Internship Report on

Bank AlFalah Limited

Submitted by: Mehraj Muhammad

Registration # SP07-MBA-011

Supervised by: Said Shah

Department of Management Sciences

COMSATS Institute of Information Technology
Abbottabad

January 2009

i
 Internship Report on
Bank Al-Falah Limited

Submitted by: Mehraj Muhammad

Registration # SP07-MBA-011

Supervised by: Said Shah

This internship report is submitted in partial fulfillment of the

requirements for degree of Master of Business Administration awarded by
the
COMSATS Institute of Information Technology, Abbottabad.

Department of Management Sciences

COMSATS Institute of Information Technology
Abbottabad

January 2009

ii
 Department of Management Sciences
COMSATS Institute of Information Technology
Abbottabad

Approval Sheet

Approval Committee

1. External Examiner

Mr. _____________________________________________
Signature_______________

2. Supervisor

Mr. ____________________________________________
Signature_______________

3. Head of Department

Mr. ___________________________________________
Signature ________________

iii
Certificate here

DEDICATION
iv
All the efforts in compiling this report are Dedicated

to

My Lovely Parents, whose unconditional love & support

helped me in making this report.

&

My Honourable Faculty Members of CIIT, for their

cooperation and assistance

Who helped me in this Achievement.

&

My siblings for their gentle

encouragement & valuable support.

v
 Abstract

The development of skills to perform well in professional life has become a dire need of every

MBA Graduate. The very purpose, an internship is to acquaint the MBA graduate with empirical

business practices, particularly in banks which is nowadays the main area of interest of most of

the graduates whether an information technologist or a business graduate.

As a compulsory requirement of Professional Degree in MBA, I opted to join

Bank AlFalah, to fulfill my degree requirement. My reason for choosing BAL was to enhance my

skills and techniques, so that to provide myself the opportunity to cope with real life situation and

I found BAL one of the best banks in Pakistan.

To better understand the report, my recommendation would be to look into different parts mainly

covering the overview of BAL, overall management of Finance and Accounts.

The BAL organizational model has been thoroughly studied and analyzed.

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 Table of Contents
Acknowledgements XIII
Abbreviations XIV
Executive Summary XV

Chapter 1:
Introduction to the Report 1
1.1 Background of Study 1
1.2 Purpose of the study 1
1.3 Merits of the Report 2
1.4 Scope of the study 2
1.5 Methodology of the report 2
1.5.1 Primary Sources 2
1.5.2 Secondary Sources 2
1.6 Limitations of the Study
3
1.7 Scheme of the report 3

Chapter 2:
Introduction to Bank Alfalah LTD 4
2.1 Evolution of Banking 4
2.1.1 Early Growth 4
2.2 Brief History of banking 4
2.3 Role of Banking in the Economy 5
2.3.1 The International Role 5
2.3.2 The Payments Role 5
2.3.3 Guarantor Role 5
2.3.4 Risk Management Role 6
2.3.5 Savings/Investment Advisor Role 6
2.3.6 Policy Role 6
2.4 Banking in Pakistan 6

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2.5 History of Bank Alfalah Limited 6
2.6 Bank Alfalah Today 7
2.7 Vision of BAL 7
2.8 Mission Statement 8
2.9 Core objectives of BAL
10
2.10 BAL Credit Rating 10
2.11 Branch Network of BAL 10
2.12 Organizational Structure of BAL 12
2.13 Departmentation
13
2.13.1 Accounts Department 13
 Procedure of Opening an Account 14
 Types of Accounts 15
a) PLS Saving (Rupee) Accounts 15
b) Current Rupee Account 15
c) Term Deposit 16
d) Royal Profit Savings (Rupee) Accounts 16
e) Royal Patriot (Rupee Term Deposit) 16
f) Foreign Currency Accounts 17
g) Notice Deposit 17
h) Call Deposit 17
i) Minor’s Account 17
j) Statement of Account 18
k) Hold Mail Facility 18
l) Stop Payment Instruction 18
m) Closure of Account 18
2.13.2 Remittances Department 19
 Local Remittances 19
a) DD (Demand Draft) 19
b) TT (Telegraphic Transfer) 19
c) MT (Mail Transfer) 20

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 d) Pay Order 20
e) Travelers Cheques 21
 Foreign Remittances 21
 Instruments of Inward Remittances 21
 Instruments of Outward Remittances 22
 Corresponding Banks for Remittance 22
 Money Gram 22
2.13.3 Cash Department 23
 The Cash Counter 23
 Receipt and Payment of Cash 23
 Counting Cash 24
2.13.4 Clearing Department 24
 Types of Clearing 24
a) Inward Clearing 24
b) Outward Clearing 24
 Process of Clearing 25
2.13.5 Credit Department 25
 Types of Advances 26
a) Running Finance 26
b) Term Finance 26
c) Loans 27
2.13.6 Credit Cards Department 28
 Categories of Alfalah Visa Credit Cards 29
 Supplementary Cards 30
2.13.7 Auto Finance & Leasing Department 30
 Car Finance 30
 Corporate & Individual Car Leasing 30
2.13.8 Home Finance Department 31
 Purposes of Home Finance Department 31
2.13.9 Foreign Exchange Department 31
a) International Trade 31

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 b) Authorized Rates for Foreign Exchange Transactions 32
c) Collection Services 32
d) Payment against Documents (PAD) 32
e) Documentary Credits (Letter of Credit) 32
 Types of Credit 33
i. Revocable Credit 33
ii. Irrevocable Credit 34
iii. Confirmed Irrevocable Credit 34
iv. Sight Letter of Credit 34
 Parties to a Letter of Credit 34
 Credit Application 35
 Chick List for Applicant 36
 Issuing a Credit 38
 Settlement 39
i. By Payment/Sight/DP 39
ii. By Acceptance/Usance 39
2.14 Management of BAL 39

Chapter 3:
Bank Alfalah Services and Products 40
3.1 BAL Products 40
3.1.1 Deposit Products 40
a) PLS Saving (Rupee) Accounts 40
b) Current Rupee Account 40
c) Term Deposit 40
d) Royal Profit Savings (Rupee) Accounts 41
e) Royal Patriot (Rupee Term Deposit) 41
f) Foreign Currency Accounts 41
g) Safe Deposit Lockers 42
3.1.2 Consumer Finance Products 42
a) Auto Leasing and Financing 43
 Car Finance 43

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  Corporate & Individual Car Leasing
43
b) Credit Cards 43
c) Alfalah Hilal Card 43
d) Consumer Durables 44
e) Home Finance 44
f) Alfalah Karobar Finance 45
g) Alfalah Zarie Sahulat 45
h) Structured Finance 48
i) Travelers Cheques 49
j) Money Gram 49
k) Online Banking 49

Chapter 4:
Analysis of Bank Alfalah 50
4.1 Common Size Analysis 50
4.1.1 Vertical Analysis 50
4.1.2 Horizontal Analysis 52
4.2 Financial Analysis 53
4.2.1 Financial Highlights (Graphical Representation) 55
a) Profit After Tax (in Rupees) 55
b) Earning Per Share (in Rupees) 55
c) Investment (in Rupees) 56
d) Net Asset Value Per Share (in Rupees) 56
e) Earning Assets to Total Assets 57
f) Credit Advances to Deposits 57
g) Return on Assets 58
h) Net Interest Margin 58
i) Operating Profit Margin 59
j) Cost to Income Ratio 59
k) Net Non-Performing Assets
60

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 4.2.2 Financial Highlights /Financial Ratio Analysis (for Last Six Years) 61

4.3 SWOT Analysis 62

4.3.1 Strengths 62
4.3.2 Weaknesses 62
4.3.3 Opportunities 63
4.3.4 Threats
63
4.4 Market Structure of BAL 64
4.4.1 Types of Market Structure 64
4.4.2 Market Structure Bank Alfalah Limited 64
Chapter 5:
Findings Recommendation & Recommendation 66
5.1 Findings 66
5.2 Recommendation 67
5.3 Conclusion 68

References 69
Annexure 70

List of figures

2.1 Branch Network of Bank Alfalah Limited 11

2.2 Organizational Structure of Bank Alfalah Limited 12
2.3 Accounts Department 13
2.4 Procedure of Opening an Account 14
2.5 Pay Order Processing 20
2.6 Hierarchy of Credit Department 25
2.7 L/C Flow Chart 33

List of Tables

2.1 Royal Profit Savings Account Proposed Rates 16

2.2 Royal Profit Rates 17

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3.1 Royal Profit Savings Account Proposed Rates 41
3.2 Royal Patriot Competitive Rates 41
3.3 Locker Rates 42
3.4 Alfalah Zarie Sahulat Products 45
3.5 Vertical Analysis Based on Total Assets of Balance Sheets 50
3.6 Vertical Analysis Based on Total Revenue of Income Statement 51
3.7 Summarized Balance Sheets Trend Analysis (Base Year 2002) 52
3.8 Summarized Income Statements Trend Analysis (Base Year 2002) 53
4.1 Financial Highlights 55

List of Graphs

4.1 Profit after Tax (in Rupees) 55

4.2 Earnings per Share (in Rupees) 55
4.3 Investment (Rupees) 56
4.4 Net Asset Value per Share (in Rupees) 56
4.5 Earning Assets to Total Assets 57
4.6 Advances to deposits 57
4.7 Return to Assets 58
4.8 Net Interest Margin 58
4.9 Operating Profit Margin 59
4.10 Cost to Income Ratio 59
4.11 Net Non-Performing Assets 60

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 Acknowledgements

All praise and gratitude due to ALLAH ALMIGHTY who created man in His own
image and enjoyed upon him to travel on the earth and enter into a profound and
analytical study of Universe for spiritual appreciation of ALLAH’S unity and His
attribute as well as for harnessing the material manifestation of the world to the
mankind’s profitable utilization. In the first place, therefore we express our utmost
thanks to ALLAH.

At the next stage I offer our gratitude to our Apostle and prospector Prophet
Muhammad (P.B.U.H) for his golden saying “Gain knowledge be in China”.

Among my contemporary benefactors I express my sincere gratitude to Mr. Imdad

Khan, (manager of Supply branch Abbottabad) who provided me with the
opportunity to work in Bank Alfalah as an internee who has persistently rendered his
erudite guidance and professional assistance in compiling this report.

In the end I would like to thank all the staff members of BAL, who cooperated with
me in every department. They have provided with me in every department. They
have provided me with valuable information which helped me a lot in completion of
this report. It was relatively a new phenomenon for me, but I am quite sure that I
have learned a lot from this internship.

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Thank you all

LIST OF ABBREVIATIONS

A/C Account
ATM Automated Teller Machine
AUD Australian Dollar
AWB Air Way Bill
B/L Bill of Lading
BAL Bank Alfalah Limited
BAL Bank Alfalah Ltd
BCCI Bank of Credit & Commerce International
BTF Balance Transfer Facility
CD Current Deposit
CEO Chief Executive officer
CIB Credit Information Bureau
D Deposits
DD Demand Draft
DD Demand Draft
DEM Deutshe Mark
DFI Development Financial Institutions

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EAT Earning after taxation
FCY Foreign Currency
FTS Funds Transfer System
FY Financial Year
GBP Great Britain Pound
HBL Habib Bank Limited
HCEB Habib Credit & Exchange Bank
HR Dep Human Resource Department
JPY Japanese Yen
L/C Letter of Credit
LC Letter of Credit
LCY Local Currency
M&A Merger and Acquisitions
MT Mail Transfer
NBP National Bank of Pakistan
NCB Nationalized Commercialized Banks
NIB National Investment Bank
NIC National Identity Card
NTN National Tax Number
PACRA Pakistan Credit Rating Agency
PAD Payment against Documents
PIB Pakistan Islamic Bank
PIN Personal Identification Number
PKR Pak Rupee
PLS A/C Profit & Loss saving Account
RP Royal Profit
SBP State Bank of Pakistan
SBP State Bank of Pakistan
SFU Structured Finance Unit
SS Card Specimen Signatures Card
TC Travelers Cheque
TC Travelers Cheques
TFC Term Finance Certificate

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TT Telegraphic Transfer
UAE United Arab Emirates
UBL United Bank Limited
US $ United States Dollar

Executive Summary

Now a day’s strong and efficient capital and financial institutions are the basic
requirements of each county. So no country can be considered strong without having
strong enough capital and financial institutions and markets. One of the components of
these financial institutions are the banks. No one can deny the role the banks are playing
in the economic development of a country.
In Pakistan banking sector, BAL is one of the leading commercial banks. It was
established by the Abu Dhabi Group in 1997. From the very beginning, BAL was
showing very good performance. The Bank has energetic and fresh management that
started new schemes and injected new concepts in order to improve its services to the
clients. The bank is in very good financial position and making his image nationally and
internationally as well. In a short span of time the BAL made great efforts for its
customers.
My six weeks internship in BAL, Abbottabad Branch gave me a very good deal of the
practical experience about the bank, its personnel and various services it offers to the

xvii
clients. Although six weeks duration for studying such a large organization by no means
is enough but I have tried my ever best to cover all the areas of the bank in my report.

I have divided my report five chapters.

Chapter # 1 is about the “Introduction to the Report”, In this chapter it is discussed that
how the internship is important and what a student can learn from it.
Chapter # 2 of report is about the “Introduction to Bank Alfalah LTD”. This chapter
contains detailed information History and Background of Bank Alfalah LTD, How it is
established and by whom it is established. This chapter includes the Vision and mission
statements and the different objectives of the Bank. The branch network and Hierarchy of
the staff and various positions of seniority of BAL are shown and discussed through
charts.

Chapter # 3 is about the “Bank Alfalah Services and Products”. This chapter includes the
different products and services introduced by the bank to its customers.

Chapter # 4 is about the “Analysis of Abbottabad Branch”. Financial statements are

analyzed. Also the performance of the bank has been shown through ratio analysis and
trend analysis. SWOT analysis and conclusion based on SWOT analysis is made in this
chapter. Regression analysis is also made in this chapter, which shows the affect of the
Deposits on the total income. Economic profit of Bank Alfalah is also calculated in this
chapter. The Market structure of BAL is also discussed in this chapter.

Chapter # 5 is about Conclusion and Recommendation.

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