Internship Report

on

Bank AlFalah Limited

In the name of Allah the most merciful the most Beneficent

Table of Contents

 Acknowledgement Back Ground History Introduction of Bank Mission Statement Objectives Functions PACRA Rating Banks Product Banks Services Marketing Mix (4Ps) Promotional Strategies Treasury & Investment Structured Finance Foreign Trade & Correspondent Banking Stock Exchange Report Islamic Banking of Bank AlFalah

Table of Contents

 Training Programme SWOT Analysis Findings Suggestion & Recommendation Conclusion

Acknowledgement
First of all I would like to thank that great entity that helped us to get through this report safely, the one who was always there when no one was!

SHUKER- ALL- HUMDULILLAH!

Would that I have words to pay tribute to all staff members of Bank AlFalah whose embodying attitude kept our spirit alive to strive for knowledge and integrity which enable us to reach milestone.

I would also like to express enormous gratitude to operation manager in refining our effort and ideas.

MR.

TABUSUM for providing the direction, all scope of this report and for helping us

I also acknowledge the help and pleasant gathering with Mr. Arshad, Mr. Gohar and Mr. Bilal Akbhar.

BANK---- THE DEFINITION

There are various viewpoints about the origin of the word Bank. One point of view is that it is derived from the word Bans which means a bench. The other view point is that it has originated from the German word bank which is called ban co in Italian language. It is a German word and means a joint stock fund. In proper word we can define; An organization, usually a corporation, chartered by a state of federal government, which does most or all of the following: receives a demand deposits and time deposits, honors instrument drawn on them, and pays interest on them; discount notes makes loan and invest in securities; collects check, drafts, and notes: certifies depositors checks; and issues drafts and cashier checks. So from the definition we can assess that the main activity or function of banking is borrowing and lending of money with a margin of gain. However, as far as the present day banking is concerned, there are a number of different banks, set up under specific different objectives, performing various functions. We can classify bank into several categories on the basis of functions on the basis of the ownership like; Central Banks, Commercial Banks, Exchange Banks, Saving Banks, Agricultural Banks, Industrial Banks and on the basis of ownership like; Public sector bank, Private sectors banks and the Cooperatives banks. But in the above classifications of banks, we are more concerned with commercial banking. The importance of commercial banking lies in the fact that they are countrys largest deposits institutions as such they accumulate saving of people and make them available for investment, thus promoting capital formation. Moreover, they advance loans to people and enable them to meet their obligations, help in controlling speculations, and maintain balance between requirements and availabilities and direct physical resources into desired channels.

Bank Profile:

Company Profile: Ticker: Exchanges: 2006 Sales: Major Industry: Sub Industry: Country: Employees:

Bank Alfalah Ltd BAFL KAR 24,500,000,000 Financial Commercial Banks PAKISTAN 6651

Back Ground:
The Abu Dhabi Group comprising prominent members of the ruling family and leading businessmen of UAE own the majority shareholding in BAL since its privatization in1997.The bank is listed on the Karachi and Lahore Stock Exchange. The chairman of the board HE Sheikh Hamdan Bin Mubarak Al Nahayan is also member of the executive Council of the Emirate of Abu Dhabi and of Higher Consultative Committee for Development of Abu Dhabi Emirate. The chief executive of the bank is a career banker with over 40 years experience both with in Pakistan and abroad and has been with the bank since its incorporation, A team of experienced professionals assists him.

History:
Bank Alfalah Limited was launched on June 21, 1997 as a public limited company under the Companies Ordinance 1984. The bank commenced its operations on November 1, 1997. The bank introduced commercial banking and related services as defined in the Banking companies ordinance, 1962. After a few years, the bank introduced its new identity of H.C.E.B after the privatization in 1997. The management of the bank had implemented strategies and policies so the bank would become a major player in the market. With a partnership with the Abu Dhabi Group the position of the bank became stronger which allowed the bank to invest more in revolutionary technology to increase its range of products and services.

Mission Statement:
To develop and deliver the most innovative products, manage customer experience, deliever quality service that contribute to brand strength, develop a competitive advantage and enhance profitabilty, thus providing value to the stakeholders of the bank.

OBJECTIVES:
Along with the core value it has some objectives, which it trying to achieve. Following are some of them: To maximize profit. To provide all sort of banking services. To serve the humanity in all parts of the world through its network of branches effective & efficient services in best and possible manner. To serve Pakistan better in order to give socio- economic uplift. To provide the maximum profit to depositors by achieving sound profitable growth. To develop & enhance its system & technology. To train its staff. Providing information & advice to its customers. Providing facilities of foreign currency accounts.

Functions:

Branch Banking E.g. Deposits,Deposits, Remittances, Foreign Trade, Lockers.

Consumer Banking E.g. Credit Cards, Auto Loans, Home Loans, Consumer Durables, RTC's.

Electronic Banking E.g. Phone Banking, ATM's, Online Banking

Corporate Banking E.g. Short/Long Term Finance, Trade Finance, Structured Finance.

Treasury & Investment E.g. Money Market, Forex Market, Investments, Govt. Securities, Correspondent Banking.

Branches:
The bank is currently operating through 177 branches in 74 cities, with the registered office at B.A.Building, I.I.Chundrigar, Karachi. Some of the main branches are located in all of the major cities including: Lahore, Kasur, Islamabad, Gawadar, Peshawar, Faisalabad, Quetta, D.I.Khan,Rawalpindi, Sukkur, Sialkot, Multan, Murree, Attock District, Gujranwala etc.

Provision Of Current Information:

The bank conducts training programs for the employees on regular basis and prints various book-lets giving current information about bank, banking & economic scenario in Pakistan and beyond Pakistan.

Security system:
New and modern security system are working there for safety and effectively monitor man traffic areas the building. By use of sophisticated surveillance equipment and crowd management the flow of employees. Clients and other visitors has been streamlined.

Sports:
Bank Al Falah arrange trips and matches for their employees to improve their health. Bank al Falah has also sponsored sports events in the Pakistan.

PACRA Maintains Ratings of Bank Alfalah Limited:

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and shortterm entity ratings of Bank Alfalah Limited at AA (Double A) and A1+ (A one plus), respectively. These ratings are applicable to senior unsecured creditors (depositors) of the bank. The ratings of unsecured subordinated TFC issues of PKR 650mln and PKR 1,250mln are maintained at AA- (Double A Minus). These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments. BAL's ratings reflect the bank's well-conceived business strategy supported by an effective risk management system, helping the bank to maintain good asset quality despite its high growth mode in recent years. Bank Alfalah's business is governed by a low-margin high-volume philosophy. In recent years, the bank has shown aggressive growth in all areas of business including deposit mobilization, credit expansion and geographical outreach. BAL is the fifth largest bank in the country in terms of total assets with a network of 90 branches, including 11 Islamic branches at end-04. BAL plans to continue network expansion (around 60 more branches in the near-term). BAL's strategy encompasses continuing growth in business volumes through providing a wider spectrum of innovative financial products and solutions to an expanding client base. However, this growth is without compromising on the quality of the credit portfolio for which a welldesigned, transparent risk management system is in place.

About BAL: Bank Alfalah Limited (BAL), since its privatization in 1997, is majority
owned by the Abu Dhabi Group. Pursuant to successful offer for sale of 20% shares by some of shareholders, the bank was listed on the Karachi Stock Exchange during 2004. BAL is providing a full range of banking facilities. The future strategy of the management envisages continuation of high growth through expansion of branch network and introduction of new products.

About the TFC issues: BAL issued its first unsecured subordinated TFC during
December 2002 for a tenor of 6 years at a floating rate of latest cut-off yield on 5 year PIB plus 1.35% with a floor of 10.00% and a cap of 15.00%. Principal redemption will be in two equal semi-annual installments commencing from the 66 th month of the issue. The bank issued second unsecured subordinate TFC for a tenor of 8 years carrying markup at a floating rate of latest 6-month KIBOR plus 1.5% during December 2004. Major principal redemption will be in three equal semi-annual installments commencing from the 84 th month of the issue

About Bank:
Since the inception of Bank AlFalah, by the grace of the Almighty, we have moved rapidly in expanding our branch network and deposit base, along with making profitable advances and increasing the range of products and services. We have made a breakthrough in providing premier services at an affordable cost to our customers. Keeping in view our valued clients and the need for constant and effective communication of information, we have designed this website to be as user-friendly as possible. As we pursue the path of excellence, customer satisfaction remains our priority. It is only when we know our customers better, can we deliver a higher quality of services, thereby adding synergy to our existing management expertise, financial strength and profitability. This is yet another channel of communication for the delivery of quality products and services that enhance value to our stakeholders.

Training And Development:

Bank Alfalfas management believes in developing the potential of the Banks employees to the fullest extent. Training & Development Center of the Bank are housed in state of the art facilities at Karachi and Lahore. The centers are responsible for providing multilevel high quality training programmes to all staff members in the following areas: Consumer Banking Operations Credit Marketing & Credit Proposals Credit Administration/Documentation Marketing & Selling skills Customer service skills Leadership and Management Skills Personal effectiveness and skills
It is obligatory for each staff member of the bank to attend at least two days of training in a calendar year. Wherever the Training Department is unable to provide focused training for certain groups of staff, reputable external training providers are invited to fill the gap.

Salary and Benefits:

Bank AlFalah offers very comparative Salaries and benefits to both fresh recruits and experienced banking who wish to join the Bank. Once part of the AlFalah family you can expect both monetary and non-monetary rewards based on performance, some of our benefits are: Attractive Salary Package Employee Provident Fund Gratuity Fund Medical Insurance (Self, family and parents) Bonuses (Performance-based and fixed) Life Insurance Promotions (Frequent performance based) Various types of staff loans Assistance in pursuing higher education Cash awards on completing IBP diploma

Selection & Recruitment:

Based on requirements of experienced staff, Bank AlFalah also recruits talent from the marketplace. Bank AlFalah offers competitive salary / benefits to worthy professionals at all levels who wish to join hands with one of Pakistan's fastest growing banks. From time to time, positions of experienced bankers become available in the following areas: Banking Operations Trade Finance Credits Sales

Batch Programs:

MTO Program:
Bank Alfalah's Management Trainee Program is a dynamic path to launch a fast track banking career. The program provides high quality training and development of the bank across Pakistan. Eligibility criteria: MBA or Masters Degree w/ 3.0 GPA or higher from an HEC recognized institution or a 4-year foreign / local Bachelors Degree, excellent communication skills, and an age limit of 26 years.

Operation Officers Batch:

Joining the Bank Alfalah Operation Officers Batch is a sure way to get involved in various day-to-day consumer banking activities of the Bank such as: account opening, remittances, collections, clearing, government securities, lockers, etc. This position includes an intense 4-week training program designed to teach officers how to manage the above mentioned areas. Eligibility criteria: Graduate / Post Graduate Degree with 1st or 2nd division from an HEC recognized institution, excellent communication skills, and an age limit of 24 years.

Cash Officers Batch

Joining the Bank Alfalah Cash Officers Batch leads to the front line and responsible position of cash officer at the Bank's branches. A 4-week training is provided to COs before they are posted to various branches of Bank Alfalah across Pakistan. Eligibility criteria: Graduation from an HEC recognized institution, good communication / interpersonal skills, and an age limit of 24 years.

Deposits Accounts:
CURRENT ACCOUNT:

Non interest bearing checking account. Minimum account opening requirement of Rs. 10,000 only. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. No restriction on number of withdrawals and on number of deposits

PLS SAVINGS ACCOUNT:

Profit & Loss Sharing Saving Bank Account. Minimum account opening requirement of Rs. 5,000 only. No restriction on number of withdrawals and number of deposits. Profit on saving accounts is credited to the customer account on half-yearly basis. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.

ROYAL PROFIT:

Minimum Deposit requirement of Rs. 50,000 only. Higher returns on higher balances. No restriction on number of withdrawals and on number of deposits. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.

Profit is credited to the customer account on monthly basis.

BASIC BANKING ACCOUNT:

Initial deposit for account opening is Rs. 1,000 with no minimum balance requirement. Non interest bearing checking account. Maximum 2 deposits & 2 withdrawals through cheque is allowed. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. No restriction on ATM withdrawal.

Alfalah Kifayat:
Any Pakistani resident over the age of 18 can open this account. This account is for individual/joint customers only. Other customers like companies, corporate etc are not eligible for opening of this account. Minimum balance requirement for opening this account is Rs. 10,000/- with a maximum of Rs.1, 000,000/- three debit transactions are allowed in a month either through cheques or Debit Card/POS machine. There is no restriction on deposit transactions. The bank will issue the first chequebook of 25 leaves and a Debit card free of cost. Profit will be calculated on monthly minimum balance basis and will be credited in the account on quarterly basis. No profit shall be payable for a particular month, if the minimum balance for any particular day of said month falls below the amount of Rs. 10,000/-. On line facility is available. All service charges are as per the prevailing Schedule of Charges Only one account per customer will be allowed across all branches of Bank Alfalah. Account statement will be generated on half yearly basis.

Alfalah Mahana Amdan:

Alfalah Mahana Amdan is a 3-year TDR with expected rate of profit of 10% p.a. This term deposit will provide an opportunity to individual/joint customers to enjoy higher returns that will automatically be credited to his/her current/PLS/RP/BBA account on 1st working day of each month. Any Pakistani resident over the age of 18 years can avail this facility. This facility is offered only to individual/joint customers. Other customers like companies, corporate

etc are not eligible to avail this facility. The Customer must be maintaining a Pak Rupees checking account with BAL and TDR facility shall be availed from the same branch. Minimum placement limit is Rs. 100,000 and maximum placement limit is Rs. 15,000,000. The Alfalah Mahana Amdan Term Deposit Receipt will be issued for three years tenure with auto renewal facility. Profit will be credited on 1st working day of each month to the customers account after deducting applicable WHT, etc. The maximum amount covered is up to the deposit amount or Rs.1, 500,000 whichever is lower. No medical examination/health declaration is required. The insurance policy will remain valid under the following conditions: a. Till the time depositor maintains his/her funds under the product Alfalah Mahana Amdan Term Deposit. b. Till the time age of the customer remains within the bracket of 18 years to 60 years. In case of a joint account the amount of insurance cover will be proportionately divided (equally) among the joint account holder. The TDR will be auto renewed for the next term at the prevailing rate of profit. In case, the customer is willing to encash the funds at the time of maturity, he/she will furnish the request at least 3 working days prior to its maturity date in writing to the branch to encash his/her TDR and credit the principal amount to his/her account (as mentioned in application form) Premature encashment is allowed. However, in such cases system will calculate profit amount at the prevailing rate of normal TDR depending upon the nearest period bracket completed. For example, if premature encashment is made after 1 year & 11 months, the 1 year prevailing profit rate of normal TDR will be applied on number of days funds remain placed with the bank. Rate differential on already paid profit will be adjusted from the principal amount. In case of any premature encashment upon customer request, prevailing premium rate (i.e. Rs. 140/- per deposit of Rs. 100,000/-) shall be recovered from the customer for the current year and will be deducted from the principal amount. Customer can maintain Alfalah Mahana Amdan Term Deposit only at any one BAL branch, with a maximum cap of Rs. 15 million. An undertaking shall be obtained from the customer certifying that he/she is not availing Alfalah Mahana Amdan TDR facility at any other branch. In case a customer is found maintaining placement at more than one branch than all subsequent Alfalah Mahana Amdan Term Deposit Receipts availed at any other branch shall be treated, as normal TDR and profit shall be paid as per prevailing normal TDR rates. Rate differential on already paid profit will be adjusted from the principal amount. In case a customer is found maintaining placement for more than 15 million, all subsequent placements exceeding Rs. 15 million shall be treated as normal TDR and profit shall be paid as per prevailing normal TDR rates. Rate differential on already paid profit will be adjusted from the principal amount. This facility is not available for business and corporate customers.

Some salient features:

1. Minimum placement limit is Rs. 100,000/- and maximum placement limit is Rs.15,000,000/2. Expected Rate of profit is 10% Per annum (as per PLS governing rules) 3. Profit will be automatically credited on the 1st working day of each month into customers Current/PLS/RP/BBA account 4. Free Personal Accident Insurance coverage up to the deposit amount or Rs. 1,500,000/- whichever is lower. 5. Customer can avail financing facility up to 90% of the deposit(as per banks policy) 6. Any Pakistani resident over the age of 18 can open this account 7. Alfalah Mahana Amdan term deposit can be maintained only at any one BAL branch with a maximum cap of Rs. 15 Million. An undertaking shall be obtained from the customer certifying that he/she is not availing Alfalah Mahana Amdan Term Deposit Receipt facility from any other BAL branch.(included in AOF) 8. Alfalah Mahana Amdan TDR will be issued for three years tenure with auto renewal facility of principal amount i.e. the facility will be renewed automatically on maturity (i.e. 3 years) 9. Alfalah Mahana Amdan TDR will be subject to Zakat, Withholding Tax as well as any other applicable taxes

Bank Services:
Along with above-mentioned products Bank AlFalah also provides u numerous services. The difference between products and services is that products are offered while services are rendered but as both the same purpose (satisfying financial needs), therefore, both are treated at equal footing.

Cash Lockers Savings & Investments Non Stop Banking Clearing Collections ATM Founds Transfer

Lockers:
Bank Alfalah provides safe deposit locker facility to its customers for safe keeping of their valuables like documents, securities and jewellery etc.

Important features of lockers facility are as follows:

Various sizes to choose from small, medium & large. Annual locker rent ranges from Rs.1,000/- to Rs.3,500/-. Locker rent is waived for customers maintaining a minimum deposit of Rs.2 million in current account or above US $25,000/- in a current account or US $50,000/- in a savings account.

Locker Rates:
The annual license fees of the following sizes of lockers will be as follows:

Locker Size Small

Charges

Rs.1000/-

Medium Large Special

Rs.1500/Rs.3000/Rs.3500/-

Key Deposit:

Rs.1000/- (Refundable)

The license fees lockers will be payable in advance every year and no part of the same shall be refundable in any circumstances.

You can apply for the Alfalah Hilal Card just by visiting your nearest Bank Alfalah branch If you have Current / Savings Account in any branch of Bank Alfalah Limited. Your HilalCard will be delivered at your correspondence address by courier within 5-7 days of your application submission

Features:
The Alfalah HilalCard can be used electronically at any retail outlet or ATM that accepts VISA cards and displays these logos:

Personal Identification Number (PIN):

Debit cards that are currently available in Pakistan require the card member to enter the PIN number in order to complete a transaction. The Alfalah HilalCard is a "One-Swipe Card" and does not require you to remember any PIN in order to execute retail transactions. The PIN, which will be delivered to you for Visa Electron will be required for ATM, based transactions only.

Special POS Machines:

In order to use other debit cards currently in the market you would need to find outlets that carry special POS machines where these cards can be used. Alfalah HilalCard is accepted at all outlets displaying the VISA/Electron logo worldwide and having selfprinting POS terminals.

Photo Card - added safety:

Unlike other Debit cards, Alfalah HilalCard is personalized for you since it carries your photograph in addition to your signatures, and thus provides you added security during your transactions. When using a card to pay a bill, you must identify yourself by placing your signature, and when withdrawing cash, you punch in your PIN valid only for your card number. It is much safer to carry a card than large amounts of cash.

Global Acceptability:
The Alfalah HilalCard is globally accepted welcomed at all locations displaying the VISA/ ELECTRON/PLUS logos with self-printing POS terminals. Your card is accepted at nearly 13 million physical locations in more than 130 countries round the globe with above 14,000 major establishments in Pakistan. With your Alfalah HilalCard, you can pay for shopping, meals, travel, entertainment, holiday, petrol and much more. Also it gives you access to ready cash through your PIN (Personal Identification Number) at more than 1 million ATMs to withdraw any amount up to your available bank account balance. This premier card service is a convenient point-of-sale alternative for ATM cardholders who do not qualify for Visa credit purchasing power. Through Alfalah HilalCard, you can access your Bank Alfalah's account from anywhere in the world.

24-Hour Customer Service:

Our 24-Hours Customer Service is there to help you with your requests. Our well-trained and qualified Customer Service team will assist you in: a b c d Answering your queries Registering and resolving your complaints Reporting a lost/ stolen card Activating your Card

Foreign Transactions:
Transactions made outside Pakistan will be converted from the transaction currency to US Dollars, based on international exchange rate prevailing on that date. In order to assist card members, all transactions will be converted to Pak Rupees for payment. This

conversation will be based on the market exchange rate quoted by authorized money changers and in accordance with the Bank's Procedures applicable from time to time.

Zero Loss Liability:

If ever you lose your card, Bank Alfalah ensures that you never have to worry about it! You are covered for all fraudulent charges made on your card as soon as it has been reported lost to us. Just make sure that you report the loss immediately upon discovery. You are completely secure against loss, theft after the card loss has been reported to us.

No Minimum Income Requirement:

Unlike other Cards, the Alfalah HilalCard is easy to obtain. There is no preset income requirement to enjoy the benefits of this fast, convenient and safe. All you need to do is open and maintain an account with any of the branches of Bank Alfalah Limited.

Simplicity:
Charge goods and services to your Alfalah HilalCard at all point-of-sale terminals with self-printing ability displaying VISA / Electron sign in Pakistan and abroad.

Flexibility:
With Alfalah HilalCard you may withdraw cash from over 1 million ATMs (Automatic Teller Machines) worldwide. You no longer need to worry about whether you'll make it to the bank before closing time, because ATMs never close - they are open 24 hours a day, 7 days a week, 365 days a year.

Promptness:
Using Alfalah HilalCard at ATMs and / or shops requires less time than queuing in the Bank and writing out checks.

Controlled Spending:
All Alfalah HilalCard transactions are subject to authorization, which means whenever you do a transaction the status of your account is checked. Thus you eliminate the risk of spending the money you don't have - you yourself control your account.

Overview of Expenses:
Each single charge and each withdrawal of cash at ATM made using your Alfalah HilalCard shall be clearly itemized on your bank statement enabling you to easily check the status of your account.

Immediate Payment:
With Alfalah HilalCard you pay your bills immediately unlike when you use a Credit Card and get the bill later. The amount is directly debited from your designated Current/Savings account.

Bank AlFalah Car Financing:

Minimum Down Payment No Hidden Charges Quickest processing

Bank Alfalah limited, in collaboration with MoneyGram, offers remittance service to Pakistan.MoneyGram is person-to-person money transfer service that allows consumers to receive money in just a few minutes.

Secure and reliable:

An extensive network of quality agents, linked by computer, will transfer your money safely and ensure that it is handled with care and without delay. Thousands of people already use the MoneyGram service all over the world. It is trusted for its reliability and security.

Convenient and fast:

MoneyGram is available in over 154 countries and in more than 40,000 locations worldwide. With MoneyGram your money is transferred immediately and usually arrives at the receiving end within 10 minutes while other services can take days or weeks. There are no complicated procedures and you do not need a bank account or a credit card. Whats more,the receiver is handed the cash immediately.

Free message service (for senders):

There is also an added personal touch-you can receive a 10 word message from the sender with every transaction at no extra cost.

Bank Alfalah Limited acknowledging the vital role of a agriculture in the economic development of Pakistan has designed Rural Finance Program named as "BANK ALFALAH ZARIE SAHULAT". The product is designed to cater for multiple financing requirements of our farming sector. We are caring our customers through chain of complete, distinguished and specialized products for agriculture sector. BAL Branches are designed to help the farmers with expert advice, technical know-how and Credit for their multifarious activities through timely, affordable and attainable modes tosuit farmer requirements. BANK ALFALAH ZARIE SAHULAT is available for Short, Medium and Long terms. Bank Alfalah Limited Strategy is to focus on following Objectives:

Provide reliable infrastructure for Agri customers. Help farmers utilize funds efficiently and effectively. Provide farmers an integrated package of credit, supervision and technical knowhow.

Bank Alfalah Limited is committed to make dreams come true by making Pakistan's Rural Economy healthier and stronger.

Home Remittance:
Remittances are transfers of money by foreign workers to their home countries. The World Bank officially estimates that migrants from developing countries sent from abroad, Home Remittances more than US$ 223 billion to their families during the Year 2005, a figure more than twice the level of international aid. Remittances are playing an increasingly larger role in the economies of many countries. Around 130,000 people leave our country annually, opening up many avenues to enrich the stream of home remittances. Therefore under the present circumstances where enhanced volumes of funds are flowing in from abroad, Bank Alfalah is proactively seeking to be an important conduit to facilitate the growth of sizeable business. Our Home remittances unit is strategically proactive in diminishing the informal channels of transfer of funds. Our strength of correspondent banking relationship plays a pivotal role in augmenting the quality of our remittance services. We continue to offer unprecedented and most efficient services to our clients.

Bank AlFalah Credit Card:

Your Bank Alfalah Credit Card is your partner everywhere and is globally accepted and welcomed at locations displaying the VISA logo. It is accepted at nearly 30 million merchants and 1 million ATMs in more than 150 countries around the globe and over 17,000 establishments in Pakistan. Alfalah VISA lets you pay for shopping, travel, entertainment, meals and much more. Card members are facilitated through a number of promotions from time to time. In addition, there are a number of strategic business partnerships with leading local and international brands for purchase of home appliances at exciting Step-BY-Step (SBS) monthly installment plan with free home delivery at lowest interest rates. Salient features are:

No Joining / Annual / Renewal fee Electricity, Sui Gas, PTCL and Warid bills payment through 24 hour Call Center and Auto Debit instructions SMS for card usage, mini statement, payment receipt confirmation, etc. Cash withdrawal at all 1LINK ATMs Special offer on Warid post paid connections

Rush now to avail matchless features offered by Alfalah VISA.

1) Platinum Card:
It is accepted at nearly 30 million locations in more than 150 countries around the globe and at over 17,000 establishments in Pakistan.

2) Gold & Silver:

A perfect card combination for all segments of salaried & professional individuals.

3) Young Professional:
This Card is for you, if you are: a Graduate or you have just started your Career.

4) Women Exclusive:
Now for the first time in Pakistan, Bank Alfalah has introduced a credit card exclusively for women. This card has its unique features.

5) Student Card:
For the first time in Pakistan, Bank Alfalah introduces a credit card for Students.

6) Supplementary Card:
Now you can give Free Supplementary Cards to anyone you care for.

7) Visa Mini:
Visa Mini is a practical and convenient part of your everyday life - whether you go for shopping, dine out, buy grocery, want to go for holidays.

8) Awami Card:
Alfalah Awami Card is your partner everywhere and is globally accepted and welcomed at locations displaying the VISA logo. It is accepted.

MARKETING MIX:
Introduction:
Marketing mix constitute different tools, which the marketers use to pursue its marketing objectives in the target market. Today we have entered in to a global world where we have few certainties that must be heeded: first, global forces which are affecting global businesses, second, technology which is continuing advancing and amazing us and third deregulation of economic sector. So these factors have created an intense environment of competition and one have to deal with a lot of internal as well as external factors to cope with this new situation. In this particular write-up, marketing mix means a group of 4 Ps which encircle all the tools necessary to gain the marketing share. These four Ps are

Product Price Place Promotion

Product:

People satisfy their needs and wants with products. A product is and\y offering that can satisfy a need or want. The product can be in the shape of goods, services, experience, events, persons, place, properties, organization, information and even ideas. Form banking sector of point of view, product mean something that provides value and satisfaction to the financial needs of customers. Here by value means what the consumer gets and what he gives. In banks consumer pays certain cost to the bank and gets benefits by getting financial assistance to solve their financial matters. Bank Al Falah is providing several products and services to the general public. We will study all those products and services in detail afterward.

Price:
All profit organization and many non-profit organization set prices on their products or services. Price is the marketing mix element that produce revenue, the others produce cost. Price is also one of the most flexible element: it can be changed quickly, unlike product features and channel commitments. From banking sector point of view price are paid against the financial services. For example, BAL is providing its products and services to the public sector and its price are controlled by the

government of Pakistan. So its clear that BAL s prices are less as compared to other multinational (foreign) banks.

Place:
By place we mean the location o bank. Its necessary that banks branch network should be effective and efficient to meet the needs at their own vicinity. Place includes the various activities the company to make the product accessible and available to target customers. From banking sector point of view place means providing a banking network that provide access to world class products and service portfolio throughout Pakistan.

Promotion:
Its a very important tool of marketing mix. By promotion we mean all the activities, which a company undertakes to communicate and promote its products to the target market. In fact promotion has got such a great importance that we have to incur great expense in this particular activity. These days banks are using different tools to promote their products and services in the market to better facilities the customers about new arrivals and other services being rendered. The promotion program consists of advertising, sales promotion, public relation, and direct and online marketing. As far as BAL is concerned, it is publishing verity of things in this regard, which tell us about the bank offering and other sort of stuff.

PROMOTIONAL STRATEGES ADOPTED BY THE BANK:

Currently Bank AlFalah is emphasizing on promotional tools to boost up their market share as now a day, they have a direct competition with various banks. So the bank is making promotion in several respects like.

Relationship Banking: The Bank AlFalah assumed relationship banking, as a strong promotional tool. So its banks new feature which is started by the bank to direct satisfy consumers/client financial needs. In fact bank is facing a strong competition with other banks and now its management has an open eye on the environment and it is adopting all the techniques to direct promote its products and services to its commercial/big client Print Media: Print media is strong promotional tools since it is printed it has a lasting impression, which cannot be rubbed out and can be easily referred back to. Bank advertise its car financing facility into famous newspapers. Brochures: The bank has well designed brochures for all of its products, Loans services and credit cards. These brochures are easily available at all branches of bank. These are written in simple language.

Web-Site: The bank has a comprehensive web site that provide all the necessary required information. It is an efficient advertisement tools of providing all detail about the latest happenings of the bank to people sitting at home or in office without having to come to the bank. Annual Reports:

The bank published an annual report that is used to communication to the shareholders and to ensure them about the safety of their investment by telling them previous year net and other related figures. The annual reports are displayed on notice board.

Treasury & Investment:

Money Market

Short term money market inter-bank trading.

Active Treasury Bills trading in secondary market. Forward forward inter-bank money market trading. Money market linked lending to and borrowing from corporate clients.

Foreign Exchange Market

Active trading in ready and forward USD/PKR. Active quotations of foreign exchange rates in fifteen major currencies. Information in respect of prevailing rates of most of the currencies of the world for corporate clients and individuals. Forward Forward foreign exchange rates of USD/PKR. Active swap trading in USD/PKR and other major currencies such as EUR, GBP, JPY and CHF.

Investment

Active Investment in treasury bills (TBs). Active Trading in Pakistan Investment Bonds (PIBs). Active investment in Certificate of Investment (COIs) Active investment in Terms Finance Certificates (TFCs)

Government Securities

Efficient service for individuals and corporate clients for buying and selling govt securities on their appropriate requests.

Custodianship

Investment Securities Portfolio Accounts of Customers for holding on their behalf Treasury Bills, Pakistan Investment Bonds.

Financial Advisory Services

Briefing on current information available in market in respect of prevailing rates of USD/PKR. Briefing on current information available in market in respect of foreign exchange rates of major foreign currencies.

Future expectations and sentiments on major foreign currencies including Pak.Rupees.

Structured Finance:
Structured Finance Department comprises a team of hand picked professionals, dedicated to syndicated loans and structured products. The teams expertise is well known in the marketplace with its capability to assist public & private sector entities, major financial institutions, multinational corporations, domestic & international institutional investors in innovative financing including underwriting & private placements. The scope of SFUs activities also encompasses advisory assignments, such as privatization, Mergers & Acquisitions (M&As), domestic listings, IPOs and restructuring. During the past few years, SFU has been successful in sourcing and participating in a number of prestigious transactions involving large amounts. Some of the value added services offered by SFU include the following:

Loan syndication Public floatation of Term Finance Certificates (TFCs) and equity Private placement of Term Finance Certificates (TFCs) and equity underwriting Guarantee syndications Financial restructuring

Mergers & Acquisitions (M&As) Fostering joint ventures Privatization Sale side and buyers side advisory Structuring new financial instruments

In future, SFU is envisaged to supplement the enhanced profile and profitability of Bank Alfalah Limited through its value added services, through both asset building and income generating aspects

Foreign Trade & Correspondent Banking:

Inspired by a challenging spirit and an unyielding desire to create a sound and reliable network of correspondent relationships, the bank has placed great emphasis towards it growth. Accomplishing something for the first time requires a special focus. It demands foreseeing possibilities. In our endeavor to do so, we successfully surmounted problems and difficulties arising out of issues relating to weak economic conditions of the economy and a continuous deteriorating status of country risk. The incertitude and skepticism of the international banking community towards financial institutions from emerging markets remained intact. Our persistence during the past four years allowed us to make significant inroads into the arena of correspondent banking. Large international banks, after critically evaluating us, agreed to enter into relationship. During 2002 we added 81 banks to our network of correspondents, bringing the total number over 170. Of these relationships, there are now several banks that rank amongst, the top financial institutions in the world. Our geographical coverage now extends to over 100 countries, which is adequately compatible with our trade flows. Our correspondents, during the year extended us unqualified support, which enabled us to undertake a healthy quantum of foreign trade business. There are many challenges ahead for the bank, in the coming year, our bank will not only continue to review its efforts on existing correspondents to make the relationship more beneficial, but will also add more correspondents to establish a comprehensive international networking to facilitate our customers transaction as well as the Banks proprietary needs. We have provided against the list of correspondents their world and country ranking. These ranking have been taken from The Bankers Almanac July 2001 issue. We would like to emphasize that correspondent arrangements do not necessarily imply the existence of account relationship. We are in the process of rationalizing our current account relationships. We shall continue to open new accounts in various currencies based on our trade flows and business requirements.

The correspondents are listed on a country-wise basis. The banks are listed alphabetically.

Stock Exchange Report of Bank AlFalah:

Its shares are listed on Karachi and Lahore stock exchanges. Bank Alfalah has two subsidiaries, namely Alfalah Securities (Private) Limited (76%) and Alfalah GHP Investment Management Limited (56%). Also, the bank has two associated companies, namely Varid Telecom (Private) Limited and Alfalah GHP Value Fund. The Overview hereunder, however, is that of Bank Alfalah alone, without consolidation with its subsidiaries. The bank now operates with 128 conventional banking (2004: 79) branches, 15 Islamic Banking (2004: 11) branches and four overseas (2004: Nil) branches (three in Bangladesh and one in Afghanistan). During the year, the bank acquired the banking business, undertaking and operations of Shamil Bank of Bahrain B.S.C's Bangladesh operations for US $17.88 million under an agreement dated November 1, 2004. On October 28, 2005, the Board of Directors of the bank approved a plan to segregate its business of Islamic Banking into a separate entity. The Board feels that the Islamic Banking Division should be converted into a wholly owned subsidiary of the bank. Total employees engaged by Bank Alfalah at end 2005 were 5,218 (2004: 3,352). Pacra has rated Bank Alfalah "AA" (Double A), Entity Rating for long term and "A1+" (A One Plus) for short term. Further, the unsecured subordinated debt (TFCs) of the bank has been awarded a credit rating of "AA-" (Double A Minus). The authorised capital of Bank Alfalah is Rs 4 billion, comprising 400 million shares of Rs 10 each. In the next AGM, the authorised capital is proposed to be raised to Rs 8 billion. As on December 31, 2005 the paid up capital was Rs 3 billion, which was held by 11,472 shareholders, of which 11,269 individuals hold nearly 12% shares. Forty five foreign shareholders own 75% of the total shares, including holding by H.E. Nahayan Mabarak Al Nahayan and H.E. Sheikh Hamdan Bin Mubarak Al Nahayan at 16.74% and 10% respectively. The rest of the shares are distributed among a number of corporate entities including banks and DFIs. For the year under review, the issuing of bonus shares at 33.33% has been recommended by the Board, for consideration in the next AGM. If approved, the paid up capital will be increased by Rs 1 billion to Rs 4 billion. Total assets of Bank Alfalah increased by 60% to Rs 248 billion on December 31, 2005 compared to Rs 155 billion on December 31, 2004. Increase in assets has been largely financed through 71% increase in Deposits to Rs 222 billion as on December 31, 2005 (2004: 130 billion). As on December 31, 2005 Investments increased by 62% to Rs 57 billion (23% of Total Assets) compared to Rs 35 billion (23% of TA) as on December 31, 2004. Of the total, Bank Alfalah has rather high investments in Held to Maturity Securities 80% (2004: 80%).

Bank Alfalah's Advances as on December 31, 2005 were Rs 119 billion (48% of Total Assets), registering 34% increase over previous year Advances at Rs 89 billion (57% of TA). On December 31, 2005, of the total Advances 95% (2004: 98%) are in local currency, while 60% (2004: 65%) of the total Advances are for short term. Unlike many banks, Bank Alfalah also has 6% exposure in public/government sector. Lending to financial institutions as on December 31, 2005 was Rs 27 billion, representing 11% of Total Assets (2004: Nil). Major exposure of the bank by way of Advances is in Textiles (20%), Individuals (24%), Agribusiness (3%), Automobile (4%), Food and Allied (3%), Import & Export (3%), Retail/Wholesale Trade (4%), and Others (39%). Bank Alfalah's equity as on December 31, 2005 stood at Rs 6.738 billion (2.7% of Total Assets) whereas gross NPLs on this date were Rs 1.060 billion (1.3% of Gross Advances). Besides, there is Asset Revaluation Surplus of Rs 0.726 billion and Subordinated Loans of Rs 3.223 billion, thus raising equity stake to Rs 10.687 billion (4.3% of TA). Bank Alfalah has made full provision against Gross NPLs according to the SBP criteria. Very low level of NPLs as shown above could be the result of bank's strategy to lend to the right type of customers. However, as some doubtful loans have the tendency to stay under cover for sometime due to different reasons, a prudent policy for Bank Alfalah would be that the management remains extra vigilant in the appraisal and monitoring of all loans. The bank achieved phenomenal increases in Deposits (71%) and Total Assets (60%) as on December 31, 2005 compared to the respective balances as on December 31. 2004. However, Shareholders Equity increased by 42% only. Equity stake including the Subordinated Loans on December 31, 2005 amounted to Rs 10 687 billion as against Total Assets of Rs 248.313 billion. In percentage term it works out to 4.3% (2004: 4.8%), which is considered on the lower side. The skewed growth during 2005 has apparently created an exposure situation, for the correction of which the stakeholders might give urgent attention. Bank Alfalah achieved 56% increase in its profit after tax for the year ended December 31, 2005 to Rs 1.702 billion as compared to Rs 1.092 billion for the last year. ROE at 25.3% for the year is almost at the last year level (2004: 25.0%). Bank Alfalah shares are currently traded at the stock exchanges at prices, more than twice the book value as on December 31, 2005. Performance statistics are given below.

Performance Statistics:
Balance Sheet As on Dec. 31 Total Assets: Cash, balances with banks: Lending to financial institutions: (Audited) (Rs million) 2005 248,314 34,502 27,050 2004 154,834 22,893 0

Investments-Net: Advances-Net:

57,426 118,864 5,845 222,345 240,850 7,464 3,000 3,738 6,738 726 7,464 3,223 10,687 120,417 1,060 1,553 79,168

35,503 88,931 12,724 129,715

Borrowing from fin. Institutions: Deposits, other accounts: Total Liabilities: Net Assets: Share Capital: Reserves, Un-app. Profit: Total Equity: Surplus on Revalue, Assets: Equity incl. Revalue Surplus: Subordinated Loan: Equity and Sub. Loans: Advances-Gross: Gross NPLs: Total Provision: Conting. & Commitments: Ratios: Cash and bank/Total Assets: Investments/Total Assets: Advance-Net/Total Assets: Gross NPLs/Advances-Gross: NPLs/Total Equity: NPLs Prov./Advances-Gross:

149,573 5,261 2,500 1,869 4,369 892 5,261 1,899 7,160 90,291 2,935 1,360 54,515

14% 23% 48% 0.9% 16% 1.3%

15% 23% 57% 3.3% 67% 1.5%

Deposits/Total Assets: Total Liabilities/Total Assets: Total Equity/Total Assets: Equity & S. Loans/Total Assets: Deposits/Equity-Times: Advances/Deposits: Investments/Deposits: Contin.& Comm./Equity -Times: Book Value Per Share: Quoted Price (19-04-06) - Rs: Price/Book Value Ratio: Income Statement Markup-interest earned: Markup-interest expensed: Net Markup-interest income: Provisions and write offs: Net mark up after provisions: Total non-markup income: Income before Admn. Exp.: Admin Expenses, etc: Profit before Taxation: Current & deferred tax: Profit after taxation: Ratios: (Annual Basis)

90% 97% 3.0% 4.3% 33.0 53% 26% 11.75 22.46 58.70 2.61 2005 12,247 7,205 5,042 -380 4,662 2,245 6,907 4,344 2,563 861 1,702

84% 97% 3.4% 4.6% 29.7 69% 27% 12.48 17.48 2004 5,620 2,434 3,186 -373 2,813 1,520 4,333 2,679 1,654 562 1,092

Markup earned/Total Assets: Net Markup Income/T. Assets: Net markup (aft. Prov.)/TA: Non-Markup Income/TA: Income before AE/TA: Admin Expenses/TA: Profit before Taxation/TA: Profit after taxation/TA: Profit after tax/Total Equity: EPS- (year-end paid up) - Rs: Price/Earnings Ratio: Cash Dividend: Bonus Shares: Cash flow Summary Net Cash flow, Operations: Net Cash flow, Investing: Net Cash flow, financing: Change in Net Liquidity: Net Liquidity at beginning: Net Liquidity at end:

4.9% 2.0% 1.9% 0.9% 2.8% 1.7% 1.0% 0.7% 25.3% 5.67 10.35 12% 33% 2005 34,088 -24,444 1,963 11,609 22,893 34,502

3.6% 2.1% 1.8% 1.0% 2.8% 1.7% 1.1% 0.7% 25.0% 4.37 0% 25% 2004 20,639 -8,196 750 13,193 9,700 22,893

Introduction of Islamic Banking:

The thrust for Islamic Banking is founded on the desire to submit to the Divine Instructions on all transactions, particularly those involving exchange of money for money. However, it would be quite unfair to limit Islamic Banking to elimination of Riba only.

Riba is but one of the major undesirable elements of an economic transaction, the others being Gharar (uncertainty) and Qimar (speculation). While elimination of these objectionable aspects in a transaction is indeed a critical aim of Islamic banking system, it is by no means its ultimate objective. At the heart of Islamic Banking is a system of commercial transactions that not only provides Halal modes of commercial transactions by avoiding that which is obnoxious and objectionable, but also fosters ethical, fair and just practices. A key element of Islamic economics is distribution of equitable rewards to the different factors of production. Islamic economic system seeks system of Redistributive justice where concentration of wealth in a few hands is countered and flow of money into economy is fluent. Islamic Banking is, therefore, seen as a lynchpin to achieving the economic and social goals of the Islamic economic system.

Riba:
It has been argued in vain for long in some circles that the prohibition in Islam is that of excessive interest only. Or that it is the interest on consumptive loans that has been forbidden and as such loans extended for commercial purposes are entitled to an excess over the principal amount lent. Such tendentious arguing fails to give due understanding to verses 278 and 279 of Surah Al-Baqarah (quoted below). O ye who believe! Be afraid of Allah and give up what remains (due to you) from Riba (usury) (from now onwards) if you are (really) believers! 2:278 And if you do not do it, take notice of war from Allah and His Messenger! But if you repent, you shall have your capital sums 2:279 However, this does not mean that Islam prohibits any gain on principal sums. In Islam, profit is the recognised reward for capital. When capital employed in permissible business yields profit that excess over capital becomes the rightful and just claim of the owner of the capital. As a corollary, the risk of loss also rests exclusively with the capital and no other factor of production is expected to incur it. Another important element of Islamic finance is that profit or reward can only be claimed in the instance where either risk of loss has been assumed or effort has been expended. Profit is therefore received by the provider of capital and wages/remuneration by labour/manager. A depositor in an Islamic bank can therefore make earnings on his or her deposit in several ways. Through return on his capital when that capital is employed in a business venture; through sharing of profit when his capital is part of the capital that is employed in a partnership, and finally through rental earnings on an asset that has been partially financed by his capital.

Islamic financing: Asset-based financing

A key feature of Islamic banking is that unlike conventional banks which deal primarily in money and financial securities, Islamic financing is related to an asset that is a feature of the transaction, and quite often the principal feature itself. From this springs an important distinguishing feature of Islam wherein Islamic financing is always based on illiquid assets that have intrinsic value. Profit to Islamic financing is generated through bonafide sale of these assets. Conventional banking, on the other hand, is free of such limitations. It lends money and makes its earnings through this act of lending. Its earnings are unconcerned with the economic fate of its lending.

A Perspective:
The history of Islamic banking from its recorded inception is less than 40 years old. From a humble beginning in a small village in Egypt in the late 60s, it has spread to the four corners of the world. By normal standards in a time span that is less than half a century it could have hardly been expected to establish foothold in Muslim world, let alone make its presence felt in Muslim-minority countries. Yet such has been its phenomenal rate of growth that not only is it taking firm roots in its homestead, but is also attracting genuine interest among the standard bearers of conventional banking and in swathes of land where Muslims are a small minority only. Still there is much ground left to cover. In Pakistan, Islamic Banking is less than 3% of the Banking sector. Even in the Gulf states, where it has a larger footprint, in no single country is the volume of Islamic banking more than a third of the entire sector. Many blame Islamic Bankings small share against conventional banking to a smaller portfolio of products. A standard complaint against Islamic banks is that they do not have the same variety of financial instruments as found in conventional banking. Though valid to an extent, this popular jeremiad needs to be seen in the perspective of Islamic Bankings brief history against more than two centuries of conventional banking adopted in full force across the globe, its competition against an entrenched system of banking and the constraints within which it must operate. Notwithstanding, Islamic banking is still growing at more than twice the growth rate of conventional banking worldwide, and while it may not have the latters plethora of financial products, its repertoire of Islamic financial products is steadily increasing. In the following space, principal Islamic instruments are briefly described to acquaint the reader with their fundamental aspects. Following that, Islamic Products in BAL-IBDs portfolio are illustrated in terms of their features.

PRINCIPAL ISLAMIC INSRRUMENTS:

Musharakah:
Musharakah is one of the two ideal modes of Islamic financing. The other one being Mudarabah. Musharakah is a contractual relationship formed through mutual consent of the parties for sharing of profits and losses in a joint venture. Assets in the venture are jointly owned in proportion to each partners contribution. The profits are shared in a preagreed ratio. Losses, however, are incurred in proportion to each partners investment. Islamic Bank representing share of its depositors invests funds in the joint venture alongside other investor(s).

Mudarabah:
Like Musharakah, Mudarabah is also a form of partnership. Whereas all partners in Musharakah contribute capital, under Mudarabah partnership is formed between provider of capital and provider of expertise or human resource. Proportions for sharing profit are decided upfront. Losses are incurred solely by the partner contributing capital.

Murabaha:
Murabaha is a non-participatory mode of Islamic financing where the bank sells the asset required by its client to the client on cost-plus basis. The asset is first purchased by the bank and the bank incurs the risk of any loss or damage to the asset as long as the asset remains under its ownership. Upon sale of the asset, the Islamic bank is obligated to inform the client of the exact cost incurred in the purchase of the asset and the margin of profit incorporated in the sale price. Payment by the client of the sale price may be deferred in which case it would become Muajjal. The selling price once agreed cannot be changed even when the client fails to pay on the agreed date.

Ijara:
Under this facility a client may take on rent, property, vehicle or any other real asset belonging to the bank. The bank transfers the right of use of the asset to the client, while retaining the ownership of the asset. The client pays periodic rent to the bank for the use of the asset. Basis for rentals can be fixed as well as floating. Any change is rental may be made through mutual consent.

Salam:

Salam is a contract of advanced payment against deferred delivery of goods. Goods paid for in advance by the buyer are delivered by the seller after an interval of time. The Seller receives in advance fully paid price of the goods at the time of contract undertaking to deliver the goods specified by the buyer at a future date.

Istisna:
Manufacture of a specific product against precise specifications by a manufacturer for delivery to buyer. It is necessary that the price of the product and product specifications are fully agreed upon by the manufacturer and the buyer, and that the material required for manufacture is arranged by the manufacturer.

ABOUT ISLAMIC BANKING:

MISSION STATEMENT:
To practice Islamic banking in its desired spirit that unfolds its true economic potential resulting in prosperity to our customers and commercial rewards to our sponsors and our employees.

COMPANY INFORMATION:
Great journeys begin with but a single step and mighty oaks are born out of humble seedlings. Bank Alfalah Islamic Banking Division (BAL-IBD) presently a division of Bank Alfalah Limited is gearing up to become a separate, full-fledged Islamic Banking entity. BAL-IBD offers to its customers a broad range of Islamic products under personal, consumer and corporate banking modes. The array of Islamic instruments at the disposal of BAL-IBD is equipped to provide efficient and satisfying solutions to our customers needs. Our Islamic products are Shariah-compliant carrying the seal of approval of the Centre of Islamic Economics, an institution vested with powers to attest authenticity and legitimacy of Islamic banking products in Pakistan. BAL-IBD has entered into a Shariah Consultancy agreement with the Centre of Islamic Economics, Karachi, which is a noted and well-known seat of learning for Shariah scholars and a prominent institution dealing in Shariah Advisory services. Besides assisting in advancement of the Divisions product portfolio, the Centre also stamps approval of the Divisions conduct of business following periodic audits. These audits are in addition to those carried out by the State Bank of Pakistan and the internal audits undertaken by the Division itself.

PERFORMANCE:

Bank Alfalahs Islamic Banking Division (BAL-IBD) started operations in 2003 and at its yearend reflected a modest capital base of Rs 100 million and deposits totalling Rs 113.7m. By following yearend, BAL-IBDs equity had risen more than 4 times to Rs 569m and the balance sheet footing had swelled to Rs 7,799 million. Deposit size had grown from less than Rs 114m to over Rs 7,229 million. The pace of frenetic, triple digit growth was continued over the next twelve months as equity more than doubled to Rs 1,278 million from Rs 569m. Assets also recorded a more than 100% growth, climbing to Rs 15,634 million from Rs 7,799 million. Deposits alone failed to double rising to Rs 12,476m from Rs 6,548 million yet managing a healthy 90% increase. Financial results as of June 30, 2006, reflect growth but at more modest pace. Total balance sheet size fell shy of Rs 18 billion Rs 17,970m vs Rs 15,634m and deposits climbed to Rs 14,111 million, rising Rs 1,635 million in six months period. Income for the 6-month period was Rs 111.23 million

PERSONAL BANKING:
Personal Accounts:
Bank Alfalah Islamic Banking Division (BAL-IBD) offers Current, Savings and Term Deposit facilities to its customers seeking personal banking relationships with the following features:

Facility Current deposit

Minimum balance Profit PKR 10,000/= Nil

Zakat deductions Not applicable

Musharakah Savings deposit

PKR 5,000/=

Tiered structure, 6 monthly pay-out

Applicable

Musharakah Term deposit

PKR 50,000/=

Tiered structure, 6 monthly pay-out

Applicable

All profits subject to 10% withholding tax

On-line cash deposit facility at all branches of Bank Alfalah On-line transfer facility between all branches of BAL-IBD

Remittances:
Foreign and local remittances are both available. Foreign remittances are available in the following currencies: US dollars, Pound Sterling and Euro.

Locker services:
Locker services are offered at select branches. Lockers are available in three sizes small, medium and large. Annual charges for the lockers are as follows: Small Medium Large Rs 1,000/Rs 2,000/Rs 3,000/-

Lockers are available to account holders and carry an insurance value of Rs.250,000

CORPORATE BANKING:
Murabaha Finance

Types of Murabaha:
o o

Local purchases: For purchase of locally available goods Imported goods/commodities/assets

Mode of repayment:
o o o o

Immediately in cash On a mutually agreed future date Spot Murabaha (Import) Deferred Sale Murabaha

Trade Finance:

Imports
o

Letter of Credits
o o

Import Murabaha Finance Full range of services related to imports e.g. Contract registration, Import bills for collection, Shipping Guarantees and Advance payments against imports.

Exports
o o o

Export Murabaha Finance SBP Islamic Export Finance Scheme Other export related services e.g. Collection of export bills, Negotiation under Sight LCs, Advising/Confirmation/Transfer of Letter of Credits opened by other banks

Bank Guarantees
A host of Guarantee types are offered by BAL-IBD including performance, financial and payment guarantees. BAL-IBD also issues guarantees securing financing facilities to be availed from Islamic Banks and/or Conventional Banks under Islamic modes of financing.

CUSTOMER BANKING:
Alfalah Musharaka Homes: With Alfalah Musharaka homes, you can participate
with Bank Alfalah-Islamic Banking Division (BAL-IBD) in joint ownership of property where BAL-IBD invests a certain amount, usually up to 80% of the property value. Through monthly payments a composite of rent for use of property and purchase of BAL-IBDs Musharaka shares/units in the property to BAL-IBD you will be able to increase your stake in the property every month. The rental component will be readjusted every month to reflect your growing share of ownership in the property. Following purchase of all Musharaka units initially owned by BAL-IBD you shall become the sole owner of the house with a free Title to the property. The Alfalah Musharaka Homes product can be used in multiple situations, giving you pure Islamic solutions for your desired objectives.

Purchase an already constructed house (Alfalah Buyer) Purchase a plot and subsequently construct upon it (Alfalah Builder) Renovate, extend, restore and enhance your already owned housing unit (Alfalah Renovation) Transfer your existing exposure of housing finance facility from another financial institution to our Riba-free facility

You have the option to choose tenures for the purchase of units from between 3 to 20 years* * 3 to 7 years in case of renovation.

Alfalah Car Ijarah: A Shariah compliant car-leasing scheme with added features
such as:

No upfront registration charges No upfront insurance premium No rentals before delivery of car

The facility applies to all locally-assembled new cars up to Rs 4 million. Used cars not older than three years can also be considered.

TRAINING PROGRAME:
INTRODUCTION:
During internship-training program, I worked in Bank AlFalah Sargodha Branch for six weeks. Fortunately I had the advantage of working in main Branch of Bank AlFalah. Here I had the chance to learn a great deal. During the training I worked in different departments of the bank. In the following pages I have explained the working of various departments in which I worked during the period of training. I am very grateful to the officers of Bank AlFalah who helped me during

the training in understanding various aspects of bank as well as after training in the preparation of Internship Report. During my internship I rotated through various department of bank. Now onwards I will provide detail of information I got during my rotation through various departments.

Procedure from Opening of Account to Closing of Account:

The depositor can open the account with the bank in the following ways: Individually Jointly Sole proprietorship Partnership Corporation

Individual Account: A person can open account with the bank in Pak-rupee or in selected foreign currencies in nominated branches of the National Bank of Pakistan. First of all he has to fill the account opening from provided by the Bank. Then the introduction of the account holder is done before the manager. For this purpose he has to provide the existing account holder of the bank or officer of the Bank as introducer. If the account holder is illiterate then he provide two photographs to the bank and thumbprint is used instead of signature. In order to stop the payment from the account it is necessary for him to give the instruction to the manager in the black and white. He may get statement of account from the Bank according to his own will. Joint Account: The person can open the joint account in Pak-rupee or in selected foreign currencies in the nominated branches of the Bank. A form is given to the person who wants to open a joint account in which he provides complete information about the joint account holder. If any one or both are illiterate then he or they give the photograph to the Bank and thumbprint. Then the information of the person is done. He also state about the modes of operation that how the amount will be drawn from the account as jointly or alone.

Sole Proprietorship: The person how is the sole owner of the business can open the account with the NBP by providing the following documents to the bank officer. Current municipal license Commercial registration certificate Copy of Identity Card etc.

The Bank is special doubtful case can get additional documents for proper verification. The Bank Manager studies the all documents of business of he feels satisfied then the account of the party is opened with the Bank. Partnership firms: The partnership firms can also opened the account with the Bank. But for this they have to provide the following types of information to the bank. For this purpose a form is provided to account holders in which they provide the following information to the bank and the person is also nominated who can draw the amount from the Bank. Name of firm Name of partner Identity cards of partner Registration of certificate of the firm with the authorities Photograph of partners in case of illiterate and thumbprint

Limited Company / Corporation:

In order to open the account of the company the following documents are required by the Bank so that the Bank would take action in case of any Fraud or discrepancy. Memorandum of Association Memorandum of Article Most recent balance Sheet and Profit and Loss Statement Resolution of Board of Directors about the person who is authorized to sign the cheques. Any other documents

MINIMUM BALANCE AND PROFIT: CURRENT ACCOUNT:

Non interest bearing checking account. Minimum account opening requirement of Rs. 10,000 only. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day. No restriction on number of withdrawals and on number of deposits

PLS SAVINGS ACCOUNT:

Profit & Loss Sharing Saving Bank Account. Minimum account opening requirement of Rs. 5,000 only. No restriction on number of withdrawals and number of deposits. Profit on saving accounts is credited to the customer account on half-yearly basis. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.

ROYAL PROFIT:

Minimum Deposit requirement of Rs. 50,000 only. Higher returns on higher balances. No restriction on number of withdrawals and on number of deposits. Free debit card can be used to withdraw cash and make purchases at thousands of outlets across Pakistan which provides access to funds 24 hours a day.

Profit is credited to the customer account on monthly basis.

Encashment of Cheque:
Bank AlFalah encashment procedure based on one window operation. So Firstly customer gets token from machine and remaining all procedure take place there. Closing of Account: There are many reason for closing of account. Some of the more common reason are as follows. Account holders own request Death of account holder Bankruptcy of account holder Closing pf account due to bad demeanor of account holder etc.

An account is closed at the request of a account holder or as a result of improper conduct of the account holder or because of the account. In first case account holder request to the manager of the Bank to close his account in black and white. While in the lateral case the Bank manager is authorized to close the account. But Bank before closing the account first sends the letter to account holder that your account is going to be closed. So after fulfilling the legal requirement, it is marked on the account holders umber that the account has been closed.

REMITTANCE DEPARTMENT:
The need of remittance is commonly felt in commercial life particularly and in every day life generally. The main function of the bank is to transmit the money from one place to another. By providing this service to the customer the Bank earns a lot of income in the form of service charges

Bank deals with the following types of remittances:

Demand Draft (DD) Mail Transfer (MT) Telegraphic Transfer (TT) Pay Order (PO)

Demand Draft (DD):

The demand draft is a written order given by the branch of the Bank on the behalf of customer to the other branch of the same Bank or to any other Bank to pay the certain amount to the concerned person.

Mail Transfer (MT):

It is the method of transferring of money from in place/ branch of the same bank or any other banks branch through mail service. In MT there is no need of advise because the amount of MT is directly credited in the receiver / payees account. That is why MT can be used to transfer the amount from one account to the account of other branch / bank.

CLEARING DEPARTMENT:
Nearly all the bank provide a wide variety of services to their depositors. One valuable service provided is that of clearing. Clearing department also plays an important role in performing the activities of the bank. The basic function of clearing department is to provide services to customers in collection of their cheques of other banks, whether they are in city or outside the city. The customer can get the money in his account from the cheques drawn on another bank. The bank accepts the cheque in the clearing which it is drawn through the clearing house i.e. State Bank of Pakistan. We can defined clearing as, the transfer of funds from one branch of bank to the other branch of the same bank or the bank on which the

instrument is drawn, without involving cash through State Banks clearing house or we can say in other that cheque which can not be cashed at the cash counter of the bank.

Clearing House:
It is of the service provided by central bank i.e. State Bank of Pakistan to the other commercial bank. SBP acts as a clearing house. A representative of each bank represents his bank in the clearing house. A clearing house is an association of commercial banks set up in a given locality for the purpose of interchange & settlements of credit claims The SBP maintains the accounts of the NBP like other scheduled banks and debits the accounts of the drawee bank and credits the presented bank which is NBP in that case. Now a days, this facility of clearing is being provided by NIFT. Here NFIT stands for National Institution Facilitation Technology These types of cheque are. 1) -Local cheque 2) -Out station cheque 3)-In house cheque 1)- Local Cheque: By local cheque we mean collection of cheque from the banks which are the member of the clearing house and which are located within the city.

2)- Out Station Cheque:

By out station cheque we mean collection of cheque from the banks which are situated the city. It mean that presenting bank and the bank on which the cheque is drawn are not situated in the same city. 3)- in House Cheque: In house cheque are drawn on one branch of NBP and presented to another branch of NBP such cheques are marked with transfer stamp.

Types of Clearing:
Clearing department deals with the two types of the clearance. These are stated below: 1)- Inward clearance. 2)- Outward clearance. 1) Inward Clearance Cheques drawn on BAL and presented to other Banks or handed over to BAL agent in clearing house. That is inward clearance for BAL. So inward clearing result in outflow of funds to collecting bands reducing the balance in the clearing account. 2) Outward Clearing Similarly cheque which are drawn on other bank and presented to BAL Sgd Branch, are known as outward clearance. So outward clearing results in inflow of funds from paying bank into the clearing account maintained with clearing house increasing the balance in the clearing account. Outward clearing thus may be: Local clearing Outstation clearing

Excess of outward clearing over inward clearing produces a net increase in the clearing account balance. Excess of inward clearing over outward. Clearing produces a net decrease in the clearing account balance. The first case is referred to as favorable clearing & the second case as unfavorable clearing.

SWOT ANALYSIS:
STRENGTHS (S)

Strength of BAL is Innovative products and quality service that develop strength and competitive advantage. Islamic banking also adds the value. WEAK NWSS (W) Less number of Branches in Islamic Banking. OPPORTUNITIES Investment in establishment of new branches THREATS (T) GOVT policies, Intense Competition, Inflation.

Findings:
During my Internship I find the bank AlFalah staff members Hardworking more friendly and co operative. In the start of Internship I face some problems but with the help of them I over come it. All the staff members are young so I enjoy learning and Internship also. From the staff members I find all the answers of my questions that are creating difficulties for me.

SUGGESTION AND RECOMMENDATIONS

The customer satisfaction should be guaranteed through rapid delivery of financial products and services. Implementations on the rules, regulation and polices should be done at all cost. The employees should be promoted according to their turn. The bank should spend more on the promotional activities. For the development of the Human Capital the bank should conduct a series of training program to achieve the mission. Bank should adopt more promotional activities. Bank should increase its branches all over the Pakistan. Bank should arrange tours for the enjoyment of their employees.

CONCLUSION:
Bank AlFalah going towards to become a major player in the banking sector and its management is working hard to implement its strategies for achieving their targets. With a partnership of Abu Dhabi Group Bank has the strong financially position which allowed the bank to invest more in revolutionary technology to increase its range of products and services. Bank Alfalah rating AA (Double A) and A1+ (A one plus) reflect the bank's well-conceived business strategy supported by an effective risk management system, helping the bank to maintain good asset quality despite its high growth mode in recent years. Bank AlFalah strategy encompasses continuing growth in business volumes through providing a wider spectrum of innovative financial products and solutions to an expanding client base. However, this growth is without compromising on the quality of the credit portfolio for which a well-designed, transparent risk management system is in place. but still there is some areas that to be improve, and bank should adopts more promotional activities.