Alfalah bank ltd

EXECUTIVE SUMMARY
Following privatization, Bank Alfalah emerged as new identity of Habib Credit and
Exchange Bank with a revived purpose and commitment. Charged with the strength
of Abu Dhabi consortium and under the leadership of his Highness Sheikh Nahayan
Mabarak Al - Nayayan, the bank has already made significant contributions in
building and strengthening both corporate retail-banking sectors in Pakistan.
Bank Alfalah has invested in revolutionary technology to have
an extensive range of products and services. This facilitates its commitment to
a culture of innovation and seeks out synergies with clients and service providers to
ensure uninterrupted services to its customers. It perceives the requirements of its
customers and matches them with quality products and service solutions. During the
past seven years, it has emerged as one of the foremost financial institution in the
region endeavoring to meet the needs of such a dynamically changing market.
Designing the product portfolio of bank response to the customer’s preferences, the
product like Royal Profit, Royal Patriot and Royal Custodial are prime examples of
quality and innovation providing timely banking opportunities to customers of bank.
Assessment of the needs and wants of the customers is an on going process at Bank
Alfalah, which helps to continually develop new products and services. To
continuously offer courteous, professional and advanced banking solutions, the team
of bank has recently been rejuvenated by going though training programs with a focus
on information technology.
To make their banking solutions become accessible to more and more people, they
have embarked upon a rapid expansion program, aiming to provide a networking that
makes the services available to any of their customers in all the major urban centers
of Pakistan with a view to go international in the future.
With their key indicators of progress already soaring to new heights, the bank is
committed to dedicate all its energies, resources and time to bring higher value and
satisfaction to their customers, employees and shareholders. The graph of bank is
going up and up every year. The ratio of profit is increasing at good percentage. Thy
bank is serving the people at high level of standard by going according to the whishes
of the customers.

Lets Look Ahead Towards a Brighter Future Together 1

HISTORY OF BANKING
According 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 Bank
borrows money at a lesser rate of interest and lends it to the borrowers at a higher
rate. It is thus a profit-lending concern. Bank cannot lend all the money that has been
deposited with it. It has to keep a certain portion of the total deposits in cash with
them in order to meet the cash requirements of the individuals and business concern.
Banking History
Word Bank is said to be derived from the words Banc us or Banque or Bank. The
history of banking is traced to as early as 2000 BC. The priests in Greece used to keep
money and valuables of the people in temples, acted as financial agents. The origin of
banking is also traced to early goldsmiths. They used to keep strong safes for storing
the money and valuables of the people. The FIRST STAGE in the development of
modern banking, thus, was the accepting of deposits of cash from those persons who
had surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These
receipts began to pass from hand to hand in settlement of transactions because people
had confidence in the integrity and solvency of goldsmiths. When it was found that
these receipts were drawn in such a way that it entitles any holder to claim the
specified amount of money from goldsmiths. These receipts were the earlier bank
notes. The SECOND STAGE in development of banking thus was the issue of bank
notes.
The goldsmiths soon discovered that all the people who had deposited money with
them did not come to withdraw their funds in cash. They found that only a few
persons presented the receipt for encashment during a given period of time. At the
same time, they found that they were being constantly requested for loan on good
security. They thought it profitable to lend at least some of the money deposited with
them too the needy persons. This proved quite a profitable business for the


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 the
total deposits for meeting the demands of customers for cash and the rest they could
easily lend. They allowed the depositors to draw over and above the money actually
standing to their credit. In Economics terminology we can say that they allowed the
overdraft facilities to their depositors. This was the FOURTH STAGE, in
development 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 earn
profits could not keep adequate reserves for meeting the demands of the customers
for cash. The failures on the part of the bankers to return money caused widespread
distress among the peoples.
In order to create confidence among the people, steps were taken to regulate the
banking organization. A conference was held in Nuremberg in 1548. It was decided
that a bank should be set up by the state, which should streamline the banking
organization 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 is
now entrusted to a central bank of each country.

FORMS OF BANK

FORMS OF BANKS

Central Bank Commercial Banks

Scheduled Banks

Non-Scheduled Banks


INTRODUCTION

Following privatization, Bank Alfalah emerged as new identity of Habib Credit and
Exchange Bank with a revived purpose and commitment. Charged with the strength
of Abu Dhabi consortium and under the leadership of his Highness Sheikh Nahayan
Mabarak Al - Nayayan, the bank has already made significant conditions in building
and strengthening both corporate retail-banking sectors in Pakistan.
Designing the product portfolio of bank response to the customer’s preferences, the
product like Royal Profit, Royal Patriot and Royal Custodial are prime examples of
quality and innovation providing timely banking opportunities to customers of bank.
Assessment of the needs and wants of the customers is an on going process at Bank
Alfalah, which helps to continually develop new products and services. To
continuously offer courteous, professional and advanced banking solutions, the team
of bank has recently been rejuvenated by going though training programs with a focus
on information technology.
To make their banking solutions become accessible to more and more people, they
have embarked upon a rapid expansion program, aiming to provide a networking that
makes the services available to any of their customers in all the major urban centers
of Pakistan with a view to go international in the future.
With their key indicators of progress already soaring to new heights, the bank is
satisfaction to their customers, employees and shareholders.
The graph of bank is going up and up every year. The ratio of profit is increasing at
good percentage. Thy bank is serving the people at high level of standard by going
according to the whishes of the customers.


COMMERCIAL BANKING SCENARIO IN
PAKISTAN

At the time of independence in 1947, there were 38 scheduled banks with 195 offices
in “Pakistan” but by December 31, 1973, there were 14 scheduled Pakistani
commercial banks with 3,233 offices all over Pakistan & 74 offices in foreign
countries.
Nationalization of Banks was not done 1st January 1974 under the Nationalization
act 1974, due to certain objectives. But it had negative effects on efficiency of the of
the banking sector afterwards a privatization Commission was set up on January 22,
1991, the commission transferred many banks to the private sector i.e., MCB & ABL.
The government approved & permitted the establishment of 10 new private banks in
1991; hence many new private banks have incorporated, since then, BANK
ALFALAH in one of the namely established private scheduled banks in Pakistan.


INTRODUCTION TO BANK ALFALLAH
Bank of Credit & Commerce International (BCCI) was a Pakistan based bank,
established by Mr.Agha Hassan Abdi from UBL, in association with U.A.E and
Europe. BCCI has its branches in 74 different countries of the world. It had its 3
branches in Pakistan. In 1991, the BCCI was banned, when it was accused by
European countries, that the bank was involved in some illegal operations with Gulf
countries. The major reason behind European accusation was that BCCI was of
Islamic mode. Therefore, the bank was closed due to international pressure. Then, its
3 Pakistani branches were taken over by the Government of Pakistan, which were
named as Habib Credit and Exchange Bank (HCEB) and these were working as
subsidiary of Habib Bank Limited.
Following the privatization in July 1997, Habib credit and Exchange Band assumed
the new identity of Bank Alfalah on February 25, 1998. It is now Abu Dhabi based
bank as the family of Sheikh Nahayan Mubarik Al Nahayan purchased 70% of its
shares and 30 % shares remained with Habib Bank on behalf of Government of
Pakistan.
It has it 42 branches in 17 cities in Pakistan. The D.G.Khan branch was opened in
August 2002. Alfalah has emerged as one of the leading commercial banks in the
financial sector of Pakistan. Charged with strength of Abu Dhabi consortium and
under the leadership of his highness Sheikh Nahayan Mubarak, minister of higher
education and scientific research and prominent member of Royal family. The bank is
energized with vision, envisaging.
The development of various sectors in Pakistan. The bank has already made
significant contribution in building and strengthening both corporate and retail banks
sector in Pakistan. Assessment of the needs and wants of customer is an on going
process at Bank Alfalah, which help to centennially develop new products of services.
Designing the product portfolio in response to royal patriot, royal custodial, Alfalah
car finance, Alfalah rupee traveler cheques home loans are prime example of quality


innovation providing timely banking opportunities to customer. To continuously offer
courteous, professional and advanced banking going through training programs with
focus 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 is
satisfaction to their customers and employers.
The graph of the bank is going up and up every year. The ratio of profit is increasing
at a good percentage. The bank is serving the people at high level of standard by
according to expectation of customers.

Evolution of Islamic banking

In 1984 General Zia Ul Haq made ISLAMIC IDEOLOGICAL COUNCIL. THEN
AFTER 2 YEARS ISLAMIC MODE OF FINANCE was introduced but people did
not accept because they said these are not ISLAMIC in true sense. In 2002
SUPREME COURT OF PAKISTAN had taken decision of INTEREST FREE
BANKING. UNITED BANK took stay order from the court. Then it was decided that
there should be a separate LICENSE for ISLAMIC BANKS. So first of all, Meezan
Bank took the license of Islamic Banking. Then Alfallah Islamic, Muslim
Commercial Bank, and Askari Bank took the license. In January 2004, Alfallah
started Islamic Banking. And in 2005, Alfallah Islamic Banking Division Multan
started working .Mr. IJAZ FAROOQ is supervising the Islamic bank of Alfallah
Bank.


BRANCH LEVEL HIERARCHY

Corporate Manager
Mr.m. saqib

Branch Manager
Mr.ahsan qureshi

Operation Manager
Mr. Faisal

OPERATION FOREIGN
DEPARTMENT EXCHANGE
DEPARTMENT
Imports
Cash Department
Mr. Amar
Mr. ikhlaq
Exports
A/C Opening Ms. Maria
Ms Humera

Remittance Dept.
Mrs. Qurat ul ain
Accounts Dept.
Mr. M.Waqar


Our Vision
Establish Islamic banking as banking of first choice to
facilitate the implementation of an equitable economic
system, providing a strong foundation for establishing
a fair and just society for mankind

“The introduction of a just and equitable financial system by
being a world class multi-purpose financial institution, providing a range of
specialized services, working on Shariah principles.”

Mission Statement

To be a premier Islamic bank, offering a one-stop shop
for innovative value added products and services to our
customers within the bounds of Shariah, while optimizing
the stakeholders' value through an organizational culture
based on learning, fairness, respect for individual
enterprise and performance.
THE PHILOSOPHY
 Excellence in service
 Quality performance
 Product innovations

THE BOARD
H. H. Sheikh Hamdan Bin Mabarak Al-Nahayan
Chairman
Mr. Abdulla Khalil Al-Mutawa
Mr. Omar Z. Al-Askari
Mr. Abdullah Nasser Hawaileel Al-Mansoori
Mr. Nadeem Iqbal Sheikh


Mr. Ikram Ul-Majeed Sehgal
Mr. Mohammad Saleem Akhtar
Chief Executive Officer

BOARD OF DIRECTORS

Chairman

Secretary of the
Board

CEOB Director Director
Director 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


BANK ALFALLAH’s SLOGAN
Let’s Look Ahead Towards a Brighter Future Together.
BRANCHES NETWORK
Bank Alfalah has 55 branches in 23 cities of Pakistan. Detail of some major branches
as 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. Branch
Lahore
 Gulberg branch
 Defense branch
 Circular road branch
 Township branch
 LDA Plaza branch


 Badami bagh branch
 Allama Iqbal branch
 Shah Alam Market branch
Rawalpindi
 Mall road branch
 Satellite town branch
Other Branches
 Sialkot
 Islamabad
 Peshawar
 Multan.
 Faisalabad
 Quetta
 Sukkur
 Hydrabad
 Gujranwala
 Rahim Yar khan
 Sahiwal
 Sargodha
 Gujrat
 Mardan
 D.G.Khan
Now, Bank Alfalah is going to establish its branches in some foreign countries.
Hopefully, in Dhaka (Bangladesh) and Bahrain, its branches will be opened in the
year 2004. Some branches will also be opened in European countries. Bank is going
to establish its branches in D.G. Khan, boray-e- wala and in Bahawalpur as well.


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 the
help of those it is growing rapidly. The Islamic banking system has seen resurgence
in the last few years. This financial system is unique since profitability is not the
ultimate aim but the social implications of the economic decision are equally
important. Communal Welfare and social justice are integral values to be upheld
during normal course of business and can not be neglected. While profitability and
economic viability as a priority is not the sole criterion for judging the performance of
an Islamic financial Institution. This ensures a more equitable distribution of wealth
and enhanced equity participation.
While this unique form of financial intermediation can emerge as an impactful engine
of economic growth, this mode of finance needs effective nurturing before its true
potential can be realized. If implemented sagaciously Islamic banking can contribute
effectively to national economic activities. We realize the significant market that
exists in Pakistan which demands Sharia compliant financial solutions and aspire to
serve this market segment with high service and value. Bank Alfallah Islamic banking
branch units have been instituted all over Pakistan and active expansion is underway.
Our comprehensive Islamic banking product portfolio includes deposits for current
accounts, 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 give
our clients greater returns and security. We wish to promote an operating system that
is geared towards supplying state of the art cutting edge financial products and
educate potential clients in the benefits and advantages of the Islamic banking system.
 Pursuit of Excellence


 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 Banking
Designing its portfolio bank is committed to develop products that give more value to
its customers in both the sectors in corporate and consumer need.


Competitors
Despite notable economic uncertainties, the financial strength of Bank Alfalah Limited
has greatly enhanced during the previous years. The successful expansion program
proved their capability and commitment in comparison with the competition in the
financial sector. The Banking structure in Pakistan comprises of:
 Central Bank
 Commercial Banks
 Investment Banks
 Development finance Institutions (DFIs)
 Specialized Banks
 Foreign Banks
Bank Alfalah is a private commercial ISLAMIC Bank so the major competitors of
Alfalah Islamic Bank are the following:
 Askari Commercial Bank Ltd
 Muslim Commercial Bank
 Meezan Bank

Internship Program

I did internship of EIGHT weeks at Bank Alfalah Limited. There I worked in six
departments. I started up with account opening, where I learned about different types of
accounts, and how to open a new account, etc. Also I worked in TDR, CDR and
collection. Here I worked with Ms. Humera
Then 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 this
department is Maria Irum. Here I learned about International Banking and the procedure
of import and export.


Alfallah CAR ijarah
It is basically transfer of usufruct of fixed asset to another person for an agree period at
an agreed consideration. Under ijarah agreement the asset will be given to the customer
on a rent for the period agreed at the time of contract.
Following the mission of providing Islamic Based Financing, Bank Alfalah’s Islamic
Banking has introduced” Alfallah Car Ijarah” a sharia compliant car leasing scheme. It is
based on the principles of Ijarah and is completely free from the element of interest. This
product is ideal for interest aversive individuals, looking for a car financing scheme that
not only provides the convenience of a well designed product but also helps in avoiding
interest based transaction. In “Alfallah Car Ijarah”the vehicle (car) remains in the
ownership 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 the
supervision of our sharia advisor (centre For Islamic Economics providing training and
consultancy of Islamic Banking to Islamic Banks through its sharia advisors). Moreover
our sharia advisor Mufti Khalil Ahmad Azami shall oversee the activities of Bank
Alfallah’s Islamic Banking on day to day basis to ensure that all the documentation and
procedures are fully compliant to Islamic Laws. The sharia advisor shall also periodically
review the activities and approve its new products. .
The Centre of Islamic Economics is operating under the chairmanship of
Justice Muhammad Taqi Usmani.
On the other hand, a conventional car financing scheme is actually an interest based loan
given by the financial institution and interest is charged on that loan. Also, the lease
contact is not in compliance with Islamic Sharia and has Riba and other un-Islamic
elements in it.
Alfallah Car Ijarah gives you the flexibility of acquiring all locally assembled new cars
costing up to Rs. 1.0 million. You can pay in flexible, easy rentals over a period of 3, 4 or
5 years, with as low as 15% security deposit. Bank Alfallah Islamic Banking being the
owner of car will be responsible for insurance of the car and for paying the insurance
premium. Until the availability of Islamic Insurance in Pakistan the Insurance will be
done under the present insurance modality. Yes, you can buy the car prior to the


termination of lease. The rental agreement will contain the purchase price schedule. After
receiving the completed application form along with the required documents, your
application will be processed in 3-4 business days.
Car Ijarah - Islamic Car Financing
Our totally halal auto finance facility that is very affordable, with quick processing and
minimal documentation. Car financing that is very competitively priced, hassle-free, and
totally Halal. Ijarah is simply a rental agreement under which the car is given on rent for
an agreed period ranging from 3 to 5 years. There is no advance rental, no up-front
insurance payment, and as little as 20% security deposits.
Rights & liabilities of Owner v/s User
An Islamic Ijarah is an asset-based contract, i.e. the Lessor should have ownership of the
asset during the currency of the contract. Under Islamic Shariah, all ownership related
rights and liabilities should lie with the owner while all usage-related rights and liabilities
should lie with the user. A conventional lease contract does not distinguish between the
nature of these liabilities and dumps all liabilities on the user, which is contradictory to
Islamic Shariah. Under Ijarah, all ownership-related risks lie with the Bank while all
usage related risks lie with the user, thus making the Lessor the true owner of the asset
and making the income generated through the contract permissible (Halal) for the Bank.
Continuation of lease rentals in case of total loss or theft of vehicle
If the leased vehicle is stolen or completely destroyed, the conventional leasing company
would continue charging the lease rent till the settlement of the Insurance claim. Under
the Islamic system, rent is consideration for usage of the leased asset, and if the asset has
been stolen or destroyed, the concept of rental becomes void. Alfallah bank does not
charge the lease rental.
Is there a Penalty for Late Payment of Rent and how is this permissible
under Islamic Shariah?
In most contemporary financial leases, an extra monetary amount is charged if rent is not
paid on time. This extra amount is the considered as Riba and is Haram. This amount is
taken by the leasing institution. Under Ijarah, the Lessee may be asked to undertake that
if he fails to pay rent on its due date, he will pay certain amount to a charity which will be
administered through the Islamic Bank. For this purpose the bank maintains a charity


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 Calculations

To 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 charged

For example: If you are interested in a car costing Rs. 300,000 for a tenure of 5 years
and are willing to pay a 50% Security Deposit, your monthly rental would be,


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 proprietor
Business 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 required
documents 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.


ALFALLAH HILAL CARD
Alfalah Hilal card is debit card that gives you access to your bank account. Alfalah Hilal
Card allows you to purchase goods merchant establishments across Pakistan and abroad
and also gives you the freedom to withdraw cash from any Visa/Electron/Plus ATMs in
Pakistan 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 with
joint/conditional mandate can obtain the Alfalah Hilal Card on request by completing the
required formalities.
The main benefit of being a Alfalah Hilal Cardholder is that you enjoy unparallel access
to your account-whatever you want, wherever you go. Besides, you can control your
finances since the balance in your account determines your spending limit. Alfalah Hilal
Card is accepted at more locations worldwide than any other debit card available in
Pakistan. You can now enquire on your balance or withdraw cash using ATMs. You can
use all Alfalah ATMs, local 1linkATMs and all other bank’s 840,000 ATMs worldwide
on the VISA electron network for cash withdrawals. Subject to the maximum cash
withdrawals limit of Rs.50, 000/-per day. Presently, the card can be used at over 7,000
establishments in Pakistan and at over 13 million outlets worldwide, where the VISA sign
is 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 be
instantly debited to the extent of purchase made or the amount withdrawn from ATMs in
addition to other charges on Alfalah Hilal Card. if in case of losing your card, it is
important to report Alfalah call center 111-225-111.or it is also advisable to report in
writing. There will be nominal charges of Rs.200 for the replacement of the card.


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 are
committed to meeting our customers’ needs in a truly Shariah-compliant manner coupled
with dedicated service excellence. Alfallah Bank’s Easy Home is the answer you’ve been
waiting for

Home Financing Options
Buy Your Home: property: 80% bank: 20% customer
With this facility, you no longer need to just dream about the home you want for yourself
and your family, disbursements of bank’s shares is one time or as per terms of deal.
Build Your Home:
Land: 60% bank: 40% customer
Construction: 70% bank: 30% customer
You have a plot, and need finance to construct a home, which excites everyone in your
family! No problem. We will provide you up 70:30.construction of house/ flat to be
completed 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 is
lower.
You already own a home, but need extra space for a growing family. One time
disbursement of bank’s shares.
Let’s Start It Together:
In” Alfallah Musharika Homes” you enter into a joint ownership agreement with the
Bank for purchase/ construction/ renovation and/ or replacement of your outstanding
housing loans to own a Musharika property, where the bank will provide you a certain
amount of financing maximum up to 80% of value of property and sign Musharika
Agreement. You also sign a Monthly payment Agreement, to pay rental for the use and
occupation of the Musharika property, and certain amount for the purchase of Bank’s
Musharika unit. The purchase of Musharika units by you shall result in Transfer of Title


of Musharika Property and you become the Sole Owner with a free and clear title to the
property.
All agreements used for Alfallah Musharika Homes are sharia compliant approved by our
SHARIA ADVISOR. Purchase of Musharika property through a joint ownership
agreement and Musharika agreement and then transferring the title of ownership to the
Customer through purchase of Musharika Units. This operational modus opendi makes
Alfallah Musharika Homes different from conventional bank’s mortgage loans. Bank
Alfallah participates in the cost of the Musharika property being purchased/ constructed/
renovated as joint owner whereas, in mortgages loans from conventional banks, the banks
charge mark-up / interest on the money lent to the customer. The rental charged by Bank
Alfallah is for the use and occupation of bank’s share in the Musharika property.
Documents
The following documents are required to be submitted by an applicant with the
completed 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 charges
You will be required to deposit processing fee in the branch according to schedule given
below;
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. 20,000


The processing charges shall be non refundable.
Furthermore, you will have to bear the actual stamp fee, registration fee and other
incidental charges required for registration of various agreements/ Mortgage deed/
irrevocable power of attorney etc.
Determination of BAL-IBD‘s share rent
BAL-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’s
share in monthly rent
Musharika Unit
BAL-IBD’s total Musharika investment / number of months allowed = cost of one
Musharika unit
Late Payment Charges:
No we never encourage Customers to delay the monthly payment As far as the Islamic
point of view, we can not charge any penalty on the late payment but to avoid late
payment, charge certain amount according to your undertaking in Monthly Payment
Agreement. This amount shall be utilized by BAL-IBD on behalf of customer for Charity
purposes 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].


 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.


BANK GUARANTEES
Bank 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.


MURABAHA FINANCE

Morabaha is a particular kind of sale where the seller (i.e. the bank) expressly mentions
the cost of the sold commodity ha has incurred, and sells it to another person (i.e. the
Customer) by adding some profit thereon. Thus morabaha is not the loan given on
interest, it is the sale of commodity for cash/deferred price. This is a mode of sale and
purchase 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 deferred
payment basis. In other words, a contract between a bank and a customer under which
the customer first purchase certain goods / commodities / assets as an agent of bank and
bank after taking possession of the goods / commodities / assets sells it to the same
customer by adding certain profit margin to its cost.

MURABAHA SALE PRICE
Cost+ Expenses incurred + Agreed profit
MODE OF PAYMENT
 Immediately in cash
 On mutually agreed future date
 Spot Murabaha
 Deferred Sale Murabaha
TYPES 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 / Assets
Murabaha for purchase of locally available goods / commodities / assets is allowed on the
following basis:
a) Spot Murabaha
b) Deferred Payment Murabaha (lump sum/ installments)
o Pledge of imported goods/ commodities


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.


FUNCTIONING OF BANK ALFALLAH IS DIVIDED
INTO FOLLOWING DEPARTMENTS

 OPERATION DEPARTMENT
 FOREIGN EXCHANGE DEPARTMENT
 CREDIT ADMINISTRATION DEPARTMENT
 CORPORATE DEPARTMENT
 CONSUMER FINANCE DEPARTMENT

OPERATIONS DEPARTMENTS
Operation Department has following segments:
a) Cash
b) Clearing
c) Remittance
d) Account opening
e) Accounts department
Operation Departments
Operations department of the Bank Alfalah Limited is responsible for the overall
operations of the bank. Mr.Faisal Nouman (Op’s Manager) is responsible for all function
under 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.


ACCOUNT OPENING DEPARTMENT
It 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 adopted
for this purpose.
Procedure of Account Opening
Just fill in the Account Opening Form, bring in your original Identity Card, and get
introduced by an existing banker. This is all that you need to open a Saving Account with
us and enjoy our personalized banking services.
It is very simple and quick procedure. A person who wants to open an account must have
the introduction of bank’s staff or any already existing account holder of the bank. The
customer is required to fill an account opening form. Then signatures of the introduce are
verified from S.S. Card (signature specimen) before opening account. AOF is very
standard 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 are
completed and verified, and all supportive documents are taken and checked according to
the nature of account. If any formality is incomplete, chequebook is not issued until it is
fulfilled.
If a person cannot sign write his / her hand thumb impression is affixed marked, which is
attested by one male or two female witnesses. Thumb impression for female right hand
and 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 the
customers in the system. S.S. cards are handed over to in charge of operations department
for record and verification. The letter of thanks is sent to customer for confirmation of
address and other particulars of customer and one copy is attached to AOF. After
complete procedures finally the manager of bank signs the AOF and these forms are filed
in a proper sequence.
They also have to give identity letter
1) NIC copies


2) Passport size photograph
One place on the form other is on SS Card they have non-bearer cheques. On their
cheque book a stamp is affixed on it there is written. Thumb impression should be fixed
in front of an officer of the bank.
Cheque book request forward by fax to the head office and cheque books will received
after one day and derived to the customer on the desk by taking their signature or if some
one else want to take on the behalf of account holder he must have to show initial deposit
slip and give ID card photo copy.
The bank does not make payment of a cheque bearing a six months or older date. If an
account is not operated in six months. It is called dormant account.
Types of Accounts
The bank different types of accounts exist.
1) INDIVIDUAL ACCOUNT
Any 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 balance
Rs. 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 ACCOUNT
When 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 or
more person neither partner nor trustee open account in their name is joint account.
Requirements
 Sign of both customers on back of AOF


 Sign on joint A/C # mandate
 Name and A/C # of introducer
 NIC copies of both members.
 Mode of operation.
3) BUSINESS ACCOUNTS
When the owner of the firm operating singly, open an in his term name.
I) SOLE OF PROPRIETOR ACCOUNT
This account is for those person who has his own business and he must be the solely
owner of the business.
Requirements
 Companies stamp
 Declaration of proportion companies’ letterhead.
 Sign on AOF.
 NIC copy
 Verified signature of introducer.
 Sole proprietorship declaration
II) PARTNERSHIP ACCOUNT
Account 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 stamp
The A/C is opened in the firm name and all partners designate one or two persons to act
behalf of the partnership firm all acts of the firm jointly and severely.
III) LIMITED COMPANY
Limited Co:
1) Private Limited
2) Public Limited


PRIVATE LIMITED
Requirements
 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 / Association
These concerns are non-trading in nature. They have their own rules and regulation and
their affairs are mentioned by the committee called as a governing body or managing
committee.
1) Stamp of directors
2) NIC copies
3) Certified copy of resolution
4) Memorandum and article of association
5) 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.


Cheque Book Issuance
When the account is opened, then the customer is given a chequebook to sign upon and to
cash money. It proceeded as under.
Procedure
All 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 AOF
Chequebook is delivered to the customer and his signature on the chequebook issuance
register. Chequebook serial number entered. In the system (FoxPro). Stock of
chequebook 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 a
new 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 leaves
Loose cheques are also issued in some cases. Number of leaves can be increased on the
request up to 100 leaves.


RECEIVING INWARD CHEQUES
Another responsibility &function of Account Opening Department is to receive Inward
cheques for collection of other banks. These cheques are sent to clearing official who
clears these cheques at SBP from other banks.
EVERY DAY POSTING
At the end of each day, Posting of cheque books is performed. The account opening
department makes credit vouchers of excise duty and provincial tax on chequebook
leaves, and posts it in the company.

CLOSING OF ACCOUNT
When a customer wants to close an account he has to given a hand written application to
the head of the operations department to close his account plus remaining leaves of
cheque book.
The manager first verifies the sign of account holder, and then closing is done from the
registers on the computer where the account was opened. In the file of the account holder
his account opening form is crossed. For this closing a fee of Rs. 150/- is charge in BAF.
CURRENT ACCOUNTS

Current deposits are those which are payable to bank whenever demanded by the
customer. Bank does not pay any profit on current deposits. There are of different
scheme of saving deposits, which are classified under different duration purpose and rate
of interest. Fixed deposits are those deposits which are by the bank under the conditions
that they will not be payable on demand but will be payable under fixed or determinable
future time date.

FEATURES
A sum of Rs. 500/= in cash as initial deposit is required for opening a current account and
the same may be maintained as minimum average running credit balance. No profit will
be paid on credit balances held in current accounts. The bank reserves the right to allow
opening of current a/c at its description. All deposits and withdrawal from a current a/c
will take place only at the branch where the account is being maintained. Current a/c
cannot be overdrawn, except by prior agreed agreements with the bank. The


correspondence relating to current A/Cs should be addressed to manager of the branch
where the account is being maintained. A distinctive number will be allotted to each
current account and shall be quoted on all correspondence relating to the respective
account and at the time of making deposits and withdraws.
The account holder can draw sums from his account by means of cheque supplied to him
by the bank for that particular account. Account holder should take well care of the
chequebooks issued to them. The account holder will pay excise duty of Rs.4 per leaf to
the government.
PAY–IN SLIP
This slip is used for depositing the additional amount. The bank will accept the
Pakistanis notes. All cheques and other instruments should be crossed before they are
deposited for credit into the account. There shall be no restriction on number of
withdrawals in current account. The account holder is expected to maintain a minimum
running credit balance of Rs.500/. An account holder wishing to close his account must
surrender the unused cheques to the bank. The current account is computerized, thus it
generate the statement of account for all account holders periodically. Incidental charges
are beard by the account holder if its credit balance is less than Rs.500/. Service charges
of RS. 20/= will be taken by the bank, if an account is closed within 6 months from the
date of its opening.

FINANCIAL PRODUCTS

SAVING ACCOUNT
Saving accounts are opened on proper introduction with sums of credit balance within
certain limit for individual (single, joint) institutions, companies, educational institutions
etc. 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 Scheme


 Khanm Bachat Scheme
 Khushali Bachat Account
 Term/ Fixed Deposits
PROFIT & LOSS SHARING (PLS) ACCOUNT
This account was started in 1980s after the issuing of banking ordinance in 1980 by Zia
Government to develop Islamic banking in Pakistan. In this case customer would be
responsible for bearing profit as well as loss. The bank would be within its rights to
make investment of credit balances in the PLS saving accounts in any manner at its sole
discretion and to make use of the fund to the best of its judgment in the banking business
under the PLS system. For withdrawal of larger amount, 7 days notice in writing is
required 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 ACCOUNTS

This account is newly developed of ABL and it provides flexibility of saving account to
business people. Profit on deposits will be payable on daily product basis on balance of
RS. 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 from
the account. Zakat and withholding Tax is also applicable on the account opened under
this scheme.
 Minimum balance is Rs.500,000/=
 Below minimum balance, profit calculation ignored


 Profit calculated on daily basis
 Profit paid on annually basis
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

TERM DEPOSITS
Term deposits are fixation of certain amount of money for a specific span of time. These
can 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 operate
on computer, deal #, customer name, reference #, date of issue, amount, rate maturity
date etc.

CALL DEPOSITS


These call deposits are presented in the bidding process as guarantee or security from the
bank that this much money is deposited in the bank. These are made in the favor the party
offering contract or any other person. The bank offer no interest rate on it because these
can be called at any time. For encashment the applicant must have to cancelled the call
deposit instrument from its beneficiary. For collection the beneficiary usually send the
authority letter for paying in the shape of Demand Draft or pay order. The call deposit
instrument containing the information regarding applicant and beneficiary name, joint
name a/c opened signature cards for encashment, reference #, amount, date of issue,
authorized signature etc.

CASH DEPARTMENT
Cash department of Bank Alfalah works under the operation department. This department
is given the complete responsibility of cash, as result of transaction in touch local and
foreign currencies. It is also responsible for the book keeping of these transactions and
the safe custody of cash.
This department performs the main function.
a) Cash receipts
b) Cash payments
Cash Receipts
In cash department depositors use deposit slip for depositing the amount into their
accounts. The officer checks if the deposit slip is properly filled up containing title of
account, A/C number, date and amount in words and figures. Detail on both counter file
and cash receipt voucher should be the same. Cash receiving officer, after twice counted
and matched with the deposit slips will handover cash to the customer. The cash details
are written on the back of the deposit slip and are also entered in cash receiving register.
Cash received stamp is affixed on the face of the deposit slip along with the signature of
the cash receiving officer.
Deposit slip and cash receiving register is given to the officer in the cash department. The
officer cash department both on cash receipt and cash receiving register do again proper


checking. Officer cash department signs both the deposit slip and register. Deposit slip is
credited and posted in the concerned accounted in the system. Counter folio is given the
deposition as receipt. One consolidated cash debit voucher is posted in the system to
balance 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

Procedure
Mr. Waqar & Ikhlaq deals with cash payments the process for payment of cheque local
and foreign currency is same. First the cheque is presented by the customer or holder to
cash payment officer. He confirms that it is drawn on the same branch and the particulars
of cheque are properly filled in. one signature of the holder is taken on the back of the
cheque. Cheque is handed over to the officer cash department for scrutiny where officer
checks the date, amount in words and amount in material figures, payee’s name, crossing
if any, account number, cheque serial number, any alterations / endorsements and
signature of the customer. Account is debited and then the officer cancels cheque. It is
posted in the system and posting stamp and number is affixed on it. Cheque is handed
over to the cash payment officer for payment. One more signature on that back of the
cheque is taken from the holder to match with the first one, and then cash is paid to the
cash detail is written on the back of the cheque. Cash paid stamp is affixed on the face of
the cheque. Entry is passed in the cash payment register and system.

CLEARING DEPARTMENT
Mr.Raza deals this department. Before discussing it is necessary to know what is
“clearing”.


“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.
1) Inward clearing
2) Outward clearing
Inward Clearing
When cheque drafts, etc, of our branch presented to us for clearing by the SBP. Cheque
to be honored by bank.
Outward Clearing
The cheque of other banks, which the account holder deposit in their accounts is, sends
for collection.

CLEARING PROCESS (INWARD/OUTWARD)
Here the local cheques are received that are drawn on BAF. All the cheques are received
on one counter along with the paying slips duly filled in properly containing particulars
of cheque and account holder. Counter folio of paying slip is handed over to the customer
by putting stamp for cheque received for collection for Bank Alfalah on it duly signed by
officer. These cheques are scrutinized and cheques for local clearing are separated from
OBCs. These are then entered in clearing register and cheques for collecting are entered
in OBC register and handed over the bills department of collection. Clearing officer
checks and verifies title of all the cheques deposited by the customer to confirm the good
title of the cheques. Cheques are scrutinized properly and paying slips are separated from
cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques.
Cheques of each bank are sorted and arranged branch wise. All the cheques are then
entered into the clearing system of bank. Print out of the clearing is taken and details are
attached.
With the cheques of each bank. Details of these banks are then entered into the clearing
schedule containing number of cheques presented and their total amount against the name
of each bank. Then total number of cheques presented to all banks and their total amount
is written on the foot of that schedule, which is tallied with the clearing register.


Next morning, these cheques are delivered to the respective banks in clearing house of
SBP between 9:00 to 9:30 AM. In the same manner, other banks present their clearing
drawn on Bank Alfalah. Total number of cheques and their amount delivered to other
banks are received from them are written on the clearing house schedule and handed over
to the officer clearing house SBP. Cheques / DD received in clearing are given to the
officer cash department of the branch for their repayment. After I proper scrutiny of
cheques, verification of signatures and confirmation of balance in the account, officer
cash 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 cash
department returns the same cheque by attaching a cheque return memo containing
reason for return. This cheque is entered into the cheque returned register and bank
charges are deducted according to the schedule of charges.
Second clearing is called at 2:30 PM to check the fate of the cheques presented to other
banks in the morning. If any cheque is to return, that is delivered to the same bank in
second clearing. In the same manner, if any cheque presented by Bank Alfalah in first
clearing is returned, they receive it and once again give schedule of clearing figure to the
officer-clearing house SBP containing number of cheques and their amount delivered and
received unpaid.


ACCOUNT DEPARTMENT
Account department is the most important department of the bank. Because it is
concerned with:
 Revenue
 Expenses
 Assets
 Liabilities
These are the pillars of any business. In this department, all the vouchers that are posted
during one day are sent to the account department next day. These vouchers are already
posted to computer by the concerned department. So computer also sends a report to the
accounts department. The accounts department has to tell that the requirements for
cheques and vouchers are fully checked.
If any kind of renovation or construction or rebuilding is done, all is paid from the
accounts department.
Daily Customer Movements List
All the changes that are made in accounts of customer are shown in the daily customer
movement list. By using this list, people of accounts department can prepare the
vouchers.
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 &
 Approvals


 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 an
account 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 system
In 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 by
two ways
1) By Customer Activities.
2) By General Ledger
After 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 payment
Vouchers & pay slips etc.
In reporting different types of reports are prepared, stored in folders or mailed to head
offices. 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.


2. Advances & Deposit Statements.

Deposits can be categorized as follows:

1. Call Deposits
Depending on local practice Call Deposits are to be repaid immediately upon demand and
during counter hours.

2. Notice Deposits
Notice deposits are kind of fixed deposits. The minimum balance requirement for
opening 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 Account
Current Account
A bank account that is ideal for businesses and individuals looking for Shariah compliant
banking and ease of access. With a minimum amount of only Rs.10, 000/- you can open a
Riba-Free Current Account. Offering you a range of benefits including free online
transactions, no restrictions on the number of transactions, Call Center facilities, balance
certificates, priority banking and much more.
Saving Account
A unique bank account that offers the opportunity to earn Halal profits, while enjoying a
range 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 a
variety of free benefits including personalized check books, no restrictions on
transactions, priority banking and so on.


Riba Free - Dollar Saving Account
With a minimum deposit requirement of only US$100, the dollar saving account is under
a Mudarabah arrangement that is strictly in conformity with the principles of Islamic
Shariah. Profit on this account is also paid on a monthly basis and comes with a range of
benefits including checking facility, balance certificates, and personal financial
consultancy services.
Riba Free - Rupee Saving Account
A unique bank account that offers the opportunity to earn Halal profits, while enjoying a
range 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 a
variety of free benefits including personalized check books, no restrictions on
transactions, priority banking and so on.
Riba Free Karobare Munafa Account
Karobari Munafa is a savings account specifically tailored for large Corporate or GOP
controlled 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 DEPARTMENT
The need of remittance is commonly felt in today’s business. A major function of any
bank is to “transfer of funds form one place to another”. Bank Alfalah uses the following
modes of transfer of funds.
a) Demand draft (DD)
b) Telegraphic Transfer (TT)
c) Pay order (PO)
d) Call deposit
e) Pay slip
f) Money gram
Demand Draft
It is instrument, which is used to transfer amount from one city to another city it can be
made on cash as well as on cheque. If it is made through cheque that it is necessary that


person must be A/c account holder while in case of cash any person can make. The
demand 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 Branch
DD is of following two types:

 DD payable
 DD Paid Suspense a/c
In the first type as advice reaches for payment the immediately pay to the customer while
in later as DD presented by the customer, it is paid and the suspense account is debited.
Procedure
The client who wants to transfer his funds form one city to another fills a form requesting
the bank to prepare a DD. DD application form contains columns requiring information
for the preparations of DD e.q.
 Beneficiary name
 Applicant’s name
 Address
 Amount to be sent etc.
Bank deducts some charges against DD.
Telegraphic Transfer
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.


Procedure for Telegraphic Transfer Issuance
Application form is given to the customer to fill. Two signatures are taken on the form
one for request and other for receiving the instrument. All the particulars of application
form are checked and bank commission charges and with holding tax are written on the
top of the applicant form. If the customer is maintaining his account with the branch he
can give cheque for total amount of instrument plus bank charges. Cheque and
application form is then given to the officer cash department for the payment of the
cheque. After proper scrutiny, officer cash department posts whom cheque and signs the
application 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 the
application form along with the bank charges and withholding tax; application form is
then given to the remittances in charge for issuance of the instrument. He enters all the
particulars of the application form in the system (BPG) and computer gives an Auto
Control Number to the T.T message of receiving branch. This message is then sent
through telex to the receiving branch followed by a T.T. advice. The customer is
confirmed that T.T. has been sent.

COLLECTION
All the cheques under collection are called cheques under collection in Bank Alfalah
Limited. There are two types of bills for collection:
 Outward Bills for Collection
 Inward Bills for Collection
Pay Order
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 other for receiving the instrument. All the particulars of
application form are checked and bank commission charges and with holding tax are
written on the top of the applicant form. If the customer is maintaining his account with
the branch he can give cheque for total amount of instrument plus bank charges. Cheque
and application form is then given to the officer cash department for the payment post the
cheque and signs the application form in token of payment received. If the customer


wants to pay cash, cash is deposited by the customer on cash counter cash receiving
officer receives, cash on the application form along with the bank charges and
withholding tax. Application form is given to the remittances in charge for issuance of
instrument. He enters all the particulars of the application form in the system (BPG) and
computer gives an auto control number to the instrument. Print out a take on the block
payment order. Two authorized officers of the branch then sign it. Instrument is the
protect graphed and given to the customers. When the instrument is presented for
payment, it is posted in the BPG and canceled by the remittances in charge after proper
scrutiny.
Call Deposit
When the party wants to give payment from itself to another party then it makes call
deposit. The bank keeps it with itself unless it does not receive instructions from other
bank. Normally it is made on cash and goes in party account.
Pay Slip
It is used when bank itself pay for any type of transaction e.g. purchased of stationary.
Money Gram
Bank Alfalah Limited, in collaboration with money gram offer remittance services to
Pakistan. “It’s basically a person to person money transfer service that allows consumer
to 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 the
amount through IBCA if it is the same bank or through DD if it is another bank. If DD is
received against OBC, it is presented in the clearing for collection. If IBCA is received
the branch for the payment of OBC, certain vouchers are posted in the system.


FOREIGN EXCHANGE DEPARTMENT
“The transfer of credits to a foreign country to settle debts or accounts between resident
of home country and those of the foreign country” or “the foreign bills currencies etc
used to settle such accounts”.
Foreign exchanged department deals within exports and imports. The bank acts as
exporter as well as importer bank for different parties who are in the business of export
and import.
Imports
Letter of Credits

All Letter of Credit transactions are handled in accordance with the Uniform Customs
and Practice for Documentary Credits as published time to time by the International
Chamber of Commerce. The vast network of our correspondents connected through
SWIFT ensures speedy processing of LC transactions.

Import Murabaha Finance
To facilitate the financing requirements of imports, we offer Riba free, Import Murabaha
Facility. This product is approved by our Sharia Advisor as true alternative of
conventional modes.
Other services
. We offer full range of services related to imports e.g. Contract Registration, Import Bills
for Collection, Shipping Guarantees and Advance Payments against Imports under
guidelines of foreign Exchange Manual.
Export
All goods and services sent from one country to another country.
Export Murabaha Finance
In order to facilitate the production / manufacturing of goods for onward export to
international markets, we offer Export Murabaha Finance completely Riba Free for our
exporters.


SBP Islamic Export Finance Scheme
We also offer SBP Islamic Export Finance under Part I & II on Murabaha basis in line
with the Sharia principles.
Other services
We offer all export related services i.e. Collection of export bills, Negotiation under Sight
Lcs, 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 registration
Documents 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 Bank
It is the choice of importer to open L/C from any bank and the bank from which L/C is
opened can also refer to some other bank for payment. So bill of exchange is sent to refer
bank and other documents are sent to L/C opening bank.


SWIFT (Standard World Wide Inter Bank Financial Transaction)
It is network among all banks. No other institute can get involved in it.
Bill Of Lading
Certificate from shipping company for loading commodities. If requirement of L/C is to
issue bill of lading in favor of L/C opening bank, then authorized dealer certificate will be
provided by bank in favor of L/C opening bank.
Bank Keep In Record
 Covering schedule
 Invoice
 Packing list
 AWB
 Certificate of origin
 E-form
Normally bank keeps photocopy of all documents in record.

DOCUMENTARY CREDIT
DC Department
Alfalah Bank has his full-fledged documentary credit department.
As a credit instrument and as a means of making as a payment the documentary credit is
an essential instrument for conducting word trade today. A documentary credit represents
a commitment bank to pay the seller of goods or services a certain amount provided
present stipulated documents evidencing the shipment of the goods with prescribed
period of time.
For imports or exports first the parties have to do upon a sale contract regarding the term
and condition of sale. One mode of payment is by L/C, which is secured, and now days
mostly use the business.
Letter of credit is under taking by opening bank (Negotiating bank) that it will make
payment if documents are as per terms of LC.


Four Parties Are Involved In Letter Of Credit
 Applicant Importer
 Beneficiary Exporter
 Issuing bank Bank of importer
 Advising bank Bank of importer
According to import policy, no import is valid with out import license, which is issued by
the chief controller of import, and export or we can say export promotion bureau (EPB).
Types of L/C:
Letter of Credit is
1. Revocable
2. 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 Bank


iv. Negotiating Bank
v. Intermediary Bank
L/C Opening Procedure
When the importer obtained import license, then the bank will open letter of credit. “A
letter of credit is undertaking by LC opening bank to put an agreed sum of money to
sellers’ bank on behalf of the buyer of the goods under clearly defined terms and
conditions”. Pakistani banks open only irrevocable LC. An essential feature of the
irrevocable LC is that it cannot be modified, altered, amended, or canceled without the
prior consent of all the parties. Party comes to the bank and fills the form, which is
provided on the payment of Rs. 100. This form is filled by the party and is return to the
bank, it includes details like.
 Name of company
 Address
 Country of origin
 Branch name
 Quantity
 Insurance company
 Shipment from
 Shipment to
One thing should also be submitted which is INDENT. If the foreign party has any agent
they will issue the indent with following details.
 To Messer
 Importers, etc
Document Required for “LC” Opening
When 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.


 LC opening register
 Margin / Liability Account Register.
Payment to Seller
The negotiating bank upon receiving the documents from the seller checks the documents
according to terms and conditions of credit upon satisfying it self of this the negotiating
bank makes payment to the seller if sight credit. It then forwards the documents to the
opening bank and reimburses it self through the opening banks account with itself.
Documents Received By the Opening Bank
Importers bank or opening bank receives the following documents form the exporter’s
bank or negotiating bank.
 Bill of exchange
 Invoices
 Bill of lading
 Packing list
 Certificate of origin
 Insurance

CREDIT ADMINISTRATION DEPARTMENT

The credit department as its name implies is basically concerned with the credits
extended to the individuals & institutions. The credit dept. is considered as the basic
earning unit of the bank. The overall functioning of the credit department covers the
following areas: The functioning of the credit department is again divided into two
departments 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 in
the coming section.


Credit Operation Department

Credit 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 Department

The 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.


3. COD also prepares the report as they are needed by the
regulatory authorities.

Deal-in Products of COD

ABL 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 facility

Before extending any facility to the customers the bank has got some documentation
requirements that are to be fulfilled by the customer. These requirements are almost the
same 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.


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 Facilities
Credit 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. This
department is the revenue-generating department. Credit department basically has three
segments.
1) Credit marketing department
2) Credit administration department
3) Trade finance services department
Credit 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 any
bank violates the regulations it should be liable for penalties under the core spirit of SBP
PAK (RS).
Commercial Credit
A commercial Credit facility is the core business area of the Bank. The types of facilities
being offered to customers can be broadly presented as follows:
a) Facilities where the bank actually advances money against future repayment -
('Funded Credits'), and


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 the
general or specific conditions upon which they are made available to a customer. The
mark-up and/or commission rates and method of computing should be specified. The
agreement should also provide for default rate for delayed payments, unless default rate is
waived with the approval of the sanctioning authority.
Following Are the Different Types of Facilities Offered By the Bank
Funded Credits NON-Funded Credits
a) Current Finance a) Letters of Credit
b) Term Finance b) Guarantees
c) Syndication / Consortium Financing  Shipping Guarantees
d) Negotiations of Export bills under L/C  Bid Bonds
e) Preshipment Finance (Packing Credit)  Advance Payment Guarantees

f) Import Financing  Performance Bonds
i) Finance Against Trust Receipt (FTR)  Others
ii) Finance Against Imported Merchandise
(FIM)
g) Contract Financing

Current Finance CF
A facility under which the bank makes available funds upto a specific amount at any
time over a specified period of time (i.e. one year) is termed as current finance. It allows
a 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 amount
established 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 of
the facility. CF facilities are allowed primarily for working capital requirement and
repayable on demand. In order to strengthen the control environment all CF accounts
should be scrutinized by the Brand/Credit Managers and/or their designates, at least once
every month to.


Term Finance TF
Term Finance is usually granted for specific purposes and is fixed as to amount and period.
Such a loan can be liquidated either by a single repayment of principal and mark-up, in
which case the mark-up is fixed for the period or by means of a repayment schedule in the
case of medium or long term loans.
TF should be granted at a fixed rate for the tenor of the facility.
Syndication / Consortium Financing
The preceding paragraph of this section assumes that there is only one bank involved in the
extension of credit facilities. However, especially when large amounts are involved, it is
common for a number of banks to take up portions in financing of a project.
This becomes necessary, when the amount of credit exceeds the lending limit of the
principal bank as per SBP Prudential Regulations. Bank may also participate in such
activity when it is prudent to spread the risk amongst a number of banks. Arrangements in
which a principal lending bank pulls its fund along with one or more other banks, which are
not a party to the original agreement, are called Consortium Agreement. When the
borrower deals with more than one bank all of which are party to the credit agreement, it is
called syndication. In all syndications/ consortiums the bank should not take a subordinate
position to other members of the syndicate/participants and the securities should be shared
on a pari passu basis without preference or priority of one or more banks.
Negotiation of Export Bills under L/C
Bills under L/Cs will be negotiated only if:
A bank that is a correspondent has established the L/C so that signature/ test can be verified
or issued by a bank whose signature/test can be verified with an intermediary bank (if
presented through another bank) and where previous experience in bills negotiation with
that bank has been satisfactory. The L/C has been established in favor of the beneficiary
who is of good repute and a known credit worthy customer of the branch approval from the
Head Office for inter-bank exposure in respect of the transaction is on record.
Finance against Packing and Credit “FAPC”
Packing Credit is extended against future exports. The usual reason for advances against
exports is to enable the merchant to buy and pack/manufacture merchandise pending


shipment of the goods and negotiation of the relative bills, hence the expression "Packing
Credit". While extending packing credit, the following aspects should be kept in view:
Advances should not be granted to enable a merchant to speculate. To prevent this, the
merchant should exhibit and lodge with the bank a Letter of Credit or other evidence of a
definite order for the goods (e.g. Purchase order/ firm contract etc.) A Letter of Credit in
itself is not "security" and it need not even constitute evidence of a firm order. However,
with reliable customers a Letter of Credit assists in deciding whether or not a Packing
Credit advance should be given. Care should be exercised to ensure that the money is used
for proper purposes. Regular scrutiny of the borrower's current account is essential and is
usually very useful. Frequent inspections should be carried out where the merchandise (raw
materials/finished goods) is stored and brief details recorded in a register. The inspection
should be used to ensure that the borrower is capable of executing the order within the
given time frame. If not, request for extension in the validity of export order/export L/C
must be submitted well in advance. It may be desirable for forward exchange to be booked
when the advance is granted. The packing credit advance should be adjusted from the
proceeds of the export bills.

Finance against Imported Merchandise FIM
This facility is allowed against the commodities imported from other countries usually
through letter of credit. Some time importer does not have enough amounts for paying the
imported merchandise therefore. He request to the bank to pay all dues to the exporter
against the security of imported merchandise. Bank pays the amount and releases the
goods, when the importer pays off its liability partially / fully.
Finance against Trust Receipt FATR
Finance Against Trust Receipts (FTRs) - are related to import transactions and should be
granted only as a sub-limit of an import L/C line. The bank may also allow to specific
customers FTR facility against collection documents as per the terms set out by the Head
Office from time to time, which are discussed as follows:
FTRs in respect of L/C documents – under this facility, the Bank is required to deliver
documents of title to goods imported under L/C, to the customer to enable the latter to


obtain goods prior to payment and the customer undertakes to hold the documents. The
goods represented thereby and the sale proceeds thereof in trust for the bank.
There are very obvious risks in permitting a customer to deal with goods in this way. A
customer having in his custody, goods released to him against a trust receipt can
fraudulently sell them or pledge them to a third party, leaving the holder of the trust
receipt only the right to sue for breach of trust. FTR facilities should therefore be granted
to undoubted importers against established credit lines.
It is important to note that the goods released under a trust receipt must be fully insured
by the customer and the Bank reserves the right to inspect, repossess and if necessary,
dispose of the goods at anytime.
Finance against Imported Merchandise (FIM)
Branches may grant Finance against Imported Merchandise by way of a sub-limit under a
customer's import credit line. This facility is usually allowed against imported goods but
occasionally such financing may be allowed against locally manufactured goods covered
under L/Cs or received for collection.
Contract Finance
When financing contracts, the main concerns by the banks on the contractors’ net worth
are as follows:
i) The standing of the employer who has to pay the contractor.
ii) The terms of the contract.
ii) The contractor's ability to execute the work properly and within stipulated time
frame.
vi) Viability of the quoted price and adequacy of the financing amount being sought.
v) The contract is framed to be irrevocable without the banks consent and is
acknowledged by the employer.
vi) Overall profitability and viability of the contract.
For contracts in excess of RS. 50.00 Million a control account should be kept for each
contract starting with the contract price and showing variations added and payments
authorized, so that at any time the branch can produce a statement of:
 Contract price (as amended by variations)
 Work completed and paid for


 Work measured and to be paid for
 Work in progress (not measured)
 Retentions by employer
 Balance of contract price
Non Funded Facilities
The facilities where there is no direct involvement of banks fund. Following are the non-
funded facilities.
1) Letter of credit L/C
2) Letter of Guarantee L/G
Letter Of Credit
A Letters of Credit (L/C) is a written undertaking by a bank (issuing bank) given at the
request and accordance in a instruction of a buyer (the applicant) to the seller (the
beneficiary) to effect payment up to a stated sum with in prescribed time limit, against
stipulated documents and provider that the terms and conditions are complied with.
The Bank groups L/Cs into two categories.
1) Sight L/C
2) Usance L/C
Letter of Guarantees
These facilities cover a number of specific types of guarantees that the Bank may issue
for its customers but in all cases the common factors are:
 The Bank substitutes its own credit standing for that of its customer,
No actual movement of funds takes place at the time of issuing the guarantee
Shipping Guarantees
Guarantees of this nature are required to enable customers to release goods before the
arrival of the documents of title; they therefore render the Bank liable to the shipping
company to whom the guarantee has been issued. The shipping company is, in turn liable
to the true owners of the goods in the event the goods are released wrongfully.
Bid Bonds (BB)
The purpose of a bid bond is to substantiate the ability of a person submitting the tender
to perform the contract when awarded. Such a bond is issued in connection with a tender


and its normal characteristic is an undertaking by the Bank on behalf of the applicant to
pay the beneficiary a fixed amount within a stipulated period on his simple written
demand if the applicant withdraws his obligation after the acceptance of his tender.
A bid bond must not contain any conditions linking it with performance of a contract if
awarded and must contain a definite expiry date. If branches are asked to give such
undertakings the guarantees must be treated as Performance Bonds. If there is any
ambiguity in the terms of a bid bond which a branch is asked to sign it should study the
basic "conditions of tender" to ascertain its precise liability. Branches must insist on the
return of the original bid bond after its expiry.
Advance Payment Guarantees (APG)
Civil engineering contracts, particularly those awarded by local governments, sometimes
provide for an advance payment to be made to the contractor for purposes such as
mobilizing site, plant and equipment. In order to obtain this payment the contractor is
required to produce an Advance Payment Guarantee.
Financial Guarantees
Financial Guarantee is a general description of various guarantees whose main
characteristic is an undertaking to meet any claim from the beneficiary up to a fixed sum
on simple demand. Claims under such guarantees must not be made contingent on the
non-fulfillment of the terms of contracts, which are unknown to the issuer. Unless the
creditworthiness of the concerned customer is undoubted, such guarantees should be
issued against full cash margin.
Maximum Maturities
Unless stated otherwise and agreed between the Bank and the borrower, all credits are
repayable upon demand. The maximum maturity/tenor for facilities is as follows. Any
deviation from maximum maturity/tenor will require approval from Head Office:
Documentation for Considering Credit Facilities
While considering credit facilities, following documents should be given special attention
as they serve to bring to light the vary factors that play an important part in facilitating
"Credit Granting and Credit Enhancement" decisions.


1. Visit Report
2. Status Reports
3. Credit Line Proposal (CLP)
i) Proposition
ii) Purpose
iii) Background
iv) Management
v) Financial Statements:
vi) Market/Competitors:
vii) Conduct of Account:
viii) Profitability to Bank:
ix) CIBR
x) Security
xi) Recommendation
Credit Files
A ‘Credit’ file must be maintained for every borrowing account as it provides all the
relevant information when considering credit facilities. The file should contain:
 Review Diary:
 Internal Memos:
 Correspondence
 Insurance Policy & Stock Reports:
 Opinions / Copies of Charge Documents:
 Financial Reports / Valuation/ CIB /Credit Reports:

CREDIT CYCLE

Request


Request
Renewal /
Revise / Request
Processing
Write-off Information &
CLP

Request
Monitoring
Decision

Disbursement
of Loan Offer

Purification of
the
Documents &
Security


FINANCIAL ANALYSIS
Background
BAL was incorporated in 1992 as Habib Credit and Exchange Bank Limited to take over
three Pakistan branches and assets of BCCI. The bank remained a wholly owned
subsidiary of Habib Bank Limited (HBL) till its privatization in the second half of 1997.
An Abu Dhabi based consortium of investors acquired 70% stake in the bank in 1997
while the balance (30%) held by HBL till the consortium also acquired 2002. The
chairman of the board, H.E. Sheikh Hamdan Bin Mabarak Al Nahayan, is also member of
the Executive Council of the Emirates of Abu Dhabi and of Higher Consultative
Committee for Development of Abu Dhabi Emirates. He is also the chairman Gulf Air,
Department of Civil Aviation, Abu Dhabi and Abu Dhabi Aviation. The present chief
executive of the bank is a career banker with over 40 years experience both within
Pakistan and abroad and has been with the bank since its incorporation. BAL is providing
a full range of banking facilities. The future strategy of the management envisages
continuation of high growth, expansion of branch network and
Introduction of new products.
During 2002, the banking sector, by and large, experienced a robust deposit led growth,
but the Lackluster credit demand compelled banks to invest a larger proportion of these
funds in government securities, resulting in decline of credit to deposit and borrowings
ratio. While the proportion of pure equity depicted a declining trend owing to overall
growth in assets, its impact was generally neutralized by the surplus on revaluation of
investments, mainly government securities. However, the CAR benefited from the
change in risk profile of assets and was largely maintained. Interest based revenues are
increasingly under pressure across the sector due to intense competition and declining
yields on the government securities. Going forward, identification of untapped credit
avenues, improvement in operational efficiency and Enlargement of non-fund based
revenues are critical for the banking sector to sustain its performance. BAL is better
positioned than peers due to its proactive management In expanding its consumer-
financing not fully niche, BAL is expected to benefit from its increased outreach through
its branch expansion.


BAL, despite reduction in spreads, maintained its profitability, due to substantial volume
growth and increasing trend in non-fund based income, though it was slightly lower
compared to growth in net interest revenue. Though BAL’s operating cost increased in
line with network expansion, the cost-to-total net revenue improved due to higher growth
in revenues. Like other banks, BAL has been flush with liquidity due to significant
growth in deposits. However, BAL deployed its assets efficiently by increasing its
advances portfolio through identification of new business avenues.
During 2003, BAL, in addition to maintained focus on trade finance, plans to further
expand its consumer-financing base by starting housing finance and also intends to
venture into financing of agro-based industry to enhance its market share and diversify its
credit portfolio.
BAL has continued its trend in the 2003 of increasing customer deposits, advances and
investments, which is in line with the projected figures of the bank for the year
2003.Non-fund based income is increasingly under pressure due to stiff competition in
the sector; the impact is expected to be managed, largely by increase in volumes. BAL is
also planning to expand its branch network.
. However, the bank’s profitability remains under pressure in case the outcome of
recovery efforts is not according to the management’s expectations. BAL’s equity-to-
total assets ratio, which was the lowest in the peer group declined further with
consequential impact on CAR, even after taking into account the tier II capital
represented by the TFC. However, the substantial surplus on revaluation of investments –
not recognized for purposes of CAR – provides considerable comfort. While the senior
unsecured creditors (depositors) derive additional comfort from the structure of the TFC,
the TFC holders are exposed to relatively higher risk, as the obligations towards the TFC
holders are subordinate to those of the senior unsecured creditors (depositors) of the
bank. Consequently PACRA assigns an A+ (A plus) rating to the TFC, that is, one notch
below BAL’s entity rating.
Ref: The Pakistan Credit Rating Agency (Pvt) Limited.


RATIO ANALYSIS

Earning Assets to Total Assets: Earning Assets / Total Assets

2004 12,443,4596 / 15,483,4534 = 80.36%
2003 85,557,449 / 98,952,499 = 86.46%

Earning assets to total ratio tells us about the bank management efficiency to
utilize the earning assets to get return. Earning assets include loans, investment
securities and money market assets. The BAL earning assets to total assets is
slightly decline as compare to previous year. But after comparison with last year
we can easily find out that total assets and earning assets are increasing because
BAL is going to expand its network.
Return on Earning Asset: Net income / Earning Assets

2004 10,91,989 / 12,434,596 = 0.87%
2003 2,123,234 / 85,557,449 = 2.48%

Return on earning assets can help us about the measurement of profitability. Better ratio
means good utilization of earning assets by bank management to earn profit. If we
compare this years ratio that is 0.87% as compare to previous year that is 2.48%. The
difference shows decrease. With the help of better utilization of assets has slightly
decreased.
Interest margin on Average Earning Assets

2004 3,185,744 / 12,443,4596 = 2.56%
2003 2,004,803 / 85,557,449 = 2.34%

This is a key determinant of bank profitability, for it provides an indication of
management’s ability to control the spread between interest income and interest expense.


The ratio of 2003 is 2.34% as compare to 2004 value that is 2.56%. The ratio is slightly
increased, may be the reason behind is that slight increase in rate of interest by SBP.
Otherwise Government gives more relaxation for investors to increase their investment in
different areas like SME sector etc.
Equity Capital to Total Assets: Average Equity / Average Total Assets

2004 4,369,072 / 154,834,534 = 2.8%
2003 3,253,416 / 98,952,499 = 3.29%

The ratio another name is funds to total assets. This ownership provides the cushion
against the risk of using debt and leverages. The higher the ratio then more cushions is
there and lower cushion with lower ratio. BAL ratio in 2004 is 2.8% as compare to 3.29%
in 2003, which show the slight decrease and last time more shares were floating in the
market that made this ratio even better in 2003 value.
Deposits times Capital: Average Deposits / Average SHE

2004 129,714,891 / 4,369,072 = 29.68t
2003 76,698,322 / 3,253,416 = 23.54t

The ratio of deposits time’s capital concerns both depositors and stockholders. To some
extent, it is a type of debt/equity ratio, indicating a bank’s debt position. As I define
above, more capital implies a greater margin of safety, while a larger deposit base gives a
prospect of higher return to stockholders, since more money is available for investment
purpose. The overall this ratio is very good in last two years. This ratio is increase in
2004 than 2003 from 23.54t to 29.68t respectively. Deposits are increased by 48% so
more deposits are available for investments are there and equity is double approximately.
Loans to Deposits: Average Total Loans / Average Deposits

2004 88,913,400 / 12,971,4891 = 68.54%
2003 49,216,120 / 76,698,322 = 64.17%


Average total loans to average deposits are a type of asset to liability ratio. As we know,
loans make up a large portion of the bank’s assets, and its principal obligations are the
deposits that can be withdraw on request. This ratio is increased from 64.17%in 2003 to
68.54% in 2004, but it’s not a good sign from debt point of view because it’s indicating
the increase in risk.
ROA: Net Income / Total Assets

2004 10,91,989 / 154,834,534 = 0.70%
2003 2,123,234 / 98,952,499 = 2.14%

Through that ratio we measure the ability of bank to utilize its assets to create profits by
comparing profits with its assets that generating profits. The BAL ratio is incredibly
decreased 3 times as compare to 2003 ratio. In 2004 this ratios is 0.70% as compare to
2003 ratio of only 2.14%. The reason is behind is that BAL income is exceedingly
decreased in 2004 as compare to preceding year.
ROE: Net Income / Total Equity

2004 10,91,989 / 4,369,072 = 24.99%
2003 2,123,234 / 3,253,416 = 65.26%

Return on Equity is informs us about the return for shareholders. That also shows
incredible decrease approx. three times. Shareholders couldn’t any effect on this ratio
because the reason is that income is unexceptionally decreased. The 2004 ratio is 24.99%
as compare to 2003 value of 65.26%
Profit before Tax Ratio: PBT / Gross Markup Income

2004 1,653,734 / 5,620,203 = 29.42%
2003 3,505,680 / 4,033,380 = 86.92%

For banking sector, profit before tax ratio is very much important because large amount is
deducted in shape of taxes. Banks profit before tax ratio is incredibly decreased in 2004
that is 29.42% as compare to 2003 value 86.92%.


Basic Earning per Share: Net Income / # of outstanding shares

2004 10,91,989 / 200,000 = 5.45 Rs.
2003 2,123,234 / 200,000 = 10.62 Rs.

This ratio is the most interesting area for stockholders and management too. This ratio
tells that how much rupees you can earn against each outstanding share. Alls ratio shows
decrease because of decrease in the growth in future perspective and unbelievable change
in income compare to preceding year in 2003.
Book Value per Share: SHE / # of outstanding shares

2004 4,369,072 / 200,000 = 21.84
2003 3,253,416 / 200,000 = 16.27

Book value per share ratio tells us about the original value of shares in books of account.
BAL book value per share ratio increased as compare to preceding year. 21.84 in 2004
shows incredible increase as compare to 2003 value that is 16.27.


SWOT ANALYSIS
Strengths
 Alfalah have moved rapidly in expanding branches network and increasing the range
of products and services.
 As BALs pursuing the path of excellence, customer satisfaction remains its priority.
 Islamic mode of financing in Islamic country.
 Bank Alfalah developing & delivering the most innovative products manage customer
experience, deliver quality service that contribute to brand strength, establishes a
competitive advantage and enhances profitability, thus providing value to the
stakeholders of the bank.
 There is fastest processing.
 In comparison to other banks Alfalah providing high excellence services like home,
car, agri-financing, which facilitate bank to get market excellence and move towards
prosperity and development.
 Customer’s behavior shows that they feel proud to being as an account holder in Bank
Alfalah.
 Customer gives suggestion for the improvement of bank.
 Bank having good friendly environment, security system concentration like cameras
installed and security guards available all the time.
 Modernized banking system with highly integrated informative system, record kept
properly, online banking, and integrated circuits between branches and personal
computer provided at every desk.
 Higher management committed to the development, quality, and continuous
improvement.
 They have wide area network in all over the Pakistan, so that they cover a lot of
portion of cash transactions and make customer satisfied.
 Entertainment facilities are available in the Bank when customer goes to the Bank for
a longer time they will enjoy newspaper, magazines, television and serve with tea,
soft drink, sweets and snakes etc.
 Strong policy and concepts are clear(Islamic banking)


Weaknesses
 People are not well aware about the products of Bank Alfalah, it should advertise
extensively.
 Mismanagement of time is another big mistake in Bank Alfalah branches.
 Profit rate is higher.
 Short team
 No arrangements for staff training.
 No innovation in IBD product.
 Weak marketing strategies.
 Bound to lease only new vehicles.
Opportunities
 Easy products
 Good opportunity to learn & earn.
 Opportunity to capture Islamic minded people.
 Time to develop for future competition as future is for Islamic Banking System.
 It is surrounded by many competitors it has an opportunity to aggressive marketing to
increase its business.
 Government is taking very bold steps to promote IT in Pakistan BankAlfalah has an
opportunity to improve in IT .
Threats
 Bank Alfalah has many competitors who are continuously increasing their products
and marketing aggressively it may cause its customer to shift to its competitors.
 The decrease purchasing power of consumer in the current economic situation of the
country affecting the business activity speed too much.
 The privatization of other banks is also a threat for the Bank. Due to the privatization
of the different bank e.g. MCB; the competition has increased a lot.
 Difficult to clear the misconception of customer about Islamic Banking.
 Threat of Sharia Audit.
 Increasing IRR


RECOMMENDATIONS
Finally, we are giving some suggestions for Bank Alfalah Limited. These suggestions are
based on our experience with bank.
 Human Resources Department should be there, to motivate and trained the
employees.
 Under no circumstances cheque book should be given to the customer if the
account formalities are incomplete.
 There are two officers involved in cash deposit process. Similarly, there are two
officers involved in cheque payment process, which is time consuming.
 Cheques, which are drawn on Bank Alfalah Branch and returned unpaid in
clearing, are not reflected in the statement of account of the customers. These
cheques must be reflected in the accounts so that credibility of the customers may
be assessed.
 Audit should be held internally,
 When giving the loan, the Bank must carefully analyze the past six months
transaction history of the borrower. This will help in judging the dealing behavior
and financial status of the client.
The Bank should try to give more loans to the small borrowers as the past history shows
that most of the loans given to the corporate borrowers have converted into bad debts.


OBSERVATION & CONCLUSION

During the period of my internship, I have found Bank Alfalah a financially sound bank.
Its profits are increasingly year-by-year. Its staff is very good and well-groomed during
the banking hours. Bank Alfalah under the leadership of Sheik Nahayan Mabarak Al-
Nahayan has made significant progress in building and strengthening both the corporate
and retail banking sectors in Pakistan. The bank attained number 2 positions in terms of
its balance sheet size amongst the private banks in Pakistan in the year 2000.

Bank Alfalah views specialization and service excellence as the cornerstone of its
strategy. The people at bank realize that innovation; creativity, reliability, customized,
services and their execution are they key ingredients for their future growth. Revenues
from these activities have started yielding dividends and they expect significant growth.
They are aware that they have stepped into the 21st century and they must meet its
challenges by acquiring the highest level of the technology. They will thus be
accelerating their technological advance to enable them to distribute their products and
services through most efficient and high tech means.

Their future plans are to continue to invest in the modern tools and substantial allocation
of resources will be made to achieve this objective during the current year and in the
coming years as well. Online banking has already been started and the introduction of
ATM at strategic locations has prepared Bank Alfalah to stand in line with its
competitors. The competition in the banking sector of Pakistan is very tough nowadays
and the road to the ultimate success is not quite steady but still armed with creativity,
high quality services, fully competent human resources and the continuous technological
advancements Bank Alfalah can reach its destination.


BALANCE SHEET
BALANCE SHEET AS AT DECEMBER 31, 2004
Note 2004 2003
Rupees'000
Assets
Cash and balances with treasury banks 8 19,708,518 8,423,399
Balances with other banks 9 3,183,957 626,917
Landings to financial institutions 10 - 7,437,733
Investments 11 35,503,196 28,903,596
Advances 12 88,931,400 49,216,120
Other assets 13 3,226,959 1,533,108
Operating fixed assets 14 4,280,504 2,791,626
Deferred tax asset - -
154,834,534 98,952,499
LIABILITIES
Bills payable 15 2,233,671 1,208,671
Borrowings from financial institutions 16 12,723,830 13,127,754
Deposits and other accounts 17 129,714,891 76,698,322
Sub - ordinated loans 18 1,899,480 649,740
Liabilities against assets subject to finance ease - -
Other liabilities 19 2,725,344 2,186,754
Deferred tax liabilities 20 275,834 323,010
149,573,050 94,194,251
NET ASSETS 5,261,484 4,758,248
REPRESENTED BY
Share capital 21 2,500,000 2,000,000
Reserves 1,008,772 790,374
Unappropriated profit 860,300 463,042
4,369,072 3,253,416
Surplus on revaluation of assets 22 892,412 1,004,832
5,261,484 4,758,248
CONTINGENCIES AND COMMITMENTS 23

PROFIT & LOSS STATEMENT

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2004
Note 2004 2003
Rupees'000
Mark-up/ return/ interest earned 24 5,620,203 4,033,380
Mark-up/ Return/ Interest expensed 25 4,434,459 2,028,577
Net mark-up/ Interest income 3,185,744 2,004,803
Provision against non-performing loans12.4 (370,208) (87,091)


and advances - net
Provision for diminution in the value of
- -
investments
Bad debts written off directly (351) (418)
(372,724) (87,509)
Net mark-up, interest income after
2,813,020 1,917,294
provisions

NON MARK-UP/INTEREST INCOME
Fee, commission and brokerage income 675,868 399,383
Dividend income 52,539 112,017
Income from dealing in foreign currencies 218,820 106,848
Other income 26 572,822 2,773,503
Total non-mark up! interest income 1,520,049 3,391,751
4,333,069 5,309,045

NON MARK-UP/INTEREST EXPENSES
Administrative expenses 27 2,677,635 1,799,490
Other provisions! Write offs - 2,000
Other charges 28 1,700 1,875
Total non-mark up! interest expenses 2,679,335 1,803,365
PROFIT BEFORE TAXATION 1,653,734 3,505,680
Taxation 29 561,745 1,382,446
PROFIT AFTER TAXATION 1,091,989 2,123,234
Unappropriate profit brought forward 463,042 250,050
Transfer from general reserve - -
Transferred from surplus on revaluation of
23,667 14,405
fixed assets - Current year net of tax

Profit available for appropriation 2,078,698 2,637,689

APPROPRIATIONS
Transfer to statutory reserve (218,398) (424,647)
Issue of bonus shares - Interim @ 33.33 % (500,000) (1,000,000)
( 2001: Nil)
Cash dividend @25% (2001: Nil) (500,000) (250,000)
(1,218,398) (1,674,647)
Unappropriated profit carried forward 860,300 963,042

Basic and diluted earnings per share 30 4.73 8.49

The annexed notes form an integral part of these accounts.


CASH FLOW STATEMENT

CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2004
Not
2004 2003
e
Rupees'000
CASH FLOW FROM OPERATING ACTIVITIES
Profit / (loss) before taxation 1,653,734 3,505,680
Less: Dividend income (52,539) (112,017)
1,601,195 3,393,663

Adjustments for non-cash charges
Depreciation 394,446 186,574
Amortization - intangible assets 11,886 21,085
Provision against non-performing advances 370,208 87,091
Provision for diminution in the value of
2,165 -
investments
Provision against other assets - 2,000
Bad debts written off directly 351 418
Gain on sale of fixed assets (4,297) (6,903)
Provision for gratuity 27,531 21,096
702,290 311,361


2,303,485 3,705,024

(Increase) / Decrease in operating assets
Lendings to financial institutions (6,787,733) (2,703,335)
Advances (40,085,839) (20,934,823)
Others assets (1,675,93) (402,028)
(34,974,009) (24,040,186)

Increase/ (decrease) in operating liabilities
Bills Payable 1,025,000 449,710
Borrowings from financial institutions (403,924) (7,090,178)
Deposits 53,016,569 25,013,338
Other liabilities 1,328,383 438,115
54,966,028 32,991,341
22,922,021 12,656,179
Gratuity paid (27,531) (73,573)
Income tax paid (1,345,952) (539,529)
Net cash flow from operating activities 20,922,021 12,043,077
CASH FLOW FROM INVESTING ACTIVITIES
Net investments in available-for-sale securities (22,464,569) (6,096,789)
Net investments in held-to-maturity securities (27,753,009) (687,520)
Net investments in held-for-trading securities (283,065) -
Investment in subsidiary companies (33,600) (42,000)
Investment in associated company (1,138,176) -
Dividend received 54,629 127,389
Investments in operating fixed assets (1,798,145) (749,771)
Sale proceeds of fixed assets disposed of 7,195 32,976
Net cash flow from investing activities (8,479,602) (7,415,715)

CASH FLOW FROM FINANCIAL ACTIVITIES
Issuance of Term Finance certificates 1,250,000 -
Redemption of Term Finance Certificates (260) (260)
Dividend paid (500,000) (250,000)
Net cash flow from financing activities 749,740 (250,260)
Increase in cash and cash equivalents 13,192,159 4,377,102
cash and cash equivalents at beginning of the
9,700,316 5,323,214
year
cash and cash equivalents at end of the year 31 22,892,475 9,700,316


Historical Overview of Bank Alfalah

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.

Bank Alfalah Opened its Multan branch in May, 1999 that is situated at Abdali Road
Multan. Currently Bank Alfalah has four conventional and one Islamic Banking Branch
in Multan.

Strengthened with the banking of the Abu Dhabi Group and driven by the strategic
goals set out by its board of management, the Bank has invested in
revolutionary technology to have an extensive range of products and services.

This facilitates our commitment to a culture of innovation and seeks out synergies
with clients and service providers to ensure uninterrupted services to its customers. We
perceive the requirements of our customers and match them with quality products and
service solutions. During the past five years, we have emerged as one of the foremost
financial institution in the region endeavoring to meet the needs of tomorrow today.


Vision
To be premier organizations operating

Locally and internationally that provides the complete

Range of financial services to all segments under on roof.

Mission

To develop and deliver the most innovative products,

Manage customer experience, deliver quality service that

Contributes to brand strength, establishes a competitive advantage

And enhance profitability, thus providing value to the

Stakeholders of the bank.


Products of Bank Alfalah

• Current A/C
• Royal Profit (Saving A/C)
• Car Financing
• Home Financing
• SME Financing
• Corporate Financing
• Personal Financing
• Credit Cards
decision-making.
Political
• Ecological/environmental issues: Political conditions are stable for the banking
business and Government is also supportive. Many of the banks are coming in the
market and due to increasing numbers of banks in market competition among
banks are also increasing which is increasing the efficiency of banks.
• Legislation: Rules and regulations about banking are very lenient in Pakistan.
Banks are free to extend their branches and products.
• Regulatory bodies and processes: Regulatory body in Pakistan is State Bank of
Pakistan which is central bank. SBP has very defined rules for its scheduled banks
which are helpful for the banks. All the policies & processes for banks by SBP are
fully executed & followed by all commercial banks.
• Government policies: Policies by the government are supportive & encouraging
for the existing and new banks in Pakistan. They can easily invest, capture the
field and can do business as they want
• Funding, grants and initiatives: Government is involved in making funding &
grants decisions. Government is also taking initiatives for the boost of
agricultural and different other sectors of the banks.


Economic
• Home economy situation: Economy is moving towards the boom now a day due
to the economic policies of the government.
• Taxation specific to product/services: Taxes are being imposed on all the
products and services with different rates. Taxes are comparatively low in the
agricultural sector.
• Natural disasters, weather issues: Earthquake has severally affected the
economy of Pakistan in the last few months but unusual floods, rains are not
common.
• Interest and exchange rates: Now a day interest rates are comparatively
increasing because most of the people are relying on loans. Exchange rates are
decreasing and government is taking initiative to make free trade with some
neighbor countries.
Social
• Lifestyle trends: Most of the people are relying on bank’s loans and banks have
changed the life of a common person by providing them facilities. Banks have
improved the living standards of the people
• Consumer attitudes: Consumers are very much relying on banks & their attitude
towards the banks is increasing specially the new generation
• Ethnic/religious factors: People in our country are much religious and they focus
on Islamic banking, refuse the interest.
• Advertising and publicity: Most of the products of the banks need to have
maximum advertisement for the increase of sale. According to the cost benefit
analysis of the products of the banking sector, advertising and publicity puts bad
impact over the pricing of the product.
Technological
• Competing technology development: World has become a global village.
Facilities provided by banks in developed countries are now in Pakistan, online
banking, credit cards and ATM are available here in Pakistan for the services of
the customers. To maximize profits, along with new technology banks are
launching new products to reduce fixed costs.


• Replacement technology/solutions: Banks in Pakistan have replaced all old,
manual systems with new technology of computers. Computers have made the
employees to do work easily. Transactions by customers are now easily held with
this new system.
• Information and communications: Now banks are at that stage, customers can
take information from website of the bank and they are providing toll free
telephone numbers to customers for their help during 24 hours a day this is very
suitable for the farmers.00
• ney Gram (Money Transfer)

Strengths

• End-user sales control and direction: Bank Alfalah has a good reputation and
having a good relationship in the market; bank can better manage its sales
transaction by putting the best control system on the dealers.

• Right products, quality and reliability: Right product, quality and reliability are
the main characteristics of the Bank Alfalah. It has created uniqueness in the mind
of the customers.

• Products availability at authorized dealers: Zarai Falah product will be
available at all the affiliated companies outlets and the customers will not feel any
type of difficulty in purchasing the product and the authorized dealers will
provide them genuine product without any fake.

• Superior product performance vs. competitors: Zarai Falah is covering many
of agriculture products and with low interest rates as compared to competitors
which is reliable for customer.

• Better product life and durability: Zarai Falah has affiliated with best products
companies and providing the product in customer regions and in case of need
more loan according to terms and conditions of the agreement can be sanctioned
for the convenience of customer.


• Some staff has experience of end-user sector: Bank Alfalah has hired the staff
which is fully aware from the domestic areas of region, having field experience in
that area and recognized in the well known persons of the area.

• Have customer lists: Bank Alfalah has affiliated companies such as buyer crops
which is having a lot of field experience for the pesticide products and have got
the list of all the customers related to agriculture sector for personal meetings and
also making them loyal.

• Product innovations ongoing: With the passage of time and according to need of
customers advance features and policies for the betterment of customers can be
included in the existing product. This innovations and customer care will make
the customer satisfied and loyal.

• Can serve from existing sites: The affiliated companies are having their outlets
already in the targeted areas so the customer can easily approach to the sale point.

• Processes are managed: Product will be issued to customer through a card
system which is more secure and affordable and the customer receives a slip of
each transaction. It will better manage the internal control system of the bank and
there are 0 % chances of fraud and fake in this process.

• Management is committed and confident: Bank Alfalah is a bank with a good
customer service quality and each and every transaction is made confidential with
respect to the customer. Because the process of these credit transactions and
issuing of product is fully managed and preplanned that’s why management and
the customer will be fully satisfied and confident.

Segmentation
Geographical Area:
Geographically we have divided areas into following groups
1. Multan, Lodhran, Muzaffar Garh, Vehari
2. Multan Region (Multan, Lodhran, Muzafar Garh, Vehari,
Bahawal pur, Rahim yar khan, sadiqabad)
3. Punjab (Whole)


4. Pakistan (Whole)
Harvesting Area:
According to the land capacity of the farmer, with a minimum land of 5 acres, we have
divided it into following categories:

1. 5 – 10 acres
2. 11 – 25 acres
3. 26 – 50 acres
4. 51 – 75 acres
5. Above 75 acres
Targeting
Bank Alfalah is taking a three-phase approach to market targeting, initially targeting the
Multan region (Multan, Lodhran, Muzafar Garh, Vehari, and adjacent rural areas) with
Short Term goods of (Buyer Crops, Punjab seeds corporation, Pakistan State oil, Fauji
Fertilizers) as phase one. Once these markets have been penetrated, Bank Alfalah will
move on to the Long Term commodities of (Chief Diesel Engine, Jafari Industries ) and
also will increase the region (whole Punjab) and finally into whole Pakistan with all
mentioned short term and long term goods including tractor. This approach will allow
our limited sales force and marketing dollars to more closely target their efforts
Positioning
Bank Alfalah is owing a good position in the minds of customers and also in the banking
market due to its best services and aggressive banking, it should also be best in the
agriculture sector, in revenue generating and fulfilling the needs of the customers,
1. Product offered will be best in quality and reasonable in price with low mark up
and easy repayments as compared to the other products in the market offered by
different companies and banks.
2. Different changes according to the requirement will be made for the convenience
of the customers after the approval, this will make customer obliged and loyal.
3. Sale territories will be expended according to the targeting policy and more
outlets will be allocated with the passage of time.


4. Bank sale force members will continuously visit the different areas and
personally to the farmers to know their views and suggestions.
Sales Strategies
Our sales strategy is oriented toward the idea of arming the sales force with information
so they completely understand both the product and the market and can hit the ground
running. We will also be training the staff within our own training center, so the sales
staff will have first hand knowledge of the product.
Our sales team (initially three representatives and a sales manager) will be divided by
geographic territory and will be on a base salary plus commission structure. They will
each go through two week-long training sessions.


Alfalah bank ltd

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