INTRODUCTION TO BANK ALFALAH

Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited
company, under the Companies Ordinance 1984 Its banking operations commenced
from November

1st,

1997.

The

bank

is

engaged

in Islamic

banking,

commercial banking and related services as defined in the Banking Companies

Ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities,
with the registered office at B.A.Building, I.I.Chundrigar, Karachi.
Management of Bank Alfalah accepted the challenge to transform this bank
into a highly professional, most efficient & service oriented institution The
management has been successful in fulfilling the undertaken challenge. It has been
successful in making a significant contribution to both corporate and retail banking
in Pakistan.
Over the years, its emphasis on growth has resulted in a strong entity capable
of offering high quality services to a wide spectrum of clients, in a highly challenging
business environment. Its strategy is to maximize the synergies of branch network
through an optimal allocation of financial resources in the face of dynamic
challenges of present financial environment.
Strengthened with the banking of the Abu Dhabi Group and driven by the
strategic goals set out by its board of management, the Bank has invested in
revolutionary technology to have an extensive range of products and services.
This facilitates their

commitment

to

a culture of innovation and seeks out

synergies with clients and service providers to ensure uninterrupted services to

its customers.

The bank perceives the requirements of its customers

and matches them with quality products and service solutions. During the past
ten years, we have emerged as one of the foremost financial institution in the
region endeavoring to meet the needs of tomorrow today.

Bank Alfalah Limited has continued its upward climb in pursuit of

excellence. Strengthened by the backing of the Abu Dhabi Group and driven by
strategic goals set out by its Board and management, Bank Alfalah Limited
increasingly inspires trust and confidence of all its clients. Within a short span of
time the bank has carved a significant niche for itself in the banking industry.
These achievements have been preceded by concerted effort to provide
highest levels of service and value to our customers. The bank aims to further
enhance performance standards through implementation of innovations in both
products as well as customer care, by discovering newer avenues of client benefit.
This customer-focused strategy has enabled Bank Alfalah Limited to evolve as a
single source financial service provider of corporate and retail banking services.
Bank Alfalah reputation has been built on its tradition of high quality and the
expertise of its extremely motivated and qualified staff. With strategic mergers and
acquisition, Bank Alfalah has become a leading player in the global banking arena.
The Bank Alfalah Limited team comprises of dedicated professionals
equipped with a diverse array of skills, vast experience and pro customer attitudes.
The management concentrates its energies on making informed economic decisions,
translating it into greater returns for our investors and customers. This prudent
attitude has created a synergistic organizational structure leading to improvements
in profitability and a sustainable competitive advantage for the bank.
A Highly Responsive Product Portfolio is not only comprehensive but also
customizable to match the needs and preferences of the customers. These
characteristics of the portfolio have helped Bank Alfalah Limited to face challenging
economic conditions. The product lineup continues to fulfill and satisfy the banking
requirements of not just the conventional consumer, but the demanding financial
needs of the corporate sector as well. Today, as Pakistan moves into the 21st century

with its ambitious expansion and development programs, Bank Alfalah is here to
join the efforts to help the country meet its growth objectives. The bank offers an
extensive range of financial services specifically designed to cater to the needs of its
successful associations with the Government and Private Sector.

ORGANIZATION OVERVIEW
HISTORY
Bank of Credit & Commerce International (BCCI) was a Pakistan based
bank, established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E
and Europe. BCCI has its branches in 74 different countries of the world. It had its
3 branches in Pakistan. In 1991, the BCCI was banned, when was accused by
European countries that the bank was involved in some illegal operations with Gulf
countries. The major reason behind European accusation was that BCCI was of
Islamic mode. Therefore, the bank was closed due to international pressure. Then,
its 3 Pakistani branches were taken over by the Government of Pakistan, which
were named as Habib Credit and Exchange Bank (HCEB) and these were working
as subsidiary of Habib Bank Limited.
Following the privatization in July 1997, Habib credit and Exchange Bank
assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu
Dhabi based bank as the family of H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan
purchased 70% of its shares and 30% shares remained with Habib Bank on behalf
of Government of Pakistan. Since its inception, as the new identity of H.C.E.B after
the privatization in 1997, the management of the bank has implemented strategies
and policies to carve a distinct position for the bank in the market place.
Since 1997, the bank has made great strides towards growth and
profitability. BAL network has expanded from 3 in 1997 to 195 as on March 2009.
The deposit base moved from less than Rs.9 billion to over Rs. 227 billion, advance
3

from 5.8 billion to 109 billion. Being a bank that is focused on financing of foreign
trade, volume of foreign trade business has grown from Rs. 5.8 billion to over Rs.
190 billion as on December 2008.
Charged with the strength of Abu Dhabi consortium, and under the
leadership of His Highness Sheikh Nahayan Mabarak Al-Nahayan, Minister of
Higher Education and Scientific Research, Government of Abu Dhabi, and a
prominent member of Royal Family, the bank is energized with the vision,
envisaging the development of various sectors in Pakistan.

COMMERCIAL BANKING SCENARIO IN

PAKISTAN
The function of commercial banking and application of the fundamental
principle of the depositor bank relationship have remind essentially the same since
about 500 B.C. bank operation methods and procedures, on the other hand , have
undergone a constant process of evaluation because of economic growth, the
mounting volume of transaction and greater use of banking feasibilities.
At the time of independence there were practically no industries and
resources so it was very difficult of Pakistan to run its own banking system
immediately. There were 487 offices of scheduled banks in the territories now
constituting Pakistan. Therefore in accordance with the provision of India
independence Act of 1947, and expert committee was appointed to study the issue.
The committee recommended that the Reserve bank of India should continue to
function in Pakistan until 30th September 1948.
It was also stipulated that Pakistan would take over the management of
public debt and exchange control Reserve bank of India on 1 st April 1948. Then
Indian notes would continue to be legal ender in Pakistan till 30 th September1948.
By 30th June 1948, the number of offices of scheduled banks in Pakistan decline
from 487 to 195. In order to establish a full-fledged control bank the Governor
General of Pakistan Quaid-E-Azam Muhammad Ali Jinnah, inaugurated the state
bank of Pakistan on July1st, 1948. At the time of independence in 1947, there were
38 scheduled banks with 195 offices in Pakistan but by December 31, 1973, there
were 14 scheduled Pakistani commercial banks with 3,233 offices all over Pakistan
& 74 offices in foreign countries.

Nationalization of Banks was not done 1 st 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.
The fact show that the commercial banking has made tremendous progress
and achieve a phenomenal growth since independent and that commercial bank
have duly played a vital role as mobilize of people saving to constitute the most
important source of financing in country economy.
As the result of these contributing factors methods and practices necessary to
handle the increase volume of detail work have been developed while an other and
quicker method have been adopted in order to cope with the increase volume , much
in which has been accomplished without unduly increasing cost of doing business.
During to last 20 years we have experience a constant transaction from the
old to the new from manual to mechanical method and procedure, from old
establish practices to current techniques and to a more scientific approach to the
solution of the problems brought about day to day changes in business practices.
Commercial banks operating in the country can be divided into four distinct
categories, private banks, foreign banks, privatized banks and nationalized
commercial banks (NCBs). The number of private banks has remained almost
constant ever since they commenced operations in early nineties. However,
ownership of a number of private banks has changed over the years. Lately, with the
take over of Prudential Bank and Platinum Bank by the new sponsors their names
were changed to Saudi Pak Commercial Bank and KASB Bank respectively Earlier

ownership of Union Bank and Schon Commercial Bank changed. While the new
sponsors of Union Bank preferred to continue with the same name, the buyers of
Schon Commercial Bank changed its name to PICIC Commercial Bank.
Union Bank acquired the operation of Emirates Bank International (EBI) in
Pakistan The scheme of amalgamation was notified by the central bank on
September 03, 2002 and Union Bank settled the amalgamation price of US$ 37
million on September 09, 2002. Union Bank had acquired Pakistan operations of
Bank of America in year 2000 and American Express credit card business in
Pakistan in year 2001
In the NCBs category two banks Habib Bank and National Bank of
Pakistan have been left after the privatization of United Bank. National Bank of
Pakistan has been listed at local stock exchanges and parts of its shares were off
loaded. The GOP is actively pursuing the privatization of Habib Bank, through sale
of its 26% shares along with transfer of management. The remaining shares of the
GOP in Muslim Commercial Bank and Bank Alfalah were also sold. The GOP sold
majority shares of Allied Bank of
Pakistan in early nineties but has not been able to off load its remaining
shares in the bank.
United Bank's privatization demands specific mention for two reasons:
1)

It was the largest transaction, and

2)

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

The consortium comprising of Abu Dhabi Group and Bestway Group has
acquired 51% shares of the bank along with management control. Since October
2002 the bank has been working under the new sponsors
Meezan Bank was created as a result of merger of Al-Meezan Investment
Bank and Societe Generale The first ever license to operate as a Scheduled Islamic
Commercial Bank was granted to Meezan Bank on January 31, 2002. Pakistan
operations of Societe Generale were amalgamated into Meezan Bank on May 01,
2002.

The number of foreign banks operating in Pakistan has been declining

constantly since the GOP decided to freeze foreign currency accounts in May 1998.
The total number of foreign banks in the country has reduced to half since the
freezing of foreign currency accounts. The positive point is that most of the foreign
banks were able to sell their Pakistan operations at attractive prices.

THE MISSION
To develop & deliver the most innovative products, manage customer
experience, deliver quality services that contributes to brand strength, establishes a
competitive advantage and enhances profitability, thus providing value to the
stakeholders of the bank

THE VISION
To be the premier organizations operating locally and internationally that
provides the complete range of financial Services to all segments under one roof.

OBJECTIVES OF BANK ALFALAH

The objectives of Bank Alfalah are as follows:

To please their customers by fulfilling the financial needs as best as possible,

they believe in placing the client at the center of business and all of the
products and services. For this the management has adopted the strategy of
Caring for you Our Customers

To get maximum share of the market

To price the products optimally

To expand more the network of branches in several other cities of Pakistan as

well as in the other countries of the world.

To reinforce a corporate culture that fosters learning, creativity and

flexibility.

To invest further in banking innovations which include Islamic banking,

SME, Home Loans and other areas of product development to provide higher
levels of services and value to the clients.

10

PRODUCTS
COMPREHENSIVE AND DIVERSIFIED PRODUCT PORTFOLIO
With the mission to provide all-encompassing banking services to the
customers, Bank Alfalah has a uniquely defined menu of financial products.
Currently it is one of the most comprehensive portfolios of personalized financial
solutions that are custom-tailored to serve the requirements not only of conventional
customers but also fulfill the needs of the corporate sector:
Car Financing
Rupee Travelers Cheques
Online Banking
Credit Cards
ATMs
Home Financing
Islamic Banking
Corporate and Structured Financing

CAR FINANCING
Car Financing is one of the major renowned products of Bank Alfalah and can be
utilized in terms of Financing of Used Vehicles, Loan against Car, Balance Transfer
Facility, Refinancing Facility (only for Alfalah Customers) and it is characterized in
terms of:
Lowest Mark up
Lower Insurance
Quick Processing
Lower Down Payment

11

HOME FINANCING
Major features of Bank Alfalah Home Financing are Lowest Mark-up, Quick
Processing, Multiple Repayment Options and Free Valuation. It has been bifurcated
in terms of Home Buyer, Home Construct, Home Improver, and Home Balance
Transfer Facility.
Financing Limit:

up to Rs. 10,000,000/-

Tenure:

up to 20Years

Equity Participation :

30% Borrower / 70% Bank

RUPEE TRAVELERS CHEQUES

Rupees Travelers Cheques are as good as cash and are accepted at the major
shops, travel agents, hotels business establishments and all over the country and
abroad. This service is being offered to facilitate instant fund availability to
travelers and business people who used to carry a large sum of money with them.

CREDITS CARDS
Bank Alfalah Visa Card is everywhere and globally accepted and welcomed
at locations displaying the VISA logo. It is accepted at nearly 30 million merchants
and 870,000 ATMs in more than 150 countries around the globe and over 10,000
establishments in Pakistan. Alfalah VISA pays for shopping, travel, entertainment,
meals and much more

DEBIT CARDS
Bank Alfalah Limited presents Alfalah Hilal Card, the first Visa Electron
International Debit Card which gives an unlimited access to current / savings
account with a simple swipe, at millions of retail shops and ATMs, worldwide. The
Alfalah Hill Card comes with a host of conveniences and benefits combined with the
wide reach of Visa Network enabling it to be accepted at more than 840,000 ATMs

12

and 13 million retail outlets around the world, making it the most acceptable Debit
Card available in Pakistan.

ON LINE BANKING
To provide enhanced and value added products to customer bank is
constantly striving for additional facilities. Bank provide fully automated on-line
telephone banking facilities to its customers enabling them to carry out banking
transactions like balance inquiries, statement requests, product information and
exchange rate.

AUTOMATED TELLER MACHINE (ATM)

The bank offers 24 hours self service banking facilities to it customers on
country wide basis through deployment of Automated Teller Machine. This system
allows the banking facilities such as cash withdrawals, cash deposits, and funds
transfer, balance inquiries, account statements. Electronic cash dispensing facilities
are available in major cities of Pakistan. All ATMs are linked through a state-of-theart Satellite Based Communication System which offers 24 hours real time service.

ISLAMIC BANKING
A separate division is a recently initiated, which operates as separate branch. It
offers Shariah Compliant products through a network of five branches, which will
increase to 50 by the year 2007. Islamic Banking has launched following products
with the perception that these are in accordance with the Sharia Principles.
Alfalah Masharaka Homes
Murabaha Finance
Alfalah Car Ijarah

13

CORPORATE AND STRUCTURED FINANCING

The portfolio concentrates on all aspects of conventional banking as well as the
financial needs of corporate sector including dynamic and high value product.
Loaning against securities
Letter of Credit
Letter of Guarantee
Demand Finance
Cash Finance

BUSINESS VOLUME
Alfalah bank is growing day by day and increasing its revenue as well as its
customer here the financial statement of past five year having the information about
assets revenue capital and liabilities
ASSETS

2010

2011

2012

2013
14

cash/balances with treasury

27859360

29436378

32687335

35056012

12731952
12456653

18380738
3452059

21581043
3315500

22722639
14947435

56502210

88491564

75973238

99159957

banks
balances with other banks
Lending to financial
institutions
Investments
Advances
operating fixed assets
differed tax assets
other assets

TOTAL

149999325 171198992 191790988 188042438

10502990

11922324

13773293

14492194

5633051

6013097

9869367

14649380

275685541 328895152 348990764 389070055

LIABILITIES
bills payable

3091135

4138243

3452031

3766144

Borrowing

8394130

21230697

13690222

20653921

deposits and other accounts

sub-ordinate loans
Liab against assets sbj to fin

239509391 273173841 300723858 324759752

3222106
0

3220858
0

2571169
0

7570181
0

deferred tax liabilities

1921338

1379809

208456

179851

other liabilities

7305496

9531860

11291280

10006786

lease

TOTAL
Net Assets

263443596 312675308 331946025 366936635

12241945

16219844

17044739

22133420

share capital

5000000

6500000

7995000

13491536

Reserves

2749533

2414833

3166056

3587969

Inappropriate profit
Surplus on revaluation of

2823072
1669340

4851840
5453171

3447467
2436216

2690728
2363160

assets

ETHICAL VALUES:
15

Professionalism without integrity is like a book without pages

Because the right may not always be obvious, we must be guided in our every
action by set of well-defined values, governing our decision. Alfalah bank
understands that its commitment to satisfy customer needs must be fulfilled
within in a professional and ethical framework.

IMPACT OF MANAGEMENT STYLE ON

EMPLOYEES
Management styles have a great impact on the overall working of an
organization. The key issues, which can arise due to strong authoritative actions by
the management, can be of the following nature:
o Absenteeism
o Irresponsible behavior
o Coordination
o Reporting time delays
o Turnover
But at Bank Alfalah Ltd. these issues have never been provoked till now. This is due
to the fact that employees have been given equal importance as been given to high
level operatives. The following important aspects need consideration.

MOTIVATION
The term motive implies action to satisfy a need. Motivation can be
defined as a willingness to expend energy to achieve a goal or a reward. The
management styles adopted by the bank affect greatly, and employees are
motivated in order to enhance their performance and achieve the derived
goals.

MORALE AND PRODUCTIVITY

16

The employees of the bank possess high morale, and thus exhibit high
productivity. The employees are happy and are also productive workers. Job
attitudes and morale are quite positive for two reasons. Firstly employees
gain social satisfaction from interactions at the work place. Working
conditions and supervision are good; secondly high morale results from high
motivation to produce. In other words we can say that management should
put its eggs in the basket that creates a high-motivated work force.

JOB EFFICIENCY AND SATISFACTION

Consequently the overall impact of the well-equipped management
styled organization is the job efficiency and job satisfaction. At Bank Alfalah
the employees are very much satisfied with the job and the overall working
conditions of the bank, so in due response, the bank is enjoying high
efficiency in managing the time delays in reporting and working operations.

17

GOALS & OBJECTIVES

Goals and objectives are factors through which the companys devotion and
commitment to the job can be seen. If the goals are realistic and achievable, than
surely that organization is doing its job.
Bank Al Falah also has certain goals and objectives which it is trying to
achieve, through its various strategies and operations. The goals and objectives are
mentioned below:
1.

To create a sound base, and through efficient systems achieve modern

banking throughout Pakistan.

2.

By the end of every accounting year there is an increase in deposits. As the

deposit rate of during 2006 was approx 72 Million and the same has been
increased in 2007 by 97 Million.

3.

To create unit banking network in all the branches of Bank Al Falah, the end
of the year. This means that all the operations of the bank, i.e. deposits to
advances, imports, exports, L/C Opening, foreign currency and many more
aspects under one roof, so that the customer can be facilitate in one visit.

4.

Islamic Banking is one of the goals of Bank Al Falah though it has been
initiated in the last fiscal year and it is very acceptable for general public.
However, there is lot of work to do for successful implementation of the
Islamic Banking Plan. In this regard the Bank is opening specific Islamic
Banking Branch under the supervision of its Islamic Banking Division.

18

ORGANIZATIONAL HIRARCY

19

BOARD OF DIRECTORS

H.E. Sheikh Hamdan Bin Mubarak

Al Nahayan
Chairman

Mr. Mohammad Saleem

Akhtar
Chief Executive Officer

Mr. Abdulla Nasser

Hawalileel AlMansoori

Mr. Abdulla Khalil Al

Mutawa

Mr. Ikram UlMajeed Sehgal

Mr.Khalid Mana Saeed Al

Otaiba

Mr. Nadeem Iqbal

Sheikh

20

MANAGEMENT
Chief Executive Officer
Executive Incharge
Strategic Planning & Global
Marketing
Executive Incharge
Human Resources Division

Executive Incharge
International &Treasury Division
Executive Incharge
IT Division

Executive Incharge
Credit Division

Executive Incharge
System & Operation Division.

Executive Incharge
Establishment &
Administratration

Executive Incharge
Credit Monitoring Division

Executive Incharge
Business Development Division
S.A.M./ Car Finance/ Leasing

Executive Incharge
Legal Affairs Division.

Executive Incharge
Audit & Inspection Division
Executive Incharge
Corporate Banking,
SME Financing & Home Loans
Executive Incharge
New Products &
Service Quality Division

Executive Incharge
Finance Division

Executive Incharge
Islamic Banking Division

Executive Incharge
Cards Division

21

DEPARTMENTS
Bank Alfalah Limited has the following departments:
Account Opening Department
Human Resource Department
Trade Finance
Credits
Accounts Department
Administration / Personnel
Special Asset Management (SAM)
MIS Department
Marketing
Cash & Deposits
Foreign Currency Accounts

COMPANY MANAGEMENT SYSTEM

Management means the administration and the governing body that is concerning
the whole organization. All the decision and strategies are been proposed and
evaluated the management of the organization. At Bank Alfalah, the management is
pretty strong and there is lot centralization in the whole network of the bank. The
management at Bank Alfalah has been divided into 3 major parts. i-e, Board of

22

Directors, the Top management, and the group of middle managers, supervisors and
the employees.

THE BOARD OF DIRECTORS:

The upper most part of the management is the Board of Directors or the Executives.
The Board of Directors are responsible for the first phase of the management
process, i-e, planning. So, all the decisions and the strategies are being proposed and
implemented under the instructions and the supervision of the board of directors or
the executives. Also the policies and the overall objectives of the Bank are being
proposed at this level of the organization.

THE TOP MANAGEMENT:

The top management involves the branch managers and the chief managers of the
bank including the operations managers as well. The major responsibilities include
the strategy formulating for the bank and supervising the whole staff at the branch.
They define and interpret the objectives and vision and then formulate policies for
their completion.

THE MIDDLE MANAGEMENT, SUPERVISORS AND THE

EMPLOYEES:

Departmental heads constitute this level of management at Bank

Alfalah.They are directly responsible for planning and controlling the activities of
officers. Finally, the employees whose activities are monitored and controlled
according to the desired objectives
23

THE OVERALL MANAGEMENT

BOARD OF DIRECTORS
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan

- Chairman

Mr. Mohammad Saleem Akhtar

- Chief Executive Officer

Mr. Abdullah Khalil Al-Mutawa

- Director

Mr. Omar Z. Al-Askari

- Director

Mr. Abdullah Naseer Hawaileel Al-Mansoori

- Director

Mr. Nadeem Iqbal Sheikh

- Director

Mr. Ikram Ul-Majeed Sehgal

- Director

THE CORE GROUP

BOARD ADVISORY COMMITTEE
Mr. Abdullah Khalil Al Mutawa
Mr. Khalid Mana Saeed Al Otaiba
Mr. Ganpat Singhvi
Mr. Bashir A. Tahir

CENTRAL MANAGEMENT COMMITTEE

Mr. Mohammad Saleem Akhtar

(Chairman)

Mr. Pervaiz A. Shahid

Mr. Sirrajuddin Aziz
Mr. Mohammad Yousaf
Mr. Ijaz Farooq
Mr. Bakhtiar Khawaja

24

Mr. Arfa Waheed Maklik

Mr. Adil Rasheed
Mr. Shakeel Sadiq
Mr. Adnan Anwar Khan
Mr. Shahid M. Murtaza
Mr. Nadeemul Haq

CORPORATE INFORMATION
Mr. Hamid Ashraf

- Company Secretary

Mr. Zahid Ali H. Jamal

- Chief Financial Officer

Taseer Hadi Khalid & Co. (Chartered Accountants)

B A Building,

- Auditors
- Head Office

I. I. Chundrigar Road,
P. O. Box 6773, Karachi.
www.bankalfalah.com

25

Chief Executive
Officer

Executive
In charge

Credit
Card

Credit

Audit

Internation
al Banking

Marketing

Finance

26

BRANCH SETUP

Assistant

Credit
Marketing

Operations
Mng.Ops

Credit
Admin

Consumer
Finance

Agri
Finance

Help Desk

CD

Accounts

Accounts

CROS

Consumer
Banking

IT

Bkg/Ops/
Cash
Cust serv

Clearing/
Collection
27

Peons

Guards

Driver

Others

THE STRATEGICAL HIERARCHY

The Strategic management model provides a conceptual basis for applying strategic
management. Alternate strategies that an enterprise could pursue can be
categorized into 4 actions:

Integration Strategies

Intensive Strategies

Diversification Strategies

Defensive Strategies

INTEGRATION STRATEGIES:
Forward integration, backward integration, and horizontal integration are
sometimes collectively referred to as vertical integration strategies. Vertical
integration strategies allow a firm to gain control over distributors, suppliers,
and/or competitors.

INTENSIVE STRATEGIES:
Market penetration, market development, and product development are
sometimes referred to as intensive strategies because they require intensive efforts
to improve a firms competitive position with existing products.

28

DIVERSIFICATION STRATEGIES:
Concentric, horizontal and conglomerate are some of the strategies, which
are inculcated under the head of diversification strategies. Overall, diversification
strategies are becoming less and less popular as organizations are finding it more
and more difficult to manage diverse business activities.

DEFENSIVE STRATEGIES:
Another way to pursue strategies is through the defensive way, which includes joint
venture, retrenchment, divestiture and liquidation strategies

29

PORTER'S 5 FORCES ANALYSIS

THREAT OF NEW ENTRANTS

Person can't come along and start up a bank, but there are
services, such as internet bill payment, on which entrepreneurs
can capitalize

Threat is companies offering other financial services. e.g. an

insurance company to start offering mortgage and loan services

POWER OF SUPPLIERS

The suppliers of capital might not pose a big threat

the threat of suppliers luring away human capital because larger

banks are offer incentives and take away trained employees

POWER OF BUYERS

The individual doesn't pose much of a threat to the banking

industry because of high switching cost of mortgage, car loan,
credit card, and mutual funds with one particular bank

corporate clients have banks wrapped around their little fingers

Financial institutions can switch them by offering better exchange

rates, more services, and exposure to foreign capital markets

AVAILABILITY OF SUBSTITUTES

there are plenty of substitutes in the banking industry

there is a non-banking financial services company that can offer

similar services like Insurance, mutual funds companies

n the lending side of the business, banks are seeing competition

rise from unconventional sources of capital

30

COMPETITIVE RIVALRY

Banks must attempt to lure clients away from competitor banks.

They do this by offering lower financing, preferred rates and
investment services

They compete on the best and fastest services

Larger banks would prefer to take over or merge with another

bank rather than spend the money to market and advertise

31

HORIZONTAL ANALYSIS

32

BANK ALFALAH LIMITED

INCOME STATEMENT
(2005-

(2006-

06)
73.04

21.67

Net Sales

%
43.61

%
87.26

20.41%

Other Income

%
68.48

%
30.33

-13.13%

%
111.42

14.05%

% 9.11%
84.18 239.91

22.32%

Description

Total Revenues
Cost of Goods Sold

07)

(2007-08)

%
110.06

%
19.24

49.09%

%
36.23

%
40.06

25.67%

%
76.76

28.15%

Operating Income
Interest Expenses
Foreign Exchange (Loss) Gain
Associated Company (Loss)

0.10%
0.00%
0.00%

%
0.00%
0.00%

-60.43%
0.00%
0.00%

Gain
Other Non operating (Loss)

0.00%

0.00%

0.00%

Gain

0.00%
-

0.00%
74.95

0.00%

Income Tax Expense

Reserve Charges

6.73%
0.00%

%
0.00%
77.58

-64.89%
0.00%

3.56%
119.32

%
49.62

-58.43%

71.86%

Provisions
Total Direct Expenses
Selling, General &
Administrative

Income Before Extra Ordinary

Items
Provisions Brought forward

33

Revaluation of assets

Minority Interests
Net Income

4.84%

0.00%

0.00%
42.07

5.71%
0.00%
62.64

0.00%
3.34%

VERTICAL ANALYSIS

34

BANK ALFALAH LIMITED

INCOME STATEMENT
VERTICAL ANALYSIS
Description
Net Sales
Other Income

2005
2006
2007
100.00 100.00 100.00
%
18.33

%
15.22

2008
100.00

%
23.42

%
16.90

%
%
%
118.33 115.22 123.42

%
116.90

%
-

%
-

%
-

%
-

58.83

71.88

64.46

65.49

%
-

11.41

3.10%
-

3.30%
-

9.22%
-

%
-

61.93

75.18

73.68

76.90

%
-

%
-

%
-

%
-

35.47

27.93

32.15

34.22

%
20.93

%
12.11

%
17.59

5.78%

Interest Expenses
Foreign Exchange (Loss) Gain
Associated Company (Loss) Gain
Other Non operating (Loss) Gain

0.00%
0.00%
0.00%
0.00%
-

0.00%
0.00%
0.00%
0.00%
-

0.00%
0.00%
0.00%
0.00%
-

0.00%
0.00%
0.00%
0.00%

Income Tax Expense

Reserve Charges

7.03%
0.00%
13.90

3.79%
0.00%

5.45% -1.59%
0.00% 0.00%
12.14

8.32%

Total Revenues

Cost of Goods Sold

Provisions

Total Direct Expenses

Selling, General & Administrative

Operating Income

Income Before Extra Ordinary

Items

4.19%

35

Provisions Brought forward

Revaluation of assets
Minority Interests
Net Income

10.95

15.63

7.02%
0.20%
0.00%
21.13

8.90%
0.12%
0.00%
17.34

%
0.10%
0.00%
23.18

%
0.08%
0.00%
19.90

VALUATION
Projected statements

36

37

RESIDUAL INCOME MODEL

38

FREE CASH FLOW

FREE CASH FLOW MODEL
Description
cash flow from operating
activities
less dividend
less capital expenditure
Free cash flow

2005
34,877,8
85
360,000
1,799,19
5
32,718,6
90

2006
7,852,3
62
0
3,542,3
12
4,310,0
50

2007
2008
39,645,3 2,499,6
25
06
0 975,000
1,074,3
969,185
14
38,676,1
40 450,292

FV =
pv(1+i)^n
450292=32718690(1+g)
^3
450292/32718690=(1+g
)^3
g =
-0.76
WACC= w1ke+w2kd(1tax)
3.7955

39

SEGMENTATION
BASED ON THREE BASIS:
1. Demographic.
2. Psychographic.
3. Behavioral Style

DEMOGRAPHIC:
1. Income.
2. Occupation.
3. Family Lifecycle.
40

 PSYCHOGRAPHIC:
1. Life Style.
2. Social class

BEHAVIORAL:
1. Benefits.
2. Services.
3. Quality.
4. Convenience.

TARGET MARKET
Bank Alfalah target market consists of individual clients as well as a number of
business organizations. Due to different market segments, BALs different branches
have their target markets.
To capture the import business in Pakistan, the targeted segments is valid markets
known as business & commercial hub of Pakistan. Due to specialized services
provided by BAL, and its highly competitive foreign exchange rates, most of the
major importers

in this area deal with BAL. Examples include; Mughal Steel and International, New
Shalimar Steel, Vellcone International, Rana Brothers etc.
41

As far as the individual clients are concerned, the targeted segment is posh areas
like DHA.

POSITIONING
The distinguish place of product/service in target customer mind. BAL positioned
itself as caring bank and customized banking When customer thinks about Alfalah
bank the following points come in his mind.

Consumer banking.

Easy approach to all departments.

Felling of self respect.

Relatedness.

Fulfill of there dreams like (build own home, buy personal cars, etc).

Guaranteed profit.

Security.

All these thinks are in the customer mind. Due to Alfalah aggressive growth
when ever customer think about banking sector the first bank comes in mind
that would be Alfalah bank. Alfalah bank positioned also as a fats growing
.where there is a new town there would be the a branch of Alfalah provide
maximum products/services under one roof .

UNIQUE POSITING
Positing mean image of service/Product in customer mind it can be created by
various attributes or qualities of product /service. BAL positioned itself by a unique
way that It is in the customer mind that

42

BAL is aggressive growing bank

New town opened Alfalah reach there first

BAL Spreads its branches at Teasel Level in Pakistan

RECRUITMENT
The development of a pool of applicants for jobs in the organization
Sources Of Job Recruitments:
Following are the some sources of Job Recruitment in Bank Alfalah:

By Universities

By Website

By Coaching

By Newspapers

RECRUITMENT PROCESS:
Following are the recruitment processes in Bank Alfalah:
1.) Assess need (strategic planning and tactical planning)
2.) Create a pool of candidates:
3.) Screen out candidates:
4.) Make selection
5.) Evaluate recruitment process:

1.) ASSESS NEED (STRATEGIC PLANNING AND TACTICAL

PLANNING)
43

There is no fixed quota of number of employees to be recruited, it depends on need

and the strategic (organizational) and tactical (branch level) requirements.

2.) CREATE A POOL OF CANDIDATES:

The prospect candidates are attracted through advertisement in the newspapers, on
the website online and also the walk in.

3.) SCREEN OUT CANDIDATES:

Through interviews and tests they screen out the less attractive candidates.

4.) MAKE SELECTION:

After further interviews and other processes the final candidate is selected.
Questions in an interview are made by doing proper job analysis of the job. That
includes identifying the job duties and requirements.

5.) EVALUATE RECRUITMENT PROCESS:

Evaluate effectiveness of recruitment by comparing the results to expected results.

TYPES OF RECRUITMENT
There are two types of recruitment in Bank Alfalah:
1. Internal
2. External

1. INTERNAL:
44

Includes recruiting of already existing employees for new jobs within the
organization

2. EXTERNAL:
Includes bringing new blood in an organization Recruiting people who are new

INTERNAL RECRUITMENT IN BANK ALFALAH

Bank Alfalah normally

Less emphasis on Internal Recruitment

Existing employees can respond to new job offers as externals

Performance appraisals

EXTERNAL RECRUITMENT IN BANK ALFALAH

In Bank Alfalah external recruitment is on

Need basis

No yearly or monthly recruitments

Every branch has its own HR department

Head office sanctions recruitment for new employees

Adds in leading newspapers (Dawn, Jang)

College Recruitment (under planning)

Online application forms

Short listing

Interviews

Decisions made through head office

No help from recruiting agencies

45

DIRECT INDUCTION OF FRESH CANDIDATES

Through direct induction of fresh candidates, Bank Alfalah is able to employ fresh
postgraduate candidates for its organization and the process is as follows:

EXPERIENCED PROFESSIONALS
Based on requirements of experienced staff, Bank Alfalah also recruits talent from
the marketplace. Bank Alfalah offers competitive salary / benefits to worthy
professionals at all levels who wish to join hands with Bank Alfalah The procedure
for selecting such professionals is as follows:

46

EXECUTIVE RECRUITMENTS:
In Bank Alfalah, Executive recruitments are done by CEO.
RECRUITMENT OF MTOS (MANAGEMENT TRAINING OFFICERS):
In Bank Alfalah, recruitment of MTOs is done on Yearly Basis

RECRUITMENT OF INTERNEES:
In Bank Alfalah, recruitment of Internees is on
> Walk-ins
> Letter of recommendation from college

Recruitment

Selection

Orientation

New Employee

Training

HUMAN RESOURCE ASSESSMENT

47

Bank Alfalah Ltd. has worked hard to build its human resource team and ensure
that the quality of newly inducted staff is not comprised with growth. For
recruitment and selection banks policy is to hire suitable candidates. By suitable
candidates bank refers to candidates having proper educational qualification,
experience and background.
Bank Alfalah not only is one of the fastest growing bank in Pakistan, that provides
its customers with a number of financial services, but is also a great employer of

human resources, that provides its employees with a conducive environment that not
only is challenging but also helps them in applying and gaining knowledge.
The above figures show that all prospect employees feel confidence in Bank Alfalah
as their prospective employer. Bank Alfalah, as a response to this confidence has
three ways of employing prospect employees for their organization.

OREINTATION
The orientation program of Bank Alfalah contains:

Introductory Lecture

Printed Employee Hand book in Bank Alfalah

Time Duration

48

Familiarize new employees with their new jobs, work units and organization
in general.

BATCH TRAINEES
All employees selected through this process, have to first complete a probation
period before given a complete status of a Bank Alfalah employee. The major benefit
of this procedure is that Bank Alfalah can employee a large number of employees at
a lower cost. The procedure for accepting a batch trainee is as follows:

TRAINING
The process of teaching new employee the basic skills
they need to perform their jobs.

BASIC STEPS IN TRAINING:

Following are the basic steps in training employees in Bank Alfalah:

Need Analysis

Instructional Design

Validation

Implementation

Evaluation and follow up

Training Mangers and faculty is hired for training purposes.

Training Mangers are in their respective head offices

THE TRAINING CENTERS OF BANK ALFALAH:

49

Bank Alfalahs training centers are in Karachi & Lahore. These training centers are
responsible for providing multi-level high quality training programs in following
areas:
- Consumer banking operations
- Credit administration/documentation
- Trade finance operations
- Marketing & selling skills
- Customer service skills
- Performance appraisal skills
- Time management & personal effectiveness

TWO SCENARIOS OF TRAINING

TRAINING CALENDAR
In Bank Alfalah, Head office devises a calendar according to which they train their
employees

NEED BASIS:
In Bank Alfalah, Branch Manger realizes that specific department
lacks in some skill.

TWO TYPES OF TRAINING

On the Job

Off the Job

50

Employee

ON THE JOB TRAINING:

Training a person to learn a job while working on it

OFF THE JOB TRAINING:

Training an employee to learn a job while providing him a class room environment

ON THE JOB TRAINING

On The Job Training in Bank Alfalah is done by

Making teams of new employees with a few old specialized

Employees.

Contribution to overall productivity.

Lower cost

Lower Time

MANAGEMENT TRAINING OFFICERS (MTO)

TRAINING PROGRAM:
In Bank Alfalah, MTOs training program is 3 months On the Job Training & 9
months Off the Job Training.

OFF THE JOB TRAINING

51

In Bank Alfalah, Off the Job Training is done by

In-house training ,done at least once a year

Employees from all over Pakistan attend seminars and courses.

Employees are tested after the completion of the course

Specialist trainers are hired

Provide a proper learning environment to the employees

Professional faculty is hired

Increases employee loyalty

Labor productivity is zero

Cost is high

TRAINING & DEVELOPMENT:

In Bank Alfalah, employee is trained & developed in following different operations:

Consumer Banking Operations

Credit Marketing & Credit Proposals

Credit Administration/Documentation

Trade Finance Operations

Marketing & Selling Skills

Customer Services Skills

Performance Appraisal Skills (Self Appraisal)

Time Management & Personal Effectiveness

52

PERFORMANCE APPRAISAL SYSTEM

Evaluating an employees current and / or past
performance relative to his or her performance
standards
The performances of employees are appraised yearly at Alfalah Bank. HR head said
that
Performance appraisal helps us in estimating employees current performance,
setting work standards and then providing feedback to employees with the aim of
eliminating performance deficiencies.

APPRAISAL METHOD AT ALFALAH

The Appraisal Methods at Bank Alfalah are
1. Self Appraisal Method

Ratting

Evaluation

53

2. Problems During Appraisal

Unfair Assessment (Bias)

BEHAVIOR APPRAISAL
In this service oriented industry behavior is as important as performance on job. To
manage behaviors and appraise company has devised a managing behavior system
to evaluate their core values. Each employee in such a system is rated against the
behavior performance achieved, against the required benchmark applicable,
depending on the Job Grade.

PERFORMANCE STANDARDS AT ALFALAH

Alfalah Bank Has laid down the following Performance Standards:
1-Demonstrates Commitment
2-Aligns Activities
3-Promotes Alfalah Long Term Objectives

MANAGING CAREER & FAIR TREATEMENT

In Bank Alfalah, Managing Career & Fair Treatment is based on:

Promotion Decision

How To Handle Transfer

Communication At Alfalah

54

Manage Dismissals

PAY PLANS & INCENTIVES AT ALFALAH

PAY PLANS:
Pay plans Alfalah are establish on the basis of job ratings. All jobs are ranked from
top to bottom, on the bases of compensable factor. Employee with higher rank gets
highest pay and incentives.

COMPENSATION PLANS FOR EMPLOYEES:

In Bank Alfalah, compensation plan for employees includes:

Basic Salary

Bonuses

Medical Facilities

Allowances

INCENTIVE PLANS:
In Bank Alfalah, incentive are provided to

Managers and Executives

Middle and Lower Level Employees

EMPLOYEE BENEFIT & SERVICES

The employee benefits & services provided by Bank Alfalah are

Health & Life Insurance

Paid Annual Vacations, Leaves, Holidays

55

Health Insurance Of Parents

Pension & Provident Fund

Discount On Company Products

Annual Bonuses

Educational Plans

Social Events

Customized Services

Creative, Learning & Healthy Environment

Highly Qualified, Experienced & Committed Staff

Profit & Gain Sharing Plans

FINANCIAL BENEFITS:
The financial benefits provided by Bank Alfalah to its employees are

SEVERANCE PAY
Severance Pay is given according to
1. Policy
2. Give Full & Final Settlement
3. Half Salary As A Complementary (Optional)

SUPPLEMENTAL UNEMPLOYMENT BENEFITS

Supplemental Unemployment Benefits are given
1. During Annual Routine Audits
2. Other Privileges
56

INSURANCE BENEFITS:
BANK ALFALAH GIVES INSURANCE BENEFITS ON

Workers Compensation

Complete Life Insurance

Hospitalization & Medical Insurance

OTHER BENEFITS:
Other benefits provided by Bank Alfalah to its employees are

Pregnancy Compensation

2 Bonuses For Each Employee

Faster Promotion

Introduction Of MENTORS

Bank Alfalah MOHTISIB

Staff Suggestion Scheme

Family Community Concept

Salary Of Own Choice

Job Rotation Facility

Prizes & Gifts

Refreshment Packages

Short Courses & Trainings + Training Material

Traveling & Stay Allowances

Communication Benefits

RETIREMENT BENEFITS:
Bank Alfalah gives retirement benefits on the basis of
57

Age

Pension Plans

Provident Fund Facility

Early Retirement Window

No-golden Offerings & Defined Contrib. Plan

No-social Security & Deferred Profit Sharing

SERVICES BENEFITS:
Following services benefits are provide by Bank Alfalah to the employees:

Introduction Of MENTORS (HR REPRESENTATIVE)

Counseling Services -

Financial, Career, Job-placement, Grievances

Bank Alfalah Mohtisib

Lunch & Learn Program

Employee Transportation

Educational & Training Subsidies

Flexible Benefits Programs (Few-limitations)

No-subsidized Child & Elder Care

EMPLOYEE SAFETY & HEALTH CONTRIBUTION

BANK ALFALAH IS

Strict About Occupational Safety Laws

Obeying The OSHA Standards

Major Responsibility Br. Manager

Routine Safety Audits

58

Inspection & Citations By Head Branch

Managing Proper Responsibilities & Rights Of

Both Employer & Employee

AVOIDING THE CAUSES OF ACCIDENTS:

Bank Alfalahs management plays an important role in avoiding the three causes of
accidents

Unsafe conditions

Unsafe acts

Accident prone people

HEALTH PROBLEMS & REMIEDIES

Following are the steps that taken by Bank Alfalahs HR Department to solve the
health problems in the organization and make possible remedial changes

Smoke Free Environment

Role Of Mentors ; Regarding

Job-stress , Burn-out , Health Conditions

Remedies For VDTS & Other Tools

Vaccinations & Health Treatments

OTHER PRECAUTIONARY MEASURES:

Other precautionary measures taken by Bank Alfalah for the safety of employees
are
1. Personalized Attention To Employees
2. Angry Employees Management
3. Temporary Stop The Working
4. Counseling
5. Real Root Problem
59

6. Use Of Personal Skills

7. Professional Attitude Adopted
8. Future Avoidance

WORK DONE BY ME
I was been assigned by our department, Bank Alfalah Ltd, Garden Town
Branch, Lahore as my internship organization. There I worked for about eight
weeks.
I worked in three departments. I started up with account opening
(operations), where I worked for about three weeks and learned about different
types of accounts, and how to open a new account, etc. I was working under the
supervision of the Manager Operations, Mr. Raheel Yaqoob at my internship in that
department.
After working in Operations, I was moved to Credits, where I learned that
how finance is advanced to the clients and different types of facilities the bank is
providing to its customers. There I worked for about two weeks with Mr. Ateeq-urRehman Sidu officer of CAD Department Mr. Ahmed Moin Lodhi officer of car
Finance Department and under supervision and training of the employees working
as the finance officers as well.
Garden Town Branch has got a wide range of excellent services departments been
supervised under the best ambiance and a very well educated staff. The following
list is showing the main departments at Garden Town Branch

Operations Department

Agri Finance Department

Car Finance Department

Accounts Department

IT Department

60

The Credit Administration Department

Now, I am going to discuss the six departments with which I was in touch during my
internship program. That is, the Account Opening department, the Remittance
department the car finance department, the Accounts department and the Credits
department.

THE ACCOUNT OPENING DEPARTMENT

Borrowing funds from different sources has become an essential feature of todays
business enterprises. But in the case of bank borrowing funds from outside parties is
more vital because the borrowed capital of a bank is much greater their own capital.
Banks borrowing is mostly in the form of deposits. These deposits are lent out to
different parties such deposit creation is done through open an account in the bank.
The department that is responsible for opening and closing an account
assumes immense significance and holds a central place in the basic banking
operations. The Account opening department was the very first experience of my
practical life being working with a bank, during my internship with Bank Alfalah
Ltd.
This department is the best way to start with the banking career or training.
This is because the ways you deal with the customers give a lot exposure to you for
the coming days in banking because the bankers are always in contact with
customers as customers are the biggest source of assets for the bank. I really enjoyed
my stay at this department as I got to interact with the customers directly for the
first time. I was given under the supervision of Mr. Naveed Khalid, who is the
Incharge of Accounts Opening
During my stay at this department I got to fill the forms of individuals who
wanted to get their accounts opened at Bank Alfalah Limited, fill the cheque and
deposit slips of customers who were not literate enough or needed instructions, and I
also got the opportunity to give advice to the customers regarding the requirements

61

of account opening and the benefits of opening an account with Bank Alfalah
Limited.
Working with the Accounts opening department gave me a lot of courage as
it taught me the way that you should deal with the customers of the bank. Now
coming towards the documentations, stuff requirement at this department for the
accounts opening process.

TYPES OF ACCOUNT
Current Account.
Saving Account.
Notice Deposit.
Term Deposit.

CURRENT ACCOUNT
The current account is the most common account and the most preferred
amongst business concerns. The theoretical explanation for this would be that they
can function more efficiently but since in reality there are no restrictions on any
withdrawal. The only reason we can think of is that current account facilitates
online banking which saves time to a considerable extent. No interest is being
credited to the customers accounts that are maintaining the current accounts with
the bank. Current account enables the client to do cash transactions in a more
efficient manner.
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. 10,000.

62

 BASIC BANKING ACCOUNT:

1. Initial deposit for account opening is Rs. 1,000 with no minimum balance
requirement.
2. Non interest bearing checking account.
3. Maximum 2 deposits & 2 withdrawals through cheque are allowed.
4. Free debit card can be used to withdraw cash and make purchases at
thousands of outlets across Pakistan which provides access to funds 24
hours a day.
5. No restriction on ATM withdrawal.

THE PLS SAVINGS 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 2 % per month. The minimum balance requirement for opening the
account is Rs.5000.
The PLS savings Account is meant for those people who have got an aptitude
towards earning some profit on their amount deposited for sometime with the bank.
Individuals who wish to earn profit/interest on their investment normally maintain
the profit and loss sharing account but in order to earn interest the client is required
to keep his/her deposits with the bank for some time. For this purpose, there are
some restrictions on withdrawal of money from a Profit and Loss sharing account
but in general banking practice there is no restriction on any with drawl from a
Profit and Loss sharing account. The interest/profit is paid half yearly.

NOTICE DEPOSITS

63

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.

NOTICE DEPOSIT IS OF TWO TYPES.

One for which a prior notice of 30 days and is required from the customer before
withdrawing deposited amount and for which rate return is 4.00%.
Second for which a prior notice of 30 days and above is required from the
customer before withdrawing deposited amount and for which the rate of return
is 4.50 %.

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 3.25 % to 6.50 %. The term deposit
account varies from one month to 3 years and the minimum balance requirement is
Rs. 50,000.

PROFIT CALCULATION METHODS

DAILY PRODUCT BASIS
Deposited Amount Rate of return

64

365 (No. of days in a year)

AVERAGE MONTH BALANCE
Sum of daily end Balance Rate of return
No. of days in month

MINIMUM MONTH BALANCE

Any minimum balance during the month is taken for calculating profit

SAVING A/C (05 DAYS _ MINIMUM MONTHLY BALANCE).

Minimum Balance of first 5 days is compared to the minimum balance of the

minimum balance of remaining 25 days. Less balance is calculated for profit.
The amount of profit is given to deposits in three ways:
Cash payment (only in case of term Deposits). Or as per customer
requirement.
By sending bank draft to depositors home address or officers or whichever is
specified as mailing address.
The depositors account is credited at maturity.

Amount of Deposits & Other Accounts in 2008

Fixed Deposits. Rs.88.851 billion
Saving Deposits... Rs78.893 billion

65

Current Accounts. Rs58.234 billion

OthersRs. 3.616 billion
Financial institutions
Remunerative Deposits. Rs. 9.892 billion
Non-Remunerative Deposits..Rs. 0.021 billion

Particulars of Deposits & Other Accounts

In Local Currency Rs. 214.824 billion
In Foreign Currencies. Rs. 24.685 billion

Total Deposits

Rs. 239.509 billion

The main document in this department is, of course, the Account Opening Form.

PARTICULARS AT THE ACCOUNT OPENING FORM:

In the account opening form the client is required to provide the following
information. The first part establishes the currency in which the account is to be
maintained / operated. The currencies include
o Pakistani rupee.
o U.S. dollar
o Pound sterling
o Euro

The second part then establishes the preference regarding the type of account to
be maintained. The various choices offered are
66

Savings account

o Current account.
o Royal profit
For the chequing account, there are different types of account holders are required
for all these types of account holders. The operation/procedure requirement that is
needed for Individual Account differs greatly from the Joint Accounts
proprietorship A/C, Partnership A/C, Private Limited Company A/C and Public
Limited Company A/C.
Now, during my internship at the Account Opening department at Bank Alfalah
Ltd. Garden Town Branch, I found out the following documentation and writings
are required in order to open an account with us:

The first thing mentioned at the account opening form is the Title of the
account. Title of the account is to be written in block letters. By title of an
account we mean the name (either of the individual or of the business
concern) with which the account is to be opened and operated.

The client is supposed to provide the information whether the account

would be maintained singly (only one person operates the account) or
jointly (two or more than two persons maintain the account).

The name of the person who intends to operate the account.

Provision of either Fathers or the Husbands name is also a pre-requisite.
Occupation of the prospective account holder.
67

 The name and complete address of the employer.

Nationality of the Account opener
Country of residence is to be specified.
Contact numbers both the cellular and the landline numbers are to be
provided in addition to the segregation of the residential and the office
phone as well.

The national identity card, of course is an integral part of the account

opening application.

Passport number, if the prospective client has got one.

Another requirement is the date and place of issue of the national identity
card.

The prospective client also has to provide the name, address and
relationship of any one of his/her close relatives in order to facilitate the
communication problem. The clients often have a misconception that
there next of kin might, if some peculiar circumstances arise, get the
profit out of his account but this is not the case. The name and address of
a close relative is only recorded in order to undertake necessary
communication when needed.

68

 In case of a business concern there are two more things that are to be
provided by the business.

Type of organization
The various types of organization which are present in Pakistan at
present are:

Public Limited Company

Private Limited Company

Partnership

Association/Club/Society

Sole-Proprietorship

Some special documentation is also required like the certifications

regarding the incorporation and commencement of business and the
Form 29. The business concerns also have to give their full name, brief
description of the business, date of incorporation, and place of
incorporation, national tax number, telephone number and fax number.

The choice of either the deduction or non-deduction of zakat also needs to

be highlighted. Zakat is deducted out of a Musharakah savings account
and not in the case f the current accounts...

Details of other accounts maintained with other branches of Bank Alfalah

Ltd. or other banks are also to be given.

69

 The name, signatures, and account number of the introducer is a very

essential prerequisite in order to facilitate the opening of an account. The
introducer is a person who already has an account in the same branch. It
can also be a person from the staff of the branch as well. This
introduction is the mandatory requirement in order to open an account in
order to trace out the defaulter in case of defaults.

Then the client also has to put forth the instructions regarding as to
whether the account would be maintained on the basis of either or
survivor, jointly or any one of us.

After this three signatures of the client are needed and if it is an account
of a business concern then the rubber stamp of the company/organization
is also needed below the three signatures.

In case of a joint account all the persons unanimously might give the right
to operate the account to one person. This right is also termed as mandate
for joint account. If the mandate is given to a person all join account
holders must sign as an evidence of their approval. The names of persons
are written on the title of A/C and on S.S. card.

INDIVIDUAL ACCOUNT
Any individual or proprietor of business can open an individual account at BAL.
PLS (profit and loss sharing) saving accounts can be opened with the minimum
balance Rs. 5000/- with expected profit rate is 2% on Rs. 25,000 or above. Following
requirements has to be fulfilled for this account.
Signature of customer on back of AOF.

70

 Mention next of kin (nominee)

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

JOINT ACCOUNT
When different people want to or need to share a single account it is called joint
account. The names of persons are written on the title of A/C and on S.S. card.
Joint A/C cannot be opened by single person. Both persons have to sign on cheque.
When two or more person neither partner nor trustee open account in their name is
joint account.

REQUIREMENTS
Sign of both customers on back of AOF
Sign on joint A/C # mandate
Name and A/C # of introducer
NIC copies of both members.
Mode of operation.
In case of account opened by a business concern there are some documents that are
needed to be attached with the account opening form. The details of these
documents are given below.

LIMITED COMPANY:

71

 Copy of certificate of incorporation

Memorandum and Articles of Association
List of Directors
Copy of the board resolution
Certificate of Commencement of Business
Copies of CNICs of Directors

PARTNERSHIP:
Partnership deed certified copy
NIC photocopies of all partners.
Partnership mandate for account signed by all the partners
A letter duly signed by all the partners containing the operating instructions
of the account also has to be taken.

CLUB/SOCIETY/ASSOCIATION:
Copy of rules/ by-laws
Copy of registration (if applicable)
List of Executive member management committee/management board etc
Certified copy of Resolution
NIC of all members of the management body

SOLE PROPRIETORSHIP / INDIVIDUAL:

NIC/ Passport photocopy
Letter from Proprietor confirming sole proprietorship

72

TERM AND CONDITIONS GOVERNING THE

ACCOUNT
ACCOUNT

Each Account will be allotted a distinctive number, which should be quoted

in all correspondence with the bank relating to the account.

The account should be subject to the applicable laws of Pakistan and

prevailing rules, regulations and directives of the State Bank of Pakistan.

MINIMUM BALANCE
Subject to the regulations of State Bank of Pakistan, the customer should maintain a
minimum credit balance in the account as may be prescribed by Bank from time to
time. The bank reserves the right to close the account after giving 14 days notice if
the customer fails to maintain the required minimum balance in the account.

DEPOSITS
(I) All deposits in the account should be accompanied by pay in slip showing the
correct title & account number to be credited.
(II) If the amount indicated on the deposit slip differs from that later cash
account the banks count shall be final and conclusive.
(III) Proceeds of a cheque deposited in the account for collection will be value dated
after receipt of the proceeds thereof.
(IV) In receiving cheque/instruments the bank acts only a collective agent of the
customer

&

assumes

no

responsibility

for

the

realization

of

such

cheques/instruments.
73

The bank may refuse to accept such cheques/instruments drawn in favor of third
party. The customer shall not draw against unclear cheques/instruments though
credited.
(V) The bank shall recover return cheque charges at the rate fixed by the bank by
dividing the account on every cheque deposited for collection and return unpaid.
(VI) The bank is realizes the services of other bank, customer do so for account and
the sole risk of the customer. The bank assumes no liability should the instruction is
transmits is not carried by such banks.
(VII) The bank shall not be responsible for the delay or loss in transit of any cheque
not for any act, omission, neglect, default, and failure of any correspondent bank,
agent or sub agent or for any reason beyond the control of the bank.

WITHDRAWALS
(I) Withdrawals from the account shall only be made by using cheque books
supplied by the bank at the request of the customer. The bank reserves the right to
withdraw cheque book facility without notice if in the opinion of the bank the
account is not being maintained or operated in accordance with these terms and
conditions or for any other reason.
(II) The customer shall exercise care when drawing cheques and agree that
cheques will not be drawn in a manner which may enable a cheque to be altered in a
manner which is not readily detectable.
(III) The customer shall ensure safe keeping of the cheque book and shall not
allow access to the cheque book to any unauthorized person. In case of loss or theft
of the chequebook or any cheque leaf, the customer will inform the bank, if he will
not then he will be himself responsible for any loss.

MINORS ACCOUNT

74

In respect of an account opened in the name of a minor, the bank shall be entitled to
act on the instructions received from the guardian name on the account opening
form, irrespective of whether the minor account holder continues to be a minor or
not unless the bank receives written instructions from the guardian or a notice to
the contrary from an appropriate authority.

STATEMENT OF ACCOUNT
The bank shall quarterly or at such other interval as it may deem fit send to
the customer statement of account and the customer shall check the entries made
therein. In case of any discrepancy or error in the statement of account, the
customer will notify the bank within 14 days of receipt of the statement.

HOLD MAIL FACILITY

Upon written request of the customer, the bank may in its sole discretion
provide a hold mail facility. The customer hereby waives his right to question any
detail appearing in the hold mail communication or statement of account
irrespective of their actual receipt. The customer accepts all risks and
responsibilities in this regard.

STOP PAYMENT INSTRUCTIONS

The bank may, in its absolute discretion, accept stop payment instructions from
customer if a cheque is reported lost or stolen, provided the necessary details of the
lost/stolen cheque given by the customer.

75

DEATH OF A CUSTOMER
In case of death of individual customer, the bank will permit no withdrawal from
that account after receiving notice of customers death, except on production of a
succession certificate or other court order from a court of competent jurisdiction.
Now, there are some documents that are always there with the account
opening forms. These things need to be filled in by the customers efficiently and
carefully. These are:

Signature Specimen Card.

Cheque Book Requisition.
The Signature specimen card basically contains information that is basically
a repertoire of information given in the account opening form, but in this card the
client vividly puts his signatures as a specimen, which are scanned and stored in an
intelligent terminal for future use and reference.
The Cheque Book requisition basically serves as an application to issue a
Chequebook. The client also fills it up and submits it along with the account opening
form as a result of which he is issued a Chequebook once his account is approved. As
regards the Chequebook one of the most important entries in a Chequebook
requisition is the series number of Cheques that correspond with the numbers of the
cheques contained in the Chequebook issued to the client

PROCEDURE OF OPENING AN ACCOUNT

THE ACCOUNT OPENING FORM:
76

When a client comes to the bank, and makes a request for opening of an A/C.
The officer says that first fill up a prescribed application form. If he/she
wants to open a PLS A/C, then he/she has to fill a form according to the
account.

COMPLETION OF THE FORM:

The name, occupation, and complete address of the person opening the
account are written in the columns are provided in the form. One signature
of the person is taken on the face of the form and one is taken on the
backside. These signatures should be usual signatures and he would operate
the account with them future.

INTRODUCTION:
The introduction of a current account holder is accepted for the opening of
either a current account or a solving account. The introduction of saving
bank account is accepted only for saving bank accounts. The signature of the
account-holder introducing the account is obtained at the place provided for
in the account opening form.

SPECIMEN SIGNATURE CARD (S. S. CARD):

It is card on which specimen of applicants signature are taken for future
reference. Every time a cheque is presented for payment, the signature on the
cheque is verified by comparing it with S.S Card. In case of joint account two
applicants can sign on one SS card. In case of more than two joint account
holders more than one SS card are required.

77

 ACCOUNT NUMBER:
As now a days Bank Alfalah has acquired centralized banking system where
all the branches are directly connected to Head office. When customers give
all the information about him, this information is entered into centralized
data base. When this procedure is completed, the system automatically
generated the account number of that customer. Due to this system the
process of account opening becomes fast and also there is no chance of any
mistake.
The account numbers of various accounts start with the following series

Account title

Account number

Current account
Saving account
Royal profit account
Ter m d e p o s i t a c c o u n t
Car finance account
Agri finance account

01
02
029
03
0191
0141

ISSUANCE OF CHEQUE BOOK:

After opening an A/C with the bank, the A/C holder once again makes a
request in the name of bank for the issuance of a chequebook. The A/C
holder mentions title of A/C, A/C number, sign it properly and mentions the
no of leaves he requires. Normally BAL issues a chequebook having at least
25 leaves. Every chequebook also contains one leaf that is used for another
issue of a Chequebook

78

 BANK ALFALAH ISSUES THE FOLLOWING

CHEQUEBOOKS.
o Saving account - 25 leaves
o Current account - 50 leaves
o Current account - 25 leaves
o Foreign currency $ - 10 leaves
o Foreign currency - 10 leaves
Loose cheques are also issued in some cases.

ENTRY OF CHEQUE BOOK:

Before issuance of a chequebook, the employee performs certain functions.
They include:
o Stamping every leaf with specific A/C number.
o Enters it in the chequebook issue register.
o Check whether or not a senior officer has verified the signatures, if no
then first he gets them verified.
o If the check book is of photo account then be sure that each and every
leaf of cheque book should carry photo account stamp
After entry in the manual register, the employee issues the chequebook to the
A/C holder after his/her signature on the register.

FILLING OF ACCOUNT OPENING FORMS:

79

For current and saving account, separate files are maintained in which the
forms are pasted or punched in numerical order and kept under lock and key
in fireproof steel or safe. This is because these forms are the basic documents
of the contract with the customer.

MAINTAINING THE COMPUTER RECORD:

After opening of account, all information regarding the account is entered
into the computer. Currently, a program named Bank Smart is being used
for this purpose. Record of all the transactions regarding the account of a
customer is kept updated in the computer.

PROCEDURE FOLLOWED IN ORDER TO CLOSE

AN ACCOUNT:
Now, coming towards the procedure for the closing of an account at Bank
Alfalah, the following steps will be followed.

The client who wishes to close an account first has to give an application,
duly signed on the pre-printed application of the bank. The client has to
attach this application with the liability form (explained below). The
client can also give an application on a plain paper, but correct signatures
are very necessary.

Then it has to be made sure that if the account to be closed is a saving or

Royal Profit then the account balance before closing should be zero. In
case of these two types of accounts the bank does not take any closing

80

charges. If a client wishes to close a current account then the bank

charges Rs.150, so at the time of closing the balance should be Rs.150.

Along with the application to close the account clients Chequebook is

also received from him and then it is destroyed in order to prevent any
misuse in the future.

A liability form is filled and sent to the Credit Department in order to

Cheque that the customer does not owe the bank a single penny in any
regard. A debit voucher and a credit voucher are also attached to the
liability form.

When the Credit department approves that the customer does not owe
any money to the bank and the form is returned to the account opening
department then the original account opening form pasted in the ledger
when the account was opened is marked account closed along with the
date on which it is so marked. One thing has to be taken into immediate
consideration that the account number allotted to the client (who has
closed his account), after closure of the account becomes useless and is not
allotted to any one in the future.

After approval of the liability form, it is sent to the Cash Department so

that the officer who scanned it in the first place could return the specimen
signature card to the account-opening department.

Once the S. S. Card is received back from the concerned official then the
liability form, the clients application along with the specimen signature
card is pasted in the ledger right along side the original account opening
form. The form has to be pasted with the original account opening form
even if the account was opened a decade ago. In the computer as well all

81

the entries and records related to that particular account is permanently

deleted by using the close account option.

IMPORTANT DOCUMENTS USED IN THE ACCOUNT

OPENING DEPARTMENT
LIABILITY FORM
This particular form is used when an account is to be closed. The staff of
account opening department, after filling in the name and account
number of the client forwards this form to the credit department and the
trade finance department who upon receipt of such liability form make
required scrutiny so as to check whether or not the customer owes some
money to the bank or not.

ACCOUNT STATEMENT REQUEST FORM

This small form is used to request for the account statement for the
desired period. The client gets this Performa from the account-opening
department and then, after filling it up, gives it to the computer section
that gives the statement to the client in printed form.

VERNACULAR FORM
This form basically functions as a thank you letter (and also as a request) on
behalf of the customer if he wants to operate his account by doing signatures
in a language other than that of English. In this particular form the client
gives his assurance in writing that he would indemnify the branch against

82

any loss that may be caused by reason of his signing in a language other than
that of English.

ISSUANCE REQUISITION
This requisition is used by the staff to order for any thing (e.g. stationary)
they need. They write the type and quantity of the stationary they need, get it
signed by the Manager Operations, give it to the person in-charge of issuance
of stationary who on receipt of this requisition (duly signed) issues the
stationary.

DEBIT AND CREDIT VOUCHERS

These two vouchers are basically used when an account has to be closed. The
debit voucher shows as to how much amount has to be taken from the clients
account and the credit voucher shows as to how much amount has to be
credited as Banks income, in order to facilitate the account closing process.

APPLICATION TO CLOSE THE ACCOUNT

This is a pre printed application of the bank in which the client fills in the
account number, the title of the account and the type of account and requests
the branch manager to close his account with the Bank.

APPLICATION TO CHANGE THE ADDRESS

This is again a pre printed request form in which the client fills in his name,
account number, telephone number/s and the new address so that he could
communicate with the bank and receives all the notices, statements and other
83

necessary document which the bank might send through mail depending
upon the circumstances.

DISCREPANCIES:
If there is fond any discrepancy in any of the following particulars then the form
will not be entertained:
1. Date of account opening
2. Account opening Approval
3. Customer Name
4. Joint Name (in case of joint account)
5. Mailing Address
6. Alternate Mailing Address
7. Telephone Number
8. Nationality
9. NIC / Passport
10. Currency of Account
11. Related Account Information
12.Zakat Deduction Authorization

13. Hold Mail

14.Either or Survivor Instructions
15. Next of Kin Information
16. Proof of Guardianship in case of
Minors Account
17. Thirty Party Mandate
18. Specimen Signature Card
19. Check Book Ordered
20. Introducers Name and

Account

number
21. Introducers Signature Verification
22. Segment Code mentioned
23. Signature on Banks Terms and
Conditions
24.Account Type
84

MY EXPERIENCES IN ACCOUNTS OPENING

DEPARTMENT:
During my internship at Bank Alfalah Ltd, Garden Town Branch, my experience
was very good while working in the said department that is the Accounts Opening
Department. This was the first ever experience of my life regarding working in any
professional environment with practical people working around.
Mr. Naveed Khalid (Incharge of Account Opening) was very much keen in telling me
all the details of all the workings of that accounts opening department. I was being
supervised by sir Naveed at that critical time who was a very ebullient person and
make me lighten up to a greater extant. Being a former PU student, university
fellow and admirer of Hailey College of Commerce, he went very supportive to me.
He was also very hardworking and supportive type of a colleague to me. He taught
me each and every thing that can happen in the accounts opening department also
direct me about the procedures of other banks dealings. Whenever he was busy in
doing a work regarding the accounts opening things he never forgot to tell me what
he is doing and what is the purpose of doing that thing.
During my stay at the accounts opening department, I got a chance to open some
accounts after the approval and due verification from my supervisor Mr. Naveed
Khalid. He told all the stamps, which have to be incorporated in the account
opening form, to me. I did mistakes as well while opening of accounts regarding
stamping at the correct place and writing account titles. But he never ever said a
word to me regarding that. This is the thing, which I observed that employees at
Bank Alfalah are very cooperative and supportive. This is the reason why the
customer satisfactions provoking all along in the branches of the bank.

85

REMITTANCE DEPARTMENT
Remittance department comes under the category of the Domestic Banking. By
remittance we mean transfer of money from one city to another. Hence this
department deals with the transfer of money using different mode from one place to
another.

PARTIES TO A REMITTANCE
REMITTER
One who make a remittance. He comes to the issuing or originating branch, ask
for a remittance to be made, and deposits the money to be remitted. The
bank charges him for the remittance. He may or not be the banks customer.

REMITEE
Also sometimes called the beneficiary, or the payee (the person to whom the
remittance is made/ the one who receives the payment.)

ISSUING BANK

86

The bank that affect the remittances, through the Demand Drafts, Telegraphic
Transfer, or Mail Transfer.

PAYING BANK
Also known as the drawee branch (The branch on which the instrument is
drawn. It has to make the payment). Usually located in a different city or
country.

PRINCIPAL DUTIES: The principal duties this department is performing are as follows

1. Pay Slips
2. Pay orders
3. Demand Drafts (DD)
4. Rupee Travelers Cheque (RTC)
5. Money Gram

DEMAND DRAFTS
Demand Drafts (DD) are a bill of exchange. It is an instrument in writing signed by
the banker containing an unconditional order to pay certain amount to or to the
order of certain person for payment on demand or otherwise as future determinant
time. If it is made through cheque than it is necessary that person must be account
holder while in case of cash any person can make. It consists of four copies.
1)

Original copy which is given to account holder.

2)

DD advice is sent to the central branch.

3)

Third copy is for reconciliation.

4)

Last copy is sent to head office for reconciliation.

87

PURPOSE: AS

THE NAME SUBJECTS

DD

IS MADE ON THE REQUEST OF THE CUSTOMER (WHICH

MAY OR MAY NOT BE THE ACCOUNTHOLDER OF THE

ANOTHER CUSTOMER OR PARTY IN SOME OTHER CITY.

BANK)

THUS

IN FAVOR OF

IT IS A MODE OF

PAYMENT USED BY ONE CUSTOMER TO PAY ANOTHER WHO MUST BE RESIDING IN

SOME OTHER CITY.

PAYMENT
PAYMENT OF DD CAN BE MADE THROUGH ALL MODES I.E. TRANSFER, CASH, CHEQUE
COLLECTION (ALL BRANCHES IN

PAKISTAN) ETC.

RECORD
No manual record of the demand draft is kept; only the record is saved in the
computer at the time of making the demand draft.

DD APPLICATION SLIP
On the DD application slip enter the
Date
Branch name draft no. (which is entered after the computer entry)
In favor of (the name of the person or party)
Drawn on (the city name and the branch code of BAL )
Amount in words as well as in figures
Commission charged is entered
Signatures of the applicant are taken

88

Then it is signed by the in charge remittance and the customer deposits the
money against this slip.
The DD slip is available with the attached forms.

SCRUTINY OF APPLICATION FORM:

There should be our banks branch at the place where payment is desired to be
made.
Full name of the payee should be mentioned.
Amount in words and figure should not differ.
Purchasers name address and telephone numbers are complete.

COMPUTER ENTRY
In the system enter into the DD section then enter the

Name of the person who is being favored

Branch code at which draft will be drawn

Bank code of that branch

Name of the person to whom the draft is being issued

The account no of the issues (if he/she has an account with our branch)

The total amount of the demand draft is entered

The commission charged is entered (computer usually perform this job

automatically)

ENTRY OF DD:
89

Entry in BAL GTN branch

YELLOW SLIP
DD Payable

credit
H.off

debit

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

Entry in H.off Karachi branch

H.off

debit
DD

credit

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

Issuance Pink Slip

H.off

credit
DD

debit

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

Entry when customer will draw amount from DD

DD payable

debit

90

Customer

credit

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

The DD number appears at the end which is entered on the demand draft
application form for record purpose.
Now press yes for the print of DD, which is in two, parts both are given to the
customer. When the computer record has been saved now the advices are made in
the favor of the bank on which DD will be drawn. The advices for BAL branches are
sent directly to that branch through mail.

PAY ORDER

Pay order is also a bank instrument a bill of exchange. The pay orders are usually
used for the payment within the city. The pay orders issued from one branch of
bank can only be drawn at the same branch, thats why it is generally referred to as
Bankers cheque.
There is a separate slip for the pay order application. All the procedures for the pay
orders are similar to the demand drafts except the charges and the record keeping
which are given below

91

RECORD KEEPING:
The record of the pay orders is kept in both the computers and manually in
registers. The computer record keeping system is similar to that of the demand
drafts. Where as in register you enter the

Date on which the pay order is issued.

Pay order number.

Payee, to whom the pay order is being issued.

Amount of pay order is entered then the officer signs it.

Date of the payment and the remarks are taken.

Entry of issuance pay order

Customer

debit

Pay order

credit

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

Entry when customer get amount from pay order

92

Pay order

debit

Customer

credit

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

Following are the parties to a pay order:

i) Purchaser:

Is a person, firm, company or local authority

ii) Issuing / paying branch: this issues / pays on presentation.

iii) Payee:

is a person named therein.

PAY SLIPS
The bank for the settlement of its own payment uses this instrument.
There are no charges for the pay slips. They are used to meet the miscellaneous
expenses of the bank. The pay slips can only be drawn on the same branch of the
bank. No manual or computer record of the pay slips is kept. Only the record of the
counter file of the slip is maintained as a record at the bank of which two signatures
of the beneficiary are taken.
On the pay slip

93

Enter the name of the party as Messrs

The reasons of payment i.e. repair, releases of security etc are written as on
account of.
Signs and stamp of the beneficiary are taken.
The payment of the pay slips can be made through any of clearing, transfer (same
city branches), cheque, and cash. Collection (all branches within Pakistan) the pay
slips can issue to both minors and majors. On the slip the signatures of two
authorized bank officials are must.

RUPEE TRAVELERS CHEQUES

These are the banks instruments issued to only major account holders of the bank.
TCs are issued to the facilities the customers during the travel.
There are the three copies of the travels cheque application. The white copy, which
is also known as agreement, remains with the customer with the agreement at the
back of it. This copy is must to be shown lost for the reimbursment. The yellow copy
is for the record and the blue one is for the head office.
According to the government policies only the RTCs of rupees 10,000 & 5,000 are
being offered to the customers .The amount in the RTC (the application for rupee
travelers cheque) is entered in multiples of 10000 as per request of the customer but
separate cheque are issued against it each of RS. 10,000 or in multiples of 5,000 as
per request of the customer but separate cheque are issued against it each of RS.
5,000.

All the travelers cheque is credited by the head office HO accounts. The payment
mode used for the travelers cheque can be cash. Transfer, authority letters,

94

collection (all branches in Pakistan), the president of the bank and it already signs
cheque is also signed by an authorized person at the bank.

ISSUING BRANCH
The branch that is issuing the TC will take the signs of the customer on upper part
of the cheque.
The issuing bank send one copy of RTC application to head office and keeps other
with it after entering all the account opening conditions i.e. NIC.no, NTC.no,
address, phone no, name etc into the system.

PAYING BRANCH: On the next date when the cheque is presented in the paying branch (any BAL
branch in PK) same signatures on the lower part of the cheque are taken and the
bank officer cheque whether they match or not.

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

PROCEDURE

Person must have reference no.

95

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

Person has to show NIC and tell compute introduction after that he can
obtain money.

THE CREDITS DEPARTMENT

The sum of money that a bank makes available to client in excess of any deposit.
Credit means belief or trust. The quality of being credible or trustworthy.
Another words we can define credit as trust in ones integrity in money matters
and ones ability to meet payment when due.

PURPOSE OF CREDITS
Earnings of a bank are dependent on CREDITS, because:

A bank receives (borrows) deposits. It pays cost on these deposits.

On the other hand bank lends the deposits to borrowers and charges interest
on the lending. This function is performed by CREDITS in any bank

Credit philosophy at BAL

Banking is an art of striking between risk and revenue
The extension of a credit facility should add value to the banks assets.

Importance of Credits
CREDITS are the most important department of a bank. Performance of all other
departments is dependent upon Credits. It attracts corporate accounts, as a

96

company prefers to do import and export business from the banks from where it is
availing limit (credit) facilities.
Risks involved in Lending
Though lending is main source of earnings for any bank but it is risky
as well. Whenever money is advanced to any customer there is always a risk
involved of default. To minimize the risk involved BAL gives loans to credible
customers.

SUB DIVISION OF CREDITS

CREDITS are further sub divided into two sections:

Credits Marketing

Credits Administration

The above-mentioned two sections perform the overall activities of credits. Role of
each section is discussed below:

CREDITS MARKETING:
Marketing personnel is responsible for attracting customers to bank for
advancement of loan facilities. They must have complete information of trends in
the industry. However several precautions are followed to give loans to only
credible customers, as the aim of bank is to recover the money at time and
through earnings of the client and through liquidation of securities.
Bank Alfalah Ltd. always prefers to give loans to credible customers. For this
BAL requires information about:
97

Basic Cs of a Credit:
Character
Who is the borrower (company)? What is its reputation for honesty, integrity and
willingness to pay?

Capacity
How is the business managed? What are its strength weaknesses? What is the
business capacity to generate the funds to repay?

Capital
How solid are its financial and human resources? Are financial resources matched
with adequate human resources?

Conditions
What is the condition of company within the economic cycle? Will the economic
and business conditions impact the borrowers ability to repay?

Collateral
98

What is the real liquidation value of the collateral? If the creditor is forced to use
thee collateral as payment, what value will be realized at liquidation?

Carelessness
While evaluating, disbursing and monitoring of the credit, professional standards
and tools are not exercised.

Complacence
When the information and data base on which decisions are to be made, are
accepted without any critical evaluation

Connivance
While certain adverse aspects observed in the operating performance, financial
position, debt servicing, etc. are not accounted for which tacit understanding of
favoring the client.

Concealment
When certain important facts are deliberately and willfully conceal from the
management which could have undermined security, credit recovery and bilateral
relationship with borrower.

Collusion
When a bank officer and borrower willfully join their hands for achieving some
ulterior motives

Corruption
When official matters are dealt with for financial and non- financial benefits at the
cost of the lender

Credit Line Proposal:

A CLP is prepared on the basis of above facts. It is forwarded to HEAD
OFFICE. If HO is satisfied then it gives a CREDIT ADVICE.

99

Offer Letter:
On the basis of credit advice the branch prepares an offer letter. This letter
gives a detail of the terms and conditions such as duration of facility, securities,
mark up etc.

After fulfilling the entire formalities loan is advanced.

After the disbursement of loan marketing personnel keeps track of every

activity of the party. They continuously observe the financial statements of
the customer.

Detail of credit line proposal prepared by marketing personnel is given below:

CREDIT ADMINISTRATION
It is the second section of CREDITS. It performs very important functions
for the bank. After the approval of CREDIT LINE PROPOSAL, it comes to
Administration section. The Administration decides the terms and conditions
regarding securities offered against the facility given to a client. It is a highly
responsible task because in case of default liquidation of securities is an important
source for bank for recovery of loan amount. Other important functions such as
adjustment of loans are also handled by administration section.

NATURE OF THE RISK EXPOSED TO A BANK

Credibility of the sponsors

Financial standing

Professional capability

100

Willful management

Credibility of credentials, data and information

Reliability of the basis assumptions underlying business and financial

projections misappropriation

Unauthorized advances to sister concern, affiliates undertaking

Agent transactions

Product obsoleteness, waning market and threatening market environment

Inconsistent and ineffective marketing plans and business strategies

Obsolescence of the technology and lack of adaptability

High interest rates

Liquidity risk

Inconsistent government tariff policies and their impact on the selling price,
cost of production, profitability etc

International environment and inter-country business risk

Currency exchange rates deterioration

Credibility and poor performance of Muccadams

Credibility of surveyors, evaluators, pre-delivery inspectors

Over capitalization

Credibility of the auditing firms

TYPES OF BORROWERS
INDIVIDUALS
Existing account holders staff members
Close relatives of staff members
Business sponsored by staff members

101

 Employees of other banks

Joint accounts

BUSINESSES ENTITIES
Sole proprietorship
Partnership
Limited liabilities Company
Joint venture
Group account\s

OTHERS
Clubs and associates
Government bodies
Traders
Contractors
Transport, storage and warehousing
Property dealers
Manufacturers
While lending to any of these parties the credit officer of BAL has to check
the following things.

1. COMPANY:
Where a company is a borrower the credit officer must ask and keep on
record following information:
The certificate of incorporation
The memorandum and articles of association
The certificate of commencement of business and
The last annual report containing accounts and balance sheet, to ensure that
the company is legally qualified to do business.

102

To ensure that the company is currently existing and is in good

standing. Credit officer should check with the registrar of joint stock
companies, and request the borrower to furnish certified List of shareholders (current)
List of directors
With public limited company verify its existence and standing on the stock
Exchange.
It is important that the borrowing company and its directors should have
requisite authorization and power to borrow which should be reflected in the
memorandum and article of association
Also see corporate resolution to borrow.

2. PARTNERSHIP
Where the borrower is a partnership, the credit officer must ask to see,
following documents;
Original partnership agreement/deed and the original certificate of
registration which will contain the name of the partners and the date of their
joining the partnership.
An individual financial statement from each partner
along these, also obtain the following document:
normal loan documents signed by all partners
continuing guarantee duly signed by all partners
Resolution/authorization to borrow and execute loan documents, signed by
all partners.
A letter signed by all partners, requesting the bank to extend credit facilities
to the firm
Certified copy of the partnership deed and certification of registration.

3. INDIVIDUAL
103

Lending to an individual the credit officer must ask him to see.

His financial statements for, at least the previous three years.
A continuing guarantee.
The decision of extending credit to an individual borrower is necessarily
a decision for the officer concerned based on the reputation and credit
standing as a client. Depending on the amount advanced, the loan should be
secured by a pledge, hypothecation, or mortgage.

4. GOVERNMENT
Where the government is a borrower, the credit officer must ensure that the
documents of indebtedness are signed by an officer of the government who is duly
authorized in writing and or by the rules of business. Legal counsels opinion should
be taken in these cases.

CREDIT LINE PROPOSAL (CLP):

A CLP contains and takes into consideration following information:

TYPES OF PROPOSAL:
o New
o Renewal
o Revision
o Single transaction

Names of owners and their shareholding

Nature of business

104

Existing and proposed limit for funded and non-funded facility

Group Exposure for both funded and non-funded facility

Purpose of each facility and Repayment

Security both existing and proposed

CUSTOMER PROFILE:

LEGAL STATUS: It specifies legal status such as:

o Individual
o Proprietor
o Partnership
o Limited liability company

Date if Incorporation

Date of Account opening and Account Number

History of Relationships with Bank

History of Borrowing Relationship

Information of whether account opening formalities are complete or not

LINE OF BUSINESS/MAIN PRODUCTS:

Following information is required in this regard

Sales break-up in various cities

Market share

Competitive brands
105

Industry Profile and Market Position

SUMMARY OF KEY FINANCIALS:

It includes following ratios:

Sales/Revenue, Net Profit

Total Assets, Liabilities

Working Capital, Current Ratio

Paid-up Capital, Reserves, Net Worth

ROE, Debt-to-Equity Ratio

Days Receivables, Days Payables, Days Inventory

Details of Allied Accounts

Background of Directors
Management
Central Risk (as reported by CIB)

Liability Details:
It includes liabilities with Allied Concerns and with other banks both funded
and non-funded.
Performance during Last One Year:
Following questions are considered:

Are acceptance paid on due date

106

Are all the instruments of TFs paid as per schedule

Audit exceptions related to credit matters only

Are checks returned due to lack of funds

Account Statistics for the previous year:

It shows:

Maximum balance

Minimum balance

Date of latest adjustment of CF

Branch Comments and Recommendations:

Based on all of the above facts and information branch gives its comments and
recommends different suitable facilities.
Credit Division Comments and Recommendations:
Based on all of the above facts and information, credit division gives its comments
and recommends different facilities.
Prudential Regulations Compliance Checklist pertaining to Credit:
Following matters are to be checked:

Limit of banks exposure to a single person

107

Limit of banks exposure against clean facilities

Linkage between a borrowers equity and total borrowing from bank

Maintenance of debt-to-equity ratio

Opening of Account:
Its required that every reasonable effort is to be made for determining the
true character of every would-be account holder.

Weight age to Credit Report:

Due weight age is to be given to the credit report relating to the borrower and
his group. Latest report is obtained from CIB of SBP for funds and non-fund facility
provided.

Minimum information of the borrower:

For this purpose bank asks for BASIC FACT SHEET.

FINANCIAL SUMMARY
It contains:

Balance Sheet

Income Statement

Cash Flow Statement

108

SECURITY ANALYSIS SHEET

It contains analysis of the security offered for availing the facility.

INDUSTRY OVERVIEW
It provides an overview of the industry in which a company is operating.

FINANCIAL ANALYSIS
Sales & Profitability ratios, Activity Ratios, Leverage Ratios and Liquidity
Ratios are calculated. More over utilization of the plant capacity over the
years is also calculated

MY EXPERIENCE AT THE CREDIT DEPARTMENT:

Corporate credits was the second last department in which I was been rotated. The
most important department in any bank is considered to be the Credits department.
This is, in my opinion, is also true due to some reasons. Firstly the reason being that

109

in credits department, the decision-making skills of a person are explored. When

you need to make a decision regarding the credit proposal after due verification, this
will give a little stress to your mind either to sanction the financing or not?
Credits involve very technological procedures and also a lot of exciting activities
because each case varies from the other one. You never become unenthusiastic
because you get an opportunity to walk around new bits and pieces every time.
In this department I worked under the supervision of Mr. Ateeq-ur-Rehman Sidu
(Credits Officer). He was also very supportive to me. He taught me the credit line
proposal from the first step till the end of its filling process. In the nutshell, the
credits department contributed a lot towards my decision-making and learning
skills.

CLEARING DEPARTMENT:
Clearing is the arrangement to which collection of cheque, bills and other
instruments payable or deliverable at or through the offices of the members of the
clearinghouses for credit of the customers account for speedy and economic collections.
The clearinghouse members are authorized to send their cheque and instruments in the
clearinghouse established in the State Bank of Pakistan.
Clearing house is the gathering of all the members of different banks and institutions
where they deliver or receive the instruments drawn on them for their clearances through
their branches in the city.

ADVANTAGES OF CLEARING:
1) Systematic arrangement for the collection and clearance of cheque.
110

2) Speedy and economic collection and clearance of cheque.

3) Clearance of cheque and other instruments of different branches of
different banks in a systematic way without any flow or mistake.
4) The collection and clearance of government bills, instruments and
cheque.
5) The collection of government revenue through cheque, pay orders
and drafts payable through State Bank of Pakistan and National
Bank of Pakistan.
6) It avoids the difficulties and cumbrances faced by the branches if
they collect the instruments directly from branch to branch.
7) Confidence among the clearing members is produced.

ROLE OF STATE BANK OF PAKISTAN IN CLEARING:

State Bank of Pakistan gives the license end enlist them as clearing house
members authorizing to submit their clearance cheque and instruments
through the clearing house established as the office of State Bank Of
Pakistan in particular city.

The clearinghouse advantages are given in the big cities where the State
Bank office is available.

Where State Bank of Pakistan office is not available the clearinghouse

functions in the National bank of Pakistan branch. However the procedure is
the same.

The State Bank of Pakistan provides the facility to member banks for
clearances of their cheque drawn on different branches of banks in different
parts of their cities. It would have been more cumbersome and time
consuming if they had been dealing from branch to branch.

111

State Bank of Pakistan is a bankers bank; it deals in a parental attitude and

provides space staff and technique to clear the bills and cheque of the
member bank.

State Bank of Pakistan maintains the statuary reserve of different banks in

their accounts and all the clearances are made by the debit and credit of
these accounts.

All the payments and receipts are settled to these accounts without any
difficulty.

The State Bank of Pakistan chalks out clearing house timings and its
procedures.

CLEARING OUTWARD
When the customer deposits cheque & other instruments of other banks for
collection, we send the cheque in outward clearing.

PROCEDURE:

Cheque are receives duly entered on pay-in-slip.

Counter foils are returned to customer after signature.

Crossing stamp is fixed on the Cheque is fixed on cheque and pay-inslip.

Clearing stamp with next date is fixed on the cheque and pay-in-slip.

Endorsement stamp is fixed on the reverse of the instruments.

Depositors account number shall be mentioned on the reverse of the

instruments for the future reference. Endorsement and pay-in-slip are
signed by an officer.
112

All the instruments ate entered in clearing register.

The officer concerned will enter the cheque in computer system.

Clearing register is generated by the computer system.

Clearing summary is produced and computer also generates bank wise

schedules.

The cheque is sorted bank wise and respective schedule id attached with
these cheque.

Total of bank wise schedule will tally with total in clearing register and
clearing summary.

All cheques along with bank wise summary are sent to main branch
where a revised summary is prepared.

The representative of the bank takes all the cheque of all the branches to
the branches to the clearinghouse at State Bank of Pakistan.

CLEARING HOUSE
In the clearinghouse the representatives of all the banks gather and exchange their
instruments. They enter the total amount of cheque delivered and received in their
summary sheets. The total of schedule received tally with the total of summary.
Clearing cheques received from other banks are sent to branches, which will
clear the cheque and instruments to the respective accounts. Some cheque is
returned unpaid with the reasons mentioned in the cheque return memo. IBCA
for net amount is sent to main branch.
In the 2nd house clearing cheque are returned and exchange by the
representatives of the banks. A summary is prepared for cheque received and
delivered and net position is ascertained. Amounts are settled through SBP
accounts.

113

After cheque is returned, the main branch sends IBCA for net amounts to the
branches. Computer entries are made for (-) credits for returns and debits to
Main office A/C.

FINANCIAL HIGHLIGHTS
For the year ended the Banks profit before provision and taxation stood at
Rs. 3,263.635 million as compared to Rs.2,965.588 million for the previous
comparable period, which is 10% higher than that of last year . This increase in
profit is primarily attributable to overall increase in business volume.
The Bank has successfully carved in the market an enviable niche for its
consumer products. Auto Finance, Credit Cards and Home Loans have significantly
contributed to the profit and growth in addition to contributions made by the core
banking activities during the period under review. Bank is indisputably market
leader in some of these initiatives.
Bank continues to make significant in-roads into the Agri-rural finance,
SME, corporate and investment banking sectors of the economy. With expanding
network of branches, bank is ideally poised and positioned to carry forward the
success. It acquired the operations of Shamil Bank of Bahrains B.S.C, Bangladesh
operations for US$ 17.88 million under an agreement dated November 1, 2004. The
entire undertaking of the Bangladesh operations including all the properties, assets
and liabilities and all the right and obligations were taken over. It has also
successfully obtained license to establish banking operations in Kabul, Afghanistan.
It continues to strengthen its presence in the market place and as of June 30, 2007,
bank has a nationwide network of 195 branches that includes 23 Islamic Banking
branches and five overseas branches 3 in Bangladesh, 2 in Afghanistan and one
offshore banking unit in Bahrain. Banks plan is to add more branches to the
network during the 2nd half of 2007.

114

PACRA, a premier rating agency of the country, has rated the Bank AA
(double A), Entity Rating for Long Term and A1+ for the Short Term. These ratings
denote a very low expectation of credit risk, strong capacity for timely payment of
financial commitments in the long term and by highest capacity for timely
repayment in the short term, respectively. Further, the unsecured subordinated debt
(Term Finance Certificates) of the Bank has been awarded a credit rating of AA(double a minus).
In compliance with the requirement of State Bank of Pakistan, Bank has in
place an approved integrated risk management framework for managing risk,
market risk, liquidity risk and operational risk as evidence by its Board approved
Risk Management and Internal Control manual and a dedicated Risk Management
Division (RMD) has been created with the Head RMD reporting directly to the
Chief Executive Officer, Risk management Division has been structured to address
credit, market and operational risk and a team of suitable person has been hired.
In summary, Bank had successful half-year results, as of June 30, 2009. This
was achieved primarily due to its long-standing and stable customer base, coupled
with

the

Managements

well-defined,

focused

strategies

and

positioning.

Accordingly the Board would like to thank its valued clients and Correspondents
and also to acknowledge the support of the State Bank of Pakistan, Ministry of
Finance and other regulatory authorities for their invaluable support, which has
greatly facilitated its work. The Board would also like to place on record its
appreciation for the hard work, dedication, professionalism and sincere efforts of
the senior management, officers and staff of the Bank.

RATIO ANALYSIS

115

Ratio analysis includes calculating different ratios for the organization of the
figures taken from its financial statements. The basic purpose of ratio analysis is
that absolute figures often give misleading image so comparison with other figures is
necessary which can be done through ratio analysis. The ratios may be:

Balance Sheet ratios

Income Statement ratios

Mixed ratios

PROFITABILITY RATIOS
The continued viability of any bank depends on its ability to earn an appropriate
return on its assets and capital. Good earning performance enables a bank to fund
its operations, remain competitive in the market and increase or decrease in market
funds.
Profitability reflects not only the quantity and
trend in earning but also the factors that may
affect the sustainability or quality of earnings.

NET PROFIT RATIO

Net Profit after Tax X 100
Net markup/interest income after provisions

2007
1325389
100

2008
x

3506737 x 100
25816457

21194254
116

= 6.25%

= 13.58%

SIGNIFICANCE:
o It is a more specific measure of sales profit ability. It is used to measure over
all profit ability and hence it is very useful to proprietors.
o The ratio is very useful as if the net profit is not sufficient, the firm shall not
be able to achieve a satisfactory return on its investment.
o It also indicates firms, capacity to face adverse economic conditions such as
price competitions, low demand etc.
o Higher is better is the profitability.

Analysis:
The above ratio indicates that the proportion of profit has seen increase over
the years from 6.25% in 2007; to 13.58% in 2008 the increase is significant. So it is a
healthy sign for bank.
7

OPERATING EXPENSE RATIO

Non Mark Expense

X 100

Gross Income

2007
15235688
100

2008
x

16645178 x 100
6142240

117

3290623
= 436%

= 271%

Significance
This ratio shows how well the organization is managing its operating cost.
Operating expenses are those expenses which are incurred indirectly for the
generation of revenue. A large portion of these expenses is the administrative
expenses which are incurred on management of the organization. It is necessary to
cut down these expenses especially when interest rates on advances are declining
leaving a narrower margin for payment of such expense. So Lower it is better it is.

Analysis
Operating expenses for the bank decreased in 2008 from 436% in 2007 to
271%in 2008 and which is a good sign as it shows decreased costs of the banks and
hence increased net income.

ADMIN EXPENSE TO TOTAL DEPOSITS

Administrative expenses

X 100
118

Total deposit
2007
5952637

2008
x

100

8383322 x 100
273172088

239480772
= 2.49%

= 3.07%%

Significance
This ratio measures banks ability to cover administrative expenses by spreading
over large number of depositors. Total deposits have been used as base as they
are main business activity of bank. A declining trend is desirable.

Analysis
In 2007 banks administrative expenses were 2.49% and in 2008 they are on
rising side i.e. 3.07%

its not good for the bank. Bank should try to control its

expenses.

TOTAL ASSET TURN OVER

119

Interest- markup- return earned

Total Assets
2007
21194254

2008
x

25816457x 100

100

330679872

275511483
= 7.96%

= 7.81%%

SIGNIFICANCE
This ratio indicates the efficiency with which total assets have been utilized to
generate net interest income. If a bank has ROA on a higher side but the relation of
net interest income to total assets is not very significant, this may translate into the
fact that bank is relying on sources of income other than interest income which is
not a healthy sign.

Analysis
It is decreasing which is unfavorable. It means bank is not able to utilize its
assets efficiently in generating its main stream income. It was 7.96% in 2007, 7.81%
in 2008.

RETURN ON ASSETS

120

Net profit after tax

x 100

Total assets
2007
1906672
275511483
= 0.69%

2008
x 100

5004600x 100
330679872
=1.51%

SIGNIFICANCE
ROA is the most comprehensive measure of banks earning capacity. Net
profit margin ignores efficiency concept while total asset turn over ignores earning
perspectives. ROA takes both perspectives into account. Thats why it is most widely
used indicator for representing the earnings of bank over time period. Higher it is
better it is. An increasing trend of this ratio signifies increased efficiency of
management of a bank to improve upon its earnings capacity.

ANALYSIS
As this ratio explains how much you are utilizing your assets. In year 2008 it is
improved from 1.151% to 0.69%. But still it is not very good, so bank should try to
improve it.

RETURN ON EQUITY

121

Net profit after tax

x 100

Share Holders Equity

2007

2008

1325389x 100

3506737x 100

11827209

17414154

= 11.21%

= 20.14%%

SIGNIFICANCE
This is another measure of overall performance of bank. This ratio is of great
importance to the present and prospective shareholders as well as the management
of the company. As the ratio reveals how well the resources of a firm are being used,
higher the ratio better it is.

ANALYSIS
In real sense ordinary shareholders are the real owners of the company (preference
shareholders have a preference over ordinary shareholders in the payment of
dividend as well as capital. Preference shareholders get a fixed rate of dividend
irrespective of the quantum of Profit Company).The rate of dividend very with the
availability of profit in case of ordinary share only. Thus ordinary shareholders are
more interested in the profitability of the company.
Return of equity of BAL is showing a good situation in year 2008 as compare to year
2007. In year 2007 the return on equity of BAL was 11.21 % and in year 2008 it was
20.14%, this increase shows that company is utilizing its funds properly relating to
its previous year.

122

NON INTEREST INCOME TOTAL ASSETS

Non interest income

x 100

Total assets

2007

2008

3290623x 100

6142240x 100

275511483
= 1.19%

330679872
= 1.86%

SIGNIFICANCE
Non interest income represents fees, commission, brokerage, and other
income and extra ordinary or unusual items if they represent income. Non interest
income is also an important source of banks earnings. While analyzing this ratio the
123

trend of non interest income to total assets should be considered. Whether the bank
has maintained this ratio at a reasonable level or are there any significant changes
over time? If this ratio increases significantly, then there is a problem with the bank
in generating revenue from its mainstream activities. But on the other hand, high
non interest income can also represent a positive point for a bank. This income
represents a diversification from earnings generated from the taking and placement
of money, which is subject to interest rate and credit risk. An emphasis on fee
income is another global trend along with the growth of capital and rising ROA's.

ANALYSIS
This ratio is increasing in the year 2008 but shows decreasing in year 2007. Over all
non markup income is increasing for the Bank. It is a positive sign.

124

NON INTEREST EXPENSE TO TOTAL ASSETS

Non markup expense

x 100

Total assets

2007

2008

= 0.93%
2554019x 100

= 1.37%
4535382x 100

275511483

330679872

SIGNIFICANCE
Non interest expenses represent operating expenses such as administrative
expenses, staff salaries and other charges plus extra ordinary and unusual items if
they represent expense. Lower this ratio better it is for the bank. If the level of non
interest expense to total assets is high this will also distort the ROA of the bank. Non
interest expense is a very critical number.

ANALYSIS
This ratio is good when it is low. This ratio is higher in year 2008. It shows non mark
up expense in increasing and it should be controlled.

125

RISK ASSET TURN OVER RATIO

Net mark up after provision
Risk assets
2007

2008

3296623x 100

6142240x 100

149942717
= 2.19%

171031183
= 3.59%

SIGNIFICANCE
Advances are the main use of banks assets. So it is necessary that bank earns
sufficient value of income on its investment of risk assets. So a steadily rising trend
is desirable.

ANALYSIS
In year 2008 it is higher than 2007. This is a good sign.

126

LIQUIDITY RATIOS
Liquidity represents the ability of a bank to efficiently and economically
accommodate deposits withdrawal as well as fund increase in assets. A bank has a
liquidity potential when it has the ability to obtain sufficient funds in a timely
manner at a reasonable cost. Illiquidity is a primary factor leading to a banks
failure whereas high liquidity helps otherwise weak institutions to remain funded
during the period of difficulty.
Liquidity

reflects

the

adequacy

of

the

institutions current and prospective sources of

liquidity and funds management practices.

CURRENT RATIO
Current Assets
Current Liabilities
2007

2008

259122914x 100

311886135x 100

254203477
= 1.02

302091341
= 1.03

SIGNIFICANCE
Current ratio may be defined as the relationship between current asset and
current liabilities. This ratio is also known as working capital ratio. It is a measure
of general liquidity and is most widely used to make the analysis for a short-term
financial position or liquidity of a bank. It represents the margin of safety or
cushion available to the creditors. It is an index of the banks financial stability. It is
also an index of the strength of working capital.
127

A relatively high current ratio is an indication that the bank is liquid and has
the ability to pay its current obligations in time as and when they become due. On
the other hand, a relatively low current ratio represents that the liquidity position of
the bank is not good and the bank shall not be able to pay its current liabilities in
time without facing difficulties. An increase in the current ratio represents
improvement in the liquidity position of bank while a decrease in the current ratio
indicates that there has been deterioration in the liquidity position of the bank. A
ratio equal or near to 2: 1, i.e., current assets double the current liabilities, is
considered to be satisfactory. The idea of having doubled the current assets as
compared to current liabilities is to provide for the delays and losses in the
realization of current assets. However, the rule of 2 : 1 should not be blindly
followed while making interpretation of the ratio, because banks having less than 2 :
1 ratio may be having a better liquidity than even banks having more than 2 : 1
ratio. This is so because the current ratio measures only the quantity of current
asset and not the quality of current assets. If a banks current assets include debtor
which are not recoverable, the current ratio may be high but it does not represent a
good liquidity position.

ANALYSIS:
BAL has maintained its liquidity position over the years. In 2007 and 2008
there is increment in ratio which shows it have current assets to pay current
liabilities.

128

ADVANCES TO TOTAL DEPOSITS

Advances

100

Deposits

2007

2008

149942717x 100

1171031183x

239480772

100

= 62.61%

273172088
=62.62%

62.74%

2007

62.61%

2008

62.48%

2007

2008

SIGNIFICANCE
This is perhaps the most important ratio as far as financial analysis of a bank
is concerned. Advances represents lending to general public and deposits represent
amount borrowed from general public. Both these items represent core activities of
a bank. A bank is there to accept deposits and lend to general public. Deposits
represent source of banks funds and advances are use of funds. This ratio compares
the major source of a bank's funds with the major use of it. It signifies that how
much deposits the bank has mobilized from general public and to what extent has
129

made use of these deposits. Credit risk is the most recognizable risk associated with
banking and granting credit is the primary activity of a bank but at the same time
interest earned on advances is the major source of banks earnings. Although the
bank wants to maximize its earnings, but it can never lend the entire amount
received through deposits. It has to keep a certain proportion of its deposits in cash
form with it as well as with SBP to meet the day to day requirements of its
customers. So there is a trade off between risk and return. If the bank wants to
increase return, it will go towards more lending thereby enhancing risk and if the
bank focuses on liquidity, it will have to forego return. Current accounts to are the
lowest cost source of funds. The bank should strive to attract current accounts to
increase this ratio, so as to control its interest expense. The bank should decide upon
the mix of its sources and uses after taking into consideration the CRR and SLR
requirements and demographics of its depositors.

ANALYSIS
We can see that for every one rupee deposit loan is given with the ratio
62. It is good but it needs to be improved as increasing loans is always
good source of earning for a bank.
DEPOITS TO TOTAL ASSETS
= deposits / total asset
2007

2008

239480772x 100

273172088x 100

275511483
= 86.92%

330679872
=82.61%

ANALYSIS

130

This ratio explains how much deposits are in percentage and trend shows a decrease from
2007 to 2008.

INTEREST COVERAGE RATIO

Earning before interest and tax
Financial charges

2007

2008

15235688

5004600

1906672
= 7.99

16645178
=3.32

SIGNIFICANCE
This ratio measures banks ability to pay financial charges. Interest expense
is main expense of bank just like cost of goods sold. So higher the ratio better is the
131

ability of bank to pay this compulsory obligation and hence better is the liquidity
potential of bank.

Analysis
We observe a decreasing trend which is not favorable.

PORTFOLIO MANAGEMENT RATIOS

Portfolio refers to the assets held by an investor taken as a group. From
banking point of view it means how the bank is maintaining its advances,
investments and lending to financial institutions with respect to its total assets. The
portfolio of the bank should be so that it contribute to overall profitability of the
bank
Portfolio management deals with managing
Advances, investments and lending to financial
Institutions with respect to the total assets of the
Bank.

ADVANCES TO TOTAL ASSET RATIO

Advances x 100
Total Assets
2007

2008

149942717 *100

171031183

275511483
= 54.42%

330679872
=51.72%

SIGNIFICANCE
This ratio indicates proportion of advance to total assets. This is main
earning assets of bank. It has two distinct features. It is most risky earning asset and
highest return getting asset. As we know, a proper balance should be maintained
between risk and return so bank should attain such level of advances. However a
132

rising trend is desirable. It indicates banks ability to compete in the market and
generate sufficient subsequent deposits.

ANALYSIS
Over the last two years bank is showing decrease in ratio i.e.54.42%, 51.72%.
It is not good sign as it shows decrease in advances and hence earnings of the bank
decrease but risk is also decreasing as there is inverse relationship between risk and
return.

GEARING RATIOS
These ratios measure the extent to which banks resources have been geared
by debt i.e. financed by debt in relation to share holders equity. It takes into
account total debt, capital employed, shareholders funds and total assets and then
on the basis of all these the proportion of debt is compared and it helps in

133

understanding that what proportion of needs should be met by debt and how much
through equity.

These ratios measure the extent to which banks

Resources have been geared by debt i.e. financed
By debt in relation to share holders equity.

Following ratios have been calculated:

1. Debt to equity ratio
2. Debt to capital employed ratio
3. Debt to total assets ratio

DEBT TO EQUITY RATIO

Long term debt x 100
Shareholders founds
2006

2008

263684274 *100

313265718

11827209
= 22.29%

17414154
=17.98%

134

SIGNIFICANCE
It shows amount of long term debt per rupee of equity. In case of
manufacturing concern, acceptable ratio is 40:60. This ratio high lights composition
of capital employed of bank. In a banking concern this ratio could be 3:1

ANALYSIS
Debt equity ratio of BAL is showing decreasing trend. It means that

company is

trying to rely on its own resources and increasing its Capital.

DEBT TO TOTAL ASSET

Total debt x 100
`Total assets

2007

2008

263684274 *100

313265718*100

275511483
= 95.7%

330679872
=94.73%

135

SIGNIFICANCE
This ratio indicates the extent to which assets have been financed by debt.
This ratio has a direct bearing on financial risk of bank. In manufacturing concerns
50% is a desirable proportion of assets financed by debt. However a banking
concern, ratio up to 90% is acceptable as whole structure of banking is based on
funds provided by the depositors.

Analysis
This ratio for bank is same over years and 94% assets are financed through debt.
SHAREHOLDERS EQUITY TO TOTAL ASSET
= Shareholders equity/ Total asset

ANALYSIS
This ratio shows that how much banks assets are financed by internal
resources. In year 2008 it is improved from 4.29% to 5.27%, which is
not bad but bank should focus to improve this ratio.
2007

2008

11827209 *100

17414154*100

275511483
= 4.29%

330679872
=5.27%

136

THE S.W.O.T ANALYSIS OF BANK ALFALAH LTD. ISLAMIC

BANKING:

Key External Forces:

External forces can be divided into four broad categories:

Social, cultural, demographic, and environmental

Forces

Political, governmental, and legal forces

Economic forces

Technological forces, and

Competitive forces

While performing an external audit, our company gathered the competitive

intelligence and information about social, cultural, demographic, economic,
political, and technological forces as well. The overall motive was to consider and
evaluate the Opportunities and Threats for the company
Following can be some of the key opportunities and threats for Bank Alfalah.

Opportunities
The opportunities on which bank Alfalah can capitalize upon are delineated as
under.

1) Extension of Local Branch Network

137

One of the biggest opportunities for bank Alfalah Limited is to extend its branch
network in Pakistan. The essential pre-requisites for a vast branch network are all
there; sponsors have the money, managerial expertise are available, and last but not
the least any bank with Bank Alfalah Limited written in blue at its front is accepted
in the market.

2) Establishing Foreign Branch Network

Going global could have been termed as a fad a few years ago, but now for those
business organizations that want to survive and thrive globalization has become the
order of the day. In order to increase the bottom line figure, it really is crucial. But
the senior management would start implementing this course of action once they feel
that they have got a strong hold in Pakistan.

3) Capitalizing On Information Technology

The information revolution has certainly made its inroads in almost all human
functions. If Bank Alfalah Limiteds senior management and the IT division make a
concerted effort to make best possible use of this miracle of human mind it would
enable Bank Alfalah Limited to harness unexplored benefits of immense magnitude.

4) Unexplored Market of Multinational Corporations

Unfortunately in spite of unprecedented image building efforts, Bank Alfalah
Limited still is an unattractive bank for big multi nationals functioning in Pakistan.
If the management is able to develop a strong relationship with such MNCs then it

138

would open doors of huge and unimaginable opportunities for Bank Alfalah
Limited. If even a single MNC becomes a corporate client of Bank Alfalah Limited
i.e. it deposits its revenue with Bank Alfalah Limited, pays its salaries through Bank
Alfalah Limited, does trade dealings through Bank Alfalah Limited, and avails
credit facilities offered by Bank Alfalah Limited, it would make a world of
difference to Bank Alfalah Limited.

5) Customers are more willing

Muslims are more consciously differentiate the Islamic-base banking from
interest-base banking. That is why there is large caution of expansion.

THREATS
The predominant threats Bank Alfalah is facing at the moment are discussed in the
following lines.

1) Private Sector Banks

Bank Alfalah Limited is at present facing really tough competition from not only
the first line international banks (ABN AMRO, Standard Chartered, Citi Bank) but
is also having a neck to neck race with other privatized banks such as Askari
Commercial Bank Limited, Union Bank, Prime Commercial Bank, Faysal Bank
Limited, Bank Al-Habib Ltd etc. All the new schemes launched by these banks and
their plans to expand branch networks are a real threat for Bank Alfalah Limited.

2) New Trade Polices

139

Introduction of new trade policies and laws are also been a source of threats to
the organization due to the imposition of new rules and terrifies, previous
maintained regulations have to be amended.

3) Network Expansion By Foreign Banks

Foreign banks have a lot of plus points as compared to Pakistani banks (state
owned and private); they have better products, better and personalized service,
desirable interest rates, foreign branch network, but they definitely lack in local
branch network (in Pakistan). Literary no foreign bank has been able to expand its
network to far-fetched places of Pakistan. Pakistani banks (private banks in general
and state owned banks in particular) are spread all over Pakistan. This is an
intangible asset for Pakistani banks. But if any of the foreign banks expands it
network, backed by their traditional powerful service, then it might prove to be the
start of downfall for Bank Alfalah Limited, unless and until Bank Alfalah Limited
raises its level of service and product feasibility to the international standards.

4) If Pakistani Banks (Especially State Owned Banks), Backed By

Huge Network Improve the Service They Give And Their
Employee Skill Set
State owned banks like National Bank of Pakistan and Habib Bank Limited
have huge networks, they have the experience, but the only set back they have is
below par service and lack of motivation amongst the employees. If their corporate
strategy is altered, and the managerial policy is revitalized, enabling them to
improve upon the service they give and enabling them to convert their work force
into human capital then such financial institutions backed up by their huge
networks pose a potential threat to Bank Alfalah Limited. So, Bank Alfalah Limited

140

should endeavor to expand their branch network as efficiently as possible and as

soon as possible.

5) Terrorist Image of the Country

After the 9 / 11 incident every kind of transaction that uses to take place with the
outside world has assumed a different mode. The trade finance transactions are the
bread and butter for the commercial bank, were also hampered by that terrorist
attack on 11th of September i.e. the magnitude of orders the exporters were receiving
decreased by a great deal, but as far as our image in the international community is
concerned there is still a considerable room for improvement. If this situation
further aggravates rather than improving, the trade finance business would really
be hampered, and one of the major earning avenues for Bank Alfalah Limited will
loose its footings. This fact poses a real threat to the sanctity of Bank Alfalah
Limited.

6) Inconsistency in Government Policies

This is a phenomenon that could hamper smooth functioning of any organization
working in a particular country. Although the sponsors of Bank Alfalah Limited --Al-Nahayan Family --- are really committed to invest more and more in the country
but still any drastic change in either the economic policies like increase in taxation
rates, or any change in the foreign policy, which could hurt Pakistans image could
also shake the investor confidence and also could lead to a decrease in the repute of
the entire banking sector of Pakistan.

STRENGTHS
The predominant strengths of Bank Alfalah Limited are

141

1) Humble Management
The senior management of Bank Alfalah Limited is considerably humble.
Their humility is an integral part of the organizational culture of the bank. The
modern management techniques have discarded the bureaucratic style of
management in which employees were treated as servants if not as slaves. In the
contemporary business world employees are said to be the biggest and the most
crucial assets of a business concern, specifically if we are talking about a service
industry and this is precisely the management policy Bank Alfalah Limited follows.
The humility of the management serves as a big morale booster and encouragement
catalyst for all employees in general and new inductees in particular.

2) Strength And Commitment Of Sponsors

Bank Alfalah Limited is a project of Al-Nahayan family, which is a renowned
Abu Dhabi based investor family. The first project of this particular family was
Bank of Credit and Commerce International (which later on became on of the most
renowned banks of the Muslim world). BCCI was acquired by Habib Bank Limited
(a nationalized bank) and as a result BCCI became Habib Credit and Exchange
Bank (H.C.E.B). The bank functioned under this particular name for six years and
then Al-Nahayan family bought 70% of its shares from Habib Bank Limited and
renamed the institute as Bank Alfalah Limited. Thus in real terms the same family
reinvested in their lost project and tried to rejuvenate their brainchild. This
reinvestment shows the investors trust, commitment, and perseverance to
transform Bank Alfalah Limited into one of the strongest financial houses of
Pakistan. The Al-Nahayan family is a royal family and this fact further adds to
the banks inherent strength.

142

3) Kaizan
Kaizan is a process of continuous improvement in production and every
aspect of value added (Japanese). In a very short time span the management of
Bank Alfalah Limited has been able to develop its image in a very effective and
efficient manner. Through the laborious efforts of the top management and the
employees, the entire organization as a whole has been able to continuously add its
prestige as a reliable, service oriented, and flourishing financial institution. When
we compare the image of Habib Credit and Exchange Bank with that of Bank
Alfalah Limited we find a world of difference, and when we compare the image of
Bank Alfalah Limited at its inception with its present image we find an even greater
difference. This fact proves the thesis that there has been continuous value addition.
The number of individuals and corporate entities that feel comfortable while dealing
with Bank Alfalah Limited is increasing on a daily basis.

4) Phenomenal Growth In Profitability, Branch Network And

Deposit Portfolio
In the very first year of its inception Bank Alfalah Limited closed its
operations at a deposit portfolio of Rs. 7 billion, at the end of the second year the
deposit portfolio had risen to Rs. 14 billion. Thus Bank Alfalah Limited is growing
at a multiplier rate of 50%. The profit before provisions and taxation of your bank
for the year 2006 stood at Rs. 3.264 billion which was 10% higher than that of last
year. The deposit grew by 7.7% and stood at a figure of Rs. 239.509 billion while
advance portfolio grew by 26% and showed a figure of Rs. 149.999 billion. When
Bank Alfalah Limited started its operations it only had three branches and in a
short time span the branch network has expanded to 195.

5) Vastly Experienced Management

143

The people who occupy the top positions in Bank Alfalahs management
hierarchy are certainly no mugs at what they do. Rather they are as capable and as
competent as they come. Their superior management skills certainly do create a
synergistic effect when coupled with the enormous amount of trust sponsors have
put in the management. One of the most evident proofs of above average
management expertise are the deposit portfolio growth, profitability growth, and
branch network growth figures shown under the previous heading.

6) Highly Trained Human Resource Department; Transformation

Of Work Force Into Human Capital
One of the most significant catalysts, management of BAL had
incorporated---and it still is incorporating---in the organization, when H.C.E.B was
transformed into Bank Alfalah Limited, was induction of young and energetic
business graduates. This was done in order to achieve quite a few objectives; one
was to raise the overall skill level of the work force so that service provision could be
improved and the second objective was to reduce the average age of Bank Alfalah
Limiteds employees so that an overall sense of change is trickled down to the grass
root level of the organization. Bank Alfalah Limited has an excellent selection /
recruitment and training program which are undertaken at its Training and
Development Center, Human Resource Division Karachi.

7) Superior Consumer Finance

In contemporary banking consumer finance has assumed immense
significance, as it is that department of a commercial bank whose personnel directly
and extensively deal with the client body. One of the most predominant sub
departments of consumer finance is Alfalah Car Finance. The customer interface is

144

greater in the consumer finance department, and the diligent staff of Bank Alfalah
limited enriched with its superior service and relationship skills attracts / persuades
these clients to develop relationship with Bank Alfalah Limited in the arena of
corporate banking as well. Thus a strong consumer finance department really helps
the bank to expand its corporate banking business.

8) Crucial Location Of Branches

All the forty five branches of Bank Alfalah Limited are located at extremely
crucial and vital locations, which is indeed a very significant factor towards earning
more profit. Moreover all of the branches are very well furnished which is an
integral characteristic of a good bank in this age of consumerism.

9) Image Building Activities

Activities such as building of Alfalah Square at Liberty Lahore, the China
Khan at the Alfalah Square, Alfalah Mini Golf Course, and Shahdin Manzil
(proposed main branch, Lahore at The Mall, under construction) have really
contributed a lot towards the image building process of Bank Alfalah Limited. Such
activities also make people aware of the rejuvenation process of Bank Alfalah
Limited. Such activities are classified as strength because they involve people in the
change process that contributes a lot towards building customer loyalty.

WEAKNESSES
The chief weaknesses are enlisted as under

1) Small Size

145

Bank Alfalah Limited is small in size; there is no doubt about this fact. Although,
as I mentioned in the strengths section, the branch network is expanding at a
phenomenal rate but still the size is not big enough as compared to some of the big
banks present in the market. Bank Alfalah limited has 189 branches in the whole of
Pakistan. A huge branch network is always an invaluable asset for any bank.
Customers simply love it when they could see another branch of their own bank at
every turn they take. Extensive branch network might reduce per branch profit but
it is very likely to raise the overall profit figure for the entire organization as a
whole.

2) Lack of Research Cell

There should be a research cell in the bank, which should be engaged in
gathering the information about the present actions of its competitors

3) Uneven treatment with customers

Customers having accounts with small amounts are not given same services and
dealing given to those with high accounts.

4) Skill Set Of Employees Is Not Up To The Mark As There Is No

Job Rotation
The contemporary banking all over the world has taken a unique turn i.e. they
have made job rotation an integral part of their management philosophy. Job
rotation adds value to every single employee, as he is able to perform a variety of
jobs related to banking profession. Moreover job rotation increases the human
capital pool of the organization as every one is trained in more than one sphere of
banking. Bank Alfalah Limited completely lacks this.

146

5) Foreign Banks Still Are A Little More Prestigious

Although Bank Alfalah Limited is continuously adding to its prestige, but still it
can not be rated as a bank with the same repute as International Banks functioning
in Pakistan, for instance ABN AMRO Bank, Citi Bank and Standard Chartered
Grindlays. Banks function as custodian of peoples possessions, act as their agents,
represent clients in trade dealings outside the country, and give different types of
guarantees and in all of these transactions repute plays a central role. And when it
comes to repute foreign banks have a little more of it as compared to Bank Alfalah
Limited.

6) Bank Alfalah Limited Does Not Possess Foreign Network

Foreign banks and some local banks having international network have this edge
over Bank Alfalah Limited. Banking transactions regarding trade finance constitute
a very important part of contemporary banking and moreover they are said to be
the bread and butter for the commercial bank. Bank Alfalah Limited, for such
transactions has to rely on its correspondents and agents in other countries, and
naturally has to pay them some remuneration --- an expense banks having foreign
network do not have to incur.

7) No Advertising in Electronic Media

Bank Alfalah does embark upon occasional sales promotion activities, it also
gives advertisements in the print media, but it has never flashed an advertisement
on the television screen, which is said to be the strongest of all Medias. Some other
commercial banks are really capitalizing on the power of this media; examples are
Askari commercial bank, Muslim commercial bank, Habib Bank Limited etc.

147

INDUSTRY ANALYSIS:

1) External Factor Evaluation (EFE) Matrix

External factor evaluation matrix is a very useful tool towards assessing as to
what are the factors that constitute the set of the most significant opportunities and
threats. I found it considerably enlightening because of its two dimensional
approach towards assessing an organization i.e. this particular matrix not only
considers the relative importance of the opportunities and threats by assigning them
weights but it also allots the factors rates on a one to four scale depending upon the
kind response the organization is giving to the opportunities and threats.
In the summer break I did my internship at Bank Alfalah Limited, Garden
Town Branch so assessing the opportunities and threats for Bank Alfalah Limited
did not pose any serious difficulties. But since I was also suppose to weight and rate
the opportunities and threats I had to go to the bank in order to get some views from
the members of the organization as to what do they think about the relative
importance of the factors and what is their view point regarding their organizations
response to these opportunities and threats.

The resultant score of 2.23 shows an average External position of the bank.

148

OPPORTUNITIES
Extension Of Local Branch Network
Establishing Foreign Branch Network
Capitalizing On Information Technology
Unexplored Market Of MNCs
More customers are willing
THREATS
Private Sector Banks
New Trade Policies
Network Expansion By Foreign Banks
Pakistani Banks Improve Their Services
Terrorist Image Of The Country
Inconsistency In Government Policies
TOTAL

WEIGHT

RATING

0.15
0.10
0.10
0.10
0.05

3
1
3
3
1

WEIGHT

RATING

0.10
0.05
0.10
0.05
0.10
0.10

3
1
3
3
2
3

1.00

WEIGHTED
SCORE
0.45
0.10
0.30
0.30
0.05
WEIGHTED
SCORE
0.03
0.05
0.30
0.15
0.20
0.30
2.23

2) Internal Factor Evaluation (IFE) Matrix

149

The IFE matrix is constructed as a summary step to performing the Internal

Audit / Assessment. Its basic purpose is to list down the major Strengths and
Weaknesses of an organization. Other than these factors, its construction is more or
less similar to that of the EFE Matrix.
As I have mentioned before, I did my internship at Bank Alfalah Limited,
Garden Town Branch. Therefore I have taken the Strengths and Weaknesses of
Bank Alfalah Limited to construct this matrix.
The resultant score of 3.15 shows the strong position of the bank internally.

STRENGTHS
Humble Management
Commitment Of Sponsors
Kaizan
Phenomenal Growth In Profitability
Vastly Experienced Management
Highly Trained HR
Superior Consumer Finance
Crucial Location Of Branches
Image Building Activities
WEAKNESSES
Small Size
Lack of research cell
Uneven treatment with customers
Skill Set Of Employees Is Not Up To The
Mark
Foreign Banks Still Are A Little More
Prestigious
Bank Does Not Possess Foreign Network

WEIGHT

RATING

WEIGHTED
SCORE

0.06

0.18

0.08
0.10
0.05
0.02
0.05
0.10
0.02
0.02
WEIGHT

0.24
0.4
0.2
0.04
0.15
0.3
0.08
0.02
WEIGHTED
RATING
SCORE
3
4
4
2
3
3
4
1

0.15

0.45

0.05
0.05

4
2

0.2
0.1

0.15

0.45

0.04

0.16

0.02

0.02
150

No Advertising In Electronic Media

TOTAL

0.04
1.00

0.16
3.15

3) Competitive Profile Matrix

The Competitive Profile Matrix identifies a firms major competitors and their
particular strengths and weaknesses in relation to a sample firms strategic position.
First of all the critical success factors are determined and examined. Rates and
weights are assigned to each factor. Rate are company based which means the
significance and importance of such factors with in a firm whereas weights are
industry based which means their relative importance in an industry. So weights
from 0.0 to 1.0 are assigned to each critical success factor and the total of such
weights should not exceed 1. On the other hand rates are assigned from 1 to 4, 1
being the minimum and 4, the maximum. Each factors weight is multiplied by the
factors rate and hence the weighted score is observed. Here advertising, turnover,
organizational culture, market share etc are considered to be the various critical
success factors.

151

For comparison with Bank Alfalah Limited, I have chosen Askari Commercial Bank
and Muslim Commercial Bank. The reason for such a choice is simple. As Bank
Alfalah Limited is a local bank; its primary competitors are the other local private
banks. Other than Bank Alfalah Limited, these two banks are providing the best
services to the general public.

BANK
ASKARI
ALFALAH
COMMERCIAL
MCB
CRITICAL
Sr.
BANK
SUCCESS
WEIGHT LIMITED
No.
FACTORS
Wt.
Wt.
Wt.
Rating
Rating
Rating
Score
Score
Score
1 Market Share
0.03
2
0.06
2
0.06
3
0.09
2 Price Competitiveness 0.02
3
0.06
2
0.04
2
0.04
3 Advertising
0.15
3
0.45
3
0.45
3
0.45
4 Financial Position
0.03
4
0.12
4
0.12
3
0.09
Variety
0.02
4
0.08
2
0.04
3
0.06
5
Of Products
6 Online Banking
0.05
0
0
3
0.15
4
0.2
7 Location
0.15
3
0.45
1
0.15
1
0.15
8 Domestic Networking
0.1
4
0.4
2
0.2
2
0.2
9 International Network
0.05
0
0
4
0.2
4
0.2
10 Customer Loyalty
0.1
4
0.4
3
0.3
3
0.3
Environment
0.05
3
0.15
4
0.2
3
0.15
11
& Decor
Customer
0.15
4
0.6
3
0.45
2
0.3
12
Relationship
Efficiency
0.05
3
0.15
3
0.15
3
0.15
13
of Staff
14 Brand Recognition
0.05
2
0.1
2
0.1
3
0.15
TOTAL
1
3.02
2.61
2.53
152

4) The Strengths-Weaknesses-Opportunities-Threats SWOT

matrix:
SWOT matrix is formulated by considering and evaluating the strengths,
weaknesses, opportunities and threats of an organization. Through proper and keen
observation, the following factors are been initialized for the SWOT analysis of
Bank Alfalah Ltd.
STRENGTHS

1.
2.
3.
4.
5.
6.
7.
8.
9.

WEAKNESSES

1. Small Size
2. Lack of research cell
Humble Management
Commitment Of Sponsors 3. Disproportionate Presence
Of Old Staff
Kaizan
4. Skill Set Of Employees Is
Phenomenal Growth In
Not Up To The Mark
Profitability
5. Foreign Banks Still Are A
Vastly Experienced
Little More Prestigious
Management
6. Bank Does Not Possess
Highly Trained HR
Foreign Network
Superior Consumer Finance 7. No Advertising In
Crucial Location Of
Electronic Media
Branches
Image Building Activities
153

OPPORTUNITIES
1.
1. Extension Of Local Branch
Network
2. Establishing Foreign
2.
Branch Network
3. Capitalizing On
3.
Information Technology
4. Unexplored Market Of
MNCs
4.
5. More customers are willing
THREATS

SO STRATEGIES
Expansion of branch
network to increase
profitability
Capturing the market
currently held by the
foreign banks
More investment in the
projects of Multi National
companies
More Advertisement to
promote the
increasing branch network
ST STRATEGIES

WO STRATEGIES
1. Increase Branch
Communications
Network
2. Product development
3. Expansion to foreign
countries to facilitate
Expatriates in transmitting
money
4. Training of the existing
employees to increase their
efficiency and effectiveness
WT STRATEGIES

154

5) Strategic Position and Action Evaluation (SPACE) Matrix

1. Private Sector Banks

2. New trade policies
3. Network Expansion By
Foreign Banks
4. Pakistani Banks
Improve Their Services
5. Terrorist Image Of The
Country
6. Inconsistency In
Government Policies

1. High customer loyalty

and experience can be
use to avoid disasters and
breakdown in service

1. Increase the marketing to

the customers to meet the

competitors claims
2. Decrease the number of

2. More effective leadership

to increase competitive
and relative advantage
3. Increased profits to be
used to open new
branches to compete with
competitors
4. Opening new branches in
business related hubs

personnel to avoid the

threat of takeovers
3. Increasing employee
retention through the
introduction of attractive
pay and benefits

This four-quadrant framework indicates whether aggressive, conservative,

defensive, or competitive strategies are most appropriate for an organization. The
axes of the SPACE matrix represent two internal dimensions (financial strength

155

[FS] and competitive advantage [CA]) and two external dimensions environmental
stability [ES] and industry strength [IS]). These four factors are the most important
determinants of an organizations overall strategic position. For Bank Alfalah Ltd.
this matrix is been drawn using the following critical success factors
Ratings Average
Financial Strength (FS)
Banks revenue increased by 74 %

Banks profits increased by 43.5 %

Return on assets have also increased showing effectiveness of bank in

proper utilization of its assets

Return on equity has increased indicating that the bank has become more
attractive for its investors

3.50

Industry Strength (IS)

Growth and Profit potential

Deregulation provides geographic & product freedom & increases competition

in banking industry
Environmental Stability (ES)
High inflation and Technological changes

Political instability
Competitive pressure and Demand variability
Competitive Advantage (CA)
Becoming increasingly Competitive
Banks customer base is expanding and strong Customer loyalty
Providing services all over Pakistan

3.50

-4
-3

-3.33

-3

-2
-3
-3

-2.67

156

DIRECTIONAL VECTOR COORDINATES

X - axis:
Industry Strength + Competitive Advantage
3.50 + (-2.67) = 0.83
Y - axis:
Financial Strength + Environmental Stability
+ (- 3.33) = 0.17

Conservative

Aggressive

3
2
1

-4

-3

-2

-1

-1
-2
-3

Defensive

-4

Competitive

-5

157

From the examination and evaluation of the above mentioned SPACE matrix for
Bank Alfalah Ltd.,it can be represented that the bank is currently been falling into
the region of being AGGRESSIVE, which shows the banks is in an excellent position
to use its internal strengths to take advantage of external opportunities overcome
internal weaknesses and avoid external threats.

6) Boston Consulting Group (BCG) Matrix

This matrix enhances multidivisional firms efforts to formulate strategies. It
stresses that autonomous divisions (or profit centers) constitute the business
portfolio. It states that a firms divisions may compete in different industries
requiring separate strategy.
This matrix

Graphically portrays differences among divisions

Focuses on market share position and industry growth rate

Manages business portfolio through relative market share position and

industry growth rate

Relative market share position is defined as

Ratio of a divisions own market share in a particular industry to the market share
held by the largest rival firm in that industry

Relative Market Share Position

High 1.0
High 1.0

Medium 0.5

Stars
II

Low 0.0

Question Marks
I

Bank
Alfalah
Limited

158

Industry Sales Growth Rate

Medium 0.5

Cash Cows
III

Dogs
IV

Low 0.0

159

7) Internal External Matrix

This matrix is a continuation and an advanced form of the Boston Consulting
Group (BCG) Matrix. The same interpretation goes for this matrix as well. The nonavailability of the department wise data limits me to construct only a rough sketch
of the matrix.

THE IFE TOTAL WEIGHTED

SCORES (3.15)

(2.23)THE EFE TOTAL WEIGHTED SCORES

Strong
3.0 to
4.0
4.0
High
3.0 to 4.0

Average
2.0 to
2.99

3.0

Weak
1.0 to 1.99

2.0

1.0

II

III

IV

VI

3.0
Medium
2.0 to 2.99

Bank Alfalah

2.0
Low
1.0 to 1.99

VII

VIII

IX

1.0

160

8) The Grand Strategy Matrix:

The upcoming details and evaluation will show a grand strategy matrix for Bank
Alfalah Ltd. based on the observation.
RAPID MARKET GROWTH

Quadrant II

Quadrant I

1. Market development

1.Market development

2. Market penetration

2. Market penetration

3. Product
development
4 Horizontal
integration
WEAK
COMPETITIVE
POSITION

5. Diversification
6. Liquidation

3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration

STRONG

7. Concentric
diversification

COMPETITIVE
POSITION

161

Quadrant III

Quadrant IV

1. Retrenchment

1. Concentric
diversification

2. Concentric
diversification
3. Conglomerate
diversification

2. Horizontal
diversification

4. Divestiture

3. Conglomerate
diversification

5. Liquidation

4. Joint Venture

SLOW MARKET GROWTH

According to my observation while working with Bank Alfalah Ltd.,It have
experienced and evaluated that my bank lies in the first quadrant of the Grand
Strategy Matrix,i-e, Quadrant I. This is because Bank Alfalah is enjoying a
moderate rapid growth in the market and the competitive strategy position as well
in the industry. So for this purpose, we can say that Bank Alfalah is in an excellent
strategic position. So continued concentration on current markets and products are
appropriate strategies. Also Bank Alfalah Ltd. can afford to take risks and
advantages of external opportunities in many areas, this is the reason that now Bank
Alfalah Ltd, has started the ISLAMIC banking in the countries like Afghanistan
and Bangladesh. So market development, market penetration and product
development are appropriate strategies.

162

MARKETING MIX OF BANK ALFALAH LTD.

Marketing mix is a set of tools you need for establishing your detailed
marketing plans and forecasting your sales to pursue the marketing objectives in the
target markets. Thus marketing mix of any organization is very much important in
order to ascertain the overall functioning of the organization. Bank Alfalah has a
strong marketing mix structure for its branches growth. Marketing mix of Bank
Alfalah will be focusing the following major aspects:

Product
Price
Place
Promotion
PRODUCT

163

Due to trend setting and innovative banking, Bank Alfalah presents a range
of quality products with revolutionary perks and convenience. Alfalah provides a
wide range of products/ services to its customers, which can be compared with any
foreign, or national bank in terms of quality and reliability. The acceptability of
these products is very much effective to the customers. Bank Alfalah has now
achieved a competitive advantage over other banking institutions by offering a
complete range of banking solution for its valued customers.
As per current laws and State Bank of Pakistans regulations, customers are
required to provide proof of their identity and a satisfactory introduction to open
any Bank Account. Term Deposit account can be opened by providing a copy of
national identity card only.
Here is an overview of different products and services formulated by Bank Alfalah.

Nature of Accounts Offered

No doubt in saying that the basic function around which the banks
operations circulate constitute the opening of accounts and ultimately enhancing the
deposit base for the branch. Accounts offered by the banks for the deposits of
customers constitute the basis of their operations and develop the basic relationship
between a banker and customer.

Deposit Products
Likewise, Bank Alfalah has formulated a number of accounts for the deposits
of customers, with unique features. These are:

Current Accounts
This account offers unlimited deposit and withdrawal facility to facilitate business
transactions. There is absolutely no limit on number of transactions deposits and
164

withdrawals. Individuals, partnerships, companies, associations, clubs, societies, and

NGOs are eligible to open current account.

PLS SAVINGS Accounts

Saving account is the most common account for individuals. Saving accounts are
designed to mobilize savings primarily from a large number of individuals and
households. Any one or more individuals or partners can open a PLS saving account
with the bank.

ROYAL PROFIT:
Royal profit is a highly yield rupee account intended to provide higher rates

of profit to high net worth customers and greater flexibility and convenience in
terms of transactions.

BASIC BANKING ACCOUNT:

Initial deposit for account opening is Rs. 1,000 with no minimum balance
requirement.

Non interest bearing checking account.

Maximum 2 deposits & 2 withdrawals through cheque are allowed.

165

Free debit card can be used to withdraw cash and make purchases at
thousands of outlets across Pakistan which provides access to funds 24 hours
a day.

No restriction on ATM withdrawal.

Alfalah Education:
Alfalah Education is a Term Deposit product with No Additional Cost (NAC)
education insurance cover for account holders with school going children. Alfalah
Education Account , beside offering competitive return on TERM DEPOSIT , offers
tuition fee reimbursement of children for 15 years of schooling or up to their 20th
birthday, in the unfortunate event of the death (either through accident, illness or
natural causes) of the main breadwinner (account holder) parent.
Alfalah Education offers a competitive return on term deposit and secondly, it
creates a contingency provision for our school going youths education in the hapless
event of the death of any major breadwinner. The product seems rewarding in the
current scenario of increasing number of children of school going age and the
general public interest in quality education of their off springs.

Alfalah Mahana Amdan:

Alfalah Mahana Amdan is a 3 year TDR with expected rate of profit of 10%
p.a. This term deposit will provide an opportunity to individual/joint customers to
enjoy

higher

returns

that

will

automatically

be

credited

to

his/her

current/PLS/RP/BBA account on 1st working day of each month.

This facility is not available for business and corporate customers.

Alfalah Kifayat :( more than a saving account)

166

Features:

Any Pakistani resident over the age of 18 can open this account. This account
is for individual/joint customers only. Other customers like companies,
corporate etc are not eligible for opening of this account

Minimum balance requirement for opening this account is Rs. 10,000/- with a
maximum of Rs

1, 000,000/-

Three debit transactions are allowed in a month either through cheques or

Debit Card/POS machine.

There is no restriction on deposit transactions.

The bank will issue the first cheque book of 25 leaves and a Debit card free of
cost.

Profit will be calculated on monthly minimum balance basis and will be

credited in the account on quarterly basis. No profit shall be payable for a
particular month, if the minimum balance for any particular day of said
month falls below the amount of Rs. 10,000/-.

All service charges are as per the prevailing Schedule of Charges.

Only one account per customer will be allowed across all branches of Bank
Alfalah.

NOTICE DEPOSITS
These are the short-term deposits of customers where the notice is to be given to
the bank prior to the withdrawal. Profit rates for these deposits are:
07 - 29 days

4.00%

30 days & above

4.50%

167

 TERM DEPOSITS
Term deposit is a fixed PLS account where the profit rates increase with the amount
as:

Tenures

Rates of profit

1 Month

3.50%

3 Months

4.00%

6 Months

4.25%

1 Year

4.75%

2 Years

6.00%

5 Years

6.50%

Salient features:
Short to long term deposits
Choice of term 1,3,6,12,26 & 36
Minimum balance required Rs. 50,000/ Profit paid on maturity of respective term profit rates increase with tenure
and amount

FOREIGN CURRENCY ACCOUNTS

Due to the increasing globalize business; all leading commercial banks have been
offering foreign currency accounts to their customers. Bank Alfalah has done it by
facilitating its customers to have their foreign currency accounts in the bank.
168

At present, BAL offers US Dollar & UK Pound accounts and profit is being paid on
half yearly basis.

ON-LINE SERVICE
Bank Alfalah provides on-line services to its customers. At present, this
service facilitates the customers to deposit and transfer their amounts from one
branch to another of BAL. It is being planned to launch a universal account to
update this facility and make it more extensive.

OTHER CONSUMER PRODUCTS

Besides the accounts variety that has been mentioned in the previous
sections, Bank Alfalah Islamic Banking provides a wide range of products that are
purely Islamic based.
These products fall in the category of Musharakah, Maharajah based financing,
that is related to the trade concerns and not the interest based financing or mark up
thing.

ALFALAH VISA CARDS (FREE forever)

Your Bank Alfalah Credit Card is your partner everywhere and is globally accepted
and welcomed at locations displaying the VISA logo. It is accepted at nearly 30

169

million locations in more than 150 countries around the globe and over 18,000 Bank
Alfalahs establishments in Pakistan.
Alfalah VISA lets you pay for shopping, travel, entertainment, meals and much
more. Card members are facilitated through a number of promotions from time to
time. In addition, there are a number of strategic business partnerships with leading
local and international brands for purchase of home appliances at exciting Step-BYStep (SBS) monthly installment plan with free home delivery at lowest interest rates.

ALFALAH HILAL CARD (Debit Card)

In our endeavor to give you versatile banking options to fulfill your financial
needs, Bank Alfalah Limited presents you the Alfalah Hilal Card, the first Visa
Electron International Debit Card which gives you an unlimited access to your
current / savings account with a simple swipe, at millions of retail shops and ATMs,
worldwide. The Alfalah HilalCard is globally accepted welcomed at all locations
displaying the VISA/ ELECTRON/PLUS logos with self-printing POS terminals.
Your card is accepted at nearly 13 million physical locations in more than 130
countries round the globe with above 14,000 major establishments in Pakistan.
What's more, it is easy to operate and can be used on any electronic self-printing
POS machine where VISA is accepted, locally and internationally. No more hassle of
remembering your PIN for retail transactions and no need to go to the ATM for cash
withdrawal, one swipe and your transaction is complete.

CAR FINANCE
Financing a car at Alfalah Bank is very easy with the due favor of no collateral
requirement. Alfalah Car is a consumer-financing scheme that enables a customer to
170

own his desired car at easily affordable and flexible installation with minimum
down payment and insurance. All maintenance and insurance expenses are borne by
the bank because of the reason that the ownership of the car is still with the bank
even after the signing of the contract. The bank is just receiving the rentals from the
customers. All businessmen, Corporate Employees, Salaried and self-employed
professionals having net take home income in excess of three times the monthly
installment are eligible to take the advantage of this scheme.
The customer is able to finance their vehicle(s) the smart way with us. Bank will
purchase the vehicles(s) of the customers choice and later rent to the client at a pre
agreed rental amount. Ownership of the vehicle(s) is transferred to the client upon
satisfactory payment of all the rentals by the time the customers security deposits
period expires.

ALFALAH AGRI FINANCE

Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank
Alfalah Zarie Sahulat. Bank is extending this service to the clients on a competitive
markup rate. BAL model is in letter and spirit based on SBP instruction. The
scheme now covers financing of a multitude of activities related to crop production,
harvesting, transportation, marketing, storage, processing, packing, export, agri
development, working capital and fixed investment financing of agri non crop
activities, storage, silos, etc. making it quite exhaustive and comprehensive. The
products have been, therefore, designed keeping in mind objectivity of practical
applicability in market scenario and to cater to the most commonly demanded items
of agricultural financing by farmers

171

 Alfalah Karobar finance

a) AKF is a Running Finance facility between Rs 0.50M to Rs 10.0M.
b) Tailor-made product for SMEs for their working capital financing based on
the cash flow methodology. (Our Edge = Better pricing, quicker TAT and low
processing charges.)

c) At Bank Alfalah, 65 branches are designated to deal with AKF business in

the entire country.

d) The purpose of the AKF is financing procurement of raw material, finished

goods and receivables of SME businesses.

MONEYGRAM

Bank Alfalah limited, in collaboration with Money Gram, offers remittance

service to Pakistan. Money Gram is person to person money transfer service that
allows consumers to receive money in just a few minutes. Money Gram is available
in over 156 countries and in more than 40,000 locations worldwide.
With Money Gram your money is transferred immediately and usually arrives at
the receiving end within 10 minutes, other services can take days or weeks. There
are no complicated procedures and you do not need a bank account or a credit card.
Whats more, the receiver is handed the cash immediately.

SOME SERVICES OF BANK ALFALAH LTD.

172

In addition to the above mentioned products offerings by the bank, we are

engaged in providing some extraordinary facility services to our customers as well.
The details are as under:

Bank Alfalah Rupee Traveler Cheques

Rupee travelers cheques are being pioneered by MCB Bank limited initially but
these days many banks are engaged in providing this service to the clients. Rupee
traveler cheques are been issued at different denominations at Bank Alfalah.

Relationship Banking
Relationship banking is basically a term been used for the purpose of the
banking 365 days all along and 24 hours a day. The Bank prides itself on
recognizing and fulfilling the varied financial needs of its customers. In doing so, it
tries to develop and build upon relationships that are based on mutual trust and
confidence: the very essence of what they call "Relationship Banking". A customer
can operate his account from any branch in the country, or through its 24-hour
ATMs.

Bank Alfalah Lockers

Before disclosing the details of lockers facility by the bank, a quote needs to be
mentioned,
If your jewellery has been giving you sleepless nights, and the prize bonds tucked
in the bottom drawer make you feel tense, it's time to discover peace of mind.

173

Bank Alfalah provides safe deposit locker facility to its customers for safe keeping of
their valuables like documents, securities and jewellery etc. For the snatching of the
peace of mind, Bank Alfalah is the best Trustee amongst all. Because of the reasons
that the bank is providing extraordinary services for the easy lockers.

The online Banking

Contrary to other banking organizations, Bank Alfalah is constantly engaged in
finding new ways to facilitate its customers and to increase its customer net. THE
BANK ALFALAHs ON-LINE BANKING is a competitive edge for them; because
in this service they provide a facility to their customer that they can operate transfer
their amount on a phone call! All the requirements for inquiries, transactions,
suggestions and complaints are handled over the phone.

Phone Banking
24 hours UAN connectivity with unmatched ease and convenience servers our
customers efficiently through interactive Voice Response delivering cards, PIN
generation and other services.

Automated Teller Machines (ATMs)

The ATMs are provoking new ways to attract the customers through
facilitating transactions. The Auto Teller Machines at Bank Alfalah are continuously
running and delivering instant cash facilities to the customers any time in the day.
Its ATMs allow the customers an access to their money 24 hours a day, 7 days a
week, giving you flexibility to bank at your convenience.

174

Miscellaneous Services:
o Issuance of Pay Order
o Issuance of Demand Draft
o Collection of Local, outstation and foreign bills
o Import export facilitation

PRICE
The term pricing refers to:
The key to pricing is to Build value into the product and price it accordingly.
Bank Alfalah has to face the ever-increasing competition in the fabric industry. As
the number of competitors are increasing day by day but still Bank Alfalah enjoys a
reasonable market share with the facts of providing excellent services amongst the
competitors.
BAL provides different products and services to its customers, which have
been discussed in previous section. Pricing of products means the commission to be
paid by the customer in return of services provided by the bank. The price paid for
the services mainly include:

Mark up
Bank charges
Fees and bank commission etc.
These charges and commissions are prescribed on Schedule of Bank Charges
(SOC) that keeps on changing time-to-time, and issued by the bank periodically
(generally after six months).The price charged for all the products and all the

175

services is given in complete detail in the schedule of bank charges for Islamic
banking are as follows:

PLACE

Pricing refers to the following methodologies taken by an organization:

Various activities the company undertakes to make the product accessible and
available to the target customers
Also,
Its can be viewed as set of interdependent organization involved in the process of
making a product or service available for use or consumption

Place refers to the means by which our customer acquires your product. This
includes the actual place it is purchased (the shop, the telephone, the web page, the
warehouse) as well as the actual route of distribution. Simply place refers how you
will sell your product to your customers.
The objective of Bank Alfalahs has always been to expand its branch
network to meet clients needs as has been mentioned clearly in the mission
statement of the bank. . Bank is well positioned and geographically poised, to cater
for increased business demands, from its existing potential clientele. Bank Alfalah
has 195 branches, spread all over Pakistan covering major business centers and
principle cities. Bank plans to add more branches to his growing network in the
ensuing years.
At present, Bank Alfalah has opened all its branches at commercial and business
areas or near to commercial areas so that the customers or clients face no problem
176

in reaching the bank. Head Office of Bank Alfalah is situated in Karachi. The detail
description of its branches is as follows:

No.

Branch Name

Address

PABX

FAX No

Abbottabad

191, Supply

0992-344723- 0992-344728

Bazar, Main

Mansehra Road,
Abbottabad
1

Ahmedpur East

Plot#188, Block

(062)

(062)

Branch

XI, Kutchery

2275504-8

2275503

Road, Ahmedpur

177

East
1

Arifwala Branch

47/D, Zain Palace, 0457-835711Qaboola Road,

0457-835717

13

Arifwala
1

Attock Branch

Zila Council

057-2701557- 057-2700248

Building, Kutchery 58
Chowk, Attock City
1

Bahawalnagar

Shop # 6, Ghallah (063)

(063)

Mandi,

2277437

2272005-8

Bahawalnagar
1

Bahawalpur Branch

Ground Floor,

062-2889922- 062-2889874

Bldg.No.V/912,

25

Circular Road,
Bahawalpur
1

Bahawalpur Branch

Ground Floor,

062-2889922- 062-2889874

Bldg.No.V/912,

25

Circular Road,
Bahawalpur
1

Bhalwal Branch

Liaqat Shaheed

048-6642647

048-6643709

Road, Bhalwal
1

Burewala

95-C, AL-Aziz

067-3771901- 067-3771905

Market, College

04

Road, Burewala
1

Chakwal

City trade Centre,

0543-555206- 0543-555220

Tehsil Chowk,

218

Rawalpindi Road,
Chakwal
1

Chaman Branch

Trunch Road,

0826-613440

0826-613488

Chaman,
Balochistan
178

Karachi Main Branch B. A. Building

I.I.Chundrigar

021-2414030- 021-2417006
39

Road, Karachi
2

Cloth Market Branch Luximidas Street,

Clifton Branch

021-2401621- 021-2401627

Karachi

26

Fl-10, Block 5,

021-5833779 - 021-5879175

KDA Scheme 5,

82

Khayaban-eRoomi, Clifton,
Karachi
4

Shahrah-e-Faisal

Progressive

021-4313536- 021-4313539

Branch

Square, Block 6,

38

PECHS, Shahrahe-Faisal, Karachi

5

Jodia Bazar Branch

Gulzar Manzil,

021-7532482- 021-2401627

Jodia Bazar,

84

NP/12/49-50,
Mohammad Shah
Street, Karachi
6

Korangi Branch

Plot No ST 4/2,

021-5050964,- 021-5050653

Sector 12-B,

387

Aiwan-e-Sanat,
Korangi, Industrial
Area, Karachi
7

M.A.Jinnah Road

Plot No.23/1, Zelin 021-2750627- 021- 2750

Branch

Place, (Habib

629

Bank
Bldg.)M.A.Jinnah,
Road / Abdullah
Haroon Road,

179

Karachi
8

SITE Branch

Siemens

021-2582114-

Chaurangi,

116

021-2582113

S.I.T.E. Karachi
9

North Karachi

Plot No SA-1 (ST

021-6950805- 021-6986051

Branch

1/1/) Sector 12-B,

06

Gabol Town, North

Karachi, Industriail
Area, Karachi
10

Paper Market

Plot No.S.R.7/23,

021-2211353-

Branch

Campbell Street,

58

021-2211243

Paper Market,
Karachi
11

Gulshan-e-Iqbal

Ground Floor,

Branch

Sumera

021-4984937

021-4984971

Apartments, Plot
SB-15, Block 13B, KDA Scheme
No 24, Gulshan-eIqbal, Karachi
12

Stock Exchange

18-20, Karachi

021-2417515-

Branch

Stock Exchange,

19

Building, Stock
Exchange Road,
Karachi
13

North Napier Road

Ground Floor,

021-2544021- 021-254006

Branch

Building at

24

Surv.No.35 /
Sheet, No.NP-10
(Old

180

Surv.No.A26/5),
Napier Quarters,
Karachi
14

Bahadurabad

1-3, Prime Arcade, 021-4128577- 021-4129676

Branch

Bahadur Shah

81

Zafar Road,
Bahadurabad,
Karachi
15

Timber Market

Siddiq Wahab

021-7750635- 021-7733463

Road, Old Haji

Camp, Karachi
16

Defence, Karachi

Plot No 40 & 42,

021-5304167

26th Commercial
street, Defense
Housing Authority,
Phase V, Karachi
17

18

PECHS

Federal B Area

154-S, Block 2,

021-4538423- 021-4314221

PECHS, Karachi

24

C-28, Block 13,

021- 6344700

021-6803043

Federal B Area,
Karachi
19

Eidgah Branch,

166, M.A. Jinnah

021-2217290- 021-2217244

Karachi

Road, Near Light

House, Karachi
20

Tipu Sultan Road

Z-111,112,

021-4398457- 021-4398456

Adamjee Nagar,

Tipu Sultan Road,

Karachi
21

Marriot Road

Murad Khan

021-2414138- 021-2412082

Road, Marriot

40
181

Road, Karachi
22

Hyderi

Al-Burhan Circle,

021-6626066

Block E North
Nazimabad,
Karachi
23

Gulistan-e-Jauhar

30-31, Saima

021-4815926- 021-4815924

Classic, Rashid

Minhas Road,
Karachi
24

Korangi bypass (D.

114, 9th East

021-5887571- 021-5887574

H. A. Phase I)

Street, D. H. A.

73

Phase I, Karachi
25

Hawksbay Road

KB-28, Haji Ishaq

021-2355873

Market, Main
Hawksbay Road,
Karachi
26

Shershah Branch

D-283, Main

021-2585001- 021-2585005

Shershah Road,

SITE, Karachi
27

Landhi Branch,

Area 5-D, Sctor

021-5034451- 021-5030875

Karachi

36-E, Landhi

Township, Karachi
28

Tariq Road Branch

124/A, Block 2,

(021)

(021)

P.E.C.H.S, Main,

4386052-5

4386056

021- 4904601

021-4904602

Tariq Road,
Karachi
29

Malir Cantt Branch

Old Malir
Cantonment
Library, Cantt
Bazar, Malir Cantt,

182

Karachi
30

Gulshan Chowrangi

Sani Arcade,

021-4988695

021-4985729

Branch

Block 3, Gulshan-

Garden East Branch, Silver Jubilee

021-2238704,

021-2225941

Karachi

Apartment,

2238717,

194/2/1, Britto

2238722,

Road, Near

2238605

e-Iqbal, Karachi
31

Ismailia Jamat
Khana, Garden
East, Karachi
32

DHA Phase IV,

Plot No. 80, 10th

021-5312832- 021-5312837

Karachi

Commercial

35

Street, Phase IV,

Defence Housing
Authority, Karachi
33

Gizri

K-4/3, Bazar Area 021-5868991- 021-5867149

Clifton, Karachi

34

Sea View

93

Sahil Promenade, 021-5364095- 021-5371259

Block 3, Scheme

97

5, Clifton, Karachi
35

Nazimabad

"Al-Kausar

(021)

(021)

Homes, Plot # 2,

6708980-83

6708978

Block-III, SubBlock E,
Nazimabad,
Karachi
1

L. D. A. Plaza

Kashmir Road

042-630 6201- 042-

Branch

Lahore

5, 042-630

6307836,042-

5614-18

6301193,042-

183

6368905
2

Gulberg, Lahore

125/E-1,Gulberg-

042-5877800- 042-5754900

Branch

III, Lahore

Defence Lahore

G-9, Commercial

042-5729723- 042-5729727

Branch

Area, Phase-I,

26

ICCHS (Defence),
Lahore Cantt.
Lahore
4

Circular Road,

Circular Road,

042-7638256-

Branch

Lahore

58

Township Branch

47, B/1, Block 10,

042-5152831- 042-5113716

Akber Chowk,

Township, Lahore
6

Badami Bagh

29-30,PECO

Branch

Road, Badami

042-7704961

042-7728074

Bagh, Lahore
7

Allama Iqbal Town

36, College Block, 042-543 2961- 042-5432960

Branch

Allama Iqbal

Town, Lahore
8

Shah Alam Market

Hilal-e-Ahmar

042-7673401- 042-7673409

Complex, Shah

Alam Market,
Lahore
9

Shadman Branch

Bunglow No. 88,

042-7538116-

Shadman - 1,

18

042-7538119

Lahore
10

11

Tufail Road, Lahore

50/3, Tufail Road,

042-6689016- 042-6688374

Cantt

Lahore Cantt

19

Lahore Stock

Basement Level 2, 042-6307461- 042-6307469

Exchange

Lahore Stock

68
184

Exchange
Building, 19,
Khayaban-e-Iqbal,
Lahore
12

IBD- New Garden

Awami Complex,

042-5846374- 042-5846386

Town

Block 1, New

81

Garden Town,
Lahore
13

Baghbanpura,

268, G.T. Road,

042-6844006- 042-6844010

Lahore

Baghbanpura,

Lahore
14

15

Ravi Road, Lahore

Thoker Niaz Beg

13, Ravi Road,

042-7708661- 042-7708660

Lahore

Raiwind Road,
Lahore

16

Shahdin Manzil

Faysal Chowk,

042-601 2000

042-6012081

Lahore
17

Liberty Market

10-C, Commercial 042-5789431- 042-5755226

Area, Liberty

34

Market, Gulberg
III, Lahore
18

Azam Cloth Market

Rehman Centre,

042-7643851- 042-7643860

Akbar Block,

54

Azam Cloth
Market, Lahore
19

Shadbagh

37,Umer Din

042-7616252- 042-6260295

Road,

56

Wassanpura,
Lahore
20

Defence Extension

Divine Centre,

042- 570

042-570 0311
185

Near Bhatta

0301-9

Chawk, New
Airport Road,
Lahore Cantt
21

Urdu Bazar

Urdu Bazar,

042- 7210644

042- 7210647

Lahore
22

Shahdara Branch

Main G.T Road,

(042) 7900290 (042)

Shahdara Chowk,

7900291

Lahore
23

Walton Road Branch E-28/A, Main

Walton Road,

(042)

(042)

6602334-8

6687391

042-7671633

Lahore
24

Brandreth Road

91-A, Brandreth

042-7674115-

Branch

Road, Near

18

Australia Building,
Lahore
25

Ghari Shahu Branch 99-A, Allama Iqbal (042) 6310973 (042)

Road, Ghari

6360962

Shahu, Lahore
26

27

DHA Phase II

65 CCA, Phase II, 042-5748846- 042-5748849

Branch, Lahore

DHA, Lahore

Model Town, Lahore 13 Bank Square,

Central

47
042-5884670- 042-5884675
72

Commercial
Market, Model
Town, Lahore
28

Cavalry Ground,

35 Main

042-6610531- 042-6610536

Lahore

Boulevard,

32, 6610534

Officers Housing
Scheme, Cavalry
186

Ground Lahore
29

Chuburji

24, Niaz View

(042)7356640- (042)7222236

Scheme, Rewaz

42

Garden, Chuburji,
Lahore
30

Main Market Gulberg 32-E-Main Market, 042-5786955- 042-5786964

Gulberg II, Lahore 59

Islamabad Branch

Awan Arcade,

051-2873345- 051-2279897

Jinnah Avenue,

Blue Area,
Islamabad
2

I-10, Markaz,

4-A,I-10 Markaz,

051-4435804- 051-4435807

Islamabad

Islamabad

F-7, Markaz

5-A, Markaz, F-7,

051- 265

Islamabad

3941-49

4-D, Urfi Centre,

051-2809 703- 051-2809 702

F-10 Markaz,

711

F-10, Markaz

051-265 3940

Islamabad
5

Islamabad Stock

101, W. Waqas

051-280 4102- 051-280 4106

Exchange

Plaza, Blue Area,

104

Islamabad
6

I-8 Markaz,

Plot No. 34, I-8

051-4862563- 051-4862567

Islamabad

Markaz,

Islamabad
7

G-9 Markaz,

39, G-9 Markaz,

051-2253002- 051-2854932

Islamabad

Mauve Area,

Islamabad
8

F-8 Markaz,

Shop # 2 & 3 Al-

051-7151673,

Islamabad

Babar Center, F-8 2854615

051-2260270

Markaz,
187

Islamabad
1

The Mall ,

B.A. Building, 8

051-5700038- 051-

Rawalpindi

The Mall,

40,051-

5700042,051-

Rawalpindi

5566084,051-

5700029,051-

5566086

5700037

Satellite Town

B/20 North Star

051-4424080-

Branch

Plaza, Murree,

85

Road, Satellite
Town, Rawalpindi
3

Jinnah Road ,

A-351, Jinnah

051-5775325- 051-5775324

Rawalpindi

Road, Rawalpindi

28

College Road

Rawalpindi

051-5762

051-5762 007

0008
5

Chaklala Scheme III

59, Shah Plaza,

051-5766003- 051-5766005

Branch

Commercial Area, 4
Chaklala Scheme
III, Rawalpindi

Lalazar Branch

Tulsa Road,

051-5522904- 051-5527814

Lalazar,

Rawalpindi
7

Peshawar Road

Plot No. 400/2,

051-5468401- 051-5468403

Branch

Gammon House,

02

Peshawar Road,
Rawalpindi
8

Airport Road

7- Fazal Town,

(051)5781484- (051)5781483

Airport Link Road, 5

Rawalpindi
1

Peshawar Branch

Peshawar City

6-B, Saddar Road, 091-5287051- 091-5287058

Peshawar Cantt.

Park-in Hotel

091-251794-6 091-251380
188

Branch

Building,
Peshawar City

Hayatabad

Hayatabad,

091-5822903- 091-5822908

Karkhano Market, 907

Jamrud Road,
Peshawar
4

G. T. Road

1045-

091- 2593003

091-2593001

081-2827567

081-2827562

081-2460520

081-2460519

081-2834425

081-2827270

Arbab Plaza,

(081)

(081)

Double Road,

2441961-62,

2441665

Quetta

2441662

Rai House, 1,

040-5487802- 040-5487807

Railway Road,

1046,Hashtnagri,
Opp: Sarhad
Chamber of
Commerce,
G.T.Road,
Peshawar
1

Quetta Branch

M. A. Jinnah
Road, Quetta

Hazar Gunji

Truck Stand,
Hazar Gunji,
Quetta

Cut Piece Cloth

Shahra-e-Iqbal,

Market

Quetta,
Balochistan

Double Road

Chichawatni

Chichawatni
1

Chiniot

Chitral Branch

1-A, Shahrah-e-

047- 6337704- 047- 6337706

Quaid-e-Azam

05

D.C. Office Road,

(0943)

(0943)
189

Opposite

414367,

Mountain Inn

414396

412988

Hotel, Attalique
Bazar, Chitral
1

Daharki Branch

1285-1287, Zafar

0723-641255

0723-644040

Bazaar, Daharki,
Taluka & Town
Daharki
1

Daska

Dera Ismail Khan

Gujranwala Road, 052- 6616834- 052- 6619650

Daska

3666-B, Kashmir

0966-720606- 0966-720612

Chowk, North

610

Circular Road,
Dera Ismail Khan
1

Dera Ghazi Khan

B.A. Building,

064 -

064 -

Branch

Jampur Road,

2468201-6

2468104

Deara Ghazi Khan

1

Faisalabad Branch

Ground Floor,

041-2617436- 041-2617432

State Life Bldg.

Liaqat Road,
Faisalabad
2

Peoples Colony

237-B,

041-8722636- 041-8722184

Commercial Area, 39
D-Ground,
Peoples Colony
No 1, Faisalabad
3

Susan Road

25-Z-101, Susan

041-8556 673- 041-8556679

Road, Madina

Town, Faisalabad
4

Rail Bazar,

P-81, Rail Bazar,

041-2540801- 041-2540806
190

Faisalabad

Faisalabad

Yarn Market Branch

P-229, Tikka Gali

041-2621486

041-2621487

No. 2,
Montgomery,
Bazar, Faisalabad
6

Minerva Road

Shop No. 16 & 17, 041-2540763- 041-2540759

Branch

Golden Market,

New Grain Market,

Minerva Road,
Faisalabad
7

Sheikhupura Road,

P-352-A, Gulistan 041-8582141- 041-8582147

Faisalabad

Colony II, Millat

Chowk,
Sheikhupura
Road, Faisalabad
1

Gawadar

Airport Road,

0864-211783

Gawadar
No.

Branch Name

Address

Gilgit Branch

Shahrah-e-Quaid- 05811-51904e-Azam, Near,

PABX

FAX No
05811-51903

07

Radio Station,
Jutial, Gilgit
1

Gojra

P-86, Block III,

046-3517876- 046-3517878

Bohar Wali Gali,

77

Gojra
1

Gujar Khan

58-D & 59-C,

051-3515704- 051-3515703

Akbar Kiani

707

Shopping Mall,
G.T. Road, Gujar
Khan
191

Gujranwala Branch

B XII-7S-145,

055-3859931- 055-3856471

Krishan Nagar,

33

G.T. Road,
Gujranwala
1

Gujrat Branch

G.T.S Chowk, G.T. 053-3530069

053-3530319

Road, Gujrat
2

Kotla Branch

Bhimber Road,

0537-586892

0537-586337

Thana Road,

(053)

(053)

Dinga, Distt.

7404844-46

7404840

0547-540801

0547-540804

Kotla Arab Ali

Khan, Tehsil
Kharian, Dist.
Gujrat
3

Dinga

Gujrat
1

Hafizabad Branch

Railway Road,
Hafizabad

Hangu

Saif ur Rehman

0925-624641- 0925-624644

Market, Opp: DCO 43

Bunglow, Kohat
Road, Main Bazar,
Hangu
1

Haripur

Main Shahrah-e-

(0995)

(0995)

Hazara, G.T.

627451-2

627831

063- 2256457

063-2256458

Road, Haripur
1

Haroonabad Branch 15/16-C, Ghalla

Mandi,
Haroonabad

192

PROMOTION
Promotion is a term that refers to the following statement:
Steps taken by the company to enhance its sales by focusing the target markets
Thus we can say that promotion can be categorized into different categories based
on the above mentioned marketing perspective definition of promotion. So
advertisement, sales force, billboards etc are major sources through which the
promotion scheme can be implemented.
This is an age of competition. Numerous organizations are providing
financial services to the customer. These days every one is facing pressure of
competitors. In this world of growing competition, the only way to survive and grow,
for an organization, in the market place is the proper marketing and promotion of
its products. Same is the case with banking companies. There is large number of
foreign and local banks working in the country and it has been noticed that they are
emphasizing much on their marketing strategies. In this scenario, the key for a bank
to succeed and attract its customers is adequate promotion of its products &services.
The bank can attract and retain its customers through:

Sales Promotion

Advertisement

Direct Marketing

Public Relations
The most prominent and important way to attract a large number of

customers is the advertisement of bank and its products/services. Bank Alfalah has
adopted different approaches for the accomplishment of this purpose. For example,
formation of Alfalah Mini Golf near Gulberg is a major step taken by BAL. It not
193

only provides a source of recreation to the people but it serves as a major source of
marketing for the bank. Due to Bank Alfalahs assistance for the construction of
fountain in Liberty Market Square, it is named as Bank Alfalah Square. BAL
Square, for being situated in such a business and commercial area has its unusual
importance and has resulted into banks promotion.
Construction of Shaahdin Manzil as main branch Lahore is going to be the
revolutionary step for Bank Alfalah. It would not serve just as a main branch only,
but it would also be a great source of ever growing marking and promotion of bank.
Bank Alfalah issued its own rupee travellers cheques with highest
denomination during the course of my internship. I have seen some colored
advertisements of RTCs in some well-known magazines like Herald. Also, some
fascinating advertisements have been printed on Daewoo City Busses, which serves
as a dynamic source of marketing.
However, one drawback or shortcoming is that, Banl Alfalah has formalized
a lot of products and services for its customers, even more than other commercial
banks, but any advertisement on electronic media has not been seen. Since, Bank
Alfalahs major competitor, Union Bank Limited has started large media campaign,
so keeping in view these threats; Bank Alfalah is emphasizing more on its
advertisement.
Along with the advertisement, the bank is providing personal services to its
clients with maximum security as other banks provide. Bank also encourages the
public relation policy of marketing.
Some brochures and promotional material has been printed but it is
distributed mainly through the clients who visit the branch for their day-to-day

194

business or through the customers who come to get information about new schemes
launched by the bank.

RECOMMENDATIONS
It was an interested experience to do internship in Bank Alfalah Limited. The staff
was highly cooperated and due to their help I learned big deal about modern
banking.
I suggest that such an internship program highly integrative for the students of
commerce education so that the students should be enquired with the knowledge of
practice world .I do summarize that it would be a great help to me in selection of job
or future field of work.
Here I am putting some suggestions, which will enable the bank to compete with
other banks more effectively & efficiently.

It is observed that the employees were overburdened so they have to stay at

branch till late at night. In this way their efficiency is affected and hiring more
employees can reduce their work.

The employees should be signed jobs for specific period and than they should
shifted to other department so that they gain knowledge of other jobs.

Bank Alfalah Limited should properly advertise and Communicate to public

about the services provided by it, so that more customers will be attracted.

The banks management should give more incentives and pay scale of officers
should be revised & improved.

System and operations should be more defined and organized.

195

IT draw backs should be improved.

Administration drawbacks should be improved by the strict control of general

issues.

Audit should be held internally. Rather there should be an Audit Department in

the branch to make audit on daily basis. This can become as helpful as different
banks are having this department of their own.

Lockers, ATM, all these facilities should be provided to attract more customers.
CONCLUSIONS

If I have to express my experience of internship in Bank Alfalah Limited Garden

Town Branch Lahore I would briefly say:
Bank Alfalah is a good Organization in the way that anybody can join it for his/ her
long-term career. Overall working environment is comfortable. Management of
branch cares a lot of its employees and considers them as the Asset of bank.
Behavior of senior executive of bank is very polite and they are caring about the
individuals career and their growth.
However management is very demanding about the targets but good reward at the
achievement of assigned targets is awarded.
Employees at Bank Alfalah are quite efficient. As Garden Town 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.
Employees are given the benefits like bonus, gratuity funds, loans, increments, and
medical.

196

All the customers are entertained individually. Same kind of behavior and attention
is given to all the customers. Getting ideas for improvement from customer side is a
new idea and that is working very well in Bank Alfalah Ltd. All the customers are
asked to fill a suggestion form and the standards of the bank are improved through
them.
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.
In bank, all the work is done on computers. All the entries are made in computer.
Balance is fed into the computer. This increases efficiency of the bank.
During my internship training I gathered information regarding how a successful
bank operational aspect decorticated with the practical.
I found my internship training at Bank Alfalah Limited Garden Town Branch
Lahore to be a very rewarding experience. The training was beneficial because it
helpful me to aware a real life working environment.
So far my learning is concerned; all the employees at branch were quite cooperative.
They helped me to understand the activities of a bank to possible extent. Their good
attitude gave me more confidence to learn more and to ask if I have any query in my
mind. Besides their ever going activities they never get irritant by my questioning. I
had made an honest efferent to present the working & operation of Bank Alfalah
Limited Garden Town Branch Lahore in simplest way.
I feel pleasure that I have really gained a lot during 8 weeks & enjoyed working
with experienced cooperative & intelligent staff.

197

RECOMMENDATIONS
It is observed that the employees were overburdened so they have to stay at
branch till late at night. In this way their efficiency is affected and hiring
more employees can reduce their work.
The employees should be signed jobs for specific period and than they should
shifted to other department so that they gain knowledge of other jobs.
Bank Alfalah Limited should properly advertise and Communicate to public
about the services provided by it, so that more customers will be attracted.
The banks management should give more incentives and pay scale of officers
should be revised & improved.
System and operations should be more defined and organized.
IT draw backs should be improved.
Administration drawbacks should be improved by the strict control of
general issues.
Some employees waive the bank charges (Statement charges, cheque book
charges etc) that decrease the income of the bank.
Lockers, ATM, all these facilities should be provided to attract more
customers.
Expenditures must be control, which are very high.

198

BIBLIOGRAPHY
Personal Refernces

Mr. Zulfiqar, Accounts Officer.

(Bank Alfalah Ltd., Wah Cantt Branch)

Mr. Waqas, Customer Services Officer.
(Bank Alfalah Ltd., Wah Cantt Branch)

Web Resources

Bank Alfalah (www.bankalfalah.com)

Wikipedia (www.wikipedia.com)

State Bank of Pakistan (www.sbp.org.pk)

Google (www.Google.com)

Reports & Papers

Annual Report Bank Alfalah 2008

199

Issues in Pakistans Economy by S. Akbar Zaidi

International Finance by Maurice D. Levi

Bank Alfalah Limited. (2009). Alfalah Mahana Amdan Plus [Brochure].

Bank Alfalah Limited. (2009). Alfalah Quick Finance [Brochure].

Bank Alfalah Limited. (2009). Alfalah Milkiat Finance [Brochure].

Bank Alfalah Limited. (2009). Alfalah Karobar Finance [Brochure].

Annexes and Glossary

A
Accountability

Obligation of government, public services or funding agencies to demonstrate

to citizens that contracted work has been conducted in compliance with agreed
rules and standards or to report fairly and accurately on performance results vis-vis mandated roles and/or plans. This may require a careful, even legally
defensible, demonstration that the work is consistent with the contract terms.
Projects commonly focus on upward accountability to the funding agency,
while downward accountability involves making accounts and plans transparent
to the primary stakeholders. Ensuring accountability is one part of the function
of monitoring and evaluation (learning and management are the other two).
Activity
Actions taken or work performed in a project to produce specific outputs by
using inputs, such as funds, technical assistance and other types of resources.
Adaptive
A process that integrates project design, management and monitoring to provide
management
a framework for testing assumptions, adaptation and learning.
Annual work plan The annual commitment of the project towards the communities, the
and budget (AWPB) Government and IFAD, and of which implementation progress will be
measured. It details the operational aspects of a project, based on the strategic
plan and the situation on the ground. It is the basis for the detailed scheduling
of activities and specific assignments in monthly management meetings. It is
also the foundation for monitoring progress at the activity level and regarding
resource use/allocation. Importantly, in the more demand-driven projects, the
AWPB is also the formal (and legal) expression of the consolidated set of
projects and initiatives of the primary stakeholders that will be supported over
the coming year.
Appraisal
Assessment, in accordance with established decision criteria, of the feasibility
and acceptability of a project or programme prior to a funding commitment.
Criteria commonly include relevance and sustainability. An appraisal may also
200

Appraisal report
Approach
Assessment
Assumption

Attribution
Audit

Back to Top
B
Baseline
information
Baseline
survey/study
Benchmark

Beneficiaries
Budget plan

relate to the examination of opinions as part of the process for selecting which
project to fund.
The document that results from the appraisal mission and serves as the basis for
project operational planning and annual planning. It is the overall framework
(but not a blueprint) for the project strategy.
A specific and chosen way of advancing or proceeding.
A process (which may or may not be systematic) of gathering information,
analysing it, then making a judgement on the basis of the information.
External factors (i.e. events, conditions or decisions) that could affect the
progress or success of a project or programme. They are necessary to achieve
the project objectives, but are largely or completely beyond the control of the
project management. They are worded as positive conditions. Initial
assumptions are those conditions perceived to be essential for the success of a
project or programme. Critical (or "killer") assumptions are those conditions
perceived to threaten the implementation of a project or programme.
The causal link of one thing to another; e.g. the extent to which observed (or
expected to be observed) changes can be linked to a specific intervention in
view of the effects of other interventions or confounding factors.
Verification of the legality and regularity of the implementation of resources,
carried out by independent auditors. An audit determines whether, and to what
extent, the activities and organisational procedures conform to norms and
criteria set out in advance. An audit helps an organisation accomplish its
objectives by bringing a systematic, disciplined approach to evaluate and
improve the effectiveness of risk management, control and government
processes. In an internal audit the auditors report to the organisation being
audited, while in an external audit the auditors report to either those who own
the organisation (for example the board) or fund it.

Information usually consisting of facts and figures collected at the initial

stages of a project that provides a basis for measuring progress in achieving
project objectives and outputs.
An analysis describing the situation in a project area including data on
individual primary stakeholders prior to a development intervention. Progress
(results and accomplishments) can be assessed and comparisons made against
it. It also serves as an important reference for the completion evaluation.
Reference point or standard against which performance or achievements can be
compared. A benchmark might refer to what has been achieved in the past, by
other comparable organisations, or what could reasonably have been achieved
under the circumstances.
The individuals, groups or organisations who, in their own view and whether
targeted or not, benefit directly or indirectly from the development intervention.
In this Guide, they are referred to as the primary stakeholders of a project.
Plan assigning the quarterly cost to be incurred by the different activities as
201

schedule
Budget plan
summary

well as subdividing these costs on the basis of the source of finance.

Summary of the budget information according to output, project component,
district and facilitation units, and national and overall project level.

C
Capacity

The ability of individuals and organisations to perform functions effectively,

efficiently and in a sustainable manner.
Capacity -building The processes through which capacity is created. This is an increasingly key
crosscutting issue in poverty alleviation projects.
Causal relationship A logical connection or cause-and-effect linkage existing in the achievement of
related, interdependent results. Generally the term refers to plausible linkages,
not statistically accurate relationships.
Causality analysis The study of cause-and-effect relations that link an intervention to its impacts.
Community
A group of people living in the same locality and sharing some common
characteristics.
Community
Generally considered to be the active participation of community members in
participation
local development activities. In practice, however, the term refers to a wide
range of degrees of local involvement in external development interventions,
from token and passive involvement to more empowerment-oriented forms of
local decision-making.
Completion
The final phase in the project cycle, when a project completion report is
produced. "Lessons learned" are identified and the various project completion
activities take place. It can include an end-of-project evaluation.
Completion
An external evaluation that occurs after project completion.
evaluation
Completion report See "Project completion report".
Conceptual model A diagram of a set of relationships between factors that are believed to impact
or lead to a target condition. It is the foundation of project design, management
and monitoring; and it is the first part of a complete project plan.
Control group
A specially selected subgroup of people who purposefully do not receive the
same treatment, input or training, etc. as the target group. Thus, differences
between the control group and the target group can be measured and evaluated.
Cooperating
The organisation that, in a loan agreement, is responsible for the loan
institution
administration and the project supervision on behalf of IFAD.
The comparison of investment and operating costs with the direct benefits or
Cost-benefit analysis impact generated by the investment in a given intervention. It uses a variety of
methods and means of expressing results.
(CBA)
Cost effectiveness
Comparison of the relative costs of achieving a given result or output by
different means (employed where benefits are difficult to determine).
Country programme Evaluation of one or more donors or agencies portfolio of development
evaluation
interventions in a partner country and the assistance strategy behind the
interventions.
Country/COSOP
A framework of objectives and priorities for a country drawn up and used to
strategy
steer investments.
202

Critical assumption An important factor, outside of aid itself, that influences the success of the
activity, but over which the manager has no influence. Initial assumptions
constitute perceived conditions for the success of a project. See "Assumptions".
Critical reflection
Questioning and analysing experiences, observations, theories, beliefs and/or
assumptions.
D
Downward
accountability

The process by which development organisations are accountable to their

partners and poor and marginalised groups. It entails greater participation and
transparency in organisations work.

E
Effect

Intended or unintended change resulting directly or indirectly from a

development intervention.
Effectiveness
A measure of the extent to which a project attains its objectives at the goal or
purpose level; i.e. the extent to which a development intervention has attained,
or is expected to attain, its relevant objectives efficiently and in a sustainable
way.
Efficacy
The extent to which the project's objectives were achieved or expected to be
achieved, taking into account their relative importance.
Efficiency
A measure of how economically inputs (funds, expertise, time, etc.) are
converted into outputs.
Evaluability
The extent to which an activity or project can be evaluated in a reliable and
credible fashion.
Evaluation
A systematic (and as objective as possible) examination of a planned, ongoing
or completed project. It aims to answer specific management questions and to
judge the overall value of an endeavour and supply lessons learned to improve
future actions, planning and decision-making. Evaluations commonly seek to
determine the efficiency, effectiveness, impact, sustainability and the relevance
of the project or organisations objectives. An evaluation should provide
information that is credible and useful, offering concrete lessons learned to help
partners and funding agencies make decisions.
External evaluation Evaluation of a project carried out by IFAD's Office of Evaluation and Studies
and implementing partners.
F
Facilitator
Feedback

Formative
evaluation

A person who helps members of a group conduct a meeting in an efficient and

effective way but who does not dictate what will happen.
The transmission of evaluation findings to parties for whom it is relevant and
useful so as to facilitate learning. This may involve the collection and
dissemination of findings, conclusions, recommendations and lessons learned
from experience. Specifically in the context of evaluation, to return and share
the evaluation results with those who participated in the evaluation.
Evaluation conducted during implementation to improve performance. It is
intended for managers and direct supporters of a project.

203

G
Goal
Grassroots
organisations
H
Horizontal logic

The higher-order programme or sector objective to which a development

intervention, such as a project, is intended to contribute. Thus it is a statement
of intent.
The organisations based in communities that (may) represent the primary
stakeholders vis--vis the project and can be implementing partners.
A summary of the project approach whose objective in a logframe is to define
how objectives specified in the project description will be measured and the
means by which the measurement will be verified. In this Guide, it is a
summary of the M&E matrix

I
Impact

The changes in the lives of rural people, as perceived by them and their partners
at the time of evaluation, plus sustainability-enhancing change in their
environment to which the project has contributed. Changes can be positive or
negative, intended or unintended. In the logframe terminology these "perceived
changes in the lives of the people" may correspond either to the purpose level
or to the goal level of a project intervention.
Impact assessment The process of assessing the impact of a programme in an intervention area.
Implementing
Those organisations either sub-contracted by the Project Management Unit or
partners
those organisations officially identified in the loan agreement as responsible for
implementing a defined aspect of the project. Also known as "co-implementing
partners".
Independent
See "External evaluation". An evaluation carried out by entities and persons
evaluation
free of control by those responsible for the design and implementation of the
development intervention.
Indicator
Quantitative or qualitative factor or variable that provides a simple and reliable
basis for assessing achievement, change or performance. A unit of information
measured over time that can help show changes in a specific condition. A given
goal or objective can have multiple indicators.
Indirect effects
The unplanned changes brought about as a result of the intervention.
Information
A system of inputting, collating and organising data that should provide
management system selective data and reports to the management, to assist in monitoring and
controlling the project organisation, resources, activities and results.
Input
The financial, human and material resources necessary to produce the intended
outputs of a project.
Intervention logic See "Objective hierarchy".
A project evaluation undertaken by IFAD's Office of Evaluation and Studies
Interim evaluation toward the end of the project implementation period (about one year before the
loan closing date) when IFAD is considering a request to finance a second
phase or a new project in the same area. An interim evaluation is a key
opportunity for IFAD, the government, implementing partners and primary
stakeholders to learn together from experience before embarking on the design
of a follow-up project.
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J
Joint evaluation

An evaluation to which different institutions and/or partners contribute.

L
Learning

Reflecting on experience to identify how a situation or future actions could be

improved and then using this knowledge to make actual improvements. This
can be individual or group-based. Learning involves applying lessons learned to
future actions, which provides the basis for another cycle of learning.
Lessons learned
Knowledge generated by reflecting on experience that has the potential to
improve future actions. A lesson learned summarises knowledge at a point in
time, while learning is an ongoing process.
Loan agreement
An agreement spelling out the project's goal, area, main components and budget
by expenditure category. It contains formal conditions that must be complied
with, primarily relating to procurement, reporting and financial management.
Logical framework An analytical, presentational and management tool that involves problem
approach (LFA)
analysis, stakeholder analysis, developing a hierarchy of objectives and
selecting a preferred implementation strategy. It helps to identify strategic
elements (inputs, outputs, purpose, goal) and their causal relationships, as well
as the external assumptions (risks) that may influence success and failure. It
thus facilitates planning, execution and evaluation of a project.
Logical framework Also known as "logframe" or "logframe matrix". A table, usually consisting of
matrix
four rows and four columns, that summarises what the project intends to do and
how (necessary inputs, outputs, purpose, objectives), what the key assumptions
are, and how outputs and outcomes will be monitored and evaluated.
M
Managing for
impact model

The process of guiding the overall project strategy, creating a learning

environment, and ensuring effective project operations by developing and using
an effective M&E system.
See "Information management system".

Management
information system
Means of
The expected source(s) of information that can help answer the performance
verification
question or indicators. This is found in the third column of the standard
logframe. It is detailed further in the M&E Matrix
Mid-term evaluation An external evaluation performed towards the middle of the period of
implementation of the project, whose principal goal is to draw conclusions for
reorienting the project strategy.
Mid-term review
An elaborate version of a supervision mission, with the same actors, that
(MTR)
sometimes questions the design of the project. There is no standardised format
and so can range from a supervision mission to a full-scale mid-term
evaluation-like exercise.
Monitoring
The regular collection and analysis of information to assist timely decision
making, ensure accountability and provide the basis for evaluation and learning.
It is a continuing function that uses methodical collection of data to provide
management and the main stakeholders of an ongoing project or programme
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Monitoring and
evaluation (M&E)
M&E framework
M&E matrix

M&E (learning)
plan
M&E (learning)
system
M&E unit

with early indications of progress and achievement of objectives.

The combination of monitoring and evaluation which together provide the
knowledge required for: a) effective project management and b) reporting and
accountability responsibilities.
An overview of the M&E system developed during the design phase of a
project and included in the project appraisal report.
A table describing the performance questions, information gathering
requirements (including indicators), reflection and review events with
stakeholders, and resources and activities required to implement a functional
M&E system. This matrix lists how data will be collected, when, by whom and
where.
An overall framework of performance and learning questions, information
gathering requirements (including indicators), reflection and review events with
stakeholders, and resources and activities required to implement a functional
M&E system.
The set of planning, information gathering and synthesis, and reflection and
reporting processes, along with the necessary supporting conditions and
capacities required for the M&E outputs to make a valuable contribution to
project decision-making and learning.
The generic title used for units at both the project and sectoral levels
responsible for M&E.

N
Narrative summary The first column of the logframe matrix in which the inputs, outputs, purpose
and goal are formulated. See "Objective Hierarchy".
O
Objective

A specific statement detailing the desired accomplishments or outcomes of a

project at different levels (short to long term). A good objective meets the
criteria of being impact oriented, measurable, time limited, specific and
practical. Objectives can be arranged in a hierarchy of two or more levels (see
"Objective hierarchy").
Objective hierarchy The different levels of objectives, from activities up to goal, as specified in the
first column of the logframe. If the project is designed well, realisation of each
level of objectives in the hierarchy should lead to fulfilment of the project goal.
Objectively verifiable A group of criteria (not necessarily measurable) used to verify the degree of
indicators
accomplishment (foreseen or actual) of the sectoral purpose, the objective, and
the inputs and outputs of a project. They can be quantitative, and therefore both
verifiable and measurable, or qualitative, and therefore only verifiable.
Operational plan
See "Annual work plan and budget".
Outcome
The results achieved at the level of "purpose" in the objective hierarchy. In
IFAD's terminology, outcome is part of impact (result at purpose and goal
level).
Outputs
The tangible (easily measurable, practical), immediate and intended results to
be produced through sound management of the agreed inputs. Examples of
outputs include goods, services or infrastructure produced by a project and
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Output indicators

meant to help realise its purpose. These may also include changes, resulting
from the intervention, that are needed to achieve the outcomes at the purpose
level.
Indicator at the output level of the objective hierarchy, usually the quantity and
quality of outputs and the timing of their delivery.

P
Participation

One or more processes in which an individual (or group) takes part in specific
decision-making and action, and over which s/he may exercise specific
controls. It is often used to refer specifically to processes in which primary
stakeholders take an active part in planning and decision-making,
implementation, learning and evaluation. This often has the intention of sharing
control over the resources generated and responsibility for their future use.
Participatory
A broad term for the involvement of primary and other stakeholders in
evaluation
evaluation. The primary focus may be the information needs of stakeholders
rather than the donor.
Participatory impact A continual immediate assessment of the impact, used to control and steer
monitoring
purposes. It is characterised by the way actors at various levels attempt to
collaborate in order to reflect on the impacts.
Partner
The organisation in the project country with which the funding agency
collaborates to achieve mutually agreed upon objectives. Partners may include
host country governments, local and international NGOs, universities,
professional and business associations, private businesses, etc.
Performance
The degree to which a development intervention or a development partner
operates according to specific criteria/standards/guidelines or achieves results
in accordance with stated goals or plans.
Performance
A question that helps guide the information seeking and analysis process, to
question
help understand whether the project is performing as planned or, if not, why
not.
Planning system
A system including the following main aspects: strategic planning, annual
planning and budgeting, and monthly activity scheduling.
Precondition
Condition that must be fulfilled before a project can become effective (when
disbursement against the loan becomes possible).
Primary
The main intended beneficiaries of a project.
stakeholders
Process evaluation An evaluation aimed at describing and understanding the internal dynamics and
relationships of a project, programme or institution.
Process monitoring The activities of consciously selecting processes, selectively and systematically
observing them to compare them with others, and communicating about what
has been observed to learn how to steer and shape the processes.
Project
An intervention that consists of a set of planned, interrelated activities designed
to achieve defined objectives within a given budget and a specified period of
time.
Project completion The report that describes the situation at the end of a development intervention,
report
including lessons learned. The project completion report (PCR) is the
responsibility of the borrower (i.e. the government).
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Project cycle
management

A tool for understanding the tasks and management functions to be performed

in the course of a project or programmes lifetime. This commonly includes the
stages of identification, preparation, appraisal, implementation/supervision,
evaluation, completion and lesson learning.
Project evaluation Evaluation of an individually planned development intervention designed to
achieve specific objectives within a given budget and time period.
Project impacts
The changes in a situation that arise from the combined effects of project
activities, or the extent to which the goal or highest-level project objectives are
achieved. Impact also refers to any unintended positive or negative changes that
result from a project. Impact sometimes means anything achieved by the project
beyond direct outputs.
Project
A project-specific document that sets out the project strategy, operational
implementation
activities, steps and procedures, and responsibilities of key stakeholders. This
manual
often includes a detailed M&E operational plan.
Project management The process of leading, planning, organising, staffing and controlling activities,
people and other resources in order to achieve particular objectives.
Project performance The overall quality of a project in terms of its impact, value to beneficiaries,
implementation effectiveness, and efficiency and sustainability.
Project strategy
An overall framework of what a project will achieve and how it will be
implemented.
Proxy indicator
An appropriate indicator that is used to represent a less easily measurable one.
Purpose
The positive improved situation that a project or programme is accountable for
achieving.
Q
Qualitative
Quantitative
R
Reach
Relevance
Reliability

Resources
Result

Something that is not summarised in numerical form, such as minutes from

community meetings and general notes from observations. Qualitative data
normally describe people's knowledge, attitudes or behaviours.
Something measured or measurable by, or concerned with, quantity and
expressed in numbers or quantities.
The beneficiaries and other stakeholders of a development intervention,
whether sectors, groups of people or geographic areas of the country or region.
The extent to which the objectives of a project are consistent with the target
groups priorities and the recipient and donors' policies.
Consistency or dependability of data and evaluation judgements, with reference
to the quality of the instruments, procedures and analyses used to collect and
interpret evaluation data. Information is reliable when repeated observations
using the same instrument under identical conditions produce similar results.
Items that a project has or needs in order to operate, such as staff time,
managerial time, local knowledge, money, equipment, trained personnel and
socio-political opportunities.
The measurable output, outcome or impact (intended or unintended, positive or
negative) of a development intervention.
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Review
Risk

S
Sample
Self- evaluation

Situation analysis
Stakeholders

Stakeholder
participation
Strategic planning

Supervision

Sustainability

T
Target

An assessment of the performance of a project or programme, periodically or

on an as-needed basis. A review is more extensive than monitoring, but less so
than evaluation.
Possible negative external factors, i.e. events, conditions or decisions, which
are expected to seriously delay or prevent the achievement of the project
objectives and outputs (and which are normally largely or completely beyond
the control of the project management).
The selection of a representative part of a population in order to determine
parameters or characteristics of the whole population.
An evaluation by those who are administering or participating in a programme
or project in the field and/or by those who are entrusted with the design and
delivery of (part of) a development intervention. As with any evaluation, a selfevaluation focuses on overall impact and performance, or specific aspects
thereof.
The process of understanding the status, condition, trends and key issues
affecting people, ecosystems and institutions in a given geographic context at
any level (local, national, regional, international).
An agency, organisation, group or individual who has a direct or indirect
interest in the project/programme, or who affects or is affected positively or
negatively by the implementation and outcome of it. In this Guide, primary
stakeholders is the term used for the main intended beneficiaries of a project.
Active involvement by stakeholders in the design, management and monitoring
of the project. Full participation means all representatives of key stakeholder
groups at the project site become involved in mutually agreed, appropriate
ways.
A broad description of the activities that would normally be carried out as part
of project development, from start to finish, and the milestones that would
generally be achieved along the way, such as implementation agreements,
registration, etc. The plan should also explain the different aspects that need to
be addressed as part of project development, and illustrate basic principles that
are to be followed. The sequence of and relationship between main activities
and milestones should also be described. The appraisal report should be used as
a starting point for refinement of the strategic plan as well as detailed
operational planning.
A process in which the legally responsible organisation (cooperating institution
or IFAD itself) administers the loan, periodically reviews progress towards
objectives, identifies key obstacles, helps find workable solutions and makes
strategic changes, as required.
The likelihood that the positive effects of a project (such as assets, skills,
facilities or improved services) will persist for an extended period after the
external assistance ends.
A specified objective that indicates the number, timing and location of that
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Target group
Triangulation
V
Validity
Validation
Vertical logic

W
Work plan

which is to be realised.
The specific group for whose benefit the project or programme is undertaken,
closely related to impact and relevance.
Use of a variety of sources, methods or field team members to cross check and
validate data and information to limit biases.
The extent to which something is reliable and actually measures up to or makes
a correct claim. This includes data collection strategies and instruments.
The process of cross-checking to ensure that the data obtained from one
monitoring method are confirmed by the data obtained from a different method.
A summary of the project that spells out the causal relationships between, on
the one hand, each level of the objective hierarchy (inputs-outputs, outputspurpose, purpose-goal) and, on the other, the critical assumptions and
uncertainties that affect these linkages and lie outside the project managers
control.
A detailed document stating which activities are going to be carried out in a
given time period, how the activities will be carried out and how the activities
relate to the common objectives and vision. The work plan is designed
according to the logical framework and contains a description in each cell of
the work plan table of each activity and output, its verifiable indicators, the
means of verification and its assumptions.

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