Internship Report on Bank Alfalah Limited
CHAPTER – 1
INTRODUCTION OF STUDY
1.1
BACKGROUND OF THE STUDY
The students of BBA-IT besides doing project are also given an option to undergo
an internship programme of eight weeks to have a practical experience. This is an
essential academic requirement, which is followed by comprehensive report
writing. Usually the choice of the organization is based on the area of
specialization of the student. This internship furnishes the students with an
exposure into the practical world. They are able to look at different concepts,
given in books, take up a form and come to life.
Commercial banks play a very important and active role in the economic
development of a country. If the banking system of the country is effective,
efficient and disciplined, it brings about rapid growth in various sectors of the
economy.
The banking sector in Pakistan with the advent of modern technology and intense
competition is playing a key role in the development of economy especially in the
sector of trade and commerce, agriculture and many others.
This study is conducted on one of the leading, innovative and modernized banks
of Pakistan i.e. Bank Alfalah Limited (BAL) Peshawar Cantt. Branch. The
introduction of BAL in Peshawar as well as in Pakistan is recent yet its growth
rate and technological advancement is remarkable. BAL is known for providing
value services to its customers and innovative new ideas of customer dealings.
Being a student of Information Technology as well I decided to join Bank Alfalah
Cantt branch for my eight weeks internship programme because it has a very well
established IT Setup.
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1.2
PURPOSE OF THE STUDY
The purpose of the study is to experience real life banking practices in order to
bridge the gap between the theoretical and the actual for better comprehension and
knowledge of the different aspects of this vast field of profession. Project was not
enough to fully understand the operations of the bank but it gave us a touch of
professional life and a chance to work with the professional people. Also this
Project program gave us an exposure to the market and taught us how to deal with
people. This study will give a detail explanation about various departments of the
bank. In this context the objectives are:

To analyze the banking operations.

To develop concrete and feasible recommendations.

To improve report writing skills.
1.3
SCOPE OF THE STUDY
The scope of this study is limited to the functions, operations and methods carried
out by the various departments of BAL, Peshawar Cantt Branch. Since BAL has
many departments, which cannot be covered in detail in this study, therefore the
major focus of this study is general function of the bank, its departments and its IT
aspect as well.
1.3.1
Limitation
The time period of our Project was very short. This period was enough just to get
to know the banking operations and understanding them properly would require a
lot more time. This is the major limitation of this study.
The non- availability of competitor’s latest information also made it impossible to
carry out a comparative analysis of the banic’s position in the market. Likewise
the staff members are not allowed to give information. Data collection consumed
a lot of time, due to the strict policies of the bank regarding the operations manual
and providing information.
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1.4
METHODOLOGY OF STUDY
Making use of two types of data i.e. primary data and secondary data has
composed the study.
1.4.1
Primary data
Data that have been originally collected (raw data) and has not undergone any sort
of statistical treatment are called primary data.
The data was collected during the course of Project at BAL. The source of this
data was
a.
Personal interviews
b.
Discussion during the Project with employees of BAL
c.
Unstructured interviews with the employees of BAL
1.4.2
Secondary data
The data which has undergone and sort of statistical methods at least once i.e. data
has been collected, classified, tabulated or presented in some form for a certain
purpose is called secondary data.
The sources of secondary data are
a.
Brochures and manuals of the bank
b.
Internet- website; www.bankalfalah .com
c.
Previous Project reports
1.5
SCHEME OF THE REPORT
The report is organized in the following manner;
Chapter 1: Introduction to the Report
This section includes the background, purpose and scope of the study along with
the methodology for the collection of data and scheme of the report.
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Chapter 2: Organizational Review
This section includes introduction of banking in Pakistan, history of BAL and then
organizational structure of BAL in general and Peshawar Cantt. Branch in
specific. This chapter also includes the departmentation of BAL along
Chapter 3: Organization Structure
This chapter gives overview of the structure of the organization i.e. Bank Alfalah
Limited.
Chapter 4: Departmentation
This chapter gives detailed information about the departments in the Bank Alfalah
Limited and their functions. Secondly the products offered by the BAL are also
discussed over here.
Chapter 5: IT Setup of BAL
This chapter elaborates of online banking system; the BAL’s Banking System, its
networking etc. In short information technology aspect is discussed over here.
Chapter 6: Analysis
This chapter contains detailed analysis of the Bank Alfalah Limited. The business
analysis tools used over here are SWOT Analysis and TOWS Matrix. The
Financial Stats of year end 2006 are also shown in this chapter.
Chapter 5: Findings/Recommendations.
This chapter elaborates the recommendations based on findings. The utmost effort
is being made to make recommendations most suitable of the Bank.
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CHAPTER – 2
INTRODUCTION TO BANKING
ALFALAH BANK LIMITED
2.1
BANK DEFINITION
According to the banking ordinance 1962 the banking is defined as:
“Banker means a person, transacting the business of accepting for the purpose of
lending or investment, of deposits of money from the public, repayable on demand
or otherwise and withdraw able by cheques, drafts or orders or otherwise”.
A bank is a financial institution where the public deposits their money for the
purpose of safety or for earning profit on them. The bank further lends this money
to those that need it and charge an interest on it. This interest is the depositor’s
profit that he gains on the deposited money and the borrower pays as interest or
markup.
Pakistan’s banking system at the time of partition consisted of 10 non-Indian
foreign banks and two Pakistani banks i.e. Habib Bank Ltd. and Australian Bank.
State bank had started functioning on July 1st 1948. In 1949 National Bank of
Pakistan was established and it started functioning with six offices in former East
Pakistan.
There are about 22 Pakistani scheduled banks operating in NWFP having 1150
branches or about 15% of all the branches of scheduled Pakistani banks in the
country. In addition six foreign banks with a total of six branches are also
operating in the province.
2.2
HISTORY OF BANK ALFALAR LIMITED
All the human organizations are a product of historical growth. They change with
the passage of time. In order to better understand the working of an organization is
important to trace the historical background of an institution.
A synoptic view of the history of BAL will help us to understand more better its
foundation and origination.
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Internship Report on Bank Alfalah Limited
Emergence of BAL can be traced back to the saga of BCCI (Bank of credit And
Commerce International). B CCI, the seventh largest bank of the world with
estimated assets of US $ 20 Billion and operating in seventy countries of the
world collapsed in July 1991 by the Bank of England and international liquidators
by accusing that BCCI was involved money laundering of $ 1.5 billion. About
$1.5 billion of money laundering took place worldwide that year. BCCI Pakistan’s
operations were taken over by Habib Bank Ltd. through SBP and the international
liquidators were paid of for the three branches of BCCI in Pakistan. This made the
BCCI Pakistan free of any charges from the international liquidators.
The three branches were then 100% owned by HBL and given the name HCEB
(Habib Credit and Exchange Bank) and during the year 1997 the privatization
commission of Pakistan sold 70% share of HCEB to the Abu Dhabi consortium
consisting of members of the Royal family of UAE.
Following the privatization in July 1997, HCEB assumed a new identity of Bank
Alfalah Limited on February 25 1998, with revived purpose and commitment.
H.H Sheikh A1-Nahayan, minister of education government of Abu Dhabi and
prominent member of the Royal Family took charge of the bank as its Chairman
with energized vision, envisaging the development of customer sector in Pakistan.
2.3
MISSION AND VISION
Mission, broadly stating is the purpose for which an organization exists and why
should it compete in certain sectors and industries. Within the mission sometimes
stated as purpose the organization addresses itself to what it intends to accomplish
both in long and short run. The mission of the organization is normally
summarized into a statement, thus the mission statement of BAL is
2.3.1
Mission
To deliver and develop the most innovative products, manage customer
experience, deliver quality service that contributes to brand strength, establishes a
competitive advantage and enhances the profitability thus providing value to the
stakeholders of the bank.
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2.3.2
Vision
To be the premiere organization operating locally and internationally that provide
the complete range of financial services to all segments under one roof.
2.4
CORPORATE VALUES
The corporate values of the bank are integrity, respect, teamwork and
professionalism, which play an integral role in the fulfillment of the banks
mission. Clearly these values are not new to the bank and have been high priority
since the inception of bank. By continuously recognizing the importance of
corporate values, the individual contribution from all employees has made the
bank what it is today. In addition to the corporate values it provides all those with
an interest in the bank with a number of criteria by which they can access the
bank. These corporate values are the fundamental corner stones of BAL’s success
2.5
STRATEGIC GOALS AND OBJECTIVES
Objectives are the ends towards which activities are aimed. In fact, these are the
results to be achieved. The BAL has the following main objectives;

To create maximum economic value for shareholders through a constant
relationship focuses on financial services.

To promote industrial agricultural and socio economic processes through
the active participation of private and sound public sector in the country.

Create a diversified and sound portfolio for utilization of idle funds and
their investment in the existing and new venture specially in the pioneering
of high tech agro based, export oriented and engineering projects to ensure
maximum returns.
BRANCH NETWORK
Bank Alfalah’s objective has been to expand its branch network and has resulted
in strong entity capable of offering high quality services in a highly challenging
business environment. In the year 2006 BAF branches increased to 111 branches.
In Peshawar there are 5 branches of bank Alfalah. Among these 4 branches are
conventional branches while the 1 is the Islamic branch of bank Alfalah.
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Internship Report on Bank Alfalah Limited
CHAPTER – 3
ORAGNIZATIONAL STRUC TURE
In order to know the organizational structure we should first understand what is
meant by organization and its structure. An organization is a rational coordination
of people of achieving some goals. When this group is arranged in a proper order
and is designated some positions with specific tasks assigned results into the
formation of organizational structure. Organizational structure is the formally
defined as framework of task and authority relationship. A good organizational
structure helps in improving the performance and overall efficiency of the
organization, its resources and management.
3.1
DISTINCT FEATURES OF THE ORGANIZATIONAL
STRUCTURE OF BAL

The structure establishes a definite responsibly, accountability and clear
reporting line.

The structure and system is designed with an aim at achieving complete
customer satisfaction

The structure focuses on specialization of function

The Human Resource department to the policy making and support other
departments giving the required independence to their managers in
selecting staff and having greater say in rewarding and promoting their
staff.

Since responsibility and accountability at each level is clearly defined
individual performance is stressed and measured to a great extent.

Checks and balances are introduced at all levels.

Customer satisfaction’ comes before anything else in BAL.
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All the system and proceeds are designed to serve customers in the best possible
manner. The organizational structure is committed to customer satisfaction and is
meant to achieve excellence and total quality in customer service.
3.2
BOARD OF DIRECTORS
H.E. Sheikh Hamdan Bin Mubarak AI-Nahayan
Chairmann & Director
Mr. Abdullah Naseer Hawaileel A1-Manssori
Director
Mr. Abdulla Khalil Al Mutawa
Director
Mr. Khalid Mana Saeed Al Otaiba
Director
Mr. Ikram ul Majeed Sehgal
Director
Mr. Naeem Iqbal Sheikh
Director
Mr. Muhammad Saleem Akhtar
Chief Executive Officer and Director
3.3
ORGANIZATIONAL CHART
Organizational chart is the visual representation of an organization structure.
Organizational charts are developed in order to show the positions of margins and
how along with the principal lines of authority. These positions are represented in
the boxes, and each line shows relationship among different portions of the
organizational chart.
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3.4
BANK ALFALAH PESHA WAR CANTT. BRANCH
BAL is a functional institute shooing strong growth and development over the last
period of time. The Peshawar Cantt. Branch started its operations in April 1998
and in the short spans of six years the deposits grew higher then all other banks
functioning for the last year or more. It performs all the functions of a commercial
bank from remittances to safe custody services.
The range of clients varies from large local private and public listed corporations
to non- resident controlled multinational high net worth individuals. The branch
mandate provided by the head office is as follows;
3.4.1
Unit Responsibilities
The branch is operating, as a profit center is responsible for the profitable
management of its business operations .it will ensure;

The quality of investment in their loan portfolio is maintained through
prudent and balanced dealing, professionally competent supervision and by
vigorous pursuit of repayments and arrears.

Active mobilization of saving and deposits.

Speedy transmission and repayment of transfers.

Fast competitively priced foreign exchange transaction.

Rapid and efficient services to clients and the public.
The branch will actively promote the innovative and diversified role of the bank
by identifying and fostering enterprise engaged and wishing to invest enviable
new products, processes and services within the area of operations.
The branch will ensure training is regularly provided for the upgrading of the staff
skills and that improvement in commercial corporate clients, technical and
management skills are encourages through the bank association with the client’s
enterprise.
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The branch will ensure that all its activities are properly recorded in accordance
with directions and procedures of the bank. Compliance with the reporting
requirements will be prompt and full. The branch will foster good working
relations with public and private agencies and institutions with common interest to
those of the bank.
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Internship Report on Bank Alfalah Limited
CHAPTER – 4
DEPARTMENTATION OF BANK ALFALAH CANTT
BRANCH
Departmentalization refers to the formal structure of an organization composed of
various departments and managerial positions and their relationships to each
other. A department is a unique group of resources established by management to
perform some organizational task. The process of establishing departments within
the management system is called departmentalization.
The splitting and grouping of jobs into work units makes management of each unit
easy as well as the concentration on the particular activities increases and this
consequently better the performance of the organization. Like all other banks,
BAL also has a specific network of departments, which are established for the
functions of customer services, to achieve the goals related to the target market
and target area, and to achieve the short term as well as long-term goals of the
organization. The departmentation in BAL is on the basis of two categories i.e.

Geographical Departmentation

Functional Departmentation
4.1
GEOGRAPHICAL DEPARTMENTATION
Geographical departmentation is the segregation of an organization intO various
segments according to their location or territory i.e. according to the places where
work is being done. This separation of activities helps in making decentralized
coordination. BAL has been divided into four main regions, which are further
subdivided into 45 branches at the domestic level throughout the territories of
Pakistan. The regional division of BAL is as follows
4.1.1
Central Region
This region has includes following cities;

D.G.Khan

Faisalabad

Gujranwala
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Internship Report on Bank Alfalah Limited

Gujrat

Multan

Rahim Yar Khan

Sahiwal

Sargodha

Sialkot

Jhelum

Bhawalpur
4.1.2
Northern Region
There are number of branches in this region which includes following cities;

Islamabad

Mardan

Peshawar

Dera Ismael Khan

Kohat

Rawalpindi

Swat
4.1.3
Southern Region
The southern region includes following cities;

Hyderabad

Karachi

Sukher
4.1.4
Western Region
This region includes following cites;

Quetta

Gawadar
4.2
DEPARTMENTATION AT THE HEAD OFFICE
At the Head Office the various divisions have been suggested on the basis of
functional approach. The various divisions at the head office level are responsible
for formulating the policies and strategies, which are then adopted by the whole
bank. Functional departmentalization leads to the efficient managing of people
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who do similar tasks. It tends to increase specialization due to which each division
is a specialized unit to itself, excelling in its area of specialization, which at the
departmental level results in an efficient and successful unit and at the overall
organizational level a well-coordinated environment.
4.2.1
Strategic Planning Department
This department is responsible for defining organization’s corporate goals and
objectives. It develops the organization’s long range (strategic) and short range
(operating) plans and budget. This identifies yearly operating targets and
tactical/short range plans. It evaluates and undertakes periodic review of the
implementation of policies and accomplishments. This department develops and
implements a feedback and measurement system that assures implementation of
approved plans and budget at all levels.
4.2.2
Personal Training Department
This department assesses individual, departmental and organizational training and
development needs. It design and facilitate meetings. In addition, this department
coordinates employee orientation in the bank.
4.2.3
Finance Department
Finance department is responsible for the planning, organization, coordination,
and control of all financial and accounting activities. The Finance department is
responsible for the administration of all financial record keeping and reporting
functions required by local, state, and federal law. The Finance department’s
functions include centralized accounting, financial reporting, budgeting,
purchasing, and revenue collection. Additional functions include coordination of
vendor payment and employee payroll systems; grant accounting, and cash
management.
4.2.4
Human Resource Department
This division deals with the people aspect of the bank. It formulates the policies
for the employees working at the bank. These policies deal with the recruitment,
selection, training, performance appraisal, employee benefits and compensation,
promotion and retirement of the employee.
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4.2.5
LT Department
This division deals with the information technology aspect of the organization. It
introduces the latest technological facilities to automate the banking services
provided by Bank Alfalah limited.
4.2.6
Audit and Inspection Department
This division is an essential internal support system that keeps a regular check on
the activities of the bank and determines if there have been any deviations from
the standard operational procedure by the employee.
4.2.7
Treasury Department
The Treasury division deals in the foreign exchange and money market. It is
widely considered a market leader in PKRIUSD spot, forward and swaps markets
and is very active in the money market. Along with this also provides advisory
services regarding foreign exchange rates and interest rate movements.
4.2.8
Credits Department
The department places a high priority on ensuring that all types of credit issued by
the branches meet the criteria defined. The main function of this department is to
monitor the credit activities at branch level. It also checks the reporting from the
branch, give advice and keep the record of all the disbursements made. This
department is responsible for the identification and analysis of the overall loan and
financial status of the bank. Nit plans on large exposures limits, loans extended to
customers, and make policies regarding credit risk management.
4.2.9
System and Operation Department
This department formulates the rules and regulations regarding the operations of
the bank. The publishing and issuing of manuals is also the responsibility of this
department.
4.3
DEPARTMENTATION AT BRANCH LEVEL
Bank Alfalah is a financial institution showing strong growth and development
over the last period of time. The Peshawar Main Branch started its operation in
April 1998 and in a short span of two (2) years; the deposits grew higher than all
other banks functioning for last many decades or more. It performs all the
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functions of a commercial bank - from deposits to advances and from remittances
to save custody services.
The branch will ensure that all its activities are properly recorded in accordance
with direction and procedures of the bank, there by showing compliance with
reporting requirements to be prompt and full. The branch will foster good working
relations with public and private agencies and institutions with common interest to
those of the bank.
It seems quite apparent that if the stated goals and objectives of an organization
are to be attained, certain activities have to be performed and it would also seem
that the organizing function of a manager would involve grouping the functions
and activities necessary to attain the goals of an enterprise. The term for that
process is “Departmentalization” or Division of Organization.
In Bank Alfalah Peshawar Main Branch, departments are made on the bases of
functions performed by the bank. The major divisions in the bank are:

General Banking Division

Credits Division

Trade-Finance Division
In each division there are certain departments, which are as follows:
4.3.1
General Bankin2 Division
The general banking division includes:

Deposits Department

Accounts Department

Cash Department

Remittances Department

Clearing Department
This department is considered as backbone of the branch. The major activities and
operations performed under this department is as follows:
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1.
Deposit Department
In line with the “Client First” philosophy, Bank Alfalah offers a wide range of
deposits to cater to the specific needs of various business segments classified as
follows:
Transacting Accounts

Current Account

Saving Account
Non-Transacting Accounts

Term Deposits

Call Deposits
The detail of these is as follows

Current Account
Current accounts are those, which let the client handle the day-to-day expanses
efficiently by allowing drawing cheques against the available balance within the
business hours. It can be further classified as Individual Account and Joint
Account.

Individual Current Account: - Individual Account is opened by a single
customer, only he can operate the Account, but he can authorize another
person to operate the Account, if he is not available, for this he will sign an
authority letter.

Joint Current Account: - If there are two or more customers who want to
open Current Joint Account, so they will open a Joint Account. This
Account may be operated: -

Jointly by all partners

Either or savoir

Any one of the partner
o Partnership Current Account: - This account is opened with the Title of
the Partnership. The Partners of the Partnership, who sign the
Partnership deed, and who sign the Account Opening Form, only
operate this account. They can give the Authority to the other partner.
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Documents required

Partnership deed

NIC photocopy of all partners

Partnership mandate

Power of Attorney
Features of Current Account
o Main features of the current account are:
o Currency options PKR, US$, GBP, J¥
o Rate of Return Not Applicable
o Checking Facility Unlimited
o Tax Application Nil
o A/C Statement Monthly
o Cheque Book 25,50,100 leaves book @ Rs .2/leaf

Saving Account
Saving account gives higher return with the edit benefit of flexibility of drawing
money at any time within business hours than the Current Account. Different
types of Saving Accounts are:
o Individual Saving Account
o Joint or Partnership Saving Account
o Minor Saving Account
Features of Saving Account
Main features of Saving Accounts are as follows:
o Currency Option PKR, US$, GBP, J
o Minimum Balance Requirement Rs. 5000 or US $ 500
o Checking Facility Unlimited
o Tax Application With holding Tax on Profit & Zakat on total amount
o A/C Statement Monthly
o Cheque Book

25, 50 leave Rs.2/leaf
Call Deposit
It is an interest bearing deposit account with a mandatory 7 or 30 days notice
period preceding the release of funds. This account can be maintained in PKR.
The interest depends upon the tenor of the deposits and is payable on maturity.
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The tax is withheld on the profit and Zakat is applicable to the principle amount
only.
o Currency Option PKR
o Minimum Balance Required None
o Tenor 7to30
o Profit On Maturity
o Tax Application With holding tax on profit Zakat on Total amount

Term Deposit
It is one of the popular account types. The amount is deposited in this account for
fixed i.e., from one (1) month to five (5) years. The interest is various with the
variation of time limitation. The rate of profit increases as per increase in time
period. The customer does not withdraw money before maturity of his/her
account. The profit is paid after the maturity but in certain cases money can be
withdrawn with the adjustment of rate of profit according to the time limitation.
2.
Accounts Department
This department coordinates all the banking activities there by keeping track of
each activity in a sequential manner and provides up-to-date data. The accounts
department is also responsible for proper accounting of assets and liabilities of the
branch. This department is the backbone of the entire banking system. All the
banking activities are placed through this channel. The main functions of this
department are:

Maintenance of books of accounts

Preparation and disbursement of salaries of bank’s staff

Maintenance of superannuating funds and investment of the staff

Dealing with the disposal of commercial and external audit reports

Preparation of budget and other financial statements
3.
Cash Department
Unlike other departments in the bank, Cash Department also categorizes itself as
one of the important department of the bank. Its significance being obvious by the
fact that banking started because of transactions relating to cash — its safe
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keeping, trading etc. Efficient management of cash is needed to execute payments,
collect receivables and maintain liquidity.
One drafts all the cash transactions with the clients by the cash department,
specifically by the tellers. The amount of cash available at teller’s area is enough
to meet daily requirements and is insured. After closing of the business hours, the
teller verifies the amount of cash, physically, which is cross verified by the
manager operations and tailed with the general ledger account. Tellers take
extreme care to detect counter fag notes and if such notes are detected, the matter
is referred to the manager operations. If counter fags are later discovered, they are
booked as cash shortages. All the activities of the cash department are divided into
two (2) i.e. Cash Collection and Cash Payment.

Cash Collection
Cash collection is accompanied by cash deposit slip. The slip contains the account
number; title of account and denomination of cash deposited both in words and in
figures followed by the signature of the depositor. The cash received is counted
and is verified with the deposit slip. Entries for cash deposits are recorded before
handling over receipts to the customer. Customer’s copy of the deposit slip is
handed over to the depositor. Before cash deposit slip is released, it is matched
and validated with the entries in the register for cash collection.

Cash Payment
Amount of payment of cash in a single transaction is fixed. Payments beyond a
certain limits are supported to be approved by an appropriate authority. Before
payment, the cheque must be checked for staling, post dated, payee’s name,
crossing, amount both in words and in figures and authentication of alterations.
Tellers verify signatures on cheque before payment. In case of illiterate account
holder the customer is identified through the photograph available in the bank’s
record and thumb impression attested under the full signature of the teller who is
authorized to approve the transaction.
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4.
Remittances Department
One of the most frequently used banking services is the transfer of funds through
the banking channels, being local or outstation. Transfer of funds entails high
level of efficiency and security on part of the bank. It creates a legal obligation for
the bank of debtor/creditors in case of DD and principle agent in case of TT.
The remittances are of two types i.e.

Local Remittances

Foreign Remittances
BAL offers following modes for Local Remittances:

Pay Order

Demand Draft

Tele-Phonic / Tele-Graphic Transfer

Mail Transfer

Travelers Cheques
The detail of each is as under:

Pay Order
Payment Order is a negotiable instrument to transfer money to other banks within
the station and is payable on demand. It is non-transferable instrument valid for
three months, making it an order by one party to make payment in favour of
another party. It is also known as Banker’s Cheque.
The customer fills an application form for Pay Order in favour of a party and
submits the amount in the cash department. It is competitively less risky. In case
of cheques, the bearer might not get the desired amount for non-having sufficient
funds available to him but the Pay Order is a secure way of having the desired
amount.

Demand Draft
Demand Draft is basically a bill of exchange, which orders to pay money on
demand to a certain person specified on the instrument, or to the order, drawn by
one bank to the branch of the same bank outside the station or on its
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corresponding banks. Legally, the Negotiable Instrument Act governs the
instrument. The following parties are involved:
o Purchaser: The customer, one who’s request the DD is issued
o Drawing / Applicant Bank: The bank, which issues the DD
o Drawer Bank: The bank on which the issued DD is drawn
o Payee: The person entitled to receive the payment
The DD is valid for three (3) months i.e. 90 days of it being drawn.

Tele-Phonic / Tele-Graphic Transfer
It is an encoded message between the bank of the beneficiary and the remitter. It is
one of the quickest mode of transfer of money where by the funds are transferred
through telex or cable from remitter / customer at one bank / branch to a payee in
another city / country through an intermediary bank / branch. It is neither
transferable nor negotiable. In this case the customer is responsible for the
instructions, being given, and the bank carries everything out. The payment
instruments in a TT should be clearly specified and must contain the following
information:
o Payment of specified amount
o Currency in which the payment is to be made
o The bank I branch where the payee’s account is being held,
including the payee’s name and account number
o Value date for effecting the payment
The message is reproduced and signed by two (2) officers. It is sending for test
where coding and decoding figures related to day, month, amount, currency and
city takes place. If the test is agreed then action on telex takes place.

Mail Transfer
When money is not required immediately, MT can also make the remittances.
Here the sending office of the bank sends instructions in writing by mail to the
payee bank for the payment of specified amount of money.
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Internship Report on Bank Alfalah Limited

Travelers Cheques
With the Rupee Travelers Cheques market growing rapidly, BAL is the latest
entrant into the market. The bank was first to introduce TCs in 2 Lac and 5 Lac
denominations, the highest ever face value for any Travelers Cheques available in
the Pakistani market. In fact the TCs come in eight (8) denominations, which
according to the bank will help clients conduct transaction at all levels and with
complete security. These cheques have added security features, including the fact
that they are printed on scan proof paper and carry the bank’s watermark and
security thread with a 24/7 security and Tele-verification line. Bank also launched
a reward program aimed at buyers of the TCs and will not be charging any
commission on the purchase or encashment of the Cheques.

Features of TCs
o Highest Denomination Available of Rs. 5, 2 and iLac along with 50, 20,
10, 5 and 1 thousand(s)
o Receive commission if in cash TC’s in any of BAL branches
o Unlimited validity
o Maximum-security features
o Fully refundable
o Transferable and endorsable
o No account needed
o Round the clock customer services

Foreign Remittances
Foreign remittances include remittances (incoming and outgoing) outside
Pakistan. There are two (2) types of remittances i.e. Inward Remittances &
Outward Remittances.
o Inward Remittances
The term “Inward Remittances” means purchase of foreign currencies in
whatever form and includes not only remittances by MT, TT, Draft etc. but
also purchase of TC’s, Drafts under Traveler Letters of Credit, Bills of
Exchange and Currency Notes etc.
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Internship Report on Bank Alfalah Limited
o Outward Remittances
The term “Outward Remittances” means sale of foreign exchange in any
form and include not only remittances by MT, TT, Draft etc. but also sale
of Travelers Cheques, Traveler Letters of Credit, Foreign Currency Notes
etc.
Since Bank Alfalah does not have branches in all countries; it has
correspondence with the following banks for remittances:
US Dollar ($) Citi Bank, American Express, ABN Amro,
Bankers Trust and Habib Bank New York
Pound Sterling (GBP) Habib Bank London
Dutch Mark (DEM) National Bank of Pakistan Frankfurt
Euro (€) Commerce Bank Frankfurt

Types of Outward Remittances
The foreign outward remittances can be of following types:
o Foreign Tele-Graphic Transfer (FTT)
o Foreign Demand Draft (FDD)
o Foreign Outward Bill for Collection (FOBC) The details are as
follows:
o Foreign Tele-Graphic Transfer
The transfer procedure is same as for local TT. The customer either
pays cash or gets his account debit. Since all arrangements are through
main office, Bank Alfalah sends credit advice to Head Office, which
gives credit to the correspondent bank of Bank Alfalah in that
particular country, ultimately giving credit to required / designated
bank and account. For ITT, Head Office account is debited and credit
is given to the beneficiary account. If beneficiary does not have
account with BAL, then M-forrn is required to fill in stating purpose of
remittances.
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Internship Report on Bank Alfalah Limited
o Foreign Demand Draft
FDD is also an instrument to transfer fund from one country to
another. The customer can make payments in three modes:
•
Debit to Foreign Currency Account
•
Foreign Currency (Cash)
•
PKR (M-form is to be filled in)
When the customer fills in the M-form, he/she has to state the purpose
of remittance. These can be on account of:
•
Membership Fee of Institutions
•
Examination Fee
•
Membership Fee of Social Clubs
•
Subscriptions to newspaper/magazine/purchase of books
Once the customer fulfills all the requisites of the prescribed, BAL
issues FDD and deducts bank charges, excise duty and withholding
tax. Customer being NTN cardholder is exempted to pay tax in this
case. FDD is then allotted a number for reference purpose and finally
FDD is issued (always typed written). Credit advice to Head Office
along with a Telex message to foreign correspondent bank is sent.

Foreign Outward Bills for Collection
When customer deposits a foreign cheque / travelers Cheques to Bank Alfalah, it
becomes the bank’s liability to collect it. It is then sent to the bank of expected
country and payment is made after confirmation. The foreign bill is sent for
correction first and then payment to beneficiary is made. It is commonly presented
through clearing.
5.
Clearing Department
Clearing system is a device that enables bankers to settle cheques and other
instruments, drawn on each other. System is of immense value in saving a lot of
labor, time and expenditure there by increasing the efficiency of the banking
system. SBP has its branches in all big cities nationwide and clearing in these
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Internship Report on Bank Alfalah Limited
cities is supervised by SBP. In cities with no SBP coverage, the clearing is
supervised by NBP.

Brief Working of Clearing Department
The Cheques received by a bank drawn on other banks are sorted bank wise. A
schedule is prepared for cheque drawn on each bank. The cheques along with the
schedule are presented in the clearinghouse where they are delivered to the
representative of the various banks. Thus each bank receives from other banks
cheques drawn upon it and delivers to other bank cheques drawn upon them. The
first one is the inward clearing and the other is the outward clearing. Dr, Cr. to
their account with the supervising bank, settles the net difference.
4.3.2
Credit Division
The Credit Division at Bank Alfalah is categorized into three (3) sub- departments
according to the functions:

Advances Department

Car Finance Department

Structure Finance Department
Advances Department
Bank is a profit seeking institution, which attracts surplus balances from the
customers at low rate of interest and makes advances at a higher rate of interest to
the individuals and business firms. Advances made by commercial banks are of
three (3) types, namely:

Over Drafts

Cash Credit

Loan against movable/immovable property and documents of title to goods

Over Draft
Over draft is the right given by a commercial bank to his customers to draw in
excess of his current account up to a fixed limit. The bank scrutinizes the
application for over draft, examine the credit worthiness of each boffower and
then approve the upper limit to overdraw the current account with or without
security. The bank often requires that the advances be secured, to reduce the risk
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of the bank. In case of default the, the amount can be record by selling the
collateral. The principal type of securities assigned to the advances is:

o
Government Securities
o
Shares and bonds of listed companies
o
Saving certificates
o
Fixed deposit receipts
Cash Credit
Cash credit is the advancement of funds against the security of movable goods.
Bank takes the physical possession of the goods. Cash credit is a short term, selfliquidating commercial loan. The bank allows the business firms to borrow up to a
certain limit either in lump sum or installments. The business concerns draw
money according to their needs.

Loans
A loan is an advance made by BAL to the borrower in lump sum for a period
exceeding one year from the date and extended is to meet the long-term capital
requirements of the borrower.
Bank loans are classified into:
o
By Security
o
By Maturity
o
By Purpose
o
Loans by Security
Secured loans are backed by collateral. The main type of securities pledged with
the bank for obtaining loans is:
 Stocks & Bonds
Real Estate
 Live Stock
Ware House Receipt
 Equipment
The main purpose of securities is to minimize the bank risk if the borrower refuse
or is unable to pay the loan at maturity.
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o Loans by Maturity
Loans classified according to the maturity of the loans are:
•
Short term loans — payable to the lender upon demand or a short
notice.
•
Intermediate term loan — run from 1-5 years and repaid on
installments.
•
Long term loans — having longer maturity date and may be repaid
before maturity.
o By Purpose
Bank Alfalah advances loans to its customers for a variety of purposes.
Commercial and Industrial loans
 Personal loans
Documentation Requirementfor Loan Advancement
The bank while advancing loans needs written proof of the dealings between the
party and the bank.
Documents required for applying for a loan are:

Credit sanction advice

Credit report

Permanent information memo

Credit Sanction Advice
It is document for a loan, which is filled by a customer. It included a margin and
security section, which is filled by the banker.

Credit report
Credit Information Bureau (CIB) is a department of the State Bank of Pakistan,
which has information about all the account holders of every bank. The credit
request by customer is sent to C1B to check the clients credit worthiness and send
a CIB report of the client, containing complete information about the clients other
accounts at other banks. Other documents are:
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Internship Report on Bank Alfalah Limited

Balance sheet of the company

Information and detailed address of stockholders

Proposed letter from the company for the required facility

Articles/memorandum of association
Purpose of Documentation
Documentation is done for two purposes. It serves as:

Evidence of contract

Evidence of charge
Documents are prepared keeping in view the type of borrower, type of finance and
the type of security.
Structured Finance Unit

Innovative solutions tailored to your needs
To provide innovative Investments banking Services, Bank Alfalah, have
established Structured Finance Unit (SFU) for the benefit of the valued clients.
SFU has the capability to assist public and private sector entitles, major financial
institution, multinational corporations, and domestic and international institution
investors in innovative financing, including underwriting, private placement and
securiticiation. SFU scope of activities also includes advisory assignments such as
privatization, M & A’s domestic listings, IPO’s and restructuring. Because of
Alfalah’s strong financial backing, SFU can source and syndicate debt, equity and
venture funds for organizations to meet their financing and capitalization needs.
For Capital Raising

Loan syndication

Public flotation of TFC’s and equity

Private placement of TFCs and equity

Underwriting

Guarantee syndicate

Term finance certificate
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Internship Report on Bank Alfalah Limited
For Corporate Advisory

Financial restructuring

Mergers and acquisitions

Fostering joint ventures

Privatization sale side and buyers side advisory

Structuring new financial instruments
4.3.3
Trade Finance Department
Opportunities for companies to buy and sell goods and services on a global bagis
will continue to increase. A new country, a new customer and a new source of
needed materials; all these opportunities demand an experienced and innovative
trade service bank as a partner.
Foreign Banks in Pakistan have traditionally been engaged in the financing of
foreign trade. Likewise, BAL has been playing an important part in financing the
international trade. For this purpose, BAL offers services for facilitating imports
and exports of the country. The Import department of BAL Peshawar Branch
makes arrangement for settlement and financing of imports whereas Export
facilities are not yet provided in the branch due to small no of industries in the
Peshawar region.
1.
Import Department
The function of the import department is:

Settlement of Imports

Short-term Financing
The detail is as follows:

Settlement of Imports
The major function is to deal with the documentary credit (i.e. the letter of credit),
which is the most convenient method for the settlement of international trade.
Documentary credit is used as a method of payment by importers. The import
facilitation offered by Bank Alfalah consists of the following i.e.
o
Letters of Credit
o
Payment against Documents
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The details are as follows:
o Letter Of Credit (L/C)
Letter of credit is a non-funded facility provided by the Bank to its
clients on the basis of credibility of each individual party.
A letter of credit is an open letter of request whereby the importer’s
bank request the exporter’s bank to advance money, or to give credit to
the exporter for a certain amount and promises that he will repay the
same to the exporter’s bank to accept bills drawn upon himself for the
amount.
A documentary credit should strictly conform to the following:

The letter of credit should specifically state that it is a letter of credit

It must have specified expiry date or definite term
The Bank’s undertaking should be limited in amount The Bank’s obligation to pay
should arise only upon the presentation of a draft or other document specified in
the letter of credit, and the bank must not be called upon to determine questions of
fact or law at issue between the account party and the beneficiary
The Bank’s customer should have an unqualified obligation to reimburse the bank
for payments made to the beneficiary
 Parties to Letter of Credit
Following parties are involved in the documentary credit
Applicant/Importer: Purchase of goods or importer who requests the bank to open
a letter of credit is known as applicant.
Issuing Bank: The bank that opens a letter of credit on the request of the
customer is the issuing bank.
Beneficiary: Seller of goods or exporter to whom payment is to be made is known
as beneficiary.
Advising Bank: When the opening bank is in a location different from that of the
beneficiary of L/C, the L/C will be usually sent to a bank in the beneficiary’s
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location with a request that the beneficiary of L/C be advised. The advising bank
gives the L/C to the beneficiary with no responsibility on its part. It is the opening
banks’ credit that beneficiary is relying upon. Confirming Bank: The opening ban
sends the L/C to a bank in the seller’s location requesting the bank to confirm the
LIC to seller. The confirming bank adds it confirmation (for a fee), thereby
guaranteeing that it will pay if the terms of L/C are met irrespective of the opening
banks’ ability to pay. The charges of confirmation are paid to the confirming bank
and are recovered by importer or exporter depending upon the agreement,
Reimbursing Bank: It is the correspondent bank of the issuing bank for
reimbursing funds to the negotiating bank. It only provides its services for the
funds transfer and bears no liability of L/C.
Negotiating Bank: The bank to which the beneficiary presents his documents for
payment, negotiation or acceptance under the L/C.2
Requirement for Opening L/C
A customer requesting the Bank to open LIC must fulfill following requirements:

Registration with EPB and CCI & E
Request Form

I- form (Import form)

Performance Invoice

Insurance Policy
The details of these requirements are as under:
Registration with EPB and CCI & E
One of the basic requirements for importer who wants to avail the facility of credit
is to get him or his firm registered with Chief Controller of Imports and Exports
(CCI & E). “No importer or exporter who has not been granted registration by the
chief controller shall indent, import or export any good into or out of Pakistan”.
Importers are required to submit prescribed documents with Treasury Challan for
import registration through the Bank. The Bank attaches its covering schedule to
the documents and sends to CCI & E, who in turn sends a category pass (CP)
book for bank record and an import certificate for the importer. The Government
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of Pakistan mentions import items. Import items have been classified into two
categories.
Free List
These include items, which can be imported against cash, or under loan, credits
barters from world sources.
Tied List
These items are importable exclusively from specified countries against Import
License. Imports are prohibited from Israel and India. CCI & E have allotted ITC
(Import Tariff Code) to importable items. The Bank officer checks if the ITC
number of goods to be imported is correct or not. Under the new import policy,
Export Promotion Bureau (EPB) will register the importer The Bank checks the
Import License for the following items

Value of import License

Endorsement of Import License

Date of issue and expiry

SBP registration number

Description of goods (allowed to be imported)

Request Form
After registration the customer makes request on the prescribed form to BAL to
open a letter of credit in favor of seller. This form provides all the details
regarding the sale contract and agreement between buyer and the seller needed by
the Bank.

I-Form
It is incumbent on the bank to report remittance against imports to SBP whenever
such transaction takes place. An import form (i-form) is to be signed by the
importer or his agent for the purpose. This form has four copies. The original copy
duly signed by the importer is to be sent to SBP. The duplicate copy is to be
attached with exchange control copy of bill of Lading (B/L). The bank keeps the
triplicate copy of the form for record purpose. In case of non-retirement of
documents by the customer, the Bank itself signs the quadruplicate copy of the
form and sends it to SBP.
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Performa Invoice
Performa invoice is issued by the beneficiary and it must have signature of both
the parties i.e. buyer (importer) and seller (exporter). This is also known as sale
contract and its copy must be submitted to the Bank for opening L/C. This copy is
known as Indent Form if it is to be submitted by the agent of exporter. Performa
invoice is rejected if its date exceeds six months. It gives details about terms and
conditions between importer and exporter regarding transaction.
Insurance Policy
According to the ICC (International Chambers of Commerce), an insurance policy
of goods, amounting to value plus 10% should be obtained. This policy can be of
two types
Cover Note i.e., Policy covers only L/C amount
Open policy i.e., Amount greater than L/C amount is covered. Same policy would
be used till the exhaustion of its limit
Usually, insurance policy is for full CIF (Cost, Insurance Freight) invoice value
and is endorsed to the order of issuing bank (BAL in this case). When an importer
brings the insurance policy, the import officer checks the following points:

Authorized signatures of officer of Insurance Company

Registration of Insurance Company with SBP

Description of goods insured

Place of dispatch and destination

Expiry date of Insurance

Last date of shipment valid
In the operation of a documentary credit, all parties concerned deal in documents
and not in goods to which the documents may relate.
Transport Documents
In order to ensure effective ownership of the goods till the opener accepts the bill
or pays for goods, the issuing bank calls for transport documents. The nature of
documents depends on whether the transport is by sea or by air. In case it is by
sea, bill of lading is required; otherwise airway bill is needed,
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Bill of Lading
A full set of “On Board” bills of lading to order have and endorsed in favor of
BAL (the issuing bank) and market freight prepaid or freight payable at
destination.
A bill of lading is a receipt issued by the carrier for the goods received and also
transportation contract to deliver goods to a specified person, provided the freight
is paid by exporter, or to be paid at destination.
Airway Bill
When the goods are sent by air, they are covered by an airway bill in set of three
to be used by the carrier, consignor and with goods. Airway bill issued and signed
by the carrier or their agent bearing reference to the credit number evidencing
dispatch of goods consigned to issuing bank market freight prepaid/freight
payable at destination as agreed upon by parties.
Terms and Conditions of letter of credit
Following terms and conditions are needed for opening L/C
Membership C’ertficate
The customer of BAL applying for L/C must be the resident of
Pakistan and has the membership certificate of the concerned
Chambers of Commerce and Industry or any of the concerned
Trade Association.

Forward Booking
Forward booking is restored to guard against the risks involved in exchange
fluctuation i.e., fluctuation in the rate of conversion of a local currency in terms of
foreign currency. Such transaction is booked on the day of agreement/contract; but
actual delivery of the exchange is mutually agreed to be effected at a later (future)
date. Thus, importer enters into a contract with the bank for the future purchase of
the foreign currency i.e., contracting with the bank to supply him foreign
exchange at a rate agreed now after a certain period. Forward booking rates are
different for different periods.
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
Amendments
For any amendments, customer submits an application duly signed giving details
of the amendments to a L/C issued with the Bank. On the receipt of documents the
bank secures the application that it should be serially numbered and must be
accepted by the parties.
Forms of Bank’s Import Income
In the procedure of settlement of imports, the Bank derives its income from two
sources

Mark-up
In case of sight L/C, mark up is recovered right from the date of negotiation until
the payment from importer is received at prescribed rate. The period for which
mark-up is recovered is classified as following Pre-lodgment Period: Period from
date of negotiation to date of lodgment. Post-lodgment Period: Period from date of
lodgment to the date when PAD is retired.
Mark up for pre-lodgment period is charged on total LIC amount, where for post
lodgment period mark up is charged on the total L/C amount less margin, already
held by the branch (if any)
In case of Acceptance, monthly commission is charged and on transfer to PAD, no
mark up is charged for pre-lodgment period; only postlodgment mark-up is
recovered form client.

Commission and Charges
The second form of income for Bank is the Bank commission and courier charges.
4.4
IT DEPARTMENT
Every branch of BAL is “online”, they are connected to each other. By online
banking, it is meant that if someone has his account in Peshawar and he wants to
access Karachi, so when the branches are online, he can make nay kind of
transaction like he can deposit and can also withdraw.
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In main branch only one employee is working in it-department, who performs all
the duties related to it. Main duties are:

Maintenance of office computers

Administration of network

Providing account statements to account holders

Generating reports of daily transactions and keeping record of transactions
in the form of soft copy and hard copy.

Reporting to head-office and area office

After balancing cheques and cash, he starts day end, the report that he gets
is send to head-office and main it- department through email and its backup is kept for future reference.

Provides data to auditors.
4.5
PRODUCTS
BAL. offers its customers a wide range of products. Their products are not only
comprehensive but also customized to match the needs and preferences of their
customers. This strategic characteristic of their portfolio has helped them to face
the challenges of the economic conditions. They cater not only conventional
customers but also the demanding needs of the corporate sector as well. Aware of
the continually changing customer needs environment, BAL has devised such a
product portfolio to stay ahead of the competitors. The lineup includes:

Saving Certificates
Branded saving schemes have been set up to address a wide range of customer
needs. The royal profit account, for example is targeted at both the individual
investor as well as the institutional investor.

Car financing
Alfalah car financing has edged its way to the number one spot in the industry.
Giving customers a chance to own the automobiles of their own choice at the
lowest prevailing markup.
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
Credit Cards
Alfalah Visa Credit Cards, introduced in early 2002 have been well received in
fiercely competitive market. The Alfalah Card Center in Lahore is a state of the
art facility that is dedicated to providing the highest level of services to the clients.
Although the card center operates as an independent unit yet its operations
synchronize with the rest of the organizational workflows, which is essential for
efficiency. A similar facility is to open in Karachi soon.

Debit cards
BAL is first bank in the market to have introduced debit cards. They started this
service in August 2003. They are having Visa Electron cards.

Home Loans
In the consumer credit arena, the bank offers Home loans for Pakistanis and
NRPs. The customers have been responding positively to the appealing rates of
loans.

On-line Banking
On-line banking and Money Gram Remittance Services provide the customers
with the facility to bank at their own convenience when conventional branch
banking is not required.

ATMs
Automated teller machines are available for the account holders of BAL. They
provide 24-hour service for the convenience of the customers. The minimum
amount that can be withdrawn from these ATM’s is Rs.500.
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CHAPTER – 5
ELECTRONIC BANKING SETUP IN BANK
ALFALAH LIMITED
5.1
“BANK SMART” ONLINE BANKING SYSTEM
Bank Alfalah has its own banking system called as BANK SMART which is used
for online transaction. Through this Bank Smart all the branches of the Bank
Alfalah are interconnected with each other through the Main IT branch which is in
Rawalpindi.
Bank Smart provides an Online Inter-Branch Transaction Facility through which
customer maintaining accounts in online branches would be able to operate their
accounts from any of the online branches across the country.
An online branch will offer the following transactions to account holder of other
online branches:

Balance Inquiry
Balance Inquiry Facility through which any customer of the Bank Alfalah can
check his account balance or any query through any branch of the BAL, as all the
branches of Bank Alfalah has Bank Smart Banking system.

Cash Withdrawal
Cash Withdrawal is another facility through which any customer can withdraw
cash from his own account regardless of in which branch he is holding his
account. His account is debited at the spot through the Bank Smart banking
system.

Cash Deposit
Cash Deposit is another facility through which any customer can deposit cash in
any Bank Alfalah account. The target account is credited at the spot through th
Bank Smart banking system.
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
Transfer of Funds
Transfer of Funds facility enables every BAL customer to transfer funds of any
amount from any account to any account or direct cash to any account through
Bank Smart Banking System.

Statement of Accounts
Any Bank Alfalah Customer can obtain his Statement of Account / Account
Statement from any Bank Alfalah Branch.

Issue ATM Cards
Any Bank Alfalah customer can apply, obtain or replace an ATM card from any
Bank Alfalah branch.
A special option has been made available in the computer system in online
branches to accept transaction meant for another online branch. The online
transaction will only be accepted during fixed hours; presently the cutoff time is
1700 on the weekdays and 1300 on the Saturdays. A complete audit trail of all the
transactions posted remotely would be available both at the destination branch and
the originated branch. The originating branch must tick all the online transactions
with the voucher/documents, as is being done for local transactions.
SCREEN SHOTS
1.
LOGIN MENU
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2.
MAIN MENU
5.2
ONLINE CUSTOMER SERVICE
Why On-line

Fast changing financial enviromnent and its shift towards automation.

Market Competition

Customer Demand due to increasing public interest in c-Banking
(Electronic Funds Transfer)
Objectives

To Acquire Market Share with the introduction of On-line (e-Banking).
Meet competition.

Improve corporate + Brand Image.

Establish Customer Loyalty.

Increase and Sustain Customer Base.

Provide ease and speed in transaction Processing.
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5.3
SYSTEM ARCHITECTURE
Online System is being integrated with UBANK Plus System Architecture and
comprises three main components.

Online IT Server

Local Branch

Remote Branch
On-Line Server (IT)
Server machine will work as an online switch and is housed at IT Department and
will establish and maintain the connection between Local and Remote Branch and
route the transaction to the Destination Branch.
Local Branch
Any Branch initiating an online transaction will be called local branch. A branch
using the system for making a transaction on some other branch will always be a
local branch.
The posting date on the remote branch system must be the same as on the local
branch system, so that the transaction is posted on the same date and balances are
up to date.
The system ensures that transaction posting date in Local and Remote branch is
aligned.
Remote Branch
A Branch on which transaction is targeted is called Remote branch. Customer of
any branch will be entertained at Online Local Branch.
5.4
NETWORKING IN THE BANK ALFALAH CANTT
BRANCH
The Bank Alfalah is a completely online branch equipped with state of the art and
latest hardware and software components. Before giving an overview of the
Bank’s network, I would like to first give an introduction to computer networks;
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Internship Report on Bank Alfalah Limited
Computer Networks
In the world of computers, networking is the practice of linking two or more
computing devices together for the purpose of sharing data. Networks are built
with a mix of computer hardware and computer software.
Bank Alfalah’s Networking
The logical networking environment of the Bank is of both types:

Server-Client Environment.

Workgroup Environment.
Server-Client Environment is used within the branch i.e. between the server and
the clients of the specific Cantt branch. Windows 2003 Server is being installed on
the server side of the branch network and windows XP is installed on the Client
side of the branch network.
The workgroup Environment is used between the Servers of the different branches
i.e. the connection between the different branches of the Bank Alfalah through out
the country is like workgroup. Peshawar Cantt branch is connected to the
Rawalpindi branch through the Least Line which is a latest WAN technology.
Also an ISDN line connection is also set between Peshawar and Rawalpindi
branch, which is used as standby line i.e. backup used when the main ISDN is
experiencing any flaw.
Types of Servers in Bank Alfalah Cantt Branch
The following lists types of servers and their purpose in the Bank;
File server
Stores various types of files and distributes them to other clients on the network
when required (Including broadcasting, uni-casting and multicasting).
Print server
Controls and manages one or more printers and accepts print jobs from other
network clients, spooling the print jobs, and performing most or all of the other
functions that a workstation would perform to accomplish a printing task if the
printer were connected directly to the workstation’s printer port.
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Internship Report on Bank Alfalah Limited
Mail server
Stores, sends, receive, routes, and perform other email related operations for other
clients on the network.
Fax server
Stores, sends, receives, routes, and performs other functions necessary for the
proper transmission, reception, and distribution of faxes.
Proxy server
Performs some type of function on behalf of other clients on the network to
increase the performance of certain operations (e.g., prefetching and caching
documents or other data that are requested very frequently) or as a security
precaution to isolate network clients from external threats.
Remote Access Server (RAS)
Monitors modem lines or other network communications channels for requests to
connect to the network from a remote location, answers the incoming telephone
call or acknowledges the network request, and performs the necessary security
checks and other procedures necessary to log a user onto the network. This remote
login is mostly used by the Network administrator to fix any problem when is
experienced. This facilitates the Administrator to troubleshoot any error/problem
even if he is far away from the branch and that error is needed to fixed urgently.
Backup server
Has network backup software installed and have large amounts of hard drive
storage or other forms of storage (tape, HDD etc.) available to it to be used for the
purpose of ensuring that data loss does not occur in the network.
5.5
NETWORK EQUIPMENT DETAILS
Since Bank Alfalah Limited was incorporated, it has been using the latest IT
equipment available. Since 2000 till 2004 BAL had the following equipment at
their disposal:

Server: - Intel Pentium 3 xenon processor with 512 MB DDR. Ram and 52
GB Hard disk.

Work stations: - Intel Pentium 3 6x processor with 128 MB Ram and fast
Ethernet Nic’s.
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Internship Report on Bank Alfalah Limited

Operating systems: - windows 2000 NT overall.

Routers: - 3cisco 2100 series fast HUB switches, which were supporting
around 10-15 workstations.

Network connectivity: - normal dial up and ISDN lines were supporting
external network.
Year 2004 till Date: - we have upgraded our IT equipment as per following
specifications: 
Server: - Intel xenon 3.20 GHZ Dual processors with 2GB Ram with
Smart Array 6i SCSI and Raid controllers used to connect External devices
as well.

Workstations: - 45-50 Pentium 4 systems with an average 256 MB Ram.

Operating System: - Windows 2003 Server & Windows XP.

Routers: - 7 fast HUB 2400 series, 24 port switches supported by a SISCO
2600 series Router for external connectivity.

Network Connectivity: - ISDN line supported by a DXX wireless
connection.
5.6
DATA FLOW DIAGRAMS OF GENERAL CUSTOMER
EVENTS
Bank has few generalized events that are most frequently occurring as far as Bank
and the Customer’s relationship is concerned.

Customer Opening an Account

Customer En cashing a Cheque

Customer Depositing Cash
Following will show the DFDs of the above mentioned three events.
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2.
Level 0 DFD
Issuance of a new cheque book
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Internship Report on Bank Alfalah Limited
3.
DFD Level – 0
Customer depositing a crossed cheque
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4.
DFD Level - 0
Customer Exchanging Foreign Currency
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Internship Report on Bank Alfalah Limited
CHAPTER – 6
ANALYSIS
6.1
SWOT ANALYSIS
Strengths, Weaknesses, Opportunities anti Threats Analysis
SWOT analysis of an organization helps find out about the strengths and
weaknesses the organization has internally and the opportunities and threats it
faces from the external environment. This analysis leads to a clear positioning of
the organization’s management and its position in the market along with
evaluation of the overall performance of the bank.
The following are the strengths, weaknesses, opportunities and threats of Bank
Alfalah limited.
6.1.1
Strengths
a.
Product line:
BAL offers a prestigious product line up that continues to fulfill and satisfy the
banking requirements of not just the conventional consumer but the demanding
financial need of the corporate sector as well. The product portfolio has expanded
in response to the customer’s needs and now covers a host of services in corporate
banking, consumer banking and investment banking. The line- up includes:

Royal Profit Account

Car financing

Credit cards

Home loans

ATMs and etc

Rupee travelers checks and Money gram

Anmol saving certificates

Online banking

Monthly income plans
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Internship Report on Bank Alfalah Limited
b.
Quality of Management
Banking organization is successful only if it has an efficient and effective
management structure. The management of BAL is trying to provide the best
possible services thus taking the organization to heights of success. The
n1tnagement is free from politics and the set up is so that everyone is aware of the
responsibilities he has. The hierarchy supports the quick decision-making and
problem solving. A bank depends on its management for its success and weak
management can adversely affect the organizations image. Planning, staffing,
organizing and leading are the basic functions of any management, the structure is
affiliated with Abu Dhabi consortium, the management style is also successfully
implemented in Pakistan.
c.
Resourcefulness of the Sponsors
Bank Alfalah limited is an extension of H.E.C.B., which was then taken over by
Abu Dhabi consortium. The resourcefulness of the sponsors has led to the
overwhelming expansion of the bank over the span of six years. The bank has
expanded from three branches to 45 branches and is still expanding. The bank has
not stopped expanding and is planning to add ten more branches with the most
recent being one in Dera Ismael khan and Kohat (in north region).
d.
Flexibility in Approach
Banking techniques used through the country are tailor made to suit the demands
of specific region. This flexibility gives an edge to the bank over other banks. In
northern and southern region the strategies are different. They know where to
invest, lend and from where to generate deposits. The branches are located in the
main areas where resources and clientele are readily available. The bank is careful
not to invest in such places where the returns are risky.
e.
Innovative products
Bank Alfalah limited is keeping pace not only with the local market but also with
the global market. New products like credit cards and money gram remittance
services have been introduced. Though being a small and a comparatively a new
bank it has established reputation in providing all the possible products with
attractive package e.g., low rates or no entrance fee etc.
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Internship Report on Bank Alfalah Limited
f.
Largest Bank
BAL is one of the largest private banks of the country with a deposit base of
Rs.76698 million in the 2003.
During the nine-month period ended September 2005, the Bank’s profit before
provision and taxation stood at Rs. 2,342.019 million as compared to Rs. l,
449.649 million for the previous comparable period, registering an increase of
61.56%. This increase in profit is primarily attributable to overall increase in
business volumes.
g.
Competitiveness and Agility
BAL is one of the top commercial banks. It has the ability to cater any kind of
market needs and to adapt to any kind of market conditions. Bank like PICIC,
ASKARI and UNION commercial banks are also having a lead in providing better
services and products but BAL still has a cutting edge by providing branded
products. The basic philosophy underlining BAL is customer satisfaction and in
order to act on this they are providing new and better products. The services of
BAL as compared to other banks are customer friendly.
h.
Promoting Sports
BAL is associated with sports channel TEN SPORTS. It sponsors cricket matches
and also a sports bulletin. Apart from this BAL also arranges championships and
tournaments of golf in all provinces of Pakistan.
i.
Credit Ratings
PACTRA (Pakistan Credit Rating Agency), which is affiliated with IBCA, rated
Bank Alfalah limited as Al + for long term and Al for short term. Both ratings are
investment grade and expectations of credit quality and very low of credit risk. It
is a statutory requirement that every bank will go though an exercise with this
rating a\agency. Bank Alfalah limited credit portfolio was rated on the basis of
bad debts, lending to different sectors and overall credit management.
j.
Interest Free Banking
BAL is one of the first commercial banks to have started interest free banking.
Having its operations in an Islamic state this venture is expected to be appraised
and taken in positively. BAL has 15 Islamic banking branches.
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Internship Report on Bank Alfalah Limited
k.
Long Term Vision
BAL has long-term vision, which plays a very important role in organization’s
success.
6.1.2
Weaknesses
No matter how successful an organization is with all its policies in line, there is
always room for improvements. These setbacks should be pointed out in time so
to solve them and leave no flaws. BAL’S weaknesses are:
a.
Overworked Staff
The bank’s staff is overworked and overloaded with responsibilities. The bank
needs more staff as the existing staff is trying hard to match up with the set
targets, their responsibilities and the customer handling. Though the working
hours of the bank are from 9 till 6 but there is so much work on the staff’s
shoulders that they cannot leave before 9 p.m, this decreases their efficiency level.
b.
Too Cautious
The bank is too cautious when it comes to exploring new dimensions. Also the
bank is cautious in terms of investment and exploring new products. It has
invested in all those companies that are already on-going concern, its good for the
profitability of the bank but it is not good for the market. The bank is ignoring
project financing. Leasing and micro finance for the durables have already been
started but BAL is still waiting for the response from the market and is delaying
the launch of these products.
c.
Revaluation of Assets
In order to elevate the equity BAL have added Rs. 2.03 billion from the
revaluation of assets. This is not a healthy practice; the bank should add freshly
generated equity in order to strengthen its capital structure.
d.
Shortage in Capital Adequacy
The bank faces shortage in capital adequacy. The deposit base has overgrown the
equity. As per statutory requirement the bank has to keep Rs. 51.6 billion against
Rs. 4,13 billion.
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Internship Report on Bank Alfalah Limited
e.
Over Ambitious
The bank is over ambitious. Over the last six years the bank has not consolidated.
Within this span the bank has opened 111 branches and is pianning to open more
which can be a hurdle or hard to manage. The main reason of failure of bank like
MCB And Habib bank Ltd. was that they were continuously expanding. The bank
is trying to move too fast in achieving its goals and ignoring the problems created
by non-satisfactory communication between the branches.
f.
Over Competitiveness
The bank is too much concerned with competition. This is affecting its
performance and profitability. The rates on car finance and home loans are the
lowest in the market. In order to achieve greater market share the bank is ignoring
its own profitability.
g.
Slow Promotions
Promotion, as we know, is one of the motivational tools in practice today. The
promotion policy of BAL is moderate. Those working hard and being able to meet
their targets on time are usually poised with career advancements.
h.
Separation of Activities
Separation of activities is rare at BAL. For example, sometimes one person
performs local remittances and the accounts section work. It provides room to
confusion and conflicts.
i.
Prayer Room and Common Room
There is no separate prayer room and dinning hail in the bank. There is no
separate common room for the female staff.
j.
Internees
There is no rule for the number of internees in the branch at the same time.
Similarly internees are not offered any stipend either.
k.
Separate HR Department
There is no separate human resource department in BAL. There is only one HR
coordinator for the whole area office and branch level who has to manage all the
activities of human resource department. As there is no proper HR department at
branch levels so they are too slow in corresponding for the training of employees.
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Internship Report on Bank Alfalah Limited
1.
Training is Provided on the basis of generalization
In BAL, training is provided on the basis of generalization rather than
specialization. After completion of training, the employee is inducted into specific
field. Due insufficient specialized knowledge, he/she faces difficulty to perform
the assigned job.
6.1.3
Opportunities
Financial market of Pakistan is very dynamic officering new opportunities to the
existing organizations. Since Pakistan lacks most of the most advanced tools used
in western and European markets, its up to the agents of this market to introduce
those products here. BAL is a well-established bank and can very well avail these
opportunities.
a.
Search for New Markets and Avenues
The bank should try to reach those markets that are completely ignored by other
banks or financial institutions. For example to start projects in development sector
of Pakistan in the Northern region to attract tourism etc or to .boost exports and
promote the products manufactured in Pakistan (e.g. carpets industry of N.W.F.P).
b.
Overseas Branches
Although is managed by Abu Dhabi’s consortium, BAL has no overseas branches.
By opening a branch overseas the bank can expand its horizon and would have an
opportunity to upgrade its service according the international standards.
6.1.4
Threats
Pakistan’s economy is quite unstable due to the instability in the political
conditions inside the country. Although the financial institutions are trying to cut
down on foreign debt, foreign aid largely supports our economy. The threats faced
by BAL due to these uncertainties are;
a.
Unstable Political Environment
Pakistan has an unstable political environment. The policies put forward by one
government are soon replaced as the new government takes charge. This is
causing mayhem in the banking sector. BAL also faces these problems, as it has to
change its policies and rules as the government changes. This is alversely
affecting the growth of the bank.
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Internship Report on Bank Alfalah Limited
b.
Over Exposure
The bank is overexposing its products and lending by aggressive marketing
strategies. This may call for unwanted competition.
c.
Change in the Foreign Policies
BAL can greatly be affected by Middle East crises. The trade finance of the bank
is negatively affected. Any change in the foreign policy will make it difficult for
the bank to stabilize its trade finance.
d.
Change in the Foreign Aid
After the 9/11 incident the attitude of WEST towards Pakistan is very cold. Banks
are trying very hard to keep good terms and business relations with the western
banks. This problem is also faces by BAL.
e.
Over Expansion
Over expansion is a very big threat to any organization. BAL is expanding and is
ignoring the problems related to the branches already established. The branches
need proper monitoring and staffing. The bank should consolidate for some time
and then plan ahead. It is very difficult to manage a large organization.
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6.2
TOWS MATRIX
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6.3
FINANCIAL STATS
a.
Balance Sheet
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b.
Income Statement / Profit in Loss Account
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Internship Report on Bank Alfalah Limited
c.
Statement of Cash Flows
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CHAPTER – 7
FINDINGS / RECOMMENDATIONS
The recommendations given are primarily based on the analysis for improvement
of bank’s efficiency, if these were followed the profitability of the bank would
increase and so would its contribution to the financial market of Pakistan.
After working in almost all departments of the bank and analyzing their
performance, I have concluded the following finding and recommendations:
7.1
RECOMMENDATIONS
a.
Expansion and Consolidation
Bank Alfalah limited, being a fast growing organization has tendency to over do
everything. It has not given any opportunity to consolidation. A healthy practice
would to expand and then consolidate and then expand and consolidate and so on.
Other leading financial institutes throughout the world are strictly following this.
BAL has to seriously think over this problem as it started with only 3 branches
and the number rose to Ill branches and is continuously on increase. Although this
is a bold step on behalf of the bank and can be profligate in the short run but in the
long run this strategy is not economical as it would become difficult to manage
these branches. The problem already is present in the current number of branches
as their management is a tough job.
b.
Up-gradation and Improvement
Information technology is such a filed that it is constantly improving and is
becoming a part of everyday life. In banking sector its importance cannot be
ignored as it provides a foolproof backing to all operations. BAL should keep
focus on the up gradation and on going improvement in IT. The bank needs
Pentium 4 computers with proper programming to carry out the given tasks in
proper time and manner. Also the printers need to upgraded as it gives a positive
outlook if everything works properly when the customer is waiting instead of
embarrassment when the systems fails or statements can not be printed.
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Internship Report on Bank Alfalah Limited
c.
Recruitment of Staff
The number of employees working in the bank is not enough for the amount of
work that is being taken from them. The bank has not recruited enough
employees. Thus the staff is burdened by the work and responsibilities, e.g.
Peshawar Cantt. Branch there is one person who is responsible to both foreign and
local remittances and at times also has to check security, it is difficult for him to
cope with all these things at one time. The bank needs to take in more staff.
d.
Accommodation
Above-mentioned feature has also got to do with the fact that the bank is too small
area wise and the amount of work being done there is too much. Peshawar cantt.
Branch is also an area office for the north region, the number of activities carried
out by the branch demand a much bigger premises, As it gets too crowded at rush
hours and the seating etc creates problem. The bank is considering expansion but
it should be done as soon as possible (so not to make customers upset and make
them change their minds about the bank).
e.
Seating arrangements
BAL Peshawar Cantt. Branch also suffers from shortage of seats for the waiting
customers. Maximum of two chairs placed in front of officer’s tables and then
four waiting seats in the area office and there are three seats downstairs in the
main branch. Most of the customers are standing by the door it creates a lot of fuss
especially in the rush hour. Also, there is no separate seating arrangement for
ladies. Most problems would get sorted if the premises were to bigger then what it
is.
f.
Meritorious Recruitment
Appointment in the bank should be strictly on the merit basis with no personal
favors given to any candidate. This will ensure the entry of competent and worthy
employees in the organization.
g.
Separation of Activities
There is no separation of activities as such. A function of clearing is partially done
in deposit department and partly in account department. This creates confusion
and conflict in decision-making process. To avoid such confusions, the functions
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Internship Report on Bank Alfalah Limited
of clearing be done in one department. This operation separation of activity will
be off great help in adding efficiency and effectiveness in work.
h.
Branch Network
BAL has opened 111 branches till now and is planning too open more. These
branches should be places strategically and a few of them should be opened
abroad. Although the bank has international branches but it has no branches
overseas.
i.
Simplification of Procedure
The procedure of opening an account should be simplified. The account opening
form should be self-explanatory and include translations in Urdu for those
customers who are not well read, since the fact cannot be ignored that many
people do not have a good understanding of English.
j.
Incentives for Depositors
Those who deposit large amounts of money or are old customers of the bank
should be given free credit lines up to a certain limit. Besides, financial advice
should be provided to customers in case there is a change in the market trend
before they seek for it.
k.
Expansion of the Cash Counter
The Cash Department at the Branch needs special attention in the sense that the
cash counter is small and becomes crowded when there are more than 10 to 15
customers to attend. Customers make online fund transfer, use the debit card,
withdrawals and deposits from the very same counter. Hence, if a new counter
cannot be built due to certain limitations, the management should try to make lines
of the customers or give tokens to them, to minimize the crowed.
l.
Burden of work in the Clearing department
The load of work on the Clearing officer is high as compared to the other staff
members of the branch. The Human Resource Department at Head Office should
hire more employees for this department.
m.
Top-Bottom Communication
The down ward communication is very important because the information flows
down
the
hierarchy
from
superiors
to
subordinates.
The
downward
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Internship Report on Bank Alfalah Limited
communications needs to be improved, by making sure that policies made at the
higher level properly reach the lower level and those policies and procedures are
properly understood. Decisions should reach as quickly as possible without any
delays. Delays create hurdles in the functioning of the bank.
Flow of information, decisions and other instructions and policies in efficient and
effective manner will enhance the over all productivity and image of the
organization.
To improve the communications in the bank the managers should strive to become
better communicator and they must accomplish to separate tasks. They must
improve their messages, the information they wish to transmit. Secondly they
must improve their own understanding of what customers and subordinates are
trying to communicate to them; they must become better encoders and decoders.
Proper training from specialized communication teacher should be given to the
managers as well as the lower level employees so that they become good listener
as well.
n.
Introducing Career Planning
As a matter of personal policy, personnel department of BAL should prepare a
career plan showing their future growth potential, depending on the job
performance and evaluation which should be made known to the employees. In
this regard the employee should be given proper opportunities to show his/her
abilities.
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REFERENCES

Ibid.P.1O.

Sekaran, Uma. (1999). Research Methodfor Business, 3rd edition, New
York: John Wiley and Sons Inc. P.57

Ibid. P.57

Asrar H. Siddique (1993) “Practice & Law of Banking in Pakistan” 6th
edition, Karachi, Royal Book Company ppl 5-18.

Bank Alfalah Ltd. (2005) Annual Report Karachi.

Web Master (2006) Technology & Immediacy of Information (On-line)
available at www.bankalflah.com.pk.

Annual Report BAL (2006).

Bank Alfalah Ltd, March (2005). Employee Handbook, Karachi.

Internship Report On Bank Alfalah (IMS) Sidra Bukhari.

Web Site of Bank Alfalah www.bankalfalah.com

IT Manual Bank Alfalah

Prof. Roger Pressman. (2003). SOFTWARE ENGINEERING, Sixth
Edition. p.208-253
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BIBLIOGRAPHY

(Online) Available http: www.bankalfalah.com

BAL, Inter Office Memorandum (2004), system and operation division.

BAL, Annual Report, (2002)

BAL, Inter Office memorandum (2000) Human Resource Development

BAL, BASIC, Karachi, (2002)

Certo, Sammuel (1997), Modern Management, Prentice Hall, International
Inc

Daft, Richard L (1997) Management, the Dryden Press, Harcourt Bruce
college

Faruq Shahid (1999) Glossary: Banking and Finance, the institute of
Bankers

Weihrich, Heinz and Harold Koonz (1993) Management, McGraw Hill Inc.
68