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Alfalah bank ltd

  1. 1. EXECUTIVE SUMMARYFollowing privatization, Bank Alfalah emerged as new identity of Habib Credit andExchange Bank with a revived purpose and commitment. Charged with the strengthof Abu Dhabi consortium and under the leadership of his Highness Sheikh NahayanMabarak Al - Nayayan, the bank has already made significant contributions inbuilding and strengthening both corporate retail-banking sectors in Pakistan.Bank Alfalah has invested in revolutionary technology to havean extensive range of products and services. This facilitates its commitment toa culture of innovation and seeks out synergies with clients and service providers toensure uninterrupted services to its customers. It perceives the requirements of itscustomers and matches them with quality products and service solutions. During thepast seven years, it has emerged as one of the foremost financial institution in theregion endeavoring to meet the needs of such a dynamically changing market.Designing the product portfolio of bank response to the customer’s preferences, theproduct like Royal Profit, Royal Patriot and Royal Custodial are prime examples ofquality and innovation providing timely banking opportunities to customers of bank.Assessment of the needs and wants of the customers is an on going process at BankAlfalah, which helps to continually develop new products and services. Tocontinuously offer courteous, professional and advanced banking solutions, the teamof bank has recently been rejuvenated by going though training programs with a focuson information technology.To make their banking solutions become accessible to more and more people, theyhave embarked upon a rapid expansion program, aiming to provide a networking thatmakes the services available to any of their customers in all the major urban centersof Pakistan with a view to go international in the future.With their key indicators of progress already soaring to new heights, the bank iscommitted to dedicate all its energies, resources and time to bring higher value andsatisfaction to their customers, employees and shareholders. The graph of bank isgoing up and up every year. The ratio of profit is increasing at good percentage. Thybank is serving the people at high level of standard by going according to the whishesof the customers.Lets Look Ahead Towards a Brighter Future Together 1
  2. 2. HISTORY OF BANKINGAccording to Professor Berton; “Banks are the guardian & distributor of money”“Bank is a pipeline through which currency moves into and out of circulation.”Bank accepts deposits and repays cash to its customers on their demand. The Bankborrows money at a lesser rate of interest and lends it to the borrowers at a higherrate. It is thus a profit-lending concern. Bank cannot lend all the money that has beendeposited with it. It has to keep a certain portion of the total deposits in cash withthem in order to meet the cash requirements of the individuals and business concern.Banking HistoryWord Bank is said to be derived from the words Banc us or Banque or Bank. Thehistory of banking is traced to as early as 2000 BC. The priests in Greece used to keepmoney and valuables of the people in temples, acted as financial agents. The origin ofbanking is also traced to early goldsmiths. They used to keep strong safes for storingthe money and valuables of the people. The FIRST STAGE in the development ofmodern banking, thus, was the accepting of deposits of cash from those persons whohad surplus money with them.The goldsmiths used to issue receipts for the money deposited with them. Thesereceipts began to pass from hand to hand in settlement of transactions because peoplehad confidence in the integrity and solvency of goldsmiths. When it was found thatthese receipts were drawn in such a way that it entitles any holder to claim thespecified amount of money from goldsmiths. These receipts were the earlier banknotes. The SECOND STAGE in development of banking thus was the issue of banknotes.The goldsmiths soon discovered that all the people who had deposited money withthem did not come to withdraw their funds in cash. They found that only a fewpersons presented the receipt for encashment during a given period of time. At thesame time, they found that they were being constantly requested for loan on goodsecurity. They thought it profitable to lend at least some of the money deposited withthem too the needy persons. This proved quite a profitable business for theLets Look Ahead Towards a Brighter Future Together 2
  3. 3. goldsmiths. This was the THIRD STAGE, in the development of banking.By experience the banks came to know that they could keep a small proportion of thetotal deposits for meeting the demands of customers for cash and the rest they couldeasily lend. They allowed the depositors to draw over and above the money actuallystanding to their credit. In Economics terminology we can say that they allowed theoverdraft facilities to their depositors. This was the FOURTH STAGE, indevelopment of banking.When every bank issues receipts and most of them allowed the overdraft facilities,there was then too much confusion in the banking system. The banks in order to earnprofits could not keep adequate reserves for meeting the demands of the customersfor cash. The failures on the part of the bankers to return money caused widespreaddistress among the peoples.In order to create confidence among the people, steps were taken to regulate thebanking organization. A conference was held in Nuremberg in 1548. It was decidedthat a bank should be set up by the state, which should streamline the bankingorganization and technique. The first central bank was formed in Geneva in 1578.Bank of England was established in 1694. The responsibility of issuing of notes isnow entrusted to a central bank of each country. FORMS OF BANK FORMS OF BANKS Central Bank Commercial Banks Scheduled Banks Non-Scheduled BanksLets Look Ahead Towards a Brighter Future Together 3
  4. 4. INTRODUCTIONFollowing privatization, Bank Alfalah emerged as new identity of Habib Credit andExchange Bank with a revived purpose and commitment. Charged with the strengthof Abu Dhabi consortium and under the leadership of his Highness Sheikh NahayanMabarak Al - Nayayan, the bank has already made significant conditions in buildingand strengthening both corporate retail-banking sectors in Pakistan.Designing the product portfolio of bank response to the customer’s preferences, theproduct like Royal Profit, Royal Patriot and Royal Custodial are prime examples ofquality and innovation providing timely banking opportunities to customers of bank.Assessment of the needs and wants of the customers is an on going process at BankAlfalah, which helps to continually develop new products and services. Tocontinuously offer courteous, professional and advanced banking solutions, the teamof bank has recently been rejuvenated by going though training programs with a focuson information technology.To make their banking solutions become accessible to more and more people, theyhave embarked upon a rapid expansion program, aiming to provide a networking thatmakes the services available to any of their customers in all the major urban centersof Pakistan with a view to go international in the future.With their key indicators of progress already soaring to new heights, the bank iscommitted to dedicate all its energies, resources and time to bring higher value andsatisfaction to their customers, employees and shareholders.The graph of bank is going up and up every year. The ratio of profit is increasing atgood percentage. Thy bank is serving the people at high level of standard by goingaccording to the whishes of the customers.Lets Look Ahead Towards a Brighter Future Together 4
  5. 5. COMMERCIAL BANKING SCENARIO IN PAKISTANAt the time of independence in 1947, there were 38 scheduled banks with 195 officesin “Pakistan” but by December 31, 1973, there were 14 scheduled Pakistanicommercial banks with 3,233 offices all over Pakistan & 74 offices in foreigncountries.Nationalization of Banks was not done 1st January 1974 under the Nationalizationact 1974, due to certain objectives. But it had negative effects on efficiency of the ofthe 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 in1991; hence many new private banks have incorporated, since then, BANKALFALAH in one of the namely established private scheduled banks in Pakistan.Lets Look Ahead Towards a Brighter Future Together 5
  6. 6. INTRODUCTION TO BANK ALFALLAHBank of Credit & Commerce International (BCCI) was a Pakistan based bank,established by Mr.Agha Hassan Abdi from UBL, in association with U.A.E andEurope. BCCI has its branches in 74 different countries of the world. It had its 3branches in Pakistan. In 1991, the BCCI was banned, when it was accused byEuropean countries, that the bank was involved in some illegal operations with Gulfcountries. The major reason behind European accusation was that BCCI was ofIslamic mode. Therefore, the bank was closed due to international pressure. Then, its3 Pakistani branches were taken over by the Government of Pakistan, which werenamed as Habib Credit and Exchange Bank (HCEB) and these were working assubsidiary of Habib Bank Limited.Following the privatization in July 1997, Habib credit and Exchange Band assumedthe new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi basedbank as the family of Sheikh Nahayan Mubarik Al Nahayan purchased 70% of itsshares and 30 % shares remained with Habib Bank on behalf of Government ofPakistan.It has it 42 branches in 17 cities in Pakistan. The D.G.Khan branch was opened inAugust 2002. Alfalah has emerged as one of the leading commercial banks in thefinancial sector of Pakistan. Charged with strength of Abu Dhabi consortium andunder the leadership of his highness Sheikh Nahayan Mubarak, minister of highereducation and scientific research and prominent member of Royal family. The bank isenergized with vision, envisaging.The development of various sectors in Pakistan. The bank has already madesignificant contribution in building and strengthening both corporate and retail bankssector in Pakistan. Assessment of the needs and wants of customer is an on goingprocess at Bank Alfalah, which help to centennially develop new products of services.Designing the product portfolio in response to royal patriot, royal custodial, Alfalahcar finance, Alfalah rupee traveler cheques home loans are prime example of qualityLets Look Ahead Towards a Brighter Future Together 6
  7. 7. innovation providing timely banking opportunities to customer. To continuously offercourteous, professional and advanced banking going through training programs withfocus to information technology has recently rejuvenated solution the team of bank.With their key indicators of progress a steady soaring to new heights, the bank iscommitted to dedicate all its energies, resources and time to bring higher value andsatisfaction to their customers and employers.The graph of the bank is going up and up every year. The ratio of profit is increasingat a good percentage. The bank is serving the people at high level of standard byaccording to expectation of customers. Evolution of Islamic bankingIn 1984 General Zia Ul Haq made ISLAMIC IDEOLOGICAL COUNCIL. THENAFTER 2 YEARS ISLAMIC MODE OF FINANCE was introduced but people didnot accept because they said these are not ISLAMIC in true sense. In 2002SUPREME COURT OF PAKISTAN had taken decision of INTEREST FREEBANKING. UNITED BANK took stay order from the court. Then it was decided thatthere should be a separate LICENSE for ISLAMIC BANKS. So first of all, MeezanBank took the license of Islamic Banking. Then Alfallah Islamic, MuslimCommercial Bank, and Askari Bank took the license. In January 2004, Alfallahstarted Islamic Banking. And in 2005, Alfallah Islamic Banking Division Multanstarted working .Mr. IJAZ FAROOQ is supervising the Islamic bank of AlfallahBank.Lets Look Ahead Towards a Brighter Future Together 7
  8. 8. BRANCH LEVEL HIERARCHY Corporate Manager Mr.m. saqib Branch Manager Mr.ahsan qureshi Operation Manager Mr. Faisal OPERATION FOREIGN DEPARTMENT EXCHANGE DEPARTMENT ImportsCash Department Mr. Amar Mr. ikhlaq ExportsA/C Opening Ms. MariaMs HumeraRemittance Dept.Mrs. Qurat ul ain Accounts Dept. Mr. M.Waqar Lets Look Ahead Towards a Brighter Future Together 8
  9. 9. Our VisionEstablish Islamic banking as banking of first choice tofacilitate the implementation of an equitable economicsystem, providing a strong foundation for establishinga fair and just society for mankind“The introduction of a just and equitable financial system bybeing a world class multi-purpose financial institution, providing a range ofspecialized services, working on Shariah principles.” Mission StatementTo be a premier Islamic bank, offering a one-stop shopfor innovative value added products and services to ourcustomers within the bounds of Shariah, while optimizingthe stakeholders value through an organizational culturebased on learning, fairness, respect for individualenterprise and performance.THE PHILOSOPHY  Excellence in service  Quality performance  Product innovations THE BOARDH. H. Sheikh Hamdan Bin Mabarak Al-NahayanChairmanMr. Abdulla Khalil Al-MutawaMr. Omar Z. Al-AskariMr. Abdullah Nasser Hawaileel Al-MansooriMr. Nadeem Iqbal SheikhLets Look Ahead Towards a Brighter Future Together 9
  10. 10. Mr. Ikram Ul-Majeed Sehgal Mr. Mohammad Saleem Akhtar Chief Executive Officer BOARD OF DIRECTORS Chairman Secretary of the Board CEOB Director DirectorDirector Director Director (member) (Govt. Nominated) (Govt. Nominated) CORPORATE INFORMATION Company Secretary Mr. Hamid Ashraf Auditors A. F. Ferguson & Co. Chartered Accountants Head Office B. A L Building I. I. Chundrigarh Road P.O. Box 6773 Karachi EXECUTIVE COMMITTEE Mr. Mohammad Saleem Akthar Chairman Mr. Parvez A. Shahid Mr. Ikram Ul-Majeed Sehgal Mr. Mohammad Yousuf Mr. Tanweer A. Khan Mr. Sirajuddin Aziz Mr. Mahmood Ashraf Lets Look Ahead Towards a Brighter Future Together 10
  11. 11. BANK ALFALLAH’s SLOGANLet’s Look Ahead Towards a Brighter Future Together.BRANCHES NETWORKBank Alfalah has 55 branches in 23 cities of Pakistan. Detail of some major branchesas under: -Karachi  Main branch, B.A. Building, I.I. Chundrigar Road  Cloth market branch  Clifton branch  Shahrah-e-Faisal Branch  Jodia Bazar branch  Korangi industrial area branch  M.A. Jinah Road Branch  S.I.T.E Branch  Paper market branch  North Karachi branch  Gulshan-e -Iqbal  Karachi stock exchange  North Napier road branch  S.I.T.E Branch  P.E.C.H.S Branch  Timber Market Branch  D.H.A. BranchLahore  Gulberg branch  Defense branch  Circular road branch  Township branch  LDA Plaza branchLets Look Ahead Towards a Brighter Future Together 11
  12. 12.  Badami bagh branch  Allama Iqbal branch  Shah Alam Market branchRawalpindi  Mall road branch  Satellite town branchOther Branches  Sialkot  Islamabad  Peshawar  Multan.  Faisalabad  Quetta  Sukkur  Hydrabad  Gujranwala  Rahim Yar khan  Sahiwal  Sargodha  Gujrat  Mardan  D.G.KhanNow, Bank Alfalah is going to establish its branches in some foreign countries.Hopefully, in Dhaka (Bangladesh) and Bahrain, its branches will be opened in theyear 2004. Some branches will also be opened in European countries. Bank is goingto establish its branches in D.G. Khan, boray-e- wala and in Bahawalpur as well.Lets Look Ahead Towards a Brighter Future Together 12
  13. 13. ABOUT THE BANK FEATURES (Islamic Banking) For prosperity in Business, Come to Islamic Banking, For Islamic Banking, Come to Bank Alfallah!Bank Alfalah Limited is an established bank. It has some special features with thehelp of those it is growing rapidly. The Islamic banking system has seen resurgencein the last few years. This financial system is unique since profitability is not theultimate aim but the social implications of the economic decision are equallyimportant. Communal Welfare and social justice are integral values to be upheldduring normal course of business and can not be neglected. While profitability andeconomic viability as a priority is not the sole criterion for judging the performance ofan Islamic financial Institution. This ensures a more equitable distribution of wealthand enhanced equity participation.While this unique form of financial intermediation can emerge as an impactful engineof economic growth, this mode of finance needs effective nurturing before its truepotential can be realized. If implemented sagaciously Islamic banking can contributeeffectively to national economic activities. We realize the significant market thatexists in Pakistan which demands Sharia compliant financial solutions and aspire toserve this market segment with high service and value. Bank Alfallah Islamic bankingbranch units have been instituted all over Pakistan and active expansion is underway.Our comprehensive Islamic banking product portfolio includes deposits for currentaccounts, saving accounts and investment deposits, capital financing trade financing,house financing and leasing etc which imbibe product features based on the Sharia.At the same time there is a strong focus on research and innovation in order to giveour clients greater returns and security. We wish to promote an operating system thatis geared towards supplying state of the art cutting edge financial products andeducate potential clients in the benefits and advantages of the Islamic banking system.  Pursuit of ExcellenceLets Look Ahead Towards a Brighter Future Together 13
  14. 14.  Dedicated Professionals  Outstanding Work Environment  Efficiency  Customer Services  Suggestions Asked From Customers  Employee Benefits  Computerized Working Environment PRODUCTS  Current Account  Alfallah Musharaka Saving Account  Musharaka Time Deposits on PLS Basis  Alfallah Car Ijarah  Alfalah Corporate Ijarah  Alfalah Consumer Ijarah  Alfallah Musharaka Homes  Trade/Project financing  Import/Export Financing  Remittances  All Types of Guarantees  Safe Deposit Lockers  On Line BankingDesigning its portfolio bank is committed to develop products that give more value toits customers in both the sectors in corporate and consumer need.Lets Look Ahead Towards a Brighter Future Together 14
  15. 15. CompetitorsDespite notable economic uncertainties, the financial strength of Bank Alfalah Limitedhas greatly enhanced during the previous years. The successful expansion programproved their capability and commitment in comparison with the competition in thefinancial sector. The Banking structure in Pakistan comprises of:  Central Bank  Commercial Banks  Investment Banks  Development finance Institutions (DFIs)  Specialized Banks  Foreign BanksBank Alfalah is a private commercial ISLAMIC Bank so the major competitors ofAlfalah Islamic Bank are the following:  Askari Commercial Bank Ltd  Muslim Commercial Bank  Meezan Bank Internship ProgramI did internship of EIGHT weeks at Bank Alfalah Limited. There I worked in sixdepartments. I started up with account opening, where I learned about different types ofaccounts, and how to open a new account, etc. Also I worked in TDR, CDR andcollection. Here I worked with Ms. HumeraThen I moved to Cash and Deposits Department. The in charge of this department is Mr.Rana Ikhlaq There I learned the handling of Cash.Then I was sent to Accounts Department where I Worked under Mr. Mubashir.Then I was send to Foreign Currency Accounts Department. Here I worked under Mr.Amir.After working in Accounts I worked in Trade Finance department. The in charge of thisdepartment is Maria Irum. Here I learned about International Banking and the procedureof import and export.Lets Look Ahead Towards a Brighter Future Together 15
  16. 16. Alfallah CAR ijarahIt is basically transfer of usufruct of fixed asset to another person for an agree period atan agreed consideration. Under ijarah agreement the asset will be given to the customeron a rent for the period agreed at the time of contract.Following the mission of providing Islamic Based Financing, Bank Alfalah’s IslamicBanking has introduced” Alfallah Car Ijarah” a sharia compliant car leasing scheme. It isbased on the principles of Ijarah and is completely free from the element of interest. Thisproduct is ideal for interest aversive individuals, looking for a car financing scheme thatnot only provides the convenience of a well designed product but also helps in avoidinginterest based transaction. In “Alfallah Car Ijarah”the vehicle (car) remains in theownership and risk of bank and the customer only pays the rental for use of the vehicle(car) just like house rent. The “Alfallah Car Ijarah” scheme has been designed under thesupervision of our sharia advisor (centre For Islamic Economics providing training andconsultancy of Islamic Banking to Islamic Banks through its sharia advisors). Moreoverour sharia advisor Mufti Khalil Ahmad Azami shall oversee the activities of BankAlfallah’s Islamic Banking on day to day basis to ensure that all the documentation andprocedures are fully compliant to Islamic Laws. The sharia advisor shall also periodicallyreview the activities and approve its new products. .The Centre of Islamic Economics is operating under the chairmanship ofJustice Muhammad Taqi Usmani.On the other hand, a conventional car financing scheme is actually an interest based loangiven by the financial institution and interest is charged on that loan. Also, the leasecontact is not in compliance with Islamic Sharia and has Riba and other un-Islamicelements in it.Alfallah Car Ijarah gives you the flexibility of acquiring all locally assembled new carscosting up to Rs. 1.0 million. You can pay in flexible, easy rentals over a period of 3, 4 or5 years, with as low as 15% security deposit. Bank Alfallah Islamic Banking being theowner of car will be responsible for insurance of the car and for paying the insurancepremium. Until the availability of Islamic Insurance in Pakistan the Insurance will bedone under the present insurance modality. Yes, you can buy the car prior to theLets Look Ahead Towards a Brighter Future Together 16
  17. 17. termination of lease. The rental agreement will contain the purchase price schedule. Afterreceiving the completed application form along with the required documents, yourapplication will be processed in 3-4 business days.Car Ijarah - Islamic Car FinancingOur totally halal auto finance facility that is very affordable, with quick processing andminimal documentation. Car financing that is very competitively priced, hassle-free, andtotally Halal. Ijarah is simply a rental agreement under which the car is given on rent foran agreed period ranging from 3 to 5 years. There is no advance rental, no up-frontinsurance payment, and as little as 20% security deposits.Rights & liabilities of Owner v/s UserAn Islamic Ijarah is an asset-based contract, i.e. the Lessor should have ownership of theasset during the currency of the contract. Under Islamic Shariah, all ownership relatedrights and liabilities should lie with the owner while all usage-related rights and liabilitiesshould lie with the user. A conventional lease contract does not distinguish between thenature of these liabilities and dumps all liabilities on the user, which is contradictory toIslamic Shariah. Under Ijarah, all ownership-related risks lie with the Bank while allusage related risks lie with the user, thus making the Lessor the true owner of the assetand making the income generated through the contract permissible (Halal) for the Bank.Continuation of lease rentals in case of total loss or theft of vehicleIf the leased vehicle is stolen or completely destroyed, the conventional leasing companywould continue charging the lease rent till the settlement of the Insurance claim. Underthe Islamic system, rent is consideration for usage of the leased asset, and if the asset hasbeen stolen or destroyed, the concept of rental becomes void. Alfallah bank does notcharge the lease rental.Is there a Penalty for Late Payment of Rent and how is this permissibleunder Islamic Shariah?In most contemporary financial leases, an extra monetary amount is charged if rent is notpaid on time. This extra amount is the considered as Riba and is Haram. This amount istaken by the leasing institution. Under Ijarah, the Lessee may be asked to undertake thatif he fails to pay rent on its due date, he will pay certain amount to a charity which will beadministered through the Islamic Bank. For this purpose the bank maintains a charityLets Look Ahead Towards a Brighter Future Together 17
  18. 18. fund where such amounts may be credited and disbursed for charitable purposes.Key Features of Car Ijarah  No application fee  Ease of acquiring any new locally assembled car  No upfront Insurance Payment  No advance Rental  Available in tenures of 3, 4 and 5 years  Minimum security deposit as low as 15% • This facility is for locally manufactured cars of Suzuki, Toyota, Honda & the new model of Santro only. Rental CalculationsTo calculate the monthly rentals simply multiply the cost of the car with the rental factors given in the table below or use our online rental calculator Rental Calculation for new cars** Security Deposit 3 years 4 years 5 years 15% 0.032303 0.026765 0.023652 20% 0.030619 0.025398 0.022240 25% 0.028934 0.024032 0.021273 30% 0.027249 0.022666 0.020083 35% 0.025565 0.021299 0.018894 40% 0.023880 0.019933 0.017704 45% 0.022195 0.018567 0.016515 50% 0.020511 0.017200 0.015325 * No separate Insurance will be chargedFor example: If you are interested in a car costing Rs. 300,000 for a tenure of 5 yearsand are willing to pay a 50% Security Deposit, your monthly rental would be,Lets Look Ahead Towards a Brighter Future Together 18
  19. 19. Rs. 300,000 X 0.015325= Rs.4, 597/- per month for 5 years **(**All other costs will be charged at actual)Required Documents for Car Finance Facility{AGE LIMIT BETWEEN 21-55 YEARS} 1) Copy of national identity card.(new) 2) Copy of driving license (optional). 3) N.T.N certificate. 4) Copy of current utility bill of residence. 5) Bank account statement for last six months from the date of application. 6) Signature verification from banker. 7) Copy of NIC of references provided. 8) 2 passport size photographs.Additional Requirements for Business Class Individuals a) Copy of NIC of partners. b) Copy of Partnership deed (if applicable) c) NOC from other partner (if applicable)Additional Requirements For proprietorBusiness proof Bank Certificate, NTN certificate.Additional Requirements for Salaried Persons a) Certificate from employer showing permanent employment for the last 2 years. b) Original salary certificate. c) Copy of Form29 ( in case of Director of Limited Company) How can I apply? Simple! All you need to do is fill out a customer application form, attach the requireddocuments mentioned in the form and get your financing approved in a 1-2 working days. To experience the comfort of our personalized services just visit your Alfallah Bank Branch.Lets Look Ahead Towards a Brighter Future Together 19
  20. 20. ALFALLAH HILAL CARDAlfalah Hilal card is debit card that gives you access to your bank account. Alfalah HilalCard allows you to purchase goods merchant establishments across Pakistan and abroadand also gives you the freedom to withdraw cash from any Visa/Electron/Plus ATMs inPakistan and abroad, and all Local Bank Alfalah and 1 link ATMs.The Alfalah Hilal Card comes with all saving and current accounts except Non resident(ordinary) accounts with joint mandate or condition mandate. However, accounts withjoint/conditional mandate can obtain the Alfalah Hilal Card on request by completing therequired formalities.The main benefit of being a Alfalah Hilal Cardholder is that you enjoy unparallel accessto your account-whatever you want, wherever you go. Besides, you can control yourfinances since the balance in your account determines your spending limit. Alfalah HilalCard is accepted at more locations worldwide than any other debit card available inPakistan. You can now enquire on your balance or withdraw cash using ATMs. You canuse all Alfalah ATMs, local 1linkATMs and all other bank’s 840,000 ATMs worldwideon the VISA electron network for cash withdrawals. Subject to the maximum cashwithdrawals limit of Rs.50, 000/-per day. Presently, the card can be used at over 7,000establishments in Pakistan and at over 13 million outlets worldwide, where the VISA signis displayed. The card is also welcomed at over 840,000 ATMs worldwide.There is no monthly outstanding in the case of Alfalah Hilal Card. your account will beinstantly debited to the extent of purchase made or the amount withdrawn from ATMs inaddition to other charges on Alfalah Hilal Card. if in case of losing your card, it isimportant to report Alfalah call center 111-225-111.or it is also advisable to report inwriting. There will be nominal charges of Rs.200 for the replacement of the card.Lets Look Ahead Towards a Brighter Future Together 20
  21. 21. Easy Home: Islamic Housing Finance (Musharika Homes)Welcome to Pakistan’s long awaited totally Shariah-compliant Home Finance facility!One that is comprehensive, affordable, and totally hassle-free. At Alfallah Bank, we arecommitted to meeting our customers’ needs in a truly Shariah-compliant manner coupledwith dedicated service excellence. Alfallah Bank’s Easy Home is the answer you’ve beenwaiting forHome Financing OptionsBuy Your Home: property: 80% bank: 20% customerWith this facility, you no longer need to just dream about the home you want for yourselfand your family, disbursements of bank’s shares is one time or as per terms of deal.Build Your Home:Land: 60% bank: 40% customerConstruction: 70% bank: 30% customerYou have a plot, and need finance to construct a home, which excites everyone in yourfamily! No problem. We will provide you up of house/ flat to becompleted with in 12 months from the date of disbursement of the first tranche.Renovate Your Home:Up to a maximum of 30% of the value of your property or Rs. 2.5 Million whichever islower.You already own a home, but need extra space for a growing family. One timedisbursement of bank’s shares.Let’s Start It Together:In” Alfallah Musharika Homes” you enter into a joint ownership agreement with theBank for purchase/ construction/ renovation and/ or replacement of your outstandinghousing loans to own a Musharika property, where the bank will provide you a certainamount of financing maximum up to 80% of value of property and sign MusharikaAgreement. You also sign a Monthly payment Agreement, to pay rental for the use andoccupation of the Musharika property, and certain amount for the purchase of Bank’sMusharika unit. The purchase of Musharika units by you shall result in Transfer of TitleLets Look Ahead Towards a Brighter Future Together 21
  22. 22. of Musharika Property and you become the Sole Owner with a free and clear title to theproperty.All agreements used for Alfallah Musharika Homes are sharia compliant approved by ourSHARIA ADVISOR. Purchase of Musharika property through a joint ownershipagreement and Musharika agreement and then transferring the title of ownership to theCustomer through purchase of Musharika Units. This operational modus opendi makesAlfallah Musharika Homes different from conventional bank’s mortgage loans. BankAlfallah participates in the cost of the Musharika property being purchased/ constructed/renovated as joint owner whereas, in mortgages loans from conventional banks, the bankscharge mark-up / interest on the money lent to the customer. The rental charged by BankAlfallah is for the use and occupation of bank’s share in the Musharika property.DocumentsThe following documents are required to be submitted by an applicant with thecompleted application 1) 3 passport size photographs 2) Copy of NIC (new). 3) Copy of co-applicant’s NIC-NEW. 4) Copies of last Salary / Pay Slip duly attested by the HR department. 5) Salary Certificate (original) from the employer, showing the gross salary and deductions. 6) Copy of paid utility bill. 7) Borrower’s fact sheet. 8) Copy of recent Credit Card Bill 9) Bank Statement for the last SIX months.Processing chargesYou will be required to deposit processing fee in the branch according to schedule givenbelow;Processing charges: up to Rs 2.0 Million- Rs.5, 000 Up to Rs5.0 Million-Rs. 10,000 Up to Rs. 7.5 Million- Rs.15, 000 Up to Rs. 10.0 Million- Rs. 20,000Lets Look Ahead Towards a Brighter Future Together 22
  23. 23. The processing charges shall be non refundable.Furthermore, you will have to bear the actual stamp fee, registration fee and otherincidental charges required for registration of various agreements/ Mortgage deed/irrevocable power of attorney etc.Determination of BAL-IBD‘s share rentBAL-IBD‘s share of monthly payment of rent shall initially be calculated as under:Monthly rent * AL-IBD’s invest in property/ total value of property = BAL-IBD’sshare in monthly rentMusharika UnitBAL-IBD’s total Musharika investment / number of months allowed = cost of oneMusharika unitLate Payment Charges:No we never encourage Customers to delay the monthly payment As far as the Islamicpoint of view, we can not charge any penalty on the late payment but to avoid latepayment, charge certain amount according to your undertaking in Monthly PaymentAgreement. This amount shall be utilized by BAL-IBD on behalf of customer for Charitypurposes in line with Sharia Principles..The Eligibility Criteria  You are a Pakistani National  If your age is between 25 and 65 years.  If you are in continuous employment for 2 years or more.  . If you have been a Bank Alfalah borrower for past one year with clean payment record.  You can apply for minimum of 03 years and a maximum period of 20 years.  Maximum financing up to Rs.10 Million or three times of gross annual income of the main customer plus 1.5 times of gross annual income of the spouse, whichever is less.  If you have 3 years (or more) of business or professional experience.  If your gross annual income is Rs: 200,000/ — or more [Your spouse’s income (up to 50%) can also be combined with yours].Lets Look Ahead Towards a Brighter Future Together 23
  24. 24.  If you require a financing of at least Rs: 500,000/- or more (maximum Rs: 7,500,000/-). If you are eligible and provide the required information/ documentation, we will take maximum of 3 to 4 weeks for approval depending on the amount of facility.10 Steps to Arranging Your Bank Alfalah Home Financing 1. We provide you with all the information you need about Bank Alfalah Home Musharika. This can be through a face-to-face meeting with our Relationship Officer, or over the telephone, or through the post. 2. You give us some basic information about your income and the amount you need so that we can give you an agreement in principle. 3. Once you have decided on the amount you want, you complete an application form and pass it on to us, together with the required documents. 4. We make some inquiries about your financial circumstances. 5. We carryout a valuation of the property and verification of your income. 6. Once we have carried out all the initial processing, we send you our offer through a “Facility Advice Letter”. 7. You sign the Facility Advice Letter and return it to us. 8. Our Documentation Control Center will get in touch with you to complete Finance & Security documentation including legal opinion on the title documents of the property and also the insurances. 9. You sign the Finance Agreement and Charge documents. 10. Our legal advisor will accompany you to the Registrar’s office on the appointed date with our cheque against the financing for conveyancing of the property and your home finance begins.Lets Look Ahead Towards a Brighter Future Together 24
  25. 25. BANK GUARANTEESBank Alfallah Islamic Banking offers following types of Bank Guarantees:  Bid bond  Performance bond  Retention money guarantee  Contract Guarantee  Advance payment Guarantee  Deferred payment Guarantee  Guarantee Favoring Courts  Guarantee Securing Gas Connections  Back to Back Guarantee  Shipping Guarantee  Container Guarantee  Guarantee Favoring Collector of Customer  Financial Guarantee  Bank Alfallah Islamic Banking shall also issue guarantees securing financing facilities to be availed from Islamic Banks and or Conventional Bank’s branches operation under Islamic modes of financing.Lets Look Ahead Towards a Brighter Future Together 25
  26. 26. MURABAHA FINANCEMorabaha is a particular kind of sale where the seller (i.e. the bank) expressly mentionsthe cost of the sold commodity ha has incurred, and sells it to another person (i.e. theCustomer) by adding some profit thereon. Thus morabaha is not the loan given oninterest, it is the sale of commodity for cash/deferred price. This is a mode of sale andpurchase of commodities. The agreement is made between the Bank and a Customer,whereby Bank purchases a commodity and sells the same to Customer on a deferredpayment basis. In other words, a contract between a bank and a customer under whichthe customer first purchase certain goods / commodities / assets as an agent of bank andbank after taking possession of the goods / commodities / assets sells it to the samecustomer by adding certain profit margin to its cost.MURABAHA SALE PRICECost+ Expenses incurred + Agreed profitMODE OF PAYMENT  Immediately in cash  On mutually agreed future date  Spot Murabaha  Deferred Sale MurabahaTYPES OF MURABAHA(Local purchase)Murabaha for purchase of locally available goods / commodities on defer payment basis.It can be lump sum and or in installments.Imported goods / commodities / AssetsMurabaha for purchase of locally available goods / commodities / assets is allowed on thefollowing basis: a) Spot Murabaha b) Deferred Payment Murabaha (lump sum/ installments) o Pledge of imported goods/ commoditiesLets Look Ahead Towards a Brighter Future Together 26
  27. 27. o Trust receipt COMMON FEATURES  Request from customer for purchase of specific goods / commodities.  Appointment of customer as an agent of bank  The bank takes the possession of goods / commodities and established its ownership  Customer offers the purchase the same goods / commodities from the bank at a specific price to be paid on some future date.  Bank accepts customer’s offer to purchase the goods / commodities and Murabaha documents are signed  All associated costs / charges to be incurred pre/ post Murabaha execution, to be determined, calculated earlier and included in Murabaha price.  In case of Import Murabaha , customer duties by the bank shall be part of Murabaha price  Appropriate collateral / securities can be obtained as per mutual consent. CUSTOMER’S GUIDANCE 1. Murabaha is always allowed for Fresh Purchases. 2. Goods shall not be used by the customer before Murabaha offer and acceptance are signed 3. Roll over in Murabaha is not allowed. However, fresh purchases can be made under new murabaha arrangements 4. Murabaha price one fixed can not be changed. In the late payment customer have to pay certain amount in charity fund according to his undertaking in Murabaha agreement.Lets Look Ahead Towards a Brighter Future Together 27
  28. 28. FUNCTIONING OF BANK ALFALLAH IS DIVIDED INTO FOLLOWING DEPARTMENTS  OPERATION DEPARTMENT  FOREIGN EXCHANGE DEPARTMENT  CREDIT ADMINISTRATION DEPARTMENT  CORPORATE DEPARTMENT  CONSUMER FINANCE DEPARTMENT OPERATIONS DEPARTMENTSOperation Department has following segments: a) Cash b) Clearing c) Remittance d) Account opening e) Accounts departmentOperation DepartmentsOperations department of the Bank Alfalah Limited is responsible for the overalloperations of the bank. Mr.Faisal Nouman (Op’s Manager) is responsible for all functionunder operation department.The detail of those departments, which are controlled under this department, is as under. a) Account opening b) Cash department c) Clearing d) Remittances e) Fixed Deposits: 1. Term Deposit. 2. Call deposit. 3. NDR.Lets Look Ahead Towards a Brighter Future Together 28
  29. 29. ACCOUNT OPENING DEPARTMENTIt is most important department of bank and its major source of income for bank.Ms.Humera operation officers deal in this department. Following procedure is adoptedfor this purpose.Procedure of Account OpeningJust fill in the Account Opening Form, bring in your original Identity Card, and getintroduced by an existing banker. This is all that you need to open a Saving Account withus and enjoy our personalized banking services.It is very simple and quick procedure. A person who wants to open an account must havethe introduction of bank’s staff or any already existing account holder of the bank. Thecustomer is required to fill an account opening form. Then signatures of the introduce areverified from S.S. Card (signature specimen) before opening account. AOF is verystandard and up to the mark which contains almost whole information about customers.Customer is guide to fill all columns of AOF. All formalities and requirements arecompleted and verified, and all supportive documents are taken and checked according tothe nature of account. If any formality is incomplete, chequebook is not issued until it isfulfilled.If a person cannot sign write his / her hand thumb impression is affixed marked, which isattested by one male or two female witnesses. Thumb impression for female right handand for male left hand.Account number is allotted to the customer and all particular such as nature of account,opening date, initial deposit, title of accounts are written in register.Account is opened in the system (Bank Excel) by putting all the particulars of thecustomers in the system. S.S. cards are handed over to in charge of operations departmentfor record and verification. The letter of thanks is sent to customer for confirmation ofaddress and other particulars of customer and one copy is attached to AOF. Aftercomplete procedures finally the manager of bank signs the AOF and these forms are filedin a proper sequence.They also have to give identity letter 1) NIC copiesLets Look Ahead Towards a Brighter Future Together 29
  30. 30. 2) Passport size photographOne place on the form other is on SS Card they have non-bearer cheques. On theircheque book a stamp is affixed on it there is written. Thumb impression should be fixedin front of an officer of the bank.Cheque book request forward by fax to the head office and cheque books will receivedafter one day and derived to the customer on the desk by taking their signature or if someone else want to take on the behalf of account holder he must have to show initial depositslip and give ID card photo copy.The bank does not make payment of a cheque bearing a six months or older date. If anaccount is not operated in six months. It is called dormant account.Types of AccountsThe bank different types of accounts exist.1) INDIVIDUAL ACCOUNTAny individual or proprietor of business can open an individual account at BAF.PLS (profit and loss sharing) saving accounts can be opened with the minimum balanceRs. 10,000/-. Following requirements has to be fulfilled for this account.  Signature of customer on back of AOF.  Mention next of kin (nominee)  Name and A/C # of introducer.  Verified sign of introducer.  Customer signature admitted by officer.  N.I.C photocopy attached.  Letter of thanks.2) JOINT ACCOUNTWhen different people want to or need to share a single account it is called joint account.The names of persons are written on the title of A/C and on S.S. card.Single person cannot open joint A/C. Both persons have to sign on cheque. When two ormore person neither partner nor trustee open account in their name is joint account.Requirements  Sign of both customers on back of AOFLets Look Ahead Towards a Brighter Future Together 30
  31. 31.  Sign on joint A/C # mandate  Name and A/C # of introducer  NIC copies of both members.  Mode of operation.3) BUSINESS ACCOUNTSWhen the owner of the firm operating singly, open an in his term name.I) SOLE OF PROPRIETOR ACCOUNTThis account is for those person who has his own business and he must be the solelyowner of the business.Requirements  Companies stamp  Declaration of proportion companies’ letterhead.  Sign on AOF.  NIC copy  Verified signature of introducer.  Sole proprietorship declarationII) PARTNERSHIP ACCOUNTAccount title will be the name of the partnership firm.Requirements  Sign of customers on back of AOF.  NIC copies of partners  Partnership deed (certified copy) duly attested by notary republic.  Partnership mandate (prescribed format)  Companies rubber stampThe A/C is opened in the firm name and all partners designate one or two persons to actbehalf of the partnership firm all acts of the firm jointly and severely.III) LIMITED COMPANYLimited Co: 1) Private Limited 2) Public LimitedLets Look Ahead Towards a Brighter Future Together 31
  32. 32. PRIVATE LIMITEDRequirements  Restrain on companies letterhead dully attested by chairman.  Sing of all directors on back of AOF.  NIC copies of all directors.  List of directors on companies’ letterhead.  List of memorandum and article of association.  Copy of board resolution.  Latest form 29 (if director is to be changed or in case of his death, this kind of form is filled, it includes information that a new director has how much number of shares with him.  Companies’ rubber stamp.  Director should attest copy of certificate of incorporation; co register an office stamp should be affix.PUBLIC LIMITED 1) Certificate of commencement of business 2) Same as home documents.Club / Society / AssociationThese concerns are non-trading in nature. They have their own rules and regulation andtheir affairs are mentioned by the committee called as a governing body or managingcommittee.1) Stamp of directors2) NIC copies3) Certified copy of resolution4) Memorandum and article of association5) List of heads on companies’ letterhead.6) Bank account opened in their name with BAL.7) Name of person to be specified for the operation in account.8) The manner in which the account shall be operated.9) Letter of registration.Lets Look Ahead Towards a Brighter Future Together 32
  33. 33. Cheque Book IssuanceWhen the account is opened, then the customer is given a chequebook to sign upon and tocash money. It proceeded as under.ProcedureAll the account opening formalities must be completed before issuance of chequebook.Particulars of the chequebook requisition should be completed containing: 1. Account Opening Form 2. Introduction 3. Specimen Signature Card 4. Requisition slip 5. Know Your Customer Form 6. Account Number 7. Depositing of amount in account 8. Issuance of a Cheque Book 9. Entry of Cheque Book 10. Filing of AOFChequebook is delivered to the customer and his signature on the chequebook issuanceregister. Chequebook serial number entered. In the system (FoxPro). Stock ofchequebook are balanced at the end of each day and kept under safe custody.Earlier the banks were charging a fee for issuance of chequebook but now whenever anew account is opened, the account holder issued a chequebook free of charge.Bank Alfalah issues the following chequebooks.  Saving account-25 leaves  Current account 50 to 100 leaves.  Current account – 25 leaves  Foreign currency $ 10 leaves  Foreign currency 10 leavesLoose cheques are also issued in some cases. Number of leaves can be increased on therequest up to 100 leaves.Lets Look Ahead Towards a Brighter Future Together 33
  34. 34. RECEIVING INWARD CHEQUESAnother responsibility &function of Account Opening Department is to receive Inwardcheques for collection of other banks. These cheques are sent to clearing official whoclears these cheques at SBP from other banks. EVERY DAY POSTINGAt the end of each day, Posting of cheque books is performed. The account openingdepartment makes credit vouchers of excise duty and provincial tax on chequebookleaves, and posts it in the company. CLOSING OF ACCOUNTWhen a customer wants to close an account he has to given a hand written application tothe head of the operations department to close his account plus remaining leaves ofcheque book.The manager first verifies the sign of account holder, and then closing is done from theregisters on the computer where the account was opened. In the file of the account holderhis account opening form is crossed. For this closing a fee of Rs. 150/- is charge in BAF.CURRENT ACCOUNTSCurrent deposits are those which are payable to bank whenever demanded by thecustomer. Bank does not pay any profit on current deposits. There are of differentscheme of saving deposits, which are classified under different duration purpose and rateof interest. Fixed deposits are those deposits which are by the bank under the conditionsthat they will not be payable on demand but will be payable under fixed or determinablefuture time date.FEATURESA sum of Rs. 500/= in cash as initial deposit is required for opening a current account andthe same may be maintained as minimum average running credit balance. No profit willbe paid on credit balances held in current accounts. The bank reserves the right to allowopening of current a/c at its description. All deposits and withdrawal from a current a/cwill take place only at the branch where the account is being maintained. Current a/ccannot be overdrawn, except by prior agreed agreements with the bank. TheLets Look Ahead Towards a Brighter Future Together 34
  35. 35. correspondence relating to current A/Cs should be addressed to manager of the branchwhere the account is being maintained. A distinctive number will be allotted to eachcurrent account and shall be quoted on all correspondence relating to the respectiveaccount and at the time of making deposits and withdraws.The account holder can draw sums from his account by means of cheque supplied to himby the bank for that particular account. Account holder should take well care of thechequebooks issued to them. The account holder will pay excise duty of Rs.4 per leaf tothe government.PAY–IN SLIPThis slip is used for depositing the additional amount. The bank will accept thePakistanis notes. All cheques and other instruments should be crossed before they aredeposited for credit into the account. There shall be no restriction on number ofwithdrawals in current account. The account holder is expected to maintain a minimumrunning credit balance of Rs.500/. An account holder wishing to close his account mustsurrender the unused cheques to the bank. The current account is computerized, thus itgenerate the statement of account for all account holders periodically. Incidental chargesare beard by the account holder if its credit balance is less than Rs.500/. Service chargesof RS. 20/= will be taken by the bank, if an account is closed within 6 months from thedate of its opening. FINANCIAL PRODUCTSSAVING ACCOUNTSaving accounts are opened on proper introduction with sums of credit balance withincertain limit for individual (single, joint) institutions, companies, educational institutionsetc. ABL has introduced various schemes under saving a/c are following: Mala Maal Scheme PLS Account Saving 365 Account Capital growth certificate scheme Fund Management SchemeLets Look Ahead Towards a Brighter Future Together 35
  36. 36.  Khanm Bachat Scheme Khushali Bachat Account Term/ Fixed DepositsPROFIT & LOSS SHARING (PLS) ACCOUNTThis account was started in 1980s after the issuing of banking ordinance in 1980 by ZiaGovernment to develop Islamic banking in Pakistan. In this case customer would beresponsible for bearing profit as well as loss. The bank would be within its rights tomake investment of credit balances in the PLS saving accounts in any manner at its solediscretion and to make use of the fund to the best of its judgment in the banking businessunder the PLS system. For withdrawal of larger amount, 7 days notice in writing isrequired to be given: Minimum balance is Rs.500/= Below minimum balance charges will be debited Not more than eight withdrawals in a year allowed More than Rs.15000/= are not allowed to draw Seven day notice is required for withdrawal Profit calculated on monthly basis Profit paid on annually basis Profit paid on lowest balance at the end 10% Withholding Tax on minimum balance Zakat deducted on @ 2.5%SAVING 365 ACCOUNTSThis account is newly developed of ABL and it provides flexibility of saving account tobusiness people. Profit on deposits will be payable on daily product basis on balance ofRS. 500,000/- and above. However, if balance in the account falls below RS. 500,000/-on any day, the product will be ignored. There will be no restriction on withdrawal fromthe account. Zakat and withholding Tax is also applicable on the account opened underthis scheme. Minimum balance is Rs.500,000/= Below minimum balance, profit calculation ignoredLets Look Ahead Towards a Brighter Future Together 36
  37. 37.  Profit calculated on daily basis Profit paid on annually basis 10% Withholding Tax on minimum balance Zakat deducted on @ 2.5%CAPITAL GROWTH CERTIFICATE SCHEME Long term deposit Profit rate as that of PLS Saving Account Minimum amount of deposit is Rs. 10,000/= Amount deposited double in of 5 years No maximum limit of Deposits 10% Withholding Tax on minimum balance Zakat deducted on @ 2.5%TERM DEPOSITSTerm deposits are fixation of certain amount of money for a specific span of time. Thesecan be of major two types i.e. short term notice deposits and long term notice deposits.Different rates are charged for different period of times like as shown by following table.If presented before maturity then previous period rate would be charged. Duration Rate of interest 01 month 08.1% 02 month 10.1% 03 month 11.0% 06 month 11.5% 01 year 12.5% 02 year 13.3% 03 year 14.5% 05 year 16.4%The instrument term deposit is like a slip containing issuing bank name, a/c # to operateon computer, deal #, customer name, reference #, date of issue, amount, rate maturitydate etc.CALL DEPOSITSLets Look Ahead Towards a Brighter Future Together 37
  38. 38. These call deposits are presented in the bidding process as guarantee or security from thebank that this much money is deposited in the bank. These are made in the favor the partyoffering contract or any other person. The bank offer no interest rate on it because thesecan be called at any time. For encashment the applicant must have to cancelled the calldeposit instrument from its beneficiary. For collection the beneficiary usually send theauthority letter for paying in the shape of Demand Draft or pay order. The call depositinstrument containing the information regarding applicant and beneficiary name, jointname a/c opened signature cards for encashment, reference #, amount, date of issue,authorized signature etc. CASH DEPARTMENTCash department of Bank Alfalah works under the operation department. This departmentis given the complete responsibility of cash, as result of transaction in touch local andforeign currencies. It is also responsible for the book keeping of these transactions andthe safe custody of cash.This department performs the main function. a) Cash receipts b) Cash paymentsCash ReceiptsIn cash department depositors use deposit slip for depositing the amount into theiraccounts. The officer checks if the deposit slip is properly filled up containing title ofaccount, A/C number, date and amount in words and figures. Detail on both counter fileand cash receipt voucher should be the same. Cash receiving officer, after twice countedand matched with the deposit slips will handover cash to the customer. The cash detailsare 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 ofthe cash receiving officer.Deposit slip and cash receiving register is given to the officer in the cash department. Theofficer cash department both on cash receipt and cash receiving register do again properLets Look Ahead Towards a Brighter Future Together 38
  39. 39. checking. Officer cash department signs both the deposit slip and register. Deposit slip iscredited and posted in the concerned accounted in the system. Counter folio is given thedeposition as receipt. One consolidated cash debit voucher is posted in the system tobalance the cash.Cheque Encashment Section:The process of cheque encashment is done with the help of the following procedure. 1. Receiving Cheques 2. Verification of signatures 3. Computer terminal process 4. Payment of cash ProcedureMr. Waqar & Ikhlaq deals with cash payments the process for payment of cheque localand foreign currency is same. First the cheque is presented by the customer or holder tocash payment officer. He confirms that it is drawn on the same branch and the particularsof cheque are properly filled in. one signature of the holder is taken on the back of thecheque. Cheque is handed over to the officer cash department for scrutiny where officerchecks the date, amount in words and amount in material figures, payee’s name, crossingif any, account number, cheque serial number, any alterations / endorsements andsignature of the customer. Account is debited and then the officer cancels cheque. It isposted in the system and posting stamp and number is affixed on it. Cheque is handedover to the cash payment officer for payment. One more signature on that back of thecheque is taken from the holder to match with the first one, and then cash is paid to thecash detail is written on the back of the cheque. Cash paid stamp is affixed on the face ofthe cheque. Entry is passed in the cash payment register and system. CLEARING DEPARTMENTMr.Raza deals this department. Before discussing it is necessary to know what is“clearing”.Lets Look Ahead Towards a Brighter Future Together 39
  40. 40. “The process by which cheque exchanged between the collecting and paying bank andthe ensuing financial settlement is called “clearing”. This facility is provided by the statebank of Pakistan for offsetting of cross obligations between the different banks. Clearingis of two types. 1) Inward clearing 2) Outward clearingInward ClearingWhen cheque drafts, etc, of our branch presented to us for clearing by the SBP. Chequeto be honored by bank.Outward ClearingThe cheque of other banks, which the account holder deposit in their accounts is, sendsfor collection. CLEARING PROCESS (INWARD/OUTWARD)Here the local cheques are received that are drawn on BAF. All the cheques are receivedon one counter along with the paying slips duly filled in properly containing particularsof cheque and account holder. Counter folio of paying slip is handed over to the customerby putting stamp for cheque received for collection for Bank Alfalah on it duly signed byofficer. These cheques are scrutinized and cheques for local clearing are separated fromOBCs. These are then entered in clearing register and cheques for collecting are enteredin OBC register and handed over the bills department of collection. Clearing officerchecks and verifies title of all the cheques deposited by the customer to confirm the goodtitle of the cheques. Cheques are scrutinized properly and paying slips are separated fromcheques. 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 thenentered into the clearing system of bank. Print out of the clearing is taken and details areattached.With the cheques of each bank. Details of these banks are then entered into the clearingschedule containing number of cheques presented and their total amount against the nameof each bank. Then total number of cheques presented to all banks and their total amountis written on the foot of that schedule, which is tallied with the clearing register.Lets Look Ahead Towards a Brighter Future Together 40
  41. 41. Next morning, these cheques are delivered to the respective banks in clearing house ofSBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearingdrawn on Bank Alfalah. Total number of cheques and their amount delivered to otherbanks are received from them are written on the clearing house schedule and handed overto the officer clearing house SBP. Cheques / DD received in clearing are given to theofficer cash department of the branch for their repayment. After I proper scrutiny ofcheques, verification of signatures and confirmation of balance in the account, officercash department pays these cheque by canceling and posting them in the system.If any cheque is not passed due to insufficient balance or any other reason, officer cashdepartment returns the same cheque by attaching a cheque return memo containingreason for return. This cheque is entered into the cheque returned register and bankcharges are deducted according to the schedule of charges.Second clearing is called at 2:30 PM to check the fate of the cheques presented to otherbanks in the morning. If any cheque is to return, that is delivered to the same bank insecond clearing. In the same manner, if any cheque presented by Bank Alfalah in firstclearing is returned, they receive it and once again give schedule of clearing figure to theofficer-clearing house SBP containing number of cheques and their amount delivered andreceived unpaid.Lets Look Ahead Towards a Brighter Future Together 41
  42. 42. ACCOUNT DEPARTMENTAccount department is the most important department of the bank. Because it isconcerned with:  Revenue  Expenses  Assets  LiabilitiesThese are the pillars of any business. In this department, all the vouchers that are postedduring one day are sent to the account department next day. These vouchers are alreadyposted to computer by the concerned department. So computer also sends a report to theaccounts department. The accounts department has to tell that the requirements forcheques and vouchers are fully checked.If any kind of renovation or construction or rebuilding is done, all is paid from theaccounts department.Daily Customer Movements ListAll the changes that are made in accounts of customer are shown in the daily customermovement list. By using this list, people of accounts department can prepare thevouchers.Account department performs following activities.  Data Controlling  Reporting  Expense Management  Taxation  Pay Role  Budget Preparation  Monthly closing Monitory & Monthly Closing Statement Preparation  Leave Record & General Administration  Fixed Assets, Record, Depreciation, Maintenance, Insurance &  ApprovalsLets Look Ahead Towards a Brighter Future Together 42
  43. 43.  Voucher preparation  Preparation of daily, weekly, monthly, and annual statement.  Budgeting and fixed assts  Employer’s benefit  Expenditure approval.The bank does not make payment of a cheque bearing a six-month or older date. If anaccount is not operated in six months, it is called dormant account.In Account Department Function Are Performed In 3 Steps  Data controlling  Payment/disbursement/payroll system.  Reporting systemIn Data controlling, vouchers are received from every department like Account Opening,Car-Financing, Cash dept, credit card section etc and then sorting will start and sorting bytwo ways 1) By Customer Activities. 2) By General LedgerAfter sorting sub-sorting will start and this can also be done in two ways 1) By A/C title (current, saving, royal group, royal profit etc) 2) By Computer codes (01,02,05,019,12,029)In disbursement and payment function they perform IBCA’s and preparing cash paymentVouchers & pay slips etc.In reporting different types of reports are prepared, stored in folders or mailed to headoffices. There are 6 basic reports on Daily basis. 1. Daily Branch Position. (Treasury) 2. Daily Deposit & Advances Position. 3. Daily Management Information System. 4. Daily Foreign Currency Report. 5. Daily fund Rupee position. 6. Statement of Affairs.Weekly Reports 1. Weekly FE-25.Lets Look Ahead Towards a Brighter Future Together 43
  44. 44. 2. Advances & Deposit Statements.Deposits can be categorized as follows:1. Call DepositsDepending on local practice Call Deposits are to be repaid immediately upon demand andduring counter hours.2. Notice DepositsNotice deposits are kind of fixed deposits. The minimum balance requirement foropening the account is Rs. 500/- and payment is drawn on maturity of the specific period. TYPES OF ACCOUNT  Riba Free - Current Account  Saving account  Riba Free - Dollar Saving Account  Riba Free - Rupee Saving Account  Riba Free Karobare Munafa AccountCurrent AccountA bank account that is ideal for businesses and individuals looking for Shariah compliantbanking and ease of access. With a minimum amount of only Rs.10, 000/- you can open aRiba-Free Current Account. Offering you a range of benefits including free onlinetransactions, no restrictions on the number of transactions, Call Center facilities, balancecertificates, priority banking and much more.Saving AccountA unique bank account that offers the opportunity to earn Halal profits, while enjoying arange of added benefits. It can be opened with a minimum amount of only Rs.10, 000.The profit on this account is calculated and paid on a monthly basis, and comes with avariety of free benefits including personalized check books, no restrictions ontransactions, priority banking and so on.Lets Look Ahead Towards a Brighter Future Together 44
  45. 45. Riba Free - Dollar Saving AccountWith a minimum deposit requirement of only US$100, the dollar saving account is undera Mudarabah arrangement that is strictly in conformity with the principles of IslamicShariah. Profit on this account is also paid on a monthly basis and comes with a range ofbenefits including checking facility, balance certificates, and personal financialconsultancy services.Riba Free - Rupee Saving AccountA unique bank account that offers the opportunity to earn Halal profits, while enjoying arange of added benefits. It can be opened with a minimum amount of only Rs.10, 000.The profit on this account is calculated and paid on a monthly basis, and comes with avariety of free benefits including personalized check books, no restrictions ontransactions, priority banking and so on.Riba Free Karobare Munafa Account Karobari Munafa is a savings account specifically tailored for large Corporate or GOPcontrolled entities. It allows customers to earn higher returns on surplus cash balances. It has no preset transaction limits and comes with a variety of free packaged benefits. REMITTANCE DEPARTMENTThe need of remittance is commonly felt in today’s business. A major function of anybank is to “transfer of funds form one place to another”. Bank Alfalah uses the followingmodes of transfer of funds. a) Demand draft (DD) b) Telegraphic Transfer (TT) c) Pay order (PO) d) Call deposit e) Pay slip f) Money gramDemand DraftIt is instrument, which is used to transfer amount from one city to another city it can bemade on cash as well as on cheque. If it is made through cheque that it is necessary thatLets Look Ahead Towards a Brighter Future Together 45
  46. 46. person must be A/c account holder while in case of cash any person can make. Thedemand draft is secured mode of payment. It consists of three copies. 1) Original copy, which is given to account holder. 2) DD advice is sent to the central branch. 3) Third copy is for reconciliation. Its photocopy is kept with us (bank) while original is sent to head office for reconciliation.Parties Involved in DD: ♦ Purchaser ♦ Issuing Branch ♦ Drawee BranchDD is of following two types: DD payable DD Paid Suspense a/cIn the first type as advice reaches for payment the immediately pay to the customer whilein later as DD presented by the customer, it is paid and the suspense account is debited.ProcedureThe client who wants to transfer his funds form one city to another fills a form requestingthe bank to prepare a DD. DD application form contains columns requiring informationfor the preparations of DD e.q.  Beneficiary name  Applicant’s name  Address  Amount to be sent etc.Bank deducts some charges against DD.Telegraphic TransferIt is another mode of transfer of funds. It is quickest mode of transfer of funds from onecity to another. For TT, client has to submit the application on a prescribed form of thebank. Client can deposit money in to the bank or can request the bank to deduct theamount against the TT along with the charges against the issuance of TT from hisaccount. The charges against the issuance of TT charged by Bank Alfalah.Lets Look Ahead Towards a Brighter Future Together 46
  47. 47. Procedure for Telegraphic Transfer IssuanceApplication form is given to the customer to fill. Two signatures are taken on the formone for request and other for receiving the instrument. All the particulars of applicationform are checked and bank commission charges and with holding tax are written on thetop of the applicant form. If the customer is maintaining his account with the branch hecan give cheque for total amount of instrument plus bank charges. Cheque andapplication form is then given to the officer cash department for the payment of thecheque. After proper scrutiny, officer cash department posts whom cheque and signs theapplication form to assure that payment is received. If the customer wants to pay cash,the customer on cash counter deposits it. Cash receiving officer receives cash on theapplication form along with the bank charges and withholding tax; application form isthen given to the remittances in charge for issuance of the instrument. He enters all theparticulars of the application form in the system (BPG) and computer gives an AutoControl Number to the T.T message of receiving branch. This message is then sentthrough telex to the receiving branch followed by a T.T. advice. The customer isconfirmed that T.T. has been sent. COLLECTIONAll the cheques under collection are called cheques under collection in Bank AlfalahLimited. There are two types of bills for collection:  Outward Bills for Collection  Inward Bills for CollectionPay OrderWritten order which is issued and received to the save book or drawn or payable on samebranch. Application form is given to the customer to fill. Two signatures are taken on theform one for request and other for receiving the instrument. All the particulars ofapplication form are checked and bank commission charges and with holding tax arewritten on the top of the applicant form. If the customer is maintaining his account withthe branch he can give cheque for total amount of instrument plus bank charges. Chequeand application form is then given to the officer cash department for the payment post thecheque and signs the application form in token of payment received. If the customerLets Look Ahead Towards a Brighter Future Together 47
  48. 48. wants to pay cash, cash is deposited by the customer on cash counter cash receivingofficer receives, cash on the application form along with the bank charges andwithholding tax. Application form is given to the remittances in charge for issuance ofinstrument. He enters all the particulars of the application form in the system (BPG) andcomputer gives an auto control number to the instrument. Print out a take on the blockpayment order. Two authorized officers of the branch then sign it. Instrument is theprotect graphed and given to the customers. When the instrument is presented forpayment, it is posted in the BPG and canceled by the remittances in charge after properscrutiny.Call DepositWhen the party wants to give payment from itself to another party then it makes calldeposit. The bank keeps it with itself unless it does not receive instructions from otherbank. Normally it is made on cash and goes in party account.Pay SlipIt is used when bank itself pay for any type of transaction e.g. purchased of stationary.Money GramBank Alfalah Limited, in collaboration with money gram offer remittance services toPakistan. “It’s basically a person to person money transfer service that allows consumerto receive money in just a few minutes.”Procedure  Person must have reference no.  Person must tell reference no. And compute the simple form.  Person has to show NIC and tell compute introduction after that he can obtain money.Vouchers are also posted in the system. When OBC is realized collection bank pays theamount through IBCA if it is the same bank or through DD if it is another bank. If DD isreceived against OBC, it is presented in the clearing for collection. If IBCA is receivedthe branch for the payment of OBC, certain vouchers are posted in the system.Lets Look Ahead Towards a Brighter Future Together 48
  49. 49. FOREIGN EXCHANGE DEPARTMENT“The transfer of credits to a foreign country to settle debts or accounts between residentof home country and those of the foreign country” or “the foreign bills currencies etcused to settle such accounts”.Foreign exchanged department deals within exports and imports. The bank acts asexporter as well as importer bank for different parties who are in the business of exportand import.ImportsLetter of CreditsAll Letter of Credit transactions are handled in accordance with the Uniform Customsand Practice for Documentary Credits as published time to time by the InternationalChamber of Commerce. The vast network of our correspondents connected throughSWIFT ensures speedy processing of LC transactions.Import Murabaha FinanceTo facilitate the financing requirements of imports, we offer Riba free, Import MurabahaFacility. This product is approved by our Sharia Advisor as true alternative ofconventional modes.Other services. We offer full range of services related to imports e.g. Contract Registration, Import Billsfor Collection, Shipping Guarantees and Advance Payments against Imports underguidelines of foreign Exchange Manual.ExportAll goods and services sent from one country to another country.Export Murabaha FinanceIn order to facilitate the production / manufacturing of goods for onward export tointernational markets, we offer Export Murabaha Finance completely Riba Free for ourexporters.Lets Look Ahead Towards a Brighter Future Together 49
  50. 50. SBP Islamic Export Finance SchemeWe also offer SBP Islamic Export Finance under Part I & II on Murabaha basis in linewith the Sharia principles.Other servicesWe offer all export related services i.e. Collection of export bills, Negotiation under SightLcs, Advising/ confirmation / Transfer of Letter of Credits opened by other banks.Document Required For Exporter 1) National tax number 2) Registration with EPB 3) Sales tax registrationDocuments to Be Attached For Exporters  Invoice  Bill of lading  Packing list  Total quantity  Net weight / carton  Gross weight / carton  Total net weight / carton  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)Payment from Importer BankIt is the choice of importer to open L/C from any bank and the bank from which L/C isopened can also refer to some other bank for payment. So bill of exchange is sent to referbank and other documents are sent to L/C opening bank.Lets Look Ahead Towards a Brighter Future Together 50
  51. 51. SWIFT (Standard World Wide Inter Bank Financial Transaction)It is network among all banks. No other institute can get involved in it.Bill Of LadingCertificate from shipping company for loading commodities. If requirement of L/C is toissue bill of lading in favor of L/C opening bank, then authorized dealer certificate will beprovided by bank in favor of L/C opening bank.Bank Keep In Record  Covering schedule  Invoice  Packing list  AWB  Certificate of origin  E-formNormally bank keeps photocopy of all documents in record. DOCUMENTARY CREDITDC DepartmentAlfalah Bank has his full-fledged documentary credit department.As a credit instrument and as a means of making as a payment the documentary credit isan essential instrument for conducting word trade today. A documentary credit representsa commitment bank to pay the seller of goods or services a certain amount providedpresent stipulated documents evidencing the shipment of the goods with prescribedperiod of time.For imports or exports first the parties have to do upon a sale contract regarding the termand condition of sale. One mode of payment is by L/C, which is secured, and now daysmostly use the business.Letter of credit is under taking by opening bank (Negotiating bank) that it will makepayment if documents are as per terms of LC.Lets Look Ahead Towards a Brighter Future Together 51
  52. 52. Four Parties Are Involved In Letter Of Credit  Applicant Importer  Beneficiary Exporter  Issuing bank Bank of importer  Advising bank Bank of importerAccording to import policy, no import is valid with out import license, which is issued bythe chief controller of import, and export or we can say export promotion bureau (EPB).Types of L/C:Letter of Credit is1. Revocable2. Irrevocable 1. Revocable Letter of Credit: A revocable Letter of Credit can be amended or cancelled by the issuing bank at any time without prior notification to the seller. This form of credit gives the buyer maximum facility but it places the seller in difficult position when the goods are in transit and the credit is revoked before the documents are presented and payment has not been made on presentation. Since it offers little security to the seller, it is hardly used in foreign trade. 2. Irrevocable Letter of Credit: An irrevocable letter of Credit constitutes a definite undertaking of the issuing bank to accept and pay the bills drawn upon it so long as the terms and conditions stipulated in the letter are fulfilled. This form of credit can be amended or cancelled only with agreement of all parties to it. Since it gives the seller greater assurance of payment, it is always preferred to revocable letter of credit. Banks involve in Letter of Credit: Following Banks are involved in letter of credit: i. Issuing Bank (Opening Bank) ii. Reimbursing Bank iii. Advising BankLets Look Ahead Towards a Brighter Future Together 52
  53. 53. iv. Negotiating Bank v. Intermediary BankL/C Opening ProcedureWhen the importer obtained import license, then the bank will open letter of credit. “Aletter of credit is undertaking by LC opening bank to put an agreed sum of money tosellers’ bank on behalf of the buyer of the goods under clearly defined terms andconditions”. Pakistani banks open only irrevocable LC. An essential feature of theirrevocable LC is that it cannot be modified, altered, amended, or canceled without theprior consent of all the parties. Party comes to the bank and fills the form, which isprovided on the payment of Rs. 100. This form is filled by the party and is return to thebank, it includes details like.  Name of company  Address  Country of origin  Branch name  Quantity  Insurance company  Shipment from  Shipment toOne thing should also be submitted which is INDENT. If the foreign party has any agentthey will issue the indent with following details.  To Messer  Importers, etcDocument Required for “LC” OpeningWhen the bank opens LC, it requires following documents.  Valid import license  Performa invoice  Importer should be Pakistani  Letter of under taking form importer  Insurance cover.After the LC is opened following entries are made.Lets Look Ahead Towards a Brighter Future Together 53
  54. 54.  LC opening register  Margin / Liability Account Register.Payment to SellerThe negotiating bank upon receiving the documents from the seller checks the documentsaccording to terms and conditions of credit upon satisfying it self of this the negotiatingbank makes payment to the seller if sight credit. It then forwards the documents to theopening bank and reimburses it self through the opening banks account with itself.Documents Received By the Opening BankImporters bank or opening bank receives the following documents form the exporter’sbank or negotiating bank.  Bill of exchange  Invoices  Bill of lading  Packing list  Certificate of origin  Insurance CREDIT ADMINISTRATION DEPARTMENTThe credit department as its name implies is basically concerned with the creditsextended to the individuals & institutions. The credit dept. is considered as the basicearning unit of the bank. The overall functioning of the credit department covers thefollowing areas: The functioning of the credit department is again divided into twodepartments whose functioning is interrelated with each other, which are:  Credit Operation Department.  Credit Administration.Now we will take a closer look at the area of functioning of each of these departments inthe coming section.Lets Look Ahead Towards a Brighter Future Together 54
  55. 55. Credit Operation DepartmentCredit operations department as its name suggest is responsible for the control &performance of the operations that comes under the head of the credit department.Function of Credit Operations DepartmentThe functions of the credit operations department extend to the following areas: 1. The function of COD rotates around the disbursement and recovery of Morabahas. All of the morabahas are processed using a specific procedure, which is as follows: i. COD books the morabaha after receiving the duly approved Risk Appraisal Form (RA) or the approval of Offering Sheet duly approved by appropriate credit authority. ii. The officers dealing the morabaha do not take direct instruction from the customers. iii. All instructions/documentations are routed through the head of COD/CBG. 2. COD prepares the monthly summary of the account detailing balances of classified customers, applicable classifications, forced sale values of securities, overdue period, etc. These reports are prepared as per the prudential regulations and submitted to the management.Lets Look Ahead Towards a Brighter Future Together 55
  56. 56. 3. COD also prepares the report as they are needed by the regulatory authorities.Deal-in Products of CODABL currently offers the following credit facilities to its customers: A.Morabaha- Local Purchase Order (LPO). B.Morabaha- Trust Receipts (TR). C.Morabaha- Payment against Documents (PAD). D.Morabaha- Pledge/FIM. E.Ijara- Leasing. F.Musharaka Financing. G.Morabaha- Export Finance. H.Car Ijara Financing.Documents required for approval of facilityBefore extending any facility to the customers the bank has got some documentationrequirements that are to be fulfilled by the customer. These requirements are almost thesame for all the different types of facilities. The formalities are given as under: i. Request letter. ii. Board resolution. iii. Signature of customer/partners/directors. iv. Visiting card.Lets Look Ahead Towards a Brighter Future Together 56
  57. 57. v. NIC card. vi. Memorandum and article of association. vii. Certificate of incorporation. viii. Certificate of commencement of business. ix. Form 29 (List of directors). x. Import/Export registration number. xi. Financial of last three year + Audit report.Credit Department Functions and FacilitiesCredit means belief or trust. “The quality of being credible or trustworthy”. Credit as“trust in one’s integrity in money matters and ones ability to meet payment when due”.. The earnings of BAL are chiefly derived from interest charge and discounts. Thisdepartment is the revenue-generating department. Credit department basically has threesegments.1) Credit marketing department2) Credit administration department3) Trade finance services departmentCredit and advance department deals with extending loans (credit facility) to customers.State Bank of Pakistan (SBP) has prescribed regulations, which are called“PRUDENTIAL REGULATIONS”. Every bank has to follow these regulations. If anybank violates the regulations it should be liable for penalties under the core spirit of SBPPAK (RS).Commercial CreditA commercial Credit facility is the core business area of the Bank. The types of facilitiesbeing offered to customers can be broadly presented as follows:a) Facilities where the bank actually advances money against future repayment -(Funded Credits), andLets Look Ahead Towards a Brighter Future Together 57
  58. 58. b) Facilities where the bank substitutes its own credit for that of its customer e.g.opening import Letters of Credit, issuance of bank guarantees - (Non-Funded Credits)Credit lines must be defined as to currency, total amount and time, purpose and thegeneral or specific conditions upon which they are made available to a customer. Themark-up and/or commission rates and method of computing should be specified. Theagreement should also provide for default rate for delayed payments, unless default rate iswaived with the approval of the sanctioning authority.Following Are the Different Types of Facilities Offered By the BankFunded Credits NON-Funded Creditsa) Current Finance a) Letters of Creditb) Term Finance b) Guaranteesc) Syndication / Consortium Financing  Shipping Guaranteesd) Negotiations of Export bills under L/C  Bid Bondse) Preshipment Finance (Packing Credit)  Advance Payment Guaranteesf) Import Financing  Performance Bonds i) Finance Against Trust Receipt (FTR)  Others ii) Finance Against Imported Merchandise (FIM)g) Contract FinancingCurrent Finance CF A facility under which the bank makes available funds upto a specific amount at anytime over a specified period of time (i.e. one year) is termed as current finance. It allowsa borrower to borrow from time to time, upto the validity period, according to his needs.The funds may be borrowed partially, be repaid and borrowed again upto the amountestablished and within the time period allowed under the agreement.This facility is a revolving advance and mark-up is charged only on the utilized part ofthe facility. CF facilities are allowed primarily for working capital requirement andrepayable on demand. In order to strengthen the control environment all CF accountsshould be scrutinized by the Brand/Credit Managers and/or their designates, at least onceevery month to.Lets Look Ahead Towards a Brighter Future Together 58