8-bank alflah internship
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HISTORY OF BANKINGHISTORY OF BANKING
“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 HistoryBanking 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. These
priests thus 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 persons who had surplus money found it safe
and convenient to deposit their valuables with them.
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.
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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.
A depositor who is to make the payments may now get the money in cash
from goldsmiths or pay over the receipt to the creditor. 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. They also found that most of the money
deposited with was lying idle. 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.
They instead of charging interest from the depositors began to give them
interest on the money deposited with them.
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.
The FOURTH STAGE, in development of banking. When every bank issues
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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.
COMMERCIAL BANKING IN PAKISTANCOMMERCIAL BANKING IN PAKISTAN
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At the time of partition total number of Banks was 38 only. Out of these
Banks the Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks
were 7. The total of deposits of Pakistani Banks was Rs.880 Million &
Advances were Rs: 198 Million. According to banking companies ordinance
Banks are the companies, which transacts the business of Banking in
Pakistan.
Commercial Banks have constituted the most important [part of the
intuitional credit in the economy of Pakistan. Being the largest source of
credits, Banking Industry is a pivot of whole the economic activities in
Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down
that the Banks must have paid-up capital & reserve of not less then Rs: 5
Lac & fulfilling certain other requirements for declaring as “Scheduled
Bank”.
At the time of independence Bank services was badly affected. But with the
passage of time these are improving. The government of Pakistan
nationalized all Banks in early 1974. This act was done to minimize control
of few hands over banking. But this step was proved e futile for the Banking
in Pakistan. So the Govt. had to revise its decision in1990. Two Banks
(Allied Bank of Pakistan Limited & Muslim commercial Bank Of Pakistan
Limited has been denationalized. Since then Banks were working well.
Now slogan of the Banks is to serve their customers in the best
possible manner.
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FORMS OF BANKFORMS OF BANK
INTRODUCTIONINTRODUCTION
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
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FORMS OF BANKS
Scheduled Banks
Non-Scheduled Banks
Central Bank Commercial Banks
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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 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.
COMMERCIAL BANKING SCENARIO IN PAKISTAN 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.
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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 ALFALAHINTRODUCTION TO BANK ALFALAH
Bank of Credit & Commerce International (BCCI) was a Pakistan based
bank, established by Mr.Agha Hassan Abdi from UBL, in association with
U.A.E and Europe. BCCI has its branches in 74 different countries of the
world. It had its 3 branches in Pakistan. In 1991, the BCCI was banned,
when it was accused by European countries, that the bank was involved in
some illegal operations with Gulf countries.
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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 145 branches in 35 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.
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With their key indicators of progress a steady 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 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.
BRANCH LEVEL HIERARCHYBRANCH LEVEL HIERARCHY
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Branch Manager
Mr. Aon Abbas
Corporate Manager
Mr. Asif Ali Sheikh
Area Manager
Mr. Shahid Husain Qazi
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THE VISIONTHE VISION
Our vision is to be a leading financial institution, with a niche in areas
where we have a competitive advantage with complete banking solutions.
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Operation Manager
Mr. Ali Akbar
OPERATION DEPARTMENT
FOREIGN EXCHANGE
DEPARTMENT
CREDIT DEPARTMENT
Cash DepartmentMr. Sh. Adeel
A/C Opening Dept. (Miss
Amara)
Remittance Dept.
Mr. Danish
Accounts Dept.
Mr. Jawad
Imports Mr. Yaseen
Exports Mr. Arif
CMD Mr. M.Farrukh
Aslam
CAD Mr. Arif Naqvi
Home FinanceMr. Atriaz Ali
Agri-FinanceMr. Nawazish Ali
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Our focus is on improving performance in each of our businesses to achieve
consistent and superior returns for our highly valued clients and
stakeholders.
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THE MISSIONTHE MISSION
Our mission is to maintain a competitive edge in quality banking, customer
service and profit performance. Our activities are geared towards making
Bank Alfalah a responsible corporate citizen. The emphasis on “Quality &
Innovation” will remain our key mission statement. We will continue to
strengthen our position as the leading provider of quality financial services
in Pakistan.
The Philosophy The Philosophy
Excellence in service
Quality performance
Product innovations
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THE BOARDTHE 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
CORPORATE INFORMATIONCORPORATE INFORMATION
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Company Secretary Company Secretary
Mr. Hamid Ashraf
Auditors Auditors
A. F. Ferguson & Co.
Chartered Accountants
Head Office Head Office
B. A Building I. I. Chundrigarh Road P.O. Box 6773Karachi
EXECUTIVE COMMITTEEEXECUTIVE 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 ALFALAH’s SLOGANBANK ALFALAH’s SLOGAN
”Let’s Look Ahead Towards a Brighter Future Together.”
BRANCHES NETWORK BRANCHES NETWORK
Bank Alfalah has 145 branches in 39 cities of Pakistan. Detail of some major
branches as under: -
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Karachi 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 Lahore
Gulberg branch
Defense branch
Circular road branch
Township branch
LDA Plaza branch
Badami bagh branch
Allama Iqbal branch
Shah Alam Market branch
Rawalpindi Rawalpindi
Mall road branch
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Satellite town branch
Other BranchesOther Branches
Other branches are in:
Sialkot
Islamabad
Peshawar
Multan.
Faisalabad
Quetta
Sukkur
Hydrabad
Gujranwala
Rahim Yar khan
Sahiwal
Sargodha
Gujrat
Mardan
D.G.Khan
Gohtiki
Mianchunho
Dehrki
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, Bore wala
and in Bahawalpur as well.
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ABOUT THE BANK FEATURESABOUT THE BANK FEATURES
Bank Alfalah Limited is an established bank. It has some special features
with the help of those it is growing rapidly.
Pursuit of ExcellencePursuit of Excellence
Bank Alfalah has continued its upward climb in pursuit of excellence.
Strengthened by backing of the Abu Dhabi group and driven by strategic
goals set out by its Board and Management, bank Alfalah increasingly
inspires trust and confidence of all its clients. Within a short span of time
the bank has carved a significant niche for itself in the banking industry.
These achievements have been preceded by concerted efforts to provide
highest levels of service and value to our customers. The bank aims to
future enhance performance standards through implementation of
innovations in both products as well as customer care, by discovering newer
avenues of client benefit. This customer-focused strategy has enabled Bank
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Alfalah to evolve as a single source financial service provider of corporate
and retail banking services.
Dedicated ProfessionalsDedicated Professionals
The bank Alfalah team comprises of dedicated professionals equipped with
a diverse array of skills, vast experience and pro-customer attitudes. The
management concentrates its energies on making informed economic
decisions, translating it into grater returns for our investors and customers.
This prudent attitude has created a synergistic organizational structure
leading to improvements in profitability and a sustainable competitive
advantage for the bank.
A High Responsive Product PortfolioA High Responsive Product Portfolio
Not only comprehensive but also customize to match the needs and
preferences of our customers. These strategic characteristics of our
portfolio have helped us to face challenging economic conditions.
Our product lineup continues to fulfill and satisfy the banking requirements
of not just the conventional consumer, but the demanding financial needs of
the corporate sector as well. The lineup includes:
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Car financing, Rupee Travelers Cheques, Anmol Saving Certificates,
Home Loans, On-Line Banking, Money Gram Remittance Service,
Monthly income plan, Credit Cards, ATMs.
Outstanding Work EnvironmentOutstanding Work Environment
As the work environment plays a great role in this competition age, so the
bank has good work environment. All the people work with cooperation;
managers are so kind that each problem can be discussed with them.
EfficiencyEfficiency
Employees at Bank Alfalah are quite efficient. They work more than their
working hours and it is all according to their will. It also shows their loyalty,
commitment to organization.
Customer ServicesCustomer Services
All the customers are entertained individually. Same kind of behavior and
attention is given to all the customers. Branch sitting arrangements;
internal atmosphere is above meeting international standards
Suggestions Asked From CustomersSuggestions Asked From Customers
Getting ideas for improvement from customer side is a new idea and that is
working very well in Bank Alfalah Ltd. All the customers are asked to fill a
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suggestion form and the standards of the bank are improved through them.
Daily report maintained about the complaints and presented to the top
management and it will show their interest about development.
Employee BenefitsEmployee Benefits
Employees are given the benefits like bonus, gratuity funds, loans,
increments, and house rent, medical and conveyance allowances.
Computerized Working EnvironmentComputerized Working Environment
In bank, all the work is done remotely. All the entries are made using the
systems, which are internally and externally integrated. This increases
efficiency of the bank.
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PRODUCTSPRODUCTS
Bank Alfalah is 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.
1. Royal profit
2. Royal patriot
3. Royal group
4. Financing scheme
5. Alfalah Car financing
6. Bank Alfalah home loan
7. Rupee traveler cheque
8. Credit Cards
9. Agri-Finance
Following their trend of bringing value added products and services to their
customers the bank has present Royal Group, Royal Profit and Royal Patriot.
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Royal Group Royal Group
Royal Group is a joint investment plan that allows individuals to invest
money collectively and earn higher rate of profit.
Amount Profit %age
From Rs. 100000/- to 999999/-3.25%
From Rs. 1000000/- to 9999999/- 4.50%
From Rs. 10000000/- and above 5.50%
Royal Profit Royal Profit
It is profit obtained by individuals on their deposited amount. 50,000,000 &
Alone profit is given on daily basis. It is just to attract customer.
Amount Profit %age
From Rs. 50000/- to 999999/-3.25%
From Rs. 1000000/- to 9999999/- 3.75.%
From Rs. 10000000/- to 49999999/- 4.25%
From Rs. 50000000/- to 149999999/- 4.75%
From Rs. 150000000/- to and above 5.50%
Royal Patriot Royal Patriot
It is fixing for specified time period. It is similar to term deposit. In term
deposit one get no benefit of profit when he withdraws his money before
maturity date. But in case of Royal Patriot of one withdraw his money
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before the maturity date; he can get the benefit of profit. The profit rates for
different periods are following:
Tenure 1
mont
h
3
month
s
6
month
s
12
month
s
24
month
s
25000-999999 7.50% 8.50% 9.00% 9.50% 9.50%
1000000-49999999 7.60% 8.60% 9.10% 9.60% 9.75%
5000000 & above 7.70% 8.70% 9.20% 9.70% 10.00
%
Financing SchemesFinancing Schemes
The bank has introduced many financing schemes such as Term Finance
and CF, FAFB, FAPC. The bank has recently introduced a Car Finance
Scheme.
Alfalah Car FinancingAlfalah Car Financing
It’s a scheme that enables one to own his desired car at easily affordable
and flexible installments with a minimum down payment and insurance. All
brands of new Pakistani assembled/manufactured cars are facilitated in
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bank Alfalah car financing. The loan can be availed from 1 year to 5 years
with early adjustment facility at any time before the maturity. Initial down
payment 20% of the value of the car. You have to pay a one-time fee of
Rs.3000/-being amount of processing and documentation charges and 1st
year insurance premium.
Bank Alfalah has made arrangements with the top insurance companies who
are offering special lowest insurance rates for bank Alfalah clients. You will
repay the loan by making easy equal monthly installments to Bank Alfalah in
the form of post-dated cheque. You are having the option to pay the
installment before the maturity. The car is the security, which will be
hypothecated in favor of the Bank and a lien will be marked with the
registrar. You can include your spouse, children (18 years and above) or
parents as co-applicants for the car loan and the car can be registered in
their names.
Eligibility CriteriaEligibility Criteria
All Businessmen, Corporate Employees, and other salaried or self-
employed professionals having net take home income in excess of three
times the monthly installment.
Required Documents For Car Finance FacilityRequired Documents For Car Finance Facility
{AGE LIMIT BETWEEN 21-55 YEARS}
1) Copy of national identity card.
2) Copy of driving license (optional).
3) N.T.N certificate.
4) Copy of current utility bill of residence.
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5) Bank account statement for last six months from the date of
application.
6) Signature verification from duly verified by the banker.
7) Asset &liabilities statement (Where Banks financing exceeds Rs.5
Lac.)
8) CIB report requirement (Where Banks financing exceeds Rs.5 Lac.)
9) Basic borrower fact sheet.
Additional Requirements for Business Class IndividualsAdditional Requirements for Business Class Individuals
Copy of rental/purchase agreement of business premises.
Sole proprietorship letter on relevant business letterhead.
Partnership deed (if applicable)
NOC from other partner (if applicable)
Additional Requirements for Self-Employed ProfessionalsAdditional Requirements for Self-Employed Professionals
Copy of rental/purchase agreement of business premises.
Copy of membership of respective institute Association.
Must be practicing/conducting for last 3years.
Additional Requirements for Salaried PersonsAdditional Requirements for Salaried Persons
Certificate from employer showing permanent employment for the last
2 years.
Original salary certificate.
Take home salary should be three times of the proposed installment.
Income of spouse can also be clubbed.
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Minimum Installments Minimum Installments
Monthly Installments for Alfalah Car can be calculated by multiplying
Bank’s financing amount with the following factors:
Periods Advance
Installment
Deferred
Installment
For 12 months
For 24 months
For 36 months
For 48 months
For 60 months
0.08661
0.04514
0.03135
0.02447
0.02037
0.08722
0.04546
0.03157
0.02465
0.02052
Alfalah Credit CardsAlfalah Credit Cards
Bank Alfalah welcome you as an esteemed recipient of Alfalah Hilal Card-
the international Debit Card, Visa Electron that gives you an unlimited
access to your current/saving account with a simple swipe, at millions of
retail shops or ATMs, Worldwide.
The Alfalah Hilal Card comes with a host of conveniences and benefits
combined with the wide reach of Visa Network enabling it to be accepted at
more than 840,000 ATMs and 13 million retail outlets around the world,
making it the most acceptable Debit card available in Pakistan. What’s
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more, it is easy to operate and can be used on any electronic self-printing
POS machine where VISA is accepted, locally and internationally.
No more hassle of remembering your PIN for retail transactions and no
need to go to the ATM for cash withdrawals, one swipe and your transaction
is complete. Difference between Hilal Card a Credit Card is simple, a Hilal
Card is a buy now, pay now option while a Credit Card is Buy now, Pay later
option.
Alfalah Visa CardAlfalah Visa Card
Credit cards are mode of payment to concerned parties on behalf of the
creditor. Credit cards are the best alternative to cash, are globally
acceptable and offer security and convenience at the same time joining
Alfalah VISA without paying any fee, start enjoying your free card from the
moment you become a card member. No annual renewal fee. Only Bank
Alfalah gives you the unmatched feature of lowest service charges @ 2.25%
per month. Transfer facility @ 1.5%per month applicable on all existing
credit card in Pakistan.75% of your assigned credit limit is available to you
for cash withdrawals.
Alfalah VISA Card gives you access to ready cash through your card and
(PIN) personal identification number at 840,000 ATMs or you can request
over-the-counter cash advances at 360,000 financial institutions worldwide
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or at any Alfalah Branch. New card will be issued within 72 hours of the
loss/theft being reported. The facility that saves you from paying surcharge
while using your Alfalah VISA Card at all Petrol Station in Pakistan.
Whether you make transaction in dollars or any other currency, all your
billing will be converted Pak Rupees for your Convenience. Alfalah VISA
Card offers a comprehensive cover up to Rs.7million on Alfalah Visa Gold
Card and Rs.305 million on Visa Classic, Classic Blue and Women Exclusive
Card.
Features of Alfalah Visa Card AreFeatures of Alfalah Visa Card Are
No Joining Fee
No Annual / Renewal Fee
Balance Transfer Facility
Global Acceptability
Cash Withdrawal
Revolving Credit
Free Supplementary Cards
24-Hour Phone Banking Services
Zero Loss Liability
All billing in Pak Rupee
Monthly Statement of Accounts
Fortunes and Discounts
Salient Features Salient Features
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Lowest financing cost available in the market.
Tenure of 1 to 5 years as per individual requirement
Quickest processing
Minimum processing charges: Rs. 3000 payable once
Down payment requirement of 25%
Repayment through monthly installments
Insurance rates available from bank’s approved insurance companies
Flexibility of adjustment at anytime during tenure.
Easily affordable flexible installment
Alfalah Hilal CardAlfalah 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.
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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.
Bank Alfalah Home LoanBank Alfalah Home Loan
Alfalah home loan is especially designed for those non-resident Pakistani’s
in UAE whose families live in Pakistan. This product is for NRD’s to buy
build or renovate arouse in Pakistan.
Home Financing Options Home Financing Options
Buy Your Home: Buy Your Home:
With this facility, you no longer need to just dream about the home you
want for yourself and your family .We will provide you up to Rs: 7.50 million
or 70% of the purchase price of the property (whichever is less), so that you
can realize your dream and enter the reality of owning a home.
Build Your Home:Build Your Home:
You have a plot, and need finance to construct a home, which excites
everyone in your family! No problem. We will provide you up to Rs:7.50
million, or 70% of the estimated value of constructed property to enable you
to say good-bye to rent forever! Even if you don't have a plot, we will
provide you up to 60% of the value of the plot that you have selected to
purchase! Do we excite your imagination?
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Renovate Your Home:Renovate Your Home:
You already own a home, but need extra space for a growing family. Simply
apply for financing of up to Rs: 2.50 million or 30% of the surveyed value of
your home (whichever is less) and get yourself the extra space! You can
stretch payment up to 7 years.
Lets Start It Together:Lets Start It Together:
The crown jewel of our Home Finance Scheme, the golden opportunity for
someone starting a career to buy an already constructed housing unit so
early in life! We offer a moratorium of up to 3 years in principal payments,
for a financing of up to 20 years. You service only the mark-up element
initially, and principal repayment starts after the end of monotorium period.
Home Start is specially designed for young people to own a home of their
own.
Make An Easy Transfer:Make An Easy Transfer:
Does your existing installment on a home finance leave you with nothing to
spend? You need not worry any more because we have genuinely low rates
and payment options that could leave more funds with you each month.
With our BTF, repaying your home finance will not make you break into a
sweet! Transfer up to Rs: 7.50 million or 100 % of the existing finance,
whichever is less.
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DocumentsDocuments
The following documents are required to be submitted by an applicant with
the completed application.
1) 2 passport size photographs
2) Copy of NIC.
3) Copies of last Salary / Pay Slip duly attested by the HR department.
4) Salary Certificate (original) from the employer, showing the gross
salary and deductions.
5) Employment verification form from the employer.
6) Non-resident Pakistani of UAE, holding valid Pakistani passport.
7) Valid UAE visa
8) Pakistani ID Card
Must be 21 year of age or over salaried and 62 in case of
businessmen
Processing Fee (Non-Refundable)Processing Fee (Non-Refundable)
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For financing up to Rs. 1.00 M Rs. 5,000,For financing up to Rs. 5.00 M Rs.
10,000, For financing up to Rs. 10.00 M Rs. 20,000.
Mark-up Rates:Mark-up Rates:
For SVR (Standard Variable Rate) option:
SBP discount rate + 1%, Currently 7.5% + 1% = 8.5%
For Fixed Rate Option:For Fixed Rate Option:
1 year 7% P.A
2 year 8% P.A
3 year 9% P.A
Late Payment Charges:Late Payment Charges:
Rs: 400/- per late payment.
Pre-Payment Charges:Pre-Payment Charges:
Up to 5% of the outstanding amount.
Documentation ChargesDocumentation Charges
At actual, including stamp duty, charges for legal documentation, on-site
inspection during construction, lawyer’s fee and charge registration fee, as
advised by the relevant persons/ agencies.
The Eligibility CriteriaThe Eligibility Criteria
You may apply for Bank Alfalah Home Finance.
For acquiring a residential accommodation in Karachi, Lahore,
Islamabad, Rawalpindi, Multan, Peshawar and Faisalabad.
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For building your dream house on your property / land.
For renovation or extension of your already owned house.
For transfer of your existing home finance from another lender.
If you are a Pakistani National.
If your age is between 25 and 65 years.
If you are in continuous employment in a permanent position for 2
years or more.
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 have been a Bank Alfalah borrower for past one year with clean
payment record.
10 Steps to Arranging Your Bank Alfalah Home Financing10 Steps to Arranging Your Bank Alfalah Home Financing
1. We provide you with all the information you need about Bank Alfalah
Home Finance. 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.
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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 Alfalah Zarie SahulatBank Alfalah Zarie Sahulat
Bank Alfalah Ltd. (BAL) agri finance program has been named as "Bank
Alfalah Zarie Sahulat”. We are extending this service to the clients on a
competitive markup rate. BAL model is in letter and spirit based on SBP
instruction.
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The scheme now covers financing of a multitude of activities related to crop
production, harvesting, transportation, marketing, storage, processing,
packing, export, agri development, working capital and fixed investment
financing of agri non crop activities, storage, silos, etc. making it quite
exhaustive and comprehensive. The products have been, therefore,
designed keeping in mind objectivity of practical applicability in market
scenario and to cater to the most commonly demanded items of agricultural
financing by farmers.
Bank Alfalah Ltd. (BAL) Agri Finance programme has been named as
“Bank Alfalah Zarie Sahulat”. Our products along with the nature of
facility and their purpose are quoted below:
1. Alfalah Paidawari Zarie Sahulat is Short Term with the purpose of
Processor, agri producer, exporters and other eligible items.
2. Alfalah Musalsal Zarie Sahulat Short Term (Running finance limit
for 3 years with annual clean up) purpose for fulfilling Credit needs
under working capital.
3. Alfalah Tractor and Transport Zarie Sahulat Medium Term cf with
the Purchase of tractors, trolleys, pick-up, motor cycle, trucks, milk
van or other such items including repair of tractors, as per eligible
items.
4. Alfalah Machinery & Equipment Zarie Sahulat is Medium/Long
Term with the purpose to finance machinery and equipments, such
as, combine harvester, thresher, picker, digger, trolley, planter,
sowing drill, cultivator, plough, power tiller, harrow, sprinkler,
cane crusher, tobacco curing equipment etc.
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5. Alfalah Islah-e-Araazi Zarie Sahulat is Medium Term with the
purpose of Land development and improvement, land leveling laser
leveling, clearance of jungle, farm field layout,
terracing, contouring, soil reclamation, embankment, land
formation, bund construction, water management, water course
improvement etc.
6. Alfalah Dairy & Livestock is Zarie Sahulat Short/Medium Term
with the purpose of fulfilling Working capital and fixed investment
financing of dairy and milch animals, feed lot and fattening station
structure and equipment, livestock farm structure and equipment,
fattening of animal, milk chilling plant, construction of sheds for
animal, opening of private veterinary clinics (veterinary
equipment), opening of veterinary store, milk plant.
Documents RequiredDocuments Required
The purpose of documentation is to secure the interest of the bank.
Therefore, security and support documents must be completed in all
respects. BAL requires the following documents for agriculture financing:
1. Loan application form which is available from Bank Alfalah Limited
branches/website.
2. Pass Book issued by Revenue department.
3. Copy of Khasra Gardawri.
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4. Proof of leased in land if any.
5. Other documents required according to nature of finance.
Finance can be provided to all categories of farmers (owners, owner-
cum-tenant, & tenant). The under mentioned criteria shall be observed
while extending agri finance to the farmers under various products of
Bank Alfalah Zarie Sahulat.
The applicant is a genuine farmer.
The applicant’s name must appear in the Revenue records.
The applicant is not a defaulter of th banking system.
The applicant must be able to produce proper securities /
sureties / passbook.
Any other criteria considered necessary.
OPERATIONAL PERFORMANCE OF BANK ALFALAHOPERATIONAL PERFORMANCE OF BANK ALFALAH
Bank Alfalah’s operations can be alienated to three divisions as perBank Alfalah’s operations can be alienated to three divisions as per
participation in banking. participation in banking.
A. OPERATION DEPARTMENT
B. FOREIGN EXCHANGE DEPARTMENT
C. CREDIT DEPARTMENT
Operation DepartmentOperation Department
Operation Department has following segments:
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1. Cash
2. Clearing
3. Remittance
4. Account opening
5. Accounts department
Operation Department PerformanceOperation Department Performance
Operations department of the Bank Alfalah Limited is responsible for the
overall operations of the bank. Mr.Najam (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
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Account Opening DepartmentAccount Opening Department
It is most important department of bank and its major source of income for
bank.
Ms. Saira & Shazia operation officers deal in this department. Following
procedure is adopted for this purpose.
Procedure Of Account OpeningProcedure Of Account Opening
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
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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.
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Types of AccountsTypes 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. 1000/- with expected profit rate is 9%. 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.
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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.
RequirementsRequirements
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.
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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.
RequirementsRequirements
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.
RequirementsRequirements
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
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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:
a) Private Limited
b) Public Limited
Private LimitedPrivate Limited
Requirements 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 Public Limited
Certificate of commencement of business
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Same as a home documents.
Club / Society / AssociationClub / 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 IssuanceCheque Book Issuance
When the account is opened, then the customer is given a cheque book to
sign upon and to cash money. It proceeded as under.
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Procedure Procedure
All the account opening formalities must be completed before issuance of
chequebook. Particulars of the chequebook requisition should be completed
containing title of account, account number, type of currency, number of
leaves and signature to the customer.
Signatures of the customer are verified on the requisition. If customer is
unable to collect his cheque book, then he can give authority to the third
person to collect his cheque book on his behalf by signing on the back of the
requisition, in such case, the particulars of the third person are required
like name of the person NIC number and signature of that person on
requisition and cheque book issuance register.
Chequebook is taken out from the safe / locker. It is assured that series of
the chequebook. Particulars are entered in the chequebook issuance
register. Account number is stamped on very leave of the chequebook and
those leaves are counted. Name of account holder is written on the cover of
the chequebook. And requisition on the chequebook for further issuance is
properly filled, stamped and signed by officer of the bank.
Chequebook is delivered to the customer and his signature on the cheque
book issuance register. Chequebook serial number entered. In the system
(FoxPro). Stock of cheque book are balanced at the end of each day and
kept under safe custody. Earlier the banks were charging a fee for issuance
of cheque book but now whenever a new account is opened, the account
holder issued a cheque book free of charge.
Bank Alfalah issues the following cheque books.
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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.
Closing of Account 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.
Cash Department 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
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Cash ReceiptsCash 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.
Cash Payments of Cheque Cash Payments of Cheque
Mr. Zahid and Imran 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 figures, payee’s
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name, crossing if any, account number, cheque serial number, any material
alterations / endorsements and signature of the customer. Account is
debited and then the officer cancels cheque. It is posted in the system and
posting stamp and number is affixed on it.
Cheque is handed over to the cash payment officer for payment. One more
signature on 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.
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Clearing DepartmentClearing Department
Mr.Danish 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 Inward Clearing
When cheque drafts, etc, of our branch presented to us for clearing by the
SBP. Cheque to be honored by bank.
Outward ClearingOutward Clearing
The cheque of other banks, which the account holder deposit in their
accounts is, sends for collection.
Clearing Process (Inward/Outward)Clearing Process (Inward/Outward)
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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.
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.
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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.
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Account Department 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. Like petrol for
the car of EVP or VP, this department pays all stationery charges, medical
allowance, etc.
Daily Customer Movements ListDaily 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.
Voucher preparation
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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 StepsIn Account Department Function Are Performed In 3 Steps
1) Data controlling
2) Payment/disbursement/payroll system.
3) 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
a) By Customer Activities.
b) By General Ledger
After sorting sub-sorting will start and this can also be done in two ways
a) by a/c title (current, saving, royal group, royal profit etc)
b) by computer codes (01,02,05,019,12,029)
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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 Forgein Currency Report.
5. Daily fund Rupee position.
6. Statement of Affairs.
Weekly ReportsWeekly Reports
1. Weekly FE-25.2. Advances & Deposit Statements.
Types of AccountTypes of Account
A. Current account
B. Saving account
C. Notice deposit
D. Term deposit
Current AccountCurrent Account
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There is no interest on these accounts. It is only for transaction purposes.
They paid on demand. Where a banker accepts, paying all checks drawn
against him to extend of the balance in the accounts. As there is no profit
paid on this account, it is also called checking account because cheque can
be drawn on it. Current account is mostly opened for business. The
minimum balance requirement for opening the current account is Rs. 1000/-
inter bank fund transaction are handled by current account.
Saving AccountSaving Account
The purpose of this account is to introduce the habit of saving individuals in
the neighborhood. The profit on saving accounts is paid on the basis of
profit and loss sharing at 9.00% six monthly. The minimum balance
requirement for opening the account is Rs. 500/-.
Notice Deposits 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.
Notice Deposit Is Of Two TypesNotice Deposit Is Of Two Types
a) One for which a prior notice of 30 days and is required from the
customer before withdrawing deposited amount and for which rate
return is 6.10%.
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b) Second for which a prior notice of 30 days and above is required from
the customer before withdrawing deposited amount and for which the
rate of return is 7.50%.
Term Deposit Term Deposit
A term deposit is a deposit that is made of a certain period of time. At the
end of specific period the customer is allowed to with draw the principal
amount. The rate of return of this account varies from 7.5% to 12.5%. The
term deposit account varies from one month to 5 years and the minimum
balance requirement is Rs. 500/-.
Remittance Department 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.
1) Demand draft (DD)
2) Telegraphic Transfer (TT)
3) Pay order (PO)
4) Call deposit
5) Pay slip
6) Money gram
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Demand DraftDemand 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.
ProcedureProcedure
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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. These charges include commission
tax provincial tax etc. Tax is deducted 0.3% while PT charges are 0.50
paisas. If customer is taxpayer than advance tax is exempt provided that he
submit the tax exemption certificate.
Telegraphic TransferTelegraphic 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 IssuanceProcedure 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.
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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.
Procedure for T.T. PayableProcedure for T.T. Payable
When TT message is received, tested number on the TT is checked and
verified. Tested number is then written in the register and signed by the
holder of test keys for office record. All the particulars of the TT payable are
entered in the system. Payment instructions on the TT message are followed
it if is pay and advice it will be paid through TTR on the cash counter or
through clearing and if it is credit and advice, it will be transferred in the
account mentioned in the TT message. Printouts of vouchers (TT payable
are taken. If TTR is presented for payment, signature of the authorized
officers are verified on TTR is presented for payment, signature of the
authorized officers are verified on TTR and after proper scrutiny, it is
posted in the BPG and canceled by the remittances in charge.
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Procedure For Foreign Demand Draft IssuanceProcedure For Foreign Demand Draft Issuance
Application form is given to the customer to fill the same. Two signatures
are taken on the form, one for request and other for receiving the
instrument. All the particulars of application form are checked and bank
commission is charged, which is US$ 5/- for each amount of FDD. Cheque is
received from the customer for total amount of FDD plus bank commission.
Cheque and application form is then given to the officer cash department
for the payment cheque.
After proper scrutiny, officer cash department posts the cheque and signs
the application form, to assure that payment is received. Then cheque and
application form is given to the incharge. Remittances, who will enter all
the particulars of the application in the FDD issuance register. 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.
Application form is then given to the remittances in charge for the issuance
of the instrument. A control number is allotted to the instrument form FD
registers. Instrument is complete by putting all the particulars in it and
signed by two attorney holders. Instruments are then handed over to the
customers. FDD advice is sent to the responding foreign bank / paying bank
where they are maintaining dollar account through registered mail.
Exchange transaction credit advice (ETCA) is sent to eh Head office fore the
reimbursement. Copies of the FDD and ETCA are kept in the record of the
bank.
Procedure For Foreign Telegraphic Transfer IssuanceProcedure For Foreign Telegraphic Transfer Issuance
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Application form is given to the customer to fill the same. Two signatures
are taken on the form one for request and other for signatures are taken on
the form one for request and other for receiving the instrument. All the
particulars of application form are checked and bank commission is
charged, which is US$ 15/- that rate for each amount of each FTT. If the
cheque is received from the customer, it is taken for total amount of FTP
plus bank commission.
Cheque and application form is then given to the officer cash department
for the payment of cheque. After proper scrutiny, officer cash department
posts the cheque and signs the application form to assure that payment is
received. If the customer wants to pay cash, the customer on cash counter
deposits it; cash receiving officer receives cash on the application form
along with the bank charges. Application form is then given to the
remittances in charge for the issuance of instrument. He enters all the
particulars of the application form in the FTT register and a control number
is allotted to the FTP.
TT message is written in the telex containing name of transferring branch,
name of receiving branch, date amount, currency, payee’s name and
account number or identification if any, payer name and payment
instructions. A test number is given to the FTT message for receiving
branch. This message is then sent through telex to the receiving branch.
Customer is confirmed that FTT has been made. Exchange transaction
credit advice (ETCA) is sent to the Head Office for the reimbursement.
Copies of advice (ETCA) and FT are kept in the record for the bank.
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CollectionCollection
All the cheques under collection are called cheques under collection in Bank
Alfalah Limited. There are two types of bills for collection:
Outward Bills for Collection
Inward Bills for Collection
Outwards Bills For Collection Outwards Bills For Collection
All the cheques are received on one counter along with paying slips duly
filled in properly containing particulars of cheques and account holder.
Counter folio of paying slip is handed over to ht customer by putting stamp
for “cheque received for collection for Bank Alfalah” on it duly signed by
officer. These cheques are scrutinized and cheques for local clearing are
separated from OBCs. Cheques for local clearing are entered in clearing
register, whereas cheques for collection are entered in OBC register and
handed over to the bills department for collection.
OBC number is allotted to the cheque from OBC register. Special crossing
and bank endorsement stamps are affixed on the cheque. OBC schedule is
attached with the cheque and dispatched to the main branch of that city for
collection. If they do not have any branch in that city, then cheque will be
sent to the collecting agent of Bank Alfalah for then cheque can be sent
directly to the drawing branch, instructions are given on the OBC schedule
for the payment of that cheque.
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Inward Bills For Collection Inward Bills For Collection
If any other bank sends a cheque of bank Alfalah limited, it is inward bill
for recollection. Bank Alfalah remits money after checking the balance of
the customer account.
The process collection starts when the cheques of bank Alfalah ltd are
received from other banks. Then these cheques are sent to the head office
Karachi, which sends the cheques to SBP for clearing and get the
confirmation of cheque and credit advice.
Pay OrderPay 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
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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 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 Pay Slip
It is used when bank itself pay for any type of transaction e.g. purchased of
stationary.
Money Gram Money Gram
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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.”
ProcedureProcedure
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.
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Foreign Exchange DepartmentForeign 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. Mr.
Yaseen at BAF supervises it. The bank acts as exporter as well as importer
bank for different parties who are in the business of export and import.
ImportImport
All goods and services brought into a country that were purchased from
organization located in other countries.
ExportExport
All goods and services sent from one country to another country.
Document Required For Exporter Document Required For Exporter
1) National tax number
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2) Registration with EPB
3) Sales tax registration
Documents to Be Attached For ExportersDocuments 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)
FORM-EFORM-E
Government has provided facility to exporter in taking E-Form from any
bank and he can present it to any bank for negotiation. Export precede
realization certificate.
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SBP gives rebate to exporter against export after realization. It is paid
according to commodity wise and bill wise. Claim period: 1 year.
Transport Document (Bill Of Lading, Airway Bill)Transport Document (Bill Of Lading, Airway Bill)
When insurance is done by importer, C&F (cost and freight) usually
used.
FOB cost (free on board)
CIF (cost insurance and freight) when insurance is done by exporter,
CIF is used.
Tenor (At sight) immediate payment by importer after receiving
product.
Partial shipment: Product is sent partially.
Transshipment: Product is sent via any country.
E-FORM CertificationE-FORM Certification
When export is done on C&F basis, so bank issues E-form certification to
exporter and he submits it to the custom officer along with e-form
certification to certify e-form.
Form Of Authorized Dealer’s CertificateForm Of Authorized Dealer’s Certificate
State bank permits exporter to issue bill of lading in the favor of e-form
bank. But if requirement of L/C is to issue bill of lading in favor of company
then shipping company issues bill of lading in favor of Exporter Company.
Authorized dealer certificate is filled for this purpose.
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Certificate Of Origin Certificate Of Origin
This certificate shows that goods are from Pakistan.
Covering ScheduleCovering Schedule
If in covering schedule, it is given that “please remit proceed to our Karachi
office a/c no. 5740734881 with ABN (Amro Bank New York), USA for
onward credit to BAF Multan.
Beneficiary Certificate Beneficiary Certificate
If L/C requires some information as proof of anything from exporter then
exporter has to present beneficiary certificate for that proof.
E-FORME-FORM
E-form has four copies:
1. One for custom officer
2. One for exporter
3. Triplicate copy for SBP
4. Duplicate copy for bank
Bank reporting or duplicate and triplicate is done by bank. Custom officer
(date is given on the foot form) should clear product.
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Payment From Importer BankPayment 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)SWIFT (Standard World Wide Inter Bank Financial Transaction)
It is network among all banks. No other institute can get involved in it.
Bill Of LadingBill 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 RecordBank Keep In Record
Covering schedule
Invoice
Packing list
AWB
Certificate of origin
E-form
Normally bank keeps photocopy of all documents in record. Negotiable
documents (original documents).
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Documentary CreditDocumentary Credit
DC DepartmentDC 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 the cases of 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 (Importers bank the
Exporters bank (Negotiating bank) that it will make payment if
documents are as per terms of LC.
Four Parties Are Involved In Letter Of CreditFour Parties Are Involved In Letter Of Credit
1. Applicant Importer
2. Beneficiary Exporter
3. Issuing Bank Bank Of Importer
4. Advising Bank Bank Of Importer
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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). If a person desires to take up import trade must
get his name, his firm or his limited company, registered with the EPB. On
being granted registration certificate, he will be eligible to import goods
according to import policy. There is no special condition of eligibility for
registration. The only requirement is that he should be a Pakistani and must
be registered with income tax department.
L/C Opening Procedure 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.
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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.
a) To Messer
b) Importers, etc
Document Required for “LC” OpeningDocument Required for “LC” Opening
When the bank opens LC, it requires following documents.
1. Valid import license
2. Performa invoice
3. Importer should be Pakistani
4. Letter of under taking form importer
5. Insurance cover.
An important point, which the bank will consider before opening of LC, is
that sufficient funds be available in the LC openers accounts. At the time of
establishing the LC the opening bank generally retains a maximum margin
to safe guard its own commitment. The margin may vary from nil to 100%
according to the nature of commodities and it also depends upon the party.
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At the item of establishing the LC opening bank charges bank commission,
postage and other charges from the LC opener account.
Another main important point is that value of LC should not increase the
value of import license. After all the documents are being checked and
signed or verified by the bank. A sanction slip is attached with each form so
that the approval can be gained from the manager of the bank. After the
approval is made four copies are prepared and the entries are made on the
computer and the printout is taken the margin amount is checked from the
importer account and if the amount is not found then LC is not opened and
the party is informed about the situation. On the deposit of the margin then
LC is opened LC limit if set by the bank is also checked.
After the LC is opened following entries are made.
LC opening register
Margin / Liability Account Register.
Payment To SellerPayment 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.
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Documents Received By The Opening BankDocuments Received By The Opening Bank
Importers bank or opening bank receives the following documents form the
exporters bank or negotiating bank.
1. Bill of exchange
2. Invoices
3. Bill of lading
4. Packing list
5. Certificate of origin
6. Insurance
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Credit DepartmentCredit Department
IntroductionIntroduction
The credit policy of any banking institution is a combination of certain
globally and locally accepted, time tested standards, and other dynamic
factors dictated by the realities in the ever-changing marketplace and
industry. The globally and locally accepted standards relate to safety,
liquidity and profitability of the advance whereas dynamic factors relate to
aspects such as nature and extent of risk, profit margins, spreads and credit
granting.
The key to safe, healthy and profitable credit portfolio lies in the quality of
judgment used by the officers making lending decisions. They should have
thorough knowledge about the borrowers and market conditions and should
be well conversant with applicable credit policies and procedures. They
should also stay updated with the SBP Prudential Regulations, circulars,
directives and market trends in order to provide the Head Office, with
accurate information regarding the credit proposals along with their
recommendations so that the right decisions can be made on the right time.
Deviations from basic policies could be permitted only with prior written
approval of the Head Office. As credit policies must remain flexible and
responsive to changing economic conditions and regulations prevalent in
the Country, the Head Office, from time to time, shall issue circulars for
amendments / changes which shall form an integral part of this manual.
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The philosophy that “The extension of a credit facility should add
value to the bank’s assets”, has to be borne in mind by all concerned.
Type of BorrowersType of Borrowers
This section classifies and describes various types of borrowers in the
market along with specific lending guidelines. The policy should be read
and understood carefully as the Bank may enter into a business relationship
with them at any point in time. Following are the three broad categories of
borrowers.
IndividualsIndividuals
a) Existing Account Holders
b) Staff Members
c) Close relatives of staff members
d) Businesses sponsored by staff members
e) Employees of other banks
f) Joint Accounts
Business EntitiesBusiness Entities
a) Sole Proprietorship
b) Partnership
c) Limited Liability Company
d) Joint Venture
e) Group Accounts
OthersOthers
a) Clubs and Associations
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b) Federal, Provincial and Local Government bodies
c) Traders
d) Contractors / Construction Companies
e) Transport, Storage and Warehousing
f) Property Dealers
g) Manufacturers
Target CustomersTarget Customers
Identification of a particular target market carries great importance for
banks. An accurate target market will result in a healthy and profitable
credit portfolio for the bank. This section deals with different types of target
customers with whom the bank will be keen to develop mutually beneficial
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business relationship along with the types of customer that are to be
avoided.
Types Of Target CustomersTypes Of Target Customers
1) The Bank shall primarily focus on extending credit facilities for Trade
finance and construction / contractor financing for short to medium
term, and on self liquidating basis, supported by cash flows and
acceptable collaterals.
2) The Bank shall also consider providing finance for working capital in
the fields of manufacturing, assembling and processing of goods and
commodities for domestic and / or export markets, provided it is
adequately secured.
3) Well-established traders dealing in particular products range with
establish markets presence, experience and track record.
4) Highly valued MNCs and local corporate group with undoubted
integrity and steady cash flows so that the failure of one segment of
the business will not impair the overall strength of the group.
5) Joint ventures of established local groups and reputed foreign
companies.
6) The Bank shall concentrate on lending to customers based in
Pakistan. However, participation in selective cross-border syndicated
lending may also be considered on a case-to-case basis and subject to
the Board's prior approval. For syndicated loans the Bank shall secure
acceptable return on equity (ROE) based on mark-up and commission.
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Exposures to various segments of the Economy / Industry shall be
reviewed from time to time in order to avoid concentration in any
single segment. The Board of Directors in accordance with any
guidelines laid down by the SBP shall guide target customers and
areas of business thrust.
Credit Department Functions And FacilitiesCredit Department Functions And Facilities
Credit means belief or trust. “The quality of being credible or trustworthy”.
Another words we can define credit as “trust in one’s integrity in money
matters and ones ability to meet payment when due”. At bank Alfalah Ltd
(BAL) Mr.Asif Ali is manager corporate banking of the credit department.
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).
The Bank Alfalah limited credit is extended on the basis of these rules and
regulations. These regulations tells the term and conditions under which
you can extend loans to the borrower and to what extent.
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Commercial CreditCommercial 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 BankFollowing 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
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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.
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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.
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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/CNegotiation Of Export Bills Under L/C
Bills under L/Cs will be negotiated only if: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 favour 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”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".
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While extending packing credit, the following aspects should be kept in view:
a) 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.).
b) 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.
c) 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.
d) 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.
e) 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 FIMFinance 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
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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 FATRFinance 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.
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FTRs in respect of collection documents-FTRs are granted only in
respect of collection documents routed through the Bank's branches. This
facility is restricted to selected customers with satisfactory account
relationship and is governed by the following safeguards:
Facility to be allowed with prior clearance of the Head Office only to prime
customers with Grade 1A to 1E and 2A and 2B rating. Branches should be
satisfied that the collection bills have genuine underlying trade transactions
and that by denying this facility, the customer would divert business to
other banks. Branches are also required to ensure that the facility is used
for the customer's regular line of business.
The facility should be given as a separate FTR line under the import line
(i.e. FTR for collection documents) as distinct from FTR sub-limit under
import (L/C) line.
Finance Against Imported Merchandise (FIM)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 FinanceContract Finance
When financing contracts, the main concerns by the banks on the
contractors net worth are as follows:
1. The standing of the employer who has to pay the contractor.
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2. The terms of the contract.
3. The contractor's ability to execute the work properly and within
stipulated time frame.
4. Viability of the quoted price and adequacy of the financing amount
being sought.
5. The contract is framed to be irrevocable without the banks consent
and is acknowledged by the employer.
6. 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
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Non Funded Facilities 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 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.
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1. Sight L/C
2. Usance L/C
Sight L/CSight L/C
Requires the importer / importing bank to pay as soon as it receives the
clean documents from exporter. Sight L/Cs are letters of credit where the
Bank engages to honour the beneficiary's sight draft upon presentation,
provided that the documents are in accordance with the conditions of the
L/C. Drafts drawn at sight simply serves as receipts for payments and are
without value for any other purpose.
In establishing sight L/Cs branches should ensure that goods are duly
insured and that the Bank retains control over the goods at all times.
Documents of title to the goods should be released only against payment,
either by cash or to the debit of the customer's current account / FTR
account / FIM account. L/C will not be opened for a period in excess of 180
days unless Head Office approval for a longer period has been obtained for
specific customers.
Usance L/C Usance L/C
ULC are similar to sight L/Cs but call for a time or usance draft payable
after a specified period of time. The normal usance period allowed for this
facility should be 90 days. But depending on the circumstances a maximum
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of 180 days may be allowed. Exceptionally for undoubted customers, usance
period exceeding 180 days may be allowed with specific Head Office
approval. For risk purposes, branches should consider the risk under a
Usance L/C as similar to a funded advance (FTR).
Letter of GuaranteesLetter 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
although there is a clear commitment by the Bank to effect payment
when called upon to do so under the terms of the particular
guarantee. Thus it is necessary to record these commitments as
contingent liabilities.
The Bank charges a commission for this service usually quoted on a
quarterly basis. Guarantees fall into many different categories, each of
which has its own characteristics and related risks; some of the important
characteristics and the appropriate cautionary measures are enumerated in
the relevant sections below:
Shipping GuaranteesShipping 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
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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. It follows therefore that such
guarantees should only be issued to importers with a credit line. Full cash
margin must be taken, for shipping guarantees issued against SLC unless
waived by appropriate Credit Authority.
Bid Bonds (BB)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)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.
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Financial GuaranteesFinancial 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 MaturitiesMaximum Maturities
Unless stated otherwise and agreed between the Bank and the borrower, all
credits are repayable upon demand. The maximum maturity/tenor for
facilities are as follows. Any deviation from maximum maturity/tenor will
require approval from Head Office:
S.
No
FACILITIES TENOR
1 Term Finance Maximum one year.
2 Current Finance Maximum one year.
3 Validity of L/Cs Maximum 1 year inclusive of usuance
period.
4 L/C / Usance Maximum 6 months (Except for supplier
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Period credit)
5 DA Bills under
L/C
Maximum 180 days (Subject to approval
of SBP if tenor exceeds 120 days)
6 Preshipment/
Postshipment
finance
Maximum 150 days (Presently)
7 Other Loans Tenor as specifically approved by Head
Office.
Loans are subject to minimum
repayment
installments which are as follows:
a) Maximum Grace period 6 months
(no grace period for mark-up
payment).
b) Amortization is at least quarterly
after the grace period.
8 Bank Guarantees Maximum period 3 years or as approved
by the Head Office
Note:
Changes in tenors / maturities are subject to regulatory
requirements advised by State Bank of Pakistan from time to
time and approval by Head Office.
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Documentation For Considering Credit FacilitiesDocumentation 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.
Visit ReportVisit Report
a) Prior to a review, the branch manager or his designated lending
officer should visit the customer and discuss relevant details of the
account and the business including clarifications on their financial
statements, as required. The calling officer should make use of the
visit to gather up-to-date information and strengthen the Bank's
relationship with the customer. Details of the visit should be recorded
in the customer file.
b) Business visits are an important tool for assessing the business
situation of a customer and it is therefore desirable that credit officers
visit the customers regularly. The branch manager should conduct
visits connected with the review of large and/or important facilities at
the branch.
Status ReportsStatus Reports
Status reports primarily include reports from the CIB and other banks. Such
reports from the customer's other bankers must be obtained at least once a
year, prior to the review or at more frequent intervals if there is
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deterioration in the customer's account operations and/or financial
statements or in the event of adverse market rumor.
Furthermore, CIB Reports (issued by the State Bank of Pakistan) should
also be obtained on a quarterly basis to facilitate further scrutiny of the
customers account. State Bank of Pakistan maintains a record of
individuals/businesses in the country having outstanding liabilities of
RS.500, 000 and above, with all financial institutions. A through study of the
CIB Report should be undertaken before taking up reviews.
Situations like significant increase in the exposure vis-à-vis the previous
reports, loss of business to other banks or similar critical issues should be
commented upon in 'comments and recommendations' section under 'CIBR'.
If the CIB reports over dues or defaults then as per SBP Prudential
Regulations branches cannot extend any credit facility even if covered fully
against most liquid security.
Credit Line Proposal (CLP)Credit Line Proposal (CLP)
The branch at which facilities are to be extended must prepare Credit Line
Proposal. Where CLPs are sent to HO for approval, copies of all enclosures
must accompany, and a photocopy should be retained with the forwarding
branch. CLPs should portray a factual picture of the borrower discussing in
detail the constitution of the firm, line of business, business commitment,
financial health, etc.
In order to bring a degree of uniformity into the CLPs, the branches are
required to provide information, and comments on the under noted aspects.
There should be no repetition but this section should provide comments
portraying a factual status of the account:
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i) Proposition
To state clearly and concisely the limits that are being requested,
highlighting changes if any.
ii) Purpose
Specific reasons for granting facilities (particularly for new facilities/
increase in existing facilities) should be brought out here. Some
examples are 'to secure the customer's business from other banks',
'increased facilities required to finance a supply contract 'etc.
iii) Background
Full information on the customer's constitution and business when
applying for establishment of facilities. For renewals, changes since
last review should be covered. The write-up should comment on the
length of relationship and time in business including general reputation
of the customer.
iv) Management
Names of Directors/Partners/Owners/Key persons and an assessment
of their capacity to manage the business highlighting any changes
since last review. The write-up should also comment on standing of the
proprietor/ partners/ shareholders (details of net worth should be
provided).
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v) Financial Statements
Brief comments on the important aspects as highlighted by the
customer's financial statements with steps being taken to eliminate the
shortcomings, if any. A detailed spread sheet should be attached along
with the CLP to assess the financial health of the borrower.
vi) Market/Competitors
An idea of the market the business is functioning in, major competitors
and the state of the business. The write up should comment on product
range/export/ import goods handled, agencies held etc. In case of
manufacturing companies, special emphasis should be placed on the
product line and viability of the venture to be established.
vii) Conduct of Account
While quantitative aspect of account operation is available elsewhere in
the Facility Application, the qualitative aspect should be covered here.
Does the borrower meet his commitment on time? Is there an adequate
spread on drawers of bills? Does the overdraft swing into credit? etc.
Adverse features like cheque returns, frequent excesses in facility
lines, hard-core and over dues should be highlighted along with steps
being taken to overcome the shortcomings. In this section, the facilities
sought should also be justified vis-a-vis turnover, future projections etc.
viii) Profitability to Bank:
While the numbers are available in 'Customer Profitability Analysis',
branches should comment on pricing aspects vis-a-vis risk grade. The
considerations which justify lower pricing (when recommended on a
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proposal) should be clearly brought out here. If significant increase in
facilities is being sought or downward revision in rates, this should be
backed by projected profitability analysis. In essence, an attempt
should be made here to gauge the true value of the account to the
bank.
ix) CIBR
All critical issues arising from these statements such as utilization of
our Banks facilities in comparison to other Banks should be elaborated
here.
x) Security
Appropriateness of mode of valuation, agency undertaking the
valuation, margin of safety available etc. If significant change in
security position is taking place, this should be elaborated here.
xi) Recommendation
A summary highlighting strengths and weaknesses of the account and
an unequivocal recommendation.
Analysis Of Customers' Financial StatementsAnalysis Of Customers' Financial Statements
Before granting or renewing facilities to a company or partnership, the
manager should insist upon latest audited / certified accounts. For
comparison purposes, it is desirable to have such accounts for the previous
two years. Even though such accounts may not reflect the true position of a
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company or firm, much useful information can be gained from studying
them. The inability to produce upto date accounts usually indicates that
something is wrong; the company or firm may be inefficiently conducted or
has something to hide.
Where the customer cannot produce Audited accounts, it should be ensured
that the unaudited accounts submitted by them are detailed and contain all
relevant information and later complemented by certified accounts which
should be compared for misreporting etc. However, no exceptions are to be
made for large (corporate) customers, and branches must insist on regular
audited financial statements prior to processing of the requested facilities.
The manager should therefore look beyond the balance sheet and profit and
loss accounts and inquire more deeply into borrowings, losses or any
extraordinary items.
A copy of the customer's latest available accounts together with the
auditor's certificate and notes, (if applicable) with Spread Sheets should
accompany the CLP, which should draw attention to, and comment upon
exceptional features in the accounts.
Stock Inspection ReportsStock Inspection Reports
The concerned credit officer along with the officer assigned the task of
stock inspection should inspect the stocks pledged / hypothecated to the
bank. A note of the inspection should be signed by both the visiting officers
and placed in the credit file. If any objectionable or adverse situation
relating to the stock is noted during the inspection the same should be
advised in writing to the customer seeking immediate rectification. The
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credit/branch managers should sign this letter. It should be ensured that a
valid insurance policy is held at all times for the pledged stocks.
Credit FilesCredit 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:
a) Review Diary:
i. Credit Line proposal, expiry dates / renewals / rescheduling.
ii. Sanction advice HO stipulations and their deadlines.
iii. Temporary excess over approved limit by BCC/EC
b) Internal Memos:
i. All correspondence with HO and their responses.
ii. Check of markup rates on a quarterly basis to approved
financials etc.
c) Correspondence
i. Correspondence with the customer regarding renewal,
adjustment and enhancement of facilities.
ii. Facility request letter from the customer.
iii. Correspondence regarding overdue facilities and markup etc.
iv. Other miscellaneous correspondence.
d) Insurance Policy & Stock Reports :
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i. Insurance policy (along with premium paid receipts) Stock
Reports
ii. Inspection reports of both pledged and hypothecated stocks
with the bank.
e) Opinions / Copies of Charge Documents:
i. Pre-disbursement Audit Certificate.
ii. Copies of Finance / Securities Documentation Checklist.
iii. Copies of charge Forms and property documents.
iv. Legal opinion on documents.
v. Copies of auditor’s pre disbursement certificate and offer letter duly
signed in acceptance by the customer.
vi. Confidential opinion from other banks and institutions
vii. Copy of Memorandum & Articles of Association or Partnership Deed.
viii. Copy of Certificates of Incorporation and Commencement of Business.
ix. Correspondence regarding any change in company’s name,
management etc.
f) Financial Reports / Valuation/ CIB /Credit Reports:
i. Copies of last three years approved Financial Statements
together with financial analysis.
ii. Valuation Certificates by bank’s approved surveyors
iii. Updated CIB Reports from SBP.
iv. Credit Reports from other banks and financial institutions
previously/ partly handling borrower’s business.
v. Company’s Reports evidencing ranking of charge.
vi. Visit Report.
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Approval Of FacilitiesApproval Of Facilities
Branch Managers should approve facilities within their delegated limits.
Any amount exceeding the managers’ limit should be referred to the Branch
Credit Committees for approval. The Branch Credit Committees should
recommend and seek approval from the Executive Committee for facilities
exceeding their delegated powers.
In case of new or increase in existing facilities approval will be sought from
the BCC only in respect of those facilities which in total do not exceed the
committee's limit. If on a group basis, the facility proposed on a group
account exceeds the BCC's lending limit, the proposal should be submitted
to the Head Office for a decision by the appropriate authority. The CLP
must be recommended and co-signed by the Credit / Branch Managers and
all other members of the BCC prior to submission to the Head Office and a
copy retained in customer's file.
Renewal of FacilitiesRenewal of Facilities
The BCC may renew Credit lines which were initially approved by them
under their lending authority provided that:
There is no downward revision in the terms on which the facility was
originally granted i.e. change in mark-up and commission rates.
No significant adverse change in the customer's finances or account
conduct which should require downgrading of the account
All terms of the prudential regulations have been complied with.
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Sanction AdviceSanction Advice
When a regular facility is granted for whatever period, the Credit Division
will prepare the sanction advice, original sent to the concerned branch,
which upon receipt should file the original advice in the respective
customer file and a photocopy filed in the Master File of BCC.
Offer / Facility LetterOffer / Facility Letter
Having received the "Sanction Advice" the concerned Credit Officer will
prepare the Offer Letter in accordance with the terms and conditions of the
"Sanction". The Offer Letter will be signed by the Branch / Credit Manager
on behalf of the Bank and dispatched to the customer for his acceptance.
This acceptance must manifest itself in the form of signatures by the
authorized signatories of the customer.
Transfer Of AccountTransfer Of Account
When the facility offer letter is prepared then the transfer of limit will done
by this the transfer of account will done which mean the specific amount of
loan is furnished and complete check over the operations of account done
periodically.
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FINANCIAL ANALYSISFINANCIAL ANALYSIS
Background 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
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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.
Credit Rating Assessments Credit Rating Assessments Update this….Update this….
Ratings (June 2004) Bank Alfalah Limited
Entity* New PreviousLong Term AA- AA-Short Term A1+ A1+TFC Unsecured, A+ A+Subordinated (PKR 650mln)* Applicable to senior unsecured Creditors (depositors).
Financial DataFinancial Data
PKR (mln) 31/12/03 31/12/02Total Assets 65,229.9 40,109.3Equity 1,678.6 1,372.5Net Income 497.4 321.8ROA % 0.94 0.93ROE % 32.60 28.31Equity/ Total Assets % 2.57 3.42SBP CAR 8.70 9.56
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BAL’s ratings reflect steady growth with sustained performance and
maintained risk profile of assets. The ratings also reflect a somewhat
constrained equity base of the bank vis-à-vis aggressive growth targets,
while taking into account strong sponsor support.
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 tapping
unexplored business areas. This stands demonstrated by the success of the
bank in emerging as the leading institution in car financing in a short period
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of time. In expanding its consumer-financing 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. The bank
has also increased its funds deployment in the money market, but still
remains heavily invested in government securities, which also strengthened
its liquidity.
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. Advances portfolio,
constituting 43% of total assets, has moderate concentration in the textile
sector and a review of the overall security structure reveals an adequate
collateralization pattern. 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 by 10 more branches during
2003.
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During the year, while BAL continued to strengthen its risk management
function as a result net addition in the classified portfolio was only PKR
76.4mln, which is less than 1% of advances portfolio. However, impaired
lending to gross advances ratio has improved due to increase in advances
portfolio and certain recoveries of non-performing loans.
The provision coverage remains close to 68% and the management is
confident of recoveries from some of the chronic NPLs, which are not fully
provided for as the bank holds collaterals against these NPLs. 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.
BAL issued an unsecured subordinate TFC during December 2002 for a
tenor of 6 years at a floating rate of latest cut-off yield on 5 year PIB plus
1.35% with a floor of 10.00% and a cap of 15.00%. Principal redemption will
be in two equal semi-annual installments commencing from the 66thmonth
of the issue. 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.
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RATIO ANALYSIS RATIO ANALYSIS Update This….Update This….
Earning Assets to Total Assets: Earning Assets / Total AssetsEarning Assets to Total Assets: Earning Assets / Total Assets
2003 85,557,449 / 98,952,499 = 86.46%
2002 57,424,113 / 65,167,031 = 88.12%
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 AssetsReturn on Earning Asset: Net income / Earning Assets
2003 2,123,234 / 85,557,449 = 2.48%
2002 445,679 / 57,424,113 = 0.78%
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 2.48% as
compare to previous year that is 0.78%. The difference shows incredible
change in positive direction. With the help of better utilization of assets and
expansion of its network BAL increase its ratio.
Interest margin on Average Earning AssetsInterest margin on Average Earning Assets
2003 2,004,803 / 85,557,449 = 2.34%
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2002 1,439,016 / 57,424,113 = 2.50%
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 2002 value that
is 2.50%. The ratio is decline, may be the reason behind is that continues
decline in rate of interest by SBP. 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 AssetsEquity Capital to Total Assets: Average Equity / Average Total Assets
2003 3,253,416 / 98,952,499 = 3.29%
2002 1,615,777 / 65,167,031 = 2.48%
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
2003 is 3.29% as compare to 2.48% in 2002, which show the improvement
and recently more shares are floating in the market that will make this ratio
even better than 2003 value.
Deposits times Capital: Average Deposits / Average SHEDeposits times Capital: Average Deposits / Average SHE
2003 76,698,322 / 3,253,416 = 23.54t
2002 51,684,984 / 1,615,777 = 31.98t
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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. But this ratio is
decrease in 2003 than 2002 from 23.54t to 31.98t 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 DepositsLoans to Deposits: Average Total Loans / Average Deposits
2003 49,216,120 / 76,698,322 = 64.17%
2002 28,319,401 / 51,684,984 = 54.79%
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 54.79%in 2002 to 64.17% in 2003, 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 ROA: Net Income / Total Assets
2003 2,123,234 / 98,952,499 = 2.14%
2002 445,679 / 65,167,031 = 0.68%
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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 improved 3 times as compare to 2002 ratio. In
2003 this ratios is 2.14% as compare to 2002 ratio of only 0.68%. The
reason is behind is that BAL income is exceedingly increased in 2003 as
compare to preceding year.
ROE: Net Income / Total EquityROE: Net Income / Total Equity
2003 2,123,234 / 3,253,416 = 65.26%
2002 445,679 / 1,615,777 = 27.58%
Return on Equity is informs us about the return for shareholders. That also
shows incredible increase approx. three times. Increase in shareholders
couldn’t any effect on this ratio because the reason is that income is
unexceptionally increased. The 2003 ratio is 65.26% as compare to 2002
value of 27.58%.
Profit Before Tax Ratio: PBT / Gross Markup IncomeProfit Before Tax Ratio: PBT / Gross Markup Income
2003 3,505,680 / 4,033,380 = 86.92%
2002 894,653 / 4,551,329 = 19.65%
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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 increases in 2003 that is 86.92% as compare to 2002 value
19.65%.
Basic Earning Per Share: Net Income / # of outstanding sharesBasic Earning Per Share: Net Income / # of outstanding shares
2003 2,123,234 / 200,000 = 10.62 Rs.
2002 445,679 / 200,000 = 2.23 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 astonishing increased because of growth
in future perspective and unbelievable change in income compare to
preceding year in 2003. 10.62 Rs. is five times greater than last year 2002
EPS that was Rs. 2.23 only.
Book Value Per Share: SHE / # of outstanding sharesBook Value Per Share: SHE / # of outstanding shares
2003 3,253,416 / 200,000 = 16.27
2002 1,615,777 / 200,000 = 8.08
Book value per share ratio tells us about the original value of shares in
books of account. BAL book value per share ratio increased two times as
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compare to preceding year. 16.27 in 2003 shows incredible increase as
compare to 2002 value that is 8.08.
Balance Sheet, Income Statement & Cash Flow Statement
You Should Update …………..
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SWOT ANALYSISSWOT ANALYSIS
Strengths Strengths
By the grace of the Almighty, Alfalah have moved rapidly in expanding
branches network and deposit base, along with making profitable
advances and increasing the range of products and services.
Alfalah have made a break-through in providing premier services at
an affordable cost to our customers.
As BALs pursuing the path of
excellence, customer satisfaction remains its priority. It is only when
we know our customers better, can we
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deliver a higher quality of services, thereby adding synergy to our
existing management expertise, financial strength and profitability.
Bank Chairman Message ”our core philosophy of honesty,
transparency in customer dealings, product innovation, excellence in
customer service and our commitment to being a responsible
corporate citizen”
As a premier organization operating locally & internationally that
provides the complete range of financial services to all segment under
one roof.
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.
Most of the customers are satisfied with the bank services and
friendly environment of the bank.
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 and also refer people to enjoy different
schemes and open their accounts.
Customer gives suggestion for the improvement of bank and these
suggestions are listened carefully and communicated to the higher
management so that action taken on relative deficiencies immediately.
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.
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Higher management committed to the development, quality, and
continious improvement.
Salaries are very reasonable, so the employees are not financially
disturbed and they devote their selves fully to their work.
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.
WeaknessesWeaknesses
The majority of people are not well aware about the products of Bank
Alfalah. Therefore it should advertise extensively especially home,
agri & car loans, RTC and Credit Cards.
Mismanagement of time is another big mistake in Bank Alfalah
branches, the bank official time of closing is 6:00pm but due
Mismanagement of time employees leave their desk at 8.00pm which
is so hectic and cause employee frustration.
A behavior has been noted that bank tries to feel at ease with good
looking rich and educated people and the un-educated and old
customers feel some bit strange in the environment of the bank.
Proper guideline should be given to the customer about bank
products. They facilitate with current information. Many of the
customer’s complaint that there should be two or more person who
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will guide people at entrance where they have to move, concerned
person and department, teach how to fill forms, slips and cheaqes.
The number of cash counter must be increased because the customer
has to wait at peak hours on the counter for deposit, withdrawals and
online.
Opportunities Opportunities
The policies of the new government to uplift the economy and pursue
financial sector reforms are expected to yield positive results in the
banking industry of the country. The Bank Alfalah is very well praised
to avail promising opportunities.
As a result of the different steps taken by the Government regarding
the betterment of the economy, small borrowers are attracted to get
the financing and start small businesses. So, the Bank Alfalah has an
opportunity to attract the customers by giving them attractive
schemes.
The need of privatization has made people to switch to banks to
satisfy their needs of lending and borrowing. This not only increases
the deposits but also the credit business.
Bank Alfalah 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 stock exchange is
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very volatile and takes immediate effect so in times of crises
conservative investors turns to saving deposits.
Threats 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 Competition has become severe by the
entrants of so many banks, So to exist one will have to prove himself
in its services through excellent management and will have to satisfy
its shareholders. Otherwise he will be out the market.
The decrease purchasing power of consumer in the current economic
situation of the country affecting the business activity speed too much
and the result is the low investment from the investors in new projects
can create problem for the bank because it is working a lot in trade.
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. Furthermore many private banks have come in the
sector due to which it is becoming more difficult day by day to attract
the customers.
The biggest threat in the banking sector is the continuous downfall of
the country economy since the last few years. If this downfall remains
for more few years then it may be the great hindrance in achieving
the Bank’s objectives.
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RECOMMENDATIONSRECOMMENDATIONS
Finally, we are giving some suggestions for Bank Alfalah Limited. These
suggestions are based on our experience with bank.
1. Human Resources Department should be there in order to motivate
and trained the employees. I have noted some dissatisfaction among
the employees, due to in efficient promoting system. So the bank
should provide clean and on the merit basis promotion system.
2. The bank is now over staff. The building under operation is in
adequate for such a large staff because new branches opening in
small cities like Bahawalpur, Sadiq Abad, Bore wala etc staff member
of these branches getting training in Multan branch, so the building
should be extended.
3. This is a routine practice that in order to give personalized services to
the customer, bank staff tries to fill all the columns of AOE with their
own handwriting, which is wrong. The customers must fill in AOE.
Bankers should avoid filling in the AOE because it can create problem
if the address, title of account or any other information provided by
the customer has not been written properly. Customer may be
affected or he may claim that he did not provide this information, but
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if the customer fills AOE then banker cannot be held responsible for
any incorrect information provided by the customer.
4. Under no circumstances cheque book should be given to the customer
if the account formalities are incomplete.
5. There are two officers involved in cash deposit process, which is time
consuming. Cashier should be given certain powers to receive cash of
US$ & DM to provide prompt services.
6. Similarly, there are two officers involved in cheque payment process,
which is time consuming. Cashier should be given certain powers to
pay cheques up to Rs. 25000/- to provide prompt services.
7. Cheques, which are drawn on Bank Alfalah Branch and returned
unpaid in clearing, are not reflected in the statement of account of the
customers. This cheque must be reflected in the accounts so that
credibility of the customers may be assessed.
8. Audit should be held internally, rather there should be an audit
department in the branch to make audit on daily basis. This can
become so, helpful as a different banks are having this department of
their own.
9. 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. In most cases,
this thing is not properly done and it is the major reason of default of
many clients.
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10. 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 & CONCLUSIONOBSERVATION & CONCLUSION
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I observed the bank Alfalah a financially sound bank. Its profits are
increasingly year-by-year. Its staff is very good and sincere with the bank.
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 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. They say that they will continue to
invest in the modern tools and substantial allocation to resources will be
made to achieve this objective during the current year. Online banking has
been started and the introduction of ATM at strategic locations has been
firmed up and it will be fully operations during the June 2001.
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COMMENTS
Signatures
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