8-Bank Alflah Internship

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HISTORY OF BANKINGHISTORY OF BANKING

“Bank is a pipeline through which currency moves into and out of

circulation.”

Bank accepts deposits and repays cash to its customers on their demand.

The Bank borrows money at a lesser rate of interest and lends it to the

borrowers at a higher rate. It is thus a profit-lending concern. Bank cannot

lend all the money that has been deposited with it. It has to keep a certain

portion of the total deposits in cash with them in order to meet the cash

requirements of the individuals and business concern.

Banking HistoryBanking History

Word Bank is said to be derived from the words Banc us or Banque or Bank.

The history of banking is traced to as early as 2000 BC. The priests in

Greece used to keep money and valuables of the people in temples. These

priests thus acted as financial agents. The origin of banking is also traced to

early goldsmiths. They used to keep strong safes for storing the money and

valuables of the people. The persons who had surplus money found it safe

and convenient to deposit their valuables with them.

The FIRST STAGE in the development of modern banking, thus, was the

accepting of deposits of cash from those persons who had surplus money

with them. The goldsmiths used to issue receipts for the money deposited

with them. These receipts began to pass from hand to hand in settlement of

transactions because people had confidence in the integrity and solvency of

goldsmiths.

Lets Look Ahead Towards a Brighter Future Together © Adnan Rasheed

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When it was found that these receipts were drawn in such a way that it

entitles any holder to claim the specified amount of money from goldsmiths.

A depositor who is to make the payments may now get the money in cash

from goldsmiths or pay over the receipt to the creditor. These receipts were

the earlier bank notes.

The SECOND STAGE in development of banking thus was the issue of bank

notes. The goldsmiths soon discovered that all the people who had

deposited money with them did not come to withdraw their funds in cash.

They found that only a few persons presented the receipt for encashment

during a given period of time. They also found that most of the money

deposited with was lying idle. At the same time, they found that they were

being constantly requested for loan on good security. They thought it

profitable to lend at least some of the money deposited with them too the

needy persons. This proved quite a profitable business for the goldsmiths.

They instead of charging interest from the depositors began to give them

interest on the money deposited with them.

The THIRD STAGE, in the development of banking by experience the

banks came to know that they could keep a small proportion of the total

deposits for meeting the demands of customers for cash and the rest they

could easily lend. They allowed the depositors to draw over and above the

money actually standing to their credit. In Economics terminology we can

say that they allowed the overdraft facilities to their depositors.

The FOURTH STAGE, in development of banking. When every bank issues


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receipts and most of them allowed the overdraft facilities, there was then

too much confusion in the banking system. The banks in order to earn

profits could not keep adequate reserves for meeting the demands of the

customers for cash. The failures on the part of the bankers to return money

caused widespread distress among the peoples. In order to create

confidence among the people, steps were taken to regulate the banking

organization. A conference was held in Nuremberg in 1548. It was decided

that a bank should be set up by the state, which should streamline the

banking organization and technique. The first central bank was formed in

Geneva in 1578. Bank of England was established in 1694. The

responsibility of issuing of notes is now entrusted to a central bank of each

country.

COMMERCIAL BANKING IN PAKISTANCOMMERCIAL BANKING IN PAKISTAN


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At the time of partition total number of Banks was 38 only. Out of these

Banks the Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks

were 7. The total of deposits of Pakistani Banks was Rs.880 Million &

Advances were Rs: 198 Million. According to banking companies ordinance

Banks are the companies, which transacts the business of Banking in

Pakistan.

Commercial Banks have constituted the most important [part of the

intuitional credit in the economy of Pakistan. Being the largest source of

credits, Banking Industry is a pivot of whole the economic activities in

Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down

that the Banks must have paid-up capital & reserve of not less then Rs: 5

Lac & fulfilling certain other requirements for declaring as “Scheduled

Bank”.

At the time of independence Bank services was badly affected. But with the

passage of time these are improving. The government of Pakistan

nationalized all Banks in early 1974. This act was done to minimize control

of few hands over banking. But this step was proved e futile for the Banking

in Pakistan. So the Govt. had to revise its decision in1990. Two Banks

(Allied Bank of Pakistan Limited & Muslim commercial Bank Of Pakistan

Limited has been denationalized. Since then Banks were working well.

Now slogan of the Banks is to serve their customers in the best

possible manner.


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FORMS OF BANKFORMS OF BANK

INTRODUCTIONINTRODUCTION

Following privatization, Bank Alfalah emerged as new identity of Habib

Credit and Exchange Bank with a revived purpose and commitment.

Charged with the strength of Abu Dhabi consortium and under the

leadership of his Highness Sheikh Nahayan Mabarak Al - Nayayan, the bank


FORMS OF BANKS

Scheduled Banks

Non-Scheduled Banks

Central Bank Commercial Banks

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has already made significant conditions in building and strengthening both

corporate retail-banking sectors in Pakistan.

Designing the product portfolio of bank response to the customer’s

preferences, the product like Royal Profit, Royal Patriot and Royal Custodial

are prime examples of quality and innovation providing timely banking

opportunities to customers of bank. Assessment of the needs and wants of

the customers is an on going process at Bank Alfalah, which helps to

continually develop new products and services. To continuously offer

courteous, professional and advanced banking solutions, the team of bank

has recently been rejuvenated by going though training programs with a

focus on information technology.

To make their banking solutions become accessible to more and more

people, they have embarked upon a rapid expansion program, aiming to

provide a networking that makes the services available to any of their

customers in all the major urban centers of Pakistan with a view to go

international in the future. With their key indicators of progress already

soaring to new heights, the bank is committed to dedicate all its energies,

resources and time to bring higher value and satisfaction to their

customers, employees and shareholders. The graph of bank is going up and

up every year. The ratio of profit is increasing at good percentage.

COMMERCIAL BANKING SCENARIO IN PAKISTAN COMMERCIAL BANKING SCENARIO IN PAKISTAN

At the time of independence in 1947, there were 38 scheduled banks with

195 offices in “Pakistan” but by December 31,1973, there were 14

scheduled Pakistani commercial banks with 3,233 offices all over Pakistan

& 74 offices in foreign countries. Nationalization of Banks was not done 1st

January 1974 under the Nationalization act 1974, due to certain objectives.


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But it had negative effects on efficiency of the of the banking sector

afterwards a privatization Commission was set up on January 22, 1991, the

commission transferred many banks to the private sector i.e., MCB & ABL.

The government approved & permitted the establishment of 10 new private

banks in 1991; hence many new private banks have incorporated, since

then, BANK ALFALAH in one of the namely established private scheduled

banks in Pakistan.

INTRODUCTION TO BANK ALFALAHINTRODUCTION TO BANK ALFALAH

Bank of Credit & Commerce International (BCCI) was a Pakistan based

bank, established by Mr.Agha Hassan Abdi from UBL, in association with

U.A.E and Europe. BCCI has its branches in 74 different countries of the

world. It had its 3 branches in Pakistan. In 1991, the BCCI was banned,

when it was accused by European countries, that the bank was involved in

some illegal operations with Gulf countries.


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The major reason behind European accusation was that BCCI was of Islamic

mode. Therefore, the bank was closed due to international pressure. Then,

its 3 Pakistani branches were taken over by the Government of Pakistan,

which were named as Habib Credit and Exchange Bank (HCEB) and these

were working as subsidiary of Habib Bank Limited. Following the

privatization in July 1997, Habib credit and Exchange Band assumed the

new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi

based bank as the family of Sheikh Nahayan Mubarik Al Nahayan purchased

70% of its shares and 30 % shares remained with Habib Bank on behalf of

Government of Pakistan.

It has it 145 branches in 35 cities in Pakistan. The D.G.Khan branch was

opened in August 2002. Alfalah has emerged as one of the leading

commercial banks in the financial sector of Pakistan. Charged with strength

of Abu Dhabi consortium and under the leadership of his highness Sheikh

Nahayan Mubarak, minister of higher education and scientific research and

prominent member of Royal family. The bank is energized with vision,

envisaging. The development of various sectors in Pakistan. The bank has

already made significant contribution in building and strengthening both

corporate and retail banks sector in Pakistan.

Assessment of the needs and wants of customer is an on going process at

Bank Alfalah, which help to centennially develop new products of services.

Designing the product portfolio in response to royal patriot, royal custodial,

Alfalah car finance, Alfalah rupee traveler cheques home loans are prime

example of quality innovation providing timely banking opportunities to

customer. To continuously offer courteous, professional and advanced

banking going through training programs with focus to information

technology has recently rejuvenated solution the team of bank.


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With their key indicators of progress a steady soaring to new heights, the

bank is committed to dedicate all its energies, resources and time to bring

higher value and satisfaction to their customers and employers. The graph

of the bank is going up and up every year. The ratio of profit is increasing at

a good percentage. The bank is serving the people at high level of standard

by according to expectation of customers.

BRANCH LEVEL HIERARCHYBRANCH LEVEL HIERARCHY


Branch Manager

Mr. Aon Abbas

Corporate Manager

Mr. Asif Ali Sheikh

Area Manager

Mr. Shahid Husain Qazi

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THE VISIONTHE VISION

Our vision is to be a leading financial institution, with a niche in areas

where we have a competitive advantage with complete banking solutions.


Operation Manager

Mr. Ali Akbar

OPERATION DEPARTMENT

FOREIGN EXCHANGE

DEPARTMENT

CREDIT DEPARTMENT

Cash DepartmentMr. Sh. Adeel

A/C Opening Dept. (Miss

Amara)

Remittance Dept.

Mr. Danish

Accounts Dept.

Mr. Jawad

Imports Mr. Yaseen

Exports Mr. Arif

CMD Mr. M.Farrukh

Aslam

CAD Mr. Arif Naqvi

Home FinanceMr. Atriaz Ali

Agri-FinanceMr. Nawazish Ali

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Our focus is on improving performance in each of our businesses to achieve

consistent and superior returns for our highly valued clients and

stakeholders.


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THE MISSIONTHE MISSION

Our mission is 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.

The Philosophy The Philosophy

Excellence in service

Quality performance

Product innovations


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THE BOARDTHE BOARD

H. H. Sheikh Hamdan Bin Mabarak Al-Nahayan Chairman

Mr. Abdulla Khalil Al-Mutawa

Mr. Omar Z. Al-Askari

Mr. Abdullah Nasser Hawaileel Al-Mansoori

Mr. Nadeem Iqbal Sheikh

Mr. Ikram Ul-Majeed Sehgal

Mr. Mohammad Saleem Akhtar Chief Executive

Officer

CORPORATE INFORMATIONCORPORATE INFORMATION


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Company Secretary Company Secretary

Mr. Hamid Ashraf

Auditors Auditors

A. F. Ferguson & Co.

Chartered Accountants

Head Office Head Office

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

EXECUTIVE COMMITTEEEXECUTIVE COMMITTEE

Mr. Mohammad Saleem Akthar Chairman

Mr. Parvez A. Shahid

Mr. Ikram Ul-Majeed Sehgal

Mr. Mohammad Yousuf

Mr. Tanweer A. Khan

Mr. Sirajuddin Aziz

Mr. Mahmood Ashraf

BANK ALFALAH’s SLOGANBANK ALFALAH’s SLOGAN

”Let’s Look Ahead Towards a Brighter Future Together.”

BRANCHES NETWORK BRANCHES NETWORK

Bank Alfalah has 145 branches in 39 cities of Pakistan. Detail of some major

branches as under: -


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Karachi Karachi

Main branch, B.A. Building, I.I. Chundrigar Road

Cloth market branch

Clifton branch

Shahrah-e-Faisal Branch

Jodia Bazar branch

Korangi industrial area branch

M.A. Jinah Road Branch

S.I.T.E Branch

Paper market branch

North Karachi branch

Gulshan-e -Iqbal

Karachi stock exchange

North Napier road branch

S.I.T.E Branch

P.E.C.H.S Branch

Timber Market Branch

D.H.A. Branch

Lahore Lahore

Gulberg branch

Defense branch

Circular road branch

Township branch

LDA Plaza branch

Badami bagh branch

Allama Iqbal branch

Shah Alam Market branch

Rawalpindi Rawalpindi

Mall road branch


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Satellite town branch

Other BranchesOther Branches

Other branches are in:

Sialkot

Islamabad

Peshawar

Multan.

Faisalabad

Quetta

Sukkur

Hydrabad

Gujranwala

Rahim Yar khan

Sahiwal

Sargodha

Gujrat

Mardan

D.G.Khan

Gohtiki

Mianchunho

Dehrki

Now, Bank Alfalah is going to establish its branches in some foreign

countries. Hopefully, in Dhaka (Bangladesh) and Bahrain, its branches will

be opened in the year 2004. Some branches will also be opened in European

countries. Bank is going to establish its branches in D.G. Khan, Bore wala

and in Bahawalpur as well.


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ABOUT THE BANK FEATURESABOUT THE BANK FEATURES

Bank Alfalah Limited is an established bank. It has some special features

with the help of those it is growing rapidly.

Pursuit of ExcellencePursuit of Excellence

Bank Alfalah has continued its upward climb in pursuit of excellence.

Strengthened by backing of the Abu Dhabi group and driven by strategic

goals set out by its Board and Management, bank Alfalah increasingly

inspires trust and confidence of all its clients. Within a short span of time

the bank has carved a significant niche for itself in the banking industry.

These achievements have been preceded by concerted efforts to provide

highest levels of service and value to our customers. The bank aims to

future enhance performance standards through implementation of

innovations in both products as well as customer care, by discovering newer

avenues of client benefit. This customer-focused strategy has enabled Bank


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Alfalah to evolve as a single source financial service provider of corporate

and retail banking services.

Dedicated ProfessionalsDedicated Professionals

The bank Alfalah team comprises of dedicated professionals equipped with

a diverse array of skills, vast experience and pro-customer attitudes. The

management concentrates its energies on making informed economic

decisions, translating it into grater returns for our investors and customers.

This prudent attitude has created a synergistic organizational structure

leading to improvements in profitability and a sustainable competitive

advantage for the bank.

A High Responsive Product PortfolioA High Responsive Product Portfolio

Not only comprehensive but also customize to match the needs and

preferences of our customers. These strategic characteristics of our

portfolio have helped us to face challenging economic conditions.

Our product lineup continues to fulfill and satisfy the banking requirements

of not just the conventional consumer, but the demanding financial needs of

the corporate sector as well. The lineup includes:


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Car financing, Rupee Travelers Cheques, Anmol Saving Certificates,

Home Loans, On-Line Banking, Money Gram Remittance Service,

Monthly income plan, Credit Cards, ATMs.

Outstanding Work EnvironmentOutstanding Work Environment

As the work environment plays a great role in this competition age, so the

bank has good work environment. All the people work with cooperation;

managers are so kind that each problem can be discussed with them.

EfficiencyEfficiency

Employees at Bank Alfalah are quite efficient. They work more than their

working hours and it is all according to their will. It also shows their loyalty,

commitment to organization.

Customer ServicesCustomer Services

All the customers are entertained individually. Same kind of behavior and

attention is given to all the customers. Branch sitting arrangements;

internal atmosphere is above meeting international standards

Suggestions Asked From CustomersSuggestions Asked From Customers

Getting ideas for improvement from customer side is a new idea and that is

working very well in Bank Alfalah Ltd. All the customers are asked to fill a


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suggestion form and the standards of the bank are improved through them.

Daily report maintained about the complaints and presented to the top

management and it will show their interest about development.

Employee BenefitsEmployee Benefits

Employees are given the benefits like bonus, gratuity funds, loans,

increments, and house rent, medical and conveyance allowances.

Computerized Working EnvironmentComputerized Working Environment

In bank, all the work is done remotely. All the entries are made using the

systems, which are internally and externally integrated. This increases

efficiency of the bank.


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PRODUCTSPRODUCTS

Bank Alfalah is designing its portfolio bank is committed to develop

products that give more value to its customers in both the sectors in

corporate and consumer need.

1. Royal profit

2. Royal patriot

3. Royal group

4. Financing scheme

5. Alfalah Car financing

6. Bank Alfalah home loan

7. Rupee traveler cheque

8. Credit Cards

9. Agri-Finance

Following their trend of bringing value added products and services to their

customers the bank has present Royal Group, Royal Profit and Royal Patriot.


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Royal Group Royal Group

Royal Group is a joint investment plan that allows individuals to invest

money collectively and earn higher rate of profit.

Amount Profit %age

From Rs. 100000/- to 999999/-3.25%

From Rs. 1000000/- to 9999999/- 4.50%

From Rs. 10000000/- and above 5.50%

Royal Profit Royal Profit

It is profit obtained by individuals on their deposited amount. 50,000,000 &

Alone profit is given on daily basis. It is just to attract customer.

Amount Profit %age

From Rs. 50000/- to 999999/-3.25%

From Rs. 1000000/- to 9999999/- 3.75.%

From Rs. 10000000/- to 49999999/- 4.25%

From Rs. 50000000/- to 149999999/- 4.75%

From Rs. 150000000/- to and above 5.50%

Royal Patriot Royal Patriot

It is fixing for specified time period. It is similar to term deposit. In term

deposit one get no benefit of profit when he withdraws his money before

maturity date. But in case of Royal Patriot of one withdraw his money


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before the maturity date; he can get the benefit of profit. The profit rates for

different periods are following:

Tenure 1

mont

h

3

month

s

6

month

s

12

month

s

24

month

s

25000-999999 7.50% 8.50% 9.00% 9.50% 9.50%

1000000-49999999 7.60% 8.60% 9.10% 9.60% 9.75%

5000000 & above 7.70% 8.70% 9.20% 9.70% 10.00

%

Financing SchemesFinancing Schemes

The bank has introduced many financing schemes such as Term Finance

and CF, FAFB, FAPC. The bank has recently introduced a Car Finance

Scheme.

Alfalah Car FinancingAlfalah Car Financing

It’s a scheme that enables one to own his desired car at easily affordable

and flexible installments with a minimum down payment and insurance. All

brands of new Pakistani assembled/manufactured cars are facilitated in


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bank Alfalah car financing. The loan can be availed from 1 year to 5 years

with early adjustment facility at any time before the maturity. Initial down

payment 20% of the value of the car. You have to pay a one-time fee of

Rs.3000/-being amount of processing and documentation charges and 1st

year insurance premium.

Bank Alfalah has made arrangements with the top insurance companies who

are offering special lowest insurance rates for bank Alfalah clients. You will

repay the loan by making easy equal monthly installments to Bank Alfalah in

the form of post-dated cheque. You are having the option to pay the

installment before the maturity. The car is the security, which will be

hypothecated in favor of the Bank and a lien will be marked with the

registrar. You can include your spouse, children (18 years and above) or

parents as co-applicants for the car loan and the car can be registered in

their names.

Eligibility CriteriaEligibility Criteria

All Businessmen, Corporate Employees, and other salaried or self-

employed professionals having net take home income in excess of three

times the monthly installment.

Required Documents For Car Finance FacilityRequired Documents For Car Finance Facility

{AGE LIMIT BETWEEN 21-55 YEARS}

1) Copy of national identity card.

2) Copy of driving license (optional).

3) N.T.N certificate.

4) Copy of current utility bill of residence.


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5) Bank account statement for last six months from the date of

application.

6) Signature verification from duly verified by the banker.

7) Asset &liabilities statement (Where Banks financing exceeds Rs.5

Lac.)

8) CIB report requirement (Where Banks financing exceeds Rs.5 Lac.)

9) Basic borrower fact sheet.

Additional Requirements for Business Class IndividualsAdditional Requirements for Business Class Individuals

Copy of rental/purchase agreement of business premises.

Sole proprietorship letter on relevant business letterhead.

Partnership deed (if applicable)

NOC from other partner (if applicable)

Additional Requirements for Self-Employed ProfessionalsAdditional 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.

Additional Requirements for Salaried PersonsAdditional 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.


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Minimum Installments Minimum Installments

Monthly Installments for Alfalah Car can be calculated by multiplying

Bank’s financing amount with the following factors:

Periods Advance

Installment

Deferred

Installment

For 12 months

For 24 months

For 36 months

For 48 months

For 60 months

0.08661

0.04514

0.03135

0.02447

0.02037

0.08722

0.04546

0.03157

0.02465

0.02052

Alfalah Credit CardsAlfalah Credit Cards

Bank Alfalah welcome you as an esteemed recipient of Alfalah Hilal Card-

the international Debit Card, Visa Electron that gives you an unlimited

access to your current/saving account with a simple swipe, at millions of

retail shops or ATMs, Worldwide.

The Alfalah Hilal Card comes with a host of conveniences and benefits

combined with the wide reach of Visa Network enabling it to be accepted at

more than 840,000 ATMs and 13 million retail outlets around the world,

making it the most acceptable Debit card available in Pakistan. What’s


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more, it is easy to operate and can be used on any electronic self-printing

POS machine where VISA is accepted, locally and internationally.

No more hassle of remembering your PIN for retail transactions and no

need to go to the ATM for cash withdrawals, one swipe and your transaction

is complete. Difference between Hilal Card a Credit Card is simple, a Hilal

Card is a buy now, pay now option while a Credit Card is Buy now, Pay later

option.

Alfalah Visa CardAlfalah Visa Card

Credit cards are mode of payment to concerned parties on behalf of the

creditor. Credit cards are the best alternative to cash, are globally

acceptable and offer security and convenience at the same time joining

Alfalah VISA without paying any fee, start enjoying your free card from the

moment you become a card member. No annual renewal fee. Only Bank

Alfalah gives you the unmatched feature of lowest service charges @ 2.25%

per month. Transfer facility @ 1.5%per month applicable on all existing

credit card in Pakistan.75% of your assigned credit limit is available to you

for cash withdrawals.

Alfalah VISA Card gives you access to ready cash through your card and

(PIN) personal identification number at 840,000 ATMs or you can request

over-the-counter cash advances at 360,000 financial institutions worldwide


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or at any Alfalah Branch. New card will be issued within 72 hours of the

loss/theft being reported. The facility that saves you from paying surcharge

while using your Alfalah VISA Card at all Petrol Station in Pakistan.

Whether you make transaction in dollars or any other currency, all your

billing will be converted Pak Rupees for your Convenience. Alfalah VISA

Card offers a comprehensive cover up to Rs.7million on Alfalah Visa Gold

Card and Rs.305 million on Visa Classic, Classic Blue and Women Exclusive

Card.

Features of Alfalah Visa Card AreFeatures of Alfalah Visa Card Are

No Joining Fee

No Annual / Renewal Fee

Balance Transfer Facility

Global Acceptability

Cash Withdrawal

Revolving Credit

Free Supplementary Cards

24-Hour Phone Banking Services

Zero Loss Liability

All billing in Pak Rupee

Monthly Statement of Accounts

Fortunes and Discounts

Salient Features Salient Features


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Lowest financing cost available in the market.

Tenure of 1 to 5 years as per individual requirement

Quickest processing

Minimum processing charges: Rs. 3000 payable once

Down payment requirement of 25%

Repayment through monthly installments

Insurance rates available from bank’s approved insurance companies

Flexibility of adjustment at anytime during tenure.

Easily affordable flexible installment

Alfalah Hilal CardAlfalah Hilal Card

Alfalah Hilal card is debit card that gives you access to your bank account.

Alfalah Hilal Card allows you to purchase goods merchant establishments

across Pakistan and abroad and also gives you the freedom to withdraw

cash from any Visa/Electron/Plus ATMs in Pakistan and abroad, and all

Local Bank Alfalah and 1 link ATMs. The Alfalah Hilal Card comes with all

saving and current accounts except Non resident (ordinary) accounts with

joint mandate or condition mandate. However, accounts with

joint/conditional mandate can obtain the Alfalah Hilal Card on request by

completing the required formalities.

The main benefit of being a Alfalah Hilal Cardholder is that you enjoy

unparallel access to your account-whatever you want, wherever you go.

Besides, you can control your finances since the balance in your account

determines your spending limit. Alfalah Hilal Card is accepted at more

locations worldwide than any other debit card available in Pakistan. You can

now enquire on your balance or withdraw cash using ATMs. You can use all

Alfalah ATMs, local 1linkATMs and all other bank’s 840,000 ATMs

worldwide on the VISA electron network for cash withdrawals. Subject to

the maximum cash withdrawals limit of Rs.50, 000/-per day.


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Presently, the card can be used at over 7,000 establishments in Pakistan

and at over 13 million outlets worldwide, where the VISA sign is displayed.

The card is also welcomed at over 840,000 ATMs worldwide. There is no

monthly outstanding in the case of Alfalah Hilal Card.

Bank Alfalah Home LoanBank Alfalah Home Loan

Alfalah home loan is especially designed for those non-resident Pakistani’s

in UAE whose families live in Pakistan. This product is for NRD’s to buy

build or renovate arouse in Pakistan.

Home Financing Options Home Financing Options

Buy Your Home: Buy Your Home:

With this facility, you no longer need to just dream about the home you

want for yourself and your family .We will provide you up to Rs: 7.50 million

or 70% of the purchase price of the property (whichever is less), so that you

can realize your dream and enter the reality of owning a home.

Build Your Home:Build Your Home:

You have a plot, and need finance to construct a home, which excites

everyone in your family! No problem. We will provide you up to Rs:7.50

million, or 70% of the estimated value of constructed property to enable you

to say good-bye to rent forever! Even if you don't have a plot, we will

provide you up to 60% of the value of the plot that you have selected to

purchase! Do we excite your imagination?


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Renovate Your Home:Renovate Your Home:

You already own a home, but need extra space for a growing family. Simply

apply for financing of up to Rs: 2.50 million or 30% of the surveyed value of

your home (whichever is less) and get yourself the extra space! You can

stretch payment up to 7 years.

Lets Start It Together:Lets Start It Together:

The crown jewel of our Home Finance Scheme, the golden opportunity for

someone starting a career to buy an already constructed housing unit so

early in life! We offer a moratorium of up to 3 years in principal payments,

for a financing of up to 20 years. You service only the mark-up element

initially, and principal repayment starts after the end of monotorium period.

Home Start is specially designed for young people to own a home of their

own.

Make An Easy Transfer:Make An Easy Transfer:

Does your existing installment on a home finance leave you with nothing to

spend? You need not worry any more because we have genuinely low rates

and payment options that could leave more funds with you each month.

With our BTF, repaying your home finance will not make you break into a

sweet! Transfer up to Rs: 7.50 million or 100 % of the existing finance,

whichever is less.


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DocumentsDocuments

The following documents are required to be submitted by an applicant with

the completed application.

1) 2 passport size photographs

2) Copy of NIC.

3) Copies of last Salary / Pay Slip duly attested by the HR department.

4) Salary Certificate (original) from the employer, showing the gross

salary and deductions.

5) Employment verification form from the employer.

6) Non-resident Pakistani of UAE, holding valid Pakistani passport.

7) Valid UAE visa

8) Pakistani ID Card

Must be 21 year of age or over salaried and 62 in case of

businessmen

Processing Fee (Non-Refundable)Processing Fee (Non-Refundable)


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For financing up to Rs. 1.00 M Rs. 5,000,For financing up to Rs. 5.00 M Rs.

10,000, For financing up to Rs. 10.00 M Rs. 20,000.

Mark-up Rates:Mark-up Rates:

For SVR (Standard Variable Rate) option:

SBP discount rate + 1%, Currently 7.5% + 1% = 8.5%

For Fixed Rate Option:For Fixed Rate Option:

1 year 7% P.A

2 year 8% P.A

3 year 9% P.A

Late Payment Charges:Late Payment Charges:

Rs: 400/- per late payment.

Pre-Payment Charges:Pre-Payment Charges:

Up to 5% of the outstanding amount.

Documentation ChargesDocumentation Charges

At actual, including stamp duty, charges for legal documentation, on-site

inspection during construction, lawyer’s fee and charge registration fee, as

advised by the relevant persons/ agencies.

The Eligibility CriteriaThe Eligibility Criteria

You may apply for Bank Alfalah Home Finance.

For acquiring a residential accommodation in Karachi, Lahore,

Islamabad, Rawalpindi, Multan, Peshawar and Faisalabad.


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For building your dream house on your property / land.

For renovation or extension of your already owned house.

For transfer of your existing home finance from another lender.

If you are a Pakistani National.

If your age is between 25 and 65 years.

If you are in continuous employment in a permanent position for 2

years or more.

If you have 3 years (or more) of business or professional experience.

If your gross annual income is Rs: 200,000/ — or more [Your spouse’s

income (up to 50%) can also be combined with yours].

If you require a financing of at least Rs: 500,000/- or more

(maximum Rs: 7,500,000/-).

If you have been a Bank Alfalah borrower for past one year with clean

payment record.

10 Steps to Arranging Your Bank Alfalah Home Financing10 Steps to Arranging Your Bank Alfalah Home Financing

1. We provide you with all the information you need about Bank Alfalah

Home Finance. This can be through a face-to-face meeting with

our Relationship Officer, or over the telephone, or through the post.

2. You give us some basic information about your income and the

amount you need so that we can give you an agreement in principle.


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3. Once you have decided on the amount you want, you complete an

application form and pass it on to us, together with the required

documents.

4. We make some inquiries about your financial circumstances.

5. We carryout a valuation of the property and verification of your

income.

6. Once we have carried out all the initial processing, we send you our

offer through a “Facility Advice Letter”.

7. You sign the Facility Advice Letter and return it to us.

8. Our Documentation Control Center will get in touch with you to

complete Finance & Security documentation including legal opinion

on the title documents of the property and also the insurances.

9. You sign the Finance Agreement and Charge documents.

10. Our legal advisor will accompany you to the Registrar’s office on

the

appointed date with our cheque against the financing for

conveyancing of the property and your home finance begins.

Bank Alfalah Zarie SahulatBank Alfalah Zarie Sahulat

Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank

Alfalah Zarie Sahulat”. We are extending this service to the clients on a

competitive markup rate. BAL model is in letter and spirit based on SBP

instruction.


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The scheme now covers financing of a multitude of activities related to crop

production, harvesting, transportation, marketing, storage, processing,

packing, export, agri development, working capital and fixed investment

financing of agri non crop activities, storage, silos, etc. making it quite

exhaustive and comprehensive. The products have been, therefore,

designed keeping in mind objectivity of practical applicability in market

scenario and to cater to the most commonly demanded items of agricultural

financing by farmers.

Bank Alfalah Ltd. (BAL) Agri Finance programme has been named as

“Bank Alfalah Zarie Sahulat”. Our products along with the nature of

facility and their purpose are quoted below:

1. Alfalah Paidawari Zarie Sahulat is Short Term with the purpose of

Processor, agri producer, exporters and other eligible items.

2. Alfalah Musalsal Zarie Sahulat Short Term (Running finance limit

for 3 years with annual clean up) purpose for fulfilling Credit needs

under working capital.

3. Alfalah Tractor and Transport Zarie Sahulat Medium Term cf with

the Purchase of tractors, trolleys, pick-up, motor cycle, trucks, milk

van or other such items including repair of tractors, as per eligible

items.

4. Alfalah Machinery & Equipment Zarie Sahulat is Medium/Long

Term with the purpose to finance machinery and equipments, such

as, combine harvester, thresher, picker, digger, trolley, planter,

sowing drill, cultivator, plough, power tiller, harrow, sprinkler,

cane crusher, tobacco curing equipment etc.


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5. Alfalah Islah-e-Araazi Zarie Sahulat is Medium Term with the

purpose of Land development and improvement, land leveling laser

leveling, clearance of jungle, farm field layout,

terracing, contouring, soil reclamation, embankment, land

formation, bund construction, water management, water course

improvement etc.

6. Alfalah Dairy & Livestock is Zarie Sahulat Short/Medium Term

with the purpose of fulfilling Working capital and fixed investment

financing of dairy and milch animals, feed lot and fattening station

structure and equipment, livestock farm structure and equipment,

fattening of animal, milk chilling plant, construction of sheds for

animal, opening of private veterinary clinics (veterinary

equipment), opening of veterinary store, milk plant.

Documents RequiredDocuments Required

The purpose of documentation is to secure the interest of the bank.

Therefore, security and support documents must be completed in all

respects. BAL requires the following documents for agriculture financing:

1. Loan application form which is available from Bank Alfalah Limited

branches/website.

2. Pass Book issued by Revenue department.

3. Copy of Khasra Gardawri.


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4. Proof of leased in land if any.

5. Other documents required according to nature of finance.

Finance can be provided to all categories of farmers (owners, owner-

cum-tenant, & tenant). The under mentioned criteria shall be observed

while extending agri finance to the farmers under various products of

Bank Alfalah Zarie Sahulat.

The applicant is a genuine farmer.

The applicant’s name must appear in the Revenue records.

The applicant is not a defaulter of th banking system.

The applicant must be able to produce proper securities /

sureties / passbook.

Any other criteria considered necessary.

OPERATIONAL PERFORMANCE OF BANK ALFALAHOPERATIONAL PERFORMANCE OF BANK ALFALAH

Bank Alfalah’s operations can be alienated to three divisions as perBank Alfalah’s operations can be alienated to three divisions as per

participation in banking. participation in banking.

A. OPERATION DEPARTMENT

B. FOREIGN EXCHANGE DEPARTMENT

C. CREDIT DEPARTMENT

Operation DepartmentOperation Department

Operation Department has following segments:


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1. Cash

2. Clearing

3. Remittance

4. Account opening

5. Accounts department

Operation Department PerformanceOperation Department Performance

Operations department of the Bank Alfalah Limited is responsible for the

overall operations of the bank. Mr.Najam (Op’s Manager) is responsible for

all function under operation department.

The detail of those departments, which are controlled under this

department, is as under.

a) Account Opening

b) Cash Department

c) Clearing

d) Remittances


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Account Opening DepartmentAccount Opening Department

It is most important department of bank and its major source of income for

bank.

Ms. Saira & Shazia operation officers deal in this department. Following

procedure is adopted for this purpose.

Procedure Of Account OpeningProcedure Of Account Opening

It is very simple and quick procedure. A person who wants to open an

account must have the introduction of bank’s staff or any already existing

account holder of the bank. The customer is required to fill an account

opening form. Then signatures of the introduce are verified from S.S. Card

(signature specimen) before opening account.

AOF is very standard and up to the mark which contains almost whole

information about customers. Customer is guide to fill all columns of AOF.

All formalities and requirements are completed and verified, and all

supportive documents are taken and checked according to the nature of

account. If any formality is incomplete, chequebook is not issued until it is

fulfilled.

If a person cannot sign write his / her hand thumb impression is affixed

marked, which is attested by one male or two female witnesses. Thumb

impression for female right hand and for male left hand. Account number is

allotted to the customer and all particular such as nature of account,

opening date, initial deposit, title of accounts are written in register.

Account is opened in the system (Bank Excel) by putting all the particulars

of the customers in the system. S.S. cards are handed over to in charge of

operations department for record and verification. The letter of thanks is


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sent to customer for confirmation of address and other particulars of

customer and one copy is attached to AOF. After complete procedures

finally the manager of bank signs the AOF and these forms are filed in a

proper sequence.

They also have to give identity letter

1) NIC copies

2) Passport size photograph

One place on the form other is on SS Card they have non-bearer cheques.

On their cheque book a stamp is affixed on it there is written. Thumb

impression should be fixed in front of an officer of the bank. Cheque book

request forward by fax to the head office and cheque books will received

after one day and derived to the customer on the desk by taking their

signature or if some one else want to take on the behalf of account holder

he must have to show initial deposit slip and give ID card photo copy.

The bank does not make payment of a cheque bearing a six months or older

date. If an account is not operated in six months. It is called dormant

account.


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Types of AccountsTypes of Accounts

The bank different types of accounts exist.

1) Individual Account

Any individual or proprietor of business can open an individual account at

BAF. PLS (profit and loss sharing) saving accounts can be opened with the

minimum balance Rs. 1000/- with expected profit rate is 9%. Following

requirements has to be fulfilled for this account.

Signature of customer on back of AOF.

Mention next of kin (nominee)

Name and A/C # of introducer.

Verified sign of introducer.

Customer signature admitted by officer.

N.I.C photocopy attached.

Letter of thanks.


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2) Joint Account

When different people want to or need to share a single account it is called

joint account. The names of persons are written on the title of A/C and on

S.S. card.

Single person cannot open joint A/C. Both persons have to sign on cheque.

When two or more person neither partner nor trustee open account in their

name is joint account.

RequirementsRequirements

Sign of both customers on back of AOF

Sign on joint A/C # mandate

Name and A/C # of introducer

NIC copies of both members.

Mode of operation.


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3) Business Accounts

When the owner of the firm operating singly, open an in his term name.

i. Sole Of Proprietor Account

This account is for those person who has his own business and he

must be the solely owner of the business.


Companies stamp

Declaration of proportion companies’ letterhead.

Sign on AOF.

NIC copy

Verified signature of introducer.

Sole proprietorship declaration

ii. Partnership Account

Account title will be the name of the partnership firm.


Sign of customers on back of AOF.

NIC copies of partners

Partnership deed (certified copy) duly attested by notary republic.

Partnership mandate (prescribed format)

Companies rubber stamp


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The A/C is opened in the firm name and all partners designate one or

two persons to act behalf of the partnership firm all acts of the firm

jointly and severely.

iii. Limited Company

Limited Co:

a) Private Limited

b) Public Limited

Private LimitedPrivate Limited

Requirements Requirements

Restrain on companies letterhead dully attested by chairman.

Sing of all directors on back of AOF.

NIC copies of all directors.

List of directors on companies’ letterhead.

List of memorandum and article of association.

Copy of board resolution.

Latest form 29 (if director is to be changed or in case of his death, this

kind of form is filled, it includes information that a new director has

how much number of shares with him.

Companies rubber stamp.

Director should attest copy of certificate of incorporation; co register

an office stamp should be affix.

Public Limited Public Limited

Certificate of commencement of business


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Same as a home documents.

Club / Society / AssociationClub / Society / Association

These concerns are non-trading in nature. They have their own rules and

regulation and their affairs are mentioned by the committee called as a

governing body or managing committee.

1) Stamp of directors

2) NIC copies

3) Certified copy of resolution

4) Memorandum and article of association

5) List of heads on companies’ letterhead.

6) Bank account opened in their name with BAL.

7) Name of person to be specified for the operation in account.

8) The manner in which the account shall be operated.

9) Letter of registration.

Cheque Book IssuanceCheque Book Issuance

When the account is opened, then the customer is given a cheque book to

sign upon and to cash money. It proceeded as under.


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Procedure Procedure

All the account opening formalities must be completed before issuance of

chequebook. Particulars of the chequebook requisition should be completed

containing title of account, account number, type of currency, number of

leaves and signature to the customer.

Signatures of the customer are verified on the requisition. 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 NIC number and signature of that person on

requisition and cheque book issuance register.

Chequebook is taken out from the safe / locker. It is assured that series of

the chequebook. Particulars are entered in the chequebook issuance

register. Account number is stamped on very leave of the chequebook and

those leaves are counted. Name of account holder is written on the cover of

the chequebook. And requisition on the chequebook for further issuance is

properly filled, stamped and signed by officer of the bank.

Chequebook is delivered to the customer and his signature on the cheque

book issuance register. Chequebook serial number entered. In the system

(FoxPro). Stock of cheque book are balanced at the end of each day and

kept under safe custody. Earlier the banks were charging a fee for issuance

of cheque book but now whenever a new account is opened, the account

holder issued a cheque book free of charge.

Bank Alfalah issues the following cheque books.


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Saving account-25 leaves

Current account 50 to 100 leaves.

Current account – 25 leaves

Foreign currency $ 10 leaves

Foreign currency 10 leaves

Loose cheques are also issued in some cases. Number of leaves can be

increased on the request up to 100 leaves.

Closing of Account Closing of Account

When a customer wants to close an account he has to given a hand written

application to the head of the operations department to close his account

plus remaining leaves of cheque book. The manager first verifies the sign of

account holder, and then closing is done from the registers on the computer

where the account was opened. In the file of the account holder his account

opening form is crossed. For this closing a fee of Rs. 150/- is charge in BAF.

Cash Department Cash Department

Cash department of Bank Alfalah works under the operation department.

This department is given the complete responsibility of cash, as result of

transaction in touch local and foreign currencies. It is also responsible for

the book keeping of these transactions and the safe custody of cash.

This department performs the main function.

a) Cash receipts

b) Cash payments


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Cash ReceiptsCash Receipts

In cash department depositors use deposit slip for depositing the amount

into their accounts. The officer checks if the deposit slip is properly filled up

containing title of account, A/C number, date and amount in words and

figures. Detail on both counter file and cash receipt voucher should be the

same. Cash receiving officer, after twice counted and matched with the

deposit slips will handover cash to the customer.

The cash details are written on the back of the deposit slip and are also

entered in cash receiving register. Cash received stamp is affixed on the

face of the deposit slip along with the signature of the cash receiving

officer. Deposit slip and cash receiving register is given to the officer in the

cash department. The officer cash department both on cash receipt and

cash receiving register do again proper checking.

Officer cash department signs both the deposit slip and register. Deposit

slip is credited and posted in the concerned accounted in the system.

Counter folio is given the deposition as receipt. One consolidated cash debit

voucher is posted in the system to balance the cash.

Cash Payments of Cheque Cash Payments of Cheque

Mr. Zahid and Imran deals with cash payments the process for payment of

cheque local and foreign currency is same. First the cheque is presented by

the customer or holder to cash payment officer. He confirms that it is drawn

on the same branch and the particulars of cheque are properly filled in. one

signature of the holder is taken on the back of the cheque.

Cheque is handed over to the officer cash department for scrutiny where

officer checks the date, amount in words and amount in figures, payee’s


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name, crossing if any, account number, cheque serial number, any material

alterations / endorsements and signature of the customer. Account is

debited and then the officer cancels cheque. It is posted in the system and

posting stamp and number is affixed on it.

Cheque is handed over to the cash payment officer for payment. One more

signature on that back of the cheque is taken from the holder to match with

the first one, and then cash is paid to the cash detail is written on the back

of the cheque. Cash paid stamp is affixed on the face of the cheque. Entry is

passed in the cash payment register and system.


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Clearing DepartmentClearing Department

Mr.Danish deals this department. Before discussing it is necessary to know

what is “clearing”.

“The process by which cheque exchanged between the collecting and

paying bank and the ensuing financial settlement is called

“clearing”.

This facility is provided by the state bank of Pakistan for offsetting of cross

obligations between the different banks. Clearing is of two types.

1) Inward clearing

2) Outward clearing

Inward Clearing Inward Clearing

When cheque drafts, etc, of our branch presented to us for clearing by the

SBP. Cheque to be honored by bank.

Outward ClearingOutward Clearing

The cheque of other banks, which the account holder deposit in their

accounts is, sends for collection.

Clearing Process (Inward/Outward)Clearing Process (Inward/Outward)


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Here the local cheques are received that are drawn on BAF. All the cheques

are received on one counter along with the paying slips duly filled in

properly containing particulars of cheque and account holder. Counter folio

of paying slip is handed over to the customer by putting stamp for cheque

received for collection for Bank Alfalah on it duly signed by officer. These

cheques are scrutinized and cheques for local clearing are separated from

OBCs. These are then entered in clearing register and cheques for

collecting are entered in OBC register and handed over the bills department

of collection.

Clearing officer checks and verifies title of all the cheques deposited by the

customer to confirm the good title of the cheques. Cheques are scrutinized

properly and paying slips are separated from cheques. Special crossing,

endorsement and clearing stamps are affixed on the cheques. Cheques of

each bank are sorted and arranged branch wise. All the cheques are then

entered into the clearing system of bank. Print out of the clearing is taken

and details are attached. With the cheques of each bank. Details of these

banks are then entered into the clearing schedule containing number of

cheques presented and their total amount against the name of each bank.

Total number of cheques presented to all banks and their total amount is

written on the foot of that schedule, which is tallied with the clearing

register. Next morning, these cheques are delivered to the respective banks

in clearing house of SBP between 9:00 to 9:30 AM. In the same manner,

other banks present their clearing drawn on Bank Alfalah.

Total number of cheques and their amount delivered to other banks are

received from them are written on the clearing house schedule and handed

over to the officer clearing house SBP. Cheques / DD received in clearing

are given to the officer cash department of the branch for their repayment.


2

After I proper scrutiny of cheques, verification of signatures and

confirmation of balance in the account, officer cash department pays these

cheque by canceling and posting them in the system.If any cheque is not

passed due to insufficient balance or any other reason, officer cash

department returns the same cheque by attaching a cheque return memo

containing reason for return.

This cheque is entered into the cheque returned register and bank charges

are deducted according to the schedule of charges. Second clearing is

called at 2:30 PM to check the fate of the cheques presented to other banks

in the morning. If any cheque is to return, that is delivered to the same bank

in second clearing. In the same manner, if any cheque presented by Bank

Alfalah in first clearing is returned, they receive it and once again give

schedule of clearing figure to the officer-clearing house SBP containing

number of cheques and their amount delivered and received unpaid.


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Account Department Account Department

Account department is the most important department of the bank. Because

it is concerned with:

Revenue

Expenses

Assets

Liabilities

These are the pillars of any business. In this department, all the vouchers

that are posted during one day are sent to the account department next day.

These vouchers are already posted to computer by the concerned

department. So computer also sends a report to the accounts department.

The accounts department has to tell that the requirements for cheques and

vouchers are fully checked. If any kind of renovation or construction or

rebuilding is done, all is paid from the accounts department. Like petrol for

the car of EVP or VP, this department pays all stationery charges, medical

allowance, etc.

Daily Customer Movements ListDaily Customer Movements List

All the changes that are made in accounts of customer are shown in the

daily customer movement list. By using this list, people of accounts

department can prepare the vouchers.

Account department performs following activities.

Voucher preparation


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Preparation of daily, weekly, monthly, and annual statement.

Budgeting and fixed assts

Employer’s benefit

Expenditure approval.

The bank does not make payment of a cheque bearing a six-month or older

date. If an account is not operated in six months, it is called dormant

account.

In Account Department Function Are Performed In 3 StepsIn Account Department Function Are Performed In 3 Steps

1) Data controlling

2) Payment/disbursement/payroll system.

3) Reporting system

In Data controlling, vouchers are received from every department like

Account Opening, Car-Financing, Cash dept, credit card section etc and

then sorting will start and sorting by two ways

a) By Customer Activities.

b) By General Ledger

After sorting sub-sorting will start and this can also be done in two ways

a) by a/c title (current, saving, royal group, royal profit etc)

b) by computer codes (01,02,05,019,12,029)


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In disbursement and payment function they perform IBCA’s and preparing

cash payment Vouchers & pay slips etc.

In reporting different types of reports are prepared, stored in folders or

mailed to head offices.

There are 6 basic reports on Daily basis.

1. Daily Branch Position. (Treasury)

2. Daily Deposit & Advances Position.

3. Daily Management Information System.

4. Daily Forgein Currency Report.

5. Daily fund Rupee position.

6. Statement of Affairs.

Weekly ReportsWeekly Reports

1. Weekly FE-25.2. Advances & Deposit Statements.

Types of AccountTypes of Account

A. Current account

B. Saving account

C. Notice deposit

D. Term deposit

Current AccountCurrent Account


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There is no interest on these accounts. It is only for transaction purposes.

They paid on demand. Where a banker accepts, paying all checks drawn

against him to extend of the balance in the accounts. As there is no profit

paid on this account, it is also called checking account because cheque can

be drawn on it. Current account is mostly opened for business. The

minimum balance requirement for opening the current account is Rs. 1000/-

inter bank fund transaction are handled by current account.

Saving AccountSaving Account

The purpose of this account is to introduce the habit of saving individuals in

the neighborhood. The profit on saving accounts is paid on the basis of

profit and loss sharing at 9.00% six monthly. The minimum balance

requirement for opening the account is Rs. 500/-.

Notice Deposits Notice Deposits

Notice deposits are kind of fixed deposits. The minimum balance

requirement for opening the account is Rs. 500/- and payment is drawn on

maturity of the specific period.

Notice Deposit Is Of Two TypesNotice Deposit Is Of Two Types

a) One for which a prior notice of 30 days and is required from the

customer before withdrawing deposited amount and for which rate

return is 6.10%.


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b) Second for which a prior notice of 30 days and above is required from

the customer before withdrawing deposited amount and for which the

rate of return is 7.50%.

Term Deposit Term Deposit

A term deposit is a deposit that is made of a certain period of time. At the

end of specific period the customer is allowed to with draw the principal

amount. The rate of return of this account varies from 7.5% to 12.5%. The

term deposit account varies from one month to 5 years and the minimum

balance requirement is Rs. 500/-.

Remittance Department Remittance Department

The need of remittance is commonly felt in today’s business. A major

function of any bank is to “transfer of funds form one place to another”.

Bank Alfalah uses the following modes of transfer of funds.

1) Demand draft (DD)

2) Telegraphic Transfer (TT)

3) Pay order (PO)

4) Call deposit

5) Pay slip

6) Money gram


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Demand DraftDemand Draft

It is instrument, which is used to transfer amount from one city to another

city it can be made on cash as well as on cheque. If it is made through

cheque that it is necessary that person must be A/c account holder while in

case of cash any person can make. The demand draft is secured mode of

payment. It consists of three copies.

1) Original copy, which is given to account holder.

2) DD advice is sent to the central branch.

3) Third copy is for reconciliation. Its photocopy is kept with us (bank)

while original is sent to head office for reconciliation.

ProcedureProcedure


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The client who wants to transfer his funds form one city to another fills a

form requesting the bank to prepare a DD. DD application form contains

columns requiring information for the preparations of DD e.q.

Beneficiary name

Applicant’s name

Address

Amount to be sent etc.

Bank deducts some charges against DD. These charges include commission

tax provincial tax etc. Tax is deducted 0.3% while PT charges are 0.50

paisas. If customer is taxpayer than advance tax is exempt provided that he

submit the tax exemption certificate.

Telegraphic TransferTelegraphic Transfer

It is another mode of transfer of funds. It is quickest mode of transfer of

funds from one city to another. For TT, client has to submit the application

on a prescribed form of the bank. Client can deposit money in to the bank or

can request the bank to deduct the amount against the TT along with the

charges against the issuance of TT from his account. The charges against

the issuance of TT charged by Bank Alfalah.

Procedure For Telegraphic Transfer IssuanceProcedure For Telegraphic Transfer Issuance

Application form is given to the customer to fill. Two signatures are taken

on the form one for request and other for receiving the instrument. All the

particulars of application form are checked and bank commission charges

and with holding tax are written on the top of the applicant form. If the

customer is maintaining his account with the branch he can give cheque for

total amount of instrument plus bank charges.


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Cheque and application form is then given to the officer cash department

for the payment of the cheque. After proper scrutiny, officer cash

department posts whom cheque and signs the application form to assure

that payment is received. If the customer wants to pay cash, the customer

on cash counter deposits it. Cash receiving officer receives cash on the

application form along with the bank charges and withholding tax;

application form is then given to the remittances in charge for issuance of

the instrument.

He enters all the particulars of the application form in the system (BPG) and

computer gives an Auto Control Number to the T.T message of receiving

branch. This message is then sent through telex to the receiving branch

followed by a T.T. advice. The customer is confirmed that T.T. has been

sent.

Procedure for T.T. PayableProcedure for T.T. Payable

When TT message is received, tested number on the TT is checked and

verified. Tested number is then written in the register and signed by the

holder of test keys for office record. All the particulars of the TT payable are

entered in the system. Payment instructions on the TT message are followed

it if is pay and advice it will be paid through TTR on the cash counter or

through clearing and if it is credit and advice, it will be transferred in the

account mentioned in the TT message. Printouts of vouchers (TT payable

are taken. If TTR is presented for payment, signature of the authorized

officers are verified on TTR is presented for payment, signature of the

authorized officers are verified on TTR and after proper scrutiny, it is

posted in the BPG and canceled by the remittances in charge.


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Procedure For Foreign Demand Draft IssuanceProcedure For Foreign Demand Draft Issuance

Application form is given to the customer to fill the same. Two signatures

are taken on the form, one for request and other for receiving the

instrument. All the particulars of application form are checked and bank

commission is charged, which is US$ 5/- for each amount of FDD. Cheque is

received from the customer for total amount of FDD plus bank commission.


for the payment cheque.

After proper scrutiny, officer cash department posts the cheque and signs

the application form, to assure that payment is received. Then cheque and

application form is given to the incharge. Remittances, who will enter all

the particulars of the application in the FDD issuance register. If the

customer wants to pay cash, the customer on cash counter deposits it. Cash

receiving officer receives cash on the application form along with the bank

charges.

Application form is then given to the remittances in charge for the issuance

of the instrument. A control number is allotted to the instrument form FD

registers. Instrument is complete by putting all the particulars in it and

signed by two attorney holders. Instruments are then handed over to the

customers. FDD advice is sent to the responding foreign bank / paying bank

where they are maintaining dollar account through registered mail.

Exchange transaction credit advice (ETCA) is sent to eh Head office fore the

reimbursement. Copies of the FDD and ETCA are kept in the record of the

bank.

Procedure For Foreign Telegraphic Transfer IssuanceProcedure For Foreign Telegraphic Transfer Issuance


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Application form is given to the customer to fill the same. Two signatures

are taken on the form one for request and other for signatures are taken on

the form one for request and other for receiving the instrument. All the

particulars of application form are checked and bank commission is

charged, which is US$ 15/- that rate for each amount of each FTT. If the

cheque is received from the customer, it is taken for total amount of FTP

plus bank commission.


for the payment of cheque. After proper scrutiny, officer cash department

posts the cheque and signs the application form to assure that payment is

received. If the customer wants to pay cash, the customer on cash counter

deposits it; cash receiving officer receives cash on the application form

along with the bank charges. Application form is then given to the

remittances in charge for the issuance of instrument. He enters all the

particulars of the application form in the FTT register and a control number

is allotted to the FTP.

TT message is written in the telex containing name of transferring branch,

name of receiving branch, date amount, currency, payee’s name and

account number or identification if any, payer name and payment

instructions. A test number is given to the FTT message for receiving

branch. This message is then sent through telex to the receiving branch.

Customer is confirmed that FTT has been made. Exchange transaction

credit advice (ETCA) is sent to the Head Office for the reimbursement.

Copies of advice (ETCA) and FT are kept in the record for the bank.


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CollectionCollection

All the cheques under collection are called cheques under collection in Bank

Alfalah Limited. There are two types of bills for collection:

Outward Bills for Collection

Inward Bills for Collection

Outwards Bills For Collection Outwards Bills For Collection

All the cheques are received on one counter along with paying slips duly

filled in properly containing particulars of cheques and account holder.

Counter folio of paying slip is handed over to ht customer by putting stamp

for “cheque received for collection for Bank Alfalah” on it duly signed by

officer. These cheques are scrutinized and cheques for local clearing are

separated from OBCs. Cheques for local clearing are entered in clearing

register, whereas cheques for collection are entered in OBC register and

handed over to the bills department for collection.

OBC number is allotted to the cheque from OBC register. Special crossing

and bank endorsement stamps are affixed on the cheque. OBC schedule is

attached with the cheque and dispatched to the main branch of that city for

collection. If they do not have any branch in that city, then cheque will be

sent to the collecting agent of Bank Alfalah for then cheque can be sent

directly to the drawing branch, instructions are given on the OBC schedule

for the payment of that cheque.


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Inward Bills For Collection Inward Bills For Collection

If any other bank sends a cheque of bank Alfalah limited, it is inward bill

for recollection. Bank Alfalah remits money after checking the balance of

the customer account.

The process collection starts when the cheques of bank Alfalah ltd are

received from other banks. Then these cheques are sent to the head office

Karachi, which sends the cheques to SBP for clearing and get the

confirmation of cheque and credit advice.

Pay OrderPay Order

Written order which is issued and received to the save book or drawn or

payable on same branch. Application form is given to the customer to fill.

Two signatures are taken on the form one for request and other for

receiving the instrument. All the particulars of application form are checked

and bank commission charges and with holding tax are written on the top of

the applicant form. If the customer is maintaining his account with the

branch he can give cheque for total amount of instrument plus bank

charges.


for the payment post the cheque and signs the application form in token of

payment received. If the customer wants to pay cash, cash is deposited by

the customer on cash counter cash receiving officer receives, cash on the

application form along with the bank charges and withholding tax.

Application form is given to the remittances in charge for issuance of

instrument. He enters all the particulars of the application form in the


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system (BPG) and computer gives an auto control number to the instrument.

Print out a take on the block payment order.

Two authorized officers of the branch then sign it. Instrument is the protect

graphed and given to the customers. When the instrument is presented for

payment, it is posted in the BPG and canceled by the remittances in charge

after proper scrutiny.

Call Deposit Call Deposit

When the party wants to give payment from itself to another party then it

makes call deposit. The bank keeps it with itself unless it does not receive

instructions from other bank. Normally it is made on cash and goes in party

account.

Pay Slip Pay Slip

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

stationary.

Money Gram Money Gram


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Bank Alfalah Limited, in collaboration with money gram offer remittance

services to Pakistan. “It’s basically a person to person money transfer

service that allows consumer to receive money in just a few minutes.”

ProcedureProcedure

Person must have reference no.

Person must tell reference no. And compute the simple form.

Person has to show NIC and tell compute introduction after that he

can obtain money.

Vouchers are also posted in the system. When OBC is realized collection

bank pays the amount through IBCA if it is the same bank or through DD if

it is another bank. If DD is received against OBC, it is presented in the

clearing for collection. If IBCA is received the branch for the payment of

OBC, certain vouchers are posted in the system.


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Foreign Exchange DepartmentForeign Exchange Department

“The transfer of credits to a foreign country to settle debts or accounts

between resident of home country and those of the foreign country” or “the

foreign bills currencies etc used to settle such accounts”.

Foreign exchanged department deals within exports and imports. Mr.

Yaseen at BAF supervises it. The bank acts as exporter as well as importer

bank for different parties who are in the business of export and import.

ImportImport

All goods and services brought into a country that were purchased from

organization located in other countries.

ExportExport

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

Document Required For Exporter Document Required For Exporter

1) National tax number


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2) Registration with EPB

3) Sales tax registration

Documents to Be Attached For ExportersDocuments to Be Attached For Exporters

Invoice

Bill of lading

Packing list

Total quantity

Net weight / carton

Gross weight / carton

Total net weight / carton

Total gross weight

Bill of exchange (original or draft)

E-form: Initial document on which total export proceeding is based. In

this form, all the conditions are given, which are necessary for

exports.

Letter of credit: It is written agreement between importer and

exporter.

Beneficiary certificate.

DHL certificate (TCS certificate)

Form ‘M’

Certificate of Origin (Form – A)

FORM-EFORM-E

Government has provided facility to exporter in taking E-Form from any

bank and he can present it to any bank for negotiation. Export precede

realization certificate.


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SBP gives rebate to exporter against export after realization. It is paid

according to commodity wise and bill wise. Claim period: 1 year.

Transport Document (Bill Of Lading, Airway Bill)Transport Document (Bill Of Lading, Airway Bill)

When insurance is done by importer, C&F (cost and freight) usually

used.

FOB cost (free on board)

CIF (cost insurance and freight) when insurance is done by exporter,

CIF is used.

Tenor (At sight) immediate payment by importer after receiving

product.

Partial shipment: Product is sent partially.

Transshipment: Product is sent via any country.

E-FORM CertificationE-FORM Certification

When export is done on C&F basis, so bank issues E-form certification to

exporter and he submits it to the custom officer along with e-form

certification to certify e-form.

Form Of Authorized Dealer’s CertificateForm Of Authorized Dealer’s Certificate

State bank permits exporter to issue bill of lading in the favor of e-form

bank. But if requirement of L/C is to issue bill of lading in favor of company

then shipping company issues bill of lading in favor of Exporter Company.

Authorized dealer certificate is filled for this purpose.


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Certificate Of Origin Certificate Of Origin

This certificate shows that goods are from Pakistan.

Covering ScheduleCovering Schedule

If in covering schedule, it is given that “please remit proceed to our Karachi

office a/c no. 5740734881 with ABN (Amro Bank New York), USA for

onward credit to BAF Multan.

Beneficiary Certificate Beneficiary Certificate

If L/C requires some information as proof of anything from exporter then

exporter has to present beneficiary certificate for that proof.

E-FORME-FORM

E-form has four copies:

1. One for custom officer

2. One for exporter

3. Triplicate copy for SBP

4. Duplicate copy for bank

Bank reporting or duplicate and triplicate is done by bank. Custom officer

(date is given on the foot form) should clear product.


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Payment From Importer BankPayment From Importer Bank

It is the choice of importer to open L/C from any bank and the bank from

which L/C is opened can also refer to some other bank for payment. So bill

of exchange is sent to refer bank and other documents are sent to L/C

opening bank.

SWIFT (Standard World Wide Inter Bank Financial Transaction)SWIFT (Standard World Wide Inter Bank Financial Transaction)

It is network among all banks. No other institute can get involved in it.

Bill Of LadingBill Of Lading

Certificate from shipping company for loading commodities. If requirement

of L/C is to issue bill of lading in favor of L/C opening bank, then authorized

dealer certificate will be provided by bank in favor of L/C opening bank.

Bank Keep In RecordBank Keep In Record

Covering schedule

Invoice

Packing list

AWB

Certificate of origin

E-form

Normally bank keeps photocopy of all documents in record. Negotiable

documents (original documents).


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Documentary CreditDocumentary Credit

DC DepartmentDC Department

Alfalah Bank has his full-fledged documentary credit department. As a

credit instrument and as a means of making as a payment the documentary

credit is an essential instrument for conducting word trade today.

A documentary credit represents a commitment bank to pay the

seller of goods or services a certain amount provided present

stipulated documents evidencing the shipment of the goods with

prescribed period of time.

For the cases of imports or exports first the parties have to do upon a sale

contract regarding the term and condition of sale. One mode of payment is

by L/C, which is secured, and now days mostly use the business.

Letter of credit is under taking by opening bank (Importers bank the

Exporters bank (Negotiating bank) that it will make payment if

documents are as per terms of LC.

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

1. Applicant Importer

2. Beneficiary Exporter

3. Issuing Bank Bank Of Importer

4. Advising Bank Bank Of Importer


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According to import policy, no import is valid with out import license, which

is issued by the chief controller of import, and export or we can say export

promotion bureau (EPB). If a person desires to take up import trade must

get his name, his firm or his limited company, registered with the EPB. On

being granted registration certificate, he will be eligible to import goods

according to import policy. There is no special condition of eligibility for

registration. The only requirement is that he should be a Pakistani and must

be registered with income tax department.

L/C Opening Procedure L/C Opening Procedure

When the importer obtained import license, then the bank will open letter of

credit. “A letter of credit is undertaking by LC opening bank to put an

agreed sum of money to sellers bank on behalf of the buyer of the goods

under clearly defined terms and conditions”. Pakistani banks open only

irrevocable LC.

An essential feature of the irrevocable LC is that it cannot be modified,

altered, amended, or canceled without the prior consent of all the parties.

Party comes to the bank and fills the form, which is provided on the

payment of Rs. 100.

This form is filled by the party and is return to the bank, it includes details

like.


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Name of company

Address

Country of origin

Branch name

Quantity

Insurance company

Shipment from

Shipment to

One thing should also be submitted which is INDENT. If the foreign party

has any agent they will issue the indent with following details.

a) To Messer

b) Importers, etc

Document Required for “LC” OpeningDocument Required for “LC” Opening

When the bank opens LC, it requires following documents.

1. Valid import license

2. Performa invoice

3. Importer should be Pakistani

4. Letter of under taking form importer

5. Insurance cover.

An important point, which the bank will consider before opening of LC, is

that sufficient funds be available in the LC openers accounts. At the time of

establishing the LC the opening bank generally retains a maximum margin

to safe guard its own commitment. The margin may vary from nil to 100%

according to the nature of commodities and it also depends upon the party.


2

At the item of establishing the LC opening bank charges bank commission,

postage and other charges from the LC opener account.

Another main important point is that value of LC should not increase the

value of import license. After all the documents are being checked and

signed or verified by the bank. A sanction slip is attached with each form so

that the approval can be gained from the manager of the bank. After the

approval is made four copies are prepared and the entries are made on the

computer and the printout is taken the margin amount is checked from the

importer account and if the amount is not found then LC is not opened and

the party is informed about the situation. On the deposit of the margin then

LC is opened LC limit if set by the bank is also checked.

After the LC is opened following entries are made.

LC opening register

Margin / Liability Account Register.

Payment To SellerPayment To Seller

The negotiating bank upon receiving the documents from the seller checks

the documents according to terms and conditions of credit upon satisfying it

self of this the negotiating bank makes payment to the seller if sight credit.

It then forwards the documents to the opening bank and reimburses it self

through the opening banks account with itself.


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Documents Received By The Opening BankDocuments Received By The Opening Bank

Importers bank or opening bank receives the following documents form the

exporters bank or negotiating bank.

1. Bill of exchange

2. Invoices

3. Bill of lading

4. Packing list

5. Certificate of origin

6. Insurance


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Credit DepartmentCredit Department

IntroductionIntroduction

The credit policy of any banking institution is a combination of certain

globally and locally accepted, time tested standards, and other dynamic

factors dictated by the realities in the ever-changing marketplace and

industry. The globally and locally accepted standards relate to safety,

liquidity and profitability of the advance whereas dynamic factors relate to

aspects such as nature and extent of risk, profit margins, spreads and credit

granting.

The key to safe, healthy and profitable credit portfolio lies in the quality of

judgment used by the officers making lending decisions. They should have

thorough knowledge about the borrowers and market conditions and should

be well conversant with applicable credit policies and procedures. They

should also stay updated with the SBP Prudential Regulations, circulars,

directives and market trends in order to provide the Head Office, with

accurate information regarding the credit proposals along with their

recommendations so that the right decisions can be made on the right time.

Deviations from basic policies could be permitted only with prior written

approval of the Head Office. As credit policies must remain flexible and

responsive to changing economic conditions and regulations prevalent in

the Country, the Head Office, from time to time, shall issue circulars for

amendments / changes which shall form an integral part of this manual.


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The philosophy that “The extension of a credit facility should add

value to the bank’s assets”, has to be borne in mind by all concerned.

Type of BorrowersType of Borrowers

This section classifies and describes various types of borrowers in the

market along with specific lending guidelines. The policy should be read

and understood carefully as the Bank may enter into a business relationship

with them at any point in time. Following are the three broad categories of

borrowers.

IndividualsIndividuals

a) Existing Account Holders

b) Staff Members

c) Close relatives of staff members

d) Businesses sponsored by staff members

e) Employees of other banks

f) Joint Accounts

Business EntitiesBusiness Entities

a) Sole Proprietorship

b) Partnership

c) Limited Liability Company

d) Joint Venture

e) Group Accounts

OthersOthers

a) Clubs and Associations


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b) Federal, Provincial and Local Government bodies

c) Traders

d) Contractors / Construction Companies

e) Transport, Storage and Warehousing

f) Property Dealers

g) Manufacturers

Target CustomersTarget Customers

Identification of a particular target market carries great importance for

banks. An accurate target market will result in a healthy and profitable

credit portfolio for the bank. This section deals with different types of target

customers with whom the bank will be keen to develop mutually beneficial


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business relationship along with the types of customer that are to be

avoided.

Types Of Target CustomersTypes Of Target Customers

1) The Bank shall primarily focus on extending credit facilities for Trade

finance and construction / contractor financing for short to medium

term, and on self liquidating basis, supported by cash flows and

acceptable collaterals.

2) The Bank shall also consider providing finance for working capital in

the fields of manufacturing, assembling and processing of goods and

commodities for domestic and / or export markets, provided it is

adequately secured.

3) Well-established traders dealing in particular products range with

establish markets presence, experience and track record.

4) Highly valued MNCs and local corporate group with undoubted

integrity and steady cash flows so that the failure of one segment of

the business will not impair the overall strength of the group.

5) Joint ventures of established local groups and reputed foreign

companies.

6) The Bank shall concentrate on lending to customers based in

Pakistan. However, participation in selective cross-border syndicated

lending may also be considered on a case-to-case basis and subject to

the Board's prior approval. For syndicated loans the Bank shall secure

acceptable return on equity (ROE) based on mark-up and commission.


2

Exposures to various segments of the Economy / Industry shall be

reviewed from time to time in order to avoid concentration in any

single segment. The Board of Directors in accordance with any

guidelines laid down by the SBP shall guide target customers and

areas of business thrust.

Credit Department Functions And FacilitiesCredit Department Functions And Facilities

Credit means belief or trust. “The quality of being credible or trustworthy”.

Another words we can define credit as “trust in one’s integrity in money

matters and ones ability to meet payment when due”. At bank Alfalah Ltd

(BAL) Mr.Asif Ali is manager corporate banking of the credit department.

The earnings of BAL are chiefly derived from interest charge and discounts.

This department is the revenue-generating department.

Credit department basically has three segments.

1) Credit marketing department

2) Credit administration department

3) Trade finance services department

Credit and advance department deals with extending loans (credit facility)

to customers. State Bank of Pakistan (SBP) has prescribed regulations,

which are called “PRUDENTIAL REGULATIONS”. Every bank has to follow

these regulations. If any bank violates the regulations it should be liable for

penalties under the core spirit of SBP PAK (RS).

The Bank Alfalah limited credit is extended on the basis of these rules and

regulations. These regulations tells the term and conditions under which

you can extend loans to the borrower and to what extent.


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Commercial CreditCommercial Credit

A commercial Credit facility is the core business area of the Bank. The types

of facilities being offered to customers can be broadly presented as follows:

a) Facilities where the bank actually advances money against future

repayment - ('Funded Credits'), and

b) Facilities where the bank substitutes 'its' own credit for that of its

customer e.g. opening import Letters of Credit, issuance of bank

guarantees - ('Non-Funded Credits')

Credit lines must be defined as to currency, total amount and time, purpose

and the general or specific conditions upon which they are made available

to a customer. The mark-up and/or commission rates and method of

computing should be specified.

The agreement should also provide for default rate for delayed payments,

unless default rate is waived with the approval of the sanctioning authority.

Following Are The Different Types Of Facilities Offered By The BankFollowing Are The Different Types Of Facilities Offered By The Bank

Funded Credits NON-Funded Credits

a

)

Current Finance a

)

Letters of Credit

b

)

Term Finance b

)

Guarantees


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c) Syndication / Consortium

Financing

Shipping Guarantees

d

)

Negotiations of Export bills under

L/C

Bid Bonds

e

)

Preshipment Finance (Packing

Credit)

Advance Payment

Guarantees

f) Import Financing Performance Bonds

i) Finance Against Trust Receipt

(FTR)

Others

ii) Finance Against Imported

Merchandise (FIM)

g

)

Contract Financing

Current Finance (CF)

A facility under which the bank makes available funds upto a specific

amount at any time over a specified period of time (i.e. one year) is termed

as current finance. It allows a borrower to borrow from time to time, upto

the validity period, according to his needs. The funds may be borrowed

partially, be repaid and borrowed again upto the amount established and

within the time period allowed under the agreement.


2

This facility is a revolving advance and mark-up is charged only on the

utilized part of the facility. CF facilities are allowed primarily for working

capital requirement and repayable on demand. In order to strengthen the

control environment all CF accounts should be scrutinized by the

Brand/Credit Managers and/or their designates, at least once every month

to.

Term Finance (TF)

Term Finance is usually granted for specific purposes and is fixed as to

amount and period. Such a loan can be liquidated either by a single

repayment of principal and mark-up, in which case the mark-up is fixed for

the period or by means of a repayment schedule in the case of medium or

long term loans.

TF should be granted at a fixed rate for the tenor of the facility.

Syndication / Consortium Financing

The preceding paragraph of this section assumes that there is only one bank

involved in the extension of credit facilities. However, especially when large

amounts are involved, it is common for a number of banks to take up portions

in financing of a project. This becomes necessary, when the amount of credit

exceeds the lending limit of the principal bank as per SBP Prudential

Regulations. Bank may also participate in such activity when it is prudent to

spread the risk amongst a number of banks.


2

Arrangements in which a principal lending bank pulls its fund along with one

or more other banks, which are not a party to the original agreement, are

called Consortium Agreement. When the borrower deals with more than one

bank all of which are party to the credit agreement, it is called syndication.

In all syndications/ consortiums the bank should not take a subordinate

position to other members of the syndicate/participants and the securities

should be shared on a pari passu basis without preference or priority of one

or more banks.

Negotiation Of Export Bills Under L/CNegotiation Of Export Bills Under L/C

Bills under L/Cs will be negotiated only if:Bills under L/Cs will be negotiated only if:

A bank that is a correspondent has established the L/C so that signature/ test

can be verified or issued by a bank whose signature/test can be verified with

an intermediary bank (if presented through another bank) and where

previous experience in bills negotiation with that bank has been satisfactory.

The L/C has been established in favour of the beneficiary who is of good

repute and a known credit worthy customer of the branch approval from the

Head Office for inter-bank exposure in respect of the transaction is on

record.

Finance Against Packing And Credit “FAPC”Finance Against Packing And Credit “FAPC”

Packing Credit is extended against future exports. The usual reason for

advances against exports is to enable the merchant to buy and

pack/manufacture merchandise pending shipment of the goods and

negotiation of the relative bills, hence the expression "Packing Credit".


2

While extending packing credit, the following aspects should be kept in view:

a) Advances should not be granted to enable a merchant to speculate. To

prevent this, the merchant should exhibit and lodge with the bank a

Letter of Credit or other evidence of a definite order for the goods (e.g.

Purchase order/ firm contract etc.).

b) A Letter of Credit in itself is not "security" and it need not even

constitute evidence of a firm order. However, with reliable customers a

Letter of Credit assists in deciding whether or not a Packing Credit

advance should be given. Care should be exercised to ensure that the

money is used for proper purposes.

c) Regular scrutiny of the borrower's current account is essential and is

usually very useful. Frequent inspections should be carried out where

the merchandise (raw materials/finished goods) is stored and brief

details recorded in a register.

d) The inspection should be used to ensure that the borrower is capable of

executing the order within the given time frame. If not, request for

extension in the validity of export order/export L/C must be submitted

well in advance.

e) It may be desirable for forward exchange to be booked when the

advance is granted. The packing credit advance should be adjusted

from the proceeds of the export bills.

Finance Against Imported Merchandise FIMFinance Against Imported Merchandise FIM

This facility is allowed against the commodities imported from other

countries usually through letter of credit. Some time importer does not have


2

enough amounts for paying the imported merchandise therefore. He

request to the bank to pay all dues to the exporter against the security of

imported merchandise. Bank pays the amount and releases the goods, when

the importer pays off its liability partially / fully.

Finance Against Trust Receipt FATRFinance Against Trust Receipt FATR

Finance Against Trust Receipts (FTRs) - are related to import transactions

and should be granted only as a sub-limit of an import L/C line. The bank

may also allow to specific customers FTR facility against collection

documents as per the terms set out by the Head Office from time to time,

which are discussed as follows:

FTRs in respect of L/C documents – under this facility, the Bank is

required to deliver documents of title to goods imported under L/C, to the

customer to enable the latter to obtain goods prior to payment and the

customer undertakes to hold the documents. The goods represented thereby

and the sale proceeds thereof in trust for the bank.

There are very obvious risks in permitting a customer to deal with goods in

this way. A customer having in his custody, goods released to him against a

trust receipt can fraudulently sell them or pledge them to a third party,

leaving the holder of the trust receipt only the right to sue for breach of

trust. FTR facilities should therefore be granted to undoubted importers

against established credit lines.

It is important to note that the goods released under a trust receipt must be

fully insured by the customer and the Bank reserves the right to inspect,

repossess and if necessary, dispose of the goods at anytime.


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FTRs in respect of collection documents-FTRs are granted only in

respect of collection documents routed through the Bank's branches. This

facility is restricted to selected customers with satisfactory account

relationship and is governed by the following safeguards:

Facility to be allowed with prior clearance of the Head Office only to prime

customers with Grade 1A to 1E and 2A and 2B rating. Branches should be

satisfied that the collection bills have genuine underlying trade transactions

and that by denying this facility, the customer would divert business to

other banks. Branches are also required to ensure that the facility is used

for the customer's regular line of business.

The facility should be given as a separate FTR line under the import line

(i.e. FTR for collection documents) as distinct from FTR sub-limit under

import (L/C) line.

Finance Against Imported Merchandise (FIM)Finance Against Imported Merchandise (FIM)

Branches may grant Finance against Imported Merchandise by way of a

sub-limit under a customer's import credit line. This facility is usually

allowed against imported goods but occasionally such financing may be

allowed against locally manufactured goods covered under L/Cs or received

for collection.

Contract FinanceContract Finance

When financing contracts, the main concerns by the banks on the

contractors net worth are as follows:

1. The standing of the employer who has to pay the contractor.


2

2. The terms of the contract.

3. The contractor's ability to execute the work properly and within

stipulated time frame.

4. Viability of the quoted price and adequacy of the financing amount

being sought.

5. The contract is framed to be irrevocable without the banks consent

and is acknowledged by the employer.

6. Overall profitability and viability of the contract.

For contracts in excess of RS. 50.00 Million a control account should be

kept for each contract starting with the contract price and showing

variations added and payments authorized, so that at any time the branch

can produce a statement of:

Contract price (as amended by variations)

Work completed and paid for

Work measured and to be paid for

Work in progress (not measured)

Retentions by employer

Balance of contract price


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Non Funded Facilities Non Funded Facilities

The facilities where there is no direct involvement of banks fund. Following

are the non-funded facilities.

1) Letter of credit L/C

2) Letter of Guarantee L/G

Letter Of Credit Letter Of Credit

A Letters of Credit (L/C) is a written undertaking by a bank (issuing bank)

given at the request and accordance in a instruction of a buyer (the

applicant) to the seller (the beneficiary) to effect payment up to a stated

sum with in prescribed time limit, against stipulated documents and

provider that the terms and conditions are complied with.

The Bank groups L/Cs into two categories.


2

1. Sight L/C

2. Usance L/C

Sight L/CSight L/C

Requires the importer / importing bank to pay as soon as it receives the

clean documents from exporter. Sight L/Cs are letters of credit where the

Bank engages to honour the beneficiary's sight draft upon presentation,

provided that the documents are in accordance with the conditions of the

L/C. Drafts drawn at sight simply serves as receipts for payments and are

without value for any other purpose.

In establishing sight L/Cs branches should ensure that goods are duly

insured and that the Bank retains control over the goods at all times.

Documents of title to the goods should be released only against payment,

either by cash or to the debit of the customer's current account / FTR

account / FIM account. L/C will not be opened for a period in excess of 180

days unless Head Office approval for a longer period has been obtained for

specific customers.

Usance L/C Usance L/C

ULC are similar to sight L/Cs but call for a time or usance draft payable

after a specified period of time. The normal usance period allowed for this

facility should be 90 days. But depending on the circumstances a maximum


2

of 180 days may be allowed. Exceptionally for undoubted customers, usance

period exceeding 180 days may be allowed with specific Head Office

approval. For risk purposes, branches should consider the risk under a

Usance L/C as similar to a funded advance (FTR).

Letter of GuaranteesLetter of Guarantees

These facilities cover a number of specific types of guarantees that the Bank

may issue for its customers but in all cases the common factors are:

The Bank substitutes its own credit standing for that of its customer,

No actual movement of funds takes place at the time of issuing the

guarantee

although there is a clear commitment by the Bank to effect payment

when called upon to do so under the terms of the particular

guarantee. Thus it is necessary to record these commitments as

contingent liabilities.

The Bank charges a commission for this service usually quoted on a

quarterly basis. Guarantees fall into many different categories, each of

which has its own characteristics and related risks; some of the important

characteristics and the appropriate cautionary measures are enumerated in

the relevant sections below:

Shipping GuaranteesShipping Guarantees

Guarantees of this nature are required to enable customers to release goods

before the arrival of the documents of title; they therefore render the Bank


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liable to the shipping company to whom the guarantee has been issued. The

shipping company is, in turn liable to the true owners of the goods in the

event the goods are released wrongfully. It follows therefore that such

guarantees should only be issued to importers with a credit line. Full cash

margin must be taken, for shipping guarantees issued against SLC unless

waived by appropriate Credit Authority.

Bid Bonds (BB)Bid Bonds (BB)

The purpose of a bid bond is to substantiate the ability of a person

submitting the tender to perform the contract when awarded. Such a bond

is issued in connection with a tender and its normal characteristic is an

undertaking by the Bank on behalf of the applicant to pay the beneficiary a

fixed amount within a stipulated period on his simple written demand if the

applicant withdraws his obligation after the acceptance of his tender.

A bid bond must not contain any conditions linking it with performance of a

contract if awarded and must contain a definite expiry date. If branches are

asked to give such undertakings the guarantees must be treated as

Performance Bonds. If there is any ambiguity in the terms of a bid bond

which a branch is asked to sign it should study the basic "conditions of

tender" to ascertain its precise liability. Branches must insist on the return

of the original bid bond after its expiry.

Advance Payment Guarantees (APG)Advance Payment Guarantees (APG)

Civil engineering contracts, particularly those awarded by local

governments, sometimes provide for an advance payment to be made to the

contractor for purposes such as mobilizing site, plant and equipment. In

order to obtain this payment the contractor is required to produce an

Advance Payment Guarantee.


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Financial GuaranteesFinancial Guarantees

Financial Guarantee is a general description of various guarantees whose

main characteristic is an undertaking to meet any claim from the

beneficiary up to a fixed sum on simple demand. Claims under such

guarantees must not be made contingent on the non-fulfillment of the terms

of contracts, which are unknown to the issuer. Unless the creditworthiness

of the concerned customer is undoubted, such guarantees should be issued

against full cash margin.

Maximum MaturitiesMaximum Maturities

Unless stated otherwise and agreed between the Bank and the borrower, all

credits are repayable upon demand. The maximum maturity/tenor for

facilities are as follows. Any deviation from maximum maturity/tenor will

require approval from Head Office:

S.

No

FACILITIES TENOR

1 Term Finance Maximum one year.

2 Current Finance Maximum one year.

3 Validity of L/Cs Maximum 1 year inclusive of usuance

period.

4 L/C / Usance Maximum 6 months (Except for supplier


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Period credit)

5 DA Bills under

L/C

Maximum 180 days (Subject to approval

of SBP if tenor exceeds 120 days)

6 Preshipment/

Postshipment

finance

Maximum 150 days (Presently)

7 Other Loans Tenor as specifically approved by Head

Office.

Loans are subject to minimum

repayment

installments which are as follows:

a) Maximum Grace period 6 months

(no grace period for mark-up

payment).

b) Amortization is at least quarterly

after the grace period.

8 Bank Guarantees Maximum period 3 years or as approved

by the Head Office

Note:

Changes in tenors / maturities are subject to regulatory

requirements advised by State Bank of Pakistan from time to

time and approval by Head Office.


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Documentation For Considering Credit FacilitiesDocumentation For Considering Credit Facilities

While considering credit facilities, following documents should be given

special attention as they serve to bring to light the vary factors that play an

important part in facilitating "Credit Granting and Credit Enhancement"

decisions.

Visit ReportVisit Report

a) Prior to a review, the branch manager or his designated lending

officer should visit the customer and discuss relevant details of the

account and the business including clarifications on their financial

statements, as required. The calling officer should make use of the

visit to gather up-to-date information and strengthen the Bank's

relationship with the customer. Details of the visit should be recorded

in the customer file.

b) Business visits are an important tool for assessing the business

situation of a customer and it is therefore desirable that credit officers

visit the customers regularly. The branch manager should conduct

visits connected with the review of large and/or important facilities at

the branch.

Status ReportsStatus Reports

Status reports primarily include reports from the CIB and other banks. Such

reports from the customer's other bankers must be obtained at least once a

year, prior to the review or at more frequent intervals if there is


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deterioration in the customer's account operations and/or financial

statements or in the event of adverse market rumor.

Furthermore, CIB Reports (issued by the State Bank of Pakistan) should

also be obtained on a quarterly basis to facilitate further scrutiny of the

customers account. State Bank of Pakistan maintains a record of

individuals/businesses in the country having outstanding liabilities of

RS.500, 000 and above, with all financial institutions. A through study of the

CIB Report should be undertaken before taking up reviews.

Situations like significant increase in the exposure vis-à-vis the previous

reports, loss of business to other banks or similar critical issues should be

commented upon in 'comments and recommendations' section under 'CIBR'.

If the CIB reports over dues or defaults then as per SBP Prudential

Regulations branches cannot extend any credit facility even if covered fully

against most liquid security.

Credit Line Proposal (CLP)Credit Line Proposal (CLP)

The branch at which facilities are to be extended must prepare Credit Line

Proposal. Where CLPs are sent to HO for approval, copies of all enclosures

must accompany, and a photocopy should be retained with the forwarding

branch. CLPs should portray a factual picture of the borrower discussing in

detail the constitution of the firm, line of business, business commitment,

financial health, etc.

In order to bring a degree of uniformity into the CLPs, the branches are

required to provide information, and comments on the under noted aspects.

There should be no repetition but this section should provide comments

portraying a factual status of the account:


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i) Proposition

To state clearly and concisely the limits that are being requested,

highlighting changes if any.

ii) Purpose

Specific reasons for granting facilities (particularly for new facilities/

increase in existing facilities) should be brought out here. Some

examples are 'to secure the customer's business from other banks',

'increased facilities required to finance a supply contract 'etc.

iii) Background

Full information on the customer's constitution and business when

applying for establishment of facilities. For renewals, changes since

last review should be covered. The write-up should comment on the

length of relationship and time in business including general reputation

of the customer.

iv) Management

Names of Directors/Partners/Owners/Key persons and an assessment

of their capacity to manage the business highlighting any changes

since last review. The write-up should also comment on standing of the

proprietor/ partners/ shareholders (details of net worth should be

provided).


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v) Financial Statements

Brief comments on the important aspects as highlighted by the

customer's financial statements with steps being taken to eliminate the

shortcomings, if any. A detailed spread sheet should be attached along

with the CLP to assess the financial health of the borrower.

vi) Market/Competitors

An idea of the market the business is functioning in, major competitors

and the state of the business. The write up should comment on product

range/export/ import goods handled, agencies held etc. In case of

manufacturing companies, special emphasis should be placed on the

product line and viability of the venture to be established.

vii) Conduct of Account

While quantitative aspect of account operation is available elsewhere in

the Facility Application, the qualitative aspect should be covered here.

Does the borrower meet his commitment on time? Is there an adequate

spread on drawers of bills? Does the overdraft swing into credit? etc.

Adverse features like cheque returns, frequent excesses in facility

lines, hard-core and over dues should be highlighted along with steps

being taken to overcome the shortcomings. In this section, the facilities

sought should also be justified vis-a-vis turnover, future projections etc.

viii) Profitability to Bank:

While the numbers are available in 'Customer Profitability Analysis',

branches should comment on pricing aspects vis-a-vis risk grade. The

considerations which justify lower pricing (when recommended on a


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proposal) should be clearly brought out here. If significant increase in

facilities is being sought or downward revision in rates, this should be

backed by projected profitability analysis. In essence, an attempt

should be made here to gauge the true value of the account to the

bank.

ix) CIBR

All critical issues arising from these statements such as utilization of

our Banks facilities in comparison to other Banks should be elaborated

here.

x) Security

Appropriateness of mode of valuation, agency undertaking the

valuation, margin of safety available etc. If significant change in

security position is taking place, this should be elaborated here.

xi) Recommendation

A summary highlighting strengths and weaknesses of the account and

an unequivocal recommendation.

Analysis Of Customers' Financial StatementsAnalysis Of Customers' Financial Statements

Before granting or renewing facilities to a company or partnership, the

manager should insist upon latest audited / certified accounts. For

comparison purposes, it is desirable to have such accounts for the previous

two years. Even though such accounts may not reflect the true position of a


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company or firm, much useful information can be gained from studying

them. The inability to produce upto date accounts usually indicates that

something is wrong; the company or firm may be inefficiently conducted or

has something to hide.

Where the customer cannot produce Audited accounts, it should be ensured

that the unaudited accounts submitted by them are detailed and contain all

relevant information and later complemented by certified accounts which

should be compared for misreporting etc. However, no exceptions are to be

made for large (corporate) customers, and branches must insist on regular

audited financial statements prior to processing of the requested facilities.

The manager should therefore look beyond the balance sheet and profit and

loss accounts and inquire more deeply into borrowings, losses or any

extraordinary items.

A copy of the customer's latest available accounts together with the

auditor's certificate and notes, (if applicable) with Spread Sheets should

accompany the CLP, which should draw attention to, and comment upon

exceptional features in the accounts.

Stock Inspection ReportsStock Inspection Reports

The concerned credit officer along with the officer assigned the task of

stock inspection should inspect the stocks pledged / hypothecated to the

bank. A note of the inspection should be signed by both the visiting officers

and placed in the credit file. If any objectionable or adverse situation

relating to the stock is noted during the inspection the same should be

advised in writing to the customer seeking immediate rectification. The


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credit/branch managers should sign this letter. It should be ensured that a

valid insurance policy is held at all times for the pledged stocks.

Credit FilesCredit Files

A ‘Credit’ file must be maintained for every borrowing account as it

provides all the relevant information when considering credit facilities. The

file should contain:

a) Review Diary:

i. Credit Line proposal, expiry dates / renewals / rescheduling.

ii. Sanction advice HO stipulations and their deadlines.

iii. Temporary excess over approved limit by BCC/EC

b) Internal Memos:

i. All correspondence with HO and their responses.

ii. Check of markup rates on a quarterly basis to approved

financials etc.

c) Correspondence

i. Correspondence with the customer regarding renewal,

adjustment and enhancement of facilities.

ii. Facility request letter from the customer.

iii. Correspondence regarding overdue facilities and markup etc.

iv. Other miscellaneous correspondence.

d) Insurance Policy & Stock Reports :


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i. Insurance policy (along with premium paid receipts) Stock

Reports

ii. Inspection reports of both pledged and hypothecated stocks

with the bank.

e) Opinions / Copies of Charge Documents:

i. Pre-disbursement Audit Certificate.

ii. Copies of Finance / Securities Documentation Checklist.

iii. Copies of charge Forms and property documents.

iv. Legal opinion on documents.

v. Copies of auditor’s pre disbursement certificate and offer letter duly

signed in acceptance by the customer.

vi. Confidential opinion from other banks and institutions

vii. Copy of Memorandum & Articles of Association or Partnership Deed.

viii. Copy of Certificates of Incorporation and Commencement of Business.

ix. Correspondence regarding any change in company’s name,

management etc.

f) Financial Reports / Valuation/ CIB /Credit Reports:

i. Copies of last three years approved Financial Statements

together with financial analysis.

ii. Valuation Certificates by bank’s approved surveyors

iii. Updated CIB Reports from SBP.

iv. Credit Reports from other banks and financial institutions

previously/ partly handling borrower’s business.

v. Company’s Reports evidencing ranking of charge.

vi. Visit Report.


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Approval Of FacilitiesApproval Of Facilities

Branch Managers should approve facilities within their delegated limits.

Any amount exceeding the managers’ limit should be referred to the Branch

Credit Committees for approval. The Branch Credit Committees should

recommend and seek approval from the Executive Committee for facilities

exceeding their delegated powers.

In case of new or increase in existing facilities approval will be sought from

the BCC only in respect of those facilities which in total do not exceed the

committee's limit. If on a group basis, the facility proposed on a group

account exceeds the BCC's lending limit, the proposal should be submitted

to the Head Office for a decision by the appropriate authority. The CLP

must be recommended and co-signed by the Credit / Branch Managers and

all other members of the BCC prior to submission to the Head Office and a

copy retained in customer's file.

Renewal of FacilitiesRenewal of Facilities

The BCC may renew Credit lines which were initially approved by them

under their lending authority provided that:

There is no downward revision in the terms on which the facility was

originally granted i.e. change in mark-up and commission rates.

No significant adverse change in the customer's finances or account

conduct which should require downgrading of the account

All terms of the prudential regulations have been complied with.


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Sanction AdviceSanction Advice

When a regular facility is granted for whatever period, the Credit Division

will prepare the sanction advice, original sent to the concerned branch,

which upon receipt should file the original advice in the respective

customer file and a photocopy filed in the Master File of BCC.

Offer / Facility LetterOffer / Facility Letter

Having received the "Sanction Advice" the concerned Credit Officer will

prepare the Offer Letter in accordance with the terms and conditions of the

"Sanction". The Offer Letter will be signed by the Branch / Credit Manager

on behalf of the Bank and dispatched to the customer for his acceptance.

This acceptance must manifest itself in the form of signatures by the

authorized signatories of the customer.

Transfer Of AccountTransfer Of Account

When the facility offer letter is prepared then the transfer of limit will done

by this the transfer of account will done which mean the specific amount of

loan is furnished and complete check over the operations of account done

periodically.


2

FINANCIAL ANALYSISFINANCIAL ANALYSIS

Background Background

BAL was incorporated in 1992 as Habib Credit and Exchange Bank Limited

to take over three Pakistan branches and assets of BCCI. The bank

remained a wholly owned subsidiary of Habib Bank Limited (HBL) till its

privatization in the second half of 1997. An Abu Dhabi based consortium of

investors acquired 70% stake in the bank in 1997 while the balance (30%)

held by HBL till the consortium also acquired 2002.

The chairman of the board, H.E. Sheikh Hamdan Bin Mabarak Al Nahayan,

is also member of the Executive Council of the Emirates of Abu Dhabi and of

Higher Consultative Committee for Development of Abu Dhabi Emirates. He

is also the chairman Gulf Air, Department of Civil Aviation, Abu Dhabi and

Abu Dhabi Aviation. The present chief executive of the bank is a career

banker with over 40 years experience both within Pakistan and abroad and


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has been with the bank since its incorporation. BAL is providing a full range

of banking facilities.

The future strategy of the management envisages continuation of high

growth, expansion of branch network and introduction of new products.

Credit Rating Assessments Credit Rating Assessments Update this….Update this….

Ratings (June 2004) Bank Alfalah Limited

Entity* New PreviousLong Term AA- AA-Short Term A1+ A1+TFC Unsecured, A+ A+Subordinated (PKR 650mln)* Applicable to senior unsecured Creditors (depositors).

Financial DataFinancial Data

PKR (mln) 31/12/03 31/12/02Total Assets 65,229.9 40,109.3Equity 1,678.6 1,372.5Net Income 497.4 321.8ROA % 0.94 0.93ROE % 32.60 28.31Equity/ Total Assets % 2.57 3.42SBP CAR 8.70 9.56


2

BAL’s ratings reflect steady growth with sustained performance and

maintained risk profile of assets. The ratings also reflect a somewhat

constrained equity base of the bank vis-à-vis aggressive growth targets,

while taking into account strong sponsor support.

During 2002, the banking sector, by and large, experienced a robust deposit

led growth, but the Lackluster credit demand compelled banks to invest a

larger proportion of these funds in government securities, resulting in

decline of credit to deposit and borrowings ratio. While the proportion of

pure equity depicted a declining trend owing to overall growth in assets, its

impact was generally neutralized by the surplus on revaluation of

investments, mainly government securities. However, the CAR benefited

from the change in risk profile of assets and was largely maintained.

Interest based revenues are increasingly under pressure across the sector

due to intense competition and declining yields on the government

securities.

Going forward, identification of untapped credit avenues, improvement in

operational efficiency and Enlargement of non-fund based revenues are

critical for the banking sector to sustain its performance. BAL is better

positioned than peers due to its proactive management in tapping

unexplored business areas. This stands demonstrated by the success of the

bank in emerging as the leading institution in car financing in a short period


2

of time. In expanding its consumer-financing niche, BAL is expected to

benefit from its increased outreach through its branch expansion.

BAL, despite reduction in spreads, maintained its profitability, due to

substantial volume growth and increasing trend in non-fund based income,

though it was slightly lower compared to growth in net interest revenue.

Though BAL’s operating cost increased in line with network expansion, the

cost-to-total net revenue improved due to higher growth in revenues. Like

other banks, BAL has been flush with liquidity due to significant growth in

deposits. However, BAL deployed its assets efficiently by increasing its

advances portfolio through identification of new business avenues. The bank

has also increased its funds deployment in the money market, but still

remains heavily invested in government securities, which also strengthened

its liquidity.

During 2003, BAL, in addition to maintained focus on trade finance, plans to

further expand its consumer-financing base by starting housing finance and

also intends to venture into financing of agro-based industry to enhance its

market share and diversify its credit portfolio. Advances portfolio,

constituting 43% of total assets, has moderate concentration in the textile

sector and a review of the overall security structure reveals an adequate

collateralization pattern. BAL has continued its trend in the 2003 of

increasing customer deposits, advances and investments, which is in line

with the projected figures of the bank for the year 2003.Non-fund based

income is increasingly under pressure due to stiff competition in the sector;

the impact is expected to be managed, largely by increase in volumes. BAL

is also planning to expand its branch network by 10 more branches during

2003.


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During the year, while BAL continued to strengthen its risk management

function as a result net addition in the classified portfolio was only PKR

76.4mln, which is less than 1% of advances portfolio. However, impaired

lending to gross advances ratio has improved due to increase in advances

portfolio and certain recoveries of non-performing loans.

The provision coverage remains close to 68% and the management is

confident of recoveries from some of the chronic NPLs, which are not fully

provided for as the bank holds collaterals against these NPLs. However, the

bank’s profitability remains under pressure in case the outcome of recovery

efforts is not according to the management’s expectations. BAL’s equity-to-

total assets ratio, which was the lowest in the peer group declined further

with consequential impact on CAR, even after taking into account the tier II

capital represented by the TFC. However, the substantial surplus on

revaluation of investments – not recognized for purposes of CAR – provides

considerable comfort.

BAL issued an unsecured subordinate TFC during December 2002 for a

tenor of 6 years at a floating rate of latest cut-off yield on 5 year PIB plus

1.35% with a floor of 10.00% and a cap of 15.00%. Principal redemption will

be in two equal semi-annual installments commencing from the 66thmonth

of the issue. While the senior unsecured creditors (depositors) derive

additional comfort from the structure of the TFC, the TFC holders are

exposed to relatively higher risk, as the obligations towards the TFC holders

are subordinate to those of the senior unsecured creditors (depositors) of

the bank. Consequently PACRA assigns an A+ (A plus) rating to the TFC,

that is, one notch below BAL’s entity rating.

Ref: The Pakistan Credit Rating Agency (Pvt.) Limited.


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RATIO ANALYSIS RATIO ANALYSIS Update This….Update This….

Earning Assets to Total Assets: Earning Assets / Total AssetsEarning Assets to Total Assets: Earning Assets / Total Assets

2003 85,557,449 / 98,952,499 = 86.46%

2002 57,424,113 / 65,167,031 = 88.12%

Earning assets to total ratio tells us about the bank management efficiency

to utilize the earning assets to get return. Earning assets include loans,

investment securities and money market assets. The BAL earning assets to

total assets is slightly decline as compare to previous year. But after

comparison with last year we can easily find out that total assets and

earning assets are increasing because BAL is going to expand its network.

Return on Earning Asset: Net income / Earning AssetsReturn on Earning Asset: Net income / Earning Assets

2003 2,123,234 / 85,557,449 = 2.48%

2002 445,679 / 57,424,113 = 0.78%

Return on earning assets can help us about the measurement of

profitability. Better ratio means good utilization of earning assets by bank

management to earn profit. If we compare this years ratio that is 2.48% as

compare to previous year that is 0.78%. The difference shows incredible

change in positive direction. With the help of better utilization of assets and

expansion of its network BAL increase its ratio.

Interest margin on Average Earning AssetsInterest margin on Average Earning Assets

2003 2,004,803 / 85,557,449 = 2.34%


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2002 1,439,016 / 57,424,113 = 2.50%

This is a key determinant of bank profitability, for it provides an indication

of management’s ability to control the spread between interest income and

interest expense. The ratio of 2003 is 2.34% as compare to 2002 value that

is 2.50%. The ratio is decline, may be the reason behind is that continues

decline in rate of interest by SBP. Government gives more relaxation for

investors to increase their investment in different areas like SME sector etc.

Equity Capital to Total Assets: Average Equity / Average Total AssetsEquity Capital to Total Assets: Average Equity / Average Total Assets

2003 3,253,416 / 98,952,499 = 3.29%

2002 1,615,777 / 65,167,031 = 2.48%

The ratio another name is funds to total assets. This ownership provides the

cushion against the risk of using debt and leverages. The higher the ratio

then more cushions is there and lower cushion with lower ratio. BAL ratio in

2003 is 3.29% as compare to 2.48% in 2002, which show the improvement

and recently more shares are floating in the market that will make this ratio

even better than 2003 value.

Deposits times Capital: Average Deposits / Average SHEDeposits times Capital: Average Deposits / Average SHE

2003 76,698,322 / 3,253,416 = 23.54t

2002 51,684,984 / 1,615,777 = 31.98t


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The ratio of deposits time’s capital concerns both depositors and

stockholders. To some extent, it is a type of debt/equity ratio, indicating a

bank’s debt position. As I define above, more capital implies a greater

margin of safety, while a larger deposit base gives a prospect of higher

return to stockholders, since more money is available for investment

purpose. The overall this ratio is very good in last two years. But this ratio is

decrease in 2003 than 2002 from 23.54t to 31.98t respectively. Deposits are

increased by 48% so more deposits are available for investments are there

and equity is double approximately.

Loans to Deposits: Average Total Loans / Average DepositsLoans to Deposits: Average Total Loans / Average Deposits

2003 49,216,120 / 76,698,322 = 64.17%

2002 28,319,401 / 51,684,984 = 54.79%

Average total loans to average deposits are a type of asset to liability ratio.

As we know, loans make up a large portion of the bank’s assets, and its

principal obligations are the deposits that can be withdraw on request. This

ratio is increased from 54.79%in 2002 to 64.17% in 2003, but it’s not a good

sign from debt point of view because it’s indicating the increase in risk.

ROA: Net Income / Total Assets ROA: Net Income / Total Assets

2003 2,123,234 / 98,952,499 = 2.14%

2002 445,679 / 65,167,031 = 0.68%


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Through that ratio we measure the ability of bank to utilize its assets to

create profits by comparing profits with its assets that generating profits.

The BAL ratio is incredibly improved 3 times as compare to 2002 ratio. In

2003 this ratios is 2.14% as compare to 2002 ratio of only 0.68%. The

reason is behind is that BAL income is exceedingly increased in 2003 as

compare to preceding year.

ROE: Net Income / Total EquityROE: Net Income / Total Equity

2003 2,123,234 / 3,253,416 = 65.26%

2002 445,679 / 1,615,777 = 27.58%

Return on Equity is informs us about the return for shareholders. That also

shows incredible increase approx. three times. Increase in shareholders

couldn’t any effect on this ratio because the reason is that income is

unexceptionally increased. The 2003 ratio is 65.26% as compare to 2002

value of 27.58%.

Profit Before Tax Ratio: PBT / Gross Markup IncomeProfit Before Tax Ratio: PBT / Gross Markup Income

2003 3,505,680 / 4,033,380 = 86.92%

2002 894,653 / 4,551,329 = 19.65%


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For banking sector, profit before tax ratio is very much important because

large amount is deducted in shape of taxes. Banks profit before tax ratio is

incredibly increases in 2003 that is 86.92% as compare to 2002 value

19.65%.

Basic Earning Per Share: Net Income / # of outstanding sharesBasic Earning Per Share: Net Income / # of outstanding shares

2003 2,123,234 / 200,000 = 10.62 Rs.

2002 445,679 / 200,000 = 2.23 Rs.

This ratio is the most interesting area for stockholders and management

too. This ratio tells that how much rupees you can earn against each

outstanding share. Alls ratio shows astonishing increased because of growth

in future perspective and unbelievable change in income compare to

preceding year in 2003. 10.62 Rs. is five times greater than last year 2002

EPS that was Rs. 2.23 only.

Book Value Per Share: SHE / # of outstanding sharesBook Value Per Share: SHE / # of outstanding shares

2003 3,253,416 / 200,000 = 16.27

2002 1,615,777 / 200,000 = 8.08

Book value per share ratio tells us about the original value of shares in

books of account. BAL book value per share ratio increased two times as


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compare to preceding year. 16.27 in 2003 shows incredible increase as

compare to 2002 value that is 8.08.

Balance Sheet, Income Statement & Cash Flow Statement

You Should Update …………..


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SWOT ANALYSISSWOT ANALYSIS

Strengths Strengths

By the grace of the Almighty, Alfalah have moved rapidly in expanding

branches network and deposit base, along with making profitable

advances and increasing the range of products and services.

Alfalah have made a break-through in providing premier services at

an affordable cost to our customers.

As BALs pursuing the path of

excellence, customer satisfaction remains its priority. It is only when

we know our customers better, can we


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deliver a higher quality of services, thereby adding synergy to our

existing management expertise, financial strength and profitability.

Bank Chairman Message ”our core philosophy of honesty,

transparency in customer dealings, product innovation, excellence in

customer service and our commitment to being a responsible

corporate citizen”

As a premier organization operating locally & internationally that

provides the complete range of financial services to all segment under

one roof.

Bank Alfalah developing & delivering the most innovative products,

manage customer experience, deliver quality service that contribute

to brand strength, establishes a competitive advantage and enhances

profitability, thus providing value to the stakeholders of the bank.

Most of the customers are satisfied with the bank services and

friendly environment of the bank.

In comparison to other banks Alfalah providing high excellence

services like home, car, agri-financing, which facilitate bank to get

market excellence and move towards prosperity and development.

Customer’s behavior shows that they feel proud to being as an

account holder in Bank Alfalah and also refer people to enjoy different

schemes and open their accounts.

Customer gives suggestion for the improvement of bank and these

suggestions are listened carefully and communicated to the higher

management so that action taken on relative deficiencies immediately.

Bank having good friendly environment, security system

concentration like cameras installed and security guards available all

the time.

Modernized banking system with highly integrated informative

system, record kept properly, online banking, and integrated circuits

between branches and personal computer provided at every desk.


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Higher management committed to the development, quality, and

continious improvement.

Salaries are very reasonable, so the employees are not financially

disturbed and they devote their selves fully to their work.

They have wide area network in all over the Pakistan, so that they

cover a lot of portion of cash transactions and make customer

satisfied.

Entertainment facilities are available in the Bank when customer goes

to the Bank for a longer time they will enjoy newspaper, magazines,

television and serve with tea, soft drink, sweets and snakes etc.

WeaknessesWeaknesses

The majority of people are not well aware about the products of Bank

Alfalah. Therefore it should advertise extensively especially home,

agri & car loans, RTC and Credit Cards.

Mismanagement of time is another big mistake in Bank Alfalah

branches, the bank official time of closing is 6:00pm but due

Mismanagement of time employees leave their desk at 8.00pm which

is so hectic and cause employee frustration.

A behavior has been noted that bank tries to feel at ease with good

looking rich and educated people and the un-educated and old

customers feel some bit strange in the environment of the bank.

Proper guideline should be given to the customer about bank

products. They facilitate with current information. Many of the

customer’s complaint that there should be two or more person who


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will guide people at entrance where they have to move, concerned

person and department, teach how to fill forms, slips and cheaqes.

The number of cash counter must be increased because the customer

has to wait at peak hours on the counter for deposit, withdrawals and

online.

Opportunities Opportunities

The policies of the new government to uplift the economy and pursue

financial sector reforms are expected to yield positive results in the

banking industry of the country. The Bank Alfalah is very well praised

to avail promising opportunities.

As a result of the different steps taken by the Government regarding

the betterment of the economy, small borrowers are attracted to get

the financing and start small businesses. So, the Bank Alfalah has an

opportunity to attract the customers by giving them attractive

schemes.

The need of privatization has made people to switch to banks to

satisfy their needs of lending and borrowing. This not only increases

the deposits but also the credit business.

Bank Alfalah is surrounded by many competitors it has an opportunity

to aggressive marketing to increase its business.

Government is taking very bold steps to promote IT in Pakistan

BankAlfalah has an opportunity to improve in IT stock exchange is


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very volatile and takes immediate effect so in times of crises

conservative investors turns to saving deposits.

Threats Threats

Bank Alfalah has many competitors who are continuously increasing

their products and marketing aggressively it may cause its customer

to shift to its competitors. The Competition has become severe by the

entrants of so many banks, So to exist one will have to prove himself

in its services through excellent management and will have to satisfy

its shareholders. Otherwise he will be out the market.

The decrease purchasing power of consumer in the current economic

situation of the country affecting the business activity speed too much

and the result is the low investment from the investors in new projects

can create problem for the bank because it is working a lot in trade.

The privatization of other banks is also a threat for the Bank. Due to

the privatization of the different bank e.g. MCB; the competition has

increased a lot. Furthermore many private banks have come in the

sector due to which it is becoming more difficult day by day to attract

the customers.

The biggest threat in the banking sector is the continuous downfall of

the country economy since the last few years. If this downfall remains

for more few years then it may be the great hindrance in achieving

the Bank’s objectives.


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RECOMMENDATIONSRECOMMENDATIONS

Finally, we are giving some suggestions for Bank Alfalah Limited. These

suggestions are based on our experience with bank.

1. Human Resources Department should be there in order to motivate

and trained the employees. I have noted some dissatisfaction among

the employees, due to in efficient promoting system. So the bank

should provide clean and on the merit basis promotion system.

2. The bank is now over staff. The building under operation is in

adequate for such a large staff because new branches opening in

small cities like Bahawalpur, Sadiq Abad, Bore wala etc staff member

of these branches getting training in Multan branch, so the building

should be extended.

3. This is a routine practice that in order to give personalized services to

the customer, bank staff tries to fill all the columns of AOE with their

own handwriting, which is wrong. The customers must fill in AOE.

Bankers should avoid filling in the AOE because it can create problem

if the address, title of account or any other information provided by

the customer has not been written properly. Customer may be

affected or he may claim that he did not provide this information, but


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if the customer fills AOE then banker cannot be held responsible for

any incorrect information provided by the customer.

4. Under no circumstances cheque book should be given to the customer

if the account formalities are incomplete.

5. There are two officers involved in cash deposit process, which is time

consuming. Cashier should be given certain powers to receive cash of

US$ & DM to provide prompt services.

6. Similarly, there are two officers involved in cheque payment process,

which is time consuming. Cashier should be given certain powers to

pay cheques up to Rs. 25000/- to provide prompt services.

7. Cheques, which are drawn on Bank Alfalah Branch and returned

unpaid in clearing, are not reflected in the statement of account of the

customers. This cheque must be reflected in the accounts so that

credibility of the customers may be assessed.

8. Audit should be held internally, rather there should be an audit

department in the branch to make audit on daily basis. This can

become so, helpful as a different banks are having this department of

their own.

9. When giving the loan, the Bank must carefully analyze the past six

months transaction history of the borrower. This will help in judging

the dealing behavior and financial status of the client. In most cases,

this thing is not properly done and it is the major reason of default of

many clients.


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10. The Bank should try to give more loans to the small borrowers

as the past history shows that most of the loans given to the corporate

borrowers have converted into bad debts.

OBSERVATION & CONCLUSIONOBSERVATION & CONCLUSION


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I observed the bank Alfalah a financially sound bank. Its profits are

increasingly year-by-year. Its staff is very good and sincere with the bank.

Bank Alfalah under the leadership of Sheik Nahayan Mabarak Al-Nahayan

has made significant progress in building and strengthening both the

corporate and retail banking sectors in Pakistan. The bank attained number

2 positions in terms of its balance sheet size amongst the private banks in

Pakistan in 2000.

Bank Alfalah views specialization and service excellence as the cornerstone

of its strategy. The people at bank realize that innovation; creativity,

reliability, customized, services and their execution are they key ingredients

for their future growth.

Revenues from these activities have started yielding dividends and they

expect significant growth. They are aware that they have stepped into the

21st century and they must meet its challenges by acquiring the highest

level of the technology. They will thus be accelerating their technological

advance to enable them to distribute their products and services through

most efficient and high tech means. They say that they will continue to

invest in the modern tools and substantial allocation to resources will be

made to achieve this objective during the current year. Online banking has

been started and the introduction of ATM at strategic locations has been

firmed up and it will be fully operations during the June 2001.


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