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INTRODUCTION
Following privatization, Bank Alfalah emerged as new identity of
Habib Credit and Exchange Bank with a revived purpose and commitment.
Charged with the strength of Abu Dhabi consortium and under the
leadership of His Highness Sheikh Nahayan Mabarak Al-Nayayan, the bank
has already made significant contributions in building and strengthening
both corporate and retail banking sector in Pakistan.
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The graph of bank is going up and up every year. The ratio of profit is
increasing at good percentage. The bank is serving the people at high level
of standard by going according to the whishes of the customers.
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Nationalization of Banks was not done 1st January 1974 under the
Nationalization act 1974, due to certain objectives. But it had negative
effects on efficiency of the 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.
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MISSION/OBJECTIVES
• Edge on competitors.
• High profits.
• Expansion of strong structure.
• Variety of Products.
• A good banking standard.
BANK BELIEVES
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BRANCHES NETWORK
KARACHI
• Main branch, B.A. Building, I.I. Chundrigar Road.
• Cloth Market Branch.
• Clifton Branch.
• Shahrah-e-Faisal Branch.
• Karachi (new Branch).
LAHORE
• Kashmir Road Branch.
• Gulberg Branch.
• Defense Branch
RAWALPINDI
• Mall Road Branch.
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OTHER BRANCHES
Other Branches are in:
• Sialkot.
• Islamabad.
• Peshawar.
• Multan.
• Faisalabad.
• Quetta.
• Sukkur.
• Hyderabad.
• Gujranwala.
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THE BOARD
Board of Directors
Chairman
Secretary of the
Board
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EXECUTIVE COMMITTEE
• Mr. Mohammad Saleem Akhtar.
• Mr. Ikram-ul-Majeed Sehgal.
• Mr. Parvez A. Shahid.
• Mr. Tanveer A. Khan.
• Mr. Mohammad Yousaf.
• Mr. M. Waqas Mohsin.
AUDITORS
• A.F. Ferguson & Co.
Chartered Accountants.
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ORGANIZATIONAL CHARTS
COUNTRY WIDE HIERARCHY
President
Chief Operating
officer
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FEATURES
Bank Alfalah Limited is and established bank. It has some special
features with the help of those it is growing rapidly.
EFFICIENCY
Employees at Bank Al-Falah are quite efficient. As Multan branch is a
new one, its employees have to bring their bank among the list of good
banks. Therefore, they work more than their working hours and it is all
according to their will. It also shows their loyalty, commitment to
organization.
CUSTOMER SERVICES
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EMPLOYEE BENEFITS
Employees are given the benefits like bonus, gratuity funds, loans,
increments, house rent, medical and conveyance.
SHARE CAPITAL
The authorized capital of Bank Alfalah is of Rs. 1000 Million
(100,000, 000) Paid-up capital is of Rs 600 Million (600,000,000) ordinary
shares of Rs.10 each issued for cash.
PRODUCTS
Prioritizing its product portfolio in line with its corporate and
consumer needs and wants the bank is committed to develop products that
give more value to its customers in both the sectors.
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ROYAL GROUP
Royal Group is a joint investment plan that allows individuals to invest
money collectively and earn higher rate of profit.
ROYAL PROFIT
It is the profit obtained by individuals on their deposited amount.
Deposit Amount Rate
50,000 to 999,999 9.00 %
1,000,000 to 9,999,999 9.50 %
10,000,000 & Above 10.50 %
ROYAL PATRIOT
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 if
one withdraw his money before the maturity date, he can get the benefit of
profit. The profit rates for different periods are following:
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FINANCE POLICY
Bank Alfalah finance on short term basis only against current assets to
its customers in both corporate and consumer sectors. They don’t invest too
much in fixed assets. Maximum credit for short term is Rs. 50 Millions for
one party, they don’t go beyond five years financing.
FINANCING SCHEMES
The bank has introduced many financing Schemes such as Term
Finance & Royal Personal Finance. The bank has recently introduced a Car
Finance Scheme.
Royal Personal Finance
This is the facility for individuals to finance their domestic requirements
such as purchase of household equipments, computers, funding of education,
marriage, planning a holiday, payments of credit card bills, other liabilities
or any other personal requirement.
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ALFALAH CAR
It’s a scheme that enables one to own his desired car at easily
affordable and flexible installments with a minimum down payment and
insurance.
SALIENT FEATURES
• 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
• Lowest Insurance rates available from bank’s approved insurance
companies
MONTHLY INSTALLMENTS
Monthly Installments for Alfalah Car can be calculated by multiplying
Bank’s financing amount with the following factors:
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Periods Factors
For 12 months 0.09072
For 24 months 0.04962
For 36 months 0.03609
For 48 months 0.02944
For 60 months 0.02553
ELIGIBILITY 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.
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TYPES OF ACCOUNT
♦ Current Account.
♦ Saving Account.
♦ Notice Deposit.
♦ Term Deposit.
CURRENT ACCOUNT
There is no interest on these accounts. It is only for transaction
purposes. They paid on demand. Where a banker accepts, paying all checks
drawn against him to extend of the balance in the accounts. As there is no
profit paid on this account, it is also called checking account because cheque
can be drawn on it. Current account is mostly opened for business. The
minimum balance requirement for opening the current account is Rs. 1000.
SAVING ACCOUNT
The purpose of this account is to introduce the habit of saving
individuals in the neighborhood. The profit on saving accounts is paid on the
basis of profit and loss sharing at 9 % six monthly. The minimum balance
requirement for opening the account is Rs.5000.
NOTICE DEPOSITS
Notice Deposits are kind of fixed deposits. The minimum balance
requirement for opening the account is Rs. 5000 and payment is drawn on
maturity of the specific period.
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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 8 % to 13 %. The term
deposit account varies from one month to 5 years and the minimum balance
requirement is Rs. 5000.
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INDIVIDUAL’S ACCOUNT
When a single man or woman opens an account in his or her own
name and has the right to operate, it is called individual A/C.
DOCUMENTATION
• Copy of National Identity Card.
• Proper Identification ( Introduction ).
OPERATION
• The person place in the type of account and type of operation required
in the account opening form.
• He/she fills in part 1 of the form, a fix his/her either two of four
similar signature ( or thumb expression in the signature space ) and
get it introduced and signed by a person who already has an account
with the bank and write his account number in the specific rows in a
specific space.
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• The person fills his or her father, mother, husband/wife or any other
relative’s name, his/her address, phone number, his or her sign to
certify this requirement. This requirement is needed because in his/her
absence bank can have correspondence with a specific person.
• The person deposits the initial amount for opening account onto the
cash counter. The person put his signature on form on two places in
“authorized Signature” and fills in the “Title of Account” space by
writing his name.
• If the person put his signature in Urdu or any other language other
than English, he signed a “Vernacular Form”.
• The next day is opening of account
JOINT ACCOUNT
When two or more persons neither partners nor, trustees, open an
account in their name is joint account.
DOCUMENTATION
• Copy of N.I.C card.
• Identification ( Introduction ).
OPERATION
• The person checks the type of account and type of operation required
in the respective box on the form.
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PROPRIETORSHIP ACCOUNT
When the owner of the firm operating singly, open an account in his firm
name.
DOCUMENTATION
• Copy of N.I.C.
• Status of the firm.
• Copy of Sole Proprietorship Declaration.
OPERATION
All operation remains the same, except that the firm name is written in
“title of account” area and Signature of the proprietor in the specified
area.
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PARTNERSHIP ACCOUNT
The account 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 serverly.
DOCUMENTATION
• Copy of N.I.C of all partners.
• Status of the firm ( In case of registered firm ).
• The attested copy of Partnership Deed (in case of registered firm ).
• Operation of the A/C (as per deed).
• Third party Mandate.
• Letter showing the authority of one or more partners to act on.
OPERATION
All other requirements are same except that all partners dully sign the
form, cards are signed by all of those partners who will act on behalf of
the firm.
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OPERATION
• The person authorized in the resolution of the board of directors
put their signature on the S.S Card.
• Next of Kin requirement is not need in a case of Private Limited
Company. Other procedure is same.
• After completing each and every formalities are signed by all
partners who will act on behalf of the firm.
OPERATION
Operation is same as Private Limited Company
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• Documentation Intact.
• Proper Introduction.
• ChequeBook Issuing.
• Receiving Inward cheques.
• Account Closing.
• Every Day Posting.
ACCOUNT CLOSING
When a customer wants to close his account because of any reason, he
has to give a hand written application to the head of the Operations
Department to close his account, plus remaining leaves of the chequebook.
The Operations Manager first verifies the signatures of account holder, then
closing is done from the registers on the computer where the account was
opened. In the file of account holder, his account opening form is also
crossed.
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PROCEDURE
All the account opening formalities must be completed before, issuance
of cheque book. Particulars of the chequebook requisition should be
completed containing title of account, account number, type of currency,
number of leaves and signature of the customer. Signature of, the customer
are verified on the requisition.
If customer is unable to collect his chequebook, then he can give authority to
the 'third person to collect his cheque book' on his behalf by signing on the
back of .the requisition. In such case, the particulars of the third person are
required like name of the person, NIC number and signature of that person
on requisition and chequebook issuance register.
Stock of Cheque books are balanced at the end of each day and kept
under safe custody.
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Earlier in the banks were charging a fee for issuance of cheque book,
but now whenever a new account is opened, the account holder is issued a
cheque book free of charge.
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CASH DEPARTMENT
CASH DEPOSITS
Cash receiving officer receives cash along with pay-in slip from the
customer. He checks if the deposit slip is properly filled up containing title
of account, account number, date and amount in word and figures. He also
verifies signature. Detail on both counter file and cash receipt voucher
should be the same. Cash is received by the cash receiving officer, twice
counted and matched with the deposit slip. The cash details are written on
the back of the deposit slip and are also entered in 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 cash
department. Again proper scrutiny is made by the officer cash department
both on cash receipt and cash receiving register. Officer cash department
signs both the deposit slip and register; Deposit slip is credited and posted in
the concerned account in the system.
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PAYMENT OF CHEQUES
The process for payment of cheques for local and foreign currency is
same. First the customer presents the cheque or holder to branch and the
particulars of cheque are properly filled in. Signature of the holder is taken
on the back of the cheque. Cheque handed over to the officer cash
department for scrutiny where officer checks the date, amount in words and
amount in figures, payee's name crossing if any, account number, cheque
serial number, any material alterations, endorsements and signature of the
customer. Account is debited 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 the back of the cheque is taken from the holder to match with the first
one, and then cash is paid to the payee. 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.
If the payment is of Rs. 50000 the cashier can make it on its own. If
the amount is greater than Rs. 50000 to Rs. 100,000 the cashier and cash
deposit Incharge will verify the check and will sing it. Then the payment
will be made. But, if the amount is greater than Rs. 100000 to Rs. 1000,000
the manager operation will also verify the check and sign it so that the
payment can be made. If the amount is greater than Rs. 1000,000 the Branch
Manager will also verify the check and sign it. Otherwise the payment will
not be made.
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CLEARING DEPARTMENT
In clearing, Mr. Anees remained so helpful. The clearing process
majority involves receiving the cheques and making payments. This process
can be inward or outward.
Clearing officer checks and verifies title of all the cheques deposited
by the customers 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 the 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
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each bank. Then total number of cheques presented to all banks and their
total amount is written on the foot of that schedule, which is tallied with the
clearing register.
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REMITTANCES DEPARTMENT
The procedure for dealing with all these under local as well as foreign
currency in BAF is as under.
PAY ORDER
A pay order is a written order issued by a bank, drawn upon &
payable by itself, to pay a specified sum of money to or to the order of a
specified person.
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for total amount of instrument plus bank charges. Cheque and application
from is then given to the officer Cash Department for the payment of
cheque. After proper scrutiny, Officer Cash Department posts the cheque
and signs the application form in token of payment received. If the customer
wants to pay cash, then cash is deposited by the customer along with the
bank charges and withholding tax.
DEMAND DRAFT
A Demand Draft (DD) is an instrument, which is drawn by one bank
upon another bank for a specific sum of money payable on demand. It is
made by the bank, given to the purchaser against cash or cheque.
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TELEGRAPHIC TRANSFER
Sometimes, when the remittance is urgently required by the remitter,
Telegraphic Transfer (TT) is issued . TT may be issued to general public on
their written request and against the value received.
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the cheque. After proper scrutiny, Officer Cash Department posts the
cheque and signs the application form, to assure that payment is received. If
the customer wants to pay cash, it is deposited by the customer on cash
counter. Cash Receiving Officer receives cash n the application form along
with the bank charges and withholding tax. Application form is then given
to the Remittances Incharge for issuance of the instrument. He enters all the
particulars of the application form in the system (BPG) and computer gives
an Auto Control Number to the T. T.
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signatures of the authorized officers are verified on TTR and after proper
scrutiny, it is posted in the BPG and canceled by the remittances Incharge.
Procedure for Foreign Demand Draft Issuance:
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 Incharge Remittances, who will enter all
the particulars of the application in the FDD Issuance Register. If the
customer wants to pay cash, it is deposited by the customer on cash counter.
Cash Receiving Officer receives cash on the application form along with the
bank charges. Application form is then given to the Remittances Incharge
for the issuance of the instrument. A control number is allotted to the
instrument from FDD Register. Instrument is completed by putting all the
particulars in it and signed by two attorney holders. Instrument is then
handed over to the customer. 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 the
Head Office for the reimbursement. Copies of the FDD and ETCA are kept
in the record of the bank.
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COLLECTION
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
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 that
city, and if they do not have any collecting agent even, then cheque can be
sent directly to the drawing branch. Instructions are given on the OBC
schedule for the payment of that cheque. Contra-liability 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
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Purpose of this policy is to set out the credit policies for the boar, which
will be implemented by the Credit Committee. The policies are described
under the following readings:
• Credit principles
• Portfolio limits
• Approval
• Administration
• Monitoring and review
1. CREDIT PRINCIPLES
It includes principles to be adopted for lending authority, approval,
monitoring and control on a basis consistent with Bank Alfalah Ltd.
The operational objectives and business strategies regarding objectives,
structure, performance and administration are also included.
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2. CREDIT PORTFOLIO
These are the guidelines set down by Credit Committee regarding:
• Total facilities
• Term facilities
3. CREDIT APPROVAL
When the terms and conditions are set and both parties are agreed, the
Credit committee makes approval for the credit.
4. CREDIT ADMINISTRATION
The credit application when handed over to Credit Administration,
then they critically examine securities given by client to bank against credit
facilities. Credit Administration keeps liaison with lawyers, surveyors,
valuators and other corporate bodies.
5. CREDIT MONITORING
The client can present his own account insurance policy as security
for credit. When he presents his own account as security, his account is
blocked for the same amount, which the bank is granting him. When the
facility is adjusted at that time, the blocking is released from the account.
Clients can also use third party’s account for getting credit. Shares can also
be kept as security in this case these are verified and duly signed. These are
kept separate to avoid theft. The company whose shares are used is informed
that its shares are in the custody of the bank.
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ADVANCES
Bank Alfalah Limited, Abdali Road Multan, provides the following
facilities in Advances Department:
• Funded facilities
• Non-funded facilities
FUNDED FACILITIES
These are the facilities in which funds like cash fund are included.
LPO
Goods purchased on behalf of bank and provided to customers.
PRE-SHIPMENT
It provides to prepare consignment. Maximum tenor is about 150
days. Profit may be 16% per annum. The repayment is generally from sale
proceeds. This is for preparation of consignment.
POST – SHIPMENT
During export process, funds are required for preparation of next
consignment that is provided by post-shipment facility. Maximum tenure is
150 days. Profit rate is about 15% per annum.
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CREDIT CARDS
Bank Alfalah has no credit card facility but, Inshallah, in March the
credit cards will be issued by bank.
ADVANCES IN 2000
Rs. 10,327,324,000 All in Local Currency
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EXPORTS
EXPORTER
When the bank becomes the exporter bank for a party then the market
stability, reputation, financial position of the exporter is first of all checked.
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• Beneficiary certificate
• DHL certificate (TCS certificate)
• Form ‘M’
• Certificate of Origin (Form –A)
FORM – E
Government has provided facility to exporter in taking E-Form from
any bank and he can present it to any bank for negotiation.
Export Proceed Realization Certificate
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E-FORM CERTIFICATION
When export is done on C&F basis, so bank issues E-form
certification to exporter and he submits it to the custom officer along with E-
form certification to certify E-form.
CERTIFICATE OF ORIGIN
This certificate shows that goods are from Pakistan.
COVERING SCHEDULE
If in covering schedule, it is given that “please remit proceed to our
Karachi Office A/C no. 5740734881 with ABN (Amro Bank New York),
USA for onward credit to BAF Multan.”
BENEFICIARY CERTIFICATE
If L/C requires some information as proof of anything from exporter
then exporter has to present beneficiary certificate for that proof.
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E-FORM
E-form has four copies:
• One for custom officer
• One for exporter
• Triplicate copy for SBP
• Duplicate copy for bank
SWIFT
It is network among all banks. No other institute can get involved in it.
BILL OF LADING
Certificate from shipping company for loading documents. If
requirement of L/C is to issue Bill of Lading in favour of L/C opening bank,
then authorized dealer certificate will be provided by bank in favor of L/C
opening bank.
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IMPORTS
L/C is opened by the importer. There are two types of L/C.
• Revocable
• Irrevocable.
NECESSARY REQUIREMENT
If place of issue and port of loading is different on Bill of Lading, then
along with the stamp of shipment on board, vessel name and port of
shipment is written.
1) Issue date of Bill of Lading – shipment on board.
2) There should not be cutting on bill of lading without authentication.
3) Bill of lading should show capacity of agent. If bill of lading can be
taken by the agent of Importer Company, then his name should be
mentioned on bill of lading.
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ACCOUNT DEPARTMENT
Most important department of bank as it is concerned with:
• Revenue
• Expenses
• Assets
• Liabilities
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SWOT ANALYSIS
STRENGTHS
• Bank has a belief in customer service
• Backed by strong Abu Dhabi Consortium
• Customer give suggestion for the improvement of bank and these
suggestions are listened carefully.
• Manager & EVP Mr. Asif A. Sheikh has good coordination with
staff members.
• Environment is friendly.
• Products are excellent
• Expansion is consistent
• Modernized banking (online + Internet)
• Fully computerized, each department has to own PC.
WEAKNESSES
• BCCI Image.
• Mixed Culture
• New Setup
• No ATM facility is provided
• No traveler cheques are issued.
• Tokens are not issued to customer so the chances of doubling are
present.
• No credit card facility is available.
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OPPORTUNITIES
• Information Technology.
• Credit Card Facility
• Internet Banking
• Establishing Foreign Branches
• Local Setup Expand
THREATS
• Competition
• Legal Reputation
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Bank Alfalah has its own full marketing Department at the Head
Office, Karachi. This department prepares different deposit schemes for its
customers, time to time, in order to increase the business of the bank. At
branch level, the Operations Department follows marketing practices. At
each branch of bank, officers are available to provide marketing activities of
their products.
They make customer calls and personally visit the potential customer
to convince them to invest in AFB. They make phone calls to customers and
inform them about their schemes, profit rates.
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CONCLUSION
BANK ALFALAH ( BAF ) under the leadership of Sheikh Nahayan
Mabarak Al-Nahayan has made significant in building of strengthening both
the corporate and retail banking sectors in Pakistan.
The Bank attained Number two (2) position in terms of its Balance
Sheet size amongst the private banks in Pakistan in 2000. The significant
improvements in terms of its results in comparison to the corresponding
period for the year 1999 have been much above the market expectations.
Balance Sheet footing of the Bank reached the level of Rs.21 Billion-an
increase of more than 46% over the previous year. Customer Deposits rose
by 33% on a year-to-year basis and stood at Rs.15.82 Billion. Bank
maintained a Capital adequacy ratio of over 13%, which is significantly
above the Basle guidelines and international requirement of 8%. The pre-tax
profit of the Bank also increased more than five (5) times as compared to the
previous year and stood at Rs.354 million for the year 2000. Bank’s
investment in the Financial Sector was based on the confidence of bank in
the country as a whole and it has been amply demonstrated by the growth
plans of bank though ambitious in nature but prudent and in line with the
potentials of the market place. Although the financial sector in general
witnessed some shrinkage, both in terms of downsizing and closure of
certain locations, the bank, however, continued with its expansion
programme and added five (5) new Branches in their network, one each in
Islamabad, Peshawar, Multan, Faisalabad and Lahore.
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They are aware that they have stepped into the 21st century and they
must meet its challenges by acquiring the highest levels of Technology.
They will thus be accelerating their enable them distribute their products and
services through most efficient and high-tech means. They say that they will
invest in the modern tools and substantial allocation of resources will be
made to achieve this objective during the current year. Their programme to
launch real time – on line Banking Services and introduction of ATMs at
strategic locations have been firmed up and it will be fully operational
during the year 2002.
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Based on the profit of Rs.354 million, the Board has proposed that a
cash dividend at a rate of Rs. 2.00 per share i.e. 20% of share capital be
distributed among the shareholders.
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BALANCE SHEET
AS AT DECEMBER 31, 2000
2000
Rs. in 000
ASSETS
Cash 1687256
Balance with other banks 1161434
Money at call and short notice 100000
Investment 4993035
Advances 10327324
Operating fix assets 1153607
Other assets 1596952
21019608
LIABILITIES
Deposit and other accounts 15820473
Borrowing from other banks, agents etc. 2972240
Bills payable 120868
Other liabilities 372855
Deferred liability staff retirement gratuity 6892
19293328
Net assets 1726280
REPRESSED BY
Share capital 600000
Reserve fund and other reserves 286399
Unappropriate profits 8931
Shareholder equity 895330
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INCOME STATEMENT
2000
Rs. in 000
431465
149760
581225
OPERATING EXPENSES
266658
314567
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Deferred (36554)
(197891)
156524
APPROPRIATION
(151305)
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2000
Rs. in 000
Appreciation 26668
30969
385384
Advances (2569616)
(4209302)
4090918
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Cash 1687256
2948690
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unchanged, other operating income and profit before tax would have
been higher by Rs. 1.26 million.
Commitments for letters of credit and acceptances are translated at the
contracted rates.
Exchange gains or losses are included in the profit and loss account.
• OPERATING FIXED ASSETS AND DEPRECIATION
All assets are stated at cost less accumulated depreciation.
Previously all assets were stated at cost less accumulated depreciation.
Depreciation is charged to income applying the straight line method.
Maintenance and normal repairs are charged to income as and when
incurred. Major renewals and improvements are capitalized. Gains or
losses on disposal of fixed assets are taken to the profit and loss account.
• TAXATION
Taxation charge in the accounts is based on the taxable income at the
current rates of taxation. The bank accounts for deferred taxation on
timing differences using the liability method.
• STAFF RETIREMENT BENEFITS
The bank operates an unapproved unfounded gratuity scheme for its
clerical staff who have completed the qualifying period of service under
the scheme.
The bank also operates an approved funded gratuity scheme for officers
and executives. Contributions are made on the basis of actuarial
valuation. The actuarial valuation of the scheme has been carrid out as at
January 1999 in accordance with IAS-19 (revised) using the projected
unit credit method which disclosed the fair value of funds assets and
liabilities of Rs. 15.00 million and Rs. 28.88 million respectively. The
transitional obligation of Rs. 13.88 million is to be recognized by the
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bank over a period of five years on a straight line basis. The following
significant assumptions are used for valuation of the scheme.
Expected rate of increase in salary level 10% per annum compound.
Expected rate of interest on investment 12 percent per annum.
• DEFERRED COSTS
These are amortised over a maximum period of five years commencing
from the year in which these are incurred.
• REVENUE RECOGNITION
Mark-up /return on advances and investment are recognized on accrual
basis. Fee, commission and brokerage except income from guarantees are
accounted for on receipt basis.
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RECOMMENDATIONS
Finally, We are giving some suggestions for Bank Alfalah Limited.
These suggestions are based on our experience with bank.
• 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.
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• Cheques, which are drawn on Bank Alfalah Branch and returned unpaid
in clearing, are not reflected in the Statement of Account of the
customers. These cheques must be reflected in the accounts so that
credibility of the customers may be assessed.
• Lockers, ATM, credit card, traveler cheques all these facilities should be
provided to attract more customers.
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