Intrnshipbal

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Introduction to Banking History of bank is as old as human society. Forever since man came to realize the importance of money as medium of exchange, the necessity of a controlling or regulating agency or institution was naturally felt. The work ‗BANK‘ is derived from the word „BANCUS‟ or „BANQUE‟ which means a bench. Other authorities hold the opinion the work ‗BANK‘ is derived from the German word ‗BACK‘ which means ‗joint stock fund‘. Later on, when the Germans occupied major part of Italy, the work „BACK‟ was Italianized into „BANK‟

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

According to Negotiable Instruments Act (1881) defines:“Bank is an institution transecting the business of accepting, for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise, and withdraw able by cheques, draft order or otherwise and includes any post office saving bank”.

According to Banking Companies Ordinance 1962 defines:“Banking means the accepting for the purpose of lending or investing of deposits of money from the public repayable in demand or otherwise and withdrawble by cheques, draft order or otherwise.”

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

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

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

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

Commercial Banking in Pakistan:First Phase (1947-1974) Establishment of Commercial Banking System:At the Time of Independence, Commercial facilities were provided well. There were 487 scheduled banks. A new country without resources it was very difficult for the Pakistan to run its own banking system. Therefore according to Indian Independence Act in 1947, an expert committee was appointed to study the issue .The Reserve Bank of India should continue to function in Pakistan until 30th September1948. In March1947, there were 487 offices of banks situated in the area which now comprises Pakistan, but soon after Independence many banks closed their branches and offices. On June 30, 1948 there were only 195 bank branches left in Pakistan. This situation posed a great threat to the economic position of Pakistan. There were 19 non-Indian foreign banks in Pakistan at the time of independence with the status of small branch network, whose policies and operations were controlled by their head offices abroad. These banks were solely engaged in export of crops from Pakistan. There were only two banks in Pakistan at the time of partition i.e. Habib bank, which had transferred its head office from Bombay to Karachi after the announcement of the partition and Australasia bank which have been working in Pakistani territories prior to June 1947.The Govt of Pakistan tried hard to eliminate the banking crises.

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______________________________________________________________the Caring Bank_ __ The Indian Govt withheld Pakistan's share of 750 million in cash balances held by her at the time of independence. The forgoing developments clearly brought home the urgency of assuming the control and currency in Pakistan and brought to the force the need to setup a central banking institution to take the place of reserve bank of India. Therefore it was agreed between the Govt of India and Pakistan to authority of Pakistan from 30th September 1947 to 30th June 1948. In order to make necessary arrangements of the establishment of the central bank of Pakistan a committee was appointed to recommend the necessary steps. Consequently the Governor General of Pakistan and father of the nation Quaid-e-Azam Muhammad Ali Jinnah inaugurated the State bank of Pakistan of 1st July 1948.After the SBP order was promulgated on 12th May 1948. When it assumed full control of banking and currency in Pakistan the first important task before the SBP was to issue of currency notes and withdrawal of reserve bank of India which had been in circulation in Pakistan so far. New bank notes and coins were issued in 1948

Second Phase (1974-79) Meaning of Nationalization:Nationalization means the transfer of any property or institution from private to state ownership. It refers to the process whereby through legal and legislative approach, the private institutions are taken up state or government .The government then manages and control such institutions and they are run in the best interest of nation.

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

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

Third Phase (1979-91) Introduction of Islamic Banking In 1977 the Bhutto government was toppled. The martial law government planned to reform the banking sector in a novel way. The overall policy was to Islamize the economy and the banking system, being based on interest was an important target of the new policy. The most preferred form of Islamic bank financing profit and loss sharing would receive banks to receive deposit without guaranteeing and return. The Islamic bank has to acquire a high degree of confidence of the saver to make him deposit his money with them. Not even the return of the principal amount if guaranteed. The Islamic bank cannot finance the project of an investor merely on the furnishing of collateral. The bank will have to be a partner in the project. This will require to careful security of the project and the assessment of risk involved because profit are the functions of the amount of risk on the project. Honesty and trust from both sides of the market are more important to the system of Islamic banking. In 1985, commercial banks transformed their nomenclature stating all Rupee saving accounts as interest-free, but the procedures adopted by the commercial banks were declared unislamic by the Federal Shariat court. In 1997, Al-Meezan Investment Bank is established with a mandate to pursue Islamic Banking, In January 2002, the State Bank of

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

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

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Background of Bank Alfalah Ltd Bank Alfalah Limited:Bank Alfalah has gone through different phases over the years. Its name and been changed in the following sequence.  Bank of Credit and Commerce and International (BCCI)—1972  Habib Credit and Exchange Bank—1992  Bank Alfalah—1997 Bank of Credit & Commerce International (BCCI) was a Pakistan based bank, established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and Europe. BCCI has its branches in 74 different countries of the world. It had its 3 branches in Pakistan, Karachi, Lahore and Rawalpindi. The Lahore branch was opened on 15th December 1978. This branch was opened at that time when some other international banks like Citi Bank, Bank of America, and American Express etc. were already working. But within a few years this branch crossed mostly all the other banks in case of deposits, advances, imports and exports dealings, guarantees, traveler‘s cheque sales etc. In 1991, the BCCI was banned, when it was accused by European countries that the bank was involved in some illegal operations with Gulf countries. The major reason behind European accusation was that BCCI was of Islamic mode. Therefore, the bank was closed due to international pressure. In July 1991, the branches of BCCI in Pakistan at that time were taken over by The Ministry of Finance and SBP. All three branches were given under Habib Bank Limited after valuation of its assets for 15 million dollars, which were named as Habib Credit and Exchange Bank (HCEB) and these were working as subsidiary of Habib Bank Limited for around about 10 months from 14 March 1992 to 31st October 1992. Following the privatization in 1997, Habib credit and Exchange Bank assumed the new identity of Bank Alfalah on June 21st, 1997 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st, 1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. The Bank is currently operating through 5 overseas branches, 1offshore banking unit, 166 conventional banking branches, 23 Islamic banking branches in 74 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. The bank is listed on the Karachi and Lahore Stock Exchange.

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Credit Rating of Bank Alfalah Ltd:PACRA, a premier rating agency of the country, has rated the bank For long term „AA‟ (double A) For short term A1+ (A one plus) These ratings denote a very low expectation of credit risk, strong capacity for timely payment of financial commitments in the long term and by highest capacity for timely repayment in the short term, respectively. The ratings of first and second and third unsecured listed and subordinated TFC issues of PKR 650 million, PKR 1,250 million and Rs.1, 325 million have been maintained at AA- (Double A minus). The Abu Dhabi Group, comprising prominent members of the ruling family and leading businessmen of UAE, own the majority shareholding in BAL since its privatisation in 1997. The chairman of the board, H.E. Sheikh Hamdan Bin Mubarak Al Nahayan (holding 10.03% shares of BAL), is Federal Minister of Public Works, United Arab Emirates. The chief executive of the bank is a career banker with over 43 years experience both within Pakistan and abroad, and has been with the bank since its incorporation. A team of experienced professionals assists him. BAL, operating the sixth largest network of 195 branches in Pakistan has branches in Bangladesh and Afghanistan, and is on the lookout for further regional expansion. Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its board of management, the Bank has invested in revolutionary technology to have an extensive range of products and services. This facilitates its commitment to culture of innovation and seeks out synergies with clients and service providers to ensure uninterrupted services to its customers. It perceives the requirements of its customers and matches them with quality products and service solutions. During the past ten years, it has emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today. The bank also entered into other dimensions of financial services – brokerage, asset management, and insurance – through its subsidiaries, which are in their development phase and would require sometime before emerging as material contributors to BAL‘s revenue stream. Subsidiary Companies of Bank Alfalah Limited:BAL has an effective shareholding in the following two entities Alfalah securities (Private) Limited 76% Alfalah GHP Investment Management Limited 56% Bank Alfalah Limited has the following associates

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______________________________________________________________the Caring Bank_ __ Warid Telecom (Private) Limited Alfalah GHP Value Fund Wateen Telecom (Private) Limited Alfalah Insurance Limited

16.38% 25.00% 20.00% 30.00%

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

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

To be a leading financial institution, with a niche in areas where we have a competitive advantage with complete banking solutions. Our focus is on improving performance in each of our businesses to achieve consistent and superior returns for our highly valued clients and stakeholders.‖

Mission “To maintain a competitive edge …..”

To maintain a competitive edge in quality banking, customer service and profit performance. Our activities are geared towards making Bank Alfalah a responsible corporate citizen. The emphasis on "Quality & Innovation" will remain our key mission statement. We will continue to strengthen our position as the leading provider of quality financial services in Pakistan.‖

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Corporate Philosophy Bank Alfalah‘s core philosophy of honesty, transparency of the customer dealing, product innovation, excellence in customer service, and commitment of being a reasonable corporate citizen pervades its business"

Bank Alfalah Believes:  Every door leads to our customers.  The legacy of leadership stands as our guiding light.  The strength of chain relies on the strength of each link.  A keen ear is a key to understanding. Achievement is nothing without target.  Time is our most valuable asset.  Performance is nothing without the ability to measure it.  Every drop counts

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BAL Culture:The culture at Bank Alfalah is diversity based. People come from various regions, they don‘t directly come to Bank Alfalah as their first job, so they come from various other organizations, so there is a pool of culture there. But after joining bank Alfalah they do not find any difficulty in exercising their skills and practices and there is no obligation to adopt and particular culture They plan their work very properly as the top management direct their employees in this case there is no biased planning for one group of people and unbiased for others. All are equally treated. Praising element is found in frequent and due to this the communication level also enhanced. Employees can easily communicate with their managers without any fear. Members having strong track record of honesty are held in high esteem, they are honoured in every place. However, maintain controls and if the trust is breached, withdraw it, and let the employee know. Friendliness is also a plus point in their culture. As the supervisor shows fairness when dealing with its teams, and respects and adheres to rule. Friendliness and trust should not be balanced so that there are not mistaken for a sign of weak management. BAL develops employees by assigning them additional responsibility where possible.

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Corporate Information of Bank Alfalah Limited (As at February 28, 2007)

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

Chairman Director Director Director Director Director Chief Executive Officer

Board Advisory Committee:Khalid Mana Saeed Al Otaiba Abdullah Khalil Al Mutawa Bashir A. Tahir Ganpat Singhvi M. Iftikhar Shabbir

Director Director Member Member Secretary

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Board Audit Committee:Abdullah Khalil Al Mutawa Khalid Mana Saeed Al Otaiba Bashir A. Tahir Ganpat Singhvi M. Iqbal Saifi

Director Director Member Member Secretary

Board Credit and Finance Committee:Khalid Mana Saeed Al Otaiba Abdullah Khalil Al Mutawa Ganpat Singhvi Bashir A. Tahir M. Iftikhar Shabbir

Director Director Member Member Secretary

Board Risk Management Committee:Khalid Mana Saeed Al Otaiba Abdullah Khalil Al Mutawa Ganpat Singhvi Bashir A. Tahir Shad Qureshi

Director Director Member Member Secretary

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

Chairman Deputy Chairman Member Member Member Member Member Member Member Member Member Member

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Chief operating Officer:Sirrajuddin Aziz

Company Secretary:Hamid Ashraf

Chief Financial Officer:Zahid Ali H.Jmall

Auditors:KPMG Taseer Hadi& Co

Registered / Head Office:B.A. Building I.I. Chundrigar Road, Lahore.

Website www.bankalfalah.com

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Branch Network Conventional Banking Branches                                    

Karachi Hyderabad Quetta Gawadar Larkana Islamabad WahCantt Peshawar Hungu Sailkot Gujranwala Sargodha Mardan Chiniot Hafizabad Arifwala Dera Ghazi Khan Jhelum Sheikhupura Okara Jhang Burewala Sadiqabad Lala Musa Daharki Haroonabad Kharian Chakwal Kasur Bannu Hazro Mirpur Gujar Khan Muridke Bahawalnagar Khanpur

                                   

Sukkur Nawabshah Chaman Mirpurkhas Lahore Rawalpindi Faisalabad Attock Multan Rahin Yar Khan Sahiwal Gujrat Bahawalpur Daska Chichawatni Pakpattan Mingora,Sawat Mian Channu Dera Ismail Khan Abbotabad Toba Tek Singh Kohat Mandi Bahauddin Ahmedpur Ghotki Hasilpur Gilgit Bhalwal Mansehra Chitral Kotla Kallar Syedan Gojra Jaranwala Muzaffaegarh Haripur

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______________________________________________________________the Caring Bank_ __  Dinga

 Wazirabad

Islamic Banking Branches     

Karachi Islamabad Peshawar Faisalabad Sialkot

    

Lahore Rawalpindi Gujranwala Multan Rahin Yar Khan

Overseas Branches Afghanistan  Kabul  Heart

Bangladesh  Dhaka  Chittagong

Kingdom of Bahrain  Manama

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Oraganizational Structure: - (13, Bank square Central Commercial Market, Model Town, Lahore)

Branch Manager

Manager Operations

Customer Service Dept.

Manager Credits

Accounts Dept.

Cash Dept.

Car Financing Department

Account Opening Dept.

Clearing Dept.

Remittance Dept..

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Products & Services offered by Bank Alfalah Limited 1. General Banking          

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

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

Features of Current Account: Minimum account opening requirement of Rs 10,000/= only  No zakat deduction  No restriction on no. of deposits and with drawl  Free debit/hilal card facility  Non interest bearing account  Service charges of Rs.100 if not maintaining average monthly balance  24 hour ATM  This account can be opened in other currencies also i.e. in Pound Sterling, U.S.Dollar and Euro If an accountholder of current accounts maintains an average monthly balance of US$15,000 or eqv then following free services are provided by the Bank  Online cash/cheque transaction  Cheque return charges (inward/outward)  Issuance of PO/DD (drawn on any Bank Alfalah‘s branch)  Cancellation of PO/DD  Hold mail arrangements  Cheque book charges

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______________________________________________________________the Caring Bank_ __     

Mailing of cheque book Duplicate statement of current account Free locker facility Stop payment instruction Balance confirmation certificate

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

Features of PLS Saving Account: Minimum account opening requirement of Rs 5,000/= only  Saving account can be opened in other currencies also i.e. in Pound Sterling,U.S .Dollar and Euro  Zakat deduction is 2.5%  Profit will be credited after every six months  Service charges of Rs.50 if not maintaining average monthly balance  Free debit/hilal card facility  24 hour ATM  No restriction on no. of deposits and withdrawl  Overdraft facilities are not provided on saving account If an accountholder of current accounts maintains an average monthly balance of US$25,000 or eqv then free services are provided by the Bank are same as provided to the current account holder mentioned above.

Profit rates for PLS Saving Deposit:- (from July0 7-Dec07) Deposits On Balance upto Rs 24,999 Rs 25,000 and above PLS Term Deposit 1 Month 3Months 6 Months 1year

Rates (P.A)% Individual/corporate 2.00%

Financial Institutions/NBFIs/DFI 1.00%

5.00%

1.00%

4.50% 5.00% 5.25% 5.50%

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______________________________________________________________the Caring Bank_ __ 2year 3year 4year 5year *Term deposit shall be eligible for before maturity date.

6.00% 6.50% 7.00% 7.50% profit on the condition that it will not be withdrawn

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

Profit rates for Royal Profit:Amount From 50,000 to999,999 From 1,000,000 to 4,999,999 From 5,000,000 & above

Proposed Rate(%) 2.50% 3.50% Contact BM

Basic Banking Account:Features of BBA:      

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

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

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

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

Profit rate for AFA:7.00%

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

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

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______________________________________________________________the Caring Bank_ __  No medical examination/health declaration required.  In case of joint account holder the amount of joint insurance cover will be proportionally divided among account holders.  Customer can avail financing facility up to 90% of the deposit (as per banks policy)  Any Pakistani resident over the age of 18 can open this account.  Alfalah Mahana Amdan term deposit can be maintained only at any one BAL branch with a maximum cap of Rs. 15 Million. An undertaking shall be obtained from the customer certifying that he/she is not availing Alfalah Mahana Amdan Term Deposit Receipt facility from any other BAL branch.  Alfalah Mahana Amdan TDR will be issued for three years tenure with auto renewal facility of principal amount i.e. the facility will be renewed automatically on maturity (i.e. 3 years)  Alfalah Mahana Amdan TDR will be subject to Zakat, Withholding Tax as well as any other applicable taxes.

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

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

Rate for Lockers:Lockers size small Medium Large

Charges Rs 1000/Rs 1500/Rs 3000/-

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Rs 3500/-

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

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

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

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

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

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

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

Features of Alfalah Education: Deposits can be placed in multiple of 100,000 units with maximum 3 units allowed

   

    

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

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______________________________________________________________the Caring Bank_ __

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

Credit cards Agriculture Finance Auto /Vehicle loans Home Loans

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

Features of Alfalah Credit Cards:          

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

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

Types of Alfalah Credit Cards:       

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

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

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

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

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

Documentation: Copy of CNIC  Rural Finance Application form which is available at Bank Alfalah Branches /

Website  Pass Book issued by Revenue Authority  Copy of Khasra Gardawari (if applicable)  Proof of leased in land (if any)

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

Features of Alfalah Car Financing:Quickest processing Easily affordable & flexible instalments No hidden charges Minimum down payment Complete repayment at any point of time Balance transfer facility {BTF} for existing as well as new clients from other Banks Tenure period ranging from 1 to 5 years Financing of all brand new locally assembled vehicles and used cars. Financing limit ranging between Rs. 200,000/- to Rs. 2000,000/- for brand new cars insurance premium in advance at the time of down payment Down payment is 10% of the value of car Documentation and processing charges including first year insurance premium is Rs 4,000/- only  The car will be hypothecated in favour of bank            

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______________________________________________________________the Caring Bank_ __

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

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

Types of Home Finance:    

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

Tenor:Product

Minimum Tenure

Maximum Tenure

Alfalah Home Buyer

3 years

20 years

Alfalah Home Construct

3 years

20 years

Alfalah Home Improver

3 years

10 years

Alfalah Home Start

10 years

20 years

Alfalah Balance Transfer Facility

3 years

20 years

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______________________________________________________________the Caring Bank_ __

Limit of Financing:Product Alfalah Home Buyer

Minimum limit (M) .5

Maximum limit (M) 20

Alfalah Home Construct

.5

20

Alfalah Home Improver

.1

3.5

Alfalah Home Start Alfalah Balance Transfer Facility

.5

20

.5

20

Mark-up rates for home finance:For salaried person For self employed professionals

11.50% p. a 13.50%p.a

Eligibility Criteria: A Pakistani National.  Age is between 23 and 60 years at the time of application. (Subject to maximum     

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

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

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______________________________________________________________the Caring Bank_ __

Structured Finance:BAL‘s SFU‘s activities cover advisory assignments, such as privatization, Mergers & Acquisitions (M&As), domestic listings, IPOs and restructuring. Structured Finance department of bank comprises a team of hand picked professionals, dedicated to syndicated loans and structured products. The team‘s expertise is well known in the marketplace with its capability to assist public & private sector entities, major financial institutions, multinational corporations, domestic & international institutional investors in innovative financing including underwriting & private placements. During the past few years, SFU has been successful in sourcing and participating in a number of prestigious transactions involving large amounts.

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

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

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______________________________________________________________the Caring Bank_ __ also add more correspondents to establish a comprehensive international networking to facilitate its customer‘s transaction as well as the Bank‘s proprietary needs.

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

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

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

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

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

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______________________________________________________________the Caring Bank_ __ which has enabled it to enter the world of industrial investment in Pakistan and on the international scene. Lease finance provides a significant source of funds for companies to acquire or use assets. Leasing provides additional earning opportunities to acquire assets and to get the inflows simultaneously out of the operations of the same assets. The ownership of the asset is vested with the Bank (lesser) and in return for rental payments , the client (lessee) has full use of the asset. Being a medium to long term mode of financing, it allows the lessee to use the funds for other profitable purposes which otherwise would have been tied up in case of immediate payment for purchase of the asset. BAL works closely with its existing and prospective business partners to deliver most comprehensive and tailored leasing solutions to meet all asset needs. BAL offers the most competitive and flexible terms & conditions for lease concerning choice of assets, repayment, pricing, and tenor which range between 3 to 5 years commensurating with the specific requirement of the lessee, useful life of the assets and client‘s ability to repay the lease rentals. BAL offers two types of lease finance facilities, i.e., Direct Lease and Sale & Lease Back. In the case of direct lease, direct payment is made to the vendor/supplier/indenter for the purchase of asset(s). While in the case of sale and lease back, the client having bought the asset(s) from his own funds may refinance and the payment is made to the client.

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______________________________________________________________the Caring Bank_ __

Field of Activities This section of report provides and comprehensive view of functions of different departments in Bank Alfalah. In this part of report I have discussed about every aspect of the bank which I observed and perceived during my internship programme. Bank Alfalah limited Model Town Branch is newly opened branch (open in 2006), and yet not offering many products of bank like house finance, lockers, agriculture finance. But branch has strong deposit base of 1.2 billion as on 31 June, deposits are mainly consists of TDR (term deposit receipts) amounting Rs.600million, current accounts Rs.250 million and others(saving, basic banking account and kifayat account) Rs.350 million, on the other hand advances are on the lower side around of 200million only. Moreover there are about 1100 current accounts, 150 saving accounts, 150 royal profit, and 100 foreign currency accounts. There are mainly 7 departments in Bank Alfalah Ltd. (13, Bank square Central Commercial Market, Model Town, Lahore) 1. Customer Service 2. Account opening 3. Accounts 4. Clearing and Remittance 5. Credit 6. Car Financing 7. Cash

Customer Service Department Functions performed by customer service department: General Client Dealing  Cheque book issuance

 Balance confirmation  Issuance of statement  Filling deposits slips on request of customer

General Client Dealing:When the customer enters into the BAL premises, he went to the customer services officer who provides him the guidance and basic information which he wants. CRO then sends the client to his respective department about which he wants to get the information.

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______________________________________________________________the Caring Bank_ __

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

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______________________________________________________________the Caring Bank_ __ Chq. Book charges received Excise duty received

Cr Cr

Rs.250/Rs. 13/-

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

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

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

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

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______________________________________________________________the Caring Bank_ __  Closing of an account  Issuance of lockers

Opening of an Account:The opening of an account is a contractual agreement between the bank and the customer, after which both indulge in a mutually beneficial business relationship. Process of account opening is the first contact which the customer establishes with the bank and vice versa. But a branch will exercise maximum care while opening a new account and it should not violate,  SBP rules and regulations  Applicable local laws  Bank‘s Internal Policy For an account opening the client is required to provide the following information. The first part establishes the currency in which the account is to be maintained/ operated. The currencies include  Pakistani rupee.  U.S. dollar  Pound sterling  Euro The second part then establishes the preference regarding the type of account to be maintained. The various choices offered are  Profit & Loss / Savings account.  Current account.  Foreign currency Account.  Royal Profit Account

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

Things to be Examine before Opening of an Account:     

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

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______________________________________________________________the Caring Bank_ __

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

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

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

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

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

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______________________________________________________________the Caring Bank_ __

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

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

_____________________Hailey College of Banking & Finance_________________ 39

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

General Observations:   

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

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______________________________________________________________the Caring Bank_ __  In case of CNIC doesn‘t contain a photograph, copy of CNIC attested by gazette office/nazim along with undertaking having no other document containing picture on notarized stamp paper required.  QA-22 in case of foreign national opening PKR account  If business account, customer bring company stamp at the time of opening of an account.  Specific business is to be mentioned in occupation column.

Procedure for Opening of an Account:Step 1-Account Opening Form When a client comes to the bank, and makes a request for opening of an A/C. The officer says that first fill up a prescribed application form. If he/she wants to open a PLS A/C, then he/she has to fill a form according to the account. Step 2-Completion of Form The name, occupation, and complete address of the person opening the account are written in the columns are provided in the form. One signature of the person is taken on the ―rules and regulations‖ column and one is taken on the backside. These signatures should be usual signatures and he would operate the account with them future. Step 3-Introducion The introduction of a current account holder is accepted for the opening of either a current account or a saving account. The signature of the account-holder introducing the account is obtained at the place provided for in the account opening form. Step 4-Specimen Signature Card The signatures of the client are obtained on a specimen Signature card. These cards are obtained in duplicate with two signatures on each card from the customer. Every time a cheque is received for a payment from the client, the signature on the cheque are verified by comparing them with the S.S. Card. In case of account of illiterate person, the attested photograph will be attached to the S.S card and the designated officer will duly admit the S.S card in respect of all the details. Step 5-Account Number When all the formalities are completed then the final approval of account has to be taken from the Branch Manager. After obtaining approval of the branch manager an account number is allotted to the customer all the information is entered into the computer. Then that account number is printed on the Cheque Book, S. S. cards and account opening form. Step 6-Issuance of Cheque Book After opening an A/C with the bank, the A/C holder once again makes a request in the name of bank for the issuance of a cheque book. The A/C holder mentions title of A/C,

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______________________________________________________________the Caring Bank_ __ A/C number, sign it properly and mentions the no of leaves he requires. Normally BAL issues a cheque book having at least 25 leaves. Every cheque book also contains one leaf that is used for another issue of a cheque book. Step 7-Scanning of S.S card and AOF After completing all the formalities, the forms are send for scanning of S.S cards and AOF. After scanning, AOF are send to the Head office Karachi because BAL has centralized system for account opening. Step8-Filling of KYC For current, saving and basic banking account, separate files are maintained in which the KYC is punched in numerical order and kept under lock and key in fireproof steel or safe. KYC should contain the signatures of Operation manager and account opening officer. Step 9-Mainting the Computer Record After opening of account, all information regarding the account is entered into the computer. Record of all the transactions regarding the account of a customer is kept updated in the computer. Step 10-ThankYou Letter After opening the account ―A Letter of Thanks‖ is send to the customer in order to thank the customer for opening an account in the Bank. This letter tells all the information regarding his/her accounts, which are kept very confidential. If letter of thanks return undelivered following procedure will be adopted, Stage 1 Branch have to mark the special condition of (WHUN) i.e. where about of the customer unknown condition on system, immediately on the same day of receiving intimation from centralized account opening. In such cases all the debit transactions are to be referred to the OM / BM. Branches to confirm the status to centralized account opening that the special condition of WHIJN has been duly marked against these accounts. On marking the condition, it is to be ensured that if the customer visits the counter at the branch, he is referred to OM for address confirmation. In case if the customer does not visit and seven days of marking the condition have lapsed then stage 2 is to be followed to contact the customer. Stage2

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______________________________________________________________the Caring Bank_ __ Operations Manager to assign the resource to contact the customers on the given land line or mobile numbers and obtain the correct address informing the reason of call to the customer. Stage3 If the customer is not traceable at the given contact numbers then Introducer of the said account is to be contacted and correct details of the said customer address to be obtained. Even if the introducer is not traceable or does not have the required information then the Stage4 In case if the customer is not traced and the correct address can not be obtained, then the account is to be closed by branch by giving 14 days notice with the prior approval of BM. On closure of account if customer visits the branch, unutilized cheque book and ATM cards are to be withdrawn.

Different Series of Account Numbers:Sr. No. 1 2 3 4 5 6 7 8 9

ACCOUNT TYPE

SERIES

Saving (PKR) Saving (FCY) Current (PKR) Current (GBP) Current (USD) Current (Euro) Royal Profit Basic Banking A/c Kafayat

0200 0280 0100 0187 0180 0185 0290 0189 0599

Stamps Use for Opening an Account:1. 2. 3. 4. 5. 6. 7. 8. 9.

Signature Admitted Signature Verified Original Seen Received copy of AOF Cutting confirm (in case of any cutting on AOF) Confirmation of integrity of customer (introducer column) Drawing in person (in case of illiterate person account) Account closed Posted

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

Procedure for Deletion of Stop Payment Instructions:1. 2. 3. 4. 5.

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

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

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

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

Key#

Locker# Date let out

Name

Rent Rent Size recovered recoverable up to

A/c #

Remarks

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

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______________________________________________________________the Caring Bank_ __ 7. person appointed by court or legal heirs complete all formalities required under law.

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

Surrender of Locker:1. 2. 3. 4. 5. 6. 7. 8. 9.

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

Re-possession of Locker:Re-possession of lockers should be carried out in the presence of witnesses comprising of locker custodian, designated officer and court appointed official. A list of the contents signed by all witnesses and contents along with list will be placed into the sealed envelope. Other functions performed by Account Opening department includes,  Change in customer Address  Power of attorney/mandate  Addition/deletion of authorize signatory

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

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

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

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______________________________________________________________the Caring Bank_ __ 1. 2. 3. 4. 5.

Statement Of Affairs Income & Expenditure Foreign Currency Report Royal Profit Report Currency Wise Deposits Report

.

Daily Activity Checking:All the operations performed in various departments of BAL are computerized. In order to facilitate double-checking of all the transactions done, every concerned official also passes vouchers manually. At the day end all the vouchers passed by various officers working in different departments are given to the Accounts Department. Furthermore the I.T. department also gives a detailed report to accounts department which constitutes of the computer print outs of all the transactions / entries which have been fed into the computer system of the branch that day, accounts department tally the transactions with the computer generated report. The report of activity checking has the following columns, Operator Scroll Chq/voucher# Local Amount amount (FCY)

Narration Value Exchange Supervisor date rate

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

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

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

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______________________________________________________________the Caring Bank_ __     

Local currency deposits. Alfalah car Financing Foreign currency advances Other advances Staff finances

The various columns included in this particular report are position at the end of previous year, expected at the end of month, yesterday‘s position, present day‘s position, and the variance in the yesterday‘s and present day‘s position. The basic purpose of generating this report is to manage the available funds in a proper manner and also to maintain a healthy liquidity position. All commercial banks are supposed to maintain 5% of their time and demand liabilities with SBP. When all the branches of Bank Alfalah Limited send this report to the head office head office consolidates the reports of all the branches and sends the consolidated report to SBP. SBP, after analyzing the deposit position of the bank checks whether the amount deposited with it is sufficient to meet the 5% requirement or not. Head office after sending the report to SBP also calculates the 5% requirement amount for every branch separately; if a branch is contributing an amount which is in excess of what is required of that branch the head office gives an interest to that branch on the excess amount, and if a branch is short of the its required amount then that branch has to pay interest on the shortage to the head office..

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

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

Clearing Department Functions performed by Clearing department:   

Inward Clearing Outward Clearing Inward bills for collection Outward bills for collection

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

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______________________________________________________________the Caring Bank_ __ Date

a/c title

A/c #

Chq.#

Reason to Supervisor return

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

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

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

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

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

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

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

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______________________________________________________________the Caring Bank_ __ 8. A copy of forwarding schedule and cheque is retained as record 9. Debit postage charges from customer account. 10. On realization, IBCA is received from branch. 11. If return unpaid than entry will be made in OBC register and cheque return register.

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

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

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

Making of Demand Draft:Suppose a customer requests his Bank Alfalah Limited, Model Town Branch, Lahore to

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

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

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

Procedure for Issuing Pay Order:Procedure adopted for Issuance of pay order is same as of demand draft.

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

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

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

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

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

Alfalah Karobar Finance:Eligibility Criteria of AKF : Resident Pakistanis.  Aged up to 60 years.  In business for the last three years

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

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______________________________________________________________the Caring Bank_ __  Customer can avail other credit facilities with AKF if there is cushion in the security offered and the projected cash flows of your business.  Processing fee is Rs.2000/ Business and financial appraisal charges are Rs.4000/ Documentation, legal and valuation charges (actual and approved charges) will bear by customer.  Loan entitlement calculated on the bass of 40% debt burden in cash flow projections or 60% of assessed normal market value of property or 35% of annual sales.  AKF do not require stock report, letter of hypothecation or insurance of stock.  Only 25% clean up requirement every 6 months as against 100% in most CF facilities.  Renewals shall be subject to regular mark-up payments, clean-up requirement and healthy turnover in AKF account.

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

Information to be filled on AKF application form:1. Title of business 2. Type of organization/legal entity 3. Type of business

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______________________________________________________________the Caring Bank_ __ 4. Sector in which business is operating 5. Brief description of business 6. Business Address 7. Purpose of finance 8. Amount of finance 9. NTN number 10. Any business association‘s membership 11. Date of establishment of business 12. No. of employees 13. Total assets (as per latest F.S) 14. Sales (as per latest F.S) 15. Professional experience in line of business 16. Detail of any litigation in which borrower involved 17. Amount of fixed assets (excluding land and building) 18. Personal details of partners/directors/members/senior management 19. Banking relationship in name of company/partner and directors (with all details of borrower, type of facility, monthly installments, security offered etc) 20. Detail of property to be mortgaged  Address of property  Area of land  Constructed area  Ownership  Approximate vale 21. Information about top four buyers 22. Information about top four suppliers 23. Undertaking from the customer that he or his any family member is not CEO or employee or director of bank.

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

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

Features of AMF: AMF 1, 2 & 3 shall be repayable in 2-12 years whereas AMF-4 shall be repaid in 24 years.  Monthly installments will be hassle free through post dated cheques  The security against Alfalah Milkiat Finance should be mortgage of urban commercial/industrial property  The property being financed shall be mortgaged in favor of the bank.  Processing fee is Rs.5000/- or 1% of loan whichever is high  Business and financial appraisal charges are Rs.5000/ Documentation, legal and valuation charges (actual and approved charges) will bear by customer.  Minimum equity participation of the SME shall be 30% under AMF 1 & AMF 3. No equity participation required for AMF 2 & AMF 4.  Repayment through equal monthly installments. .  Disbursement within one month after completion of documentary requirements by the customer  Market based mark-up (SBP discount rate + 4%) shall be charged on the outstanding principal balance.  Full and final early repayment from own sources shall not attract any penalty, once a year partial repayment shall be allowed without any penalty however  In case the outstanding liability is swapped by another bank 5% of the outstanding principal balance shall be charged.  Under AMF-2 a grace period can be allowed for a period not exceeding 9 months inclusive in the total tenor of facility.  Monthly mark-up shall be serviced during the grace period.  In case of individual/sole proprietor, life insurance of the borrower shall be obtained with Bank as loss payee in both cases. Insurance premium shall be built in the installment amount.

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Documentation & Information to be filled on AKF application form:Same as of AKF explained previously

Things to be Considered before Granting any Credit facility:1. Know your customer; the branches should very well know their borrowers as the borrower‘s integrity and ability to conduct business are of paramount importance. Well reputed past performance, good trade experience and financial control are the attributes that should be weighed before processing an advance. 2. Purpose of facility; the purpose of an advance should be determined that it is within the parameters defined by the Bank‘s Policy and does not breach local laws / regulations. Secondly it should be evaluated that the advance is in proportion to the borrower‘s business and is not being taken for speculative purposes. 3. Profitability; apart from a mark-up rate charged to the borrowers, branches should also view other allied businesses that may be received for enhancing the profitability. 4. Source of repayment; cash flow projections should be critically examined as they play a vital role in devising a repayment schedule. 5. Security; all advances will be made against adequate security and with the completion of modalities to enable the bank to either have possession or undisputed title of the securities. The basis of security valuations will be third party assessment viz. a viz. current market price and forced sale value. 6. Tenor of the facility; bank officer should know the tenor of the facility being granted.

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

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______________________________________________________________the Caring Bank_ __ 9. If any irregularity found return proposal to customer for regularities, if not regularized decline proposal. 10. If no irregularity found, prepare CLP providing all the necessary details. 11. Perform comparative analysis of audited financial statement over the past three years. 12. Check proposal for compliance with prudential regulations and mention the applicable prudential regulation 13. After compiling prudential regulations with, credit officer gives his approval by signing on it and forward to credit/branch manager. 14. After crosscheck of information in CLP and financial analysis and discussion with credit manager, branch manager sign and forward the document to BCC. 15. After analyzing the proposal and CLP, where consensus obtained approve sanction and forward it to concern credit officer. 16. After getting ―sanction advice‖, prepare an offer letter and send it to customer which reflects the detail of sanction. 17. Generally offer letter prepare in two original, one is retain by customer and second is return to bank after acceptance. Offer letter has following particulars,  Type of facility  Amount of facility  Security  Description of an asset  Tenor of facility  Documentation charges  Mode of payment  Purpose of facility  Repayment terms of facility  Securities and margins  Standard terms and conditions 18. Every page of an offer letter should be sign by customer. 19. All finance and security documents are taken from the customer before releasing facility. 20. Facility is extended to the customer/make payment to vendor.

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

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

Verification Report:Verification report obtain from evaluators has following contents,

1.

Introduction of management and business.  About company (category)  Business detail (employee number, key buyers, key suppliers)  Principle address  Management structure (information about the accounting system, operational details of business, detail about applicants)

2. 3. 4.

Business assets and net worth.

5.

Applicant‘s personal expenses and data  Personal expenses (information regarding bills, education, household and conveyance)  Personal data (address, vehicle, ownership)  Credit card (bank, limit, number)  Detail bank relationship  Borrowing (bank, type of loan, tenure, installments)

Applicant‘s net worth. Operations and profitability  Expenses  Financial statements

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6.

Applicant‘s business cash flow from operating activities.

7. Sensitivity test ( risks associated) 8. Market reputation of company 9. Purpose of loan 10. Debt stress (amount of loan, years, rate) 11. Confidence on estimation Credit Line Proposal:Credit line proposal contain information regarding,

1- BORROWER The name / title of the borrower should be correctly stated and spelt and should be same as appear on account opening form (every page of CLP should mention the name and title of the borrower) 1.1 BRANCH Name of the branch with address. 1.2 CUSTOMER'S RISK GRADING Mention current grading as well as previous grading Grade1: it includes undoubted borrower e.g. government, corporation, multinationals, very good quality borrowers e.g. large and well establish corporations, good quality borrowers e.g. medium to large local business both manufacturing and trading. Grade 2: it includes the borrower who lacks audited financial statements and incomplete security documentations, have excess over dues and new ventures. Grade 3: it includes an account that shows possibility of future loss by reason of adverse trend in financial statements, managerial or economic nature or due to significant weakness in security, and accounts experiences prolonged irregularities. Grade 4: it includes account where full recovery appears doubtful on the basis of information available and therefore some loss is likely (e.g. customer attains a negative net worth and the weakening of security). Grade 5: it includes accounts where no further recovery can be expected (full provisioning has been made) The same should be mentioned. 1.3 LEGAL STATUS. The legal status of the borrower could be any one of the following:  Individuals.  Proprietorship & Partnership ( Registered or Unregistered)  Private Limited Company (foreign or local)  Public Limited Company (Listed or Unlisted) [foreign or local]  Corporations

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______________________________________________________________the Caring Bank_ __  Local Authorities / Statutory Undertaking

 Non- Banking Financial Institutions  Trusts / Clubs / Associations 1.4 NEW/RENEWAL/REVISION It shows whether proposal is submitted for first time or submitted to renew existing facilities or to enhance/reduce existing facilities. 1.5 GROUP Mention name of group ( if applicable) 1.6 KEY PERSON It shows name(s) of person(s) and designation(s) who is (are):  Running the business being financed on day-to-day basis, or  The person(s) with whom the Bank will be dealing on a day-to-day basis and who will be responsible for drawing the line of credit as well as be called upon by the Bank to adjust them.  In case of Proprietorship or Partnership concerns, the key person will be the proprietor and the active partner.  For limited liability companies, the person could be the main director or the senior management executives running the business. 1.7 REGISTERED ADDRESS: Address should be mentioned as it appears in the Bank‘s record. 1.8 NATURE OF BUSINESS/MAIN PRODUCT: The exact nature of the borrower's business and the name(s) of main product items dealt with should be stated. 1.9 BORROWING RELATIONSHIP SINCE: Date on which the customer initially became borrower of branch. 1.10 DATE ESTABLISHED: The year of establishment of the business/firm. 1.11 ACCOUNT NUMBER: Number allotted to the borrower's account at the time of opening the account. 1.12 DATE ACCOUNT OPENED: Date on which the customer opened the account with the branch. 1.13 CLP REFERENCE NUMBER:

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______________________________________________________________the Caring Bank_ __ Mention the serial number allocated to the particular CLP, obtained from the register maintained for this purpose e.g. BAL/MB/ACC/001 (Bank Alfalah Limited/Model town Branch/Area credit committee/first proposal) 1.14 DATED: It shows date on which the CLP is prepared. 1.15 OWNERSHIP/SHAREHOLDING: Mention name of the person, complete residential address, CNIC number, age and percentage of shareholding in a company. 1.16 EXISTING LIMITS: The existing approved limits in detail is mentioned here. 1.17 OUTSTANDING AS ON: Shows the balances outstanding on the date of the CLP (if any) 1.18 PRICING: Mention the existing rate of Mark-up. 1.19 EXPIRY Date the existing facility (ies) is/are expiring 1.20 PROPOSED LIMIT Report the proposed limit(s) to the borrower. It is to be ensured that the limits proposed are in line with the purpose of facility. 1.21 MATURITY Mention future date upto which the proposed limit is available to the borrower. 1.22 PRICING The proposed Mark-up for each facility is mention here. 1.23 TENOR Mention the appropriate period of adjustment of the facility.

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

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______________________________________________________________the Caring Bank_ __  Sister concerns of the borrower (if the borrower is also a subsidiary of the same parent company which owns the sister concerns).  Concerns owned by the same owners.  Concerns to which facilities have been guaranteed by the borrower. 2.3 TOTAL LIMITS AVAILABLE TO CUSTOMER AT OTHER BANKS/DFI's: This section mentions the facilities (funded and unfunded) avail by customers from other bank with the total limits available to borrower at other bank, outstanding balances and securities being offered to other bank. 2.4 CIB: Mention status of customer in CIB report. 2.5 PURPOSE OF EACH FACILITY AND REPAYMENT: Mention list of facility (ies) proposed to be availed by the borrower, purpose of each facility and time and source of repayment of credit extended to the borrower. 2.6 SECURITY STRUCTURE: The security structure mentions the details of security presently held with bank along with value and also proposed securities and type of property, address of property, nature of mortgage on property, ownership details and value is clearly mentioned.

3. ACOOUNT MONITORING MEASURES/OTHER TERMS & CONDITIONS: This section mentions that conditions are fulfilled regarding,  Relevant State Bank of Pakistan requirements.  Securing the credit facility (ies) as per Bank's requirements.  Effective monitoring of the use of facilities by the borrower.  Submitting of financial statements, stock reports, insurance policies with the required clauses to bank. 3.1 CREDIT OFFICER / CREDIT MANAGER: Signature of the Credit Officer / Credit Manager who has initiated and prepared the CLP. 3.2 MANAGER / CHIEF MANAGER: Signature of the Branch Manager/Chief Manager 3.3 ASSOCIATED CONCERNS: A brief comment on the performance of the borrower's associated concerns at the CLP initiating Branch and at other branch (es) of BAL. 3.4 COMMENTS ON CONDUCT OF ACCOUNT: Comments about performance of business, if business commitments have been fulfilled, the projected earnings from the account, deposits, if any, held by the Branch and

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

3.5 NATURE OF MAIN BUSINESS AND PRODUCTS: The main business and products of the group should be stated along with names of the major buyers of the exporter abroad. 3.6 HISTORY OF RELATIONSHIP/INTRODUCTION WITH THE BANK Comment on the relationship with the customer from the date account opened and from the date he started enjoying facility (ies) with BAL, also mention whether the borrowing relationship has been satisfactory or not. 3.7 BRIEF INDUSTRY PROFILE AND MARKET POSITION: Identification of the borrower by the industrial/commercial sectors to which they belong. The comments on the sector should be supported by the latest facts and figures. Secondly, the market share of the borrower with respect to the market / sector is mention here. 3.8 BRIEF COMMENTS ON THE FINANCIAL PERFORMANCE OF THE COMPANY: Analyze the latest balance sheet, preferably audited, of the borrowing company, comments on the ratios as to whether the company is progressing or showing a downward trend. 3.9 SUMMARY OF KEY FINANCIALS: It gives detail about the sales, profitability, total assets, current ratio, net worth and leverage ratio.

4. BACKGROUND OF PROPRIETOR/PARTNERS/DIRECTORS: This section covers the aspects relating to the owner/managers, their background and experience, managerial capability, integrity and market reputation. Additionally, comments are made on the following:  Owners/partners/directors and their relationship with each other.  Main/active owners and their experience and expertise.  Infrastructure facilities at office/factory/industry. 4.1 MANAGEMENT: List strengths and weaknesses of business as well as brief comments on the financial and managerial capabilities here. Some of these are listed for guidance: 4.2 LIABILITY DETAILS - ALLIED CONCERNS WITH BAL AND WITH OTHER BANKS / DFIs

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

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

6. BRANCH CREDIT RECOMMENDATIONS

COMMITTEE

COMMENTS

/

APPROVAL

/

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

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

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______________________________________________________________the Caring Bank_ __  Correspondence with the customer regarding renewal, adjustment and enhancement of facilities.  Facility request letter from the customer. 6. Information reports  Memorandum & AOA  CIB  Evaluation report  Director‘s net worth 7. Credit documentation  Sale invoices  Pay order 8. Financials  Financial statements  CIB  Credit reports from other banks 9. Audit

Car Financing Department Eligibility Criteria: Pakistani National Identity Card holder.  Over 20 years of age (Maximum 60 years in case of salaried and 62 in case of a business person at the time of maturity of the loan).  Salaried, businessman or self employed (not preferably generalist, property dealers, showbiz personnel, advocates, politicians, police department, farmers)

 For an installment payment debt burden should not be more than 33%. Documentation:-

 Two passport size photographs.  Copy of National ID card.  Bank statement for the last six months.  Copy of utility bills.  Salary certificate {for salaried individual}  Business proof {for a business person}.  N.T.N Certificate.  Co-borrower‘s NIC copy {if the car is to be in the name of the co-borrower}. ADDITIONAL REQUIREMENTS FOR BUSINESS CLASS INDIVIDUALS  Copy of rental/purchase agreement of business premises  Sole proprietorship letter on relevant business letterhead

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______________________________________________________________the Caring Bank_ __  Partnership deed (if applicable)  NOC from other partner (if applicable)  Tax returns ADDITIONAL REQUIREMENTS FOR SELF-EMPLOYED PROFESSIONALS  Copy of rental/purchase agreement of business premises  Copy of membership of respective institute/association  Must be practicing /conducting for last 3years.  NTN number ADDITIONAL REQUIREMENTS FOR SALARIED PERSONS  Certificate from employer showing permanent employment for the last 2 years.  Original salary certificate.  Take home salary should be three times of the proposed installment.  Income of spouse can also be clubbed.

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

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______________________________________________________________the Caring Bank_ __  Guaranteed bonus (if any)  Sources of other monthly income  Average monthly savings 6. Bank Details  Bank where a/c held  Type of account  Details of credit card  Other credit facilities 7. Vehicle Details  Vehicle price  Colour  Dealer‘s name  Insurance company 8. Financing Details  Down payment  Financing required  Tenor of financing  Installment (deferred or advance)  Amount of installments 9. Personal Details of Co-Borrower same as (1) 10. References 11. Terms and conditions duly signed by applicant and co-borrower.

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

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

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

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

Mark-up Rates:Financing Product Car loan for brand new vehicle Car loan for brand new imported vehicle Used car

1 2year 3year year 14% 14.50% 15% 16% 16% 16% 17% 17% 17%

4year

5year

15.50% 16% 17%

15.50% 16% 17%

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

Insurance:Renowned and reliable Insurance companies are offering the competitive rates of insurance. Pay year insurance premium in advance {at the time of down payment} and the remaining in the subsequent equal monthly installment.

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

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

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

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

Online Cash/Clearing/ Transfer Transactions:This function includes the transfer of cheques drawn on the same branch or between branches of BAL. One accountholder wants to transfer his amount to another , he will give him a cheque. The cheque holder will attach with the paying slip, which is duly filled with his account number, then he deposits on the counter. The bank transfers the amount from one account holder‘s account to another‘s. Fee is charge from customer. Charges are, Online cash transaction Rs. 100 from current account customer Rs.150 from saving/royal profit customer Online cash transaction Rs.50 from current/saving/royal profit account customer

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Human Resource Management:Bank Alfalah Ltd. has worked hard to build its human resource team and ensure that the quality of newly inducted staff is not comprised with growth. For recruitment and selection bank‘s policy is to hire suitable candidates. By suitable candidates bank refers to candidates having proper educational qualification, experience and background. It is the policy of the bank that ―President‖ of the bank will be the representative of major stakeholders/owners. Board of Directors is representative of sponsors. Bank is reluctant in making direct appointment of senior executives. EVPs are promoted from lower levels. Every year Bank Alfalah opens its doors for about 30 fresh post-graduates to join the ranks of Management Trainee officers‘ with the Bank. The MTO scheme is a highly competitive and sought after induction scheme, in which short-listed applicants appear in a written test followed by a panel interview. Successful candidates then receive comprehensive training in essential areas of branch banking at the Bank‘s state-of-the-art training facility at Karachi, prior to their posting at various branch locations. Preferred educational background for entry into the MTO scheme includes an MBA degree, MA Economics or M.Com from reputable Pakistani or foreign institutions with GPA of 3 plus, or equivalent. Strong personal character, as well as communication and interpersonal skills are essential pre-requisites to succeed as an MTO. BAL prefers to hire candidates having MBA degree for credits. For relationship officers, education qualification is not very important. Their family background and communication skills are more important. Bank hires fresh MBAs from prestigious Universities in batches of 20-25 officers. Bank hires officers in range 1. Then depending upon their job performance they are promoted to next range. More facilities and increments are given along with promotion. The bank gives a car to officers of range 5. Bank‘s policy is to give cash rewards and salary increments for increasing the employees‘ satisfaction. Human Resource team takes special interest in recruitment and training. Its training and business philosophy is geared to provide professional, personalized and efficient services to its clients. Alfalah provides both “In-house training” and “Outside the house training” to its employees. To impart technical skills to its staff ―Training and Development Center‖ offers programs in several skill areas, employees attend seminars and courses offered by ―Institute of Bankers‖. Alfalah also offers various computertraining courses to its employees. It is obligatory for each staff member of the bank to attend a minimum number of training courses during the course of a year. Wherever the Training Department is unable to provide focused training for certain groups of staff, reputable external training providers are invited to fill the gap.

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______________________________________________________________the Caring Bank_ __ All new employees of the Bank initiates preparation of their Job Description and get it finalized with the help of their immediate supervisors within 30 days of joining at their place of posting. The job Description duly signed and agreed by the new joiner, his/her immediate supervisor and manager should be sent to HRD for record. Concerned Branch Managers will be held responsible for non compliance of this requirement. The purpose of the Job Description is to clearly define the job responsibilities of each employee and to ensure that employees are made aware of and understand what is expected from them. Periodic rotation of staff between various assignments is used by Bank Alfalah as a means of broadening areas of expertise of concerned staff. This is also done to ensure smooth transition from one job to another in case a staff member leaves the job, or is transferred to another job or location .Staff members posted at branches rotated periodically according to the following guidelines:  For clerical, supervisory and officer level positions, rotation may be done upon completing around two years in one assignment.  For Departmental Heads or Managers the maximum period in one assignment should not exceed five years. For training and development of employees of bank an Annual Training Plan shall be circulated by HRD in December for both Training and Development Centers, keeping in view the requirements of various departments of the Bank identified through the annual appraisal form and feedback from Audit Division. The plan would list all workshops, courses & seminars to be offered during the next year. It is obligatory for each employee of the Bank to attend at least two days of training in a calendar year. Branches, Area Offices and Head Office Division/Departments are to send their nominations for training courses in advance (as prescribed by the concerned Training & Development Centre). Employees are encouraged to take initiative and get them nominated through their supervising officers for training courses relevant to their needs. TDC organize full day induction sessions for new joiners, both at Lahore and Karachi. These one day programs are aimed at giving a broad overview of Bank Alfalah‘s corporate culture, values, norms, products and services to new employees. New joiners are also briefed on employees‘ benefits as well as service rules. Heads of Branches and Units must ensure that all newly inducted staff members attend these sessions, preferably within the first three months of their joining. As per the requirements, the Bank recruits batches of fresh graduates under various schemes through a competitive process and offers them comprehensive training. Batch Trainees may be asked to go through on-job training by way of structured rotation programs. In order to enhance in-house training efforts, external training providers will be utilized on a periodic basis, by nominating Bank Alfalah‘s employees to external

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______________________________________________________________the Caring Bank_ __ courses. Alternatively, external training consultants may be invited to conduct training programs exclusively for BAL employees, whenever deemed necessary. Staff monthly salary is to be disbursed before the end of each month usually on 26th/27th of the month. Salary & allowances of each employee is a confidential matter. Those officials, who due to reasons of procedural expediency, are in the knowledge of salary particulars of their colleagues, must treat such information as confidential. Their failure to do so may result in disciplinary proceedings against them. In order to disburse salary on time, branches are advised to ensure that all salary amendments must reach HRD latest by 20th of every month. Review of salary and allowances, which is based on previous year‘s performance, is carried out once a year during the first quarter of every year. Employees in need of funds for an emergency may be allowed advance against salary for the current month to be adjusted in full on disbursement of salary. Since this facility is only meant for emergencies, no staff member may be allowed to make a habit for applying for such advance. Approval shall be obtained from the Departmental Head/Branch Manager and forwarded to HRD. As a matter of policy, a staff member may avail this facility only twice during a calendar year under the following conditions: If the staff member is proceeding on leave and next payday falls during vacation period.  In case of emergency Salary deduction on account of leave without pay will apply to the entire salary package of the concerned employee, including allowances and perks. Moreover, weekends and public holidays falling during this period will also be considered as part of leave without pay. At the discretion of the Bank‘s management, furnished or unfurnished accommodation upto reasonable rental value may be provided to senior officers, transferred from their permanent locations to fulfill the Bank‘s requirements. The Bank‘s performance appraisal (PA) system is primarily based on goal setting in the beginning of a year, monitoring by supervising officers on bi-annual basis and final evaluation, using standardized performance appraisal forms at the end of the year. Some weightage is also given to evaluation of enabling personal skills and personality traits, as listed in the Appraisal Form. Appraisal exercise is done only for those employees who have completed six month‟s service with the bank on 31st December and whose appraisal forms have been received from their respective officers within the specified time limit. To reward high performance during the period under review, performance bonuses may be awarded to deserving officers based on their performance rating.

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

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______________________________________________________________the Caring Bank_ __

BAL Marketing:BAL provides different products and services to its customers as discussed earlier which differentiate BAL from other banks , the pricing of products means the commission to be paid by the customer in return of services provided by the bank. The price paid for the services mainly include mark-up, bank charged and fees and bank commission etc. These charges and commissions are prescribed on Schedule of Bank Charges (SOC) that keeps on changing time-to-time, and issued by the bank periodically (generally after six months). Bank Alfalah‘s has been expanding its branch network to meet clients‘ needs. Bank is well positioned and geographically poised, to cater for increased business demands, from its existing potential clientele. BAL has 195 branches, spread all over Pakistan covering major business centers and principle cities. Bank plans to add more branches to his growing network in the ensuing years. At present, BAL has opened all its branches at commercial and business areas or near to commercial areas so that the customers or clients face no problem in reaching the bank. Head Office of BAL is situated in Karachi. This is an age of competition. Numerous organizations are providing financial services to the customer. These days everyone is facing pressure of competitors. In this world of growing competition, the only way to survive and grow, for an organization, in the market place is the proper marketing and promotion of its products. Same is the case with banking companies. There is large number of foreign and local banks working in the country and it has been noticed that they are emphasizing much on their marketing strategies. In this scenario, the key for a bank to succeed and attract its customers is adequate promotion of its products &services. Bal for the promotion of its new and existing products invest heavily, it advertises its product through:     

Print media i.e. newspaper Electronic media i.e. television Billboards Business magazines Website

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

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______________________________________________________________the Caring Bank_ __  Sponsoring different events like cricket matches, basant and golf events in order to increase the public trust.  Giving heavy donations to human welfare organizations that support the needy people  Make heavy investment on overhead bridges. The most prominent and important way to attract a large number of customers is the advertisement of bank and its products/services. Bank Alfalah has adopted different approaches for the accomplishment of this purpose. For example, formation of Alfalah Mini Golf near Gulberg is a major step taken by BAL. It not only provides a source of recreation to the people but it serves as a major source of marketing for the bank. Due to Bank Alfalah‘s assistance for the construction of fountain in Liberty Market Square, it is named as Bank Alfalah Square. BAL Square, for being situated in such a business and commercial area has its unusual importance and has resulted into bank‘s promotion. Construction of Shaahdin Manzil as main branch Lahore is going to be the revolutionary step for BAL. It would not serve just as a main branch only, but it would also be a great source of ever growing marking and promotion of bank. Along with the advertisement, the bank is providing personal services to its clients with maximum security as other banks provide.

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Financial Analysis BALANCE SHEET (Rupees in ‘000) ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax asset Total Assets

2006

2005

2004

2003

27,859,360

24,798,625

19,708,518

8,423,399

12,731,952

9,713,369

3,183,957

626,917

12,456,653

27,050,493

-

7,437,733

56,502,210

57,425,700

35,503,196

28,903,596

149,999,325

118,864,010

88,931,400

49,216,120

5,633,051

3,851,529

3,226,959

1,553,108

10,502,990

6,620,067

4,280,504

2,791,626

-

-

-

-

275,685,541

248,313,793

154,834,534

98,952,499

3,091,135

3,733,124

2,233,671

1,208,671

8,394,130

5,844,389

12,723,830

13,127,754

239,509,391

222,345,067

129,714,891

76,698,322

3,222,106

3,223,355

1,899,480

649,740

-

-

-

-

7,305,496

5,219,666

2,725,344

2,686,754

LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities

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______________________________________________________________the Caring Bank_ __ Deferred tax liabilities

NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit

Surplus on revaluation of assets

1,921,338

484,066

275,834

323,010

263,443,596

240,849,667

149,573,050

94,694,251

12,241,945

7,464,126

5,261,484

4,258,248

5,000,000

3,000,000

2,500,000

2,000,000

2,749,533

2,351,218

1,008,772

790,374

2,823,072

1,386,845

860,300

463,042

10,572,605

6,738,063

4,369,072

3,253,416

1,669,340

726,063

892,412

1,004,832

12,241,945

7,464,126

5,261,484

4,258,248

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INCOME STATEMENT (Rupees in ‘000) 2006

2005

2004

2003

Mark-up/return/interest earned Mark-up/return/interest expensed

21,191,470 12,246,811 5,620,203 4,033,380 15,232,886

7,204,992

2,434,459 2,028,577

Net mark-up/interest income Provision against non-performing loans and advances - net Provision for diminution in the value of investments

5,958,584

5,041,819

3,185,744 2,004,803

(697,690)

(402,298)

(370,208)

(87,091)

-

23,163

(2,165)

-

Bad debts written off directly

(1,537)

(512)

(351)

(418)

(699,227)

(379,647)

(372,724)

(87,509)

5,259,357

4,662,172

2,813,020 1,917,294

1,804,998

1,158,747

675,868

399,383

37,393

52,014

52,539

112,017

386,997

290,091

218,820

106,848

995,251

744,518

572,822

2,773,503

3,224,639

2,245,370

1,520,049 3,391,751

8,483,996

6,907,542

4,333,069 5,309,045

Administrative expenses

5,874,745

4,313,023

2,677,635 1,799,490

Other provisions/write offs

-

10,125

-

2,000

Other charges Total non-mark-up/interest expenses

43,306

21,104

1,700

1,875

5,918,051

4,344,252

2,679,335 1,803,365

2,565,945

2,563,290

1,653,734 3,505,680

-

-

Net mark-up/interest income after provisions 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 NON-MARK-UP/INTEREST EXPENSES

Extraordinary/unusual items

-

-

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______________________________________________________________the Caring Bank_ __ PROFIT BEFORE TAXATION

2,565,945

2,563,290

1,653,734 3,505,680

For the year - Current

476,226

592,635

586,159

1,364,723

Deferred

(100,874)

267,524

(3,663)

(5,164)

(7,000)

(30,000)

22,887

427,902

8,037

9,249

-

803,254

861,196

561,745

1,382,446

PROFIT AFTER TAXATION Unappropriated profit brought forward

1,762,691

1,702,094

1,886,845

860,300

963,042

250,050

Transfer from general reserve Transfer from surplus on revaluation of Fixed Assets - net of tax

-

-

-

-

26,074

24,870

23,667

14,405

Profit available for appropriation

3,675,610

2,587,264

Taxation

For prior year - Current Deferred

1,091,989 2,123,234

2,078,698 2,387,689

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______________________________________________________________the Caring Bank_ __

HORIZONTAL ANALYSIS Balance Sheet (%change) ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax asset TOTAL ASSETS LIABILITIES & EQUITY Bills payable Borrowings from financial institutions Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities TOTAL LIABILITIES REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets Total EQUITY

2006

2005

2004

12.3 31.07

25.82 205.07

133.97 407.88

(53.95) (1.59) 26.11

61.72 33.66

(100) 22.83 80.70

46.25 58.65 1.02

19.35 54.66 60.37

107.77 53.33 56.47

(17.19)

67.12

84.80

(3.08) 69.12 192.34

(54.06) 71.41 69.70

(3.08) 69.12 192.34

39.96 296.91 9.38

91.53 75.49 61.02

24.63 14.61 58.79

25 27.63 (10.67)

20 83.51 119.32

66.67 48.52 49.61

(11.19) 64.01

(18.64) 41.86

129.92 10.58

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Comments on Horizontal Analysis of Balance Sheet: For computing horizontal Analysis, previous year is use as base year e.g. for 2004, 2003 is use as base year. Assets: The assets of the BAL have been growing very fast since its inception. This growth is the result of the massive expansion policy the management has been following ever since the inception of BAL. One of the important ingredients of any commercial bank‘s growth is increase in most of current assets that is a good sign as it increases their liquidity. Let us first have a look at the liquid assets. The increase in percentage is always a good sign, but it is especially healthy sign when we take into consideration that it is increasing at a very commendable rate, but it is observed that in 2006 lending to financial institutions is decreased by 54% and also there is an decrease of 1.59 which shows remarkable increase in 2005 of 67%, advances of bank shows increase but in decreasing rate. Therefore all the assets of the bank shows increasing trend but in decreasing rate except fixed assets and other assets, increase in fix assets might be because of expansion of bank‘s branch network. Liabilities: As regards the liability section of the balance sheet chief liability of commercial bank is its deposits it generates from its customer The ratio of increase in deposits in 2006 is 7.72% which is low as compare to increase in 2005 which is 69.12%, it is concluded that the deposits are increasing but at decreasing rate. The other encouraging ratio we observe in liability section is borrowing from financial institution which shows decreasing trend in 2004 and 2005 but it shows an increase of 43& in 2006 which proves financial strength and its credit worthiness in the money market. On the other hand the subordinate loans that represent the TFC‘s are decreasing it‘s a good sign as bank is paying off its long term debts. Equity: Bank‘s Share Capital is increasing at increasing rate as bank announce stock dividend of 25% and in 2006 33.33 % as well as unappropriate profits are also increasing at a much higher rate especially in 2005. So overall bank‘s equity is increasing at a satisfactory rate.

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______________________________________________________________the Caring Bank_ __

Income Statement (%change) INCOME Mark-up/return/interest earned NON MARK-UP /INTEREST INCOME Fee, Commission and brokerage income Dividend income Income from dealing in Foreign currency Gain on sale of securities Unrealized (loss) /gain on revaluation of Investments Other income Total Non mark-up/ Interest income TOTAL INCOME EXPENSES Mark-up/return/interest earned expensed Provision against nonperforming loans and advances-net Provision for the diminution in the value of investments Bad debts written off directly NON MARK-UP/ INTEREST EXPENSES Administrative expenses Other Provisions/Write Offs Other charges Total non mark-up/ Interest expenses Extraordinary / Unusual items PBT Taxation -Current

2006

2005

2004

73.04

117.9

39.34

55.77 (28.11)

71.45 (0.99)

69.22 (53.09)

33.41 (24.54)

32.57 -

104.80 -

(219.15) 66.76

(11.84)

79.34

42.15 68.21

49.24 103.29

(55.18) (3.84)

111.42

195.96

20.00

73.43

8.67

525.18

200.19

(100) 45.87

(16.03)

36.12 100 105.2

61.08 1141.4

48.80 100 (9.33)

36.22

62.14

48.57

0.10

55.00

(52.83)

(19.64)

1.10

57.04

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______________________________________________________________the Caring Bank_ __ -Prior years -Deferred TOTAL EXPENSES PAT

(9827.48) 59.94 76.80 3.56

(104.99) (7403.41) 111.85 55.87

(166.09) (73.21) 14.08 (48.57)

Comments on Horizontal Analysis of Income Statement: For computing horizontal Analysis, previous year is use as base year e.g. for 2004, 2003 is use as base year. Income: The income of the BAL shows the increasing trend in 2005& 2006 but in 2004 the overall income decrease by 3.84% as compare to 2003 which is mainly because of decrease under dividend and other income head. Overall the income of the bank increases year by year but we observe remarkable increase in total income in 2005i.e. raise by 103.29%, mainly because of interest earned from loans to customer and from financial institutions. Expense: The expenses of the bank are increase as operations of the bank increase, like income in 2005 expense head shows higher trend as compare to 2006 and 2004 because penalties impose by SBP raise from 1700 M to 21104 M. Profit: As increase in income is more as compare to increase in expense, so profit after tax proves a high-quality financial performance of BAL.

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______________________________________________________________the Caring Bank_ __

Vertical ANALYSIS Balance Sheet (%) ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax asset TOTAL ASSETS LIABILITIES & EQUITY Bills payable Borrowings from financial institutions Deposits and other accounts Subordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets Total LIABILITIES &EQUITY

2006

2005

2004

10.11 4.62

9.99 3.91

12.7 2.06

4.52 20.49 54.40

10.89 23.12 47.87

22.9 57.4

2.08 2.76 100

1.55 2.67 100

2.04 3.81 100

1.12

1.50

1.44

3.04 86.88 1.17

2.35 89.54 1.29

8.22 83.8 1.22

2.65 0.70

2.10 0.19

1.76 0.18

1.81 0.99 1.02

1.21 0.75 0.76

1.61 0.65 0.56

0.61

0.29

0.58

100

100

100

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

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Income Statement Total Income Total Expenses Profit

2006 24416109 6048263 1091989

2005 14515344 12813250 1702094

2004 7140252 6048263 1762691

(In %) INCOME Mark-up/return/interest earned NON MARK-UP /INTEREST INCOME Fee, Commission and brokerage income Dividend income Income from dealing in Foreign currency Gain on sale of securities Unrealized (loss) /gain on revaluation of Investments Other income Total Non mark-up/ Interest income TOTAL INCOME EXPENSES Mark-up/return/interest earned expensed Provision against nonperforming loans and advances-net Provision for the diminution in the value of investments Bad debts written off directly NON MARK-UP/ INTEREST EXPENSES Administrative expenses Other Provisions/Write Offs Other charges

2006

2005

2004

86.79

84.37

78.71

7.39 0.15

7.98 0.36

9.47 0.74

1.59 0.74

2 1.65

3.06 -

(0.11) 3.45

0.16 3.48

8.02

13.21 100

15.63 100

21.29 100

67.24

56.23

40.25

3.08

3.14

6.12

.0067

0.0039

0.04 0.0058

25.93 0.191

33.66 0.08 0.16

44.27 0.028

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______________________________________________________________the Caring Bank_ __ Total non mark-up/ Interest expenses Extraordinary / Unusual items Taxation -Current -Prior years -Deferred TOTAL EXPENSES PAT

26.12

33.90

44.29

-

-

-

2.10 (0.45) 1.89 100

4.63 0.008 2.09 100

9.69 (0.34) (0.061) 100

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

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RATIO ANALYSIS 1. Average Rate of Lending = Mark up /interest/return earned

* 100 Advances+ Investment +l ending to Financial Institutions

Return earned Adv +Inv + lending to F.I Avg. Rate of lending

2004 5,620,203 124,434,596 4.52

2005 12,246,811 203,330,758

2006 21,191,470 218,958,188

6.02

9.68

12 10

9.68

8 6.02

Percentage 6 4

4.52

2 0 2004

2005

2006

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

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

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

Return expensed Dep +subordinated loans +borrowing from F.I+ liab against lease Avg. Rate of borrowing

2004 2,434,454

2005 7,204,992

2006 15,232,886

144,338,201

231,412,811

251,125,627

1.69

3.11

6.06

7 6.07

6 5 Percentage

4 3.11

3 2

1.69

1 0 2004

2005

2006

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

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3. Spread = Interest Earned

Interest Expensed Average interest bearing liabilities

Average interest bearing assets

Return earned Avg Interest bearing Assets Return expensed Avg Interest bearing Liab Spread

2004 5,620,203 104,996,022

2005 12,246,811 163,882,677

2006 21,191,470 211,144,473

2,434,454 117,407,008

7,204,992 187,875,506

15,232,886 241,269,219

4.98

3.64

3.75

6 5

4.98

4

3.64

3.75

Percentage 3 2 1 0 2004

2005

2006

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

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4. Cost of Admin Expense = Admin Expense * 100 Deposits

Admin Exp. Deposits

2004 2,677,635 239,509,391

2005 4,313,023 222,345,067

2006 5,874,745 239509,391

Cost of Admin Exp.

2.06

1.94

2.45

3 2.5 2

2.45 2.06

1.94

Percentage 1.5 1 0.5 0 2004

2005

2006

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

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5. Infection Ratio = Classified Advances * 100 Gross Advances

Classified Adv Gross Adv

2004 2,934,413 90,291,457

2005 1,059,955 120,416,991

2006 2,308,668 152,235,781

Infection Ratio

3.25

0.88

1.51

3.5 3

3.25

2.5 Percentage

2 1.51

1.5 1

0.88

0.5 0 2004

2005

2006

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

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

Cash & Bal with treasury banks Deposits Liquidity Ratio

16 14

2004 19,708,518

2005 24,798,625

2006 27,859,360

239,509,391

222,345,067

239509,391

15.19

11.15

11.63

15.19

12

11.15

10

11.63

Percentage 8 6 4 2 0 2004

2005

2006

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

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

Invt in Govnt Approved Sec Deposits Statutory Liquidity Ratio

25 24

2004 31,622,670

2005 51,906,092

2006 49,390,810

129,14,891

222,345,067

239509,391

24.38

23.34

20.62

24.38 23.34

23 Percentage

22 21

20.62

20 19 18 2004

2005

2006

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

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

Cash & Bal with treasury banks+ Bal with other banks Deposits Cash Ratio

* 100

2004

2005

2006

22,892,475

34,511,439

40,591,312

239,509,391

222,345,067

239509,391

17.64

15.52

16.94

18 17.5

17.64

17

16.94

16.5 Percentage

16 15.52

15.5 15 14.5 14 2004

2005

2006

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

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9. Advance to Deposit Ratio = Advances

* 100

Deposits

Advance Deposits

2004 88,931,400 239,509,391

2005 118,864,010 222,345,067

2006 149,999,325 239509,391

Adv to Dep Ratio

68.56

53.45

62.63

80 70

68.56

60

62.63 53.45

50 Percentage 40 30 20 10 0 2004

2005

2006

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

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

* 100 Non-Mark up income

Mark up Income Non-Mark up Income Mark up Income to Non-Mark up Income Ratio

2004 5,620,203 1,520,049

2005 12,246,811 2,245,370

2006 21,191,470 3,224,639

3.69

5.39

6.57

7

6.57

6

5.39

5 Percentage

4

3.69

3 2 1 0 2004

2005

2006

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

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11. Time Deposits to Total Deposit Ratio = Time Deposits

* 100

Total Deposits

Time Deposits Total Deposits Time Dep to Total Deposit Ratio

2004 21,892,081 239,509,391

2005 80,167,779 222,345,067

2006 88,851,222 239509,391

16.87

36.05

37.09

40 36.05

35

37.09

30 25 Percentage 20 15

16.87

10 5 0 2004

2005

2006

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

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12. Capital Adequacy Ratio = Paid up capital

* 100 Sum of Balance Sheet

2004 8.16

Capital Adequacy Ratio

2005 8.66

2006 9.48

10 9.5

9.48

9 Percentage

8.66

8.5 8

8.16

7.5 2004

2005

2006

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

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13. Return on Average Equity = Net Profit after Tax * 100 Average Equity 2004 1,091,989 4,061,244 26.89

NPAT Average equity ROE

2005 1,702,094 5,553,567 30.65

2006 1,762,691 8,655,334 20.37

35 30 25 Percentage

30.65 26.89 20.37

20 15 10 5 0 2004

2005

2006

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

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

NPAT Average Asset ROA

1 0.9 0.8 0.7 0.6 Percentage 0.5 0.4 0.3 0.2 0.1 0

2004 1,091,989 126,893,516 0.86

0.86

2005 1,702,094 201,574,163 0.84

2006 1,762,691 261,999,667 0.67

0.87 0.67

2004

2005

2006

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

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15. Earning per share =

NPAT No.of shares outstanding EPS

NPAT * 100 No of shares outstanding

2004 1,091,989 250,000

2005 1,702,094 300,000

2006 1,762,691 500,000

4.3

5.6

3.52

6

5.6

5 4

4.3 3.52

EPS 3 2 1 0 2004

2005

2006

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

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16. Book Value = Equity

* 100

No of shares outstanding

Equity No.of shares outstanding Book value

2004 4,369,072 250,000

2005 6,738,063 300,000

2006 10,572,605 500,000

17.47

22.46

21.15

25 22.46 20

21.15

17.47 15 Book value 10 5 0 2004

2005

2006

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

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

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

Opportunities:   









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

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

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

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

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

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Overall Conclusion Let’s Look Ahead Towards a Brighter Future Together” A generation ago the world of banking seemed much simpler and less burdened with risk than it is today. Regulations are severely limiting the range of bank management decision making, but it is also tending to shelter the industry from the risk of the financial market place. It has been said that banking in an earlier era was concerned mainly with the prudent management of assets and liabilities and the achievement of satisfactory returns for bank stockholders. Banking in the modern era, on the other hand, is immensely more concerned with risk-how to manage risk and still earn enough returns to retain owner‘s capital and remain viable. In Pakistan, the banking sector continued to support the financing needs of the country. In short Bank Alfalah (BAL) since its inception under the leadership of Sheikh Nahayan Mabarak Al-Nahayan has made significant in building of strengthening both the corporate and retail banking sectors in Pakistan. The growing client base is a sign of its recognition in the market place. It made a significant progress despite the keen and challenging business environment. It made notable progress in business volume, efficiency and profitability following its increased involvement in trade finance, commercial lending, and foreign exchange and money market operations. Moreover the financial statements of the bank show strong financial position and trust of the people on bank, Bank Alfalah Limited truly proves to be, the caring bank.

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References:www.bankalfalah.com www.sbp.org.pk/fsr

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