Allied Bank Internship Report

Published on July 2016 | Categories: Documents | Downloads: 85 | Comments: 0 | Views: 767
of 118
Download PDF   Embed   Report

IT IS AN INTERNSHIP REPORT ON ALLIED BANK AND I HOPE IT

Comments

Content

Internship Report 2009

Table of Contents
PREFACE ACKNOWLEDGMENT BANKING SYSTEM TODAY CHAPTER 1 THE ORGANIZATION HISTORY AND BACKGROUND: GENERAL PROFILE OF THE ALLIED BANK LIMITED: PRODUCTS: ORGANOGRAM OF ALLIED BANK: BRANCH NETWORK: CREDIT RATING: VARIOUS BANK DEPARTMENTS: APPRAISALS AND PROBLEMS AT ABL: CHAPTER 2 ANALYSIS SWOT ANALYSIS FINANCIAL ANALYSIS: FUTURE OUTLOOK: CHAPTER 3 INTERNSHIP ACTIVITIES WEEKLY ACTIVITIES: MANAGEMENT STYLE WORKING ENVIRONMENT: CHAPTER 4 SUMMARY & RECOMMENDATIONS OVERALL SUMMARY: RECOMMENDATION FOR RECOMMENDATION FOR ANNEXURE: 2 3 4 5 6 10 15 36 39 40 43 56 57 58 61 64 65 66 101 101 102 103 104 105 106

THE THE

ORGANIZATION: IBIT:

Annexure:

Institute of Business & Information Technology

Internship Report 2009

PREFACE

The report is specially meant for the students of MBIT. It is concerned to a brief study of operations, functions, tasks and services of Allied Bank of Pakistan. Banking play very important role in the commerce and economic development of a country. Now-adays banks are using different modern technologies, which influence the managerial activities, that’s why I decided to do my internship training in the bank. In preparation of this report I have tried my best to provide all possible information about the operations, functions, tasks and the corporate information of Allied Bank of Pakistan in brief and comprehensive form. Then internship report ends with some recommendation after identification of problems that I observed during the course of my internship training.

Institute of Business & Information Technology

Internship Report 2009

Acknowledgment

“To Him belongs the dimension of the Heavens and the Earth, it is He who gives life and death and He has power over all things.”
(Al-Quran)

All acclamations are to Allah, the most Merciful and Compassionate, who has empowered and enabled me to accomplish this task successfully. After that I submit my earnest thank to my affectionate parents, who pray for my success and always been a source of encouragement for me. Secondly, I am grateful to my prestigious institute that made this learning opportunity a part of my education, especially I would like to thank my Professors as the knowledge imparted by them enable me to gain knowledge and learning exposure of the organization in the best way. Also I express my appreciation to all staff members of Allied Bank of Pakistan who are very cooperative guided me a lot and also I express my greatest gratitude to my kindhearted supervisor Mr. Asif Incharge of reporting fraud, forgery and dacoity, Miss Syeda Ana Mehdi Credit Analyst and the wing head Mr. Syed Mujtaba Gillani.

Institute of Business & Information Technology

Internship Report 2009

BANKING SYSTEM TODAY The banking business as we know it today is composed of three separate and distinctive principal functions these are: • The acquiring of funds to invest and advances


The investing of such funds and advances (loans) in bonds The servicing of such funds, such as providing of checking, saving facilities and the collection of draft, notes and cheques



These functions while deferring in detail of operations follow the same principles established hundreds of year ago by money lenders and exchangers.

Institute of Business & Information Technology

Internship Report 2009

Chapter 1 the Organization

Institute of Business & Information Technology

Internship Report 2009

HISTORY AND BACKGROUND:
Allied Bank was the first Muslim bank that has been established in Pakistan in December 1942 as the Australasia Bank in Lahore with a paid-up share capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux, the Bank attracted deposits equivalent to Rs. 0.431 million in its first eighteen months of business. At the time, the Bank’s total assets amounted to Rs. 0.572 million. Today, Allied Bank's paid up Capital & Reserves amount to Rs. 10.5 billion, deposits exceed Rs. 143 billion and total assets equal Rs. 170 billion. The Bank’s journey has been about dedication, commitment, professionalism and adapting to environmental changes, leading to its immense growth and stability. A view of Khawaja Bashir Bux's Residence that was the first branch of Australasia Bank came into existence. It is these factors that have made it a Bank the rest look up to.

THE PRE-INDIPENDENCE HISTORY (1942-1947):
In the early 1940s, the Muslim community was beginning to realize the need for its active participation in the fields of trade and industry. Since the late 1880s, Hindus had established a commanding presence in the areas of industry, trade and commerce and were especially dominating in the Sub-continent area. Banking, in particular, was the exclusive forte of Hindus and it was popularly and wrongly believed that Muslims were temperamentally unsuited for this profession. It was particularly upsetting for Khawaja Bashir Bux to hear that:

“Muslims could not be successful bankers”.
He decided to step-up to that challenge and took the lead in establishing this first Muslim bank by the name Australasia Bank Limited in Punjab, which was to become Pakistan in December 1942. The initial equity of the Bank amounted to Rs 0.12 million, which was raised to Rs. 0.5 million by the end of the first year of operation, and by the end of 30th June 1947 capital increased to Rs. 0.673 million and deposits raised to Rs 7.728 million.

Institute of Business & Information Technology

Internship Report 2009

AUSTRALASIA BANK (1947-1974):
A view of the building in Lahore that once housed the Australasia Bank branch, Australasia Bank was the only fully operational Muslim bank in Pakistan on August 14th, 1947. However, it was severely hit by the riots in East Punjab. The Bank was identified with the Pakistan Movement. At the time of independence all the branches in India, (Amritsar, Batala, Jalandhar, Ludhiana, Delhi and Angra (Agra)) were closed down. New branches were opened in Karachi, Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. Later, the network spread to Multan and Quetta as well. The Bank financed trade in cloth and food grains thus, played an important role in maintaining consumer supplies during the early months of 1948 affected by riots. Despite the difficult conditions prevailing and the substantial set back in the Bank’s business in India, Australasia Bank made a profit of Rs. 50,000 during 1947-48. By the end of 1970 it had 101 branches. Unfortunately, it lost 51 branches in the separation of East Pakistan. But the Bank did well despite losing a lot of its assets and by the end of 1973 had 186 branches in West Pakistan.

ALLIED BANK (1974-1991):
In 1974, the Board of Directors of Australasia Bank was dissolved and was renamed Allied Bank after the amalgamation of four banks. The first year was highly successful; profit exceeded Rs. 10 million, deposits rose by over 50 percent and approached Rs. 1460 million. Investments rose by 72 percent and advances exceeded Rs. 1080 million for the first time in the banking history. 116 new branches were opened during 1974 and the Bank started participating in the Government’s spot procurement agriculture program. Those seventeen years saw a rapid growth for the Bank. Branches increased from 353 in 1974 to 748 in 1991. Deposits rose from Rs. 1.46 billion, and Advances & Investments from Rs. 1.34 billion to Rs. 22 billion during this period. It also opened three branches in the U.K.

ALLIED BANK- 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 the challenge. In September 1991, Allied Bank Limited entered in the new era of its history a world’s first bank to be owned and managed by its employees. The 850 executives and 7200 staff members spread over 800 branches throughout the Pakistan established in high degree of cooperation and family feelings.

Institute of Business & Information Technology

Internship Report 2009

ALLIED BANK (1991-2004):
As a result of privatization in September 1991, Allied Bank entered a new phase, and became the world’s first bank to be owned and managed by its employees. In 1993 the “First Allied Bank Modaraba” (FABM) was floated. After privatization, Allied Bank became one of the premier financial institutions of Pakistan. Allied Bank’s capital and reserves were Rs. 1.525 billion; its assets amounted to Rs. 87.536 billion and deposits to Rs. 76.038 billion. Allied Bank enjoyed an enviable position in Pakistan’s financial sector and was recognized as one of the best amongst the major banks of the country. In August 2004, as a result of capital reconstruction, the Bank’s ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. Today, the Bank stands on a solid foundation built over 63 years of hard work and dedication, giving it a strong equity, an asset and deposit base and the ability to offer customers universal banking services with more focus on retail banking. The Bank has the largest network of online branches in Pakistan and offers various technology-based products and services to its diverse clientele through its network of more than 700 branches.

ALLIED BANK (2005 to date):
In May 2005, Ibrahim Leasing Limited dissolved and the company was vested into Allied Bank Limited. ALL the shareholders were issued ABL shares instead of the all shares held by them. An application for the listing of ABL shares in all the Stock Exchange Companies of Pakistan was made; ABL was formally listed and the Bank’s share trading began on the following dates i.e. Islamabad Stock Exchange August 8, 2005, Lahore Stock Exchange August 10, 2005 and Karachi Stock Exchange August 17, 2005. Today, all Allied Bank Limited shareholders can trade in the Bank’s shares at their will and 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.

Institute of Business & Information Technology

Internship Report 2009

IBRAHUM GROUP ASSUMES CONTROL OF ABL:
Ibrahim Group, through its different companies and sponsors owns more than 75% of Allied Bank. The Group apart from interest in financial sector is engaged in manufacturing of yarn and polyester staple fiber, trading and power generation. The consortium of Ibrahim Leasing Limited And Ibrahim Group, which has injected Rs. 14.2 billion into capital of Allied Bank of Pakistan for acquiring its 325 million additional shares, today assumed the control of the bank. The Governor, State Bank Of Pakistan, Dr. Ishrat Hussain handed over the relevant documents to Mr. Mohummad Naeem Mukhtar, Authorized Attorney of the consortium at a simple ceremony held at SBP, Karachi. Among those who present at the ceremony were Deputy Governor, Mr. Tawfiq A. Hussain and senior officials of the State Bank of Pakistan, representatives of the Allied Bank and the consortium. Speaking on the occasion, the State Bank Governor has termed the successful reconstruction of ABL as beneficial both for the organization as well as for banking industry. He expressed the hope that the transfer of the management of ABL to a strategic investor will turnaround the bank and usher in a new era of growth and stability in the banking sector. He stressed upon the new Board of the Bank to run it professionally, prudently and with the highest standards of corporate governance. It may be recalled that the auction of 325 million additional shares as a part of reconstruction of Allied Bank of Pakistan was held under the chairmanship of the deputy Governor, State Bank of Pakistan, Mr. Tawfiq A. Hussain at Islamabad on 23rd July, 2004. In the auction, the consortium of Ibrahim Leasing Limited And Ibrahim Group were the successful bidder as they offered the highest bid of Rs. 14.2 billion for acquiring these additional shares, which constitutes 75.35% of the revised capital of ABL. The Federal Government approved the scheme for reconstruction of ABL, under section 47 of the Banking Companies Ordinance 1962 on July 24, 2004. After the approval of scheme by the Federal Government, the State Bank issued the Letter of Acceptance (LOA) to the consortium of Ibrahim Leasing Limited And Ibrahim Group on July 26, 2004 in terms of which the full payment of Rs. 14.2 billion was made on August 19, 2004. On receipt of full payment by the Allied Bank of Pakistan Limited and verification of the sources of funds by the State Bank of Pakistan, the control of the Bank was handed over to consortium of Ibrahim Leasing Limited And Ibrahim Group.

Institute of Business & Information Technology

Internship Report 2009

General Profile of the Allied Bank Limited:
Allied Bank Limited operates by the following Vision, Mission & Values:

VISION:
To become a dynamic and efficient bank providing integrated solutions and the first choice of bank for all customers.

MISSION:
• • • • • To provide value-added services to our customers To provide high-tech innovative solutions to meet customer requirements To create sustainable value through growth, efficiency and diversity for all stakeholders To provide a challenging work environment, and reward dedicated team members To play a proactive role in contributing towards the society

CORE VALUES:
The core values of Allied Bank are these: • • • • Integrity Excellence in Service High Performance Innovation and Growth

Institute of Business & Information Technology

Internship Report 2009

OBJECTIVES:
Allied Bank has following objectives: • • • • • Prime focus to earn profit by providing values to its customers To provide superior services to its customers To provide assistance in the development of the commerce and trade industry Focus on blending skills and experience towards creating an enabling environment Core focus is to inculcate a culture of collaboration intended to deliver world class customer service

Institute of Business & Information Technology

Internship Report 2009

BOARD OF DIRECTORS:
“The people who draw the picture of the organization on the broader canvas of strategy and planning, the pioneers of prosperity and world of wisdom that paves the path to long term success”

Mr. Mohammad Naeem Mukhtar Mr. Mohammad Aftab Manzoor Mr. Khalid A. Sherwani Mr. Pervaiz Iqbal Butt Mr. Mohammad Waseem Mukhtar Mr. Farrakh Qayyum Mr. Sheikh Mukhtar Ahmed Mr. Abdul Aziz Khan Mr. Tasneem M. Noorani Mr. Sheikh Jalees Ahmed Mrs. Nazrat Bashir Mr. Mubashir A. Akhtar

Chairman (CEO) President & (CEO) Director Director Director Director Director Director Director Director Director

Institute of Business & Information Technology

Internship Report 2009

EXECUTIVE COMMITTEE:

Mr. Khalid A. Sherwani Mr. M. Naveed Masud Mr. Akhter Ali Khan Mr. Tahir Saeed Effendi Mr. Mohammad Yaqoob Mr. Masud A. Sidique Mr. Anwar Zaki Mr. Khalid Mehboob Mr. Sayed Mujtaba Gillani

President & (CEO) Senior Executive Vice President Head Credit Head I.T & Financial Officer Head Islamic Banking & Planning Div Head Human Resource Head Treasury Head Business Promotion Head Special Vigilance Unit

Institute of Business & Information Technology

Internship Report 2009

THE MANAGEMENT:
“The brilliants whose passion is dedicated to discover newer ways to make the organization goals reality”

Mr. Asim Tufail Mr. Fareed Vardag Mr. Iqbal Zaidi Mr. Mohammad Abbas Sheikh Mr. Mohammad Aftab Manzoor Mr. Muhammad Jawaid Iqbal Mr. Muhammad Yaseen Mr. Mujahid Ali Mr. Shafique Ahmed Uqaili Mr. Khawaja Mohammad Almas Mr. Tahir Hassan Qureshi Mr. Tariq Mehmood Mr. Waheed ur Rehman Mr. Zia Ijaz

(Group Chief, Consumer & Personal Banking) (Chief Risk Officer) (Group Chief, Compliance) (Group Chief, Special Assets Management) (Chief Executive Officer) (Group Chief, Corporate & Investment Banking) (Group Chief, Treasury) (Group Chief, Information Technology) (Group Chief, Human Resources) (Head, Core Banking Projects) (Chief Financial Officer) (Group Chief, Operations) (Company Secretary) (Group Chief, Commercial & Retail Banking)

Institute of Business & Information Technology

Internship Report 2009

PRODUCTS:
In line with the Bank’s aim to provide a host of products and services to its customers, substantial ground work has been done to establish a strong consumer banking business. Furthermore, to achieve this objective, professionals from across the industry have been recruited into areas of product development, sales, credit policy, research, consumer analytics, call centers and service quality departments.

Phone Banking:
Allied Bank is focused on delivering exceptional services to its customers that would strengthen the relationship and build Loyalty. To make banking experience quick, efficient, secure and easy, Allied Bank of Pakistan now offer its customers 24/7 Phone Banking Services. Allied Phone Banking provides its customers immense comfort! In addition, Allied customers can also avail a host of services through automated Allied Phone Banking (IVR/Self Service Banking) that lets them use their telephone keypad to inquire about their financial balance/transactions. Allied Phone Banking Services: Dial - 0800-22522 to get absolute Banking freedom

Branch Banking:
1. Inquiry • • • A/C balance Statement details Product information

2. Transactions • • • • • Cheque book request TPIN issuance & re-issuance ATM PIN issuance & re-issuance PO/DD & Bank certificate Funds transfer

Institute of Business & Information Technology

Internship Report 2009

Credit Cards:
1. Inquiry • • • • Card balance Statement details Product information Application status

1. Transactions • • • • • Card activation Card lost/stolen Card replacement Credit Card bill payment Insurances

Internet Banking:
Banking at your fingertips Allied Direct Internet Banking offers convenience to its customers to manage and control their banking and finances - when they want to, where they want to! So, just get clicking. Allied Direct Internet Banking is; • • • Simple and Convenient Secure and Faster 24X7 Account Access

Online Banking:
Allied Online Banking is a unique service being offering from Allied Bank. Through this service, account in Allied Bank is available to customers from any of abl branches countrywide. No matter where customers are in the country and whichever branch their account is maintained at, customer can have their cheque cashed at any of abl 757 online branches located in 250 cities.

Institute of Business & Information Technology

Internship Report 2009

Customers can also use the service, from any branch, to deposit cash for instant credit into their account or any other account in Allied Bank. Similarly, the account-to-account Funds Transfer facility is also available for instant remittance. Customers’ cheque drawn from a remote branch for credit into a beneficiary’s account or encashment of a specified amount can also be presented by a third person at any branch. What’s more, making a Balance Inquiry and getting an Account Statement are additional services available to Account holders from remote branches. Allied Online provides a secure, efficient and convenient facility for making payments to beneficiary accounts from any of abl branches countrywide. Corporate customers requiring fund collection or a disbursement facility can use it for cash management services.

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

1 Link Network:

Additionally, Allied Bank is a member of the ‘1-LINK ATM sharing switch’ comprising of over 2,000 ATMs nationwide, therefore, giving its Allied Cash+Shop Visa Debit Card holders access to even more ATMs across the country. The "1-Link Switch" has the following Bank members: • •
• • • • • • • • • ABN Amro Bank KASB Bank Limited Al Baraka Islamic Bank Meezan Bank Limited Allied Bank Limited National Bank of Pakistan Askari Commercial Bank Limited NIB Bank Limited Atlas Bank Limited PICIC Commercial Bank Limited Bank AL Habib Limited Soneri Bank Limited Bank Alfalah Limited


• • • • • • •




• •

Standard Chartered Bank Pakistan Limited Bankislami Pakistan Limited Union Bank Limited Crescent Commercial Bank Limited United Bank Limited Dubai Islamic Bank Pakistan Limited MyBank Limited Emirates Global Islamic Bank Limited Tameer Micro Finance Bank Limited Faysal Bank Limited Habib Bank Limited First Dawood Islamic Bank Limited



Institute of Business & Information Technology

Internship Report 2009

All ATMs connected with the"1Link Switch" will show its Logo.

Bank: City: Branch: Address:

Muslim Commercial Bank Select City Select Branch

M NET Network:
The Allied Cash+Shop Visa Debit Card can also be used at M Net ATMs, for cash withdrawal.

The "M Net Switch" has the following Bank members: • • • • • • • • • • JS Bank (American Express Bank) Bank of Khyber Bank of Punjab Citibank First Women Bank Limited Habib Metropolitan Bank HSBC Bank Muslim Commercial Bank Saudi Pak Commercial Bank Prime Commercial Bank

ORIX POS Network:
City: Merchandiser: Address:
KARACHI

Institute of Business & Information Technology

Internship Report 2009

Institute of Business & Information Technology

Internship Report 2009

Institute of Business & Information Technology

Internship Report 2009

Corporate Leasing:
Allied Bank started lease operations when it integrated with Ibrahim Leasing Limited. Facilities include leases for machinery, commercial vehicles and equipments. The Bank provides lease facilities to corporate and commercial clients in all industrial enterprises for balancing, modernization, replacement and expansion schemes. Leasing is a popular mode of financing because of its distinctive features like tax shield, preserve working capital, easy documentation and less processing time. Lease applications are processed at all Bank branches in Pakistan.

Unclaimed Deposits:
If the account is dormant or not operated for 5 years then these are called unclaimed deposits and all unclaimed deposits are surrendered to the State Bank of Pakistan. In accordance with the Banking Companies Ordinance, 1962, Section 31, the Bank is liable to surrender to S.B.P, all unclaimed deposits and instruments which have not been operated/collected by the account holders/beneficiaries for last 10 years. All such customers/beneficiaries are requested to contact the concerned branch to reactivate their accounts/collect the instruments, failing which, the bank will be compelled to classify the same "UNCLAIMED" and surrender to SBP.

Deposit Accounts:
Allied Bank of Pakistan provides different nature of deposit accounts to its customers. • • • • • • • • • • • • PLS Account Current Account Allied Basic Banking Account Foreign Currency Deposit Monthly Profit Plus Rewarding Term Deposit Behtar Munafa Account Behtar Munafa Term Deposit Allied Munafa Account Allied Bachat Scheme Allied e-Savers Accounts Allied Business Account

Institute of Business & Information Technology

Internship Report 2009

PLS Account:
Allied Bank offers the PLS Savings Account facility to its customers with the following attractive features: • • • Attractive return of up to 5.00% per annum Free Online Transactions, DD/TT/PO for depositors maintaining an average monthly balance of Rs. 2.500 (M) & above. Free issuance of cheaque book at the time of account opening

Current Account:
• • • • Allied Bank offers the Current Account facility for individuals as well as for institutions and commercial customers. There are free Online Transactions, DD/TT/PO for depositors maintaining an average monthly balance of Rs. 0.5 (M) & above. Free issuance of cheaque book at the time of account opening

Allied Basic Banking Account:
In order to provide basic banking facilities to its lower-middle class customers, Allied Bank has introduced the “Allied Basic Banking Account” (ABBA). • • • • • Account can be opened with an initial deposit of Rs 1,000/= It is a non-remunerative account with a no minimum balance requirement. The Statement of Account is issued on a yearly basis. The account will be closed automatically if the balance remains “zero” for one year. No service charges on the account for a maximum of 2-withdrawals and 2deposits during a calendar month. Additional transactions will be subject to a service charge as per the Bank’s Schedule of Charges for every withdrawal/deposit. Unlimited withdrawals from ATMs.



Institute of Business & Information Technology

Internship Report 2009

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

Monthly Profit Plus:
Saving has now become all the more appealing with our Monthly Profit plus Scheme, which earns you monthly profits on investments. The scheme is designed for a period of 1 Year Tenure 1 Year with the Profit Rate 10.00% p.a. following Profit Payment Rs.833 * per month profit rates:

Approximate monthly returns calculated on the investment of Rs.100, 000
* Withholding tax, Zakat or other Government Levies are applicable separately

Salient Features: • • • • • Account Type: Term Deposit Term Period: 1 year Profit: Payable on monthly basis Minimum Deposit Amount: Rs.25,000 Eligibility: Individuals & Institutions (other than financial institutions)

Additional Benefits: • • • • • Cheaquing Account for monthly profit credit 24 hour phone banking service Free internet banking facility SMS transaction alerts Allied Cash + Shop Visa Debit Card

Rewarding Term Deposit:
• • A term deposit scheme which gives a high rate of return and the flexibility of various tenure. Investment can be made with the minimum of PKR 25,000 only.

Institute of Business & Information Technology

Internship Report 2009

Rate of Profit: D 1 3 ep M M Rs. 7.0 9.0 os on on 25, 0% 0% it Salient Features: th th 00 A s 0 m • Account Type: Term Deposit & ou • Term Period: 1-12 months Ab nt • Investment: Rs. 25,000 & above ov e • Profit: Payable on maturity • Eligibility: Individuals & Institutions 6 M 9.5 on 0% th s 12 M 10. on 50 th % s

Allied Advance Profit scheme:
In keeping with our objective to bring you new and innovative services and banking products, we now introduce Allied Advance Profit Scheme that gives the entire profit upfront. Product Specifications: Minimum Investment Required – Rs.25, 000 Investment Terms: • • 18 months Auto roll-over (optional)

Profit Payment: Profit of Rs.13, 500* will be immediately credited in the customer’s current account. *on an investment of Rs.100, 000 Tax/Zakat will be applicable as per rules Additional Features & Benefits • • • • • Current account for regular banking needs Allied Cash+Shop Visa Debit Card Financing facility of upto 80% on investment Free internet banking facility 24-hour phone banking service

Institute of Business & Information Technology

Internship Report 2009

Institute of Business & Information Technology

Internship Report 2009

Behtar Munafa Account:
If customer wants a chequing account that earns it attractive returns, paid on monthly
Upto Rs.5,000,000 Rs.5,000,001 to Rs.25,000,000 Rs.25,000,001 to Rs.50,000,000 Rs.50,000,001 to Rs.100,000,000 Rs.100,000,001 to Rs.250,000,000 Rs.250,000,001 to Rs.500,000,000 Rs.500,000,001 & above 5.00% 6.00% 7.00% 8.50% 9.25% 10.00% 10.50%

basis, then this is the account for such customer. Rate of Profit:

Salient Features: • • • • • Account Type: Chequing Account Investment: Up to Rs.5,000,000 & above Profit: Payable on monthly basis Highest Profit: Up to 10.50% p.a Eligibility: Individuals, and institutions

Behtar Munafe Term Deposit:
If customer wants to fix its money now to secure the future, this is the product for customer.
BEHTAR MUNAFA TERM DEPOSITS (3739): Upto Rs. 5,000,000 Rs.5,000,001 to Rs.25,000,000 Rs.25,000,001 to Rs.50,000,000 Rs. 50,000,001to Rs. 100,000,000 Rs.100,000,001& Above 1 Month 6.00% 6.50% 7.00% 7.50% 8.00% 3 Months 8.00% 8.50% 9.00% 9.50% 10.00% 6 Months 8.50% 9.00% 9.50% 10.00% 10.50% 1 Year 9.50% 10.00% 10.50% 10.75% 11.00%

Rate of Profit:

Institute of Business & Information Technology

Internship Report 2009

Rate of Profit: • • • • • Account Type: Fixed Term Deposit Investment: Up to Rs.5,000,000 & above Profit: Payable on maturity Highest Profit: Up to 11% p.a. Eligibility: Individuals, and institutions

Allied Munafa Account (AMA):
Salient Features: • The applicable profit rate will be based on the amount maintained in the account on an average monthly basis and the return will also be credited to the account on a monthly basis. Individuals, Firms, Companies, Schools, Hospitals, Charitable Organizations, etc., are welcome to open their account in this scheme.



Allied Bachat Scheme:
Allied Bachat Scheme is a PLS Term Deposit Scheme based deposit scheme whereby customer 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 Eligibility: All individuals and institutions Free Internet Banking facility

Allied e-Savers Accounts:
Saving has never been so flexible! The Allied e-Savers Account is a unique savings plan where customer can earn returns as high as 7.5% with the convenience of 4 withdrawals a month!

Institute of Business & Information Technology

Internship Report 2009

Institute of Business & Information Technology

Internship Report 2009

Salient Features: • • • • Investment: Rs. 10,000 to Rs. 500,000 Profit: payable on Half Yearly basis. Expected Profit Rate: Up to 7.50% p.a. Eligibility: Individuals

Allied Business Account:
Allied Bank offers banking experience beyond expectations! Allied Business Account is a non-profit current account with countless benefits and services. If customers are a businessman, trader or an individual, Allied Business Account is an ideal proposition for such customers.

Rs. 500,000/- and above

Features & Benefits Online/Manual Remittances Outward Cheque Return Issuance of DD/TT/PO/OBC /Expression Collection

Free Free Free

Institute of Business & Information Technology

Internship Report 2009

SME:
The Commercial and Retail Banking Group (CRBG) caters to the needs of commercial entities and small and medium enterprises. A dedicated team of Relationship Managers first identifies the specific needs of each customer segment, then designs and delivers a facility package, which is in conjunction with those needs, and provides customers the full support and opportunity to take advantage of the various business prospects available in the market.

Following are the main credit facilities ABL offer:
RF/CF: These are short term credit facilities (maturity of up to one year) lent to customers to meet their day-to-day business/working capital requirements and finance their inventories, receivables, etc. Generally, in addition to collateral security, these facilities also entail security in the form of hypothecation of stocks and receivable/pledge of stocks. Export Refinance Facility: This is mainly the same as RF/CF, but as per the Terms and Conditions set by SBP, is meant exclusively for exporters. Under the Export Refinance Part I Scheme, both pre-shipment and post-shipment financing facility is available. Foreign Bill Purchase/Bill Discounting Facility: This loan/facility is provided to exporters against their export bills under LC and a contract to facilitate their cash flow, while they are waiting receipt of their payments. LC (Sight /Usance): This facility allows importers to import goods and machinery. FIM/FATR: These facilities allow customers to finance imported goods against Pledge & Trust Receipts, backed by collaterals. Demand Finance Facility: This is a medium/long term credit facility available to establish new projects for BMR and capacity expansion with a repayment term of more than one year, which can be paid back in installments. This facility meets clients’ long term needs such as, financing factory constructions or machinery expenses. Demand Finance Long Term Loans: The demand finance long term loan is approved for a period of 3-5 years. The loan is specifically for fixed asset financing with maximum grace period of upto 12 months from first draw-down. Inland LC (Sight/Usance): This facility allows customers to purchase commodities within the country.

Institute of Business & Information Technology

Internship Report 2009

Letter of Guarantee (LG): On behalf of the customers, the Bank issues a guarantee in favor of the beneficiary, against the performance of a particular job/contract, within a particular time. Import Export: Allied Bank provides highly efficient trade finance services for import/export businesses through a large number of authorized branches where trained and motivated staff is available to handle the business on the customer’s behalf. Cash/ Liquid Financing: The product is aimed at providing prompt financial services (fund based and non fund based) to SME sectors. The cash/liquid collateral financing program is aimed to be the cheapest source of funds available to the SME sector. Vendor Financing: The product is aimed at vendors of large corporate entities whereby the corporate entity has an agreement with the vendor to provide specific quantities of certain goods in a specific period of time. ABL whould finance such vendors in order to promote their production capabilities.

Agriculture Finance:
The Bank, under the Agricultural Financing Scheme, as decided 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, cattle), poultry and factories including social forestry and fisheries (inland and marine, excluding deep sea fishing). Details are as follows:

Farm Loans:

Production Loans:

1. Inputs like seeds, fertilizers, pesticides, weedicides, herbicides, labour charges, water charges, vegetables, floriculture, etc. 2. Working capital finance to meet various farming expenses. •
Development Loans

1. Improvement of agricultural land, orchards, etc. 2. Construction of Godowns 3. Tractors, Machinery & other equipments 4. Tube wells 5. Farm Transportation, etc

Institute of Business & Information Technology

Internship Report 2009



Non-Farm Loans

1. Livestock 2. Poultry 3. Fisheries 4. Forestry • Agriculture Revolving Credit Scheme

1. Loan Tenure: 3 Years (Clean up once a year) 2. One time documentation for 3 years 3. Loan limit will be based on the Indicative per Acre limit prescribed by SBP •
Development Loans/Finances (Term Loans)

1. Loan Tenure: up to 5 years 2. Repayment: Monthly/Quarterly/Bi-Annual 3. Criteria Selection: a) b) c) d) e) f) g) • Should be a Pakistani & have a CNIC. Preferably is an account holder with ABL. Have a permanent residence and be a self-cultivator. Not be a defaulter of any other Financial Institution/Clear ECIB. Be reputable in the business Have ‘Repayment Capacity’ Be able to produce proper securities

Amount of Finance

a) b) c) d) •

Value of agricultural land/Pass Book 80% of PIU or 50% of last 3 years’ average Sale Price or Market Value 50% of Residential/Commercial property in municipal limit. 90% of DSCs/SSCs/TDR/SNDR

Insurance

Insurance facility is available for all Farm and Non Farm Loans except orchards. Insurance premium amount of subsistence holding farmers availing loans for following 5 major crops will be reimbursed by the Government of Pakistan.

Institute of Business & Information Technology

Internship Report 2009

1) 2) 3) 4) 5)

Wheat Rice / Paddy Cotton Sugar Cane Maize

Utility Bill:
Customers can pay their utility bills (e.g. electricity, gas, telephone) at any of the Bank’s branches. For further convenience, bills are collected on all working days during normal banking hours and also at certain times during the evening. Bills can be paid with cash or cheaque, plus customers can even drop crossed cheaque in drop-boxes available at all branches. Furthermore, customers can also pay their bills using any of the Bank’s ATMs or via Internet Banking for SSGC and SNGP bills.

LOCKERS:
Allied Bank Lockers are available, at an annual fee, in four different sizes - small, medium, large and extra large. Locker holders are not required to have an account with the Bank.

S. # 1. 2. 3. 4.

Locker Size
Small Medium Large Extra Large

Annual Locker Rent (Current) Rs.1,500/Rs.2,000/Rs.4,000/Rs.5,000/-

Maximum Loss Coverage / Limit Rs.500,000/Rs.1,000,000/Rs.1,500,000/Rs.2,000,000/-

Hajj Services:
The Hajj Service is available to all pilgrims. The forms and other related services are provided by the Bank. Hajj applications are available with all branches during Hajj season, immediately after the Hajj policy is announced by the Government of Pakistan.

Institute of Business & Information Technology

Internship Report 2009

Allied Visa Credit Card:
In order to cater to growing financial needs of customers ABL is proud to introduce Allied Visa Credit Card with the Lowest Service Charge ever! So now customers can save money where it counts and spend lavishly at favorite places with greater flexibility, convenience and most important-Affordability! With Allied Visa Credit Card customer can enjoy a variety of state-of-the-art features and unmatched value by spending at over 49,000 merchants across Pakistan and 27 million merchant outlets worldwide! And what more, customer can also use your credit card at over 1 million ATMs internationally!

Allied Visa Gold Credit Card:
With 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 Allied Visa Gold Credit Card, free credit period allows customers to pay for purchases up to 50 days after the date of purchase. •
Flexible Repayment:

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

As an Allied Visa Gold Credit Card member, customers are entitled up to 75% of available credit limit in cash. •
Allied Easy Installments (AEI):

The Allied Easy Installments (AEI) plan provides customers with the facility to pay outstanding card balance in equal and affordable monthly installments spread over 3, 6, 12, 18, 24, 30 or 36 months.

Institute of Business & Information Technology

Internship Report 2009



Supplementary Cards:

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

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

With Credit Protection Plus, Allied Visa Gold Credit Card provides payment cover against: 1. 2. 3. 4. • 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 its customers from paying for any unauthorized transactions on their Card in the event that it is lost or stolen. •
Free CIP Lounge Access:

As an Allied Visa Gold Credit Cardholder, its customers are eligible to avail the free lounge facility at Quaid-e-Azam International Airport, Karachi and enjoy a variety of complimentary features. 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.

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

Institute of Business & Information Technology

Internship Report 2009

Features:
• • • •

With Allied Visa Platinum Credit Card, customers can enjoy these facilities:
Visa Platinum Golf Visa Platinum Dining Visa Experiential Travel Priority Pass Airport Lounge Program

• Platinum Life Platinum Life is a unique platform that showcases exclusive programs and events specially designed for Visa Platinum Credit Cardholders. With Allied Visa Platinum Credit Card, customers are eligible to join this exclusive platform and avail many exciting services like Platinum Club, Platinum Dining, Platinum Golf, Experiential Travel and much more. • 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. • Visa Platinum Websites The Visa Platinum websites have been designed to ensure that Visa Platinum Cardholders around the Asia-Pacific region are up-to-date with the latest product offerings and benefits. The sites also include additional features like: • • • •
The latest information on Visa Platinum regional programs, such as the Visa Platinum Club, Visa Platinum Dining, Visa Platinum Golf, Holidays and Visa Platinum Experiential Travel Facilities. The latest information on local country promotions and events. Online applications such as Concierge Online. A directory of toll-free numbers for reaching the VPCC from all key global destinations.

Allied Cash+Shop Visa Debit Card :
Features:

Get Cash:

Life is always on the move, now your bank account is too.

Institute of Business & Information Technology

Internship Report 2009

By using Allied Cash+Shop Visa Debit Card to withdraw cash directly from bank account from over 3,500 ATMs in Pakistan - including Allied Bank's largest network of ATMs - and over 1 million ATMs worldwide • Stay Alert Now, be more secure and keep better track of spending. With Allied Cash+Shop Visa Debit Card,customers can get SMS alerts when they make transactions on their Card. •
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 Enjoy Traveling Get Groceries Have Fun Fuel Up

Cash Management:
ABL’s cash management team offers a full range of transactional banking services, from collections to cross-border payments, from customized services to comprehensive industry expertise. Having the largest real-time online branch network in Pakistan, combined with a host of value-added services, ABL is uniquely positioned to meet the demanding requirements of global corporate, public sector enterprises and top-tier domestic companies. With its collaborative approach to building and implementing solutions, ABL is committed to giving its customers the best service possible.

Home Remittances:
Allied Bank has rolled out its state-of-the-art ‘e-Remittance’ services to facilitate international remittances sent to Pakistan by overseas Pakistanis. ABL has been significantly important in originating home remittances to Pakistan, and is continuously working to develop innovative ideas for maximizing its reach to all Pakistanis living abroad. We have identified several strategic partners in the main overseas markets, and will be providing a fully automated, end-to-end solution for non-resident Pakistanis.

Institute of Business & Information Technology

Internship Report 2009

ABL’s real-time online branch network – one of the largest networks in Pakistan, consists of over 760 branches in 350 cities, and provides domestic distribution of remittances to customers receiving money in Pakistan. A host of top international banks, exchange houses and funds transfer companies from across the world, including the Middle East, Europe, Asia-Pacific and North America, have been involved to make this a quality service. By implementing a fully automated, straight-through processing facility, we are in a position to activate an innovative set of remittance products. A host of options is available to non-resident Pakistanis under this service, including direct credit to account, cash payment over the counter and issuance of the Allied Express cheque, a payment instrument that can be honored across the entire ABL network of branches.

CIBG (Corporate Investment Banking Group) Corporate Banking Project Finance Long Term Financing Short Term Financing Trade Finance Investment Banking - Project Finance - Syndication - Advisory Financial Institution - Cash Management - Home Remittances

Institute of Business & Information Technology

Internship Report 2009

Organogram of Allied Bank:
Central Departmentalization

C orporate B anking G roup

Credit S ec tion G roup

Foreign Trade G roup

C redit A dm inistration G roup

H um an R esource G roup A ccounts G roup

Finance G roup

B ranches

O perations G roup

Inform ation Technology G roup

Investm ent & Treasury G roup

Internal D ivision G roup A udit & Inspec tion G roup

A dm inistration G roup A gricultural G roup

S pecial A sset M anagem ent G roup

Institute of Business & Information Technology

Internship Report 2009

Organogram of SVU

Institute of Business & Information Technology

Internship Report 2009

Organogram of RMG Hierarchy of Authorities of Allied Bank Limited

Institute of Business & Information Technology

Internship Report 2009

BRANCH NETWORK:
Allied Bank has 885 nationwide branches of which approximately 67% i.e. 573 are located in large metropolitan area, namely Karachi, Islamabad, Faisalabad, Lahore, Multan, Peshawar and Hyderabad. The network of 855 branches enables the bank to generate a substantial and stable deposit base, provide a wide range of banking products and other financial services and diversify lending risks geographically, as well as on the basis of credit and customer type. Allied Bank divided into four Centers i.e. North, Central-I, Central- II and South. These Centers have the regions and the regions further have the sub branches of Allied Bank Limited. The detail is given there:

Institute of Business & Information Technology

Internship Report 2009

CREDIT RATING:
Allied Bank’s credit rating has been maintained to ‘AA’ for long term, by the Pakistan Credit Rating Agency (PACRA), the leading credit rating agency in the country and AA donates a very low expectation of credit risk, indicates very strong capacity for timely payment of financial commitments and not significantly vulnerable to foreseeable events. The short term rating was also maintained at ‘A1+’, which is the uppermost possible rating under this category and represents highest capacity for timely repayment.

CORPORATE GOVERNANCE RATING:
Corporate Governance Rating (CGR) is meant to indicate the relative level to which an organization accepts and follows the codes and guidelines of corporate governance practices. In this context, JCR-VIS Credit Rating Company Limited had assigned a corporate governance rating of ‘CGR-8’ to your bank during the last year, which denotes ‘high level of corporate governance’ and is only two notches away from the highest level of CGR. CGR is arrived at after evaluating key governance elements of the rated enterprise, which include regulatory compliance, ownership structure, composition and operations of the board of directors and executive management, self-regulation, financial transparency and relationship with stakeholders. Rating for the current year is under process.

Term Finance Certificate (TFC) - 1st issue:
In July 2008, JCR-VIS Credit Rating Company upgraded the rating assigned to Allied Bank’s TFC to ‘AA-’ from ‘A+’ earlier, with stable outlook.

Institute of Business & Information Technology

Internship Report 2009

Deal of the Year Award 2008 by ‘The Banker’ – UK:
The Allied Bank has been awarded the Deal of Year Award 2008 for Pakistan by The Banker magazine - United Kingdom. This was awarded in recognition of Balance Sheet Restructuring & Debt Reprofiling of Maple Leaf Cement Factory Limited for Rs.13 billion which was the largest ever financing extended to cement company in Pakistan. As the sole financial advisor lead arranger, Allied Bank was involved in a well-engineered structure and a timely execution that made the transaction a

and success.

Allied Bank has been declared BANK OF THE YEAR 2006:
Allied Bank has been declared BANK OF THE YEAR 2006 by UK renowned financial magazine The Banker published by Financial Times Business Limited. This is considered to be the most prestigious award in the world of finance. The award is given by the The Banker annually to one high performer Bank in each country based on key performance indicators. The Bank of the Year 2006 Award was presented to Mr. Khalid A. Sherwani, President of the Bank during a ceremony held at London, UK on November 30, 2006.

Corporate Finance House of the Year 2007:
It feels pleased to apprise that Allied Bank of Pakistan has been awarded ‘Corporate Finance House of the Year (Banks)’ for the second consecutive year. CFA Association of Pakistan, a member society of CFA Institute – USA, conferred the award on Allied Bank based on the highest value and number of corporate finance concluded during July 2006 –December 2007.

Corporate Report Award & Certificate:
During the year, Annual Report of Allied Bank of Pakistan for the year 2007 won the first prize for “the Best Corporate Report” for the financial sector category, awarded jointly by the Institute of the Chartered Accountants of Pakistan and Institute of Cost and Management Accountants of Pakistan. The Annual Report for the year 2007 was also awarded ‘Certificate of Merit’ by the South Asian Federation Accountants (SAFA), an apex body of the SAARC countries.

Institute of Business & Information Technology

Internship Report 2009

Top 1000 Banks of the World – Ranking:
Allied Bank of Pakistan has been ranked among the top 1000 banks of the world by UK’s ‘The Banker’, published by Financial Times London. The categories and ranking are as follows:

Rank Categories Performance based Profit on average capital (ROE) Return on assets (ROA) Real profit growth Soundness based Capital assets ratio Size based Assets Overall world ranking

Rank

31st 130th 206th

517th

846th 969th

Institute of Business & Information Technology

Internship Report 2009

VARIOUS BANK DEPARTMENTS:
Allied Bank of Pakistan distributed its functions into various groups these are as follows:

Audit & Inspection Group: Vision:
To transform internal audit function of Allied Bank Limited in to an IT enabled risk based audit and management consultancy function providing value added services and management consultancy to the board and senior management.

Mission:
Our mission is to provide an independent, objective assurance and consulting services to management designed to add value and improve operations of the bank, dedicated to providing assistance to the management in effectively and efficiently accomplishing its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

Terms of Reference:
One of the prime responsibilities is the satisfactory implementation of the internal control over financial reporting. The committee also determines appropriate measures to safeguard bank’s assets, ensures consistency of accounting policies, reviews financial statements and recommends appointment of and coordinates with external auditors. The committee is also responsible to ascertain the internal control system including financial and operational controls, ensuring adequate and effective accounting and reporting structure, determining and monitoring compliance with the best practices of the corporate governance. Implementation of the management testing plan, assessing the testing results and advising appropriate corrective action is also a major responsibility of Audit Committee.

Institute of Business & Information Technology

Internship Report 2009

Risk Management Group: Goals:
The goals of RMG are to understand the risk profile of each business area, to propose risk policies, risk measurement methodologies, and risk limits in order to aggregate and control credit, market and operational risks across the Bank. In pursuance of these goals, RMG has taken up the challenge of building an effective Risk Architecture.

Terms of Reference:
The primary functions of Risk Management Committee (RMC) is the monitoring of management’s adherence to prudent and sound risk policies, assessing the ever changing risk profile and providing risk appetite to the business units. It also ensures development of risk management principles to build stakeholders confidence, safeguard and enhance reputation. The committee approves risk limits for Credit, market and operational risks, Credit approval grid and proposals regarding rescheduling/write-offs and filling of recovery suits. Overseeing of certain management committees and groups is also undertaken by the RMC. The Committee also monitors the initiatives and expenses pertaining to Basel II and up gradation of Risk Management Systems.

Structure of RMG:
Risk management functions have been segregated by business specialization i.e. Credit Risk, Operational Risk, Market Risk, Credit Administration, Risk Architecture and Risk Analytics.

Risk Analytics:
Risk Analytics is an integral part of the credit process. The objective of Risk Analytics is to limit portfolio concentrations, reduce volatility, achieve optimum earnings and create shareholder value. It also incorporates portfolio strategy and planning. The Risk Analytics is a relatively new concept in Pakistan, and the function at ABL has started managing portfolio risk through launch and usage of risk rating model, design and launch of a new Credit Application Package, that ensures a risk-based approach to credit presentations and allows pursuing systematic data gathering with a view to migrating to advanced approaches.

Institute of Business & Information Technology

Internship Report 2009

Credit Administration:
Credit Administration’s role is to minimize losses that could arise due to security and documentation deficiencies. The Credit Administration unit constantly monitors the security and documentation risks inherent in the exiting credit portfolio. This function operates through eight regional departments located all over the country. All these functions are operating in tandem to improve and maintain the health of the lending portfolio and keeping aggregate risk within the Bank’s overall risk taking capacity.

Credit Risk:
Credit Risk Management at ABL is divided in to two branches; 1. Corporate & Financial Institutions Risk 2. Commercial & Retail Risk This function ensures that the risk exposures undertaken match the risk appetite of the Bank, and that proper credit approval procedure are adhered to. Identification and Monitoring of problematic exposures and to take proactive measures to minimize the financial loss to the bank is also a responsibility of this function.

Market Risk:
Market Risk is defined as any fluctuation in value of the portfolio resulting from changes in market price and market parameters, such as interest rates, exchange rates and share prices. The Bank intends to build an effective Market Risk Management unit to independently identify measure, monitor and control the potential losses that may arise from the Bank’s activities in financial market.

Operational Risk:
It includes risks that primarily arise from internal processes of the Bank. Operational Risk Management unit is developing an effective system for identification of critical risk areas, and developing processes/controls to mitigate these risks.

Institute of Business & Information Technology

Internship Report 2009

Commercial & Retail Banking Group:
All the regional heads of Allied Bank reports the Commercial and Retail Banking Groups, The hierarchy of the Allied Bank is as follows:

ONE GROUP CHIEF OF CRBG

FOUR GROUP HEAD (Central-I, Central-II, South and North)

TWENTY REGIONAL HEAD

BRANCH MANAGERS

Institute of Business & Information Technology

Internship Report 2009

Operation Group:
Operations Group, apart from re-engineering the existing procedures to ensure safe and smooth conduct of Banks operational activities also focuses on supporting the field offices in pursuit of their business objectives and goals while maintaining adequate controls from a risk perspective. Group also assisted in launching of a variety of value added services facilitating bank’s account holders/customers by offering them a wider product range and efficient delivery. Operations Group is divided into the following five areas. 1. Alternative Delivery Channels provides innovative and value added I.T. based solutions to the Bank’s clients. 2. Branch Operations supports the field functionaries through procedural manuals, branches rationalization, fully automated inter branch & nostro accounts reconciliations. It also provides support Hajj & Zakat matters. During 2005, it has developed a number of new procedural manuals including ATM, Allied Online, Remittances, and Cash & Teller etc. 3. Treasury Operations supports Treasury front office in settlement of its trading/investment activities in Foreign Exchange, Money Market and Stock Market besides providing operational support in cash management to the branches and other business areas of the Bank. 4. Establishment caters to the Bank’s requirements for printed stationary, operating and fixed assets, insurance and security arrangements at the central office level. 5. Engineering is responsible for the purchase of new properties and construction/renovation of the existing/newly hired premises.

Information Technology Group:
The Allied Bank Ltd has a separate Group for Information Technology which looks after the entire bank’s automation. The bank’s major achievement in automation is that 100% branches are computerized and inter-connected and these branches offer the customers full range of online banking services. The bank also offers most of the currently sought after technology based products including Internet Banking. The IT Group is presently structured in three areas namely 1. 2. 3. 4. Core Banking T24 Software Services Office Automation / Technical Services Operations

Institute of Business & Information Technology

Internship Report 2009

But with the launch of the Core Banking project driven from Head Office at Lahore, the IT Group will be re-structured very shortly. A complete revamping of the IT Group is underway to cater to the expansion of activities within the IT Group and to create capacity for the Core Banking Project. Moreover, the IT Group will extend its support to the newly created Regional Offices as well. The new IT Organization is expected to grow both vertically and horizontally and a substantial number of new hiring will take place to fill the gaps within the new organization chart.

Human Capital Group:
The group defines the organizational structure and functional responsibilities of each group. It approves staff strength, key appointments, salary revisions, bonuses and any special allowances. It nominates the management personnel on the boards of other companies / subsidiaries. It also recommends amendments in Human Resources Policy to the Board. Besides monitoring performance of Human Resources Group, the committee also oversees certain H.R. related management committees.

Corporate & investment Banking Group:
The Corporate Investment Banking Group (CIBG) holds the Bank’s loan portfolio and enjoys a leading position in corporate lending in the country. It offers a wide range of financial services to medium and large sized public and private sector entities. These services include, providing and arranging tenured financing, corporate advisory, underwriting, cash management, trade products, corporate finance products and customer services on all bank related matters. ABL – C&IBG was established in 2005 and focuses on the Investment Banking market. It has the highest number of Successful Arrangement and Participation in Key Privatization & Acquisition Financing Transactions achieved by any Investment Banking Group in Pakistan.

C&IBG – Ranges of Services:

Institute of Business & Information Technology

Internship Report 2009

Finance Group:
Finance Group plays a central role in strategic decision making, transparent financial reporting and enhancing the economic value of the Bank. It also provides support to the business groups in performance analysis and launching new products and initiatives. 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.

-

Corporate Affair Group:
Corporate Affairs Group is responsible for compliance of all legal and statutory corporate requirements under Corporate and Banking laws and Regulations. Besides arranging Board of Directors and Shareholders’ meetings, it co-ordinates meetings of the Strategic Planning & Monitoring Committee of the Board,and Management Committee. The corporate group has two wings: CORPORATE AFFAIRS WING: 1. To deal corporate matters with Security and Exchange Commission of Pakistan, Company Registration Office Lahore, Stock Exchanges and State Bank of Pakistan. 2. To arrange meetings of the Board of Directors and preparation of the Agenda for such meetings. 3. To assist Company Secretary in all Corporate and Board Affairs. 4. To assist Company Secretary in implementation of the decision of the Board. 5. To obtain approvals through circulation on emergent proposals from the Directors.

Institute of Business & Information Technology

Internship Report 2009

6. To obtain approvals through circulation on the cases from the Board of Directors, Strategic Planning & Monitoring Committee. 7. To maintain record of Board of Directors, S. P. & M. C. Other Committees along with former Executive Board. 8. To arrange meetings of the Management Committee and prepare agenda for such meetings. 9. To affix company seal on Powers of Attorney, Shares and other documents as & when required and keeping its record. 10. To keep liaison with Govt. nominee and non-employee Directors of the Bank. 11. To assist Group Chief in carrying out different assignments entrusted by the President. 12. To provide information to Credit Rating Agency and co-ordinate with them in the process of Entity Rating. 13. To co-ordinate with Share Wing and Finance Group for arranging AGM/Extra Ordinary General meetings. 14. To provide information’s to external Auditors and SBP Auditors.

SHARES WING:
Shares Wing a part of Corporate Affairs manages shareholders’ matters and co-ordinates with the Shares Registrar for the transfer and issue of Bank’s shares. 1. To supervise Government Compensation Bonds. 2. To make correspondence relating to ABL Shares with Employees / Legal Wing / Registrar / shareholders. 3. To make arrangements for floatation of shares & TFCs and payment of dividend on behalf of public limited companies.

Institute of Business & Information Technology

Internship Report 2009

SAM Group:
The Special Asset Management Group further grouped into three wings namely: 1. Legal Affairs Wing 2. Special Vigilance Wing 3. Corporate & Commercial Wing

LEGAL AFFAIRS:
The personnel engage with Legal Affairs is responsible for monitoring of all legal matters pertaining to the bank, covering functions of rendering opinions of applicable laws, to deal with special tasks and assignments , advice on legal issues relating to operational matters, legal compliances and to ensure remedial and litigation management. This diligently provide counseling on all legal matters including suits filed, executions of decrees & criminal complaints etc;. It coordinates with the advocates on Bank’s panel; ascertain their enlistment and selection of appropriate lawyers in complicated legal cases which is one of its core responsibilities. Through its law officers, following objectives are achieved.

FUNCTIONAL RESPONSIBILITIES
1. To render legal advices and guidance sought by the branches in matters of legal significance and involvement. 2. To provide assistance to the branches/offices in filing of suits, Execution application and in other Legal matters. 3. Follow-up of all the pending Suits, Decreed cases and Executions. 4. To impart legal opinion on documents viz. Succession Certificates, Bond of Indemnity, Staff & Executives H.B. Finance cases etc. 5. To prepare and submit all statements in respect of Suits Decreed and Executions filed by or against the Bank for submission to concerned quarters as per proforma A to I attached. 6. To attend all legal matters and provide assistance to the Group at Central Office, Karachi. 7. To process proposals for enlistment of Advocates on Bank’s panel, duly recommended by the Field Offices. 8. To maintain record pertaining to under Suit /Decreed/Execution Cases and submission of returns to SBP on fortnightly/monthly/half yearly/yearly basis.. 9. To scrutinize documents and to impart legal opinion on various property/charge, documents, agreement.. 10. Examination of Lease Agreement, Bank Guarantee and Bid Bonds.

Institute of Business & Information Technology

Internship Report 2009

CORPORATE & COMMERCIAL WING OF SAM:
In order to pursue the strategic goals, following five units are instrumental which perform various functions to achieve tactical and operational goals.

PROCESSING UNIT:
Each Area Manager of Processing Unit will attend the cases of NPL A/Cs of respective area in line with Bank’s approved strategy. The Area Manager will process the proposals of settlements, rescheduling / restructuring, with or without financial relief in shape of waiver/write-off received through SAM Branches of respective area and put up the proposals with proper Analysis keeping in view the prudential regulations, financial aspects of defaulting borrowers and others facts about the proposal. The Area Manager will handle the proposals in respect of incentives to the staff on account of Cash Recovery in terms of Bank’s Policy and put up the proposals with their Analysis. The Area Manager examines the proposals received from SAM Branches for grant of permission of publications, approval for sale/disposal of mortgaged/pledged assets, deployment of security guards and formation of sale Committee where-ever required, and submits office notes for approval of valuation and legal and misc. expenses. The Area Managers will closely monitor and make follow up with Field Offices /SAM Branches asking for implementation in respect of cases settled/approved by competent authority The Area Manager will prepare the cases in respect willful defaulters to be submitted to SBP for issuance of 7 days notice to the borrowers/guarantors/mortgagors by the Governor, SBP, under NAB ordinance 199. The Area Managers will co-ordinate with Risk Management Group with regard to implementation of BASLE II accord as per SBP directives. The Area Manager has to make liaison with the Risk Management Group with regard to classification of accounts and to deal with the matters relating to placement/deletion of names of defaulters on Exit Control List (ECL), and correspondence thereon with SBP/Ministry of Interior, Islamabad.

Institute of Business & Information Technology

Internship Report 2009

DATA PROCESSING / MIS & SBP REPORTING UNIT:
The Area Manager of this Unit collects data from SAM Branches; consolidate the same for onward submission to SBP and Management for its review as part of Management Information system. The other functions of this Unit comprise of:1. Maintenance of data of the Classified NPL accounts. 2. Consolidation of fortnightly Performance of Recovery Position of all SAM Branches for perusal of line authority. 3. Preparation of periodical Recovery Position for submission to SBP through Finance Group. 4. Preparation of Information memorandum related to NPLs as desired by line authority.

NAB AFFAIRS UNIT:
The Area Manager of this Unit handles with all the matters relating to, NAB in connection with Non Performing Loans. The other functions of this unit are summarized as follows:• Collection, consolidation and submission of information under section 19 of NAB Ordinance to NAB Islamabad, NAB Cell at SBP and NAB offices in Provincial Headquarters, and maintenance of record thereof.

WRITE-OFFS & PROVISIONS UNIT:
The Area Manager of this Unit maintains the provisions held against classified accounts in close co-ordination with RMG & Finance Group. The other functions of the unit are summarized as follows:1. To process the request of SAM Branches for issuance credit advice against the approved write-off loans. 2. Maintenance of proper record of all the written-off /waiver cases of the bank. 3. Providing record/files of write-off/waiver proposals approved at different levels, for external as well as internal auditor and coordinate with them and participate in meeting with regard to disagreed cases of write-off/waiver with BID, SBP. 4. Submission of periodical consolidated statements of write-off/waiver to SBP, Finance Group as well as to Risk Management Group. 5. Preparation of Information Memorandum for line authority in respect of written off/waiver cases for their review. 6. Provide necessary data to Finance Group in respect of borrowers where write – off implemented for publications in the annual reports.

Institute of Business & Information Technology

Internship Report 2009

BUDGET & ADMIN UNIT:
The Area Manager of this unit deals with operating expenses budget of 05 SAM Branches as well as SAM Group. The Units further deals with HR related activities of employees posted in SAM Branches as well as in SAM Group.

Special Vigilance Wing:
Operational Risk is gaining importance in the banking industry in the wake of increasing complexity of operations and the risks involved therein. The incidents of internal and external frauds and forgeries are included in list of the operational risk events that have the potential to result in substantial losses. Keeping in view the size, sophistication, nature and complexity of operations of bank, Allied Bank of Pakistan opened a separate wing for it. In view of the importance of frauds prevention/mitigation strategy in overall operational risk framework and to improve the mechanism for active supervisory response, the Allied bank has formulated the revised reporting requirement on frauds/forgeries/dacoities cases, which is submitted to State Bank of Pakistan on quarterly bases. Creation of Special Vigilance Unit (SVU) at Strategic Asset Management Group The competent authority has approved and created “Special Vigilance Unit (SVU)” previously known as “Control Unit” to monitor the Operational Loss cases of Frauds, Forgeries and Dacoities set up at Strategic Asset Management Group SAM Group, Central Office Karachi in January 01, 2008 in the light of decision of audit committee taken in its 43rd meeting held on October 10, 2007, to make pursuance of the cases of Frauds, Forgeries and Dacoities. Transfer of Special Vigilance Unit (SVU) from Karachi to Lahore: Audit committee again decided in its 46th meeting held on July 04, 2008 that the function of reporting of frauds, forgeries and dacoity presently being done by the Audit and Credit Risk Review Group (ACCRG) may be transferred to Strategic Asset Management Group SAMG effective from August 01, 2008, excepting the functions of investigations which will remain with Audit and Inspection Group (AIG). With the approval of competent authority, the Special Vigilance Unit (SVU) now located at Strategic Asset Management Group (SAMG), Lahore.

Institute of Business & Information Technology

Internship Report 2009

Scope of the unit, its TOR, Organogram, Staff requirements and Reporting structure was approved by the competent authorities. Scope of the Unit: 1. The unit will monitor all the cases of ‘Frauds’ committed by the staff exclusively or in collusion with other where bank sustain operational losses. 2. To monitor all the cases of ‘Dacoities’ occurred at the branches/offices, carrying loss of cash and other valuable of banks. 3. To pursue with law enforcing agencies for expeditious disposal of the cases of Frauds/Docoities against the culprits. 4. To settle the claims with insurance co. in respect of operational losses on account of frauds and dacoities. 5. Frauds and Forgeries reporting to the management or State Bank of Pakistan. Term of Reference: On receipt of initial reports about the incidents of Frauds, Forgeries and Dacoities, “Special Vigilance Unit (SVU)” will undertake the following actions: 1. To liaison with Audit and Inspection Group (AIG) to ascertain the modus operandi/quantum of loss and tentative names of responsible persons. 2. To visit the branch/office where incident took place, for personal verification of the facts. 3. To make efforts for the catch hold of the culprits and to ensure that the losses are made good by recovering the cash/valuables from them. 4. In case of no instant recovery to keep lien on the assets held by the culprits and their associates and to execute the agreements etc. 5. To acquire the services of suitable lawyers and to coordinate for lodgment of FIR and taking other legal steps. 6. To obtain and provide details about incident/loss and arrange lodgment of proper claims with concerned insurance co. in case of Allied Bank Limited it is EFU. 7. To refer the cases of delinquent staff to Human Resource Group (HRG), recommending suitable actions in accordance with rules and regulations. 8. To liaison with agencies like Police/FIA/NAB for recovery of accounts, finalization of cases and submission of challans at concerned courts and pursue the cases. 9. Submission of Quarterly statement of Frauds/Forgeries/Dacoities on the prescribed format to the Operational Risk Unit, Banking Surveillance Department of State Bank of Pakistan within 15 days of close of quarter. 10. Maintenance of database of operational losses of frauds, forgeries and dacoities and its reporting to the Operational Risk- RMG.

Institute of Business & Information Technology

Internship Report 2009

11.

Appraisals and Problems at ABL:
Employees at ABL facing these problems i.e.:

Fewer Incentives: In back offices as compared to the branches the incentives are very less given to the employees and this arises the dissatisfaction among them. Work Burden: In back offices the staff is very few as compared to the work load so the few employees bearing the more work burden and this create discomfort in them. No Job Rotation: Most of the employees stick to the one job for long periods and having no grip on all the operations. Still Manual Work: In the some offices and wings of ABL the employees still depend on manual work which causes slow performance. Favoritism: The most discouraging thing in ABL is that the promotions of employees are very late and mostly based on favoritism.

Institute of Business & Information Technology

Internship Report 2009

Chapter 2 Analysis

Institute of Business & Information Technology

Internship Report 2009

SWOT Analysis

Institute of Business & Information Technology

Internship Report 2009

Strengths: 1. Brand name: earned a reputation for extending quality services. 2. Allied Bank Limited was the first Muslim bank to be established in Pakistan. 3. Allied Bank Limited proudly extends its ovation over the nationwide or internationally by opening new and more branches to facilitate the customers and having more than 850 branches in Pakistan. 4. Allied Bank has become the first bank to participate in the Sustainability Finance Facility of the IFC’s Global Trade Finance Programme. IFC is a member of the World Bank Group. 5. The bank is passionate about high performance, innovation and delivering value to its customers. 6. With a vision to make ABL one of the most technologically advanced organization in the country with ability to provide real time services to its client the BOD embarked to implement state of the art Core Banking Solution TEMENOS at ABL, that is working in more than 500 locations worldwide. 7. ABL has opened the Management Development Center MDC that caters to the growing needs of ABL staff through computerized training workshops and seminars. 8. Training needs analysis to be conducted on annual bases to identify training gaps. 9. ABL has the large network of ATM throughout the nation. 10. ABL do the time to time monitoring over its different wings and groups to increase efficiency. 11. The Bank has the most experienced and the least experienced staff, which is a good combination of experienced heads and exuberance of youth. 12. Successfully launching new Product Lines. 13. With the objective of achieving decentralization and cutting down expenses, the decision making has been reduced from two to four tiers. 68 controlling offices, comprising of 4 provincial, 18 circle and 46 zonal offices have been consolidated into 16 regional offices. 14. A centralized Special Asset Management Division has been established for expeditious recovery and settlement of non-performing loans. 15. ABL offers the privilege of using thousands of ATMs of all banks without the extra charge of Rs 15 to its customers. 16. At ABL the customers who have more than one account can have the facility of the same account number only the suffix is changed for the easy remembrance. 17. For employees entertainment and relaxation, ABL gives the facility that the employees may get the 36 medical leaves and 1-month vacation in one year with their pay.

Institute of Business & Information Technology

Internship Report 2009

Weaknesses: 1. 2. 3. 4. 5. 6. ABL did not introduce any Islamic product. The controls of Heads are not effective. In spite of the presence of technology many jobs are done manually. ABL is not enhancing the new obligors. Fewer incentives in back office as compared to the branches. ABL credit group do not sanction the loan to the lawyers, politicians and the female having no blood relative. 7. In back offices the employees are less so it creates more work burden on the existing one. Opportunities: 1. The policies of the new government to uplift the economy and pursue financial sector reforms are expected to yield positive results in the banking industry of the country. The ABL is well praised to avail promising opportunities. 2. As a result of different steps taken by the government regarding the betterment of the economy, small borrowers are attracted to get the financing and start business. So, the ABL has an opportunity to attract the customers by giving them more attracted schemes. 3. They have wide area network in all over the Pakistan, if ABL can made it possible the fast delivery of funds from abroad through online banking, it can cover the major market of Pakistan which still is capturing by “Hundi”. Threats: 1. The biggest threat in the banking sector is the continuous downfall of the country economy since the last few years. 2. Other treat which ABL faces is the policies of the Government; tax charged on the income of banking co. is much than the income of other companies. 3. Sudden rise and fall in the trade and industry conditions and stock exchange business of the country also adversely affect the growth of banking sector. 4. As the situation of Frontier Province of Pakistan is not sound and ratio of dacoity cases in branches is high so it is the big threat to the Bank. 5. The default ratio of customers who are availing the credit facilities from the ABL is very high due to the economic recession in Pakistan. 6. Also the threat of new entrants exists there.

Institute of Business & Information Technology

Internship Report 2009

Financial Analysis:

Institute of Business & Information Technology

Internship Report 2009

Vertical & Horizontal Analysis: Vertical Analysis
2004 2005 2006 2007 9.5% 5.8% 26.2% 52.6% 2.4% 3.6% 100.0% 2008 7.0% 4.3% 22.5% 58.1% 3.0% 5.0% 100.0% 9.5% 13.1% 34.7% 34.6% 2.2% 5.9% 100.0% 8.0% 10.4% 37.0% 38.4% 1.6% 4.6% 100.0% 9.4% 3.0% 23.3% 57.7% 2.5% 4.1% 100.0% 9.8% 7.6% 18.6% 57.2% 2.6% 4.3% 100.0% December 31 Assets Cash and balances with treasury and other banks Lending to financial institutions Investments - net Advances - net Operating Fixed assets Other assets Total assets - net of provisions 2003 Liabilities

Institute of Business & Information Technology

Internship Report 2009
Customer deposits Inter bank borrowings Bills payable Other liabilities Sub-ordinate loans Total Liabilities Share capital Reserves Un - appropriated profit / (loss) Equity - Tier I Surplus on revaluation of assets Total Equity 97.2% 2.3% 1.5% 2.4% 0.0% 103.4% 0.9% 7.3% -5.5% -4.1% 0.8% -3.4% 81.6% 8.1% 1.6% 2.1% 0.0% 93.4% 2.8% 3.0% -4.1% 6.1% 0.5% 6.6% 83.8% 5.0% 1.3% 2.3% 0.0% 92.4% 2.3% 2.4% 1.4% 6.7% 0.8% 7.6% 81.7% 7.3% 0.9% 2.0% 1.0% 93.0% 1.8% 1.9% 2.2% 6.4% 0.6% 7.0% 82.5% 7.2% 1.1% 2.3% 0.8% 93.8% 1.7% 1.6% 2.2% 5.8% 0.5% 6.2%

Institute of Business & Information Technology

Internship Report 2009
81.1% 7.6% 0.8% 3.7% 0.7% 93.9% 1.8% 1.6% 2.3% 5.7% 0.4% 6.1%

283.4% 608.0% 1040.5% 131.5% 427.3% 173.3% 562.5%

Horizontal Analysis
Assets Cash and balances with treasury and other banks Lending to financial institutions Investments - net Advances - net Operating Fixed assets Other assets Total assets - net of provisions Liabilities Customer deposits Inter bank borrowings Bills payable Other liabilities Sub-ordinated loans Total Liabilities Share capital Reserves Un - appropriated profit / (loss) Equity - Tier I Surplus on revaluation of assets Total Equity 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 110.0% 105.3% 140.7% 146.3% 98.3% 101.6% 131.8% 160.9% 37.6% 110.3% 273.5% 181.8% 113.6% 163.9% 220.8% 124.0% 115.3% 354.2% 248.3% 155.2%

Institute of Business & Information Technology

Internship Report 2009
214.5% 271.4% 119.9% 206.1% 414.2% 290.8% 163.3% 272.4% 229.8% 102.8% 202.9% 523.8% 428.9% 264.4% 312.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 110.7% 470.5% 143.0% 113.1% 119.1% 414.3% 2035.7% -97.3% 194.0% 90.3% 258.0% 141.3% 363.8% 138.1% 157.7% 146.5% 422.2% 1020.6% 42.1% 265.2% 182.8% 366.1% 180.4% 690.9% 128.5% 180.6% 192.9% 422.2% 1099.4% 86.4% 333.3% 163.0% 445.0% 231.1% 860.7% 197.1% 258.6% 247.1% 506.6% 1084.6% 107.4% 378.1% 164.3% 500.1%

260.4% 1042.5% 166.6% 480.5%

Institute of Business & Information Technology

Internship Report 2009

Financial Ratios:
2004 2007 2008
Rs. in Millions

December 31 CASH FLOW STATEMENT - SUMMARY Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Financing Activities Cash & Cash equivalent at the Beginning of the Year Effect of Exchange Rate changes on Cash & Cash equivalent Cash & Cash equivalent at the End of the Year FINANCIAL RATIOS Return on equity (ROE) Return on assets (ROA) Profit before tax ratio (Profit before tax / Gross Income) Gross spread ratio Return on capital employed (ROCE) Advances to deposits ratio (ADR) - Gross Advances to deposits ratio (ADR) - Net Income to expense ratio Cost to revenue ratio Growth in gross income Growth in net profit after tax Total assets to shareholders’ funds Intermediation cost ratio NPL ratio Net infection ratio Weighted average cost of debt Capital adequacy ratio (CAR)* SHARE INFORMATION Cash dividend per share Proposed bonus issue per share Dividend yield (based on cash dividend) Dividend payout ratio (Total payout) Earnings Per Share (EPS) ** Price earnings ratio *** (PE x) Market value per share - highest / lowest during the year Book value per share OTHER INFORMATION Non - performing loans (NPLs) Imports and Exports business Number of employees Number of branches 2003 Restated 2006 8,253 (8,512) (12) 10,803 58 10,590 4,523 (17,183) 14,176 10,483 109 12,107 (5,893) 11,664 12,129 (21) 17,877 9,328 (4,241) 1,403 17,753 124

Institute of Business & Information Technology

Internship Report 2009
24,368 46,350 (38,461) (1,904) 24,303 65 30,353 564 (3,544) (1,755) 29,842 511 25,618
% % % % % % % Times % % % Times % % % % %

0.34% 16% 77% 44% 36% 1.4 69.5% 14% 136% (24.1) 3.8% 35.7% 20.93% 3.54% -12.33% 8% 0.14% 8% 85% 8% 55% 47% 1.5 66.5% 4% -50% 16.4 3.4% 22.0% 8.28% 2.45% 16.64% 28% 1.78% 49% 80% 28% 74% 69% 2.30 43.5%

Institute of Business & Information Technology

Internship Report 2009
58% 1511% 14.9 3.0% 10.6% 3.64% 6.78% 12.17% 30% 1.98% 52% 61% 26% 74% 70% 2.43 41.1% 31% 42% 15.5 2.9% 6.91% 1.96% 9.09% 12.80% 24% 1.42% 40% 52% 21% 68% 64% 2.43 41.1% 17% -7% 17.4 2.6% 6.36% 0.74% 9.96% 10.26% 21% 1.21% 34% 46% 19% 75% 72% 2.16 46.2% 21% 2% 17.6 3.0% 6.16% 1.46% 11.50% 10.90% Rs. Rs. % % Rs. Times Rs. Rs. 1.27

Institute of Business & Information Technology

Internship Report 2009
(37.4) 0.43 23.3 2.50 2.9% 36% 4.78 12.6 86.5 32.4 2.50 2.00 2.7% 46% 6.80 9.5 93.5 39.4 3.00 2.50 2.00 1.00 2.3% 8.0% 66% 54% 6.31 6.43 17.2 4.9 130.2 31.3 36.9 34.6 Rs. in millions Rs. in millions Nos. Nos. 17,833 56,868 6,859 752 15,383 72,765 6,768 735 12,699 96,072 6,909 741 10,479 113,571 7,139 742 11,355 13,772 150,698 194,186 8, 181 8,325 757 766 2005

Future Outlook:
Institute of Business & Information Technology

Internship Report 2009

The global financial crisis has its effects trickling down to the banking system. The financial sector is facing its lows but still on its comparative basis its better than other neighboring countries owing to regulations and role of SBP to take timely corrective measures. Measures include relaxation of CRR and SLR in phases. The banking sector’s spread continues its rising trends after witnessing a dip to the level of 6.78% in June 2008 that has been taken as an after effect of minimum profit payment of 5% on saving accounts. The profits shows that long term investment in Pakistani banking system will be lucrative, as the asset quality is quite satisfactory. Challenges faced by the economy in general and banking sector in particular, include restrained liquidity, slowdown of economic activities and high inflation. Despite of these issues, ABL has been able to maintain its profitability and equipped to face challenges with its dynamic management and trained workforce.

Institute of Business & Information Technology

Internship Report 2009

Chapter 3 Internship Activities

Institute of Business & Information Technology

Internship Report 2009

Weekly Activities:
First week:
In the first week of my internship training I have worked on the process flow chart of fraud, forgery and dacoity. I have learnt how the reporting procedure of frauds, forgeries and dacoities has done? The process flow chart of reporting of any incident about frauds and dacoits in Allied Bank of Pakistan is here: a. Cases of frauds/forgery and gross negligence in CRBG or CIBG branches: Detection of incident

Immediate intimation to GCA and CRRG by the line management compulsorily within 1 working day from the occurrence /detection of the incident

Finalization of detailed audit report on the incident by Audit and CRRG

Audit Report/findings to be sent to the legal cell of SAMG by A&CRRG

Legal Cell of SAMG to draft the Charge Sheet, to be vetted by the lawyer and sent it to the respective Regional Head CRBG with three working days

The alleged employee shall have seven days to respond to the Charge Sheet

Institute of Business & Information Technology

Internship Report 2009

Reply received from alleged employee on Charge Sheet, to be forwarded by the Regional Head CRBG directly to the enquiry committee within two working days with copies to SAMG

Enquiry committee to conduct an enquiry within 1 week of the receipt of charge sheet from alleged employee through the Regional Head CRBG

The Central Administration Action Committee to meet on the First and Third Wednesday of each month, review the case, takes the decision within 2 weeks of report enquiry

Punishment is communicated & verdict implemented within 1 working day of the decision of The Central Administration Action Committee

Institute of Business & Information Technology

Internship Report 2009

2nd week: Reporting Structure Of Fraud, Forgery & Dacoity:
➢ Whenever an incident of fraud forgery and dacoity takes place the concerned Regional Head/ Head Branch Operations or Group Head or Regional Operation Manager will immediately give such information to the Head of “Special Vigilance Unit (SVU)”. ➢ After getting the documented information SVU makes the “Office Note” of the whole incident and mail one copy to the SP&MC, Group Chief SAM, Group Chief CBRG, regional head and the branch as well. During the first week of my internship training I have write 7 Office Notes after reviewing the audit report and the document that send the concerned branch. One of the Office Notes that I made is scanned here and also attached in annexure. OFFICE NOTE:

Institute of Business & Information Technology

Internship Report 2009

➢ Also SVU immediately issue the emergency report of the incident to Management and State Bank of Pakistan SBP in specific terms and conditions within the duration of 72 hours otherwise State Bank of Pakistan will Charge the Penalty to the bank.

➢ The concerned Regional Head/ Head Branch Operations or Group Head or Regional Operation Manager after that submit the FIR to the SVU. ➢ Audit and Inspection Group (AIG) will immediately be contacted to depute a team to make a thorough probe and to submit the investigation to SVU. ➢ SVU immediately report the Insurance Co. i.e. EFU for the claim.

Institute of Business & Information Technology

Internship Report 2009

➢ Insurance co. (EFU) then appoints a surveyors and report it to SVU. Surveyors should submit the survey report with policy documents within period of 60 days. ➢ The following documents are required for the survey to the surveyors: 1. 2. 3. 4. 5. 6. 7. 8. Log Book (one month record) Cashier’s daily memo book Cashier’s daily cash position Copy of all cheques/credit slips/withdrawal of log book Detailed statement of happening by the branch manager Attested copy of FIR. Policy Progress Report Claim from duly filled in, signed and stamped

➢ After the survey report of surveyor Chief Manager of the concerned branch submits the Police Progress Report to the surveyor so that insurance claim will be finalize. ➢ During this process of Final Police Progress report SVU requested to release 80% of insurance claim under banker’s blanket insurance policy and 20% after the submission of Final Police Progress Report to the surveyor. Insurance co. (EFU) deducts the charges of insurance policy i.e. Rs.50, 000 and bank transfer this loss or write off this amount to the “Expense Account” to balance the figure of “Suspense Account”.

Claim Lodged Less: Policy Deductible Net Loss Less: 80% received & reimbursed to bank Balance 20% receivable

Rs.

8,001,200 50,000 7,951,200 6,360,960 1,590,240

➢ Then enclose the Final Police Report and request to insurance co. (EFU) to disbursement of insurance claim under banker’s blanket insurance policy that is remaining 20%. ➢ SVU issued “Legal Letter of Subrogation” to insurance co. and granting permission that all rights title and interests transferred to the insurance co. in the said cash that it shall now the property of insurance co. and bank have no right on it that police did not recover and has not found yet. The scanned copy of “Legal Letter of Subrogation” is here also attached in the annexure.

Institute of Business & Information Technology

Internship Report 2009

➢ In the case if no amount is recovered under the banker’s blanket insurance policy then at Allied Bank certain powers are defined who have rights to write off the lost/unrecovered amount involved in cases related to inter branch, other assets, fraud and forgeries, looting/theft of cash. These powers are delegated to the followings:

Institute of Business & Information Technology

Internship Report 2009

Approving Authority Group Chief Operations, Group Chief Risk Management Group Chief, Operations with the President Strategic Planning and Monitoring Committee (SP&MC) Commercial Retail Banking Group (CRBG) Board of Directors (BOD)

Powers Rs. 500,000 Rs. 1,500,000 Rs. 5,000,000 Rs. 300,000 Rs. 500,000

➢ Such report will immediately be put up before senior Management in order to proceeds with suggested actions. ➢ SVU will liaison with the concerned branch/office controlling tiers and the external agencies, for lodgment of proper repots/complaints as per law and to effectively monitor the legal action as well as the task of recovery and to submit the progress report.

Institute of Business & Information Technology

Internship Report 2009

3rd Week:
All banks/DFIs are advised to submit a quarterly statement of frauds/forgeries/dacoities on the revised format, within 15 days of the close of each calendar quarter along with a soft copy to the Banking Supervision Department. The quarterly report includes all actual as well as attempted fraud cases even if the bank may not have sustained any monetary loss. Therefore, cases where bank recovers the entire amount involved and does not suffer any loss must also be reported to SBP. Furthermore, banks/DFIs l separately report to this Department all material incidents of frauds/forgeries/dacoities etc. of Rs. one million and above on urgent basis as under:a) Preliminary report within 2 working days of the occurrence of such incident by mentioning the date of the incident and other information about the case as available at the time of such reporting; and b) Detailed report within 15 days of the occurrence of such incident on the format. I prepared the quarterly report of Fraud, Forgeries and Dacoites of Allied Bank of Pakistan that submitted to the State Bank of Pakistan for the 2nd Quarter of 2009 that is ended at June 30, 2009. The report was submitted on July 17, 2009 to the State Bank of Pakistan.

Institute of Business & Information Technology

Internship Report 2009

ANNEXURE “A” (FORM-I)

ANNEXURE "A" (Form-I) ALLIED BANK LIMITED, Special Vigilance Unit, SAM Group HEAD OFFICE, LAHORE SUMMARY POSITION OF CASES OF FRAUDS /FORGERIES /DACOITIES FOR THE QUARTER ENDED 30.06.2009

1

Cases Detected prior to the quarter under report which were still outstanding at the beginning of this quarter ( including those closed during the quarter) a b c d e No of cases Total amount originally involved Adjustment to amount involved during the quarter*** Total recoveries prior to the quarter under report from old cases Recoveries made during this quarter from cases outstanding prior to the quarter Insurance Other sources Progressive Total Recovery (1d+1e) Total amount still recoverable (1b+1c-1f) Provision held against (1g) above Provision held against (1g) above during the quarter Expected Recovery from Insurance Other sources

1) Serious frauds cases 10 (M) and above*

2. Medium severity cases 110(M)*

3) Low severity cases below 1( M)*

All No progress cases **

Total (1+2+3)

11 795.906 0.000 58.574

23 84.285 0.000 25.218

28 11.363 0.000 4.438

23 758.488 0.000 2.032

62 891.554 88.230

0.000 0.000 58.574 737.332 400.427 0.000

2.507 0.350 28.075 56.210 43.113 10.546

0.312 0.435 5.185 6.178 5.334 0.321

2.819 0.785 5.636

f g h i 0

2.819 0.785 91.834 799.720

752.852 448.874 446.388 10.986 10.867

302.423 415.959

39.345 19.722

3.903 3.022

317.758 438.698

345.671 438.703

Institute of Business & Information Technology

Internship Report 2009 2 All Cases Detected during the quarter under report (Whether detected and closed in the same quarter) a b c No of cases Total amount originally involved Total Recoveries made, from any source against the cases detected during the quarter under report 1) Serious frauds cases (10M and above* 0 0.000 3) Low severity cases below 1 (M)* 7 1.210

2. Medium severity cases 1-10 (M)* 0 0.000

All No progress cases ** 0 0

Total (1+2+3)

7 1.210

Insurance 0.000 0.000 0.000 0.000 0.000 Other sources 21.382 0.000 1.210 0.000 22.592 d Total amount still recoverable ( 2b-2c) -21.382 0.000 0.000 0.000 -21.382 ANNEXURE "A" (Form-I) e Provision made against (2d) above 0.000 0.000 0.000 0.000 0.000 ALLIED BANK LIMITED, f Expected recovery from: Special Vigilance Unit, SAM Group Insurance 0.000 0.000 0.000 0 0.000 HEAD OFFICE, LAHORE Other sources 18.950 0.000 0.000 0.000 18.950 SUMMARY POSITION OF CASES OF FRAUDS /FORGERIES /DACOITIES FOR THE QUARTER ENDED 30.06.2009

ANNEXURE “A” (FORM-I)

Institute of Business & Information Technology

Internship Report 2009

ANNEXURE “A” (FORM-I)
1) Serious frauds cases (10 M and above)* 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

All cases closed during quarter under report

2) Medium severity cases 1-10 (M)* 5 11.400 9.713 0.937 0.750 11.400 0.000 0.000 0.000

3) Low severity cases (below 1 M)* 9 1.929 0.719 0.000 1.210 1.929 0.000 0.000 0.000

All No progress cases ** 14 12.613 10.33 0.573 1.71 12.613 0.000 0.000 0

Total (1+2+3)

a b 3 c d

No of cases Total amount originally involved ( after all adjustments to original amounts) Total recoveries prior to the current quarter Recovery during the current quarter from: Insurance Other sources Total recoveries (3c+3d) Total amount recoverable before closure of cases ( 3b-3e) Write off against provision Direct write off

14 13.329 10.432 0.937 1.960 13.329 0.000 0.000 0.000

e f g h

Cases outstanding at the end of quarter under report

1) Serious frauds cases 10(M) and above)*
11 795.906 79.956 715.950 400.427 302.423 434.909

2. Medium severity cases 1-10 (M)*
18 72.885 16.675 56.210 53.659 39.345 19.722

3) Low severity cases below 1 (M)*
26 10.644 4.466 6.178 5.655 3.903 3.022

All No progress cases **
9 745.875 -6.977 752.852 446.388 317.758 438.698

Total (1+2+3)

a

4

b c d e f

No of cases (1a+2a-3a) 1 Total amount originally involved ( 1b+1c+2b3b)² Total cumulative recoveries including this quarter recoveries (1f+2c-3e)³ Total amount recoverable (4b-4c) Provision held against 4d above (1h+1i+2e-3g) 4 Expected recovery from: Insurance Other sources

55 879.435 101.097 778.338 459.741 345.671 457.653

Institute of Business & Information Technology

Internship Report 2009

Annexure “A” (Form II)
DETAILS OF ACTUAL/ATTEMPTED FRAUD, FORGERY AND DACOITY CASES OUTSTANDING DURING THE QUARTER ENDED 31.03.2009 Fraud classification (Enter Code) Name of Branch & Provinc e Is it an Emergenc y Reported Fraud Case

S #

Fraud Identificatio n Number

Natur e

Individu al Involved

Amoun t Involve d

Date of Commitme nt of Fraud

Date of Detectio n

1

2

1

0501430100 1

2

0501300000 1

3 Khori Garden Branch merged with Jodia Bazar Branch, Karachi Sindh Kaghzi Bazar Branch merged with Bomba y Bazar Branch, Karachi / Sindh

4

6

7

8

9

10

03'

02'

01'

Old case

19.09.01 to 25.09.01

25.10.01

09'

03' Total

01'

Old case

2000 to 2002

26.09.02

Institute of Business & Information Technology

Internship Report 2009

S pecial Vigilance Unit

Annexure “A” (Form II)
DETAILS OF ACTUAL/ATTEMPTED FRAUD, FORGERY AND DACOITY CASES OUTSTANDING DURING THE QUARTER ENDED 31.03.2009 Recovery from other sources (customer/Staff /Services provider) Origina l Amoun t Involve d

Date of Completio n of Investigati on

Date of Reporti ng to SBP

Adjustme nt before Current Quarter

Adjustme nt during Current Quarter

Total Amoun t Involve d

Previous Recover y

Current Recover y

Recover y from Insuran ce (Total)

A(1) 11 12 13

A(2) 14

A(3) 15

A=A1+ A2+A3 16

R1 17

R2 18

R3 19

25.10.01

30.06.02

12.353

0.000

0.000

12.353

0.647

0.000

9.365

23.04.03

30.06.04

19.530 31.883

0.000 0.000

0.000 0.000

19.530 31.883

0.000 0.647

0.000 0.000

0.000 9.365

TOTAL

Institute of Business & Information Technology

Internship Report 2009

Special Vigilance Unit

Allied Bank
Group, Lahore 425941270

SAM Ph:0

Annexure “A” (Form II)
DETAILS OF ACTUAL/ATTEMPTED FRAUD, FORGERY AND DACOITY CASES OUTSTANDING DURING THE QUARTER ENDED 31.03.2009 Rs. IN MILLION

Progr essive Total Recov ery

Direct Writeoff

Writeoff again st Provi sion

Total Write-off amount W=W1+ W2 24

Net Amount Outstan ding O=A-RW 25

Expected Recovery through Insurance

Expected Recovery through other sources

Provisio n before Current Quarter

Provisi on during Current Quarter

Net Amou nt W(X+Y) 30

R=R1+ R2+R3 20

(W1) 22

(W2) 23

(X) 26 27 28

(Y) 29

10.012

0.000

0.000

0.000

2.341

0.000 10.012

0.000 0.000

0.000 0.000

0.000 0.000

19.530 21.871

0.000 Case pending in the Court of Law. Regional Settlemen t Committe e has deferred the case till Court's decision. 0.000

2.341

0.000

0.000

0.000

19.530 21.871

0.000 0.000

0.000 0.000

0.000 0.000

Institute of Business & Information Technology

Internship Report 2009

Spec ial Vigilance Unit SA M Group, Lahore

Allied Bank
Ph:0425941270

Institute of Business & Information Technology

Internship Report 2009

Annexure “A” (Form III)
PROGRESS OF OUTSTANDING FRAUDS, FORGERIES & DACOITIES CASES DETECTED / REPORTED IN PRIOR QUARTERS (Serious ( 10 M & above), Medium Severity Cases (1 M & above)

Fraud Identification No 05027906001
Pending with Court /Police.

NAB M/s. Adamjee Insurance company Ltd., declined the bank claim. However, negotiation with officials of Adamjee Insurance Company is under way for reconsideration of bank claim.

Insurance Claim Lodged Status

Action against the staff if any. Is there any progress on case in the quarter, if no, then why.

Mr. Muhammad Shoaib, Cashier, dismissed from bank's services. Mrs. Saira Ali OG-III, dismissed from bank's services. Mr. Atta ur Rehman, OG-III, dismissed from bank's services. Mr. Faisal Riaz OG-II, dismissed from bank's services. Mr. Munir Ahmed Awan OG-II, dismissed from bank's services. Mr. Yasir Mehmood OG-II, letter of reprimand issued.

Yes there is progress. Negotiations with the top management of M/s Adamjee Insurance Company are under way for reconsideration of bank insurance claim. The bank has taken up the matter with NAB for declaring the culprit as proclaimed offender. Claim of the few claimants has been settled.

If progress was made then present position of the case.

Institute of Business & Information Technology

Internship Report 2009

ALLIED BANK LIMITED DETAILS OF ACTUAL /ATTEMPTED FRAUDS / FORGERIES/ DACOITIES CASES SERIOUS & MEDIUM SEVERITY CASES DETECTED /REPORTED DURING THE CURRENT QUARTER Fraud Identification Code. 05024909001 FIELD DESCRIPTION Detail of staff at fault (Name & NIC) Ms. Seher Rana (MG-11 Holder of master Key of Locker) found negligence. CNIC #36302-8410863-8 Mr. Syed Haider Chiragh Kazmi maintaining PLS/B visited the branch on 26-04-09 operated the locker #245 and reportedly placed gold ornaments there in. On 18-04-09 Mr. Murad Kazmi S/o Syed Haider Chiragh Kazmi (additional authority) operated locker # 245 Mrs Seher Rana, Officer arranged operation of locker. After operating it, he left the branch without informing to the staff. Later on, he came back with his father. Both disclosed that the gold ornaments weighing about 45 tolas amounting to Rs.1.100(M) were not available in their locker #245. The locker was got operated again in the presence of Manager/ Locker In-charge and found empty.

Modus Operandi of case

Reason for the time lag, if any, i.e. not reported the case in the quarter in which case was detected & reasons if the investigation not completed within 30 days of detection Pending with Court / Police Stat us Insurance Claim lodged Action against the staff if any Any other

In time reporting to SBP

----Insurance claim lodged. Under process. --All the concerned staff of the branch has been advised to ensure enforcement of the Bank’s laid down system/procedures in letter and sprit regarding operation of lockers under their jurisdiction in order to avoid recurrence of such instance in future. ----

Steps taken to avoid such incidents in future Points for consideration of SBP, if any.

Institute of Business & Information Technology

Internship Report 2009

Annexure “A” (Form IV)

Institute of Business & Information Technology

Internship Report 2009

Annexure “A” Form “V”
Special Vigilance Unit SAM Group, Lahore

DETAILS OF ACTUAL/ATTEMPTED FRAUDS/FORGERIES/DACOITIES CASES DETECTED/REPORTED DURING THE CURRENT QUARTER ENDED 30.06.2009 (LOW SEVERITY CASES BELOW RS.1.000 (M)

Fraud Classification (Enter Code)

Nature & Branc h

Busines s Line

Individu al Involved

Amount Involve d

Date of Commitment

Date of Detection

(1)
01 & Shers hah, Karac hi.

(2) B-05

(3) 01

(4) 03

(5) 00-03-2009

(6)

Reason for the time tag if any i.e. not reporting the case in the quarter in which it was detected (7)

Modus Operandi

Staff Involved (Name & CNIC)

(8) Pocketing in Utility bills collection by Tousif Khan/Teller

(9) Tousif Khan/Tell er

07-04-2009 In time reporting to SBP

Institute of Business & Information Technology

Internship Report 2009

Annexure “A” Form “V”
Special Vigilance Unit SAM Group, Lahore

DETAILS OF ACTUAL/ATTEMPTED FRAUDS/FORGERIES/DACOITIES CASES DETECTED/REPORTED DURING THE CURRENT QUARTER ENDED 30.06.2009 (LOW SEVERITY CASES BELOW RS.1.000 (M)

Amount Involve d (10) 0.429 (M)

Pendin g with Court / Police (11)

Insuran ce claim lodged (12)

Action against staff if any (13) Enquiry against the delinquent staff is under process.

From Insuranc e Co. (14)

From other sourc es (15)

Amount outstandi ng (16)

Prov ision mad e (17)

Net Amou nt (18)
-----

Steps taken to avoid such incidents in future (19) All branches have been advised to ensure bank’s laid down procedure / systems for the collection of utility bills.

---

---

----

0.429 (M)

---

---

Institute of Business & Information Technology

Internship Report 2009

STAFF DATA

Annexure A (Form VI)

(Convicted or Acquitted During the Current Quarter Under Report)

Fraud Identification Number: Field.
Name of Branch. Amount Originally Involved. Name of Staff. Father's Name. CNIC No. Designation/Grade. Nature of appointment. (Permanent/Contract etc.) Period of Service. Action taken along-with the date to take effect from.

05016108001

Description.
Hyderi Market Branch, Karachi Rs.86.691(M) Mr. Muhammad Aslam Khan Muhammad Ibrahim Khan 42101-9396910-5 MG-08/Manager Permanent 26 Years Dismissed from bank’s service vide letter No.CO/HRG/CAAC/09/ 1868 dated 31.01.2009

Institute of Business & Information Technology

Internship Report 2009

5th Week:
During the 5th week of my internship training in Allied Bank of Pakistan, the task of maintain complete and comprehensive database of all the pending and withdrawal cases of frauds, forgeries and dacoity since 2005 to till date is assigned to me and I have completed that project within one week successfully.

6th Week:
During the 6th week of my internship training I have prepared the report of detailed insurance claim lodged how much rejected from them, overall position of insurance claims and the detail of the settled claims some of them is mentioned there.

ALLIED BANK LIMITED SPECIAL VIGILANCE UNIT, SAM GROUP, LAHORE DETAIL OF INSURANCE CLAIMS WHICH HAVE BEEN REJECTED BY ADAMJEE INSURANCE CO DURING THE YEAR 2009.

Sr No

Branch Name

Amount Involved

Amount of Claim Declined

Loss No

Reasons

1

Napier Road, Lahore

45.000

45.000

05/C/367/002643/12/2003

2

The Mall, Murree

56.869

56.869

05/C/367/002860/06/2006

Gross negligence at the part of branch does not cover any clause of the insurance policy. However, insurance company offered to pay Rs. 22.500 (M) to Group Chief SAM during the meeting dated 24.05.2006 held at Adamjee House, Karachi, which was declined by the then Bank’s Management as they demanded 100% claim of loss amount. The claim rejected due to violation of bank staff’s rotation policy. Gross negligence at the part of CRBG, Islamabad by instructing Mr. Yasir Mahmood, the new Manager to take charge and issue a relieving letter to the culprit Manager, Mr. Muneer Ahmed Awan without verifying the records despite the lapse of two weeks.

Total

102.486

102.486

Institute of Business & Information Technology

Internship Report 2009

OVERALL POSITION OF INSURANCE CLAIMS UP TO 31-07-2009
SETTLED CLAIMS WITH M/S EFU GENERAL INSURANCE COMPANY Rs. in Million. O/S Policy Total Amount Deducti (4+7+8 to be ble +9) Written Amoun -off as t Policy Alread Deducti y ble. Writte n-off

Natu re of incid ent

No. of Settl ed Clai ms

Amou nt Invol ved

Cash Recove ry (Culpr its)

Amou nt Receiv ed from Insura nce Co. up to 3112-08 5 15.011 1.560 16.571

1 Dacoi ty Fraud & Forge ry Total :-

2 15 03 18

3 22.94 2 4.576 27.51 8

4 1.200 0.000 1.200

Amou nt Recei ved from Ins. Co. 01-0109 to 31-0709 6 4.981 2.416 7.397

100% Claim Amou nt Receiv ed from Insura nce Co. 7 19.992 3.976 23.968

8 0.650 0.600 1.250

9 1.100 0.000 1.100

10 22.942 4.576 27.518

OUTSTANDING INSURANCE CLAIMS WITH M/S EFU GENERAL INSRUANCE COMPANY Rs. In Million Nature of Incident No. of Claims Claim Amount Dacoity 02 2.695 Fraud & Forgery 14 350.322 Total:16 353.017

Institute of Business & Information Technology

Internship Report 2009

DECLINED CLAIMS BY M/S EFU GENERAL INSURANCE COMPANY Nature of Incident Looting cases in Kohat/ Mingora Branches under Terrorism/Operation Fraud & Forgery Cases: Total:No. of Claims 06 06 12 Loss Amount 70.821 14.318 85.139

LONG OUTSTANDING CLAIMS WITH M/S ADAMJEE INSURANCE COMPANY Nature of Incident No. of Claims Claim Amount Dacoity 01 0.466 Fraud & Forgery Cases: 08 73.679 Total:09 74.145

DECLINED CLAIMS BY M/S ADAMJEE INSURANCE COMPANY Nature of Incident No. of Claims Claim Amount Dacoity 00 0.000 Fraud & Forgery Cases: 03 102.486 Total:03 102.486

Institute of Business & Information Technology

Internship Report 2009

Special Vigilance Unit, SAM Group, Lahore DETAIL OF 100% SETTLEMENT OF INSURANCE CLAIMS DURING THE YEAR 2009 WITH M/S EFU GENERAL INSURANCE COMPANY IN RESPECT OF DACOITY CASES

Sr . N o

Name of Branch.

Date of claim lodged

Amount involve d in Dacoity / Claim Lodged

Cash Recover y (Culprits )

Amount receive d from M/s EFU Up to 3112-2008

Amount Receive d from M/s EFU from 0101-2009 to 31-072009

100% Claim Amount Receive d from M/s EFU

O/S Amount to be written off as Policy Deductibl e 0.000 0.025 0.025 0.000 0.000 0.050 0.000 0.000 0.000

Amount Already Writtenoff as Policy Deductibl e 0.025

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Metrovill, Karachi Hassan Abdal Azizabad, Karachi Kashmir Road, Lahore Nazimabad, Karachi Pattoki Khadimaba d, Mir Pur, (A.K) Public School, Haydrabad Survey Centre, Karachi Hafizabad Road, Gujranwala D.C. Road Gujranwala Regency Apartment, Karachi Sanda Road, Lahore Kotri Baba-eUrdu, Karachi Total:-

02.08.200 7 06.09.200 7 22.09.200 7 11.12.200 7 16.11.200 7 26.11.200 7 31.12.200 7 31.03.200 8 10.04.200 8 13.06.200 8 20.06.200 8 25.06.200 8 25.07.200 8 16.09.200 8 04.11.200 8

3.343 1.471 2.543 0.600 1.698 2.050 0.658

0.000 0.000 0.000 0.000 0.000 0.600 0.000

2.654 1.157 1.980 0.460 1.339 1.120 0.507

0.664 0.289 0.538 0.115 0.334 0.280 0.126

3.318 1.446 2.518 0.575 1.673 1.400 0.633 0.798

0.000 0.000 0.025 0.025 0 0.025 0.250 0.250 0.250

1.048 0.000 0.638 1.882 2.912 2.067 0.445 0.427 0.762 1.036 22.942 0.000 1.306 0.600 1.650 0.000 0.000 0.156 0.000 0.000 0.000 0.000 0.000 1.200 15.011 1.011 4.981 0.590 0.177 0.147 0.039 1.454 0.412 0.363 0.326 0.160

1.632 2.062

0.000 1.817 0.195 0.177 0.737 1.011 19.992 0.000 0.250 0.250 0.025 0.025 0.650 0.250 0.000 0.000 0.000 0.000 1.100

Institute of Business & Information Technology

Internship Report 2009

7th & 8th Week:
The last two weeks of my internship training I have worked in Regional Commercial & Retail Risk Group as a Credit Analyst. During these days I have learnt how to analyze the credit proposal and on what ground the credit lines and loan sanction to an obligor. What are the criteria and documents necessary and how these are analyzed. The process of sanctioning a loan in Allied Bank Limited is as follows:

Concerned Branch Initiate Credit Application (CA) Send it to Regional Head of the Concerned Branch

According to the Exposure Limit Send to the 5 levels of CRR

Levels Analyze the Queries & Approve for the Sanction Send Copies to Regional Head Credit Administration Dept Issue BFL Sanction (Bank Facility Letter) Customer/Obligor Institute of Business & Information Technology Send to CAD Issue DAC Concerned Branch

Internship Report 2009

Credit Approval Matrix:
The credit approval matrix detailed herein is devided into two sections. 1. Approval Grid- defines the maximum approval authority assigned to six levels of authority in the bank on a per party and group basis. 1. Per Party Limit- further divided into inner limits for lending against Agri Finance, Security Types S1, S2, S3. 1. Approval Parameters-illustrate various terms and conditions applicable on different lending products.

Credit Approvable Process Workflow:

Approval Grid Leve ls I II III IV V VI Members BM/CM +RH RCRR RH CRBG+ Manager RCRR Manager RCRR+Head Asset Marketing Group Head CRBG GC CIBG President Security Type S1 S2 S3 10 0 0 25 10 0 Agri Financ e 0.5 5 Per Part y 10 25 Grou p 10 25

100 50 50 50 100 100 200 100 100 100 200 200 100 100 100 0 0 0 1000 1000 3000 All amounts exceeding level V as per Prudential Regulations

Institute of Business & Information Technology

Internship Report 2009

Credit Approval Parameter Process Workflow: Approval Parameter
A. Term Loan & Agriculture Finance Term Loan (Exceeding One Year) Maximum Tenor for Term Loan Maximum Tenor for Agri Finance B. Watch List & NPLs Approval of watch list with or without Rescheduling/Restruc turing Approval of NPLs without Rescheduling/Restruc turing Approval of NPLs with Rescheduling/Restruc turing C. Guarantees Guarantees Level I Level II 100% Against Security Type 0 S1 0 2Yr 3yr 3yr Level III Allowed 3yr 5yr Level IV Allowe d 5yr 5yr Level V Allowe d 8yr 8yr Level VI Allowe d Any Any

50 >50 Allowe 10 d

>50 Allowe d

Please refer to the policy 100% Cash Margin/li en on ABL Deposits a) upto Rs 25M against 100% Cash Margin/lien on ABL Deposits b) upto Rs 10M against 25% Casah Margin on ABL Deposits and balances against security type Allowed Allowe d Allowe d Allowe d

Institute of Business & Information Technology

Internship Report 2009

S1 or Parri passu Mortgage on Land & Bld.

Maximum Tenor for Guarantees Financial Guarantees

3yr

3yr

5yr

5yr Allowe d

8yr Allowe d

Any Allowe d

Back to Back Guarantees against Exposure

Allowed

Continuing Guarantees D. Letter of Credits Letter of Credits

100% Cash Margin 100% Cash Margin/li en on ABL Deposits Usance LC: Allowed a) upto Rs 25 M against 100% Cash Margin b) upto Rs 10 M against 25% cash Margin on ABL Deposits & balances against security type S1 or Parri Passu Mortgage on

Allowe d Agains t Securi ty Type S1 Allowe d

Allowe d Agains t Securi ty Type S1 Allowe d

Allowe d Agains t Securit y Type S1,S2, S3 Allowe d

Institute of Business & Information Technology

Internship Report 2009

land & Bld

LC for import of new machinary & Perishable items E. Leasing Leasing Min Cash Margin Against Leasing Max Leasing Tenor for Vehicles Max Leasing Tenor for Machinery F. Others New Customer exposure Startup Venture Underwritting Commitments Interbank Treasury Lines Investment in TFCs Lending Against Shares Clean Lending

100% Against Security Type S1

Allowed Allowed 15% 3yr

Allowe d Allowe d 10% 5yr 5yr

Allowe d Allowe d 5% 5yr 5yr Allowe d Allowe d Allowe d

Allowe d Allowe d 5% >5yr >5yr Allowe d Allowe d Allowe d VI Allowe d Allowe d Allowe d

Allowed Security type S1

Allowed Security type S2

Allowed Security type S3

Allowe d Allowe d

To be approved by the Treasury jointly with level Allowe d Allowe Allowe d d

Security Description:
Cash/Near Cash 100% Cash Margin Lien over Deposit Lien over Registered Govt Securities

S1

1 2 3

Institute of Business & Information Technology

Internship Report 2009

4 5 6 7 1 S2 2 3 4

Pledge /Lien over FEBCs/Bearer/Registered US $ Bonds issued by Govt of Pakistan Mortgage of Rural Property through pledge of agri pass book joint registration of vehicles Mortgage of urban Property Pledge/Fixed Assets Pledge of goods imported under Sight LC issued by Abl Pledge of locally produced agricultural commodities Parri Passu Mortgage on Land And Building Lien over Deposit with a minimum rating of B Fixed Assets/Current Assets/Shares/TFCs Parri passu charge on current assets Parri passu hypo charge on plan & machinery pledge of stocks imported under non ABL LC/finished goods Parri Passu Mortgage on Land & Building Shares & Closed Ended Mutual Funds Term Finance Certificates Pledge on locally produced goods

1 2 S3 3 4 5 6 7

Borrowers Evaluation (Pre-Sanction Stage): 1. Objectives of Analyzing the Information: • • • • • To determine the strong points To reveal the weaknesses To learn about operations peculiarities of the business firms To determine crucial/vital factors for the continuing success of borrower’s business To determine as to whether the prospective borrower can timely repay the requested finance from the stated sources of funds without financial/operational difficulties Institute of Business & Information Technology

Internship Report 2009

Getting complete information about a tentative borrower is possible through random collection of information from different resources and clubbing them together to understand their business position on the following points. • • • • • Financial position Method of operation Management policies Future plans Product quality

As a credit analyst the following documents are essentially analyzed or to keep in view for sanctioning the credit: 1. Credit Application I. Exposure Summary: The exposure summary contains the following information about obligor: 1. Credit Application (CA) type- it may be annual, interim, initial & classified. 2. Credit Application (CA) No. 3. Date of Review 4. Obligor Name 5. Extending Unit 6. Control Unit 7. Signature and Stamp of Concerned BM/CM/RM/GRM 8. Information about exposure limit- how much the obligor is already requiring and also his proposed limit with increment or decrement 9. Exposure summary whether it is “Fund Base: or “ Non Fund Base” 10. Obligor risk rating internal or external

Institute of Business & Information Technology

Internship Report 2009

11. Obligor classified exposure if it is in • • • • Watch List- the amount is overdue more than 30 days , Substandard- the amount is overdue more than 90 days, Doubtful- the amount is overdue more than 180days & Loss- the amount is overdue more than 365days

1. Stability criteria whether the obligor previously breach or violate any essential requirement e.g. Prudential regulation breach, Covenant violation 2. TER Temporary Extension Request 3. Approved by the Manager RCRR and recommended by RH-CRBG I. Sanction Advice: The Sanction Advice contains the following information about obligor: 1. National Tax No. of obligor 2. Industry type 3. Industry Code 4. Business Segment- whether SME, Commercial 5. Legal entity i.e. Sole Proprietor, Partnership, Co. 6. Total Asset of Obligor and the Turnover 7. Type of Credit Facility, the Obligor is obtaining previously and extending as well 8. Pricing according to SBP and Bank Policies-Floor Pricing i.e. KIBOR three month average +Spreads fixed by SBP 9. Margins 10. Personal Guarantees 11. Securities detail whether same or changed 12. Charge on Securities, Margin on Securities, Collaterals and its For Sale Value & Market Value 13. Covenants I. Group Facility Summary:

If the Obligor is not individual then Group Facility Summary is required. II. Basic Information Report (BIR): The Basic Information Report (BIR) contains the following information about obligor: 1. Obligor Name, Address & Tel. No. 2. Date of establishment of business 3. Background of obligor’s business and product details

Institute of Business & Information Technology

Internship Report 2009

• • • • • • • I.

Shareholding Status- Business directors name, Shareholding whether 100% or not and Net Worth Management- Name, Position, Tel. Nos. Remark (Age, Experience, Qualification, and Association with the Co.) Bank Lines- from which the obligor obtaining the credit lines. Credit Checking from CIB- Status whether clean, overdue, default Market Checking- At least 3 checking from the market ( from Buyers/Suppliers/Competitors) should be made Classification History External Rating- ( Long term/Short term)

Credit Memorandum: The Credit Memorandum contains the following information about obligor: 1. Purpose- describe the purpose of the proposed facility 2. Special Approvals- Provide comments for each “Stability Criterion Exceptions” checked off on the front page of CA 3. Ways Out Analysis- Indicate for each facility, the primary, secondary way out. 4. Three year exposure Trend 5. Industry Analysis 6. Management Analysis- Provide an assessment of the integrity of the borrowers 7. Financial Analysis-Balance Sheet, P&L Account, Statement of Sources (Fund Flow Statement), Notes on Accounts and Auditor Certificate 8. Risk Factors- Business Risk, Financial Risk, Management Risk, Security Risk, Account Performance Risk, Environmental & Social Risk and Disaster Risk 9. Relationship Strategy- In view of the risks discussed above provide a relationship strategy (Grow, Maintain, Reduce, Exit) for the obligor.

1. Borrower’s Basic Fact Sheet (BBFC) on approved pattern/ specimen duly filled in all respect, duly signed & stamped by the obligor & BM 2. Form 151- Loan Application Form 3. Security Compliance Certificate SCC- confirming the security/ documentation status for the existing approved facilities. 4. Copy of DAC in case of previous sanction 5. Latest Balance Sheet duly signed by obligor i.e. proprietor/Counter signed by CA/ duly audited as per requirements along with cash flow statements 6. Spread Sheet in case of exposure exceeding Rs. 10 M- to inculcate the practice of determining the Short term working capital requirement and long term repayment capacity through financial projection and cash flow analysis

Institute of Business & Information Technology

Internship Report 2009

7. Projected Balance Sheet 8. Previous/ Other Bank Report from whom the credit lines availed 9. Occupancy status of collateral security i.e. self occupied/ rental/ state commercial/ residential/industrial 10. Mark up payment history 11. Extracts from inspection & compliance 12. Ensure compliance of convent imposed in last year approval 13. Copy of Last Sanction 14. Ensure all columns of CA are filled in completely and correctly on proper prescribed formats of the bank. All pages of CA must be signed/ initialed by the BM. 15. Ensure Principal/collateral securities meet marginal requirements. 16. Forced Sale Vale Certificate signed by RH showing occupancy status of property/location/i.e. industrial/commercial/residential as well as approved map held or not. Ensure that Forced Sale Vale Certificate should not later than 3 years 17. Ensure stock report held and outstanding reported therein tally with statement of A/C and meet marginal requirements. 18. Statement of Account for last one year and ensure satisfactory turnover. 19. Ensure personal guarantees are recommended of all concerned i.e. proprietor/partner/directors/owner of the properties/holder of liquid securities etc. 20. Photocopies of Title Documents i.e. Title Deeds, NEC, Valuation Report, Legal opinion, Revenue Record, Excise & Taxation record in case of fresh proposals. 21. Ensure that valuation of properties is made from the short listed panel of PBA (Pakistan Banking Association) Evaluators in case of limits exceeding Rs.5 (M). 22. Date of Valuation-Ensure that valuation of Properties should not later than 3 years. 23. Prudential Compliance Check list must be compliance for SME, LC, Agri R8 and for corporate R3 24. In case party is also dealing with other banks ensure copies of other banks ensure copies of Other Bank Sanctions/Statement of A/C 25. Copy of account opening form in case of fresh proposals 26. Net Worth statements of obligor/partners/directors 27. EE Statement for borrowing in case of exporters, issued by SBP on yearly bases and this statement reports all exports of the particular obligor was carried out through which bank. 28. Confirm age of obligor is not more than 65 years in case of SME 29. Fresh Search Report in case of limited companies 30. Ensure the registration of charge over the Current/Fixed Assets of the Limited Co. Call copy of Form No. 10 or 16 i.e. Registration of Charge over the Current/Fixed Assets of the Limited Co. 31. Account Profitability Report when the limit is > 10 M- issued by the branch shows the previous credit lines avail by the obligor, the outstanding behavior and calculated yield. 32. Performa invoice in case of import

Institute of Business & Information Technology

Internship Report 2009

33. Form 29 i.e. Board resolution of limited co. 34. PDO Post Due Obligation of the obligor 35. Undertaking or confirmation for proper utilization of loan from obligor 36. Form 20 i.e. List of Directors of private limited co. 37. Clean up of facilities- an important element of credit initiation is proper structuring of credit facilities so as to minimize the risk associated with lending. This structuring of facilities in terms of amount, tenor and underlying security requires a thorough analysis of obligor’s WCR and an understanding of CCC of Co. firm. A clean up is considered to have taken up place when the outstanding finance has been fully adjusted repaid for a period of min 2 consecutive working days. Credit Analysis for Sanctioning Loan to Agriculture Sector: Furthermore the documents for sanctioning the loan for agriculture required are: 1. Zarai Pass Book- Evidence of Title 2. Latest copy of Khasara Gardawri( to check applicant is self cultivator or not) 3. Fard Jama Bandi 4. Total cultivated land (owned+ rented) 5. Lease Agreements Limit of Agri Credit Initiation to Obligor: Loan Entitlement 1. Valuation: Market Value of cultivated land *50%---------------------- Maximum Limit 2. Production Unit (PIU): Production Unit *Per Unit Price------------------------------ Minimum Limit 3. Owned & Leased Land: Total Area Cultivated * As Per Circular Production Crop Price/Acre

Institute of Business & Information Technology

Internship Report 2009

Financial Analysis for Sanctioning Loan: 1. 2. 3. 4. 5. 6. 7. 8. Equity of the Business of obligor Past year Sales And Turnover Current Ratio Quick Ratio Leverage Ratios Cash Conversion Cycle Work Capital Requirement = (Cost of Sales/365)*CCC Already available WCR = Current Asset-Current Liabilities (if it is more than the WCR then may be more enhancement is rejected) 9. Cash Flow Statement 10. Entitlement = 4* Equity Collateral Acceptable by ABL: Generally the following are the types of collateral acceptable by ABL are: 1. Mortgage of Land & Building: Credit facilities against mortgage of land & building may be granted as per the margins specified by the bank, on the forced sale value of the property determined by PBA approved valuation firm, subject to the following condition: 1. Max tenor of up to 7 year 2. Max grace period of up to 12 months from the date of first drawn- down. 3. The collateral must be easily realizable and must have an independent approach and right of way. 2. Hypothecation of Stocks, Plant & Machinery: Credit facilities against hypothecation of stock may be granted as per the margins specified by the bank subject to the following condition: 1. Max tenor of 1 years 2. No grace period is allowed 3. Asset coverage to be monitored via monthly stock report by the borrower showing the position of stock on month end. 4. Hypothecation to be provided on present and future stock. 5. Semiannual stock inspection is conducted 6. Annual clean up requirement may be imposed where deemed necessary

Institute of Business & Information Technology

Internship Report 2009

Credit facilities against hypothecation of Plant & Machinery may be granted as per the margins specified by the bank subject to the following condition: 1. Max tenor of up to 7 year 2. Max grace period of up to 12 months from the date of first drawn- down. 3. Hypothecation to be provided on present and future Plant & Machinery. 3. Pledge of Stocks, Raw Material & Finished Goods: Credit facilities against pledge of readily marketable stocks, raw material and finished goods may be granted as per margin requirements specified by the bank subject to the following condition: 1. Max tenor of 6 to 11 months depending upon the asset conversion of the borrower. 2. PBA approved macadam to take charge of the pledged stock and keep it under lock & key. 3. Macadam to submit monthly stock position report. 4. clean up requirement may be imposed where deemed necessary

Institute of Business & Information Technology

Internship Report 2009

Management Style:
In Allied Bank of Pakistan, the Managers are promoting the “Open Door Banking”. They used to interact with their subordinates and workers on time to time basis this is the main reason the managers at ABL know the problems that their employees are facing and this time to time interaction has created a healthy environment among the staff and their managers and this monitoring increase the efficiency at ABL. In ABL the managers having the control over the staff members and employees and having the check over the tasks of employees that they are performing even on daily basis. Although the environment is very learning but also in some wings and groups of ABL the management approach towards their employees is still bureaucratic. Some most experienced managers are hesitant to adopt the learning and open door banking.

Working Environment:
Allied Bank boasts of a work culture, which displays respect for all walks of life and different ways of thinking. Everyone at Allied Bank has a common corporate vision and values. However, all employees are encouraged to grow as individuals and collaborate in teams. Increments, bonuses and promotions are based solely on individual skills, qualities, abilities and attitude. It is our aim to provide innumerable opportunities for all those employees who show aptitude and the will to keep learning. Training programmes, both local and foreign, are also considered important for employee growth.

Institute of Business & Information Technology

Internship Report 2009

Chapter 4 Summary & Recommendations

Institute of Business & Information Technology

Internship Report 2009

Overall Summary:
At present there is no such organization in the world that is free from problems and challenges. Every concern has to strive and struggle a lot to be more profitable and to get more competitive edge. The management of ABL is taking strategic steps to enable the bank to emerge as a strong and progressive institution. It is continuing to make efforts to refine its products and operations to make them more compatible. New deposit schemes have been introduced and an action plan to maintain revenue growth in future. During my internship I have learned many new things in spite of the knowledge gained at university and also came to conclusion that education alone is not enough, practical training in every field is crucial to become a successful manager. The bank has great image due to the trust but it needs to use it effectively to increase market share. Also the flaws in branch operations such as misallocation of resources should be rectified. As the business and economic conditions remain uncertain, ABL continues to develop the new products like it has been doing in past.

Institute of Business & Information Technology

Internship Report 2009

Recommendation for the Organization:
While doing my internship training of 8 weeks in Allied Bank of Pakistan, I have analyzed some problem in the Bank. Keeping in views those problems followings are my recommendations: 1. The bank has a lot of financing schemes but there are little advertisements of these schemes so ABL should more advertise its schemes. 2. Most of the bank employees are stick to one seat only, which result that they become master of one particular job and lose their grip on other banking operations. So all employees should have regular job rotation. 3. Some of the talented employees should be sent to other countries for their advance trainings. 4. In back offices the employees are still depend on manual work which causes slow performance. It should convert their system to an automated one. 5. ABL should promote the paperless banking. 6. In some groups or wings, approach towards employees is still bureaucratic, late promotion, favoritism in appraisals and lack of sufficient incentives are some problems arising dissatisfaction so the employees should be promoted on fair policies to increase more satisfaction among them. 7. ABL should introduce the Islamic products because it has the potential market.

Institute of Business & Information Technology

Internship Report 2009

Recommendation for the IBIT:

While studying in IBIT, I have analyzed some problem. Keeping in views those problems followings are my recommendations: 1. The management of this prestigious institute should introduce the training programmes among the departments i.e. IAS & IBA same as the UMT does with the IBA for the promotion of students. 2. This institute also should organize the seminars with the cooperation of industries like with Chamber of Commerce and Supply Chain Group of Pakistan that assist its students and the market will knows its students. 3. The institute also should arrange the field tours for its students to enhance and give the market exposures.

Institute of Business & Information Technology

Internship Report 2009

Annexure:

Institute of Business & Information Technology

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close