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INTERNSHIP REPORT ON ABL

Chapter 1

INTRODUCTION

1.1 Background of the Study

The study is about the general operations and management of Allied Bank

Limited G.T. Road branch Peshawar, which was conducted through interviews in

the branch.

Every student of B.Com IT (CECOS Frontier College of Business Education)

has to under go an internship program of eight weeks in any organization to get

exposure to the real time business environment. The real purpose of this

internship program is to provide an opportunity to the students to see the practical

applications of their background professional studies.

The repot is a reflection on my experience when I was interne in ABL, G.T.

Road branch, Peshawar. Since its inception in 1942, ABL has maintained a steady

growth over the sixty years span of its operations. After its nationalization in

1974, it was denationalized in 1991 and the employees became the owners of

ABL, through the unique concept of ESOP (Employees Stock Ownership

Scheme).

1.2 Purpose of the Study

Purpose of the study was two pronged.


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1.2.1 General Purpose

The general purpose:

To get acquaintance to the banking operations.

To see the application of our Professional studies especially.

1.2.2 Specific Purpose

Specific purpose of the study includes.

A partial fulfillment as a requirement for the completion of B. Com (IT)

degree.

To objectively observe the operations of Allied Bank of Ltd in general and

the operations of ABL, G.T. Road branch Peshawar in specific.

To make recommendations or implementation plans for the improvement

of the operations of ABL, G.T. Road branch Peshawar in the light of our

professional studies.

1.3 Nature of the Study

The study is critical in nature. It was conducted to investigate critically into the

operations of Allied Bank Ltd especially its operations in and the operations of

ABL, G.T. Road branch Peshawar. The annual reports or the consolidation data

of the Bank has not been focused in specific because it does not reflect on the

operational performance of branches. However, they have been referred to as

when and where required.


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1.4 Scope of the Study

The study covers two areas with its variables, which affects the operations of

the branch directly, or indirectly. These two areas of variables are:

Branch specific variable.

Bank specific variable.

The branch specific variables are the variables under the control of the branch

management and directly affect its operations e.g.

Layout of the branch.

Customers relations.

Technology management.

The bank specific variables are those variables, which are not in control of the

branch management and indirectly affect the operation of the branch e.g.

Operations of other branches Allied Bank in the area.

Operational audit/review of the branches.

Training and development programmes.

Discretionary powers of manager.

1.5 Methodology of Research

The research methodology adopted was as follows:


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1.5.4. Sampling Unit

The sampling unit constitutes of the following.

Manager of Allied Bank branch.

Staff of Allied Bank branch.

Customers.

Personnel from Regional operations department.

1.5.5. Sample Size

The sampling size constituted of

All the customers coming into the Bank.

Five bank managers.

Fifteen staff members.

Two personnel from operation department.

1.5.6 Sampling Procedures

The sampling procedure used was non-probability judgmental and convenience

procedure.

1.5.7. Contact Method

Personal contact method was used as a contact method, which included:

Structured interviews with managers and personnel from operations

department.

Unstructured interviews with staff members.


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1.6 Mission Statement

To provide quality financial services with an edge of technology businesses

particularly small and medium size enterprises through a motivated human

resource endeavoring to achieve customer satisfaction. The bank now plane to

focus on further objectives, set as follow:

1.6.1 Diversity Products and Services.

Anticipating customer needs, the bank is introducing various types of

financing structures tailored to the capital investment requirements of its

corporate clients as well as small and medium size enterprises.

1.6.2 Focus on Consumer Banking.

Making use of its computerized network of branches, the bank plane to

enhance its market share and profitability via focusing on consumer

banking products and services as well as integrating e-banking into its

delivery channels.

1.6.3 Improvement Credit Assessment, Loan Monitoring and

Debts Recovery.

The management intends to improve asset quality by implementing

strategies for identification, measurement and mitigation of risk which

will result in reducing the quantum of non-performing loans


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1.6.4 Increase Employee Productivity through Training and New

Techniques.

The bank seeks to increase employee productivity through a combination

of training and implementation of modern human resources techniques.

Frequent in-house and external training programs are expected to help the

Bank in maintaining and developing efficient work forces.

1.7 Limitations

The Study was subject to the following limitations, the absence of which could

have made this report more accurate, systematic and factual:

Lake of published financial data.

Access to data.

The non cooperative behavior of some managers and staff members.

My weak financial position.

Scheme of the Report

The report has been divided into eight chapters. A brief introduction of these

chapters is given below:

Chapter 1 This chapter contains a brief introduction of the report.

Chapter 2 This chapter is about a brief history of banking in the Indo-Pak

subcontinent and the banking system in Pakistan.


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Chapter 3 A brief organizational profile of ABL is presented in this chapter,

which includes brief information about the evolution of ABL, its

organizational structure and its developmental role in banking

sector and NWFP.

Chapter 4 An overview of the services offered by ABL is given in this

chapter.

Chapter 5 The contents of this chapter consist of the operational,

organizational and marketing analysis of ABL, Bank G.T. Road,

Peshawar.

Chapter 6 This chapter contains material regarding the financial analysis of

the ABL, G.T. Road branch, Peshawar. The data provided by the

regional office has been analysis in this chapter.

Chapter 7 It consists of the important findings of the study and the

recommendations developed in the light of these findings.


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Chapter 2

HISTOR OF BANKING

2.1 Banking

The Banking companies Ordinance, 1962 defines Banking as Banking means

accepting for the purpose of lending or investment, of deposits of money from

public, repayable on demand or otherwise and withdrawal by checks, drafts,

order, or otherwise.

2.2 Banking in Indo-Pakistan Sub-Continent

Ever since, money became the medium of exchange in our society, banks

existed in one from or the other, and though in those days their function was

mainly to lend money to the people and the kings. In the words of R.C. Dutt:

Loans and usury were well understood in those days and Rishis lament their

state of indebtedness with the simplicity of primitive times

The Vedic Epic clearly mentioned about giving and taking of credit and also

contracts of debts at dicing. Later on, Manu in his Sammurti clearly mentioned

these transactions by saying, a sensible man should deposit his money with a

person of good family, of good conduct, well acquainted with the law, veracious,

having many relatives wealthy and honorable. Manu has also prescribed the

rules to govern the policy of loans and rates of interest.

During the fifth century people were accustomed to use hundies as a credit

instrument. The land revenue was collected generally in kind, while he services

were paid mostly in cash. Therefore, bankers assistance in these and other

financial matters of State was very much necessary. The bankers enjoyed very

good reputation, and the people deposited their jewelry and cash holdings with


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them for safe custody. Loans were given to the people against personal and other

securities such as ornaments, goods and immovable properties and the banker and

customer had very cordial relations.

The Muslim rules provided substantial encouragement to the farmers by giving

them interest-free loans and grants in cash. They also allowed them to pay the

land revenue in cash or kind. This agricultural finance resulted in bumper food

production, which had a great surplus after consumption at home. Therefore, it

was being exported against pure gold.

Industrial development was not ignored at all. Small-scale units as well as

factories were working efficiently under the patronage. Loans were also given for

increase in production through the parentage and encouragement of the King and

the State.

These factories thus produced enough for local consumption and left

substantial quantities for exports. Textile, calico-printing and dyeing, pottery,

china-ware, indigo, opium, metal work, paper, leather and sugar etc. were being

exported to foreign countries like China, East Indies and Pacific Islands against

pure gold. Thus the port towns of Surat and Coa (Gujarat). Calicut and Cochin

(Malabar cost); Masupatam and Negapatam (Coromandal cost) and Chitagong

and Sonagung (East Bengal) become the centers of the world trade where foreign

buyers used to come for purchase of Indian commodities.

Muslim historians of the 12th century have also mentioned some bankers

known as Multani and Shroffs. They used to act as agents to the government

to collect revenue. They also charged money to government. Such a prosperous

society did need a well-regulated financial administration and monetary system.

Muhammad Tughlaq was the first king to have introduced token currency in

India. He issued metal counts as well as paper currency from the Royal Mints.


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In later years, Shershah Suri, and then Mughal emperors further streamlined

this system. Akber established mints all over the country to prepare and issue

currency. Royal treasuries were also established all over the country under a well

conceived plan so that they could function as the offices of Central Bank of the

time. They also functioned as the drawing and disbursing offices to the

Government.

Though the Muslim rulers did not establish Bank as such, yet they

revolutionized the entire financial and monetary structure in India and the old

Mahajins were eliminated. In fact, Government introduced reforms were so

affective that these classical-bankers wee pushed into he past. Due to the

prosperity of Indian society of that time, the Royal mints and Treasuries did act as

agencies for transfer of money as well as for custody of valuables.

2.3 Banking in Pakistan

At the time of independence, the areas, which now constitute Pakistan, were

producing only food grains and agricultural raw material for Indo-Pakistan

subcontinent. There were practically industries and whatever raw material was

produced was being exported from Pakistan. However, commercial Banking

facilities were provided fairly well here.

Before partition of sub-continent, the entire banking system was almost in the

hands of non-Muslims. When Hindus capitalists become sure of division of sub-

continent, they transferred their funds to India in safe places. Pakistan was

declared an independent state. The mass scale migration of Non-Muslims from

Pakistan to India caused the reduction in banking deposits. The number of

scheduled bank branches was reduced from 619 to 213 and the numbers of non-


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scheduled bank reduced from 411 to 106. The independent sate of Pakistan had

no central bank of its own at time of independence.

As a new country without resources it was very difficult for Pakistan to run its

own banking system immediately. Therefore, in accordance with the provision

of Indian independence Act of 1947, an Expert Committee was appointment to

study the issue. The Committee recommended that the Reserve bank of India

should continue to function in Pakistan until 30th September 1948, so that

problems of time and demand liability, coinage, currencies, exchange etc. are

settled between India and Pakistan. It was also stipulated that Pakistan would take

over the management of public debt and exchange control from Reserve Bank of

Indian on 1st April, 1948 and the Indian Notes would continue to be legal tender

in Pakistan till 30th September, 1948. Following the announcement of

independence Plan June, 947, the Hindus residing in the territories now

comprising Pakistan started transferring their assets to India. Moreover, the banks

including those having their registered offices in Pakistan transferred to India in

order to bring a collapse of new state. It is worth mentioning here to list the

important events in the history of banking in Pakistan in chronological order.

The first important event was establishment of Habib Bank Limited, on August

25, 1941 at Bombay. This was the first bank in Indian sub-continent, which was

operated by Muslims. Habib bank Limited transferred its Registered Head Office

to Karachi on August 07, 1947. It played a great role in the next forty year of

Pakistans Economic Development.

The second important event in the history of Banking in Pakistan is the

establishment of Australasia Bank Limited, at Lahore on December 03, 1942. Its

name was changed to Allied Bank of Pakistan Limited, on July 01, 1974. After

nationalization of the Banking Industry on January 01, 1974 three other banks

were merged in to it.


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The other important date is July 09, 1947; when the Muslim Commercial Bank

Limited was registered and incorporated at Calcutta. Its registered Head Office

was transferred to Dacca o August 17, 1948. Subsequently its registered Head

Office moved to Karachi on August 23, 1956.

The most important day is July 01, 1948, when State Bank of Pakistan was

established at Karachi as the central Bank of the country. Central bank addressed

itself with the urgent task of creating a national banking system. In order to attain

this goal it provided every help and encouragement to Habib Bank to expand its

network of branches, and also recommended to Government the establishment of

a new bank which could server as an agent of State Bank. As a result, The

National Bank of Pakistan came into being ion November 09, 1949 and by 1952

it became strong enough to take over the agency function from the Imperial Bank

of India. This was the first Commercial Bank in the public sector. At the end of

June 1999, the number of scheduled Banks in Pakistan was 52 with 7,874

branches. Out of these there are 25 Pakistani bank with 7,779 branches and 27

foreign banks with 95 branches.

On January 1st 1947 the government of Pakistan decided to nationalized the

Pakistani scheduled banks and promulgated the bank (Nationalization) Act, 1974,

with the following main objectives:

To enable the government use the capital concentrated in the hands of a

few rich bankers for the raid economic development of the country and

the more urgent social welfare projects.

To distribute equality bank credit to different classes, sectors and regions.

To co-ordinate the banking policy in various areas of feasible joint

activity without eliminating healthy competition among banks.


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The Act further provided for the setting up of the Pakistan Banking Council all

Nationalized commercial Banks, consisting of the following members.

The government of Pakistan from the economic activities and business pattern

in the past two decades has realized that the national economy was dominated by

public sector and production, trade and finance were over regulated. This resulted

not only in chronic budget deficit, leaving not much for physical and social

infrastructure.

The government of Pakistan introduced comprehensive economic reforms

aimed at liberalization and deregulation of trade, commerce, industry, banking

and finance, reducing the role of public sector and increasing social sector

activities. In order to deregulate the financial sector, various governing laws were

amended in 1990.

Banks (Nationalized Second Amendment) Ordinance, 1991 was also

promulgated to pave the way for privatization of banking in Pakistan. Muslim

Commercial Bank, Allied Bank of Pakistan and First Women Bank were

disinvested.

Private sector has been invited and encouraged to established commercial

banks and other financial institutions in Pakistan, since 1990. It is expended that

this new policy and practice of disinvestments and privation of banking and

financial sector would help in bringing a new era of economic development.

2.4 Banking System in Pakistan

The banking system of a country to the working process followed by the

banking institutions. It is identified through the relationship between the apex


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banks (central bank) and the other banks operating in the economy. It embodies

the principles and practices relating to the banking transactions prevalent in the

country.

In Pakistan there is a central banking system controlled by the central bank the

State bank of Pakistan. The central bank (SBP) directs and controls the activities

of other banks operating in the economy. It guides commercial banks through the

monetary measures, which are collectively conducive for the economic

development of the country.

At the time of partition, there were 631 offices of the scheduled banks. West

Pakistan contained 487 and East Pakistan 144 such offices. There were only two

Pakistani banks namely Habib Bank and Australasia Bank with their head offices

in Pakistan.

The Central Bank of the country (SBP) was established in July 1948. It

recommended to the government to establish a new bank, as an agent of the State

Bank as well as spearhead of its credit policy. The government accepted the

suggestion and National Bank of Pakistan came into existence in September

1949. This ban also helped Habib Bank to expand its organization. From here

onwards rapid development took place in the banking system of the country.

Currency notes of the value of Rs. 5, Rs. 10, and 100 were issued by the State

Bank for the first time in October 1948 and by August 1949 all currency notes

issued by the Reserve Bank of India worth Rs. 12,000 million were withdrawn

and replaced by Pakistani currency.

Under the banks Nationalization Act, of 1974 the commercial banks were

nationalized in January 1974. The nationalized banks included Habib Bank,

Allied Bank, Muslim Commercial Bank and National bank besides these

Nationalized Commercial banks (NCBs) and other commercial banks in the

private sector, there are certain foreign bar operating in Pakistan like Citibank,


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standard and chartered Grind lays Bank etc. The foreign banks are under the

administrative control of State Bank being the central Bank of the country.

The Federal Government also setup the Pakistan Banking Council (PPC) on

21st March 1974 under the banks nationalized Act of 1974. It reports directly to

the Ministry of Finance and provides support and advice to the State Bank. Its

responsibilities include.

Evaluate performance of (NCBs) according to criteria laid down by the

PBC and socio-economic objective set by SBP.

Policy recommendations to the Federal Government.

Policy guidelines to the (NCBs).

Appointment of senior staff and training within the (NCBs).

Grand approval to (NCBs) to write off loans exceeding Rs. 25, 000, 00.

Monitor performance of (NCBs) including overseas branch.

Annual Inspections of (NCBs).

Steps were taken to implement a more acceptable form of financial system inaccordance with the injunctions of essential principle of Islam Banking System.

The major permissible modes of National Islamic Banking finances are:


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Chapter 3

ORGANIZATION OF ALLIED BANK Ltd

3.1 Evolution of ABL

Allied Bank is the first Muslim bank established on the territory that became

Pakistan. Established on December 03, 1942, as the Australasia Bank, Lahore

with a paid up capital of Rs. 0.12 million, under the chairmanship of Khawaja

Bashir Bux, the bank had attracted deposits worth Rs. 0.431 in its first Eighteen

months of business and its assets then amounted to Rs. 05.72 million.

The Bank went through several distinct phases of history. It began life as aLahore based Muslim bank in a financial world, which was predominated by

other non-Muslim communities. Quaid-e-Azams Muhammad Ali Jinnah

emphasized on the presence of a Muslim representative Bank in the sub

continent, to minimize the dependence of Indian Muslim communities on other

communities. The founder of Australasia bank, Khawaja Bashir Bux, responded

to the Quaid-e-Azams call and established Australasia Bank as a Muslim

representative Bank.

The experience gained during this period proved to be of great benefits in

enabling the Bank to impart financial knowledge and developed financial

expertise at the time when Pakistan suffer from a sever shortage of these skills.

During the 25 years of united Pakistan, the Bank advanced forward in all areas of

its activities. The 1970s were a difficult period for all Pakistani banks. With theseparation of the eastern part of the country, Allied Bank lost more than 50

branches and deposits worth Rs. 54.44 millions. Nevertheless, the growth

remained steady and by the end of 1973, the assets rose to Rs. 1.25 billions and

the deposits to Rs. 894 billions.


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Total customers 4,605,000

Employees 6,747

Total branches 735

Utility booths 34

Airport booths 1

Total clients in Peshawar region 145,000

Table 3.1

3.3 Operational Division

Allied Bank has been divided into 16 regions, each under the control of a

regional General Manger (RGM). The RGM is not any fixed designation in the

organizational hierarchy. The person appointed for its position can be a SEVP

and EVP.

The details of these regions are given below:

Region Email

Abbottabad [email protected]

Bahawalpur [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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President

Senior Vice President

Vice President


Faisalabad [email protected]

Gujranwala [email protected]

Hyderabad [email protected]

Islamabad [email protected]

Karachi [email protected]

Lahore [email protected]

Mardan [email protected]

Mirpur (AJK) [email protected]

Multan [email protected]

Peshawar [email protected]

Quetta [email protected]

Sargodha [email protected]

Sialkot [email protected]

Sukkar [email protected]

Table-3.2

3.4 Management Hierarchy

The management hierarchy represents the different positions and designationsin the hierarchy of the ABL. However, this is not the reporting hierarchy but

merely represents the positions and grades on the basis of seniority and grades.
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Executive Vice President

Senior Executive Vice

President[rosodmemtPresidentRegional General Manager

Managerxecutive Vice

President

Branch Manager


Figure 3.1 Management hierarchy

3.5 Functional Hierarchy

The functional hierarchy represents the reporting order in the hierarchy of

ABL. The hierarchy has president and directors at top management level and

officers Grade I, II and Grade three at the lower level management of ABL. The

middle level management consists of regional general Manager and Regional

Controller of Operations. These positions are not fixed. Any person in the

hierarchy above the branch manager can be appointed as RGM and controller

operations.

President and CEO


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Figure 3.2 Functional hierarch

Chapter 4

SERVICES OF ALLIED BANK Ltd

4.1 All-Time Banking

Allied Bank is now introducing the Allied Cash also referred to as ATM card.

The customer will now have the convenience of withdrawing cash from any of

ABLs ATMs (Auto Taller Machine) conveniently located in major cities at any

time of the day or night even on closed days/holidays. Other services include

customer being able to inquire about the balance of his/her account or printing an

abbreviated (mini) statement showing the most recent eight transactions up to the

previous working day.

Board of Director

Head of Departments

Regional General Manager Controllers of Operation

Branch Manager

Office G-I, II and other lower Staff


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In order to obtain Allied Cash+ Card, the customers simply has to fill out

prescribed Application form available at selected Allied Bank Branches in

Karachi and Lahore. The dully filled form should be handed over the Manager of

the Branch where the customer is maintaining his account. Non-account holders

would first have to open an account with Allied Bank to have access to this

facility. The Customer can feel absolutely safe his Allied Cash + Card because it

can only be used with the Personal identification Number (PIN), which is given to

him by the bank. Graphical representations have been employed, where

appropriate, for ease of understanding.

Occasionally, a particular ATM may be out of service. This would be indicated

on the screen displaying the status of the machine. Various factors could cause

this condition, which includes telecommunication problems, hardware

breakdowns, power shutdowns, insufficient cash in the machine, etc. if the

customer encounter an out of service.

4.2 Allied Umrah Aasan

This unique scheme facilities those persons, who cannot afford to incur the

lump sum expenses for Umrah. It allows the intending pilgrims (Aazmeen) to

make payment of Umrah charges in monthly installments. Its salient features are:

It is free of interest and markup.

Using this scheme family, relatives and household servants can be sent for

Umrah.

All applicants will be definitely sent for Umrah.

Around 2500 Aazmeen are to be sent for Umrah every month.

Lucky winners of the draw are duly informed by their respective branches.


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Total package for Aazmeen from Karachi is being Rs. 30,000. Aazmeen

from Lahore and Islamabad will have to pay an extra Rs. 3,000/- for

Airline fare.

Umrah packages are of 10 days duration. The charges include Airline

return ticket.

Visa fee, family accommodation and traveling within Saudi Arabia

(Jeddah to Makka, Makka to Madina and Median to Jeddah).

Application for whole Family/Group can be filed through a single

Application Form. All applicants of a family/group are sent for Umrah

even if only one member of that family/group is declared successful in the

draw.

Due to any reason if Umrah Applicant needs to withdraw his/her

application, he/she will given a refund of all money deposited through

installments till that time.

At the time of submitting the application Aazmeen has to deposit Rs.

2,000 per person as first installment. Rest of the money is to e deposited

through monthly installments of Rs. 2,000/- per son on every 5th day of the

month.

If an Applicant wins in the draw he/she is required to pay the balance

amount through monthly installments on returning from Umrah.

Aazmeen have to submit a copy of their NI Cards and Passports with the

application.

Applicants have to deposit the monthly installment using deposit slips still

5th of every month. Defaulters will not be included in the draw.

4.3 Master Cards

The customer can now become the holder of a true Credit Card here in

Pakistan. Allied Bank under license from Master Card International, U.S.A.


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issues its Master Card to anyone meeting the eligibility criteria. With the Allied

Bank Master Card the customer is assured of a service meeting the highest

international standards maintained by Master Card.

The Allied Bank Master Card helps the customer pay without the

complications of cash or checks. It doesnt cost the customer anything if he pays

in full within the due date, but if he decides to spread the payments over several

months a service charge @ 2.50% per month is charged. Allied Bank Master

Card is safer than cash and simpler than checks.

The customer has been an account holder with the Allied Bank to apply for the

Allied Bank Master Card which is available to the customer for an initial fee of

Rs. 2,000/- (Rs. 500/- membership fee + Rs. 1,500/- annual fee). Once the

customer obtains his card, he simply presents it at Shops, Supermarkets,

Hotels, Pharmacies, Nursing Homes, restaurants, Petrol Pumps and hundreds of

other establishments which display the familiar Master Card sign throughout

Pakistan and abroad.

Once purchases are made, the customer signs a voucher and thats it he is need

required to take extra troubles. Every month the customer receives a statement

showing details of transactions, outstanding and the minimum amount due. The

statements also give the last date for payment so the customer can avoid paying

service charges.

In order to avoid disruption in use of the card, it is essential that a least

minimum payable amount of the bill is paid regularly. In case the required

payment is not received the operation of the Master Card is automatically,

suspended by the system. In such case, the card is activated after receipt of

overdue payment only.


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4.4 Allied Tahafuz Deposit Scheme

Brings the customer unparalleled life insurance covers along with attractive

monthly profit. Minimum Deposit amount Rs. 50,000/- or multiples thereof.

Insurance cover up to - Rs. 5,000,000/. Competitive rate profit. The features of

this scheme are:

Prospective client who will maintain a return free deposit for at least 3

months shall eligible to avail interest free/mark-up free finance.

Payment of profit on monthly basis, automatic renewal on face value.

Life insurance up to 5 times of the customers deposit amount with no

extra cost.

Premium shall be paid by the bank.

Full payment of claim in case of Death Permanent total Disability.

Eligibility Age 18 to 64 years.

No medical examination for:

- Deposit up to Rs. 500,000/- and age up to 60.

Allied Tahaffuz Deposit Certificate acceptable as collateral.

4.5 Allied Karsaz Scheme(No Interest/Markup)

Allied Bank moves a step forwards by introducing interest free banking

through Allied Karsaz Scheme. The aim of this scheme is to provide an

opportunity to the depositors to take advantage of a real Riba Free economic

environment and avail

Interest Free and Mark-up free Finance at the time of need to meet their business,

trade and agricultural obligation.


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Prospective client will maintain a return free deposit for at least 3 months

shall be eligible to avail interest free/mark-up free finance.

Deposit amount Rs. 100,000/- and multiples thereof.

Minimum deposit period, 3 months with automatic rollover facility.

Premature encashment allowed, without any penalty/charge.

Eligible depositors may avail finance individually or for the companies

wherein they have financial interest/stake.

Minimum deposit period for eligibility of finance, 3 months.

Maximum period of finance, 6 months.

Maximum period to avail finance, 12 months from the maturity of deposit.

Every month (30 days) completed by the deposit shall be taken into

account for calculation of entitlement of finance.

Finance will be allowed to the eligible clients, only on providing adequate

securities acceptable to the bank and fulfillment of other requirements.

Finance proposal processing fee Rs. 100/- (non-refundable) plus

documentation cost on actual basis.

In case of default/delay in repayment @ 0.055% per day (20.075% p.a._

to be placed in charity A/C.

Formula for calculation of entitlement of finance.

- Same amount of finance for half the period of deposit or

- Same period of finance for half the amount of deposit.

4.6 Other Products

PLS Savings Account

PLS Saving Account can be opened with a minimum of Rs. 100/-. There are

no limits on the maximum balance. Allied Bank pays the most competitive rate of

profit on PLS savings Account. Funds can be deposited into this account through


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Lockers

Allied Bank Lockers are available in three different sizes Small, Medium and

Large on a yearly fee. Locker holders need not have an account in the Bank.

Import Export Business/Trade Finance

ABL Provides highly efficient trade finance services for import/export business

for our clients/customers through large number of authorized branches where

trained and motivated staff is available to handle the business on behalf of

customer.

Allied Bank Rupee Travelers Checks

Carrying cash to strange alien location can prove to be risky as a single

incident can render one without monetary backup of any sort. Hence travelers

checks are introduced by banks in order to protect against any contingency.

Seasonal Finance

Running Finance is a short-term loan allowed by the bank for a period of

one year. The running finance account can be operated and daily sale proceeds

can be deposited into the account. The mar-up is recovered on the products of

daily outstanding balance. The running finance is suitable for meeting day to day

financial needs of the business.

Cash Finance is allowed against pledge of goods. The delivery of goods

is made against payment.


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Demand Finance is disbursed in lump sum or in accordance with the

agreed disbursements schedule and it is repayable as per the agreed installments,

which could be monthly, quarterly, biannual or annual.

4.7 Role of ABL in Banking Sector

ABL is one of he most dynamic and progressive bank in the banking industry

of Pakistan. This is due to its impressive growth and development, which it

achieved during sixty years of its existence. It did not take long for Allied to grow

into one of the leading bank in the country overtaking the several other banks

which were its competitors were established earlier.

Contribution Before/At the Time of Independence

ABL was established as a response to the cal of Muhammad Ali Jinnah

for having a Muslim representative bank in him Sub Continent. At the time of

independence when Pakistan was in intense need of banking services and

expertise, ABL rose to the occasion and rendered all its expertise at best for the

development of the newly born state.

Commitment to Serve the Customers

ABL used novel methods of customers service instead of conventional ways of

the day, which was market oriented and appealed to if customers. ABLs

dynamic, radical and personalized style of banking differed significantly for the

conventional business patterns of the period. In fact every feature and aspect


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ABLs behavior reflected highlighted those differences most significantly, the

commitment to serve the customers.

Better Working Environment

ABL has provided its employees a better working environment and salary

structure and facilities. Incentives and awards were given to promote efficiency

and better service to customers. A competitive environment was instrumental in

introducing a thorough going professionalism, which in the ultimate analysis

transformed the entire outlook of the industry.

Modern Banking Policy

The expansion and growth of he banking sector in Pakistan has been

remarkable. Until 1942, the growth of banking comprised the phases of laying the

foundation of the banking structure. The establishment of ABL has started a new

era in the banking system. This was the phase competition with the already

established giants. Banking underwent a complete metamorphosis; clients were

naturally attracted to the bank, which provided better and quicker banking

services. When Allied Bank challenged the major banks of the time they began

evaluate their policies and were surprised to find that they had a lot to change

before long. They began to change and adopt a more modern and relevant

strategy.

Deposit Mobilization

The banking sector as a whole and ABL in particular has played an important

role in helping to mobilized savings. The continuously rising importance of


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commendable, as it has not only to compete with the domestic banks but with the

large international financial agencies as well.

Interest Free Banking

The Islamization of economic system in Pakistan began from July 1979. In Jan

1981 the PLS banking was launched. Interest free modes of financing had been

introduced, and in the firs t half of 1985 a number of measures over taken for

complete charge over of the whole system of domestic banking to non interest

basis. And finally the process of transaction from interest base to non interest

banking was completed. Since the banking companies are not allowed to accept

deposits (excluding foreign currency deposits) except on the basis of Profit &

Loss sharing.

A separate department at the head office was set up which was later on

upgraded into a full-fledged Islamic banking division apart from supervising the

Islamic banking operations. The division has conducted research and has been

able to add to the literature on Islamic banking, both of theoretical and practicalsignificance.

Computerization

While mechanization in ABL, began as early as in 1950s the bank also took

the lead in introducing computers in banking operation in Pakistan.

Utility Booths


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The bank has 34 utility booths throughout of country to accept payments, both

in the morning and in the evening against utility bills, such as gas, electricity and

telephone bills. The bank also issues television licenses.

Prize for Success in Banking Diploma Examination

The bank instituted prizes for those securing highest position in bank diploma

examinations. In 1993, three bonuses were awarded in a single year to recognize

and reward to services and achievements of its employees.

Obligation to Serve Society

ABL also plays it part in the development of society. It has established public

libraries in many cities and towns.

4.8 Development Role of ABL in NWFP

The ABL functions to pursue the profit motive principle, satisfying the social

and economic needs of the country. ABL is playing it part in the socio-economic

development of NFWP with the following objectives.

To participate in the economic development of the region.

Encouragement of new entrepreneurs of small and moderate teams.


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To provide financial and technical, assistance for the modernization of

existing units in small and medium sector and for setting up of new

units.

To provide new development opportunities to improve the pattern of

income distribution.

Encouragement of industry based on locally fabricated machinery and

local raw material.

To act as a bridge between local and foreign entrepreneurs.

CHAPTER 5

ACCOUNTS AND FINANCIAL STATEMENT

Financial statements of an organization are the key important documents forthe management to take future decision. As many of the concerns are at the look

of the financial statements to know about their investments. The shareholders and

the potential investors also focus their attention to the return on investments

already made by the investors and the dividend they paid to the shareholders. The

statements have importance for the money lending agencies. The organization


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that wants to borrow money from financial institutions must show their financial

statements in such a format that is prepared under Generally Accepted

Accounting Principles and Practices and that could cover all the legal aspects of

each accounting concepts. It must follow the International Accounting Standards.

The different types of statement that are prepared are given below.

1. The balance sheet.

2. The income statement (profit & loss account).

3. Cash flow Statement.

A balance sheet is a financial photograph of a company at a give period of

time. Normally the balance sheet is prepaid on the last date of the financial year.

It is divided into two parts Assets, Liabilities and owner equity. The assets

column show goods and property by the business owned and the liability column

shows the debts of the company creditor, claim against assets, and stock holder

equity.

Income statement same times call profit and loss a/c. It summarizes a firms

operating result for a past period normally one year. It matchesamount received

from sale of and other interest income in (financial institution) and other items

with all cost incurred in operating the company over period. The result is a net

profit or net income for the period. So it is also an important statement for an

earning concern.

It is a financial statement design to provide information about the cash receipt

and cash payments an operating financing and investing activities of the concern.

The statement is useful in evaluating solvency of the business.


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Allied Bank Ltd has also prepared and presented its balance sheet and profit

and loss account for the year ended December 31, 2004. The detail and related

graphs are as under.

BALANCE SHEET

AS AT DECEMBER 31, 2004

(Rs. 000)2004 2003

ASSETS

Cash and balance with treasury banks

Balance with other banks

Lending to financial institutionsInvestments

9,443,478

1,761,896

15,361,237

40,734,61640,659,158

5,758,689

2,596,1331,200,741

10,842,435

1,477,282

16,175,000

57,262,83458,799,702

5,946,710

5,548,3751,155,817


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2,869,757 3,226,500NON-MARK-UP / INTEREST INCOME

Fee, commission and brokerage income

Dividend income

Income from dealing in foreign currencies

Income from sale and purchase of securitiesIncome from trading in government securities

Unrealized / gain on revaluation of investments classified

as held for trading

Other income

Total non-mark-up / interest expenses 1,739,649 2,143,280

4,609,406 5,369,780NON-MARK-UP /INTEREST INCOME

Administrative expenses

Provision against other assets

(Reversal of provision) provision against off balance sheetobligations

Other chargesTotal non-mark-up / interest expenses 4,152,446 4,522,910

456,960 846,870

Reversal arising on account of depreciation charged on land in prior years - 107,189PROFIT BEFORE TAXATION 456,960 954,059

Taxation current (For the year)

(For prior year)

- deferred

288,690 568,479PROFIT AFTER TAXATION 168,270 385,580

Accumulated losses brought forward

Transfer from surplus revaluation of fixed assets of tax(6,475,150) (6,798,603)

APPROPRIATION

Transfer to:

- statutory reserve

- capital reserve

- revenue reserve

- proposed cash dividend

- other 16,827 77,116

Accumulated losses carried forward (6,323,707) (6,490,139)

Earning per share basic and diluted (in Rs) 0.27 3.63

454,784

15,352

162,151

124,273

1,074,486

-

312,534

1,255,153

14,705

165,345

14,008

35,688

68

154,682

4,088,685

150,179

(93,427)

7 009

4,247,103

1,736

265,513

8 558

158,000

28,000

102,690

97,012

209,089

262,378

(6,490,139)

14,989

(6,811,367)

12,764

16,827

-

-

-

-

77,116

-

-

-

-


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CASH FLOW STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2004

(Rs. 000)

2004 2003

CASH FLOW FROM OPERATING ACTIVITIESProfit before taxation 456,960 954,059

Less: Dividend income 14,705 15,352

442,255 938,707Adjustments for non-cash charge

Depreciation / amortization

Reversal arising on account of depreciation charged on land in

prior years

200,602

-

1,519,682(26,832)

(68)

(93,427)

150,179

(12,685)

44,294

-

243,443

(107,189)

615,996(16,931)

-

265,513

1,736

(11,450)

-

550


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Provision against non-performing loans and advances

Reversal of provision for diminution in the value of investments

Unrealized gain on revaluation of held for trading securities

(Reversal of provision) / provision against off balance sheet items

Provision against other assets

Net profit on sale of property and equipmentBad debts written off directlyFinance charged on leased assets

1,781,745 991,668

2,224,000 1,930,375

(Increase) / decrease in operating assets

Lending to financial institutions

Held for trading securities

Advances net

Other assets (excluding advance taxation)

(20,137,763) 1,749,353

Increase / (decrease) in operating liabilities

Bills payable

Borrowing from financial institutions

Deposits

Other liabilities

22,892,024 5,261,560

4,978,261 (8,941,288)

Income tax paid (715,979) (688,467)

Payment against provision for off balance sheet obligation (167,553) -Net cash flow from operating activities 4,094,729 8,252,821

CASH FLOW FROM INVESTING ACTIVITIESNet investments in available-for-sale scaleNet investments in held-to-maturity securities

Dividend received

Investment in operating fixed assets

Proceeds from sale of property and equipment

Net cash flow on investing activities (16,778,756) (8,511,867)

CASH FLOW FROM FINANCING ACTIVITIES

Payment of lease obligations

Issue of share capital

Net cash flow on investing activities 14,200,000 (8,511,867)Increase / (decrease) in cash and cash equipment 1,515,973 (270,920)Cash and cash equivalents at beginning of the year 10,481,649 10,802,775

Effect of exchanges rate changes on cash and cash equivalents 108,531 58,325Cash and cash equivalents at end of the year 12,106,153 10,590,180

(4,522,624)

(16,499)

4,041,1162,247,360

(813,763)

12,147

(19,536,967)200,820

761,633

9,631,669

12,173,670

325,052

372,673

(4,822,684)

10,334,737

(623,166)

35,050,801(51,694,132)

18,510,

(190,539)

36 604

(9,200,822)717,334

69,692

(119,551)

21 480

-14,200,000

(11,874)-


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CHAPTER 6

FINANCIAL ANALYSIS

Financial analysis is based on the actual data of the ABL, G.T. Road branch

provided by the Operations Control Department, Peshawar Region. The analysis

and all its tools are different from that generally followed in the conventional

analysis procedures. The reasons for this little different procedure are:


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The Balance Sheet of the branch is not available because there is no

requirement for Bank branches to prepare a Balance Sheet.

The high level of secrecy maintained by banks regarding the disclosure of

their financial data, which denied me access to the organized data required

for the analysis.

There is no Cash flow Statement prepared and maintained by the bank

branches.

Tax is not charged to the Branch but is paid by the central office of the

Bank upon the consolidated income of all branches.

Tax is not charged to the Branch but it paid by the central office of the

Bank upon the consolidated income of all branches.

The conventional tools of analysis are mostly devised for non-banking

companies which are not reliable tools to be employed for the analysis of

a banking company generally and the bank branch particularly.

Look of financial data published by Allied Bank of Pakistan.

However the bank Authorities granted me access to the necessary datarequired to analyze the financial performance of the branch and hence to assess

Operational success of the Bank G.T. Road branch. The data so obtained is

analyzed as follows:

6.1 Deposits and Other Accounts

Deposits are the lifeblood of banking company. Deposits are the fuel which

keeps the organization. The number of Accounts depicts the customers

confidence over the Bank, but deposits are the quantitative measure of this trust.

This direct relationship determines the success or failure of a bank.

Deposits and Other Accounts (Rs. In million)


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Year Deposits and

other Accounts

Increase/(decrease) Percentage Change

2000 96,803 - -

2001 94,492 (2,311) 2%

2002 103,883 9,391 10%

2003 114,218 10,335 10%

2004 126,392 12,174 11%

Table 6.1

2000 2001 2002 2003 2004

96803 94492

-2311

103883

9391

114218

10335

126392

12174

-20000

0

20000

40000

60000

80000

100000

120000

140000

2000 2001 2002 2003 2004

Graph 6.1

Deposits constitute the majority portion of the liabilities of a bank, which are

used the used for funding its lending and investing activities. The deposits of ABL

have shown a mixed trend over the five years period (2000-2004).

The deposits have decreased by 2% in the year 2001 as compared to the year

2000. But the rates of growth in deposits have increased to 10% in the year 2002

as compared to year 2001. The rates of increase in deposits are 10% and 11% in

the years 2003 and 2004 respectively.

The analysis shows that the Bank is lacking consistency in its deposits

generation. The causes of this inconsistency are:

Improper assignment of targets to employees.

Transfers of employees.


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Lack of diversified services range, which can help ABL attract and retain

more customers.

6.2 Advances (Rs. In million)

Year Advances (Million) Increase/(decrease) Percentage Change

2000 57,132 - -

2001 54,403 (2,729) 5%

2002 45,316 (9,087) 17%

2003 40,659 (4,657) 10%

2004 58,800 18,141 45%

Table 6.2

For banks loans of advances are the major portion of its assets. These are the

major assets responsible for the earning of a bank.


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The advances of ABL are on the decline trend for the last year. The bank

advances have decreased by Rs. 2,729millions (5%) and 9,027 millions (17%) in

2001 and 2002 with respect to their previous years. Similarly in the year 2003 the

advances are decreased by (10%). In the year 2004 the advances are increased by

Rs. 18,141 million (45%).

2000 2001 2002 2003 2004

5713254403

-2729

45316

-9087

40659

-4757

58800

18141

-10000

0

10000

20000

30000

40000

50000

60000

2000 2001 2002 2003 2004

Graph 6.2

6.3 Total Assets (Rs. In million)

Year Total Assets Increase/(Decrease) Percentage change

2000 105706 - -

2001 103,568 (2,138) 2.%

2002 112,465 8,897 9%

2003 117,516 5,051 5%

2004 154,208 36,692 31%

Table 6.3

Assets are the economic resources, which are expected to benefit the future or

present operations of the business. For ABL the cash, loans and advances form

the major portion of the assets, effectively supported by fixed assets. The total

assets of the bank have decreased by 2,138 million (2%) in the year 2001 as

compared 2000. in the year 2002 8,897 million (9%) increase was shown by


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ABL. And 5% and 31% increase in advances are shown by ABL for the year

2003 and 2004 respectively.

2000 2001 2002 2003 2004

105706 103568

-2138

112465

8897

117516

5051

154208

36692

-20000

0

20000

40000

60000

80000

100000

120000140000

160000

2000 2001 2002 2003 2004

Graph 6.3

6.4 Profit before Tax (Rs. In million)

Year Profit before tax Increase/(Decrease) Percentage change

2000 4,492 - -

2001 839 (3,645) 81%

2002 1,587 748 89%

2003 954 (633) 40%

2004 457 (497) 52%

Table 6.4


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2000 2001 2002 2003 2004

4492 839

-3645

1587748

954

-633

457

-497

-5000

0

5000

2000 2001 2002 2003 2004

Graph 6.4

The profit before tax of the Bank is calculated by deducting all the expenses

from the revenue generated by the bank, it is also the Net Income of the bank

because all the expenses are paid out and only tax is include in this profit.

In the year 2001 the profit before tax is decreasing by 3,645 (81%) as compared

2000. But in the next year the profit before tax was increased at 748 (89%).

However in the year 2003, 2004 the profit is increase at a decreasing rate (40%)

and (52%).

6.5 Profit after Tax (Rs. In million)

Year Profit after tax Increase/(Decrease) Percentage change

2000 4,842 - -

2001 1,122 (3,720) 77%

2002 1,069 (53) 5%

2003 386 (683) 64%2004 168 (218) 56%

Table 6.5


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2000 2001 2002 2003 2004

4842

-1122

-3720

1069

-53

386

-683

168

-218

-4000

-20000

2000

4000

6000

2000 2001 2002 2003 2004

Graph 6.5The profit after tax of the Bank is calculated by deducting all the expenses and

all taxes from the revenue generated by the bank, it is also the Net Income of the

bank because all the expenses are paid out and alls the taxes are paid.

In the year 2001 the profit before tax is decreasing by 3,720 (77%) as compared

2000. But in the next year the profit before tax was increased at 53 (5%). However

in the year 2003, 2004 the profit is increase at a decreasing rate (64%) and (56%).

6.6 Earnings per Share

Year Earning per share Increase/(Decrease) Percentage change

2000 45.54 - -

2001 10.55 (35) 77%

2002 10.06 (0.49) 5%

2003 3.63 (6) 64%

2004 0.74 (3) 80%

Table 6.6


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2000 2001 2002 2003 2004

45.54

-10.55

-35

10.06

-0.49

6.63

-6

0.74

-3

-40

-20

0

20

40

60

2000 2001 2002 2003 2004

Graph 6.6

6.7 No. of Employees

Year No. of Employee Increase/(Decrease) Percentage change

2000 7,217 - -

2001 7,082 (35) 0.48%

2002 6,947 (135) 1.90%

2003 6,959 12 0.17%

2004 6,747 (212) 3.04%

Table6.7


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2000 2001 2002 2003 2004

7217 7082

-35

6947

-135

6959

12

0.17%

6747

-212-2000

0

2000

4000

6000

8000

2000 2001 2002 2003 2004

Graph 6.7

6.8 No. of Branches

Year No. of Branches Increase/(Decrease) Percentage change

2000 929 - -

2001 856 (73) 7.85%

2002 814 (42) 4.90%

2003 752 (62) 7.61%

2004 735 (17) 2.26%

Table 6.8


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2000 2001 2002 2003 2004

929 856

-73

814

-42

752

-62

735

-17

-500

0

500

1000

2000 2001 2002 2003 2004

Graph 6.8

The branches of ABL are on the decline trend for the last five year. In 2000 the

total numbers of branches are 929. In 2001 the numbers of branches are decrease

by 73 (8%). Respectively in 2002 the number of branches decreased by 42(5%),

in 2003 the number of branches decreased by 62 (8%), and in 2004 the branches

of ABL decreased by (2%)

RATIO ANALIYSIS

NET WORKING CAPITAL RATIO. 2003

= Current assets Current liabilities

= 113719074 121490424

= 77713150

2004

= Current assets Current liabilities

= 150502963 143887391

= 6615572


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There two concepts of working capital. The first define the working capital as

the investment in current assets. Current assets mean which can be converted into

cash within an according period and include cash, short-term securities, debtors,

bill receivable, stock etc. According to the other concept working capital is the

excess of current assets over current liabilities.

The net working capital in the year 2003 is (77713150) while in 2004 net

working capital is increased to 6615572.

2003 2004

77713150

6615572

0

20000000

40000000

60000000

80000000

Net Working Cpital Ratio2003 2004

CURRENT RATIO.

2003 Current assets

Current ratio=

Current liabilities

113719074

= = 0.94121490424

2004

150502963

Current ratio= = 1.05143887391


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Current assets are those assets which can quickly convertible to cash are very

near to cash such as account receivable, inventory, investment, and advances etc.

When the current assets are divided by current liability of the same year we find

the current ratio. In the year 2003 the current ratio shows a negative figure of

0.94. But in the year 2004 the current ratio in positive 1.05 it is due to increase in

current assets.

2003 2004

0.94

1.05

0.85

0.9

0.95

1

1.05

Current Ratio 2003 2004

QUICK RATIO.

2003 Quick assets

Quick ratio =Current liabilities

113719074

= = 0.94121490424

2004

Quick assets

Quick ratio =Current liabilities

150502963

= = 1.05


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143887391

Quick assets are those assets in which the liquidity is more then the current

assets. When we deduct the amount of inventory and prepaid from the current

assets we fined quick assets. And the quick assets are divided by current liability

we fined quick ratio or acid test ratio. But there is no inventory and prepaid there

fore the current assets and quick are the same. In the year 2003 the quick ratio is

negative (0.94) but in the year 2004 the ratio is positive (1.05). It is due to

increase in assets.

2003 2004

0.94

1.05

0.85

0.9

0.95

1

1.05

Quick Ratio 2 00 3 2 00 4

NET PROFIT MARGIN BEFORE TAX.

2003

Net profit before tax

Net profit margin before tax = * 100Total markup & non markup interest income

954059

= *100 = 18%5369780

2004

Net profit before tax

Net profit margin before tax = * 100Total markup & non markup interest income

456960

= * 100 = 9.914%


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4609406

The net profit before tax in the year 2003 was 18% but in 2004 the ratio in

decreased to 10% it is due to decreased in profit because some assets are acquired

by ABL such as computer equipment and ATM machine etc.

2003 2004

18%

9.94%

0%

5%

10%

15%

20%

Net Profit Margin Before Tax Ratio 2003 2004

NET PROFIT MARGIN AFTER TAX.

2003

Net profit after tax

Net profit margin after tax = * 100

Total markup & non markup interest income385580

= *100 = 8%5369780

2004

Net profit after tax

Net profit margin after tax = * 100

Total markup & non markup interest income168270


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= * 100 = 3.65%

4609406

The net profit after tax in the year 2003 was 8% but in 2004 the ratio in

decreased to 3.65% it is due to decreased in profit because some assets are

acquired by ABL such as computer equipment and ATM machine etc.

2003 2004

8%

3.65%

0%

2%

4%

6%

8%

Net Profit Margin After Tax Ratio 2003 2004

TOTAL ASSETS TURN OVER RATIO.

2003Total assets

=

Total markup & non-markup interest income117515948

= = 21.88 Time5369780

2004

Total assets=

Total markup & non-markup interest income


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154208155

= = 33.45 Time4609406

The turn over of ratio over interest income is 22 time per year in the year

2003. While in the year 2004 the turn over of assets over interest income is 34

time per year.

2003 2004

21.88

33.45

0

510

15

20

25

30

35

Total Asset Turn Over Ratio 2003 2004

CHAPTER 7

SWOT ANALYSIS

The SWOT analysis is a comprehensive and critical overview of the

operations, procedures, rules and regulations, services and other related activities,

the analysis include the analysis of ABL Bank G.T. Road branches in the light of

the entire branch and Bank specific variables which directly or indirectly affect

the operations of the branch. The tool selected for the analysis of organization is

SWOT analysis.

SWOT analysis


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SWOT analysis is an acronym that stands for Strengths, Weaknesses,

Opportunity and Threats. This is a careful evaluation of an organizations

strengths to avail an opportunity by overcoming its weaknesses and phasing out

all he threats to its survival in order to grow and survive.

5.1 Strengths

Employees of the Bank are also owners of the Bank, being employees and

owners; the interest of the Bank is also the interest of the employees.

Due to the interrelatedness of the Bank and that of the employees, it is much

easier to motivate the employees and lift their spirits.

The branch is situated in the commercial hub of Peshawar. This location

provides a competitive edge to the Branch.

The Branch has the most experienced and the least experienced staff, which

is a good combination of experienced heads and exuberance of youth.

The branch is the main branch in the areas, which is another plus point for

the Branch.

It holds the Hundi Accounts, where the payments are made through checks.

This process provides an opportunity to the Branch to have more of the

Hundi customers as the Bank customers.

5.2 Weaknesses

The Branch has a good staff combination on the basis of experience, but

their training capabilities are not up to the requirements of the fast changing

banking environment.

The customers Long tern contacts are not maintained with customers.

As the banks employees are also the owners, it is very difficult to remove

then or punish their negative behavior.


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The technical training of the staff is negligible e.g. in case absence in case

of the absence of computer there is no alternate trained personal who can

record the daily transactions.

The organization is very much mechanistic and provides no flexibility to

encourage creativity.

The lower staff is non cooperative as compared the lower staff of other

branches.

The control of manager is not effective.

The discretionary powers of manger are very low to offer more incentives

and value added services to its customers.

There is a lack of commitment and professionalism on part of the

employees. The staff is always in a hurry to leave the bank as soon as

possible. They were also observed to starting their operations comparatively

late.

The organizational culture is not cooperative and friendly.

Nepotism was observed on part of the manger as well as the top

management towards some staff members.

The branch has no industrial accounts.

The level of technology management in the branch is very low. The

technology available is not maintained well mainly because of the lack of

technically trained staff. For instance the scanner, in spite of its availability

has not been used for scanning the specimen signature cares.

In spite of the presence of technology many jobs are done manually such as

the letters, drafts for fax messages and other calculations, which could be

easily, done in MS Word and Ms Excel.

The branch lacks some physical facilities such as washrooms.

The layout of the branch is such that it is hindering the flow of work on one

hand and the documents are laying exposed which can be easily taken away

by any person entering the branch.


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The job distribution is not up to the mark. The immediate result of this

immediate result of which is:

The filing system is not up-to-date. Much time is wasted while

searching for even a week old document.

The staff spent ore time in collections than required.

Delays were observed because the prescribed procedures are not followed.

Though ABL, G.T. Road branch in the area it lack specialized counters or

facilities such as:

Investment advisory counters;

Leasing or leasing arrangements;

Credit services.

The four branches of Allied bank in Peshawar are closely located where

most of the services offered are not at all differentiated.

No efforts are made to recover the outstanding debts.

There is no facility for receiving and satisfying complaints and inviting

suggestions.

Foreign currency accounts are not entertained. The main reason for this

negative response s that the staff is not trained in dealing foreign currency

accounts.

Customers coming to the Bank for TTs TCs etc. are not received with open

hearts and thus deprives the bank of revenues.

Some shortcomings on part of Allied Bank of Pakistan which affects the

operations of the bank G.T. Road branch:


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There s a lack of functional and proper research and development,

which could scan the micro and macro environmental data for future planning and

strategy.

Financial audits are conducted but operational audits have not

received proper attention as much as it should get.

There is no procedure, which could encourage the middle and lower

level management to initiate creativity.

5.3 Opportunities

The biggest opportunity for the ABL, G.T. Road branch Peshawar is the

greater number of Hindi customers who get their payments through ABL,

Bank G.T. Road branch. These customers can be easily convinced to open

their accounts with ABL.

A considerable portion of the labor force of the area is serving overseas.

Their and their families can be encouraged to use ABL as channel for

remittances.

The Internet facility in the area provides an opportunity to ABL to get

Online.

The Bank has the basic infrastructure, which can facilitate the online

process.

The location of the ABL, G.T. Road branch itself provides an opportunity

to ABL to get more and less cost deposits.

5.4 Threats

The biggest threat to the operational success of the branch is the better

competitors services. Many private sector banks are offering higher rates of

return to customers than Allied Bank of Pakistan.


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implementation plans, which can help to increase the profitability and operational

success of the ABL, G.T. Road branch Peshawar.

Some of the major findings suggestions are discussed.

7.1 Physical Facilities

The physical facilities or the layout are the most fundamental features in an

organization, which the customers observe in forming an opinion, perception or

idea about the organization. Therefore, every organization tries to make a good

first impression on customers through the presentation of its physical facilities or

layout. The physical facilities in the branch are not up to the mark, which requires

timely changes to provide good environment to customers. The suggested

changes and corrective actions are gives below:

The lighting system must be improved and all the out of use lights must be

replaced.

There is always a stinking smell in the Bank due to the out of order

condition of washroom. Therefore the washroom must be brought into

order to remover this unpleasant smell.

Generators should be made available to the branch to minimize the

disruptions due to power failure.

Newspaper should be provided to the customers to avoid the pain of

waiting long.

A cash counting machine can help reduce the time spent in counting cash.

7.2 Availability of Staff

The existing staff in the Bank is overburdened due to the non-availability of

more staff. Staff in the branch must be in proportion to the customer has so as to


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expedite the workflow, avoid overloading of staff and remove the customers

grievances arising mainly due to delay in workflow.

The additional staff required is in the fallowing categories.

One staff assistant or grade 2 officers properly trained in computer and

sufficiently trained in foreign currency accounts.

One class IV employee, preferably on daily wages or contract, to maintain

filing.

7.3 Technical Training of Staff

More technically trained staff should be added to the existing staff strength

while the efficiency of the existing staff should be increased through proper

training and development.

The training needs should be assessed through proper research so as to compete

in the fast growing banking sector. Training should be provided to existing and

new employees in the following areas.

Customers relations.

Organizational behavior and developments.

Marketing and

Computer literacy.

7.4 Commitment of Employees


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The decreasing commitment of employees can be increased by introducing an

effective performance appraisal system, which can reward and recognize the

achievements and services of employees for the Bank.

The appraisal system must have the following features.

Feed Back:

Periodically provided to employees and recognizing their efforts through

reward (bonuses) and publicly appreciation.

Uniform:

The appraisal system must be uniform in evaluating all the employees

without any discrimination.

Objectivity:

The appraisal system must be based on facts and figures and objective

evaluation of the facts on grounds.

7.5 Simplification of Advances

The biggest source of the bank revenue is advances. The advances of ABL,

G.T. Road branch are on him decreasing trend, causing a decrease in the revenue

for the bank. The bank should make the advance procedure simple and quick to

meet the customers requirements. The following steps are suggested for

simplifying the advance procedure.

Increasing the discretion of manager for the amount of advance to Rs.

100,000.

Speeding up the process of investigation and verification.

Expanding its customer base.


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7.6 Marketing Concept

The concept of marketing should be followed in every aspect of the

organization. Generally, the banks staff considers that marketing is to go to

customers, beg them for opening an account with the Bank and to abide by his

every just and unjust action.

They should be taught that marketing is not only to go to customers only. A

customer can also b attracted by provided customer oriented services, showing

empathy to your customers and attending him personally.

7.7 Customer Orientation

Deposits are the main source of funds for commercial banks. Therefore, the

priority of every bank is to increase the number and amount of deposits. The key

to successful business does not lie in simply attracting new customers. The real

success is to maintain in the old customers and attract new customers at the same

time because retaining a customer is more difficult than attracting new customers.

Every depositor should be given equal importance and there should be no

differentiation between customers so that every customer feels himself as

much important as the other customer.

The attitude of the staff should be friendly to all the customers. The

customers should be taken to the concerned person or guided friendly if

the concerned person is not available. The attitude of thats not my job

should not exist anymore.

7.8 Mobilization of Less Cost Deposits


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The analysis of expenses shows that 43% of eh expenses of he bank are the

payments on fixed deposits, which is a very high proportion. Apart from this the

interest earned on advances Rs. 0.265 million is smaller than the interest paid on

different deposits.

Rs. 4.1 million.

The bank should launch a campaign to get less cost deposits much as high

amount current account as well as low cost PLS saving accounts.

7.9 Decentralization

The authority in the bank is highly centralized with a very wide span of

control, which hinders the smooth functioning of the organization. All the

authorities are vested at the regional or central office. Some the authority must be

delegated at the branch level in the following areas.

Reprimanding the negative behavior of lower level

staff.

Providing some incentives/exemptions to customers in different services

charges.

7.10 Information Access

The Bank should provide information to all the present and potential customers

relating to the new products, services, some services fee structure and other

matters which are likely to affect the customers. It should be made sure that all

the customers have access to this information. Conveying information is of no

use, unless, there is some feedback from he customers. The following measures

are suggested to implement this suggestion.


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Brochures, hand outs, pamphlets and other printed reports must be

provided to customers, which should provide all the information

necessary to attract and retain customers and to satisfy the customers

need for more information.

Personal contacts with the customers can help in providing information to

customers. All the customers must be provided a chance to get the desired

information by personal contact with the Bank staff.

Complaint and suggestion box should be maintained at the door of the

Bank where the customers can point out drawbacks in the customers

services and put forward their suggestions on his improvement of the

services quality of the Bank.

7.11 Performance Audit

The financial audit of the bank is conducted on regular basis both as a surprise

and routine audit. However, the performance and system audits are completely

ignored which, other wise, should have been a compulsory part of the auditing

services of the Bank. The immediate outcome of ignoring performance outcome

is shortcoming in the non-financial aspects of his organization such as customer

relations, lack of necessary facilities, motivation of employees, and the control of

manager.

In the light of the above facts it is suggested that the performance audit of the

bank must be carried out on both regular and surprise basis to keep the Bank

competitive in the run of for more customers, more deposits and high

profitability.

7.12 Campaign for Increasing the Deposits.


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The numbers of account holders in a bank make a significant contribution to

the deposits of the Bank and determine its business volume, profits and size of a

bank. Therefore, ABL, G.T. Road Peshawar branch must a clear plan for

increasing the number of accounts. The details of plan for increasing the number

of accounts are given in the implementation plan.

7.13 Relocation of Branches

Allied bank has five branches in

Peshawar on G.T. road. All these

branches are so closely located so

that they are mostly taking away

each other customers, rather than

competing the real competitors.

The location of different branches

on G.T. road Peshawar

diagrammatically given in figure

7.1

G.TRoad

New

Adda

Hash

tnagri

Ferd

ous

Truck Stand Branch

Bus Stand Branch

Chowk Yadgar Branch

AshrafRo

ad

AshrafRo

ad


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Figure 7.1 Diagrammatic representation of location of different branches of ABL

Figure 7.1 Diagrammatic representation of location of different branches of ABL

at G.T. road Peshawar.

The diagram shows that the branches are closely located to each other. The

distance between these branches should be adjusted in such a way that they would

not only cover a wide customer base and compete the other banks withoutcannibalization of its own profits. The proposed relocation scheme of all branches

of ABL in Peshawar is given in the implementation plan.

7.14 Increases in Business Share

Gur Mandi Branch

G.T. Road Branch

A

Faqeer Abad Road


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Along with concentrating on increasing the customer base, the Bank must also

emphasize on securing the highest market share in other banking services such as

issuance of letter of credit, foreign exchange, remittances, bills identification of

productive secure and easily realizable advances etc. to achieve this strategy the

Bank should have a clear plans with the consent of the higher management. The

plan must be divided into different periods weekly, monthly, semiannual and

annual. Every stage of the plan must be monitored and controlled on regular

basis.

7.15 Use of Computer Technology

Presently the computers available in the Bank are used for recoding accounting

entries. There is no other use of computer. The minor calculations and letter that

could have been easily done in Excel and Ms Word are done manually.

It is suggested that full benefit must be taken of the technology available. All

the minor calculations should be done in computers and all the correspondence

should be typed with the help of computers. This will benefit the bank in two

ways:

The data can store with dependability and reliability.

The data so stored can be easily retrieved in less time.

Calculations with the help of computer are less time consuming and have

a very low margin of error.

The results of computer assisted calculations are more reliable.

af


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CHAPTER 9

CONCLUSION

During my internship in ABL G.T. Road branch I observe many of the finding

which were presented in the previous. Now if conclude with major finding which

are given below. Major findings, which came into light as a result of the critical

evaluation of organization and performance of Bank G.T. Road branch, are listed

below.


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The branch is facing shortage of staff, which has made the existing staff

overloaded.

The branch lacks some physical facilities and equipments such as

washroom, electric generator etc.

The equipments and machines in the branch require and maintenance.

The branches of ABL in his area eating up each others profits by entering

into competition and rivalry with ineffective administrative control from the

top.

The marketing mix of ABL is not competitive in fast growing banking

market.

The organization is very mechanistic.

The findings of analysis were carefully and thoroughly studied for possible

corrective actions and improvements. As a result of this study, the following

suggestions and recommendations were developed, the implementation of which

can help the branch to improve its performance. A bird eye view of these

recommendatio

Documents

Internship Ok 1