Business includes all the activities of manufacturing trading and services with the object of earning profit through the satisfaction of the human wants all the activities must be carried out under the law of the country
Definition of Accounting
Accounting is the art of classifying, recording, summarizing, results in a significant manner and in term of money the transaction & events which are at least in financial character & interpreting the results thereof.
Name of Organization
Bank Alfalah Limited
“ Let’s Look Ahead Towards a Brighter Future Together”.
To be the premier organizations operating locally & internationally that provides the complete range of financial services to all segments under one roof
To develop & deliver the most innovative products, manage customer experience, deliver quality service that contributes to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.
Bank Alfalah Limited was incorporated on June 21st, 1997 as a public limited company under the Companies Ordinance 1984. Its banking operations commenced from November 1st ,1997. The bank is engaged in commercial banking and related services as defined in the Banking companies ordinance, 1962. The Bank is currently operating through 104 branches in 36 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Since its inception, as the new identity of H.C.E.B after the privatization in 1997, the management of the bank has implemented strategies and policies to carve a distinct position for the bank in the market place.
Hierarchy President Chief Operating Office Head of County Operations Country Risk Manger Executive Vice President Executive Vice President Charted Accountant Information Department Corporate Heads Branch Manager Branch Manager
Our core Philosophy of honesty, transparency in customer dealings, product innovation, excellence in customer service and our commitment to being a responsible corporate citizen.
Mr. Mohammad Saleem Akhtar Chief Executive Officer Mr. Abdulla Khalil Al Mutawa Mr.Khalid Mana Saeed Al Otaiba Mr. Abdulla Nasser Hawalileel Al-Mansoori Mr. Ikram Ul-Majeed Sehgal Mr. Nadeem Iqbal Sheikh Board of Directors
Following the privatization in July 1997, Habib Credit and Exchange Bank assumed the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based bank as the family of Sheikh Nahayan purchased 70% of its shares and 30% remained with Habib Bank on behalf of Government of Pakistan. It has 115 branches in 46 cities of Pakistan.
About the Bank
Alfalah Car financing
Bank Alfalah home finance
Rupee traveler cheque
Bank Alfalah Home Finance
Buy Your Home with Bank Alfallah Home finance
You have a plot and need to finance to construct a home.they will provide you 7.50 million or 70% of the estimated value of constructed property.
They have six types of home finance loans.they are:-
Payment period ranges from 3 to 20 years
Renovate Your Home with Bank Alfalah Home Improver
They provide upto Rs 7.50 million or 100% of the existing finance.
Payment period upto 20 years
Let’s Start It Together with Bank Alfalah Home Start
They will provide you Rs 7.50 or 70%of the purchase price of the property
Payment ranges from 3 years to 20 years
Build Your Home with Bank Alfalah Home Construct
You already own a home and need extra space for growing family.they will finance you upto Rs 2.50 million or 30% of the surveyed value of your home. Payment period upto 7 years
Make An Easy Transfer with Alfalah Home BTF
The crown Jewel of their home finance scheme.they offer a moratorium of up to 3 years in principal payment,for a financing of up to 20 years.you service only the mark up initially and principal repayment starts from the 4 th year.Home start is specially designed for young people to own a home of their own.
For financing up to Rs 1.00 m Rs 5,000
For financing up to Rs 5.00 m Rs10,000
For financing up to Rs 10.00 m Rs 20,000
Mark up rates:-
For SVR option:
SBP discount rate +1% currently 7.5%+1%=8.5%
For fixed rate option:
1 year 7%
2 year 8%
3 year 9%
Late payment charges
Rs 400/ late payment
Upto 5% of the outstanding amount
Credit card department
Bank Alfalah offers:
Features of Alfalah Classic and Alfalah Gold
No Joining fee
No Annual/ Renewal fee
Low service charges are only 2.50% per year
Balance transfer facility valid on all credit cards in Pakistan
Global Acceptability in more then 150 countries
Free supplementary cards
Zero loss liability
Departments Accounts Department Credit Department Operation Department
Operation department of Bank Alfalah Main Branch Multan is responsible for the overall operations of the bank. Here operations officer is responsible to make the daily report of operation and solve the queries of different branches remaining under the policies of Bank Alfalah.
a) Account Information
b) Cash Department
Types of Accounts
a) Current Accounts
No interest or profit shall be payable on current account to allow the customer to overdraw the Account, the bank shall charge Markup/Interest. The minimum balance required for opening the current account is rupees 5000/- inter bank fun transaction are handled by current account.
b) Saving Account
The purpose of this account is to introduce the debit of saving individuals in the neighborhood. The profit on saving account is paid on the basis of profit and loss sharing at 2% six monthly. The minimum balance requirement for opening the account is Rs. 2500/-
Types of Accounts
c) Notice Deposits
Notice Deposits are kind a fixed deposits the minimum balance requirement for opening account is Rs. 2500/- 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%.
Types of Accounts
c) 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 withdraw the principal amount. The rate of return of this amount varies from 2.5% to 5.75%. The term deposit account varies from one month to 5 years and the minimum balance requirement is Rs. 2500/-
This Department is given the complete responsibility of Cash as a transaction in touch local and foreign currencies it is also responsible for the book keeping for these transactions and the safe custody of cash.
This department performs the main function:
i) Cash Receipts
ii) Cash Payments
In Cash Department Depositors use deposit slips for depositing the amount into their account the officer checks if the deposit slip is properly filled up containing title of account, A/C number and amount in words and figures.
First the cheque is presented by the customer or holder to the cash payment officer. He confirms that it is drawn on the same branch and the particulars of cheque are properly filled. One Signature or the holder is taken on the back of the cheque.
The process by which cheque exchanged between the collecting and paying bank and the ensuing financial settlement is called “clearing”. This facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks.
Clearing is of two types:
a) Inward Clearing
When Cheque drafts etc, of our branch presented to us for clearing by the SBP. Cheque to be honored by bank.
b) Outward Clearing
The Cheque of other banks, which the account holder deposit in their accounts is, sends for collection.
The need of remittance is commonly felt in today’s business. A major function of any bank it to transfer of funds from one place to anther. Bank Alfalah uses the following modes of transfer of funds.
a) Demand Draft (DD)
Its an instrument, which is use to transfer from on city to another it can be made on cash as well as on cheque, if it is made through cheque that it is necessary the person must be account holder while in case of cash any person can make. It consists on three copies.
1) Original Copy, which is given to the account holder
2) DD advice sent to the central branch
3) Third party for reconciliation. Its photocopy is kept with bank while original is send to head office for recociliation.
b) Telegraphic Transfer (TT)
It is another mode of transfer of funds. It is quickest mode of transfer of funds from one city to another. For TT, client has to submit the application on a prescribed form of the bank. Client can deposit money in to the bank or can request the bank to deduct the amount against the TT along with the charges against the issuance of TT from his account. The charges against the issuance of TT charged by Bank Alfalah.
c) Pay Order (PO)
Written order which is issued and received to the save book or drawn or payable on same branch. Application form is given to the customer to fill two signatures are taken on the form one for request and the other for receiving the instrument
d) Call Deposit
When the party wants to give the payment from it self to another party then its makes call deposit the bank keeps it with itself unless it does not receive instruction from the bank. Normally it is pain in cash and goes in party account.
e) Pay Slip
It is use when bank itself pay for any transaction for e.g purchase of stationary.
f) Money Gram
Its basically a person to person money transfer service that allows consumer to receive money in just a few minutes.
> Person must have reference no.
> Person must tell reference no and compute the simple form.
> Person have to show NIC and tell compute introduction after that he can obtain money.
Type of Borrowers:
This section classifies and describes various types of borrowers in the market along with specific lending guide lines. The policy should be read and understood carefully as the bank may enter into a business relationship with them at any point in time. Following are the three broad categories of borrowers.
> Existing Account Holders
> Staff Members
> Close Relatives of Staff Members
> Businesses sponsored by staff members
> Employees of other banks
> Joints Accounts
> Sole Proprietorship
> Joint Venture
> Limited Liability Company
> Group Accounts
> Clubs and Associations
> Federal Provisional and Local Government Bodies.
> Contractor or Construction Companies
> Transport, Storage and warehousing
> Property Dealers
Credit Department Function and Facilities:
The earning of Bank Alfalah are chiefly derived from interest charge and discounts. This department is the revenue generating department. Credit Department basically has three segments.
> Credit Marketing Department.
> Credit Administration Department,
> Trade Finance Services Department.
Credit and advance department deals with extending loans (credit facility) to customers.
Following are the different types or facilities offered by the bank
Funded Credits Non-Funded Credits
a) Current Finance a) Letters of Credit
b) Term Finance b) Guarantees
Account department is the most important department of the bank because it is concerned with:
Income from sales of goods and services, minus the cost associated with things like returned or undeliverable merchandise also called "Sales", "Net Sales", "Net Revenue", and just plain "Revenue".
All operating, overhead and production costs incurred in producing gross revenue.
Assets include holdings of obvious market value (cash, real estate), harder-to-measure value (inventory, aging equipment), and other quantities (pre-paid expenses, goodwill) considered an asset by accounting conventions but possibly having no market value at all.
An obligation to pay. These include accounts payables, and bond and bank debt.
> Short Term Liabilities:
Which are expected to be paid with in one year.
> Long Term Liabilities:
Which are expected to be paid in more than one year.
In this department all the voucher that are posted during one day are send to the head office account department next day. These vouchers are already posted to computer by the concern department so computer also sends are report to the accounts department. The account department has to tell that the requirements for cheques and vouchers are fully check if any kind of renovation or construction or rebuilding is done, all is paid from the accounts department. Like stationary charges medical charge etc.
Daily Customer Movements List:
All the changes that are made in accounts of customers are shown in the daily customer movement list. By using this list, people of accounts department can prepare the vouchers.
Account Department performs following activity: > Voucher preparation
> Preparation of Daily Weekly and monthly statements
> Budgeting and fixed assets
> Employers benefit
> Expenditure approval
The bank does not make payment of a cheque bearing a six month or older date. If an account is not operated in six month. It is called dormant account
In Account Department functions are performed in three steps:
> Data Controlling:
i. Collection of data from a department on daily basis.
ii. Sorting of data and voucher with respect to General Ledger and customer activity
iii. Further sorting of voucher product wise
General Ledger (GL) Activities:
i. Sorting of different heads of accounts
ii. Separation of DD from TT, PO etc, Income accounts, and expense accounts
iii. Checking of voucher with generated reports
iv. Counting of no of vouchers, preparation of summary and bunching of voucher
v. Data retrieval
vi. Rectification of Data
This section is concerned with all types of payments
i. Preparation of pay slips
ii. Preparation of cash slip vouchers
iii. Calculation of with holding tax on weekly basis
iv. Few miscellaneous commitments
Payroll is one of a series of accounting transactions dealing with the process of paying employees for services rendered, after processing of the various requirements for withholding of money from the employee for payment of payroll taxes, insurance premiums, employee benefits, garnishments and other deductions
> Reporting System
In reporting system different types of reports are prepared, stored in folders or mailed to head office. There are six basic reports on daily basis.
i. Daily Branch Position. (Treasury)
ii. Daily Deposit and Advances position
iii. Daily management information system.
iv. Daily foreign currency report.
v. Daily fund rupee position.
vi. Statement Affairs.
Transaction used in Bank Alfalah’s accounting system:
Customer presents a cheque:
Customer A/C Dr
Cash Cr (GL Activity)
A Balance Sheet is a Statement which shows the Financial position of the Company at a particular date. With the help of Balance Sheet, management can assess the company's position in terms of solvency, it's liquidity and it's profitability. The Balance Sheet is followed by number of schedules separately detailing assets, liabilities and revenue. The Balance Sheet must necessarily refer to a particular date because the financial condition of the company will change from time to time depending on whether the Company is operated as a profit or loss, whether additional resources are brought
in by way of capital or loans, whether some assets are purchased etc. It should, therefore, be useful to visualize the Balance Sheet essentially in terms of resources of the company. Shareholder or institutions providing funds to the company (either directly as investors or indirectly by providing credit) shall have claims against the assets and at appropriate the funds originally made available by them to the company shall have to be repaid. Since all existing funds invariably represent claim on assets, they are technically known as equities in the Company. One part of the Balance Sheet set out claims or equities, those relating to shareholders being classified as capital and the other equities relating to outsiders being classified as liabilities.
Accounting Department Balance Sheet Sep 30, 2005
Cash and balances with treasury banks
Balances with other banks
Lendings to financial institutions
Operating fixed assets
Deferred tax assets
Borrowings from financial institutions
Deposits and other accounts
Liabilities against assets subject to finance lease - -
Deferred tax liabilities
Surplus on revaluation of assets - net of deferred tax
Bank depreciates its own assets by state line methods
Cost – Residual Value
years of useful life
Bank uses IT Software's in helping with the accounts system.
> Accounts Maintenance
> Inward Clearing
> Cash Posting
> Transferring Posting
> Cash Supervision
> Transfer Supervision
> Quick Statement
> Bank Alfalah has moved rapidly in expanding branches network and Deposit base, along with making profitable advances and increasing the rang of products and services.
> As Bank Alfalah Limited pursuing the path of excellence, customer satisfaction remains its priority
> Bank Alfalah developing and delivering the most innovative products, manage customer experience, deliver quality service that contribute brand strength, establishes a comparative advantage and enhances profitability
> In comparison to other banks Alfalah providing high excellence service like home, car, agri-financing
> Modernize Banking system with highly integrated information system record kept properly, online banking and integrated circuits.
> Salaries are very reasonable, so the employs are not financially disturb and they devote their selves fully to their work.
Swot Analysis >Entertainment facilities are available for customers > Bank Alfalah is lending more money then any other bank in Pakistan by providing least interest rates
Bank Alfalh is offering two types of banking
> Alfalahs credit cards are globally accepted in more then 150 countries
> The majority of people are not well aware about the products of Bank Alfalah their for it should advertise especially home, agri & car loans and credit cards.
> Miss management of time is another draw back in Bank Alfalah branches, The bank official timing for closing is 6 pm but due to miss management employees leave there desk at 8 pm.
> A behavior has been noted that Bank Alfalah tries to feel at ease with good looking rich and educated people and the uneducated and old customers feel a bit strange in the environment of the bank.
> The number of counter must be increased because the customer have to wait at peak hour on the counter for deposit, withdraws and online.
> The policies of new government to uplift the economy and pursue financial sector reforms are expected to yield positive results in the banking industry of the country. Bank Alfalah should avail these promising opportunities.
> Bank Alfalah is surrounding by many competitors it has an opportunity to aggressive marketing and increase its business.
> As Government is taking bold steps in promoting IT in Pakistan, Bank Alfalah should be well aware of this opportunity as it will help in the near future.
> Bank Alfalah has many competitors who are continuously increasing their products and marketing aggressively, it may cause its customers to shift to the other competitors.
> The privatization of other banks is a threat for Bank Alfalah. Due to the privatization of different banks the competitions has increasing a lot.
> The Bank is now over staff the building under operation is in adequate for such a large staff as new branches opening in different part of city should be availed.
> Under no circumstances cheque book should be given if the account formalities should be complete.
> There are two officer involved in Cash Deposit process which is time consuming. Cashier should be given certain powers to receive cash of US$ and DM to provide prompt services.
> Cheque which are drawn on Bank Alfalah Branch and returned unclear in clearing are not reflected in the statement of account of the customer. These cheques must be reflected in the account so that credibility of the customers may be assessed.
> The bank should try to give more loans to the small borrowers as the past history shows that most of the loans given to corporate borrowers have converted into bad debt.
I observed the Bank Alfalah a financially sound bank, its profits are increasing year by year, its staff is very good sincere with the bank. Bank Alfalah under the leader ship of Sheikh Hammad Bin Mubarak Al Nahyan has made significant in building and both the corporate and retail banking sectors in pakistan. The bank attained number two position in terms of its balance sheet size amongst the private bank in Pakistan in 2000.
Bank Alfalah use specialization and service excellence as the corner stone of its strategy the people at bank realize that innovation, creativity, reliability, customized, service and their execution are the key ingredients are the key ingredients of their future
Observation & Conclusion:
Revenue from these activates have started yielding dividends they expect significant growth. They are aware that they have stepped into 21 Century and they must meet its challenges by acquiring the highest level of technology. They say that they will continue to invest in the modern tools and substantial allocation to resources will be made to achieve this objective during the current year. Online banking has been started and the introduction of ATM at strategic location have been of great help since June 2001.