Bank Alfalah (Saba)

8/8/2019 Bank Alfalah (Saba)

1/84

INTRODUCTION OF BANK ALFALAH

LIMITED

Bank of credit and commerce international (BCCI) was a Pakistan based bank established by Mr. Agha Hassan Abdi from UBL in

association with U.A.E and Europe. BCCI has its branches in 74

different countries of the world. It had its three branches in Pakistan.

1991, The BCCI was banned, when it was accused by the European

countries that the bank was involved in some illegal operations with

gulf countries. The major reason behind European accusation was that

BCCI was of Islamic mode. Therefore the bank was closed due to

international pressure. Then, its 3 Pakistani branches were taken over

by Government of Pakistan which were named as Habib credit and

exchange bank and these were working as subsidiary of Habib Bank

Limited.

Following the privatization in July 1997, Habib credit and exchange

bank assumed the new identity of Bank Alfalah on February 25, 1998.

It is now Abu Dhabi based bank as the family of Sheikh Nahayan

Mubarak Al-Nahayan purchased 70% of its shares and 30% shares

remained with Habib Bank on the behalf of government.

It has it 45 branches in 21 cities in Pakistan. The Multan branch has

been opened in May 1999. It is not listed in any stock exchange of

Pakistan. Alfalah has emerged as one of the leading commercial banks

in the financial sector of Pakistan. Charged with strength of Abu Dhabi

consortium and under the leadership of his highness Sheikh Nahayan

Mubarak, minister of higher education and scientific research and


2/84

prominent member of Royal family. The bank is energized with vision,

envisaging.

The development of various sectors in Pakistan. The bank has already

made significant contribution in building and strengthens both

corporate and retail banks sector in Pakistan. Assessment of the needs

and wants of customer is an on going process at BAL, which help to

centennially develop new products of services. Designing the product

portfolio in response to royal patriot, royal custodial, Alfalah can

financing, Alfalah rupee traveler cheques home loans are prime

example of quality innovation providing timely banking opportunitiesto customer. To continuously offer courteous, professional and

advanced banking going through training programs with focus to

information technology has recently rejuvenated solution the team of

bank.

With their key indicators of progress a steady soaring to new heights,

the bank is committed to dedicate all its energies, resources and time to bring higher value and satisfaction to their customers and employers.

The graph of the bank is going up and up every year. The ratio of profit

is increasing at a good percentage. The bank is serving the people at

high level of standard by according to expectation of customers.


3/84

THE VISION

Our vision is to be a leading financial institution, with a niche in areas

where we have a competitive advantage with complete banking

solutions. Our focus is on improving performance in each of our

businesses to achieve consistent and superior returns for our highly

valued clients and stakeholders.


4/84

THE MISSION

Our mission is to maintain a competitive edge in quality banking,

customer service and profit performance. Our activities are geared

towards making Bank Alfalah a responsible corporate citizen. The

emphasis on Quality & Innovation will remain our key mission

statement. We will continue to strengthen our position as the leading

provider of quality financial services in Pakistan.

THE PHILOSOPHY

Excellence in service

Quality performance

Product innovations


5/84

THE BOARD

H. H. Sheikh Nahayan Mubarak Al-NahayanChairman

Mr. Abdulla Khalil Al-Mutawa

Mr. Omar Z. Al-Askari

Mr. Abdullah Nasser Hawaileel Al-Mansoori

Mr. Nadeem Iqbal Sheikh

Mr. Ikram Ul-Majeed Sehgal

Mr. Mohammad Saleem Akhtar

Chief Executive Officer

CORPORATE INFORMATION

Company SecretaryMr. Hamid Ashraf

AuditorsA. F. Ferguson & Co.Chartered Accountants

Head Office

B. A BuildingI. I. Chundrigarh RoadP.O. Box 6773

Karachi


6/84

EXECUTIVE COMMITTEE

Mr. Mohammad Saleem Akthar Chairman

Mr. Parvez A. Shahid

Mr. Ikram Ul-Majeed Sehgal

Mr. Mohammad Yousuf

Mr. Tanweer A. Khan

Mr. Sirajuddin Aziz

Mr. Mahmood Ashraf


7/84

BANK ALFALAHS SLOGAN

Lets Look Ahead Towards a Brighter Future Together.

BRANCHES NETWORK

Bank Alfalah has 45 branches in 21 cities of Pakistan. Detail as under:-

Karachi

Main branch, B.A. Building, I.I. Chundrigar Road

Cloth market branch

Karachi Stock Exchange Branch

Clifton branch

Shahrah-e-Faisal Branch

P.E.C.H.S Branch

Timber Market Branch

Defence Housing Authority Branch

Gulshan-e-Iqbal Branch

Jodia Bazar branch

Korangi industrial area branch

M.A. Jinah Road Branch

North Napier Road Branch

S.I.T.E BranchPaper market branch

North Karachi branch


8/84

Lahore

Gulberg branch

Defense branch

Circular road branch

Township branch

LDA Plaza branch

Badami bagh branch

Allama Iqbal Town Branch

Shah Alam Market Branch

Rawalpindi

Mall road branch

Satellite town branch

Peshawar

Peshawar Branch

Peshawar City Branch

OTHER BRANCHES

Other branches are in:

Hyderabad

Sukhar

Rahim Yar Khan

Multan

Sialkot

Islamabad


9/84

Jehlum

Quetta

Mingora, Swat

Faisalabad

Gujranwala

Sargodha

Bahawalpur

Dera Ghazi Khan

Gujrat

Sahiwal

Mardan

Now, Bank Alfalah is going to establish its branches in some foreign

countries. Hopefully, in Dhaka (Bangladesh) and Bahrain, its branches

will be opened soon. Some branches will also be opened in European

countries. Bank is going to establish its branches in Mian Channu and

another branch in Multan.

FEATURES

Bank Alfalah Limited is an established bank. It has some special

features with the help of those it is growing rapidly.

GOOD WORK ENVIRONMENT

As the work environment plays a great role in this competition age, so

the bank has good work environment. All the people work with


10/84

cooperation; managers are so kind that each problem can be discussed

with them.

EFFICIENCY

Employees at Bank Alfalah are quite efficient. As Multan branch is a

new one, its employees have to bring their bank among the list

of good banks. Therefore, they work more than their working

hours and it is all according to their will. It also shows their

loyalty, commitment to organization.

CUSTOMER SERVICES

All the customers are entertained individually. Same kind of behavior

and attention is given to all the customers.

SUGGESTIONS ASKED FROM CUSTOMERS

Getting ideas for improvement from customer side is a new idea and

that is working very well in Bank Alfalah Ltd. All the customers are

asked to fill a suggestion form and the standards of the bank are

improved through them.


11/84

EMPLOYEE BENEFITS

Employees are given the benefits like bonus, gratuity funds, loans,

increments, house rent, medical and conveyance.

COMPUTERIZED WORKING ENVIRONMENT

In bank, all the work is done on computers. All the entries are made in

computer. Balance are fed into the computer. This increases efficiency

of the bank.


12/84

PRODUCTS

ANMOL deposit certificate

Royal profit

Royal patriot

Royal group

Financing scheme

Alfalah car financing

Bank Alfalah home loan

Rupee traveler cheque

Designing its portfolio bank is committed to develop products that give

more value to its customers in both the sectors in corporate and

consumer need.

Following their trend of bringing value added products and services to

their customers the bank has present Royal Group, Royal Profit andRoyal Patriot.

ROYAL GROUP

Royal Group is a joint investment plan that allows individuals to invest

money collectively and earn higher rate of profit.

Amount Profit %ageFrom Rs. 100000/- to 999999/- 8.00%From Rs. 1000000/- to 9999999/- 8.25%From Rs. 10000000/- and above 9.00%


13/84

ROYAL PROFIT

It is profit obtained by individuals on their deposited amount.

50,000,000 & Alone profit is given on daily basis. It is just to attract

customer.

Amount Profit %ageFrom Rs. 50000/- to 999999/- 7.50%From Rs. 1000000/- to 9999999/- 8.%From Rs. 10000000/- to 49999999/- 8.25%From Rs. 50000000/- to 149999999/- 9.00%From Rs. 150000000/- to and above 9.25%

ROYAL PATRIOT

It is fix for specified time period. It is similar to term deposit. In term

deposit one get no benefit of profit when he withdraws his money

before maturity date. But in case of Royal Patriot of one withdraw his

money before the maturity date, he can get the benefit of profit. The

profit rates for different periods are following:

Tenure 1month

3months

6months

12months

24months

25000-999999 7.50% 8.50% 9.00% 9.50% 9.50%1000000-49999999 7.60% 8.60% 9.10% 9.60% 9.75%5000000 & above 7.70% 8.70% 9.20% 9.70% 10.00%


14/84

CONSUMER FINANCE BANKING

FINANCING SCHEMES

The bank has introduced many financing schemes such as Term

Finance and CF, FAFB, FAPC. The bank has recently introduced a Car

Finance Scheme.


15/84

ANMOL DEPOSIT CERTIFICATE

In Anmol deposit, profit is given on daily basis. Profit is calculated

from date of purchase (Subject to minimum holding period of 30 days).

Certificate can be encashed from the issuing branch.

ALFALAH CAR Its a scheme that enables one to own his desired car at easily

affordable and flexible installments with a minimum down payment

and insurance.

SALIENT FEATURES

Lowest financing cost available in the market.

Tenure of 1 to 5 years as per individual requirement

Quickest processing

Minimum processing charges: Rs. 3000 payable once

Down payment requirement of 20%

Repayment through monthly installments

Insurance rates available from banks approved insurance

companies

Flexibility of adjustment at anytime during tenure.

Easily affordable flexible installmentLowest markup

Pre-mature Termination 5% Of Principal Outstanding


16/84

MINIMUM INSTALLMENTS

Monthly Installments for Alfalah Car can be calculated by

multiplying Banks financing amount with the following factors:

Periods Advance

installment

Deferred

installmentFor 12 months

For 24 months

For 36 months

For 48 months

For 60 months

0.09072

0.04962

0.03609

0.02944

0.02553

0.09216

0.05041

0.30666

0.02996

0.2594

Eligibility Criteria

All Businessmen, Corporate Employees, and other salaried or self-employed professionals having net take home income in excess of threetimes the monthly installment.

Required Documents For Car Finance Facility{ AGE LIMIT BETWEEN 21 55 YEARS}

1. Application Form

2. Copy of National Identity Card.

3. Copy Of Driving License

4. N.T.N Certificate.

5. Copy Of current utility bill of residence.

6. Bank account statement for last six months from the date of

application.

7. Signature verification from duly verified by the Banker.


17/84

8. Assets and Liabilities Statement ( Where Banks Financing

Exceeds Rs. 5 Lac)

9. CIB Report Required ( Where Banks Financing Exceeds Rs. 5

Lac)

10.Basic Borrower fact Sheet


18/84

ADDITIONAL REQUIREMENTS FOR BUSINESS

CLASS INDIVIDUALS.

A) COPY OF RENTAL/ PURCHASE AGREEMENT OF

BUSINESS PREMISES.

B) SOLE PROPRIETORSHIP LETTER ON RELEVANT

BUSINESS LETTER HEAD.

C) PARTNERSHIP DEED (IF APPLICABLE).

D) NOC FROM OTHER PARTNERS (IF APPLICABLE).

ADDITIONAL REQUIRMENT FOR SELF EMPLOYED

PROFESSIONALS .

A) COPY OF RENTAL/ PURCHASE AGREEMENT OF

BUSINESS PREMISES.

B) COPY OF MEMBERSHIP OF RESPECTIVE INSTITUTE.

C) MUST BE PRACTICING/ CONDUCTING FOR LAST 3

YEARS.

ADDITIONAL REQUIREMENT FOR LAND LORDS.

A) FARD MALKIAT/ TILTLE DEED OF LAND

B) UNDERTAKING FROM A COMPETENT LANDLORD

ADDITIONAL REQUIREMENT FOR SALARIED

INDIVIDUALS

A) CERTIFICATE FROM EMPLOYER SHOWING

PERMANENT EMPLOYMENT FOR THE LAST 2

YEARS.

B) ORIGINAL SALARY CERTIFICATE.


19/84

C) TAKE HOME SALARY SHOULD BE THREE TIMES OF

THE PROPOSED INSTALMENT.

D) INCOME OF SPOUSE CAN ALSO BE CLUBBED.

CREDIT CARD DEPARTMENT


20/84

BANK ALFALAH HOME LOANAlfalah home loan is especially designed for those non resident

Pakistanis in UAE whose families live in Pakistan. This product is for

NRDs to buy build or renovate arouse in Pakistan.

Documents

1) Non-resident Pakistani of UAE, holding valid Pakistani

passport.

2) Valid UAE visa

3) Pakistani ID Card

Must be 21 year of age or over salaried and 62 in case of

businessmen

Functioning of BAL is dived into following departments.

1) Operation Department

2) Foreign Exchange Department

3) Credit Department

4) Accounts Department


21/84

OPERATIONS DEPARTMENTS

Operation Department has following segments.

a) Cash

b) Clearing

c) Remittance

d) Account opening

e) Accounts department

OPERATION DEPARTMENTS

Operations department of the Bank Alfalah Limited is responsible for

the overall operations of the bank.

Mr. Hassan Zaidi is operation Manger. He looks after the overall to the

higher authority about all its departments. The detail of those

departments which are controlled under this department is as under.

a) Account opening b) Cash department

c) Clearing

d) Remittances

e) Online Transactions


22/84

ACCOUNT OPENING DEPARTMENT

It is most important department of bank and its major source of income

for bank. Miss Shazia Bashir deals in this department.

Following procedure is adopted for this purpose.

Procedure Of Account Opening

It is very simple and quick procedure. A person who wants to open an

account must has the introduction of banks staff or any already

existing account holder of bank. The customer is required to fill an

account opening form. Then signatures of the introduce are verified

from S.S. Card before opening account. AOF (Account Opening Form)

is very standard and up to the mark which contains almost whole

information about customers. Customer is guide to fill all columns of

AOF. All formalities and requirements are completed and verified, and

all supportive documents are taken and checked according to the nature

of account. If any formality is incomplete, cheque book is not issueduntil it is fulfilled.

If a person cannot sign his / her hand thumb impression is affixed

marked, which is attested by one male or two female witnesses. Thumb

impression for female right hand and for male left hand.

They also have to give identity letter

1) NIC copies2) Passport size photograph


23/84

One place on the form other is on SS Card they have non-bearer

cheques. On their cheque book a stamp is affixed on it there is written.

Thumb impression should be fixed in front of an officer of the bank.

The bank does not make payment of a cheque bearing a six months or

older date. If an account is not operated in six months. It is called

dormant account.

TYPES OF ACCOUNTS

The bank different types of accounts exist.

1) INDIVIDUAL ACCOUNT

Any individual or proprietor of business can open an individual account

at BAF.

PLS (profit and loss sharing) saving accounts can be opened with the

minimum balance Rs. 1000/- with expected profit rate is 9%. Following

requirements has to be fulfilled for this account.Signature of customer on back of AOF.

Mention next of kin (nominee)

Name and A/C # of introducer.

Verified sign of introducer.

Customer signature admitted by officer.

N.I.C photocopy attached.

Letter of thanks.


24/84

2) JOINT ACCOUNT

When more than one person open a single account it is called joint

account. The names of persons are written on the title of A/C and on

S.S. card.

Joint A/C cannot be opened by single person. Both persons have to sign

on cheques. When two or more person neither partner nor trustee open

account in their name is joint account.

RequirementsSign of both customers on back of AOF

Sign on joint A/C # mandate

Name and A/C # of catrodiecer

NIC copies of both members.

Mode of operation.

3) BUSINESS ACCOUNTS

When the owner of the firm operating singly, open an in his term name.

Three types of Accounts are Here For Business Accounts:

a) Sole Proprietor Account

b) Partnership Account

c) Limited Company

I) SOLE OF PROPRIETOR ACCOUNT

This account is for those person who has his own business of the

business he is one owner of the firm.


25/84

Requirements

Companies stamp

Declaration of proportion companies letter head.

Sign on AOF (Account Opening Form)

NIC copy

Verified signature of introducer.

Sole proprietorship declaration

II) PARTNERSHIP ACCOUNT

Account title will be the name of the partnership firm.

Requirements

Sign of customers on back of AOF.

NIC copies of partners

Partnership deed (certified copy) duly attested by notary

republic.

Partnership mandate (prescribed format)

Companies rubber stamp

The A/C is opened in the firm name and all partners designate one or

two persons to act behalf of the partnership firm all acts of the firm

jointly and severely.

III) LIMITED COMPANY

Limited co:

1) Private Limited


26/84

2) Public Limited

PRIVATE LIMITED

Requirements

Restrain on companies letterhead dully attested by chairman.

Sing of all directors on back of AOF.

NIC copies of all directors.

List of directors on companys letterhead.

List of memorandum and article of association.

Copy of board resolution.

Latest form 29 (if director is to be changed or in case of his

death, this kind of form is filled, it includes information that a

new director has how much number of shares with him.

Companies rubber stamp.

Copy of certificate of incorporation should be attested by

Director, co register an office stamp should be affix.

Code Of Accounts

Saving account 02

Current account 01

Royal profit 029

Royal group 05

FSB 028

FCP 018

EURO 0287


27/84

PUBLIC LIMITED

1) Certificate of commencement of business

2) Same as a home documents.

Club / Society / Association

These concerns are non-trading in nature. They have their own rules

and regulation and their affairs are mentioned by the committee called

as a governing body or managing committee.

1) Stamp of directors

2) NIC copies3) Certified copy of resolution

4) Memorandum and article of association

5) List of heads on companies letter head.

6) Bank account opened in their name with BAL.

7) Name of person to be specified for the operation in account.

8) The manner in which the account shall be operated.9) Letter of registration.

Trust

Certified Copy of Trust Deed

1) Certified copy Of Buy Laws

2) List Of Trustees

3) Board of resolution resolving to open an account with BALalong with the signing instructions of the authorized

signatures to operate the account. This resolution must bear

the trust stamp and at the same time must be attested by the

company secretary.

4) NICs of all the trustees


28/84

CHEQUE BOOK ISSUANCE

When the account is opened, then the customer is given a chequebook

to sign upon and encash money. It proceeded as under.

PROCEDURE

All the account opening formalities must be completed before issuance

of chequebook. Particulars of the chequebook requisition should be

completed containing title of account, account number, type of

currency, number of leaves and signature to the customer. Signature of the customer is verified on the requisition.

If customer is unable to collect his cheque book, then he can give

authority to the third person to collect his cheque book on his behalf by

signing on the back of the requisition, in such case, the particulars of

the third person are required like name of the person NIC number and

signature of that person on requisition and cheque book issuanceregister.

Chequebook is taken out from the safe / locker. It is assured that series

of the chequebook. Particulars are entered in the chequebook issuance

register. Account number is stamped on very leave of the chequebook

and those leaves are counted. Name of account holder is written on the

cover of the chequebook. And requisition on the chequebook for further

issuance is properly filled, stamped and signed by officer of the bank.

Chequebook is delivered to the customer and his signature on the

chequebook issuance register. Chequebook serial number entered. In

the system (Bank Smart)


29/84

Stock of chequebook are balanced at the end of each day and kept

under safe custody.

Earlier the banks were charging a fee for issuance of cheque book but

now whenever a new account is opened, the account holder issued a

cheque book free of charge.

Bank Alfalah issues the following chequebooks.

Saving account-25 leaves

Current account 50 leaves.

Current account 25 leaves

Foreign currency $ 10 leaves

Foreign currency 10 leaves

Loose cheques are also issued in some cases.

Closing Of Account

When a customer wants to close an account he has to given a hand

written application to the head of the operations department to close his

account plus remaining leaves of cheque book.

The manager first verifies the sign of account holder, then closing is

done from the registers on the computer where the account was opened.

In the file of the account holder his account opening form is crossed.

For this closing a fee of Rs. 150/- is charge in BAF.


30/84

CASH DEPARTMENT

Cash department of Bank Alfalah works under the operation

department. this department is given the complete responsibility of

cash, as result of transaction in touch local and foreign currencies. It is

also responsible for the book keeping of these transactions and the safe

custody of cash.

This department performs the main function.

a) Cash receipts

b) Cash payments

CASH RECEIPTS

In cash department depositors use deposit slip for depositing the

amount into their accounts. The officer checks if the deposit slip is

properly filled up containing title of account. A/C number date and

amount in words and figures. Detail on both counter file and cash

receipt voucher should be the same. Cash is received by cash receivingofficer, twice counted and matched with the deposit slip. The cash

details are written on the back of the deposit slip and are also entered in

cash receiving register. Cash received stamp is affixed on the face of

the deposit slip along with the signature of the cash receiving officer.

Deposit slip and cash receiving register is given to the officer in the

cash department. The officer cash department both on cash receipt andcash receiving register makes again proper scrutiny. Officer cash

department signs both the deposit slip and register. Deposit slip is

credited and posted in the concerned accounted in the system. Counter


31/84

folio is given the deposition as receipt. One consolidated cash debit

voucher is posted in the system to balance the cash.

CASH PAYMENTS OF CHEQUE

Mr. Jawad deals with cash payments the process for payment of

cheques local and foreign currency is same. First the cheque is

presented by the customer or holder to cash payment officer. He

confirms that it is drawn on the same branch and the particulars of

cheque are properly filled in. one signature of the holder is taken on the

back of the cheque. Cheque is handed over to the officer cash

department for scrutiny where officer checks the date, amount in words

and amount in figures, payees name, crossing if any, account number,

cheque serial number, any material alterations / endorsements and

signature of the customer. Account is debited and then cheque is

cancelled by the officer. It is posted in the system and posting stamp

and number is affixed on it. Cheque is handed over to the cash paymentofficer for payment. One more signature on that back of the cheque is

taken from the holder to match with the first one, and then cash is paid

to the cash detail is written on the back of the cheque. Cash paid stamp

is affixed on the face of the cheque. Entry is passed in the cash payment

register.


32/84

CLEARING DEPARTMENT

Mr. Anees deals this department. Before discussing it is necessary to

know what is clearing.

Exchange of Cheques and balance of accounts

The process by which cheques exchanged between the collecting and

paying bank and the ensuing financial settlement is called clearing.

This facility is provided by the state bank of Pakistan for offsetting of

cross obligations between the different banks. Clearing is of two types.

1) Inward clearing

2) Outward clearing

Inward Clearing

When cheques drafts, etc, of our branch presented to us for clearing by

the SBP. Cheques to be honored by bank.

Outward Clearing

The cheques of other banks that the account holder deposits in their

accounts are send for collection.

Clearing process (Inward/Outward)

Here the local cheques are received that are drawn on BAF. All the

cheques are received on one counter along with the paying slips dulyfilled in properly containing particulars of cheques and account holder.

Counter folio of paying slip is handed over to the customer by putting

stamp for cheque received for collection for Bank Alfalah on it duly

signed by officer. These cheques are scrutinized and cheques for local


33/84

clearing are separated from OBCs. These are then entered in clearing

register and cheques for collecting are entered in OBC register and

handed over the bills department of collection. Clearing officer checks

and verifies title of all the cheques deposited by the customer to

confirm the good title of the cheques. Cheques are scrutinized properly

and paying slips are separated from cheques. Special crossing,

endorsement and clearing stamps are affixed on the cheques. Cheques

of each bank are sorted and arranged branch wise. All the cheques are

then entered into the clearing system of bank. Print out of the clearing

is taken and details are attached.With the cheques of each bank. Details of these banks are then entered

into the clearing schedule containing number of cheques presented and

their total amount against the name of each bank. Then total number of

cheques presented to all banks and their total amount is written on the

foot of that schedule, which is tallied with the clearing register.

Next morning, these cheques are delivered to the respective banks inclearinghouse of SBP between 9:00 to 9:30 AM. In the same manner,

other banks present their clearing drawn on Bank Alfalah. Total

number of cheques and their amount delivered to other banks are

received from them are written on the clearinghouse schedule and

handed over to the officer clearing house SBP. Cheques / DD received

in clearing are given to the officer cash department of the branch for

their repayment. After I proper scrutiny of cheques, verification of

signatures and confirmation of balance in the account, officer cash

department pays these cheque by canceling and posting them in the

system.


34/84

If any cheque is not passed due to insufficient balance or any other

reason, officer cash department returns the same cheque by attaching a

cheque return memo containing reason for return. This cheque is

entered into the cheque returned register and bank charges are deducted

according to the schedule of charges.

Second clearing is called at 2:30 PM to check the fate of the cheques

presented to other banks in the morning. If any cheque is to return, that

is delivered to the same bank in second clearing. In the same manner, if

any cheque presented by Bank Alfalah in first clearing is returned, they

receive it and once again give schedule of clearing figure to the officer-clearing house SBP containing number of cheques and their amount

delivered and received unpaid.


35/84

REMITTANCE DEPARTMENT

The need of remittance is commonly felt in todays business. A major

function of any bank is to transfer of funds form one place to another.

Bank Alfalah uses the following modes of transfer of funds.

a) Demand draft (DD)

b) Telegraphic transfer (TT)

c) Pay order (PO)

d) Call deposit

e) Pay slip

f) Money gram

DEMAND DRAFT

It is instrument, which is used to transfer amount from one city to

another city it can be made on cash as well as on cheque. If it is made

through cheque that it is necessary that person must be A/c account

holder while in case of cash any person can made. It consists of threecopies.

1) Original copy which is given to account holder.

2) DD advice is sent to the central branch.

3) Third copy is for reconciliation. Its photocopy is kept with us

(bank) while original is sent to head office for reconciliation.

Procedure

The client who wants to transfer his funds form one city to another fills

a form requesting the bank to prepare a DD. DD application form

contains columns requiring information for the preparations of DD eg.


36/84

Beneficiary name

Applicants name

Address

Amount to be sent etc.

Bank deducts some charges against DD. These charges include

commission tax provincial tax etc. Tax is deducted 0.3% while PT

charges are 0.50 paisas. If customer is taxpayer than advance tax is

exempt provided that he submit the tax exemption certificate.

TELEGRAPHIC TRANSFER

It is another mode of transfer of funds. It is quickest mode of transfer of

funds from one city to another. For TT, client has to submit the

application on a prescribed form of the bank. Client can deposit money

in to the bank or can request the bank to deduct the amount against the

TT along with the charges against the issuance of TT from his account.

The charges against the issuance of TT charged by Bank Alfalah.

Procedure For Telegraphic Transfer Issuance

Application form is given to the customer to fill. Two signatures are

taken on the form one for request and other for receiving the

instrument. All the particulars of application form are checked and

bank commission charges and with holding tax are written on the top of the applicant form. If the customer is maintaining his account with the

branch he can give cheque for total amount of instrument plus bank

charges. Cheque and application form is then given to the officer cash

department for the payment of the cheque. After proper scrutiny,


37/84

officer cash department posts whom cheque and signs the application

form to assure that payment is received. If the customer wants to pay

cash, it is deposited by the customer on cash counter. Cash receiving

officer receives cash on the application form along with the bank

charges and withholding tax; application form is then given to the

remittances incharge for issuance of the instrument. He enters all the

particulars of the application form in the system (BPG) and computer

gives an Auto Control Number to the T.T message of receiving branch.

This message is then sent through telex to the receiving branch

followed by a T.T. advice. The customer is confirmed that T.T. has been sent.

Procedure for T.T. Payable

When TT message is received, tested number on the TT is checked and

verified. Tested number is then written in the register and signed by the

holder of test keys for office record. All the particulars of the TT payable are entered in the system. Payment instructions on the TT

message are followed it if is pay and advice it will be paid through TTR

on the cash counter or through clearing and if it is credit and advice, it

will be transferred in the account mentioned in the TT message.

Printouts of vouchers (TT payable are taken. If TTR is presented for

payment, signature of the authorized officers are verified on TTR is

presented for payment, signature of the authorized officers are verified

on TTR and after proper scrutiny, it is posted in the BPG and canceled

by the remittances incharge.


38/84

Procedure For Foreign Demand Draft Issuance

Application form is given to the customer to fill the same. Two

signatures are taken on the form, one for request and other for receiving

the instrument. All the particulars of application form are checked and

bank commission is charged, which is US$ 5/- for each amount of

FDD. Cheque is received from the customer for total amount of FDD

plus bank commission. Cheque and application form is then given to

the officer cash department for the payment cheque.

After proper scrutiny, officer cash department posts the cheque andsigns the application form, to assure that payment is received. Then

cheque and application form is given to the incharge. Remittances, who

will enter all the particulars of the application in the FDD issuance

register. If the customer wants to pay cash, it is deposited by the

customer on cash counter. Cash receiving officer receives cash on the

application form along with the bank charges. Application form is thengiven to the remittances incharge for the issuance of the instrument. A

control number is allotted to the instrument form FD registers.

Instrument is complete by putting all the particulars in it and signed by

two attorney holders. Instruments are then handed over to the

customers. FDD advice is sent to the responding foreign bank / paying

bank where they are maintaining dollar account through registered

mail. Exchange transaction credit advice (ETCA) is sent to eh Head

office fore the reimbursement. Copies of the FDD and ETCA are kept

in the record of the bank.


39/84

Procedure For Foreign Telegraphic Transfer Issuance

Application form is given to the customer to fill the same. Two

signatures are taken on the form one for request and other for

signatures are taken on the form one for request and other for receiving

the instrument. All the particulars of application form are checked and

bank commission is charged, which is US$ 15/- that rate for each

amount of each FTT.

If the cheque is received from the customer, it is taken for total amount

of FTP plus bank commission. Cheque and application form is then

given to the officer cash department for the payment of cheque. After proper scrutiny, officer cash department posts the cheque and signs the

application form to assure that payment is received.

If the customer wants to pay cash, it is deposited by the customer on

cash counter; cash-receiving officer receives cash on the application

form along with the bank charges. Application form is then given to the

remittances incharge for the issuance of instrument. He enters all the particulars of the application form in the FTT register and a control

number is allotted to the FTP. TT message is written in the telex

containing name of transferring branch, name of receiving branch, date

amount, currency, payees name and account number or identification

if any, payer name and payment instructions. A test number is given to

the FTT message for receiving branch. This message is then sent

through telex to the receiving branch. Customer is confirmed that FTT

has been made. Exchange transaction credit advice (ETCA) is sent to

the Head Office for the reimbursement. Copies of advice (ETCA) and

FT are kept in the record for the bank.


40/84

COLLECTION

All the cheques under collection are called cheques under collection in

Bank Alfalah Limited. There are two types of bills for collection:

Outward Bills for Collection

Inward Bills for Collection

Outwards Bills For Collection

All the cheques are received on one counter along with paying slips

duly filled in properly containing particulars of cheques and account

holder. Counter folio of paying slip is handed over to ht customer by

putting stamp for cheque received for collection for Bank Alfalah on

it duly signed by officer. These cheques are scrutinized and cheques for

local clearing are separated from OBCs. Cheques for local clearing are

entered in clearing register, whereas cheques for collection are entered

in OBC register and handed over to the bills department for collection.

OBC number is allotted to eh cheque from OBC register. Specialcrossing and bank endorsement stamps are affixed on the cheque. OBC

schedule is attached with the cheque and dispatched to the main branch

of that city for collection. If they do not have any branch in that city,

then cheque will be sent to the collecting agent of Bank Alfalah for

then cheque can be sent directly to the drawing branch, instructions are

given on the OBC schedule for the payment of that cheque.

PAY ORDER

Is written order issued by a bank, drawn upon and payable by itself, to

pay specified sum of money to the order of a specified person.


41/84

Application form is given to the customer to fill. Two signatures are

taken on the form one for request and other for receiving the

instrument. All the particulars of application form are checked and

bank commission charges and with holding tax are written on the top of

the applicant form. If the customer is maintaining his account with the

branch he can give cheque for total amount of instrument plus bank

charges. Cheque and application form is then given to the officer cash

department for the payment post the cheque and signs the application

form in token of payment received. If the customer wants to pay cash,

cash is deposited by the customer on cash counter cash receivingofficer receives, cash on the application form along with the bank

charges and withholding tax.

Application form is given to the remittances in charge for issuance of

instrument. He enters all the particulars of the application form in the

system (BPG) and computer gives an auto control number to the

instrument. Print out a take on the block payment order. Twoauthorized officers of the branch then sign it. Instrument is the protect

graphed and given to the customers.

When the instrument is presented for payment, it is posted in the BPG

and canceled by the remittances in charge after proper scrutiny.

CALL DEPOSIT

When the party wants to give payment from itself to another party then

it makes call deposit. The bank keeps it with itself unless it does not

receive instructions from other bank. Normally it is made on cash and

goes in party account.


42/84

PAY SLIP

It is used when bank itself pay for any type of transaction e.g.

purchased of stationary.

MONEY GRAM

Bank Alfalah Limited, in collaboration with money gram offer

remittance services to Pakistan.

Its basically a person to person money transfer service that allows

consumer to receive money in just a few minutes.

Procedure

Person must have reference no.

Person must tell reference no. and compute the simple form.

Person has to show NIC and tell compute introduction after that

he can obtain money.

Vouchers are also posted in the system. When OBC is realized

collection bank pays the amount through IBCA if it is the same bank or

through DD if it is another bank. If DD is received against OBC, it is

presented in the clearing for collection. If IBCA is received the branch

for the payment of OBC, certain vouchers are posted in the system.


43/84

ACCOUNT DEPARTMENT

Account department is the most important department of the bank.

Because it is concerned with:

Revenue

Expenses

Assets

Liabilities

These are the pillars of any business. This department is supervised by

Mr. M. Zubair. In this department, all the vouchers that are posted

during one day are sent to the account department next day. These

vouchers are already posted to computer by the concerned department.

So computer also sends a report to the accounts department. The

accounts department has to tell that the requirements for cheques and

vouchers are fully checked.

If any kind of renovation or construction or rebuilding is done, all is

paid from the accounts department. Like petrol for the car of EVP or

VP, this department pays all stationery charges, medical allowance,

etc..

Daily Customer Movements List

All the changes that are made in accounts of customer are shown in the

daily customer movement list. By using this list, people of accounts

department can prepare the vouchers.

Account department performs following activities.


44/84

1. Data Controlling

a) Sorting and arrangements of vouchers

b) Checking of the posted vouchers into daily activity report.

c) Custody of all vouchers

2. Reporting

a) Preparation of daily reporting

b) Preparation of weekly reporting

c) Preparation of monthly reporting

d) Preparation of quarterly reporting

e) Preparation of semi annually reporting3. Expense Management

Payment of all petty cash

a) Payment of all capital expenditures

b) Payment of inter branch expense

4. Taxation

Deduction of withholding tax and deposit into SBPa) Filing of tax returns

5. Pay Role

6. Budget Preparation

Preparation of monthly budget review

a) Preparation of monthly performance review

7. Monthly closing Monitory & Monthly Closing Statement

Preparation

8. Leave Record & General Administration

9. Fixed Assets, Record, Depreciation, Maintenance, Insurance &

Approvals


45/84

The bank does not make payment of a cheque bearing a six month or

older date. If an account is not operated in six months, it is called

dormant account.

For any financial institution it is of utmost importance to maintain a

healthy and a strong deposit base. Deposits enable a bank to extend

credit facilities thereby generating income.

Deposits are held on behalf of the customer in either local currency or foreign currency. The differences between profit/interest paid and mark up recovered contributes to the profit portfolio of the Bank.

Deposits can be categorized as follows:

1. Call Deposits

Depending on local practice Call Deposits are to be repaid immediately

upon demand and during counter hours.

2. Notice Deposits

Notice deposits are kind of fixed deposits. The minimum balance

requirement for opening the account is Rs. 500/- and payment is drawn

on maturity of the specific period.

Deposits repayable on receipt of notice from a customer after a pre-

specified period are termed as notice deposits. The depositor indicating

his intention to withdraw the funds selects the notice period. Notice

Deposits are usually held for pre-specified tenors of seven days and

thirty days. A deposit should be placed for a minimum of 7 days in

order to qualify for accruing of profit. If the deposit runs for a period in

excess of the notice period, then the profit shall be payable up to the

encashment date.


46/84

Notice Deposit Is Of Two Types

One for which a prior notice of 30 days and is required from the

customer before withdrawing deposited amount and for which

rate return is 6.10%.

second for which a prior notice of 30 days and above is required

from the customer before withdrawing deposited amount and for

which the rate of return is 7.50%.

3. Term / Time DepositsA term deposit is a deposit that is made of a certain period of time. At

the end of specific period the customer is allowed to with draw the

principal amount. The rate of return of this account varies from 7.5% to

12.5%. The term deposit account varies from one month to 5 years and

the minimum balance requirement is Rs. 500/-.

These deposits are repayable on a term due date. This due date iscalled the maturity date of the deposit and is determined at the time

the deposit is made. These deposits have tenors starting from one

month, and can extend up to a period of five years.

PAK . RUPEE DEPOSITS

All deposits placed by the Bank on behalf of the depositor are non-cumulative, non-transferable and non-negotiable.

Application Form:

Every deposit taken must be supported by either a written request along

with a confirmatory cheque/cash and a Term Deposit Application


47/84

(BAF-TD-001) duly signed by the depositor. The application should

contain all required instructions in connection with the nature of

deposit, principal amount, and a particular period. The branches are

advised to cite the account number on the application, if the depositor

is already a customer. Also a copy of valid identification document

should be obtained from all depositors.

Deposit Receipts :

The deposit receipt (BAF-TD-002) should be issued in duplicate. The

original will be issued to the depositor, the copy be attached to the

Term Deposit Application Form (BAF-TD-001), filed as per 2.2 above

and which should be retained at the issuing branch.

The deposit receipt (BAF-TD-002) should necessarily indicate the

following:

The name of the depositor

The currency of deposit

Tenor of the deposit

The value date

The principal amount of deposit in words and figures

The deposit reference number in the form

XXX-YYYY-ZZZZ where:

XXX denotes abbreviation of the accepting branch

name

YYYY denotes the year of issue i.e. 1999 etc.

denotes the number allotted from a manually maintained sequential


48/84

ZZZZ checklist, which starts with 0001 each year (separate

checklist will be maintained for each type of deposit).

No alteration of any kind should be made on a Deposit Receipt (BAF-

TD-003). Any receipt requiring alteration should be cancelled by

reversing the transaction (if not on the same day) and in lieu of the

previous one; a fresh receipt should be issued.

Accounting Concepts for Accrual:

The accounting of profit accrued, payable & paid is explained by the

following entries:

Profit Accrual:

DR: Expenditure A/C Profit Payable

CR: Sundry Creditors Expenditure Account Profit

Payable.

Profit Paid to Customers:

DR: Expenditure A/C

Profit Paid

CR: Customer Account /

Cash.

Pre-Mature/Partial withdrawal of Term Deposits:

All requests for pre-mature / partial withdrawals of term deposits must

be supported by an application duly signed by the depositors. In case of

partial withdrawal the application should contain instructions for

encashment of the deposit, placement in a different /or same tenor of


49/84

the balance amount as a fresh deposit, and/or treatment of the profit

(e.g. a pay order for the profit amount may be requested favoring the

depositor only).

If the deposit does not complete the tenor of placement then the branch

manager has the discretion to pay or forfeit the Profit. Furthermore, if

the decision is made to pay the profit then profit payable on time

deposits withdrawn prematurely will be calculated on the

Deposit amount for the "period run" at the prevalent rate. "Penal rate"

will be applied to the uncovered period and will be deducted from the

profit amount payable for the period run". The terms "period run","prevalent rate" and "penal rate" have the following meaning:

Period Run: The period for which the time deposit has run from the

date it was established.

Prevalent Rate: The rate of profit, which is declared by the Bank twice

a year i.e. from Jan. to Jun. and July to Dec.

Penal Rate: The rate, which is currently valued at 2% by the

Management, is to be applied for the uncovered period of the maturity

and is deductible from the profit to be paid. Penal Rate as authorized by

the SBP and the Bank policy is intended to discourage premature

encasements.

Whenever a request for partial withdrawal of deposit is allowed, the

entire amount of the deposit will be treated as prematurely paid-up. Theamount being withdrawn will be repaid to the customer and the balance

placed as a fresh deposit from the date of partial withdrawal to the new

maturity date as requested by the customer, at the appropriate rate

prevalent on that date for that period.


50/84


51/84

ii) Prior to the issuance of a duplicate receipt confirmation from all the

branches should be obtained to ensure that the receipt has not

already been encashed and that no borrowing has been allowed

against the same.

iii) An "indemnity letter" having a current stamp value (Presently

Rs.60/), available with the Cash Department should be signed by

the customer in the presence of the concerned officer, thereby

absolving the Bank from all claims arising from possible

malicious intents.

iv) A remark to the effect, "duplicate issued in lieu of old receiptnumber" should be written visibly on the face of the new receipt.

Deposits "UNDER LIEN":

a) The Credit Department, after duly completing the required

documentation from the depositor, should request the Manger

Operations in writing to mark Bank's lien on the deposit.

When so advised by the Credit Department, the Deposit Section

will mark a lien in the following manner:

i) A notation, "under Bank's lien", should be visibly written on the face

of the deposit receipt (BAF-TD-003).

ii) The entry in the register, system and the application should

carry the notation of lien and the date of creating the lien.

iii) The receipt to be kept in Bank's custody, it is mandatory toobtain two signatures of the depositor at the reverse of the receipt

duly verified ensuring a proper discharge in Bank's favor.


52/84

b) The Credit Department should ensure that obtaining written

confirmation from the Deposit Section has marked lien on the deposit

and the original receipts, which, should be "saved-in".

c) The amount of deposit placed under lien shall not be released to the

depositor without prior approval of the Credit Department. The Deposit

Section will maintain documentation duly authorized by the concerned

credit authority for placing

Deceased Accounts:

a) On receipt of intimation of death of the depositor, a notation

'Account Holder Deceased' should be marked in the register, systemand the application.

b) Due care and precaution should be exercised to ensure that person(s)

claiming the deposit amount(s) is/are the legal heir(s) of the deceased,

all formalities have been complied with, and prior approval of the

branch manager obtained before the amount(s) is/are paid. If necessary,

the documentation may be sent to the local legal counsel for approval before payment is effected.

Loss of Customer Contact / Inactive Accounts :

a) All repayments of dormant deposits within the span of tenyears shall be authorized by the Branch Manager.

b) If any deposit has remained dormant for ten years or more,

the Head Office should be notified and requested for providing

guidance for the treatment of the deposit.


53/84

FOREIGN CURRENCY TERM DEPOSITS

Term Deposits should be accepted on behalf of customers only.

Reporting:

a) TREASURY

All new (after Jul. 01, 1998) foreign currency deposits, when

created/withdrawn should be reported to the treasury, same day, with

respect to their amounts and tenors.

b) STATE BANK OF PAKISTAN

A schedule 'D' format is used to book contracts for old deposits with

the SBP.

The sale/purchase (dealing activity) is communicated to the SBP on

daily basis. Moreover, at month end a consolidated statement of all

outstanding contracts booked with the SBP are reported in respect to

contract number, amount and expiry/maturity of the contract.However, the reporting requirements are subject to change as per the

instructions of SBP and internal policies.

Account Documentation

a) Placements should then be linked with the term deposit account.The receipt (BAF-TD-003) should contain a clause that provides

for automatic renewal of the deposit amount together with interest

accrued at maturity in the absence of instructions to the contrary,

from the depositor.


54/84

The control over documentation outlined in Account Opening Manual

(BAF-OM-CB-003) will apply to term deposits as well. All necessary

account opening documentation where required must be obtained at the

time of opening the respective Term Deposit Account for the customer

or at the time of accepting the first term deposit.

In certain instances, it may not be possible to obtain the original written

request from the customer and instead a facsimile, mentioning that the

original debit authority will shortly follow, may be accepted. It should

be ensured that the term deposit is being created in the favor of the

account holder and not a third party and that prior approval of the branch manger is also obtained in writing. Follow up, should be

adopted for obtaining of the original debit authority.

Term Deposit Advice

The system will generate term deposit advice in duplicate. The original

will be issued to the depositor and the copy retained at the branch as a

file copy. The advice should, inter alia, indicate the following'

The account number

The name and address of the depositors

The currency of deposit

Tenor of the deposit

The value date

The principal amount of deposit in words and figures

The rate of interest at which it has been placed

The interest amount at maturity

The deposit reference number in the form


55/84

XXX-YY-ZZZZ where:

XXX denotes abbreviation of the accepting branch name

YY Denotes the year of issue i.e. 99 for 1999 etc.

ZZZZ Denotes the number allotted from a manually maintained

sequential checklist which starts with 0001 each year

(separate checklist will be maintained for each type of

deposit). Type of the deposit and the maturity date in case

of term deposits

If the system generated advice contains a discrepancy due to input

error, then the concerned officer should first rectify/amend data in the

system, cancel and file the erroneous advice in the respective customer

file and issue the system generated corrected / new receipt to the

customer.

Pre-Mature/Partial Withdrawal of Term Deposits

All requests for pre-mature/partial withdrawals of term deposits must be supported by an application (BAF-TD-001) duly signed by the

depositors. In case of partial withdrawal the application should contain

instructions for enchantment of the deposit partially, and/or placement

in a different tenor of the balance amount as a fresh deposit. The

customer request should also clearly specify the treatment of the

interest if due.

Interest payable on time deposits withdrawn prematurely will be

calculated on the deposit amount for the "period run" at the "applicable

rate". "Penal rate" will be applied to the uncovered period and the

product will be deducted from the profit amount payable for the period


56/84

run". The terms "period run", "applicable rate" and "penal rate" have

the following meaning:

Period Run'. The period for which the time deposit has run from the

date it was established.

Applicable Rate: The rate of interest fixed at the time of placement of

the term deposit, which would have been applied on the original

maturity date, if the deposit had remained with the Bank for the full

period intended.

Penal Rate: The rate, which is to be applied for the uncovered period of

the maturity and deductible from the interest paid. Penal Rate asauthorized by the SBP and the Bank policy is intended to discourage

premature encashment.

Whenever a request for partial withdrawal of deposit is allowed, the

entire amount of the deposit will be treated as prematurely paid-up. The

amount being withdrawn will be repaid to the customer and the balance

placed as a fresh deposit from the date of partial withdrawal to thematurity date of the original deposit or such fresh maturity date as

requested by the customer at the appropriate rate prevalent on that date

for the period.

Matured Deposits /Automatic Roll Over

a) In the case of prevalently practiced automatic renewal of term

deposits at maturity, until otherwise advised by the customer, the

original customer request will suffice and no fresh application need be

held in support of the renewed deposit. The system /customer file

should be updated each time to reflect the new deposit number and date

of issue.


57/84

b) Applicable to FCY deposits only and in, the absence of disposal

instructions at maturity, the deposit amount together with interest

accrued will be automatically ' rolled over' for an identical period at the

rate prevalent on that date.

c) A due date diary should be maintained through consultation of

TDR Maturity Report (ARM A-16) and deposit accounts marked for

disbursement of profit upon the maturity as per customer's standing

instructions.

Withdrawal

The customer has to instruct the Bank in writing for either

withdrawal of the term deposit before or at maturity and / or for

principal amount including interest or otherwise

A facsimile message can be accepted for encashment of the deposit,

if it contains confirmation of the original request being mailed shortly;

and only if the proceeds credited to the deposit holder's account (SB or

CD).

However, prior written approval of the branch manager remains mandatory.

Deposits "UNDER LIEN"

a) The credit department after duly completing the required

security documentation from the depositor should request the

Manger Operations in writing to mark lien.

When so advised by the Credit department, a lien will be marked by the

deposit section by carrying out maintenance in the system and the

deposit account shall be blocked. The credit department should ensure


58/84

that lien/block on the deposit has been marked in the system and obtain

fresh confirmation with lien/block marked on it from the system, by the

Term Deposit Section.

b) The amount of deposit placed under lien shall not be

released to the depositor without the prior authorization from the

Credit Department or appreciate authority. The term deposit

advice should carry a notation, "under bank's lien". The Term

Deposit Section will maintain documentation in respective

customer file duly authorized by the concerned credit authority

for placing and lifting of the lien on the term deposit .


59/84

FOREIGN EXCHANGE DEPARTMENT

The transfer of credits to a foreign country to settle debts or accounts

between resident of home country and those of the foreign country or

the foreign bills currencies etc used to settle such accounts.

Foreign exchanged department deals within exports and imports. Mr.

M. Yaseen at BAF supervises it. The bank acts as exporter as well as

importer bank for different parties who are in the business of export

and import.

Import

All goods and services brought into a country that were purchased from

organization located in other countries.

Export

All goods and services sent from one country to another country.

DOCUMENT REQUIRED FOR EXPORTER

1) National tax number

2) Registration with EPB

3) Sales tax registration

DOCUMENTS TO BE ATTACHED FOR EXPORTERS

Invoice

Bill of lading


60/84

Packing list

Total quantity

Net weight / carton

Gross weight / carton

Total net weight / carton

Total gross weight

Bill of exchange (original or draft)

E-form: Initial document on which total export proceeding is

based. In this form, all the conditions are given, which are

necessary for exports.

Letter of credit: It is written agreement between importer and

exporter.

Beneficiary certificate.

DHL certificate (TCS certificate)

Form M

Certificate of Origin (Form A)

FORM-E

Government has provided facility to exporter in taking E-Form from

any bank and he can present it to any bank for negotiation. Export

precede realization certificate.

SBP gives rebate to exporter against export after realization. It is paid

according to commodity wise and bill wise. Claim period: 1 year.


61/84

TRANSPORT DOCUMENT (BILL OF LADING, AIRWAY

BILL)

When insurance is done by importer, C&F (cost and freight)

usually used.

FOB cost (free on board)

CIF (cost insurance and freight) when insurance is done by

exporter, CIF is used.

Tenor (At sight) immediate payment by importer after receiving

product.

Partial shipment: Product is sent partially.

Transshipment: Product is sent via any country.

E-FORM CERTIFICATION

When export is done on C&F basis, so bank issues E-form certification

to exporter and he submits it to the custom officer along with e-form

certification to certify e-form.

FORM OF AUTHORIZED DEALERS CERTIFICATE

State bank permits exporter to issue bill of lading in the favor of e-form

bank. But if requirement of L/C is to issue bill of lading in favor of

company then shipping company issues bill of lading in favor of Exporter Company. Authorized dealer certificate is filled for this

purpose.


62/84


63/84

payment. So bill of exchange is sent to refer bank and other documents

are sent to L/C opening bank.

SWIFT (Standard World Wide Inter Bank Financial Transaction)

It is network among all banks. No other institute can get involved in it.

BILL OF LADING

Certificate from shipping company for loading commodities. If

requirement of L/C is to issue bill of lading in favor of L/C opening

bank, then authorized dealer certificate will be provided by bank infavor of L/C opening bank.

BANK KEEP IN RECORD

Covering schedule

Invoice

Packing listAWB

Certificate of origin

E-form

Normally bank keeps photocopy of all documents in record. Negotiable

documents (original documents).


64/84

IMPORTS

L/C is opened by the importer. There are two types of L/C

Revocable L/C

Irrevocable L/C

NECESSARY REQUIREMENT

If place of issue and port of loading is different on bill of lading, then

along with the stamp of shipment on board, vessel name and port of

shipment is written.

1) Issue date of bill of lading shipment on board.

2) There should not be cutting on bill of lading without

authentication.

3) Bill of lading should show capacity of agent. If the agent of

Importer Company can take bill of lading, then his name

should be mentioned on bill of lading.

4) Original GSP should be presented.

5) If TT reimbursement is not acceptable, it means bill of lading

is necessary.

When documents are received fro export, do enter into

lodgment register.

DOCUMENTS FOR IMPORT

Performa invoice signed by importer

Category passbook copy attested by any bank

L/C opening application filled in by the customer

Import registration with export promotion bureau


65/84


66/84

DOCUMENTARY CREDIT

DC Department

Alfalah Bank has his full-fledged documentary credit department.

As a credit instrument and as a means of making as a payment the

documentary credit is an essential instrument for conducting word trade

today. A documentary credit represents a commitment bank to pay the

seller of goods or services a certain amount provided present stipulated

documents evidencing the shipment of the goods with prescribed

period of time.

For the cases of imports or exports first the parties have to do upon a

sale contract regarding the term and condition of sale. One mode of

payment is by L/C, which is secured, and now a day mostly uses the

business.

Letter of credit is under taking by opening bank (Importers bank the

Exporters bank (Negotiating bank) that it will make payment if

documents are as per terms of LC.

Four Parties Are Involved In Letter Of Credit

Applicant Importer

Beneficiary Exporter

Issuing bank bank of importer

Advising bank bank of importer

According to import policy, no import is valid with out import license,

which is issued by the chief controller of import, and export or we can

say export promotion bureau (EPB). If a person desires to take up


67/84

import trade must get his name, his firm or his limited company,

registered with the EPB. On being granted registration certificate, he

will be eligible to import goods according to import policy. There is no

special condition of eligibility for registration. The only requirement is

that he should be a Pakistani and must be registered with income tax

department.

L/C OPENING PROCEDURE

When the importer obtained import license, then the bank will open

letter of credit. A letter of credit is undertaking by LC opening bank to put an agreed sum of money to sellers bank on behalf of the buyer of

the goods under clearly defined terms and conditions. Pakistani banks

open only irrevocable LC. An essential feature of the irrevocable LC is

that it cannot be modified, altered, amended, or canceled without the

prior consent of all the parties. Party comes to the bank and fills the

form, which is provided on the payment of Rs. 100. This form is filled by the party and is return to the bank, it includes details like.

Name of company

Address

Country of origin

Branch name

QuantityInsurance company

Shipment from

Shipment to


68/84

One thing should also be submitted which is INDENT. If the foreign

party has any agent they will issue the indent with following details.

To masers

Importers, etc

Document Required for LC Opening

When the bank opens LC, it requires following documents.

Valid import license

Performa invoice

Importer should be Pakistani

Letter of under taking form importer

Insurance cover.

An important point, which the bank will consider before opening of

LC, is that sufficient funds be available in the LC openers accounts. At

the time of establishing the LC the opening bank generally retains a

maximum margin to safe guard its own commitment. The margin may

vary from nil to 100% according to the nature of commodities and it

also depends upon the party. At the item of establishing the LC opening

bank charges bank commission, postage and other charges from the LC

opener account. Another main important point is that value of LC

should not increase the value of import license. After all the documents

are the bank verifies being checked and signs. A sanction slip is

attached with each form so that the approval can be gained from the

manager of the bank.

After the approval is made four copies are prepared and the entries are

made on the computer and the printout is taken the margin amount is


69/84

checked from the importer account and if the amount is not found then

LC is not opened and the party is informed about the situation. On the

deposit of the margin then LC is opened LC limit if set by the bank is

also checked.

After the LC is opened following entries are made.

LC opening register

Margin / Liability Account Register.

Payment To Seller

The negotiating bank upon receiving the documents from the seller

checks the documents according to terms and conditions of credit upon

satisfying it self of this the negotiating bank makes payment to the

seller if sight credit. It then forwards the documents to the opening

bank and reimburses it self through the opening banks account with

itself.

Documents Received By The Opening Bank

Importers bank or opening bank receives the following documents form

the exporters bank or negotiating bank.

Bill of exchange

Invoices

Bill of ladingPacking list

Certificate of origin

Insurance


70/84


71/84

CREDIT DEPARTMENT

Credit means belief or trust. The quality of being credible or

trustworthy. Another words we can define credit as trust in ones

integrity in money matters and ones ability to meet payment when

due.

At bank Alfalah Ltd (BAL) Mr. Omer Nadeem is manager corporate

banking of the credit department. The earnings of BAL are chiefly

derived from interest charge and discounts. This department is the

revenue-generating department. Credit department basically has three

segments.

1) Credit marketing department

2) Credit administration department

3) Trade finance services department

Credit and advance department deals with extending loans (credit

facility) to customers. State Bank of Pakistan (SBP) has prescribedregulations which are called PRUDENTIAL REGULATIONS. Every

bank has to follow these regulations. If any bank violates the

regulations it should be liable for penalties under the core spirit of SBP

PR (S).

The Bank Alfalah limited credit is extended on the basis of these rules

and regulations. These regulations tells the term and conditions under which you can extend loans to the borrower and to what extent.

CREDIT FACILITIES

At BAL there are two types of credit facilities


72/84

1) Funded facilities

2) Non funded facilities

FUNDED FACILITIES

These are the facilities in which there is direct involvement of cash

fund. Following are the funded facilities.

1) Current finance CF

2) Term finance TF

3) Finance against foreign bills FAFB

4) Finance against packing and credit FAPC5) Finance against imported merchandise FIM

6) Finance against trust receipt FATR

7) Payment against document PAD

Current Finance CF

The extensively used financing mode at BAL is current finance (CF)current finance is used to finance both individuals and industries.

Individual take current finance for their personal use while in

industries. It is taken for fulfilling the requirement of working capital.

Term Finance TF

Term finance is for specified time period. Term finance is given for

fixed asset financing.

Finance Against Foreign Bills FAFB

In FAFB facility exporter take loan from bank on the behalf of their

foreign export bills. Like exporter sends shipment but at that time he


73/84

needs fund for the operation of the business. He may go to the bank and

surrenders all the documents including L/C, Bill of lading etc. bank

checks all the documents to be in accordance with terms and

conditions. If they find no discrepancy, they give money to exporter but

take some margin on it.

Finance Against Packing And Credit FAPC

FAPC is taken for the preparation of consignment. It has two forms.

1) Pre shipment

2) Post shipment

1) Pre Shipment

Preshipment loans are export related working capital financing.

2) Post Shipment

Post shipment financing is essentially the receivable financing to theexporters till the period he is out of cash after the shipment.

Finance Against Imported Merchandise FIM

This facility is allowed against the commodities imported from other

countries usually through letter of credit. Some time importer does not

have enough amounts for paying the imported merchandise therefore.

He request to the bank to pay all dues to the exporter against the

security of imported merchandise. Bank pays the amount and releases

the goods, when the importer pays off its liability partially / fully.


74/84

Finance Against Trust Receipt FATR

Finance is extended upon the trust receipt signed by borrower.

Importers have to import the product. There are three conditions.

1. Pay money and get thing

2. Get FIM facility

3. And third is that if that client is trust worthy for bank believing

on him based upon his past record. He releases the goods against

the trust receipt. Trust the customer gives receipt to the bank.

The customer in turn commits that I will pay on such and suchdate. Bank pays all taxes and gets merchandise and then gives it

to client. Bank do charges markup against such financing. FATR

is for specific period of time. If client do not pay with in

specified time then bank charges higher per day markup.

Payment Against Document PADPayment against document is made by the banks as payment against

L/C comes due payment is made for imported documents. For example

when exporter sends all the document to importing bank as document

reached, importing bank has to make payment within 24 hrs if the

importer does not pays then bank charges markup per day.

NON FUNDED FACILITIES

The facilities where there is no direct involvement of banks fund.

Following are the non-funded facilities.

1) Letter of credit L/C

2) Letter of Guarantee L/G


75/84

Letter Of Credit

Importer bank issues a document on request stating that it will pay the

exporter when exporter fulfill the terms of letter of credit L/C is off two

types.

1) Sight L/C

2) Usance L/C

Sight L/C

Requires the importer / importing bank to pay as soon as it receives theclean documents from exporter.

Usance L/C

It extends time period (typically 60, 90, 120 days) to importing bank

for payment. After specified time period importer have to pay.

Letter of guarantee L/G. Bank gives guarantee in the behalf of personthat I will pay in case of default.

GUIDE LINE OF CREDIT POLICY

Total outstanding financing facilities by banking company to

single person shall not at any point of time exceed 30% of banks

unimpaired capital.

No banking company shall make loans or advances against the

security of its own shares.

No banking company shall grant unsecured loans / advances on

the guarantee of,


76/84

o Any of its directors.

o Family member of director

o Any private company in which banking company is

interested.

In arriving at exposure per person weight age of 50% shall be

given to

o Documentary credit opened by bank.

o Guarantees/bonds other than repayment guarantees.

In arriving at per party exposure 90% of

o Deposit of party with bank under lien.

o Face value of FIBs lodged by the party as collateral.

o Pak rupee equivalent of face value of special US Dollar

bonds converted at official rate, lodged by the party as

collateral shall be deducted.

Aggregate exposure of bank against all its clean facility shall not

at any point exceed the amount of banks capital and general

reserve.

Advances given to the employees of bank in accordance with

their entitlement.

While granting any accommodation, bank shall ensure the total

accommodation availed by any borrower from banks / financial

institution does not exceed 10 tines of the capital and reserve of

the borrower.

A borrower who is prepared to inject fresh equity irrespective of

the fact that its equity is negative is eligible to obtain finance

from bank to the extent of 10 times fresh injected equity.


77/84

No banking company allow financing facilities whether fund

based / non-funded against the shares of companies which are

not in central depository system.

CREDIT CYCLE

Request

ProcessingInformation & CLP

Decision

OfferPurification of

the

Docum

Disbursement of Loan

Monitoring

Renewal / Revise /Write-off


78/84

STEP I

Credit cycle start with request letter. When customer give a request

letter to bank that he want that much amount of credit from bank.

STEP II

When bank receive the request letter from customer. The officer of

credit marketing department make credit line proposal (CLP) of client.

It is essential that the proposal define clearly the purpose of facility, the

source of repayment, the agreed repayment. Schedule, the value of

security and customer relationship consideration implicit in creditdivision.

The security to be accepted as collateral for the facility and all the

documentation relating to the security of facilities must be in the

approved form all approval procedures and required documentation

must be completed all these things all feed in CLP.

CLP is basically a medium to present proposal for seeking approval of credit line in client. In CLP they feed complete data of the client their.

Credit limit

Legal status of company.

History of relationship / introduction with bank.

Line of business

Background of proprietor / partner / owner.Purpose of facility

Security

Along with it they attach borrower basic fact sheet.

CCA


79/84


80/84

Transferable

Transportation

STEP VI

On completion of legal documents and security arrangement and

receipt of completion certificate from recognized legal counsel, the

bank according to the approved schedule prepared by bank after

obtaining confirmation of other payments have been funds from

sponsors other source via, equity fund from sponsors release of fund by

other co-financiers etc. After the valuation of security the loan is

disbursed to customer.

STEP VII

Responsibility lies to branch manager to monitor the overall profit and

risk aspect of credit portfolio in accordance with criteria setout in

banks credit policy. After the disbursement credit administrationofficer monitor the performance of customer whether he is fulfilling the

requirement or not. He is paying markup or not for which purpose he

has taken the loan whether he is utilizing loan for that purpose or not.

STEP VIII

After specific time period credit officer see what customer wantwhether he want to renew / revise or write off it. If he want to renew it

he said to officer to renew it with same limit.


81/84

SWOT ANALYSIS

STRENGTHS

Bank has a belief in customer service

Backed by strong Abu Dhabi Consortium

Customers give suggestion for the improvement of bank and

these suggestions are listened carefully.

Manager and EVP Mr. Asif Ali Sheikh have good coordination

with staff members.

Environment is friendly.

Products are excellent

Modernized banks (online banking)

Fully computerized, each department has to own PC.

Quematic machine

WEAKNESSESMixed culture

No ATM facility is provided in Multan

OPPORTUNITIES

Information technology

ATM real time one lineMaster card facility

Establishing foreign branches

THREATS

Competition


82/84

Legal reputation

RECOMMENDATIONS

Finally, we are giving some suggestions for Bank Alfalah Limited.

These suggestions are based on our experience with bank.

This is a routine practice that in order to give personalized

services to the customer, bank staff tries to fill all the columns of

AOF with their own handwriting, which is wrong. AOF must be

filled by the customers.

Under no circumstances chequebook should be given to the

customer if the account formalities are incomplete.

There are two officers involved in cash deposit process, which is

time consuming. Cashier should be given certain powers to

receive cash of US$ & DM to provide prompt services.

Similarly, there are two officers involved in cheque payment

process, which is time consuming. Cashier should be given

certain powers to pay cheques up to Rs. 25000/- to provide

prompt services.

Cheques, which are drawn on Bank Alfalah Branch and returned

unpaid in clearing, are not reflected in the statement of account

of the customers. These cheques must be reflected in the

accounts so that credibility of the customers may be assessed.

ATM, credit card, all these facilities should be provided to attract

more customers.

Audit should be held internally, rather there should be an audit

department in the branch to make audit on daily basis. This can


83/84

become so, helpful as a different banks are having this

department of their own.

Observation & Conclusion

I observed the bank Alfalah a financially sound bank. Its profits are

increasingly year-by-year. Its staff is very good and sincere with the