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Prepared for Mr. Sadir Zaidi Director Department of Economics and Business Management

Prepared by Mr. Qaisar Hussain

MBA (Life sciences)

(III) Semester

session (2008-2010)

Department of Economics and Business Management

Date of Submission: Oct 14, 2009

University of Veterinary and Animal Sciences (UVAS) Lahore, Punjab, Pakistan

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DEDICATED

TO MY PARENTS WHO ALWAYS LOVE ME & all THOSE WHO HAVE A SOFT CORNER FOR ME IN THEIR HEARTS

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Acknowledgement

All gratitude and thanks to almighty ALLAH the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this project. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to our course instructor Mr. Sadir Zaidi for providing me an opportunity to analyze the brand like Allied Bank Limited" which is vital ingredient of MBA program. I am very great full to my teacher Mr. Sadir Zaidi for providing me guideline for the completion of this project. I feel great pride and pleasure on the accomplishment of this project.

EXECUTIVE SUMMERY

Every student of Master in University of Veterinary and Animal Sciences, (UVAS) has an essential requirement to do Six to Eight weeks internship in any of the well reputed organization. The purpose of this program is to acquaint the students with practical applications of theoretical concepts taught to them during conduct of their MBA program. The internship in Allied Bank was arranged by the institute. Really, it was a nice opportunity to have a close comparison of theoretical concept in practical field, involving the use of primary and secondary data. All the efforts on the way are summarized in shape of this Internship Report. The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank. This history of banking is traced to as early as 2000 B.C. Talking about commercial banking in Pakistan It was very difficult for Pakistan to build up its own Banking system immediately after independence without sufficient resources. By 30th June 1948 the number of schedule banks in Pakistan declined from mere scratch. Today there are more than 7000 branches of commercial banks along with an established network of supplementary financial institutions. All this development in the banking sector is the result of untiring efforts of six decades. Allied Bank was the first Muslim bank to have been established in Pakistan. Established in December 1942 as the Australasia Bank in Lahore with a paid-up share capital of Rs. 0.12 million under the Chairmanship of Khawaja Bashir Bux, the Bank attracted deposits equivalent to Rs. 0.431 million in its first eighteen months of business. At the time, the Banks total assets amounted to Rs. 0.572 million. Today, Allied Bank's paid up Capital & Reserves amount to Rs. 10.5 billion, deposits exceed Rs. 143 billion and total assets equal Rs. 170 billion

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This report contains information about ABLs board of directors, management, mission and vision. ABLs operations are discussed in light of its working department in the branches like operation, foreign exchange and advances and also in light of its services and products which it is offering to customers weather they are individual, business, corporate. During the time of my internship in Allied Bank Chowk Dalgran Branch, Lahore (0211) I got the chance to work in all the departments of ABL working there. Duties and learning in each department is given in this report. At the end of this report I have given my suggestion for the improvement of the bank

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TABLE OF CONTENT

Contents PREFACE ......................................................................................................................... IX INTRODUCTION .............................................................Error! Bookmark not defined. BOARD OF DIRECTORS ................................................Error! Bookmark not defined. MANAGEMENT ........................................................................................................... XVI ORGANIZATIONAL STRUCTURE ...............................Error! Bookmark not defined. PLANNING .......................................................................Error! Bookmark not defined. ORGANIZING ..................................................................Error! Bookmark not defined. LEADING ..........................................................................Error! Bookmark not defined. CONTROLING..................................................................Error! Bookmark not defined. GOALS & OBJECTIVES .................................................Error! Bookmark not defined. STRATEGIES....................................................................Error! Bookmark not defined. SEGMENTATION ............................................................Error! Bookmark not defined. TARGET MARKET ............................................................Error! Bookmark not defined. POSITIONING ..................................................................Error! Bookmark not defined. SWOT Analysis .................................................................Error! Bookmark not defined. PEST Analysis ...................................................................Error! Bookmark not defined. Porters Five Forces Model .................................................Error! Bookmark not defined. MARKETING MIX ...........................................................Error! Bookmark not defined. IMC ....................................................................................Error! Bookmark not defined.

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PREFACE Banking sector owes a pivotal importance in the contour of any country through its vibrant functions. This is the deep seated motivator that geared up me to join any bank for internship. Moreover, the practice and familiarity learned during this tenure would also attest very helpful and alleviating in the awaiting proficient life. Allied Bank limited posses an imperative importance in the banking sector of Pakistan. It always remains the center of hustles in business activities. It always endows with great covenant of rally round in terms of funds and services at all epochs of its dynamism. I made industrious efforts to converse them comprehensively in this report. Particularly, I have remunerated more accents on study of distinguishing features and services of Allied Bank Limited. I have made maximum venture to elaborate this project with the material read, listened and observed. I have strong belief that this project will guide and ease the readers to understand the operations of banking system and more prominently have good knowledge about Allied Bank Limited, one of the most trusty and leading banks in Pakistan. Dear readers, I hope that you will appreciate my project and sense that reading my project is not like to waste the time in any respect.

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

MISSION
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

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History of allied bank limited Pakistan

The Banks journey has been about dedication, commitment, professionalism and adapting to environmental changes,leading to its immense growth and stability. A view of Khawaja Bashir Bux's Residence. The first branch of Australasia Bank.

The Pre Independence History (1942 to 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.

Mr. S.R. Jariwalla (sitting in the center) A legendary figure in the history of the Bank 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 take 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. Australasia Bank was the only fully operational Muslim bank in Pakistan on August 14th, 1947. A view of the building in Lahore that once housed the Australasia Bank branch

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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 Banks business in India, Australasia Bank made a profit of Rs. 50,000 during 194748. 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 to 1991) In 1974, the Board of Directors of Australasia Bank was dissolved and was renamed Allied Bank. The first year was highly successful; profit exceeded Rs. 10 million, deposits rose by over 50 percent and approached Rs. 1460 million. Investments rose by 72 percent and advances exceeded Rs. 1080 million for the first time in the banking history. 116 new branches were opened during 1974 and the Bank started participating in the Governments spot procurement agriculture program. Those seventeen years saw a rapid growth for the Bank. Branches increased from 353 in 1974 to 748 in 1991. Deposits rose from Rs. 1.46 billion, and Advances & Investments from Rs. 1.34 billion to Rs. 22 billion during this period. It also opened three branches in the U.K.

view of AlliedBank's FTC branch,Karachi.

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Allied Bank (1991 to 2004) As a result of privatization in September 1991, Allied Bank entered a new phase, and became the worlds first bank to be owned and managed by its employees. In 1993 the First Allied Bank Modaraba (FABM) was floated. After privatization, Allied Bank became one of the premier financial institutions of Pakistan.

A view of Allied Bank, Head Office, Lahore. Allied Banks 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 Pakistans 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 Banks ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. August 2004, as a result of capital reconstruction, the Banks 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.

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(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 Banks share trading began on the following dates:

Islamabad Stock Exchange 8th August 2005 Lahore Stock Exchange 10th August 2005 Karachi Stock Exchange 17th August 2005

Today, all Allied Bank Limited shareholders can trade in the Banks shares at their will.

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Board of Directors Left to Right

Pervaiz Iqbal Butt (Director)

Mohammad Waseem Mukhtar (Director)

Farrakh Qayyum (Director)

Sheikh Mukhtar Ahmed (Director)

Abdul Aziz Khan (Director)

Tasneem M. Noorani (Director)

Sheikh Jalees Ahmed (Director)

Nazrat Bashir (Director)

Mohammad Aftab Manzoor (CEO)

Mubashir A. Akhtar (Director)

Mohammad Naeem Mukhtar (Chairman)

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Management

Asim Tufail (Group Chief, Consumer & Personal Banking)

Fareed Vardag (Chief Risk Officer)

Iqbal Zaidi (Group Chief, Compliance)

Mohammad Abbas Sheikh (Group Chief, Special Assets Management)

Mohammad Aftab Manzoor (Chief Executive Officer)

Muhammad Jawaid Iqbal (Group Chief, Corporate & Investment Banking)

Muhammad Shahzad Sadiq (Group Chief, Audit & CRR)

Muhammad Yaseen (Group Chief, Treasury)

Mujahid Ali (Group Chief, Information Technology)

Shafique Ahmed Uqaili (Group Chief, Human Resources)

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Khawaja Mohammad Almas (Head, Core Banking Projects)

Tahir Hassan Qureshi (Chief Financial Officer)

Tariq Mehmood (Group Chief, Operations)

Waheed ur Rehman (Company Secretary)

Zia Ijaz (Group Chief, Commercial & Retail Banking)

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Management Hierarchy The management hierarchy represents the different positions and designations in the hierarchy of the ABL. However, this is not the reporting hierarchy but merely represents the positions and grades on the basis of seniority and grades.

President

Senior Vice President

Vice President

Executive Vice President

Senior Executive Vice President [rosodmemtPresident Regional General Manager Managerxecutive Vice President Branch Manager
Figure: - Management hierarchy

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Functional Hierarchy The functional hierarchy represents the reporting order in the hierarchy of ABL. The hierarchy has president and directors at top management level and officers Grade I, II and Grade III at the lower level management of ABL. The middle level management consists of regional general Manager and Regional Controller of Operations. These positions are not fixed. Any person in the hierarchy above the branch manager can be appointed as RGM and controller operations.

President and CEO

Board of Director

Head of Departments

Regional General Manager

Controllers of Operation

Branch Manager

Office G-I, II and other lower Staff

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Learning during internship During the period of my internship program I work in the different department of the allied bank like operation, Advances department and foreign exchange department:

Operation department:
Accounts Opening: Basic function of the accounts department is to open new account and facilitate the customer for the account opening purpose. There are certain formalities which are to be observed for opening of an account with a Bank. These formalities in brief are as under: FORMAL APPLICATION: The customer is to fill "Account Opening Form. It is a formal request by a customer to the bank to allow him to have and operate the account. Documents require for opening an account: Copy of CNIC Service certificate or student card. Utility bill Provisional receipt Posting the account on the system: When the Banker is satisfied about the integrity of the customer, he agrees to open the account. The Banker obtains the specimen signatures of the customer on the signature book or on card. After that officer has to, post the new account on computer system for further processing. During the process customer ID and account number is generated. New account remains active for one day after that it is blocked by the head office until CNIC of the customer is verified from NADRA.

Cheque Book After completing formalities for opening saving and current account a cheque books issued to the customer for withdrawing cash from his or her account at the time of need. The cheque contains minimum 25 pages & maximum 100 leaves. The bank also charges excise duty on cheque book. But now a days cheque books issued by the head office Karachi and it delivered to costumers after 5 days of request. Only account holder can receive the cheque. Types of accounts: Business accounts JOIN ACCOUNT Individual accounts REASON FOR CLOSING THE CUSTOMERS ACCOUNT: The banker may close the account of the customer due to following reasons: i. Notice by a Customer ii. Death of a Customer iii. Customers Insanity iv. By order of court I) NOTICE BY CUSTOMER The banker closes the account of the customer on the application of the customer for closing his account. II) DEATH OF CUSTOMER On death of his customer, the bank must stop payment on cheques drawn on him by the deceased customer because the death revokes his authority to pay such cheque. The heirs

or the executors of the deceased customer are not authorized to operate on the account; it can act only in accordance with provisions mentioned in the letter of probate issued by a competent courts. III) CUSTOMERS INSANITY If the customer becomes insane or mental it terminates the bankers authority to act as his customers agent. Since the banker customer relationship comes to end, in such as situation, it is usually considered that the bankers authority to pay his customers cheques is revoked by notice of insanity. However, the bankers treat their customers as it unless a fairly inclusive evidence of the customers insanity is available to them. IV) ORDER OF COURT A court of law may serve a banker with an order in garnish proceeding in execution of a decree prohibiting him from honoring a customers cheques. Cash deposit procedure: The customer fills the pay slip. The cashier receives the pay slip and cash. He counts the cash and makes the detail of the notes at the back of the pay slip. Then he compares the detail with amount written on slip and signs the pay Slip. Then he credits the entries in the computer by serial No, account type, Account number and amount. Puts the stamp of the cash Received on the payment slip. The first portion is for bank record while other one is given to the customer. Cash payments procedure: When a customer comes to withdraw a certain amount from his account, he brings a Cheque along with him. In this case the following steps are taken. The cashier receives the cheque and checks it whether it is post dated or predated. Cheque can be cashed within six months. A predated cheque cannot be cashed. He takes two signatures at the back of the cheque from the bearer. He gives the cheque for posting at the computer. The computer checks out whether there is balance in the account or not. Other instructions are also received e.g. blocked, frozen, Etc. the posting is done in the computer and the cheque is stamped posted with the serial number and date. He gives the cash to bearer and the respected account is debited.

Online fund transfer: Another function of the cash department is of online transfer of funds. Customer has give filled remittances form with cash or without cash (from account transfer) to the cashier in cash department who will then credits the beneficiary account. Allied Bank Rupee Travelers Cheque(ABRTC): Carrying cash to strange alien location can prove to be risky as a single incident can render one without monetary backup of any sort. Hence banks introduce travelers checks in order to protect against any contingency. Limit of ABRTC is 10,000 pak rupees only Only main branch pay it. For its clearing; must mention issuance date, two signature of client and clearing stamp by the presenting branch. If ABRTC claimed in main branch then only transfer stamp is required.

Pay Order Pay order is the most convenient simple and secure way of transfer of money. It is issued by, drawn upon and payable by the same branch of the bank. It is neither transferable nor negotiable and as such it is payable to the payee named there in. The following are the parties to a pay order. Purchaser is a person, firm, company or local authority. Issuing/paying branch is one which issues/pays on presentation. Payee is a person named there in.

Demand Draft Demand Draft is another way of transfer of money from one bank to another bank. Unlike pay order, a form is required to be filled for the issuance of the demand draft in which necessary particulars about the beneficiary and sender are given. The sender deposits the amount of DD plus commission and other charges on the bank counter, from where he is given a receipt and in accordance with this receipt he is issued The following are the main essential of draft: It is a Negotiable Instrument. Filling a form and depositing the amount written on it prepare 2} Draft.

It is a written order to its branches or to another bank to pay the stated amount on draft. DD issued for tenders

Deposit at call (DAC) DAC like as pay order but there are no charges on it and people use it for saving ZAKAT. Before 1st RAMADAN customer submit an application for DAC to the bank manager. Then bank issued the DAC and debit the customer account with same amount.

Bills Clearing Department: Introduction: Every bank acts in two way i.e. i. Paying Bank ii. Collecting Bank Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. It is, however, an important function of crossed cheques. A large part of this work is carried out through the N.I.F.T.

NIFT- National Institutional Facilitation Technologies (Pvt.) Limited: NIFT is a joint venture between a group of six major banks and private sector. It is responsible for the establishment and management of automated clearinghouse facilities in Pakistan. NIFT is directly involved in the modernization of payment systems in Pakistan. Inward clearing In inward clearing other banks send the cheques of associated branch through the NIFT. Other banks received the chaques of different banks by the customer and send to the NIFT. NIFT separate the cheques of different banks/branches and send them to that banks or branches. After presenting the cheques that branch debit the customers account and pay to the correspondent branch/bank.

Outward clearing In outward clearing the account holder present the other banks cheques. Then officer post that cheques in computer and put crossing and normal clearing stamp on face side and endorsement stamp on back. After that all cheque forward to the NIFT for normal clearing. NIFT send that cheques to the associated branch and that branch clear them. If the account has insufficient fund or signature not verified or cheque is post dated then that branch send back to the sender. In outward clearing bank received the cheque of same citys banks. Intercity In intercity the banks send the cheques of other banks to NIFT for clearing from the different cities. When the customer present the cheque in the bank the officer put the three stamp on it (1) crossing stamp (2) intercity stamp (3) endorsement stamp on it. First two on faced side and endorsement at back and send it to the NIFT. NIFT (has near about 20 main branches all over the Pakistan) send it to associated branch for clearing. Minimum 3 days required for clearing through intercity. If the account holder maintains more then 5lac monthly average then no charges on intercity clearing.

Outward bill for collection (OBC) Bank sends the cheque to their branch for collection fron the other banks. When the customer presents the cheque the officer put three stamps on it (1) crossing (2) OBC (3) endorsement stamp. Then he notes it in OBC register and put the OBC No. on the cheque and attaches a voucher with the cheque. Normally it sends to the city head office. Then that head office /branch send that cheque to associated branch. Minimum 5 days required for OBC Allied Bank charge the232 Pak rupee on it.

Lockers: Lockers are available in many of the ABL branches in different sizes like small, medium and large; some branches also have extra large and cubical lockers. Except rural areas, because of security reasons.

Eligibility for using lockers Account holders and non-account holder can gain the facility of lockers. The annual rent will be directly debited from their respected accounts at the start of the year.

Advances department:
During the three weeks of my internship program I do different assignments and learn about the task and different function of the advances department at the allied bank. Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans. The Credit Management Division of Head Office directly controls all the advances. As we known bank is a profit seeking institution. It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all financial institutions, because it is the main source of earning. However, at the same time, it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. Any individual or company, who wants loan from ABL, first of all has to undergo the filling of a prescribed form, which provides the following information to the banker. Bank requirement by the borrower. Existing financial position of a borrower at a particular branch. Accounts details of other banks (if any). Security against loan. Exiting financial position of the company. (Balance Sheet & Income Statement). Signing a promissory note is also a requirement of lending, through this note borrower promise that he will be responsible to pay the certain amount of money with interest. TDR (term deposits receipts)for security.

 Credit application. Sanction Advices. Application for credit facilities. Detail of immovable and moveable properties by the borrowers/guarantors. Undertaking. Borrower/companys Balance sheet, Cash flow and Income statement. CIB report. NTN verification form. Legal opinion. Bank guarantee bond. Principles of Advances There are five principles, which must be duly observed while advancing money to the borrowers. Safety Liquidity Dispersal Remuneration Suitability

Foreign Exchange Department: International trade is growing and with the development of international trade it has become more imperative. For countries to devote more and more attention to the complicated mechanism of Foreign Exchange, It is more important in case of developing countries. It is need of time, that a country should conserve its foreign exchange resources. MEANING OF FOREIGN EXCHANGE The foreign exchange term refers to the principles that determine the rate of exchange. It covers following three senses: i. The mechanism or system by which international obligations or indebtedness are fulfilled. ii. The currency of one country is exchanged for that of another. The principles on which the people of world settle their debts to one another: Letter of Credit: It is a negotiable instrument through which the bank of the exporter deals with bank of the importer through the guarantee of a bank. There are different parties involved in the L/C, e-g importer, exporter, importer bank, exporter bank, and advisory bank. LC involves banking channels in foreign trade to mitigate risk. The procedure of opening of an L/C is as follow The first thing is the Performa invoice. The Performa invoice is a document (say a clip), which is, sends by the exporter to the importer and includes the information like. Descriptions of goods, what type of goods you are needed and what are the quality, rate and originating country etc. Before to open a L/C the bank also consider that the goods which the importer is importing is allowed by govt. of Pakistan or not. Because the importer is not allowed to import that goods which are prohibited by the Govt. of Pakistan. The importer is asked to show the membership certificate of any chamber of commerce and industry affiliated with the Pakistan federation of chamber of commerce and industry.

 Fill the import form of the govt. of Pakistan, which is the proof of this that there is no objection on the goods, which the customer is importing. What type of goods you are needed and what are the quality, rate and originating country etc. Necessary Documents required for L/C: NTN Tax Authority registration certificate Chamber of Associations trade certificate Type of Business NIC Margin Registration No. Application for L/C

On providing these documents the importer will be given the L/C form named as IB-8. Contents of IB 8 1. Request for LC 2. Rate 3. Importer and Exporters particulars 4. Amount 5. Terms 6. Partial Shipment (Allowed, not allowed) 7. Transshipment (Allowed, Not Allowed) 8. Port of Loading and destination 9. Payment Mode I. Sight On seeing the documents the importer has to pay. II. At Sight and Negotiation: It means that exporter will submit his documents with the bank and immediately asks for payment. III. Acceptance:

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On showing the documents to the importer, the bank asks him to accept that he will pay within 30, 60, 90, 120, 180 etc days.

10. Documents Required: Certificate of Origin. Commercial Invoice Bill of Lading / Air way bill.

Charges: For L/C following charges are applicable; Commission Postage L/C Advising commission L/C amendment Commission L/C confirmation Commission L/C Negotiation Commission Payment Mode: In foreign trade payment modes are 1) Advance Payment: Importer makes payment before delivery of goods. 2) Open A/C: Importer makes payment after receiving the goods.

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