6 OBJECTIVES OF STUDYING THE ORGANIZATION

The banking industry in Pakistan since last 5-6 years is on boom. Entrance of lot of foreign banks in the banking industry of Pakistan is the proof that how much potential this industry has. The basic reason to set up banks in Pakistan is the raw form of infrastructure in the sector which needs lots of improvement in Services sector. The upcoming banks are hitting hard the area of better and prompt services with online and remote banking.

Objectives are ends towards which an enterprise activity is aimed. The purpose of business is production and marketing of economic goods and services but to accomplish these objectives to a number of enterprise objectives may be necessary.

Allied bank also have another responsibility to give service to their communities. It watches the growth and development of his community especially the commerce and business of the area.

The main objective is to study the functions of the finance department and to relate the theoretical concepts to practical experiences. The following are objectives of studying the organization, The Allied Bank (ABL).

1. What theoretical concepts the Finance Department of the organization under study is playing.

2. What accounting system is being used in the organization under study?

3. What is the finance system of the organization?

4. What are the sources and uses of funds?

5. How they raise money to run their business and budgets and what are the investment avenues of the organization for placement of their funds to gain

7. OVERVIEW OF ORGNIZATION

Allied Bank is located in Lahore, Punjab, Pakistan. It was established in 1942 before independence, Allied Bank Limited is one of the largest banks in Pakistan with 735 Branches connected to an online network. In August 2004 the Bank was restructured and the ownership was transferred to Ibrahim Group.

7.1 HISTORY OF ALLIED BANK

At the time of independence in 1947 the banks services were very badly affected and by June 30, 1948, the number of offices of scheduled banks came down to only 81 in the territories comprising Pakistan; but by December 31, 1973 there were following 14 scheduled Pakistani commercial banks with 3323 offices all over the Pakistan and 74 offices in foreign countries.

1. National Bank of Pakistan

2. Habib Bank Limited.

3. Habib bank (Overseas) Limited.

4. United Bank Limited.

5. Muslim Commercial Bank Limited.

6. Commerce bank limited.

7. Standard bank Limited.

8. Australasia bank limited.

9. Bank of Bahawalpur Limited.

10. Premier bank limited

11. Pak bank limited.

12. Sarhad Bank limited

13. Lahore commercial banks limited.

14. Punjab Provincial Cooperative bank limited.

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.

ABL is the first Muslim Bank established on territory that later on became Pakistan. It was established on December 3, 1942 as Australasia Bank at Lahore with capital of 0.12 million. At that time the chairman was Kh. Bashir Baksh. ABL’s story was one of the dedications, commitment to professionalism and adaptation to environmental changes leading to its immense growth and stability.

The bank's history is divided into many phases. During 25 years of united Pakistan the bank advanced forward in all areas of its activities. 1970’s were a difficult decade for all Banks of Pakistan. In 1971 East Pakistan was separated and Australasia Bank lost its 50 branches and a lot of capital as well. Nevertheless the growth remained steady.

In 1974 all the Banks were nationalized including Australasia Bank. The small provincial Banks were merged into Australasia Bank. On 1st July 1974 the new entity was renamed as ABL of Pakistan Limited. Then it started its operations as Public sector financial institution.

THE PRE INDEPENDENCE PERIOD (1942-47)

Australasia Bank had the unique distinction of being closely identified with some of the country’s most Prominent leaders of the freedom moment. Such as Mian Mumtaz Daultana (Board of directors), Mian Iftikhar Hussain and Maulana Zafar Ali Khan.

The bank originally started its operation in the garage of Khawaja Bashir Baksh’s bungalow (who was the chairman) near the Lahore Railway Station. But the success of Bank enforced the directors to open it’s another branch in Anarkali on 1st March 1944. Kh. Bashir was first chief executive.

Another branch was opened at Amaratsar in 1945. In June 1946, the bank earned the status of scheduled bank. During 1946-47 many other branches were opened at Mcleod Road Lahore, Jallandhar, Ludhiana, Agra and Delhi.

At independence the industrial and commercial sectors were underdeveloped but ABL contributed a lot in the development of these sectors.

AUSTRALASIA BANK IN PRIVATE SECTOR (1947-74)

It was the only full functional Muslim Bank on the land of Pakistan. On August 14, 1947 bank was identified with Pakistan moment. Many of its Board of Directors was prominent Muslim League leaders. During 1948 new branches were opened at Karachi, Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. But later on its branches were spread to Multan and Quetta. At that time, the bank financed trade in cloth and food grains and thus maintained consumer’s supplies during the riot effected early months of 1948. Australasia Bank made a profit of 50,000/= in 1947-48.

In 1963, Bank had 29 branches in various cities. And deposits were 89 million and advances were 66 million. Bank was mainly concerned with general banking and trade financing (including foreign exchange transactions). It helped a lot in development of small and medium sized business houses. These were Nishat, Crescent, Pak Cement, Haroon traders, Takht Bhai Sugar, Insaf, Punjab soap, Pak fruit and Saboor Oil Mills etc. In 1964, 13 new branches were opened including 3 in East Pakistan. In 1965, 17 new branches were opened and over 83 % of gross profit for the year was earmarked for development expenditure in connection with opening of new branches.

In 1966 bank opened 26 new branches and doubled its reserved funds. For the first time in history, its advances were increased to Rs. 160 million and deposits raised by almost 58 % exceeding Rs. 232 million marks. In 1966, Central Office was built in Karachi but Head Office remaining at Shah Chiragh Building, Lahore.

16 new branches were opened in 1967 and 20 in 1968. Respectively their funds were increased gradually. 21 new branches were opened in 1971. But separation time the 51 branches were lost by the bank which was a big loss.

ALLIED BANK: PUBLIC SECTOR YEARS (1974-91)

Under the Nationalization Act of 1974, 14 scheduled banks were taken over by the Government. Australasia Bank’s Board of Directors was dissolved and the bank was renamed as Allied Bank of Pakistan Limited. Sarhad Bank, Lahore Commercial Bank and Pakistan Bank Limited were merged into Australasia Bank. At time of merge, ABL was second highest among all the banks Nationalized in 1974.

Allied Bank’s first Executive Board was constituted of Mr. Iqbal A. Rizvi as President, Mr. Ajmal Khalil as Joint President and Mr. Khadim Hussain Siddique as member. In 1974 Mr. I.D. Junejo and Mr. Safdar Abbas Zaidi joined the Board later. 116 new branches were opened in 1974 and it started participation in commodity Operation program of Government.

In 1981, President was changed. In 1984, again new president was come to know. He tries to increase the international business. It also initiated a major counter program. In 1985, mainframe computer was installed and effective management system was developed. During this period profitability was increased. New President Mr. Maqbool introduced different schemes in 1987-88. In 1989, new 13 branches were installed. Over 1991, 745 branches were there in all over the Pakistan.

A NEW BEGINNING.

In November/ December 1990, the Government announced its commitments to the rapid privatization of the Banking sector. Allied Bank’s management under the leadership of Mr. Khalid Latif decided to react positively to this challenge. In August 2004 as a result of capital reconstruction, the Bank’s ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group.

Today the Bank stands on a solid foundation of over 63 years of its existence having a strong equity; assets and deposits base offering universal banking services with higher focus on retail banking. The bank has the largest network of on-line branches in Pakistan and offers various technology-based products and services to its diversified clientele through its network of more than 700 branches.

Islamabad Stock Exchange 8^th August 2005

Lahore Stock Exchange 10^th August 2005

Karachi Stock Exchange 17^th August 2005

Now all shareholders of Allied Bank Limited can trade in the shares of the Bank at their free will.

The bank has 850 executives and 7475 staff members spread over 766 branches throughout the Pakistan established a high degree of cooperation and family feelings. After this, it grows more and more. In 2005 Branches at U.K. have been merged with Habib Bank Limited and renamed as Allied Habib International Bank.

7.2 NATURE OF ORGANIZATION

According to of Banking Ordinance 1962, meaning of banking is as under:

“Banking company is a company which transacts the business of banking in Pakistan, mainly of accepting, for the purpose of lending and investments of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order, or otherwise”

The Bank’s journey has been about dedication, commitment, professionalism and adapting to environmental changes, leading to its immense growth and stability.

The bank is providing all banking services of mercantile & commercial banking permissible in the country, which include,

1. Handling of treasury transactions for the government of Pakistan as agent to SBP.

2. Accepting of deposits of money on current, fixed, saving, term deposit & profit & loss sharing.

3. Borrowings money & arranging finance from other banks.

4. Advancing & lending money to its clients.

5. Financing of projects including technical assistance, project appraisals through long term / short term loans, term finance & musharika certificate.

6. Buying, selling, dealing, including entering into forward contracts of foreign exchange.

7. Financing seasonal crops, like cotton, wheat, rice, sugarcane, tobacco, etc.

8. Receiving bonds, scrip, valuables for safe custody.

9. Providing lockers for safe custody of jewellery or documents or securities of the public instruments.

10. Issuance of Traveler Cheques for convenience of transportation of heavy amounts

11. Generating, undertaking, promoting, etc of issues of shares & bonds, etc.

12. Transaction guarantees & indemnity business.

13. Undertaking & executing trusts.

14. Providing personalized Hajj services to the intending borrowers.

Allied bank Objectives:

Allied bank has following objectives:

v Main objective of Allied bank is to earn profit.

v To provide services to their customers and assistance in the development of commerce and trade.

Allied bank also have another responsibility to give service to their communities. It watches the growth and development of his community especially the commerce and business of the area.

Business Activities

Allied Bank is now one of the top 1000 banks in the world this shows the improvement in Allied Bank Policy ,procedures and services during the year .Currently Allied Bank possesses 93 Ist position ,the management has a vision to move forward and be one of the world s leading banks.

Allied Bank Ltd is a commercial bank, in modern time it plays a very vital role and its functions are manifold. The main functions are as under

v Accepting various types of deposits.

v Granting loans and advances.

v Undertaking of agency services and also general utility functions, few of these are as under

v Collecting cheque and bills of exchange for the customers

v Collecting interest due, dividend, pensions, and other sum due to customers.

v Providing safe custody and facilities to keep jewellery, documents, and securities etc

v Transfer of money from place to place.

v Acting an executor, trustee or attorney for the customers

v Issuing of travelers’ cheque and letters of credit to give credit facilities to travel

v Accepting bills of exchange on behalf of customers

v Purchasing shares for the customers

v Undertaking foreign exchange business

v Furnishing trade information and tendering advice to customers.

For proper functioning of all these activities, the bank has divided its operations into different departments that would be discussed next. These departments are as under:

v Cash Department

v Deposit Department

v Clearing Department

v Advances and Credit Department

v Remittance Department

v Foreign Exchange Department

7.3 BUSINESS VOLUME

The growth of its business viz a viz deposits, Advances, investments and its profit for last five years is given under.

	YEAR 2005 RS in Million	YEAR 2006 RS in Million	YEAR 2009 RS in Million	YEAR 2008 RS in Million	YEAR 2009 RS in Million
Total Deposits:	126392	161410	206031	263972	297475
Total Advances	69949	119866	151705	178524	223640
Total Investments:	57657	45269	47156	84151	84587
Equity	9448	12914	16230	18408	20805
Net Profit:	192	3090	4397	4076	4157

7.4 NUMBERS OF EMPLOYEES

The total staff strength at the end of year 2009 was as under.

Permanent 8325

Temporary/contractual/trainee 102

Outsourced 2681

Total staff Strength 11108

7.5 PRODUCTS AND SERVICES OF ALLIED BANK LIMITED

Allied Bank offers a full suite of banking products and services with a focus on service delivery through technology.

· Current Account.

Allied Bank offers Current Account facility for individuals as well as for institutions and commercial customers. Free services for depositors maintaining minimum balance of Rs. 0.100 (M) in previous month.

v Free Online Transactions

v Free issuance of Payment Orders

v Free issuance of Demand Drafts

v Free Issuance of Deposit at Call Receipts

· PLS Saving Deposits.

Allied Bank offers PLS Savings Account facility to its customers with the following attractive features.

v Attractive return up to 5.00% per annum

v No service charges on active accounts

v Complementary ATM cards

v For depositors maintaining a minimum balance of Rs. 0.5 (M) in the previous month the following additional benefits are offered.

v Free Online Transactions

v Free issuance of Payment Orders

v Free issuance of Demand Drafts

v Free Issuance of Deposit at Call Receipts.

Allied Basic Banking Account.

In order to provide basic banking facilities to low income people in Pakistan, Allied Bank has introduced Allied Basic Banking Account (“ABBA”).

v This account can be opened with an initial deposit of Rs 1,000/=.

v The account is a non-remunerative account with no minimum balance requirement.

v The account will be closed automatically if the balance remains “zero” continuously for one year.

v The statement of the account will be issued on yearly basis.

v Here are no service charges on the said account for a maximum 2-withdrawals and 2-deposits during a calendar month. Additional transactions will be subject to a service charge as per Bank’s schedule of charges for every withdrawal/deposit.

v Unlimited free of charge withdrawals from ATM.

Foreign Currency Deposits.

Allied Bank offers the facility for opening Current, Savings and Term deposit Accounts. These accounts can be opened in US Dollar, Pound Sterling, Euro, and Japanese Yen at designated branches.

PLS Term Deposit Account

Allied bank offers the following rates in its normal term deposit account:

PLS Term Deposits	1 Month	3 Months	6 Months	1 Year
Up to Rs. 5,000,000	4.00%	6.50%	7.00%	8.00%
Rs.5,000,001 to Rs.25,000,000	4.50%	7.00%	7.50%	8.50%
Rs.25,000,001 to Rs50,000,000	5.00%	7.50%	8.00%	9.00%
Rs50,000,001 to Rs100,000,000	5.50%	8.00%	8.50%	9.25%
Rs100,000,001 to Rs.500,000,000	6.00%	8.50%	9.00%	9.50%
Above 500,000,000	-	-	9.25%	9.75%
PLS Term Deposits	1 Month	3 Months	6 Months	1 Year
Up to Rs. 5,000,000	4.00%	6.50%	7.00%	8.00%
Rs.5,000,001 to Rs.25,000,000	4.50%	7.00%	7.50%	8.50%
Rs.25,000,001 to Rs50,000,000	5.00%	7.50%	8.00%	9.00%
Rs50,000,001 to Rs100,000,000	5.50%	8.00%	8.50%	9.25%
Rs100,000,001 to Rs.500,000,000	6.00%	8.50%	9.00%	9.50%
Above 500,000,000	-	-	9.25%	9.75%

Allied Munafa Account (AMA).

Allied Munafa Account is a profit bearing checking account with the payment of profit on a monthly basis. The estimated rate of profit is given below:

Slabs	Rates effective from 01.01.07
Rs 0.5(M) to less than Rs 5 (M)	5.00%
>Rs 5(M) to Rs 25 (M)	6.00%
>Rs 25(M) to Rs. 50 (M)	7.00%
>Rs 50(M) to Rs. 100 (M)	7.50%
>Rs 100(M) to Rs. 250 (M)	8.00%
>Rs 250(M) to Rs. 500 (M)	8.50%
Rs 500(M) and above	9.00%

Salient Features:

v The applicable profit rate would be based on slab of amounts maintained on average monthly basis and the profit credited in the account on monthly basis.

v Individuals, Firms, Companies, Schools, Hospitals, Charitable Organization & Non-Govt. Organizations etc are free to open their account in this scheme

Mahana Aamdani Package(MAP)

Mahana Aamdani Package is a unique product with attractive returns. It provides an opportunity for a regular monthly income with a flexibility of placement for 12, 24 & 36 months.

Minimum Amount:	Rs 100,000/- (with multiples of Rs 10,000/-)
Profit:	Payable on monthly basis
Projected profit rates	Up to @ 10.30% per annum
Eligibility:	All individuals & institutions
Period:	1,2 and 3 years

Special Benefits.

v Profit to be credtited in the depositors PLS Saving A/c and can be drawn through ATM all over the Pakistan.

v Free transfer of monthly profit to any branch of ABL all over the Pakistan.

Pre-Mature Encashment.

S#	Deposit paid before Maturity	Recovery of profit already paid & Payment
1.	Within 6 months of opening of account	No profit will be paid & profit already paid will be recovered from principal
2.	After 6 months but before completion of 12 months	60% of the profit paid will be recovered/ adjusted from the principal amount
3.	After 12 months but before completion of 18 months	40% of the profit paid will be recovered/ adjusted from the principal amount
4.	After 18 months but before completion of 24 months	30% of the profit paid will be recovered/ adjusted from the principal amount
5.	After 24 months but before completion of 30 months	20% of the profit paid will be recovered/ adjusted from the principal amount
6.	After 30 months but before completion of 36 months	10% of the profit paid will be recovered/ adjusted from the principal amount

Allied Bachat Scheme (ABS).

Allied Bachat Scheme (ABS) is a PLS Term Deposit Scheme based deposit scheme whereby you can double your investment in just 7.5 years.

Maturity Period:	7.5 years
Minimum Deposit:	Rs. 50,000/- with multiples of Rs. 10,000/-
Expected rate of Profit:	The deposit amount will be doubled in 7.5 years
Eligibility:	All individuals & institutions

Premature Encashment.

No profit shall be paid from the date of issue, if en-cashed before completion of 6 months. In case encashment take place after 6 months, the profit is to be paid for completed half year on the prescribed rates & 6% for the completed months as per the projected rates.

Allied E-Savers Accounts (ESA).

Allied e- Savers Account is a unique savings plan where you can earn returns as high as 7.5% with the flexibility of 4 withdrawals a month!

So wake up to the world of modern banking and open an account now.

Slabs	Rates effective from 01.01.07
Rs. 400,001 up to Rs. 500,000	7.5% p.a.
Rs. 300,001 up to Rs. 400,000	6.0% p.a.
Rs. 200,001 up to Rs. 300,000	5.0% p.a.
Rs.100,001 up to Rs. 200,000	4.5% p.a.
Rs. 10,000 up to Rs. 100,000	4.0% p.a.

Additional Benefits.

v 24 hours phone banking service

v Free Internet banking facility

v SMS transaction alerts

v ATM/Debit Card for cash withdrawals through any ATM

v Including our largest network of ATMs across Pakistan

v And for debit transactions at various retail outlets

v First free cheque book - A/c Payee only.

Allied Monthly Income Scheme

Allied Monthly Income Scheme is a unique product with attractive returns. It provides an opportunity for a regular monthly income. The period of deposit under this scheme is 3 years.

The Scheme Provides The Following Special Benefits.

v Complementary ATM card for depositor and spouse.

v Profit to be credited in the depositor’s PLS saving A/C and can be withdrawn through ATM free of charge Complementary credit card with approved credit limit.

v Free transfer of monthly profit to any branch of ABL all over the Pakistan Loan facility against deposit

ALLIED BUSINESS ACCOUNT:

Allied Business Account is a current account, targeted to small businessmen, that along with the features of a regular account facilitates the customers in their daily transactions by providing free remittances and free online transactions.

ALLIED ADVANCE PROFIT SCHEME

For the first time in Pakistan a term deposit scheme was launched by Allied Bank where profit was paid to the customer right at the time of investment. Allied advance profit scheme is available for the fixed period of 18 months and on the investment of Rs.100, 000 profit of Rs.13, 500 is paid upfront to the customer.

Allied Advance Profit Scheme	PKR
18 Months	13,500*

REWARDING TERM DEPOSIT

It is fixed term deposit scheme with the tenure options of 1,3,6, and 12 months.

Rewarding Term Deposit Scheme
1 Month	7.00%
3 Months	9.00%
6 Months	9.50%
1 Year	10.50%

MONTHLY PROFIT PLUS

It is a fixed term deposit with profit payable on monthly basis, so that the customer can have a regular inflow of cash without compromising on savings.

Monthly Profit Plus
12 Months	10.00%

Foreign Currency Deposits

Allied Bank offers the facility for opening Current, Savings and Term deposit Accounts. These accounts can be opened in US Dollar, Pound Sterling, Euro, and Japanese Yen at designated branches

Allied Cash+ CARD

Allied Bank has a vast network of over 460 ATMs installed in over 130 cities, which continues to grow at a rapid pace.

ABSOLUTELY NO CHARGES!

Allied Cash+ offers the privilege of using thousands of ATMs of all banks without the extra charge of Rs 15. Through this card you can have an experience of Cashless Shopping at thousands of merchant locations. Get the card at no issuance fee. Pay no annual fee and no transaction fee Get instant cash and check balances at over 1000 ATMs nationwide with no ATM access fees! Here is what we have to offer:

Round-the-clock cash withdrawals:

Now you can make withdrawals up to Rs. 25,000 in a day (depending upon your deposit) at any ATM across Pakistan. (The transaction limit is Rs.25, 000.)

'No Fee' ATMs:

Next time you make a transaction at a 1-Link or MNET ATM anywhere in Pakistan, you can be rest assured you will not be charged the extra fee of Rs.15

Balance Inquiry & Mini Statement of Account:

Absolutely free. The ATM screen will reveal the balance in your account. A mini statement comprising last 8 transactions can also be obtained from the ATM.

PIN change: You can now easily change your PIN at regular intervals for enhanced security at all ATMs of Allied Bank.

Utility Bill payment facility: Pay your telephone, electricity, and gas utility bills on any of our ATMs without having to wait in long queues outside your branch.

Funds Transfer facility:

You have the power to transfer money from your account to any account of Allied Bank anywhere in Pakistan

ONLINE BANKING

Allied Online is a unique service offering from Allied Bank Limited. Through Allied Online, your account in Allied Bank is available to you from any of our branches countrywide.

Allied Online provides a secure, efficient and convenient facility for making payments to beneficiary accounts from any of our branches countrywide. Corporate customers requiring funds collection or disbursement facility can use it for cash management services.

INTERNET BANKING

Banking at your fingertips! “Allied Direct Internet Banking,” offer you the convenience to manage and control your banking and finances - when you want, where you want to! It's Simple, Convenient, Secure and Faster. So, just get clicking.

Some features of Allied Direct are:

Simple and Convenient Easier navigation and help provided at every step so you can have most out of this service. With Allied Direct convenience is just a click away.

Secure and Faster Secured & encrypted with latest tools and technologies, Allied Direct is the choice for secure and fast Internet Banking.

24 x 7 Access
You now have access to your account 24 hours a day, 7 days a week. You transfer funds or even pay bills even if it's a holiday.

HELPLINE

Since the launching of Allied Cash+ Debit Card on January 27^th 2003, Allied Bank embarked on the path of value added consumer products. Customer related services were being provided through our ATM-Wing situated at Central Office Karachi.

As the numbers of Allied Cash+ Card increased, so did the services related inquiries, complaints and requests from our customer. Hence, to facilitate and to offer Quality Service to our customer, Allied Bank decided to provide Toll Free Number Customer Services through 0800-22522.

VISA CARD

Visa is the world's leading payment brand generating more than US$3.1 trillion in annual card sales volume. Visa has unsurpassed acceptance in more than 150 countries. The Visa system is the world’s most robust electronic payments network, linking a billion cardholders and more than 24 million acceptance locations around the world. Moreover, VISA debit card is superior to Master Card & VISA is currently the undisputed leader in debit worldwide.

The New Allied Bank-VisaCard: For You!

Allied Bank Limited holds a unique privilege of having 469 ATM machines all over Pakistan and having an extensive online network of 757 branches and a customer base of around 2.2 million. Our new VISA debit Card will give access to our customers to 49,000 retailers in Pakistan and over 27 million retailers all over the world. It will give the access to over 1 million ATMs worldwide and over 3,000 ATMs in Pakistan including our largest network of ATMs of 469 ATMs. The Allied Bank-VisaCard is your ticket to complete financial independence.

No Annual or Joining Fee!

No annual or joining fee is applicable for the first year of operations of the card after 1st year for Local Card Rs.1000/ per year, International Card Rs.1, 500/- per year and supplementary card are free for Lifetime

Quick Processing Time:

With our automated processing systems and simplified application procedures, Allied Bank promises delivery of the Visa Card at your door step in record time.

Features

Get Cash: You are always on the move, now your bank account is too. You can use your Allied Cash+Shop Visa Debit Card to withdraw cash directly from your bank account from over 2,500 ATMs in Pakistan - including Allied Bank's largest network of ATMs - and over 1 million ATMs worldwide.

Shop Anywhere

Use the Visa power of your Allied Cash+Shop Visa Debit Card to shop at over 49,000 retailers in Pakistan and over 27 million retailers internationally.

Dine Out

Go to all your favorite restaurants and order whatever you want without having to worry about how much cash you have in your pocket - thanks to your Allied Cash+Shop Visa Debit Card

Enjoy Traveling
Imagine traveling without carrying cash. With your Allied Cash+Shop Visa Debit Card, you can buy your plane tickets and do all your shopping abroad without worrying about spending too much or running out of cash.

Get Groceries

Go grocery shopping with your Allied Cash+Shop Visa Debit Card and you will never have to worry about having enough cash in your pocket when you're standing in line at the cash counter.

Have Fun

Whether you feel like taking the family to see a movie at the cinema or treating some friends to a night of bowling, you can do it all and more with your Allied Cash+Shop Visa Debit Card.

Fuel Up

Now you can fuel up your car without emptying your wallet. Pay for all your fuel purchases with your Allied Cash+Shop Visa Debit Card.

Stay Alert

Now, be more secure and keep better track of your spending. With your Allied Cash+Shop Visa Debit Card, you can get SMS alerts when you make transactions on your Card. You can also access the details of your transactions via internet banking at www.abl.com.pk So you are always updated and alert.

Allied Visa Gold Credit Card

With your Allied Visa Gold Credit Card every Pakistani can now enjoy the benefits of a Gold Card internationally with unmatched savings greater flexibility, convenience and security.

Features

Buy Now,Pay Later

With your Allied Visa Gold Credit Card, your free credit period allows you to pay for your purchases up to 50 days after the date of purchase. So now you can buy all the things you want - whenever you want - at your own convenience

Flexible Repayment

When paying your credit card bill, your Allied Visa Gold Credit Card gives you the option to either pay the entire amount according to your statement or a minimum of 5% of your total outstanding balance.

Cash Advance Facility

As an Allied Visa Gold Credit Card member, you are entitled up to 75% of your available credit limit in cash. Just go to your nearest ATM with the VISA or PLUS sign and avail the facility of withdrawing cash 24 hours a day.

Allied Easy Installments (AEI)

The Allied Easy Installments (AEI) plan provides you with the facility to pay your outstanding card balance in equal and affordable monthly installments spread over 3, 6, 12, 18, 24, 30 or 36 months. So now you can easily afford anything from everyday household appliances to exotic vacations abroad.

Supplementary Cards

Want to share the benefits of your Allied Visa Gold Credit Card with others? Now you can! Treat up to two people with supplementary credit cards and pass on the many privileges of your Allied Visa Gold Credit Card to your chosen friends and family members.

Balance Transfer Facility

In case you have outstanding balances on other cards, consolidate these onto your Allied Visa Gold Credit Card with the lowest BTF rate and save more on your outstanding payments than ever before.

Credit Protection Plus

With Credit Protection Plus, your Allied Visa Gold Credit Card provides payment cover against:

· Death, due to accident or sickness

· Permanent and Total Disability, due to sickness or accident

· Temporary Total Disability, due to sickness or accident

· Terminal Illness

Zero Loss Liability

The Allied Visa Gold Credit Card’s Zero Loss Liability feature protects you from paying for any unauthorized transactions on your Card in the event that it is lost or stolen. Please notify Allied Phone Banking immediately on 0800-22522 (within Pakistan) or on 9221-5301094 (outside Pakistan) in case your Card is lost or stolen.

24-hour Allied Phone Banking

For any information and queries about your Allied Visa Gold Card, call Allied Phone Banking on 0800-22522. If you are calling from outside the country, please dial 9221-5301094.

Free CIP Lounge Access

As an Allied Visa Gold Credit Cardholder, you are eligible to avail the free lounge facility at Quaid-e-Azam International Airport, Karachi and enjoy a variety of complimentary features.
Relax while you watch leading television channels or select something to read from an updated library of newspapers and periodicals. Also feel free to plug in your laptop and mobile phone into the charging facilities provided or browse the internet or send and receive faxes while you wait. You can also treat yourself to a wide assortment of high quality snacks, beverages and fresh fruits.

Visa Platinum Credit Card

With your Allied Visa Platinum Credit Card you can enjoy exceptional benefits and a host of local and international benefits like never before!

Features

Visa Platinum Golf

Fancy a game of golf? With your Allied Visa Platinum Credit Card, you can enjoy golf at its best with complimentary tee-offs, discounted green fees and access to some of the world’s most celebrated golf clubs.

Platinum Life Platinum

Life is a unique platform that showcases exclusive programs and events specially designed for Visa Platinum Credit Cardholders. With your Allied Visa Platinum Credit Card, you are eligible to join this exclusive platform and avail many exciting services like Platinum Club, Platinum Dining, Platinum Golf, Experiential Travel and much more.

So get ready to enjoy the luxury of Platinum Life with the Allied Visa Platinum Credit Card.

Visa Platinum Club

As a member of the Visa Platinum Club, you are part of an internationally reputed rewards program that provides an unmatched quality of services and customized luxuries to all Allied Visa Platinum Credit Cardholders.
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Visa Platinum Dining

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Traveling with your Allied Visa Platinum Credit Card means that you can now avail the optional facility of the Priority Pass Airport Lounge Program in your overall Visa Platinum product offering.

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The Lowest Service Charge

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Buy Now, Pay Later

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Flexible Repayment

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Supplementary Cards

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Balance Transfer Facility

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Credit Protection Plus

With Credit Protection Plus, your Allied Visa Platinum Credit Card provides payment cover against:

· Death, due to accident or sickness

· Permanent and Total Disability, due to sickness or accident

· Temporary Total Disability, due to sickness or accident

· Terminal Illness

Zero Loss Liability

The Allied Visa Platinum Credit Card’s Zero Loss Liability feature protects you from paying for any unauthorized transactions on your Card in the event that it is lost or stolen. Please notify Allied Phone Banking immediately on 0800-22522 (within Pakistan) or on 9221-5301094 (outside Pakistan) in case you’re Card is lost or stolen.

SEASONAL FINANCE

Seasonal Finance facility is allowed against pledge of produce of Cash Crops harvested in that particular crop season. The delivery of pledged stocks/goods is made against appropriate cash payment.

AGRICULTURAL FINANCE.

Bank under Agricultural Financing Scheme envisaged by the State Bank Of Pakistan extends 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).ABL has financing schemes like Hari Bhari Finance ,Livestock financing and Cattle Farming Financing

IMPORT EXPORT BUSINESS/TRADE FINANCE.

Allied Bank 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.

RUNNING FINANCE

It 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 mark-up is recovered on the products of daily outstanding balance. The running finance is suitable for meeting day-to-day financial needs of the business

DEMAND FINANCE.

It is disbursed in lump sum or in accordance with the agreed disbursement schedule and it is repayable as per the agreed installments, which could be monthly, quarterly, biannual or annual

CORPORATE LEASING

Allied Bank Limited commenced lease operations upon amalgamation with Ibraheem Leasing Limited. Facilities include leasing for machinery, commercial vehicles, vehicles and equipments. The Bank provides lease facilities for balancing, modernization, replacement and expansion schemes to corporate and commercial clients in all industrial enterprises.

Home Remittance.

The Bank having a network of over 750 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 Service, Allied Bank ensures that beneficiaries' Accounts in Allied bank branches are credited with in 48 hours of receiving home remittance information from overseas

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.

Hajj Services

The Bank serves the intending pilgrims by helping them in performing this religious obligation. The Hajj forms and other related the bank provides services. 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 Government of Pakistan announces the Hajj policy.

Utility services

All branches of the Bank collect utility bills of electricity, gas and telephones. For convenience of the customers, the branches collect Utility Bills during banking hours and also in the evening banking on all working days. Bills can be paid through Cash or Cheques. Consumers may drop bills with crossed Cheques into a drop box available at the branches under "Cheque Drop-in" system. Utility Bill payment facility - Pay your telephone, electricity, and gas utility bills on any of our ATMs without having to wait in long queues outside your branch.

NON-FUND ADVANCES

Non-fund base business is the business where the Bank is not involving its funds at the time of sanction of certain facility. But it is contingent liability of the bank & in the case of needs Bank is supposed to honor it promise.

1. GUARANTEE

A guarantee is a promise between one person to another person or party to answerable for the debt of the third party. Bank issue guarantee after 100%cash collaterals are provided by the person with 35% in the form of cash, subject to remaining amount is secured by addition collateral.

Bank accepts only other bank guarantee but in some cases personal guarantee is also accepted. The bank provides following types of guarantees to the customers.

Ø Bid Bond

Ø Mobilization Bond

Ø Performance Bond

BID BOND

The facility provided at the time of bid opening is called bid bond.

MOBILIZATION BOND

When the bid is accepted, the bank provides this type of facility to the customer.

PERFORMANCE BOND

When the project is completed, a performance certificate is provided by the contractor about the performance of the project for one year. During one year, if there is any mishap in the project the repair otherwise authorities claim the performance charges from the bank.

2 Letter of Credit

A letter of credit is defined as under

“Undertaking by the importer’s bank to exporter that the draw in accordance with terms and conditions of the credit will be honored if presented with in the validity of the credit.” It is a conditional undertaking by the Bank to make payment to the exporter if he fulfills the terms of credit by presenting the required documents to the bank in his country. In fact LC is a legal document on behalf on which the payment made by the importer’s bank to the exporter’s bank

SIGHT L.C

The LC in which payment is made at sight basis after documents are delivered.

USANCE L.C

In this class of LC the exporter with that listed in the L.C makes the payment after a specific period of time bank checks all the documents provided. If no error then payment is being made else vice verse. The payment in this type of export is made in full else specified, partly payment may be made when both the parties agrees. After receiving the LC and checking all the documents the officer is issuing an approval sheet. The bank provides the bill of exchange.

LOANS FOR EMPLOYEES

Allied Bank has a long list of loans, which it offers to its employees. The hire the post is, the more facilities are given to the employees. Now they have also amended the rules relating to conveyance allowance. Loans are as follows.

PROVIDENT FUND LOAN.

Provident Fund loan is loan which is given after the retirement of the employees. It is equal to own contribution plus the interest on the amount. An employee can avail this loan up-to three basic salaries and repayable within three years.

OLD OPTION BENEFITS.

In P.F.L a lumps is taken in this case and the pension is not given.

New option benefit.

In case of option pension, loan against general provident fund is allowed equal to own contribution and 3 months basic salaries.

CONVINCE LOANS.

The convince loan include Motor Cycle Loan, Car Loan. The car loan is available to staff up to Rs.0.500(M) which is sanctioned to officers, executives only. Such loans bear interest of six 6% p.a. They are recoverable in 100 monthly installments.

MOTOR CYCLE LOAN.

Such loans are sanctions to lower grade officers and clerical, non-clerical staff. The limit of the loan is not more then Rs.70,000. It is conditioned that the employees have completed 3 years of service in the bank. Motor Cycle loan is interest free loan to Officer, Clerical & Non-Clerical staff. It is repayable within five years in 50 equal installments.

HOUSE BUILDING LOANS.

This loan is given if the employees have completed of full 5 years of service, as a confirmed officer. It is repayable in 200 installments. Limit of loan is already fixed by the Management according to their Management Grades.

RECRUITMENT

After the Privatization of ABL central office at Karachi is dealing with the appointments to different officers posts. And the central office also fills other executive posts. For certain posts the executives also have right to appoint the qualified persons. But the main criteria of appointment are by test and interviews. Allied Bank has a criteria already prepared for the appointments of employees. The criteria involve:

· Academic work.

· Extra curricular activities

· Working experience.

8. STRUCTURE OF OVERALL ORGANIZATION

ORGANOGRAM

Internal

Audit

8.2 ORGANIZATION STRUCTURE OF BRANCH

8.3 REVIEW OF VARIOUS DEPARTMENTS

Allied Bank Ltd. has divided its operations into different departments for smooth running of the system. Following are the some main departments of Allied Bank Cantt Branch which I studied during my internship period.

8.3.1 GENERAL BANKING

General banking is one of the major departments of Allied Bank, Ltd. It consists of sub department, which are following.

1. Current department

2. Token department

3. Remittance department

4. Clearing department

5. Accounts department

8.3.2 CURRENT DEPARTMENT

This department maintains all formalities of the accounts and accounts holder, like accounts name, account holder's name, code No., and full address. Different cheques debit and credit voucher come from different departments like Token, Clearing, Remittance, Cash, and Foreign Exchange, Advance and posted against different accounts.

A working Journal called Manual is prepared daily which shown the balance accounts of all parties. Mark-up and profit are calculated daily. That would be debited or credited from or to Account holder's account after specific period of time. Mark-up is debit from the account after every three month and profit is credited to accounts after every 6 month. New accounts are also opened in this department. Total function perform by this department is shown by block diagrams. These diagrams show the sequence of activities. These are simplified diagram of what is actually being done in current department and what happen to a customer who comes to open an account in the branch.

Following are the three accounts, which are maintained by this department.

· Current Account

· Saving Account

· Fixed Account

ACCOUNT OPENING

It is most important department of bank and its major source of income for bank. Operation officers deal in this department. Following procedure is adopted for this purpose.

How To Open An Account

It is very simple and quick procedure. A person who wants to open an account must have the introduction of bank’s staff or any already existing account holder of the bank. The customer is required to fill an account opening form (AOF). Then signatures of the introducer are verified from S.S. Card (signature specimen) before opening account. AOF is very standard and up to the mark which contains almost whole information about customers. Customer is guide to fill all columns of AOF. All formalities and requirements are completed and verified, and all supportive documents are taken and checked according to the nature of account. If any formality is incomplete, cheque book is not issued until it is fulfilled.

If a person cannot sign write his / her hand thumb impression is affixed marked, which is attested by one male or two female witnesses. Thumb impression for female right hand and for male left hand.

Account number is allotted to the customer and all particular such as nature of account, opening date, initial deposit, title of accounts are written in register.

Account is opened in the system (Bank Excel) by putting all the particulars of the customers in the system. Specimen Signature Cards are handed over to in charge of operations department for record and verification. The letter of thanks is sent to customer for confirmation of address and other particulars of customer and one copy is attached to AOF. After complete procedures finally the manager of bank signs the AOF and these forms are filed in a proper sequence.

They also have to give identity letter

1) Copies of CNIC.

2) Passport size Photograph

One place on the form other is on S.S. Card they have non-bearer cheque. On their cheque book a stamp is affixed on it there is written. Thumb impression should be fixed in front of an officer of the bank.

Cheque book request forward by fax to Central Office, Karachi, and cheque books will received after three days and delivered to the customer on the desk by taking their signature or if some one else want to take on the behalf of account holder then he must come with introduction letter duly attested his signature by the account holder along with copy of CNIC.

The bank does not make payment of a cheque bearing a six months or older date. If an account is not operated in six months. It is called dormant account.

Procedure Of Account Opening.

If a person cannot sign write his / her hand thumb impression is affixed marked, which is attested by one male or two female witnesses. Thumb impression for female right hand and for male left hand.

Account number is allotted to the customer and all particular such as nature of account, opening date, initial deposit, title of accounts are written in register.

Account is opened in the system (Bank Excel) by putting all the particulars of the customers in the system. S.S. cards are handed over to in charge of operations department for record and verification. The letter of thanks is sent to customer for confirmation of address and other particulars of customer and one copy is attached to AOF. After complete procedures finally the manager of bank signs the AOF and these forms are filed in a proper sequence.

They also have to give identity letter

3) CNIC copies

4) Passport size Photograph

One place on the form other is on SS Card they have non-bearer cheque. On their cheque book a stamp is affixed on it there is written. Thumb impression should be fixed in front of an officer of the bank. Cheque book request forward by fax to the head office and cheque books will received after one day and derived to the customer on the desk by taking their signature or if some one else want to take on the behalf of account holder he must have to show initial deposit slip and give ID card photo copy. The bank does not make payment of a cheque bearing a six months or older date. If an account is not operated in six months. It is called dormant account.

The bank different types of accounts exist.

Types of Account

The bank different types of accounts exist.

1) INDIVIDUAL ACCOUNT

Any individual or proprietor of business can open an individual account at ABL. PLS (profit and loss sharing) saving accounts can be opened with the minimum balance Rs. 5000/- with expected profit rate is 2.5%. Following requirements has to be fulfilled for this account.

v Signature of customer on back of AOF.

v Mention next of kin (nominee)

v Name and A/C # of introducer.

v Verified sign of introducer.

v Customer signature admitted by officer.

v C.N.I.C photocopy attached.

v Letter of thanks.

2) JOINT ACCOUNT

When different people want to or need to share a single account it is called joint account. The names of persons are written on the title of A/C and on S.S. card. Single person cannot open joint A/C. Both persons have to sign on cheque. When two or more person neither partner nor trustee open account in their name is joint account.

Requirements

v Sign of both customers on back of AOF

v Sign on joint A/C # mandate

v Name and A/C # of introducer

v C.N.I.C. copies of both members.

v Mode of operation.

3) BUSINESS ACCOUNTS

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

I) SOLEPROPRIETOR ACCOUNT.

This account is for those person who has his own business and he must be the solely owner of the business.

Requirements

v Sign on AOF.

v CNIC copy. .

v Sole proprietorship declaration

2) PARTNERSHIP ACCOUNT

Account title will be the name of the partnership firm.

Requirements

v Sign of customers on back of AOF.

v CNIC copies of partners

v Partnership deed (certified copy) duly attested by notary republic.

v Partnership mandate (prescribed format)

v Companies rubber stamp

The A/C is opened in the firm name and all partners designate one or two persons to act behalf of the partnership firm all acts of the firm jointly and severely.

3. LIMITED COMPANY.

v Private Limited

v Public Limited

1) Private Limited

Requirements

v Request on companies letter head dully attested by chairman.

v Sing of all directors on back of AOF.

v CNIC copies of all directors.

v List of directors on companies’ letter head.

v List of memorandum and article of association.

v Copy of board resolution.

v Latest form 29 (if director is to be changed or in case of his death, this kind of form is filled, it includes information that a new director has how much number of shares with him.

v Companies’ rubber stamp.

v Director should attest copy of certificate of incorporation; co register an office stamp should be affix.

2. Public Limited

1) Certificate of commencement of business

2) Same as home documents.

· Club / Society / Association

These concerns are non-trading in nature. They have their own rules and regulation and their affairs are mentioned by the committee called as a governing body or managing committee.

v Stamp of directors.

v CNIC copies.

v Certified copy of resolution.

v Memorandum and article of association.

v List of heads on companies’ letter head.

v Bank account opened in their name with ABL.

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

v The manner in which the account shall be operated.

v Letter of registration.

Cheque Book Issuance

When the account is opened, then the customer is given a cheque book to sign upon and to cash money. It proceeded as under; all the account opening formalities must be completed before issuance of cheque book. Particulars of the cheque book requisition should be completed containing title of account, account number, type of currency, and number of leaves and signature to the customer. Signatures of the customer are verified on the requisition.

Allied Bank is now offering inter-net banking and customer who has availed this facility can apply for cheque book by using his I.D. without going into branch.

If customer is unable to collect his cheque book, then he can give authority to the third person to collect his cheque book on his behalf by signing on the back of the requisition, in such case, the particulars of the third person are required like name of the person CNIC number and signature of that person on requisition and cheque book issuance register.

Cheque Book is taken out from the safe / locker. It is assured that series of the cheque book. Particulars are entered in the cheque book issuance register. Account number is stamped on very leave of the cheque book and those leaves are counted. Name of account holder is written on the cover of the cheque book. And requisition on the cheque book for further issuance is properly filled, stamped and signed by officer of the bank. Cheque book is delivered to the customer and his signature on the cheque book issuance register.

Earlier the banks were charging a fee for issuance of cheque book but now whenever a new account is opened, the account holder issued a cheque book free of charge.

Now Allied Bank Limited, is issuing cheque books in the name of customer i.e. customer name is printed on the leaves of cheque book.

Allied Bank issues the following cheque book.

v Saving account - 25 leaves

v Current account 50 to 100 leaves.

v Current account – 25 leaves

v Foreign currency $ 10 leaves

v Foreign currency 10 leaves

Loose cheques are also issued in some cases. Number of leaves can be increased on the request up to 100 leaves.

· CLOSING OF ACCOUNT

When a customer wants to close an account he has to given a hand written application to the head of the operations department to close his account plus remaining leaves of cheque book. The manager first verifies the sign of account holder, and then closing is done from the registers on the computer where the account was opened. In the file of the account holder his account opening form is crossed. For this closing a fee of Rs. 150/- is charge in ABL.

8.3.3 TOKEN DEPARTMENT

In token department, token are issued for the encashment of cheques Demand draft, Telegraphic transfer, Mail transfer and miscellaneous expanses voucher of bank before issuing term we check the following

Ø Date should be current or previous not advance.

Ø Specimen Signature of account holder should there.

Ø Signature of bearer should on backside of cheques.

Ø Amount should be same both in figure and words.

In case of DD, checking sign of authorized officer of bank if there is any discrepancy in above-mentioned point, no token would be issued. Before issuing token, we stamped on backside of cheques and write the no. Of token both front and backside of cheques, etc.

After all the process, the entry of cheques would be posted on the given register, which include token no. Code no. and amount after banking hours. Total amount on register would be tallied with the cash department amount, that which has been paid. Any cheques that is returned from the current department because of any discrepancy, is debited from the total amount on the register in token department.

8.3.4 CASH DEPARTMENT

Cash department deals with the cash, which either comes in the Bank or goes out side the Bank. Cash can be in any form of currency.

SOURCES OF THE CASH

There are different sources through the cash inflows the Bank. These sources are as follows.

DEPOSITS

This is the major source of the cash inflow. When someone deposits the cash in the Bank in any currency, it means that the cash is coming in the Bank.

1. DEMAND DRAFT AND TELEGRAPHIC TRANSFER COMMISSION.

These are the second major sources of the cash inflow of the Bank. When the Bank issues the DDs, TTs and on-line transaction within ABL all over the country on the behalf of customer then the Bank takes certain charges as commission. These DDs and the TTs can be issued in any currency on the demand of the customer.

2. PRIZE BONDS, FEBCS, NDSCS ETC.

Prize bonds, FEBCs, and NDSCs are other sources of cash. These instruments are sold to the general public and cash is received from them. Though this cash is ultimately transferred to SBP but still the Bank has to manage this cash.

This department performs the main function.

a. Cash receipts.

b. Cash payments

In cash department depositors use deposit slip for depositing the amount into their accounts. The officer checks if the deposit slip is properly filled up containing title of account, A/C number, date and amount in words and figures. Detail on both counter file and cash receipt voucher should be the same. Cash receiving officer, after twice counted and matched with the deposit slips will handover cash to the customer. The cash details are written on the back of the deposit slip and are also entered in cash receiving register. Cash received stamp is affixed on the face of the deposit slip along with the signature of the cash receiving officer.

Deposit slip and cash receiving register is given to the officer in the cash department. The officer cash department both on cash receipt and cash receiving register do again proper checking. Officer cash department signs both the deposit slip and register. Deposit slip is credited and posted in the concerned account in the system. Counter folio is given the deposition as receipt. One consolidated cash debit voucher is posted in the system to balance the cash.

Now in ABL they are not using the stamps for receipts / payments. They are using Flat Bed Printers and sing on this printed stamp.

MANAGEMENT OF CASH.

It is necessary for every branch to maintain a specific amount of cash with it at any time, so that when a customer comes to get cash, he may get it promptly. If a branch is not able to maintain such appropriate level if cash then it will have a bad effect on its repute and it will not be able to fulfill the customer expectations. So effective management of cash is very necessary for every Bank. ABL has put an appropriate limit on its branches that they should keep that minimum level of cash with them at any time. This limit is different for main branch and other sub-branches.

TREATMENT OF SURPLUS CASH

The surplus cash means the cash, which is over and above the limit of any particular branch. It may happen that a branch may have the surplus cash with it. If a sub branch has surplus cash with it than that of limit, then it will transfer it to the main branch on daily bases. If the main branch has the surplus limit then he will transfer the surplus money to head office in Karachi through the SBP. If these surplus funds remain with the main branch, they will be of no use and will act as idle money because they are earning no profit. So these funds are remitted to Central Office, Karahci, where they are invested and will earn profit for the Bank. The main branch earns the profit on the funds, which it remits to the head office. Currently this rate of profit is 13%. There is no profit given on the funds which the sub-branches which they transfer to the main branch.

TREATMENT OF CASH DEFICIT.

As surplus of the cash occurs, similarly the deficit can also be there in the Bank. It means that the cash shortage is there in the branch. To cover this shortage the patterns are followed. If shortage is there in sub-branch, then it may take the cash from the main branch. If the main branch has the shortage of cash, then it may take the funds from the head office. The head office charges certain rate of profit, which is 13 % on the funds, which it remits to the main branch. There is no profit charged by the main branch on the funds provided to the sub-branches.

CASH IN TRANSIT

The cash, which is transferred from any sub-branch to Main branch or from main branch to SBP is called cash in transit. There is limit of cash in transit on main branch. This limit is of Rs. 20 millions i.e. main branches can take the cash from any sub-branch or can transfer the cash to SBP up to the limit to the 20 millions.

INSURANCE OF CASH

All the cash of the Bank is insured. The major companies, which insure the cash, include Adamjee Insurance Corporation, General Insurance Company and East West Insurance Company. The Central Office pays all the expenses of the insurance of cash.

SECURITY ARRANGEMENTS

Few years earlier, the Bank has its own guards for the transfer of the cash from main branch to SBP or from sub-branch to the main branch. But now the Bank has hired a security company for the transference of cash. This company is “Brinks”. The commission which is charged by the Brinks Company varies from place to place and is different for different amounts of cash.

8.3.5 CLEARING DEPARTMENT

“The process by which cheque exchanged between the collecting and paying bank and the ensuing financial settlement is called “clearing”. This facility is provided by the state bank of Pakistan for off-setting of cross obligations between the different banks.

The Bank is the member of the Clearing House and receives Cheques, demand drafts and other negotiable instruments for presentation of its payment by the branch of a drawee bank located within the city other then ABL. The proceeds of the clearing instruments are credited into the account of the customer. The clearing facility is available on all working days.

Wherever the clearing facility is not available or the drawee institution is not the member of clearing house the Bank receives Cheques, demand draft or negotiable instruments for collection and upon receipt of payment from the drawee the same is credited into the account of the customer. Clearing may be outward or inward.

i. Inward clearing

ii. Outward clearing

Inward Clearing.

When cheques, drafts, etc, of our Branch presented to us for clearing by the SBP. Cheque to be honored by bank.

Outward Clearing.

The cheque of other banks, which the account holder deposit in their accounts is, sends for collection.

CLEARING PROCESS.

Here the local cheques are received that are drawn on ABL. All the cheques are received on one counter along with the paying slips duly filled in properly containing particulars of cheque and account holder. Counter folio of paying slip is handed over to the customer by putting stamp for cheque received for collection for Allied Bank on it duly signed by officer. These cheques are scrutinized and cheques for local clearing are separated from OBCs.

These are then entered in clearing register and cheques for collecting are entered in OBC register and handed over the bills department of collection. Clearing officer checks and verifies title of all the cheques deposited by the customer to confirm the good title of the cheques. Cheques are scrutinized properly and paying slips are separated from cheques. Special crossing, endorsement and clearing stamps are affixed on the cheques. Cheques of each bank are sorted and arranged Branch wise. All the cheques are then entered into the clearing system of bank. Print out of the clearing is taken and details are attached with the cheque of each bank.

Details of these banks are then entered into the clearing schedule containing number of cheques presented and their total amount against the name of each bank. Then total number of cheques presented to all banks and their total amount is written on the foot of that schedule, which is tallied with the clearing register.

Next morning, these cheques are delivered to the respective banks in clearing house of SBP between 10:00 AM. In the same manner, other banks present there clearing drawn on Allied Bank. Total number of cheques and their amount delivered to other banks are received from them are written on the clearinghouse schedule and handed over to the officer clearing house SBP. Cheques / DD received in clearing are given to the officer cash department of the Branch for their repayment. After I proper scrutiny of cheques, verification of signatures and confirmation of balance in the account, officer cash department pays these cheque by canceling and posting them in the system.

If any cheque is not passed due to insufficient balance or any other reason, officer cash department returns the same cheque by attaching a cheque return memo containing reason for return. This cheque is entered into the cheque returned register and bank charges are deducted according to the schedule of charges.

Second clearing is called at 1:30 PM to check the fate of the cheques presented to other banks in the morning. If any cheque is to return, that is delivered to the same bank in second clearing. In the same manner, if any cheque presented by Allied Bank in first clearing is returned, they receive it and once again give schedule of clearing figure to the officer-clearing house SBP containing number of cheques and their amount delivered and received unpaid.

8.3.6 BILL/REMITTANCE DEPARTMENT

Bills for collection means the Cheques or DDs/TTs/POs which are received from or sent to other branches outside the city for collection, drawn on any other Bank. Bills for collection may be inward or outward.

Remittances means, the transfer of cash from one place to other place through paper transaction. Remittances may be inward and outward.

BILLS FOR COLLECTION

i. There are two types of bills for collection.

ii. Inward bills for collection (inland & foreign)

iii. Outward bills for collection (inland & foreign)

INWARD BILLS FOR COLLECTION

Suppose a customer of ABL Mall Branch Lahore deposits a cheque drawn in the name of Habib Bank Multan Cant Branch. Now the ABL Mall Branch Lahore will send this cheque to ABL Main Branch of Multan for collection from Habib Bank Branch. Now ABL Main Multan branch will collect this cheque from Habib Bank Branch through clearing, and will remit the amount to the ABL Mall Branch Lahore. This is called Inward Bills for Collection (inland) for ABL Main Branch Multan. It will be recorded in Inward Bills Collection Register. In the same way if the cheque is received for collection drawn on any other Bank from Foreign Branch of ABL, then this will be called as Foreign Inward Bills for Collection. It will also be recorded in Inward Bills Collection Register.

OUTWARD BILLS FOR COLLECTION

When any branch of ABL sends a cheque or DD/TT/PO to main branch ABL in another city for collection from any other Bank, then it is known as Outward Bills for Collection. Suppose a person deposits a cheque in ABL Rashidabad Multan branch drawn on Habib Bank Lahore branch. Now ABL Rashidabad branch will send this cheque to ABL main branch Lahore for collection from Habib bank Lahore branch. ABL main branch Lahore will collect this cheque through clearing from Habib Bank branch through clearing and will remit the amount to ABL Rashidabad branch Multan. This is called) Outward Bills for Collection (inland) and it will be recorded in Outward Bills Collection Register.

In the same way, if ABL Rashidabad branch Multan sends any cheque or DD/TT/PO to its foreign branch for collection from any other Bank, then it will be called as Foreign Outward Bills for Collection and will also be recorded in Outward Bills Collection Register.

REMITTANCES

The remittances can be made through the following mode of transference.

Demand Draft (DD)

Telegraphic Transfer (TT)

Payment Order (PO)

SBP Cheque

DEMAND DRAFT.

It is a kind of cheque, which is issued by the ABL to the other banks, or other branches of the ABL on the demand of the client. On the Demand Draft there are different heads mentioned on that. Such as the amount to be sent, the name of the person to whom it is to be sent. It is very convenient and safe method of sending the money from one place to another. The businessman to transfer or send the money from one place to another usually uses it. If one person issues the DD in the name of other person, then it can be transferred to the account of the second person easily. DD can be in Pakistani Rupee or in any Foreign Currency. When DD is issued, it is given to the person, who wanted to make it. At that time Bank will have no concern with that DD but an advice is sent to the concerned branch that we have issued the DD of such amount and on the name of this person, and you will pay him on the demand of the client. This DD can be closed before the issuing the amount. On issuance the DD, Bank takes some commission.

TELEGRAPHIC TRANSFER.

It is also a way of sending the money from one place to another. Like DD certain farms are to be filled. In this the message sill not is sent through the paper, but with the help of the fax or things like that. All other processes are same as of the DD.

PAYMENT ORDER.

It is an order issued by the Bank and payable on itself, through this client can easily transfer the money from one person to another within the same city. It is a written document on which the certain commission is to be paid and certain documents are filled by the client. For this certain amount is needed to deposit with the Bank.

PROCESS FOR REMITTANCE.

All branches of ABL deal with each other through a central account named as “Pak Account”.

PAK ACCOUNT.

Pak Account is maintained in Central Office Karachi. In Central Office there is an account of every branch and all these accounts of all branches are maintained through this Pak Account. In Pak Account, a specific code has been allotted to every branch’s account. These Pak Account controls all the remittances made by different branches. Remittances may be outward or inward.

REMITTANCE IN TRANSIT.

Suppose the ABL Main Branch, Multan wants to send the surplus fund to the central office Karachi. This branch will first deposit the funds in the State Bank of Pakistan, which will transfer these funds to central office, Karachi. Here the SBP acts as a cash agent. Now the ABL Multan, Branch will send an advice to central office, Karachi that it had remitted that many amounts through SBP. This is called Remittance in Transit. Now the SBP Multan, Branch will remit this fund to the SBP Karachi, Branch and from there, funds will be ultimately transferred to the central office.

In the same way when ABL Multan, Branch requires the funds then Central Office will remit these funds through SBP and will send an advice to the ABL Multan, Branch. The funds will be ultimately transferred from SBP Multan, Branch to ABL Multan, Branch. This is also Remittance in Transit.

8.3.7 ACCOUNT DEPARTMENT

Every Transaction, which takes place, is recorded in the computer. Transaction takes place through different vouchers which are finally posted to computer. As I already wrote that total branch was computerized so all transaction in different deptt.. Would be made on computer. Each deptt. prepare a summary of daily transaction 'at is forwarded to Account dept. Since all voucher from differ-it deptt.. Also forwarded to current deptt.. So this deptt.. Will tally it such transaction with current deptt. After maintaining the ledger each deptt.

The department take care about bookkeeping, maintains ledger and current accounts of different dept.

Following are the different functions performed by this department.

i. Preparation of monthly, quarterly, semiannually and yearly balance sheet of the branch.

ii. To maintain all accounts of different department.

iii. Calculation of profit of different investment schemes.

iv. Calculation of mark-up of different advances.

v. Preparation of different type of reports for State Bank of Pakistan.

vi. Preparation of daily position report of cash and every account.

vii. The most important function is the checking and tallying daily summaries of different departments with ledger's balance.

If any kind of renovation or construction or rebuilding is done, all is paid from the accounts department. Like petrol for the car of EVP or VP, this department pays all stationery charges, medical allowance, etc.

Daily Customers Movement List.

All the changes that are made in accounts of customer are shown in the daily customer movement list. By using this list, people of accounts department can prepare the vouchers.

Account department performs following activities.

v Voucher preparation

v Preparation of daily, weekly, monthly, and annual statement.

v Budgeting and fixed assts

v Employer’s benefit

v Expenditure approval.

The bank does not make payment of a cheque bearing a six-month or older date. If an account is not operated in six months, it is called dormant account.

VOUCHER SYSTEM

Voucher is a written authorization sued in approving a transaction for recording and payment. Voucher is a system, which is generally designed to provide strong internal control over the transaction, which takes place during the business hours.

When ever a transaction takes place in any department of the bank. One debit and one credit voucher is prepared. At the end of the day, these vouchers are collected and recorded.

Debit Voucher

Debit vouchers are used in two circumstances:

When ever any expense is incurred.
When a depositor withdraws some amount from his account the account of the customer is debited with the amount and debit voucher is prepared.

The format of the debit voucher includes:

1- Name of branch

2- Date

3- Branch No.

4- Account No.

5- Transaction Code

6- Amount and other details (Narration)

Credit Voucher

There are two types of transaction in which credit vouchers are used.

a. When a depositor deposits any amount in his account as it is liability of the bank.

b. Any income receive by the bank e.g. income earned from Markup and commission and brokerage.

Three important functions of Account department of BOP are described as follows:

All expenses vouchers are routed ask through Accounts Department.
Preparing of various statements
Preparation daily activity report at the end of each day

Expense Voucher

All the expense vouchers passed by each department are routed through accounts department. These expenses include:

Salaries given to all employees of the bank
Utility Bills
Lease installments
Medical allowances (reimbursed)
Salaries given to all employees of the bank
Insurance of cash
Insurance of vehicle
Wages
Rent
Cash carrying charges

8.3.7 ADVANCES/CREDIT FACILITY DEPARTMENT

Advances department of a bank provides many facilities to various individuals and businessmen against charging the interest from them. It is the usual practice of the back level it examines the perusal characteristics of the borrower and the reputation and scope of the business; he is doing or going to start.

However, there are there ways normally used to seem the account.

1. Pledge.

2. Mortgage.

3. Hypothecation.

1. PLEDGE.

Pledge is a contract between the borrower and the back whereby the goods are transferred into the banker's possession while the ownership remains in the possession of the borrower. This possession remains with the bank until the payment of loan is dully made. In case of default, the back can sale the goods after giving the notice.

2. MORTGAGE.

Mortgage is a contract whereby the interest in any specified immovable property is transferred to the banker in order to give the security for the payment of debts.

3. HYPOTHECATION.

Hypothecation is a term where goods are charged for the purpose of security. But the possession and ownership remains with the owner of the goods.

CATEGORIES OF ADVANCES

The bank can make the advances in the following three ways.

1. Overdraft

2. Loan

3. Cash Credit

1. OVERDRAFT.

Under such arrangement the customer is allowed to withdraw the amount excessive from his balance. But the limit of amount is sanctioned by the manager and given for a fixed period.

2. LOAN.

When the banks make the advances in a lump sum, to be repaid in lump sum or in forms of installments with interest at any future date, is known as loan. These loans may be of short and long term.

3. CASH CREDIT.

These advances are made against the security of the goods which may be made like in the form pledge or hypothecation. The bank credits the borrower's account with the amount making as loan. The amount can not be withdrawn in lump sum. While interest is paid on the amount withdrawn from the bank.

TYPES OF LOANS

The Bank provides the facility of two types of financing.

1. Funds based Financing

2. Non Funds based Financing

1. RUNNING FINANCE.

PURPOSE.

Running Finance is short-term loan usually given for the working capital management. The running finance is suitable for meeting day to day financial needs of the Business. The running finance account can be operated and daily sale proceeds can be deposited into the account.

SECURITY

The Bank requires following types of securities in running finance.

PRIMARY SECURITY

The primary security requires by the Bank is stock. Bank hypothecates a specific amount of stock, that is, stock remains in the custody of borrower, but the lien is of Bank. The borrower is responsible for keeping and managing the stock well and providing the regular stock reports to the Bank. The Bank advances a certain percentage of the value of the hypothecated stock as loan after keeping some margin.

PERIOD.

Running finance is usually given for a period of one or less than one year.

2. CASH FINANCE.

INTRODUCTION

Cash finance is the account of the Bank. It is like the current account. In this account a certain amount of cash is available for the borrowers at all the times. A limit is first sanctioned to the borrower and then, on his needs, the amount is transfer from cash finance account to the borrower’s current account from where he can withdraw the money. This transfer of cash from the Bank’s cash finance account to the borrower’s current account is just the paper transaction and the borrower takes the finance in no time. The borrower can take finance unto his limit sanctioned by Bank’s authorities. However, the Bank cannot keep the cash finance account greater than 30% of its equity.

PURPOSE

Cash finance is normally giver for seasonal needs e.g. in Cotton season, Rice season etc. But in some cases it can be given for regular needs.

SECURITY

Following securities are required by the Bank.

PRIMARY SECURITY

The primary security required by the Bank is stocks. But unlike running finance, in which the stock is hypothecated, here the stock is pledged by the Bank. The stock pledged is kept with the Bank at the cost of the borrower. Usually the stocks are kept at the warehouses of the Borrower Company, but certain representative of Bank as Inspector is always there to keep a check on the stock. The Bank advances certain percentage of the pledge stock after keeping some margin.

PERIOD

The maximum period for cash finance is one year.

REPAYMENT SCHEDULE

Repayment of the loan is made after the completion of loaning period, along with the markup.

3. DEMAND FINANCE.

PURPOSE

Demand finance is usually given for the financing of new Projects. For example, if a person wants to open the Floor mill or textile mill, he can get the demand finance from the Bank.

MODE OF FINANCE

Demand finance is given in installments to the borrower. First installment is given to purchase the land, then second installment is given for the construction of building and finally the remaining amount is paid to the supplier to install the Machinery.

SECURITY

The Bank requires the following types of securities.

PRIMARY SECURITY

No primary security is required as the finance is given for the new projects and the Borrower Company has no existing stocks with it.

PERIOD

Demand finance is usually given for the long-term period e.g. for two years, five years or even upto fifteen years.

REPAYMENT SCHEDULE

The repayment of loan is made in installments. A grace period of one year is given, after the maturity of loaning period. But this grace period can be extended to two years. The installments may be quarterly, semi annually or annually. The markup is also included in these installments.

IMPORTANT FEATURE

Demand finance is given on the basis of debt equity ratio which 40-60. It is standard ratio. It means that a borrower can finance 60 percent of its project cost through demand finance scheme. But the remaining 40 percent should be financed himself.

8.3.8 FOREIGN EXCHANGE DEPARTMENT

INTRODUCTION

In the very beginning of this era people were not aware of foreign exchange. All the foreign money was kept at hand and this idle money did not contributed in the Pakistan economy at that time. But in 1991 foreign department introduced was introduced by the government of that time. After being introduced people deposited their currency in the Bank. It was the amount equal to the total Pak Rupees that were in the circulation in the economy of Pakistan.

After the foreign currency accounts were opened, the economy gradually improved because foreign currency contributed a lot. Before the facility of foreign currency accounts, nearly 60% foreign currency was held by the people as idle.

ABL FOREIGN CURRENCY ACCOUNTS.

In Allied Bank Limited, Foreign Currency account can be opened in four major currencies;

US Dollar

Sterling Pound

Japanese Yen

EURO

CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT

There are not hard and fast rules for becoming the Foreign Currency Account holder. Bank wants only introduction of the Client and very little about the background. I.D card is also not necessary, if someone has; well and good, otherwise no restriction will be there for him. Minimum requirements are not also fixed F.C. Accounts. It can be operated by 10$ only. But other Banks may have some limits on minimum requirement.

“The transfer of credits to a foreign country to settle debts or accounts between resident of home country and those of the foreign country” or “the foreign bills currencies etc used to settle such accounts”.

FEATURES OF FOREIGN CURRENCY ACCOUNTS

There will be legal protection for the account holders. According to foreign exchange rules and regulation every citizen of Pakistan, either within the Pakistan or outside the Pakistan, can open the foreign currency account.

Resident firms and Resident Companies including investment Banks can open Foreign Currency Accounts. All foreign nationals and foreign Companies in Pakistan or abroad can open Foreign Currency Accounts. Opening of Foreign Currency Accounts in the joint names of residents/non-residents is permissible. Foreign Currency can be deposited by:-

v Remittance received from abroad

v Traveler Cheques

v Foreign Currency Notes

v Foreign currency bearer Certificates

There will be no restriction and questioning to him about the currency, which he wants to deposit that from where he got that money. No Zakat will be deducted on these accounts; no Income Tax deduction, no Wealth Tax deduction will be there.

These incentives reinforce and motivated the people to invest in foreign currency accounts rather to keep the foreign currency idle. Foreign currency accounts can easily be transferred from one person to another, one place to another, with in the ABL Branches or in other Bank. This facility is not available in Pak Rupee account.

v The account holder can transfer the funds freely, in any currency to any part of the world.

v Traveler Cheques can be issued for abroad to the account holders without any limit.

v Foreign currency Accounts can be used for payment of purchases at Duty Free shops.

v Foreign Exchange Bearer Certificates and U.S. Dollar Bearer Certificates can be purchased from Foreign Currency Accounts.

FOREIGN DEPOSIT SECHMES

Deposit Schemes of Foreign Currency Accounts are very much related with Pak Rupees Accounts such as saving deposit, current deposit and fixed deposits.

SAVING ACCOUNTS.

In these accounts there is no Minimum limit for opening the account and the Bank offers certain rates of interests on all Foreign Currency Accounts.

Fixed deposit facility is also provided to clients. These deposits can be for three months, less than six months, six months, less than twelve months, twelve months, two years, three years, four years and for five years.

Rate of Interest

Rates of Interests are different for different Currencies for different Periods.

CURRENT DEPOSITS

Multiple withdrawals of any part of balance can be made on demand. Funds can be credited into the current deposit account in the form of cash, Cheques and other financial instruments drawn on any bank or other branch of ABL. The current account is suited to meet both domestic and business requirements of the customer.

Letter of Credit

A letter of credit is defined as under

SIGHT L.C

The LC in which payment is made at sight basis after documents are delivered.

USANCE L.C
In this class of LC the exporter with that listed in the L.C makes the payment after a specific period of time bank checks all the documents provided. If no error then payment is being made else vice verse. The payment in this type of export is made in full else specified, partly payment may be made when both the parties agrees. After receiving the LC and checking all the documents the officer is issuing an approval sheet. The bank provides the bill of exchange.

9. STRUCTURE AND FUNCTIONS OF ACCOUNTS/ FINANCE DEPARTMENT

9.1.1 STRUCTURE OF FINANCE DEPARTMENT

BOARD OF DIRECTORS

PRESIDENT (Chief Executive Officer)

Group Chief Finance

(Chief Executive Officer) ))Offi

Group Head

Planning & MIS

Group Head

Taxation

Group Head Financial & Regulatory Reporting

Branches

Branches report to the respective Regional Heads who are responsible for reporting to Group Heads Taxation ,Planning & MIS and financial & Regulatory reporting .All these information are consolidated at Group Chief Finance level and presented to the president for decision making and policy formulation .

9.1.2 FINANCE & ACCOUNTING OPERATIONS

All accounting operations are being done at branch/ unit level. It is computer based accounting operation system as there are large numbers of transactions, which are not possible in manual accounting system. Professionally skilled personnel are doing these operations, computer equipment and computer generated reports which provide mass of information for classifying and summarizing the data.

The reports generated by all branches are submitted to Finance division for onward consolidation to compile financial results i.e. periodical financial reports such as Balance Sheet, Profit and loss, Cash flow statement etc.

9.1.3 Functions of Finance Department

The main functions of Finance Department in the ABL are summarizing the business transactions recorded and classified by the branches and communicate the information contained in the system to decision makers. It formulates the annual budgets such as capital budget, cash budget etc. It provides information about economic resources, claims to resources and changes in resources and claims. It provides information useful in assessing amount, timing and uncertainty of future cash flows. It provides information useful in making decisions to all functional departments of the Bank such as Administration Department to recruit staff at low cost, to Operation division to minimize the operational cost of the organization, to Marketing department to market low cost deposit and sell the products which give more return and similarly to all other departments which play pivotal role in achieving organizational goals.

Finance Group has three major areas:

- Planning and MIS arm of the Finance Group translates financial and operational data into strategic information for an efficient and effective decision making.

- Financial and Regulatory Reporting arm of the Finance Group provides timely, relevant and reliable information to the shareholders, regulators and other stakeholders while following the statutory requirements and international best practices.

- Taxation wing of the Finance Group manages the Bank wide tax matters and endeavors to bring tax efficiency while complying with the tax laws.

9.1.4 ACCOUNTING SYSTEM OF THE ORGANIZATION

The accounting system of the organization consists of double entry system in which contra vouchers are passed for each entry in the system reflecting its credit and debit impact for each head of account being involved for accomplishment of a transaction. In the branch the entry officer enters his transaction by vouching contra entries and same are authenticated by branch manager operations or any other authorized officer after ascertaining its genuineness and correctness. The system then automatically segregates them according to Income/Expenditure and Balance Sheet which are executed at the end of day after completion of all transactions from each terminal. The print of these reports is taken at day end step on daily basis in order to check wrong impact of any entry and necessary correction entries are passed on next working day after calling all the working of the day by the branch manager operations.

9.1.5 OPERATIONS OF ACCOUNTING DEPARTMENT

ABL deals in accounting operations. The check the daily voucher and posting. They note all the banks charges and expenses. The main focus on bank financial statement, they prepare the financial statement annually and semi annually of the bank.

1 Preparation of the statements

2 Depreciation calculation

3 Payments of salaries

4 Generation and Allocation of funds

5 Preparation of daily bank positions statement

9.2 FINANCE AND ACCOUNTING OPERATIONS

Manager Operations / Accounts

Preparation of special reports as per instruction by branch manager
Verify the party’s payment & all other expenses payments
Finalize the Accounts on monthly basis
Supervise all the working of other staff members
Posting in the Accounting System
Supporting to manager Accounts to finalize the Accounts on monthly basis
Supporting to make the monthly budget of the company

Accounts Officer

Supporting to prepare weekly budget
Posting of Funds Received from parties.
Prepare fund flow statement on daily basis
Preparation of Refund case & Processing in department
E-Filing of both (Sales tax &Parties tax payment)
Handle all sales tax and income tax matters.

Finance System of the Organization

From the accounting information, the finance department makes decisions to invest the funds generated. These investments are in corporate sector, in capital and money markets. The treasury department and shares department makes decisions about investment of funds generated.

9.3 ROLE OF FINANCIAL MANAGER

The role of financial managers in helping create new business models should encompass the following components and activities:

v Pressing the organization to assess, develop and leverage managers with high business acumen, who may or may not reside within the financial function

v Redesigning both the financial and the broader organization to leverage organizational assets - financial and otherwise but including human capital assets to have the most immediate impact on supporting the enhancement and creation of new business models

v Providing the data and financial insights which underpin the creation of new business models

v Specifically focusing on the financial organization to develop and enhance business acumen and to use it in the development of new business models.

Providing and interpreting financial information;
Business modeling and forecasting;
Reconciliation of Funds
Treasury Function & Investment
SBP Reporting
Monitoring performance and efficiency;
Analyzing change and conducting risk assessment;
Participating in strategic planning, and formulating long-term business plans;
Researching and reporting on factors influencing business performance;
Pricing and competitor analysis;
Developing complex finance models;
Assessing the financial implications of new or existing ventures;
Conducting reviews and evaluations for cost-reduction opportunities;
Preparing accounts and reconciling balance sheets;
Overseeing budgetary control;
Monitoring cash flow; depositing surplus cash and arranging immediate funds
Leading, or working on, projects;
Liaising with other members of the team and across the business;
Supervising other staff
Above all, to maintain an adequate and efficient credit discipline for availability of funds in time and its proper utilization .He must keep active liaison with SBP, commercial banks and money market.

9.4 USE OF ELECTRONIC DATA IN DECISION MAKING

In the fast and speedy period, every one in this world wants quick and accurate result. So different sectors; departments and companies use electronic data for decision-making.

The Bank has comprehensive Management information system (MIS) from where the management takes data to control and make decisions about business i.e. to observe daily fluctuations in deposits, advances, number of accounts and borrowers at particular point of time. The data is updated daily automatically on the site. The management can take corrective measures plus controls the business strategy. The business promotion and enhancement decisions are taken by the use of electronic data from use of electronic sources such as e- mails, faxes, internet etc. The LINUX, UNIX AND COBOL, software is being used in the Bank. The Bank has an information Technology division who are providing IT services to the branches. The data from branches is transferred through on line to Head Office through executing Day End steps which have given to all branches who performing successfully. The computer generated reports are then forwarded to each division for their study and necessary action

Different Types of Reports

Different types of reports in ABL which are being produced for management use are;

Management Audit report
Weekly MIS report
KYC report
ALCO report
Compliance report
Financial & regulatory Report
Reconciliation report

9.5 SOURCES OF FUNDS

The sources of funds in ABL are share capital, Reserves and liabilities created from deposits collected from customers and borrowing from financial institutions. The funds mobilized are from following sources.

(Rs in Million)

	YEAR 2005	YEAR 2006	YEAR 2007	YEAR 2008	YEAR 2009
Share Capital	4405	4489	4489	5386	6464
Share premium	10640	4316	4316	3419	2341
Reserves	717	1377	1817	2632	3463
LIABILITIES
Borrowings	12538	9694	18410	22934	27778
Deposit accounts.	126392	161410	206031	263972	297475

9.6 GENERATION OF FUNDS

The funds are generated in shape of interest income earned by advances portfolio of branch , non interest income from commission , brokerage , other miscellaneous heads and investment in different sectors of economy such as corporate investment in shares, NIT units, Mutual Funds, Ordinary Shares of listed Companies and Modarabas, Pakistan Market Treasury bills, Pakistan Investment Bonds, TFC, WAPDA Bonds and Allied Mudaraba. The funds generated in last 5 Years are mentioned below.

(Rs in Million)

YEAR 2005	YEAR 2006	YEAR 2007	YEAR 2008	YEAR 2009
4451(M)	7867(M)	10423(M)	11108(M)	14011(M)
1740(M)	1940(M)	2449(M)	3920(M)	4152(M)
6191(M)	9807(M)	12872(M)	15029(M)	18163(M)
4115(M)	4264(M)	5289(M)	6174(M)	8399(M)
1884(M)	2453(M)	3186(M)	4779(M)	5607(M)
192(M)	3090(M)	4397(M)	4076(M)	4157(M)

Interest Income before provision

Non Interest Income

Gross Profit

Operating Expense

Provision/taxation

Net Profit

The results show that there is increasing trend in each kind of funds generation due to increase in volume of advances, investments, commission, exchange earning, and brokerage fee and dividend income.

9.7 ALLOCATION OF FUNDS

Bank has invested funds in SME’s, Agricultural, fertilizer, pesticides, textiles and manufacturing industries, commodity, consumer, corporate and others sectors of economy. The growth in the assets of the Bank can be compared from the following figures.

(Rs In Million)

	YEAR 2005	YEAR 2006	YEAR 2007	YEAR 2008	YEAR 2009
Cash & Balance with other Banks	12320	18035	24745	30408	25751
Lending to Fin. Institutions.	16175	5777	19050	18419	15793
Investments	57657	45269	47156	84151	84587
Advances	69949	119866	151705	178524	223640
Fixed Assets	2552	4721	6445	7549	11134

Funds allocation is increasing gradually with the increase in balance sheet footings

10 CRITICAL ANALYSIS OF THEORETICAL CONCEPTS RELATING TO PRACTICAL EXPERIENCE

During my internship at ABL ,I found all the process interesting ,innovative, cohesive, adventurous and full of learning .All the procedure and process was in accordance with policies of bank and prudential regulations ; however some disparities and anomalies in practical were observed:

1) Specific timing set for dealing with customer was not observed due to shortage of staff and the small customer were found annoyed for getting late .

2) Although complaint register for customers was maintained in accordance with guidelines of SBP but most of the complaints were dealt outside due to prospective complications

3) Newly deployed staff was ignorant of the policy and true procedure and instead taking interest in banks work ,they are engaged in the process of switching to other banks.

4) Dress Code was not observed in letter and spirit

5) ATM machine was either out of cash or out of order

6) Insurance of the hypothecated/pledged stocks was arranged by bank officials instead of customers.

7) Bank officials are habitual of sitting late and it is not possible to close the working within time due to voluminous transactions .

11 FINANCIAL ANALYSIS

11.1 FIVE YEAR BALANCE SHEET IN SINGLE TABLE FORM

Assets	Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
Cash and balance with treasury banks and other banks	12320	18035	24745	30408	25751
Lending to financial institutions	16175	5777	19050	18419	15793
Investments	57657	45269	47156	84151	84587
Advances	69949	119866	151705	178524	223640
Operating fixed assets	2552	4721	6445	7549	11134
Other assets	7073	7908	10800	11368	18399
Total Assets -Gross	165726	201575	259902	330419	379304
Provision against NPL	(10464)	(8659)	(7672)	(10117)	(10668)
Provision against diminution in investment	(336)	(342)	(203)	(192)	(1956)
Total Assets-Net of provision	154926	192574	252027	320110	366680

Liabilities

Customer Deposits	126392	161410	206031	263972	297475
Inter Bank Borrowings	12538	9694	18410	22934	27778
Bills Payable	2534	2449	2278	3494	2952
Other Liabilities	3206	4472	5119	7332	13621
Sub- ordinated loans			2500	2499	2498
Total liabilities	144671	178025	234339	300231	344325

Net Assets/Liabilities	10256	14550	17688	19878	22356
Represented by
Share capital	4405	4489	4489	5386	6464
Share Premium	10640	4316	4316	3419	2341
Reserves	717	1377	1817	2632	3463
Un-appropriated profit/(loss)	(6314)	2732	5608	6971	8537
Equity –Tier -1	9448	12914	16230	18408	20805
Surplus on revaluation of assets	808	1636	1458	1470	1550

11.2 FIVE YEAR INCOME STATEMENT IN A SINGLE TABLE FORM

	Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
Mark up /Return/Interest Earned	5245	9892	17216	21201	30571
Mark up /Return/Interest Expensed	794	2025	6793	10093	16560
Net markup/Interest Income	4451	7867	10423	11108	14011

Fee, Commission , Brokerage & Exchange Income	1520	1471	1636	2258	2522
Capital Gain & Dividend Income	65	196	540	1585	1571
Other Income	155	273	273	77	59
Non Interest Income	1740	1940	2449	3920	4152
Gross Income	6191	9807	12872	15029	18163
Operating expenses	4115	4264	5289	6174	8399
Profit before provision	2076	5543	7583	8855	9764
Donations		15	9	28	82
Provisions- (expense)/reversal	(1594)	(694)	(913)	(2874)	(3561)
Profit before Taxation	482	4834	6661	5953	6121
Taxation	(290)	(1744)	(2264)	(1877)	(1964)
Profit/(Loss) after taxation	192	3090	4397	4076	4157

11.3 RATIO ANALYSIS FOR LAST FIVE YEARS

Ratio analysis is essentially concerned with the calculation of relationship which after proper identification and interpretation may provide information about the operation and state of affairs of a business enterprise.

The banking sector faced a daunting task of maintaining stable balance sheet while ensuring to secure profitability margins for the shareholders.

Return on Equity

“Measuring earning power on shareholders’ book value investment. Another summary measure of overall firm performance is return on equity”.

This ratio is calculated as:

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
8%	28%	30%	24%	21%

There is a rise in ROE from year 2005 to year 2007 due to upward trend in profitability but from 2008, it is decreasing gradually. The year 2009 remained recession period and global economy collapsed. Hence financial crisis have huge negative impact on all banks, having operations in Pakistan

Return on Assets

This ratio means that how many assets are used to generate net income. so increasing ratio shows good position on any firm.

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
0.14%	1.78%	1.98%	1.42%	1.21%

There is a rise in ROA from year 2005 to year 2007 due to upward trend in profitability .However recession, slow down of economy ,low GDP growth ,energy shortages and political uncertainty and global financial crisis are few examples of crises .

Profit before Tax Ratio (profit before tax/Gross Income)

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
8%	49%	52%	40%	34%

There is a declining trend in this ratio from 2007 to on ward because of increase in operating expenses , accepting high cost deposits at higher interest rate, high provisioning for NPL ,break down of stock exchange ,voluntary retirement scheme (VRS) ,employee benefits ,emphasis on IT infrastructure and renovation of branch net work.

Return on Capital Employed (ROCE)

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
8%	28%	26%	21%	19%

There is a rise in ROCE from year 2005 to year 2007 due to upward trend in profitability but from 2007, it is decreasing gradually. The year 2009 remained recession period and global economy collapsed. Hence financial crisis have huge negative impact on all banks, having operations in Pakistan

Advances to Deposit Ratio (ADR)-Gross

Year 2004	Year 2005	Year 2006	Year 2007	Year 2008
55%	74%	74%	68%	75%

“While there is a concept that bank’s loans are its assets while its deposits are liabilities. But if a bank has low deposits then obviously it will give low loans because bank gives its loans by the deposits and earn on the loans then pay mark up on the deposits to the customers”.

It is observed that this ratio except 2005 & 2008 almost remained the same .Loan portfolio of the bank grew by 25.3% and deposits were increased by 13% .The deposit growth increased its market share by 40 basis points to reach 7.8%by the end of the year 2009 and resultantly ,the bank managed to increase its market share of loans by 40 basis points to 7.1%by the end of year 2009.

Advances to Deposit Ratio (ADR)-Net

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
47%	69%	70%	64%	72%

Net advances are calculated by subtracting provisioning for NPL from gross advances .These ratios are almost the same from 2006 to 2009 .The banking system shrinking liquidity during the last quarter of 2009 which made deposit retention extremely challenging.

Income to Expense Ratio

Year 2004	Year 2005	Year 2006	Year 2007	Year 2008
1.5 times	2.30 times	2.43 times	2.43 times	2.16 times

This ratio remains almost the same except 2005 (which is pre –privatization period) .In 2009,there is a slight decrease in income that is attributed mainly because of breakdown of stock exchange and resultant impairment losses in investment and slash in capital gain /dividend income

Cost to revenue ratio

The cost/revenue ratio is an efficiency measure similar to operating margin. Unlike the operating margin, lower is better.

It is useful to measure how costs are changing compared to income - for example, if a bank's interest income is rising but costs are rising at a higher rate looking at changes in this ratio will highlight the fact.

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
66.5%	43.5%	41.1%	41.1%	46.2%

From year 2005 to year 2008, this ratio is decreasing to high interest in high return from corporate sector while as compare to operating income; expenses are low due to very low return to depositors. But in year 2009, this ratio is drastically increased because SBP has enforced the banks for mandatory requirement for payment of minimum return of 5% per annum on all categories of savings / PLS savings deposits, including any other profit bearing deposit with no fixed maturity.

Growth in Gross Income

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
4%	58%	31%	17%	21%

Following the take over of its management control by the Ibrahim Group in 2005 and subsequent merger of Ibrahim Leasing into Allied Bank in 2005 ,the bank performed better but thereafter gross income started decreasing due to slow down of economy ,hike in lending rates, recessionary trend and tight liquidity approach of the banks .In 2009, it performed well despite various domestic and global challenges and posted an operating profit of Rs.9.8 billion in 2009 which is up by 10% over Rs.8.8 billion last year.

Growth in Net Profit after Tax

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
-50%	1511%	42%	-7%	2%

ABL performed well in 2006 after the takeover by Ibrahim Group but thereafter growth was slowed down due to slow down of economy, energy shortages, disappointing crop harvest, political uncertainty which resultantly increased NPL

Total Assets to Shareholder’s fund

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
16.4 times	14.9 times	15.5 times	17.4 times	17.6 times

The ratio remained almost the same as the total assets and equity both increased at same rate which depicts consistency and stability in financial health of the institution.

NPL Ratio

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
22.0%	10.6%	6.91%	6.36%	6.16%

After the privatization of ABL, this ratio started decreasing gradually and displayed a healthy sign despite the increase in total advances which is solely because of solid policies, strict risk management and above all strategic vision with balanced growth approach.

Weighted Average Cost Of Debt

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
2.45%	6.78%	9.09%	9.96%	11.50%

This ratio shows an increasing trend because of increase in interest rates and liquidity crunch.

Capital Adequacy Ratio(CAR)

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
16.64%	12.17%	12.80%	10.26%	10.90%

The SBP recently required to link bank’s Capital Adequacy Ratio (CAR) with the CAMEL-s rating .However ,it subsequently provided some relaxation by restricting it a minimum of 9% for only 2009.ABL’s CAR at December 31,2009 was worked out at 10.90 %improved from last year’s 10.26%.This reflects its balance sheet leveraging while also ensuring regulatory compliance.

(INVESTORS RATIOS)

Earning per share ratio

This ratio which is investor’s ratio shows how much the bank is earning on its shares issued.

Earning per Share

= net profit after taxation – dividend to preferred stock holder

Out standing common stock

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
0.43	4.78	6.80	6.31	6.43

Earning per share is also on rise, because of increased profits every year. And this is showing greater confidence and attraction for the investors. But in 2008 ,it decreased slightly due to provisioning for NPL .EPS for 2009 is up only by 2% from last year that is mainly due to decrease in un appropriated profit because of impairment loss in equity market.

Price Earning Ratio

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
-	12.6	9.5	17.2	4.9

In 2009 ,P/E ratio decreased drastically by quickly absorbing the political shocks peaked at 15676 level in April (11.37% rise from 31^st Dec 2008),and thereafter , experienced the worst fall of the decade .The market exhibited a fall of 58.3% to close at a level of 5865 and resultantly ABL’s share decreased from Rs.156 to Rs.31.Stock markets world over depicted a sorry picture of worse year in the history of financial markets and that is the reason behind fall in P/E ratio.

2. Book Value per Share = Share Holders Equity

Outstanding Common Stock

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
23.3	32.4	39.4	36.9	34.6

The bank’s book value per share remained almost the same

3. Dividend Payout Ratio =Dividend per Share / Earnings per Share

Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
-	36%	46%	66%	54%

This ratio shows positive trend from year 2006 to year 2008 which is due to high profitability of the bank. And hence, dividend per share remained high during these years because of profitability. So investors were also very keen in investment in share/stock of the bank. But in year 2009, cash dividend and bonus issue were decreased due to the plunge of equity market.

11.4 HORIZONTAL ANALYSIS OF BALANCE SHEET

BASE YEAR =2004
*FORMULA =YEAR /BASE YEAR100**
Assets	2004	2005	2006	2007	2008	2009
Cash and balance with treasury and other banks	100%	110.0%	160.9%	220.8%	271.4%	229.8%
Lending to financial institutions	100%	105.3%	37.6%	124.0%	119.9%	102.8%
Investment-net	100%	140.7%	110.3%	115.3%	206.1%	202.9%
Advances -net	100%	146.3%	273.5%	354.2%	414.2%	523.8%
Operating fixed assets	100%	98.3%	181.8%	248.3%	290.8%	428.9%
Other assets	100%	101.6%	113.6%	155.2%	163.3%	264.4%
Total Assets –net of provision		131.8%	163.9%	214.5%	272.4%	312.0%
Liabilities
Customer Deposits	100%	110.7%	141.3%	180.4%	231.1%	260.4%
Inter Bank Borrowings	100%	470.5%	363.8%	690.9%	860.7%	1042.5%
Bills Payable	100%	143.0%	138.1%	128.5%	197.1%	166.6%
Other liabilities	100%	113.1%	157.7%	180.6%	258.6%	480.5%
Total Liabilities	100%	119.1%	146.5%	192.9%	247.1%	283.4%
Represented by
Share capital	100%	414.3%	422.2%	422.2%	506.6%	608.0%
Reserves	100%	2035.7%	1020.6%	1099.4%	1084.6%	1040.5%
Un-appropriated profit/(loss)	100%	-97.3%	42.1%	86.4%	107.4%	131.5%
Equity-Tier 1	100%	194.0%	265.2%	333.3%	378.1%	427.3%
Surplus on revaluation of assets	100%	90.3%	182.8%	163.0%	164.3%	173.3%
Total Equity	100%	258.0%	366.1%	445.0%	500.1%	562.5%

COMMENTS ON HORIZONTAL ANALYSIS OF BALANCE SHEET

ASSET

CASH AND BALANCE WITH TREASURY ANDOTHER BANKS

It has an increasing trend. In year 2004 we assume the cash and balance with treasury banks is 100% and take it as base year to make a comparison. In year 2005 cash balance with treasury banks is 110%. It improves in year 2006 and become 160.9% due to increase in cash in hand in local currency, foreign currency, local currency current account with state bank of Pakistan and in local currency current account with national bank of Pakistan. It further increases in year 2007 and 2008 but in 2009 % becomes 229% of the cash of balance with treasury banks in year 2004. This percentage is low as compare to that figure of year 2007 because of the liquidity crunch in year 2008.

LENDING TO FINANCIAL INSTITUTIONS

It includes call money lending ,letter of placements ,repurchase agreement and certificate of investment Due to decline in repurchase agreement lending and placements it has decreasing trend and it comes to 37.6% in year 2006 In year 2007 there is an improvement the ratio is now 124%. It is because of an increase in call money repurchase agreement lending, certificate of investment and placements. In year in 2008 it is decreasing because of high rate of SLR and CRR to be maintained with State Bank of Pakistan. In year 2009, this ratio shows slight decrease as no certificate of investment was present due to liquidity problems.

INVESTMENT

Investment portfolio is classified into three categories i.e held for trading, held to maturity and available for sale There is a increase in investment in 2005 but decline in 2009 due to break down of stock exchanges and the values of investments were impaired. In 2007, it exhibited again rising trend. In 2008 it is increasing remarkably but in 2009 it shows decreasing trend due to liquidity problems and impairment loss in market value of investments .

ADVANCES

Advances of the bank are showing an increasing trend due to credit expansion in corporate, SME and consumer loans in pace with its deposits. In 2005 it was 146.3 % and then gradually it improves till 2009 to reach at a remarkable figure of 523.8% despite worsening of business and economic environment faced by banking industry

OPERATING FIXED ASSET

An operating fixed asset comprise of capital work in progress, property and equipment and intangible assets and shows an increasing trend because of expansion, renovation and technological advancements by the new management and reaches at a remarkable figure of 428.9% in 2009.

OTHER ASSETS

Other assets increases from 2004 to 2009 continuously due to increase in advances, taxation, branch adjustment account, and deferred cost. It pattern is as 101.6%, 113.6 %, 155.2%, 163.3% and 264.4% respectively. It keeps on increases due to change in above items from year to year.

LIABILITIES

CUSTOMER DEPOSITS

Customer Deposits are the main source of funding .It has an increasing trend. Fixed deposits, saving deposits, current account and sundry deposits both in local and foreign currencies increases due to continuous growth in clientage up to year 2009 despite slower pace of growth and tight competitions in market especially National Saving Centers which were offering high rate of return. The bank registered a deposit growth of 13% in 2009 to reach at 297.5 billion mark in the presence of shrinking liquidity environment .This increased ABL’s share by 40 basis points in only one year’s time to reach 7.8% in only one year.

BORROWING FROM FINANCIAL INSTITUTIONS

It has an increasing trend continuously from year 2005 to year 2009 except in 2006 due to repayment of its debts.. Because bank realized need to invest more and more in different sectors like purchase of NIT Units, lending to commercial corporate and agri sectors. That’s why the ratio moves up word continuously. The major chunk of borrowings involves secured financing from SBP under export finance scheme and LTF-EOP

SHARE CAPTIAL

Share capital is in continuous increasing trend from 2005 to 2009. This increase is due to condition enforced by SBP for maintaining capital adequacy ratio (CAR) and to enhance its financial worth.

RESERVES

The reserves show mixed trends .It were maximum in 2004 from where it declined drastically and from 2005 to 2009, they present a stable position.

UN- APPROPRIATED PROFIT/(LOSS)

Un appropriated profit is increasing continuously due to continuous growth and posted a high of 131.5% in 2009

EQUITY

Equity of the bank which is the sum of share, capital, reserves, un appropriated profit and surplus on revaluation of assets shows continuous growth from the base year 2004 to 2009 and reflects remarkable increment at 562.5% in 2009 which depicts sound financial health of bank.

11.5 Horizontal Analysis of Income Statement

	Year 2004	Year 2005	Year 2006	Year 2007	Year 2008	Year 2009
Mark up /Return/Interest Earned	100%	105.2%	198.43%	345.35%	425.29%	613.25%
Mark up /Return/Interest Expensed	100%	68.74%	175.32%	588.13%	873.85%	1433.76%
Net markup/Interest Income	100%	116.21%	205.40%	272.14%	290.02%	365.82%
Fee, Commission , Brokerage & Exchange Income	100%	246.35%	238.41%	265.15%	365.96%	408.75%
Capital Gain & Dividend Income	100%	5.35%	16.14%	44.48%	130.56%	129.40%
Other Income	100%	49.52%	87.22%	87.22%	24.60%	18.84%
Non Interest Income	100%	81.19%	90.52%	114.27%	182.92%	193.74%
Gross Income	100%	103.66%	164.18%	215.50%	251.61%	304.08%
Operating expenses	100%	99.20%	102.80%	127.50%	148.84%	202.48%
Profit before provision	100%	113.75%	303.72%	415.50%	485.20%	535.01%
Provisions- (expense)/reversal	100%	-183.2%	-79.77%	-104.94%	-330.34%	-409.31%
Profit before Taxation	100%	197.92%	506.70%	698.21%	624.00%	641.61%
Taxation	100%	-51.05%	-307.04%	-398.59%	-330.45%	345.77%
Profit/(Loss) after taxation	100%	49.74%	800.51%	1346.50%	1055.95%	1076.94%

COMMENTS ON HORIZONTAL ANALYSIS OF INCOME STATEMENT

MARK-UP /RETURN /INTEREST EARNED

It increases in year 2004 to year 2009 due to increase in volume of advances and investments. In 2009 it grew by 44% to reach Rs.30.6 billion led by earning assets growth coupled with the re-pricing of the assets at higher interest rate .With the quality of growth given priority, average earning assets rose by 21%.

MARK-UP /RETURN /INTEREST EXPENSED

It increases in year 2004 to year 2009 due to increase in the volume and interest on deposits. In 2009, it is maximum at 1433.76% from the base year 2003.Mark-up / interest expense in 2009 rose to Rs.16.6 billion depicting a rise of 64.1%.

NET MARKUP/INTEREST INCOME

This shows also increasing trend and stages a record high of 365.82% in 2009. Net mark-up / interest income, as a result, rose by over 26% to Rs.14.0 billion as Interest rate spread grew to reach remarkably above 5.7% compared to 5.1% last year.

NON INTEREST INCOME

This income includes Fee, commission, brokerage income ,dividend income ,income from dealing in foreign currencies and gain on sale of securities . In 2008 Non mark-up income grew by 5.9% to Rs.4.2 billion, contributing 23% to gross income. The core fee, commission and brokerage income grew by over 19% to Rs.1.98 billion. Amidst global recession and weakening economy, the bank was still able to grow its investment banking fee income remarkably by 24% to Rs.299 million. Account maintenance charges fell by 23% to Rs.314 million primarily due to easing out of minimum account balance requirement for the depositors’ convenience.

GROSS INCOME

This income is also showing increasing trend in pace with cumulative effect of net mark up/interest income and non interest income from year to year .Gross income staged a record high in 2009 to reach at 304% and shows healthy signs of growth .

OPERATING EXPENSES

Continuous hike is observed in the operating expenses from year 2003 to 2008 which comprises mainly administrative expenses. In 2009 bank’s operating expenses increased by 36% to Rs.8.4 billion.

PROFIT BEFORE PROVISION

It is showing increasing trend from year 2004 through 2009 due to increase in mark up income and expansion of advances portfolio and also rise in non mark up income. The bank, despite economic challenges in 2008 has registered an impressive operating profit of Rs.9.8 billion, which is up by 10% over last year.

PROVISIONS AGAINST NON- PERFORMING ADVANCES

It is in increasing trend in year 2006 to 2009 because of increase in the volume of advances and has negative impact on the profitability of bank. However NPL ratio is on decreasing side and has improved to 6.2% from last year’s 6.4%which is a good omen.

PROFIT BEFORE & AFTER TAXATION

It is showing increasing trend from year 2005 through 2007 due to increase in mark up income and expansion of advances portfolio and also rise in non mark up income. During this period business of the bank increased tremendously hence income increased. In 2009 profit before and after taxation stood at RS.6.12 billion and Rs.4.16 billion respectively compared to Rs.5.95 billion and RS.4.08 billion last year. These results show a strong resilience by the bank to the tough challenges.

11.6 VERTICAL ANALYSIS OF BALANCE SHEET

Assets	2004	2005	2006	2007	2008	2009
Cash and balance with treasury and other banks	9.5%	8.0%	9.4%	9.8%	9.5%	7.0%
Lending to financial institutions	13.1%	10.4%	3.0%	7.6%	5.8%	4.3%
Investment-net	34.7%	37.0%	23.3%	18.6%	26.2%	22.5%
Advances -net	34.6%	38.4%	57.7%	57.2%	52.6%	58.1%
Operating fixed assets	2.2%	1.6%	2.5%	2.6%	2.4%	3.0%
Other assets	5.9%	4.6%	4.1%	4.3%	3.6%	5.0%
Total Assets –net of provision	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%
Liabilities
Customer Deposits	97.2%	81.6%	83.8%	81.7%	82.5%	81.1%
Inter Bank Borrowings	2.3%	8.1%	5.0%	7.3%	7.2%	7.6%
Bills Payable	1.5%	1.6%	1.3%	0.9%	1.1%	0.8%
Other liabilities	2.4%	2.1%	2.3%	2.0%	2.3%	3.7%
Sub-ordinated loans	0.0%	0.0%	0.0%	1.0%	0.8%	0.7%
Total Liabilities	103.4%	93.4%	92.4%	93.0%	93.8%	93.9%
Represented by
Share capital	0.9%	2.8%	2.3%	1.8%	1.7%	1.8%
Reserves	7.3%	3.0%	2.4%	1.9%	1.6%	1.6%
n-appropriated profit/(loss)	-5.5%	-4.1%	1.4%	2.2%	2.2%	2.3%
Equity-Tier 1	-4.1%	6.1%	6.7%	6.4%	5.8%	5.7%
Surplus on revaluation of assets	0.8%	0.5%	0.8%	0.6%	0.5%	0.4%
Total Equity	-3.4%	6.6%	7.6%	7.0%	6.2%	6.1%

COMMENTS ON VERTICAL ANALYSIS OF BALANCE SHEET

ASSETS

CASH AND BALANCE WITH TREASURY AND OTHER BANKS

The cash and balance with treasury and other banks is almost the same from 2004 to 2008 but in 2009 it reduces to 7% because of liquidity problems and better cash management.

LENDING TO FINANCIAL INSTITUTIONS

Share of Lending to financial institutions shows a mixed trend from 2003 to 2008 which depends mainly upon monetary policy, bank’s own policy ,CRR & SLR ratios . In 2008 ,this figure was at the lowest level of 4.3% because of slow down in economic activities ,hike in lending rates and above all liquidity crunch .

INVESTMENTS

From 2004 to 2009, investments are varying at different ratios at the cost of advances. In 2004, investment portion was at its peak at 37%, but after the privatization of bank since 2006, share of investment shows somewhat decreasing trend .

ADVANCES

Advances portfolio shows increasing trend from 2004 to 2009 because of increase in its equity, increase in deposit base with a view to achieve high returns.

OPERATING FIXED ASSETS

Operating fixed assets comprise of capital work in progress, property and equipment and intangible assets .It shows a mixed trend from 2004 to 2009 because of priorities of the management .The share of operating fixed assets is maximum at 3 % in year 2009 due to expansion, renovation and technological advancements.

OTHER ASSETS

The proportion of other assets which comprises accrued income, advance rent, suspense account and advance taxation remain almost the same from 2004 to 2009. It pattern is as 5.9%, 4.6 %, 4.1%, 4.3%, 3.6% and 5.0% respectively.

LIABILITIES

CUSTOMER DEPOSITS

The ratio of customer deposits remain almost the same from 2004 to 2009 in pace with increase in the size of balance sheet .Despite the tough market competition and slower pace of growth in 2009 ,the bank increased its market share and registered a deposit growth of 13 % over last year.

BILLS PAYABLE

They represent spontaneous liabilities which increase or decrease with the time being. The proportion of bills payable shows a mixed trend ranging from 0.8% to 1.6% which is lowest in 2009 at 0.8%

OTHER LIABILITIES

These liabilities include mark up/interest payable, accrued expenses, adjustment accounts, dividend payable and different employee’s provisions .It shows an increasing trend with the increase in balance sheet footings .The proportion of other liabilities is maximum in 2009 at 3.7% due to highly cost deposits and inter bank borrowings in an liquidity shortage environment.

SUB –ORDINATED LOANS

The Bank has issued unsecured sub-ordinated Term Finance Certificates, which will contribute towards Tier II capital for minimum capital requirements (MCR) as per guidelines set by the SBP, under BSD Circular No. 12, dated August 24, 2005, to support the Bank’s growth. This loan although remains the same in absolute terms but its share decreases substantially from 2006 to 2009 due to increase in the size of balance sheet.

SHARE CAPITAL

Although the Share capital shows increasing trend from 2005 to 2009 but its share in the total balance sheet shows stability from 2006 to 2008 .The reason behind increase in share capital in 2005 at 2.8% is that of amalgamation of Ibrahim Leasing & First Allied Bank Mudarba in Allied Bank .

RESERVES

The reserves follow almost same trend as share capital which are maximum in 2004 at 7% but after that its share declines substantially to 1.6% in 2008 and 2009.

UN- APPROPRIATED PROFIT/(LOSS)

After the take over of the bank by Ibrahim Group, its un appropriated loss at 5.5% in 2004 ultimately converted into profit at 1.4% in 2006 and thereby increasing its share at maximum ratio of 2.3% in 2009 which shows continuous growth.

TOTAL EQUITY

Equity of the bank which is the sum of share, capital, reserves, un appropriated profit and surplus on revaluation of assets was negative in 2004 due to continuous losses but after privatization of bank in 2005 ,a substantial increase in the share of total equity is witnessed which decreases slightly from 7.6% to 6.1% in the years 2006 to 2009.

11.7 VERTICAL ANALYSIS OF INCOME STATEMENT

	Year 2003	Year 2004	Year 2005	Year 2006	Year 2007	Year 2008
Total Mark up/Non Mark up Income	100%	100%	100%	100%	100%	100%
Mark up /Return/Interest Earned	69.93%	75.08%	83.60%	87.54%	84.40%	88.04%
Mark up /Return/Interest Expensed	16.20%	11.36%	17.11%	34.54%	40.18%	47.69%
Net markup/Interest Income	53.73%	63.72%	66.49%	53.00%	44.22%	40.35%
Fee, Commission , Brokerage & Exchange Income	8.65%	21.76%	12.43%	8.32%	8.99%	7.26%
Capital Gain & Dividend Income	16.82%	0.93%	1.66%	2.74%	6.31%	4.52%
Other Income	4.60%	2.23%	2.31%	1.39%	0.30%	0.17%
Non Interest Income	30.07%	24.92%	16.40%	12.46%	15.60%	11.95%
Gross Income	83.79%	88.63%	82.88%	65.45%	59.82%	52.30%
Operating expenses	58.19%	58.91%	36.03%	26.89%	24.57%	24.18%
Profit before provision	25.60%	29.72%	46.84%	38.56%	35.25%	28.12%
Donations			0.12%	0.04%	0.11%	0.23%
Provisions- (expense)/reversal	-12.20%	-22.82%	-5.86%	-4.64%	-11.44%	-10.25%
Profit before Taxation	13.38%	6.90%	40.85%	33.87%	23.70%	17.62%
Taxation	-7.96%	-4.15%	14.73%	11.51%	-7.47%	-5.65%
Profit/(Loss) after taxation	5.42%	2.75%	26.12%	22.36%	16.23%	11.97%

COMMENTS ON VERTICAL ANALYSIS OF INCOME STATEMENT

MARK-UP /RETURN /INTEREST EARNED

It shows substantial growth from the year 2004 to year 2009 due to increase in volume of advances and investments

MARK-UP /RETURN /INTEREST EXPENSED

It increases in year 2004 to year 2009 (except 2005) due to increase in the volume and interest on deposits and inter bank borrowing whereas in 2005 interest rates were at their minimum.

NET MARKUP/INTEREST INCOME

Although net mark up /interest income is increasing every year but its share in the total mark up /non mark up income shows mixed trend i.e increasing from year 2004 to 2006 and then decreasing behavior from 2006 to 2009. In 2008, this ratio stands at the minimum level of 40.35% due o slackness of economy

FEE, COMMISSION, BROKERAGE & EXCHANGE INCOME

This ratio shows mixed trend i.e increase from 2004 to 2005 and decrease from 2006 to 2009 which depend mainly upon the policy, opportunities and trade activities.

OTHER INCOME

Other income which represents gain on sale of fixed assets and miscellaneous income shows decreasing trend from year to year as the bank is in the renovation and expanding phase and instead of selling the fixed assets, it is in the process of acquiring the fixed assets.

NON INTEREST INCOME

This income includes Fee, commission ,brokerage income ,dividend income ,income from dealing in foreign currencies and gain on sale of securities .Although non interest income increased year to year but is contribution in the total mark up /non mark up income shows decreasing trend and stands at minimum level of 11.95% in 2009 .This is because the bank earned more on interest base assets than on non interest items due to increase in volume of advances and investments .

GROSS INCOME

Gross Income which is the total impact of net mark up/interest income and non interest income also follows the same pattern of both constituents i.e it shows almost decreasing trend from 2004 to 2009 and stands at minimum level of 52.3% in 2009.

OPERATING EXPENSES

Operating expenses which are actually increasing from year to year show mixed trend in percentage terms when seen from vertical analysis. It remains stable from 2004 to 2005 at 58% of total interest/non interest income from where it declines to 26.89% in 2007 and then again remains stable in 2008 & 2009 at 24% .In this way operating expenses follow the same pattern as that of gross income.

PROFIT BEFORE PROVISION

Profit before provision which is the difference of gross income and operating expenses shows mixed trend from 2004 to 2009. In percentage terms, it increases from 2004 to 2006 at the ratio of 25.60% to 46.84 % and afterwards shows decreasing trend from 2006 to 2009.

PROVISIONS AGAINST NON- PERFORMING ADVANCES

Provision against NPL follows the same pattern as the volume of advances in percentage terms i.e they increase or decrease with the share of advances. In this way, provision increases from 2004 to 2005, decreases from 2006 to 2007, increases to 11.44% in 2007 and the decrease slightly to 10.25% in 2009.

PROFIT BEFORE & AFTER TAXATION

It shows mixed trend with maximum percentage in 2006 at 26.12% and then decreases gradually to achieve level of 11.97% in 2009 .This is because of slow down of economy ,increase in operating expenses and provision for loan losses which ultimately declined the percentage profitability of bank.

11.8 ORGANIZATIONAL ANALYSIS WITH REFERENCE TO THE INDUSTRIES LISTED ON THE STOCK EXCHANGE

Key Indicators	Bank Names
Key Indicators	ABL	NBP	HBL	MCB	UBL
Total Deposits	297.5 B	625	597 B	330 B	484 B
Total Advances	223.6 B	413 B	456 B	262 B	371 B
Total NPL's	13.8 B	56.5 B	40 B	18.3 B	27 B
Total Assets	366.6 B	817.7 B	717.3	443.6 B	605 B
Net Profit	4.16 B	15.4	15.6 B	15.3 B	8.45 B
Equity	22.3 B	102.5 B	75 B	58.4 B	49.4 B

11.9 FUTURE PROSPECTS OF ALLIED BANK LIMITED

Pakistan’s economy remained under pressure due to global down turn, low GDP growth, and high inflation and energy shortages and therefore the banking sector faced a challenging task of maintaining stable balance sheet while ensuring to secure profitability margins.

Allied Bank is in process of developing & delivering the most innovative products manage customer experience, deliver quality service that contribute to brand strength, establishes a competitive advantage and enhances profitability, thus providing value to the stakeholders of the bank.

Allied Bank Limited has selected TEMENOS T24 Core Banking Software Solution for implementation across its branches countrywide. TEMENOS is a software company based in Geneva, Switzerland and its core banking software is rated as the leading such product in the world with over 500 installed sites worldwide. The software T24 is considered as the most technologically advanced integrated banking system available worldwide which runs on all major technology platforms including Oracle and using Windows, UNIX, Linux, etc. In Pakistan, TEMENOS has already provided its software and Services to State Bank of Pakistan Since 2000 in all its branches.

ABL believes in providing high-tech innovative and value-added services to its customers and T24 has been found by the bank to be best suited for this purpose. T24 will replace the existing branch-banking software used by ABL to automate and network its branches. ABL has selected the full Suite of T24 modules covering all business function areas of the bank. It will enable the bank to Bring to market new products very quickly and scale upwards both in terms of transaction volumes and customer services.

In view of prevailing market scenario, the bank is focusing on consolidation and cost control through shedding off high cost corporate deposits .In line with its strategy there has been a decline in financing portfolio and deposits during the first quarter of 2009.

Allied Bank has won the “9th Best Corporate Report Award 2008,” securing 2nd position for excellence in its annual publication of timely, informative, factual and reader friendly annual report

Furthermore SBP has allowed the banks to avail 40% FSV benefit of collateral for calculating provisioning requirement 40% of FSV is allowed against pledged stock and mortgaged commercial and residential properties only .This will reduce the provisioning and has a positive impact on the profit ability of bank .Also SBP ha increased the minimum deposit rates for banks to 5% in May 2008 which may result in increase in the cost of deposit of the bank.

The Board and the management strongly believe that ethical corporate culture has a positive impact on its long- term strategic success. The Bank is committed to maintaining a strong corporate culture founded on ethical business principles and moral values. The bank will continue to strive for sustained growth and to become a leader in the banking industry by undertaking a number of initiatives namely

1) Renovation of Branches.

2) Launch of bank assurance products

3) Aggressive mobilization of deposits with a focus on reducing cost

4) Commencement of Asset Management Operations through a wholly owned subsidiary.

Corporate Governance is one of the top priorities of the board of directors and the management. The Bank complies with all the regulations of SBP and SECP and other regulatory requirements .The Bank will also endeavor to implement international best practices of governance and ensure transparency and safeguarding the rights of all the stakeholders.

12. SHORT-FALLS/WEAKNESSES OF THE ORGANIZATION

v The majority of people are not well aware about the products of Bank Allied. Therefore it should advertise extensively especially home, agri & car loans and Credit Cards.

v Mismanagement of time is another big mistake in Bank Allied Branches, the bank official time of closing is 5:00pm but due Mismanagement of time employees leave their desk at 8.00pm which is so hectic and cause employee frustration.

v A behavior has been noted that bank tries to feel at ease with good looking rich and educated people and the un-educated and old customers feel some bit strange in the environment of the bank.

v Proper guideline should be given to the customer about bank products. They facilitate with current information. Many of the customer’s complaint that there should be two or more person who will guide people at entrance where they have to move, concerned person and department, teach how to fill forms, slips and cheques.

v The number of cash counter must be increased because the customer has to wait at peak hours on the counter for deposit, withdrawals and online.

v After privatization Old Staff of ABL is diminishing rapidly with increasingly replacement by new entrants especially MBA culture who are all leaders but not workers with no loyalty and switch over within no time at higher benefits.

v Promotions and incentive are awarded on lobby/favoritism and not on individual performance.

v Bank is unable to get the benefit from loan sanctioned but not availed due to lack of co ordination between credit department & finance department.

v The policies regarding revenue budgets are formulated but not properly implemented

v Late arrival of reconciliation from Finance Division to the branches which may cause the chances of fraud and forgery after late identification of the entries

13 CONCLUSIONS

2009 was a year full of challenges for the financial services industry around the globe and Pakistan was no exception .ABL five year strategic plan continued to be executed during the turbulent economic environment of the last twelve months like high inflation, liquidity crunch and limited the adverse effect of the deteriorating economy. Continuous focus on quality human resource, state of art technology, product innovation and improving customer experience helped the bank to deliver better shareholder value in those difficult times.

The balance sheet grew by 15 %to Rs.367 billion as compared to Rs.320 billion a years ago .Despite low presence in the consumer market, it has diversified its earning asset base and substantial core deposit base This is an outcome of pragmatic business approach adopted by the Board and the Management team coupled with the dedication and hard working of the entire staff.

Allied Bank’s extensive approach ,capital structure ,focus on human capital ,infrastructure development and technology have earned the bank a long term rating of “AA” and a short term rating of “A1” by PACRA

14 RECOMMENDATIONS

Finally, we are giving some suggestions for Allied Bank Limited. These suggestions are based on our experience with bank.

v Human Resources Group should be there in order to motivate and train the employees. I have noted some dissatisfaction among the employees, due to in efficient promoting system. So the bank should provide clean and on the merit basis promotion system.

v The bank is now over staff. The building under operation is in adequate for such a large staff because new Branches opening in small cities.

v Under no circumstances cheque book should be given to the customer if the account formalities are incomplete.

v There are two officers involved in cash deposit process, which is time consuming. Cashier should be given certain powers to receive cash of US$ & DM to provide prompt services.

v Similarly, there are two officers involved in cheque payment process, which is time consuming. Cashier should be given certain powers to pay cheques up to Rs.25000/- to provide prompt services.

v Cheques, which are drawn on Allied Bank Branch and returned unpaid in clearing, are not reflected in the statement of account of the customers. These cheques must be reflected in the accounts so that credibility of the customers may be assessed.

v Audit should be held internally, rather there should be an audit department in the Branch to make audit on daily basis. This can become so, helpful as a different banks are having this department of their own.

v When giving the loan, the Bank must carefully analyze the past six month’s 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.

v 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.

v It should employ professionally qualified staff for the purpose and imparting training to concerned staff to generate quality results.

v Allocation of targets of target should based of the basis of average industry growth and realistic.

15 REFERENCES

·Analysis report from News paper “Business recorder”

·Financial Reports of the Allied Bank for the Years 2004,2005,2006,2007,2008 & 2009

·Principles of Corporate finance by Richard A.Brealey and Stewart C.Myers

·Accounting by Meigs Williams Haka Bettner

· Practice and Law of Banking in Pakistan by Israr H. Siddiqui

·Financial Reports of following Commercial Banks for the year 2009 UBL, MCB, HBL AND NBP

16 ANNEXES

STRUCTURE OF OVERALL ORGANIZATION

ORGANOGRAM

Internal

Audit

ORGANIZATION STRUCTURE OF BRANCH

Structure of Finance Department

BOARD OF DIRECTORS

PRESIDENT (Chief Executive Officer)

Group Chief Finance

(Chief Executive Officer) ))Offi

Group Head

Planning & MIS

Group Head

Taxation

Group Head Financial & Regulatory Reporting

Branches

Wednesday, 6 August 2014

Allied Bank Repot01r

· Current Account.

· PLS Saving Deposits.

Allied Monthly Income Scheme

VISA CARD

AGRICULTURAL FINANCE.

IMPORT EXPORT BUSINESS/TRADE FINANCE.

DEMAND FINANCE.

NON-FUND ADVANCES

1. GUARANTEE

BID BOND

MOBILIZATION BOND

PERFORMANCE BOND

2 Letter of Credit

A letter of credit is defined as under

Procedure Of Account Opening.

3) BUSINESS ACCOUNTS

· Club / Society / Association

· CLOSING OF ACCOUNT

SECURITY ARRANGEMENTS

1. RUNNING FINANCE.

PURPOSE.

SECURITY

PRIMARY SECURITY

PERIOD.

INTRODUCTION

PURPOSE

SECURITY

PRIMARY SECURITY

PERIOD

REPAYMENT SCHEDULE

PURPOSE

MODE OF FINANCE

SECURITY

PRIMARY SECURITY

PERIOD

REPAYMENT SCHEDULE

IMPORTANT FEATURE

INTRODUCTION

ABL FOREIGN CURRENCY ACCOUNTS.

CRITERIA FOR OPENING FOREIGN CURRENCY ACCOUNT

FEATURES OF FOREIGN CURRENCY ACCOUNTS

SAVING ACCOUNTS.

Rate of Interest

CURRENT DEPOSITS

Letter of Credit

A letter of credit is defined as under

9.1.3 Functions of Finance Department

9.1.4 ACCOUNTING SYSTEM OF THE ORGANIZATION

Finance System of the Organization

Funds allocation is increasing gradually with the increase in balance sheet footings

Ratio analysis is essentially concerned with the calculation of relationship which after proper identification and interpretation may provide information about the operation and state of affairs of a business enterprise.

ASSET

CASH AND BALANCE WITH TREASURY ANDOTHER BANKS

INVESTMENT

ADVANCES

OPERATING FIXED ASSET

OTHER ASSETS

LIABILITIES

CUSTOMER DEPOSITS

BORROWING FROM FINANCIAL INSTITUTIONS

RESERVES

Un appropriated profit is increasing continuously due to continuous growth and posted a high of 131.5% in 2009

11.5 Horizontal Analysis of Income Statement

MARK-UP /RETURN /INTEREST EARNED

MARK-UP /RETURN /INTEREST EXPENSED

PROVISIONS AGAINST NON- PERFORMING ADVANCES

11.6 VERTICAL ANALYSIS OF BALANCE SHEET

ASSETS

RESERVES

MARK-UP /RETURN /INTEREST EARNED

MARK-UP /RETURN /INTEREST EXPENSED

PROVISIONS AGAINST NON- PERFORMING ADVANCES

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