Bank Alfalah Internship Report: Insights Into Islamic Banking Operations & Departmental Functions

INTERNSHIP REPORT BANK ALFALAH LIMITED Specialization: Banking and Finance
Submitted To: Submitted By:
Chairman, Dept. of Business Administration
DEPARTMENT OF BUSINESS ADMINISTRATION ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
Allama Iqbal Open University
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ACKNOWLEDGEMENT
I thank to Allah Almighty to help me in completion of this report. I also humbly commence my acknowledgement by reflecting innumerable gratitude towards Prof. Sajjad ali, his continuous guidance helped me in learning the accurate way of writing this report. I am also thankful to Mr. Masood Zafar Hashmi (Branch Manager), Mr. Arsalan Sajid (Manger Operation) and all other staff members for giving their full support in carrying out this internship project. They guided me in each and every area of this internship project. I would also like to thank all of my colleagues for their support.
4. TABLE OF CONTENTS DEPARTMENT OF BUSINESS ADMINISTRATION.....................................................1 ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD.................................................1 3. ACKNOWLEDGEMENT...............................................................................................2 7. Overview of the Organization:...................................................................................5 7.2 BRIEF HISTORY OF BANK ALFALAH ISLAMIC..................................................6 Process of Products and Services of Bank Alfalah IBD:................................................8 Products Offered By Bank Alfalah Islamic Banking Division:......................................9 Corporate Financing:......................................................................................................9 Corporate Murabaha Financing:.....................................................................................9 Main Features:..............................................................................................................10 Murabaha Financing is currently offered for:...............................................................10 CORPORATE IJARAH FINANCING........................................................................10 MUSHARKAH:...........................................................................................................10 TYPE OF HOUSE FINANCE: ...................................................................................11 TENOR:........................................................................................................................11 8. Organizational Structure:...............................................................................................12 Annexure # 1 (Organizational Hierarchy)....................................................................14 Annexure # 2 (Branch Hierarchy)................................................................................14 8.2 Review of various departments in term of their function and responsibilities.......14 ......................................................................................................................................14 1). Account Opening Department:.....................................................................................14 2). CREDIT ADMNINISTRATION DEPARTMENT:....................................................16 Principle set of Accountabilities:..................................................................................16 Company Business Processes of Credit Department:........................................................16 CREDIT ADMINISTRATION PROCESS:.................................................................16 Securities / Facilities documentation:...........................................................................17 3). HUMAN RESOURCE DEPARTMENT.....................................................................18 OPERATIONAL WORKINGS:...................................................................................18 Job Responsibilities of the Personal Assistant:............................................................18 Procedures for Employee Selection:.............................................................................19 ASSESSMENT OF EMPLOYEES:.............................................................................19
Major Managerial Policies:................................................................................................20 Recruitment Policy:......................................................................................................20 4). Credit Department:.......................................................................................................20 Trade Finance:....................................................................................................................21 Corporate Ijarah Department:............................................................................................21 Corporate Murabaha Department:......................................................................................21 Consumer Finance:............................................................................................................22 Business Development:......................................................................................................22 CAR IJARAH (Consumers):.............................................................................................23 CONSUMER BANKING:.................................................................................................23 Term Deposits Receipts:...............................................................................................24 Safe Deposit Lockers:...................................................................................................24 Electronic Banking:............................................................................................................24 Phone Banking:.............................................................................................................24 Assets (OR Investment Side) of Bank Alfalahs Islamic Banking:...................................25 5).Operations Department:.................................................................................................26 Departmental Functions:...............................................................................................26 OUTWARD CLEARING AT THE BRANCH.........................................................27 NIFT (National Institutional facilitation Technologies):..............................................28 9. Structure and Function of Finance Department.......................................................29 9.2 Finance and Accounting Operations:......................................................................29 10.2 Organizational analysis with reference to the industry:.............................................51 MEEZAN BANK:..............................................................................................................52 Bank ALBARKAH:...........................................................................................................52 Standard Chartered Bank:..................................................................................................52 Comparison with Other Units of the Industry:.............................................................53 GRAPHICAL REPRESENTATION.................................................................................53 STRENGTHS:..............................................................................................................56 WEAKNESSES:...........................................................................................................56 OPPORTUNITIES:......................................................................................................57 THREATS:...................................................................................................................57 PROBLEMS:.....................................................................................................................58 Departmental Problems in Bank Alfalah Islamic:........................................................59 12. CONCLUSION............................................................................................................60 13. Recommendations ......................................................................................................61 14. References....................................................................................................................62 Annexure # 1.................................................................................................................63 .....................................................................................................................................63 Annexure # 2.....................................................................................................................64 Organizational Hierarchy...................................................................................................64
6. Objective of Studying the Organization:

Well-developed Banking sector can rightly be said the backbone of an economy. Pakistans banking sector is progressing everyday at very high pace and contributing to the development of economy. Pakistans banking sector is considered a well-developed banking system in South Asia. So, I had an option to choose a bank and I selected THE BANK ALFALAH LIMITED for my internship. THE BANK ALFALAH is one of the most popular banks in Pakistan and due to its trend of progress; there is a big room to learn the modern banking. From the financial point of view, THE BANK ALFALAH is financially a strong bank showing increasing trends in Market Value of shares, Price Earning Ratio etc. Being a student of M.B.A (banking & finance), the selection of THE BANK ALFALAH for internship seemed fit to the assigned task.
7. Overview of the Organization:

Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of a country and Pakistan is no exemption. Banks are custodian to the assets of the general masses. The banking sector plays a significant role in a contemporary
world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization, poverty elimination, production and distribution of public finance. It is purchase of car or building of home banks is always there to serve you better. It is play ground or any educational or healthy societal activity the money of banks nurture them. It is an industrial project or agricultural development of the country the sponsor-ship of banks is very much involved. Banks play very positive and important role in the overall economic development of the country.
7.1 Brief History of 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 commercial banking related services as defined in the Banking Companys ordinance 1962. At its commencement in 1997 Bank Alfalah Limited faced stiff competition from established banking giants. However due to mature focus on objectives, hard work and dedication Bank Alfalah has carved an enduring niche for itself and now serves as a benchmark for financial institutions. This is a momentous achievement that bank Alfalah started out as a hatchling with only 3 branch offices burdened with a swarm of problems. But today, the Bank is operating through an expanded network of 289 branches in almost 45 cities with the registered office at B.A. Building I.I. Chundrigar, Karachi. This lingering network of branches across Pakistan includes 48 Islamic Banking branches which are based on Sharia laws. Strengthened with the banking of 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 the commitment to a culture of innovation and seeks out synergies with clients and service providers to ensure ceaseless services to its customers. The bank perceives the requirements of its customers and matches them with quality products and service solutions. During the past five years, bank has emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow.
7.2 BRIEF HISTORY OF BANK ALFALAH ISLAMIC
Islamic Banking has bee defined as, Banking in consonance with the ethos and values system Islam and governed in addition to the conventional governance and risk management rules by the practices laid down by Islamic Sharia. Customarily, Islamic banking is considered only to be an interest free banking However, Interest free banking is a narrow concept that is denoted by a number of banking instruments or operations which avoid interest. On the contrary, Islamic Banking, the more general term is expected not only to avoid interest based transactions prohibited in Islamic Sharia but also avoid unethical practices and participate actively in achieving the goals and objectives of an Islamic economy. There are 48 branches of Bank Alflah Islamic in Pakistan. There are 47 branches currently operating in Pakistan and one Division office located in Gulberg Lahore. To make banking solutions become accessible to more and more people, Bank Alfalah Limited has embarked upon a rapid expansion program, aiming to provide a networking that makes its services available to any of its customers in all the major urban centers of Pakistan. The bank has made a significant planning and effort in this regard. At the end of year 2003, Bank Alfalah initiated a new division named as Bank Alfalah Islamic Banking Division. As mentioned earlier that an Islamic bank is an institution which identifies itself with the spirit of Sharia, as laid down by the Holy Quran and Sunnah as regards its objectives, principles, practices and operations. Due to this fact the operational workings of this division are based on the regulations prescribed by Islamic Sharia advisors. Apart from Bank Alfalahs conventional banking operations the management decided to provide Riba free products to their massive clientele which is an enticement to the Islamic minded business people. This division is also working in accordance with the prudential regulations described by SBP. The license to be an Islamic Bank is not yet Issued by SBP so thats why the branches of Alfalah Islamic Banking are working as separate Division under the worthy management. With a focus of providing Riba Free financing facilities and fair services, the Bank is going towards a new way of headship. Introduction of true modes of financing are not only an attraction to the clients but also route to follow Islamic Sharia principles VISION STATEMENT
To be the premier organizations operations operating locally and internationally that provides the complete range of financial services to all segments under one roof. MISSION STATEMENT To develop and deliver the most Innovative products, manage customer experience, deliver quality service that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.
7.3 Business Volume(Rs. In (000):

2003 Revenue 7425 Deposits 76698 Advances 49216 Investment 28904 2004 7140 129715 88931 35503 2005 14515 223345 118864 57416 2006 24416 239509 149999 56502 2007 31822 273174 171199 88492
Analysis: The trend shows that BAL is progressing rapidly. His revenue, deposits, advances, investment is increasing rapidly which is a good sign for the progress of bank. Bank Alfalah is one of the fastest growing banks in Pakistan.
7.4 Number of Employees:

Years Number of Employees 2003 2133 2004 3352 2005 5218 2006 6543 2007 7371
Process of Products and Services of Bank Alfalah IBD:

A product is a set of tangible and intangible attributes, which may include packaging, color, price, quality and brand, plus the sellers services and reputation. A product may be a good, service, place, person, or idea.
With mission to provide all-encompassing banking services to the customers Bank Alfalah Islamic has uniquely defined menu of financial products currently offering one of the most comprehensive portfolios of personalized financial solutions that are customer tailored to serve the requirements of not only the individuals but also the corporate customers. As financial institutions offer diversified and attractive products and service packages for the consumers, consumer banking in Pakistan is becoming a challenging industry. However, because of the prudent financial policies and clear understanding of the market scenario of Islamic banking, Bank Alfalah Islamic Banking Division offers highly prioritized and specifically tailored products and services to its valuable customer with a prime focus to introduce Riba Free financing with in the industry. The products are developed according to the prescribed principles of Islamic Sharia. To become an industry leader, Bank Alfalah is providing a consortium of Islamic modes of financing.
Products Offered By Bank Alfalah Islamic Banking Division:

There are mainly four categories of the products offered by Bank Alfalah Islamic Banking Division Corporate Financing: Corporate Murabaha, Corporate Ijarah Consumer Financing: Home Loan (Housing Finance on Diminishing Musharka Basis) and Car Ijarah Consumer Banking: Current Account, PLS Saving Account, Call deposits Receipts, Term Deposits Receipts, Safe Deposit Lockers. Electronic Banking: On-Line Banking, Phone Banking. Corporate Financing: Bank Alfalah Islamic Banking division emphasizes heavily on its corporate clients. The corporate clients are the big giants in the industry who take massive financing from the bank. As the bank is operating on the basis of Islamic Sharia principles thats why the products they offer are strictly Islamic Sharia based products one of which is Murabaha Financing.
Corporate Murabaha Financing:

This facility is offered to the corporate client of Bank Alfalah Islamic Banking division. Usually, there is a misconception that Murabaha is a term loan which is provided to the customer but actually it is a Sale based transaction for financing the purchase of assets by the
clients to meet short term working capital needs. Primarily it is provided for buying raw material, work in process, Inventory and finished goods.
Main Features:
The main feature of Murabaha is that transaction is held on cost plus profit basis The seller bank serves as an agent to the customers. It purchases the items on behalf of the customer from the supplier. Then the seller discloses the cost to the buyer, a known profit is added in it after certain bargaining and there is flexibility in the payments. The expenses which are incurred by the seller directly in acquiring the commodity can be included in the cost price.
Murabaha Financing is currently offered for:

Import financing, Export financing, Working capital financing.
CORPORATE IJARAH FINANCING

The Ijarah facility is offered to the corporate clients for purchasing machinery, equipment and vehicles. Difference between Murabaha and Ijarah: A Murabaha attributed to a future date in invalid in Islamic Sharia. But Ijarah can be attributed to future date. A Murabaha cannot be transacted at a future date as the sale would be executed simultaneously after taking delivery from the supplier and seller would never bear its risk which Sharia does not permit. But in leasing it is permissible, because in leasing the assets remains under the risk and ownership of the lessor throughout the leasing period. Consumer Financing: In consumer financing at individual level, Bank Alfalah is offering these two products namely: House Financing: Bank Alfalah Limited Islamic Banking Division with the objective to tough every aspect of their consumers life, has decided to launch a product in the shape of housing finance on the basis of diminishing Musharaka and Murabaha basis in line with Sharia Principles to meet the increasing demand of its customers to have a sharia compliant product in the field of housing sector.
MUSHARKAH:
Musharka means sharing and relationship established under the contract by the mutual consent of the parties for sharing profit and losses arising from the joint venture. In this Islamic mode of financing the Investment comes from all the partners. The profits are distributed according
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to the specified ratio while as the loss is borne by the partners according to the ratio of contribution by the partners. SCOPE: Housing finance is an investment facility in which the bank and the customer jointly purchase and construct a property/house/flat. The purpose of facility is to finance the purchase and construction private residential real estate / property on the basis of Sharia principles. The finance shall be extended for all types of real estate / properties, which are for purchase / construction of houses, apartments, bungalows, town houses etc. TYPE OF HOUSE FINANCE: The house finance facility is tailored keeping in view the specific need of the customers, and is provided under the following categories. PRODUCT Alfalah Home Buying Alfalah Home Construction PURPOSE Purchase of already constructed housing nit on diminishing Musharka basis. Purchase of Land and subsequent construction thereon which is to be completed within 12-15 months from the date of disbursements of the first transaction. The house / flat shall be constructed on Istisna basis. Renovation, extension, restoration and enhancement of Alfalah Home Renovation: an already owned housing unit. Taking over the existing house finance facility obtained by the customer from other financial Alfalah Home BTF: institutions.
TENOR: Customer has the option to choose one of the following tenures for purchase of units (share of banks investment in the property): PRODUCT Alfalah Home Buying Alfalah Home Construction Alfalah Home Renovation Alfalah Home BTF MINIMUM TENURE 3 years 3 years 3 years 3 years MAXIMUM TENURE 20 years 20 years 07 years 20 years
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8. Organizational Structure:
Over all structure of the Bank Alfalah Islamic is centralized the final authority is chairman all the branches head reports to chairman and according to department head information, suggestions chairman make the final decision. The basic management structure of Bank Alfalah Islamic is Customer Oriented for routine operations: it defined job title, pay grades, a set of relatively fixed reporting relationships, and related formal tasks. In it opportunity tended to be limited to formal promotion paths, and power flows from the contacts and resources inherent in a defined position. The basic purpose for the establishment of this bank is to provide all financial solutions to its customers. Its main function was continuing reutilization of useful procedures. There are long-service employees who have grown up with the company from bottom to the top management. The head of the Islamic banking division office is known as Executive Incharge, assisted by President and CEO who control different Senior Executives, such as Senior Executive vice president, as well as Area vice President. Each Directorate control different Regions under respective jurisdiction. Efficient personnel are employed for the satisfactory operation, control and expansion of banking services.
MANAGEMENT OF ORGANIZATION
Sheikh Hamdan Bin Mubarik Mr. Sirajuddin Aziz Mr. Pervaiz A. Shahid Mr. Shakil Sadiq Mr. Arfa Waheed Malik Mr. Ijaz Farooq Mr. Adil Rashid Mr. Muhammad Salim Mirza Mr. Mohammad Yousuf Mr. Bakhtiar Khawaja Mr. A. Waid Dada Mr. Hamid Ashraf Mr. Zahid Ali Mr. Mohammad Iqbal Mr. Talib Rizvi Mr. Tariq Mir Mr. Ather Shehab Chairman Chief Executive Officer Co-Chairman Centeral Management Committee. Chief Operating Officer Corporate & Investment Banking Group Head (Islamic Banking) Group Head (Consumer Finance) Group Head (Operations) Credit & Collection Group Head (Training & Development) Group Head (Commercial Banking) General Manager(Legal Affairs) Chief Financial Officer Group Head (Audit & Inspection) Group Head (Priority Banking) General Manager (International Business) Executive Incharge (Establishment & Administration) 12
Mr. Mahmood Ashraf Mr. Flak Sher
General Manager (Credit Monitoring) Chief Compliance Officer
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Annexure # 1 (Organizational Hierarchy)
Organizational Structure of Branch.

Employee Branch Manager Operational Manager Manager Credits Manager Consumer Banking Manager I.T Manager Business development Operation Officer Account & Finance Officer Customer Relationship Officer Cash officer Business Development Officer Annexure # 2 (Branch Hierarchy) 8.2 Review of various departments in term of their function and responsibilities . The list of departments of this branch is given below: Credit department, Operations department, Trade Finance department, Corporate Ijarah department, Finance department, Consumer Finance, Business Development department, House keeping department. All of these departments are supervised by the Branch Manager Mr. Rashid Rauf. Positions 1 1 1 1 1 1 1 2 3 3 1
1). Account Opening Department: Account Opening Procedure:

The Person who opens his account in the bank is referred as depositor. In order to open account in BAL the depositor has to fill up an Account Opening Form (AOF) and he has to attach attested copy of his/her NIC along with signed SS card. i.e., Specimen Signature card
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caries the signature of the depositor and is for the bank use. These cards are scanned in the banksmart software and later on bank verifies the signature of the depositor whenever the depositor makes use of banks services. The depositor also has to attach attested copy of his service card or any other acceptable evidence of service, including, but not limited to a certificate of the employer. The service card is basically a way showing the designation of the depositor, it may be a visiting card in case of sole proprietorship, or when a retired person wants to open account in The Bank ALFALAH, his attested copy of pension pay order must be attached, in case of armed forces personnel his PA number is obtained. The account-opening officer then checks the validity of AOF. The attached photocopy of clients id card is verified from NADRA website and after proper verification further procedure is carried on. When the customer makes necessary submission of documents required with AOFs, his account is opened; entry is made in Account opening register. After two days of customers submission, a letter of thanks is sent to introducer and new account holder. The purpose of sending LOT (Letter of Thanks) is to verify the customers mentioned address in AOF. In order to get the checkbook for the first time, the customer is to bring the sent LOT, then the customer is given form A, after filling and giving it to the officer, the customer is issued checkbook. Thus, banker customer relationship is established in this way. . Vernacular form: When the customers signature does not match with those of SS Card, then vernacular form is get filled by the customer. This form is actually an undertaking by the customer, that hell not held the Bank liable for any further problem arising due to his different signature. Categories of Accounts: PLS saving account (PLS) Current Account (CD) Mahana Amdani Account. Non Chquing account. TYPES OF ACCOUNTS: Accounts of general customers are; Minor Account Illiterate Person Account Joint Account Accounts of special customers are; Proprietorship Account Partnership Account Limited Companys Account Accounts of Clubs, Societies and associations Agents Account Trust Account Liquidators Account
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Executors and Administrators account
2). CREDIT ADMNINISTRATION DEPARTMENT:

In Bank Alfalah the credit administration department is meant for streamlining the working of credit disbursement and to mitigate the chances of losses arising from incomplete security and documents covering advances. Objective: The main objective of this department is to provide independent assurance to branch management and head office credit monitoring division that financing is properly controlled and monitored in the light of Islamic rules and injunctions and no deviation is made from the sharia principles. Principle set of Accountabilities: The department is required to ensure that: PRE Disbursement: In this context the customer contacts are well documented. There must be compliance with all regulatory and sharia requirement. In case of non compliance a report should be sent to the credit approving authority. On the other side the approval terms and conditions of the facility extended and head office policies are complied with. Collateral security is obtained in accordance with the terms and conditions. Documents are collected from the customer for each facility / service provided. Charge documents (charge is the personal promise made by the company to pay off the financing amount which the company has already obtained from the bank. POST DISBURSEMENT: After disbursement of the facility to the customer the condition of the facility is to be reviewed on timely basis. Effective diary system is maintained and place to monitor customer compliance with financial reporting including the stock reports for the stocks pledge with the bank. Company Business Processes of Credit Department:
CREDIT ADMINISTRATION PROCESS:

The credit administration process includes:
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Registration of Charge: It is obligatory to register hypothecation and mortgage charge over the limited company assets (current and fixed assets) with SECP within 21 days from the date of execution of documents. On the other side, there should b a check from the memorandum whether company is authorized to charge its assets or the amount of charge can be created over assets. Securities / Facilities documentation: Collateral security is taken in many forms through: First Exclusive charge: This is an immediate charge which is determined at the time of liquidation that which company is having first right to get a share from the assets of the company in case of default. First / Joint Pari Pasu Charge: It is a type of security in which the consortium of banks through NOC or through joint letter of hypothecation agrees to share on pro rata basis the collateral under charge. Ranking Charge: The bank which has registered charge first will be given first from the process of company. Pledge: It is the type of security which confers the physical possession of movable but not ownership. Hypothecation: Hypothecation is a type of security in which asset remains in the possession of the customer but the ownership is transferred to Bank. Mainly, hypothecation is of two types: Hypothecation by fixed assets (it is also called Mortgage and the nature is of fixed assets like as real estate). Hypothecation by floating assets (the nature of assets is movable like as stock and current assets). Mortgage: Mortgage is a claim against real estate or fixed assets. The deposit of title deed without documentation cannot create an equitable mortgage. In order to create equitable mortgage, Memorandum of Deposits of Title Deed is required to be deposited along with deposit of original title documents with bank. This memorandum is basically a signing of agreement between the bank and the customer. Now mortgage is of two types: Equitable Mortgage: In this after signing memorandum the title documents are deposited with the bank. Registered Mortgage: In case of registered mortgage the documents are registered with the registrar of the area. In case of DHA the mortgage is also considered as equitable mortgage
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because the transfer letter is considered title document as per laws. In other cases, the mortgage is created on the basis of legal opinion. Registered mortgage is expensive as there are legal charges, stamp paper cost and registration cost. In addition to the above mentioned collaterals, these may also be considered as collateral, Letter of Credit, Bank Guarantee, Guarantees of parent companies cross, Guarantees of the group of companies personnel. Valuation: For the valuation of the securities which are covering the risk of the bank, different methodologies are adopted and this is done on periodic basis: Type of Security Deposits Government Securities Source of Valuation The amount of actual deposit held is shown through printouts The face value or the encashable value of the securities is judged through the rats published Shares Mortgage of properties / Assets Stock under (pledge by hypothecation) by the government. Karachi stock exchange publishes the rates of the stocks The valuation reports are obtained from the banks approved evaluator. Usually the stocks which mortgaged are cotton bales and the rates for these are issued by the Karachi cotton association. Book Debt / receivables or any other of book debts as per term of sanction List securities advice.
3). HUMAN RESOURCE DEPARTMENT

OPERATIONAL WORKINGS: The department deals with all the matters of employee recruitment at branch level. From this department the curriculum vitae of the candidates are routed to the Head office. Written test and interviews of the suitable candidates are conducted. The main responsibility for interviewing and testing lies on the shoulders of Head office and their decision is the final one. Beside it, this department coordinates the employees at branch level in order to solve their problems regarding salary, increments and other HR Issues. Job Responsibilities of the Personal Assistant: The job responsibilities of the personal assistant to chief Manager include:
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Personal Assistance to CM Mail Receiving Hr File updating (The records of the employees are maintained in the shape of files). Serving as liaison to employees Regulation of Internal memos Dealing with the Matters of Interns Assisting Interns in their work / Department Rotation Procedures for Employee Selection: Employees are selected by a number of written testes carried down by the Head office and also by having a great number of panel interviews. The candidates selected are hired normally on contractual basis as well as permanent basis. The candidates are recruited according to the needs of the situation. There are certain criteria for the candidate to be applied for the concerned job. The education and qualification of the candidate is taken into consideration while the personality exposure and family background also matters in the selection of the employees. There is an open option for the eligible candidates to apply. ASSESSMENT OF EMPLOYEES: Bank Alfalah considers its employees as its valuable asset. Having this consideration the management at Bank Alfalah believes on providing a fabulous training to their staff members for providing quality services to the customers as well as establishing good repute among their competitors within the industry. The training is given when employees are hired to enhance their abilities and polish their skills. After that when they start working on their assigned responsibilities, they are to be assessed annually with the help of various assessment appraisals. These appraisals help them in getting their promotions and increments on timely basis. There are several facts on the basis of which the employees are assessed. Information regarding the employees performance and his/her behavior during job is normally taken from the Branch, operation Managers and departmental heads. The employee contribution towards increasing the clientele and deposit generation is also of special importance. Qualification has also having a great impact on the promotion of an employee. During first year of his/her job, the pressure to show good impression is on its peak. The first appraisal is of tremendous importance in the career of a new employee. So, the employees who were appointed a few months before were very conscious of their workings. At bank Alfalah the appraisals are sent not only for new employees but his process is done for the whole staff from top to bottom.
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Major Managerial Policies: The foremost managerial policies which the manager follow in order to accomplish the organization objectives are explicated below: Recruitment Policy: According to our research the recruitment process of bank alflah Islamic is not very complicated. Our finding of Research is as follows:
4). Credit Department:

This department deals with all the credit functioning held in the branch. In this branch a branch credit committee is established which give approval to the various facility amounts which are obtained by the customer. In association with the Credit Administration Department (which is responsible for the documentation of the Murabaha financing, Ijarah corporate financing and the Home loan). This department also processes the documentation procedures. The credit line proposals and the feasibilities are prepared and checked by this department. The CAD operations are held under the supervision of the credits department. Principles: The principles laid down by the Credit division at Head office are as under: Know your customer, know the purpose of the facility, know the profitability of the applicant, know the source of repayment, and assess the securities. Departmental Functions: This department deals with all the credit functioning held in the branch. In this branch a Branch Credit committee is established which gives approval to the various facility amounts which are obtained by the customer. In association with the Credit Administration Department (which is responsible for the documentation of the Murabaha financing, Ijarah corporate financing and the Home Loan). This department also processes the documentation procedure. The credit line proposal and the feasibilities are prepared and checked by this department. The CAD operations are held under the supervision of the credits department. Principles: The principles laid down by the credit division at the head office are as under: Know your customer, know the purpose of the facility, know the profitability of the applicant, know the source of repayment, assess the securities, Tenor of facility
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Trade Finance:
The trade finance department deals with the import and export financing by the bank. All the issues of trade financing are handled by the personnel in this department. This department provides L / C facility, Guarantees and support export and import transactions.
Corporate Ijarah Department:

This department provides Ijarah services to the corporate clients in Islamic modes. In conventional terms, the word IJARAH is translated as leasing. But there are certain differences with regard to the operations of this department. Corporate Ijarah does not provide the loans to the corporate clients rather they provide the assets to their clients and then received back the principle in shape of installments adding certain profits. The profits are a necessary element of the whole banking activity so the profit is included in it having certain fluctuations. Under Islamic Sharia laws the profits are not static or fixed but these are changed with the change in the nature of transactions and market conditions. The assets and the equipments are given to the customers for their intended use. Before providing this facility to the clients, the purpose for the facility is taken into consideration by the Ijarah personnel after having interactions with the customer. Then the credit line proposal is prepared and it sends to the concerned approving authority. During this, necessary documentation is done by the bank according to their prescribed rules. When the limit is approved by the authority then the limit is assigned by the bank to its client and the bank on behalf of the customer transact with the specified supplier according to the prerequisite of the customers.
Corporate Murabaha Department:

This department also deals with the corporate clients and provides Murabaha facility to them. Mostly this facility is obtained by the clients who need to meet their working capital requirements. This department does not provide loans to such customers instead the customers benefit from the sale based transaction held with the bank. Usually, the customers come to the bank for obtaining this facility then the bank asks them about their purpose. After necessary processing which is in form of CLP preparation and other documents, the bank asks from the
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buyer about his specifications of the products. Then the bank handles the transaction with the supplier by paying him cash on the spot or makes the bank handles the transaction with the supplier by paying him cash on the spot or makes certain deferred arrangements. As on behalf of the customer the bank purchases the goods and then sells them to the customer for the price agreed upon. In this case there should be no contingency with regard to sale, date of payment and payment itself. The facility is available to the customer for, Purchasing Raw Material, Work in process Inventory, Finished Products, Import, and Export. The amount of facility is repaid by the customers in easy installments. The tenure of the repayment is mostly shorter as for 60, 90, and 180 days. This tenure depends upon the trade cycle of the customers business as in how many days he will be able to pay back the price of the products to the bank.
Consumer Finance:
The head of consumer finance mainly covers the Ijarah facility for the consumers as well as the home loan facility. The Ijarah facility is available for the individual consumers and the Home loans are also provided to the consumers. After necessary documentation the facilities are provided to the customer but there is a limit for Ijarah that this facility is available only upto the amount of 1.0 million. The tenure of the Ijarah facility may be of 2 years and 5 years. Similarly there are different products which are offered by the home loan department and the installments are calculated on diminishing Musharkah basis.
Business Development:
This particular department is meant for development of business contracts. They are indulged in developing the new modes of having business on large scales. Besides it this department also maintains the contract with the high priority customers.
House Keeping:
This department contains the low level staff which is helpful in conducting various daily side activities of the bank.
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CAR IJARAH (Consumers):

Following the mission of providing Islamic based financing. Bank Alfalahs Islamic banking has introduced Alfalah Car Ijarah a Sharia compliant car leasing scheme. It is based on the principles of Ijarah and is completely free from the element of Interest. This product is ideal for interest-averse individuals, looking for a car financing scheme that not only provides the convenience of well designed product but also helps in avoiding interest based transactions. In this scheme the vehicle remains in the ownership and risk of the bank and the customer only pays the rental for use of the car just like a house rent. Moreover the Ijarah contract and other documentation also comply with Sharia requirements. On the other hand, a conventional car financing scheme is actually an interest based loan given by the financial institution and interest is charged on that loan. Facility Limits: Alfalah Car Ijarah gives the flexibility to acquire all locally manufactured and assembled cars costing up to Rs. 1.0 million. Tenure Of the Repayment: The cost of the vehicle can be paid in the easy rentals over a period of , 3 years, 4 years, and 5 years. Insurance Arrangement: Bank Alfalah Islamic Banking being the owner of vehicle/ car is responsible for insurance of the car and for paying insurance premium. The insurance is done under the present principles of insurance of Pakistan. Security Deposits: The percentage of security deposit is at least of 10%.This percentage can be increased up to any percentage according to the wish of the customer. Termination of the Lease Tenure: If the lease tenure is terminated by the customer before the time specified then with total remaining amount the bank receives 2% penalty of premature termination of the contracts.
CONSUMER BANKING:
Current Account: Bank Alfalah Islamic banking division maintains the current accounts of its customers in four major currencies as given under: PKR, Dollar, Pound, Euro. Saving Account: Another product is PLS saving account on Musharakah basis which is offered by the Bank to its customers.
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Profit Rate for Saving Account: The profit Rate for saving account is 2.5% offered to the customers. Call Deposits: Call deposits are also called demand deposits. In this product, the customer deposits some amount and with the Bank and then on demand by the customer to get the amount back to any time, the bank gives back the money to the customer. Term Deposits Receipts: It is a form of deposit in which the client deposits its amount for a specific period of time. No Cheque book is issued but a receipt is issued (for the amount and the time period for which the deposits are with the bank) to the customer. Usually term deposits certificates are issued for a shorter period of time and at maturity the customer gets the principle amount and added profit on it. These deposits are of various types as half yearly, yearly, and long term basis. Safe Deposit Lockers: The safe deposit lockers are offered to the customer. These lockers can be operated either singly or jointly. There are three different types of lockers at Bank Alfalah as: Small Charges Rs.1000, Medium- charges Rs.2000, Large- charges Rs.3000. The key deposit for any type of locker is Rs.2000 fixed. For operating the lockers the customer should have an account with the bank. Electronic Banking: Online Banking: The bank provides an online banking facility to its customers from 9.00 a.m to 1:00 p.m. The bank charges for each on line transaction Rs.1000. The customer can also check the balance of the accounts online in addition to the transactions. Phone Banking: Bank Alfalah Islamic Banking division is currently providing this service by offering centralized UAN connectivity to all its customers nation-wide. The customers now have the advantage of transacting their banking from the ease of their own homes or offices. The bank ensures the client facilitation with minimum hassle. These are the industry business processes performed by bank Alfalah Islamic. The process of banking industry is not very complicated. All the departments are interlinked with each other and performed various functions.
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Finance against Imported Merchandise (FIM):
In case of finance against imported
merchandise, the importer gives the imported goods into the effective pledge of the bank and avails the credit facility against the pledge goods. There is a slight technical difference between pledge and effective pledge. In case of pledge the imported goods come under the banks ownership, when they reach the desired godoown that is under the supervision of Mugadams, appointed by the bank. But on the other hand in case of effective pledge the goods are under the ownership of the bank even when they are being transported from the port of the goon. Finance against Trust Receipt (FATR): The mechanism with finance against trust receipt works, It is identical to the procedure of Hypothecation. The logical rational behind FATR is that all the imported goods cannot, by nature, be given the effective pledge of the bank. Imported goods could be of perishable nature or they could be of central importance for the operations of the business concern. Local Bills Purchased Documentary (LBP D): This particular type of credit is again aimed toward helping out business concerns with their working capital requirement. Suppose A company sells goods to company B on a credit of 90 days. Now the remuneration for these goods is going to be received after a time span of 90 days, and during these 90 days company A needs money for its working capital. What company A does is that it draws a bill on company B, negotiates that bill with the bank i.e. Bank Alfalah Limited purchases that bill and receives the amount, after 90 days from the company B.
Assets (OR Investment Side) of Bank Alfalahs Islamic Banking: Balance Sheet
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Islamic Banks Assets or Investable funds
Equity based instruments
Trade based instruments
Rental based Instruments
Musharkah
Murabaha Export Import
Ijarah (leasing)
5).Operations Department:
This department deal with the over all operations of the bank as well as particular issues with regard to the consumer banking. The customer services departments are directly accountable to the operations Manager. The customer services department directly deals with customer in order to provide them quality and personalized services. Besides it the operational workings of the cash and clearing department are also handled by the operations manager. In case of any problem, the operations manager along with the employees of the each department is accountable to the branch manager. Departmental Functions: This department deals with the over all operations of the bank as well as particular issues with regard to the consumer banking. The customer services department is directly accountable to the operations manager. The customer services department directly deals with the customers in order to provide them quality and personalized services. Besides it the operational workings of the cash and clearing department are also handled by the operations manager. In case of any problem, the operations manager along with the employees of the cash department is accountable to the branch manager.
CLEARING:
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Meaning of Clearing: The word clearing has been derived from the word Clear and is defined as: A system by which banks exchange cheques and other negotiable instruments drawn on each other through a reliable institution referred as NIFT and thereby secure payments for their clients through the clearing house at specified time in an efficient way.
Bills for collection:

The account holders of THE BANK ALFALAH when takes Cheque from the account holders of banks other than THE BANK ALFALAH can take payment from the department named Bills for Collection. Bills for Collection are of two types; OBC (Outward Bills for Collection) and IBC (Inward Bills for Collection)
OBC (Outward Bills for Collection):

OBC are the bills that are delivered by the branch of THE BANK ALFALAH to any bank outside Lahore.
IBC (Inward Bills for Collection):

IBCs are the bills that are received by the branch of THE BANK ALFALAH from branches of THE BANK ALFALAH in Lahore.
OUTWARD CLEARING AT THE BRANCH

The following points are to be taken in consideration while an instrument is accepted at the counter to be presented in Outward Clearing: The name of the branch appears on its face where it is drawn on. It should not be stale or post dated or without date. Amounts in words and figures must not differ. Signature of the drawer appears on the face of instrument. Instrument is not mutilated. There should be no material alteration, if so it should be properly authenticated. If order instrument, suitably endorsed and the last endorsees account being credited. Endorsement is in accordance with the crossings if any. The amount of instrument must be same as mentioned on the pay-in-slip and counterfoil. The title of account in the pay-in-slip is that of payee or endorsee (with the exception of bearer cheque)
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INWARD CLEARING OF THE BRANCH

The particulars of the instruments are compared with the attached IBC schedule list. The instruments are already attached and arranged with the IBC (Inward Bills for Collection) schedules branch wise. The instruments are detached from the Schedule and are sent to the respective departments against acknowledgement in the Inward Clearing register. Entry is made in IBC Software in the computer. Print out is taken and is maintained by the Bank for its record. Outward Cheques Returned Unpaid: These are the cheques returned unpaid by THE BANK ALFALAH Branch in Inward Clearing due to some objections. Inward Cheques Returned Unpaid: These are the cheques returned unpaid to THE BANK ALFALAH Branch, which were lodged by the Bank in Outward Clearing.
NIFT (National Institutional facilitation Technologies):

Following are the duties of NIFT: It collects cheques, demand drafts, pay orders, Travelers cheques, etc. from all the branches of different banks within city through its carries and sends them to the branches on which these are drawn for clearing. It prepares a list for each branch showing the number for instruments and amount in its favor and drawn on it and sends it to each branch after the banks approve the instruments drawn on them. A copy of same list for each bank is also sent to clearing house of SBP for where accounts of banks are settled in the same manner. In finance Department Work to do At month end / Year End: IN finance department at the end of the month the record of the following items is maintained: Salaries payment, Advance salary adjustment, Sundry creditors, Advance rent, Prepaid Insurance, Other pare payments, Stationery printed and security, Accrual cheques books, Accrual electricity, Water, Telephone and Telex, Depreciation, Accrual Car Ijarah- consumer, Accrual Ijarah-Corporate, Accrual Advances for Murabaha finance, Accrual Advances for Musharka Finace, Closing of Books, Finance against Imported Merchandise (FIM), Finance Against Trust Receipt (FATR), Local Bills Purchased Documentary (LBP-D) etc. Discount of 1% from the profit rate offered to general customers or both
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9. Structure and Function of Finance Department

This department is the core of the whole banking activity as it has to record all the transactions held in the premises of the bank. To meet the estimated budget targets is the core responsibility of this department. This department corresponds with the SBP Lahore branch and NIFT for clearance. The financial statement like income and expenditure statement, Balance sheet, Statement of Affairs related with the daily position of the operations are prepared. Then in review, the required figures of estimated budget and the actual figures achieved are compared. 9.2 Finance and Accounting Operations: Main activities are performed by the finance department including, Budgeting, Reporting, Maintenance records of Branch Accounts. Budgeting: The annual estimated budget is decided by the higher management at Head office and then they negotiate with the branch management for the implementation of the estimated budget. The branches also submitted their estimated budget to Head office. The targets are settled for the year and branch management is entitled to fulfill those targets and at the end of the year. In this regard regular reviews are taken at the end of the month in order to confirm the variation of the actual figures from the budgeted figures. For instance, the budget review is done at the end of June 2006, in which the position of the bank at start of operations is taken. The condition for the last month is also taken for comparison purposes. Reporting: In finance department different statements are prepared according to the regulations specified in Islamic Banking laws. The reports are generated through the module used (BANK SMART). Annual, semi Annual, and quarterly reports are used in analyzing the financial situation of the Bank. Preparation of Statements by the finance Department personnel: The following statements are prepared in the division: Income and Expenditure statement, Balance sheet, Statement of Affairs, Daily position of Advances and Deposits, Daily exchange position report, closing statement of fixed assets. Income And Expenditure Statement: The income and expenditure statement is prepared for the period of time. So this statement contained the details of income earned by the branch and the expenditures made within a period of year. At the start of the fiscal year budget estimated is
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done by the top management. The targets are settled and then at the end of the year these targets are compared with those estimation for the analysis purposes. Balance Sheet: The balance sheet is prepared at the end of the year and it reflects the situation at the point of time. This balance sheet shows the position of the banks assets and the liabilities. The main difference between the statement of affairs and the balance sheet is that the earlier one is prepared on daily basis, while as the later one is prepared on a point if time. Statement of Affairs: Statement of affairs is basically the balance sheet of BAL-IBD that is generated by the accounts department on a daily basis. This statement gives the complete detail of all the assets and liabilities on a daily basis. In finance officer of the branch prepare Daily branch position with the help of statement of affairs. This is to be submitted to Head office on daily basis for proper monitoring of branch activities. Daily Position of Advances And Deposits: The daily position of the advances and the deposits is maintained by the finance department in order to comply with the requirement of the state bank of Pakistan. The variances are reported to the SBP and these are in the form of different currencies which are currently handled by the bank. The main purpose behind the generation of this report is to have a complete review of the condition of advances and deposits of the bank. The deposits and advances may include various categories like as: Foreign Currency deposits (New and old accounts), Local Currency deposits, Total Advances made to: (Car Ijarah and Corporate Ijarah for machinery, equipment and vehicles. Daily Exchange Position Report: This particular statement is basically meant for ascertaining as to how much do we own in terms of foreign currency and how much do we owe in terms of foreign currency at a particular date. In simple terms, this statement gives us an overview of the fact as to what are our assets and liabilities in terms of foreign currencies at a particular point in time. Moreover this statement also gives us the local equivalents of the assets and liabilities. It also tells us the profit on exchange trading on a particular date. Normally at the end of the month the calculation is done in order to take a review of the situation. Closing Statement of Fixed Assets: The closing statement of fixed assets is prepared by this department. The book value is obtained after deducting the depreciation from it and this depreciation is deducted on the basis of straight line method.
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Fee Based Operations of the Bank: Bank Alfalah charges fee for the provision of following services: Checking account, Money transfer, L / C (non funder), Lockers (safe keeping), Online services. Daily Module Wise Activity Report: The daily module wise activity report is generated by the system. This activity report consists of the number of vouchers which are generated by each department for the transaction held. In other words, the financial effects are recorded in this report from different departments. This report is a kind of internal audit held on daily basis. The date, amount and signature are verified by the concerned personnel. The authority to issue the deposit slips is varied with respect to the tellers. Each teller has certain limit to which he is able to verify the signature and amount. Basically, there are five types of activities in the systems which are reported namely. Cash: The activity of cash includes, Cash deposit by customer, Cash payment by Bank, Utility bills collection, Demand draft, Cash payment Vouchers Online: There is a facility available to the customer through which they can withdraw and deposit funds in their account from any branch of Bank Alfalah Limited. Fee Charges for Online Transactions: Bank charges a fee for an online transaction. The amount of fee is Rs.110 for every transaction. (There is no fee in case if the customer is the employee of the bank). SBP imposed 10% federal excise duty of commission of bank. In that online fee Rs. 100/- is banks commission and Rs. 10 is fed excise duty on commission. Fixed Assets Verification: First of all, the approval for the purchase of fixed assets is obtained from the head office. Head office approves the purchase of asset after the request made by the branch. The quotations are sent to the head office and then the most feasible one is accepted. The final purchase of assets is done. These fixed assets are also physically verified time to time. In this regard, tagging procedure helps in finding out that the asset is physically presents. The tags of Bank Alfalah are placed on each and every asset with special numbers for the identification. Necessary documentation is done in this regard by the finance department.
9.3 ROLE OF FINANCIAL MANAGER:
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The BANK ALFALAH LIMTED has observed that some institutions/persons without having legal authority to accept deposits of money from the public and lending and/or investing such money, are raising funds from the public in various forms on a repayable basis as part of their business. Such transactions are called by various names such as investment, credit, borrowing, participation in projects or management of funds. Under these schemes, often very high rates of return are paid to attract the less informed general public. It may be possible to pay such high rates of return for some duration using funds obtained from new depositors/investors. However, once the inflow of new deposits/investments is dried up, these schemes collapse and the public who have placed funds under such schemes lose their monies. Therefore, the Bank Alfalah Limited wishes to bring the following facts to the attention of the public. Financial manager play very important role in any organizations. The key responsibilities of financial manager in BAL is as follow. Analysis of market condition and development of product according to target market. Cash budget management of all branches. Expenditure which are 5000 plus required prior approval from finance department of BAL. Profit calculation of different types of saving accounts. Supervision of credit department of each branch. Financial manager also maintain relations with other financial institution in order to know the current market situation .
9.4 Software:
The software which is being used in Bank Alfalah Llimited is BANK SMART. This software is very user friendly but it has many draw back. That is the reason the management of bank wishes to change its operating software. Recently the had purchased Terminos 24 and its installation process has been started in branches. Types of Report: Statement of affairs. Statement of Income and Expenditure. Daily Branch Position.
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Ledger Daily Activity Report.
9.5 MOBALIZATION OF FUNDS

The Bank Alfalah Limited has observed that some institutions/persons without having legal authority to accept deposits of money from the public and lending and/or investing such money, are raising funds from the public in various forms on a repayable basis as part of their business. Such transactions are called by various names such as investment, credit, borrowing, participation in projects or management of funds. Under these schemes, often very high rates of return are paid to attract the less informed general public. It may be possible to pay such high rates of return for some duration using funds obtained from new depositors/investors. However, once the inflow of new deposits/investments is dried up, these schemes collapse and the public who have placed funds under such schemes lose their monies. Therefore, the Bank Alfalah Limited wishes to bring the following facts to the attention of the public. Product promotional campaign New and improved product development. Good rate of return on investments. Less complicated credit policy
9.6GENERATION OF FUNDS
Banks for this type of funds actively look for companies performing well in a specific field, for instance, by implementing a special social policy or by making considerable efforts to produce ecologically responsible methods. For these funds, banks are screened for only one or some aspects of sustainable business. This mainly concerns banks which carry out a reasonable sustainability policy in other areas - good social or environmental policies are usually part of an overall bank plan.
9.7 SOURCES OF FUNDS
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The bank manger makes decisions to ensure that the bank has sufficient funds to meet financial obligations when they are due and to take advantage of transaction opportunities. To help the analyst appraise these decisions, manager needs to study the banks sources of funds. By arranging a banks sources of funds in a systematic fashion, the manager can better determine whether the decisions make for the bank resulted in a reasonable source of funds or in questionable sources, which warrant further inspection. For example, a reduction in inventory (an asset) would be a source of funds, as would an increase in short-term loans (a claim). Permanent Source of Funds: (Internal): The permanent sources of internal funding are as followed: Issued subscribed and paid up capital, Accumulated profits (retained earnings), Capital reserves, and Revenue reserves. Permanent Sources of Funds (External): Bank Account Non profit accounts or current accounts (demand deposits), saving account, Investment accounts.
9.8 ALLOCATION OF FUNDS

Allocation of funds is to invest the funds in kind of purchase of companies shares, investment in Govt. Projects, advances of various kinds of loans etc. in order to earn the high ratio profit. However, such kind of behavior is very normal in all banks but especially in Bank Alfalah Limited a special attention is paid by the management while investing funds of the bank in different private sector as well as Government Projects in order to earn maximum profit or benefits.
SOURCES AND ALLOCATION OF FUNDS IN FINANCIAL TERMS

2007 Deposit 2006 Deposit
Advances
Advances
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Agribusiness Automobile & Tranportation equipment Chemical and Pharmaceuticals Cement Communication Electronics and Electrical Appliances Educational Institute Financial Fertilizers Food & Allied Products Glass & Ceramics Ghee & Edible Oil Housing Societies/Trust Insurance Import & Export Iron/ Steal Oil & Gas Paper & Brand Production and Transmission of Energy Real Estate / Constructoin Retail / Wholesale Trade Rice Processing and Trading/ wheat Sugar Shoes and Leather Garments Sports Goods Surgical Goods Textile Spining Textile Weaving Textile Composite Welfare Institutoins Individuals
(in '000) 7,830,88 2 5,815,98 4 3,749,42 5 2,817,24 6 2,105,50 3 2,173,23 3 607,08 0 4,263,59 3 2,297,93 4 3,229,04 3 253,66 1 3,664,08 0 2,484,93 4 75,73 6 2,846,93 1 3,365,85 7 3,976,62 7 2,034,69 6 7,208,15 1 5,834,98 4 5,666,52 5 4,354,13 5 2,715,81 4 742,76 0 259,01 2 201,36 0 14,115,92 5 6,728,55 2 8,757,95 9 657,14 9 43,497,45 1
4.4 8 3.3 1 2.1 3 1.6 0 1.2 0 1.2 4 0.3 5 2.4 3 1.3 1 1.8 4 0.1 4 2.0 9 1.4 1 0.0 4 1.6 2 1.9 2 2.2 6 1.1 6 4.1 0 3.3 2 3.2 3 2.4 8 1.5 5 0.4 2 0.1 5 0.1 1 8.0 4 3.8 3 4.9 8 0.3 7 24.7 5
(in '000) 1,562,97 3 2,794,28 1 1,951,14 9 1,008,10 5 7,911,20 4 841,61 1 5,237,63 7 10,841,62 4 3,229,60 2 1,294,97 4 312,12 6 445,54 3 5,593,63 4 1,385,18 9 4,793,40 7 2,539,86 3 14,850,57 8 1,248,91 8 16,433,32 0 8,301,05 0 6,728,48 6 729,34 6 653,21 1 609,83 0 314,20 1 155,13 1 2,290,83 6 1,648,11 2 866,56 0 9,273,54 6 88,754,31 5
0.57 1.02 0.71 0.37 2.9 0.31 1.92 3.97 1.18 0.47 0.11 0.16 2.05 0.51 1.75 0.93 5.44 0.46 6.02 3.04 2.46 0.27 0.24 0.22 0.12 0.06 0.84 0.6 0.32 3.39 32.49
(in '000) 8,589,22 4 3,841,81 8 1,235,32 9 1,661,73 2 4,436,49 6 906,30 2 708,19 4 3,174,25 4 1,376,52 3 1,180,21 6 116,31 7 1,729,78 1 1,029,52 0 37,96 9 4,680,84 8 922,77 6 718,17 0 725,95 8 219,20 3 4,889,40 4 6,294,46 1 3,914,25 8 1,899,34 3 1,095,61 3 278,52 4 102,24 3 10,660,13 4 10,029,65 1 5,226,50 3 515,11 9 50,844,26 4
5.64 2.52 0.81 1.09 2.91 0.6 0.47 2.09 0.9 0.78 0.08 1.14 0.68 0.02 3.07 0.61 0.47 0.48 0.14 3.21 4.13 2.57 1.25 0.72 0.18 0.07 7 6.59 3.43 0.34 33.4
(in '000) 1,336,05 5 1,805,44 5 2,676,32 6 835,70 0 9,484,80 7 706,88 7 4,629,62 5 11,195,61 7 3,588,09 9 2,536,45 9 234,35 0 897,33 8 4,069,43 9 1,523,80 5 2,837,08 0 1,943,46 6 12,507,48 4 827,26 5 16,146,80 5 6,366,66 1 5,933,50 0 497,15 8 1,013,90 1 570,58 9 118,64 3 7,75 4 1,255,92 5 1,007,63 0 1,041,87 1 4,917,02 5 83,390,95 9
0.56 0.75 1.12 ..35 3.96 0.3 1.93 4.67 1.5 1.06 0.1 0.37 1.7 0.64 1.18 0.81 5.22 0.35 6.74 2.66 2.48 0.21 0.42 0.24 0.05 0.01 0.52 0.42 0.44 2.05 34.82
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Others TOTAL
21,346,58 8 175,678,81 0
12.1 4 10 0
68,573,47 9 273,173,84 1 0 25.1 10 4
19,195,63 12.61 10 0 3 152,235,78 1
53,605,72 22.37 10 0 239,509,39 1
10. CRITICAL
ANALYSIS OF THE THEORETICAL CONCEPTS
RELATING TO THE PRACTICAL EXPERIENCE

1.Strong brand recognition in the domestic market and niche foreign markets. 2. Strong distribution capability through the largest domestic and overseas network amongst all commercial banks in Pakistan. 3.Established market presence 20% market share. 4.Focused business strategy supported by appropriate organization structure, operating procedures, and human resource and information technology initiatives. 5.Strong credit rating. 6. A full service bank bank AlFalah provides a complete range of banking products and services including retail banking, corporate banking, trade finance, consumer finance, credit cards and lease finance. Such a wide product portfolio, along with increasing greater hedging of business risks also significantly increases cross selling opportunities. 7.Large (over 5 million accounts) and loyal domestic deposit base with low cost deposits. 8.Most international operations are funded by stable and core retail deposits. 9,Largest Treasury function amongst all commercial banks in Pakistan enables ability to achieve attractive rates in the interbank market. Balance sheet Last Five Years Date 2003 2004 2005 2006 (Rupees in '000) Assets
Cash & balance (treaury banks) 8,423,399 19,708,518 24,798,070 27,859,360 29,436,378
2007
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balances with other banks lendings to financial instutiation investments advances operationg fixed assets defered tax assets other assets
626,917 7,437,733 28,903,596 49,216,120 2,791,626 1,553,108
3,183,957 35,503,196 88,931,400 4,280,504 3,226,959
9,713,369 12,731,952 27,050,493 12,456,653 57,416,255 56,502,210 118,864,010 149,999,325 6,620,067 10,502,990 3,851,529 5,633,051
18,380,738 3,452,059 88,491,564 171,198,992 11,922,324 6,013,097
98,952,499 154,834,534
248,313,793 275,685,541 328,895,152
Liabilities
bills payable borrowings deposits and other accounts sub-ordinated loans liabilities against assets defferred tax liabilities other liabilities Net Assets 1,208,671 13,127,754 76,698,322 649,740 323,010 2,186,754 2,233,671 12,723,830 129,714,891 1,899,480 275,834 2,725,344 3,733,124 3,091,135 5,844,389 8,394,130 222,345,067 239,509,391 3,223,355 3,222,106 484,066 5,219,666 1,921,338 7,305,496 4,138,243 21,230,697 273,173,841 3,220,858 1,379,809 9,531,860
94,194,251 149,573,050 4,758,248 5,261,484
240,849,667 263,443,596 312,675,308 7,464,126 12,241,945 16,219,844
Represented by
Share captal Reserves Unappropriated profit 2,000,000 790,374 963,042 3,753,416 2,500,000 1,008,772 860,300 4,369,072 892,412 5,261,484 3,000,000 1,851,218 1,886,845 6,738,063 726,063 7,464,126 5,000,000 2,749,533 2,823,072 10,572,605 1,669,340 6,500,000 2,414,833 4,851,840 13,766,673 2,453,171
Surplus and revaluation of assets -net of tax 1,004,832 4,758,248
12,241,945 16,219,844
Explanation: Balance sheet is a snapshot of what a company owns and owes at that point in time ,A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity Each of the three segments of the balance sheet will have many accounts within it that document the value of each. Accounts such as cash, inventory and property are on the asset side of the balance sheet, while on the liability side there are accounts such as accounts payable or long-term debt. The exact accounts on a balance sheet will differ by
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company and by industry, as there is no one set template that accurately accommodates for the differences between different types of businesses.
Profit & Loss Account Last Five Years Date 2003 2004 2005 2006 (Rupees in '000)
Markup/ return/ interest earned markup/ return/ interest expensed net mark-up/ interest income Provision against non performing loans for diminution in value of investments. bad debts written off directly 4,033,380 2,028,577 2,004,803 (87,091) (418) (87,509) net mark-up / interest income after provisins 1,917,294 NON MARK-UP / INTEREST INCOME Fee, commission and broerage income 399,383 675,868 Divident income 112,017 52,539 Income from dealing in foreign currencies 106,848 218,820 Gains and sale of securities Unrealized (loss)/ gain on revaluation of investment classified as held for trading other income 2,773,503 572,822 total Non-Mark-up/ interest income 3,391,751 1,520,049 5,309,045 4,333,069 Non Mark-up / Interest expenses Administrative expenses other provisoin/ write offs other charges total non-Mark-up / interest expenses Extra ordinary / unusual items Profit before taxation Taxation - current - prior years - deffered PROFIT AFTER TAXATION Un appropriate profit B/F Transferred from surplus on revaluation of fixed assets. Profit availble for appropriation 1,799,490 2,000 1,875 1,803,365 3,505,680 3,505,680 1,364,723 22,887 (5,164) 1,382,446 2,123,234 250,050 14,405 2,637,689 2,677,635 1,700 2,679,335 1,653,734 1,653,734 586,159 (30,000) 5,586 561,745 1,091,989 463,042 23,667 2,078,698 4,313,023 10,125 21,104 4,344,252 2,563,290 2,563,290 592,635 1,037 267,524 861,196 1,702,094 860,300 24,870 2,587,264 5,874,745 43,306 5,918,051 2,565,945 2,565,945 476,226 (100,874) 427,902 803,254 1,762,691 1,886,845 26,074 3,675,610 1,158,747 52,014 290,091 239,551 23,163 504,967 2,268,533 6,907,542 1,804,998 37,393 386,997 180,751 5,620,203 2,434,459 3,185,744 (370,208) (2,165) (351) (372,724) 2,813,020 12,246,811 7,204,992 5,041,819 (402,298) (512) (402,810) 4,639,009 21,191,470 15,232,886 5,958,584 (697,690) (1,537) (699,227) 5,259,357
2007
25,783,871 16,620,963 9,162,908 (2,370,867) (5,844) (2376711) 6,786,197
2,429,599 64,722 474,510 2,053,192
(27,599) (14,929) 842,099 1,031,372 3,224,639 6,038,466 8,483,996 12824663
8,272,587 6,959 9,565 8,289,111 4,535,552 4,535,552 1,726,810 (321,487) 1,405,323 3,130,229 2,823,072 24,585 5,977,886
38
Basic / Diluted Earnings per share
8.49
4.37
3.92
3.86
4.82
EXPLANATION: A Income statement that measures a company's financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. The income statement is the one of the three major financial statements. The other two are the balance sheet and the statement of cash flows. The income statement is divided into two parts: the operating and non-operating sections. The portion of the income statement that deals with operating items is interesting to investors and analysts alike because this section discloses information about revenues and expenses that are a direct result of the regular business operations. For example, if a business creates sports equipment, then the operating items section would talk about the revenues and expenses involved with the production of sports equipment. The non-operating items section discloses revenue and expense information about activities that are not tied directly to a company's regular operations. For example, if the sport equipment company sold a factory and some old plant equipment, then this information would be in the non-operating items section.
10.1 RATIO ANALYSIS

Ratio analysis involves methods of calculating and interpreting financial ratios to analyze and monitor the firms performance. Accounting ratios arte used to explain a number of financial statements. Its used to diagnose the financial health of an enterprise.
1.Equity Margin
2003 Rs in(000) = 98952499 4758248 2004 Rs in (000) = 154834534 5261484
(Total Assets /Shareholders Equity)

2005 Rs in (000) = 248,313,793 7,464,126 2006 Rs in (000) = 275,685,541 12,241,945 2007 Rs in (000) =328,895,152 16,219,844
20.79 %
29.42 %
33.27
22.52
20.27
39
Comments This ratio shows that Bank Alfalah is getting much of its resources from its shareholders in 2005 as compared to year 2006. This means that Bank Alfalah is low-geared bank and faced less difficulty while trying to be financed through debt in 2005 in contrast with year 2007.
2.Demand Deposit to Total Assets

2003 Rs in(000) = 27517167 * 100 98952499 = 27.81 % 2004 Rs in (000) = 31895179 * 100 154834534 = 20.61 %
(Demand Deposit /Total Assets)*100

2006 Rs in (000) = 58,234,013 * 100 275,685,541 = 21.12 % 2007 Rs in (000) = 67,604,689* 100 328,895,152 = 20.55%
2005 Rs in (000) = 45,814,316* 100 48,313,793, = 18.45 %
Comments This ratio is used to measure a company's financial position by determining how much of the company's assets have been financed by current deposits. BAL has more demand deposits in 2006 as compare to 2005 which shows that BAL in 2006 has more liquid asset as compare to year 2005. If BAL in 2007 tried to make investments for long term it was more risky for it because these deposits are for short term and should necessarily be pay to the customer on demand any time.
3.Provision for Loan Losses to Avg. Total Assets

Losses /Avg. Total Assets)*100
2003 Rs in(000) = 87091 * 100 85059540 = 0.10 % 2004 Rs in (000) = 370208 * 100 126896516 = 0.29 % 2005 Rs in (000) = 402,298* 100 201,574,164 0.20 % 2006 Rs in (000) =
(Provision for Loan

2007 Rs in (000) = 4,479,818, * 100 302,290,346 = 1.48 %
2,236,456 * 100 261,999,667 0.85 %
Comments
40
The provision for loan losses is a charge to current earnings to build the Allowance for Loan and Lease Losses (ALLL). The ALLL is a general reserve kept by banks to absorb loan losses. One of your responsibilities as a director is to ensure the loan loss reserve is sufficient to absorb probable loan losses. When considering how much to take out of earnings to add to the ALLL, consider factors that may affect loan losses. These include changing market conditions where the bank operates (e.g. corporate layoffs or plant closings, drought, low farm prices, etc.), rising numbers of delinquent loans and significant loan growth. All may bear on loan loss and the need to increase ALLL reserves. BAL in 2006 had 0.65% more provision for loan losses as compare to 2005. Higher the ratio is, worse the company performance.
4.Profit Before Tax Ratio

2003 Rs in(000) = 3505680 * 100 4033380 = 86.91 % 2004 Rs in (000) = 1653734 * 100 5620203 = 29.42 %
(Profit Before Tax /Gross Mark-up Income)*100

2006 Rs in (000) 2007 Rs in (000)
2005 Rs in (000)
= 2,563,290 * 100 = 12,246,811 = 20.93 % =
2,565,945 * 100 = 4,535,552, * 100 21,191,470 25,783,871 12.11 % = 17.6 %
Comments BAL in 2005 has 8.82% more PBT ration in contrast with year 2006. PBT ratio shows how much the company earns before paying the tax against the gross markup income.
5. Advances/Deposits Ratio
2003 Rs in(000) = 49216120 * 100 76698322 = 64.16 % 2004 Rs in (000) = 88931400 * 100 129714891 = 68.55 %
(Advances/Deposits)*100
2006 Rs in (000) 2007 Rs in (000)
2005 Rs in (000) =
118,864,010 * 100 = 222,345,067 53.46 % =
149,999,325 * 100 = 171,198,992, * 100 239,509,391 273,173,841 62.63 % = 62.67 %
41
Comments This ration indicates that what percentage the advances issued against the deposits. This ratio shows BAL in 2006 issued more advances against deposit in contrast with year 2005.
6.Return on Equity (ROE) =

Equity)*100
2003 Rs in(000) = 2123234 * 100 26849.19 = 79.08 % 2004 Rs in (000) = 1091989 * 100 5009866 = 21.79. %
(Net
Income/Avg.
Total
Shareholders
2005 Rs in (000)
2006 Rs in (000)
2007 Rs in (000)
= 1,702,094 * 100 = 1,762,691 * 100 = 3,130,229 * 100 6,362,805 9,853,036 14,230,894, = 26.75 % = 17.90 % = 21..99 %
Comments It measures the rate of return on common stockholders equity. The ROE ratio of BAL in 2005 is higher then 2006 which mean the profitability of the BAL in 2003 is higher then the year 2007. This ratio shows that more effectively the shareholder's investment is being employed by BAL in year 2005 as compare to 2006. It also shows that in year 2007 BAL use greater portion of debt as compare to 2005. If we see from investor point of view the BAL in 2005 is more attractive then in 2007 because in 2005 BAL is generating profit more efficiently.
7. Return on Assets (ROA)

2003 in(000) = 2123234 * 100 829389 = 2.59 % 2004 Rs (000) = 1091989 * 100 126893516 = 0.86 %
=
Rs2005 in (000)
(Net Income/Avg. Total Assets)*100

Rs 2006 in (000) Rs2007 in Rs in (000)
= 1,702,094 * 100 201,574,164 = 0.84 %
= 1,762,691 * 100 = 3,130,229 * 100 261,999,667 302,290,346 = 0.67 % = 1.035 %
Comments
42
ROA ratio is an indicator of how profitable a company is relative to its total assets. ROA ratio in 2005 is higher as compare to 2007 which gives an idea that management of BAL more efficiently using its assets in 2005 to generate earnings. Form the investor point of view this ratio gives investors an idea of how more effectively the BAL is converting the money the investor has to invest into net income. In Year 2003 bank is better at converting its investment into profit because its ratio is 0.17% higher then 2006
8.Interest Income to Total Assets = (Interest Income/Avg Total Assets)*100

2003 Rs in(000) = 2004803 * 100 829389 2004 Rs in (000) = 3185744 * 100 126893516 2005 Rs in (000) 2006 Rs in (000) 2007 Rs in (000) = 9,162,908 * 100 302,290,346
= 5,041,819 * 100 = 5,958,584 * 100 201,574,164 261,999,667
26.75 %
2.51 %
2.50 %
2.27 %
3.03 %
Comments This ratio is used to measure the company's financial position with respect to the interest income by determining how much of the company's assets generating interest income from interest bearing items. The ratio of BAL in 2005 is 0.23% higher then 2006 which shows BAL in 2005 is more efficient to generating interest income from their assets as compare to 2006.
9.Time Deposit to Total Assets

2003 Rs in(000) = 45897143* 100 98952499 = 46.38 % 2004 Rs in (000) = 64197582 * 100 154834534 = 41.59 %
(Time Deposit /Total Assets)*100

2006 Rs in (000) = 88,851,222* 100 275,685,541 = 32.23 % 2007 Rs in (000) = 85,520,839 * 100 328,895,152 = 26 %
2005 Rs in (000) = 80,167,779 * 100 248,313,793 = 32.28 %
Comments
43
This ratio is used to measure a company's financial position by determining how much of the company's assets have been financed by Fixed Account. Bank Alfalah in 2005 has more Time deposits as compare to year 2007, which shows BAL in 2005 has more long term assets as compare to year 2006. If Bank Alfalah in 2005 tried to make investments for long term it is more appropriate for it because they have more deposits for long term investment. But the drawback to have more Time deposit is, Bank Alfalah in 2004 has to pay more interest on their deposits as compare to year 2006 until unless Bank Alfalah invest these deposits.
10. Gross Loans to Total Assets

2003 Rs in(000) = 60197584 * 100 98952499 = 60.83 % 2004 Rs in (000) = 88931400 * 100 154834534 = 57.44 % 2005 Rs in (000) =
(Gross Loans /Total Assets)*100

2006 2007 Rs in (000) Rs in (000) =171,198,992 * 100 328,895,152 = 52 %
147,467,484 * 100 =149,999,325* 100 248,313,793 275,685,541 59.39 % = 54.41 %
Comments There is not a big difference between these ratios of BAL for two years but for comparison point of view, we can say that in 2003 BAL issued more loans than 2007 and it is getting more business from fundamental banking. It also shows that for borrowers 2005 was more suitable then 2006 when getting funds for investment. There is an other point which can contradict my above saying that in gross loans, provision of loan losses include, this ratio did not give the clear picture about the loans condition of bank. The reason may be that this ratio in year 2005 can contain more provision for non-performing loans losses as compare to 2006.
11.Net Loans to Total Assets =

2003 Rs in(000) 2004 Rs in (000) 2005 Rs in (000)
(Net Loans /Total Assets)*100

2006 Rs in (000) 2007 Rs in (000)
44
=46,852,176 * 100 = 79,587,159 * 100 = 145,914,503* 100 98952499 154834534 248,313,793 = 47.34 % = 51.40 % = 58.76 %
= 152,235,781* 100 275,685,541 = 55.22 %
=175,678,810* 100 328,895,152 = 53.4 %
Comments There is not a big difference between these ratios of two banks but for comparison point of view, we can say that in 2005 BAL issued more loans than in 2006 and it is getting more business from fundamental banking. It also shows that for borrowers 2005 was more suitable then 2006 when getting funds for investment. This ratio will be more considerable for borrowers as compare to gross Loans to total assets ratio because provision for non-performing loans not include in this ratio.
12.Provision for loan losses to Total Revenue = (Provision for loan losses / Total
Revenue)*100
2003 Rs in(000) = 370915 * 100 1803365 2004 Rs in (000) = 572724 * 100 2679335 2005 Rs in (000) =402,298* 100 1,702,094 2006 Rs in (000) =2,236,456*100 8,483,996 2007 Rs in (000) = 4,479,819 * 100 12,824,663
20.56 %
21.37 %
= 23.64 %
26.36 %
= 34.93 %
Comments Bank Alfalah has more provision for loan losses in 2006 as compare to 2005 which shows loan payment from the borrowers is less effective in year 2007 as compare to 2005.
13.Trading Commission & Fees to Total Assets = ( Trading Commission & Fees /
Total Assets)*100
2003 Rs in(000) 2004 Rs in (000) 2005 Rs in (000) 2006 Rs in (000) 2007 Rs in (000)
45
= 399383 * 100 98952499 = .040 %
= 675868 * 100 154834534 = 0.44 %
1,158,747* 100 248,313,793 0.47 %
1,804,998* 100 261,999,667 0.69 %
= 2,429,599 * 100 302,290,346 = 0.8 %
Comments BAL in 2007 had more Trading Commission & Fees ratio as compare to other years shows which shows that BAL in 2006 was more involved in trading business as compare to other years and getting more profit from trading business in 2006.
14.Foreign Exchange Trading Income to Total Assets = (Foreign Exchange

Trading Income / Total Assets)*100
2003 Rs in(000) = 106848 * 100 98952499 = 0.11 % 2004 Rs in (000) = 218820 * 100 154834534 = 0.14 % 2005 Rs in (000) = 290,091* 100 248,313,793 0.12 % 2006 Rs in (000) = 386,997 * 100 261,999,667 0.15 % 2007 Rs in (000) = 474,510 * 100 302,290,346 = 0.157 %
Comments BAL in 2007 has more Foreign Exchange Trading Income ratio as compare to other years which shows that in 2007 BAL was more involve in foreign exchange business as compare to year 2005 and getting more profit from foreign exchange business.
15. Debt to Asset Ratio

2003 Rs in(000) 2004 Rs in (000)
=
2005 Rs in (000)
(Total Liability /Total Assets)*100

2006 Rs in (000) 2007 Rs in (000)
= 94194251 * 100 =149573050 * 100 = 240,849,667* 100 = 263,443,596* 100 = 312,675,308 * 100 98952499 154834534 248,313,793 275,685,541 328,895,152 = 95.19 % = 96.60 % = 97 % = 95.56 % = 95.06 %
Comments
46
The debt/asset ratio shows the proportion of a company's assets which are financed through debt. BAL in 2005 has high ratio as compare to year 2007 which shows BAL in 2005 more relies on debts in contrast with 2006. BAL in 2005 was highly leveraged as compare to 2006, which shows BAL in 20030 was in more danger as compare to 2006.
HORIZONTAL ANALYSIS
Operations and the financial position of the company may be viewed over a number of years by preparing the financial statements in competitive form. The comparative statement may go beyond a simple listing of competitive values by offering analytical information in the form of dollar changes and percentage changes for the data that are presented. The absolute changes, together with the relative changes are thus shown. The development of data measuring changes taking place over a number of periods is known as Horizontal Analysis.
Horizontal Analysis of Balance Sheet For the years ended ___ Rupees in 000 Dec 0403 CURRENT ASSETS: Cash and balances with treasury banks Balances with other banks lendings to financial institutions Investments Other assets FIXED ASSETS: 53. Operating fixed assets Deferred tax assets Advances TOTAL ASSETS CURRENT LIABILITIES: 84. Bills payable Borrowing from financial institutions Deposits and other accounts 1025000 -403924 5301656 9 80 (3.0 8) 69. 12 -7283365 14564674 2 8) 189. 90 2524453 86 (55.4 -4733624 16281106 9 6) 212. 27 208. 1882464 75 (36.0 8102943 19647551 9 2 256.1 7 155. 2929572 8 61.7 242.3 1488878 0 3971528 0 5588203 5 33 3828441 0 80. 70 56. 47 69647891 14936129 2 145.50 150. 94 14 137. 7711364 0 10078320 5 17673304 2 23 276. 9130698 0 12198287 1 31994265 5 7 327.0 6599600 1673851 1128511 9 2557040 133. 97 407. 88 22. 83 107. 77 16374671 9086452 19612760 28512659 2298421 194. 40 1,449. 39 263. 69 98. 65 147. 99 19435961 12105035 5018920 27598614 4079943 230. 74 1,930. 88 67. 48 95. 49 262. 70 21012979 17753821 -3985674 59587968 4459989 249.4 6 2,831.9 3 (53.5 9) 206.1 6 287.1 7
%Age
Dec 05-03
%Age
Dec 06-03
%Age
Dec 07-03
%Age
204. 78 178. 60
247.8 5 323.3 3
47
sub ordinate loans Other liabilities LONG TERM LIABILITIES: Liabilities against assets subject financial lease Deferred tax liability TOTAL LIABILITIES
1249740 538590
192. 34 24. 63
396. 2573615 3032912 10 138. 69 5118742 08 2572366 91
395. 2571118 234. 7345106 9 1
395.7 335.8
to 0 -47176 5537879 9 (14.6 1) 58. 79 0 49. 161056 14665541 0 86 155. 69 1598328 16924934 5 82 179. 68 0 494. 1056799 21848105 0 7 231.9 5 0 327.1
25. Share Capital Reserve funds and other reserves Unappropriated profit Surplus on revaluation of assets assets- net of tax 500000 218398 -102742 -112420 00 27. 63 (10.6 7) (11.1 9) 1000000 1060844 923803 -278769 00 22
50. 3000000 134. 1959159 95. 93 (27.7 4) 664508 13 1860030 14 88 00
150. 4500000 247. 1624459 193. 3888798 66. 1448339 4 0 3 0
225.0 205.5 403.8 144.1
Interpretation of balance sheet:

The analysis shows that the banks cash balance with treasury is expanding very rapidly from 2003 to 2005 which means the deposit of bank is increasing. The banks lending to financial institutions was only positive in 2003-2005 because in that year bank has a huge amount of deposit due to increase in foreign exchange deposits. Other assets also increase with the passage of time bank expand its branch network which resulted in increased other assets. Other assets and advances also increased because the bank has a good portfolio of deposits. Sub ordinate loans increases remarkably in 2004 & 2005 but after its remains constant due to strictness by SBP due to subordinate loans defaults. Other liabilities also increase as well as the other assets due to the expansion in banks network.
Horizontal Analysis of Profit & loss Account For the periods ended ____Rupees in 000 Particulars Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/return/interest income Provisions against non-performing advances Bad debts written off directly Net mark-up/return/ interest income Non mark-up/interest income Fee, commission and brokerage income Dividend income Dec 04-03 1586823 405882 1180941 283117 -103 895726 %Age 39.34 20.01 58.91 325.08 0.25 46.72 Dec 05-03 8213431 5176415 3037016 315207 -94 2721715 %Age 203.64 255.17 151.49 361.93 22.49 141.96 Dec 06-03 17158090 13204309 3953781 610599 -1119 3342063 %Age 425.40 650.91 197.22 701.10 267.70 174.31 Dec 07-03 21750491 14592386 7158105 2283776 -5426 4868903 %Age 539.29 719.34 357.05 2,622.29 1,298.09 253.95
276487 -59476
69.23 (53.10
759366 -59997
190.14 (53.56)
1405617 -74618
351.95 (66.62)
2030218 -47289
734.29 (42.22)
48
) Income from dealing in foreign currencies Other income Total non mark-up/interest income Non mark-up/interest expense Administrative expenses Provision against off balance sheet items Provisions against receivable from NIT Other charges Total non mark-up/interest expenses 111974 -2200679 -1871702 ) (55.18 ) -1123218 (33.12) -167112 (4.93) 2646715 78.03 104.80 (79.35 183247 -2268534 171.51 (81.79) 280153 -1931402 262.21 (69.64) 367666 -1742129 344.12 (62.81)
878145 0
48.80
2513533 8125
139.68 406.25
4075255 0
226.47
6473097 4959
359.72 247.95
(9.33 -175 875970 ) 48.57 (52.83 Profit before taxation Taxation Current Deferred -1851946 ) (57.05 -778564 -422 ) 8.17 (39.10 Profit after taxation -1031245 ) -421140 (20.26) -360543 (13.67) 1006995 38.18 -772088 262360 (56.57) (5,080.56) -888497 422738 (65.10) (8,186.25) 362087 -316323 26.53 6,125.54 -942390 (26.88) -939735 (26.81) 1029872 29.38 19229 2540887 1,025.55 140.90 41431 4114686 2,209.65 228.17 7690 6485746 410.13 359.65
Interpretation of Profit & Loss account: Net markup income increased from 46.72 in 2004 to 141.96 in 2005 , 174.31 in 2006 and 253.95 in 2007. Thats means the profitability of bank is increasing with increases the trust of its stake holders. Fee commission and brokerage income increases due to increase in operational activities of bank. But the dividend income start decreasing because a huge portion of income is plunge back into business for banks expansion. Because the bank expand its network very rapidly its administration and other expense also incrases. None performing loans have been decreased from year 2006 to 2007 considerably. So, thats a good sign for the company. Dividend income is increasing in 2006 by 83.88% as compared to the other two years so it indicates a good sign. Profit after tax is lesser 2006 as compared to the other two years so it must be under firm consideration.
VERTICAL ANALYSIS
Comparative data may include analysis in terms of %age or ratios based upon the related data of each individual period. The development of data expressing relationship within a single period is known as Horizontal Analysis.
Vertical Analysis of Balance Sheet For the years ended ___ Rupees in 000
Particulars ASSETS:
2007
2006
2005
49
Cash and balances with treasury banks 29,436,378 8.95 Balances with other banks 18,380,738 5.59 lendings to financial institutions 3,452,059 1.05 Investments 88,491,564 26.91 Advances 171,198,992 52.05 Operating fixed assets 11,922,324 3.62 Other assets 6,013,097 1.83 TOTAL ASSETS 328,895,152 100 LIABILITIES: Bills payable 4,138,243 1.32 Borrowing from financial institutions 21,230,697 6.79 Deposits and other accounts 273,173,841 87.37 Other liabilities 9,531,860 3.05 Subordinat loans 3,220,858 1.03 Deferred tax liability 1,379,809 0.44 LIABILITIES 312,675,308 100 EQUITY Share capital 6500000 Reserve funds and other reserves 2414833 Un-appropriated profit 4851840 Surplus on revaluation of assets 2453171 Total shareholders' equity 16,219,844
27,859,360 10.11 12,731,952 4.62 12,456,653 4.52 56,502,210 20.50 149,999,325 54.41 10,502,990 3.81 5,633,051 2.04 275,685,541 100 3,091,135
24,798,070 9.99 9,713,369 3.91 27,050,493 10.89 57,416,255 23.12 118,864,010 47.87 6,620,067 2.67 3,851,529 1.55 248,313,793 100 1.55
1.17 3,733,124
8,394,130 3.19 239,509,391 90.91 7,305,496 2.77 3,222,106 1.22 1,921,338 0.73 263,443,596 100
5,844,389 2.43 222,345,067 92.32 5,219,666 2.17 3,223,355 1.34 484,066 0.20 240,849,667 100
40.07 14.89 29.91 15.12 100
5,000,000 2,749,533 2,823,072 1,669,340 12,241,945
40.84 22.46 23.06 13.64 100
3,000,000 1,851,218 1,886,845 726,063 7,464,126
40.19 24.80 25.28 9.73 100
Interpretation of balance sheet:

Balances with treasury banks have increased in percentage of total assets as compared to 2005, 2006 which Is a good sign of banks liquidity position. Lending to financial institution starts deceasing because the bank the return on lending to financial institution is low as compare to market. The bank used more of its deposit for investment in stock exchange, Government securities ete because the return on these investment is high as compare to lending to financial institution. Other assets are also showing increasing trend, advances are showing good position while operating fixed assets have decreased in year 2006. Deposit of the bank increased which shows a sound liquidity position. The profitability of the bank did not showed any remarkable sign there are two reasons behind that in 2004, 2005 the deposit position is very strong due to increase in foreign exchange deposits and the 2nd one is due to rapid expansion in branchs network. The borrowings are decreasing which is another good indicator. Deposits liability has increased considerably which shows the increased market area covered by BAL. Equity is showing a good and stable condition.
Vertical Analysis of Profit & loss Account

50
For the periods ended ____Rupees in 000
2,007
2,006
2,005
Mark-up/return/interest earned 25,783,871 86.57 Fee, commission and brokerage income 2,429,599 8.16 Dividend income 64,722 0.22 Income from dealing in foreign currencies 474,510 1.59 Other income 1,031,372 3.46 Total non mark-up/interest income 29,784,074 100 Non mark-up/interest expense Administrative expenses 8,272,587 77.56 Provision against off balance sheet items 6959 0.07 Bad debts written off directly 5844 0.05 Provisions against receivable from NIT370867 22.23 2 Other charges 9565 0.09 Total non mark-up/interest expenses 10,665,822 100
21,191,470 87.34 12,246,811 85.93 1,804,998 7.44 1,158,747 8.13 37,393 0.15 52,014 0.36 386,997 1.60 290,091 2.04 842,099 3.47 504,967 3.54 24,262,957 100 14,252,630 100 5,874,745 88.78 4,313,023 90.86 10,125 1,537 0.02 512 697,690 10.54 402,298 43,306 0.65 21,104 6,617,278 100 4,747,062 0.21 0.01 8.47 0.44 100
Interpretation of Profit & Loss account: Mark up income of Bank alfalah as a percentage of total income has decreased in 2006 as compared to year 2005s income. Dividend income is also showing downward trend from year 2004 to 2006. Income from other sources has increased which is a good sign. Administrative expenses have reduced giving a good impression. Bad debts are also reducing along with other charges showing effective working of bank. Total income of bank in 2007 as compared to years 2005 and 06 is increasing which shows that banking operations are expanding.
10.2 Organizational analysis with reference to the industry:

Bank Alfalah Limited is consistently competing on sound grounds with its competitors. With the revolution of Islamic banks in Pakistan. Conventional banks are tending to follow Islamic
51
Sharia Principles and for this they are opening branches of Islamic Banks to meet the Industrys current trend. State bank of Pakistan has also contributed in the promotion of Islamic banking by giving licenses to only Islamic banks. So, presently Bank Alfalah is facing a stiff competition not only in conventional as well as in Islamic fields from a list of competitors like as MEEZAN, ALBARKAH,STANDARD CHARTERED, ASKARI COMMERCIAL, UNION BANK, MUSLIMC COMMERCIAL, SAUDI PAK, UBL AND BANK AL-ALHABIB etc. At this time, the general trend in the industry is to expand branch network and to create associations with different other newly emerging companies to support and promote to get a larger share of the market. MEEZAN BANK: MEEZAN BANK is the most enthusiastic competitor of Alfalah Islamic banking division. It is a premier Bank in establishing Islamic banking operations in the industry. Due to an exponential growth in Islamic banking in Pakistan, It leads the market with innovative research and development to promote range of product and services in keeping with the dictates of the Sharia. The bank is working with 23 branches all over Pakistan. This Bank is going to be a threat through its team of experienced banking professionals with a share commitment to the values and development of Islamic banking, energetic strategic branch expansion, new product development, leading edge technological investment and training. Bank ALBARKAH: It is another major competitor of Bank Alfalah Islamic Division. This bank is one of those who have taken the initiative to introduce Islamic banking in Pakistan. This bank is not registered in Pakistan rather its origin is in Bahrain. Although this bank is considered to be the competitor but its workings are not enthusiastically undertaken. This bank has not taken any step to expand allover the country but it has restricted its operations in few areas of the country. Standard Chartered Bank: Standard chartered bank, a largest multinational bank in Pakistan, who has recently initiated Islamic banking operations in comparison with the emerging industry within the geo-limits of Pakistan. This bank is having rigorous recruitment and training standards ensuring capable staff which can cater the most complex financial solutions. This bank is one of the leading competitors of Bank Alfalah Islamic. In competition with the Alfalah Islamic banking division, the management is focusing its efforts to ensure that Islamic products are innovative, yet they strictly comply with Sharia Principles. Recently standard chartered bank acquire Union Bank.
52
Comparison with Other Units of the Industry:

Although, this bank is established within a very short time span but its expansion rate is tremendous. Now division are opened at a faster pace in other different cities of the country and the portfolio of existing branches is having a larger amount than the estimation made by the Head office. The figures which are given under depict the range of deposits and advances for Bank Alfalah and its two foremost competitors as Meezan Bank and Standard Chartered Bank. For the Year 2008 Name of Bank Bank Alfalah Meezan Bank Standard chartered Rs In Million Deposits 1,01,317 54,582 59,454 Financing 88,931 45,675 51,075
GRAPHICAL REPRESENTATION
120,000 100,000 80,000 60,000 40,000 20,000 0 Bank Alafalah Meezan Bank Standard chartared
Comparisons of the Advances for the Year 2007
53
90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 standard chartared Bank Alfalah Meezan Bank
Elucidation:
The above graphs show the comparison between the figures of deposits and advances and advances upon which the whole activity of bank is based. It is clear from the graph that Bank Alfalah is leading in the industry. Meezan bank and standard chartered bank are selected for comparison as Meezan is the strongest competitor of Alfalah in Islamic banking while as the union bank is also one of the biggest competitors in conventional banking operations. Both the figures for Bank Alfalah in case of deposits and advances are high. Figures of Meezan bank are relatively lesser as these comprises of the amount of Islamic banking only.
MEEZAN BANK 2005 2006 2007 1.46 1.88 2.55 23.25 0 16 15.92 52.69 30.42 67.71 419 30676 19.5 0 10 10.51 45.86 22.98 73.4 604 46439 38.55 0 20 15.12 46.39 21.43 71.21 963 67179 STANDARD CHARTARED 2005 2006 2007 2.56 1.42 1.9 24 2 5 9.38 12.72 43.24 1.64 96 24159 17 1 10 12.25 7.53 25.22 1.32 62 25576 13.6 1.5 5 7.16 9.56 32.52 1.45 82 25607 BANK ALFALAH 2005 2006 2007 3.92 2.94 4.82 24.88 12 0 22.46 41.17 20.93 3.34 1702 248314 24.48 0 33.33 21.15 28.12 12.11 4.13 1763 275686 24.95 0 30 21.18 35.54 17.59 3.84 3130 328895
Earning per share Market value pr share Cash dividend Bonus dividend Price earning ratio Return on equity Profit before tax Income/Expense ratio Net Profit Total Assets
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10.3 FUTURE PROSPECTS OF THE ORGANIZATION

BANK ALFALAH LIMITED is an organization that provides opportunities for its staff to have a challenging and rewarding long-term career. To this end the Human Resource Group (HRG) encourages and motivates its employees to excel in the responsibility that they have in the organization. We believe that creativity and innovation comes from talent, knowledge and experience and it is our endeavor to provide and maintain an environment which not only nourishes these strengths but also provides opportunities for the staff to have a career which has multidimensional growth opportunities. In doing so, HRG has been restructuring and redesigning the overall structure of the organization, which includes rationalization, cutting down the decision layers, improvement in staff training and hiring professionals and MBAs at entry-level management. The overall direction of HRG has been towards nurturing the strengths of the human capital to its maximum with a defining principal to help create a progressive environment and sustain a thorough commitment of our staff towards focused customer service. HRG therefore recognizes the need to proactively invest in staff training anddevelop courses on a regular basis. Under the umbrella of our Management and Organization Development Division (MODD) our Management Development Institute (MDI) with its three fully equipped chapters at Karachi, Lahore & Islamabad regularly conducts and outsource technical and personal development courses for our all level of staff enabling them to meet the challenges of the everchanging business requirements and customer needs. During 2005, 629 courses, workshops, skill development clinics and seminars in the disciplines of Service & Attitude, Market Research & Selling, Management & Communication, Credit & Finance, I.T. & e-Banking, Treasury & Trade Finance, Global/ Domestic Banking Operations and on other diverse subjects were conducted by In / Ex-House professionally skilled, qualified and certified faculty and industry experts for 10233 people of senior / middle line management & staff carving 1334 days training days. There is no budget limit for Training and Education at Bank Alfalah. HR Group aims to maintain and further improve the service-oriented culture and to make employment not only satisfying but also enjoyable.
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Future planning of this organization is that information technology used mostly and recruited the employees intelligent and skill person with computer knowledge. Every organization thinks the best mission statement for future.
11. SWOT ANALYSIS OF BANK ALFAH (IBD) STRENGTHS:

Bank Alfalah Islamic Banking division is financially very strong bank. Following are some of the strengths of the Bank. Bank Alfalah IBD is able to give really good customer care, because they know that customers are the source of funds for them and also there is a great competition among the Islamic banks in Pakistan. In coming future Alfalah bank is applying the TQM in each of its branch, which is the great achievement. No other bank has this department. Attractive deposits and financing schemes offer by Alfalah bank with suit able interest rate. Bank Alfalah Islamic is financially strong and has a huge deposit reserve. Its cost of funds is less as compared to many of its competitors. Personnel of Alfalah are well trained and highly skilled. Majority of employees has many years of experience in banking sector and are an asset for the bank. WEAKNESSES: Bank Alfalah IBD also has some weaknesses. But their number is much less than the strengths of the bank. Following factors need attention of the management. Lack of branch network as compare to others Islamic banks in Pakistan. More job rotation is there in bank Alfalah Islamic that may cause to loose the confidence of their employees. Banks marketing department is not very strong. Advertising done by the bank is less than the requirement. It is a step behind in using new technology as compared to other banks. It is a step behind in using new technology as compared to other banks.
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Most of the employees are overloaded with work. There is uneven distribution of work and promotions are not very timely. Bank alfalfa Islamic is slow in the introduction of new services as compare to other Islamic banks in Pakistan.
OPPORTUNITIES:
Bank can extend its network in other cities of Pakistan. It can enhance its profitability by making use of new technology. It has the opportunity to introduce new products and services. It can adopt E-banking and provide credit card facility to its customers. Good financial position creating a good reputation for future advances and huge deposits Changes in social patterns, population, and lifestyle changes and in economical. Mean people now thinking to deposit their money in such a sound Islamic bank.
THREATS:
In certain era of Pakistan people are more emphasizes on Islamic mode of banking. Bank is facing intense competition from other Islamic Banks working in Pakistan. Although it is ahead of many banks but banks like Meezan, Albarkah are a constant threat to Bank Alfalah Islamic. Bank Alfalah IBD has been performing very well in the presence of unstable political and economic situation but this uncertainty is a continuous threat for the bank. SWOT analysis shows that Bank Alfalahs strengths are more than its weakness and it has a chance of availing many opportunities. STRENGHTS SWOT Phenomenal growth in branches External Credit Rating. Enhance Customer services and care Charging moderate rate of return. No specific market niche Personalized banking services Systematic working operations Offering a generous product portfolio
WEAKNESS No ATM for Islamic Banking branches. (Only Conventional branches have ATM machines). Lack of awareness through publication of Islamic material. Lack of research and development.
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SO STRATEGIES OPPORTUNITIES Market Development (S1, 01, 04) Government Patronage Product development (s8,05,03) Acceptance by layman Cost Leadership Strategy (S4,)7,02) Refinement procedures Energized research and development THREATS documentation STRATEGIES Cost Leadership strategy (S4,07,02) of
WO Strategies Strengthen research and development through industrial support (w3, T3) Control Inflation (w3,02)
WT STRATEGIES Concentric diversification (W3,T3) Proper Advertisement to enhance awareness(W4,T4,T6)
Expensive and excessive Horizonatl Integration (S2, T7)
Explanation:
In the above developed matrix the SO strategies use a firms internal strength to take advantage of external opportunities. These strategies are the best one when applied in the feasible situation. On the other hand, WO strategies aim at improving internal weaknesses by taking advantage of external opportunities. The ST strategies use an organizations strengths to reduce the impact of the external strengths. And lastly the WT strategies are defensive tactics directed at reducing internal weakness and avoiding external threats. The purpose of developing this matrix is just to determine different strategies but not to select or determine which strategies are best. It means that not of all the strategies which are developed through this matrix will be selected for implementation.
PROBLEMS:
During the course of my internship the things which need to change are discussed below:
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The branch has no independent identity. It has no license to work as an Islamic bank by the SBP. Due to this fact, the financial statements are prepared after consolidating the accounts of conventional branches and the Islamic banking division which may be a vital cause of reduced trust of stakeholders upon banking operations of these divisions. The employees are low paid which may cause dissatisfaction with regard to the responsibilities assigned and the salary received for those jobs. Pending work may cause difficulties. More efficiency in manual work is needed to cater the faster pace of work. Overall timings of entrance into the office for the employees are very strict but there is no time for them to leave the office and no over time is paid to them which may be significant reason of dissatisfaction for their jobs. Modules (working Soft wares) are not user friendly and having certain flaws which should be resolved. For instance, the way module calculates the installments for the period are not matched with calculates the installments for the period are not matched with manually calculated installments which may cause problems in understanding the calculated figure. Culture: The bank maintains a very strict policy about punctuality. The management continuously strives to minimize absenteeism in employees. System Problems: The internal computer system is quite slow and often gets hanged up. Most of the time employees of IT department face this problem. Bank Alfalah Islamic has no ATM machines. So most of the customer faces this major problem. The employee turnover is very high in bank alfalah Islamic, which they have to cut down as they are losing a number of good trained employees due to its poor policy.
Departmental Problems in Bank Alfalah Islamic:

The staff working in management information system department is very short. The workload of all the branch of bank Alfalah conventional is also deal by this department. All the other departments are dependent on information technology department. Because this department is responsible for starting the bank operations and also close at the end of the day. Personnel in Accounts department are overloaded. In branch operations, for handling all types of financial reporting, preparation of financial statements only one employee is working there.
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The other employee is also overloaded as he has to verify all the activity with regard to cash and clearing. Employees do not feel comfortable to talk to their Chief Manager. The leadership style should be democratic, as the leader has an excessive authority over and above al the employees of the branch but for the proper maintenance of crucial operations and healthy environment friendliness and delegation of authority are two key elements which may bring the employees with their maximum efficiency. The staff working in operations department face problem of Business development department face problem shortage of advances and deposits. Because the bank is depending on the business development officer. They are not contributing according to the expectations of the bank. Marketing department of bank Alfalah Islamic is not very strong. Bank Alfalah is investing more on conventional banking as compare to the Alfalah Islamic. So the branch marketing budget is very short. This is the main problem that marketing department of bank Alfalah Islamic is facing.
12. CONCLUSION
Conclusively, it is better to say that internship at BAL-IBD was a good start of my professional experience. The friendly attitude of personnel has convinced me to work with such a dynamic environment, where peace and creativity are the key elements in driving the organization towards its success. This organization has an Islamic oriented vision of doing business so they purity which lies in their ambiance is enough to impress any prospective business professional. The company has been growing both in size and profit for past few years and has a good credibility and repute in the market but until or unless they come up with sound information as well operational system they would keep on losing the business. The year 2005 is expected to offer increased competition in the secured assets business as more Islamic banks enter in the market. With their focused strategy and product development initiatives planned for the year, Bank Alfalah IBD is strongly positioned to meet these challenges. The bank has very well repute in the market overall bank is going well and doing a good business but there are few problems face by bank Alfalah Islamic. On the basis of these problems we tried to give few recommendations that might help company to improve. Bank Alfalah Islamic is also
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contributing financial help to earth quick victims. Bank cut down its stationary expense this year and invest this fund in earth quick relieve fund. So this is the main reason that bank alfalah Islamic is known as The carrying bank. So finally this internship has helped me a lot in gaining practical knowledge of job that will help to build my professional career in business field.
13. Recommendations
Following are the recommendations of Bank Alfalh Islamic banking division. Distribution of Work: Management should distribute work equally among different employees. Some of the employees are overburdened while some sections are overstaffed. Build their Own Website: Bank Alfalah Islamic Banking division has no separate website. Some of the information of Bank Alfalah Islamic is available on Alfalah Conventional website. So they need to build their own website. Advertising / Marketing: Bank needs to use more marketing channels to make the public aware of its products and services. In the presence of intense competition Alafalah has to realize the importance of marketing. Introduction of New Products: Alfalah Islamic needs to introduce new products like credit cards for its customers. It should also avail the facilities of E-Banking. Women In Workforce: The number of women hired by the bank is very less. Bank Alfalah Islamic should employ more women. Moreover it should also recruit women for working in Credits and other departments. Team Formation:
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Bank Alfalah should make makes work teams in Credits like other banks such as Meezan, Albarkah, Standard Chartered and Askari Commercial bank. It will have a positive impact on the morale of employees. Their performance will improve as a result of distribution of work and responsibility. And it will also enable the bank to hire talented workforce in the Credits as well other departments of its Islamic bank branches. Culture: The bank maintains a very strict policy about punctuality. The management continuously strives to minimize absenteeism in employees. Need to Adopt More Islamic Culture: Bank Alfalah Islamic also try to adopt more Islamic culture in all Islamic banks currently operating in Pakistan. They try to create awareness among the people who do not have enough knowledge of Islamic banking. Decrease Employee Turnover Rate In Alfalah Islamic: They try to cut down their employee turnover rate by providing better incentives and bonuses. This policy will be beneficial for the bank in near future. Because they are not in a position to loose its productive workforce.
14. References
Islamic Banking (Theory practice & challenges) written By :(Fuad Al-Omar and Muhammad Abdul Haq. Meezan bank Guidge to Islamic Banking: written By: Dr.Muhammad Imran Ashraf Usmani. Islamic Financial System: Including Strategy for Elmination of Riba. (International Islamic University, Islamabad). www.bankalfalah.com www.meezanbank.com www.yahoo.com
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www.answers.com www.sbp.com.pk www.encharta.com Annual Report of Bank Alfalah Limited Manual of Corporate Murbaha Manual of Corporate Ijarah Alfalah Musharaka Home
Annexure # 1 Organizational Hierarchy
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Branch Manager
Annexure # 2 Organizational Hierarchy
Operation Manager
Oraganogram Bank Alfalah - Islamic Banking Gulshan-e-Ravi Lahore (As From July 2007) Manager Consumer Manager Manager Credits Banking Information Tech Manager Business Development Operation Officer
Cashiers or Tellers
Customer Relation Officers
Account & Finance Officer
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Business Development Officer
Car Ijarah
Home Musharka
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Bank Alfalah Internship Report: Insights Into Islamic Banking Operations & Departmental Functions

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INTERNSHIP REPORT BANK ALFALAH LIMITED Specialization: Banking and Finance

Submitted To: Submitted By:

Chairman, Dept. of Business Administration

DEPARTMENT OF BUSINESS ADMINISTRATION ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

Allama Iqbal Open University

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6. Objective of Studying the Organization:

7. Overview of the Organization:

7.1 Brief History of Bank Alfalah

7.2 BRIEF HISTORY OF BANK ALFALAH ISLAMIC

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7.3 Business Volume(Rs. In (000):

7.4 Number of Employees:

Process of Products and Services of Bank Alfalah IBD:

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Products Offered By Bank Alfalah Islamic Banking Division:

Corporate Murabaha Financing:

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Murabaha Financing is currently offered for:

CORPORATE IJARAH FINANCING

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Mr. Mahmood Ashraf Mr. Flak Sher

General Manager (Credit Monitoring) Chief Compliance Officer

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Annexure # 1 (Organizational Hierarchy)

Organizational Structure of Branch.

1). Account Opening Department: Account Opening Procedure:

Executors and Administrators account

2). CREDIT ADMNINISTRATION DEPARTMENT:

CREDIT ADMINISTRATION PROCESS:

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3). HUMAN RESOURCE DEPARTMENT

4). Credit Department:

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Corporate Ijarah Department:

Corporate Murabaha Department:

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CAR IJARAH (Consumers):

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Finance against Imported Merchandise (FIM):

In case of finance against imported

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Islamic Banks Assets or Investable funds

Equity based instruments

Trade based instruments

Rental based Instruments

Murabaha Export Import

Bills for collection:

OBC (Outward Bills for Collection):

IBC (Inward Bills for Collection):

OUTWARD CLEARING AT THE BRANCH

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INWARD CLEARING OF THE BRANCH

NIFT (National Institutional facilitation Technologies):

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9. Structure and Function of Finance Department

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