INTERNSHIP REPORT

ON
 Table of Contents
TOPICS PAGE #
1-COMPANY PROFILE 3
 History 3
 Vision 4
 Mission Statement 4
2-DEPARTMENT WORKED DURING INTERNSHIP 6
 Account Opening Department 6
 MY activities and Learning in A O Department 10
 Accounts Department 11
 My Activities and Learning in Accounts Department 12
 Operations Department 14
 My Activities and Learning in Operations Department 21
3-APPLICATION OF CLASSROOM LEARNING 21
4- ANALYSIS OF BANK ALFALAH 22
 SWOT Analysis 22
 PEST Analysis 24
4-MY FINDINGS & SOLUTIONS 27
5-RECOMMENDATIONS 29
6-CONCLUSION 31
7-IF I WERE MANAGER THERE? 32
8-FINANCIAL ANALYSIS 39

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 ACKNOWLEDGMENT

My gratitude and thanks to almighty “ALLAH” the gracious, the most merciful
and beneficent who gave me courage to undertake and complete this task. I am
very much obliged to my ever caring and loving parents whose prayers have
enabled me to reach this stage.

I am highly indebted and grateful to my teachers, my Internship Incharge Madam

Ruhma Khan and Internship Coordinator Madam Javeria Abbas for providing me
guideline for the completion of this report.

I feel great pride and pleasure on the accomplishment of this report as this help
me a lot to increase my learning and capabilities.

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 COMPANY PROFILE

HISTORY
Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group. Bank
Alfalah was incorporated on June 21, 1997 as a public limited company under the Companies
Ordinance 1984. Bank Alfalah is registered at both Karachi and Lahore Stock Exchange with
a ticker name of “BAFL”. Its banking operations commenced from November 1, 1997. The
bank is engaged in commercial banking and related services as defined in the Banking
companies ordinance, 1962, with the registered office at B.A.Building, I.I.Chundrigar Road,
Karachi.

Since its inception, as the new identity of H.C.E.B (Habib Credit and Exchange Bank Limited)
after the privatization in 1997, the management of the bank started implementing strategies and
policies to carve a distinct position for the bank in the market place. This was further
strengthened with a partnership with the Abu Dhabi Group which owns 70% of Bank Alfalah
shares and remaining 30% were owned by HBL. This allowed the bank to invest more in
revolutionary technology to increase its range of products and services, perceiving the
requirements of their customers and matching them with quality products and service
solutions.

Branches
The bank is currently operating through more than 274 branches domestically and an
international presence in Afghanistan, Bangladesh and Bahrain, with the registered office at
B.A.Building, I.I.Chundrigar, Karachi. Some of the main branches are located in all of the
major cities including: Lahore, Kasur, Islamabad, Gawadar, Peshawar, Faisalabad, Quetta,
D.I.Khan, Rawalpindi, Sargodha, Sukkur, Sialkot, Multan, Murree, Attock District,
Gujranwala, Pirmahal, Mirpur Khas etc.

Now12 years after being incorporated, Bank Alfalah has emerged as one of the foremost
financial institution in the region, endeavoring to meet the needs of tomorrow today, operating
through 274branches in 74 cities nation wide, with total employees exceeding 6000. Bank
Alfalah also expanded its network internationally by opening branches in Afghanistan,
Bangladesh and Bahrain to further improve its image as a premier banking institution.

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 Vision Statement

To be the premier organization operating locally & internationality that provides the complete
range of financial services to all segments under one roof.

Mission Statement

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

Chairman bank alfalah

H.E. Sheikh Hamdan Bin Mubarak Al Nahayan

Products

Loans, Credit Cards, Savings, Consumer Banking etc.

Company financials

Revenue : PKR 25.783 Billion (2007)

Net income : PKR 3.130 Billion (2007)

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Offer Structure Summary

Company Bank Alfalah Limited

Lead Manager and Lead

Aqeel Karim Dhedhi Securities (Pvt.) Limited
Underwriter

Shares Offered 40,000,000

Face Value Rs. 10 per share

Offer Price Rs. 30 per share

Premium Rs. 20 per share

Offerers Certain members of the Abu Dhabi Group

To enable listing of Alfalah on the Karachi Stock

Purpose of the Offer
Exchange

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 MY INTERNSHIP

I did my internship at Bank Alfalah Limited Hussain Agahi Branch and the main departments
of this bank in which I worked and their functions are as follows:
 Accounts Opening Department
 Accounts Department
 Operations Department (Remittance / Clearing)

1-ACCOUNTS OPENING DEPARTMENT

Accounts opening department is one of the departments that come under the retail/general
banking facilities provided by Bank Alfalah SRA Branch. Some of the major deposit accounts
opened by Bank Alfalah SRA Branch are as follows:

Major Deposit Account Products

1-Current Account
Current Accounts are non interest bearing accounts that have a minimum account opening
requirement of Rs 10,000. No zakat is deducted on the accounts balance. Furthermore all
current account holders receive a Hilal debit card and there are no restriction on the number of
withdraws or deposits made to and from the account.

2- Profit& Loss Saving Account

Profit& Loss saving accounts can be opened with a minimum balance requirement of Rs 5,000
and profit is credited on a half yearly basis. There are no restrictions on the number of deposits
and withdrawal made to and from the account and all account holders receive a Hilal debit card
as well. Profit and loss saving account cannot be opened by a business corporation, however
can be jointly opened by individuals. Profits are paid at 2% on all account balances.

3- Basic Banking Account (BBA)

Basic Banking Account was introduced by banks on an order by the State Bank of Pakistan
and is current in nature. There is no minimum balance requirement for BBA, however initial

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deposit must be Rs 1000. Maximum two withdrawals and deposits are allowed by cheque,
while there is no restriction on ATM withdrawals.

4- Royal Profit Account

Royal profit accounts are opened with a minimum balance requirement of Rs 50,000. The basic
aim of this account is that the higher the balance the higher the return, as profit is credited on a
monthly basis.

5- Kifayat Account
Kifayat account is another saving account product that can be opened with a minimum balance
requirement of Rs 10,000, with a maximum limit of Rs 1 million. Profit is calculated on a
monthly basis, while it is credited on quarterly basis. Bank Alfalah pays 7% pa interest on
Kifayat Account.

6- Mahana Amdan Account

Mahana Amdan account is Term Deposit Receipt (TDR) for three years that can be opened
with a minimum balance requirement of Rs 100,000, with a maximum limit of Rs 15 million.
Profits are paid at 10% pa, credited on a monthly basis. Other features of this account include
free personal accident insurance and automatic renewal for another 3 years, after the expiry of
original period.

7- Alfalah Kamyab Karobar Account

This is the newly introduced account of bank Alfalah that can be opened with a minimum
balance requirement of Rs 25000, and the most suitable business account. This account has the
facility of free cheque book, gold ATM card, free online service, free first pay order and DD
etc.Account holders lie in different tyres such as Silver, gold and Platinum according to their
maintaining balance in account.

Pre-Requisites for Account Opening

FOR INDIVIDUALS/SELF EMPLOYED ACCOUNT
 CNIC
 Source of income (salary slip etc)
 NTN certificate (optional)

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  Company letterhead or authorization (as required)
FOR A PARTNERSHIP ACCOUNT
 Partnership Deed
 Partners CNIC
 Company Letterhead
 NTN certificate (optional)
FOR COMPANIES’ ACCOUNT
 Memorandum of Association
 Article of Association
 Directors CNIC
 Company Letterhead
 NTN certificate (optional)
ACCOUNT OPENING PROCESS
1. The Account Opening Form
When a client comes to the bank, and makes a request for opening of an A/C. The officer says
that first fill up a prescribed application form.
2. Completion of the Form
The name, occupation, and complete address of the person opening the account are written in
the columns that are provided in the form. Signatures are obtained from the customer where it
is required. These signatures should be usual signatures and he would operate the account with
them.
3. Introduction
The introduction of a current account holder is accepted for the opening of either a current
account or a saving account. The introducer should be Account Holder. The signature of the
account-holder introducing the account is obtained at the place provided for in the account
opening form.
4. Specimen Signature Card, Cheques Book Requisition, Online Form
The signatures of the client are obtained on a specimen Signature card Cheque book requisition
and online form. These specimen signature cards are obtained in duplicate with two signatures
on each card from the customer. Every time a Cheque is received for a payment from the
client, the signature on the Cheque are verified by comparing them with the Specimen
Signature Card.

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 5. Signature Difference Form
The signatures of the client are obtained on a signature difference form if his / her signatures
differ from the computerized National Identity Card.
6. Vernacular Form
The signature of the customer is also obtained on the vernacular form if he / she signs in a
language other than English.
7. Verisys
Then we do a ‘Verisys’, a verification system started by NADRA on the CNIC of the new
account opener. A ‘Verisys’ tells, if more information pertaining to the customer is needed to
open the account or not.It is used mostly to verify the customer CNIC with Nadra.
8. Account Number
When all the formalities are completed then the final approval of account has to be taken from
the Branch Manager. After obtaining approval of the branch manager an account number is
allotted to the customer all the information is entered into the computer. Then that account
number is written on the Cheque Book, Specimen Signature cards and account opening form.
9. Sending the form to Head Office
After fulfill all the requirement and verify the form from operation manager the account
opening form send to Head Office Karachi and make request to issue the printed cheque book.
10. Issuance Of A Cheque Book
After opening an A/C with the bank, the A/C holder receive a letter of thanks from Head
Office Karachi then after receiving this letter client come to bank and makes a request in the
name of bank for the issuance of a Cheque book. The A/C holder mentions title of A/C, A/C
number, signs it properly. Normally BAL issues a Cheque book having 25 leaves for Saving
Account and 50 leaves Cheque Book to Current Account Holder. Every Cheque book also
contains one leaf that is used for another issue of a Cheque book.
11. Entry Of A Cheque Book
Before issuance of a Cheque book, the employee performs certain functions. They include:
Stamping requisition slip that is in Cheque book.

12. EntRY in the Cheque Book Issue Register

Check whether or not a senior officer has verified the signatures, if not then first gets them
verified.

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After entry in the manual register, the employee issues the Cheque book to the A/C holder with
his/her signature on the register

13. Stop Payment

If a customer looses their cheque book or ATM card, then that customer will have to come to
the bank and firstly report the loss and then stop payment, by telling the series of cheque he has
lost. By stopping payment, the customer is guaranteed that no illegal payment is made from
their account.
The process for stopping payment, after the customer tells that he has lost is cheque book is
that he fills a ‘Form B’, which is same as a cheque book requisition form and an indemnity
form, stating no responsibility on behalf of the bank if any illegal payment is made before the
time of announcing a cheque book or ATM card lost.

MY ACTIVITIES AND LEARNING IN ACCOUNT OPENING DEPARTMENT

As a part of my internship I had to fill the different forms and also did the appropriate bank
stamping to complete the forms and also learn about the Cheque Book issuing process after the
opening of account. During the deal with customers First we asked from customer about their
profession either a businessman, Job holder, student or a housewife in order to make estimate
of their income. Different A/c are suitable for different customers such as BBA for student etc.
Two types of A/c are;

1-PERSONAL ACCOUNT

This A/c is open with the name of person and he can’t do any business transaction in it. A/c
could be a Current, Saving or BBA etc.

2-BUSINESS ACCOUNT

It is open with the name of account holder business and for doing business transactions and
A/c type could be Current, RP(Saving), AKK, Kifayat , Agri etc. I have learned about these
things.

DORMANT ACCOUNT

“The A/c in which there is no transaction from previous six months is stated as Dorment
Account” We prepared a Notice to inform the customer that his account become dormant and

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he can Re Active it by responding.I also learn about this and how to prepare and send notice to
the customers.

KYCs (KNOW YOUR CUSTOMER)

This is attached at the end of form and as name mentioned this include all the information
about customer such as His Name, Account title, Account #, Nature of business, Estimated
income, their Assets, Liabilities, other Bank account #s if they have etc. We Preview our
Customer KYCs periodically (maximum period of preview is 12 months) by monitoring their
types and # of transactions.For preview we fill the simple form manually then enter it in the
system and a revised KYC is prepared.The complete set of preview contain Old KYC, Filled
Form and new KYC.

I filled the forms for KYC preview and learned about all of these above mentioned activities in
account opening department.

2- ACCOUNTS DEPARTMENT

Accounts department is a backend department at Bank Alfalah SRA Branch that performs the
following functions;
1. Reports
It generates reports like Statement of Account Activity (a report on the activity of all
accounts at Bank Alfalah SRA Branch), Statement of Affairs (a report on the assets and
liabilities of Bank Alfalah SRA Branch), Statement of Foreign Exchange (a report on the
foreign exchange currencies at the bank) and Income Expenditure Statement (a report on
the income and expenditures of Bank Alfalah SRA Branch).
These reports can be generated at daily, weekly, monthly, quarterly or yearly basis as
required by the bank.
2. Income and Expense
The department also needs to calculate the revenues and expenses, control expenditure and
forecast profits every month.
3. Budget
Formulation of yearly budgets & targets in consultation with the branch manager is also
done by the accounts department.

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 4. Activity Checking
Daily activity checking and monitoring is done by the accounts department of the whole
bank
5. Storage of Records
Accounts Department also has the duty to store vouchers and system generated reports.
6. Payments
The accounts department is responsible to pay vendors on behalf of the bank with
authorization from the branch manager. It also has to amortize large payments and
calculate depreciation of branch assets.
7-Depreciation Record
Accounts department also made a record of depreciation of fixed assets such as Office
Equipment, Computers, Vehicles, Furniture and their invoices.

MY ACTIVITIES AND LEARNING IN ACCOUNTS DEPARTMENT

ACTIVITY CHECKING
In the accounts department, I had to do daily activity checking and there are four stages in
which activity checking takes place:
1. Collecting vouchers, cheques etc from all departments
2. Sorting Vouchers
3. Checking Activity
4. Packing
COLLECTING VOUCHERS
The first stage of activity checking is collecting all vouchers, cheques, DD’s, pay order, pay
slips etc from all departments of the bank. Mainly vouchers come from the operations
department. After collecting these vouchers etc from the departments, we need to check if all
stamps are stamped on these vouchers etc.
SORTING VOUCHERS
After all vouchers are collected, they need to be sorted into different categories:
1. Income: Income vouchers
2. Expenditure: Expenses vouchers and payment vouchers
3. Others: Includes vouchers about excise duty, FED, teller, ATM, payables etc

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 4. Online: Contain online vouchers and online credit slips etc
5. Head Office (H.O): Includes HO vouchers and IBCA, DD advices
6. Bills Payable General (BPG): Includes vouchers and DD, Pay orders, Pay slips etc
CHECKING ACTIVITY
After sorting takes place, daily activity is checked using the statement of account activity,
which contains all daily activity of the accounts in the bank. Activity checking is done by
seeing if the values and account numbers in the sorted vouchers match that of the activity and
whether or not there is any missing activity that is not in the vouchers.

PACKING
After the activity is checked, all sorted vouchers are counted, both debit and credit and then
packed by totaling the vouchers.
At the end of the completion of ticking a Summary is prepared which listed the daily total
amount of # of cheques, vouchers and receipts etc.

RECORDING OF DEPRECIATION

And the other important work that I have learned is the Recording of Depreciation of Assets.
We use the straight line method to record the depreciation by using Formula;

Dep Amount = Purchase Amount × % dep × # of days

365
e.g

Dep Amount = 8000 × 20% × 31 = 136 Ans

365
Different % of depreciation is given to different groups of Assets such as;

ASSET HEAD % OF DEPRECIATION

Office Equipment 20%
Computers 25%
Vehicles 25%
Furniture 10%

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After recording depreciation month wise to 31 July 2009, I match the total calculated
depreciated Amount with the computerized prepared sheet each for all the assets heads in order
to check out that the recording of all is correct and depreciated amount is tellied.
I also checked out the INVOICE documents about the purchase of each asset.

3-OPERATIONS DEPARTMENT (REMITTENCE / CLEARING)

The operations department is responsible for three major activities:

 Clearing
 Transfers
 Remittances
These three activities are done under one department in the Bank Alfalah SRA Branch.

1-Clearing
The clearing department is responsible for the clearing of all cheques that are of other banks
and branches that the bank receives daily and the different types of clearing are:
 Inward Clearing
 Outward Clearing
 Online Clearing
 Outward Bills for Collection
Clearing process is Defined as ;
“A system by which banks exchange cheques and other negotiable instruments drawn on each
other within a specific area and thereby secure payment for their clients through the Clearing
House called NIFT at specified time in an efficient way.”
Each bank has collected cheques as behalf of their customer but these cheques are not drawn
on their own bank so in the clearinghouse (NIFT) they hand over these cheques to respective
banks on which these cheques are drawn. Similarly each bank receives cheques from other
banks if any.

Inward Clearing
Inward clearing takes place when a Bank Alfalah SRA Branch account holder drew’s a cheque
in favor of a Non- Bank Alfalah account holder. The process for inward clearing is as follows:
1. Cheques are received by the operations department from NIFT

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 2. The bank officer verifies all particulars from the instruments and the system for
sufficient balance etc. If any fault is found, then the officer will mark the cheques as a
return, stating the reasons with them.

3. If no fault is found, then the officer will post these cheques in the system by debiting
the customer account.
4. The particular of the returned cheques are entered in the ‘O/W return of inward
clearing’ register and returned to NIFT.

Outward Clearing
Cheques drawn by Non-Bank Alfalah customers in favor of Bank Alfalah SRA Branch
customer and deposited at SRA Branch are known as outward clearing cheques. The process
for outward clearing is as follows:
1. Cheques are received by the operations department of Bank Alfalah SRA Branch
2. The customer in favor of whom the cheque is drawn is credited
3. Clearing stamps are affixed on the cheque and sent to the other bank via NIFT.
If any cheque returns the next days as a returned, the posted entries are reversed and the cheque
is returned to the customer who presented it and is recorded in the cheque return register.

Same Day Clearing

This involves within city other banks local cheques process by same day clearing stamp and
clear within same day and of above 2 lac. Basically this is the benefit provided to the
customers.
Regular Clearing
This involves within or out of city other banks cheques process by next day clearing stamp.

Intercity Clearing
This involves other branches cheques which are of another city and received by air in which
own branch is debit and other is credit.

Online Clearing
Online clearing takes place when a cheque is drawn by a Non-Bank Alfalah customer in favor
of a Bank Alfalah customer but is deposited at Bank Alfalah SRA Branch. The person, who

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had drawn this cheque, however should have an account in the Islamabad/Rawalpindi area.
The process for online clearing is as follows:
1. The cheque is sent as an outward clearing via NIFT

2. When the cheque is cleared, it is credited to the Bank Alfalah account via the online
transfer software.

Special crossing and bank endorsement stamps and clearing stamp are affixed on the cheque
which is to be cleared.

2-Outward Bills for Collection (OBCs)

There are some cheques that are drawn by a Non Bank Alfalah Account that is outside the twin
city area in favor of Bank Alfalah SRA Branch account holders and thus are treated as OBC’s.
Or in other words;
“When an instrument is drawn on a bank, which is located outside the city, its proceeds can be
collected through a mechanism called Outward Bills for Collection (OBC)”
Process;
The process for clearing of the OBC’s is as follows:
 Cheques received by Bank Alfalah SRA Branch
 The officer affixes the OBC stamp on the cheques and writes its individual number
from the OBC register.
 Entries of all OBC cheques are written in an OBC register.
 An OBC letter is printed, which shows the cheque numbers, the branch drawn on and
amount.
 Original Cheques are attached to these letter and sent to the main Bank Alfalah branch
in that area by courier

OBC send and its Realization

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

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OBC schedule for the payment of that cheque. Contra-liability 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.

3- Transfers
This process is done for the local transfer of cheques. Transfers are conducted by Bank Alfalah
SRA Branch, using its software ‘Bank Smart’. There are two types of transfers:
1. Internal Transfers
2. Online Transfers

Internal Transfers
Internal transfers take place when a Bank Alfalah SRA Branch account holder draws a cheque
in favor of another Bank Alfalah SRA Branch account holder. The process for internal transfer
is as follows:
1. Officer of the bank receives the cheque and determine if the cheque is an internal
transfer by looking at the branch code, if they are same then it is an internal transfer
2. The officer will post entries by credit the account in favor of whom the cheque was
drawn and debit the account that drew it in the banks software.
3. The cheque will be sent for supervision to the operations manager for authentication of
the entries
4. When supervised, the cheque will be affixed with the official stamps and kept with the
bank.
Processing Stamps
Transfer cheques are processed by five types of stamps;

1-Transfer stamp (same day)

2-Bank Alfalah LTD
3-Banksmart
4-Signature verified
5-Payees A/c credited (on Back)

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Online Transfers
All those transfers that take place when a Bank Alfalah account holder draws a cheque in favor
of a Bank Alfalah SRA Branch account holders are known as online transfers. The process for
online transfer is as follows:

1. The bank officer collects the cheque from the depositors.

2. Verify’s if the accounts are online and need to be transferred online
3. Posts entries by debiting the account of the cheque, while crediting the account on the
slip attached with the cheque.
4. Sends the cheque for supervision to the operations manager
5. When supervised, the cheque will be affixed with the official stamps and kept with the
bank.

4-Remittances

“Remittance is transfer of funds from one place to another or from one person to another.”

A Remittance is an important service provided by banks to customers as well as non-

customers. Since it is not a free service it is a source of income for the bank.

Parties involve in remittances

Four parties involved in remittance:-

 Remitter
 Remittee
 Issuing Bank
 Paying Bank

Remitter

One who initiates, or requests for a remittance. The remitter comes to the issuing or originating
branch, asks for a remittance to be made, and deposits the money to be remitted. The bank
charges him a commission for this service. He may or may not be the branch customer.

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Remittee

A Remittee is also called the beneficiary, or the payee. The person in whose name the
remittance is made. A remittee is also the one who receive the payment.

Issuing Bank

The bank that sends or affects the remittance, through demand drafts, pay orders, or Mail
Transfers.

Paying Bank
Paying Bank also knows as the drawee branch. The branch on which the instrument is drawn.
It has to make the payment (usually located in a different city country).
Instrument used
There are two main types of instruments that are used to transfer money, which are as follows:
 Pay order: Used to transfer money within the city
 Demand Draft: Used to transfer money outside the city

5-Pay Orders
Pay orders are made to transfer money within the city and this is a safe way to transfer money
as the person who makes the transfer through pay order pays in advance. The procedure that is
carried out in transferring money through pay order is as follows:
Procedure for Transferring Money through Pay Order
The customer will come to the bank and fill in the pay order application, giving in the details to
which account the money is being transferred, the amount etc and attach a cheque to pay for
the pay order. Pay orders can also be made through cash but mainly it is made through cheque.
The officer checks all the details in the application, makes out the charges for the transfer that
the customer will pay and then make the pay order for the customer and pass the following
entry:
Customer A/c
Pay order payable
When the customer in favor of whom the pay order was made gives the pay order to his
branch, the entries passed are:
Pay order payable
Customer A/c

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Demand Draft
Demand Draft is another way in which customers can transfer money outside the city. There
are two types of situations for transfer of money through demand drafts:
Outward DD’s
When a customer comes to Bank Alfalah to make a DD to transfer money outside the city is
known as outward DD. The customer will fill the details in a DD application form, and will
attach a cheque or pay cash as he wish.
Then the officer will check all the details and make a demand draft for the customer and pass
the following entries:
For Cheque For Cash
Customer A/C Sundry A/c
Head Office Head Office

Inward DD’s
This is the procedure adopted when the issuing branch sends copy of the instrument as an
advice. When the bank receives the advice, the officer will pass the following entries:
Head Office A/c
DD Payable A/c
When the customer comes with the DD to get his payment, the following entries are passed:
DD Payable A/c
Cash

If that customer is a Bank Alfalah account holder then the following entries are passed:
DD Payable A/c
Customer Account

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MY ACTIVITIES AND LEARNING IN OPERATIONS DEPARTMENT

As a part of my internship I have learnt all about these clearing and transfer processes by
doing them practically. I learned how to make cheques and their receipts(slips) and also cash
deposit slips by preparing them.Then I have done the stamping of all types of cheques and
slips.I deal with customers by preparing for them slips and cheques.I also get knowledge about
the process when the cheque is returned due to insufficient fund or other reasons then we return
back the cheque to the party with attached MEMO and service charges are deducted from their
account.

I have also learnt all about these OBCs, DD and pay orders and how to make OBC by
practically prepared it. I also made entry of OBCs sequence wise in the OBC register and also
the entries of Pay Orders and DDs in register.

APPLICATION OF CLASSROOM LEARNING

During my internship I have to apply and learn the some concepts that I have learned during
my classroom studies such as;

 The concept of debit and credit

 How to improve efficiency by proper time management
 Customer relationship management in order to satisfy the customer
 To learn and see different management practices
 How to manage the work pressure in the days of relatively high activities
 The ways by which organization provide employees satisfaction and motivation
 Practically calculate the depreciation of different fixed assets by using the straight line
method etc

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 SWOT ANALYSIS

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is the
careful evaluation of organization’s internal strengths and weaknesses as well as its
environmental opportunities and threats. In SWOT analysis the best strategies accomplish an
organization’s mission by exploiting an organization’s opportunities and strengths while
neutralizing its threats and avoiding its weaknesses. During my internship I also observed these
and conclude as follows:

STRENGTHS

The main strengths of the bank are as follows;

 Being the private organization its main aim is not to earn profit only but also to satisfy
its customers and the slogan of BAL is also the representative of this purpose Bank
Alfalah “The Caring Bank”.
 Bank has AA(Double A) and A1+(A one plus) credit rating for Long term and Short
term loans respectively.
 Main source of profit for any financial institution is public saving which only comes
from public confidence and BAL is getting this confidence which is one of the main
strength of bank.
 Bank Alfalah is also getting fame in market due to its name “ALFALAH” which is
leaving the Islamic and favorable impact on the minds of public.
 Consumer survey has selected Alfalah credit cards as the best product in the market
with attributes of Affordability.
 Within very short period it has got a superb accomplishment which shows the
competency of its top management.
 BAL is providing the facility of Money Gram to the all the people who are its
customers or not and through this service it has got the leadership in Money Gram as
no other bank is offering this service.

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WEAKNESSES

Beside all these strengths I also noted some weaknesses which are described as below;

 BAL is not offering the loan facility to the newly established businesses because it is
the bank policy that it will give loan only to those people who are running their
businesses from 3 years.
 BAL’s lending procedure is quite complicated that some people are hesitate to come
as they are requiring a huge file of documents.
 BAL is not offering any credit facility to students.
 BAL is not offering the online facility to the customers having photo account.
 BAL is charging online charges for the transfer of money but some other banks not
charges.

OPPORTUNITIES

It is mandatory to try to make progress with consistency as well as to adopt changes with of
time, in order to cope up with both conditions.BAL has following opportunities;

 Bank Alfalah is spreading its network outside the boundaries of Pakistan and it has
new policies in the prudential policies.
 As BAL is providing the facility of Islamic Banking through its separate branches,
there is a great chance to enhance its market share as the concept of Islamic Banking is
gain popularity day by day.
 In addition to excellent routine banking, it has earned a good name by offering special
 Product like Car, Home finance, credit card facility. So the penetration of these
products could enhance the market share.
 As the increase in overall business activity in the country, the investors are launching
various types of Mega Projects especially in housing and textile the bank has a great
opportunity to finance these projects at very profitable term.
 The SBP has revised the interest policy and the interest rates have been linked with the
KIBOR rates. Due to which the banks interest rate has been substantially increased
which will greatly increase the banks’ profitability

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THREATS

Threats are negative trends in the external environmental factors. As one side environment
provide opportunities to the organization, on the other side it also gives some threats. Some of
the threats associated with BAL are as follows;

 One of the major threat to the bank is the strong competition facing by its major
competitors like UBL, Askari Bank etc so BAL should try to update its products and
policies in order to be remain successful.
 For last seven to eight years there is political stability in Pakistan but now again a new
layer of political instability arises which effects almost all industries operations
including banks.
 Due to economic instability like currency depreciation and inflation, the bank is
constantly facing the threat, e.g in case of inflation the people have low disposal
income which means lower deposits in banks.
 Other investment opportunities like investment in property is giving people more
return as compared to banks, it can decrease the deposits of banks.
 There is a trend of launching mega projects in the country. And every one is involved
in this trend without taking any measure for the successfulness of these projects. This
can result into the failure of this project which can make it difficult for the banks to
recover their funds from these defaulters.

PEST ANALYSIS

A PEST analysis is merely a framework that categorizes environmental influences as political,

economic, social and technological forces. The analysis examines the impact of each of these
factors (and their interplay with each other) on the business. PEST analysis is a useful strategic
tool for understanding market growth or decline, business position, potential and direction for
operations. The use of PEST analysis can be seen effective for business and strategic planning,
marketing planning, business and product development and research reports. PEST also
ensures that company’s performance is aligned positively with the powerful forces of change
that are affecting business environment. The observation of all these factors is described
below;

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POLITICAL FACTORS

The political environment of any country is greatly affect the operations of its businesses and
banking sector.

 Political factors perform an important role in the competition among the banks as the
bank which better adopt the changes can survive the best.
 Political instability as now a days affect badly the operations of businesses and banks
as well.
 The more influence of government impose the conditions on banks to work and
perform according to their demand this could affect the profitability.

ECONOMIC FACTORS

Economic conditions of a country has strong influence on banking sector as the banks are
mainly deal with money.

 Economic conditions affect how easy or how difficult it is to be successful and

profitable at any time because they affect both capital availability and cost, and
demand for the banks.
 If demand is buyout and the cost of capital is low, it will be attractive for firms to
invest and grow with expectations of being profitable.
 Economic situations directly affects the purchasing and spending power of public so
banks are directly suffer from changes in economy.
 Due to economic instability like currency depreciation and inflation, the bank is
constantly facing the threat, e.g in case of inflation the people have low disposal
income which means lower deposits in banks.

SOCIAL FACTOR

The social arid cultural influences on business vary from country to country. The social
structure of Pakistan is closely tied. The trend is now changing as the general public is
educated and is pursuing professional goals. Customers are more aware of market conditions
and available options and want to get best value for their money.

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  The sociocultural environment encapsulates demand and tastes, which vary with
fashion and disposable income, and general changes can again provide both
opportunities and threats for particular companies and banks.
 Banks should be aware of demographics changes as the structure of the population by
ages, affluence, regions, numbers working and so on can have an important bearing on
demand as a whole and on demand for particular products and services.
 The businessmen and upper class people focus more on the banking service for their
transactions, financing and deposits so banks have their services design according to
them to be successful.

TECHNOLOGICAL FACTORS

Technology is widely recognised as part of the organization and the industry part of the model
as it is used for the creation of competitive advantage. However, technology external to the
industry can also be captures and used, and this again can be influenced by government support
and encouragement.

 Bank Alfalah has equipped its branches with all major IT tools being used in the
industry like ATM’s, fax machines, photocopiers, printers, latest computers and a good
connectivity architecture. So this provides them competitive advantage.
 IT information system provides the banks with the feasibility of their operations bank
Alfalah has this well organized system.
 Online banking facility is the great success to the banking sector.which one provided
good online service is more successful like Alfalah.

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 MY FINDINGS & SUGGESTIONS

The main vision of Bank Alfalah is to become a premier banking institution in not only
Pakistan but also abroad. In achieving this mission, Bank Alfalah has been successful by
increasing its revenues, deposit base and branches in Pakistan. Although there are no major
problems at Bank Alfalah, some of the problems observed are as follows:

1-Technological Advancements

Bank Alfalah has equipped its branches with all major IT tools being used in the industry like
ATM’s, fax machines, photocopiers, printers, latest computers and a good connectivity
architecture, however it has been observed that when its time to work, there are many failures
seen in the different devices used by Bank Alfalah, especially its connectivity architecture and
remains offline with the main server, that creates problems for the customers.

2-Training & Development

There are effective training centers of Bank Alfalah at Karachi and Lahore. For Bank Alfalah
SRA Branch, it employees get to train at the Lahore center. The problem with training and
development is that it is only available for the officers of the bank and not for the lower staff
members.

3-Job Advancements
There is no job advancements procedure for lower staff members or junior executives that have
joined recently at Bank Alfalah. The main problem that was observed was that the lower staff
should be trained about the operations of the bank and also the junior executives should be
given promotions by defining the criteria’s like performance etc.

4-Lack of Employees in some Departments

Although Bank Alfalah is a very good employer of talented professionals at different branches,
however, it was observed that there were some departments in the bank that lacked the number
of professionals in it that resulted in efficiencies in that department.

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5-New Products Introduction
Bank Alfalah has a wide variety of financial products to cater to the needs of its competitors;
nonetheless the main problem seen is that it is not introducing innovative products like other
banks in Pakistan, for example Standard Chartered Bank introduced a self depositing machine,
a machine that can be used by consumers to deposit money at any time of the day.

6-Priority Banking
Bank Alfalah does not have any priority banking department that can cater to the need to high
end customer. At Bank Alfalah SRA Branch, there were no large company’s accounts mainly
because there was no department to develop relationships with large customers.

7-Amenities at Branch
Providing amenities like a separate room for prayers because currently the employees pray in
the conference room of the branch. Also separate rooms should be made for the account
department for sorting of vouchers as it is also done in the conference room.

8-Incentive Schemes
There are no incentive schemes for employees of Bank Alfalah like scholarship schemes for
employees that want to pursue higher education. Bank Alfalah although gives a number of
incentives to its employees, like personal loans at nominal markup but they are only provided
to employees that are in higher ranks. Education fees are also returned by Bank Alfalah to its
employees, after the have finished their studies.

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 RECOMMENDATIONS

Some of the recommendations that I would recommend to some of the problems discussed in
the above section, that might increase the efficiency of both the operations and employees of
Bank Alfalah are as follows

1-Technological Advancements
Bank Alfalah should develop a modern connectivity architecture to effectively maintain an
online connection of the branch with other branches and also the ATM link, which may include
using modern technologies like fiber cables, routers etc. Also backup links should also be
developed,
Also a proper IT department should be established in all branches, with professional having the
knowledge to maintain a secured connection with other banks. Also scheduled backups of data
should be done with in the bank.

2-Workshops and Counseling

Work shop programs should be conducted in every city, rather than just two centers, for all
Bank Alfalah employees. These workshops should relate to all aspects of banking and may
also be conducted with other banks as a joint program.
Also as parts of the human resource training, counseling programs should be started for junior
executives or new entrants into the bank, introducing them to their prospects in this industry.
The lower staff employed at Bank Alfalah should also be given a chance to succeed in life by
training them in different simple jobs at the bank, which my include sorting of cheques, phone
banking etc.

3-Incentives
Incentive schemes should be developed for the employees that can help motivate them, which
might include:
 Personal loans and car financing facilities for all ranks of employees.
 Scholarship programs for all employees.
 Introducing employee awards at branch and regional levels.
 Job rotation programs to enhance the skills of employees.

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4-Priority Banking and Business Development Department
There is no priority banking department at Bank Alfalah, like that of other bank. A priority
banking department should be developed so as to give even more exclusive and customized
services to high end customers with large deposit accounts. Also Business Development
Department should be developed in all branches, so that they can actively find prospect
customers to take up products from Bank Alfalah.

5-Innovative Products
New and innovative products should be introduced by Bank Alfalah, like other bank such as
Citibank and Standard Chartered Bank develops for their customer. For this purpose, special
teams should be developed that include professional from all departments of the banks to come
with ideas. This process will increase the number of ideas generated and even produce
innovative products for the bank that might give them the edge.

6-Placements of Employees
There are some departments in the bank that do not have enough employees, while some have
more than needed. All this creates inefficiencies and so the operations manager should look at
the department of the branch and see where inefficiencies lie, in consultation of with the heads
of the departments and hire individuals where there are less employees or rotate employees
from other departments.

7-Amenities in Branch
There should be a prayer room developed in all branches as many employees want to pray, but
do not have the proper place to do it. Also work like sorting, which takes up a lot of space
should be done in a separate place and amenities like television and internet connection should
be placed in the common room, so as to give employees a relaxing environment when they
have a break.

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 CONCLUSION

It has been ten years since the establishment of Bank Alfalah, and since its establishment it has
aimed to become the leading bank of Pakistan by that provides outstanding services to its
customers.The bank has seen phenomenal growth in the past few years by opening more
branches in the country, increasing the deposit base, while also increasing the assets and profits
of the bank.The services that Bank Alfalah provides have a great market penetration not only
because of their features but also the profit and markup rates that they charge. Also the
products that Bank Alfalah provides cater to sector of the economy.The top management of the
bank is always developing strategies that cope with unexpected challenges to deliver products
and services more efficiently.Furthermore, as the bank is growing, the number of employees at
Bank Alfalah are increasing, which shows that Bank Alfalah is being considered as a an
employer, that provides its employees with a challenging environment to work in, where they
can harness their full potential and shows confidence as an employer by the employees of the
bank.Lastly to become the leading bank of Pakistan, Bank Alfalah has to benchmark its
services to its major competitors in the industry or the market leader in the industry and
provide a continuous mean of improvement in its existing products and services, while
introducing new ones to the industry.
In the last section, I would like to give some recommendations and is hoped that if they
are implemented will bring benefits to Bank Alfalah.

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 IF I WERE MANAGER THERE?

If I were manager there I would like to apply some changes in the working of a
bank. As I have noted that in some of the department there was over staffing
while in others understaffing is there. Due to understaffing there is a lot of burden
on one officer I would like to cover this problem by doing proper hiring in each
department so that employees remain satisfied by the justification of their work,
which as a result can increase the efficiency of a bank as it is correctly said that
“satisfied worker is a productive worker”.

I would also try to increase the customer satisfaction by providing them good
service as I have noted during internship that sometimes customer become angry
due to rude behavior of an officer this could affect the customer loyality so I
woud like to cover it.

I would also like to increase the advertisement of bank to attract more customers
and to make them aware of our products.

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 FINANCIAL ANALYSIS
(Ratio analysis)

(On the basis of financial statements @ Dec 31, 2008)\

1-DEBT RATIO
DEBT RATIO = Total liability/Total asset

2008 2007
Years
(Rs. in 000) (Rs. in 000)

Total liability 331946025 312675308

Total assets 348990764 328895152

Debt ratio 95.1% 95.0%

The debt ratio shows that liability has increased in more intensity as compared to the assets of
the bank. The higher this ratio, the greater the greater the firm’s degree of indebtedness and the
more financial leverage it has. There is only increase of 0.1% in 2008 as compared to 2007.

2-CURRENT RATIO

Current ratio = current assets / current liabilities

2008 2007
Years (Rs. in 000) (Rs. in 000)

Current assets 54268378 47817116

Current liabilities 17142253 25368940

Current ratio 3.16 1.88

This ratio measures the firm’s ability of to meet its short term obligations. The above table of
current ratio shows that the bank was less liquid in 2007 with the current ratio of 1.88 but in
2008 current ratio increased to the 3.16 which is showing the more liquidity of the bank in this
year.

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3-NET PROFIT MARGIN

Net profit margin= Earnings available for common stock/Interest earned

2008 2007
Years
(Rs. in 000) (Rs. in 000)
EA for C-S 1301301 3130229
I-E 31046583 25783871
NPM 4.19% 12.1%

Net profit margin measures the percentage of each sale after deducting all the cost and expense
including interests, taxes and preferred stock dividend. The result shows that bank s net profit
margin has decreased from 12.1% in2007 to 4.19% in 2008. This measures the bank’s success
with respect to earnings on sales.

4-GROSS PROFIT MARGIN

Gross profit margin = (interest earned – interest expense)/interest earned

2008 2007
Years
(Rs. in 000) (Rs. in 000)
I-Earned 31046583 25783871
I- Expense 20331194 16620963
GP(Gross-profit)
10715389 9162908
(I earned-I exp)
GPM 34.5% 35.5%

This is the bank s ratio gross profit to its earnings. This ratio measures the percentage of the
earnings remaining after the bank has paid its interest expenses. Gross profit ratio has also
decreased to the 1% as compared to last year. Bank has increased its gross profit to last year
but the bank’s interest expenses have also increased.

5-RETURN ON ASSET

Return on asset = Profit after tax / total assets

2008 2007
Years
(Rs. in 000) (Rs. in 000)
Profit after tax 1301301 3130229

Total Assets 348990764 328895152

ROA 0.37% 0.95%

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ROA has been decreased by 0.58%, as it was 0.95% in 2007 and 0.37% in 2008. Although the
difference is minor but even it indicates that the asset using efficiency of the bank is getting
lower.

6-RETURN ON EQUITY

ROE= Profit after tax /Common-Stock Equity

Years 2008 2007

(Rs. in 000) (Rs. in 000)
PAT 1301301 3130229

C-S Equity 14608523 13766673

ROE 8.90% 22.7%

The ratio that is representing all the returns generated by equity is also showing the decreasing
trend. ROE is the basic indicator of what the bank is earning compared to equity investment in
the form of how efficiently the bank is being managed and utilized .There is a huge difference
between the earnings available for the common stock holders in two years as 2008 has much
lesser earning but the portion of the equity has increased in the year 2008.

7-PROFIT BEFORE TAX RATIO

PBT Ratio = Profit before tax / Interest earned

2008 2007
Years
(Rs. in 000) (Rs. in 000)
Profit before tax 1794720 4535552

I Earned 31046583 25783871

PBT Ratio 5.78% 17.59%

This is the bank ratio of its profit before tax to its earnings. This ratio measures the percentage
of earnings before the bank has paid its taxes.PBT Ratio has also decreased from 17.59% in
2007 to 5.78% in 2008.

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8-EARNING PER SHARE

EPS = Profit after tax / number of shares

2008 2007
Years
(Rs. in 000) (Rs. in 000)

PAT 1301301 3130229

# of shares 799500 799500

EPS 1.63 3.92

BAL is having decrease trend in EPS ratios with the 3.92 in 2007 and 1.63 in 2008.It means
that in 2008 Rs. 1.63 was available for the single Common – stock outstanding. The difference
shows that the management is not performing well. The difference is showing that bank is
earning less than previous year on per share.

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