BANK ALFALAH LIMITED

Presented To: Mr. Masood (IBP)

Presented BY: Taimoor Mahmood

Roll No. L3F04M.Com0496

Batch 5th

UNIVEERSITY OF CENTRAL PUNJAB

Acknowledgement

On behalf of the bank I would like to express my serious appreciation to the staff
of Allied commercial bank Ltd LCCHS Lahore Cantt. For their guidance and support
me to under stand the banking environment which gives us the excellent results.
Following are the employees who give us maximum time and knowledge in this
project;

Miss Ammara Qamar

(Officer Grade II)

Mr. Rizwan
(In charge General Banking)

CH. Mohammad Awais:

(Relationship Manager )

Executive Summary
This internship program is very useful for our practical experiences with
theoretical

knowledge as it is very necessary to vision the practical life which can handle
the

various problem and stages and the ability of decision. I tried my best to collect
the

valuable information and its relevant facts and figures. This report is the result
of my

research and understanding of the work with Bank Alfalah Ltd.

I personally worked there for Eight Weeks as a part of bank and I found that BAL –

IBD at Defence Y Block commercial area Phase-III. It has attractive physical

environment for all the employees and customers.

TABLE OF CONTANTS

Introduction …….……………………………. 05

Future Forecasting …………………………….... 07

Vision Statement ………………………………… 09

Mission Statement ………………………………. 10

Board of directors … ……………………………. 11

ORGANOGRAM (BAL-IBD) Y Block DHA….. 13

Introduction of Islamic Banking……………….. 14

Aims and Objectives in this organization ……... 16

Data information ……………………………….. 17

Analysis …………………………………………. 31

Suggestions and Recommendations …………… 32

References ……………………………………..... 33

INTRODUCTION

BANK ALFALAH LIMITED

Bank Alfalah Limited was incorporated on June 21, 1997 as a Public Limited Company
under the Companies Ordinance 1984. 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.
Currently Bank Alfalah Limited has 142 branches out of which 15 are Islamic in
their operations, spread all over Pakistan. In the coming years, the bank plans to
open a number of new branches to ensure that its customers get the benefit in the
form of extended branch network and comprehensive products and services. It has
also its branches in Afghanistan and Bangladesh.
PURSUIT OF EXCELLENCE
Bank Alfalah Limited has continued its upward climb in pursuit of excellence.
Strengthened by the backing of the Abu Dhabi Group and driven by strategic goals
set out by its Board and management, Bank Alfalah Limited 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 effort to provide highest
levels of service and value to our customers. The bank aims to further 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 Alfalah Limited to evolve as a single
source financial service provider of corporate and retail banking services.
DEDICATED PROFESSIONALS
The Bank Alfalah Limited 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 greater returns for its 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 HIGHLY RESPONSIVE PRODUCT PORTFOLIO
Not only comprehensive but also customizable to match the needs and preferences of
the customers. These strategic characteristics of the portfolio have helped Bank
Alfalah Limited to face challenging economic conditions. The 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 for conventional bank includes:
Car Financing
Rupee Travelers Cheques
Anmol Saving Certificates
Home Loans
On–Line Banking
MoneyGram Remittance Services
Monthly Income Plan
Credit Cards
ATMs
While the line up against the Islamic set up includes:
Car Ijara
Home Musharaka
Mudarbah
Murabaha
Salam
Istesna
Credit cards.

THE FUTURE OF BANK ALFALAH LIMITED

“Our Core Philosophy Of Honesty, Transparency In Customer Dealings, Product
Innovation, Excellence In Customer Service, And Our Commitment To Being A
Responsible Corporate Citizen Pervades This Bank”
These are the words that the Chairman His Highness Sheikh Nahayan Mabarak Al-
Nahayan uttered for the commitment of the bank towards providing satisfaction to
its customers. Confronted with a more open financial market but tougher
competition, Bank Alfalah Limited, with its professional outlook and commitment,
maintained healthy growth in resource mobilization and financing of foreign trade.

At the close of the sixth year of operations after its privatization in 1997, Bank
Alfalah Limited has been steadily reaching higher standards of service excellence
and performance despite many challenges.
The year 2002 has seen Bank Alfalah Limited achieving significant success both in
terms of product portfolio and customer service. The unfortunate “9/11” incident
caused economic uncertainty and political turbulence. However, Bank Alfalah
Limited was able to face these challenges valiantly and courageously.
Consequently, the size of the bank’s client base was increased that showed the
favorable reputation Bank Alfalah Limited enjoys in the market.
BRANCH NETWORK:
Over the years, the bank’s emphasis on growth has resulted in a strong entity
capable of offering high quality services to a wide spectrum of clients, in a
highly challenging business environment. Bank Alfalah Limited’s strategy is to
maximize the synergies of branch network through an optimal allocation of
financial, human and other resources in order to meet the dynamic challenges of
present financial environment. In the year 2001, the branch network increased to
32 branches, making the reach to 142 branches 15 branches operate in Islamic
banking and 59 state of art ATM machines. The bank is also operating in Bangladesh
and Afghanistan.
CONSUMER BANKING:
Bank Alfalah Limited continually strives to improve and add to the consumer
banking services. In the endeavor to provide best returns to the clients, an
impressive product portfolio has been designed to provide reasonable returns to
them, coupled with security of their capital.
AUTOMATION AND TECHNOLOGY:
Information technology and its optimum use greatly facilitate work and increase
performance potential. Bank Alfalah Limited is in the forefront of providing
customers online and timely services. For this, automated and technologically
sophisticated work flows and systems are a prerequisite.
Bank Alfalah Limited continually invests in upgrading these systems and similarly
training the human resource. The ultimate aim is to achieve both service and cost
optimization.
The in-house developed software BankSmart has been successfully installed in all
the branches and has been well received.

TRAINING AND DEVELOPMENT:

Bank Alfalah Limited is committed to the personal welfare and professional
development of all its team members. It realizes that proper training of human
resource is essential, not only for a more productive and satisfied work force but
also for a homogeneous corporate culture.
The bank continues to follow its strategy of hiring batches of young and energetic
management trainees who are sent to a Training and Development Center for training
in all areas of banking. The Training and Development Center is a state of the art
facility with an impressive faculty.
FUTURE OUTLOOK:
The economic future for the country seems brighter with many key indicators moving
in a favorable direction. Investor’s confidence is recovering and entrepreneurial
activity has gained momentum. Amidst these positive developments, Bank Alfalah
Limited will continue to follow a strategy based on business and deposit
enhancement and network expansion.

THE VISION

THE MISSION

MANAGEMENT STRUCTURE
Bank Alfalah is proud of its Human Resource, as almost all the employees have been
hand picked by the management. However, in this section, I would discuss those
people who are responsible for hiring such a bright staff and establishing such a
magnificent bank. They are the higher management of Bank Alfalah Limited.

THE CHAIRMAN (OUTGOING)

H. H. Sheikh Nahayan Mabarak Al-Nahayan is an important and prominent member of
the ruling family of Abu Dhabi. After the culmination of his studies at Oxford, he
returned to shoulder important responsibilities in the state administration. In
1988, he was appointed the President of the higher colleges of Technology
comprising of eight colleges throughout the UAE – a responsibility he fulfilled
with distinction. In 1990, he was appointed Minister of Higher Education and
Scientific Research. Presently he also holds the presidency of the Society of the
Natural History and National Heritage. In 1992, he became the Chairman of the
Union National Bank and has since remained involved in strategic management of the
institution.
THE CHAIRMAN (NEW)
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan
THE BOARD OF DIRECTORS
H. H. Sheikh Nahayan Mabarak Al-Nahayan - Outgoing Chairman
H. E. Sheikh Hamdan Bin Mabarak Al-Nahayan - New Chairman
Mr. Mohammad Saleem Akhtar - Chief Executive Officer
Mr. Abdullah Khalil Al-Mutawa - Director
Mr. Omar Z. Al-Askari - Director
Mr. Abdullah Naseer Hawaileel Al-Mansoori - Director
Mr. Nadeem Iqbal Sheikh - Director
Mr. Ikram Ul-Majeed Sehgal - Director

BOARD ADVISORY COMMITTEE

Mr. Omar Z. Al-Askari
Mr. Abdullah Khalil Al-Mutawa
Mr. Ganpat Singhvi
Mr. Bashir A. Tahir
EXECUTIVE COMMITTEE
Mr. Mohammad Saleem Akhtar - Chairman
Mr. Pervaiz A. Shahid
Mr. Ikram Ul-Majeed Sehgal
Mr. Mohammad Yousaf
Mr. Tanveer A. Khan
Mr. Sirajuddin Aziz
Mr. Mahmood Ashraf
CORPORATE INFORMATION
Mr. Hamid Ashraf - Company Secretary
A. F. Ferguson & Co. (Chartered Accountants) - Auditors
B A Building, - Head Office
I. I. Chundrigar Road,
P. O. Box 6773, Karachi.

ORGANOGRAM OF BAL-IBD Y BLOCK DEFENCE BRANCH LAHORE

BANK ALFALAH IBD

Y BLOCK DEFENCE LAHORE
(Organogram)

Mehboob Ahmed Bhatti

Manager

Umar Younis Shoaib ur rehman

Ch. Awais Aamir
Manager Credits Manager Ops. & Trade finance Manager
Home musharkah BDO

Azhar Irfan Ali Tariq

Daud Khan Sheraz
Credits officer Officer Trade Finance
Officer Home musharkah BDO

Nagina Awais Durish Sheeraz Tajdaar

Car ijara Manager CR Officer Home musharkah

Aqna Ehsan Faran Ahmed

Car ijara CRO

Irfan Anees Rana Waheed

Car ijara In charge Accounts

Umair Hamid
 Officer Collection, Remittances,
& Clearing

Rizwan Hameed
Cashier

Majid Anwar
Cashier

Arsalaan Sajid
IT

ISLAMIC BANKING

Concept and philosophy:

Islamic banking is basically based on those transactions that are riba (interest)
free. Any return on deposit is not riba , if the return is earned through
investment in Islamic modes then its halal.
In Islam trading profits are allowed because they involve Efforts and Risks. So
any stipulated profit on any debt is riba. Any increase over and above the
principal amount payable in a contractual agreement is Riba if it is not covered
by a corresponding increase in:
Commodity, labor, risk or expertise.

TYPES OF RIBA:
1.RIBA AL FADAL – sale transaction:
Quality premium in exchange of low quality with better quality of goods of same
kind; prohibited e.g. dates for dates or wheat for wheat.

2. RIBA AL NASIA- loan transaction:

It involves in credit /delay ;modern banking transactions fall under riba al
nasia.
Islam encourages trade and business activities. Allah has ordained in the Holy
Quran:
“Allah has permitted trade and prohibited riba.”

ISLAMIC MODES OF FINANCING:

1. DEBT CREATING MODES:

a : Murabaha
b : Salam
c : Istesna

2. IJARA

3. PARTENERSHIP BASED MODES:

A: MUSHARAKAH
B: MUDARBAH
1. Murabaha:

2. Salam :

3. Istesna :

4. Ijara :
PARTNERSHIP BASED MODES:

MUSHARAKAH:

MUDARBAH:

DIFFERENCES BETWEEN ISLAMIC AND CONVENTIONAL BANKING

1. The basic difference between Islamic and conventional banking is that in
Islamic banking riba is not allowed.
And return is taken on the assets i.e. asset based transactions take place, while
in conventional banking interest is taken on money which is not allowed.
Moreover if effort and risk is not involved then transactions become fasid.

2. In the conventional banking, the interest is pre determined or fixed in

advance; whereas in Islamic banking the profit or return is based on actual
investment outcome.
3. In the conventional banking, transactions are financial asset based while in
Islamic banking transactions are real asset based.

Aim and objectives in the organization

Aim:

As being the student of M.com (Banking) 3rd semester, from University of Central
Punjab According to me for the internship program, my Aim to get the best
available knowledge and experience from that particular organization (Allied
Commercial Bank Ltd), Pakistan L.C.C.H.S Lahore Cantt. And prove my self as the
best candidate for this particular bank.

Objectives:

• Adopted the best working technique and gather the knowledge by my best
effort.

• Work there as being apart of the organization and always ready to help
others.

• Implement best knowledge in the organization regarding to my course and all

kind of information which I got from my institution, to achieve my target and
objective.

• Learn the procedure of the Account opening and Atm cards of the bank.

• To deal with clearing department that is related to all kinds of Cheque’s.

• Learn to handle multiple tasks and give maximum attention to my work.

• To adopted the working condition which is suit able for each employee.

• Learn the basic objects for of all kinds of dealing with their customers.

• Enhance my interpersonal skills and work there with my best efforts.

• Work in the different departments to enhance my professional skills.

• To work in each department available in the particular bank branch.

• Analyzing all kind of information which I get from the organization.

• Share my knowledge with others while working in the organization

ACTIVITES:
During my stay into Bank Alfalah Limited-IBD Y Block Defence Lahore, I was rotated

to different departments. When I joined the bank internal audit was completed. And
after that Sharia Audit came and completed their audit in six days. Then after
that in a sequence the external audit came from Karachi, which took a week.
I was rotated into the following departments:
The Account Opening Department

The department that is responsible for opening and closing an account assumes
immense significance and holds a central place in the basic banking operations.
During my stay at this department I got to fill the forms of individuals who
wanted to get their accounts opened at Bank Alfalah Limited, fill the cheques and
deposit slips of customers who were not literate enough or needed instructions,
and I also got the opportunity to give advice to the customers regarding the
requirements of account opening and the benefits of opening an account with Bank
Alfalah Limited.
The incharge of Account Opening department is Miss Durish who is the manager
customer relations. She also provided her full support towards me during my stay
at this department.
The main document in this department is, of course, the Account Opening Form.

DETAILS OF THE ACCOUNT OPENING FORM

In the account opening form the client is required to provide the following
information.
The first part establishes the currency in which the account is to be
maintained/operated.
The currencies include
Pakistani rupee.
U.S. dollar
Pound sterling
Euro
The second part then establishes the preference regarding the type of account to
be maintained. The various choices offered are
Profit and loss sharing/Savings account
Current account
Foreign currency account.

DISTINCTIVE FEATURES OF THE VARIOUS TYPES OF ACCOUNTS:

1. Musharaka Saving Account:
Individuals who wish to earn profit on their investment normally maintain the
profit and loss sharing account but in order to earn profit the client is required
to keep his/her deposits with the bank for some time. In BAL- IBD the customers
sign Musharka- Mudarbah Agreement for the saving account and thus become partners
with the bank and get profit accordingly. The profit is paid half yearly, from
Jan- June or June to Dec.
An individual or joint account can be opened in saving category, while company’s
accounts are not opened in saving category; they are considered as current
accounts because cash flow is continuous. Trust account does not occur in this
category. Zakat is deductible on saving accounts. The minimum amount for the
account is 5000 Rs.

2. Current Account:

The current account is the most common account and the most preferred amongst
business concerns. The theoretical explanation for this would be that they can
function more efficiently but since in reality there are no restrictions on any
with drawl the only reason we could think of is that current account facilitates
online banking which saves time (which in this ultra competitive business world
the most precious resource) to a considerable extent. In case of a current account
the client does not earn any profit.
Current account enables the client to do cash transactions in a more efficient
manner. Current account can be opened by all; individuals, joint or by companies.
The minimum balance required for the current account is 10,000 Rs.

3. Foreign Currency Account:

In the foreign currency account, saving and current account both can be opened.
Zakat is not deductible at FCY. Minimum balance required is equivalent to the
local currency limit used in local currency saving and current account.
Moreover other accounts could be of Public limited company, Private limited
company or of sole proprietorship.
Account Opening Form:
The information to be provided in the account opening form is as follows
Title of the account is to be written in block letters. By title of an account we
mean the name (either of the individual or of the business concern) with which the
account is to be opened and operated.
The client is supposed to provide the information whether the account would be
maintained singly (only one person operates the account) or jointly (two or more
than two persons maintain the account).
Name of the person who intends to operate the account is to be provided.
Provision of either Father’s or the Husband’s name is also a pre-requisite.
Occupation of the prospective account holder is also to be written.
Name and complete address of the employer is to be written.
Nationality is to be provided.
Country of residence is to be specified.
Telephone number is must.
The national identity card, of course is an integral part of the account opening
application.
Passport number, if the prospective client has got one.
Another requirement is the date and place of issue of the national identity card.
The prospective client also has to provide the name, address and relationship of
any one of his/her close relatives in order to facilitate the communication
problem. The clients often have a misconception that there next of kin might, if
some peculiar circumstances arise, get the profit out of his account but this is
not the case. The name and address of a close relative is only recorded in order
to undertake necessary communication when needed.
In case of a business concern there are two more things that are to be provided by
the business.
Type of organization. The various types of organization which are present in
Pakistan at present are
 Limited company
 Public
 Private
 Partnership
 Association/Club/Society
 Sole-Proprietorship
The business concerns also have to give their full name, brief description of the
business, date of incorporation, place of incorporation, national tax number,
telephone number and fax number.
The choice of either the deduction or non-deduction of zakat also needs to be
highlighted. Zakat is deducted out of a Profit and Loss Sharing account and a
Royal Profit account maintained in Pak Rupee and not out of any account maintained
in any other currency. Moreover exemption from zakat would only be granted if
proper proof of exemption under a law presently enforced in Pakistan is provided.
Details of other account/s maintained with other branches of BAL or other banks
are also to be given.
The name, signatures, and account number of the introducer is a very essential
prerequisite in order to facilitate the opening of an account. The introducer is a
person who already has an account in the same branch. It can also be a person from
the staff of the branch as well.
Then the client also has to put forth the instructions regarding as to whether the
account would be maintained on the basis of ‘either or survivor’, ‘jointly’ or
‘any one of us’.
After this three signatures of the client are needed and if it is an account of a
business concern then the rubber stamp of the company/organization is also needed
below the three signatures.
In case of a joint account all the persons unanimously might give the right to
operate the account to one person. This right is also termed as mandate for joint
account. If the mandate is given to a person all join account holders must sign as
an evidence of their approval.
In case of account opened by a business concern there are some documents that are
needed to be attached with the account opening form. The details of these
documents are given below.

LIMITED COMPANY:
 Copy of certificate of incorporation
 Memorandum of Association
 List of Director’s
 Copy of board resolution
 Certificate of Commencement of Business
 Copies of NIC of Director’s
 Latest copy of Form-29
PARTNERSHIP:
 Partnership deed certified copy
 NIC photocopies of all partners.
 Partnership mandate for account signed by all the partners
 A letter duly signed by all the partners containing the operating
instructions of the account also has to be taken.
SOLE PROPRIETORSHIP / INDIVIDUAL:
 NIC/ Passport photocopy
 Letter from Proprietor confirming “sole proprietorship”
There are two things that always accompany an account opening form;
Signature Specimen Card.
Cheque Book Requisition.
Signature specimen card basically contains information that is basically a
repertoire of information given in the account opening form, but in this card the
client vividly puts his signatures as a specimen, which are scanned and stored in
an intelligent terminal for future use and reference.
Cheque Book requisition basically serves as an application to issue a Chequebook.
The client also fills it up and submits it along with the account opening form as
a result of which he is issued a Chequebook once his account is approved. As
regards the Chequebook one of the most important entries in a Chequebook
requisition is the series number of Cheques that correspond with the numbers of
the cheques contained in the Chequebook issued to the client.
PROCEDURE OF OPENING AN ACCOUNT

Step 1-The Account Opening Form:

When a client comes to the bank, and makes a request for opening of an A/C. The
officer says that first fill up a prescribed application form. If he/she wants to
open a PLS A/C, then he/she has to fill a form according to the account.
Step II-Completion of The Form:
The name, occupation, and complete address of the person opening the account are
written in the columns are provided in the form. One signature of the person is
taken on the face of the form and one is taken on the backside. These signatures
should be usual signatures and he would operate the account with them future.

Step III-Introduction:
The introduction of a current account holder is accepted for the opening of either
a current account or a solving account. The introduction of saving bank account is
accepted only for saving bank accounts. The signature of the account-holder
introducing the account is obtained at the place provided for in the account
opening form.
Step IV: Specimen Signature Card (S. S. Card):
The signatures of the client are obtained on a specimen Signature card. These
cards are obtained in duplicate with two signatures on each card from the
customer. Every time a cheque is received for a payment from the client, the
signature on the cheque are verified by comparing them with the S.S. Card.
Step V-Account Number:
When all the formalities are completed then the final approval of account has to
be taken from the Branch Manager. After obtaining approval of the branch manager
an account number is allotted to the customer all the information is entered into
the computer. Then that account number is printed on the Cheque Book, S. S. cards
and account opening form.
Step VI- Issuance Of A Cheque book:
After opening an A/C with the bank, the A/C holder once again makes a request in
the name of bank for the issuance of a cheque book. The A/C holder mentions title
of A/C, A/C number, sign it properly and mentions the no of leaves he requires.
Normally BAL issues a chequebook having at least 25 leaves. Every chequebook also
contains one leaf that is used for another issue of a chequebook.
Step-VII Entry Of A cheque book:
Before issuance of a chequebook, the employee performs certain functions. They
include:
 Stamping every leaf with specific A/C number.
 Enters it in the chequebook issue register.
 Check whether or not a senior officer has verified the signatures, if no
then first he gets them verified.
After entry in the manual register, the employee issues the cheque book to the A/C
holder after his/her signature on the register.

Step-VIII Filing Of Account Opening Forms:

For current and saving account, separate files are maintained in which the forms
are pasted or punched in numerical order and kept under lock and key in fireproof
steel or safe. This is because these forms are the basic documents of the contract
with the customer.
Step-IX Maintaining the Computer Record:
After opening of account, all information regarding the account is entered into
the computer. Currently, a program named Bank Smart is being used for this
purpose. Record of all the transactions regarding the account of a customer is
kept updated in the computer.

PROCEDURE FOLLOWED IN ORDER TO CLOSE AN ACCOUNT

The procedure followed for the purpose of closure of an account is described in
the following steps:
The client who wishes to close an account first has to give an application, duly
signed on the pre-printed application of the bank. The client has to attach this
application with the liability form. The client can also give an application on a
plain paper, but correct signatures are very necessary.
Then it has to be made sure that if the account to be closed is a Saving, Royal
Profit, or Foreign Currency Account then the account balance before closing should
be zero. In case of these types of accounts the bank does not take any closing
charges. If a client wishes to close a current account then the bank charges
Rs.150, so at the time of closing the balance should be Rs.150.
Along with the application to close the account client’s Cheque book is also
received from him and then it is destroyed in order to prevent any misuse in the
future.
A liability form is filled and sent to the Trade Finance Department and Credit
Department in order to Cheque that the customer does not owe the bank a single
penny in any regard. A debit voucher and a credit voucher are also attached to the
liability form.
When both of these departments approve that the customer does not owe any money to
the bank and the form is returned to the account opening department then the
original account opening form pasted in the ledger when the account was opened is
marked ‘account closed’ along with the date on which it is so marked. One thing
has to be taken into immediate consideration that the account number allotted to
the client (who has closed his account), after closure of the account becomes
useless and is not allotted to any one in the future.
After approval of the liability form, it is sent to either the Foreign Currency
Accounts Departments or the Cash Department, as the case may be so that the
officer who scanned it in the first place could return the specimen signature card
to the account-opening department.
Once the S. S. Card is received back from the concerned official then the
liability form, the client’s application along with the specimen signature card is
pasted in the ledger right along side the original account opening form. The form
has to be pasted with the original account opening form even if the account was
opened a decade ago. In the computer as well all the entries and records related
to that particular account are permanently deleted by using the ‘close account’
option.
TERM DEPOSIT ACCOUNTS:
Term deposit account is essentially a fixed deposit account. It is opened if a
customer is willing to deposit his funds with the bank for a period within which
he cannot withdraw his money. In case a customer withdraws his amount then he is
given no interest at all on the principal. Normally people tend to fix their
deposits with the bank for a relatively longer period of time (3 years, 5 years
etc.) although the facility of opening a term deposit account is also offered for
short tenors like 7 days, 30 days etc. reason being that as there is a positive
relationship between the tenor and the rate of interest i.e. longer the tenor
higher would be the rate of interest. Customers benefit by opening a fixed/term
deposit account as they earn a higher rate of interest which cannot be earned if
you are operating, say for example a savings account. At this point one thing must
be taken into immediate consideration that only those people will fix their money
that do not face any problem regarding liquidity, people having one would feel
contend with a lower rate of interest but would certainly go for some other
account like royal profit or savings account. Banks benefit by opening a term
deposit account as funds are placed with them for a longer period of time and the
bank can earn a lot by advancing these funds more than once, specifically if the
advancing is short or medium term.
TDR in Bal- IBD is Musharkah – Mudarbah based.

SOME IMPORTANT DOCUMENTS USED IN THE ACCOUNT OPENING DEPARTMENT

Liability Form
This particular form is used when an account is to be closed. The staff of account
opening department, after filling in the name and account number of the client
forwards this form to the credit department and the trade finance department who
upon receipt of such liability form make required scrutiny so as to check whether
or not the customer owes money to the bank or not.
Account Statement Request Form
This small form is used to request for the account statement for the desired
period. The client gets this Performa from the account-opening department and
then, after filling it up, gives it to the computer section that gives the
statement to the client in printed form.
Vernacular Form
This form basically functions as a thank you letter (and also as a request) on
behalf of the customer if he wants to operate his account by doing signatures in a
language other than that of English. In this particular form the client gives his
assurance in writing that he would indemnify the branch against any loss that may
be caused by reason of his signing in a language other than that of English.
Debit And Credit Vouchers
These two vouchers are basically used when an account has to be closed. The debit
voucher shows as to how much amount has to be taken from the client’s account and
the credit voucher shows as to how much amount has to be credited as Bank’s
income, in order to facilitate the account closing process.
Application To Close The Account
This is a pre printed application of the bank in which the client fills in the
account number, the title of the account and the type of account and requests the
branch manager to close his account with the Bank.
Application To Change The Address
This is again a pre printed request form in which the client fills in his name,
account number, telephone number/s and the new address so that he could
communicate with the bank and receive all the notices, statements and other
necessary document which the bank might send through mail depending upon the
circumstances.
Mandate Form Used By An Individual To Enable A Third Party To Operate The Account
An individual to enable another individual to operate hi/her account without
changing the title of the account uses this form. In this form the account holder
certifies that the person to whom he is giving the mandate shall be fully
authorized to embark upon all possible transactions with regard to this account
unless and until otherwise specified. The original account holder writes his
account number, the title of the account, and puts his signatures.
The signature specimen card to be filled by the person who is being given the
mandate is attached with this form. That individual fills it up and his signatures
are also scanned and entered into the computer system for future reference in
similar fashion as the signatures of a new client are scanned and entered into the
computer system.
THE CLEARING DEPARTMENT
One of the basic economic functions of commercial banks is to receive deposits and
to honor cheques drawn upon them. So, cheque is a most commonly used instrument
for making payments by account holders. Along with the cheques, there are some
other negotiable instruments that are used for making payments and are drawn upon
a bank.
But cheque holds prime importance in banking.
Now the question arises that how these cheques & other negotiable instruments
drawn on one bank are deposited in other banks and money is transferred from one
bank to another.
Clearing House has provided this facility. Clearing house facilitates different
banks to get their cheques drawn upon other banks to be cleared.
Cheques lodged in clearing constitute two types of clearing
Outward Clearing
Inward Clearing

Outward Clearing
When cheques and other negotiable instruments drawn upon other banks like MCB,
ABN-AMRO of the same city (as Lahore) are presented in Bank Alfalah Limited IBD to
deposit them in the respective payee’s accounts, these instruments are lodged in
outward clearing of BAL-IBD.
STAMPS PUT ON THE CHEQUES
When the cheques are presented in BAL to be deposited in their respective payee’s
accounts, different stamps are put on cheques before their lodgment in outward
clearing.
CROSSING THE CHEQUES
Crossing means two parallel transverse lines, drawn across the face of the cheques
with or without words written in between them. Crossing may be general or special.
In clearing, cheques are crossed specially. Cheques are stamped with bank’s name
between two transverse parallel lines to constitute special crossing. After the
cheques have been crossed specially, the holder cannot receive payment except
through the banker named on the cheque. Basic advantage of crossing is to save the
instrument to go it from illegal hands. If, a crossed cheque is lost or stolen,
there is no risk of wrong payment. So it is an effective means of minimizing the
risk of loss or forgery.
CLEARING STAMP
After the cheques have been crossed specially, clearing stamp is put on the
cheques and other instruments, with the following day’s date, as these cheques
would have to be presented in their concerned drawee banks on the subsequent day.
ENDORSEMENT STAMP
The word endorsement is derived from Latin word ‘in dorsum’ that means ‘on the
back’. Ordinarily, it means anything written or printed upon the back of an
instrument. So, at the end, the cheques are endorsed in full (endorsed
specially) by putting the stamp with words describing “Payee’s account Credited in
BAL-IBD Y block defense Lahore.
After putting these three stamps on cheques & other negotiable instruments, they
are sent to NIFT (National Institutional Facilitation Authority) with Add List.
NIFT after segregating the cheques of different banks delivers them to their
concerned banks, which constitute the inward clearing for those (drawee) banks.
INWARD CLEARING
Cheques and other negotiable instruments (PO, DD, PS, CDR etc.) drawn BAL-IBD Y
Lahore, sent by other banks, constitutes the inward clearing of Bank Alfalah
Limited. After having all the stamps and dates of cheques confirmed, the concerned
drawer’s accounts are debited (in Bank Alfalah Limited, IBD y block defense
Lahore) and main branch’s account is credited by the total amount.
RETURN IN INWARD CLEARING
In case of cheques dishonored (returned) due to some deficiencies, the main
branch’s account is debited by the amount of cheques returned.
LIABILITY/DEPOSIT MANAGEMENT IN BAL-IBD.
Customers deposit their cash into Alfalah Islamic bank and receive profit on their
deposits. For the bank these deposits are liabilities while the advances in case
of Murabaha, Musharka or Ijara transactions are the assets, which bring profit to
the bank. The bank justifies this submission of deposits by the customers by using
the Sharia principles.
PROCEDURE:
Many customers come with their deposits and their cash is deposited in a separate
account and Musharka Pool is made. Due to t his Musharka Agreement all customers
become shreek/ partners. Now the percentage of each customer’s cash is maintained,
so that at the end of the tenure the profit is distributed according to the ratio
of their amounts
deposited.
Now another agreement is signed between the bank and the Musharka Pool, which is
Mudarbah Agreement. Here Musharka Pool acts as Rabb-ul-maal and the bank acts as
the
Mudarib.The Rabb-ul-maal is the sleeping partner; it only provides the capital
while bank or Mudarib does the management of funds and does the business. If the
Rabb-ul-maal provides 70% of the capital and the Mudarib invest 30% in the
business then the profit will be divided accordingly, each partner will get the
profit according to the ratio of his investment.i.e. Weighted average profit rates
are calculated.
The bank/ Mudarib utilizes the money in business like Home Musharka, Car Ijara,
Corporate Finance etc. and the profit that it gets through it is divided among all
the partners according to the tenure and ratio of cash deposited by each partner
ANALYSIS

SWOT ANALYSIS OF THE BRANCH:

The Branch is relatively a new branch, its progressing day by day. It has got some
strengths that favor it in attracting customers and making it successful among
others. The employees are given proper training and they are sent to Karachi Head
Office to be trained by professionals for a couple of weeks.
There is cohesiveness and a strong bond between the employees and they work
together for the success of their organization; moreover bonuses are announced for
the encouragement of the employees.
The organization believes in good customer relationship and customers are treated
in a very good manner.
There are opportunities also. Bank Alfalah is one of the pioneer banks in
introducing Islamic banking in the country. Thus people want to invest in the
Islamic banks and Alfalah has become a conspicuous name in Islamic banking.
There are some weaknesses also; as there is no ATM facility for Alfalah Islamic
banks. The online banking is still weak. R&D and quality assurance is also weak.
This branch is under staff, if one employee is absent then there is no proper
alternate to it, moreover the communication gap is there between the top
management and the middle management which becomes a hurdle and definitely affects
the performance of the individuals. There are no recreational activities for the
employees. The IT system of the bank is weak.
The threats that the bank is facing are; more competitors in the market with
better services and rates. This is the biggest threat to the Islamic division of
Bank Alfalah. Many Islamic banks are coming like DIB (Dubai Islamic bank), Saudi
Pak etc. which are no doubt a threat to Alfalah.

SOME SUGGESTIONS AND RECOMMENDATION FOR THE BANK:

The bank should bring innovation in its products and bring quality assurance, R&D
should be more active. ATM facility for the Islamic branches should also be
available as soon as possible so that customers can get the ease of obtaining
their money at any time they need it.
In the branch extra staff should be available so that alternate will be there.
Communication gap should be alleviated so that every employee feels free to talk
about the problems him/her facing. On line banking system needs to be
strengthened.
In order to retain the good employees and to face the challenge of the
competitors, the management should give better compensation and rewards to the
employees for encouraging them. Innovation in the products and good competitive
rates can lead to a good future ahead.

References

Miss Ammarah Qamar

(Officer Grade II)
Mr. Rizwan
(In charge General Banking)

CH. Mohammad Awais:

(Relationship Manager )