bank alfalah complete intership report format_

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www.vuatach.ning.com Great Students Network Come & Join Us ECONOMY ROUND-UP The last two years have witnessed a gradual and noticeable improvement in the economy. The upsurge in inward remittances, proactive policy initiatives on country debt reduction, implementation of IMF program and negligible trade gap have led to a progressive strengthening of the external account. These factors have led to a healthy build-up of reserves and improved the investment outlook of Pakistan. At the domestic level from the financial industry’s perspective, the emphasis on monetary policy initiated in 2001 to reflate the economy continued resulting in surplus liquidity in the banking sector and further lowering of interest rates. Despite the foregoing positive catalysts to re- invigorate the economy, the real sector continues to be plagued with subdued economic activity and an increase in unemployment levels. There are multiple causative factors for the current situation as far as the real sector is concerned. The large scale-manufacturing sector suffers from excess supply as a result of heavy investments in the nineties. Discernable investment in recent times has been in selective 1

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Page 1: BANK ALFALAH Complete Intership Report Format_

www.vuatach.ning.com

Great Students Network

Come & Join Us

ECONOMY ROUND-UP The last two years have witnessed a gradual and noticeable improvement in the

economy. The upsurge in inward remittances, proactive policy initiatives on country debt

reduction, implementation of IMF program and negligible trade gap have led to a

progressive strengthening of the external account. These factors have led to a healthy build-

up of reserves and improved the investment outlook of Pakistan.

At the domestic level from the financial industry’s perspective, the emphasis on

monetary policy initiated in 2001 to reflate the economy continued resulting in surplus

liquidity in the banking sector and further lowering of interest rates.

Despite the foregoing positive catalysts to re-invigorate the economy, the real sector

continues to be plagued with subdued economic activity and an increase in unemployment

levels. There are multiple causative factors for the current situation as far as the real sector is

concerned. The large scale-manufacturing sector suffers from excess supply as a result of

heavy investments in the nineties. Discernable investment in recent times has been in

selective areas primarily oil and gas and textile exporting units. Domestic investment by

small and medium industries seems to be hostage to investor anxiety perhaps stemming

from geo-political and domestic political risk.

Fiscal measures to compliment the expansionist monetary policy need to be

crystallized and implemented to re-spark economic growth. The development of appropriate

fiscal measures, coupled with social and development spending program of GOP and

sustenance of good governance by the new government will be important for the future

economic revival.

Emanating from the operating environment and the monetary policy, the banking

system continues to reflect hefty investments in Treasury bills etc well in excess of the SLR

requirements. In response there is a marked change in the efforts of the financial fraternity to

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explore new avenues to lend; consumer financing seems to be the flavor of the day. Factors

like skill, technology to originate and manage consumer loans in a cost effective manner,

development of a borrowing culture in individuals and evolving cost-effective legal and

collection framework and lastly job creation in the economy are needed for volumetric

growth in consumer financing. The impact of this on advances will however, be felt in the

longer term and in the interim low margins from the existing borrowing segments will

continue to pressure banks profitability.

EMERGENCE OF BANKING

The word “bank” is derived from “Bancus” or “Banque”. History of banking is

traced to 2000 B.C in Greece. Priest and Goldsmiths acted as financial agents by keeping

money and valuables of people in temples in strong safes. Thus, the first stage in the

development of modern banking was accepting of deposits of cash from those who had

surplus money with them.

The Goldsmiths issued receipts for the money deposited with them, which began

to pass from hand to hand in settlement of transaction as people had confidence in the

integrity and solvency of goldsmiths. The receipts were drawn on a way that it entitled

the holder to claim that specified amount of money from goldsmiths. These receipts were

the earlier bank notes. Thus the second stage in the development of banking was the

issues of bank notes.

The goldsmiths discovered all the people who had deposited money did not come

to withdraw their finds in cash, only a few people presented the receipts for encashment

during a given period of time and they also found that most of the money deposited with

them was lying idle. They also found they were being constantly requested for loan on

good security. They thus thought it profitable to lend at least some of the money with

them to needy persons. This proved profitable for them. Instead of charging interest from

deposits, they began to give them interest on money deposited with them. This was the

third stage in the development of banking.

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Through experience, banks came to know that they could keep a small proportion

of total deposits for meeting demands of customers for cash and could easily lend the

rest. They allowed deposits to draw over and above than the money standing to their

credit. They thus allowed the overdraft facility to their deposits and this was the fourth

stage in the development of banking. Every bank issued receipts and most allowed

overdraft facility and this caused too much confusion the systems. In order to earn profits,

banks did not keep adequate reserves to meet demands of customers for cash. This failure

on the part of bankers to return money caused widespread distress among people.

In order to create confidence among the people, steps were taken to regulate the

banking. A conference was held in Nuremberg in 1548 where it was decided that a bank

should be set up by the state, which would streamline the banking organization and

technique. The first central bank was thus formed in Geneva in 1694. The responsibility

of issuing notes is now entrusted to a central bank in each country.

With passage of time, activities of commercial bank increased. They dealt with

large number of issues such as obtaining funds, advancing loans to business, farmers,

households, making investment in stocks, discounting bills of exchange etc. commercial

banks are now multi-service organizations and play a very important role in financial

markets.

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OVERVIEW OF THE FINANCIAL SECTOR IN PAKISTAN

The history of banking system in Pakistan dates back to independence of Pakistan in

August 1947 when various banks transferred their Head Quarters and funds to areas likely to

fall in India. This trend emerged due to dominant role of Hindus in pre-partitioned Indian

banking system.

According to various books there were 3496 branches of Indian scheduled banks in

the undivided sub-continent as on 1st March 1947 out of which only 487 branches were

located in areas presently constituting Pakistan. However the number of scheduled banks

drastically declined to 195 from 487 immediately after partition.

At the time of partition there were only two banks having the honor to be first

commercial bank of Pakistan namely Habib Bank Ltd., which was set up in 1941 with its

Head Office in India and the Australasia Bank Ltd., which was established in 1944 with its

Head Office in Pakistan.

By following the partition, an expert committee was set up and this committee

recommended that the Reserve Bank of India being the Central Bank of the undivided India

should continue to function as Central Bank of Pakistan and the Indian currency notes

would continue to be legal tender in Pakistan till 30th September 1948. Subsequently it was

decided to have separate Central Banks and the State Bank of Pakistan was set up and

started functioning from 1st July 1948.

Thus the history of Banking system in Pakistan started with the establishment of the

State Bank of Pakistan which was inaugurated by Quaid-e-Azam Mohammad Ali Jinah on

1st July, 1948. Consequently three banks were established which include Muslim

Commercial Bank Ltd. formed in September 1948. Bank of Bhawalpur in October 1948 and

National Bank of Pakistan in 1949. Habib Bank also transferred its Head Office from

Bombay to Karachi due to partition in August 1947 and it was assisted by the State Bank to

finance domestic trade of the country.

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BANK ALFALAH LIMITED

Bank Alfalah Limited was incorporated in June 21st, 1997 as a public limited

company under the Companies Ordinance 1984. Its banking operations commenced from

November 1st ,1997. The bank is engaged in commercial banking and related services as

defined in the Banking companies ordinance 1962. The Bank is currently operating

through 45 branches in 21 cities, with the registered office at B.A.Building, I.I.

Chundrigar, Karachi.

Since, its inception as the new identity of H.C.E.B after the privatization in 1997,

the management of the bank has implemented strategies and policies to carve a distinct

position for the bank in the market place. Strengthened with the banking of the Abu

Dhabi Group and driven by the strategic goals set out by its board of management, the

Bank has invested in revolutionary technology to have an extensive range of products and

services. This facilitates their commitment to a culture of innovation and seeks out

synergies with clients and service providers to ensure uninterrupted services to its

customers.

The bank perceived

the requirements of

customers and matches

them with quality products

and service solutions.

During the past five years,

bank has emerged as one of

the foremost financial

institution in the region

endeavoring to meet the

needs of tomorrow as well

as today. To continually

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upgrade the quality of service to the customers, training of team members in all the

integral aspects of banking, customer service and IT was specially focused.

The portfolio concentrates on all aspects of conventional banking as well as the

financial needs of corporate sector. Dynamic and high value product includes Car

Financing, Home Financing, Rupee Travellers Cheques, Credits Cards, Debit Cards, On

line Banking, ATM and consumer Durables. In addition to this, Islamic Banking Division

is a recent initiative, which operates as separate branch. It offers Shariah Compliant

products through a network of five branches, which will increase to 50 by the year 2007.

The bank is committed to combine all it s energies and resources to bring high value,

security and satisfaction to its customers, employees and shareholder. The Bank has

invested in revolutionary technology to have an extensive range of products and services.

This facilitates commitment to a culture of innovation and seeks out synergies with client

and service providers to ensure uninterrupted services to it customers.

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V I S I O N

“To be the premier organizations

operating locally and

internationally that provided the

complete range of financial

services to all segments under

one roof”

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MISSION

“To develop and deliver the most

innovative products, manage

customers experience, deliver

quality service that contributes

to brand strength, establishes a

competitive advantage and

enhances profitability, thus

providing value to the

stakeholders of the bank

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BOARD OF DIRECTORS

H.E. Sheikh Hamdan Bin Mubarak

Al Nahayan

Chairman

Mr. Mohammad Saleem AkhtarChief  Executive Officer

Mr. Abdulla Nasser Hawalileel Al-Mansoori

Mr. Abdulla Khalil Al MutawaMr. Ikram Ul-Majeed Sehgal

Mr.Khalid Mana Saeed Al OtaibaMr. Nadeem Iqbal Sheikh

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MANAGEMENT

Chief  Executive Officer

Executive InchargeStrategic Planning & Global

Marketing

Executive InchargeInternational &Treasury Division

Executive InchargeHuman Resources Division

Executive InchargeIT Division

Executive InchargeCredit Division

Executive InchargeSystem & Operation Division.

Executive InchargeEstablishment & Administratration

Executive InchargeCredit Monitoring Division

Executive InchargeBusiness Development DivisionS.A.M./ Car Finance/ Leasing

Executive InchargeLegal Affairs Division.

Executive InchargeAudit & Inspection Division

Executive InchargeFinance Division

Executive InchargeCorporate Banking,

SME Financing & Home Loans

Executive Incharge Islamic Banking Division

Executive Incharge New Products &

Service Quality Division

Executive InchargeCards Division

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NETWORK OF BANK ALFALAH LIMITED IN PAKISTAN

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The detail of Bank Alfalah Network in over Pakistan is as under:

Sr. No. Branch Phone Number

KARACHI

1. Main Branch

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

111-777-786

021-2414030-9

2. Clifton Branch, Karachi 021-583778-2

3. Korangi Industrial Area Branch, Karachi 021-5065701-2

4. Muhammad Ali Jinnah Branch, Karachi 021-7750627-30

5. Sharah-e-Faisal Branch, Karachi 021-4313536-8

6. Defence Branch, Karachi 021-5374330-5

7. Gulshan-e-Iqbal, Karach 021-4984937

8. Cloth Market Brach, Karachi 021-2401621-26

9. Jodiah Bazar Branch, Karachi 021-7532482-84

10. North Karachi Branch, Karachi 021-698760

11. KESC Branch, Karachi 021-2417515-9

12. Paper Market Branch, Karachi 021-2211353-8

13. North Napier Road, Branch, Karachi 021-7540067-68

14. S.I.T.E Branch, Karachi 021-2582114-16

15. PECHS Branch, Karachi 021-4535861-2

16. Timber Market Branch, Karachi 021-7750635-9

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Sr. No. Branch Phone Number

17. Bahadurabad Branch, Karachi 021-4128578-81

LAHORE

18. LDA Plaza Branch, Lahore 042-6306201-10

19. Defence Branch, Lahore 042-5729772-6

20. Township Branch, Lahore 042-5114722-23

21. Gulberg Branch, Lahore 042-5877800-8

042-5757791-2

22. Circular Road Branch, Lahore 042-7638256-8

23. Badami Bagh Branch, Lahore 042-7708291-5

24. Allama Iqbal Brach, Lahore 042-5432961-3

25. Shah Alam Branch, Lahore 042-7673401-6

26. Shadman Branch, Lahore 042-7538116-8

27. Mall Road, Brnach, Lahore 042-7350033-35

RAWALPINDI

28. Main Branch, The Mall, Rwp. 051-5582288

051-566084-6

29. Satellite Town, Branch, Rwp 051-4424080-5

ISLAMABAD

30. Blue Area Branch, Islamabad 051-2275286

051-2270193

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Sr. No. Branch Phone Number

051-206986-7

Branches in Other Cities

31. Liaqat Road Branch, Sargodha 0451-724138-9

32. Sarwar Road Branch, Sahiwal 0931-73631-2

33. College Road Branch, D.I Khan 0961-711730-3

34. Saidu Sharif Road Branch, Mangora 0936-726745-6

35. Saddar Branch, Hyderabad 0221-786020-2

36. Islamia Road Branch, Peshawar 091-287051-5

37. Cantt Branch, Peshawar 091-287051-5

38. Hospital Road, Nawabshah 0214-62127-9

39. Liaquat Bazar, DG Khan 0641-468201-4

40. Circular Road, Gujrat 0433-530219

41. Bank Road Branch, Mardan 0931-73631-2

42. The Mall Branch, Wah Cantt. 0596-539426-8

43. Circular Road Branch, Bahulpur 0621-889922-5

44. Cantt. Branch Jhelum 0541-610022

45. Abdali Road Branch, Multan 061-546792-6

46. Paris Road, Branch, Sialkot 0342-591741-43-44

47. Liaquat Road Branch, Faisalabad 041-617436-39

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Sr. No. Branch Phone Number

48. G.T Road Branch, Gujranwala 0431-255556-16

49. Frefre Road Branch, Sukkur 071-28173-75

50. Shahi Road Branch, Rahim Yar Khan 0731-84771-73-79

51. M.A Jinnah Road Branch, Quetta 081-827567

ISLAMIC BANKING BRANCH NETWORK

1. Islamic Banking Main Branch

66, Main Boulevard, Gulberg, Lahore

042-5715241-5

2. Islamic Banking Y-Block Branch

93-Y, Phase-3-C, DHA, Lahore Cantt

042-5746191-95

3. Islamic Banking Katchery Branch

Kutchyery Bazar, Faisalabad

041-603021-25

4. Islamic Banking Jinnah Avenue Branch

REDCO Plaza, 8-E, Blue Area, Islamabad

051-2879589

5. Islamic Banking Uni Tower Branch

UNI Tower, I.I Chundriger Road, Karachi

021-2472001

6. Islamic Banking McLeod Road, Branch

Plot No. 13, McLeod Road, Lahore

042-7211640

7. Islamic Banking Faisal Arcade, Branch

G.T Road, Gujranwala

0431-557301-5

8. Islamic Banking Murree Road Branch

Near Ministry of Defence

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ORGANIZATIONAL STRUCTURE

President (CEO)

Senior Executive Vice President

Executive Vice President

Senior Vice President

Vice President

Assistant Vice President

Officers Grade I, II, III

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Clerical Staff Non-Clerical Staff

Cashier Typist Clerks & Guards Messengers

Assistants

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GOALS & OBJECTIVES

Goals and objectives are factors through which the company’s devotion and

commitment to the job can be seen. If the goals are realistic and achievable, than surely

that organization is doing it’s job.

Bank Alfalah also has certain goals and objectives which it is trying to achieve,

through it’s various strategies and operations. The goals and objectives are mentioned

below:

1. To create a sound base, and through efficient systems achieve modern

banking through out Pakistan.

2. By the end of every accounting year there is an increase in deposits. As

the deposit rate of during 2002 was approx 52 Million and the same has

been increased in 2003 by 77 Million.

3. To create unit banking network in all the branches of Bank Alfalah, the

end of the year. This means that all the operations of the bank, i.e. deposits

to advances, imports, exports, L/C Opening, foreign currency and many

more aspects under one roof, so that the customer can be facilitate in one

visit.

4. Islamic Banking is one of the goals of Bank Alfalah though it has been

initiated in the last fiscal year and it is very acceptable for general public.

However, there is lot of work to do for successful implementation of the

Islamic Banking Plan. In this regard the Bank is opening specific Islamic

Banking Branch under the supervision of its Islamic Banking Division.

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STRATEGIES

Bank Alfalah has formulated certain sets of strategies to enable it to achieve its

goals and objectives. These strategies are mentioned below:

1. In order to achieve it’s goals of creating a sound base and presence of efficient

modern banking system, Bank Alfalah has started operation of Automated Teller

Machines in all the major areas like Karachi, Lahore, Islamabad and other cities of

Pakistan.

2. Bank Alfalah is committed to building long-lasting relationships through an

assertion to service excellence and providing innovative products to meet the changing

needs of our valued customers. Although still in its infancy, compared to the exalted

banking standards, Bank Alfalah, backed by a strong Abu Dhabi Group and inspired by

the vision of its Board and Management, has built up a strong customer base. 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.

3. The main focus is building relationships and being known by the way they do

business. Management recognizes that a banking relationship requires compatibility,

communication, and cooperation and that each customer deserves nothing less than full

attention and available resources to meet their financial objectives.

4. Core value and corporate culture is based on the belief that superior personalized

service is the most important product. Bank is in the process of getting to know

customers by name and understand their business and personal financial needs. This one-

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on-one, personalized service quality has served as Bank Alfalah's unique signature since

inception and continues to separate it from other financial institutions.

5. The Bank Alfalah team comprises of some of the most highly skilled and

professional financial experts in banking industry. Managers, lenders and trust advisors

offer the unique perspective of knowing and understanding in the local economy. The

Management focuses its attention on making informed and feasible economic decisions,

bringing better returns and more profitability for investors and customers.

6. Keeping in view the unrest among the Islamic Community on the Interest Bearing

Banking the Alfalah is in the process of target marketing and gives its full attention to

this segment of a large population over the world.

7. To acquire the reputation and status of bank which operates on international

standard, Alfalah Bank was to get the credit rating of Pakistan Credit Rating Agency,

which gave it the AA- and A1+ in the long term and short term respectively.

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ACCOUNTING POLICIES

Bank Alfalah is a scheduled commercial bank and is principally engaged in the

business of bak as defined in the Banking Companies Ordinance, 1962.

Basis of Presentation

In accordance with the directive of the Federal Government regarding the shifting

of the Banking system to Islamic modes, the State Bank of Pakistan has issued various

circulars from time to time. On permissible form of trade related mode of financing

comprises of purchase of goods by the banks from their customers and resale to them at

appropriate mark-up in price on deferred payments basis. The purchase and slaes arising

under these arrangements are not reflected in these accounts as such but are restricted to

the amount of facilities actually utilized and the appropriate portion of mark-up thereon.

Accounting Conversion

These accounts have been prepared using the historical cost convention in

conformity wit the accepted practice of banking institution in Pakistan.

Fixed Assets

Owned: Fixed assets are stated at cost less accumulated depreciation. Depreciation

is computed over the estimated useful lives of the related assets at varying rates and

methods depending on the nature of the assets.

The cost of the assets is depreciated on the diminishing balance method, except

for vehicles, carpets and renovation costs of leased premises, which are depreciated on a

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straight-line basis. Depreciation is charged for the full month on purchase/acquisition of

assets while no depreciation is charged in the month of disposal of an assets.

Maintenance and normal repairs are charged to income as and when incurred.

Major renewal and improvements are capitalized. Gains and losses on disposal of fixed

assets are taken to the profit and loss account.

Leased: Assets held under finance lease are accounted or by recording the assets

and the related liabilities at the amounts determined on the basis of lower of fair value of

the assets and present value of minimum lease payments. Finance charge is allocated to

accounting periods in a manner so as to provide a constant periodic rate of charge on the

outstanding liability. Depreciation is charged on leased assets on the basis similar to that

of owned assets.

Investment

Investments are stated at cost, net off provisions made for diminution in value.

Profits and losses on sale of investment are dealt with through the profit and loss account

in the year in which they arise.

Advances

Advances are stated net off provisions for bad and doubtful debts. Specific and

general provisions for bad and doubtful debts are determined by the management kepping

in view the requirements of the Prudential Regulations issued by the State Bank of

Pakistan.

Foreign Currencies

Assets and liabilities in foreign currencies have been translated into Pak Rupees at

the rates of exchange approximating those ruling at the Balance Sheet date except those

covered by forward exchange contracts which are converted at contracted rates.

Exchange gains and losses are included in income currently.

Taxation

Provision for tax is based on applicable rates of tax after taking into account tax

credit available, if any.

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The Bank accounts for deferred tax, if any, taking into account major timing

differences, using the liability method. However, deferred tax is not provided it can be

established with reasonable probability that the timing differences will not reverse in the

foreseeable future.

Revenue Recognition

Income is recognized on accrual basis.

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P R O D U C T S

COMPREHENSIVE AND DIVERSIFIED PRODUCT PORTFOLIO

With the mission to provide all-encompassing banking services to the customers,

Bank Alfalah has a uniquely defined menu of financial products. Currently it is 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 Travellers Cheques

Online Banking

Credit Cards

ATMs

Home Financing

Islamic Banking

Corporate and Structured Financing

Car Financing

Car Financing is one of the major renowned product of Bank Alfalah and can be

utilized in terms of Financing of Used Vehicles, Loan against Car, Balance Transfer

Facility, Refinancing Facility (only for Alfalah Customers) and it is characterized in

terms of:

Lowest Mark up

Lower Insurance

Quick Processing

Lower Down Payment

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Home Financing

Major features of Bank Alfalh Home Financing are

Lowest Mark-up, Quick Processing, Multiple Repayment

Options and Free Valuation. It has been bifurcated in terms

of “Home Buyer, Home Construct, Home Improver, Home

Balance Transfer Facility”.

Financing Limit : upto Rs. 10,000,000/-

Tenure : upto 20Years

Equity Participation : 30% Borrower / 70% Bank

Rupee Travelers Cheques

Rupee Travelers Cheques are as good as cash and are accepted at the major shops,

travel agents, hotels business establishments and all over the country and abroad. This

service is being offered to facilitate instant fund availability to travelers and business people

who used to carry a large sum of money with them.

Credits Cards

Bank Alfalah Visa Card is everywhere and

globally acce pted and welcomed at locations

displaying the VISA logo. It is accepted at nearly 30

million merchants and 870,000 ATMs in more than

150 countries around the globe and over

10,000 establishments in Pakistan. Alfalah

VISA pays for shopping, travel,

entertainment, meals and much more.

Debit Cards

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Bank Alfalah Limited presents Alfalah HilalCard, the first Visa Electron

International Debit Card which gives an unlimited access to current / savings account

with a simple swipe, at millions of retail shops and ATMs, worldwide. The Alfalah Hilal

Card comes with a host of conveniences and benefits combined with the wide reach of

Visa Network enabling it to be accepted at more than 840,000 ATMs and 13 million

retail outlets around the world, making it the most acceptable Debit Card available in

Pakistan.

On Line Banking

To provide enhanced and

value added products to customer

bank is constantly striving for

additional facilities. Bank provide

fully automated on-line telephone

banking facilities to its customers

enabling them to carry out banking

transactions like balance inquiries,

statement requests, product information and exchange rate.

Automated Teller Machine (ATM)

The bank offers 24 hours self service banking facilities to it customers on country

wide basis through deployment of Automated Teller Machine. This system allows the

banking facilities such as cash withdrawls, cash deposits, funds transfer, balance

inquiries, account statements. Electronic cash dispensing facilities are available in major

cities of Pakistan. All ATMs are linked through a state-of-the-art Satellite Based

Communication System which offers 24 hours real time service.

Islamic Banking

A separate division is a recently initiated, which operates as separate branch. It

offers Shariah Compliant products through a network of five branches, which will

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increase to 50 by the year 2007. Islamic Banking has launched following products with

the perception that these are in accordance with the Sharia Principles.

a. Alfalah Masharaka Homes

b. Murabaha Finance

c. Aflalah Car Ijarah

Corporate and Structured Financing

The portfolio concentrates on all aspects of conventional banking as well as the

financial needs of corporate sector including dynamic and high value product.

Loaning against securities

Letter of Credit

Letter of Guarantee

Demand Finance

Cash Finance

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BOSTON CONSULTING GROUP (BCG) MATRIX FOR THE SBU’S

MARKET SHARE

GROWTH RATE

HIGH LOW

HIGH

Car Financing

Home FinancingOnlineBanking

Islamic Banking

ATM

Debit Card

LOW

Deposits

Investments

Credit Cards

Rupee Travelers Cheques

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ENVIRONMENTAL ANALYSIS

Any environment which interacts with the functions and operations of a company,

should be properly studied and evaluated so that the environment only benefits the

company rather than affecting it negatively. Like other institutions, Bank Alfalah also has

an environmental effect on its functions. Basically two types of environment effect the

bank operations, policies and strategies.

Micro Environment

Microenvironment is in fact the internal environment, which ahs an effect on the

functions of the bank. Micro environment of Bank of Alflah consiss of:

1. Deposits

2. Advances

3. Competitors

1. Deposits

Depositors are the main source of profit generation for

the bank. Alflah offers depositors number of incentive by

virtue of which they too care make same money. Alflah relies

on depositors & workers to increase their volume every year.

This is evident from the fact that the growth rate increased

48.40% during 2002-03, as this growth rate is satisfactory it is

a must that this environment of deposit growth should not

decline.

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2. Advances

Advances are basically what Alflah give to people asking for money. If there shall

be more people depositing money. There will be more asking for advances as well. Banks

tend to make profit by giving advances at a rate higher than what they owe to the

depositors. The difference is the banks profit. If the environment is healthy then more &

more people will be asking for advances for business and other options. It is also evident

from the fact that during the year 2002-03 the advances growth rate is 71.12%.

3. Competitors

Competitors should always be studied with great care, because competitors, can

greatly influence an organization position. Bank Alfalah has a lot of competitors because

in a short span of 5 year it has achieved what not many banks had achieved. This leads to

competitions. Similarly Bank Alfalah should keep a tag on the competitors move or any

other new technology it is introducing, because to sustain in the micro environment, a

competitor has to be viewed with a lot of care.

Macro Environment

Every organization is subject to general trends prevailing in the environment. For

the success of the organization these trends are of significant importance and must be

thoroughly studies. Bank Alfalah faces the following factors in connection with its macro

environment:

1. Demographic Sector

2. Economic Sector

3. Technological Sector

4. Social Sector

5. Political Sector

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HUMAN RESOURCE MANAGEMENT

Human Resource Planning

At Bank Alfalah Limited, Human Resource Planning involves a decision making

in three areas of combined activites:

Step-I The bank identifies its organizational needs and then acquires a

right king of human resource accordingly.

Step-II Bank motivates them to achieve excellent performance by giving

them different sorts of targets according to their job requirements.

Step-III It also creates an interactive link between the employee goals and

the organizational goals.

Job Description

It is descriptive in nature and constitutes a record of existing and additional job

facts. The order of job description is as follows:

Job identification

Job summary

Duties performed

Supervision given and received

Recruitment and Selection

Bank Alfalah Limited recruits three kinds of employees:

1. Top Level Management

2. Trainee Officers

3. Contractual Basis Employees

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Training and Development

In Bank Alfalah Ltd. the process of Training and Development consists of various

other activities like:

a. Training:

i. The appraisal form of an employee indicates the areas in which the

employee should be trained and developed. It also elaborates the

abilities of an employee.

ii. Management and Organization Development Division of each region

timely reviews the employees and recommends them for training

during the operations it they note any discrepancy between the desired

and actual performance. This review is performed after every quarter.

iii. Upon the request of GM (Operation), indicates which sort of training

is needed in a particular region regarding the Operation Support and

Service

b. Development:

i. Management Skill Training,

ii. Special Training for Foreign Transferred Employees,

Performance Appraisal:

It is a structured discussion between employee and supervisor. It provides an

opportunity for the supervisor to recognize an employee’s achievement, offer suggestions

for improvement when needed, discuss job responsibilities, define objectives, counsel for

career advancement, and justify a pay adjustment. Regarding the performance appraisal,

bank adopts both type of approaches.

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a. Traditional Approach:

The traditional approach is primarily concerned with the overall

organization and its past performance. In Bank Alfalah, overall

performance is reviews at branch level. Each branch is liable to show its

performance in a positive direction according to set goals.

b. Development Approach:

This approach viewed the employees as individuals and has been forward

looking through the use of goal setting. All the employees in the each of

the branches are given a performa. Every employee working in the bank is

assigned targets, usually their target are in the form of amount. The

performances of all the branches are reviewed in the end of December.

Till yet Bank Alfalah, has no computerized system to assess the

performance of employees

Performance Appraisal Process:

The performance appraisal process in the Bank Alfalah Ltd. consists of four inter-

related steps:

i. Establish a common understanding between the manager (evaluator) and

employee (evaluate) regarding work expectations, mainly the work to be

accomplished and how those work are to be evaluated.

ii. Establish ongoing assessment of performance and the progress against

work expectation.

iii. Formal documentation of performance through the completion of a

performance and development appraisal form appropriate to the job

family.

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iv. The formal performance and development appraisal discussion, based on

the completed appraisal form and ending in the construction of a

development plan.

Reward Management

Reward Management elaborates how people are rewarded in accordance with

their value to an organization. It is concerned with both financial and non-financial

rewards. A reward system of an organization consist of integrated policies, processes and

practices for rewarding its employees in accordance with contribution, skill and

competence and their market worth.

In Bank Alfalah the elements of reward management system are consists of Basic

Pay; the fixed salary or wage which constitutes the rates for the job. This rate is varied in

a skill based or competence based system according to the individual’s skill or

competence. The rates are fixed by managerial judgement of what is required to recruit

and retain the employee.

In Bank Alfalah there is no any concept of individual performance related pay

except to the Business Development Officer. Business Development Officers are those

who are hired at contractual basis. They are assigned different targets. If they exceed to

the targets they can enjoy the individual performance related pay otherwise they are fied.

There is no concept of bonuses, commission or over time related pay. The official

timing of bank is 09.00 AM to 06.00 PM but almost all of the employees have to work till

near 08.00 PM. However, for this additional work they are not getting any additional

bonuses / over time.

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S W O T A N A L Y S I S

STRENGTHS

Since, inception of Bank Alfalah, it has moved rapidly in expanding branch

network and deposit base, along with making profitable advances and increasing the

range of products and services bank have made a break-through in providing premier

services at an affordable cost to our customers.

Bank Alfalah has been awarded an AA- (double A minus) and an A1+ (A one

plus) in the long and short term respectively by the PACRA. These rating denote very

high credit quality and very low expectation of credit risk.

The main source of a financial institution is public savings in this regard public

confidence plays a vital role. So, the confidence of customers are the main strength of

Bank Alfalah.

In order to maintain an effective communication of information regarding the

need of valued clients bank has designed its website to be as user-friendly as possible.

This facilitates to pursue the path of excellence and customer satisfaction through

delivering higher quality of services, thereby adding synergy to our existing management

expertise, financial strength and profitability. Hence, it’s a channel of communication for

the delivery of quality products and services that enhance value to our stakeholders.

WEAKNESSES

As per Bank policy, advertising and publicity is not extensively emphasized.

Through advertisement customers could be kept abreast with the products and services.

The main focus of Bank is major cities of Pakistan. It is direly needed to extend

its network and people should be educated about the functioning of bank. Since, Bank

Alfalah has strong set up in UAE and Middle East, therefore, specifically those areas of

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Pakistan should be targeted where large number of people are working abroad. Hence,

bank could avail an excellent deposit rate by using its annual budget specified for

network extension.

OPPORTUNITIES

The life cycle of an organization is comprised of threats as well as opportunities.

If we say, today the rates of challenges are too high but simultaneously the rate of

opportunities is also high. It is mandatory to try to make progress with consistency as

well as to adapt changes with the needs of time, in order to cope up with both conditions.

In the prevailing scenario, Bank Alfalah could penetrate further and could capture

various corporate customers in addition to the retail customers by expanding their

network.

In addition to the excellent routine banking, it has earned a good name by offering

special products like car financing, home financing and credit card. So, the penetration of

these products could enhance the market share.

In the rapidly growing industry of Pakistan, launching of another SBU, Alwarid

Mobile will be an excellent addition towards the credibility as well as enhancement of

Bank Alfalah’s market share.

Bank Alfalah has launched another division known as Islamic Banking. This new

aspect will also attract a large number of people, who don’t want to deal with interest

bearing banking. Hence, it’s a new opportunity where competitors are limited.

THREATS

While doing business, threats are part of the game. Especially, in this era, most of

the financial institutions are working as Private Limited Company and facing or have a

fear of threat from their competitor as well as new entrants.

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In order to maintain as well as to enhance the market share, banks always try to

introduce new schemes / packages. Hence, the environment is very much innovative and

adaptive to the needs of customers.

Though Bank Alfalah has a strong footing and maintain a good number of loyal

customer, still bank has threats in various sectors:

a. In Car Financing MCB & UBL are threats however, the expected

car financing of ABN Ambro could also be a threat for Bank Alfalah.

b. In Home Financing Union Bank or to some extent NBP are

threats.

c. In credit cards, Bank Alfalah captured the market share of Citi

Bank and Standard Chartered Bank. Till yet the bank has no prominent

threat. But, the launch of Askari Bank Master Card and Union Bank Card

might be threat after some time.

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MANAGERIAL PRACTICES

Aggressive Banking

Bank alfalah expanding their network of Islamic Banking. Bank Al Baraka has been

serving the Islamic banking sector since 10 years and they have only 5 braches in

Pakistan. On the other hand bank Alfalah has established 20 branches in a year.

Motivation

Bank Alfalah motivating their employees by giving them comprehensive benefits and

professional environment within the organization, which enhances the performance of the

employees. Bank motivates their employees by giving 3 bonuses in a year.

BENEFITS

Monitory Benefits

Monitory benefits are given to the employees on the basis of their performance like salary

rise, cash prize.

Grade Promotion

Bank also provides benefit to their employees in the form of grade promotion. Grade

promotion motivates the employee to do their work efficiently and effectively.

Abroad Posting

Bank benefit their employees by sending them on overseas posting where they can

enhance their professional skills and get handsome financial benefits in terms of salary or

fridge benefits.

Controlling

Bank has proper setup of controlling the day to day transactions and operational affairs.

Bank controls the operations through a proper check and balance system and properly

monitor the daily work.

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Internal Control Unit

Bank has an Internal Control Unit that monitors the daily transactions within the

organization and keeps informing the management about the rules and policies violation.

Internal control unit has a proper check and balance on operations and other bank

departments.

Internal Audit

Internal audit is a tool to have a proper check on daily working in a bank. Internal auditor

has to point out the discrepancies found during audit. Internal auditors hand over the

audit report to the audit chief and he hand over that to the management. Management

overlook all the discrepancies and try to reduce the violation and also took the necessary

actions. Internal audit conducted in a bank twice a year.

External Audit

External auditors are the representatives of state bank of Pakistan. State bank assigned

them to audit the banks the find out the lapses or discrepancies according to the rules and

regulations of state bank of Pakistan. State bank imposed penalty on bank if they found

any discrepancies related to banking practices or procedures. External auditor hand over

the audit report to state bank of Pakistan and SBP handover the report to the management

along with the debit advice in form of penalty and management overlook the

discrepancies and take necessary actions. External audit conducted once in a year. Bank

Al Falah has a Chartered Accountant Company on his panel who prepare and overview

the financial reports of the bank Taseer Hadi & Co. is a chartered firm which is on the

panel of Bank Alfalah.

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0CUSTOMERS PROBLEMS

It seems that the priority is given to the corporate customers in Bank Al Falah as the

individuals from middle class have to remind the management of certain branch to do the

needful for them. Customer is the king and customer always right. Bank is earning profit

from the customers. Bank should have a proper relationship with corporate as well as

individual customers. It is recommended that the management should stress on having

satisfactory relationship with individual customers because they can also provide the

revenue in term of profit.

EMPLOYEES PROBLEMS

1 Insufficient EmployeesTo compete in the banking industry Bank Al Falah should have enough

employees to facilitate the customers, and divide the workload of the existing

employees by hiring new people, because the bank cannot use the alternative

to reduce the number of customers and loosing the market share.

2 Working Hours

Bank Al Falah although providing the customer service in better way but there

is a lot of work to do in a routine banking to the employees due to which they

work for long time. Management should gave relaxation to the employees by

hiring new professionals and reduce the working hours.

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