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CHAPTER 1

INTRODUCTION TO HISTORY OF BANKING & ALLIED BANK LTD

1.1History of Banking in Pakistan:The banking system is passing through a difficult phase mainly because of excessive political

interference in the working of the nationalized banks by the different governments in the past.

Hence the political interference in nationalized banks did not allow them to carry out their

business purely on merit. It may be recalled that some twenty years back, the banking system

was working on such a solid ground that various developing and under-developed countries

used to take guidelines from Pakistani banks.

A little earlier before the creation of country, the role of Muslims of the areas which were

later included in Pakistan was of no significance due to their restricted participation in the

banking sector. There was only a small bank namely Australasia Bank having a few branches

in Lahore and its suburbs. In 1942, the Australasia bank was housed in a garage of a trader of

Lahore who used to trade at a small scale with Australia during that period. However the only

Bank was run by the Muslims of the sub-continent was Habib Bank which was established in

1941. At that time Quaid-e-Azam Mohammad Ali Jinnah expressed his desire that another

Muslim bank also be established in Calcutta which came into reality when Adamjee with the

assistance of Siphons established Muslim Commercial Bank a few months before the creation

of Pakistan in Calcutta. When Pakistan came in to being The Habib Bank shifted its

Headquarters from India to Karachi. A few of Habib Bank's branches were already in

operation in Pakistan. The Muslim Commercial Bank also moved its headquarters from

Calcutta to Dhaka and later on to Karachi. At the time of independence, another small bank

namely Bank of Bahawalpur also started business from Bahawalpur from December 1947.

Before independence, the financial sector was in the hands of foreign banks some of them

were British by origin. The oldest bank operating from 1883 in this part of the world was the

Chartered Bank while another bank namely the Grindlays Bank which was also working

simultaneously from 1883. In order to expand its business operations, the Grindlays acquired

other small banks and merged them into the business of Grindlays. For example Allied Bank,

National Bank of India etc was merged into Grindlays Bank. Among the contemporaries,

Imperial bank of India was the largest Indian Bank which had started its operations in 1919

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which was discharging the role of a commercial banks as well as the Central Bank for India

until an independent Central Bank i.e. Reserve Bank of India was established in 1935.

However, since the Imperial Bank had the largest network of its branches all over India, it

continued to play its role as a subsidiary of the Reserve Bank of India. In the Muslim

majority areas which were later on became the part of Pakistan, small branches of Indian

banks were operating and soon after creation of Pakistan they shifted their branches and

headquarters to India. At the time of independence, two major banks including Punjab

National Bank at Lahore and Comila Banking Corporation were working in the then East

Pakistan. This trend was so obvious that the total number of bank offices between June 30,

1918 and August 14, 1947 were reduced from 631 to 195 only. During the early part of 1949

the number of branches of Imperial Bank of India in Pakistani areas were more than of Habib

Bank. In the early days of Pakistan, the government worked hard left no stone unturned to

establish and strengthen the banking system in Pakistan. These efforts resulted in the

establishment of State Bank of Pakistan which was inaugurated by Quaid-e-Azam on July 1,

1948. Quaid-e-Azam flewed from Quetta to Karachi specially to grace the occasion.

Originally the State Bank was scheduled to be established in September 1948. Zahid Hussain,

who was the first Governor of the State Bank, devoted all his time and energy to streamline

the working of the State Bank. In normal situation, the Central Bank of a country is only

established when the commercial banking start working on sound footings. But the

circumstances forced the government to establish Central Bank and the task of stabilizing the

commercial banking was also assigned to the State Bank, which it really did.

The establishment of the National Bank of Pakistan in 1950 on the pattern of Imperial Bank

of India was yet another milestone in the banking history of Pakistan. In September 1949 the

rupee value was reduced against the Pound sterling which was a major event in the banking

circles. Consequently Indian government devalued its Rupee against Pound Sterlings,however Pakistan decided not to devalue its currency against Pound Sterling which resulted

in increase of Pakistani cotton and jute prices for India which affected our exports to India.

Though Pakistan had to suffer economically due to decline of exports to India, it however

gave a sense of economic independence to Pakistan. Cut in imports from Pakistan proved as a

blessing in disguise as Pakistan had to explore new exports markets for its products. However

Indian banks operating in Pakistan refused to finance Pakistani exports.

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The facts show that commercial banking has made tremendous progress and achieved a

phenomenal growth since independence and that the commercial banks have duly played a

vital role as a mobilizer of people's saving to constitute the most important source of

financing in country economy. However it was felt that these bank failed to ensure that the

resources so mobilized by them flow in those sectors of economy where they would produce

the goods and services needed badly by a very large number of people in Pakistan.

1.2 HISTORY OF ALLIED BANK LTD PAKISTAN

1.2.1 Allied Bank Ltd (1974-1991):Allied Bank was the first Muslim bank that has been established in Pakistan in December

1942 as the Australasia Bank in Lahore with a paid-up share capital of Rs. 0.12 million under

the Chairmanship of Khawaja Bashir Bux, the Bank attracted deposits equivalent to Rs. 0.431

million in its first eighteen months of business.At the time, the Banks total assets amounted

to Rs. 0.572 million. Today, Allied Bank's paid up Capital & Reserves amount to Rs. 10.5

billion, deposits exceed Rs. 143 billion and total assets equal Rs. 170 billion.

The Banks journey has been about dedication, commitment, professionalism and adapting to

environmental changes, leading to its immense growth and stability. A view of Khawaja

Bashir Bux's Residence that was the first branch of Australasia Bank came into existence. It

is these factors that have made it a Bank the rest look up to.

In 1974, the Board of Directors of Australasia Bank was dissolved and was renamed Allied

Bank after the amalgamation of four banks. The first year was highly successful; profit

exceeded Rs. 10 million, deposits rose by over 50 percent and approached Rs. 1460 million.

Investments rose by 72 percent and advances exceeded Rs. 1080 million for the first time in

the banking history. 116 new branches were opened during 1974 and the Bank started

participating in the Governments spot procurement agriculture program. Those seventeen

years saw a rapid growth for the Bank. Branches increased from 353 in 1974 to 748 in 1991.

Deposits rose from Rs. 1.46 billion, and Advances & Investments from Rs. 1.34 billion to Rs.

22 billion during this period. It also opened three branches in the U.K.

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1.2.2 Allied Bank Ltd-A New Beginning (1991)

ESOP Revolution:

Under the philosophy of ESOP ownership of an enterprise is transferred to its employees who

are in an advantageous position in running the enterprise. The added advantage of ESOP that

it strengthens the workers stake in the free enterprise system, in job securities, better

profitability & unique corporate culture symbolizing family feelings & professional

fraternity.

September 10,1991 is the historical date as on this date the bank became the countrys 1st

bank to be reconstituted as an institution jointly owned by its employees through the unique

concept of Employees Stock Ownership plan [ESOP] developed by the Allied ManagementGroup headed by Mr. Khalid Latif enabled the bank staff to react creatively to the

privatization challenge. More than 7500 staff members acquired a share in the bank . The

articulation of the ESOP is a landmark in the financial history of Pakistan-indeed of the entire

world .It is a practical step ensuring an increase in workers participation and in productivity a

means for enhancing an equitable redistribution of financial assets & an effective strategy for

achieving the cherished goal of national self-reliance.

1.2.3 Privatization of Allied Bank (1991-2004):As a result of privatization in September 1991, Allied Bank entered in a new phase of its

history, as the worlds first bank to be owned and managed by its employees. In 1993 the

First Allied Bank Modaraba (FABM) was floated.

After privatization, Allied Bank registered an unprecedented growth to become one of the

premier financial institutions of Pakistan. Allied Banks capital and reserves were Rs. 1.525

(Billion) and assets amounted to Rs. 87.536 (Billion) and deposits were Rs. 76.038 (Billion).

Allied Bank enjoyed an enviable position in the financial sector of Pakistan and was

recognized as one of the best amongst the major banks of the country.

In August 2004 as a result of capital reconstruction, the Banks ownership was transferred to

a consortium comprising Ibrahim Leasing Limited and Ibrahim Group.

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1.2.4 Ibrahim Group Assumes Control of ABL (2005):In May 2005 Ibrahim Leasing Limited was amalgamated by transfer to and vested in with

and into Allied Bank Limited. ILL shareholders were issued ABL shares in lieu of the ILL

shares held by them. Application for the listing of ABL shares in all the Stock Exchange

Companies of Pakistan was made. ABL was formally listed and trading of the shares of the

Bank commenced w.e.f. the following dates.

Islamabad Stock Exchange - 8th August 2005

Lahore Stock Exchange - 10th August 2005

Karachi Stock Exchange - 17th August 2005

Ibrahim Group, through its different companies and sponsors owns more than 75% of Allied

Bank. The Group apart from interest in financial sector is engaged in manufacturing of yarn

and polyester staple fiber, trading and power generation.

1.2.5 Allied Bank (2007-2010):

Mohammad Aftab Manzoor has taken charge as CEO and President of the Bank on August

13 2007. He is an ex-president of MCB Bank Ltd.

1.3 Branch Network:Allied Bank has 885 nationwide branches of which approximately 67% i.e. 573 are located in

large metropolitan area, namely Karachi, Islamabad, Faisalabad, Lahore, Multan, Peshawar

and Hyderabad. The network of 855 branches enables the bank to generate a substantial and

stable deposit base, provide awide range of banking products and other financial services

and diversify lending risks geographically, as well as on the basis of credit and customer

type.

1.4 INFORMATION ABOUT THE ALLIED BANK LTD PAKISTAN

1.4.1Vision:To become a dynamic and efficient bank providing integrated solutions and the first choice of

bank for all customers.

1.4.2 Mission: To provide value-added services to our customers

To provide high-tech innovative solutions to meet customer requirements

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To create sustainable value through growth, efficiency and diversity for all

stakeholders.

To provide a challenging work environment, and reward dedicated team members

To play a proactive role in contributing towards the society.

1.4.3 Core values: Integrity

Excellence in Service

High Performance

Innovation and Growth

1.4.4 Objectives: Allied Bank has following objectives:

Prime focus to earn profit by providing values to its customers

To provide superior services to its customers

To provide assistance in the development of the commerce and trade industry

Focus on blending skills and experience towards creating an enabling environment

Core focus is to inculcate a culture of collaboration intended to deliver world class

customer services.

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CHAPTER 2

Products & Services

2.1 Products OF ALLIED BANK LTDIn line with the Banks aim to provide a host of products and services to its customers,

substantial ground work has been done to establish a strong consumer banking business.

Furthermore, to achieve this objective, professionals from across the industry have been

recruited into areas of product development, sales, credit policy, research, consumer

analytics, call centers and service quality departments.

2.1.1 Home Remittances:The Bank having a network of 855 branches all over Pakistan, undertakes to provide safe and

instant payment of remittance from expatriates, routed through designated foreign exchange

companies and correspondent banks with whom special arrangements have been made in this

regard. Through the Allied Express Services, ABL ensures that beneficiaries Accounts in

ABL branches are credited with in 48 hours of receiving home remittance information from

overseas.

2.1.2 Hajj Services:The Bank serves the intending pilgrims by helping them in performing this religious

obligation. The Hajj forms and other related services are provided by the bank. However, the

terms and conditions for accepting the Hajj forms from intending pilgrims are in accordance

with the Hajj Policy announced by the government, each year. Hajj applications are available

with all branches during Hajj season, immediately after the Hajj policy is announced by the

Government of Pakistan.

2.1.3 Utility Bills:All branches of the Bank collect utility bills of electricity, gas and telephones. For

convenience of the customers, Utility Bills are collected by the branches during banking

hours and also in the evening banking on all working days. Bills can be paid through cash or

checks. Consumers may drop bills with crossed checks into a drop box available at the

branches under Checks Drop-in system.

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2.1.4 Agricultural Finances:Bank under Agricultural Financing Schemes envisaged by the State Bank of Pakistan extend

short, medium and long term, farm and non-farm credits. The farm credits are extended for

production (inputs) and development purposes. Non-farm credits are allowed for livestock

(goats, sheep and cattle), poultry, factory including social forestry and fisheries (inland and

marine excluding deep sea fishing).

2.1.5 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.

2.1.6 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.

2.1.7 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 banks introduce travelers checks in order to

protect against any contingency.

2.1.8 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

markup is recovered on the products of daily outstanding balance. The running finance is

suitable for meeting day-to-day financial needs of the business.

2.1.9 Home Remittances Handled:The Bank contributions in handling home remittances by overseas Pakistanis have also been

commendable.

2.1.10 Foreign Trade:The bank has always played key role in the promotion of foreign trade especially in financing

of exports. The bank achievement in the area is really commendable, as it has not only to

compete with the domestic banks but with the large international financial agencies as well.

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2.1.11 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 first

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 practical significance.

2.1.12 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 and now ABL is connected to its

branches through online banking.

2.1.13 Utility Booths: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.

2.2 SERVICES OF ALLIED BANK LTD

2.2.1 All-Time Banking:Allied Bank has introduced the Allied Cash last year 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.

In order to obtain Allied Cash + Card, the customers simply have 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

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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.

2.2.3Allied Umrah Aasan:This unique scheme facilitates 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.

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

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

Total package for Aazmeen from Karachi is being Rs. 45,000. 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.

Fee Visa, 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 be deposited through monthly

installments of Rs. 2,000/- person 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.

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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.

2.2.4 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. 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 orchecks. 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 that 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 not 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 be 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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2.2.5 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/. As 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.

2.2.6 Allied Karzas Scheme (No Interest/Markup):Allied Bank moves a step forwards by introducing interest free banking through Allied

Karzas Scheme. The aim of this scheme is to provide an opportunity to the depositors to takeadvantage of a real Riba Free economic environment and avail

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.

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.

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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.

2.2.7 Online Banking:Allied Online Banking is a unique service being offering from Allied Bank. Through this

service, your account in Allied Bank is available to you from any of our branches

countrywide. ABL is the first bank in the history of Pakistan which connects with each

branch of it through online banking. These branches can offer the facilities of remote cheque

encashment, cash deposit, funds transfer, balance enquiry and statement of account printing

to customers of other online branches besides issuance of ATM cards to their own account

holders.

2.2.8 Auto Mated Teller Machine:Allied Bank has a vast network of over 460 ATMs installed in over 130 cities, which

continues to grow at a rapid pace The ABL Automated Teller Machine (ATM) launched in

1995 is a means of providing customers with 24 hour cash convenience. Over the years its

success has encouraged the bank to expand its network to major cities. In the past six years,

ABL installed this convenience in Karachi, Lahore, Hyderabad, Islamabad / Rawalpindi,

Faisalabad, Multan, Gujranwala, Quetta, Sialkot and Peshawar. Further expansion plans to

other cities are on the way.

2.2.9 Debit Card Facilities: Funds transfer To ATM

ATM Daily Withdrawal Limit:

Debit Card on Point of Sale.

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CHAPTER 3

VARIOUS DEPARTMENTS OF ALLIED BANK LTD

I did my internship of six weeks in ABL I-8 Markaz branch Islamabad. It is one of the

smallest branches of ABL in Islamabad, which is yet to be renovated. I selected this branch

because of two reasons. First, I was of the view that one can find more learning opportunities

in a small branch as compare to a big one; secondly it is situated near to my residence.

3.1 CURRENT SAVING DEPARTMENT:In ABL current saving department mainly deals with cheques, vouchers and advices. First of

all a cheque holder have to present his/her cheque to the person responsible for issuing the

tokens. Then cheque is passed on to the computer operator to entry it in computer. Afterward

it will go for signature verification after which it will be given to cashier for payment.

3.2 COMPUTER OPERATIONS:

Daily Transactions

To record all the transactions in case of deposits made by the people and also to record all the

withdrawals made by the people or customers. Each transaction has to be recorded in its

appropriate head of account with the help of prescribed codes.

Vouchers

To record all the vouchers made by the remittance department. Remittance department have

to prepare debit and credit vouchers for about every transaction recorded in their department.Then these vouchers are sent to computer operator to record those in computer.

Advices

To record all advices received from other branches. Most of the-inter branch or intra branch-

remittances are subject to ultimate receipt of advices from the corresponding branch to

materialize the transactions. These advices also have to be recorded in computer. Statements

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To close the daily record a number of statements have to be printed out Statements like:

Days transactions (sequence)

Overdrawn facilitated a/c statement

Markup sheet

Inter branch transactions

Detail of PLS and Current a/c

Days transactions (a/c wise)

Operative, Dormant, Inoperative and Unclaimed a/c

All ATM transactions

Detail of General Ledger entries (official & non customer

transactions)

Summary of all a/c (debits, credits & balances)

Profit due, transferred, disbursed, etc.

3.3 ACCOUNT DEPARTMENT

Deposits The Life Blood of a Bank:Bank borrowing funds from outside parties is more important because the entire banking

system is based on it. Receiving of deposits is a basic function of all commercial banks.

Commercial banks do not receive these deposited for safekeeping purpose only. When the

bank receives the amount of deposited as a depositor, it become the owner of it. The bank

may therefore use these deposits, as it deems appropriate. But there is an implicit agreement

that the amount owned by the bank will be paid back to the depositors on demand or after a

specified period of time.

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The borrowed capital of the bank is than the bank own capital. Banks borrowing is mostly in

the form of deposits. These deposits are lend-out to different parties. Larger the difference

between the rate at which these deposits are borrowed and the rate at which they lend-out the

greater will be the profit margin of the bank. Larger the funds lend-out the greater will be the

return earned on them and greater the amount of return on these deposits earned greater will

be the profit for the bank. It is because of this interrelated relationship. Deposits are referred

to as the life blood small for any banking sector.

Kinds of Accounts:

1 . Saving Bank Account Profit & Loss Account:

.In Pakistan the saving Bank accounts are known as profit and profit and loss sharing

accounts (PLS A/C) fowling the illumination of bank. The owners of such account are not

allowed to withdraw money more than once are twice a week. In case of withdrawal of large

sum, the depositor is required to give to prior notices a week or two. Thus the bankers are not

required is always available to bank for giving to loans to their customers. Thus these

deposits also serves as source of credit certain by the commercial banks.

The rate or profit on this type of account varies from time to time. All the commercial banks

declare the rate of profit every year that is paid on these accounts on the basis of their

monthly credit balance. The bank will determine the proportion of profit & its decision will

be final. Profit will be determined on daily product basis while it will be paid on monthly

basis & will be paid on the minimum balance between the first day & last day of the month.

Zakat will be deducted on the exceeding amount as exempted from the Zakat deduction.

Taxes will be imposed according to the rules & regulation. In Pakistan post offices & national

saving centers also maintain this savings bank account to encourage saving habits among the

people. At the time of opening this account, a minimum amount of Rs.500 is to be deposited.

Subsequently the account is opened & account number is located. The depositor is given a

cheque book. The depositors who are wishing to close his account are required to present his

cheques to the bank in order to draw the credit balance and to close the account. In this type

of account you can open joint account also which can be operated by anyone.

2 . Current Account:

There is no limit of withdraw of money from these accounts. In practice the bankers do notallow any profit to such deposits in Pakistan. The customers are required maintaining the

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minimum credit balance in their account in case of failing incidental charges are recovered

from defaulters. This is because the depositors may withdraw current deposits at any time and

as such the bank is not entirely free to employ such deposits. In general, the bank allows the

overdraft facilities to current account holders & the prevailing rate of markup is charged from

these customers. In ABL the minimum amount required to open the C/A is Rs. 500. No profit

is paid to account beside this that the account holder has the facility to taking s much money

as he wants.Individual account is opened in the name of the single personal one person on

whose name it is opened only conduct it. While two opens joint account and partnership

account are more person and the bank fallow their instructions for the conduct of the account.

Similarly limited companies can also open their current account.

3 . Fixed Deposit Account/Term Deposits:

These deposits are also called as time deposits because these deposits are based on the fixed

duration. The period for which these deposits are kept with bank are ranged from seven days

to ten years in light of the agreement between the customer and the banker. The profit

allowed on these account depend on the duration longer the duration of the deposits the

higher will be the rate of profit.

The operation of fixed account is different from saving & current accounts. Every time

money is deposited with the bank an application from filled and the bank issue a fixed deposit

receipt for amount deposited along with specific period. Fixed deposit receipt is given to the

depositor and the bank retains the counterfoil of the same receipt. Fixed term deposits may be

in the joint names of two or more person. The payment to one of those people will not

discharge by the bank without the authority of others.

Opening And Operation Of Bank Account:As discuss earlier there is a prescribed procedure for opening different types of account.

Following steps re followed while opening a new account.

1. Application Form for Opening an Account:

A person who wishes to open a bank account is required to complete this from the personal

information is to be furnished. The application signs the declaration to effect that he has

understood the rules and regulation of the bank.

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2. Introduction:

As required by the banking law the new customer needs to be introduced by the account

holder of the same branch where the account is being opened. The manager or any other bank

officer may introduce the new customer if they know them personally.

3. Signature Card:

At the time of opening an account a specimen signature card containing two signature of the

customer is required which the manager of the branch attaches with application.

4. Cheque Book:

After completing formalities for opening saving and current a cheque book issued to the

customer for withdrawing cash from his or her account at the time of need. The cheque

contains minimum 25 pages & maximum 100 pages. The bank also charges excise duty on

cheque book.

3.4 ADVANCES DEPARTMENT:

Function Of Credit Department:The main function of the credit department is to lend money to the customer. Allied Bank

Ltd. Lends money in the form of clean advances against promissory notes as well as secured

advances against tangible and marketable securities. Beside these ABL also lend money

against life policies and immovable property..

Lien:

Lien is the bank right to with hold property until the claim on the property is paid. The bank

looks at their lien as a protection against loss or overdraft or any other credit facility. In

ordinary lien the borrower remains the owner of the property, but the actual or constructive

possession remains with the creditor or bank though the borrower has no right to sell it.

By Cash Credit:

In this the bank lends money to the borrower against tangible security. The total amount of

the loan is not paid in one installment. The borrower has to pay markup on the amount

borrowed. Cash credit is favorite loan for large commercial & industrial concern.

By Overdraft:

This the most common type of bank lending. When a borrower requires temporary

accommodation, ABL allows its customer to withdraw an excess of the balance form their

account which the borrowing customers have in credit and thus called overdraft. This facility

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is given to regular reliable & well established customer. When it is against collateral

securities, it is called Secured Overdraft & when borrowing customer can not offer any

collateral security except his personal security then the accommodation is called Clean

Overdraft.

Types of finance

Short Term Finance:

Allied Bank Ltd. receives the saving of the people and lends it for short term to its customers.

Short-term finance is generally given for a period of one year or less in duration.

Medium Term Finance:The duration range of the intermediate term finance is from one year to three years. It is also

called term loan. Intermediate term finance is usually given for the expansion of an existing

business or for the purchase of new equipments.

Long Term Finance:

This type of finance is required for the period of more than five years. Long term finance is

generally given for the compilation of big projects, for the construction of building and for

the purchase of machineries.

Producer of Applying for Loan :

Any customer who applies for loan should have an account (usually current account) with

ABL branch concerned. That account must be in running position. When approval from head

office is given, branch gives tern & condition to the party. Bank does not advance 100% loan

against a security, rather the profit margin is different in different type of loan.

3.5REMITTANCES DEPARTMENTAnother important department in ABL is Remittances Department. The remittances

department transfers the funds from one bank to other bank and from one place to another

place. In remittances department the collection take place. The ABL made payment of only

open cheques on the counter and prohibits the payment of crossed cheques.ABL transfers

money from one place to another by the following means:

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Mail transfer:When a customer requests the bank to transfer his money from this bank to any other bank or

the branch of some other bank, the first thing he has to do is to fill an application form. In

which he states that he/she wants to transfer the money from this bank to that bank by mail.

If the customer is the account holder of the bank, operating personal will proceed further with

steps like:

Writing a debit voucher for a/c holders a/c

Preparing an advice in favor of stated bank/branch

Writing credit voucher for GL

Mail the advice

If the customer is not the account holder of this bank, then firstly, he has to deposit the money

and then above procedure will be adopted to transfer his money.

Telegraphic Transfer:With the changing requirements of the customer, ABL has introduced the fastest transfer of

money. The sender is required to apply through a form in which he will give all the necessary

details about the sender and beneficiary. The sender deposits the money to be transferred plus

bank charges at the bank counter. The remittances officials send a telegram to concerned

branch with specified code words and the receiving branch makes payment to the beneficiary.

Vouchers are sent by ordinary mail to keep the record. On TT, no excise duty is charged only

commission and telegram charges are charged.

Pay Order:Pay order is the most convenient simple and secure way of transfer of money. It is issued by,

drawn upon and payable by the same branch of the bank. It is neither transferable nor

negotiable and as such it is payable to the payee named there in. The following are the parties

to a pay order.

Purchaser is a person, firm, company or local authority.

Issuing/paying branch is one which issues/pays on presentation.

Payee is a person named there in.

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Demand Draft:Demand Draft is another way of transfer of money from one bank to another bank. Unlike

pay order, a form is required to be filled for the issuance of the demand draft in which

necessary particulars about the beneficiary and sender are given. The sender deposits the

amount of DD plus commission and other charges on the bank counter, from where he is

given a receipt and in accordance with this receipt he is issued

The following are the main essential of draft:

It is a Negotiable Instrument.

Filling a form and depositing the amount written on it prepare 2} Draft.

It is a written order to its branches or to another bank to pay the stated amount ondraft.

3.6 CASH DEPARTMENTThis is the most important and critical department in a Bank. There are two basic functions

performed by the cash department. These are

Receipts:

An individual who has account in the Bank can deposit money in his account. For deposit of

the money the individual has to fill the deposit slip in which the account holder writes his

name, Account number, amount of the money both in figures and in words.

After filling the deposit slip the Cash amount along with the deposit slip is submitted with the

cashier. The cashier collects the cash and counts it and after verification the cashier stamps

the deposit slip. One part of the deposit slip is given back to the customer and the other part

of the deposit slip remains with the bank for the record purposes

The cashier also record the deposits made by the customers in credit sheets daily. The

deposits of all customers of the bank are controlled by mean of ledger account. Every

customer has its own ledger account and has separate ledger cards in which his / her total

record is kept.

Bill collection is also one of the main functions of bank. Cashier has to prepare a list of bills

serial number, a copy of which is to be sent to the corresponding organization.

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Payments:

The procedure of clearance of a cheque or payments is as following. First of all the customer

presents his cheque to the cashier The cashier records the account number and the amount,

which is to be drawn. Then the cashier check the cheque number in the computer for the

verification whether the account holder has such amount in his account which he is

demanding or not. If the computer passes the cheque, the Passing officer signs the cheque and

sent it to the cash counter then cashier pays the written amount to the customer and then in

the end cashier records the amount paid in computer.

3.7 CLEARING DEPARTMENT:In clearing process, if the account holder of ABL receives the cheque of other bank like City

Bank, Habib Bank Limited etc, and he submits it in ABL branch to be cashed. At the same

time the clearing process starts. First the bank name. Cheque number and the amount are

written in the register. After this three kind of stamps are required first bank name stamp,

secondly clearing stamp of next date and If the cheque is not local then the inter city clearing

stamp is required.

Some cheques are local and some are outstation. The institution N.I.F.T. provides the services

in clearing the cheque. They send the different cheque to different banks. The N.I.F.T service

is only in few cities, like Karachi, Lahore, and Rawalpindi. The cheque of inter city is send

through N.I.F.T. And where, the N.I.F.T service is not available so the cheque is sent through

T.C.S.

The clearance of cheque is informed through advice. Some cheque is not passed so they

should return so Rs. 100 is deducted and if the cheque is intercity then the postage charges is

deducted. For this purpose the Debit & Credit voucher is used. When the cheque is cleared

the today stamp is required. Some cheque is drawn on ABL. This is called outward clearing.

These cheques will be entered in the outward clearing register. And the advice is sent for the

clearance of cheques. The account holder account is credited.

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CHAPTER 4

OUT WARD BILL FOR COLLECTION

OBC means the cheque of other banks. When they sent OBC the OBC is credit & OBR is

debited and the advice is made on that time, one copy is remain in the bank and the other

copy is sent to the related branch. When they realized the opposite entry is made. It is entered

in the OBC register. The income A\c commission is credited, and postage

4.1 CONCERNED DEPARTMENT INFORMATIONBack to my real learnings. In my six week internship, I worked in customer service

department, as well as in clearing department. Because of some work load, I was unable to

learn much about other cash and accounting department. Here is my countdown learning of

six weeks.

4.1.1 Customer Service Department

Account Opening:

Working at Customer Service Department, I did counter with different types of customer and

opened their accounts under the supervision of the officer. When you have the sole

responsibility to open the accounts, it's always very important to understand the needs of your

customer. Understanding the psyche of customer is very important. Until and unless you're

completely satisfied that the customer has genuine reason and need to open the account, don't

do so. At the opening of account, first the filling of form , identifying the account number,

number of leaves and whether to hold cheque book for collection or to mail it. A letter of

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thanks is dispatched to the mailing address of the new account holder and its copy is attached

to the AOF. Actually this letter of thanks is for the confirmation of this fact that customer

actually lives at the mentioned address. My experience at Islamabad branch started from

there.

4.1.2 Clearing Department:Right in the morning cheques collected from the drop box simply flood over my table.

According to all I learnt through listening, viewing and questioning is summarized below.

After entering the details into the system, we can accept, modify and reject it. As soon as

entry is accepted, computer generated document number is assigned. In case further

modification is required, it can be done at clearing modification option under clearing

schedule.

Now the next day when clearing is confirmed by NIFT, respected accounts are debited. We

go into the banking option and in transfer; we debit all the respected accounts. Same is the

case with intercity and OBC cheques. In documentation, debit and credit vouchers are made,

which show total amount of clearing as per day. All the cheques which are returned, due to

any reason, are then reversed. They are debited back in the clearing schedule. All the returned

cheques are documented in the cheque return registers and all the account holders of returned

cheques are charged with service penalty.

4.2 WORKING EXPERIENCE:I completed six week (Internship) at ABL ISLAMABAD branch. My first work which I did

was filling the deposit slip, ATM form because when I start working at bank this time the old

ATM are cancelled and bank issue new ATM card most of I have enrty for ATM cards

deposit slip It was filling when customer want to deposits cash / cross cheque in the bank. It

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included the stamping, title name, amount and signature of the account holder. It is a small

Branch of ABL.

The second activity, I did in the bank was about Remittance (payment). It was money

exchanged or sent between two parties. It includes the remittance form which had the Date,

Branch Stamp, Account holder No, Amount, Branch code, City name, Branch Complete

Address and Applicant Signature. After filling, particular amount was send to the given

account holder. The most important point was that the purpose of sending the money & cell

no of sending parties. In an good organization the most important point is the environment

with peer to peer, with upper level and with lower level, I am feeling so pleasure to see that it

is very good because each person respect for everyone.

My next activity was account opening, bank is a best source of provided the financial facility

to its customer and bank facilitates to those which have an account in the bank. To open an

account in ABL the customer will have to fill an account opening form in front of bank

officer. He has to sign in all required places in front of the officer and also get the facility of

the ATM cards. There are two types to cash the cheque. 1st if it is a photo account then only

account holder get money not any other person get it, Documents Required in Account

Opening, N.I.C Copy, Account opening form (provided by bank), Two photograph (in case

of illiterate person), Specimen Signature card (Provided By Bank), Cheque Requisition Form

& Introduction of Account.

In the bank Voucher has more importance. It is used for the purpose of bank expenses in

suspense account. Voucher has two types debit voucher & credit voucher. It is a bond which

is worth a certain monetary value and which may only be spent for specific reasons or on

specific goods purchased and it is also cover to the expenses of bank.

My final achievement was that; understand a real working system which I never got it

before. At the last my thanks to all the staff of ABL I-8 branch, Islamabad and especially to

Madam Umber Ratoor (Branch Manager) that he helped me a lot about working

environments.

4.3 LEARNING/ ACHIEVEMENTS: ABL Islamabad branch, I heard the good news of me having six weeks opportunity to

interact with a world class bank. All these six weeks were full of events, full of learning and

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most importantly full of professional working. Here 'professional' regards in all from clerical

to managerial work. In these six weeks period, the best thing to me was the authority and

dependency of customers upon me, when they come with a hope that I'm there to guide them

through. Knowing all is not learning, the real learning is to convey right. I tried to learn real,

and tried to comprehend the difference between what ABL look from outside and what is

going on inside.

ABL is full of experienced and professional traditional bankers. As it perfectly suit the

environment ABL is operating in, YOU ATTITUDE has helped ABL in capturing masses.

In the private sector, no doubt its a fast growing bank, but here's something that's still

unrealistic to the policy makers. The line of unsatisfied customers is increasing, not because

ABL is not serving well, it's because customers are not understanding the YOU ATTITUDE

right. Every customer wants to make sure his work is done at the first convenience, but they

are not concerned about the responsibility with which every employee is working. ABL needs

to put in some guidelines for its customers, as they walk in. This will not only save their time

but will also motivate staff members to work more promptly, because if customer and

employee engage into some unhealthy quarrel, the whole environment will be disturbed.

4.4 SKILLS USED & ACQUIRED:Computer Skills:

In this modern world, office work has shifted from manual to computer. So it is very

important to have good knowledge and sharp computer skills to work efficiently in an

office environment. Almost all of my work was done on computer so the computer skills,

which I possessed, help me a lot.

Work Management Skills:

In the office environment a person is known by the work he or she does, the better oneperforms the more is one praised. So the work management skills that I had gained during the

BBA program helped me manage the work. I also got the chance to improve those skills

because skills become more effective with practice.

Communication Skills:Business communication is the heart of the effective and efficient working of an

organization. In ABL I utilized the communication skills which I learnt in my first two

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semester of BBA in the course of Business Communication taught by madam sajda Using

this skills I was able to disseminate information to my seniors and to the manager.

Accounting Skills:

The skills gained during the three semester of BBA Finance helped me get the understanding

of the accounting systems adopted by ABL. This is important because every organization

develops its own accounting information system according to its own requirement. By

utilizing these skills I performed these important tasks:

Reporting

Error Recognition.

Documentation

Record Keeping

Relationship Management Skills:

During the internship period I was able to exercise the techniques of relationship

management as I had the opportunity to communicate and develop relations with my

colleagues and seniors. ABL headquarters was the best place to implement these

methodologies due to large number of employees working there.

Coordination Skills:Success of any organization depends upon the level of coordination among its employees. I

learnt how to coordinate with other employees at the same level and with the upper level.

During the Internship, I improve my coordination skill with working different persons having

different ranks. For Example when I am coordinating with the manager, I am more formal

than coordinating with immediate officer.

Stress Management Skills:The work in the office has to be completed in the specific time period so this creates a

stressful situation for the employees. It is therefore important to exercise the stress-

management skills in order to get ready for the next task. I implemented these techniques.

Time Management Skills:Managing many things at time is the skill which we learnt during our BBA program where

we had to manage many projects at time helped me to do multi tasking at same time, for

example dealing with clients at same time and working.

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Conflict Resolution Skills:I gained the skill to manage conflicts amongst employee because small conflicts do arise in

large organizations as the work is interlinked. As the output of one department becomes the

input of the other department.

Self-management Skills:The next thing I was able to learn was indeed very important for a young professional like me

was self-management. I was bound to follow the rules and regulations being followed in ABL

therefore I was able to develop discipline in myself.

Boss Is Always Right Skills:This is the golden rule, very strongly executed in the government and private sector of the

Pakistan. By doing internship in such an organization that has recently gone out of the

government sector but the behavior of the employees is still like a government organization, I

have come to learn that the boss is always right is one of the key to success.

CHAPTER 5

5.1 SWOT ANALYSIS:SWOT is the abbreviation of four words these are S stands for strength W stand for

weaknesses O stands for opportunities and T stand for threats. Strength and weaknesses

are the internal factors of the organization and these are also known as the micro factors but

the opportunities and threats are the external factors and these are known as the macro

factors. Micro factors are the controllable factors but the macro factors are uncontrollable.

Whenever the organizations come into a form, they have to know about their strength and

weaknesses. Then they have to find out their opportunities and then they come to know about

their threats but according to the latest theory the word SWOT is known as WOTS.According to this theory, first of all the organizations know their weaknesses, then they get

knowledge of their opportunities that they have in the particular sector and then they have

come to know about their competitors and at the last they think about their strengths.

The easiest way to know about any organization is the SWOT analysis. So to reveal the

hidden factors I did a SWOT analysis of the Allied bank. It is not the SWOT analysis of ABL

as a whole but only of the branch where I worked. Many aspects are same almost in every

branch of the Allied bank

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5.1.1 Strengths:Brand name earned a reputation for extending quality services.

Bank Limited was the first Muslim bank to be established in Pakistan.

Allied Bank Limited proudly extends its ovation over the nationwide or internationally by

opening new and more branches to facilitate the customers and having more than 850

branches in Pakistan.

Allied Bank has become the first bank to participate in the Sustainability Finance Facility

of the IFCs Global Trade Finance Programmed. IFC is a member of the World Bank

Group.

The bank is passionate about high performance, innovation and delivering value to its

customers.

With a vision to make ABL one of the most technologically advanced organization in the

country with ability to provide real time services to its client the BOD embarked to

implement state of the art Core Banking Solution TEMENOS at ABL, that is working in

more than 500 locations worldwide.

ABL has opened the Management Development Center MDC that caters to the

growing needs of ABL staff through computerized training workshops and seminars.

Training needs analysis to be conducted on annual bases to identify training gaps.

ABL has the large network of ATM throughout the nation.

ABL do the time to time monitoring over its different wings and groups to increase

efficiency.

The Bank has the most experienced and the least experienced staff, which is a good

combination of experienced heads and exuberance of youth.

Successfully launching new Product Lines.

With the objective of achieving decentralization and cutting down expenses, the

decision making has been reduced from two to four tiers. 68 controlling offices,

comprising of 4 provincial, 18 circle and 46 zonal offices have been consolidated into

16 regional offices.

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A centralized Special Asset Management Division has been established for

expeditious recovery and settlement of non-performing loans.

ABL offers the privilege of using thousands of ATMs of all banks without the extra

charge of Rs 15 to its customers. At ABL the customers who have more than one account can have the facility of the

same account number only the suffix is changed for the easy remembrance.

For employees entertainment and relaxation, ABL gives the facility that the

employees may get the 36 medical leaves and 1-month vacation in one year with their

pay.

5.1.2 Weaknesses: ABL did not introduce any Islamic product.

The controls of Heads are not effective.

In spite of the presence of technology many jobs are done manually.

ABL is not enhancing the new obligors.

Fewer incentives in back office as compared to the branches.

ABL credit group do not sanction the loan to the lawyers, politicians and the

female having no blood relative.

In back offices the employees are less so it creates more work burden on the

existing one.

5.1.3 Opportunities: The policies of the new government to uplift the economy and pursue financial sector

reforms are expected to yield positive results in the banking industry of the country.

The ABL is well praised to avail promising opportunities.

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As a result of different steps taken by the government regarding the betterment of the

economy, small borrowers are attracted to get the financing and start business. So, the

ABL has an opportunity to attract the customers by giving them more attracted

schemes. They have wide area network in all over the Pakistan, if ABL can made it possible the

fast delivery of funds from abroad through online banking, it can cover the major

market of Pakistan which still is capturing by Hundi.

5.1.4 Threats: The biggest threat in the banking sector is the continuous downfall of the country

economy since the last few years.

Other treat which ABL faces is the policies of the Government; tax charged on the

income of banking co. is much than the income of other companies.

Sudden rise and fall in the trade and industry conditions and stock exchange business

of the country also adversely affect the growth of banking sector.

As the situation of Frontier Province of Pakistan is not sound and ratio of dacoits

cases in branches is high so it is the big threat to the Bank.

The default ratio of customers who are availing the credit facilities from the ABL is

very high due to the economic recession in Pakistan.

Also the threat of new entrants exists there.

5.2 PEST ANALYSIS

5.2.1 Political:

Pakistan despite all international and public perceptions, today is a functioning democracy

and gradually there is a change in complexion and composition of legislatures with moreeducated people and women (27% of National Assembly and 17% of Senate) entering into

politics Similarly it helps in designing best strategies to implement that could support the

revival of bank industry. Like in the era of nationalization banks had to suffer as other

industries.

5.2.2 Economical:Although banking sector development is important at the early stage of economic growth,

general liberalization presuming a homogeneous bank role may not necessarily promote

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growth. The estimated cost structure indicates that state- owned commercial banks are large

enough, while development financial institutions and private banks can expect to obtain cost-

saving advantages by expanding their operations. Since scope economies are significant,

portfolio diversification generally increases bank profits. In addition, privatized banks are the

most efficient, followed by foreign and private banks. Public banks are the least efficient.

5.2.3 Social:Banks always helped people in improvement of living condition of poor people in various

forms like giving loans to poor for starting business or directly providing them the

instruments that could enhance their living conditions. Similarly Allied Bank always tried to

provide the needy people loans on soft terms and also helped to eradicate unemployment by

providing job opportunities

Recent high growth trends coupled with enhanced spending on social and poverty programs

that rose from 3.8% of GDP in 2001/2002 to 5.05% by 2005/2006 has together begun to pay

some dividends as evident from the reversal in poverty incidence trends and social indicators.

5.2.4 Technology:The Banking sector in Pakistan has experienced a rapid transformation. Just about a decade

back this sector was limited to the Sarkari (read nationalized) and co-operative banks. Then

came the multi-national banks, but these were confined to serving an elite few. One could

regard the past as the medieval ages in the banking industry, wherein every branch of the

same bank acted as an independent information silo and multi-channel banking (ATMs. Net

banking. Tele-banking, etc) was almost non-existent. Today banks have to look much beyondjust providing a multi-channel service platform for its customers. There are other pressing

issues that banks need to address in order to chalk-out a roadmap for the future. Here are the

top three concerns in the mind of every banks CEO. The customer is interested in how he/she

can benefit from the bank and its products. Thats why it becomes necessary for a bank to

differentiate its products from the others. Some of the ways in which differentiation can be

introduced are through specialization, new products, and increasing the added value

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5.3 FINANCIAL ANALYSIS

Vertical Analysis(2003-2008)

December 31 2003 2004 2005 2006 2007 2008

Assets

Cash and balances with

treasury and other banks

9.50% 8.00% 9.40% 9.80% 9.50% 7.00%

Lending to financial

institutions

13.10

%

10.40

%

3.00% 7.60% 5.80% 4.30%

Investments net 34.70

%

37.00

%

23.30

%

18.60

%

26.20

%

22.50

%Advances net 34.60

%

38.40

%

57.70

%

57.20

%

52.60

%

58.10

%

Operating Fixed assets 2.20% 1.60% 2.50% 2.60% 2.40% 3.00%

Other assets 5.90% 4.60% 4.10% 4.30% 3.60% 5.00%

Total assets net of

provisions

100.0

0%

100.00

%

100.00

%

100.00

%

100.00

%

100.00

%

Liabilities

Customer deposits 97.20

%

81.60

%

83.80

%

81.70

%

82.50

%

81.10

%

Inter bank borrowings 2.30% 8.10% 5.00% 7.30% 7.20% 7.60%

Bills payable 1.50% 1.60% 1.30% 0.90% 1.10% 0.80%

Other liabilities 2.40% 2.10% 2.30% 2.00% 2.30% 3.70%

Sub-ordinate loans 0.00% 0.00% 0.00% 1.00% 0.80% 0.70%

Total Liabilities 103.4

0%

93.40

%

92.40

%

93.00

%

93.80

%

93.90

%

Share capital 0.90% 2.80% 2.30% 1.80% 1.70% 1.80%Reserves 7.30% 3.00% 2.40% 1.90% 1.60% 1.60%

Un - appropriated profit /

(loss)

-

5.50%

-4.10% 1.40% 2.20% 2.20% 2.30%

Equity - Tier I -

4.10%

6.10% 6.70% 6.40% 5.80% 5.70%

Surplus on revaluation of

assets

0.80% 0.50% 0.80% 0.60% 0.50% 0.40%

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Total Equity -

3.40%

6.60% 7.60% 7.00% 6.20% 6.10%

Horizontal Analysis(2003-2008)

Assets 2003 2004 2005 2006 2007 2008

Cash and balances with

treasury and other banks

100.0

0%

110.00

%

160.90

%

220.80

%

271.40

%

229.80

%

Lending to financial

institutions

100.0

0%

105.30

%

37.60

%

124.00

%

119.90

%

102.80

%

Investments net 100.0

0%

140.70

%

110.30

%

115.30

%

206.10

%

202.90

%

Advances net 100.0

0%

146.30

%

273.50

%

354.20

%

414.20

%

523.80

%

Operating Fixed assets 100.0

0%

98.30

%

181.80

%

248.30

%

290.80

%

428.90

%

Other assets 100.0

0%

101.60

%

113.60

%

155.20

%

163.30

%

264.40

%

Total assets net of

provisions

100.0

0%

131.80

%

163.90

%

214.50

%

272.40

%

312.00

%

Liabilities

Customer deposits 100.0

0%

110.70

%

141.30

%

180.40

%

231.10

%

260.40

%

Inter bank borrowings 100.0

0%

470.50

%

363.80

%

690.90

%

860.70

%

1042.5

0%

Bills payable 100.0

0%

143.00

%

138.10

%

128.50

%

197.10

%

166.60

%

Other liabilities 100.0

0%

113.10

%

157.70

%

180.60

%

258.60

%

480.50

%

Sub-ordinated loans 100.0

0%

119.10

%

146.50

%

192.90

%

247.10

%

283.40

%

Total Liabilities

Share capital 100.0

0%

414.30

%

422.20

%

422.20

%

506.60

%

608.00

%

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Reserves 100.0

0%

2035.7

0%

1020.6

0%

1099.4

0%

1084.6

0%

1040.5

0%

Un - appropriated profit /

(loss)

100.0

0%

-

97.30

%

42.10

%

86.40

%

107.40

%

131.50

%

Equity - Tier I 100.0

0%

194.00

%

265.20

%

333.30

%

378.10

%

427.30

%

Surplus on revaluation of

assets

100.0

0%

90.30

%

182.80

%

163.00

%

164.30

%

173.30

%

Total Equity 100.0

0%

258.00

%

366.10

%

445.00

%

500.10

%

562.50

%

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Cash & Cash equivalent

at the End of the Year

10,590 12,10

7

17,87

7

24,36

8

30,35

3

25,618

Cost to revenue ratio 69.50% 66.50

%

43.50

%

41.10

%

41.10

%

46.20

%

Growth in gross income 14% 4% 58% 31% 17% 21%

Growth in net profit

after tax136% -50%

1511

%42% -7% 2%

Total assets to -24.1 16.4 14.9 15.5 17.4 17.6

Cash Flow Statement - Summary

December 31 2003 2004 2005 2006 2007 2008

Cash Flow from

Operating Activities8,253 4,523 -5,893 9,328

46,35

0564

Cash Flow from

Investing Activities

-8,512 -

17,18

3

11,66

4

-4,241 -

38,46

1

-3,544

Cash Flow from

Financing Activities

-12 14,17

6

- 1,403 -1,904 -1,755

Cash & Cash equivalent

at the Beginning of the

Year

10,803 10,48

3

12,12

9

17,75

3

24,30

3

29,842

Effect of Exchange Rate

changes on Cash &

Cash equivalent

58 109 -21 124 65 511

December 31 2003 2004 2005 2006 2007 2008

Return on assets (ROA) 0.34% 0.14% 1.78% 1.98% 1.42% 1.21%

Profit before tax ratio

(Profit before tax /

Gross Income)

16% 8% 49% 52% 40% 34%

Gross spread ratio 77% 85% 80% 61% 52% 46%

Return on capital

employed (ROCE)- 8% 28% 26% 21% 19%

Advances to deposits

ratio (ADR) Gross44% 55% 74% 74% 68% 75%

Advances to deposits

ratio (ADR) Net

36% 47% 69% 70% 64% 72%

Income to expense ratio 1.4 1.5 2.3 2.43 2.43 2.16

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shareholders funds

Intermediation cost ratio 3.80% 3.40% 3.00% 2.90% 2.60% 3.00%

NPL ratio 35.70%22.00

%

10.60

%6.91% 6.36% 6.16%

Net infection ratio 20.93% 8.28% 3.64% 1.96% 0.74% 1.46%

Weighted average cost

of debt3.54% 2.45% 6.78% 9.09% 9.96%

11.50

%

Capital adequacy ratio -12.33% 16.64 12.17 12.80 10.26 10.90

Financial Ratios Analysis:The purpose of this analysis is to check the profitability and efficiency of the business

includes following ratios

1. Return on Asset:

This describes the effectiveness of investment of earning assets higher the ratios better the

result. It is also known as profitability ratio of the bank Return on earning asset: This ratio

explains the control of management over the spread of interest income to interest expenses.

Higher ratio in 2006 indicates the controllability of management over the interest income.

The net profit margin of ABL increased by 32'4 from the base year. Which might be due to

the rise in earning assets? This ratio is calculated to check the profitability of the bank. After

the calculation of the concerned ratio it is observed that the results are favorable to the bank.

Because the profitability of the bank increased with higher percentage in this year as compare

to the base year. And overall expenses decreased from base year which indicates the control

of management over the spread of interest income to interest expenses is favorable..

2. Current Ratio:

Also called the Working Capital Ratio, it measures the extent to which current assets are

available to meet current liabilities (due within the next 1 2 months). The Current Ratio

indicates whether the business has sample working capital i.e. the excess of current liabilities

over current assets used to meet short-term obligations, quickly take advantage of

opportunities. and qualify for favorable credit terms A Current Ratio of 1.0 or greater is

considered acceptable for most businesses. Most analysts agree that other factors need to be

considered before drawing conclusions from the Current Ratio such as how quickly current

assets can be converted into cash. And the credit terms extended by suppliers and to

customers. A high ratio (greater than 2.0) indicates excessive current assets in the form of

inventory, and underemployed capital. A low ratio (less than .0) indicates difficulty to meet

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short-term financial obligations, and the inability to take advantage of opportunities requiring

quick cash.

3. Acid Test Ratio:

Also called the Acid Test Ratio or the Cash Ratio, it indicates the company's ability to pay off

the immediate demands of creditors using its most liquid and current assets: these can be

converted quickly into cash. Temporary investments and marketable securities. It gives a

more realistic picture of a business's ability to repay current obligations than the Current

Ratio as it excludes inventories and prepaid items for which cash cannot be obtained

immediately. This ratio is usually used as a supplement to the Current Ratio. Indicates the

number dollars of quick assets available to pay each dollar of current liabilities. Generally. a

Quick Ratio of 1.0 or greater is considered adequate to ensure a company's ability to pay its

current obligations. A value of less than 1.0 signals a problem in meeting short-term

4. Earning Assets to Total Assets:

Total assets describe the effectiveness of management of banks funds higher the ratio

indicates how best bank puts its assets to earn maximum return. SBP fixed a certain limit of

reserve which should be considered in evaluating this ratio (open market operation) The bankmost important assets are earning assets (lending to other institution. loans. investments) etc.

Bank efficiency depends upon the worth & volume of the earning in total assets. The analysis

of ABL's earning assets with total asst shows 1 .7'k decrease. Which is because of the change

in investment pattern of ABL.? Although the earning asset of ABL has increased as compare

to the base year. The major change in balances with other banks which is decreased by 48 e/

as compare to the base year. The bank has invested its more amounts in operating fixed assets

which is not included in earning assets.

5. Loan Loss Coverage Ratio:

This ratio explain the capacity of the bank to cover its loan loss through its yearly income

higher the ratio better the result. This also explains the level of protection of all depositors. It

is also based upon

Quality of loan

Efficiency of management

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This ratio indicate the level of protection available to customer in bank in term of their

deposit the higher ratio in 2(H)7 means more protection to customer as compare to 2008

the ratio also indicate the efficiency of management to control its bad debts and to protect

its depositors from the loan losses. Whenever the bank advances the loan to the general

public it is always from the depositor's amount deposited in the bank. Sometimes the

advanced loans become the bad debt and could not be recovered back easily. In the base

year the bank was not so efficient to recover the bad debts. But in the year 2006 the bank

has became more efficient.

6. Deposit Time Capital:

It indicates the portion of depts. With reference to equity. D

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bank is favorable. This profit is because of the earnings generated from the banks earning

assets.

8. Loans to Deposits:

This ratio shows the activity of the bank to advance its available deposits. Apart from central

bank requirement it is the effectiveness of management to utilize its available deposits which

ultimately provide high profit to the bank. Ratio is basically calculated to show the

effectiveness of the management to convert the deposits into advances. This also implies that

the debt coverage of the bank has slightly increased in 2006. The increase in loans shows that

the bank deposits are properly utilized. The profitability of the bank is directly dependent on

the loans/ advances. In respective of the state bank's policy 69% indicates that the bank is

also using some of its reserves in secured investment. Because while depositing money thebank gives less percentage of interest but in the advances the bank receives more percentage

of interest. So with the more advancement of the cash the bank will ultimately generate more

income. So while calculating the concerned ratio. it is observed that the bank's management

is working and utilizing the available deposits in more efficient and effect ways.

9. Solvency Ratios:

The ability of a business to pay its long term debts is called solvency. There are two kinds of

solvency one is periodic payment and second is original principle amount. Periodic payment

is the ability of a business to pay its fixed payment through its normal operating income in

one year. And original principle amount is the ability of a business to pay its original

principle amount from its available resources.

Items Involved:Earnings before interest and taxes, Interest Lease payment, Preferred dividend, Total assets,

Total equity Tangible debts, Tangible net worth in consideration,

The long term debt paying ability of Allied Bank Ltd. It is observed that the solvency of the

business is unfavorable towards the owner. The percentage contribution of total debts in total

assets and in relationship of debts and equity shows that the owner is not in a better position

for payment of its long term debts to the outsiders. Although total assets and equity increased

from the previous year but due to lack of management of the Allied bank. They could not get

out maximum from their assets. The bank uses most of its proportion from the debtors. That

is way the debt ratio shows high percentage change in current year is unfavorable with

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respect to the owner. In the year 2007 as it is observed that the bank has increased its assets

and equity both with 30 and 22 percent respectively that is high percentage than the base

year. But change in total assets is more than the change in equity that is way the equity of the

owner decreased from the previous year. Which make the results unfavorable with respect to

the bank? So if the solvency of the bank is unfavorable to the owner it is ultimately

unfavorable for the business

FUTURE OUT LOOK:The global financial crisis has its effects trickling down to the banking system. The financial

sector is facing its loss but still on its comparative basis its better than other neighboring

countries owing to regulations and role of SBP to take timely corrective measures. Measures

include relaxation of cash reserve ratio (CRR) and statutory liquidity ratio(SLR) in phases.

The banking sectors spread continues its rising trends after witnessing a dip to the level of

6.78% in June 2008 that

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CHAPTER 6

RECOMMENDATION FOR THE ALLIED BANK LTD

Following are some observations and suggestions during the internship:

When giving the loan, the Bank must carefully analyze the past six months

transaction history of the borrower. This will help in judging the dealing behavior

and financial status of the client. In most cases, this thing is not properly done and

it is the major reason of default of many clients.

The Bank should keep the proper cheque on stock which is hypothecated. A textile

owner may ret the loan on same 1000 bales of cotton from checking system of the

Bank.

The Bank should have the moving cameras in their branches for security purposes.

The Bank should try to give more loans to the small borrowers as the past history

shows that most of the loans given to the corporate borrowers have converted into

bad debts. The Bank has a lot of financing schemes but there is very little advertisement of

these schemes. So Bank should increase its advertisement.

When any one comes to operate the lockers, then the things which he keeps in

locker should be checked through metal detector for security purposes.

All the Bank Branches should be getting online to provide the quality and speedy

services to the customers and also remain competitive in the market.

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Most of the bank employees are sticking to one seat only, with the result that they

become master of one particular job and lose their grip on other banking

operations. In my opinion all the employees should have regular job experience

through job rotation. The promotion policy should be adjusted. The circle of ATM machines should extend in all the major cities of Pakistan.

Every year some of the employees should be sent for training to other countries

and employees from other branches should be brought here. More reading

material should be brought / provided in the reference Room, it should be relevant

and its purpose should be to educate the employees with the advance studies in

their field. The employees should be provided the opportunities to attend and

participate in seminars and lectures on banking.

With the internship letter should also be requested to provide us the financial

reports. Because when we demanded the financial reports they said that this is

confidential. And they are not allowed to provide these statements to any trainee.

To create royalty in customers ABL should start the facility of online banking through

Internet, so that customers can check their balances and make transfer of fund online has been

taken as an after effect of minimum profit payment of 5% on saving accounts. The profits

shows that long term investment in Pakistani banking system will be lucrative, as the asset

quality is quite satisfactory.

Challenges faced by the economy in general and banking sector in particular, include

restrained liquidity, slowdown of economic activities and high inflation. Despite of these

issues, ABL has been able to maintain its profitability equipped to face challenges with its

dynamic management and trained workforce.

.

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CONCLUSION

At present there is no such organization in the world that is free from problems and

challenges. Every concern has to strive and struggle a lot to be more profitable and to get

more competitive edge.

The management of ABL is taking strategic steps to enable the bank to emerge as a strong

and progressive institution. It is continuing to make efforts to refine its products and

operations to make them more compatible. New deposit schemes have been introduced and

an action plan to maintain revenue growth in future.

During my internship I have learned many new things in spite of the knowledge gained at

university and also came to conclusion that education alone is not enough, practical training

in every field is crucial to become a successful manager.

The bank has great image due to the trust but it needs to use it effectively to increase market

share. Also the flaws in branch operations such as misallocation of resources should be

rectified.

As the business and economic conditions remain uncertain, ABL continues to develop the

new products like it has been doing in past.

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REFERENCES:

Allied Bank, (2007-2008), Annual Reports, Karachi, Head office, Board of Director.

Uma Sekaran, (2000), Business research methods, London: McGraw-Hill, New York,

Research methods for business, A skill building approach, (3nd Ed.).

Professor Rob Hyndman, Business Research Methods, Clayton campus, Monash University.

Department of Econometrics and Business Statistics.

Muhammad Haris Saeed, (2005-2007), Efficiency of Allied Bank Limited

Before & After Privatization (1981-2006), Lahore, Government College University.

Smith, William, (1992), ESOP revolution, SAM Advanced Management Journal,

http://www.allbusiness.com/

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Table of Contents

CHAPTER 1 .....................................................