Bank Alfalah Internship Report

INTERNSHIP REPORT On

Bank Alfalah Limited

DEPARTMENT OF BUSINESS ADMINISTRATION GUJRANWALA CAMPUS

PREFACE

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Internship is the one of the crucial part of the MBA course and this provide the practice knowledge of what students read about business in their books. Internship report is prepared to full fledge analysis of an organization. As this is the only field experience that students before entering practically into the market.

During our internship we had been rotated different departments as accounts, bills and remittances, cash, credit, foreign exchange & internet banking etc. this movement and working provide a completely knowledge of their working to us, they also explained each and every concept to make us clear. This knowledge and practical experience was the thing which help we have completed the internship report.

Executive Summary

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I have completed my 6 weeks internship at Alfalah Bank of Pakistan. I tried my best to gain something practically from this opportunity. This report starts from the introduction of word ‘Banking’, and then History of Alfalah Bank of Pakistan. History of Alfalah Bank shows that how it helps its Nation and Country in both war & peace. Bank Mission statement & Vision shows its focus on overall performance of the bank and quality of services and products. After restructuring of the bank the objectives of the bank are changed. Now it has objectives to overcome past mistakes, realize the real importance of customer so now it has main objective to achieve customization. Bank also provides facility of L.C to support export and import in the region. SWOT analysis of Alfalah Bank of Pakistan shows that it has small number of strengths and lot of weaknesses. The bank should give attention to this drawback. But bank has lot of opportunities to improve its quality of services, and do efficient banking. Bank should give proper attention to overcome its threats.

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INTRODUCTION Following privatization, Bank Alfalah emerged as new identity of Habib Credit and Exchange Bank with a revived purpose and commitment. Charged with the strength of Abu Dhabi consortium and under the leadership of his Highness Sheikh Nahayan Mubarak Al - Nahayan, the bank has already made significant conditions in building and strengthening both corporate retail banking sector in Pakistan. Designing the product portfolio of bank response to the customer’s preferences, the product like Royal Profit, Royal Patriot and Royal Custodial are prime examples of quality and innovation providing timely banking opportunities to customers of bank. Assessment of the needs and wants of the customers is an on going process at Bank Alfalah, which helps to continually develop new products and services. To continuously offer courteous, professional and advanced banking solutions, the team of bank has recently been rejuvenated by going though training programs with a focus on information technology. To make their banking solutions become accessible to more and more people, they have embarked upon a rapid expansion program, aiming to provide a networking that makes the services available to any of their customers in all the major urban centers of Pakistan - with a view to go international in the future. With their key indicators of progress already soaring to new heights, the bank is committed to dedicate all its energies, resources and time to bring higher value and satisfaction to their customers, employees and shareholders. The graph of bank is going up and up every year. The ratio of profit is increasing at good percentage. Thy bank is serving the people at high level of standard by going according to the whishes of the customers.

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BANKING SECTOR At the time of independence in 1947, there were 38 scheduled banks with 195 offices in “Pakistan” but by December 31,1973, there were 14 scheduled Pakistani commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign countries. Nationalization of Banks was not done 1st January 1974 under the Nationalization act 1974, due to certain objectives. But it had negative effects on efficiency of the of the banking sector afterwards a privatization Commission was set up on January 22, 1991, the commission transferred many banks to the private sector i.e., MCB & ABL. The government approved & permitted the establishment of 10 new private banks in 1991; hence many new private banks have incorporated, since then, BANK ALFALAH in one of the namely established private scheduled banks in Pakistan. Commercial banks operating in the country can be divided into four distinct categories, private banks, foreign banks, privatized banks and nationalized commercial banks (NCB’s). The number of private banks has remained almost constant ever since they commenced operations in early nineties, with the exception of Indus Bank that is under liquidation. However, ownership of a number of private banks has changed over the years. Lately, with the take over of Prudential Bank and Platinum Bank by the new sponsors their names were changed to Saudi Pak Commercial Bank and KASB Bank respectively. Earlier, ownership of Union Bank and Schon Commercial Bank changed. While the new sponsors of Union Bank preferred to continue with the same name, the buyers of Schon Commercial Bank changed its name to PICIC Commercial Bank. Union Bank acquired the operation of Emirates Bank International (EBI) in Pakistan. The scheme of amalgamation was notified by the central bank on September 03, 2002 and Union Bank settled the amalgamation price of US$ 37 million on September 09, 2002. Union Bank had acquired Pakistan operations of Bank of America in year 2000 and American Express credit card business in Pakistan in year 2001. In the NCBs category two banks — Habib Bank and National Bank of Pakistan — have been left after the privatization of United Bank. National Bank of Pakistan has been listed at local stock exchanges and part of its shares were off loaded. The GoP is actively pursuing the privatization of Habib Bank, through sale of its 26% shares along with

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transfer of management. The remaining shares of the GoP in Muslim Commercial Bank and Bank Alfalah were also sold. The GoP sold majority shares of Allied Bank of Pakistan in early nineties but has not been able to off load its remaining shares in the bank. United Bank's privatization demands specific mention for two reasons: 1)

It was the largest transaction, and

2)

A large part of sale proceeds was received in foreign exchange.

The consortium comprising of Abu Dhabi Group and Bestway Group has acquired 51% shares of the bank along with management control. Since October 2002 the bank has been working under the new sponsors. Meezan Bank was created as a result of merger of Al-Meezan Investment Bank and Societe Generale. The first ever license to operate as a Scheduled Islamic Commercial Bank was granted to Meezan Bank on January 31, 2002. Pakistan operations of Societe Generale were amalgamated into Meezan Bank on May 01, 2002. At the end of year 2002 it had six branches, three in Karachi and one each in Islamabad, Lahore and Faisalabad. The number of foreign banks operating in Pakistan has been declining constantly since the GoP decided to freeze foreign currency accounts in May 1998. The total number of foreign banks in the country has reduced to half since the freezing of foreign currency accounts. The positive point is that most of the foreign banks were able to sell their Pakistan operations at attractive prices. Operations of ANZ Grindlays Bank have been fully amalgamated into Standard Chartered Bank as a result of global merger.

KEY PLAYERS ASKARI COMMERCIAL BANK has posted Rs 687 million profit after tax for the year 2002 as compared to a profit of Rs 551 million for the previous year. The Board of Directors also announced 20% dividend and issue of 5% Bonus Shares subject to the approval of issue of Bonus Shares by the SECP. The bank had distributed 20% dividend among its shareholders for the year 2002 and also issued 5% Bonus Shares. The Bank transferred Rs 137 million to statutory reserve and Rs 284 million to revenue reserve. EPS improved from Rs 5.06 for the year 2001 to Rs 6.32 for the year 2002.

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BANK AL HABIB has posted Rs 290 million profit after tax for the year 2002 as compared to a profit of Rs 246 million for the previous year but bid not announce any dividend. The Board of Directors has approved issue of 20% Bonus Shares. The bank had paid 5% dividend and also issued Bonus Shares at the end of year 2001. Though there was increase in total income, total expenditure also went up. Total income grew from Rs 1,090 million to Rs 1,383 million. Non-mark-up/interest expenses went up from Rs 539 million to Rs 763 million. EPS improved from Rs 2.84 for the year 2001 to Rs 3.35 for the year 2002.

BANK OF PUNJAB has posted Rs 284 million profit after tax for the year 2002 as compared to a profit of Rs 236 million for the previous year. The Board of Directors approved distribution of 17.5% dividend among the shareholders for the year 2002. The bank had distributed 15% dividend to its shareholders for the year 2001 and also issued Bonus Shares amounting to over Rs 24 million last year. The Bank transferred Rs 56.8 million to statutory reserve and Rs 50 million to general reserve. EPS improved from Rs 2.35 for the previous year to Rs 2.83 for the year 2002.

BOLAN BANK has posted Rs 3.7 million profit after tax for the year 2002 as compared to a profit of Rs 8.7 million for the previous year. EPS declined from Rs 0.17 for the year 2001 to Rs 0.07 for the year 2002. It is worth noting that profit before tax improved from Rs 10 million for year 2001 to Rs 24.7 for the year 2002. However, due to higher appropriation for tax for the year 2002, profit after tax declined substantially. Tax appropriation went up from Rs 1.3 million to slightly more than Rs 21 million.

FAYSAL BANK has posted Rs 656 million profit after tax for the year 2002 as compared to a profit of Rs 410 million for the previous year and also announced 17.5% dividend. It had distributed 10% dividend to its shareholders for the year 2001. The improvement in profit was driven by higher income, going up from Rs 1,489 million to Rs 1,877 million. There was decrease in fee-based income but increase in dividend income. Fee, commission and brokerage income went down from Rs 242 million to Rs 205 million. Dividend income grew from Rs 208 million to Rs 391 million. However, there was increase in non-mark up expenses, going up from Rs 534 million to Rs 622 million, mainly due to rise in administrative expenses. EPS improved from Rs 1.55 for the year 2001 to Rs 2.48 for the year 2002.

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KASB BANK (formally Platinum Commercial Bank) has posted Rs 114 million loss after tax for the year ending December 31, 2002 as against a loss of Rs 67.5 million for the previous year. The results pertain to the operations under the previous management as the new sponsors took over the management in October 2002. The change in name was brought subsequent to the notification of the central bank dated February 21, 2002. It is expected that the combination of services which the bank will have access to will be unique. Once corporate reorganization is complete, the bank will have a majority stake in KASB Leasing and a 100% stake in Khadim Ali Shah Bukhari & Company (KASB). Hence, the client base at large will not only have access to commercial and consumer banking services, but to lease financing, equity and debt securities broking, investment banking and investment advice.

MEEZAN BANK has posted Rs 223 million profit after tax for the year 2002 as against a loss of about Rs 54 million for the previous year. However, it must be kept in mind that 2002 was the first year of operations as a full-fledged scheduled commercial bank. The total financing portfolio of the bank as on December 31, 2002 amounted to Rs 3.53 billion. As of the balance sheet date the bank did not have any overdue or defaulting accounts. The bank has introduced Islamic Export Refinance Scheme. This has, for the first time in Pakistan, enabled exporters to avail financing at concessional rates under a Shariah compliant scheme,

METROPOLITAN BANK has posted Rs 430 million profit after tax for the year 2002 as compared to a profit of Rs 335 million for the previous year and also announced 20% dividend. It did not distribute any dividend to its shareholders for the year 2001 but issued 25% Bonus Shares. The improvement in profit was driven mainly by higher income, going up from Rs 1,112 million to Rs 1,362 million. There was increase in fee-based income and dividend income. Fee, commission and brokerage income went up from Rs 168 million to Rs 235 million. Dividend income grew from Rs 1.7 million to Rs 11.4 million. However, there was increase in non-mark up expenses, going up from Rs 369 million to Rs 486 million, mainly due to rise in administrative expenses. EPS improved from Rs 3.35 for the year 2001 to Rs 4.30 for the year 2002.

MUSLIM COMMERCIAL BANK has posted Rs 1,739 million profit after tax for the year 2002 as compared to a profit of Rs 1,108 million for the previous year. This is the

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first year in the history of MCB and in the banking sector that two interim announcements were made, 10% Bonus Shares and 25% dividend besides 15% final Bonus Shares. Another achievement was that the bank did not make provision for diminution in the value of investment and also against non-performing loans and advances. However bad debts worth Rs 721 million were written off directly. Deposits went up from Rs 154.5 billion to Rs 182.7 billion. Advances grew from Rs 76.6 billion to Rs 78.9 billion. Value of investments went up from 55.4 billion to Rs 89.6 billion.

NATIONAL BANK OF PAKISTAN has posted Rs 6 billion profit before tax for the year 2002, a record profit in the history of banking sector in Pakistan. Profit after tax came to Rs 2.253 billion as against a profit of Rs 1.148 billion for the year 2001. The key factor behind this increase was no more amortization of deferred cost. The bank has made the final provision of Rs 2.7 billion against this head in year 2001. The Board of Directors approved payout of 12.5% dividends and issue of 10% Bonus Shares. The bank had also distributed 12.5% dividend for the year 2001.

PICIC COMMERCIAL BANK has posted Rs 319 million profit after tax for the year 2002 as compared to a profit of Rs 112 million for the previous year. The Board of Directors approved issue of 30% Bonus. The bank had not distributed any dividend to its shareholders but issued Bonus Shares amounting to Rs 125 million for the year 2001. The Bank transferred Rs 63.85 million to statutory reserve. EPS improved from Rs 1.78 for the year 2001 to Rs 4.30 for the year 2002. The bank opened 22 new branches during the year 2002 and has received permission to open another 22 branches during the year 2003.

PRIME COMMERCIAL BANK has posted Rs 176 million profit after tax for the year 2002 as compared to a profit of Rs 153 million for the previous year and also announced 10% dividend. The bank did not distribute any dividend to its shareholders for the year 2001. Total income went up from 603 million to Rs 822 million. However, there was

increase in non-mark up expenses, going up from Rs 362 million to Rs 516 million, mainly due to the rise in administrative expenses. The factors contributing to higher profit were decline in provision against non-performing loans and advances, and increase in

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income/gains from trading in government securities. EPS improved from Rs 1.51 for the year 2001 to Rs 1.74 for the year 2002.

SAUDI PAK COMMERCIAL BANK achieved substantial growth during the year ending December 31, 2002. This remarkable performance was due to the enormous improvement in its corporate image. The bank posted Rs 202 million profit after tax for the year 2002 as against a loss of Rs 182 million for the previous year. Deposits increased by 156% to Rs 12,340 million and advances by 95% to Rs 9,753 million. The credit deposit ratio improved from 104% to 79%. Investments including lending to financial institutions also grew by 166% to Rs 7,410 million. The total asset base doubled, from Rs 9,513 million to Rs 19,617 million. Non-performing advances of Rs 640 million were regularized during the year. The ratio of performing advances to total advances improved markedly from 29% in year 2001 to 69% for the year 2002. However, a real concern for the investors is that the bank still carries accumulated losses of over Rs 811 million.

SONERI BANK has posted Rs 350 million profit after tax for the year 2002 as compared to a profit of Rs 270 million for the previous year and also announced 10% dividend. It did not distribute any dividend to its shareholders for the year 2001 but issued 30% Bonus Shares. The improvement in profit was driven by higher income, going up from Rs 915 million to Rs 1,073 million. There was increase in fee-based income but income from dealing in foreign currencies decreased. Fee, commission and brokerage income went up from Rs 111 million to Rs 133 million. Income from dealing in foreign currencies came down from Rs 348 million to Rs 184 million. Other income grew from Rs 77 million to Rs 175 million. However, there was increase in non-mark up expenses, going up from Rs 364 million to Rs 452 million, mainly due to rise in administrative expenses. EPS went up from Rs 2.66 for the year 2001 to Rs 3.44 for the year 2002.

UNION BANK has posted Rs 286 million profit before tax for the year 2002 as compared to a profit of Rs 9 million for the previous year. The bank posted Rs 286 million profit before tax for the year 2002 but an appropriation of Rs 122.5 million reduced profit after

tax to Rs 163 million. The Board of Directors did not approve distribution of dividend. EPS improved from Rs 0.43 for the year 2001 to Rs 1.34 for the year 2002. The bank is

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following an aggressive marketing strategy well supported by investment in technology. This has resulted in heavy administrative expenses, going up from Rs 1,056 million to Rs 1,591 million.

UNITED BANK has posted Rs 1,414 million profit after tax for the year 2002 as compared to a loss of Rs 7,478 million for the previous year. The loss for year 2001 was mainly due to an extraordinary item amounting to Rs 7,200 million. The increase in profit of the bank can be attributed to higher income, lower provision against non-performing loans and lower appropriation for tax. Total income went up from Rs 6,643 million to Rs 8,173 million. Provision against non-performing advances came down from Rs 1,488 million to Rs 852 million.

BANK ALFALAH has posted Rs 445.7 million profit after tax for the year 2002 as compared to a profit of Rs 310.6 million for the previous year. EPS improved from Rs 3.65 for year 2001 to Rs 4.46 for the year 2002. The Board of Directors approved distribution of 20% dividend to the shareholders and issue of 33.33% Bonus shares. Net mark-up/interest income grew from Rs 891 million to Rs 1,463 million. Non mark-up income went up from Rs 377.9 million to Rs 615.4 million. However, non mark-up/interest expenses also hiked from Rs 744 million to Rs 1,184 million. Investments went up from Rs 11,396.6 million to Rs 24,694.4 million. Advance went up from Rs 19,131.5 million to Rs 28,319.4 million. Deposits went up from Rs 30,207 million to Rs 51,685 million.

STANDARD CHARTERED BANK has released the financial accounts for the year 2002 after amalgamation of ANZ Grind lays Bank into it. The bank has posted Rs 1,408 million profit after tax for the year 2002 as compared to the combined profit of Rs 396 million for both the banks for the year 2001. Customer deposits grew from Rs 51,643 million to Rs 55,525 million. Customer advances went up from Rs 38,096 million to Rs 17,653 million. The most remarkable feature was nearly three-fold increase in investment, going up from Rs 5,817 million to Rs 17,653 million. As the bank continued to add new products and further improve the level of customer support, there was increase in administrative expenses also, going up from Rs 598 million to Rs 1,195 million.

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CITIBANK has posted Rs 1,064 million profit for the year 2002 as compared to a profit of Rs 847 million for the previous year. Among the foreign banks, Citibank has recorded the highest capital gains on investments, going up from a meager of Rs 30 million to Rs 364 million. While the bank experienced decline in deposits and advances, there was

Substantial increase in investments. Deposits came down from Rs 41,506 million to Rs 40,838 million. Advances declined from Rs 27,119 million to Rs 25,657 million. Investments went up from Rs 6,799 million to Rs 11,280 million.

ABN AMRO BANK has improved its profit after tax from Rs 732.5 million for the year 2001 to Rs 1,025.5 million for the year 2001. The investment by the bank in technology and introduction of new value-added products and services has started yielding results. There was marginal increase in deposits, going up from Rs 34,192 million to Rs 34,696 million. Advances grew from Rs 23,861 million to Rs 25,141 million. Investments came down from 9,317 million to Rs 8,935 million.

DEUTSCHE BANK has posted a meager profit of Rs 119 million for the year 2002. However, it should be looked as an achievement because the bank had posted heavy loss for the year 2001. The declining trend was witnessed in deposits, advances and investments. Deposits came down from Rs 3,994 million to Rs 2,701 million. Advances declined from 3,169 million to Rs 2,293 million. Investments plunged from Rs 571 million to Rs 304 million.

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INTRODUCTION TO BANK ALFALAH Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established by Mr.Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its 3 branches in Pakistan. In 1991, the BCCI was banned, when it was accused by European countries that the bank was involved in some illegal operations with Gulf countries. The major reason behind European accusation was that BCCI was of Islamic mode. Therefore, the bank was closed due to international pressure. Then, its 3 Pakistani branches were taken over by the Government of Pakistan, which were named as Habib Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited. Following the privatization in July 1997, Habib credit and Exchange Banned assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as the family of Sheikh Nahayan Mubarik Al Nahayan purchased 70% of its shares and 30% shares remained with Habib Bank on behalf of Government of Pakistan. The development of various sectors in Pakistan. The bank has already made significant contribution in building and strengthening both corporate and retail banks sector in Pakistan. Assessment of the needs and wants of customer is an on going process at Bank Alfalah, which help to centennially develop new products of services. Designing the product portfolio in response to royal patriot, royal custodial, Alfalah car finance, Alfalah rupee traveler cheques, home loans are prime example of quality innovation providing timely banking opportunities to customer. To continuously offer courteous, professional and advanced banking solution the team of bank has recently been rejuvenated by going through training programs with focus to information technology. With their key indicators of progress a steady soaring to new heights, the bank is committed to dedicate all its energies, resources and time to bring higher value and satisfaction to their customers and employers. The graph of the bank is going up and up every year. The ratio of profit is increasing at a good percentage. The bank is serving the people at high level of standard by according to expectation of customers.

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FINANCIAL HIGHLIGHTS Bank Alfalah has grown 51.84% in its total assets and 101.35% in its equity. The Bank netted record pre tax profit of Rs. 3.506 billion, a 291.85% increase over the corresponding period last year (2004), which includes capital gains on Federal Government securities of Rs. 2.19 billion. The deposits of the Bank rose to Rs. 76.7 billion which is 48.4% higher than corresponding period last year (2004) 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 (2004). This portfolio has been supplemented keeping the Bank’s stringent and prudent policies in view.

BRANCH NETWORK AND CONSUMER BANKING The Bank is fully aware that the branch network has direct implications on the services that it provides to its customers. In the year 2005, nine (73) commercial banking branches and five (5) Islamic banking branches were added to the Bank Alfalah network extending our coverage to one hundred one (101) branches in twenty-three (23) cities nationwide. We are confident that a well integrated branch network, offers greater potential for serving a larger client base through high value products. Bank Alfalah continually endeavors to develop a wider spectrum of innovative financial products based on consumer needs. The Alfalah Visa Card has been recognized by the Visa International as the first credit card in South Asia to have crossed the100,000th mark in the shortest timeframe. Alfalah Car Finance is another market leader offering superior value and convenience to its clients. At the end of 2003, its portfolio crossed Rupee five billion marks. Consumer durable financing was launched in August 2003. This product too has also met a considerable success in the market. Similarly, the overwhelming response received to the Home Financing scheme launched by the Bank during the last quarter of 2003 offers great potential of becoming yet another important product of the Bank.

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In the latter half of 2003, Phone Banking was launched with a view to establish a more direct contact with our clients. This support centre has greatly facilitated the overall sales efforts of the Bank. Alfalah has emerged as one of the leading commercial banks in the financial sector of Pakistan. Charged with strength of Abu Dhabi consortium and under the leadership of his highness Sheikh Nahayan Mubarak, minister of higher education and scientific research and prominent member of Royal family. The bank is energized with vision, envisaging.

CREDIT PORTFOLIO A depressive interest rate environment has spurred the competition for scarce banking assets in local financial industry. While Bank Alfalah remains a key player in the market, however, it treads with caution so that the quality of its credit portfolio is not compromised. The Bank has employed a proactive approach in the form of a well-designed and transparent credit approval process. This process benefits from an inherent system of checks and balances at each level.

FOREIGN TRADE, CORRESPONDENT TREASURY OPERATIONS

BANKING

AND

Bank Alfalah offers high quality service to its foreign trade clients. Customers are assured of efficiency and timeliness when dealing with their overseas counterparts. Our clients enjoy the benefit of our well integrated global correspondent-banking network giving them greater global reach. This comprises more than 200 financial institutions all over the world signifying the favorable reputation that Bank Alfalah enjoys globally as a stable and responsible banking institution. During the year, the foreign trade volume of the Bank has recorded an impressive growth and it has reached to the level of 8% of total foreign trade of the country. The imports figure of Rs. 46.81 billion and exports figure of Rs. 44.27 billion represented an increase of 38% and 34% respectively over the last year figures. The Bank has also been fairly active in the inter-bank market and enjoyed substantial lines of credit. The Treasury Division added significant profitability to the Bank through

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Its intuitively priced transactions and proactive strategies for both investment and realization of capital gains.

CREDIT RATING Despite the political and economic uncertainties, Bank Alfalah was able to maintain its impressive credit ratings of AA- and A1+ in the long and short term respectively. These ratings are indicative of a very high credit quality and low potential for credit risk. These ratings have been assigned by the PACRA, the leading credit rating agency of Pakistan. These ratings have been awarded on the basis of a steady improvement in organizational performance, augmentation in equity base and increased sponsor backing.

HUMAN RESOURCE 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. Our state-of-the-art training centre 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 our employees translating into better job performance and satisfaction. During the year 2004-2005 we aim to establish a similar training and development facility in Lahore, Pakistan.

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Vision “To be the premier organization operating locally and internationally that provides 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 customer experience, deliver quality service that contributes to brand strength, establishes a competitive advantage and enhance profitability, thus providing value to the stakeholders of the bank.”

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CORPORATE INFORMATION Company Secretary Mr. Hamid Ashraf

Chief Financial Officer Mr. Zahid Ali H. Jamal

Auditors Taseer Hadi Khalid & Co. Chartered Accountants

Head Office B. A Building I. I. Chundrigarh Road P.O. Box 6773 Karachi

Executive Committee Mr. Mohammad Saleem Akhtar (Chief Executive Officer) Mr. Ikram Ul-Majeed Sehgal Mr. Parvez A. Shahid Mr. Mohammad Yousuf Mr. Tanweer A. Khan Mr. Sirajuddin Aziz

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Mr. Mahmood Ashraf

Branches Network The network of bank alfalah consist of 101 branches all the country-wide. Details: CITIES • • • • • •

• • • • •

• • • • • • • •

No. of Branches

Karachi Lahore Peshawar Rawalpindi Faisalabad Multan Bhawalpur Dera Ghazi Khan Gujranwala Gujrat Hyderabad Islamabad Jehlum Mardan Mianchannu Mengora (Sawat) Queeta Rahim Yar Khan Sahiwal

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• • • • • • •

Sargodha Sheikhupura Sialkot Sakhar Wah Cantt. D.I.Khan Gawader

1 1 1 1 1 1 1

FEATURES Bank Alfalah Limited is an established bank. It has some special features with the help of those it is growing rapidly.

OUTSTANDING WORK ENVIRONMENT As the work environment plays a great role in this competition age, so the bank has good work environment. All the people work with cooperation; managers are so kind that each problem can be discussed with them.

EFFICIENCY Employees at Bank Alfalah are quite efficient. They work more than their working hours and it is all according to their will. It also shows their loyalty, commitment to organization.

CUSTOMER SERVICES All the customers are entertained individually. Same kind of behavior and attention is given to all the customers.

SUGGESTIONS ASKED FROM CUSTOMERS Getting ideas for improvement from customer side is a new idea and that is working very well in Bank Alfalah Ltd. All the customers are asked to fill a suggestion form and the standards of the bank are improved through them.

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EMPLOYEE BENEFITS Employees are given the benefits like bonus, gratuity funds, loans, increments, house rent, medical and conveyance allowances.

COMPUTERIZED WORKING ENVIRONMENT In bank, all the work is done remotely. All the entries are made using the systems which are internally and externally integrated. This increases efficiency of the bank.

DEPARTMENT HIERARCHY Bank Alfalah Limited

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Bank Alfalah Limited

Operation Department

CAD

Credit Marketing Department

TSD

Car Financing Account Opening Section

Online Transaction Section Home Financing

Clearing Section

IT & Remittances Section

Branch Level Hierarchy Chief Manager (Mr. Sheikh Asif)

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MB-04031 (2004-2006) Corporate Internship Report Manager (Mr. M.Saqib)

Trade&Service CAD Manager (Mr.Qazi Manager Zubair) (Mr.Amir) Credit Card

Consumer financing Department

Branch Manager Mr. Ehsan ul haq Qureshi

Operations Manager Mr. Faisal Noman

Manager Consumer Finance (Mr.Faisal Rana)

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PRODUCTS

OF

BANK

ALFALAH

LIMITED Foreign currency accounts- new scheme (saving) Projected Profit rates (per annum) Currency

Profits (Semi-annually) 1.00% 2.00% 1.25%

US Dollar UK Pound Euro

ROYAL PROFIT (PROFIT BEARING CURRENT ACCOUNT) Projected profit rates (per annum) Amount From Rs. 50,000 to From Rs. 1000,000 to From Rs. 10,000,000 to From Rs. 25,000,000 to From Rs. 50,000,000 to

999,999 9,999,999 25,000,000 50,000,000 and above

Profit (Yearly) 2.50% 3.5% 4.00% 4.75% Contact Treasury

CLASSIC PLS DEPOSITS Projected profit rates (per annum) Type of deposits Saving account

Profit 2.00%

TERM DEPOSITS 1 Month 3 Month 6 Month 1 Years 2 Years

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ATM Bank Alfalah through its commitment to provide superior and improved services to its valued customers, has unveiled a nationwide network of ATMs. For customer convenience, customers now have access to instantaneous cash availability, 24 hours a day, 7 days a week. ATM network is geared up to exploit the latest technology, and is equipped to meet the highest standards of security and efficiency. With new ATM card you can now: Withdraw Cash Use our convenient, user-friendly fast cash option Make a Balance Inquiry. Get an instant printout of your account balances Get a printout of your last transactions (Mini-statement) on the spot. Change your PIN (Personal Identification Number). Bank Alfalah is pleased to introduce 27 state of the art ATMs, deployed at the most convenient and accessible locations. Bank Alfalah is a founder member of the 1-Link Switch, thus making a countrywide network of ATMs available.

ONLINE BANKING Bank Alfalah now offers the facility of on-line banking to its customers through its countrywide network of branches. Customers can use the ATMs or the banking counters of any branch for day-to-day banking needs, irrespective of branch where they maintain their accounts. For Corporate customers centralized Cash Management facility is also offered through online banking.

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PHONE BANKING "Alfalah Phone Banking” is available to all customers on a countrywide basis. Customers can dial 111-225-111 (without any city code/prefix) from their respective cities i.e. 21 cities where Bank Alfalah is present, and get prompt services from the Centralized Phone Banking Services. Customers enjoy 24x7 Round the Clock Phone Banking Services. Bank Alfalah is the first bank in Pakistan to offer Centralized UAN connectivity from 21 cities to its Call Centre with Hunting & ACD facilities.

MONEYGRAM

Bank Alfalah limited, in collaboration with MoneyGram, offers remittance service to Pakistan. MoneyGram is person to person money transfer service that allows consumers to receive money in just a few minutes. MoneyGram is available in over 154 countries and in more than 40,000 locations worldwide. With MoneyGram your money is transferred immediately and usually arrives at the receiving end within 10 minutes, other services can take days or weeks. There are no complicated procedures and you do not need a bank account or a credit card. What’s more, the receiver is handed the cash immediately.

SECURE AND RELIABLE An extensive network of quality agents, linked by computer, will transfer your money safely and ensure that it is handled with care and without delay. Thousands of people already use the MoneyGram service all over the world. It is trusted for its reliability and security.

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CONVENIENT AND FAST MoneyGram is available in over 154 countries and in more than 40,000 locations worldwide. With Money Gram your money is transferred immediately and usually arrives at the receiving end within 10 minutes while other services can take days or weeks. There are no complicated procedures and you do not need a bank account or a credit card.

FREE MESSAGE SERVICE (FOR SENDERS) There is also an added personal touch-you can receive a 10 word message from the sender with every transaction at no extra cost.

RUPEE TRAVELLERS CHEQUES CONVENIENT DENOMINATIONS Bank Alfalah presents Rs.1,000, 5,000 and 10,000 denominations of travelers cheques, making it very convenient to carry money while traveling or keeping your emergency cash safe.

YOU’RE GREAT COMPANION WHILE TRAVELING Bank Alfalah travelers’ cheques are your best travel companion they provide the most benefits that no other travelers’ cheques offer. Alfalah TCs have matched security features Plus, you don't have to be an account holder to avail these benefits! Free from the risk and hassle of carrying cash during travel, Bank Alfalah TC’s ensure safe and smooth travel.

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THE MAXIMUM SECURITY FEATURES Lithographic security features, invisible UV printing, high definition micro-lines, antiscanner effect, mould based paper, Alfalah watermark and printing in the UK, are just some of the security features of our TCs which prevent counterfeiting. Just in case you are still not convinced, we refund your money in case of loss or theft of your TCs.

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FEATURES Convenient denominations available  Rs. 1,000  Rs. 5,000

 Rs. 10,000

Maximum security features Special embossed intaglio printing in the UK, Alfalah security thread and Alfalah watermark. Just some of the advanced features that make your TCs secure.

Fully Refundable You can refund your TCs without any penalty or loss.

Transferable and endorsable You can transfer and endorse your TCs over to anyone.

Unlimited validity Bank Alfalah TCs will always remain encashable.

No account needed You don’t have to be an account holder to get our TCs benefits.

Network of Branches Bank Alfalah branches all across Pakistan.

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CREDIT CARDS

Bank Alfalah Limited offering credit cards with minimum markup and in wide variety in the market. Markup rate that is charge is 2.50% after the 51 days of transaction. Bank Alfalah also does not charge any annual fee and no charges when you avail credit card facility. Bank Alfalah offering various varieties of cards:  Gold Card

150,000 --- 499,000

 Silver Card

25,000---150,000

 Women Exclusive

16,000---499,000

 Classic Blue (professionals) ----------------- (only for panel companies’ members)

FEATURES Balance transfer facility-Smart settlements Offering an easy and convenient way to settle unsettled credit card payments on all existing credit cards in Pakistan. Avail this facility at as low as 1.5%.

Cash advance facility – 75% of your credit limit Now you can avail cash advance facility up to 75% of your available credit limit. Enjoy the benefits of this exclusive offer on your Bank Alfalah credit card. Step by step monthly installment plan – 1.25% p.m. only

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Now you can convert any transaction, amount of Rs. 3000 and above to a step-by-step monthly installment payment plan. It gives you the flexibility to convert your large payments into small equal monthly installments.

Free supplementary cards Offering the facility to acquire free supplementary cards for your family members. Avail this card without any extra cost.

Fortunes Offering an amazing rewards program that let you earn points every time you use Alfalah Visa card. Redeem the earned points anytime for fabulous gifts of your choice.

Discounts Offering discounts at wide range of outlets, selected especially to much your taste. You can avail matchless discounts each time you charge your card at these outlets.

Insurance Cover Offering card members a range of features design to protect you and your family from the setbacks of life, at very affordable rates.

Petro facility Offering you the facility that saves you the extra that you pay when you use Alfalah Credit Card at all patrol pumps in Pakistan.

UNIQUE BENEFITS Bank Alfalah Auto Debit Service This facility is specially designed for Bank Alfalah account holders. It gives the option of making minimum or full payments through Bank Alfalah Savings / Current Pak Rupee account specified on Alfalah VISA monthly statement.

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Bank Alfalah Credit Cover Alfalah VISA offers card members a new and powerful protection against the uncertainties of life. In the unfortunate even of prolonged illness, disability or death, it’s reassuring to know that with Alfalah Credit Cover you have no cause to worry about your monthly credit card repayments. Alfalah Credit Cover has a range of features designed to protect you and your family from the setbacks of life, at rates that are affordable.

DOCUMENTS REQUIRED Eligibility Criteria  Total gross salary / income of Rs. 8,000/- or more per month.  Aged between 25 to 60 years (60 years at maturity of facility).  Should be Pakistani National For Salaried Applicants  Copy of National Identity Card.  Current Salary Slip/Salary Letter / Proof of BPS (for Govt. Employees)/ Proof of Rank for Armed Forces Personnel) .  Computerized Personal Bank Statement (on bank letterhead in original) for last six months. For Self Employed Applicants  C  opy of National Identity Card.  Computerized Personal Bank Statement (on bank letterhead in original) for last six months. Additional Requirements Partnership deed & personal account statements of partners (if any) for last six months.  Bank letters / certificate confirming Proprietorship (in case of Proprietorship). 

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 Memorandum / Articles of Association / Form A (in case of private limited company).  Recognized professional degree / membership certificate to professional associations (in case of professionals).

ALFALAH CAR It’s a scheme that enables one to own his desired car at easily affordable and flexible installments with a minimum down payment and insurance.

BENEFITS AND FEATURES    

Quickest processing No hidden charges Minimum down payment Complete repayment at any point of time

 Balance transfer facility {BTF} for existing as well as new clients from other Banks  Tenor period ranging from 1 to 5 years.  Financing of all brand new locally assembled vehicles.  Financing limit ranging b/w Rs. 200,000/- to Rs. 2000,000/-

CORPORATE & INDIVIDUAL CAR LEASING BAL’s recently introduced car leasing facility for individuals and corporate sector has set new dimensions for the product. Now you are provided with the option of either to get the vehicle leased or financed.

INSURANCE Renowned and reliable Insurance companies are offering the competitive rates of Insurance. Pay year insurance premium in advance (at the time of down payment) and

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remaining in the subsequent equal monthly installment.

HOW MUCH EXTRA MONEY BEING PAID? {MARK-UP} Offering lowest rate of markup of 12, 12.5%, {per annum}, BAL has captivated a major market share and so is the plan for future.

REPAYMENTS Easily affordable installments on monthly basis in the form of postdated cheques will set you free of depositing your rental cheques every month.

SECURITY Hypothecation of vehicle in the name of the Bank Alfalah Limited.

YOU CAN ACT AS A CO BORROWER Acting as a co borrower, will enables your family members {spouse, children- 18 year and above} to avail the financing facility and can get the car registered in their names as well.

ELIGIBILITY CRITERIA  Yes you get a car loan form bank Alfalah to purchase a brand new car if you are: Pakistani National Identity Card holder.  Over 20 years of age (Maximum 60 years in case of salaried and 62 in case of a business person at the time of maturity of the loan).  Salaried, Businessman or self employed.

Required documents for car finance facility 1. 2. 3. 4. 5. 6. 7.

Application form Copy of national Identity card Copy of Driving License (optional) N.T.N. Certificate Copy of current utilities bill of residence Bank account statement for last six months from the date of application Signature verification fro duly verified by t he banker

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8. 9. 10.

An Assets & liabilities statement (where bank‘s financing exceeds Rs. 5 Lac.) CIB report required (where bank‘s financing exceeds Rs. 5 Lac.) Basic Borrower Fact Sheet

Additional requirements for business class individuals a. b. c. d.

Copy of rental/ purchase agreement of business premises. Sole proprietorship letter on relevant business letterhead. Partnership deed (if applicable). NOC from other partners (if applicable)

Additional requirement for self employed professionals a. b. c.

Copy of rental/ purchase agreement of business premises Copy of membership of respective institution/ association Must be practicing from last 3 years.

Additional requirements for landlord a. b.

Fard malkiat/ title deed of land Undertaking fro competent landlord

Additional requirements for salaried individuals a. Certificate from employer showing permanent employment for the last 2 years b. Original salary certificate c. Take home salary three times of proposed installment d. Income of spouse can also be clubbed

MINIMUM INSTALLMENTS Monthly Installments for Alfalah Car can be calculated by multiplying Bank’s financing amount with the following factors:

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Periods

Advance installment

Deferred installment

For 12 months For 24 months For 36 months For 48 months For 60 months

0.09072 0.04962 0.03609 0.02944 0.02553

0.09216 0.05041 0.30666 0.02996 0.2594

HOME FINANCING BAL aims to be provider of mortgages and other financial products, offering our valued customers excellent service and good value. Bank Alfalah is one of Pakistan’s most efficient and customer friendly banks, and has a tradition of caring for customers. Choosing the best mortgage plan for your particular circumstances is very important. Bank Alfalah tries to make home buying or home construction process as straightforward as possible with a wide range of home finance plans designed to suit your needs now and in the future.

You have a plot, and need home, which excites No problem. BAL will 7.50 million, or 70% of constructed property to bye to rent forever! Even BAL will provide you up the plot that you have selected to purchase. years.

finance to construct a everyone in your family! provide you up to Rs: the estimated value of enable you to say goodif you don't have a plot, to 60% of the value of Payment period ranges from 3 to 20

With this facility, you no about the home you want for family .BAL will provide or 70% of the purchase price is less), so that you can enter the reality of owning a Payment period ranges from 3 to 20 years.

longer need to just dream yourself and your you upto Rs: 7.50 million of the property (whichever realise your dream and home!.

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Does your existing installment you with nothing to spend? more because BAL has payment options that could you each month. Transfer up 100 % of the existing finance, Stretch your repayment period for up to 20 years.

on a home finance leave You need not worry any genuinely low rates and leave more funds with to Rs: 7.50 million or whichever is less.

You already own a home, growing family. Simply Rs:2.50 million or 30% of your home (whichever is extra You can stretch your repayments for up to 7 years

but need extra space for a apply for financing of up to the surveyed value of less) and get yourself the space!

The crown jewel of BAL Home Finance Scheme, the golden opportunity for someone starting a career to buy an already constructed housing unit so early in life! We offer a moratorium of up to 3 years in principal payments, for a financing of up to 20 years. You service only the mark-up element initially, and principal repayment starts after the end of monotorium period. Home Start is specially designed for young people to own a home of their own.

THE ELIGIBILITY CRITERIA You may apply for Bank Alfalah Home Finance:  For acquiring a residential accommodation in Karachi, Lahore, Islamabad,Rawalpindi, Multan, Peshawar and Faisalabad.  For building your dream house on your property / land.  For renovation or extension of your already owned house.

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 For transfer of your existing home finance from another lender.

 If you are a Pakistani National.  If your age is between 25 and 65 years.  If you are in continuous employment in a permanent position for 2 years or more.  If you have 3 years (or more) of business or professional experience.  If your gross annual income is Rs: 200,000/ — or more [Your spouse’s income (upto 50%) can also be combined with yours].  If you require a financing of at least Rs: 500,000/- or more (maximum Rs: 7,500,000/-)  If you have been a Bank Alfalah borrower for past one year with clean payment record. You may apply for Bank Alfalah’s Home Finance for minimum period of 3 years and a maximum period of 20 years (subject to your age).

DOCUMENTS CHECKLIST The following documents are required to be submitted by an applicant with the completed application.

For salaried person    

2 passport size photographs. Copy of NIC. Copies of last Salary / Pay Slip duly attested by the HR department. Salary Certificate (original) from the employer, showing the gross salary and deductions.  Employment verification form from the employer.

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For self-employed and Businessman    

2 passport size photographs. Copy of NIC. Certified Copy of last Six Months bank Statement. Copy of current professional association membership / trade body membership certificate (if Applicable).  Sole partnership deed letter.  Copy of Latest Form 29 duly attested by the company secretary.  Letter from company secretary confirming the status and share-holding (where applicant is director of company).

OPERATIONS DEPARTMENT Operations department of the Bank Alfalah Limited is responsible for the overall operations of the bank. Operation Department has following segments. a) b) c) d) e)

Cash Clearing Remittance Account opening Accounts department

The detail of those departments that are controlled under operation department is as under. a) b)

Account opening Cash department

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c) d)

Clearing Remittances

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ACCOUNT OPENING DEPARTMENT It is most important department of bank. Ms. Saira deals in this department. Following procedure is adopted for this purpose.

PROCEDURE OF ACCOUNT OPENING It is very simple and quick procedure. A person who wants to open an account must has the introduction of bank’s staff or any already existing account holder of bank. The customer is required to fill an account opening form. Then signatures of the introduce are verified from S.S. Card before opening account. AOF is very standard and up to the mark which contains almost whole information about customers. Customer is guide to fill all columns of AOF. All formalities and requirements are completed and verified, and all supportive documents are taken and checked according to the nature of account. If any formality is incomplete, chequebook is not issued until it is fulfilled. If a person cannot sign write his / her hand thumb impression is affixed marked, which is attested by one male or two female witnesses. Thumb impression for female right hand and for male left hand. They also have to give identity letter ∗ NIC copies ∗ Passport size photograph One place on the form other is on SS Card they have non-bearer cheques. On their cheque book a stamp is affixed on it there is written. Thumb impression should be fixed in front of an officer of the bank. The bank does not make payment of a cheque bearing a six months or older date. If an account is not operated in six months. It is called dormant account.

Following Factors Prior To Opening Of Account Should Be Concider 1. 2. 3. 4.

The suitability of the perspective customers Verification of customer credentials. The perspective possibility of profitability of the relationship. The proposed relationship does not violate:

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1. SBP rules & regulation 2. Applicable local laws 3. The bank’s internal policies

Current Account 1. No limitation on frequency or amount of transaction. 2. No profit payable.

Saving Account 1. Profit is payable 2. No of withdraw restricted 3. Large amount of withdraws requires 7 days.

GENERAL PRINCIPLES 1.

2. 3. 4. 5.

No account will be opened on fictitious name. All documents necessary required for opening account must be taken after verification from original No operation of account should be allowed & chequebook must not be issued until all formalities are confirmed. Genuineness of introduction should be properly ensured All information of AOF should be filled at front of concerned officer.

TYPES OF ACCOUNTS The bank different types of accounts exist.

1)

INDIVIDUAL ACCOUNT

Any individual or proprietor of business can open an individual account at BAF. PLS (profit and loss sharing) saving accounts can be opened with the minimum balance Rs. 5000/- with expected profit rate is 9%. Following requirements has to be fulfilled for this account.  Signature of customer on back of AOF.

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 Mention next of kin (nominee)     

2)

Name and A/C # of introducer. Verified sign of introducer. Customer signature admitted by officer. N.I.C photocopy attached. Letter of thanks.

JOINT ACCOUNT

When different people want to or need to share a single account it is called joint account. The names of persons are written on the title of A/C and on S.S. card. Joint A/C cannot be opened by single person. Both persons have to sign on cheques. When two or more person neither partner nor trustee open account in their name is joint account. Requirements  Sign of both customers on back of AOF  Sign on joint A/C # mandate  Name and A/C # of introducer  NIC copies of both members.  Mode of operation.

3) BUSINESS ACCOUNTS When the owner of the firm operating singly, open an in his term name. I)

Sole Of Proprietor Account

This account is for that person who has his own business of the business he is one owner of the firm. Requirements:  Companies stamp  Declaration of proportion companies’ letterhead.  Sign on AOF.

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 NIC copy  Verified signature of introducer.  NIC copy

II)

Partnership Account

Account title will be the name of the partnership firm. Requirements     

Sign of customers on back of AOF. NIC copies of partners Partnership deed (certified copy) duly attested by notary republic. Partnership mandate (prescribed format) Companies rubber stamp

The A/C is opened in the firm name and all partners designate one or two persons to act behalf of the partnership firm all acts of the firm jointly and severely. III)

Limited Company

Limited Co: 1) Private Limited 2) Public Limited PRIVATE LIMITED Requirements  Restrain on companies letterhead dully attested by chairman.  Sing of all directors on back of AOF.  NIC copies of all directors.  List of directors on companies’ letterhead.  List of memorandum and article of association.  Copy of board resolution.

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 Latest form 29 (if director is to be changed or in case of his death, this kind of form is filled, it includes information that a new director has how much number of shares with him.  Companies’ rubber stamp.  Copy of certificate of incorporation should be attested by director, co register an office stamp should be affix.

PUBLIC LIMITED 1) 2)

Certificate of commencement of business Same as home documents.

CLUB / SOCIETY / ASSOCIATION These concerns are non trading in nature. They have their own rules and regulation and their affairs are mentioned by the committee called as a governing body or managing committee. 1) 2) 3) 4) 5) 6) 7) 8) 9)

Stamp of directors NIC copies Certified copy of resolution Memorandum and article of association List of heads on companies’ letterhead. Bank account opened in their name with BAL. Name of person to be specified for the operation in account. The manner in which the account shall be operated. Letter of registration.

SPECIAL TYPES OF ACCOUNTS These types of accounts only can establish after approval of system and operation division head office: o Trust Accounts o Accounts of executors / administrators o Accounts of liquidators

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o Accounts of local authorities/ municipals.

CHEQUE BOOK ISSUANCE When the account is opened, then the customer is given a chequebook to sign upon and withdraw money. It proceeded as under. PROCEDURE All the account opening formalities must be completed before issuance of chequebook. Particulars of the chequebook requisition should be completed containing title of account, account number, type of currency, number of leaves and signature to the customer. Signature of the customer is verified on the requisition. If customer is unable to collect his chequebook, then he can give authority to the third person to collect his cheque book on his behalf by signing on the back of the requisition, in such case, the particulars of the third person are required like name of the person NIC number and signature of that person on requisition and cheque book issuance register. Chequebook is taken out from the safe / locker. It is assured that series of the chequebook. Particulars are entered in the chequebook issuance register. Account number is stamped on very leave of the chequebook and those leaves are counted. Name of account holder is written on the cover of the chequebook. And requisition on the chequebook for further issuance is properly filled, stamped and signed by officer of the bank. Chequebook is delivered to the customer and his signature on the chequebook issuance register. Chequebook serial number entered. In the system (FoxPro), Stock of chequebook are balanced at the end of each day and kept under safe custody. Earlier the banks were charging a fee for issuance of chequebook but now whenever a new account is opened, the account holder issued a chequebook free of charge. Bank Alfalah issues the following chequebooks.    

Saving account-25 leaves Current account 50 leaves. Current account – 25 leaves Foreign currency $ 10 leaves

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 Foreign currency 10 leaves CLOSING OF ACCOUNT When a customer wants to close an account he has to given a hand written application to the head of the operations department to close his account plus return remaining leaves of Chequebook. The manager first verifies the sign of account holder, then closing is done from the registers on the computer where the account was opened. In the file of the account holder his account opening form is crossed. For this closing a fee of Rs. 150/- is charge in BAF.

TYPES OF CHEQUES There are four types of cheques: In-house cheques / transfers cheques Inter branch cheques Inter bank cheques Outstation cheques OBC

VERIFICATION OF CHEQUES/ INSTRUMENTS Some important things should be verified and confirmed about the cheques and instruments: 1. 2. 3. 4.

5.

It is not stale/ post-dated or incompletely dated. It is not mutilated. There are no unauthenticated alterations on the cheques/ instruments or the pay-in-slip The amount in words & figures on the pay-in-slip agrees to the total of the cheques enclosed. The details on the pay-in-slip & counterfoil do not differ.

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CASH DEPARTMENT Cash department of Bank Alfalah works under the operation department. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsible for the book keeping of these transactions and the safe custody of cash. Out of five counters of cash department one counter is fix for senior citizens and females. All counters are dealing at the same time in deposits, withdraw and online transaction processes. This department performs the main function. a) Cash receipts b) Cash payments

CASH RECEIPTS In cash department depositors use deposit slip for depositing the amount into their accounts. The officer checks if the deposit slip is properly filled up containing title of account, A/C number date and amount in words and figures. Detail on both counter file and cash receipt voucher should be the same. Cash is received by cash receiving officer, twice counted and matched with the deposit slip. The cash details are written on the back of the deposit slip and are also entered in computer software called “bank Smart”. Cash received stamp is affixed on the face of the deposit slip along with the signature of the cash receiving officer. Deposit slip is forward to the officer in the cash department. Again proper scrutiny is made by the officer cash department both on cash receipt and Bank smart software. Officer cash department sign the deposit slip and finally approved the transaction on Bank Smart. Deposit slip is credited and posted in the concerned accounted in the system. Counter folio is given the deposition as receipt. One consolidated cash debit voucher is posted in the system to balance the cash.

CASH PAYMENTS OF CHEQUE All five counters deal with cash payments the process for payment of cheques local and foreign currency is same. First the cheque is presented by the customer or holder to cash

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payment officer. He confirms’ that it is drawn on the same branch and the particulars of cheque are properly filled in. one signature of the holder is taken on the back of the Cheque. Officer checks the date, amount in words and amount in figures, payee’s name, crossing if any, account number, cheque serial number, any material alterations / endorsements and signature of the customer. Account is debited in Bank Smart and then cheque is cancelled by the officer. It is posted in the system and posting stamp and number is affixed on it. At the end officer hands over cash to client.

CLEARING DEPARTMENT Mr. Behzad deals this department. Before discussing it is necessary to know what is “clearing”. “The process by which cheques exchanged between the collecting and paying bank and the ensuing financial settlement is called “clearing”. This facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types: 1) 2)

Inward clearing Outward clearing

INWARD CLEARING When cheques drafts, etc, of our branch presented to us for clearing by the SBP. Cheques to be honored by bank. OUTWARD CLEARING The cheques of other banks which the account holder deposits in their accounts are send for collection.

CLEARING PROCESS (INWARD/OUTWARD) Here the local cheques are received that are drawn on BAF. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars

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of cheques and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for Bank Alfalah on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. These are then entered in clearing register and cheques for collecting are entered in OBC register and handed over the bills department of collection. Clearing officer checks and verifies title of all the cheques deposited by the customer to confirm the good title of the cheques. Cheques are scrutinized properly and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged branch wise. All the cheques are then entered into the clearing system of bank. Print out of the clearing is taken and details are attached. With the cheques of each bank. Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Then total number of cheques presented to all banks and their total amount is written on the foot of that schedule, which is tallied with the clearing register. Next morning, these cheques are delivered to the respective banks in clearing house of SBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearing drawn on Bank Alfalah. Total number of cheques and their amount delivered to other banks are received from them are written on the clearing house schedule and handed over to the officer clearing house SBP. Cheques / DD received in clearing are given to the officer cash department of the branch for their repayment. After I proper scrutiny of cheques, verification of signatures and confirmation of balance in the account, officer cash department pays these cheque by canceling and posting them in the system. If any cheque is not passed due to insufficient balance or any other reason, officer cash department returns the same cheque by attaching a cheque return memo containing reason for return. This cheque is entered into the cheque returned register and bank charges are deducted according to the schedule of charges. Second clearing is called at 2:30 PM to check the fate of the cheques presented to other banks in the morning. If any cheque is to return, that is delivered to the same bank in second clearing. In the same manner, if any cheque presented by Bank Alfalah in first clearing is returned, they receive it and once again give schedule of clearing figure to the

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officer clearing house SBP containing number of cheques and their amount delivered and received unpaid.

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ACCOUNTS DEPARTMENT Account department is the most important department of the bank. Because it is concerned with:    

Revenue Expenses Assets Liabilities

These are the pillars of any business. In this department, all the vouchers that are posted during one day are sent to the account department next day. These vouchers are already posted to computer by the concerned department. So computer also sends a report to the accounts department. The accounts department has to tell that the requirements for cheques and vouchers are fully checked. If any kind of renovation or construction or rebuilding is done, all is paid from the accounts department. Like petrol for the car of EVP or VP, stationery charges, medical allowance, etc. are all paid by this department.

DAILY CUSTOMER MOVEMENTS LIST All the changes that are made in accounts of customer are shown in the daily customer movement list. By using this list, people of accounts department can prepare the vouchers. Following activities are performed by account department:     

Voucher preparation Preparation of daily, weekly, monthly, and annual statement. Budgeting and fixed assets Employer’s benefit Expenditure approval.

The bank does not make payment of a cheque bearing a six month or older date. If an account is not operated in six months, it is called dormant account.

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TYPES OF ACCOUNT    

Current account Saving account Notice deposit Term deposit

CURRENT ACCOUNT There is no interest on these accounts. It is only for transaction purposes. They paid on demand. Where a banker accepts, paying all checks drawn against him to extend of the balance in the accounts. As there is no profit paid on this account, it is also called checking account because cheque can be drawn on it. Current account is mostly opened for business. The minimum balance requirement for opening the current account is Rs. 1000/- inter bank fund transaction are handled by current account. SAVING ACCOUNT The purpose of this account is to introduce the habit of saving individuals in the neighborhood. The profit on saving accounts is paid on the basis of profit and loss sharing after every six monthly. The minimum balance requirement for opening the account is Rs. 500/-. NOTICE DEPOSITS Notice deposits are kind of fixed deposits. The minimum balance requirement for opening the account is Rs. 500/- and payment is drawn on maturity of the specific period. Notice Deposit Is Of Two Types  One for which a prior notice of 30 days and is required from the customer before withdrawing deposited amount and for which rate return is 1.50%.  Second for which a prior notice of 30 days and above is required from the customer before withdrawing deposited amount and for which the rate of return is 1.50%.

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TERM DEPOSITS A term deposit is a deposit that is made of a certain period of time. At the end of specific period the customer is allowed to with draw the principal amount. The rate of return of this account varies from 1.50% to 2.25%. The term deposit account varies from one month to 1 years and the minimum balance requirement is Rs. 500/-.

REMITTANCE DEPARTMENT The need of remittance is commonly felt in today’s business. A major function of any bank is to “transfer of funds form one place to another”. Bank Alfalah uses the following modes of transfer of funds.      

Demand draft (DD) Telegraphic Transfer (TT) Pay order (PO) Call deposit Pay slip Money gram

DEMAND DRAFT It is instrument, which is used to transfer amount from one city to another city it can be made on cash as well as on cheque. If it is made through cheque that it is necessary that person must be A/c account holder while in case of cash any person can made. It consists of four copies. 1) 2) 3) 4)

Original copy which is given to account holder. DD advice is sent to the central branch. Third copy is for reconciliation. Last copy is sent to head office for reconciliation.

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Procedure The client who wants to transfer his funds form one city to another fills a form requesting the bank to prepare a DD. DD application form contains columns requiring information for the preparations of DD eg.    

Beneficiary name Applicant’s name Address Amount to be sent etc.

Bank deducts some charges against DD. These charges include commission tax provincial tax etc. Tax is deducted 0.3% while PT charges are 0.50 paisas. If customer is taxpayer than advance tax is exempt provided that he submit the tax exemption certificate.

TELEGRAPHIC TRANSFER It is another mode of transfer of funds. It is quickest mode of transfer of funds from one city to another. For TT, client has to submit the application on a prescribed form of the bank. Client can deposit money in to the bank or can request the bank to deduct the amount against the TT along with the charges against the issuance of TT from his account. The charges against the issuance of TT charged by Bank Alfalah.

Procedure for Telegraphic Transfer Issuance Application form is given to the customer to fill. Two signatures are taken on the form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission charges and with holding tax is written on the top of the applicant form. If the customer is maintaining his account with the branch he can

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give cheque for total amount of instrument plus bank charges. Cheque and application form is then given to the officer cash department for the payment of the cheque. After proper scrutiny, officer cash department posts who cheque and signs the application form to assure that payment is received. If the customer wants to pay cash, it is deposited by the customer on cash counter. Cash receiving officer receives cash on the application form along with the bank charges and withholding tax, application form is then given to the remittances incharge for issuance of the instrument. He enters all the particulars of the application form in the system (BPG) and computer gives an Auto Control Number to the T.T message of receiving branch. This message is then sent through telex to the receiving branch followed by a T.T. advice. The customer is confirmed that T.T. has been sent. Procedure for T.T. Payable When TT message is received, tested number on the TT is checked and verified. Tested number is then written in the register and signed by the holder of test keys for office record. All the particulars of the TT payable are entered in the system. Payment instructions on the TT message are followed it if is pay and advice it will be paid through TTR on the cash counter or through clearing and if it is credit and advice, it will be transferred in the account mentioned in the TT message. Printouts of vouchers (TT payable are taken. If TTR is presented for payment, signature of the authorized officers are verified on TTR is presented for payment, signature of the authorized officers are verified on TTR and after proper scrutiny, it is posted in the BPG and canceled by the remittances incharge. Procedure for Foreign Demand Draft Issuance Application form is given to the customer to fill the same. Two signatures are taken on the form, one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission is charged, which is US$ 5/- for each amount of FDD. Cheque is received from the customer for total amount of FDD plus bank commission. Cheque and application form is then given to the officer cash department for the payment cheque. After proper scrutiny, officer cash department posts the cheque and signs the application form, to assure that payment is received. Then cheque and application form is given to the incharge. Remittances, who will enter all the particulars of the application in the FDD

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issuance register. If the customer wants to pay cash, it is deposited by the customer on cash counter. Cash receiving officer receives cash on the application form along with the bank charges. Application form is then given to the remittances incharge for the issuance of the instrument. A control number is allotted to the instrument form FD register. Instrument is complete by putting all the particulars in it and signed by two attorney holders. Instrument is then handed over to the customers. FDD advice is sent to the responding foreign bank / paying bank where they are maintaining dollar account through registered mail. Exchange transaction credit advice (ETCA) is sent to eh Head office fore the reimbursement. Copies of the FDD and ETCA are kept in the record of the bank.

Procedure for Foreign Telegraphic Transfer Issuance Application form is given to the customer to fill the same. Two signatures are taken on the form one for request and other for signatures are taken on the form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission is charged, which is US$ 15/- that rate for each amount of each FTT. If the cheque is received from the customer, it is taken for total amount of FTP plus bank commission. Cheque and application form is then given to the officer cash department for the payment of cheque. After proper scrutiny, officer cash department posts the cheque and signs the application form to assure that payment is received. If the customer wants to pay cash, it is deposited by the customer on cash counter; cash receiving officer receives cash on the application form along with the bank charges. Application form is then given to the remittances incharge for the issuance of instrument. He enters all the particulars of the application form in the FTT register and a control number is allotted to the FTP. TT message is written in the telex containing name of transferring branch, name of receiving branch, date amount, currency, payee’s name and account number or identification if any, payer name and payment instructions. A test number is given to the FTT message for receiving branch. This message is then sent through telex to the receiving branch. Customer is confirmed that FTT has been made. Exchange transaction credit advice (ETCA) is sent to the Head Office for the reimbursement. Copies of advice (ETCA) and FT are kept in the record for the bank.

COLLECTION

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All the cheques under collection are called cheques under collection in Bank Alfalah Limited. There are two types of bills for collection:  Outward Bills for Collection  Inward Bills for Collection

Outwards Bills for Collection All the cheques are received on one counter along with paying slips duly filled in properly containing particulars of cheques and account holder. Counter folio of paying slip is handed over to ht customer by putting stamp for “cheque received for collection for Bank Alfalah” on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs. Cheques for local clearing are entered in clearing register, whereas cheques for collection are entered in OBC register and handed over to the bills department for collection. OBC number is allotted to eh cheque from OBC register. Special crossing and bank endorsement stamps are affixed on the cheque. OBC schedule is attached with the cheque and dispatched to the main branch of that city for collection. If they do not have any branch in that city, then cheque will be sent to the collecting agent of Bank Alfalah for then cheque can be sent directly to the drawing branch; instructions are given on the OBC schedule for the payment of that cheque.

PAY ORDER Written order which is issued and received to the save book or drown or payable on save branch. Application form is given to the customer to fill. Two signatures are taken on the form one for request and other for receiving the instrument. All the particulars of application form are checked and bank commission charges and with holding tax is written on the top of the applicant form. If the customer is maintaining his account with the branch he can give cheque for total amount of instrument plus bank charges. Cheque and application form is then given to the officer cash department for the payment post the cheque and signs the application form in token of payment received. If the customer wants to pay cash, cash is deposited by the customer on cash counter cash receiving officer receives, cash on the application form along with the bank charges and withholding tax.

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Application form is given to the remittances incharge for issuance of instrument. He enters all the particulars of the application form in the system (BPG) and computer gives an auto control number to the instrument. Print out a take on the block payment order. It is then signed by two authorized officers of the branch. Instrument is the protect graphed and given to the customers. When the instrument is presented for payment, it is posted in the BPG and canceled by the remittances incharge after proper scrutiny.

PAY SLIP It is used when bank itself pay for any type of transaction e.g. purchased of stationary.

MONEY GRAM Bank Alfalah Limited, in collaboration with money gram offer remittance services to Pakistan. “It’s basically a person to person money transfer service that allows consumer to receive money in just a few minutes.”

Procedure  Person must have reference no.  Person must tell reference no. and compute the simple form.  Person has to show NIC and tell compute introduction after that he can obtain money. Vouchers are also posted in the system. When OBC is realized collection bank pays the amount through IBCA if it is the same bank or through DD if it is another bank. If DD is received against OBC, it is presented in the clearing for collection. If IBCA is received the branch for the payment of OBC, certain vouchers are posted in the system.

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FOREIGN EXCHANGE DEPARTMENT “The transfer of credits to a foreign country to settle debts or accounts between resident of home country and those of the foreign country” or “the foreign bills currencies etc used to settle such accounts”. Foreign exchanged department deals within exports and imports. Mr. Muhammad Yaseen at BAF supervises it. The bank acts as exporter as well as importer bank for different parties who are in the business of export and import.

Import All goods and services brought into a country that were purchased from organization located in other countries.

Export All goods and services sent from one country to another country.

EXPORT DOCUMENT REQUIRED FOR EXPORTER 1)

National tax number

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2) 3)

Registration with EPB Sales tax registration

DOCUMENTS TO BE ATTACHED FOR EXPORTERS  Invoice  Bill of lading  Packing list

      

 Total quantity  Net weight / carton  Gross weight / carton  Total net weight / carton  Total gross weight Bill of exchange (original or draft) E-form: Initial document on which total export proceeding is based. In this form, all the conditions are given, which are necessary for exports. Letter of credit: It is written agreement between importer and exporter. Beneficiary certificate. DHL certificate (TCS certificate) Form ‘M’ Certificate of Origin (Form – A)

FORM-E Government has provided facility to exporter in taking E-Form from any bank and he can present it to any bank for negotiation. Export precede realization certificate. SBP gives rebate to exporter against export after realization. It is paid according to commodity wise and bill wise. Claim period: 1 year.

TRANSPORT DOCUMENT (BILL OF LADING, AIRWAY BILL)  When insurance is done by importer, C&F (cost and freight) usually used.  FOB cost (free on board)  CIF (cost insurance and freight) when insurance is done by exporter, CIF is used.

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 Tenor (At sight) immediate payment by importer after receiving product.  Partial shipment: Product is sent partially.  Transshipment: Product is sent via any country.

E-FORM CERTIFICATION When export is done on C&F basis, so bank issues E-form certification to exporter and he submits it to the custom officer along with e-form certification to certify e-form.

FORM OF AUTHORIZED DEALER’S CERTIFICATE State bank permits exporter to issue bill of lading in the favor of e-form bank. But if requirement of L/C is to issue bill of lading in favor of company then shipping company issues bill of lading in favor of exporter company. Authorized dealer certificate is filled for this purpose.

CERTIFICATE OF ORIGIN This certificate shows that goods are from Pakistan.

COVERING SCHEDULE If in covering schedule, it is given that “please remit proceed to our Karachi office a/c no. 5740734881 with ABN (Amro Bank New York), USA for onward credit to BAF Multan.

BENEFICIARY CERTIFICATE If L/C requires some information as proof of anything from exporter then exporter has to present beneficiary certificate for that proof.

E-FORM E-form has four copies:  One for custom officer  One for exporter  Triplicate copy for SBP

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 Duplicate copy for bank Bank reporting or duplicate and triplicate is done by bank. Custom officer (date is given on the foot form) should clear product.

PAYMENT FROM IMPORTER BANK It is the choice of importer to open L/C from any bank and the bank from which L/C is opened can also refer to some other bank for payment. So bill of exchange is sent to referred bank and other documents are sent to L/C opening bank.

SWIFT (Standard World Wide Inter Bank Financial Transaction) It is network among all banks. No other institute can get involved in it.

BILL OF LADING Certificate from shipping company for loading commodities. If requirement of L/C is to issue bill of lading in favour of L/C opening bank, then authorized dealer certificate will be provided by bank in favor of L/C opening bank.

BANK KEEP IN RECORD      

Covering schedule Invoice Packing list AWB Certificate of origin E-form

Normally bank keeps photocopy of all documents in record. Negotiable documents (original documents).

IMPORTS L/C is opened by the importer. There are two types of L/C:

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 Revocable L/C  Irrevocable L/C

NECESSARY REQUIREMENT If place of issue and port of loading is different on bill of lading, then along with the stamp of shipment on board, vessel name and port of shipment is written. 1) 2) 3)

4) 5)

Issue date of bill of lading – shipment on board. There should not be cutting on bill of lading without authentication. Bill of lading should show capacity of agent. If bill of lading can be taken by the agent of Importer Company, then his name should be mentioned on bill of lading. Original GSP should be presented. If TT reimbursement is not acceptable, it means bill of lading is necessary. When documents are received fro export, do enter into lodgment register.

DOCUMENTS FOR IMPORT          

Performa invoice signed by importer Category passbook copy attested by any bank L/C opening application filled in by the customer Import registration with export promotion bureau Annexure Verification of signature by S.S. Card L/C issued on basis of L/C application form. Insurance if covered by buyer. Insurance cover note. Insurance policy.

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DOCUMENTARY CREDIT TRADE SERVICS DEPARTMENT Alfalah Bank has his full fledged trade service department. As a credit instrument and as a means of making as a payment the documentary credit is an essential instrument for conducting word trade today. A documentary credit represents a commitment bank to pay the seller of goods or services a certain amount provided present stipulated documents evidencing the shipment of the goods with prescribed period of time. For the cases of imports or exports first the parties have to do upon a sale contract regarding the term and condition of sale. One mode of payment is by L/C which is secured and now a days mostly use the business. Letter of credit is under taking by opening bank (Importers bank the Exporters bank (Negotiating bank) that it will make payment if documents are as per terms of LC.

Four Parties Are Involved In Letter Of Credit    

Applicant Importer Beneficiary Exporter Issuing bank bank of importer Advising bank bank of importer

According to import policy, no import is valid with out import licence which is issued by the chief controller of import and export or we can say export promotion bureau (EPB). If a person desires to take up import trade must get his name, his firm or his limited company, registered with the EPB. On being granted registration certificate, he will be eligible to import goods according to import policy. There is no special condition of eligibility for registration. The only requirement is that he should be a Pakistani and must be registered with income tax department.

L/C OPENING PROCEDURE When the importer obtained import license, then the bank will open letter of credit. “A letter of credit is undertaking by LC opening bank to put an agreed sum of money to

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sellers bank on behalf of the buyer of the goods under clearly defined terms and conditions”. Pakistani banks open only irrevocable LC. An essential feature of the irrevocable LC is that it can not be modified, altered, amended, or canceled without the prior consent of all the parties. Party comes to the bank and fills the form which is provided on the payment of Rs. 100. This form is filled by the party and is return to the bank, it includes details like.    

   

Name of company Address Country of origin Branch name

Quantity Insurance company Shipment from Shipment to

One thing should also be submit which is INDENT. If the foreign party has any agent they will issue the indent with following details:  To messers  Importers, etc

Document Required for “LC” Opening When the bank opens LC, it requires following documents: 

   

Valid import license Performa invoice Importer should be Pakistani Letter of under taking form importer Insurance cover.

An important point which the bank will consider before opening of LC is that sufficient funds be available in the LC opener’s accounts. At the time of establishing the LC the opening bank generally retains a maximum margin to safe guard its own commitment. The margin may vary from nil to 100% according to the nature of commodities and it also depend upon the party. At the item of establishing the LC opening bank charges bank commission, postage and other charges from the LC opener account. Another main important point is that value of LC should not increase the value of import license. After all the documents are being checked and signs are verified by the bank. A sanction slip is attached with each form so that the approval can be gained from the manager of the bank.

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After the approval is made four copies are prepared and the entries are made on the computer and the printout is taken the margin amount is checked from the importer account and if the amount is not found then LC is not opened and the party is informed about the situation. On the deposit of the margin then LC is opened LC limit if set by the bank are also checked. After the LC is opened following entries are made:  LC opening register  Margin / Liability Account Register.

Payment to Seller The negotiating bank upon receiving the documents from the seller checks the documents according to terms and conditions of credit upon satisfying it self of this the negotiating bank makes payment to the seller if sight credit. It then forwards the documents to the opening bank and reimburses it self through the opening banks account with itself.

Documents Received By the Opening Bank Importers bank or opening bank receives the following documents form the exporters’ bank or negotiating bank.      

Bill of exchange Invoices Bill of lading Packing list Certificate of origin Insurance

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CREDIT DEPARTMENT Credit means belief or trust. “The quality of being credible or trustworthy”. Another words we can define credit as “trust in one’s integrity in money matters and ones ability to meet payment when due”. The earnings of BAL are chiefly derived from interest charge and discounts. This department is the revenue generating department. Credit department basically has three segments. 1) 2) 3)

Credit marketing department Credit administration department Trade finance services department

Credit and advance department deals with extending loans (credit facility) to customers. State Bank of Pakistan (SBP) has prescribed regulations which are called “PRUDENTIAL REGULATIONS”. Every bank has to follow these regulations. If any bank violates the regulations it should be liable for penalties under the core spirit of SBP PR(S). The Bank Alfalah limited credit is extended on the basis of these rules and regulations. These regulations tells the term and conditions under which you can extend loans to the borrower and to what extent.

CREDIT FACILITIES At BAL there are two types of credit facilities 1) Funded facilities 2) Non funded facilities

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FUNDED FACILITIES These are the facilities in which there is direct involvement of cash fund. Following are the funded facilities. 1) 2) 3) 4) 5) 6) 7)

Current finance CF Term finance TF Finance against foreign bills “FAFB” Finance against packing and credit “FAPC” Finance against imported merchandise “FIM” Finance against trust receipt “FATR” Payment against document “PAD”

Current Finance CF The extensively used financing mode at BAL is current finance (CF) current finance is used to finance both individuals and industries. Individual take current finance for their personal use while in industries. It is taken for fulfilling the requirement of working capital.

Term Finance TF Term finance is for specified time period. Term finance is given for fixed asset financing.

Finance Against Foreign Bills FAFB In FAFB facility exporter take loan from bank on the behalf of their foreign export bills. Like exporter sends shipment but at that time he needs fund for the operation of the business. He may go to the bank and surrenders all the documents including L/C, Bill of lading etc. bank checks all the documents to be in accordance with terms and conditions. If they find no discrepancy, they give money to exporter but take some margin on it.

Finance Against Packing And Credit “FAPC” FAPC is taken for the preparation of consignment. It has two forms. 1)

Pre shipment

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2)

Post shipment

1) Pre Shipment Preshipment loans are export related working capital financing.

2) Post Shipment Post shipment financing is essentially the receivable financing to the exporters till the period he is out of cash after the shipment.

Finance Against Imported Merchandise FIM This facility is allowed against the commodities imported from other countries usually through letter of credit. Some time importer does not have enough amounts for paying the imported merchandise therefore. He request to the bank to pay all dues to the exporter against the security of imported merchandise. Bank pays the amount and releases the goods, when the importer pays off its liability partially / fully.

Finance Against Trust Receipt FATR Finance is extended upon the trust receipt signed by borrower. Importer have to import the product. There are three conditions. 1) 2)

Pay money and get thing Get fine facility

And third is that if that client is trust worthy for bank believing on him based upon his past record. He releases the goods against the trust receipt. Trust receipt is given to the bank by the customer. The customer in turn commits that I will pay on such and such date. Bank pays all taxes and gets merchandise and then gives it to client. Bank do charges markup against such financing. FATR is for specific period of time. If client do not pay with in specified time then bank charges higher per day markup.

Payment Against Document PAD Payment against document is made by the banks as payment against L/C comes due payment is made for imported documents. For example when exporter sends all the

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document to importing bank as document reached, importing bank has to make payment within 24 hrs if the importer does not pays then bank charges markup per day.

NON FUNDED FACILITIES The facilities where there is no direct involvement of banks fund. Following are the non funded facilities. 1) 2)

Letter of credit L/C Letter of Guarantee L/G

Letter Of Credit Importer bank issues a document on request stating that it will pay the exporter when exporter fulfill the terms of letter of credit L/C is off two types: 1) 2)

Sight L/C Usance L/C

Sight L/C Requires the importer / importing bank to pay as soon as it receives the clean documents from exporter. Usance L/C It extends time period (typically 60, 90, 120 days) to importing bank for payement. After specified time period importer have to pay. Letter of guarantee “L/G”. Bank gives guarantee in the behalf of person that I will pay in case of default.

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GUIDE LINE OF CREDIT POLICY  Total outstanding financing facilities by banking company to single person shall not at any point of time exceed 30% of bank’s unimpaired capital.  No banking company shall make loans or advances against the security of its own shares.  No banking company shall grant unsecured loans / advances on the guarantee of, o Any of its directors. o Family member of director o Any private company in which banking company is interested.  In arriving at exposure per person weight age of 50% shall be given to o Documentary credit opened by bank. o Guarantees/bonds other than repayment guarantees.  In arriving at per party exposure 90% of o Deposit of party with bank under lien. o Face value of FIBs lodged by the party as collateral. o Pak rupee equivalent of face value of special US Dollar bonds converted at official rate, lodged by the party as collateral shall be deducted.  Aggregate exposure of bank against all its clean facility shall not at any point exceed the amount of bank’s capital and general reserve.  Advances given to the employees of bank in accordance with their entitlement.  While granting any accommodation, bank shall ensure the total accommodation availed by any borrower from banks / financial institution does not exceed 10 tines of the capital and reserve of the borrower.

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 A borrower who is prepared to inject fresh equity irrespective of the fact that its equity is negative is eligible to obtain finance from bank to the extent of 10 times fresh injected equity.  No banking company allow financing facilities whether fund based / non funded against the shares of companies which are not in central depository system.

CREDIT CYCLE

Request

Renewal / Revise / Write-off Processing Information & CLP Monitoring

Decision Disbursement of Loan

Offer Purification of the Documen ts & Security

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STEP I Credit cycle start with request letter. When customer gives a request letter to bank that he want that much amount of credit from bank.

STEP II When bank receive the request letter from customer. The officer of credit marketing department make credit line proposal (CCP) of client. It is essential that the proposal define clearly the purpose of facility, the source of repayment, the agreed repayment. Schedule, the value of security and customer relationship consideration implicit in credit division. The security to be accepted as collateral for the facility and all the documentation relating to the security of facilities must be in the approved form all approval procedures and required documentation must be completed all these things all feed in CLP. CLP is basically a medium to present proposal for seeking approval of credit line in client. In CLP they feed complete data of the client that include:          

Credit limit Legal status of company. History of relationship / introduction with bank. Line of business Background of proprietor / partner / owner. Purpose of facility Security Along with it they include borrower basic fact sheet. CCA Prudential checklist.

STEP III

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After the processing of information, credit officer decides weather to give credit to that person or not. They also check weather its security has any market value or not. Decision is taken by the branch credit committee (BCC). If the proposal is within the discretionary powers of committee the proposal may approve after evaluation of credit risk. It CLP is beyond discretionary power of branch credit committee the CLP is sent to credit division at head office along with supporting documents and recommendation of branch credit committee.

STEP IV When decision is made now credit officer offer that we will give you loan uptill that limit not more than that. Up till now all the process is done by credit marketing officer. After that credit administration officer’s work start. Credit Administration department basic function is to fulfill the requirement of documents as a security for credit. Different types of documents are required for Pledging, mortgage and hypothecation.

Documents required for C.F. Hypothecation Legal stamp documents required: • • • • •

Promissory note-------------------IB~12A Letter of Hypothecation----------IB~25C Letter of guarantee------------------IB~29 Letter of continuity Agreement of finance----------------IF-3

Letters without Stamp: • • • •

Letter of arrangement Letter of disbursement Letter of authority SBP regulation undertaking

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Documents required for C.F. Pledge Legal stamps documents required: • • • • • •

Agreement of finance Promissory note Letter of guarantee Memorandum of deposit of title deed Letter of hypothecation Letter of continuity

Letters without Stamp: • • • •

Letter of arrangement Letter of disbursement Letter of authority SBP regulation undertaking

Property Documents for mortgage • • • • • • • • • •

•

Legal advice about property documents Title deeds (original documents of property Aux Sajra (location site map) NEC (non-encompress certificate) PT 1 in favor of borrower PT 1 in favor of bank MoTD (Mortgage of title deeds) Agreement to create mortgage Letters submit to ETOS & registrar Irrevocable general power of attorney (IGPA) Valuation report

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STEP V Here documents are checked security is properly checked which is checked by the valuer. Valuer tells the value of security. Here following characteristic of security are checked:      

Market value Consistency Salable Storable Transferable Transportation

STEP VI On completion of legal documents and security arrangement and receipt of completion certificate from recognized legal counsel, the bank according to the approved schedule prepared by bank after obtaining confirmation of other payments have been funds from sponsors other source viz, equity fund from sponsors release of fund by other cofinanciers etc. After the valuation of security the loan is disbursed to customer.

STEP VII Responsibility lies to branch manager to monitor the overall profit and risk aspect of credit portfolio in accordance with criteria setout in bank’s credit policy. After the disbursement credit administration officer monitor the performance of customer whether he is fulfilling the requirement or not. He is paying markup or not for which purpose he has taken the loan whether he is utilizing loan for that purpose or not.

STEP VIII After specific time period credit officer see what customer want whether he want to renew / revise or write off it. If he wants to renew it he said to officer to renew it with same limit.

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-78MB-04031 (2004-2006)

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BALANCE SHEET 2004 (In thousands)

2003

ASSETS Cash and balance with treasury bank Balances with other Bank Lending to financial institutions Investments Advances Other assets Operating fixed Assets Deferred tax assets TOTAL ASSETS

8,423,399 626,917 7,437,733 28,903,596 49,216,120 1,553,108 2,791,626 0 98,952,499

4,540,486 232,728 4,634,398 24,470,314 28,319,401 1,208,930 1,760,774 0 65,167,031

LIABILITIES Bills payable Borrowing from financial institutions Deposits and other accounts

1,208,671 13,127,754 76,698,322

758,961 6,037,576 51,684,984

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-79MB-04031 (2004-2006)

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Sub-ordinated Loans 649,740 Liabilities against assets subject to finance lease Other liabilities 2,686,754 2004 Deferred tax liabilities 323,010(rupees in ' TOTAL LIABILITIES 94694251 000) mark-up/ returned interest earned 4,033,380 mark-up/ returned interest expensed 4,258,2482,028,577 Net Assets net mark-up interest income 2,004,803 provision against non-performing loans and Represented By advances-net Share capital 2,000,000 -87,091 provision in domination in the value of 790,374 Reserves investments 0 Un-appropriated Profit 463,042 bad debt written off directly -418 3253416 -87,509 Surplus on revaluation of assets 1,004,832 net mark-up interest income after provisions 4,258,2481,917,294 NON-MARK-UP/INTEREST INCOME Fee, commission and brokerage income Dividend income income from dealing in foreign currencies Other income total non mark-up/ interest income

650,000

2003 1,196,342 1,186,501 61514364 4,551,329 3,112,313 3,652,667 1,439,016 -57,619 1,000,000 365,727 0 250,050 -1,447 1615777 -55,066 1,383,95 2,036,890 0 3,652,667

399,383 112,017 106,848 2,773,503 3,391,751

316,368 62,077 95,165 220,973 694,583

5,309,045

2,078,53 3

NON-MARKUP/ INTEREST EXPENSES Administrative expenses Other provisions/ write offs Other charges total non-markup/ interest income Extraordinary/ unusual items

1,799,490 2,000 1,875 1,803,365 3,505,680

1,182,887 0 993 1,183,880 894,653

PROFIT BEFORE TAXATION Taxes PROFIT AFTER TAXATION

3,505,680 1,382,446 2,123,234

894,653 448,974 445,679

RATIO ANALYSIS

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Earning Assets to Total Assets: Earning Assets / Total Assets 2004 2003

85,557,449 / 98,952,499 57,424,113 / 65,167,031

= =

86.46% 88.12%

Earning assets to total ratio tells us about the bank management efficiency to utilize the earning assets to get return. Earning assets include loans, investment securities and money market assets. The BAL earning assets to total assets is slightly decline as compare to previous year. But after comparison with last year we can easily find out that total assets and earning assets are increasing because BAL is going to expand its network.

Return on Earning Asset: Net income / Earning Assets 2004 2003

2,123,234 / 85,557,449 445,679 / 57,424,113

= =

2.48% 0.78%

Return on earning assets can help us about the measurement of profitability. Better ratio means good utilization of earning assets by bank management to earn profit. If we compare this years ratio that is 2.48% as compare to previous year that is 0.78%. The difference shows incredible change in positive direction. With the help of better utilization of assets and expansion of its network BAL increase its ratio.

Interest margin on Average Earning Assets 2004 2003

2,004,803 / 85,557,449 1,439,016 / 57,424,113

= =

2.34% 2.50%

This is a key determinant of bank profitability, for it provides an indication of management’s ability to control the spread between interest income and interest expense. The ratio of 2004 is 2.34% as compare to 2003 value that is 2.50%. The ratio is decline, may be the reason behind is that continues decline in rate of interest by SBP. Government gives more relaxation for investors to increase their investment in different areas like SME sector etc.

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-81MB-04031 (2004-2006)

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Equity Capital to Total Assets: Average Equity / Average Total Assets 2004 2003

3,253,416 / 98,952,499 1,615,777 / 65,167,031

= =

3.29% 2.48%

The ratio another name is funds to total assets. This ownership provides the cushion against the risk of using debt and leverages. The higher the ratio then more cushion is there and lower cushion with lower ratio. BAL ratio in 2004 is 3.29% as compare to 2.48% in 2003, which show the improvement and recently more shares are floating in the market that will make this ratio even better than 2004 value.

Deposits times Capital: Average Deposits / Average SHE 2004 2003

76,698,322 / 3,253,416 51,684,984 / 1,615,777

= =

23.54t 31.98t

The ratio of deposits times’ capital concerns both depositors and stockholders. To some extent, it is a type of debt/equity ratio, indicating a bank’s debt position. As I define above, more capital implies a greater margin of safety, while a larger deposit base gives a prospect of higher return to stockholders, since more money is available for investment purpose. The overall this ratio is very good in last two years. But this ratio is decrease in 2004 than 2003 from 23.54t to 31.98t respectively. Deposits are increased by 48% so more deposits are available for investments are there and equity is double approximately.

Loans to Deposits: Average Total Loans / Average Deposits 2004 2003

49,216,120 / 76,698,322 28,319,401 / 51,684,984

= =

64.17% 54.79%

Average total loans to average deposits are a type of asset to liability ratio. As we know, loans make up a large portion of the bank’s assets, and its principal obligations are the deposits that can be withdraw on request. This ratio is increased from 54.79%in 2003 to

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-82MB-04031 (2004-2006)

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64.17% in 2004, but it’s not a good sign from debt point of view because it’s indicating the increase in risk.

ROA: Net Income / Total Assets 2004 2003

2,123,234 / 98,952,499 445,679 / 65,167,031

= =

2.14% 0.68%

Through that ratio we measure the ability of bank to utilize its assets to create profits by comparing profits with its assets that generating profits. The BAL ratio is incredibly improved 3 times as compare to 2003 ratio. In 2004 this ratios is 2.14% as compare to 2003 ratio of only 0.68%. The reason is behind is that BAL income is exceedingly increased in 2004 as compare to preceding year.

ROE: Net Income / Total Equity 2004 2003

2,123,234 / 3,253,416 445,679 / 1,615,777

= =

65.26% 27.58%

Return on Equity is informs us about the return for shareholders. That also shows incredible increase approx. three times. Increase in shareholders couldn’t any effect on this ratio because the reason is that income is unexceptionally increased. The 2004 ratio is 65.26% as compare to 2003 value of 27.58%

Profit Before Tax Ratio: PBT / Gross Markup Income 2004 2003

3,505,680 / 4,033,380 894,653 / 4,551,329

= =

86.92% 19.65%

For banking sector, profit before tax ratio is very much important because large amount is deducted in shape of taxes. Banks profit before tax ratio is incredibly increased in 2004 that is 86.92% as compare to 2003 value 19.65%.

Basic Earning per Share: Net Income / # of outstanding shares 2004

2,123,234 / 200,000

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=

10.62 Rs.

-83MB-04031 (2004-2006)

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2003

445,679 / 200,000

=

2.23 Rs.

This ratio is the most interesting area for stockholders and management too. This ratio tells that how much rupees you can earn against each outstanding share. Alls ratio shows astonishing increased because of growth in future perspective and unbelievable change in income compare to preceding year in 2004. 10.62 Rs. is five times greater than last year 2003 EPS that was 2.23 Rs. only.

Book Value per Share: SHE / # of outstanding shares 2004 2003

3,253,416 / 200,000 1,615,777 / 200,000

= =

16.27 Rs. 8.08 Rs.

Book value per share ratio tells us about the original value of shares in books of account. BAL book value per share ratio increased two times as compare to preceding year. 16.27 in 2004 shows incredible increase as compare to 2003 value that is 8.08.

Sana ullah

-84MB-04031 (2004-2006)

Internship Report

SWOT ANALYSIS During the internship of eight weeks of mine in Bank Alfalah Limited, Main Branch Multan, I am going for SWOT Analysis.

Strength

 Bank is believe on customer service. In first week of internship, I worked on customer feedback desk for the purpose of improve the services.  Customer feedback is collected on daily basis and reported to the Branch manager to area manager.  Bank Alfalah providing the credit card facility at minimum rate all over the Pakistan with other good benefits.  Phone Banking is offering first time by Bank Alfalah in Pakistan. 

Bank Alfalah modernize its banking by providing the facility of Online Banking, ATM and money gram

 Bank Alfalah enjoying the large market share in car finance area.  Home finance and agriculture loans are recently introduce by BAL at competitive rates.

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 Quematic machine is used to provide facility to customers. 

Branch Manager and Chief Manager having good coordination with staff to make the environment friendly.

Weakness  BAL main branch, Multan all time overcrowded.  Customers are not properly guided to get the benefit of BAL facility.  Online services are charging compare to other competitive banks.  BAL main branch Multan still having the shortage of cash and deposits counters.

Opportunities  Banking industry is one of the most growing sectors in Pakistan. So Bank Alfalah should be continually expanding its network of branches.  Muslims are more consciously differentiate the Islamic-base banking from interest-base banking. That is why there is large caution of expansion.  Mobile banking should be started to compete in market.  Establishing foreign branches.  All products of Consumer Financing that include home financing, car financing, home appliances products and others should be introduce to all the branches in the cities of Pakistan.

Threats

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-86MB-04031 (2004-2006)

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

Banks in Pakistan those having large networks of hundred branches like MCB, HBL etc. are the great threats for Bank Alfalah Limited. Large networks can play the important role in banking business. BAL having small network of 95 branches compare to other key players in industry.

 Many other banks are now involving themselves in consumer financing at competitive rate. This is one of the biggest threats for BAL consumer financing products.

Sana ullah

-87MB-04031 (2004-2006)

Internship Report

RECOMMENDATIONS Finally, I am going to gives few recommendations on the basis of my personal experience of eight weeks of internship in Main Branch, Multan.  The main and biggest problem which I found that main branch is always overcrowded. In rushing hours, there is shortage of seating facility not only for customers but also for the employees of the managers. Number of seats should be increased on priority basis for employees and customers.  Reception desk should be worked properly with the help of skilled person for the purpose of guidance for customers.  Number of counters should be increased specially in rush hours to reduce the size of waiting line in rushing hours.  Account opening forms should be filled properly and try to filled it in client handwriting and sure that terms and conditions are read by clients.  Online service charges should be reduced if that is not possible to omit it.  In the branch, there is proper one section for the TT, DD and ATM card application, which not only save the time of cash department but also helps the IT department people to concentrate their original task.

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-88MB-04031 (2004-2006)

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

All customers dealing desk should be at front door. Customer should not be approached to each corner of the bank for the purpose of security.Proper customer feedback should be taken on continues basis through feedback desk.

OBSERVATION & CONCLUSION I observed the bank Alfalah a financially sound bank. Its profits are increasingly year by year. Its staff is very good and sincere with the bank. Bank Alfalah under the leadership of Sheik Nahayan Mabarak Al-Nahayan has made significant progress in building and strengthening both the corporate and retail banking sectors in Pakistan. The bank attained number 2 positions in terms of its balance sheet size amongst the private banks. Bank Alfalah views specialization and service excellence as the cornerstone of its strategy. The people at bank realize that innovation, creativity, reliability, customized, services and their execution are they key ingredients for their future growth. Revenues from these activities have started yielding dividends and they expect significant growth. They are aware that they have stepped into the 21st century and they must meet its challenges by acquiring the highest level of the technology. They will thus be accelerating their technological advance to enable them to distribute their products and services through most efficient and high tech means. They say that they will continue to invest in the modern tools and substantial allocation to resources will be made to achieve this objective during the current year. Phone Banking and credit card have been introduced in many cities.

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-89MB-04031 (2004-2006)

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TABLE OF CONTENT ...............................................................................................................................1 PREFACE............................................................................................................1 INTRODUCTION ..........................................................................................................4 INTRODUCTION TO BANK ALFALAH....................................................................................................13 Company Secretary.........................................................................................................................................20 Chief Financial Officer...................................................................................................................................20 Auditors..........................................................................................................................................................20 Head Office.....................................................................................................................................................20 Executive Committee......................................................................................................................................20 Branches Network..........................................................................................................................................21 FEATURES....................................................................................................................................................22 DEPARTMENT HIERARCHY......................................................................23 PRODUCTS OF BANK ALFALAH LIMITED............................................................................................26 Foreign currency accounts- new scheme (saving)..........................................................................................26 Currency Profits.......................................................................................................................................26 ROYAL PROFIT (PROFIT BEARING CURRENT ACCOUNT)................................................................26 Projected profit rates (per annum)..................................................................................................................26 CLASSIC PLS DEPOSITS............................................................................................................................26 TERM DEPOSITS..........................................................................................................................................26 ATM...............................................................................................................................................................27 ONLINE BANKING......................................................................................................................................27 PHONE BANKING........................................................................................................................................28 MONEYGRAM .............................................................................................................................................28 RUPEE TRAVELLERS CHEQUES..............................................................................................................29 CREDIT CARDS............................................................................................................................................31 ALFALAH CAR............................................................................................................................................34 HOME FINANCING......................................................................................................................................37 OPERATIONS DEPARTMENT....................................................................................................................40 ACCOUNT OPENING DEPARTMENT.......................................................................................................42 Saving Account...............................................................................................................................................43 Requirements..................................................................................................................................................44 3) BUSINESS ACCOUNTS...........................................................................................................................44 Requirements:.................................................................................................................................................44 Requirements..................................................................................................................................................45 PRIVATE LIMITED .....................................................................................................................................45 Requirements .................................................................................................................................................45 PUBLIC LIMITED.........................................................................................................................................46 .......................................................................................................................................................................46 CLUB / SOCIETY / ASSOCIATION............................................................................................................46 CHEQUE BOOK ISSUANCE.......................................................................................................................47 PROCEDURE ................................................................................................................................................47 CLOSING OF ACCOUNT ............................................................................................................................48 TYPES OF CHEQUES ..................................................................................................................................48 There are four types of cheques:.....................................................................................................................48 In-house cheques / transfers cheques..............................................................................................................48 Inter branch cheques.......................................................................................................................................48 Inter bank cheques..........................................................................................................................................48 Outstation cheques OBC.................................................................................................................................48 VERIFICATION OF CHEQUES/ INSTRUMENTS.....................................................................................48 Some important things should be verified and confirmed about the cheques and instruments:.....................48 ......................................................................................................................................................................48 -90-

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CASH DEPARTMENT .................................................................................................................................49 CASH RECEIPTS..........................................................................................................................................49 CASH PAYMENTS OF CHEQUE ...............................................................................................................49 CLEARING DEPARTMENT........................................................................................................................50 ACCOUNTS DEPARTMENT ......................................................................................................................53 DAILY CUSTOMER MOVEMENTS LIST.................................................................................................53 TYPES OF ACCOUNT..................................................................................................................................54 CURRENT ACCOUNT.................................................................................................................................54 SAVING ACCOUNT.....................................................................................................................................54 NOTICE DEPOSITS .....................................................................................................................................54 Notice Deposit Is Of Two Types....................................................................................................................54 TERM DEPOSITS .........................................................................................................................................55 REMITTANCE DEPARTMENT ..................................................................................................................55 DEMAND DRAFT.........................................................................................................................................55 Procedure........................................................................................................................................................56 TELEGRAPHIC TRANSFER........................................................................................................................56 Procedure for Telegraphic Transfer Issuance.................................................................................................56 Procedure for Foreign Demand Draft Issuance..............................................................................................57 Procedure for Foreign Telegraphic Transfer Issuance....................................................................................58 COLLECTION...............................................................................................................................................58 Outwards Bills for Collection.........................................................................................................................59 .......................................................................................................................................................................59 PAY ORDER..................................................................................................................................................59 PAY SLIP ......................................................................................................................................................60 MONEY GRAM ............................................................................................................................................60 Procedure .......................................................................................................................................................60 FOREIGN EXCHANGE DEPARTMENT....................................................................................................61 Import.............................................................................................................................................................61 Export.............................................................................................................................................................61 DOCUMENT REQUIRED FOR EXPORTER .............................................................................................61 DOCUMENTS TO BE ATTACHED FOR EXPORTERS............................................................................62 FORM-E.........................................................................................................................................................62 FORM OF AUTHORIZED DEALER’S CERTIFICATE.............................................................................63 CERTIFICATE OF ORIGIN .........................................................................................................................63 COVERING SCHEDULE..............................................................................................................................63 BENEFICIARY CERTIFICATE ..................................................................................................................63 E-FORM.........................................................................................................................................................63 PAYMENT FROM IMPORTER BANK.......................................................................................................64 SWIFT (Standard World Wide Inter Bank Financial Transaction)................................................................64 BILL OF LADING.........................................................................................................................................64 BANK KEEP IN RECORD............................................................................................................................64 IMPORTS.......................................................................................................................................................64 NECESSARY REQUIREMENT...................................................................................................................65 DOCUMENTS FOR IMPORT.......................................................................................................................65 DOCUMENTARY CREDIT .........................................................................................................................66 TRADE SERVICS DEPARTMENT..............................................................................................................66 Four Parties Are Involved In Letter Of Credit................................................................................................66 L/C OPENING PROCEDURE ......................................................................................................................66 Document Required for “LC” Opening..........................................................................................................67 Payment to Seller............................................................................................................................................68 Documents Received By the Opening Bank..................................................................................................68 CREDIT DEPARTMENT..............................................................................................................................69 CREDIT FACILITIES....................................................................................................................................69

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-91MB-04031 (2004-2006)

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FUNDED FACILITIES..................................................................................................................................70 Current Finance CF.........................................................................................................................................70 Finance Against Foreign Bills FAFB.............................................................................................................70 Finance Against Packing And Credit “FAPC”...............................................................................................70 Finance Against Imported Merchandise FIM.................................................................................................71 Finance Against Trust Receipt FATR............................................................................................................71 Payment Against Document PAD..................................................................................................................71 NON FUNDED FACILITIES .......................................................................................................................72 Letter Of Credit ..............................................................................................................................................72 Sight L/C.........................................................................................................................................................72 Usance L/C ....................................................................................................................................................72 GUIDE LINE OF CREDIT POLICY.............................................................................................................73 STEP I.............................................................................................................................................................75 STEP II...........................................................................................................................................................75 STEP III..........................................................................................................................................................75 STEP IV..........................................................................................................................................................76 Documents required for C.F. Hypothecation .................................................................................................76 Documents required for C.F. Pledge..............................................................................................................77 STEP V...........................................................................................................................................................78 STEP VI..........................................................................................................................................................78 STEP VII........................................................................................................................................................78 STEP VIII.......................................................................................................................................................78 RATIO ANALYSIS.......................................................................................................................................80 Earning Assets to Total Assets: Earning Assets / Total Assets......................................................................81 Return on Earning Asset: Net income / Earning Assets.................................................................................81 Interest margin on Average Earning Assets...................................................................................................81 Equity Capital to Total Assets: Average Equity / Average Total Assets.......................................................82 Deposits times Capital: Average Deposits / Average SHE............................................................................82 Loans to Deposits: Average Total Loans / Average Deposits........................................................................82 ROA: Net Income / Total Assets ...................................................................................................................83 ROE: Net Income / Total Equity....................................................................................................................83 Profit Before Tax Ratio: PBT / Gross Markup Income..................................................................................83 Basic Earning per Share: Net Income / # of outstanding shares.....................................................................83 Book Value per Share: SHE / # of outstanding shares ..................................................................................84 SWOT ANALYSIS........................................................................................................................................85 RECOMMENDATIONS................................................................................................................................88 OBSERVATION & CONCLUSION ............................................................................................................89

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-92MB-04031 (2004-2006)

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