “customer is
always right” as the customers are the main strength for any bank Alfalah does not
compromise on the customer satisfaction. The staff of the bank is so courteous and tries
to solve the problem of the customer in the every possible way. That is why the bank is
regarded as the caring bank.

EXTENSION OF LOANS

Bank extends loan to the companies and individuals out of the accumulated deposits and
gets interest or markup. As the interest or markup on these loans is the main source of
income for a bank so more loans a bank advance to its clients more it can earn. But
before advancing loan to a client it is also duty of the bank staff to determine the viability
and profitability of the client and evaluate projects and proposals for which the banks are
advancing loan.

The bank evaluates the customer who has applied for loan. They visit the sites and
financial analysis is done (in case of companies) for lending loans. That is how bank is on
safer side. If the company or any business firm, which has applied for the loan is not
eligible then bank, refuses to give loan or sometimes the less amount is lend by the bank.

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POLICIES OF BANK ALFALAH

The policies are the written rules, which an organization follows, and perform its
functions according to these rules. Bank Alfalah follow the policies of State Bank of
Pakistan basically but there are also some internal policies but these policies are not in
conflict with the policies of SBP. Following are the major policies of Bank Alfalah

ASSET AND LIABILITY MANAGEMENT:

Asset and Liability Management is the optimum utilization of financial resources for
maximizing benefits. Alfalah Bank constantly tries to provide better service to its
customers and shareholders, and has always adopted such sound practices to meet
stringent standards set out by it.

LIQUIDITY & CAPITALRESOURCES MANAGEMENT:

The bank believes that it has sufficient resources to meet the present and foreseeable
needs of its business operations. The bank maintains its liquidity through the
management of its assets and liabilities. The bank places special emphasis on developing
and strengthening fund management policies and practices. To manage its liquidity and
resources the bank has a central treasury headed by a Senior Vice President. In its
formative stage, the Chief Executive Officer of the Bank was personally involved and
reviewed the liquidity position himself. Over the years, the monitoring and review
procedure has been institutionalized. Two committees monitor evaluate and authorize
different facts of treasury operation and functions, maintain an overview and check on the
Banks liquidity and capital position. The two committees are Treasury and Investment
committee and Asset and Liability committee. The bank assesses its liquidity profile,
such as asset marketability, asset to liability repayment, maturity characteristics and

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funding diversification under various scenarios. The bank now believes it has consistently
improved its ability to withstand liquidity shocks, both macro and institutional specific.

Over 31% of the banks assets are highly liquid and have excellent quality. The bank
maintains excess liquidity through its base of liquid assets. Liquid assets consist of cash,
balances with State Bank of Pakistan, balances with other Banks. Money at Call & Short
Notice, Investment in FIB & TB and Bills payable outside Pakistan which are drawn on
top 100 banks. Over the past five years the bank has continued to diversify its liabilities
to ensure sufficient resources are always available to meet its present and future liquidity
and capital requirements.

There have been three key elements to the Banks liquidity strategy. The first to maintain
alternative funding sources so that debt obligations maturing in the near future can be
funded without raising fresh liabilities or liquidating business assets. Consequently the
bank kept vigilance on its loan build up which remained significantly lower than its
peers. Depending on the nature of the maturity risk and profile of the credit asset, the
bank's policy is to maintain a loan to deposit ratio of approximately 60%.

The most significant alternative funding source remains the proceeds from executing
repurchase agreement (reports) and obtaining a secured bank loan from the Money
Market using approved government securities. This policy ensures that the bank remains
highly liquid especially during the turbulent periods and yet earns a reasonable return.

The second element of the Banks liquidity strategy, most marked in the earlier years, was
to have a significant asset build-up in self liquidating Bills of Exchange. The top 100
banks letter of credit secures such bills of exchange with maturity varying between 30 to
120 days. Such Bills of Exchange have a ready secondary market. Again while risk
weighed returns have been above average absolute yields have been lower.

The third element was to diversify the deposit base geographically. Though the Bank
does not plan to engage in managing an extensive network of branches, it will continue to

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add new branches till a critical mass of network in all the major urban centers of Pakistan
is established. The bank's advent into the Consumer Banking market was fueled with the
desire to develop a broad base of stable deposits. This resulted in the Bank's saving
account, its most stable product's continued growth at an accelerated rate.
The bank pursues Capital Management with the objective of enhancing its ability to
execute its expansion based, strategic business plan while retaining financial flexibility.

The bank actively monitors compliance with regulatory capital requirements. In fact, the
Bank's capital adequacy has been far in excess of has been required by law. Though not
mandatory we have maintained strict adherence to the guidelines of the Based Committee
on banking supervision.

CREDIT RISK MANAGEMENT:

The Credit Division, manned by two Executive Vice Presidents and two Senior Vice
Presidents, is responsible for developing credit policies as well as for monitoring and
managing the overall credit risk.

The governing body of the credit policies is a high-powered credit committee which is
composed of the three Regional General Managers, like Executive Director, the CEO and
the credit department head.

The credit department is bifurcated into two units. Credit compliance unit is responsible
for evaluating the credit compliance unit is responsible for evaluating the credit
worthiness of each borrower and monitoring the relationship. One officer is responsible
for reviewing the entire credit risk profile of a borrower regardless of nature and
geographical diversification. Credit officers also monitor the credit risk usage by entity
versus the limits at the product & business activity level.

The remedial asset management unit of credit department, also headed by an Executive
Vice President, is responsible for protecting the bank from a credit translating into a

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default and a potential loss to the Bank. Any account, which in view of the credit
committee shows signs of softening, is transferred to the remedial unit.

The Board and the management of the Bank are alert to mitigating credit risk and have
evolved and implemented a tiered level of monitoring and evaluation. The credit
committee governs the development of credit policies as well as approving monitoring
and managing the over all credit risk. The credit committee meets regularly and actively
manages the credit committee meets regularly and actively manages the credit portfolio
to ensure that the risk characteristics and degree of diversification conforms to the
corporate policies.

The credit manual, a comprehensive document details out the bank's credit guidelines and
procedures. This manual was prepared and instituted as early as 1993. For large corporate
relationships statistical cash flow modules are used to guage the credit worthiness and
potential magnitude of the exposures.

POLICIES CONCERNING EMPLOYEES:

ALFALAH BANK provides such a cooperative and healthy environment for working to
its employees, which motivates them and increase heir morale. The morale of workers in
Alfalah Bank is very high and this is due to the keen interest and careful supervision of
the top management. Following are the reasons to this high level of morale amongst the
employees of Alfalah Bank.

 Top management's trust on the employees

 Hearing the problems of the employees
 Establishment of good relationship between the workers and the management.
 Excellent working conditions.
 Allowances.
 Medical facilities.
 Promotion of employees on time.

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 Reward in the form of cash or bonus.

 Highly satisfactory lead of salary.
DEVELOPMENT POLICIES:

The senior officers work in close coordination with the officers of the middle level and
lower level staff. All of the people work together in a very comfortable environme the
branch manager is mostly directly involved in the problems of the employees in the bak
for solving them. This increases the inter-personal relation between the employees. That
is how the coordination between the senior and junior employees increases.

The administration department and the personnel/human resources department take care
of the inter-personal relationships and facilities all the matters concerning personal and
official matters.

PERSONALITY DEVELOPMENT POLICIES

Bank Alfalah also adopts the policies regarding the personality developments of the its
employees. Personality means how people affect others and how they conceive and view
themselves as well as their pattern of inner and other measurable patterns, and the
personality of its workers and the development of the personality of an individual is a
continuous process by which people learn how to behave, people start thinking and
solving the problems. Alfalah Bank enables its workers to use their knowledge more
effectively.

INVESTMENT POLICY

Bank treasury office in Karachi makes decision about investment.

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USES OF FUNDS

Funds are converted in

1. Advances
2. Investments
3. Liquidity

Bank Alfalah Limited invests portfolio mainly comprising of federal and provincial
government securities, participation term certificates, treasury, participation term
certificates, treasury bills and shares of joint stack companies.

 Bank Alfalah Ltd basically invests in the following areas:

 Basic metals and engineering units
 Sports goods
 Food processing units
 Textile and weaving units in foreign currency
 Surgical instruments
 Service industry
 Leather garments industry.

SOURCES OF FUNDS

1) Current Accounts
2) PLS Saving Bank Accounts
3) Interests-bearing (Saving Bank Accounts)
4) Fixed Deposits
5) Other deposits schemes, authorized by the central office
6) Royal profit account

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In Alfalah Bank they invest in Government securities as well as Private securities. They
invest in federal and provincial securities and treasury bills. In Government securities,
return as well as risk is low. In Private securities, return as well as risk is high. But they
invest more in Government securities than Private securities.

LENDING POLICY

The major function of commercial banks is to make loans to businessmen, traders,

exporters, etc. Of all the functions of Alfalah Bank lending is the most essential function.
The advances consist a very large portion of a bank's total assets. Management decides
how many types of loans will be made to whom and under what circumstances. Lending
is the major business of Alfalah Bank than investing in securities.

CRITICAL OF EVALUATING LOANS

1. Repayment of loan
2. Safety
3. Validity of purpose

The liquidity needs of individual banks are related to the demands made upon them for
funds over periods of time. It can be defined as
"A bank's (or the banking's system) ability not only to meet possible deposit
withdrawals but also to provide for the legitimate credit needs of the community
(or the economy as well."

SERVICING POLICY:

The management of Alfalah Bank is very conservative about servicing policy. Alfalah
Bank provides following facilities.

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COLLECTION OF CHEQUES:

It acts as agent to its customers in the collection and payment of cheques.

GENERAL UTILITY SERVICE:

a. Issuance of traveller's
b. Issuance of bank statement
c. Provides phone service
d. Air conditioners and heaters
e. Lockers facility to customers
f. Facility to customers to pay the bills either through cheques or debiting their
accounts.
g. Provide a variety of accounts.

PERSONNEL POLICY

SALARY ADMINISTRATION:

Salary is decided by the decision of top management in the central office.

SELECTION AND TRAINING:

Written test and interview appoint employees. After selection, they are trained in Alfalah
Banks own training academy in Lahore.

RECRUITMENT:

Human Resource Department does recruitment of employees. According to the

management of Alfalah Bank. Bank select the most capable, efficient, skilled and
confident employee through recruitment.

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ACCOUNTING POLICIES

These accounts have been prepared under the historical cost convention and are in
conformity with the International Accounting Standards, where applicable, and the
Banking Companies Ordinance, 1962 in all material respects.

In accordance with the Islamic Banking System, trade related modes of financing include
purchase of goods by the bank from its customers and immediate resale to them at
appropriate mark-up in price on deferred payment basis. The purchases and sales arising
under these agreements are not reflected in these accounts as such, but are restricted to
the amount of facility actually utilized and the appropriate portion of mark-up thereon.

INVESTMENTS:

Investment securities are started at cost less provision for permanent diminution in value,
if any. Dealing securities are stated at the lower of cost or market value. Profit/loss on
sale of investments is dealt with through the profit and loss account in the year in which it
arises.

The bank enters into transactions of repurchase and resale of government securities at
contracted rates for specific periods of time with other financial institutions. These are
recorded as follows:
a) In case of sales under repurchase obligations, the securities are deleted from the
books and charges arising from the differential in sale and repurchase values are
accrued on a prorata basis and charged to expenses. Upon repurchase, the
securities are reinstated at their respective original costs; and
b) In case of purchases under resale obligations, the securities are booked at
contracted purchase price and the differential in resale and purchase price is
amortized over the period of contract and recorded under income.

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ADVANCES

Advances are stated net of provisions for bad and doubtful debts, if any, which is taken to
the profit and loss account.

The Bank makes provision against advances in accordance with the Prudential
Regulations issued by the State Bank of Pakistan. Accordingly, the mark-up on such
advances is also suspensed and excluded from income in the profit and lass account.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash and balances with treasury bank and balances
with other banks and call lendings.

Off-settings

Financial assets and financial liabilities are only off-set and the net amount is reported in
the financial statements when there is a legally enforceable right to set-off the recognized
amount and the bank intends either to settle on a net basis, or to realize the assets and to
settle the liabilities simultaneously. Income and expense items of such assets and
liabilities are also off-set and net amount is reported in the financial statements

FIXED ASSETS AND DEPRECIATION

Owned

These are stated at cost less accumulated depreciation. Depreciation is computed at

varying rates by taking into consideration the estimated useful life of the related assets,

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 BANK ALFALAH Ltd

using straight-line method. Depreciation on additions/disposals during the year is charged

for the proportionate period the assets remained in use.

Gains and losses, if any, on disposal of fixed assets are taken to the profit and loss
account.

Leased

Assets subject to finance lease are stated at cost less accumulated depreciation.
Depreciation on leased assets is provided from the date of the lease agreement using
straight-line method.

The obligations outstanding under the finance leases less finance charges relating to
future periods are shown as liability. The finance charge is calculated at the mark-up rates
implicit in the leases and taken to the profit and loss account.

Taxation

Provision for current taxation is based on taxable income at the current rates of tax. The
Bank accounts for deferred taxation using the liability method on all significant timing
differences.

FOREIGN CURRENCIES

Assets and liabilities in foreign currencies are translated into Rupees at the rates of
exchange ruling at the balance sheet date except those covered by forward exchange
contracts, which are translated at the contracted rates. Exchange gains and losses are
included in the profit and loss account for the year in which these arise.

STAFF RETIREMENT BENEFITS

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 BANK ALFALAH Ltd

The Bank operates an approved Contributory Provident Fund Scheme through a Trust for
all its permanent employees.

REVENUE RECOGNITION

Profit on advances and investments is recognised on an accrual basis, except income, if

any, which warrants suspension in compliance with the Prudential Regulations of the
State Bank of Pakistan.

Commission earned on letters of credit and guarantees is also recognised on an accrual

basis.

OTHER POLICIES

CLIENT SATISFACTION:

Alfalah Bank's consumer banking department aims of profit maximization through client
satisfaction. They have no target market as such but are willing to take on whoever meets
the bank's requirements.

However, the minimum balance requirements of their various saving schemes clearly
show them to be targeting the middle-income group. Target markets could also be
defined according to branch location. For example the Lahore Stock Exchange branch
visited was a primarily megeting broker.

COMPETITION:

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 BANK ALFALAH Ltd

Alfalah Bank, like Union Bank, tends to compete with local private banks, claims not be
ignore the multinational banks.

BANK TIMINGS:

The bank claims to be the first to offer evening banking facilities. It offers transactions
facilities from 9:00 a.m. to 5:00 am. In this time customers are attended even if there is a
lunch brake in the bank, the customers are provided with the services.

There is no problem in the implementation of the policies within the organization as but
sometimes customers do argue on the policies but this problem is solved by making the
customer aware of the rules and regulations of the bank and SBP. So the policy
implementation is not a serious problem in the organization as bank such policies which
are for the betterment of the employees and customers both.

PROCEDURES OF BANK

The bank has different procedures regarding various departments. Every department is
performing according to its requirements. But basically the procedures are not very
complicated or difficult to understand. These procedures are very simple. Some of the
basic procedures are of the main departments are given bellow.

ACCOUNT OPENING:

Account opening is the basic procedure of the banking. Bank advances on its basis as
through account opening the people deposit money in the bank and bank makes its
deposits.

The account opening procedure involves the filling of the account opening form. It is on
the will of customer to open saving, current or royal profit account. The minimum initial

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 BANK ALFALAH Ltd

deposit for the saving account is 5,000, for current is 25,000 and for Royal account is
50,000.

REQUIREMENT OF THE BANK:

 A reference from the current account holder of the Bank Alfalah.

 Copy of I.D. Card

The reference is sometimes provided by the B.D.Os if any customer does not have any.
The bank use to fill a KYC (Know Your Customer) form. This form is filled by the
account-opening officer. The account opening form consists of 4 documents i.e. Account
opening form, S.S.C (specimen signature form), checque book form, K.Y.C.

After the filling of the form the account number is given signatures of the introducer are
verified and the signatures of the account holder is admitted. The I.D. card’s copy is
attached and verified and then this account is posted in the computer. Now the customer
is the account holder in Bank Alfalah. a letter of thank is posted to the customer on
opening of the account. Customer is supposed to show this letter on the collection of the
cheque book.

The deposit slip is filled to deposit the amount. The cheque book is given next day. On
cheque book form customer declares that who is going to collect the cheque book.

After posting the account list is made of all the accounts opened in a day and that list is
received by the CD Incharge.

DEBIT CARD:

A debit card is the ATM card. This is known as HILAL CARD in Bank Alfalah. There is
no fee for the debit card. The customer fills only a form in order to have a debit card and
2 passport size photographs are required.

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CLEARING OF CHEQUES:

In this department chques of the other banks, either they are inward or outward, they are
verified and cleared by the bank and on clearing payment is made. There are two types of
cheques:
 Inward cheques
 Outward cheques

INWARD CHEQUES are of the same branch. They come from some other bank or
branch. Bank has to pay the amount mentioned in the cheque. It is actually loss to the
bank.

OUTWARD CHEQUES are the cheques which bank send to other branches for
payments. It is profit to a bank.

This all process of sending and receiving a cheque take place through NIFT. This a
National Institute of Facilitaion Technology.

Three types of stamps are there on the inward cheques crossing, clearing and payees
account. Crossing stamp is to make the cheque secure.

O.B.C: Outward Bills for Clearing. These are outstation cheques. These are send to the
branch of the bank in other cities. It is sent to the main branch. In case if there is no
branch in that city then it is sent directly to the owner branch of the bank.

If bank sends cheque directly to the owner branch of any other bank then it will make
D.D (demand draft), so that cheque can be drawn from any branch of that bank and

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 BANK ALFALAH Ltd

sender bank cuts the charges for it. Similarly receiver bank also cuts the charges for ir.
The sender bank cuts Rs.150 for it.

If the bank has branch in other city, then it will send the cheque to main branch. Main
branch will deal with the respective branch and send us the I.B.C.A.(inter-branch credit
advice). Then the receiver bank clears the cheque and makes the transaction by sending it
to the mentioned branch. I.B.C.A contains the O.B.C number.

REMITANCES:

Remittance is the mode of fund transfer. Pay orders, D.D, T.T (telex transfer) and Pay
slips are its tools.

Pay Orders are made when funds are transferred within the city. The branch which
issues the pay order, it pays the amount. There is no limit of the mount. Its charges are
Rs.50.

Pay Slips are the expenses of the branch. These are been payed by the bank as salaries or
expenditures e.g. plants expenditure

Telex Transfer is the T.Ts. in this you just order to transfer the funds.

Demand Draft is for the payments outside the city. It carries sign of both powers of
attorneys of the bank which issues it and to whom it is issued. It is been paid to the bank.

RTC are the rupee traveler’s cheque. They are issued by the min brancha nd they can be
cashed from any branch of the Bank Alfalah.

Online Banking: In this cheques can be cashed from any branch. You give up th cheque
to bank. Bank faxes it to respective branch or mails it. They verify the signatures and then
the payment is made.

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 BANK ALFALAH Ltd

Pay slips and pay orders are been debited and credited by the banks own account.
T.T and D.D’s are been credited by the head office.
COORPORATE FINANCE

In corporate finance loans are given for the business. Corporate finance covers import,
export and all other businesses. If any firm applies for loan, bank evaluate it and analyze
it on financial basis that either it is suitable to finance the firm or not or is the firm able to
pay back the loan or not. Bank performs these formalities to be on safer side. The officers
visit the site for which loan is demanded and complete the documentation.

REQUIRED DOCUMENTS:

 Request letter for availment of financial facilities (mention nature and amount of
facilities required along with tenor, purpose and repayment terms for finances)
 Borrower’s basic fact sheet 9format enclosed)
 Audited financial statement for the last three years
 Existing credit facility. Copy of sanction letter from-----------
 Copy of evaluation report of property (factory, plot, house) mortgage with--------
(revaluation of there collaterals to be carried out by B.A.F’s approved evaluator)
 List of customers (buyers and sellers)
 Details about the process (production/services) and manufacturing capacity
 Photocopy of property documents.

DOCUMENTS FOR PROCESSING OF CREDIT LINE

 Profile of the company, brief history and future prospect.

 Industry profile and market position of the company
 Line of business
 Management structure and organogram

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 BANK ALFALAH Ltd

 Bank account statement for the last one year

 Net worth of the directors of the company on prescribed format
 Brief profile and history of all directors/partners/proprietors
 Copy of NTN Certificate
 Copy of memorandum and articles of association with certificates of
incorporation duly certified by the company secretary
 Photocopies of NICs of all directors
 Certified copy of board resolution to borrow
 Form 29 duly certified by SECP.

TRADE FINANCE

In trade finance the loans are given to the import and export business. The procedure is
more or less the same as corporate finance. Similarly the documents required are also the
same exception of few documents.

CAR FINANCE

Car finance is not a new product in the consumer market but ha rather gained popularity
because of growing inflation and increase in the price of motor vehicle. Since the
purchasing power of consumers is continuously declining, most of the leasing Companies
and banks are offering car financing.

The option of Car Financing presents an ideal solution for the borrowers who are able to
pay smaller amount by way of monthly installments instead of total cost of the motor
vehicle in one go. Also, unlike leasing, car financing allows the vehicle to be registered in
the borrower’s name.

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 BANK ALFALAH Ltd

An integral part of the Consumer Finance Alfalah Car is intended to be a term finance
facility, which shall be repayable in equal monthly installments. The scheme will provide
the opportunity for the borrowers to own a brand new car.

The bank provides automobile finances under the “Murabaha” mode of financing in
accordance with the Islamic injunctions and in accordance with the guidance and
approval provided by State Bank of Pakistan.

DOCUMENTS REQUIRED

 Two passport size photographs

 Copy of national ID card
 Bank statement of last 6 months
 Salary certificate specifying the name, date of joining, designation and salary
details
 Business proof (for a business person)
 Current utility bill of your residence in Pakistan
 Copy of the ID card of the co-borrower (if the car is to be in the name of the co-
borrower)

HOME FINANCE

The home finance department lends money for the construction, buying and renovation of
the home. It is a very good scheme as it has the lowest mark-up, quick processing,
multiple repayments and free valuation.

Following are the mark-up rates offered:

Base Option:
It is the standard variable rate option, which is priced at a certain percentage over State
Bank of Pakistan Discount Rate. In this bank guarantees that within one month of a

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change in the SBP discount rate, bank will amend the SVR so that it is no more than the
agreed percentage above the discount rate for the life of financing. In case of repayments,
it will attract a charge of up to 5% of the outstanding amount if paid through another
lender.

Fixed:
Mark-up stays the same for a set of period of 1,2 or 3 years, even if general mark-up rates
go up or down allowing the borrower to plan his budget with confidence. At the end of
the fixed rate period, the borrower will be offered a fresh rate option or he may be opt for
the bank’s SVR option.

Home Start:
This option is specially designed for young home owners. With home start option; the
borrower has an opportunity to reduce the monthly payments for up to 3 years by paying
only the mark-up component. After the first 3 years, the principal payments also begin.
Charge for early settlement of financing would be up to 5% of the outstanding amount if
paid through another lender.

ELIGIBILTY:
 Resident of Pakistan
 Wish to acquire/construct a residential accommodation in Karachi, Hyderabad.
Lahore, Multan, Faisalabad, Sialkot, Gujranwala, Rawalpindi, Islamabad,
Peshawar, Quetta, Sargdha and Wah.
 Are interested in obtaining financing for a residential property located in the
urban developed areas in the above-mentioned cities.
 Age limit 25 or above and under 65 years
 Have a minimum gross income of Rs.200,000/per annum

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 BANK ALFALAH Ltd

 Are a permanent employee with at least 2 years of working experience or a self-

employed individual or a businessman with at least 3 years of business track
record

DOCUMENTS REQUIRED:

For Salaried Person:

 Two recent passports sized colored photographs
 Copy of NIC
 Copy of last pay slip duly attested by HR department
 Salary certificate, showing gross salary
 Employment verification
 Copy of last six months credit cards bills.

For Business Person

 Two recent passports sized colored photographs

 Copy of NIC
 Copy of last six months credit cards bills
 Copy of last six months bank statements
 Copy of current professional association membership
 Copy of partnership deed (if applicable)
 Sole proprietorship letter
 Partnership status letter
 Copy of latest form 29 duly attested by the company secretary (if applicable)
 Latter from company secretary confirming the status and share-holding (where
applicant is a director of a company)

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 BANK ALFALAH Ltd

ALFALAH VISA CARD

Bank Alfalah offers the facility of credit card to its customer. There are two conditions
they are either for salaried or businessmen. But now Alfalah has offered some more
credit cards for housewives, students and even for the servants of the homes.

Salaried Person:
The conditions for salaried persons are 10,000 minimum salary. The credit limit is
multiplied 3 times by the salary of the employee. In Bank Alfalah some of the companies
are listed with the bank these are called as CCM. For the employees of these companies
the minimum limit of the salary is 8000. The employees with the minimum salary 8000
are given the blue cards. In CCM the employees who are graduate and have the degree
of Bachelors can apply.

In Non-CM (companies which are not listed) the blue card is offered to the employees
who have minimum 12,000 salary.

DOCUMENTS REQUIRED
CCM:
 Salary slip
 Copy of NIC
 Bank statement
 Copy of graduate degree

NON_CCM:
 Salary slip
 Copy of NIC

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 BANK ALFALAH Ltd

 Last six months bank statement

BUSINESS PERSON
The minimum income limit is more for the business persons. The bank offers Visa gold,
classic etc for them.

DOCUMENTS REQUIRED
 Bank statement (it must have 25,000 in the last bank statement)
 Business prove
 Copy of NIC

51 days of limit is given to the customer to pay back the credit. Salary increments can be
adjusted in the credits.

Women Exclusive cards are being offered to the housewives. These cards includes the
expenses for drivers, house staff, daughter and son etc. the limit of the credit is decided
by the customer.

Student Card is the offer for the students of some particular institutions including
University of Punjab, LUMS, King Edward, UET, Lahore College University. Credit
limit is between 15,000-25,000.
Conditions are as follow:
 Current student of the institute
 Last receipt of Fee
 Recommendation letter from director
 Copy of NIC

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BANK ALFALAH Ltd

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BANK ALFALAH Ltd

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 BANK ALFALAH Ltd

Bank Alfalh is one of the leading banks in Pakistan. It is trying to lead the market in each
and every aspect. Human resource is the most important resource for any organization.
To utilize this resource efficiently Bank Alfalah is trying its best to deal with all its H.R
Issues in effective way. They are creating opportunities for new people, helping their
people in career development, providing them with different facilities and good working
environment etc.

OPPORTUNITIES FOR NEW PEOPLE

Bank Alfalah is creating opportunities for new people in a sense that they are providing
job opportunities for the people as they are opening their branches all over the country.
According to the annual report of 2003 there are 59 branches in 23 cities. The application
forms are available online and the candidates can apply online for the job. The written
tests are conducted which is followed by the interview for selection.

Recently Bank Alfalah has sold its shares. These shares were available for everyone
without the restriction of any criteria. Through this selling of shares bank has given the
opportunity to everyone to share the prosperity of Bank Alfalah and has involved people
in their business.

Moreover they are offering internships for thee students. Thus they are providing an
opportunity for the students to get introduced with the banking policies and procedures,
and office work.

Bank Alfalah has also offered the consumer banking, which is becoming a challenging
industry in Pakistan. However because of the prudent financial policies and clear
understanding of the market scenario, they have been able to maintain its position among
the leaders in consumer banking in Pakistan. While offering its products, Bank Alfalah
make sure that these are firmly in line with the fast changing economic scenario and
cognizant of the requirement of the consumers. The products offered by the bank are as
follow:

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 BANK ALFALAH Ltd

Branded Saving Schemes have been set up to address a wide range of consumer needs.
e.g. The Royal Profit Account is targeted at both the individual investor as well as the
institutional investor.

Alfalah Car Financing gives the customers an opportunity 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.

Alfalah Visa Credit Card has been well received in a fiercely competitive market. The
Alfalah card centers in Lahore and Karachi are state-of-art facilities that are dedicated to
providing the highest levels of service to clients. Although the card centers operate as
independent units, yet their operations synchronize with the rest of the organizational
workflows, which is essential for efficiency. These cards are available without any
joining fee and with low mark up. Alfalah offers different credit cards for salaried
persons, businessmen, and housewives and even for students on simple terms and
conditions.

Home Financing For Pakistani and Non-Resident Pakistanis (NRPs) offered by Bank
Alfalah have been responded well by the consumers. The major attractions for the
customer are the appealing rates for loans. Bank offers loans at lowest mark-up and
participates up to 70%. This is a good opportunity for he people who want to have their
own home but cant afford to have. As the repayment of the loan is easy and there are
multiple repayment options which make the return of loan easy for customer.

Online Banking and MoneyGram Remittance Services create an opportunityfor the

customer to bank at their own convenience when conventional branch banking is not
required.

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CAREER DEVELOPMENT

Development of professional skills and knowledge of the employees is essential for the
efficient functioning of any organization. At Bank Alfalah appropriately designed
policies and practices have been instituted to achieve this strategic objective.

The state-of-art training center at Karachi remains indispensable in imparting valuable

training to all our team members. This has become especially important considering the
pace of change that the banking industry is exposed to. Consequently training ensures
that change is successfully navigated to discover potentially beneficial opportunities that
can be transformed into direct gains for the bank and its customers. This also positively
impacts the confidence levels of the employees translating into better job performance
and satisfaction. During the year 2004-2005 bank aims to establish a similar training and
development facility in Lahore.

TRAINING:

When the individuals are selected for the job, they are given 6 months tarianing, to get
them introduced with the policies, procedures of the bank and with the job they will
perform. This is a probation period. During the probation period, each individual is
attached with some senior who watches the senior's activities and the working activities.
The senior's liability is to train him/her, how to perform the job efficiently, how to deal
with the customers, how to report to the seniors, and how to achieve the organizational
goals, successfully.

At the end of six months' if the trainee learns the job to the satisfactory level, he/she is
appointed on the job, permanently. But on the other hand, if the management is not
satisfied with his/her performance, the probation period is extended to nine-months or
sometimes to one year.
During the training period of the new employees, the management also observes job
functions, weaknesses and strengths of the employee. From these observations, the

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management gets the feedback in deciding that the new employed person will be suitable
for the assigned job or not or for which area he/she would be most suitable. Normally,
he/she is trained in a well-organized way that the management appoints him/her
permanently, on the job in the organization. On-the-job training is also given to the
employees. Bank Alfalah Limited also organizes the training programs, the training
workshops, time by time, which are compulsory to attend by the employees.

THE TRAINING PROGRAMS

The training programs are organized by the H.R department ot the bank. The training
programs for the existing employees are organized, whenever the training is needed in the
different places. The department heads are supposed to consult the Human Resource
Department for the need of training in his department. The Human Resource department
set the schedule of training. The Human Resource manager gives the date and time of
training to the department head for the training of the department. The Human Resource
department supervises the training and it provides all the necessary materials and funds to
the training team.

Sometimes the outside expertise is hired, by the organization if the bank has not the
training facility.During the training program, the organization gets feedback from the
trainees that whether they are satisfied with the existing training facilities or not. If they
are not satisfied with existing training program, what kind of improvements are required
in the training program. Based on their suggestions, the management makes some
necessary changes in the training program, after having the discussion on this issue in the
conference or meeting.
On the other hand, after completing the training of employees, the management also gets
the feedback from the concerned department heads that whether the trained employees
are trained according to the requirements or not. Based on the feedback from the
department heads, the necessary modifications and improvements are done in the existing
training program.

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 BANK ALFALAH Ltd

During the training, the employees are given some of the practical problems and are
asked to give the solutions and suggestions regarding that particular problem. This makes
the employees more confident and use to with the practical problems in the organization.

Bank Alfalah Limited presently is not facing any problem, regarding "Training". So there
is no weakness of the bank in the "Training" policy.

On-The-Job Training: In this approach of training employees are put in the actual work
situations by giving them some cases to study and decide that either bank should finance
the subject or not. The employee gives the decision and reason for that decision.

Off-The-Job Training: This includes different seminars, workshops and classroem

lectures, in addition with simulation exercises.

EMPLOYEE DEVELOPMENT

When the management is satisfied with the training of the employees, it appoints them on
the specified jobs on permanent basis, in the organization. During their job in the
organization, the employees are developed throughout their job in the organization. The
organization develops the employees in different ways.

In the conferences and meetings of the management, the employees get the chance to
take an active part. In conferences and meetings, these employees give the suggestions
and watch the whole procedure and activities there. These employees observe there the
way of attending such meetings and the seminars.

The employes are allocated the practical problems, during their job in the organization.
They are asked to give the solution of such problems and also give the suggestions for the

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 BANK ALFALAH Ltd

improvement of the system. Giving to much priority to the employees makes them more
confident and satisfied and as a result, they take much more interest in their work.

The management organizes the coaching classes in the organization for the development
of the employees. By attending such classes, the employees learn more about the
organization and due to this additional knowledge and skills, they have the chances of
promotion.

Bank Alfalah arranges the competitions on different topics and issues, other than the
work for the entertainment of the employees. The employees take part in such
competitions and the winning employees are awarded the prizes in the shape of money
and other house holds

For the employee development, the management also organizes the formal training
programs and the special courses are offered to the employees. After the completion of
such courses, the employees are tested that whatever they have gained from the course, is
it sufficient or not.

Usually, the employees are given the opportunity to attend the courses on
communication skills, advertising, managing sales, public relations, and the human
resource management programs. The objective of such programs is to educate
employee in almost all disciplines of their field not only about their specific job. The
bank affords all the expenses of such educational programs.

METHODS OF DEVELOPMENT:
The methods of development followed in Bank Alfalah are as follow:

JOB ROTATION:
The employees are given chance to work on different positions in an effort to expand
their skills, knowledge and experience. This job rotation is mostly horizontally but
sometimes it is also in vertical direction.

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 BANK ALFALAH Ltd

ASSISTANT TO POSITION:
Employees are transferred within the branches and hence they get chance to work under
experienced people and head and that’s how they learn more.

LECTURE COURSES AND SEMINARS:

These courses and seminars are arranged on regular basis especially for the BDOs
(business development officers). Through this they are able to acquire knowledge and
develop their conceptual and analytical abilities.

These regular trainings, workshops, seminars and courses help in employee in his/her
career development and full understanding of the techniques and policies of the bank.

BASIC PRINCIPLES FOLLOWED IN H.R.M

RECRUITMENT: It is the process of finding capable employees for the bank. The
applicants apply online for the job; as bank use to advertise online for the jobs,
advertisement in the newspaper is also given. So one who wants to do job in Bank
Alfalah, should keep in touch with the web site of the bank. Recruitment seeks to create a
pool of suitable applicants. Once that Pool has been assembled, the selection process
begins.

SELECTION: Selection process is a series of different steps, which include written

tests, interview, and finally when a person is selected final interview is conducted that is
basically a negotiation on the pay and working environment.

This the basic selection method used in the Bank Alfalah. The bank sort out the capable
and suitable employees through selection process. They try to provide their employees

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 BANK ALFALAH Ltd

with complete job security and good working environment. They are been provided with
all he benefits and facilities and try to make them perfect in their work.

EMPLOYEE BENEFITS:

Bank Alfalah has emerged as a caring bank in the market. It not only cares for its
customers but also for its employees. They try to benefit their employees as much as
possible. Many of the benefits and compensations are given to the employees. A very
simple example is of O.D i.e. over draft facility or waving of charges in case of O.B.C.
Following are some other benefits are discussed in detail.

PAY INCREAMENTS
Bank Alfalah provides a satisfactory pay structure to its employees. Although it is not the
best pay structure but it is satisfactory for 90% of its employees. The management makes
regular increaments in the pays of its employees. The pay increases with the promotions.
The most important thing is the working environment and benefit, which they provide to
their employees and due to this the salary take the secondary position for employees.
However bank is concerned to provide a better salary plan to its employees.

.
BONUSES
Bonuses depend on the annual performance of the bank. The number of bonuses varies
every year according to the performance and profit gained by the bank. In 1996,on the
basis of profit and performance of the bank, 3 bonuses were announced. These bonuses
are just like rewards for its employees and act as a motivating factor.

HOUSE RENT
Bank Alfalah is also provide the facility of house rent to its employees. They are paying
45% of basic salary as house rent allowance.

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 BANK ALFALAH Ltd

MEDICAL ALLOWANCES
Bank Alfalah Limited is providing 12% of basic as a medical allowance to their
employees. The medical allowance is the basic benefit, which the employees of Bank
Alfalah get, as everyone requires medication either for himself/herself or for his/her
family. It also acts as a motivator for the employees.

GROUP INSURANCE
Bank also insures their employees for their safety. As it is according to labour law so
bank obeys this law.

REWARDS
The employees will always be motivated if they are rewarded for their great performance.
Bank Alfalah also reward their employees in the shape of cash increments and promotion
on their performance in the bank. These rewards motivate other employees to perform
well at their job.

PROMOTION
Promotion is another type of reward, which is given to employees and motivates them if
it is on regular basis and timely. The promotion is based on the following criteria:
• On the past service record and performance appraisal system.
• Individual evaluation of the person.
• Recommended persons by the branch manager and adequately qualified
persons are promoted.
• The vacant seats available.
• Capability of the person

HOLIDAYS
After a hard work and continuous effort people want to have once a long leave and also it
is their right to have vocations or holidays for relaxation. Bank Alfalah provide this

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facility to its employees. This is called as the privilege leave. Bank Alfalah Limited
provides 30 days privilege leave. The bank also gives 10 casual leave to their employees.

LOAN FACILITIES
Bank Alfalah provide the loan facility to its employees but only to those employees who
have worked for at least three years in their bank. The loan of house is equivalent to 100
basic salaries, which should be returned back wit in 20 years at 6% of interest. This is a
major step taken by the Bank to motivate their employees.

JOB CHOICE
The privilege is given to the employee to choose the suitable job for him/herself. If
employee thinks that he/she is not fit in any particular department, he/she is given the
chance to change the department. This reduces the stress from the employee and makes
them comfortable.

CONVEYANCE FACILITY
This facility is given to only the executive officers. They are provided with cars.

PROVIDENT FUND
A separate provident fund is been established by the bank for their employees. It totally
depends on the employee to avail this advantage or not.

ENTERTAINMENT ALLOWANCE

Entertainment allowance is given to all the bank employees. The range of the allowance
varies according to the range of the employee.

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 BANK ALFALAH Ltd

I.T SUPPORT

The employees of the Bank Alfalh are provided with computers for the support of their
work. Sometimes in small branches this facility is not available for each and every
employee but in large branches, everyone has his/her own computer system. This support
helps the employee to work effecieently.

There are no such information systems provided in the bank except one. It is the TPS
named as BANK SMART. It is software, which records the daily transactions. It is good
software but requires some more features to become effective and efficient software.

Online banking is another I.T support provided to the employees and customers both.
This is a good advancement, but it also requires more changes to work efficiently. Online
banking is done through mails and faxes. Sometimes even telephones are used in some
cases e.g. confirmation of cheques.

In short I.T support is provided to the employees but the I.T system is weak and require
betterment in it.

CONFLICT OF INTEREST AMONG EMPLOYEES

The conflict of interest amongst the employees is in the form of leg pulling. Overall interest
of the employees is the prosperity of the bank but individually when one wants to get the
better position then comes the conflict amongst them.

Leg pulling does exist in this organization and similarly the favoritism. This results in the
promotion of the favorite employee but this practice is not very frequent in the bank. This
thing varies from branch to branch and on the people working in those branches but on
the whole it is not the strong practice.

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 BANK ALFALAH Ltd

The problems between individual and groups due to difference in cultural background,
ethnic differences, and difference in values, norms and standard of behaviours do not
exist in Bank Alfalah. More or less all the employees are from the same country i.e.
Pakistan so they have almost same norms and values and cultural background. These
problems exist where people are from totally different cultures and they have different
norms and values. As there are no such differences in the organization so Bank Alflah is
not facing as such any problem due to such differences.

However power struggle exist in the organization but it is mostly in the positive sense as
employees work hard to achieve a better position in the organization and for their
promotions. This power struggle sometimes takes the form of leg pulling which creates
problem but this is not at very large scale so organization is not facing any problem in
this respect.

CONTRADICTION IN PROMISE AND PRACTICE

There exist the contradictions in promise and practice on the behalf of organization but
Bank Alfalah tries to reduce this problem and tries to fulfill its promises. This
contradiction is due to the scarce resources but bank tries to come over this deficiency. So
it is not a very big problem as bank pays the immediate attention to the problem, which
occurs and tries to find out the solution as soon as possible.

LABOUR UNIONS

There are no such labor unions in BANK ALFALAH. so there bank is facing no problem
due to unions in the organization.

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BANK ALFALAH Ltd

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 BANK ALFALAH Ltd

STRENGHTHS

STRONG COMMITMENT
Bank Alfalh is committed to build new long lasting relationships through an assertion to
serve excellence and providing innovative products to meet the changing needs of the
valued customers of Bank Alfalh. Although still in its infancy compared to the exalting
banking standards, Bank Alfalah backed by a strong ABOU DEHBI group and inspired
by the vision of its Board and Management, has built strong customer based. The bank
provides a full range of banking services to corporate clients, while applying leading
technologies. Today the bank is well positioned to provide appropriate banking services
to customers.
Its focus is building relationship and being known by the way they do business. They
recognize that a banking relationship requires compatibility, communication and
cooperation and that each customer deserves nothing less than their full attention and
available resources to meet their financial objectives.

PERSONALIZED SERVICE
The core value and cooperte culture is based on the belief that superior personalized
service is the most imp product of the bank. They take time to get to know their customer
by the name and understand their business and personal financial needs. This one-on-one,
personalized service quality has served as Bank’s Alfalah’s unique signature and since
inception and continues to separate us from other financial institutions.

HIGHLY TRAINED AND SEASONED PROFESSIONALS

The banks team comprises of the most highly skilled and professional financial experts in
their industry. The managers, lenders and trust advisors offer the unique perspective of
knowing and understanding of local economy. The management focuses its attention on
making informed and feasible economic decisions, bringing better returns and more
profitability for our investors and customers.

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HEALTHY WORK ENVIRONMENT

The work environment of the bank is very healthy and encouraging. Senior staff in case
of any problem provides everyone with every possible assistance. Performance appraisal
letters are written to tribute the work of excellence. Top management had established a
very friendly relationship with lower level and middle level employees.

LOYAL EMPLOYEES
The organization is enjoying another strong benefit that hardly few companies enjoy that
is employee's loyalty. Every organization does it best to impede the employees from
leaving the job. The company has reduced the turnover rate to zero level all most.
Turnover rate refers to the degree of relinquishing jobs by employees. If it is high it had
negative impact upon profitability and vice versa.

JOB SECURITY
Employees at Bank Alfalah feel sever regarding their future. In any case here downsizing
is inevitable, employees are adjusted in some other tasks. No employee is threatened to
leave the job. Hence it contributes to greater extent, to good reputation of the company.

LOWEST MARK_UP
Bank Alfalah offers the consumer products at lowest mark-up. The Car Finance and
Home Finance scheme charges lowest mark-up from the customer. This is the main
strength that Alfalah has.

CREDIT CARD
The credit card is also strength for Bank Alfalah, as they charge no joining fee and no
renew charges are been charged by the bank. Also the mark-up charged is very low as
compare to other banks.

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WEAKNESSES

MARKETING DEPARTMENT
The marketing department of Bank Alfalah is not a very efficient department. It needs
rather more good strategies and more development. Similarly the employees in the
marketing department require more training and more facilities like conveyance or fuel
allowance as they have to spent money on their own for this purpose.

LOCATION
The location of the most of the branches of Bank Alfalah is not very suitable from the
commercial point of view. As some of the branches are far from the commercial areas. So
this affects the business of the bank.

ONLINE CHARGES
Online charges of Bank Alfalah are more than other banks that is another weakness, as
customer does not prefer their account to be online.

WEAK I.T SYSTEM

The I.T support provided to the employees is not very efficient. The information system
used in the bank is a good one but not very efficient. Similarly not all the branches have
the facility of ATM machine.

OPPURTUNITIES

AGRICULTURE FINANCE
Bank Alfalah is working on the opportunity to lend loans for the agriculture area. This is
an opportunity for all the banks in the market.

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 BANK ALFALAH Ltd

INDIVIDUAL FINANCE
The bank is planning to finance on individual basis. Soon the policy will be made for this
purpose.

SME FINANCE
The greatest opportunity for Bank Alfalah is to finance the small and medium enterprises.
Soon this operation will get started in Alfalah.

INTERNATIONAL MARKET
The bank has opportunity to move in the international market. Many of the branches of
the Bank Alfalah are opened in the other countries as well.

LENIENT POLICIES
The bank is trying to make its policies linient so that more and more people can be
benefited from the bank’s offers.

THREATS

COMPETITION FROM OTHER BANKS

Bank Alfalah is facing a tough competition in the market as many of the foreign banks
have started banking in the Pakistan and other local banks are also trying to decrease their
mark-ups and increase their deposits.

MARKETTING STRATEGIES
Bank has to improve its marketing departments in order to become apopular bank in
Pakistan.

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BANK ALFALAH Ltd

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 BANK ALFALAH Ltd

ECONOMIC OVERVIEW
As a result of stabilization of policies and a wide-ranging Economic Structural Reform
Programs put in place, Pakistan’s economy has largely been protected from the world
wide economic slowdown. The country has remained on the road to economic recovery.

In spite of competition due to reduction to mark-up/ interest rate b/w the peer banks, the
bank has shown an impressive performance. The bank with its professional outlook and
commitments maintain a progressive growth in resources mobilization and financing of
foreign trade

FINANCIAL HIGHLIGHTS

It has grown 51.84 % in total assets and 101.35% in its equity. The bank netted record pre
tax profit of Rs 3.506 bill, a 291.85 increase over the corresponding period last year,
which includes capital gain on Federal Government securities of Rs 2.19 bill. The
deposits of the bank rose to Rs 76.7 bill which is 48.4% higher than corresponding period
last year and indicative of increasing customers, confidence in your Bank, because of its
superior services and healthy practices. The loans and advances figure stood at Rs 50.37
billion, an increase of approximately 71% over the last financial year. This portfolio has
been supplemented keeping the Bank’s stringent and prudent policies in view.

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Annual Report 2003

BALANCE SHEET AS AT DECEMBER 31, 2003
Note 2003 2002
Rupees'000
Assets
Cash and balances with treasury
6 8,423,399 4,540,486
banks
Balances with other banks 7 626,917 232,728
Landings to financial institutions 8 7,437,733 4,634,398
Investments 9 28,903,596 24,470,314
Advances 10 49,216,120 28,319,401
Other assets 11 1,533,108 1,208,930
Operating fixed assets 12 2,791,626 1,760,774
Deferred tax asset 13 - -
98,952,499 65,167,031
LIABILITIES
Bills payable 14 1,208,671 758,961
Borrowings from financial
15 13,127,754 6,037,576
institutions
Deposits and other accounts 16 76,698,322 51,684,984
Sub - ordinated loans 17 649,740 650,000
Liabilities against assets subject to
18 - -
finance ease
Other liabilities 19 2,686,754 1,196,342
Deferred tax liabilities 13 323,010 1,186,501
94,694,251 61,514,364
NET ASSETS 4,258,248 3,652,667
REPRESENTED BY
Share capital 19 2,000,000 1,000,000
Reserves 790,374 365,727
Inappropriate profit 463,042 250,050
3,253,416 1,615,777
Surplus on revaluation of assets 20 1,004,832 2,036,890
4,258,248 3,652,667
Contingencies and Commitments 21

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER

31, 2003
Note 2003 2002
Rupees'000
Mark-up/ return/ interest earned 22 4,033,380 4,551,329
Mark-up/ Return/ Interest expensed 23 2,028,577 3,112,313
Net mark-up/ Interest income 2,004,803 1,439,016

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 BANK ALFALAH Ltd

Provision against non-performing loans

10.4 (87,091) (53,619)
and advances - net
Provision for diminution in the value of
- -
investments
Bad debts written off directly (418) (1,447)
(87,509) (55,066)
Net mark-up, interest income after
1,917,294 1,383,950
provisions

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 399,383 316,368
Dividend income 112,017 62,077
Income from dealing in foreign
106,848 95,165
currencies
Other income 24 2,773,503 220,973
Total non-mark up! interest income 3,391,751 694,583
5,309,045 2,078,533

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 25 1,799,490 1,182,887
Other provisions! Write offs 2,000 -
Other charges 26 1,875 993
Total non-mark up! Interest expenses 1,803,365 1,183,880
PROFIT BEFORE TAXATION 3,505,680 894,653
Taxation 27 1,382,446 448,974
PROFIT AFTER TAXATION 2,123,234 445,679
Inappropriate profit brought forward 250,050 249,701
Transfer from general reserve - 85,000
Transferred from surplus on revaluation
of fixed assets
- Prior year - 38,098
- Current year - net of tax 14,405 20,708
14,405 58,806
Profit available for appropriation 2,387,689 839,186

APPROPRIATIONS
Transfer to statutory reserve (424,647) (89,136)
Issue of bonus shares - Interim @ 33.33 % (1,000,000) (250,000)
(2001: Nil)
Cash dividend @25% (2001: Nil) (500,000) (250,000)
(1,924,647) (589,136)
463,042 250,050
Unappropriated profit carried forward
Basic and diluted earnings per share 28 10.62 2.23

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CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2002
Note 2003 2002
Rupees'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit / (loss) before taxation 3,505,680 894,653
Less: Dividend income (112,017) (62,077)
3,393,663 832,576

Adjustments for non-cash charges

Depreciation 186,574 141,235
Amortization - intangible assets 21,085 1,898
Amortization - deferred cost - 7,989
Provision against non-performing advances 87,091 53,619
Provision against other assets 2,000 -
Bad debts written off directly 418 1,447
Gain on sale of fixed assets (6,903) (2,568)

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 BANK ALFALAH Ltd

Provision for gratuity 21,096 15,925

311,361 219,545
3,705,024 1, 052, 1 21

(Increase) / Decrease in operating assets

Lending to financial institutions (2,703,335) (2,535,429)
Advances (20,934,823) (9,242,973)
Others assets (402,028) 77,083
(24,040,186) (11,701,319)

Increase/ (decrease) in operating liabilities

Bills Payable 449,710 453,403
Borrowings from financial institutions 7,090,178 (671,478)
Deposits 25,013,338 21,477,660
Other liabilities 438,115 196,464
32,991,341 21,456,049
12,656,179 10,806,851
Gratuity paid (73,573) (3,490)
Income tax paid (539,529) (277,366)
Net cash flow from operating activities 12,043,077 10,525,995

CASH FLOW FROM INVESTING ACTIVITIES

Net investments in available-for-sale (6,138,789) (13,584,669)
securities
Net investments in held-to-maturity (687,520) 3,012,810
securities
Dividend received 127,389 78,714
Investments in operating fixed assets (749,771) (481,755)
Sale proceeds of fixed assets disposed of 32,976 5,299
Net cash flow from investing activities (7,415,715) (10,969,601)

CASH FLOW FROM FINANCING ACTIVITIES

Issue of share capital - -
Issuance of Term Finance certificates (260) 650,000
Dividend paid (250,000) -
Net cash flow from financing activities (250,260) 650,000
Increase/ (Decrease) in cash and cash
4,377,102 206,394
equivalents
Cash and cash equivalents at beginning of
29 5,323,214 5,116,820
the year
Cash and cash equivalents at end of the
29 9,700,316 5,323,214
year

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