Bank Alfalah Limited - Internship
Report
Executive Summary
Following privatization, Bank Alfalah emerged as new identity of Habib Credit and
Exchange Bank with a revived purpose and commitment. Charged with the strength
of Abu Dhabi consortium and under the leadership of His Highness Sheikh Nahayan
Mabarak Al-Nayayan, the bank has already made significant contributions in building
and strengthening both corporate and retail banking sector in Pakistan.
Designing the product portfolio of bank in response to the customer’s preferences, the
product like Royal Profit, Royal Patriot and Royal Custodial are prime examples of
quality and innovation providing timely banking opportunities to the customers of
bank.
Assessment of the needs and wants of the customers is an ongoing process at Bank
Alfalah, which helps to continually develop new products and services. To
continuously offer courteous, professional and advanced banking solutions, the team
of bank has recently been rejuvenated by going though training programs with a focus
on information technology.
To make their banking solutions become accessible to more and more people, they
have embarked upon a rapid expansion program, aiming to provide a networking that
makes the services available to any of their customers in all the major urban centers of
Pakistan- with a view to go international in the near future.
With their key indicators of progress already soaring to new heights, the bank is
committed to dedicate all its energies, resources and time to bring higher value and
satisfaction to their customers, employees and shareholders.
The graph of bank is going up and up every year. The ratio of profit is increasing at
good percentage. The bank is serving the people at high level of standard by going
according to the whishes of the customers.
Commercial Banking Scenario in Pakistan
At the time of independence in 1947, there were 38 scheduled banks with 195 offices
in “Pakistan” but by December 31, 1973, there were 14 scheduled Pakistani
commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign
countries.
Nationalization of Banks was not done 1st January 1974 under the Nationalization act
1974, due to certain objectives. But it had negative effects on efficiency of the
banking sector afterwards a privatization Commission was set up on January 22,
1991, the commission transferred many banks to the private sector i.e., MCB & ABL.
The government approved & permitted the establishment of 10 new private banks in
1991;hence many new private banks have incorporated, since then, BANK
ALFALAH in one of the namely established private scheduled banks in Pakistan.
Introduction to Bank Alfalah
Bank of Credit & Commerce International (BCCI) was a Pakistan based bank,
established by Mr. Agha Hassan Abdi from UBL, in association with U.A.E and
Europe. BCCI has its branches in 74 different countries of the world. It had its 3
branches in Pakistan. In 1991, the BCCI was banned, when is was accused by
European countries that the bank was involved in some illegal operations with Gulf
countries. The major reason behind European accusation was that BCCI was of
Islamic mode. Therefor, the bank was closed due to international pressure. Then, its 3
Pakistani branches were taken over by the Government of Pakistan, which were
named as Habib Credit and Exchange Bank (HCEB) and these were working as
subsidiary of Habib Bank Limited.
Following the privatization in July 1997, Habib credit and Exchange Band assumed
the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based
bank as the family of Sheikh Nahayan Mubarik Al-Nahayan purchased 70% of its
shares and 30% shares remained with Habib Bank on behalf of Government of
Pakistan.
It has its 18 branches in 8 cities of Pakistan. The Multan branch has recently been
opened in May 1999. It is not listed on any stock exchange of Pakistan.
Charged with the strength of Abu Dhabi consortium, and under the leadership of His
Highness Sheikh Nahayan Mabarak Al-Nahayan, Minister of Higher Education and
Scientific Research, Government of Abu Dhabi, and a prominent member of Royal
Family, the bank is energized with the vision, envisaging the development of various
sectors in Pakistan.
Mission/Objectives
· Edge on competitors.
· High profits.
· Expansion of strong structure.
· Variety of Products.
· A good banking standard.
Bank Alfalah’s Slogan
Let’s Look Ahead Towards a Brighter Future. Together.
Bank Believes
· Every door leads to our customers.
· The legacy of leadership stands as our guiding light.
· The strength of chain relies on the strength of each link.
· A keen ear is a key to understanding. Achievement is nothing without target.
· Time is our most valuable asset.
· Performance is nothing without the ability to measure it.
· Every drop counts.
Branches Network
Bank Alfalah has its 18 branches in 8 cities of Pakistan. Detail is as under:
KARACHI
· Main branch, B.A. Building, I.I. Chundrigar Road.
· Cloth Market Branch.
· Clifton Branch.
· Shahrah-e-Faisal Branch.
· Karachi (new Branch).
LAHORE
· Kashmir Road Branch.
· Gulberg Branch.
· Defense Branch
RAWALPINDI
· Mall Road Branch.
OTHER BRANCHES
Other Branches are in:
· Sialkot.
· Islamabad.
· Peshawar.
· Multan.
· Faisalabad.
· Quetta.
· Sukkur.
· Hyderabad.
· Gujranwala.
Now, Bank Alfalah is going to establish its branches in some foreign countries.
Hopefully, in Dhaka (Bangladesh) and Bahrain, its branches will be opened in the
year 2001. Some branches will also be opened in European countries.
The Board
The list of Board of Directors of Bank Alfalah Limited is as under:
· H.H. Sheikh Nahayan Mabarak Al-Nahayan.
· Mr. Abdulla Naseer Hawalled Al-Mansoori.
· Mr. Abdulla Khalil Al-Mutawa.
· Mr. Omar Z. Al-Askari.
· Mr. Naeem Iqbal Sheikh.
· Mr. Ikram-ul-Majeed Sehgal.
· Mr. Muhammad Saleem Akhtar.
The core group
In the core group, there are 2 committees, i.e.,
· Board Advisory Committee.
· Executive Committee.
Board advisory committee
· Mr. Omar Z. Al-Askari.
· Mr. Abdulla K. Al Mutawa.
· Mr. Ganpat Singhvi.
· Mr. Bashir A. Tahir.
Executive Committee
· Mr. Mohammad Saleem Akhtar.
· Mr. Ikram-ul-Majeed Sehgal.
· Mr. Parvez A. Shahid.
· Mr. Tanveer A. Khan.
· Mr. Mohammad Yousaf.
· Mr. M. Waqas Mohsin.
Auditors
· A.F. Ferguson & Co.
Chartered Accountants.
ORGANIZATIONAL CHARTS
FEATURES
Bank Alfalah Limited is and established bank. It has some special features with the
help of those it is growing rapidly.
Good Work Environment
As the work environment plays a great role in this competition age, so the bank has
good work environment. All the people work with cooperation; managers are so kind
that each problem can be discussed with them.
Efficiency
Employees at Bank Al-Falah are quite efficient. As Multan branch is a new one, its employees have to bring their bank
among the list of good banks. Therefore, they work more than their working hours and it is all according to their will. It
also shows their loyalty, commitment to organization.
Customer Services
All the customers are entertained individually. Same kind of behavior and attention is
given to all the customers.
Suggestions asked from Customers
Getting ideas for improvement from customer side is a new idea and that is working
very well in Bank Alfalah Ltd. All the customers are asked to fill a suggestion form
and the standards of the bank are improved through them.
Employee Benefits
Employees are given the benefits like bonus, gratuity funds, loans, increments, house
rent, medical and conveyance.
Computerized Working Environment
In bank, all the work is done on computers. All the entries are made in computer.
Balance are fed into the computer. This increases efficiency of the bank.
Share Capital
The authorized capital of Bank Alfalah is of Rs. 1000 Million (100,000, 000) Paid-up
capital is of Rs 600 Million (600,000,000) ordinary shares of Rs.10 each issued for
cash.
Products
Prioritizing its product portfolio in line with its corporate and consumer needs and
wants the bank is committed to develop products that give more value to its customers
in both the sectors.
Following their trend of bringing value added products and services to their customers
the bank has present Royal Group, Royal Profit and Royal Patriot.
ROYAL GROUP
Royal Group is a joint investment plan that allows individuals to invest money
collectively and earn higher rate of profit.
Deposit Amount
Rate
100,000-999,999
9.50 %
1,000,000-9,999,999
9.70 %
10,000,000 and above
10.00 %
ROYAL PROFIT
It is the profit obtained by individuals on their deposited amount.
Deposit Amount
Rate
50,000 to 999,999
9.00 %
1,000,000 to 9,999,999
9.50 %
10,000,000 & Above
10.50 %
ROYAL PATRIOT
It is similar to term deposit. In term deposit one get no benefit of profit when he
withdraws his money before maturity date. But in case of Royal Patriot if one
withdraw his money before the maturity date, he can get the benefit of profit. The
profit rates for different periods are following:
Duration
1Month
3Months
6Months
12Months
2Ye
Amount
Rate
Rate
Rate
Rate
Rat
25,000-999,999
8.00 %
10.00 %
10.50 %
11.00 %
11.0
1,000,000-4,999,999
8.10 %
10.10 %
10.60 %
11.10 %
11.2
5,000,000 & Above
8.20 %
10.25 %
10.70 %
11.20 %
FINANCE POLICY
Bank Alfalah finance on short term basis only against current assets to its customers
in both corporate and consumer sectors. They don’t invest too much in fixed assets.
Maximum credit for short term is Rs. 50 Millions for one party, they don’t go beyond
five years financing.
FINANCING SCHEMES
The bank has introduced many financing Schemes such as Term Finance & Royal
Personal Finance. The bank has recently introduced a Car Finance Scheme.
Royal Personal Finance
This is the facility for individuals to finance their domestic requirements such as
purchase of household equipments, computers, funding of education, marriage,
planning a holiday, payments of credit card bills, other liabilities or any other personal
requirement.
· Facility Range Minimum Rs. 50,000 Maximum Rs. 500,000
· Tenure From 1 to 3 years.
Maximum Loan Entitlement (Approximately)
Tenure
1 year
2 years
3 years
Factors
0.09168
0.04993
0.03615
ALFALAH CAR
It’s a scheme that enables one to own his desired car at easily affordable and flexible
installments with a minimum down payment and insurance.
Salient Features
· Lowest Financing cost available in the market
· Tenure of 1 to 5 years as per individual requirement
· Quickest processing
· Minimum processing charges: Rs. 3000 payable once
· Down Payment requirement of 25%
· Repayment through monthly installments
· Lowest Insurance rates available from bank’s approved insurance companies
Monthly Installments
Monthly Installments for Alfalah Car can be calculated by multiplying Bank’s
financing amount with the following factors:
Periods
Factors
For 12 months
0.09072
0.04962
0.03609
0.02944
0.02553
For 24 months
For 36 months
For 48 months
For 60 months
Eligibility Criteria
All Businessmen, Corporate Employees, and other salaried or self-employed
professionals having net take home income in excess of three times the monthly
installment.
Account opening Department
Borrowing funds from different sources has become an essential feature of today’s
11.5
business enterprises. But in the case of bank borrowing funds from outside parties is
more vital because the borrowed capital of a bank is much greater their own capital.
Banks borrowing is mostly in the form of deposits. These deposits are lent out to
different parties such deposit creation is done through open an account in the bank.
The Bank does not make payment of a cheque bearing a six-month or older date. If an
account is not operated in six months, it is called Dormant Account.
Types of Account
¨ Current Account.
¨ Saving Account.
¨ Notice Deposit.
¨ Term Deposit.
Current Account
There is no interest on these accounts. It is only for transaction purposes. They paid
on demand. Where a banker accepts, paying all checks drawn against him to extend of
the balance in the accounts. As there is no profit paid on this account, it is also called
checking account because cheque can be drawn on it. Current account is mostly
opened for business. The minimum balance requirement for opening the current
account is Rs. 1000.
Saving Account
The purpose of this account is to introduce the habit of saving individuals in the
neighborhood. The profit on saving accounts is paid on the basis of profit and loss
sharing at 9 % six monthly. The minimum balance requirement for opening the
account is Rs.5000.
Notice Deposits
Notice Deposits are kind of fixed deposits. The minimum balance requirement for
opening the account is Rs. 5000 and payment is drawn on maturity of the specific
period.
Notice deposit is of two types.
¨ One for which a prior notice of 30 days and is required from the customer before
withdrawing deposited amount and for which rate return is 6.10%.
¨ Second for which a prior notice of 30 days and above is required from the customer
before withdrawing deposited amount and for which the rate of return is 7.50 %.
Term Deposit
A term deposit is a deposit that is made of a certain period of time. At the end of
specific period the customer is allowed to with draw the principal amount. The rate of
return of this account varies from 8 % to 13 %. The term deposit account varies from
one month to 5 years and the minimum balance requirement is Rs. 5000.
Profit Calculation Methods
Daily Product Basis
Deposited Amount × Rate of return.
365 (No. of days in a year)
Average Month Balance.
Sum of daily end Balance × Rate of return / No. of days in month
Minimum Month Balance
Any minimum balance during the month is taken for calculating profit
Saving A/C (05 days _ Minimum Monthly Balance).
Minimum Balance of first 5 days is compared to the minimum balance of the
minimum balance of remaining 25 days. Less balance is calculated for profit.
The amount of profit is given to deposits in three ways:
Þ Cash payment ( only in case of term Deposits ). Or as per customer requirement.
Þ By sending bank draft to depositors home address or officers or whichever is
specified as mailing address.
Þ The depositor’s account is credited at maturity.
Amount of Deposits & Other Accounts in 1999.
Fixed Deposits Rs. 4,038,133,000.
Saving Deposits Rs. 8,734,265,000.
Current Accounts Rs. 1,499,657,000.
Margin, Call & Sundry Deposits Rs. 158,708,000.
Deposits of Federal Government Rs. 1,389,710,000.
Particulars of Deposits & Other Accounts
In Local Currency Rs. 8,829,008,000.
In Foreign Currencies Rs. 6,991,465,000.
Total Deposits Rs. 15,820,473,000.
Account opening procedure
For the chequing account, there are different types of account holders are required for
all these types of account holders. The operation/procedure requirement that is needed
for “Individual Account” differs greatly from the “Joint Accounts” proprietorship
A/C, Partnership A/C, Private Limited company A/C and Public Limited Company
A/C.
Individual’s Account
When a single man or woman opens an account in his or her own name and has the
right to operate, it is called individual A/C.
Documentation
· Copy of National Identity Card.
· Proper Identification ( Introduction ).
Operation
· The person place in the type of account and type of operation required in the account
opening form.
· He/she fills in part 1 of the form, a fix his/her either two of four similar signature (
or thumb expression in the signature space ) and get it introduced and signed by a
person who already has an account with the bank and write his account number in the
specific rows in a specific space.
· The person fills his or her father, mother, husband/wife or any other relative’s name,
his/her address, phone number, his or her sign to certify this requirement. This
requirement is needed because in his/her absence bank can have correspondence with
a specific person.
· The person deposits the initial amount for opening account onto the cash counter.
The person put his signature on form on two places in “authorized Signature” and fills
in the “Title of Account” space by writing his name.
· If the person put his signature in Urdu or any other language other than English, he
signed a “Vernacular Form”.
· The next day is opening of account
Joint Account
When two or more persons neither partners nor, trustees, open an account in their
name is joint account.
Documentation
· copy of N.I.C card.
· Identification ( Introduction ).
Operation
· The person checks the type of account and type of operation required in the
respective box on the form.
· The person fills the Part-1 and Part-II
· Signature of box or all persons are obtained on the formed in the area specified for
signature.
· In the title of account space names of all persons maintained.
· Account holders specified in the form that they will operate the form singly or
jointly.
Proprietorship Account
When the owner of the firm operating singly, open an account in his firm name.
Documentation
· Copy of N.I.C.
· Status of the firm.
· Copy of Sole Proprietorship Declaration.
Operation
All operation remains the same, except that the firm name is written in “title of
account” area and Signature of the proprietor in the specified area.
Partnership Account
The account is opened in the firm name and all partners designate one or two persons
to act behalf of the partnership firm all acts of the firm jointly and serverly.
Documentation
· Copy of N.I.C of all partners.
· Status of the firm ( In case of registered firm ).
· The attested copy of Partnership Deed (in case of registered firm ).
· Operation of the A/C (as per deed).
· Third party Mandate.
· Letter showing the authority of one or more partners to act on.
Operation
All other requirements are same except that all partners dully sign the form, cards are
signed by all of those partners who will act on behalf of the firm.
Private Limited Company account
Documentation
· N.I.C of all partners.
· Articles and Memorandum of association.
· List of directors.
· Resolution of Board of directors.
· Certificate of Incorporation Form 29 (B) (Lasted Copy).
Company secretary will certify all these copies.
Operation
· The person authorized in the resolution of the board of directors put their signature
on the S.S Card.
· Next of Kin requirement is not need in a case of Private Limited Company. Other
procedure is same.
· After completing each and every formalities are signed by all partners who will act
on behalf of the firm.
Pubic Limited company account
Documentation
· Copy of N.I.C of all partners.
· Articles and Memorandum of association.
· List of directors.
· Resolution of Board of Directors.
· Certificate of commencement of Business.
Operation
Operation is same as Private Limited Company
.
Responsibilities of Account Opening Department
· Documentation Intact.
· Proper Introduction.
· ChequeBook Issuing.
· Receiving Inward cheques.
· Account Clo-sing.
· Every Day Posting.
ACCOUNT CLOSING
When a customer wants to close his account because of any reason, he has to give a
hand written application to the head of the Operations Department to close his
account, plus remaining leaves of the chequebook.
The Operations Manager first verifies the signatures of account holder, then closing is
done from the registers on the computer where the account was opened. In the file of
account holder, his account opening form is also crossed.
For this closing, a fee of Rs. 150 is charged in Bank Alfalah.
Cheque Book Issuance
When the account is opened, then, the customer is given a cheque book to sign upon
and en cash money. It is proceeded as under.
PROCEDURE
All the account opening formalities must be completed before, issuance of cheque
book. Particulars of the chequebook requisition should be completed containing title
of account, account number, type of currency, number of leaves and signature of the
customer. Signature of, the customer are verified on the requisition.
If customer is unable to collect his chequebook, then he can give authority to the 'third
person to collect his cheque book' on his behalf by signing on the back of .the
requisition. In such case, the particulars of the third person are required like name of
the person, NIC number and signature of that person on requisition and chequebook
issuance register.
Chequebook is taken out from the safe/locker. It is assured that series of the
chequebook is in order. Particulars are entered in the cheque book issuance register.
Account number is stamped on every leaf of the cheque book and those leaves are
counted. Name of the account holder is written on the cover of the cheque book and
requisition on the chequebook for further issuance is properly filled stamped and
signed by officer of the bank.
Chequebook is delivered to the customer and his signature is taken on the cheque
book issuance register, cheque serial number is entered in the system (Bank Excel).
Stock of Cheque books are balanced at the end of each day and kept under safe
custody.
Earlier in the banks were charging a fee for issuance of cheque book, but now
whenever a new account is opened, the account holder is issued a cheque book free of
charge.
Bank Alfalah issues the following chequebooks.
¨ Saving account - 25 leaves
¨ Current account - 50 leaves
¨ Current account - 25 leaves
¨ Foreign currency $ - 10 leaves
¨ Foreign currency £ - 10 leaves
Loose cheques are also issued in some cases.
Receiving Inward cheques
Another responsibility &function of Account Opening Department is to receive
Inward cheques for collection of other banks. These cheques are sent to clearing
official who clears these cheques at SBP from other banks.
Every Day Posting
At the end of each day, Posting of cheque books is performed. The account opening
department makes credit vouchers of excise duty and provincial tax on chequebook
leaves, and posts it in the company.
CASH DEPARTMENT
Mr. Aqeel and Mr. Jawad helped us in learning about Cash Department. Cash
Department performs two main functions:
¨ Cash Deposits
¨ Cash Payments
CASH DEPOSITS
Cash receiving officer receives cash along with pay-in slip from the customer. He
checks if the deposit slip is properly filled up containing title of account, account
number, date and amount in word and figures. He also verifies signature. Detail on
both counter file and cash receipt voucher should be the same. Cash is received by the
cash receiving officer, twice counted and matched with the deposit slip. The cash
details are written on the back of the deposit slip and are also entered in cash
receiving register. Cash received stamp is affixed on the face of the deposit slip along
with the signature of the cash receiving officer.
Deposit slip and cash receiving register is given to the officer in cash department.
Again proper scrutiny is made by the officer cash department both on cash receipt and
cash receiving register. Officer cash department signs both the deposit slip and
register; Deposit slip is credited and posted in the concerned account in the system.
Counter folio is given to the depositor as receipt. One consolidated cash debit voucher
is posted in the system to balance the cash.
PAYMENT OF CHEQUES
The process for payment of cheques for local and foreign currency is same. First the
customer presents the cheque or holder to branch and the particulars of cheque are
properly filled in. Signature of the holder is taken on the back of the cheque. Cheque
handed over to the officer cash department for scrutiny where officer checks the date,
amount in words and amount in figures, payee's name crossing if any, account
number, cheque serial number, any material alterations, endorsements and signature
of the customer. Account is debited and then the officer cancels cheque. It is posted in
the system and posting stamp and number is affixed on it. Cheque is handed over to
the cash payment officer for payment. One more signature on the back of the cheque
is taken from the holder to match with the first one, and then cash is paid to the payee.
Cash detail is written on the back of the cheque. Cash paid stamp is affixed on the
face of the cheque. Entry is passed in the cash payment register.
If the payment is of Rs. 50000 the cashier can make it on its own. If the amount is
greater than Rs. 50000 to Rs. 100,000 the cashier and cash deposit Incharge will
verify the check and will sing it. Then the payment will be made. But, if the amount is
greater than Rs. 100000 to Rs. 1000,000 the manager operation will also verify the
check and sign it so that the payment can be made. If the amount is greater than Rs.
1000,000 the Branch Manager
Will also verify the check and sign it. Otherwise the payment will not be made.
CLEARING DEPARTMENT
In clearing, Mr. Anees remained so helpful. The clearing process majority involves
receiving the cheques and making payments. This process can be inward or outward.
CLEARING PROCESS (INWARD/OUTWARD)
Here t he local cheques are received that are drawn on BAF. All the cheques are
received on one counter alongwith the paying slips duly filled in properly containing
particulars of cheques and account harder. Counter folio of paying slip is handed over
to the customer by putting stamp for #cheque received for collection for Bank
Alfalah' on it duly signed by officer. . These cheques are scrutinized and cheques for
local clearing are separated from OBC. These are then entered in clearing register and
cheques for collection, are entered in OBC register and handed over the Bills
Department for collection.
Clearing officer checks and verifies title of all the cheques deposited by the customers
to confirm the good title of the cheques. Cheques are scrutinized properly and paying
slips are separated from cheques. Special crossing, endorsement and clearing stamps
are affixed on the cheques. Cheques of each bank are sorted and arranged branch
wise. All the cheques are then entered into the clearing system of the bank. Print out
of the clearing is taken and details are attached with the cheques of each bank. Details
of these banks are then entered into the clearing schedule containing number of
cheques presented and their total amount against the name of each bank. Then total
number of cheques presented to all banks and their total amount is written on the foot
of that schedule, which is tallied with the clearing register.
Next morning, these cheques are delivered to the respective banks in clearing house
of State Bank of Pakistan between 9:00 to 9:30AM. In the same manner, other banks
present their clearing drawn on Bank Alfalah. Total number of cheques and their
amount delivered to other banks and received from them are written on the Clearing
House schedule branch for their payment. After proper scrutiny of cheques,
verification of signatures and confirmation of balance in the account, the Officer Cash
Department pays these cheques by canceling and posting them in the system.
If any cheque is not passed due to insufficient balance or any other reason, Officer
Cash Department returns the same cheque by attaching a cheque return memo
containing reason for return. This cheque is entered into the cheque returned register
and bank charges are deducted according to the schedule of charges.
Second clearing is called at 2:30PM to check the fate of the cheques presented to
other banks in the morning. If any cheque is to return, that is delivered to the same
bank in second clearing. In the same manner, if any cheque presented by Bank
Alfalah in first clearing is returned, they receive it and once again give schedule of
clearing figure to the Officer Clearing House SBP containing number of cheques and
their amount delivered and received unpaid.
Remittances Department
The need of remittances is commonly felt in today’s business. The main function of
remittance department in a bank is the transfer of funds.
Mr. Hassan in Bank Alfalah is the officer for Remittances Department. In remittances,
following banking instruments are used:
· Pay order
· Demand draft
· Telegraphic transfer
The procedure for dealing with all these under local as well as foreign currency in
BAF is as under.
Pay Order
A pay order is a written order issued by a bank, drawn upon & payable by itself, to
pay a specified sum of money to or to the order of a specified person.
Procedure for Pay Order
Application form is given to the customer to fill. Two signatures are taken on the
form one for request and other for receiving the instrument. All the particulars of
application form are checked and bank commission charges and withholding tax is
written on the top of the application form. If the customer is maintaining his account
with the branch, he can give cheque for total amount of instrument plus bank charges.
Cheque and application from is then given to the officer Cash Department for the
payment of cheque. After proper scrutiny, Officer Cash Department posts the cheque
and signs the application form in token of payment received. If the customer wants to
pay cash, then cash is deposited by the customer along with the bank charges and
withholding tax.
Application form is then given to the Remittances Incharge for issuance of
instrument. He enters all the particulars of the application form in the system and
computer gives an Auto Control Number to the instrument. Printout is taken on the
block of payment Order. Two authorized officers of the branch then sign it.
Instrument is then protectographed, and given to the customer.
When instrument is presented for payment, it is posted in the system and canceled by
the Remittances Incharge after proper scrutiny.
DEMAND DRAFT
A Demand Draft (DD) is an instrument, which is drawn by one bank upon another
bank for a specific sum of money payable on demand. It is made by the bank, given to
the purchaser against cash or cheque.
Parties Involved in DD:
¨ Purchaser
¨ Issuing Branch
¨ Drawee Branch
¨ Payee
Procedure for Issuing DD
Issuance procedure of Demand Draft is same as of pay Order.
PROCEDURE FOR DEMAND DRAFT PAYABLE
When DD advice is received, signatures of both signatory on the DD are verified. All
the particulars of the DD payable are entered in the system. Prints out of vouchers
(DD payable) are taken. When instrument is presented for payment, signatures of the
attorneys are verified on DD and after proper scrutiny, it is posted in the system and
canceled by the Remittances Incharge.
Telegraphic Transfer
Sometimes, when the remittance is urgently required by the remitter, Telegraphic
Transfer (TT) is issued . TT may be issued to general public on their written request
and against the value received.
Procedure for Issuing Telegraphic Transfer
Application form is given to the customer to fill. Two signatures are taken on the
form one for request and other for receiving the instrument. All the particulars of
application form are checked and bank commission charges and withholding tax is
calculated and written on the top of the application form (if customer is tax payer, he
can give tax exemption certificate). If the customer is maintaining his account with
the branch, he can give cheque and application form is then given to the officer for the
payment of cheque. After proper scrutiny, Officer Cash Department posts the cheque.
After proper scrutiny, Officer Cash Department posts the cheque and signs the
application form, to assure that payment is received. If the customer wants to pay
cash, it is deposited by the customer on cash counter. Cash Receiving Officer receives
cash n the application form along with the bank charges and withholding tax.
Application form is then given to the Remittances Incharge for issuance of the
instrument. He enters all the particulars of the application form in the system (BPG)
and computer gives an Auto Control Number to the T. T.
Telegraphic Transfer message is written in the telex containing name of transferring
branch, name of receiving branch, date, amount, currency, payee’s name and account
number or identification if any, payer name and payment advice. A test number is
given to the T. T. message for receiving branch. This message is then sent through
telex to the receiving branch followed by a T.T. advice. The customer is confirmed
that T.T. has been sent.
Procedure for T. T. Payable
When T.T. message is received, tested number on the T.T. is checked and verified.
Tested number is then written in the register and signed by the holder of test keys for
officer record. All the particulars of the T.T. payable are entered in the system.
Payment instruction on the T.T. message are followed if it is pay and advice it will be
paid through TTR on the cash counter or through clearing and if it is credit and
advice, it will be transferred in the account mentioned in the T.T. message. Printouts
of vouchers (T.T. payable) are taken. If TTR is presented for payment, signatures of
the authorized officers are verified on TTR and after proper scrutiny, it is posted in
the BPG and canceled by the remittances Incharge.
Procedure for Foreign Demand Draft Issuance:
Application form is given to the customer to fill the same. Two signatures are taken
on the form, one for request and other for receiving the instrument. All the particulars
of application form are checked and bank commission is charged, which is US$ 5/for each amount of FDD. Cheque is received from the customer for total amount of
FDD plus bank commission. Cheque and application form is then given to the Office
Cash Department for the payment of cheque.
After proper scrutiny, Officer Cash Department posts the cheque and signs the
application form, to assure that payment is received. Then cheque and application
form is given to Incharge Remittances, who will enter all the particulars of the
application in the FDD Issuance Register. If the customer wants to pay cash, it is
deposited by the customer on cash counter. Cash Receiving Officer receives cash on
the application form along with the bank charges. Application form is then given to
the Remittances Incharge for the issuance of the instrument. A control number is
allotted to the instrument from FDD Register. Instrument is completed by putting all
the particulars in it and signed by two attorney holders. Instrument is then handed
over to the customer. FDD advice is sent to the responding foreign bank/paying bank
where they are maintaining dollar account through registered mail. Exchange
Transaction Credit Advice (ETCA) is sent to the Head Office for the reimbursement.
Copies of the FDD and ETCA are kept in the record of the bank.
PROCEDURE FOR FOREIGN TELEGRAPHIC TRANSFER ISSUANCE
Application form is given to the customer to fill the same. Two signatures are taken
on the form one for request and other for receiving the instrument. All the particulars
of application form are checked and bank commissin is charged, which is US$ 15/(flat rate) for each amount of FTT.
If cheque is received from the customer, it is taken for total amount of FTT plus bank
commission. Cheque and application form is then given to the Officer Cash
Department for the payment of cheque. After proper scrutiny, Officer Cash
Department posts the cheque and signs the application form to assure that payment is
received.
If the customer wants to pay cash, it is deposited by the customer on cash counter.
Cash Receiving Officer receives cash on the application form along with the bank
charges. Application form is then given to the Remittances Incharge for the issuance
of instrument. He enters all the particulars of the application form in the FTT Register
and a Control Number is allotted to the FTT. TT message is written in the telex
containing name of transferring branch, name of receiving branch, date, amount,
currency, payee’s name and account number or identification if any, payer name and
payment instructions. A test number is given to the FTT message for receiving
branch. This message is then sent through telex to the receiving branch. Customer is
confirmed that FTT has been made. Exchange Transaction Credit Advice (ETCA) is
sent to the Head Officer for the reimbursement. Copies of the FTT and ETCA are
kept in the record of the bank.
Collection
All the cheques under collection are called cheques under Collection in Bank Alfalah
Limited. There are two types of bills for collection:
· Outward Bills for Collection
· Inward Bills for collection
OUTWARDS BILLS FOR COLLECTION
Al the cheques are received on one counter along with the paying slips duly filled in
properly containing particulars of cheques and account holder. Counter folio of
paying slip is handed over to the customer by putting stamp for “cheque received for
collection for Bank Alfalah” on it duly signed by officer. These cheques are
scrutinized and cheques for local clearing are separated from OBCs. Cheques for local
clearing are entered in Clearing Register, whereas cheques for collection are entered
in OBC register and handed over to the Bills Department for collection. OBC number
is allotted to the cheque from OBC register. Special crossing and bank endorsement
stamps are affixed on the cheque.
OBC schedule is attached with the cheque and dispatched to the main branch of that
city for collection. If they do not have any branch in that city, then cheque will be sent
to the Collecting Agent of Bank Alfalah for that city, and if they do not have any
collecting agent even, then cheque can be sent directly to the drawing branch.
Instructions are given on the OBC schedule for the payment of that cheque. Contraliability vouchers are also posted in the system. When OBC is realized, collection
bank pays the amount through IBCA if it is the same bank or through DD if it is
another bank. If DD is received against OBC, it is presented in the clearing for
collection. If IBCA is received from the branch for the payment of OBC, certain
vouchers are posted in the system.
INWARD BILLS FOR COLLECTION
If any other bank sends a cheque of Bank Alfalah Limited, it is Inward Bill for
Collection. Bank Alfalah remits money after checking the balance of the customer
account.
The process of collection starts when the cheques of Bank Alfalah Ltd. Are received
from other banks. Then these cheques are sent to the Head Office Karachi, which
sends the cheques to SBP for clearing and get the confirmation of cheque and credit
advice. Main activity of clearing is performed by Head Office, which contacts other
banks through SBP.
BILLS FOR COLLECTION IN 1999
Payable In Pakistan Rs. 22,092,000
Payable Outside Pakistan Rs. 1,964,738,000
Total Rs. 1,986,830,000
Credit and Advance Department
Credit and Advances Department deals with the provision of loans (credit facility) to
the customers. At BAF, credit is given on the basis of a policy made by Board of
Directors and is called Credit Policy. This policy statement sets out the underlying
principles from which the BOD will determine the commercial credit activity of Bank
Alfalah Ltd. The committee to approve direct and review commercial lending of Bank
and to ensure that credit policies are adhered to and the credit operation is conducted
in an efficient and effective manner.
Purpose of this policy is to set out the credit policies for the boar, which will be
implemented by the Credit Committee. The policies are described under the following
readings:
· Credit principles
· Portfolio limits
· Approval
· Administration
· Monitoring and review
1. CREDIT PRINCIPLES
It includes principles to be adopted for lending authority, approval, monitoring and
control on a basis consistent with Bank Alfalah Ltd.
The operational objectives and business strategies regarding objectives, structure,
performance and administration are also included.
2. CREDIT PORTFOLIO
These are the guidelines set down by Credit Committee regarding:
· Total facilities
· Term facilities
3. CREDIT APPROVAL
When the terms and conditions are set and both parties are agreed, the Credit
committee makes approval for the credit.
4. CREDIT ADMINISTRATION
The credit application when handed over to Credit Administration, then they critically
examine securities given by client to bank against credit facilities. Credit
Administration keeps liaison with lawyers, surveyors, valuators and other corporate
bodies.
5. CREDIT MONITORING
The client can present his own account insurance policy as security for credit. When
he presents his own account as security, his account is blocked for the same amount,
which the bank is granting him. When the facility is adjusted at that time, the blocking
is released from the account. Clients can also use third party’s account for getting
credit. Shares can also be kept as security in this case these are verified and duly
signed. These are kept separate to avoid theft. The company whose shares are used is
informed that its shares are in the custody of the bank.
Advances
Bank Alfalah Limited, Abdali Road Multan, provides the following facilities in
Advances Department:
· Funded facilities
· Non-funded facilities
FUNDED FACILITIES
These are the facilities in which funds like cash fund are included.
LPO
Goods purchased on behalf of bank and provided to customers.
PRE-SHIPMENT
It provides to prepare consignment. Maximum tenor is about 150 days. Profit may be
16% per annum. The repayment is generally from sale proceeds. This is for
preparation of consignment.
POST – SHIPMENT
During export process, funds are required for preparation of next consignment that is
provided by post-shipment facility. Maximum tenure is 150 days. Profit rate is about
15% per annum.
NON – FUNDED FACILITIES
These facilities are on:
· Letter of Credit
· Letter of Guarantee
L/C is of two types:
· Sight L/C for 90 days
· Usance L/C for 120 days
CREDIT CARDS
Bank Alfalah has no credit card facility but, Inshallah, in March the credit cards will
be issued by bank.
ADVANCES IN 1999
Rs. 10,327,324,000 All in Local Currency
Foreign Exchange Department
Foreign Exchanged Department deals within exports and imports. Mr. Saleem at BAF
supervises it. The bank acts as exporter as well as importer bank for different parties
who are in the business of export and import.
Exports
EXPORTER
When the bank becomes the exporter bank for a party then the market stability,
reputation, financial position of the exporter is first of all checked.
DOCUMENTS TO BE ATTACHED FOR EXPORTS
· Invoice
· Bill of lading
· Packing list
(a) Total quantity
(b) Net weight/carton
(c) Gross weight/carton
(d) Total net weight/carton
(e) Total gross weight
· Bill of exchange (original or draft)
· E-form: Initial document on which total export proceeding is based. In this form , all
the conditions are given, which are necessary for exports.
· Letter of credit: It is written agreement between importer and exporter.
· Beneficiary certificate
· DHL certificate (TCS certificate)
· Form ‘M’
· Certificate of Origin (Form –A)
FORM – E
Government has provided facility to exporter in taking E-Form from any bank and he
can present it to any bank for negotiation.
Export Proceed Realization Certificate
SBP gives rebate to exporter against export after realization. It is paid according to
commodity wise and bill wise.
Claim period: 1 year.
Transport Document (Bill of Lading, Airway Bill)
· When insurance is done by importer, C&F (cost and freight) usually used.
· FOB cost (free on board)
· CIF (cost insurance and freight) when insurance is done by exporter, CIF is used.
· Tenor (At sight) immediate payment by importer after receiving product.
· Partial shipment: Product is sent partially.
· Transshipment: Product is sent via any country
E-FORM CERTIFICATION
When export is done on C&F basis, so bank issues E-form certification to exporter
and he submits it to the custom officer along with E-form certification to certify Eform.
FORM OF AUTHORIZED DEALER’S CERTIFICATE
State Bank permits exporter to issue Bill of Lading in the favor of E-form bank. But if
requirement of L/C is to issue Bill of Lading in favor of company then shipping
company issues bill of lading in favor of Exporter Company. Authorized Dealer
Certificate is filled for this purpose.
CERTIFICATE OF ORIGIN
This certificate shows that goods are from Pakistan.
COVERING SCHEDULE
If in covering schedule, it is given that “please remit proceed to our Karachi Office
A/C no. 5740734881 with ABN (Amro Bank New York), USA for onward credit to
BAF Multan.”
BENEFICIARY CERTIFICATE
If L/C requires some information as proof of anything from exporter then exporter has
to present beneficiary certificate for that proof.
E-FORM
E-form has four copies:
· One for custom officer
· One for exporter
· Triplicate copy for SBP
· Duplicate copy for bank
Bank reporting or duplicate and triplicate is done by bank. Custom Officer (date is
given on the foot of form) should clear product.
PAYMENT FROM IMPORTER BANK
It is the choice of importer to open L/C from any bank and the bank from which L/C
is opened can also refer to some other bank for payment. So bill of exchange is sent to
referred bank and other documents are sent to L/C opening bank.
SWIFT
It is network among all banks. No other institute can get involved in it.
BILL OF LADING
Certificate from shipping company for loading documents. If requirement of L/C is to
issue Bill of Lading in favour of L/C opening bank, then authorized dealer certificate
will be provided by bank in favor of L/C opening bank.
BANK KEEP IN RECORD
· Covering schedule
· Invoice
· Packing list
· AWB
· Certificate of Origin
· E-form
Normally bank keeps photocopy of all documents in record. Negotiable documents
(original documents).
IMPORTS
L/C is opened by the importer. There are two types of L/C.
· Revocable
· Irrevocable.
NECESSARY REQUIREMENT
If place of issue and port of loading is different on Bill of Lading, then along with the
stamp of shipment on board, vessel name and port of shipment is written.
1) Issue date of Bill of Lading – shipment on board.
2) There should not be cutting on bill of lading without authentication.
3) Bill of lading should show capacity of agent. If bill of lading can be taken by the
agent of Importer Company, then his name should be mentioned on bill of lading.
4) Original GSP should be presented.
5) If TT reimbursement is not acceptable, it means bill of lading is necessary.
When documents are received for export, do enter into lodgment register.
DOCUMENTS FOR IMPORT
· Performa Invoice signed by importer
· Category passbook copy attested by any bank
· L/C opening application filled in by the customer
· Import registration with export Promotion Bureau
· Annexure
· Verification of signature by S. S. Card
· L/C issued on basis of L/C application form.
· Insurance if covered by buyer.
· Insurance cover note.
· Insurance policy.
Account Department
Most important department of bank as it is concerned with:
· Revenue
· Expenses
· Assets
· Liabilities
These are the pillars of any business. This department is supervised by Mr. Masood
Ahmad. In this department, all the vouchers that are posted during one day are sent to
the Account Department next day. These vouchers are already posted to computer by
the concerned department. So computer also sends a report to the Accounts
Department. The accounts Department has to tell that all the vouchers are posted
under the right head. Amount, date, stamps, signatures all the requirements for
cheques and vouchers are fully checked.
If any kind of renovation or construction or rebuilding is done, all is paid from the
Accounts Department. Like petrol for the car of EVP and VP, stationery charges,
medical allowance, etc. are all paid by this department.
Daily Customer Movement List
All the changes that are made in accounts of customer are shown in the daily
customer movement list. By using this list, people of Accounts Department can
prepare the vouchers.
Following activities are performed by Account Department:
· Voucher preparation
· Preparation of daily, weekly, monthly, and annual statement.
· Budgeting and fixed assets
· Employer’s benefit
· Expenditure approval.
SWOT ANALYSIS
Strengths
· Bank has a belief in customer service
· Backed by strong Abu Dhabi Consortium
· Customer give suggestion for the improvement of bank and these suggestions are
listened carefully.
· Manager & EVP Mr. Asif A. Sheikh has good coordination with staff members.
· Environment is friendly.
· Products are excellent
· Expansion is consistent
· Modernized banking (online + Internet)
· Fully computerized, each department has to own PC.
WEAKNESSES
· BCCI Image.
· Mixed Culture
· New Setup
· No ATM facility is provided
· No traveler cheques are issued.
· Tokens are not issued to customer so the chances of doubling are present.
· No credit card facility is available.
· Personal Lockers are not available.
· No internal audit is held.
· Staff is lesser.
OPPORTUNITIES
· Information Technology.
· Credit Card Facility
· Internet Banking
· Establishing Foreign Branches
· Local Setup Expand
THREATS
· Competition
· Legal Reputation
Recommendations
Finally, We are giving some suggestions for Bank Alfalah Limited. These suggestions
are based on our experience with bank.
· This is a routine practice that in order to give personalized services to the customer,
bank staff tries to fill all the columns of AOE with their own handwriting, which is
wrong. AOE must be filled in by the customers. Bankers should avoid to fill in the
AOE because it can create problem if the address, title of account or any other
information provided by the customer has not been written properly. Customer may
be affected or he may claim that this information was not provided by him, but if
AOE is filled by the customer then banker cannot be held responsible for any
incorrect information provided by the customer.
· Under no circumstances chequebook should be given to the customer if the account
formalities are incomplete.
· There are two officers involved in cash deposit process, which is time consuming.
Cashier should be given certain powers to receive cash of US$, DM and L to provide
prompt services.
· Similarly, there are two officers involved in cheque payment process, which is time
consuming. Cashier should be given certain powers to pay cheques up to Rs. 25,000/to provide prompt services.
· Cheques, which are drawn on Bank Alfalah Branch and returned unpaid in clearing,
are not reflected in the Statement of Account of the customers. These cheques must be
reflected in the accounts so that credibility of the customers may be assessed.
· Tokens should be issued to avoid doubling.
· Lockers, ATM, credit card, traveler cheques all these facilities should be provided to
attract more customers.
· Audit should be held internally. Rather there should be an Audit Department in the
branch to make audit on daily basis. This can become so helpful as different banks are
having this department of their own.
Marketing Practices Adopted by Bank
Nowadays marketing of products is of prime importance for any organization. In this
dynamic environment, every organization has its own Marketing Department, which
is responsible for creating the demand of its goods and services.
Nowadays banks also have their marketing departments, which are responsible for
creating demand of their products, i.e., their deposit schemes and increasing the
deposit of the bank.
Bank Alfalah has its own full marketing Department at the Head Office, Karachi. This
department prepares different deposit schemes for its customers, time to time, in order
to increase the business of the bank. At branch level, the Operations Department
follows marketing practices. At each branch of bank, officers are available to provide
marketing activities of their products.
They make customer calls and personally visit the potential customer to convince
them to invest in AFB. They make phone calls to customers and inform them about
their schemes, profit rates.
CONCLUSION
BANK ALFALAH ( BAF ) under the leadership of Sheikh Nahayan Mabarak AlNahayan has made significant in building of strengthening both the corporate and
retail banking sectors in Pakistan.
The Bank attained Number two (2) position in terms of its Balance Sheet size
amongst the private banks in Pakistan in 1999. The significant improvements in terms
of its results in comparison to the corresponding period for the year 1998 have been
much above the market expectations. Balance Sheet footing of the Bank reached the
level of Rs.21 Billion-an increase of more than 46% over the previous year. Customer
Deposits rose by 33% on a year-to-year basis and stood at Rs.15.82 Billion. Bank
maintained a Capital adequacy ratio of over 13%, which is significantly above the
Basle guidelines and international requirement of 8%. The pre-tax profit of the Bank
also increased more than five (5) times as compared to the previous year and stood at
Rs.354 million for the year 1999. Bank’s investment in the Financial Sector was
based on the confidence of bank in the country as a whole and it has been amply
demonstrated by the growth plans of bank though ambitious in nature but prudent and
in line with the potentials of the market place. Although the financial sector in general
witnessed some shrinkage, both in terms of downsizing and closure of certain
locations, the bank, however, continued with its expansion programme and added five
(5) new Branches in their network, one each in Islamabad, Peshawar, Multan,
Faisalabad and Lahore.
BANK ALFALAH views specialization and service excellence as the cornerstone of
its strategy. The people of bank innovation, creativity, reliability, customized services
and their execution are the key ingredients for their future growth. Based on this
approach, their Treasury Division and the Structured Finance Unit have been geared
to provide specialized services to the Corporate customers. Revenues from these
activities have started yielding dividends and they expect significant growth in these
areas in the coming years. While building on their in-depth familiarity with their
customers’ needs and anticipated developments in the banking industry, the Retail
and Corporate areas of their operations will continue to provide a strong and stable
base to the business of the Bank.
They are aware that they have stepped into the 21st century and they must meet its
challenges by acquiring the highest levels of Technology. They will thus be
accelerating their enable them distribute their products and services through most
efficient and high-tech means. They say that they will invest in the modern tools and
substantial allocation of resources will be made to achieve this objective during the
current year. Their programme to launch real time – on line Banking Services and
introduction of ATMs at strategic locations have been firmed up and it will be fully
operational during the year 2001.
Their focus would be to constantly seek out growth opportunities through increased
quality assets and by offering a wider range of products and services to their esteemed
customers. There are significant growth opportunities for BANK ALFALAH and they
are confident in their ability to grasp them. They are committed to enhancing the
shareholder’s value and look forward with greater optimism to a prosperous future for
BANK ALFALAH
Based on the profit of Rs.354 million, the Board has proposed that a cash dividend at
a rate of Rs. 2.00 per share i.e. 20% of share capital be distributed among the
shareholders.