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Department of Management SciencesCOMSATS Institute of Information Technology

Abbottabad

Approval Sheet

.

Approval Committee

1. External Examiner

Mr. _____________________________________________

Signature_______________

2. Supervisor

Mr. ____________________________________________ Signature_______________

3. Head of Department

Mr. ___________________________________________ Signature ________________

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Certificate here

DEDICATION

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All the efforts in compiling this report are Dedicated

to

My Lovely Parents, whose unconditional love & support

helped me in making this report.

&

My Honourable Faculty Members of CIIT, for their

cooperation and assistance

Who helped me in this Achievement.

&

My siblings for their gentleencouragement & valuable support.

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Abstract

The development of skills to perform well in professional life has become a dire need of every

MBA Graduate. The very purpose, an internship is to acquaint the MBA graduate with empirical

business practices, particularly in banks which is nowadays the main area of interest of most of

the graduates whether an information technologist or a business graduate.

As a compulsory requirement of Professional Degree in MBA, I opted to join

Bank AlFalah, to fulfill my degree requirement. My reason for choosing BAL was to enhance my

skills and techniques, so that to provide myself the opportunity to cope with real life situation and

I found BAL one of the best banks in Pakistan.

To better understand the report, my recommendation would be to look into different parts mainly

covering the overview of BAL, overall management of Finance and Accounts.

The BAL organizational model has been thoroughly studied and analyzed.

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Table of Contents

Acknowledgements XIII

Abbreviations XIVExecutive Summary XV

Chapter 1:

Introduction to the Report 1

1.1 Background of Study 1

1.2 Purpose of the study 11.3 Merits of the Report 2

1.4 Scope of the study 2

1.5 Methodology of the report 2

1.5.1 Primary Sources 2

1.5.2 Secondary Sources 2

1.6 Limitations of the Study

3

1.7 Scheme of the report 3

Chapter 2:

Introduction to Bank Alfalah LTD 4

2.1 Evolution of Banking 4

2.1.1 Early Growth 4

2.2 Brief History of banking 4

2.3 Role of Banking in the Economy 5

2.3.1 The International Role 5

2.3.2 The Payments Role 5

2.3.3 Guarantor Role 5

2.3.4 Risk Management Role 6

2.3.5 Savings/Investment Advisor Role 6

2.3.6 Policy Role 6

2.4 Banking in Pakistan 6

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d) Pay Order 20

e) Travelers Cheques 21

Foreign Remittances 21

Instruments of Inward Remittances 21

Instruments of Outward Remittances 22

Corresponding Banks for Remittance 22

Money Gram 22

2.13.3 Cash Department 23

The Cash Counter 23

Receipt and Payment of Cash 23Counting Cash 24

2.13.4 Clearing Department 24

Types of Clearing 24

a) Inward Clearing 24

b) Outward Clearing 24

Process of Clearing 25

2.13.5 Credit Department 25Types of Advances 26

a) Running Finance 26

b) Term Finance 26

c) Loans 27

2.13.6 Credit Cards Department 28

Categories of Alfalah Visa Credit Cards 29

Supplementary Cards 302.13.7 Auto Finance & Leasing Department 30

Car Finance 30

Corporate & Individual Car Leasing 30

2.13.8 Home Finance Department 31

Purposes of Home Finance Department 31

2.13.9 Foreign Exchange Department 31

a) International Trade 31

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b) Authorized Rates for Foreign Exchange Transactions 32

c) Collection Services 32

d) Payment against Documents (PAD) 32

e) Documentary Credits (Letter of Credit) 32

Types of Credit 33

i. Revocable Credit 33

ii. Irrevocable Credit 34

iii. Confirmed Irrevocable Credit 34

iv. Sight Letter of Credit 34

Parties to a Letter of Credit 34

Credit Application 35

Chick List for Applicant 36

Issuing a Credit 38

Settlement 39

i. By Payment/Sight/DP 39

ii. By Acceptance/Usance 39

2.14 Management of BAL 39

Chapter 3:

Bank Alfalah Services and Products 40

3.1 BAL Products 40

3.1.1 Deposit Products 40

a) PLS Saving (Rupee) Accounts 40

b) Current Rupee Account 40

c) Term Deposit 40

d) Royal Profit Savings (Rupee) Accounts 41

e) Royal Patriot (Rupee Term Deposit) 41

f) Foreign Currency Accounts 41

g) Safe Deposit Lockers 42

3.1.2 Consumer Finance Products 42

a) Auto Leasing and Financing 43

Car Finance 43

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4.2.2 Financial Highlights /Financial Ratio Analysis (for Last Six Years) 61

4.3 SWOT Analysis 62

4.3.1 Strengths 62

4.3.2 Weaknesses 62

4.3.3 Opportunities 63

4.3.4 Threats

63

4.4 Market Structure of BAL 64

4.4.1 Types of Market Structure 64

4.4.2 Market Structure Bank Alfalah Limited 64Chapter 5:

Findings Recommendation & Recommendation 66

5.1 Findings 66

5.2 Recommendation 67

5.3 Conclusion 68

References 69Annexure 70

List of figures

2.1 Branch Network of Bank Alfalah Limited 11

2.2 Organizational Structure of Bank Alfalah Limited 12

2.3 Accounts Department 13

2.4 Procedure of Opening an Account 14

2.5 Pay Order Processing 20

2.6 Hierarchy of Credit Department 25

2.7 L/C Flow Chart 33

List of Tables

2.1 Royal Profit Savings Account Proposed Rates 162.2 Royal Profit Rates 17

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3.1 Royal Profit Savings Account Proposed Rates 41

3.2 Royal Patriot Competitive Rates 41

3.3 Locker Rates 42

3.4 Alfalah Zarie Sahulat Products 45

3.5 Vertical Analysis Based on Total Assets of Balance Sheets 50

3.6 Vertical Analysis Based on Total Revenue of Income Statement 51

3.7 Summarized Balance Sheets Trend Analysis (Base Year 2002) 52

3.8 Summarized Income Statements Trend Analysis (Base Year 2002) 53

4.1 Financial Highlights 55

List of Graphs

4.1 Profit after Tax (in Rupees) 55

4.2 Earnings per Share (in Rupees) 55

4.3 Investment (Rupees) 56

4.4 Net Asset Value per Share (in Rupees) 56

4.5 Earning Assets to Total Assets 57

4.6 Advances to deposits 574.7 Return to Assets 58

4.8 Net Interest Margin 58

4.9 Operating Profit Margin 59

4.10 Cost to Income Ratio 59

4.11 Net Non-Performing Assets 60

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Acknowledgements

All praise and gratitude due to ALLAH ALMIGHTY who created man in His own

image and enjoyed upon him to travel on the earth and enter into a profound and

analytical study of Universe for spiritual appreciation of ALLAHS unity and His

attribute as well as for harnessing the material manifestation of the world to the

mankinds profitable utilization. In the first place, therefore we express our utmostthanks to ALLAH.

At the next stage I offer our gratitude to our Apostle and prospector Prophet

Muhammad (P.B.U.H) for his golden saying Gain knowledge be in China.

Among my contemporary benefactors I express my sincere gratitude to Mr. Imdad

Khan, (manager of Supply branch Abbottabad) who provided me with the

opportunity to work in Bank Alfalah as an internee who has persistently rendered his

erudite guidance and professional assistance in compiling this report.

In the end I would like to thank all the staff members of BAL, who cooperated with

me in every department. They have provided with me in every department. They

have provided me with valuable information which helped me a lot in completion of

this report. It was relatively a new phenomenon for me, but I am quite sure that I

have learned a lot from this internship.

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Thank you all

LIST OF ABBREVIATIONS

A/C Account

ATM Automated Teller Machine

AUD Australian Dollar

AWB Air Way Bill

B/L Bill of Lading

BAL Bank Alfalah Limited

BAL Bank Alfalah Ltd

BCCI Bank of Credit & Commerce International

BTF Balance Transfer Facility

CD Current Deposit

CEO Chief Executive officer

CIB Credit Information Bureau

D Deposits

DD Demand Draft

DD Demand Draft

DEM Deutshe Mark

DFI Development Financial Institutions

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EAT Earning after taxation

FCY Foreign Currency

FTS Funds Transfer System

FY Financial Year

GBP Great Britain Pound

HBL Habib Bank Limited

HCEB Habib Credit & Exchange Bank HR Dep Human Resource Department

JPY Japanese Yen

L/C Letter of Credit

LC Letter of Credit

LCY Local Currency

M & A Merger and Acquisitions

MT Mail Transfer

NBP National Bank of Pakistan

NCB Nationalized Commercialized Banks

NIB National Investment Bank

NIC National Identity Card

NTN National Tax Number

PACRA Pakistan Credit Rating Agency

PAD Payment against Documents

PIB Pakistan Islamic Bank

PIN Personal Identification Number

PKR Pak Rupee

PLS A/C Profit & Loss saving Account

RP Royal Profit

SBP State Bank of Pakistan

SBP State Bank of Pakistan

SFU Structured Finance Unit

SS Card Specimen Signatures Card

TC Travelers Cheque

TC Travelers ChequesTFC Term Finance Certificate

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TT Telegraphic Transfer

UAE United Arab Emirates

UBL United Bank Limited

US $ United States Dollar

Executive Summary

Now a days strong and efficient capital and financial institutions are the basic

requirements of each county. So no country can be considered strong without having

strong enough capital and financial institutions and markets. One of the components of

these financial institutions are the banks. No one can deny the role the banks are playing

in the economic development of a country.

In Pakistan banking sector, BAL is one of the leading commercial banks. It was

established by the Abu Dhabi Group in 1997. From the very beginning, BAL was

showing very good performance. The Bank has energetic and fresh management that

started new schemes and injected new concepts in order to improve its services to the

clients. The bank is in very good financial position and making his image nationally and

internationally as well. In a short span of time the BAL made great efforts for its

customers.

My six weeks internship in BAL, Abbottabad Branch gave me a very good deal of the

practical experience about the bank, its personnel and various services it offers to the

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clients. Although six weeks duration for studying such a large organization by no means

is enough but I have tried my ever best to cover all the areas of the bank in my report.

I have divided my report five chapters.

Chapter # 1 is about the Introduction to the Report , In this chapter it is discussed that

how the internship is important and what a student can learn from it.

Chapter # 2 of report is about the Introduction to Bank Alfalah LTD . This chapter

contains detailed information History and Background of Bank Alfalah LTD, How it is

established and by whom it is established. This chapter includes the Vision and mission

statements and the different objectives of the Bank. The branch network and Hierarchy of

the staff and various positions of seniority of BAL are shown and discussed through

charts.

Chapter # 3 is about the Bank Alfalah Services and Products . This chapter includes the

different products and services introduced by the bank to its customers.

Chapter # 4 is about the Analysis of Abbottabad Branch. Financial statements are

analyzed. Also the performance of the bank has been shown through ratio analysis and

trend analysis. SWOT analysis and conclusion based on SWOT analysis is made in this

chapter. Regression analysis is also made in this chapter, which shows the affect of the

Deposits on the total income. Economic profit of Bank Alfalah is also calculated in this

chapter. The Market structure of BAL is also discussed in this chapter.

Chapter # 5 is about Conclusion and Recommendation.

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