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BANK ALFALAH LIMITEDPROJECT REPORT


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PROJECT REPORT

BANK ALFALAH LIMITED

MODULE:

MANAGEMENT

SUBMITTED TO:

MADAM AQSA AKBAR

SUBMITTED BY:

RAI MUHAMMAD YASIR MBA3Y02103-163

TAHIR HAFEEZ MBA3Y02103-148

HIRA AZHAR MBA3Y02103-153NISHAN ALI MBA3Y02103-139

NOMAN SOHAIL BUTT MBA3Y02103-157


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TABLE OF CONTENTS:


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DEDICATION

This report is dedicated to ourbeloved parents and teachers who

educated us and enabled us to reach

at this level. They helped us in our

lives and motivated us to face the

problems of life.


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ACKNOWLEDGEMENT

We would like to express special thanks of gratitude to our course

instructorMADAM AQSA AKBAR who gave us the golden opportunity to

do this wonderful project on the topic ofResearch on Bank Alfalah

Limited. This project made us do extensive research on the Bank Alfalah

Limited.We are extremely grateful to her for providing us with this

opportunity.

We would also like to thank our parents and friends who helped us to

complete this report successfully and within time. They have provided us

support and care to let us complete this report.We are grateful to all those

who helped us in some way throughout the course of writing this report.

Regards:

Rai Muhammad Yasir

Tahir Hafeez

Hira Azhar

Nishan Ali

Noman Sohail Butt


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A LETTER OF AUTHORIZATIONMAY 24th, 2011.

Dear Reader,

As the students of MBA, we were authorized to prepare a research report for our course

MANAGEMENT by our course instructor MADAM AQSA AKBAR and MISS IRUM, as per the

course requirement.We have been authorized to prepare this research report on BANK

ALFALAH LIMITED.We are required to submit a copy of our research to the course instructor

at the end of the semester.

We have been given a specified outline that we have followed in order to complete this report.

This research report contains authentic facts and information on the subject collected and

interpreted through various research methods.

We hope you will find this report both informative and helpful in your academic as well as

practical disciplines.

Regards:

Rai Muhammad Yasir Tahir Hafeez

(MBA3Y02103-163) (MBA3Y02103-148)

Hira Azhar Nishan Ali

(MBA3Y02103-153) (MBA3Y02103-139)

Noman Sohail Butt

(MBA3Y02103-157)


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A LETTER OF TRANSMITTAL

MAY 24th, 2011.

Madam Aqsa Akbar,

Course Instructor

Management.

Lahore Business School

The University of Lahore.

Dear Madam Aqsa,

The research report that you assigned us concerning the A Research Report on Bank Alfalah

Limitedhas been completed.We were supposed to examine the business policies and

strategies, planning and recommend change if required.

The support provided by everyone in the writing of this report is highly appreciated and

acknowledged. We thank you for your assistance to prepare this comprehensive report.

We would be contented to discuss with you any questions and queries concerning this research

report. Please feel free to ask us for any query or concerns.

Regards:

Rai Muhammad Yasir

Tahir Hafeez

Hira Azhar

Nishan Ali

Noman Sohail Butt


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PREFACE

We wrote this research report as a part of our term project for the class of Management and

the topic that this report discusses is The Research Report on Coca Cola Bank Alfalah

Limited. A lot of effort has been put into researching to find the right material to prepare this

report.

This report includes the Bank history, vision and mission statement of Bank, organizationalculture, External and Internal analysis of Organization, Planning and Controlling, Organizational

structure and at the end of the report is the conclusion and recommendations.

For this research project we went to the Bank Alfalah Limited head office and we met the

Human Resource manager _____________.

We would like to thank Madam Aqsa Akbar for providing us the opportunity and the chance to

research about and write this report.We would also like to thank _____________, for

cooperation and providing us the opportunity to conduct our survey and interview with the

employees.


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EXECUTIVE SUMMARY:


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INDUSTRY OVERVIEW

Banking is one of the most sensitive businesses all over the world. Banks play a very positive

and important role in the economy of a country and Pakistan is no exception. Banks are

custodian to the assets of the general masses. The banking sector plays a significant role in a

modern world of money and economy. It influences and facilitates many different but integrated

economic activities like resources mobilization, poverty elimination, production and distribution

of public finance.

Pakistan has a well-developed banking system, which consists of a wide variety of institutions

ranging from a central bank to commercial banks and to specialized agencies to cater forspecial requirements of specific sectors. The country started without any worthwhile banking

network in 1947 but witnessed phenomenal growth in the first two decades. By 1970, it had

acquired a flourishing banking sector.

SIZE

In 1990 the banking system was dominated by five commercial banks, which were all stateowned. The 1990 amendments to the Banking Companies Ordinance launched the process of

financial sector reforms by allowing privatization of the state-owned banks. During the first round

of reform two of the state-owned banks, Muslim Commercial Bank and Allied Bank, were

privatized between 1991 and 1993. The reforms process was subsequently delayed for several

years and resumed significantly only in the early 2000s. With the privatization of the third large

bank, United Bank, in 2002 the domination of the state-owned banks was ended.

As of September 2003, the asset share of local private banks and public sector commercial

banks was 47 percent and 41 percent respectively. Another large state-owned bank, HabibBank, completed its privatization process in February 2004. As a result of this privatization, the

share of banking system assets held by public sector commercial banks decreased to less than

25 percent. The largest bank in the country, National Bank of Pakistan, with a market share of

approximately 20 percent, remains state-owned and its privatization prospects are uncertain at

this stage, although the government divested approximately 25 percent of its capital in 2001-03.


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INTRODUCTION TO BANK

ALFALAH LIMITED

Bank Alfalah Limited was incorporated on June 21, 1997 as a Public Limited Company under

the Companies Ordinanc1984. Its banking operations commenced from November 1, 1997.

The bank is engaged in commercial banking and related services as defined in the Banking

Companies Ordinance, 1962.

Since its inception, as the new identity of H.C.E.B. after the privatization in 1997, the

management of the bank has implemented strategies and policies to carve a distinct position for

the bank in the market place.

Strengthened with the backing of the Abu Dhabi Group and driven by the strategic goals set out

by its board of management, the Bank has invested in innovative technology to have

an extensive range of products and services.

This facilitates their commitment to a culture of innovation and seeks out synergies with

clients and service providers to ensure uninterrupted services to its customers. They

perceive the requirements of their customers and match them with quality products and

service solutions. During the past five years, they have emerged as one of the foremost

financial institution in the region

endeavoring to meet the needs of tomorrow

today.

Currently Bank Alfalah Limited has One

Hundred and Ninety five branches (195

branches in 74 cities) spread all over Pakistan.

In the coming years, the bank plans to open anumber of new branches to ensure that its

customers get the benefit in the form of

extended branch network and comprehensive

products and services.


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HISTORY OF BANK

ALFALAH LIMITEDBank of Credit and Commerce International

No mention of Bank Alfalah Limited would be complete before the discussion of the history of

the bank and its founders. The history of Bank Alfalah Limited dates back to September 21,

1972, when Bank of Credit and Commerce International (BCCI) were incorporated in

Luxemburg.

FROM BCCI TO BANK ALFALAH LIMITED:

THE LONG JOURNEY

LIQUIDATION OF BCCI:BCCI was liquidated on July 5, 1991. At that time BCCI was opening in almost 69countries in the world. When financial authorities launched a coordinated swoop inwhat was a lleged to be the biggest international fund in history.

INCORPORATION OF HABIB CREDIT AND EXCHANGE BANK(H.C.E.B):

In July 1991, the branches of BCCI in Pakistan at that time were taken over by The Ministry Of

Finance and SBP. All three branches were emerged in Habib Bank Limited after valuation of its

assets for 15 million dollars. It worked with Habib Bank Limited for around about 10 months from

14 March 1992 to 31st October 1992.

PRIVATIZATION OF HABIB CREDIT AND EXCHANGE BANK:

H.C.E.B was privatized on July 7, 1997. Management was taken over by Abu Dhabibased Al-Nahyan consortium. This consortium consists of foreign investors of UAE andhighly professional Pakistani bankers. Mr. Pervaiz Sheikh and Mr. Omer Khan


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represent this consortium in Pakistan. The bank was sold for Rs. 39 per share forbuying 70% shares. The government decided to sell 10% shares to employees andrest of the shares was privatized through the stock exchange.

EMERGENCEOF BANK ALFALAH LIMITED

Following the privatization in July 1997, Habib Credit &

Exchange Bank assumed the new identity of Bank

Alfalah Limited on February 25, 1998. And with this a

challenge was launched, the challenge to transform

this bank into a highly professional, most efficient &

service oriented institution.

Charged with the strength of the Abu Dhabi based

consortium, and under the leadership of His Highness

Sheikh Nahayan Mubarak Al-Nahayan, Minister of

Education, Government of Abu Dhabi, and a prominent

member of Royal Family the bank is energized with

the vision, envisaging the development of consumer

sector in Pakistan. Bank Alfalah has emerged as one

of the leading commercial banks in the financial sectorof Pakistan. This bank has made significant

contributions in building and strengthening both the corporate and retail banking in Pakistan. To

make banking solutions become accessible to more and more people, Bank Alfalah Limited has

embarked upon a rapid expansion program, aiming to provide a networking that makes its

services available to any of its customers in all the major urban centers of Pakistan.


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ABU DHABHI GROUP CONCERNS

y Taavun (Pvt) Limited

y Warid Telecom

y Wateen Telecom

y Bank Alfalah Limited

y Alfalah GHP Investment Management Limited

y Alfalah Securities (Pvt) Limited

y Alfalah Insurance Limited

y Alrazi Health Care

y UBL

y Islamic Banking


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"Our core philosophy of honesty, transparency in customer dealings, productinnovation, excellence in customer service and our commitmentto being a responsible corporate citizen pervades this website

Since the inception of Bank Alfalah, by the grace of the Almighty, we have moved rapidly in expanding ourbranch network and deposit base, along with making profitable advances and increasing the range ofproducts and services. We have made a break-through in providing premier services at an affordable costto our customers.

Keeping in view our valued clients and the need for constant and effective communication of information,we have designed this website to be as user-friendly as possible.

As we pursue the path of excellence, customer satisfaction remains our priority. It is only when we knowour customers better, can we deliver a higher quality of services, thereby adding synergy to our existingmanagement expertise, financial strength and profitability.

This is yet another channel of communication for the delivery of quality products and services thatenhance value to our stakeholders.

Thank you for visiting our site.

H.E.Sheikh Hamdan Bin Mubarak Al Nahayan


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VISION STATEMENT

To be the premier organization operating locally & internationality thatprovides the complete range of financial services to all segmentsunder one roof.

MISSION STATEMENT

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


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SWOT ANALYSIS OF

BANK ALFALAHHere we have applied this very useful technique to identify the strengths, weaknesses,opportunities and threats of Bank Alfalah.

Strengths:

y Strong Financial Position:

As we can see in the financial statements of the bank, the financial position of

the organization is very sound and its profitability is in increasing. The Earning per share hasbeen increased on a rate of about 50%, which is a very positive sign.

y Highly QualifiedEmployees:

The bank has highlyqualified and skilled workforce and it hassucceeded to attract the best bankingprofessionals from across the country dueto its growing pace and sound reputation.

y ConduciveEnvironment:

The management of the bank is very much concerned with the development of andimprovement of the working environment. The bank has state of the art and purpose builtbranches where all the modern technologies are provided to get the efficiency of the workforceand the customer satisfaction.

y Govt. Support and Encouragement:

As the owners of the bank belong to UAE and the type of their investment inPakistan is a foreign investment, the govt. is fully supporting the bank management due to itspolicy to maximize the foreign investment in the country, to get the economic prosperity.


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y Fastest Growing Financial Institution:

Due to its successful business policies and the strong financial position thebank has achieved the reputation of fastest growing financial institution in the country. It hasgreatly increased the customers confidence in the bank.

y Huge Expansion Plan:

Due to its strong financial position the bank has undergone a huge expansionplan to compete with the existing bank all over the country and with the passage of time thebranch network is expanding at a very good pace.

y Young and Energetic Workforce:

As the bank is a newer one in the country, the bank has an advantage over itscompetitors because the majority of its workforce is young and not very much over aged. Thusthe bank is getting maximum out put from its young and energetic workforce by spendingcomparatively less on their remunerations.

y Islamic Banking Division:

The bank is one of the pioneers of the commercial banks who have started theIslamic Banking along with their conventional banking. The bank has a separate network of itsIslamic Banking Division which has 16 branches across the country and this network is alsoexpanding at a very good pace.

Weaknesses:

y Waiver of charges:

Currently the middle management of bank Alfalah is the big reason for waiverof charges. Bank Alfalah loosing a lot of its income likes (Cheque book charge, online charges,statement charges, and other things) because of management. This is a weakness of bank

Alfalah.

y Inexperienced workforce:

As the majority of the workforce consists of young professional, they lack intheir experience. And sometimes lack of experience becomes a hurdle while serving to thecustomers. It is the point where they feel difficulty while competing the other bank, which have avery experienced workforce.


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y Over work Load on Employees:

It was observed inthe branch that as comparedto huge business the bank is

dealing in, the no. ofemployees is lesser and thusthere is an increased workloadon the employees. Due to this the efficiency of the employees is reduced.

y Employees are not very much Motivated:

The workload is high and the employees, especially the credit department, haveto do late sittings to complete their tasks. On the other hand the bank has revised its salaryincrements policy to decrease the increment rate, as a result a decreased motivation level ofemployees is observed.

Opportunities:

y Increased Interest Rates:

The SBP has revised the interest policy and the interestrates. Due to which the banks interest rate has been substantiallyincreased which will greatly increase the banks profitability.

y Mega Projects Financing:

As the increase in overall business activity in the country, the investors arelaunching various types of Mega Projects especially in housing and textile the bank has a greatopportunity to finance these projects at very profitable term.

y Huge Demand for Consumer Financing:

The increase in per capita income and overall economy has resulted into a greatdemand for the consumer financing especially for home finance and car financing and it is saidthat this trend will increase more in future. The bank can earn a lot by focusing on its consumerfinancing sections.

y Merger with UBL:

After the privatization of United Bank Limited, the management of the BAL haspurchased the majority shares of the UBL, and it is planning to merge these two banks. As UBLis the second largest bank in the country, this merger can make the bank the largest bank of thecountry.


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y Growing Trend of Islamic Banking:

There is a very good growth trend in the Islamic banking in the country and in theworld as well. BAL has the advantage of having full fledged Islamic Banking network and thegrowth in this particular field can be very fruitful for the bank.

Threats:

y Uncertainty of Economy:

Although the economy is growing at a goodpace, but there are many factors which results in theuncertain position of the economy. Such as politicaluncertainty,WTO, increase in poverty etc. As a result thereare permanent threats of future risks and losses for thebank.

y High Rate of Inflation:

The inflation rate of the country has gone above the 10%. This can result into anunfavorable situation for the bank. And especially when the ownership of the bank is UAEbased, the net spread for them can substantially decrease.

y Trend ofMergers:

There is a trend of mergers among the banks to become prominent in the market

and to get the maximum market share. This trend can result into the union of some leadingbanks which can give tough time to the bank and it will become difficult for the bank to competewith them.

y Privatization of Banks:

Due to its privatization policy, the govt. is privatizing the state owned banks. Thechange in management may result in the increase in the efficiency and productivity of thebanks. Thus it can become a threat for the bank.

y Risk of Defaults:

As discussed earlier that there is a trend of launching mega projects in the

country. And every one is involved in this trend without taking any measure for the

successfulness of these projects. This can result into the failure of this project which can make it

difficult for the banks to recover their funds from these defaults


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PEST

ANALYSIS OF

BANK

ALFALAHPolitical Factors:

Analysis of Political environment is very critical and this environment has a

strong influence upon the activities of any organization in a society. Political environment

strongly affects the marketing decisions. The political stability of a country has its impact on the

consistency of policies of local government. Pakistan has always been struggling for political

stability since its creation. Government has been changing in Pakistan many times due tomultiple reasons and most of the times Military has taken the charge of the government. So,

there are significant political risks in Pakistan. But the positive aspect is that State bank of

Pakistan has been given sovereignty and it is now an autonomous body in making its decisions.

From this perspective environment becomes suitable and favorable for BANK ALFALAH and

ISLAMIC BANKING. They can make their strategies accordingly as there is no chance for any

major Change of policies in near future.

Economical Factors:

Pakistani economy is good for foreign investments and it is also good for

Islamic banking sector of Pakistan.GDP rate of Pakistan is showing a consistency in upward

direction and per capita income has increased as compared to past. FDI is increasing every

year. Home economy is in recovery phase but it is showing good indicators for banking sector.

Some transactions of Islamic banking like modaraba have been promoted by giving incentives.


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As Pakistani economy is showing some level of stability and consistency from last couple of

years, so its good sign for BAL Islamic banking as well.

SocialF

actors:Pakistan is situated at very important geographically location and it has a

diverse culture. Islam is the religion of majority of the population and Islam has deep and ever

lasting influences upon the culture of the people of the area. So, the life style of people and

attitudes of consumers is favorable for Islamic banking as people are religious and they want to

deal in Islamic finances. Pakistani people have a respect for their religious and cultural

celebrations. BAL Islamic banking is taking an advantage of this socio-cultural environment of

Pakistan.

Technological Factors:

There is lack of proper infrastructure in Pakistan, for that reason different

sectors are not becoming able to cope with the technology. Banking sector has introduced a lot

of innovative services with the help of technology. Islamic banking is also on its way but it is

expanding slowly as compared with potential demand of Islamic banking.


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Industry Analysis of

Bank Alfalah

Porters Five Forces ModelFor further analysis of BANK

ALFALAH environment, Porters five

forces analysis is also applied on the

bank. This analysis takes into

consideration the following factors:

Bargaining power of customers

Threat of new entrants

Threat of substitute product

Bargaining power of suppliers

Competitive rivalry within an industry

Availability of Substitutes:

Substitution of one product with another one increases the rivalry within an

industry. Although perfect substitute of banks are not available in the market but people still

have choices of saving or investing their money. They can either save their money at homes or

put their money in the National Saving Centers (Banking Intermediaries) which give protection

to their assets. Aside from saving one can invest money in stock market in form of shares /

bonds or in real estate. These kinds of substitutes increase the rivalry in the banking sector.

Rivalry among existing firmsThere is tough competition among various banks. As variety of public and

private banks are already existing in the market, offering products on competitive prices. If


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we look at BANK ALFALAHs products then, Meezan Bank, Habib Bank and many others

are offering wide range of products in this sector. The tough competition among these banks

gives rise to the challenges which the competitor banks have to face. The competition

among various banks increases the switching of the customers form one banks product to

the other bank.

Threat of new entrants:

The banking sector of any country has always chances of growth and

competition so many new banks enter and leave the market. Mostly foreign banks step in the

developing countries for expanding their branches, not only this mergers between foreign and

local banks take place at large scale but Pakistans present economic condition and government

instability has arose the feelings of awe and terror among most of the foreign banks to enter in

the market. In future due to uncertainty and security problems in Pakistan investors will not be

willing to invest here. Due to overall financial problems in the whole world new banks will not be

entering in to the banking industry.

BargainingPower of Buyers:

Bargaining power of buyer is low where the products substitutes are not

available and customers are large in number. In case of banks there are lots of other banks and

banking intermediaries, having wide range of products, so power of buyer in banking sector is

high. The bank can not force any customer to buy the desired product because this directly

affects its reputation, but can convince its customers by giving them special discount or

rewards. If we look atBank Al Falah we will find that the competitors are also offering products

due to which customer feel in power by saying that they can go to some other bank in case of

dissatisfaction.

Bargaining power of Suppliers:As in banking sector suppliers does not exist so there is no bargaining power of

supplier


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Planning process

Goals and objectives are factors through which the companysdevotion and commitment to the job can be seen. If the goals are realistic and achievable, than

surely that organization is doing its job.

Bank Alfalah also has certain goals and objectives which it is trying to achieve, through

its various strategies and operations. The goals and objectives are mentioned below:

1: To create a sound base, and through efficient systems achieve modern

Banking through out Pakistan.

2:By the end of every accounting year there is an increase in deposits. As the deposit rate ofduring 2002 was approx 52 Million and the same has been increased in 2003 by 77 Million.

3: To create unit banking network in all the branches of Bank Alfalah, the end of the year. This

means that all the operations of the bank, i.e. deposits to advances, imports, exports, L/COpening, foreign currency and many more aspects under one roof, so that the customer can befacilitate in one visit.

4: Islamic Banking is one of the goals of Bank Alfalah though it has been initiated in the lastfiscal year and it is very acceptable for general public. However, there is lot of work to do for

successful implementation of the Islamic Banking Plan. In this regard the Bank is openingspecific Islamic Banking Branch under the supervision of its Islamic Banking Division.1


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Strategic planningStrategic planning is not about how to position products and businesses within an industry.

Rather, it is about changing industry rules or creating tomorrows industries. The biggest benefit

of strategic planning is its emphasis on growth and it encourages managers to look for new

opportunities, rather than simply cutting more workers. Strategic planning may result in new

business acquisitions, new capital investment or new management approaches. It provides

direction and scope to tactical planning.

StrategiesBank Alfalah has formulated certain sets of strategies to enable it to achieve its goals and

objective .These strategies are given below:

Efficient modern banking system

In order to achieve its goals of creating a sound base and presence of efficient

modern banking system, Bank Alfalah has started operation of Automated Teller Machines in all

the major areas like Karachi, Lahore, Islamabad and other cities of Pakistan.


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Long lasting relationship

Bank Alfalah is committed to building long-lasting relationships through an assertion to

service excellence and providing innovative products to meet the changing needs of our valued

customers. Although still in its infancy, compared to the exalted banking standards, Bank Alfalah

backed by a strong Abu Dhabi Group and inspired by the vision of its Board and Management,

has built up a strong customer base. The Bank provides a full range of banking services to

corporate clients, while applying leading technologies. Today the Bank is well-positioned to

provide appropriate banking services to customers.

Corporate value and core culture

Core value and corporate culture is based on the belief that superior personalizedservice is the most important product. Bank is in the process of getting to know customers by

name and understand their business and personal financial needs. This one-on-one,

personalized service quality has served as Bank Alfalah's unique signature since inception and

continues to separate it from other financial institutions.

Bank alfalah team

The Bank Alfalah team comprises of some of the most highly skilled and professional

financial experts in banking industry. Managers, lenders and trust advisors offer the uniqueperspective of knowing and understanding in the local economy. The Management focuses its

attention on making informed and feasible economic decisions, bringing better returns and more

profitability for investors and customers.

Islamic banking

Keeping in view the unrest among the Islamic Community on the Interest Bearing

Banking the Alfalah is in the process of target marketing and gives its full attention to this

segment of a large population over the world.

Reputation of bankTo acquire the reputation and status of bank which operates on international standard,

Alfalah Bank was to get the credit rating of Pakistan Credit Rating Agency, which gave it the AA-

and A1+ in the long term and short term respectively.


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Operational planningThis aspect of planning addresses issues associated with the growth of current or new

operations, as well as with any specific problems of planned growth. Purchasing new or

additional office equipment to enhance efficiency.Account opening

There are pre-written policies and procedures mostly in collaboration with the state bank

of Pakistan. The details of the person who wants to open the account, their job

appointment letter to a preprinted account opening form.

Foreign remittanceTransfer of funds to foreign nations or from foreign nation .They can be in the shape of

money gram, or cash transfers.

Transfer postingsAll financial transaction made during one working are the end of the day recorded with

the finance department. The purpose of these posting is to be verify that the said amount

of any money is transferred in the accounts, this operational is done on daily basis.

ClearingAny issues with the cheques, such as bounced cheques, posted or any issues are

responsible for the clearing, posted or any issues are responsible for the clearing staff in

the operations, it is a daily base task.

Cashiers tellersThe tellers are a major part of operations of the banking sector .All money transaction of

the banker done with the teller .Paying utility bills depositing Cash cheques.

Debit credit cardThe issues of debit cards of linking them with the correct accounts are all part of the

operations .This procedure takes about two weeks.


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Policies of bank alfalhPolicies overview at bank

Since the inception of bank alfalh limited in 1997, by the grace of almighty, the bank has

move rapidly in expanding its branch network and deposit base, along with making profitable

advances and increasing its range of products and services .It has made a break-through in

providing premier services at an affordable cost to their customers. Managerial policies followed

by the bank have direct contribution in its success. The board and management of the bank

have implemented strategies and policies to carve a distinct position for the bank in the marketplace .In the bid to satisfy bank alafalh, s share holders and valued clients, the management

initiated the process of the banks vision by consolidating its financial position and creating a

large and diversified business base. Bank alfalh has made notable progress in business

volume, efficiency and profitability following its increased involvement in trade finance,

commercial lending, and foreign exchange and money market operation.


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Consumer banking policies

Alfalhs policy regarding consumer banking policies includes the development throughthe electronic consumer banking operations .Likewise, bank alfalah has created a niche for itself

in the marketplace. It is planning to introduce new consumer products like credit etc.

y Lending policyBank alfalah peruses a conservative yet dynamic credit policy. The strategy has enabled

the bank to have quality risk portfolio .Bank prefers to finance exporters because of less

risk involved. Bank alfalh manages the credit risk, very efficiently, for this purpose bank

alfalah has got an effective credit line proposal system to be sanctioned to thee clients

on demand.

y Selection of clientsManagement is very selective of clients. All of the refers carefully check to learn about a

political client before establishing a relationship. References are excellent source of new

accounts as they give an opportunity to learn about a potential client before establishing

a relationship. This policy helps the integrity of the bank. It ensures good relationship

with clients.

y Services and product policiesBank alfalh provide a vast variety of services to its clients .Some of the policies are

discussed below:

I. Credit policyIn this service the loans are provided to the customers by the bank to meet

revenue short falls.

II. Stop payment instructionsIt is one of the most important services provided by the bank to its client. In case

the account holder has lost his/her cheque he can issue the stop payment

instructions to the bank. The bank till further instruction till not honors the

cheque.

III. PoliciesThe bank deposits different types of deposit to its accounts holders.

a) Alfalh musharaka saving accounts

b) Current accounts

c) Musharaka time deposit on pls basis


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IV. Drafts ,telephone transfers, pay ordersThese are the facilities that bank offers its customers and, at time to the people

who do not maintain an account with the bank, that are ordinary people. Foroffering these services the bank charges commission besides the government

taxes and duties

Marketing policy

Bank alfalh invests heavily for the marketing policies & orientations, for the new products

and services. It uses television advertisement, newspapers as well as various promotional

schemes to attract customers. The bank support number of sporting and community

development initiatives to play its part as a responsible corporate citizen.

Trade department policy

Bank alfalahs focus is on foreign trade as its primary market of business. It maintains

high emphasis on enlarging its correspondent banking network besides aiming to enhance the

scope and level of cooperation with existing correspondents. The trade finance department has

efficiently done management of the changing trade policies by the central bank over there.

Promotion and incentives

Bank hires officers in range 1.Then depending upon their job performance they are

promoted to next range. More facilities and incentives are given along with promotion .The bank

gives a car facility to the officers at range 5.Banks basic policy is to give cash rewards and

salary increments for increasing the employees satisfaction .Also with the expansion of the

branch network growth in current area, more and more opportunities have been provoked not

only for the young generation but also for the employees of the bank.

Recruitment policy

Hiring is the mainly of two types ie direct hiring and promotion from lower levels. Banks

policy is to hire suitable candidates .By suitable candidates bank refer to candidates havingproper educational qualification, experience and background .It is the policy of the bank that

president of the bank will be the representative of the major stake holders. Board of director is

representative of sponsors. Bank is reluctant in making direct approach of senior executives.

EVPs are promoted from lower level .Every years bank alfalh opens it doors for 30 fresh post

graduates to join the prestigious rank of management trainee post. The mto test scheme is a

highly competitive training and after that a panel interview .Successful candidates then after

gets training in the banks state of the art facility at Lahore, Karachi prior to their posting at


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various branch locations .Prefer educational scheme to enter in mto exam is mba includes ma

economics and m.com from reputable Pakistani institutions.

Job satisfaction policy

Job satisfaction is the major important factor to be considered while evaluating anyorganization. To evaluate organization strengths and repute in the industry job satisfaction is the

key factor as well like that of growth and development in the monetary terms. During our visit to

bank we found out that all the employees are working with devotion that is the basis the basis of

job satisfaction. In addition all the employees are satisfied with the working ambience, with the

salaries and increment and promotions. Only thing to be mentioned out over here is the

workload and the employee timings for their job .Some of the employees are overburdened with

work. But not effect the overall job satisfaction of the organization. Bank takes much care of its

employees because they are precious assets of bank. Bank celebrates of all employees

birthdays, of all employees, arrange trips and given opportunity for recreation and enjoyment.

Bank hires officers in range 1.Then depending upon their job performance they arepromoted to next range. More facilities and increment are given along with promotion. The bank

gives a car facility to the officers of rank 5.Bank policy is to give cash rewards and salary

increments for increasing the employees satisfaction .Also with the expansion of the branch

network growth in the current era, more and more opportunity has been emerging not only for

young generation but also for the employee of the bank .At bank allfalh the employees are very

much satisfied with their job and overall working conditions of the bank., so in due response

bank is enjoying high efficiency in managing the time delays in reporting and working

operations.

A

ccounting policiesBank Alfalah is a scheduled commercial bank and is principally engaged in the business

of bank as defined in the Banking Companies Ordinance, 1962.

y Basis of presentationIn accordance with the directive of the Federal Government regarding the shifting of the

Banking system to Islamic modes, the State Bank of Pakistan has issued various

circulars from time to time. On permissible form of trade related mode of financing

comprises of purchase of goods by the banks from their customers and resale to them

at appropriate mark-up in price on deferred payments basis. The purchase and sales

arising under these arrangements are not reflected in these accounts as such but arerestricted to the amount of facilities actually utilized and the appropriate portion of mark-

up thereon.

y Accounting conversion

These accounts have been prepared using the historical cost convention in Conformity

wit the accepted practice of banking institution in Pakistan.


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y Fixed asset

Owned: Fixed assets are stated at cost less accumulated depreciation. Depreciationis computed over the estimated useful lives of the related assets at varying rates and methods

depending on the nature of the assets. The cost of the assets is depreciated on the diminishing

balance method, except for vehicles, carpets and renovation costs of leased premises, which

are depreciated on a straight-line basis. Depreciation is charged for the full month on

purchase/acquisition of assets while no depreciation is charged in the month of disposal of

assets. Maintenance and normal repairs are charged to income as and when incurred. Major

renewal and improvements are capitalized. Gains and losses on disposal of fixed assets are

taken to the profit and loss account.

Leased: Assets held under finance lease are accounted or by recording the assets

and the related liabilities at the amounts determined on the basis of lower of fair value of theassets and present value of minimum lease payments. Finance charge is allocated to

accounting periods in a manner so as to provide a constant periodic rate of charge on the

outstanding liability. Depreciation is charged on leased assets on the basis similar to that of

owned assets.

Investments

Advances are stated net off provisions for bad and doubtful debts.

Specific and general provisions for bad and doubtful debts are determined by the management

keeping in view the requirements of the Prudential Regulations issued by the State Bank of

Pakistan.

Foreign currencies

Assets and liabilities in foreign currencies have been translated into

Pak Rupees at the rates of exchange approximating those ruling at the Balance Sheet date

except those covered by forward exchange contracts which are converted at contracted rates.

Exchange gains and losses are included in income currently.

Taxation

Provision for tax is based on applicable rates of tax after taking intoaccount tax Credit available, if any. The Bank accounts for deferred tax, if any, taking into

account major timing differences, using the liability method. However, deferred tax is not

provided it can be established with reasonable probability that the timing differences will not

reverse in the foreseeable future.


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Procedures/rulesBatch trainee

All employees selected through this process, have to first complete a probation period

before given a complete status of a Bank Alfalah employee. The major benefit of this procedure

is that Bank Alfalah can employee a large number of employees at a lower cost. The procedure

for accepting a batch trainee is as follows:

Process for employing fresh candidates


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Direct induction of fresh candidates

Through direct induction of fresh candidates, Bank Alfalah is able to employ fresh

postgraduate candidates for its organization and the process is as follows:

Process for Employing Fresh Candidates


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ExperiencedProfessionals

Based on requirements of experienced staff, Bank Alfalah also recruits

ta lent from the marketplace. Bank Alfalah offers competitive salary / benefits to worthyprofessionals at all levels who wish to join hands with Bank Alfalah. The procedure

for selecting such professionals is as follow:

Procedure for Employing Experienced

Professionals


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Planning tools and

techniquesBank Alfalah Ltdhas a rich history of success and in its success, among other factors;

Human Resource Management has a pivotal role. In these organizations, there is a well-

integrated, established and innovative human resource system that judges the employees, their

potentials and their weaknesses and does corrective actions without any bias, discrimination

and without any delay. In these organizations, there are well-organized methods for all of the

HRM functions. Through proper planning of HRM, they try to improve their employees

performance as well as their employees job satisfaction level to achieve their objectives.

Aggressive banking

The first planning tool which is used by bank

allfalh is aggressive banking. Bank alfalah

expanding their network of Islamic Banking. Bank Al

Baraka has been serving the Islamic banking sector

since 10 years and they have only 5 braches in

Pakistan. On the other hand bank Alfalah hasestablished 20 branches in a year.

MotivationBank Alfalah motivating their employees by giving

them comprehensive benefits and professional

environment within the organization, which

enhances the performance of the employees. Bank

motivates their employees by giving 3 bonuses in a

year.


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BENEFITS

y

Monitory BenefitsMonitory benefits are given to the employees on the basis of their performance likesalary rise, cash prize.

y Grade PromotionBank also provides benefit to their employees in the form of grade promotion. Grade

Promotion motivates the employee to do their work efficiently and effectively.

y Abroad PostingBank benefit their employees by sending them on overseas posting where they can

enhance their professional skills and get handsome financial benefits in terms of salary

or fridge benefits.

y ControllingBank has proper setup of controlling the day to day transactions and operational affairs.

Bank controls the operations through a proper check and balance system and properly

monitor the daily work.

y Internal Control Unit

Bank has an Internal Control Unit that monitors the daily transactions within theorganization and keeps informing the management about the rules and policies

violation. Internal control unit has a proper check and balance on operations and other

bank departments.

y Internal AuditInternal audit is a tool to have a proper check on daily working in a bank. Internal

auditor has to point out the discrepancies found during audit. Internal auditors hand

over the audit report to the audit chief and he hand over that to the management.

Management overlooks all the discrepancies and try to reduce the violation and also

took the necessary actions. Internal audit conducted in a bank twice a year.


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y External AuditExternal auditors are the representatives of state bank of Pakistan. State bank assigned

them to audit the banks the find out the lapses or discrepancies according to the rules

and regulations of state bank of Pakistan. State bank imposed penalty on bank if they

found any discrepancies related to banking practices or procedures. External auditor

hand over the audit report to state bank of Pakistan and SBP handover the report to the

management along with the debit advice in form of penalty and management overlook

the discrepancies and take necessary actions. External audit conducted once in a year.

Bank Al Falah has a Chartered Accountant Company on his panel who prepare and

overview the financial reports of the bank Taseer Hadi & Co. is a chartered firm which is

on the panel of Bank Alfalah.

Competitors analysis

The growth in the banking industry of Pakistan has led to an increase in the number of banks

both domestic and international to be established and create a competitive industry. For Bank

Alfalah its competitors come in the form of both domestic and international commercial banks

established in Pakistan.


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y Local private banks in Pakistan

Askari Commercial Bank Limited, RawalpindiAtlas Bank Limited, KarachiBank Al Habib, Karachi

BankIslami Pakistan Limited, KarachiCrescent Commercial Bank Limited,KarachiDawood Bank Limited, KarachiFaysal Bank Limited, KarachiHabib Bank Limited, KarachiHabib Metropolitan Bank, KarachiJS BankKASB Bank Limited, KarachiMeezan Bank Limited, KarachiMCB Bank, IslamabadMyBank Limited, Karachi

NIB Bank Limited, KarachiPICIC Commercial Bank Limited, KarachiSaudi Pak Commercial Bank Limited,KarachiSoneri Bank Limited, KarachiUnited Bank Limited, KarachiGR Bank Limited, Karachi


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However Bank Alfalah feels that its major competitors are as follows:

y United bank (UBL)

y MCB bank

y Citi bank

y

Askari bank

As far as UBL is concerned, Bank Alfalah feels that it is a competitor because UBL itself is a

sister company of Bank Alfalah as the Abu Dhabi Group has stake in UBL and so there is

always a comparison between them. Furthermore, Askari Bank is a competitor because of the

fact that the product and services that it offers is fairly similar to that of Bank Alfalah and its

markup rates are similar as well. MCB, after being privatized has also introduced a wide variety

of services and with its large number of account holders, it is also a big competitor. Citibank is a

foreign bank that has been established in Pakistan for a long period of time and has introduced

a number of first class services and as Bank Alfalah is also competing in the services industry, it

needs to benchmark its product and services to a bank with a stature to that of Citibank.


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Opportunities

After the emergence of Islam in western countries, like France and other European country

bank alfalh has a chance to establish its foot steps in their banking sector. As a large number ofMuslims live in these countries and they also use banking facilities but they dont use bank of

these countries as the issue of interest in Islam. But bank alfalah has a chance to start their

operations and offer those persons their services who want to do Islamic banking.


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Threats

The main threat to Bank Alfalah is the threat posed by western banks who are able to engage in

less restrictive sources of revenue generating. Bank Alfalah freely admits that they do not offer

the full range of products of conventional western banks. These banks may pose a threat to

them in their home market and will certainly pose a threat if they choose to expand into western

markets.


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Leadership style at bank

alfalhManagement must have to adopt some administrative style to get all the activities to be done

effectively and efficiently. As far as the leadership style at bank alfalah is to centralize and

decentralize to some extent .Management must adopt some administrative style to get all the

activities done .And in bank alfalh leadership style is democratic how this leadership style is

practiced in this organization is given below.

Job satisfaction

Employee training

Consistent communication

Job security

In job movement

Low ratio of turnover

Employee happiness

Security

Motivation

Clear authority

On the job incentives


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cover page(3)

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