BANK ALFALAH LIMITED

PROJECT REPORT
 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 MBA3Y02103-153
NISHAN ALI MBA3Y02103-139
NOMAN SOHAIL BUTT MBA3Y02103-157

Page 2
TABLE OF CONTENTS:

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 DEDICATION

This report is dedicated to our

beloved 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
instructor MADAM AQSA AKBAR who gave us the golden opportunity to
do this wonderful project on the topic of “Research 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 AUTHORIZATION
MAY 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

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 (MBA3Y02103-157)

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
Limited” has 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

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Noman Sohail Butt

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, organizational
culture, 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 for
special 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 state
owned. 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, Habib
Bank, 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 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.

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 HISTORY OF BANK
ALFALAH LIMITED
Bank 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 69
countries in the world. When financial authorities launched a coordinated swoop in
what was alleged 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 Dhabi
based Al-Nahyan consortium. This consortium consists of foreign investors of UAE and

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highly professional Pakistani bankers. Mr. Pervaiz Sheikh and Mr. Omer Khan
represent this consortium in Pakistan. The bank was sold for Rs. 39 per share for
buying 70% shares. The government decided to sell 10% shares to employees and
rest of the shares was privatized through the stock exchange.

EMERGENCE OF 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 sector
of 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

 Taavun (Pvt) Limited

 Warid Telecom

 Wateen Telecom

 Bank Alfalah Limited

 Alfalah GHP Investment Management Limited

 Alfalah Securities (Pvt) Limited

 Alfalah Insurance Limited

 Alrazi Health Care

 UBL

 Islamic Banking

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 "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 website”

Since the inception of Bank Alfalah, by the grace of  the  Almighty, we have moved rapidly in expanding our
branch network and deposit base, along with  making  profitable advances and increasing the range of
products and services. We  have  made a break-through in  providing premier services at an affordable cost
to 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 know
our customers better, can we deliver  a  higher  quality  of  services, thereby adding synergy to our existing
management  expertise, financial strength and profitability. 

This is yet another channel of  communication  for  the  delivery  of  quality  products and services that
enhance 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 that

provides the complete range of financial services to all segments
under one roof.

MISSION STATEMENT

To develop & deliver the most innovative products, manage customer

experience, deliver quality services that contributes to brand strength,
establishes a competitive advantage and enhances profitability, thus
providing value to the stakeholders of the bank.

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 SWOT ANALYSIS OF
BANK ALFALAH
Here we have applied this very useful technique to identify the strengths, weaknesses,
opportunities and threats of Bank Alfalah.

 Strengths:
 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 has
been increased on a rate of about 50%, which is a very positive sign.

 Highly Qualified
Employees:
The bank has highly
qualified and skilled workforce and it has
succeeded to attract the best banking
professionals from across the country due
to its growing pace and sound reputation.

 Conducive
Environment:
The management of the
bank is very much concerned with the development of and improvement of the working
environment. The bank has state of the art and purpose built branches where all the modern
technologies are provided to get the efficiency of the workforce and the customer satisfaction.

 Govt. Support and Encouragement:

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

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  Fastest Growing Financial Institution:
Due to its successful business policies and the strong financial position the
bank has achieved the reputation of fastest growing financial institution in the country. It has
greatly increased the customer’s confidence in the bank.

 Huge Expansion Plan:

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

 Young and Energetic Workforce:

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

 Islamic Banking Division:

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

 Weaknesses:
 Waiver of charges:
Currently the middle management of bank Alfalah is the big reason for waiver
of 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.

 Inexperienced workforce:
As the majority of the workforce consists of young professional, they lack in
their experience. And sometimes lack of experience becomes a hurdle while serving to the

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customers. It is the point where they feel difficulty while competing the other bank, which have a
very experienced workforce.

 Over work
Load on
Employees:
It was observed in
the branch that as compared to huge business the bank is dealing in, the no. of employees is
lesser and thus there is an increased workload on the employees. Due to this the efficiency of
the employees is reduced.

 Employees are not very much Motivated:

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

 Opportunities:
 Increased Interest Rates:
The SBP has revised the interest policy and the interest
rates. Due to which the banks interest rate has been substantially increased
which will greatly increase the banks’ profitability.

 Mega Projects Financing:

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

 Huge Demand for Consumer Financing:

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

 Merger with UBL:

After the privatization of United Bank Limited, the management of the BAL has
purchased the majority shares of the UBL, and it is planning to merge these two banks. As UBL

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is the second largest bank in the country, this merger can make the bank the largest bank of the
country.

 Growing Trend of Islamic Banking:

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

 Threats:
 Uncertainty of Economy:
Although the economy is growing at a good
pace, but there are many factors which results in the
uncertain position of the economy. Such as political
uncertainty, WTO, increase in poverty etc. As a result there
are permanent threats of future risks and losses for the
bank.

 High Rate of Inflation:

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

 Trend of Mergers:
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 leading
banks which can give tough time to the bank and it will become difficult for the bank to compete
with them.

 Privatization of Banks:
Due to its privatization policy, the govt. is privatizing the state owned banks. The
change in management may result in the increase in the efficiency and productivity of the
banks. Thus it can become a threat for the bank.

 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
ALFALAH
 Political 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 to
multiple 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.

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Some transactions of Islamic banking like modaraba have been promoted by giving incentives.
As Pakistani economy is showing some level of stability and consistency from last couple of
years, so it’s good sign for BAL Islamic banking as well.

 Social Factors:
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 Model

For further analysis of BANK
ALFALAH environment, Porter’s 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 firms

There 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 ALFALAH’s 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 bank’s 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 Pakistan’s 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.

 Bargaining Power 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 at Bank 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 company’s

devotion 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 of
during 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/C
Opening, foreign currency and many more aspects under one roof, so that the customer can be
facilitate in one visit.

4: Islamic Banking is one of the goals of Bank Alfalah though it has been initiated in the last
fiscal 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 opening
specific Islamic Banking Branch under the supervision of its Islamic Banking Division.1

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Strategic planning
Strategic planning is not about how to position products and businesses within an industry.
Rather, it is about changing industry rules or creating tomorrow’s 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.

Strategies
Bank 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 personalized
service 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 unique
perspective 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 bank
To 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.

Page 27
 Operational planning
This 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 remittance
Transfer of funds to foreign nations or from foreign nation .They can be in the shape of
money gram, or cash transfers.

 Transfer postings
All 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.

 Clearing
Any 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 tellers
The 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 card

The issues of debit cards of linking them with the correct accounts are all part of the
operations .This procedure takes about two weeks.

Page 28
 Policies of bank
alfalh
 Policies 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 market
place .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.

Page 29
  Consumer banking policies
Alfalhs policy regarding consumer –banking policies includes the development through
the 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.

 Lending policy
Bank 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.

 Selection of clients
Management 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.

 Services and product policies

Bank alfalh provide a vast variety of services to its client’s .Some of the policies are
discussed below:

I. Credit policy
In this service the loans are provided to the customers by the bank to meet
revenue short falls.

II. Stop payment instructions

It 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. Policies
The bank deposits different types of deposit to its accounts holders.

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 a) Alfalh musharaka saving accounts
b) Current accounts
c) Musharaka time deposit on pls basis

IV. Drafts ,telephone transfers, pay orders

These 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. For
offering 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 having
proper 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

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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
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 any
organization. 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 are
promoted 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.

 Accounting policies
Bank Alfalah is a scheduled commercial bank and is principally engaged in the business
of bank as defined in the Banking Companies Ordinance, 1962.

 Basis of presentation
In 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 are
restricted to the amount of facilities actually utilized and the appropriate portion of mark-
up thereon.
 Accounting conversion

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 These accounts have been prepared using the historical cost convention in Conformity
wit the accepted practice of banking institution in Pakistan.

 Fixed asset
Owned: Fixed assets are stated at cost less accumulated depreciation. Depreciation
is 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 the
assets 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 into
account 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/rules
 Batch 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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  Experienced Professionals
Based on requirements of experienced staff, Bank Alfalah also recruits
talent from the marketplace. Bank Alfalah offers competitive salary / benefits to worthy
professionals 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
techniques
Bank Alfalah Ltd has 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

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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 employee’s
performance as well as their employee’s 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 has established 20
branches in a year.

Motivation
Bank 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.

 BENEFITS
 Monitory Benefits
Monitory benefits are given to the employees on the basis of their performance like
salary rise, cash prize.

 Grade Promotion
Bank also provides benefit to their employees in the form of grade promotion. Grade
Promotion motivates the employee to do their work efficiently and effectively.

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 Abroad Posting
Bank 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.

 Controlling
Bank 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.

 Internal Control Unit

Bank has an Internal Control Unit that monitors the daily transactions within the
organization 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.

 Internal Audit
Internal 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.

 External Audit
External 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.

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 Competitor’s 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.

 Local private banks in Pakistan

Askari Commercial Bank Limited, Rawalpindi

Atlas Bank Limited, Karachi
Bank Al Habib, Karachi
BankIslami Pakistan Limited, Karachi
Crescent Commercial Bank Limited,
Karachi
Dawood Bank Limited, Karachi
Faysal Bank Limited, Karachi
Habib Bank Limited, Karachi
Habib Metropolitan Bank, Karachi
JS Bank
KASB Bank Limited, Karachi

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 Meezan Bank Limited, Karachi
MCB Bank, Islamabad
MyBank Limited, Karachi
NIB Bank Limited, Karachi
PICIC Commercial Bank Limited, Karachi
Saudi Pak Commercial Bank Limited,
Karachi
Soneri Bank Limited, Karachi
United Bank Limited, Karachi
GR Bank Limited, Karachi

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

 United bank (UBL)

 MCB bank
 Citi bank
 Askari bank

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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.

 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 of
Muslims live in these countries and they also use banking facilities but they don’t 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
alfalh

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Management 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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