Final Report of Abl

8/3/2019 Final Report of Abl

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Department of Management Sciences (IUB) 1


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Executive Summary:

The economic growth and success behind every developed all

developing country revolve around an efficient banking system. No one

would argue the fact that banking sector plays the vital role in maintaining

sustained growth and development.

Allied bank is the first Muslim bank established on the territory that

became Pakistan, Established on December 3, 1942 as the Australasia Bank

at Lahore under the chairmanship of Khawaja Bashir Bux,Allied Bank of Pakistan offered services, Deposit of Money, Acquiring

Loans, Transfer of Money, foreign currency account, ATMs and Master

cards and lockers services. Cash, Accounts, Advances and Remittance etc.

are departments of the ABL. In Account or Deposit department open the

different type of accounts like, Current and PLS saving account of their

customers. ABL lunched the different Products for their customers, like this

Master card, Debit and ATMs cards.

Now with its network of 735 branches located in the urban and

rural areas throughout Pakistan, Allied Bank is positioned to provide

personalized banking services to its customers at locations convenient

to the customers. ABL has invested extensively in banking

automation. 680 branches out of a total of 735 branches are fully

equipped with On-Line Banking facility.



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MISSION STATEMENT

To provide quality financial services with

an edge of technology to businesses

particularly small and medium sized enterprises

through a motivated human resource

endeavoring to achieve customer satisfaction.

Objectives of the ABL.

Following are the objectives of Allied Bank of Pakistan.

Our customers come first they will be served at all times by friendly,

caring and responsibility.

Our services must be characterized by fairness and respect

Professionalism, integrity and ethical conduct.

To explore the opportunities of joint ventures in central Asian

countries, which have won their independence and to agency

arrangement with exchange companies and other financial situation of

Middle Eastern countries, be pursued to boost the mush need homeremittance business.

To develop and introduces new products for moving up small saving at

the grass root level.



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To achieve the ultimate object of customer orientation, we have

already lunched an ambitions plan of automation of our operation,

which will to a long in providing prompt and efficient serves to our

customers.

Upgrade technology particularity computerization and automation of

the banks operation.

Enhance research on the banks operation and product development.

Business diversification-involving merchant banking and credit market

operation. Increase training of staff.

Develop an institutional capacity effectively serve small business.

Organization restructuring to minimize the time of transactions.

Accelerate recoveries, Expansion of network at selective strategic

location.



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Presidents Message:

I joined Allied Bank in October 2000 to lead the Bank towards

completion of its privatization. At the very outset, I found that certain

operational and functional areas of the bank required urgent restructuring and

strengthening for effective management.

To Address these areas, restructuring process at field arid Central

Office was initiated with a view to ensure more effective control, improve

customer responsive and cut costs. There were gaps in the management levels

and to fill them, some lateral entries have been made and a few are in the

pipeline. Another round of restructuring will be implemented shortly to bring

in the required focus for different market segments and to further improve

our credit and audit processes after review pf actions to date.

The Bank faced possibly the most difficult situation in history during 2000.

Due to low interest margin, providing previous years adjustment and meeting

the provision needs, there was a very substantial pre-tax loss in addition to an

operational loss. However, in the year 2001, cost of funds has been

nationalized resulting in improvement in interest margin. Similarly

intermediation cost has also been cut-down. Revenues from investments have

substantially improved, Consequently operational profitability has been

restored and pre-tax loss almost eliminated.



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I am happy that in all my endeavors I had the desired support of the

staff of the Bank and with renewed zeal and spirit, we shall surmount all our

difficulties and be able to regain our position as one of the leading

Commercial banks of the country. In this journey, we should be keen

to adopt market-based policies for the long-term financial health of the Bank.



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EVOLUTION OF BANKING

BANKING:

The economic growth and success behind every developed all

developing country revolve around an efficient banking system. No one

would argue the fact that banking sector plays the vital role in maintaining

sustained growth and development.

EVLUTION OF BANKING:

It has not so far been decided as to how the word Bank originated.

Some authors opine that this word is derived from the words Banque which

mean a bench. The explanation of this origin is attributed to the fact that the

Jews in Lombardy transacted the business of money exchange on benches in

the market place, and when the business failed, the people destroyed the

Banco. Incidentally the word Bankrupt is said to have been evolved from

this practice.

Others authorities hold the opinion that the word Bank is derived

from the German word Back which mean joint stock fund. Later on,

when the Germans occupied major part of Italy, the word back was

Italianized in to Back.



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EARLY GROWTH:

Banking in fact is as primitive as human society, for ever since man

came to realize the importance of money as a medium of exchange, the

necessity of, a controlling or regulating agency or institution was naturally

felt perhaps it were the Babylonians who developed banking system as it

early as 2000 Bait is evident that the temples of Babylon were used as banks

because of the prevalent respect and confidence in the clergy.

King Hammurabi (1728 1686 B.C.), the founder of the Babylonian

empire, drew up a code wherein he laid down standard rules of procedure for

banking operations by temples and great landowners. He got his, code

inscribed on a block of diorite about 8 feet tall, containing about 150

paragraphs which deal with nearly all aspects of loans, interest, pledges,

guarantees, natural accidents, loss, theft etc. Later on, the Sumerians

Babylonians, Hittites and Assyrians standardized the values of the goods in

silver, copper, bronze or electrum.

In 1401 a German Public Bank was formed comprising the operations

of discounting, deposit and transferring of money. By the 16th century, some

more public banks were formed in Venice, Milan, Amsterdam, Hamburg, and

Nuremberg.

In the old times Gold Smith in England started banking system. People use to

deposit their valuables and commodity money with Gold Smiths. So Gold

Smiths can be said the people who firstly started formal banking people use



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to deposits their valuables with the Gold smiths for the purpose of

safekeeping. Then when after some time these valuables were drawn from

Gold smiths, Gold Smith used to charge some service charges. So in this

system the deposits were backed up with hundred present reserves with Gold

Smith.

If we make a balance sheet of a Gold Smith today, it looks like this,

ASSETS LIABILITIES

Reserves =Rs. 1000 Deposits = Rs. 1000

---------------- ----------------

Total = Rs. 1000 Total = Rs. 1000

------------------ ---------------

by and by Gold Smith started thinking that al the deposits are not with drawn

at the same day. In a particular day some people withdraw their deposits and

some also comes to make new deposits. So over all effect is offset. So Gold

Smith realized that a handsome amount always remained with them. Then

they decided to keep fractional reserves for daily transactions.

This was of course a revolutionary idea realized by Gold smith that

gave birth to modern banking system by keeping fractional reserves with

them Gold Smith started lending money to the needy people and thus

increasing their profits. From these profits, Gold Smith started giving other

services to the common public. So a balance sheet under fractional reserve

system would look like as,

ASSETS LIABILITIES

Reserves = Rs. 100 Deposits = Rs. 1000

Loan extended

To public = Rs. 900



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------------- --------------

Total =Rs. 1000 Total =Rs. 1000

-------------- ---------------

In 1672, however, English banking faced great crises when Charles-11

borrowed huge sums of money from the Gold Smiths and later refused to pay

them back. Therefore, a number of Gold Smith bankers formed themselves

into a corporation in 1695, known as the Bank of England. This bank lent

pound sterling 12,00,000 at 8 % interest to William-111, who in return,

allowed a number of privileges to the bank, specially the right to issue Notes

payable to bearer on demand upto the amount of this loan. This was known

as fiduciary issue, not covered by the gold. This new bank becomes very

serious competitor to the comparatively smaller private banks run by the

London Gold Smiths.

BANKING IN PAKISTANAt the time of independence the areas which now constitute Pakistan

were producing food grains and agriculture raw material for sub-continent so

there were no industrial zones in these areas however, there were 487 offices

of banks in these areas which were providing banking facilities.

When Pakistan came into existence its was decided that reserve bank

of India will continue solving problems of time and demand liabilities,

coinage, currencies, exchange etc.

There were only two Pakistani institutions Habib bank and Australasia

bank in Pakistani. In July 1st, 1948 Govt. of Pakistan decided to establish a

full-fledge central bank. Governor General of Pakistan Quaid-e-Azam



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Muhammad Ali Jinnah inaugurated state bank of Pakistan. The first

important task, which the state bank of Pakistan had to do, was the issue of

currency noted and withdrawal reserve bank of India notes with over

printing there of Govt. of Pakistan, which had been in circulation in Pakistan.

The central bank of Pakistan was assigned an urgent task creating a

National banking system. In order to attain this task it provided every help of

Habib bank to expand its network of branches and also recommended to

Govt. the establishment of a new bank, which could server as an agent of the

state bank. As a result, the National bank of Pakistan came into being in

1949.

The outbreak of Korean War in 1950 provided a great boom for

Pakistans export, and thus the demand for bank advances increased shapely.

However, when the Korean war ended in 1952, there was a shortfall in the

countrys export earnings with no appreciable change in imports earnings

with any appreciable change in inputs. This naturally caused a drain or the

foreign exchange reserves, and in turn, affected the balance of payments

position the government had, therefore, to reduce inputs and provide

adequate incentives to the business and industry in the form of protective

tariffs. This induced banks to provide working capital for industries. The

state bank of Pakistan sponsored the setting up of and industrial finance

corporation.

Agriculture development bank was setup to attend agriculture finance.

All these measures and the devaluation of Pakistani rupee on August 1st, 1955

had a very favorable effect on market and balance of payments position in

1955-56. Thus Pakistan now entered in to a phase of planned economic

development in 1956, and naturally further expansion in banking and credit



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facilities was mad. However, despite the intensive needs, private enterprise

was not coming in Pakistan consequently the state establish

a regional bank by the name of EASTERN MERCANTILE BANK in east

Pakistan. In 1960 RURAL CREDIT FUND was setup with one Crore to

provide medium and long-term credit in the rural areas.

Small business finance corporation etc. are contributing there due

share in the countrys economic life. The nationalized of banks in Pakistan

since January 01, 1974 has heralded a new area of development and progress.

It has taken a completely new turn with the phased introduction of interest

free banking system with effect from January 1981.

KINDS OF BANKING IN PAKISTAN

In Pakistan following types of banks are operating in the business

circle like economics.

Central banks:Each country in the world has its own central banks. This bank does

not deal with public directly. This means that it neither receive cash deposit

from the people.

State bank is the central bank of Pakistan. It was set up on July 1st, 1948.

Commercial banks:

The first commercial bank in the world is Bank of Venus. It was set up

in 1171 in Italy.

These banks are set up on commercial bases therefore; their primary

objective is to earn profit and maximize it is far as possible. For this they



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received cash deposits from the people in different accounts. They give loans

to different business enterprises and thereby create credit money.

The state bank of Pakistan is the central bank of Pakistan, commercial

banks, financial institutions and cooperative banks are the other components

of the banking system.

Agricultural banks:

The bank is responsible for development of agricultural sector in the

country. The public linked with agriculture and agro-based industries can get

financial help from agricultural bank.

These banks are providing long term and short term credit facilities to thefarmers for the purpose of seeds, fertilizers and agriculture tools, fencing and

tube wells.

The agriculture development of Pakistan is working as a agriculture

bank in Pakistan.

Industrial banks:

The banks meets financial needs of industrial sector loans are grantedto set up new companies to purchase of new machinery and construction of

buildings requires long term loans at responsible rate of interest. Industrial

development bank of Pakistan is working as industrial bank.

Mortgage banks:

The banks provide loans against land and building for short and long

term. The bank can lend money to buy or construction of new house.Moreover purchase and development of land require funds. In Pakistan there

is need of mortgage banks. At present House Building Finance Corporation is

doing work of Mortgage banks in housing sector.



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Exchange banks:

The exchange has their head offices in foreign countries. They deal in

foreign exchange due to foreign trade. The importer makes payments in

foreign currency. The exporter receives foreign currency. American express

bank limited bank of Tokyo limited Rupali bank limited, Bank of Oman and

Doha Bank Ltd. are some example of exchange bank in Pakistan.

Cooperative Banks:

These banks can provide banking facilities to member for meeting their

financial requirement. The members may be farmers or small producers. The

Punjab provincial cooperative is the example of cooperative bank.

Saving Banks:

The banks receive idle money from people having low income. The

people save money for future needs. The saving offers responsible rate of

profit on saving account. The student Govt. employees and house hold

women can open such account. Post offices and national saving centers are

example of such banks in Pakistan.



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INTRODUCTION OF AUSTRALASIA BANK

The Australasia bank was established in 1942 in a motor garage in

Lahore with a staff of three. Initially, it was little more than an agency for the

collection of rents from the family estate. Then, the tenants began to open

accounts and the bank to make advances against gold, insurance policies, and

merchandise Management of family properties led to the business of

managing other peoples estates and the new ban soon encountered

opposition from the established banks. Discrimination took the form of acollection charges applied to local cheque, n the grounds that the new bank,

was not located in the Bank Square, the Australasia bank was at that stage a

non-scheduled bank, it was claimed that at this time it was not accorded the

facilities available even to that class of bank.

The reserve bank of India was loath to grant facilities for the exchange

of notes or the grant of accommodation. After two years, the bank was

moved to a new building. It did the same business as before though on an

increased scale a number of branches were opened. In due course it applied

for inclusion in the schedule and was accorded the status of a scheduled bank

in the financial year 1946-47. After partition the bank was entrusted with the

collection of treasury revenues and payments on behalf of the government in

certain centers, subsequently it was granted a license to undertake foreign

exchange business, and further branches were opened. The bank is still small,

though included in the schedule, but its does a business comparable in quality

and scope with larger and longer established banks. If any proof wore needed

that the Muslim is capable of the initiative and



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Persistence to embark upon the complex business of banking, this case

study should provided useful evidence.

OVERVIEW:

Allied bank is the first Muslim bank established on the territory that

became Pakistan, Established on December 3, 1942 as the Australasia Bank

at Lahore with a paid up share capital of Rs. 0.12 million under the

chairmanship of Khawaja Bashir Bux, the bank had attracted deposits,

equivalent to Rs. 0.431 million in its first eighteen months of business. Total

assets then amounted to Rs. 0.572 million. Today, Allied Banks paid up

capital & reserves amount to Rs. 565.7 million., deposits come to Rs.

101.554 billion and total assets equal Rs. 121.164 billion.




to the customers. ABL has invested extensively in bankingautomation. 680 branches out of a total of 735 branches are fully


History:

The Allied Bank's story is one of dedication, commitment to

professionalism, adaptation to changing environmental challenges

resulting into an all round growth and stability, envied and aspired by

many.

The Pre-Independence Period (1942-1947)



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When Quaid-e-Azam Muhammad Ali Jinnah began the reorganization

of the Muslim league in 1934, he realized that as a mass party, the League

would have to provide not just political but also socio-economic guidance

for the uplift of the Muslim community. After the passage of the historic

Pakistan Resolution in March 1940, the Quaid became acutely conscious of

the need for producing a Muslim business and industrial leadership.

Being a dedicated person Khawaja Bashir Bux, the founder of the

Australasia Bank, was successful in obtaining the support of several

prominent Muslim Leaguers including Mian Mumtaz Daultana who was later

elected as Chairman of the Board of Directors in 1943. Mian Iftikhar Hussain

Nawab of Mamdot, Syed Amjad Alt and Nawab Muzzafar Ali khan Qizibash

also joined the Board. Another enthusiastic supporter (though not a Director)

was Maulana Zafar Ali Khan. Thus Australasia Bank had the unique

distinction of being closely identified with some of the countrys most

prominent leaders of the freedom movement. The subscribed share capital

was raised to Rs. 0.5 million at the end of the first full year of operations

during which the Bank earned a profit of Rs. 9840 and declared a dividend of

3 percent. The bank originally started its operations in the garage of Khawaja

Bashir Buxs bungalow near the Lahore Railway Station. But its success

encouraged its Director to open a branch at Anarkali on the15th march 1944.

Khawaja Bashir Bux was the Banks first Chief Executive. His contribution

to the success of the bank is acknowledged in several reports of the Board of

Directors. His selflessness and sincerity of purpose can be judged from the

fact that he would not draw more than a rupee as his emoluments per month.

The second branch of the Bank was opened in 1945 in Amritsar, and was also

established a full-fledged Head Office at shah Chiragh premises nest to the



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building of Reserve Bank of India in the heart of the business and banking

locality of Lahore. In June 1946 the bank earned the status of a scheduled

bank. During 1946-47 more branches were opened

at Mcleod Road Lahore, Jallandhar, Laudhiana, Agra and Delhi. During the

period between 1942-47 the Bank made considerable progress. On 30th June

1947 share capital increased to Rs. 0.673 million and deposits had risen to Rs

7.728 million. The bank continued to pursue a prudent and cautious policy

throughout the period and managed to maintain a highly liquid position. The

total income of the bank on 30-06-1947 was Rs. 0.265 million of which over

90 percent was obtained from interest bearing investment. At the time of

partition the total salaried staff of the bank was 55 and the total wages

expenditure amounted to Rs. 0.126 million. Mian Mumtaz Daultana remained

Chairman of the Board of Directors throughout this period.

At independence the industrial and commercial sector were under-

developed. Under the able stewardship of Quaid-e-Azam Muhammad Ali

Jinnah, the Govt. responded imaginatively to the challenge. A full-fledged

Central Bank, the State Bank of Pakistan

Became operational on 1st July 1948 and under its guidance the financial

sector also flourished.

Australia Bank in the Private Sector (1947-1974)

Australasia Bank was the only fully functional Muslim bank on the soil

of Pakistan on August the 14th, 1947. it had been severely hit by the riots in

East Punjab. The Bank was identified with the Pakistan movement.



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Several if its Directors were prominent Muslim League leader. Its

offices throughout. East Punjab was ransacked and rioters attacked Muslim

staffs at Laudhiana. The Jallandhar branch was burned immediately after

independence as the manger Mr. Abdul Karim had hoisted Pakistani flag and

the branch had become a symbol of Muslim national determination. At that

time all brandies in India, (Amritsar, Balata0 Jallandhar, Laudhiana, Delhi

and Agra) were closed down. All told the bank lost about Rs. 3 million in

deposits and 6 branches, the Govt. of India refused to provide any assistance

for transfer of records from the East Punjab branches despite the very

generous facilities made available to banks seeking to shift to India by the

Govt. of Pakistan. The true picture of the Banks liabilities and assets in India

thus could not be ascertained. This was a particularly important problem

since the Bank was fully committed to reimbursing the clients who had lost

their deposits in its branches in East Punjab, U.P. and Delhi. Up to 30th June

1948, the Bank had paid claims to the extent of Rs. 1.112 million. The bank

also absorbed its officials and staff members who migrate to Pakistan. New

branches were opened during 1948 at Karachi, Rawalpindi, Peshawar4,

Sialkot, Jhang, Gujranwala and Kasur. Later its branch network spread to

Multan and Quetta. Australasia Bank made a profit of Rs. 50,000 during

1947-48.

In August 1948, Australasia Bank became the first Pakistani bank to

successfully negotiate and open an L/C for a Sialkot based importer of books.

Correspondent relationships were also established with Midland (U.K),

Chase Manhattan (U.S.A), and Lloyds (India). A single distinction accorded

to Australasia Bank was that during the period September 1947 to March



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1948 it performed the treasury function of federal Government of Pakistan.

The Treasury functions were taken over by the National

Bank of Pakistan in 1949. During the financial year 1950-51 the

founder, first chairman and first Managing Director of the bank, Khawaja

Bashir Bux was replaced by his brother Khawaja Sharif Bux. By the

beginning of 1950-51. Paid up share capital amounted Rs. 1.1 million and

assets amounted to Rs. 26.7 million. The bank had 21 branches, 16 in Punjab,

2 in Sindh, 1 in Balochistan and 1 in NWFP.

The Banks profit had increase after 1951 due to the export boom at

about Rs. 20.1 million marks throughout this period. During 1955-56 Mr.

Naseer A. Shaikh became chairman of the Board and a close working

relationship was forged between the Banks new Chairman and Managing

director. This partnership proved instrumental in overhauling the bank,

modernizing its operations and consolidating its financial position.

By the end of 1963, the bank had 29 branches in various cities of

Pakistan. Deposits rose to Rs. 89 million and advances to talled Rs. 66

million. The bank was still mainly concerned with general banking and trade

financing (including foreign exchange transactions) but it was playing an

increasingly important role in the development of small and medium sized

business houses. Many, now familiar business names were helped to establish

themselves by Australasia Bank during the golden 1960s. These

Included, Nishat, Crescent, Pak Cement, Haroon Traders, Takht Bai Suger,

Insaf, Punjab Soap, Pak Fruit and Saboor Oil Mills etc.

Mushtaq Ahmed Yousufi, the well-known banker, writer and

administrator took over as General Manager from Mr. S.R. Jariwala in May

1965. Bank staff does not however, remember Mr. Yousufi as a humorist but



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as a professional banker interested in streamlining operational procedures and

enhancing efficiency. Mr. Yousufis period was marked by sustained and

orderly growth during 1965. 17 new branches were opened and over 83

percent of the gross profit for the year was earn marked for development

expenditure in connection with the opening of new branches. The bank

contributed Rs. 0.125 million to the National Defense Fund in the wake of

the September 1965 war. In 1966 the bank opened 26 new branches and

doubled its reserve funds. Its advances portfolio exceeded Rs. 160 million for

the first time in its history and deposits raised by almost 58 percent exceeding

Rs. 232 million marks. In 1966 the Central Office of the bank was

established at Karachi while the Head Office remained at Shah Chiragh

Building, Lahore. This problem of a dual control structure could not be

effectively tackled until the banks nationalization 1974.

16 new branches were opened in 1967 and 20 in 1968. In that year the

banks reserve fund equaled Rs. 2.5 million. By the close of the 1960s, the

total number of branches of Australasia Bank was 136, total deposits Rs. 300

million and the advances portfolio amounted to Rs. 231 million. 1971 was a

better year despite the troubled conditions in East Pakistan. 21 new branches

were opened (including two in east Pakistan). Deposits exceeded Rs. 400

million and the investment portfolio surpassed Rs. 283 million marks.

The Bank list 51 branches and a sizeable proportion of its assets by the

separation of East Pakistan. Problems were also encountered in connation

with advances for financing inters provincial trade. However flexible and

adroit financial management ensured that these losses were soon made good.

Profit during 1972 amounted to Rs. 2.9 million. 31 branches were opened



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during that year and advances rose by over 73 percent. Progress was

sustained during 1973 when the bank made a profit of Rs. 6.7 million.

On the eve of nationalization, the banks paid up capital amounted to

Rs. 5.83 million, reserves were Rs. 6.2 million, deposits amounted to Rs. 849

million and advances exceeded Rs. 628 million.

On 1st January 1974 all the scheduled banks, including Australasia

Bank, were nationalized. Three small provincial banks were merged into

Australasia bank and on 1st July 1974, the new entity was renamed as the

Allied Bank of Pakistan Limited. Allied Bank began its operation as a public

sector financial institution. During the 17 years (1974-1991) the value of total

net assets rose to Rs. 24.4 billion and deposits to over Rs. 21.3 billion with

747 branches network (figures are for 10-09-1991, this date the bank was

privatized).

Allied Bank: Public Sector Years (1974-1991)

Under the Bank Nationalization Act of 1974, 14 scheduled banks were

taken over by the Govt. Australasias Board of Directors was dissolved and

the bank was renamed as Allied Bank of Pakistan Limited. Sarhad Bank,

Lahore Commercial Bank and Pak bank limited were merged into Australasia

Bank. Australasia Bans outstanding performance is reflected by the fact that

the break-up value of its share as estimated in 1974 exceeded tree times its

nominal value. At the time of merger, it was the second highest among all

banks nationalized in 1974. Allied Banks success is also reflected in the fat

that Mr. Yousufi, its Managing Director since 1965, was soon to become the

chairman of the Pakistan banking council.

Allieds first executive board was constituted of Mr. Iqbal A. Rizvi as

President, Mr. Ajmal Khalil, Joint President. And Mr. Khadim H. Siddiqui as



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a Member during 1974. Mr. Rizvi was also appointed as Chief Executive of

the Bank. The first year was a highly successful one; gross profit exceeded

Rs. 10 million mark, deposit rose by over 50 percent and approached Rs.

1460 million. Investment rose by 72 percent and advances exceeded Rs. 1080

million for the first time in banks history. 116 new branches were opened

during 1974 and the bank stated and the bank started

anticipation in the commodity Operations programme of the Govt. Spot

financing remained an important activity of the bank during the 1973 76

period and trade financing in the area of wool, cotton and rice was also

expand. In the 1970s the bank an important part in procuring the services of

Govt. Tahsildars for the recovery of agricultural and other loans, the

approach was lauded by the Pakistan Banking Council and provided the basis

of a Recovery Model which was subsequently adopted by all other

commercial banks and DFIs.

In 1976 Mr. Ajmal Khalil replaced Mr. Rizvi as Chief Executive and

President. 1975 was an important year for the staff. The award of the Wage

Commission for Financial Institutions ensured that remuneration scales at

Allied become equivalent to that of all other NCBs and DFIs. Nationalized

also saw a rapid increase in dividend, these rose from 7 to 8 percent in the

early 1970s to 20 percent in 1974 and 1975.

The 1970s also saw a major shift in policy in which the bank expanded

promotional activities. During this period the bank played an important role

in expanding financial support to public corporations such as OGDC, the

capital Development Authority, Fauji Foundation etc. interaction with ADBF

also increased. The bank rapidly increased its commitment of financing

cotton and rice transactions. The commitment to the development of under



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developed areas is evident from the fact that during 1974-77, 361 new

branches was opened, of these as many as 233 were located in villages and

small towns. A very important development during this period was the

opening of Allieds first foreign branch at 14-Trinity Square, London near the

bank of England. The 1970s also saw a major expansion in the home

Remittances related business and this encouraged the Bank to increase its

branches in Britain to three. In 1980 the Bank of England granted the Allied

Ban recognition as a full-fledged bank under the relevant U. K. Banking Act.

Mr. Khadim H. Siddiqui succeeded Mr. Ajmal Khalil as President of

the Bank in 1981. In his first year of office there was a significant increase in

the capital base, which increased to Rs. 132.2 million by the issuance of

bonus and rights shares. Under Mr. Khadim Hussains leadership, the bank

launched an extensive meet the client programmed which led to the

addition of 122,000 new clients during 1981. It was estimated that he total

number of clients being serviced by the Bank as at end 1981 was 1.2 million.

In 1984 Mr. I.D.Junep as the Banks President replaced Mr. Khadim H.

Siddiqui. As important concern of the new President was the expansion of

international business. The U.K. operations were streamlined. The

international correspondents network was enhanced and measures were

taken to expand import and export business. In 1984 the Bank also initiated a

major computerization programme. A mainframe computer was installed at

Central Office in 1985 and an effective Management Information System was

developed.

The overall profitability of the Bank continued to improve during

1984-86, partly due to the institution of several incentives an awarded

schemes ant the operation of the staff welfare fund. The bank also succeeded



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in mobilizing a substantial amount of saving deposits despite the more

attractive profit being offered by Govt. sponsored saving schemes.

In 10988 Mr. Maqbool A. Soomro took over as President of the Bank.

In both 1986 and 1987 the bank achieved the distinction of obtaining the

highest rate of growth in assets, deposits and profit among me NCBs.

This encouraged the Bank to increase its capital base and the Banks

paid up capital rose to Rs. 272.2 million in 1987. Authorized capital was

increased to Rs. 500 million.

In 1986 and 1987 the Bank adopted several measures to assist the social

development programme of the Govt. These included:

1. Expansion of the supervised agricultural credit schemes.

2. Provision of loans for cost housing and Qarz-I-Hasna for education.

3. Collection facilities for utility Bills.

4. Facilities for Hajis.

Mr. S. Amjad Ali assumed charge as President in 1989. During that year

the bank made significant progress in its foreign exchange operations-

Earnings from currency management rose by over 40 percent.

This was an important step for developing merchant banking business and

diversifying operations. In 1989 bank deposits exceeded Rs. 16 billion bench

mark and profit from foreign exchange transactions rose by two-third and

exceeded Rs. 100 million for the first time in the Banks history. The

international operation of the Bank received a fillip when Allied Bank took

over the entire British operations of the Muslim Commercial bank. The take

over of the MCB Glasgow Brach enabled the Bank to establish its business is

Scotland. In 1989 also saw the addition of 19 new branches. In 1990 tempo

of new branch opening was maintained and 36 new braches were opened.



29/91

Mr. Muhammad Khan Memon replaced Mr. S. Amjad in December 1989

as president of the bank. Mr. Muhammad Khan Memon was replaced by Mr.

Inam Elahi presently President of the countrys largest bank, (National Bank

of Pakistan) of deputation from Allied Bank of Pakistan Ltd. He held the post

of the President from December 1990 till September 1991.During the

tenure of Mr. Inams President ship, Allied Bank benefited a great deal

through his variegated banking experience.

On the eve of privatization, net assets of the bank amounted to Rs. 24.4

billion. Its paid up capital was Rs. 272 million. Reserves amounted to Rs. 178

million. Deposits had just surpassed Rs. 20 billion benchmark, investment

and advances were in excess of Rs. 19 billion and it had more than 2 million

customers. The bank had a network of 745 branches in Pakistan and three in

the U.K.

In November/December 1990, the government announced its commitment

to the rapid privatization of the financial sector. Allied Banks management

under the leadership of Mr. Khalid Latif decided to react creatively to the

challenge.

A New Beginning:

In September 1991, Allied Bank entered in a new phase of its history,

as worlds first bank to be owned and managed by its employees.Mr. Khalid Latif, an employee of the bank since 1971, had anticipated

that an opportunity would emerge for the workers to take management

control of the bank. He proceeded on long leave in November 1990 to make

an in-depth study of the concept of Employees Stock Ownership Plan



30/91

(ESOP). He was thus well prepared when in May 1991, the privatization

Commission announced the impending privatization of Allied Bank and

invited pre-qualifications bids.

During May/June 1991, almost all the officers, staff members and

CBA union had given a mandate to Mr. Khalid to acquire Allied Bank for

employees through the Allieds Management Group which had been formed

specially for this purpose.

Within a week the formal letter of acceptance of this bid was handed

over by the Prime Minister of Pakistan to Mr. Khalid. The executives,

officers and representatives of all CBA union confirmed Mr. Khalid as

Chairman of the Allieds Management Group. In September 1991, the Board

of Directors approved the transfer of 26 percent of the banks shares to the

Allieds Management Group. The Board of Directors was reconstituted. It

elected Mr. Khalid Latif as its Chairman and Chief Executive of the Bank.

The State Bank of Pakistan also approved this decision.

ANGELES, CAMay 24Interlink Considers $200M

investment in ABL Buyout LOS, 2002.

US Based Interlink, a global investment group has given a vote of

confidence of Pakistans investment outlook, in committing up to USD$200

million in the interlink led buyout of 49% shares in Allied Bank Ltd. of

Pakistan. This was announced following the landslide victory of Pakistans

President Pervaiz Musharraf in a referendum that guarantees his Presidency

for another five years.

Interlink plans to further the banks expansion into the Middle East and

later Europe and the US. ABL is currently one of the largest banks in



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Pakistan with USD$3 billion in assets, 7000 employees and 855 branches. In

1991 the Government sold 51% shares in ABL to the employees and retained

49%.

A high level Interlink delegation is also expected to visit in Pakistan

along with other group partners soon, once the Privatization Commission

And State Bank of Pakistan gives Interlink the clearance to proceed with the

ABL privatization, which is expected by May 31, 2002. During the upcoming

visit, they hope to complete the necessary arrangements required to formalize

the purchase. Post acquisition, Interlink plans to restructure and expand the

ABL deposit base by an additional USD$ 500 million or 30 billion rupees

and introduce an array of Islamic banking products to Pakistan.

Current position of ABL:

Mr. Khalid A. Sherwani, took over as President of Allied Bank on

18th October 2000 The President gave policy guide lines and the

strategy to run the affairs of the Bank in the light of changed

requirements of the banking industry. He emphasized that the Bank

Executives, officers & staff must work fearlessly and put in all-out

effort to ensure steady growth of the Bank. He emphasized that

customers have to be given the best possible service as it is they who

are the source of our growth & success.Habib Allied International

Bank PLC Financial Services Authority was desirous to form a UK

incorporated independent subsidiary by all the Pakistani Banks or a

joint subsidiary of two Banks. Accordingly the Management ofAllied

Bank of Pakistan LTD and Habib Bank LTD agreed to incorporate a

joint venture Bank named "Habib Allied International Bank PLCC"



32/91

Whose initial paid-up capital is 25.00 million pound sterling. With a

network of 10 branches located in all big cities of UK, the bank will be

Well poised to handle large volumes of business, particularly of the

Asian community.




to the customers. ABL has invested extensively in banking

automation. 680 branches out of a total of 735 branches are fully




33/91



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HIERARCHY OF ABL


PRESIDENT

SECRETRAY

Board of

Directors

Executive

committee

Secretary

Executive

committee

SEVPC

O NST

SEVP

Corporate

Affairs

SEVP Eco

Research

SEVP

Credit

Local

Collection

SEVP

EDP

SEVP

Treasury

SEVP

Inter

division

SEVP

Audit

SEVP

Capital

Market

SEVP

Admin


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Branch Structure


MANAGER

FOREIGN

EXCHANGE

GENERAL

BANKING

ADVANCES &

FINANCES

Accounts

Department

On Line

Department

Cash

Department

Remittance

Department

Clearing

Department


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BOARD OF DIRECTORS

Chairman:

Mr. Khalid A. Sherwani

Board of Directors:

Mr. Asif Bajwa

Mr. Shoukat Hiyyat Durrani

Mr. Muhammad Sami

Mr. Muzafar Iqbal

Mr. Saeed Anwar

Mr. Muhammad Azam khan

Mr. Justice (Retd) Aamir Raza

Company Secretary:

Mr. Muhammad Yaqoob



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Executive Committee:

A committee called as executive committee is formed in order tostrengthen the controlling activities within the bank. The members are board

of directors, chief executive and the head of all provisional head quarters are

the members of the executive committee.

The executive committee facilitates the top management, being an

important part of it, in coordinating the decision made by top management to

the middle and lower management. Moreover disciplinary and other

important issues are also taken into the consideration by the executive

committee in mailing proposals and decision for the betterment of the bank.

BRANCH NETWORK:

Allied bank of Pakistan limited has a branch network all over the

country. There are total 735 branches of the bank. Besides country branches,

there are four foreign branches of ABL located in United Kingdom for the

banking operation outside Pakistan.

The network of branches in the Pakistan and outside Pakistan is providing

good banking services to people.



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ON-LINE BRANCH NETWORK

REGIONAL OFFICES BRANCHES

Islamabad 78

Lahore 68

Multan 89

Faisalabad 73

Gujranwala 27

Sialkot 35

Karachi 95

Hyderabad 57

Quetta 28

Peshawar 106

Azad Kashmir 25

-----------------

Total On-line Branches = 680

-----------------



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List of overseas correspondents

With whom Allied Bank

Maintain NOSTRO Account

# Currency Name of Foreign Correspondence Abbreviated Name

1 ACUD Bank Melli Iran, Tehran, Iran BKMIRANTEH

2 ACUD Mashreq, Bank, Psc, Mumbai, India MASHBKMUM

3 ACUD Muslim Commercial Bank Ltd, Colombo, SriLanka. MCBCOLOMBO

4 ACUD Rupali Bank Ltd, Dhaka, Bangladesh RUPBKDHAKA

5 ACUD ANZ Banking Group Ltd, Melbourne, Canada ANZMELB

6 CAD Bank of Montreal, Canada BKNONTMONT

7 CHF Union Bank of Switzerland, Zurich, Switzerland UBSZURICH

8 EURO Banca Comm. Italiana, Milano, Italy BCIMILANEUR 9 EURO Commerze Bank AG, Frankfurt, Germany COMMBKFFEUR

10 EURO Credianstalt Bank Verein, Vienna, Austria CRBKVEREINEUR

11 EURO Dresdner Bank AG, Frankfut, Germany DRESBKFFEUR

12 EURO Fortis Bank Brussels, Belgium FORTISBRUSEUR

13 EURO Habib Ban Intl Bank Plc. London, UK ABLLDNEUR

14 EURO Habib Bank Ltd, Pairs, France HBLPARISEUR

15 EURO National Bank of Pakistan, Frankfurt, Germany NBPFFIUR

16 EURO National Bank of Pakistan, Pairs France NBPPARISEUR

17 GBP Habib Allied Intl Bank Pic, London, UK ABLLDNGBP

18 GBP HSBC, Bank Plc, London, UK MIDBKLDN

19 GBP National Westminster Bank Plc, London, UK NATWESTLDN

20 JPY Bank of Tokyo Mitsubishi Ltd. Tokyo, Japan BOTMITTOKYO

21 JPY National Bank of Pakistan Tokyo, Japan NBPTOKYO

22 JPY Union De Bq. Arabes Et Francaises, Tokyo, Japan UBAFTOKYO

23 SEK Nord Banken Stockholm, Sweden. NORDBANKSHOLM

24 SAR Saudi British Bank Riyadh, Saudi Arabia. SBBRYAD

25 SGD HSBC, Bank USA Singapore. RNBNYSING

26 USD American Express Bank Ltd. New York, USA. AMEXNY

27 USD Citibank N.A., New York, USA CITINY

28 USD Habib Allied Intl Bank Plc. London, UK. ABLLDNUSD

29 USD Habib Bank Ltd. New york, USA. HBLNY

30 USD Mashreq Bank Psc, New York,USA. MASHBKNY



40/91



41/91

Services offered by Allied Bank of Pakistan

These are the following services, which are offered to the Pakistanicustomers as well as the foreign by the Allied Bank of Pakistan.

Deposits of Money

Deposit At Call

Transfer of Money

Acquiring Loans

Evening banking services Hajj services

Buy and Sell Securities and Bounds

Utility Bills

Lockers facility

Collection of Zakat

Foreign Currency Accounts

ATMs Cards

Allied Bank Master Card

On-line Banking

Home Remittance

Inter Branch Remittance

Import Export Business/Trade finance

Cash finance etc.



42/91



43/91

DEPARTMENT OF ALDEPLIED BANK

OF PAKISTAN

Deposit Department

Cash Department

Remittance Department

Advances Department

Foreign Exchange

Clearing Department



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DEPOSIT SECTION:

All types of transaction are deled under this section. Now we see thetypes of accounts, which are opened in this section.

TYPES OF THE ACCOUNTS:

Depositors can open the following types of accounts with the Allied

Bank of Pakistan.

Current Account

PLS Saving Account

PLS Term deposit Account

CURRENT ACCOUNT:

As the name signifies the depositor can draw of demand amount at

any time by presenting the cheque in the bank. Unlike time deposits there is

no restriction of withdrawals. The bank neither pays any kind of interest nor

deducts the Zakat from the deposits of this account. The bank also does not

tale any series charges up to the minimum balance of account from the

depositors. The minimum balance required to an account to be opened is Rs.

5000/-. If balance in account reduces from the minimum balance then the

bank charges Rs. 50/- as service charges. In developed and developing

countries a very significant amount of money is kept under current account.

Businessman normally opens this kind of account.



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PROFIT & LOSS SHARING (PLS) ACCOUNT:

PLS saving accounts the gives no fixes rate of profit. These types of

deposit are designed to encourage the saving habits of the people. The

minimum to opened is Rs. 100/-

Now a day if an account holder maintains Rs.3000/- minimum

balance throughout the year then his account is eligible for profit. Also on

first day of Ramzans zakat is deducted at the rate of 2.5 percent. If the

balance is less than Rs.5000/- then Rs. 25 per month will deducted as service

charges.

PLS TERM DEPOSIT ACCOUNT:

These accounts are opened with a minimum initial balance of Rs.

1000. The deposits are accepted for period of minimum 3 months and

maximum 5 years. Profit rate is determined by bank. Profit and loss is paid

on a condition that deposit will be not withdrawn from the bank within a

period of less than 3 months. PLS terms deposit withdrawn after completionof 3 months but before due date will be eligible for sharing of profit. But after

the due date profit is not paid even if amount is not withdrawn from account.

Account opening procedure:

The customer can open an account with the Allied Bank of Pakistan

in the following categories:

Individual Account

Joint account

Sole proprietorship

Partnership



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Corporation

Individual Account:

A person can open in Allied Bank of Pakistan in Pak rupee. First of

all he or she has to fill the account opening form provided by the bank. Then

his or her introduction is done before the branch manager. An existence

account holder of the bank or an officer of the bank who know him or her

very well can do this introduction. A copy of his/her identity card is must

attached with his/her account opening form. If the account holder is illiterate

then he/she provides his/her recent photographs to the branch. The account

holder can get the statement of accounts from the bank at his/her will at anytime without any charges.

Joint account:

One or two person can open an account jointly. An account opening

form is given from that branch where they want to open their account. In that

opening form they provide complete information about the account the

account holders. If any one or both of them are illiterate then he or they give

the photographs to the bank. Then the introduction of the persons is done.

Copies of identity cards are must attached with their account opening form.

In jointly mode both the persons must signed the cheque. And for any kind of

transaction they must dually signed the documents while the either or

survivor mode any one of them can sign the cheque and withdraw their

money.

Sole proprietorship:

Sole proprietorship account is that, which is opened for the individual,

trading under the style of the firm on his declaration to the effect that he is



47/91

the sole proprietor of the firm. After getting proper introduction and

establishing identity of the account opener the account is opened and will be

operated by the account holder easily. The sole owner of the business is

providing the following documents to the bank officer.

Current Municipal License

Commercial Registration Certificate

Copy of Identity Card

Partnership Account:

The partnership can open the account in the bank but he has to

provide the following information to the concerned branch and the person

who can draw the amount is also nominated.

Name of the Firm

Name of parties

Identity card of partners

Registration Certificate of the Firm

Limited company/Corporation:In order to open the account of a company the following documents

are required by the bank, so that the bank could take action in case of any

fraud of discrepancy.

Memorandum of Association

Memorandum of Article

Most recent balance sheet and profit & loss statement

Resolution of Board of Director the person who is authorized to

Sign the cheque

Any other documents



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Issuance of Cheque Book:

The size of the chequebook varies from 10 to 50 leaves. The bank

deducts the charges (Rs.3 per leave) from his account. The assistant writes the

following information on the title page of the chequebook and on chequebook

issuance register.

o Issuance date

o Name of account holder

o Account number

o Type of account

After the signature of authorized officer the chequebook is handed over to the

account holder.

Depositing of the Amount:

Account holder can deposit the amount in cash of draft etc. in his

account through credit voucher. In ABL white slip use for current account

and blue slip use for PLS Saving Accounts.

Payment of cheque:

Ways to make payment of cheque:

The cheque may be paid in one of the following ways:

* By cash payment over the counter. ** By collection/clearing.

*** By transfer from one account to another.

Closing of Account:

There are many reasons for closing an account. Some of the more common

reasons are given below:



49/91

At the request of account holder

Death of the account holder

Bankruptcy of account due to bad conduct of account holder

If an account holder wants to close the account then he has to give an

application to the bank manager. In other case bank manager is authorized to

close the account but first the letter is sent to the account holder.



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CASH DEPARTMENT

It provides its users with following facilities:

1. Make payments on cheque.

2. Accept deposits

3. Collect utility bills.

Cheque: The cheque is the most important, convenient and well-established

medium of modern banking used for withdrawal of funds and settlement

of debts by an account holder i.e. a drawer.

Definition: A cheque may be defined as A written order of a depositor

upon a bank to pay or to the order of a designated party, a specified sum of

money on demand.

Parties of cheque: Parties involved in cheque are:

A. Drawer: the person who is ordering for payment.

B. Drawee: that bank that has to pay the amount.

C. Payee: the person who is receiving the payment. The drawer and

Payee may be the same person.

Payment of cheque:

Ways to make payment of cheque:

The cheque may be paid in one of the following ways:

1. By cash payment over the counter.2. By transfer from one account to another.

3. By collection/clearing.

Token: Before start of business the cashier hand over the stock of tokens to

token issuing official. Token issuing official count the tokens and arrange



51/91

them in a serial order for issuing. When a customer goes to get payment from

a bank first it will go to token issuing officer. The officer enters the

information in token book and after that put a stamp on the back of the

cheque. The token is made of braes engraved with bank and branch name.

But the officer must be careful in issuing token and have to make sure that

the cheque is honored.

Token book: Before issuing token to customer the officer put information

related to cheque and token in a token book.

Verification of signatures: After token issuing the sign of the drawerwill be checked. It must match to the sign that put up on the signature card at

the account opening time.

Posting and supervision: After passing above two steps the cheques are

given for posting. The account no written over cheque will be entered in the

computer and computer will display the information of respective account.

While posting following information is put up:

Name of drawer.

Cheque no

Amount

Date of cheque

When cheque is posted it is supervised to know the effect of posting and if

the cheque is ok it is forwarded to the cashier for payment.

Payment by cashier: Cashier makes payment of cheque that is clear after

taking back the token from the customer. It is very important to take the

token back because until token is in customers custody he can demand for

the payment.



52/91

Cashier long book: After making the payment the cashier will enter the

amount in cashier long book on the debit side.

Dishonor of cheque: While making payment of cheque the officer must

check it according to following guidelines. If any of the following case is

appeared then payment is not given to the customer.

When cheque presented at a branch where customer not held his

account.

When customers account is closed before presentation of cheque

When a notice of customers insanity is given to bank.

When notice of loss of cheque is given to bank.

When signatures of drawer differ.

When the cheque is undated or post dated.

When balance of customers account is insufficient to meet

the demand.

When order of court prohibits the payment of cheque.

Accept deposits: When a customer wants to deposit any amount in its

account it goes to the relevant officer who accepts deposit and gives a receipt

to the customer. The cashier in cashier long book enters the amount deposited

by the customer on its credit side.

Collection of utility bills: The branch also provides the facility of utilitybills collection of electricity, gas and telephones. The branches collect utility

Bills during banking hours. Bills can be paid through cash or cheque.



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Remittance Department

One of the major functions of bank is remittance. This department provides

this facility through following instruments.

1. Demand draft (DD)

2. Telegraphic Transfer (TT)

3. Deposit at call (DAC)

4. Pay Order (PO)

Demand Drafts (DD):Draft is an order cheque drawn by the one branch of the same

bank to pay sum of money to drawer on demand. It is payable on demand.

A bank Demand draft has following particulars:

Payees name

Date of issue

Amount in words and figures

Drawer Branchs name and code

Address

Serial number

Demand Draft Issue Register:

When a Demand draft is filled out and made than an entry is made in

demand draft issue register.

Demand Draft Issue Payable Register:

When a Demand draft is received and paid than an entry is made in

Demand draft payable register.



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Telegraphic Transfer (TT):

This is the most urgent method of remitting the money from one place

to another place. This method is used when sender desires to send urgently,

in this case the sender request the manager of the branch to issue TT.

Following are the particulars of Telegraphic transfer.

Name of applicant

Telegraphic transfer number

Amount in words and figures

Name of sending branch

Name of receiving branch

Address of applicant

Telegraphic Transfer Outward Payable Register:

When a Telegraphic transfer is prepared an entry is made in

Telegraphic transfer outward payable register.

Telegraphic Transfer Payable Register:

When a branch receives a Telegraphic transfer an entry is made in

Telegraphic transfer payable register.

Deposit At Call (DAC):

These are made for tender purposes. These are kept as security when

a person to a company submits a tender. If the tender is approved than these

are payable to that company but if person fails to get approval of tender than

these are cancelled and will be refunded by the person. There is no limit of

the period of deposit at call.



55/91

Deposit At Call Register:

When a deposit at call voucher is filled out an entry is made in

deposit at call register.

Pay Order:

A Pay Order is written order issued by the bank no its own branch,

drawn upon and payable by itself to pay a specified sum of money to the

person. The purpose of a Pay Order is to transfer the fund from one place to

another. It is usually not issued in favor of the parties of other cities. Usually

the Pay Order is issued for the local transfer of money from one person to

another of from the person to any other department. It is used for different

purposes. The purpose may be the repairs of the branch of renovation of the

branch.

Procedure:

The procedure of the Pay Order varies with the nature of the purpose.

If the work is of huge amount then first the manager writes a latter to theZonal Chief in order to get sanction of the work. Then the advertisement of

the work is given in the newspaper in order to invite the contractors. But if

the work is small then the branch manager has discretionary power to select

the party whose rate is lowest. After finishing the work the contractor

submits the bill of work on his stamp pad. Then the bank issues a pay order,

against the pay order the contactor gets the amount from the issuing branch.



56/91

Advances Department:

Allied Bank of Pakistan facilitates into customer by providing

Different type of loans. Following are the types provided by the bank.

Running Finance:

Running finance is the short-term loan usually allowed by the bank for

a period of one year. The running finance account can be operated and daily

sale proceeds can be deposited into to the account. The mark-up is recovered

on the product of daily outstanding balance. The running finance is suitablefor meeting day-to-day financial needs of the business.

Cash Finance:

Cash finance is allowed against pledge of goods. The delivery of goods is

made against payment.

Demand Finance:

Demand finance is disbursed in lump sum or in accordancewith the agreed disbursement schedule and it is repayable as per the

agreed installments, which should be monthly, quarterly, biannually

or annually.

Finance Against Imported Merchandize:

The Bank also extends facility of clearing the consignment through its

approved clearing agents and considers finance against pledge of

consignment imported through the bank. This is called finance against

imported merchandise.



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Letter of Guarantee:

The Bank issue letter of guarantee in local and foreign currency and thereby

undertakes the responsibility on behalf of the customer for the debt, default

or miscarriage by the customer, whether, such requirement is domestic or

overseas.

Performance Bond:

The Bank issues a performance bond in local and foreign currency on

account of the customer engaged in building and construction industry,

whether, such requirement is domestic or overseas.

Bid Bond:

The bank issue a guarantee in local and foreign currency in support of his

customer tendering for a public works contract overseas.

Fixed Industrial Investment / Term Finance:

The Bank for building plant and machinery of the project extends the

fixed industrial investment. The debt / equity ratio could be 60: 40 or 70: 30

depending upon the government policy in this regard.

Working Capital Finance:

The Bank extends working capital finance to the industry / project. The

working capital finance may be in the shape of running, cash finance or one /

some forms of finance products of imports and exports.

Agricultural Financing: Bank under Agricultural Financing Scheme envisaged by the State

Bank of Pakistan extends short, medium and long term, farm and non-farm

credits. The farm credits are extended for production (inputs) and the

development purposes. Non-farm credits are allowed for livestock (goats,



58/91

sheep and cattle), poultry, factory including social forestry and fisheries.

Procedure For Loan Approval

Following is the general procedure adopted by bank while approving loan.

Proper Introduction To Client:

In this process the first and very important step is to take introduction

of that person. He may be the existing client or may be a new one.

In case of existing client it is easy to get introduction because bank already

possess his record, past dealing with bank, his background.

In case of new client it is difficult to get proper introduction. They will obtain

his record of dealing with previous bank, because it may be possible that he

is defaulter of any other bank.

Application By Client:

After introduction of client the client fills an application. All relevant and

important information is obtained by this application.

Testing And Evaluation:

After obtaining information it will attest and after that the authority on

the basis of collected information and after evaluates the application that

decision is made for approval or not approved.

After giving loan the dealing of customer is constantly viewed by the

banker. It is important for bank.



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Foreign Exchange Department

Foreign exchange is defined as the mechanism of exchanging currency of one

country with that of another country.

Foreign Currency:

Foreign currency is defined as the currency other than local currency.

Importance of Foreign Exchange:

Trade when take place among different countries there is need forsettlement of payments mechanism because more than one currencies are

involved in it foreign exchange department performs that function and

facilitates the international trade.

Controlling Authority:

In Pakistan authority to regulate in State bank of Pakistan and policies

are made by SBP, which are followed by all dealers of foreign exchange, andthey have to report to SBP at every months end.

International Trade:

To organize international trade there is ICC. ICCs publications are

available that provide instructions to monitor international trade, both import

and export are covered in it.

Function of Foreign Exchange Department:

The department provides function of import, export letter of credit,

export refinancing, negotiation, collection, foreign currency accounts, foreign

currency drafts, telegraphic transfer, import on consignment basis, advances

payments in import.



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Allied bank Foreign exchange department deals in following currencies.

a). US Dollar b). GBP (UK)

c). Euro d). Japanese Yen

Type of Accounts:

1. Frozen Accounts

2. NewAccounts

Frozen Accounts:

These are the accounts that are freeze after the nuclear blast by

Pakistan on 28 May 1998.

These accounts are further divided into

Current Account

Saving Account

Fixed Deposit

New Account:

When permission is given to open the foreign currency accounts than

accounts open after that are called new accounts.

These are the following types.

Current Account

Saving Account

Fixed Deposit

Modes of Payments in import export:

These are different mode of payment for importer such as advance

payment but in that there is high risk for the buyer another way in import on

consignment basis and in that commodity is send and than payment is given

which involves risk for seller another method in collection is that there is



61/91

Involvement of there party but there is no guarantee of bank. So the softest

way is letter of credit.

Letter of Credit:

Definition:

A concept is developed between seller and buyer. Buyer goes to bank and

makes his letter of credit. It is just like a guarantee. Guarantee to pay account

from bank but if terms and conditions of letter of credit are fulfilled.

Parties Involve in L/C:

Following parties are involved in it.

Importer:

The person who wants to open a letter of credit in favor of exporter when

importing something from abroad.

Exporter:

The person who is selling in abroad letter of credit is open for exporter.

Issuing Bank:

The bank that issue letter of credit. It is the bank of importer.

Advising Bank:

The bank with whom issuing bank negotiates in exports country.

Export Company:

The bank that work on behalf of exporter. Advising bank and exporter bank

may be the same but it is not necessary.

Confirming Bank:

In case if exporter hesitates for trading due to bad economic conditions of

importers country than confirming bank assure the exporter bank that



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Payments are made to exporter.

Reimbursement Bank:

This bank maintains the account of issuing bank and it is situated in that

country whose currency is used for payments.

L/C Opening Register:

When L/C is opened some information is maintained in that register.



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Clearing Department

When the branch receives cheques of other banks than one process of getting

payment against these cheques is that you sent a person who will take money

on your behalf but in these cities where State bank exist this function is

performed by clearing. In State bank of Pakistan there is a clearinghouse. The

representatives of local banks meet there at 9:00oclock and exchange there

cheques and other instruments with each other. Than they come to their bank

andcheck these instruments that these are ok or not. The representative again

meet at 12:00 oclock in the clearance house and the cheque which are ok get

payment against these and the cheque that cannot be cashed these are again

exchanged. In State bank every local bank has its account from that account

payments for clearing are made.

Outward Clearing Register:

When through clearing payment is given to the other bank than this entry will

be recorded in outward clearing register.

Inward Clearing Register:

When payment is received from the other bank than entry is recorded in

inward clearing register.

Transfer Delivery:

All cheques and other instruments received for collection, which have been

drawn on other local branches of Allied Bank Of Pakistan Limited, their

collection system is called transferdelivery.



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Outward Transfer Delivery:

When the branch sends on instruments for collection than it will called

outward transfer delivery. All such instruments will be entered in a separate

register called outward transfer delivery register.

Inward Transfer Delivery:

When the branch pays against an instrument it is called inward transfer

delivery. All such instruments are recorded in a separate register called

inward transfer delivery register.



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PRODUCTS OF ABL:

Following are Products and Services, which are offered to the customers.

Foreign Currency Accounts:

Allied Bank offers the highest rate of return on Foreign

Currency Deposits in the Country. Accounts can be opened

in US Dollar, Pound Sterling, Deutsche Mark, and

Japanese Yen at designated branches. All Pakistani nationals residing in

Pakistan and outside Pakistan can also open Foreign Currency Accounts.

Resident Firms, Companies including Investment Banks can open Accounts.

Home Remittances:

The Bank having a network of 735 branches all over

Pakistan, undertakes to provide safe and instant payment

of remittance from expatriates, routed through designated

foreign exchange companies and correspondent banks with whom special

arrangements have been made in this regard. Through the Allied Express

Service, ABL ensures that beneficiaries' Accounts in ABL branches are

credited with in 48 hours of receiving home remittance information from

overseas.

Inter Branch Remittances:

Allied Bank can transfer funds to the remotest part of the

country for payment/credit to the customer himself or a

third party, through Telegram/Telex/Telefax for payment/credit

http://www.abl.com.pk/fcyBranches.htmhttp://www.abl.com.pk/homeRemittance.htmhttp://www.abl.com.pk/homeRemittance.htmhttp://www.abl.com.pk/fcyBranches.htmhttp://www.abl.com.pk/homeRemittance.htmhttp://www.abl.com.pk/homeRemittance.htmhttp://www.abl.com.pk/homeRemittance.htm


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on the same/next day. Telegraphic transfers can also be made abroad in

Foreign Currency.

Hajj Services:

The Bank serves the intending pilgrims by helping

them in performing this religious obligation. The Hajj

forms and other related the bank provides services.

However, the terms and conditions for accepting the

Hajj forms from intending pilgrims are in accordance with the Hajj Policy

announced by the government, each year. Hajj applications are availablewith all branches during Hajj season, immediately after the Government

of Pakistan announces the Hajj policy.

Utility Bills:

All branches of the Bank collect utility bills of

electricity, gas and telephones. For convenience of the

customers, the branches collect Utility Bills during banking hours and also

in the evening banking on all working days. Bills can be paid through cash

or cheques. Consumers may drop bills with crossed cheques into a drop

box available at the branches under "Cheque Drop-in" system.

Lockers:

Allied Bank Lockers are available in three different sizes

Small, Medium and Large on a yearly fee. Locker holders

need not have an account in the Bank.



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Allied Bank Rupee Travelers Cheques:

Carrying cash to strange alien location can prove to be risky as a single

incident can render one without monetary backup of any sort. Hence banks

introduce travelers cheques in order to protect against any contingency.

Commodity Operations:

It is a Cash Credit Financing to Government

Departments for procurement of various commodities, as

per allocation of the limits by SBP on Government of

Pakistan Guarantee.

Seasonal Finance:

Seasonal Finance facility is allowed against pledge of

produce of Cash Crops harvested in that particular crop

season. The delivery of pledged stocks/goods is made

against appropriate cash payment.

Agricultural Finances:

Bank under Agricultural Financing Scheme envisaged by the

State Bank Of Pakistan extends short, medium and long term,

farm and non-farm credits. The farm credits are extended for

production (inputs) and development purposes. Non-farm

credits are allowed for livestock (goats, sheep and cattle), poultry, factory



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including social forestry and fisheries (inland and marine excludingdeep sea

fishing).

Import Export Business/Trade Finance:ABL Provides highly efficient trade finance services for import/export

business for our clients/customers through large

number of authorized branches where trained and

motivated staff is available to handle the business on

behalf of customer

Running Finance:

It is a short-term loan allowed by the bank for a period of one year.

The running finance account can be operated and daily sale proceeds can be

deposited into the account. The mark-up is recovered on the products of daily

outstanding balance. The running finance is suitable for meeting day-to-day

financial needs of the business.

Demand Finance:

It is disbursed in lump sum or in accordance with the agreed disbursement

schedule and it is repayable as per the agreed installments, which could be

monthly, quarterly, biannual or annual.

http://www.abl.com.pk/tradeBranches.htmhttp://www.abl.com.pk/tradeBranches.htm


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ELECTRONIC PRODUCTS OF ABL

These are following Electronic Products and

Services, which are offered to customers.

All Time Banking:

Allied Bank has introduced Allied Cash+ Card

also referred to as ATM card. You will now have the convenience of

withdrawing cash from any of our multiple ATMs ("All-Time Banking"

locations) conveniently located in major cities like Karachi and Lahore at

any time of the day or night even on closed days/holidays. Other services

include customer being able to inquire about the balance of his/her account or

printing an abbreviated (mini) statement showing the most recent eight

transactions up to the previous working day....

Master Cards:

You can now become the holder of a true Credit Card

here in Pakistan. Allied Bank under license from

Master Card International, U.S.A issues it's Master Card to anyone meeting

the eligibility criteria. With the Allied Bank - Master Card you will be

assured of a service meeting the highest international standards maintained

by Master Card.

DEBIT Card:

Now you can use your existing ABL ATM Card as

DEBIT Card at over 2500 outlets ofORIX networks.

http://www.abl.com.pk/atmLocations.htmhttp://www.abl.com.pk/DebitCrd.htmlhttp://www.abl.com.pk/atmLocations.htmhttp://www.abl.com.pk/DebitCrd.html


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Online Banking:

Online Banking facilities are available to

customers maintaining accounts at all online branches across the country.



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ALLIED BANK OF PAKISTAN

Income statement

For the year ended-----------

Rs. (000)

1996 1997 1998 1999

Total interest revenue 4,692,220 5,026,784 6,059,060 7,287,432Interest Expense 3,802,172 4,639,053 5,289,971 6,953,006

Net interest Revenue 890,048 387,731 769,089 33,4426

Other Income 405,746 361,322 426,229 358,997

Commission & Fees 1,185,396 1,130,242 1,033,310 1,172,024

Trading Securities 491,449 564,453 755,170 971,956Gain (Loss) on Foreign Exchange -- -- -- --

Other income 795,933 1,313,718 710,238 1,081,457

Total income 3786572 3757466 3694036 3918860

Administrative expenses 3,019,703 2,960,699 3,396,440 3,772,889

Other charges -- 32,001 128,004 128,004

Provision against non- performing Loans 515,000 736,000 -- (53,131)Total expenses 35347033 3728700 3524444 3847762

Income before tax 233869 28766 169592 71098

Taxation 164000 15102 150000 60554

Income after Tax 69869 13664 19592 10544



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Allied Bank of Pakistan

Balance Sheet

As on December 31, ------

Rs. (000)

Assets 1996 1997 1998 1999

Cash 7195269 6,316,337 7,646,937 8,601,193

Balance with other banks ,627,627 1,380,840 1,878,796 1,757,510

Money at call ------ 450,000 100,000 300,000

Total Investment 15,552,713 20,192,699 25,605,470

26,774,766

Total loans & advances 32,766,263 36,231,357 42,719,169

55,263,762

Fixed Assets 901,904 872,730 2,488,619 3,062,045

Other assets 5,395,334 6,959,687 8,919,166 11,1167,055

Total Assets 63,439,110 72403650 89358167 106926331

Equities & Liabilities

Total deposit 55,896,800 63,429,709 76,541,153

93,107,291

Borrowing 4,015,193 4,914,558 6,243,517 7,144,163

Bills payable 548,575 802,367 1,084,151 1,073,491

Other liabilities 1,589,147 1,741,598 2,487,440 2,588,936

Total liabilities 62042715 70888232 86356261 103913881

Paid up capital 950,797 1,063,156 1,063,156 1,063,156

Reserves 438,598 452,262 1,938,750 1,949,294

Total equity 1389395 1515418 3001906 3012450Total Equity + Total Liabilities 63439110 72403650 89358167 106926331



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RATIO ANALYSIS

Regulatory Ratio:

Advan

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Final Report of Abl

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