Introduction To Banking: "Bank" and Its Origen

INTRODUCTION TO BANKING
“BANK” AND ITS ORIGEN
Even the standard encyclopedia and the books of laws find

it very difficult to state exactly that what is bank, there are
many definitions of the word bank. Following are the
different attempts made by different writers to explain the
word bank.
According to Gilbert:
“A bank is a dealer in capital or dealer in
money. He is an intermediary party
between the borrowers and lenders.”
According to Samuelson:
“Commercial banks provide certain
services for customers and in return
receive payments from them.”
According to Holder:
“The modern banker is primarily a dealer
in credit.”
Hailey College of Commerce 1

According to Crowther:
“Bank is a dealer of debt, his own and of
other people.”
IMPORTANCE OF BANKING
Banks play very important role in the economic life of a

nation. The growth of the economy is dependent upon the
soundness of its banking system. Although banks do not
create new wealth but borrow, exchange and consume.
These make generation of wealth. In this way they become
most effective partners in the development of that country.
To encourage the habit of saving and to mobilize these

savings is its basic purpose. Banks deposit surplus from the
public and then advances these surpluses in the form of
loans to the industrialists, agriculturists, businessmen and
unemployed people under different schemes so that they set
up their own business. Thus banks help in capital formation.
If there are no banks, then there would be

concentration of wealth in few hands and great portion of
wealth of a country would be idle. We can take bank just like
a heart in the economic structure and capital provided by it
is like blood in it. As long as the blood is in circulation, the
organs will remain sound and healthy. If the blood is not

provided to any organ then the organ would become useless.
So if the finance is not provided to agriculture sector or to
industrial sector, it will be destroyed.
Loan facility provided by bank works as an incentive to

the producer to increase production. Banks provide transfer
of payment facility, which is cheaper, quicker and safe.
HISTORY OF ALLIED BANK OF

PAKISTAN
Establishment of Australasia Bank

The Australasia Bank (the old name of allied bank) was
established in 1942 in a motor garage in Lahore with a staff
of three. Initially, it was little more than an agency for the
collection of rents from the family estate. Then, the tenants
began to open accounts and the bank to make advances
against gold, insurance policies, and merchandise
Management of family properties led to the business of
managing other people's estates and the new bank soon
encountered opposition from the established banks.
Discrimination took the form of a collection charges applied
to local cheques, on the grounds that the new bank. was not
located in the 'Bank Square', The Australasia Bank was at
that stage a non-scheduled bank, but it was claimed that at

this time it was not accorded the facilities available even to
that class of bank. The Reserve Bank of India was loath to
grant facilities for the exchange of notes or the grant of
accommodation. After two years, the bank was moved to a
new building. It did the same business as before though on
an Increased scale, A number of branches were opened. In
due course it applied for inclusion in the Schedule and was
accorded the status of a scheduled bank in the financial year
1946-47. After Partition the bank was entrusted with the
collection of Treasury revenues and payments on behalf of
the Government in certain centers. Subsequently, it was
granted a license to undertake foreign exchange business,
and further branches were opened. The bank is still small,
though included in the Schedule, but it does a business
comparable in quality and scope with larger and longer-
established banks. If any proof wore needed that the Muslim
is capable of the initiative and persistence to embark upon
the complex business of banking, this case study should
provide useful evidence.
Allied Bank’s 60 Years of Progress
Allied bank of Pakistan Limited (formerly Australasia

Bank Limited) has witnessed and experienced all political,
economic, financial and technological changes which have
taken place in the South Asian region since it was
incorporated in 1942 at Lahore. Allied Bank of Pakistan is

the first Muslim bank established on the territory that
became Pakistan established on December 3, 1942 as the
Australasia Bank at Lahore under the chairmanship of
Khawaja Bashir Bux.
In 1942, the situation was as follows:
Rs. 0.12
Paid up share capital million
Rs. 0.431
Deposits million
Rs. 0.572
Total assets million
In 1947, when the bank was in nascent age, it had to

undergo a traumatic event, which divided Asian Sub
Continent into two independent states, namely, Pakistan and
India. Allied Bank, being the only Muslim bank on the soil of
Pakistan, lost over 50% of its operations and its assets, which
were on the soil of India. The management faced the
multiple challenges resulting from huge human and financial
losses on the one hand and the task of providing the newly
emerged nation with efficient and effective payment system
and bank facilities to all sectors of economy on the other
hand.

The bank rendered valuable treasury services for the
government of Pakistan and despite many constrains played
an effective role in socio-economic uplift of the country.
In 1965 the Bank shifted its operational head quarters

from Lahore to Karachi. In 1971, the Bank lost more than
half of its assets and network due to cessation of East
Pakistan. The bank not only survived this crisis but also
regained its financial strength maintaining the growth rates.
In 1974, the government of Pakistan nationalized all financial
institutions in the country. Releasing the robust financial
strength of Australasia Bank Limited among all the
nationalized financial institutions, the government decided to
merge three financially weak institutions, namely, Sarhad
Bank Limited, Lahore Commercial Bank Limited and Pak Bank
Limited into Australasia Bank Limited and renamed it as
Allied Bank of Pakistan Limited.
During 1974
Rupees in
Financial Equity
Million
Subscribed paid up capital 13.46
General and other reserves 6.73
Deposits and Advances

Private sector 570.46
Public sector 110.14
Investment 152.01
Net pre tax profit 4.46
Number of branches 265
Number of staff 3,256
Number of accounts 2,90,732
Allied Bank remained in the public sector for seventeen

years, during which the quality of its assets remained
comparatively better among its peer. During this period the
bank expanded its domestic network and opened its first
foreign branch at London, UK in 1977. The performance of
the domestic and foreign operations of Allied Bank, during
nationalized period, was so good that in 1989 UK operations
of Muslim Commercial Bank were merged into Allied Bank of
Pakistan Limited. Because of privatization in September
1991, Allied Bank entered in a new phase of its history, as
world’s first bank to be owned and managed by its
employees.
After privatization, Allied Bank registered and

unprecedented growth to become one of the premier
financial institutions of Pakistan. Allied Bank enjoys an
enviable position in the financial sector of Pakistan. As on
date the quality of assets of the bank is one of the best
amongst the major banks of the country.

EMPLOYEE STOCK OWNERSHIP PLAN
A New Beginning
In September 1991, Allied Bank entered in a new phase

of its history, as world's first bank to be owned and managed
by its employees. Mr. Khalid Latif, an employee of the bank
since 1971, had anticipated that an opportunity would
emerge for the workers to take management control of the
Bank. He proceeded on long leave in November, 1990 to
make an in-depth study of the concept of Employees Stock
Ownership Plan (ESOP). He was thus well prepared when in
May 1991, the Privatisation Commission announced the
impending privatisation of Allied Bank and invited pre-
qualification bids.
During May/June 1991, almost all the officers, staff

members and CBA unions had given a mandate to Mr. Khalid
Latif to acquire Allied Bank for employees through the Allieds
Management Group which had been formed specially for this
purpose,
Mr. Khalid Latif was thus in a strong advantageous

position when he met the Cabinet Committee on Privatisation
in August 1991 to present his plan for acquisition of Allied
Bank within the context of an Employees Stock Ownership
Plan (ESOP). The meeting examined the plan in detail and

concluded with the Finance Minister's announcement that
the Government had accepted the Allieds Management
Group's bid.
Within a week the formal letter of acceptance of this bid was

handed over by the Prime Minister of Pakistan to Mr. Khalid
Latif. The executives, officers and representatives of all CBA
unions confirmed Mr. Khalid Latif as Chairman of
the Allieds Management Group. In September 1991, the

Board of Directors approved the transfer of 26 percent of the
Bank's shares to the Allieds Management Group. The Board
of Directors was reconstituted. It elected Mr. Khalid Latif as
its chairman and Chief Executive of the Bank. The State Bank
of Pakistan also approved this decision.
BASIC PRINCIPLES
The basic principle and features underlined by

Mr. Khalid Latif when he launched this scheme
countrywide and positive response of the government, press
and public at large.
1. ESOP means employee stock ownership plan.
2. ESOP combines knowledge, experience and efforts of
the people.

3. ESOP gives employee job security, better prospectus for
the career, family feeling and sense of loyalty and share
in the progress and prosperity of an entity.
4. 7500 people spread over more than 750 branches
raised the slogan of ESOP.
5. ESOP is customer oriented.
6. ESOP is motivational tool, which disciplines the people,
prevents wastage of resources and ensures better and
efficient customers service standards.
7. ESOP envisages management control and ownership of
the enterprise for the employee, by the employees and
of the employees.
8. ESOP provides protection to the family retirement. It is

an umbrella, which automatically opens as soon as
there is a rain. ESOP shows loyalty to the organization.
9. ESOP is a team work.
How ESOP was accomplished:

Privatization of the Allied Bank under the concept of
employee stock ownership plan (ESOP) is a singular success
story anywhere in a world. Dynamic leadership was the
singular factor in getting the dream of Allied Bank translated
into reality.

At the commencement of the privatization process in
the country Mr. Khalid Latif prepared a working paper on
employee stock ownership plan. Management and staff
members numbering over 7500 joined together and united to
form Allied’s management group. On 3rd August 1991 Mr.
Khalid Latif discussed with the cabnit committee on the
privatization the concept of employee stock ownership plan
with particular reference to the ownership of the Allied Bank
to it employees. The deal was finalized after in a depth
study of ESOP.
On 11 August 1991 Allied management group deposited

sale price of 26% share in State Bank of Pakistan. In its
meeting on 10th September 1991, board of director of the
bank approved sale of 26% shares of the bank to the
employees and there after vacated their seats for the new
nominees of Allied management group. In its very first
meeting the new board of directors elected Mr. Khalid Latif
as its Chairman and Chief Executive. The Govt. of Pakistan
in its notification dated 12th September 1991, transferred the

management of the bank to its employees through their
nominees on the board of the Directors. New board of
directors constituted.

MANAGEMENT STRUCTURE OF
ALLIED BANK OF PAKISTAN
This bank is owned and controlled by
shareholder who elects board of director to over seas bank.
The bank has six directors, the chairman and a company
committee that has a president and members of a bank are
seven, both from board of director and employees of the
bank and sectaries.
Board of director
Khalid A Sherwani
Chairman
(Ex-President UBL)
Mehmood Akhtar
Director
(Point Secretary Ministry of Finance)
Shaukat Hayat Durrani
Director
(Point Secretary Ministry of Finance)
Muhammad Sami Saeed
Director
(Secretary Excise & Taxation Govt. of Punjab)

Mozaffer Iqbal
Director
(Ex-Director NBP)
Justice Retd. Amir Raza Khan

Director
(Retired Justice of Supreme Court)
Iqbal Mustafa
Director
(Chairman SMEDA)
Asif Bajwa
Director
Muhammad Yaqoob
company secretary
EXECUTIVE COMMITTEE
CHAIRMAN
Khalid A Serwani
MEMBERS
Shukat Hayat Durani

Swami Saeed
Mohd. Akhtar
Naveed Masod
Bilal Mustafa
Justice Retd. Amir Raza Khan
Iqbal Mustsfa
Muzafar Iqbal
Asif Bajwa
SERETARY
Shariq Umar Farooqi
ORGANIZATIONAL HIERARCHY
President
Senior executive vice president
Senior vice president
Vice president
Asst. vice president
Officers
Assistants
Cashier

Peon
ORGANIZATION SET UP
Central office Karachi
PROVINCIAL HEADQUARTERS
Punjab Lahore
Sindh Karachi
N.W.F.P& Azad Kashmir Peshawar
Balouchistan Queeta

Organizational and Functional Chart
Chairman &
Chief Executive
Central Office /
Head Office
SEVP SEVP SEVP
PHQ Islamic Banking Admin & Human International

SINDH Division Resource Division Division
Credit Audit &

PHQ Finance
Monitoring Inspection
NWFP/AK Division Division Division
Maintenance Engg. Environmental

PHQ Customer Services
Protocol and Protection
PUNJAB Stationary Division Division
Division
Agriculture & President’s

PHQ Small Finance Secretarial & Board
Legal Affairs
BALOCHISTAN Affairs Division
Division
10 Credit Audit Overseas

Computer & MIS
Offices Located 4 Operation
Division
Provinces (UK Branches)
Business Promotion, Research & Investment &

Marketing Planning Development Fund Management
Division Division Division
Training Division
Recovery Credit Processing Academies in Karachi,
Division Division Lahore, Islamabad &
Peshawar
General Services
Sports Division
Division H.O.
H.O. Lahore
Lahore
Credit &
Corporate
Division
Shares Division

REGION-WISE BRANCHES
Central Office
Khayaban-e-Iqbal, Main Clifton Road, Bath Island, Karachi-75600
Tel: (UAN) 111-110-110,
(PABX): (021)5860052
Registered Office
8 - Kashmir / Egerton Road, Lahore
Ph: (042) 6360076, 6370202
REGION WISE BRANCHES
REGIONAL OFFICE NO. OF BRANCHES

ABBOTABAD
517-Mansehra Road, Abbottabad 2201 24
Tel: 0992-334794, 334795 Fax: 0992-334762
BAHAWALPUR
Outside Farid Gate, Circular Road, Bahawalpur 63100 41
Tel: 0621-877131 Fax: 0621-876516
FAISALABAD
Sitara Tower, Mezzanine Floor, Bilal Chowk, New Civil Lines,
76
Faisalabad 38000
Tel: 041-618144, 618202 Fax: 041-617987
GUJRANWALA
2nd Floor, Chamber Plaza, GT Road, Gujranwala 52250 38
Tel: 0431-9200470,9200316 Fax: 0431-9200319
HYDERABAD 68

10/A, GOR Colony,Hyderabad 71000
Tel: 0221-784662 Fax: 0221-784345
ISLAMABAD
2nd and 4th Floor, ABL Building, Blue Area, Islamabad 44000 101
Tel: 051-2820556,2820558 Fax: 051-2823817
KARACHI
4-Banglore Town, Main Sharea Faisal, Karachi 75350 107
Tel: 021-4311129,4311130 Fax: 021-4311124
LAHORE
199 - Upper Mall, Lahore 54000 71
Tel: 042-5750227 Fax: 042-5754044
MARDAN
204 - I Sector, Sheikh Maltoon Township, Murdan 23200 35
Tel: 0931-68103 Fax: 0932-68493
MIRPUR
Main Post Office, Banks Squre(NANGI), Mirpur10250, Azad Kashmir 62
Tel: 058610-42045,44058Fax: 058610-42303
MULTAN
90- Aziz Shaeed Road, Multan Cantt 60000 63
Tel: 061-580166,510766 Fax: 061-584196
PESHAWAR
1st Floor, Statelife Building, The Mall, Peshawar Cantt 25000 69
Tel: 091-276209,278248 Fax: 091-271579
QUETTA
CC & I Building, Zarghoon Road, Quetta Cantt 87300 36
Tel: 081-821949,825114 Fax: 081-821067
SARGODHA
Liaquat Market, Block No. 01, Sargodha 40100 39
Tel: 0451-711744,700155Fax: 0451-712459

SIALKOT
Goolam Kadir Arcade, Aziz Shaheed Road, Sialkot Cantt 51300 42
Tel: 0432-273616,265045Fax: 0431-265045
SUKKUR
Minara Road, Mohammad Bin Qasim Park, Sukkur 65200 35
Tel:071-24355 Fax:071-24221
FUNCTIONS OF MANAGEMENT
The top management of ABL is performing the various

managerial functions I order to make good planning,
organizing, leading and controlling the activities to middle
and lower management. There are seven senior executive
vice presidents (SEVPs) who control these functions.
A SEVP has to control the Islamic banking, credit

monitoring, maintenance protocol and stationary,
agricultural and small finance, computer and MIS, business
promotion and marketing division, the management make
the banking policies in the light of values of Islam and they
are tying to eliminate the elements of interest and they
introduce the mark up system and up to some extent
Mudarbah and the Musharkah schemes. The credit
monitoring division emphasizes on the credit extenuation
made by the bank

among different sectors. The function is the maintenance
engineering, protocol and stationary of the bank to the PHQs
and circle and zonal offices and to the branches and also the
maintenance of the bank equipment and furniture and
buildings. Agricultural and small finance division provides
the loans to small manufacturers and the farmers in the rural
areas in order to increase the growth of agriculture and
trade. The function of computer and MIS division is to
computerize the PHQs and circle and zonal offices and as
well branches. But now-a-days majority of branches of the
bank are computerize. The other important role of this
division is to call the daily, weekly and monthly progress and
compile in the prescribed manner and send to other divisions
e.g. financial and audit division for the analysis purpose.
The second SEVP manages and controls the activities of
human resources and inspection, customer services,
research and development, credit processing division and
also manages the affairs of the president and board
secretariat office. The task of this division is recruitment of
adequate and skilled staff for the bank. This division also
keeps the individual record of each staff member and
promotes the skilled and efficient staff to next grade with
proper rules and regulations.
The audit inspection division audits the circle and zonal

offices time to time and find out regulation and take the

necessary corrective actions and also inform to the top
management about the “working of circle and zonal offices.”
The customer services division makes the policies in

order to increase the bank dealing with general public. For
this purpose they issue the credit cards of ABL in 1996 and
also issued the travelers cheque for easy transfer of money
from one place to another place.
The credit processing division with the help of

monitoring and recovery divisions forms the policies for the
sanction of loan and also sets the limits of loan in different
sectors of the economy under the guidance of State Bank of
Pakistan.
The third SEVP is head of the international division,

investment and funds management, environment protection,
training division, legal affairs, sports division and share
division.
The function of the International division is to provide

the banking facilities of ABL in UK and these are working

successfully. They motivate Pakistanis in UK to send the
foreign exchange through the local bank of Pakistan. The
finance division’s function is to anticipate, acquisition of
funds and also allocation of these funds in the profitable
channels. This division also prepares the budget of the bank
and also checks the performances of the branches with the
help of the weekly and monthly reports. This division also
provides the guidance to the audit division.
The success of any organization depends upon the

trained and efficient employees. For this purpose the
function of the training division is to provide the training to
exiting and newly appointed staff in the PHQs. This division
provides the modern banking training to the staff. For this

purpose they established academies in different provinces
and different cities. They also trained the managers and
other clerical staff. The refresher courses are also provided
to the staff according to their skills and seniority basis and
the nature of work. The function of the legal affairs division
capes with the help of recovery division controls all the legal
affairs of the bank with respect to the recovery of loan.
The sports division makes arrangement of games and

the tournaments of cricket and other games. The players of
ABL also participate in Wills Cup cricket tournaments.

All the PHQs of the bank are supervised by SEVP. They
also receive the information and regulations from the
relevant division and also send the suggestions to the
relevant division for improvement. The PHQs controls the
activities of circle and zonal offices, and the circle and zonal
offices control the branches which are falling in their
respective goals.
FIELD OF ACTIVITIES
The functions performed by the ABL are divided into the

following departments.
1. Deposits Department
2. Clearing Department
3. Advance Department
4. Foreign Department

5. Bills Department
6. Accounts Department
7. Remittance Department
1. DEPOSIT DEPARTMENT
The function of deposits department is to collect
deposits from customers. Following types of deposits are
offered by Allied Bank.
i. Current Deposits
ii. Saving Bank Deposit
iii. Profit and Loss Sharing Deposits
iv. Fixed Deposits
v. Call Deposits
vi. Short notice term Deposits
vii. Foreign currency deposit
i. Current Deposit
In this type of account the customer is allowed to deposit
and withdraw money as much and when he likes. He
performs this function for several times a day. This facility
greatly appeals to the businessmen.
Features

• Open with a minimum amount of Rs.
• No profit is paid and operation is allowed for any
number of cheques.
• Cheque book provided comprises of 50 leaves.
Rs. 2.00/= is charged per leave.
ii. Saving deposit:

These types of accounts are offered to those people who
want to make small savings. This type of can be opened with
Rs:200. in this case deposit can be only made up to a costing
amount and withdrawals are allowed twice a week .
iii. Profit and Loss Sharing Accounts
These types of accounts are one step towards the

Islamization of Banking system in the Pakistan. Under such
types of accounts the bank allows no interest to the
customers. The executive board of the bank declares profit
or loss every year. PLS saving account having a running
minimum credit balance of Rs. 100 would be eligible for
sharing profit/loss of the bank. The rate of profit or loss on
PLS saving accounts shall be determined by the bank at the
close of each half year, in its sole discretion and the banks
decisions shall be final and binding on the PLS account
holder.

iv. Fixed Deposit
In the type of account a certain amount is deposited for
a certain, period such as six-month, two years or longer. A fix
deposit receipts is issued in the same of the depositor. The
officer incharge and the bank manager sign the receipt. A
notice is given to the depositor requesting the depositor to
withdraw his money or to renew this deposit. The interest
allowed on fixed varies with the period for which the deposits
are made.
v. Call Depostis
Call deposits are the sorts of deposits, which are

deposited with the banker against any tender. This is without
interest deposits, this may be with interest provided the
depositor has agreed to keep its amount with the banker for
some fixed period.
vi. Short Notice Term Deposit
This kind of deposit is for a short period. The depositor

may withdraw his deposit at any time by giving seven days
notice to the banker. In this type of deposit facility the trader
is allowed to withdraw his amount with interest of the
deposited period.
vii. Foreign Currency Deposit:

Foreign currency account is opened by depositing
foreign currency. In ABL, you can open foreign currency
account in:
1. Us Dollar
2. Pound Sterling
3. Japanese Yen
4. Euro
2. CLEARING DEPARTMENT
Every bank acts in two way i.e.
1. Paying Bank
2. Collection Bank
Here in theory there is 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 though the bankers
clearing house wherever it is established.
Clearing House
A clearing house is the place where representatives, of

all the banks get together for the purpose of off setting the

inter bank indebtedness arising from the transfer of deposits
by a customer of a particular bank to another bank.
Advantages of Clearing House
The advantages are manifold. It prevents the cost and

waste involved in collection each and every cheque and
claim. Which a banker holds against another, across the
counter with all the danger of loss in the transit incumbent
upon it. Great economy is also achieved in the employment
of liquid cash by setting the difference by simpler transfer of
credit from one account to another,
there by minimizing the necessity of holding large wash

balances, clearing house works under the control of State
Bank of Pakistan. A banker has no legal obligation to collect
cheque drawn upon other banks for the customers, though
modern banks have assumed this important function of their
own choice. Therefore, it is very important that since they
have assumed this function, the banker should be very
careful in their performance, otherwise they will face more
difficulties. So, if they provide this facility when the cheques
are crossed.
Functions of Clearing Department
The following are the main functions of clearing department.

1. To accept transfer deliveries and clearing cheques from
the customer of the branch and to arrange for their
collection.
2. To arrange the payment of cheque drawn on the branch
and given for collection to any other branch of Allied Bank
of Pakistan or any other members, or sub-members of the
local clearing house.
3. To collect amounts of cheques drawn on members, sub-
members of the local clearing house, sent for collection by
those Allied Bank Limited branches which are not
represented the local clearing house.
Procedure of depositing cheque in Clearing

Department
Whenever a customer wants to deposit cheque, etc, he

fills a pay in slip and hands it over the counter along with the
instruments he wants to deposit with bank. As far as
possible, the customer desire that on of the staff member fill
in a slip for him, he should be obliged promptly.
Types of cheques collected by clearing department
1. Transfer Cheques

Transfer cheques are those cheques, which are collected and
paid by the same branch of bank.
2. Transfer Delivery Cheques
Transfer Delivery cheques are those cheques, which are

collected and paid by two different branches of a bank,
situated in the same city.
3. Clearing Cheques
Clearing cheques are those cheques in which the payee

(Person who deposit cheques for collection) and the drawer
of a cheque maintain the account with different banks.
Scrutiny of Cheque
When the cashier receives the cheques, which are to be

deposited for clearing purpose the following points must be
verified.
1. The instrument should be neither stale nor post dated.

2. If the instruments is crossed, not negotiable, it can be for
the third party (can be endorsee of an order cheque, or a
holder of bearer cheque)
3. The instrument should not bear any unauthorized
alteration.
4. The amount in words and figures should be the same.
5. The instruments should be drawn on a member, or any of
local branches.

6. If the cheque is crossed “Account payee’s” “Account
payee only” or “Payee’s Account”, it should be accepted
for collection for the payee’s account.
7. The cheques or drafts should not be crossed specially to

any other bank.
8. A cheque payable to one of the joint account holder should
not be collected for the joint account without the payee’s
endorsement, or consent.
9. A cheque payable to a firm should not be accepted for
credit to a partner’s account.
10. A cheque drawn by a customer in the capacity of an
agent. Attorney, or Manager of his company or firm,
should not be collected for credit to his personal account.
11. Pay orders, although negotiable, should not be collected
for third parties.
12. Do not collect an instrument in the account of an agent,
or of the servant of the payees of endorsee of the
instruments.
13. Mail transfer Receipts pay ships and treasury receipt
should not be collected for persons other than the payee.
14. If an account is new, or the balance or operation of the
account is not satisfactory, satisfy yourself about the titles
of the customer to the instruments before the titles of the
customer to the instrument before accepting the deposit.

15. Brach agent’s permission should be obtained before
accepting a third party cheque or draft for creditor the
account of the staff member.
16. If the payee is a government department, government
official, or a trust account, the instrument cannot be
collected, but of the payee’s account.
17. If the payee of an instrument is Allied Bank Limited, it
can collected for credit of the drawer’s account, or the
amount of the instrument may be utilized as desired be
the drawer in writing.
18. Cheque payable to a trust, account should not be

collected for credit to at trustee account.
19. All the endorsement should be regular, and on
endorsement should be missing. After the cashier
scrutinizes the cheques he must also scrutinize the pay in
slip.
Scrutiny of Pay-in-slip
The following steps are involved in the scrutiny of pay in

slip.
1. On both the counterfoil and the pay in slip following should
be checked.
I. Date of Deposits
II. Account number

III. Title of the account
IV. The cheque number and the drawer bank name.
V. Total amount in words and figures
2. Customer should use separate pay in slip for transfer,
transfer delivery, and clearing cheques.
3. The amount noted should be the same as the amount of
the instruments, and the amount in words and figures

should be same.
Procedure after scrutinizing
After scrutinizing the cheques and other deposit

instruments and paying slip at the counter the following
procedure is under taken by cashier if he is satisfied.
1. Fixing the stamp.

2. Scrutiny, and receipt by the authorized officer
3. Returning the counter foil to the depositor.

4. Certificates and confirmation by the officer-incharge of the
department.
5. Separating the cheque into transfer delivery, and clearing
cheque.
Procedure Of Clearing At Clearing House
The mechanism of setting inter bank indebtedness

operates as follows.

Clerks representing various banks meet at a common place,
The Clearinghouse, everyday. Every clerk then delivers to
the others the cheques and the other claims which their
respective banks hold against his banks hold against his
bank cheques and other documents dishonored will be
returned to the representative of the respective bank. The
various amounts of receipts and deliveries are now added up
and a balance is struck there in and the final settlement is
effected by the supervisor of the clearing house by
transferring balance kept and the central bank by these
various clearing banks.
3. ADVANCES DEPARTMENT
The function of advances department is to lend in the
form of clean advances, against promissory notes, as well as
secured advances against tangible and marketable
securities. According to the Prudential Regulations of the
State Bank of Pakistan, No bank can issue a clean advance of
more than Rs. 100,000/-. The bankers prefer such securities
that do not run the risk of general depreciation due to
market fluctuations.
SECURITIES
Common Securities for the banker’s advances are as under:

• Banker’s Lien
Lien is the banker’s right to withhold property until

the claim on the property is paid. The banker’s look at their
lien as a peotection against loss on loan or over draft or any
other credit facility. In ordinary lien the borrower remains
the owner, but the possessions of the property is with the
creditor. Unless it is the banker’s lien there is, in most cases,
no right of sale.
• Guarantee
When an application for advance cannot offer any

tangible security, the banker may rely on personal
guarantees to protect himself against loss on advances or
overdraft to the applicant.
• Mortgage
A mortgage is the transfer of an interest in specific

immovable property for the purpose of security the payment
of money advanced or to be advanced by; way of loan, and
existing or future debt, or the performance of an
engagement which may rise to a pecuniary liability. The
transfer is called a mortgagor, the transferee a mortgage.
• Hypothecation
When property in the shape of goods is charged as

security for a loan form the bank the ownership and
possession is left with the borrower, the goods are said to be

hypothecated. The essence of hypothecation is that neither
the property in the goods not the possession of them are
possessed by the lender, but the security is granted by
means of letter of hypothecation, which usually provides for
a banker’s charge on the hypothecation goods.
• Pledge
In a pledge the ownership remains with pledge, but the

pledgee has the exclusive possession of property until the
advance in repaid in full. While in case of the default the
pledgee has the power of sale after giving due notice.
• Promisory Note
Sometimes promissory note is also accepted as a

security, “A promissory note is an instruments in writing
containing an unconditional undertaking signed by the
maker, to pay ;on demand or at a fixed or determinable
future time a certain sum of money only, to or to the order of
certain persons, or to the bearer or the instrument.” A
promissory note is incomplete until has been delivered to
payee or the bearer. Moreover, the sum promised in a
promissory note may be made by two or more makers who
may be liable there on jointly and severally.
Types of Advances

The advances which are given by Allied Bank Limited are
as under:
I. Demand Finance:
Demand Finances are those advances, which are

allowed in lump sum for a fixed period and payable lump
sum or gradually in installments. Its types are as under
a) Demand Finance (Packing Credit)
b) Ordinary Loan (Demand Finance to Students)
c) Demand Finance for staff
II. Running Finance
Running finance (old name overdraft) are advances,

which are generally given to meet temporary requirements
of customers. A good customer uses the bank’s running
finance limit as mean of protecting its credit in market and
as a line of security defense to meet his commitments. The
types of running finance are as under.
a) Unsecured
b) Secured
III. Cash Finance
These types of loans are given against following
a) Against locally manufactured goods

b) Cash finance against Rice and Paddy
c) Against pledge
d) Against Commodities
Besides advances against the above commodities

parties of other commodities may reach to the bank
for the purpose of loan.
e) Against trust receipts
To obtain adjustment of an overdue account or to

facilitate the borrower to sell the pledged goods it is
some times necessary to deliver a portion of the
goods; against the trust receipt and promise cfrom
the borrower to deposit against trust receipt the sale
proceeds with bank.
IV. Finance against Foreign Bills
This advance facility is available to both local and

foreign bills
1. FAFB (local) advance against Railway receipts

and truck receipt, a company with bills of
exchange and invoices, are given under this
head.

2. FAFB (foreign) advances against foreign bill
covering bills of exchange, bills of lading airway
bills of exchange etc.
V. Agricultural Loans
Loans to the farmers with holding up to 25 acres for

meeting their short term, medium and long term agricultural
production requirements, such as:
1. Agricultural inputs
2. Tube Wells
3. Live Stock Framing
4. Land improvements
VI. Industrial Loans
Besides the short-term loans which play an important

part in working capital requirements, medium and long-term
loans are also given to industrial sector for purchases of
machinery and other capital nature goods for their working.
4. Foreign exchange Department

International trade is growing and with the growth of
international trade the importance of this department
increases . it is very important for developing countries . it
he need of time that the country should conserve its
resources.
MEANING OF FOREIGN EXCHANGE

The term foreign exchange refers to the pricciple that
determine the rate of exchange. It cover the following three
sences
1. The mechanism or system by which international

obligation or indebtedness are be fulfilled
2. the currency of one countrty is exchange for the other

country
3. the principle on which ht epeople of the world settle their

debts to one another
FOREIGN EXCHANGE TRANSACTION
The foreign exchange transaction are usually of three types .
1. current accopunt transaction
It is classified are as under
a .Marchandise transaction
this consist of visible imports and exports i.e the

purchase of goods from abroad and sale of goods
to abroad
b. Service transaction
these represent the inward and outward payment

in respect of shipping ,insurance, banking and
travelers services
c. Unrequited transaction

It indicate the receipts and payments from foreign
countries in shape of such items as home
remittance by work abroad, gift and aids etc
2. Capital account transaction
It include
a. Long term cspital transaction
Those transfers whereby resident of one country

acquire securities and tangible asset in foreign
countries in order to earn profit in future
b. short term capital transaction
those transaction which moves relative quickly

from country to country
i) for speculative purpose
ii) to take dvantage of difference in interest

rate
iii) as balancing items where a country has a

debt or credit balance
5. BILLS DEPARTMENT
The bills department receives the following types of
different bills.
I. Inward Bills for Collection:

These are bills or cheques etc. which is collected
locally. These are received from outstation branches banks
and parties.
II. Outward Bills for Collection:
There are four types of outward bills for collection

which are explained in the following
a) Clean Bills
These are negotiable instruments, drawn on

outstation branches, bills sent for collection on behalf of
the customers i.e. cheques, drafts or treasury bills etc.
b) Documentary Bills
These are bills accompanied by documents such as

R.R.T.R. Bills of lading etc. having title to goods,
collected by the bankers on behalf of their customers.
c) Pay Slip
Pay slip is an instrument in receipt, issued by the

bank in the following cases:
• On account of expenditure incurred by the

bank.
• On account of refund of a payment to a

persons under certain circumstances.

d) Pay Order
Pay order is issued to other banks for collection of

payments as said.
III. Demand Draft:
It refers to the payment of money on demand of the

holder of draft. Demand draft includes DD issues and DD
payable.
6. ACCOUNTS DEPARTMENT
Usually accounts are maintain in two ways
1 . Journal system
some commercial industrial institution adopt journal system.
In journal system entries are reported in journal books and

posted to ledger
2. Vouchers system
Voucher system is used for ever transaction. Voucher have to

be prepare in cash or in transfer or in clearing. The sheet
upon which these voucher are summaries trasaction wise
and consolidated into a figure is checked supplementary. Its
type are as under

a) debit supplementary
b)credit supplementary
bebit supplementary is used for debit vouchers & credit for

crdit vouchers books and reeeeegister are maintained by
bank as follow
i. general ledger
ii. statement of dailey affairs
iii. cash book
iv. transfer book
v. income and expenditure ledger
7. REMITTANCE DEPARTMENT
Home Remittances
The bank having a network of above 900 branches all

over the country, undertakes to provide safe and instant
payment of remittance from expatriates routed through
designated foreign exchange companies and correspondent
banks with whom special arrangements have been made in
this regard. Through the Allied Express Service, ABL ensures
that beneficiaries accounts in ABL branches are credited

within 48 hours of receiving home remittance information
from overseas.
Inter Branch Remittances
Allied Bank can transfer funds to the remotest part of

the country for payment or credit to the customer himself or
a third party , through telegrams, telex for payment, credit
on the same or next day. Telegraphic transfers can also be
made abroad in foreign currency.
Remittance department deals with the following

instruments used for remittance purposes
Mail Transfer:
When a customer requests the bank to transfer his

money from one branch of bank to another branch of the
same bank or from one city to another city to the same bank
or any other bank, customer fills the form given by bank. If
the customer has an account with that amount as mentioned
in the application form then concerned officer will undertake
the following procedure to make the mail transfer complete.
1. Branch Mail transfer form

2. Receiving Branch Register copy
3. Issuing branch register Copy
4. beneficiary advice

5. advice to customer
In case where the customer is not account holder of the

bank then the customer will have to deposit the amount
which he wants to transfer under Mail. Then the above said
procedure will be done.
Telegraphic Transfer:
This type of transfer is simple. After filling the

application form the concerning officer shall fill the
telegraphic transfer form. Then it is sent to the required bank
which on receiving it immediately makes the payment to the
customer and afterwards the voucher are sent to that bank
by ordinary mail.
Demand Draft:
We can differ these type of drafts in two more types,

which are explained as under
a. Local Demand Draft:
Demand draft is just like cheques and issued when

the customer wants to take cash with him personally.
The idea behind is to avoid the risk and burden of
currency notes in huge quantity. Demand draft can
easily be handled whatever amount it has and the
money can easily be taken from the bank when it is
presented. In fact, the bank persuades the customer to
transfer money by drafts and avoid the risk of frauds

involves in MT and T.T. Draft is only issued when the
bank knows customer and bank has the confidence in
him
In case of transfer of money by drafts, the customer has

to fill an application form. Then the concerned officer
fills the following forms:
1. Customer’s advice
2. Customer’s debit form
3. Register copy
4. Cover Advice
A foreign bank uses the cover advice if draft is issued to

National Bank of Pakistan.
b. Foreign Demand Draft:
The foreign bank only uses the cover advice if draft is

issued to National Bank of Pakistan. Foreign Demand
Draft is just like the demand draft. The only difference is
that a bank issues Foreign Demand Draft to the bank of
another country. It requires foreign exchange and it
involves seven forms, which are to be filled.

OTHER PRODUCTS AND SERVICES
Allied bank of Pakistan provides its customers with

various products and services, to cater their needs of
investments, and other social or business requirement.
These products and services offered by bank are as follows.
1. Allied Tahaffuz Deposit Scheme
 Brings unparalleled life insurance cover along with

profit.
 Minimum deposit amount to Rs. 50,000/= or multiples

thereof. Insurance cover upto Rs. 5,000,000/=.
 Competitive rate of profit.
 Payment of profit on monthly basis. Automatic renewal

on face value.
 Life insurance upto 5 times of your deposits amount

with no extra cost.
 Premium shall be paid by the bank.
 Eligibility age is 18 to 64 years.
 No medical examination is required for
 Deposit upto Rs. 500,000/= and age upto 60.

 Deposit upto Rs. 100,000/= and age above 60 and upto
61.
 Allied Tahaffuz Deposit Certificate cceptable as

collateral.
2. Master Cards
Allied Bank master cards helps to pay with out the

complication of cash and cheques.
Convenience at no extra cost
It doesn’t cost anything if we pay in full within the due

date, but if decide to spread out payments over several
months a service charge @2.5% per month is charged.
Allied Bank master card is safer than cash and simpler than
cheques.
How the Allied Bank Master Card works
We have to be an account holder with the Allied Bank to

apply for the Allied Bank. Master card which will be available
for an initial fee of Rs. 2000/= (Rs. 500/=membership fee +
Rs. 1500/= annual fee). Once we obtain card, we simply
present it at shops, supermarkets, hotels, pharmacies,
nursing homes, restaurants, petrol pumps and hundreds of
other establishments which display the familiar master card

sign throughout Pakistan and abroad. Once purchases are
made, we sign a voucher and that’s it.
Billing is easy too
Every month you will receive a statement showing

details of transactions, outstandings and the minimum
amount due. The statement will also give the last date for
payment-so you can avoid paying service charges.
Payment options
Settle in full within 15 days of statement date. Pay just

the minimum payment required. Service Charges are
calculated on a daily product basis on extended credit (much
like an overdraft) @ 2.50% per month.
Mimimum payment requirement
In order to avoid disruption in use of the card, it is

essential that at least minimum payable amount of the bill is
paid regularly. In case the required payment is not received
the operation of the Master Card is automatically, suspended

by the system. In such case, the card is activated after
receipt of overdue payment only.
3. All time banking
Allied Bank is now introducing the AlliedCash+ also

referred to as ATM card. You will now have the convenience
of withdrawing cash from any of our multiple ATMs ("All-Time
Banking" locations) conveniently located in major cities like
Karachi and Lahore at any time of the day or night even on
closed days/holidays. Other services include customer being
able to inquire about the balance of his/her account or
printing an abbreviated (mini) statement showing the most
recent eight transactions up to the previous working day.
How to obtain
In order to obtain an AlliedCash+ Card, you simply have

to fill out the prescribed Application form available at
selected Allied Bank Branches in Karachi and Lahore. The
duly filled form should be handed over to the Manager of the
Branch where you are maintaining your account. Non-
account
holders would first have to open an account with Allied Bank

to have access to this facility. You can feel absolutely safe
about your AlliedCash+ Card because it can only be used
with the Personal Identification Number (PIN) which is given

to you by the bank. As a security measure, you should keep
this number absolutely Confidential.
How to use
The instructions appearing on the screen of ATMs have

been designed to help the customer in using the facility.
Graphical representations have been employed, where
appropriate, for ease of understanding the following simple
guidelines would also be useful.
Inserting the card
Please insert your AlliedCash+ Card in the Card Slot

located at the front of the machine. The Card must be
inserted with its face up as indicated on the machine.
Entering PIN
The PIN has to be keyed in using the Key Pad located

just below the screen. Please note that the PIN is not
displayed on the screen as it is keyed in. This is to keep the
PIN confidential from onlookers. A precaution to keep in mind
is that the Key Pad should not be directly visible to any other
person when you enter your PIN. This is easily accomplished
by positioning yourself in such a way that you stand close to
the machine directly in front of the Key Pad.

Changing PIN
When changing your PIN, you would be asked to key in

your existing PIN once, and new PIN twice to ensure that you
did not make a mistake while entering your new PIN.
Menu selection
Most of the options available on ATM screens are to be

selected by using the eight Menu keys located on the sides
of the screen, or on each side. You will notice that options
appear on the screen by dividing the screen into boxes. For
selecting the desired option, press the Menu Key next to the
appropriate box.
Fast cash and cash withdrawal
Fast Cash option allows you to select predetermined

amounts for withdrawal by simply using a Menu Key.
Choosing Cash Withdrawal, on the other hand, will permit
you to specify the exact amount (in multiple of Rs. 500 upto
maximum of Rs. 10,000) by using the key Pad below the
screen.
Cards capture
ATMs automatically capture cards that have been duly

reported as lost or have been cancelled. Similarly, if you fail
to enter your correct PIN in 3 repeated attempts, the
machine will capture the card. Also any cards unrecognized
by the ATM may be captured. In all such cases, ATM services
will not be made available. In case your Card is captured,

please contact the manager of bank branch where the Card
has been captured.
Time out
In order to provide added security, ATMs are

programmed to capture the card if the customer forgets to
take it back after a transaction. Similarly, if you forget to
take the cash within a pre-set time limit, the machine will
take it back. Typical time for recapture of the card/cash is 20
seconds. You should, however, be careful to take both your
card and the cash before moving away from the machine as
it cannot be guaranteed that the machine will recapture
them before they are taken away by the next user or a
passer by.
Out of service
Occasionally, a particular ATM may be out of service.

This would be indicated on the screen displaying the status
of the machine. Various factors could cause this condition,
which includes telecommunication problems, hardware
breakdowns, power shutdowns, insufficient cash in the
machine, etc. If you encounter an out of service ATM, please
proceed to the nearest available ATM for service.

Loss of card
In case you lose your AlliedCash+ Card or the Card is

stolen, the matter should invariably be bought to the notice
of the Bank personnel as soon as you discover the loss. For
this purpose, the Branch Manager must be notified in writing
immediately.
In continuation of ALL TIME BANKING services, with the

country wide network of 165 branches, ABL is pleased to
announce that we have enhanced ATM services by joining
the "1-Link Switch" which has following members Banks:
• ABN Amro
• Habib Bank Limited
• Askari Bank
• Bank Al Habib
• Union Bank
• Soneri Bank
The card holders of our bank will thus be able to access

member banks ATMs for balance inquiry and can withdrawal
simultaneously vice versa. The card holder's member banks
will access our bank ATMs.
4. Allied Umrah Aasan

This unique scheme facilitates those persons, who
cannot afford to incurr the lump sum expense. It allows the
intending pilgrims to make payment of Umrah charges in
monthly installments.
• It is free of interest and markup.

• Using this scheme family, relatives and household
servants can also be sent for Umrah.
• Azmeen-e-Umrah will depart from Karachi, Lahore and
Islamabad. Umrah departure can also be arranged from
Peshawar based on number of Aazmeen.
• Best services will be provided during the stay at the
holy city. Tour operators will guide every group of
Azmeen-e-umrah.
• Azmeen can also apply for ABL Master Card.
• Aazmeen will be chosen through a monthly draw.
• All applicants will be definitely sent for Umrah.
• Around 2500 Azmeen will be sent for Umrah every
month.
• Lucky winners of the draw will be duly informed by their
respective branches.
• Total package for Azmeen from Karachi will be Rs.
30,000. Azmeen from Lahore and Islamabad will have to
pay an extra Rs. 3,000 for Airline fare.
• Umrah package will be of 10 days duration. The charges
include Airline return ticket, Visa fee, family
accommodation and traveling within Saudi Arabia

(Jaddah to Makkah, Makkah to Madina and Madina to
Jaddah).
• Application for whole Family/Group will be filed through
a single Application Form. All applicants of a
family/group will be sent for Umrah even if only one
member of that family/group is declared successful in
the draw.
• Due to any reason if Umrah Applicant needs to
withdraw his/her application, he/she will get a refund of
all money deposited through instalments till that time.
• At the time of submitting the application Azmeen will
have to deposit Rs. 2,000 per person as first
installment. Rest of the money will have to be deposited
through monthly installments of Rs. 2,000 per person
on every 5th day of the month.
• If an Umrah Applicant wins in the draw he/she will be
required to pay the balance amount through monthly
installments on returning from Umrah.
• Azmeen will have to submit a copy of their NI Cards and
Passports with the application.
• Applicants will deposit the monthly installment using
deposit slips till 5th of every month. Defaulters will not
be included in the draw.
5. Hajj Services

The Bank serves the intending pilgrims by helping them
in performing this religious obligation. The Hajj forms and
other related services are provided by the bank. However,
the terms and conditions for accepting the Hajj forms from
intending pilgrims are in accordance with the Hajj Policy
announced by the government, each year. Hajj applications
are available with all branches during Hajj season,
immediately after the Hajj policy is announced by the
Government of Pakistan.
6. Lockers
Allied Bank Lockers are available in three different sizes

Small, Medium and Large on a yearly fee. Locker holders
need not have an account in the Bank.
7. Rupee Travellers Cheques
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 travellers cheques are introduced
by banks in order to protect against any contingency.
8. Utility Bills
All branches of the Bank collect utility bills of electricity,

gas and telephones. For convenience of the customers,
Utility Bills are collected by the branches during banking
hours and also in the evening-banking on all working days.
Bills can be paid through cash or cheques. Consumers may
drop bills with

crossed cheques into a drop box available at the branches
under "Cheque Drop-in" system.
9. ALLIED MAHANA AMADANI SCHEME
Salient Features
1. Minimum investment Rs. 25000/-
2. Maximum investment Rs. 1,000,000/-
3. The maturity period for Mahana Amadani Certificates is

5/10 years
4. Investment can be done by :
I. Individuals singly or jointly
II. Proprietary/partnership Concerns or Companies in

their names
5. It carries special attraction for:
I. Retired Civil & Armed Forces Employees
II. Windows and children being brought up by

guardians
III. Expatriates looking for permanent monthly income
Rate of Return

The estimated minimum rate of profit will be 1166/- per
month
The monthly return on various amounts would be as follows
Amount Monthly Profit

Rs. 1,000,000/- Rs. 11,666/-
Rs. 5,000,000/- Rs. 5,830/-
Rs. 100,000/- Rs. 1,166/-
Rs. 50,000/- Rs. 583/-
Rs. 25,000/- Rs. 291/-
If the profit declared by the bank is higher, additional profit
shall be paid to the depositors
Mode of Payments
I. You will enjoy the facility of receiving the profit through

Payment Order/Demand Draft/Postal Money Order every
month of your door steps
II. At your discretion you or your authorized receivers can

also receive the profit through Cash/Pay Order, Demand
Draft
Since the profit shall be payable by the branch where you

will open your account under the “Allied Mahana Amadani
Scheme”, your profit can also be credited to your account
every month
10. ALLIED SUPER PREMIUM TERM CERTIFICATES
Salient Features

1. Allied Super Premium Term Certificates are of the
following denominations.
Rs. Rs.
10,000/- 100,000/-
Rs. Rs.
500,000/- 1,000,000/-
2. Certificates of Rs. 10,000/- have been issued to
accommodation customers investing in fractions but above
Rs. 100,000/-.
3. Super Premium Term Certificates have been categorized

as A, B and C referring to quarterly, half yearly and yearly
profit payment respectively.
4. Super Premium Term Certificates will bear the names of

respective account holders
Rates of Profit
Allied Super Premium Term Certificates carry the profit of the

estimated rate of:
151/2% Per annum on quarterly

payment
16% Per annum on half yearly
payment
161/2% Per annum on yearly
payment

1. Net payment on an investment of Rs. 100,000/- is being
illustrated hereunder. Similar pattern will be followed in
case of other sums of investments:
Principal Amount Rs. 100,000/- Estimat

ed Profit
Quarterly Payment @ 3,875/-
151/2% PA
Half Yearly Payment @ 16% 8,000/-
PA
Yearly Payment @ 16,500/-
161/2% PA
Mode of Profit Payment

The valued customers will enjoy the facility to receiving
their profit through Cash/Postal Money Order/Demand
Draft/Pay Order or by transferring it to their usual
Current/Saving Bank Account as per their written
instructions, and addresses provided by them.
11. ALLIED OVERSEAS SAVERS ACCOUNT
Overseas Pakistanis are playing an important role in the

economic development of the country. Allied Bank is always
greatly concerned about the due recognition of these
stalwarts for making a singular contribution to the progress
and prosperity of the nation. We are always in the lead to

offer greater banking facilities to Pakistanis working
overseas.
Most of our schemes pay special attention to the fact

that overseas Pakistanis, working their hearts out, should get
all the facilities possible for not only remitting their earnings
home but also getting better value of their savings.
The beneficiaries receiving the remittances through Allied
Overseas Savers Account will not only be able to earn a
higher rate of profit but the remitters will also feel that the
money being sent to their kith and kins will remain safe,
secure and growing
Salient Features
1. This is the easiest, fastest and safest way of

sending remittances home.
2. The amount in your account will get 3% extra

profit in the first year.
3. Account holders get all the professional services

and facilities offered by Allied Bank.
4. Money saved from domestic expenses not only

remains safe but also earns profit continuously.
5. Unlike other Savings Accounts, you can withdraw

as much money as you want from Allied Bank

Overseas Savers Account without giving any advance
notice.
Remittances can be received in any currency. The amount
received is converted into Pakistani Rupees on the
conversion rate applicable on the date of receipt and
deposited into your account
12. YOUNG SAVERS CERTIFICATES
1. Children and individuals of all age groups are the

investors/customers of the scheme.
2. There is no age limit.
3. The children will open and operate their accounts through

their parents/guardians.
4. The investors will be provided certificates against their

investments.
5. The certificates shall be of the following denominations.
6. Rs. 1000/- 7. Rs. 3000/- 8. Rs. 5000/-
9. Rs. 10. Rs. 11. Rs.100,00

10,0000/- 50,000/- 0/-
12. Maturity period of the Certificates will be 10 years.

The average expected rate of profit for 10 years will be 15%
13. ALLIED KARSAZ SCHEME

Allied Bank moves a step forward towards interest free
banking by introducing Allied Karsaz Scheme. The aim of this
scheme is to provide an opportunity to the depositors to take
advantage of a real Riba Free economic environment and
avail Interest Free and Mark-up Free Finance at the time of
need to meet their business, trade and agricultural financial
obligations.
1. Prospective client who will maintain a return free deposit

for at least 3 months shall be eligible to avail interest
free/mark-up free finance.
2. Deposit amount, Rs.100,000/- and multiples thereof.
3. Minimum deposit period, 3 months with automatic rollover

facility.
4. Premature encashment allowed, without any

penalty/charge.
5. Eligible depositors may avail finance individually or for the

companies wherein they have financial interest/stake.
6. Minimum deposit period for eligibility of finance, 3 months.
7. Maximum period of finance, 6 months.
8. Maximum period to avail finance 12 months from the

maturity of deposit.
9. Every month (30 days) completed by the deposit shall be

taken into accounts for calculation of entitlement of
finance.

10. Finance will be allowed to the eligible clients, only on
providing adequate securities acceptable to the bank and
fulfillment of other requirements.
11. Finance proposal processing fee Rs. 100/- (non-

refundable) plus documentation cost on actual basis.
12. In case of default/delay in repayments, penalty @

0.055% per day (20.075% p.a.) to be placed in charity A/C.

WORK DONE
I started my internship from 1st July to 31st August 2003

at Allied Bank of Pakistan Civic Centre Karim Block Allama
Iqbal Town Lahore. The work done in different departments
is as follows
 General Department
 Accounts department
 Cash department
 General Department
I spend my 1st month in this department and I
performed different tasks which can be divided into different
classes discussed as under
1. Token Book
2. Cheque Return Register
3. Mail Inward Register
4. Mail outward Register
5. Clearing Inward Register
6. Clearing outward Register
7. Sorting of Cheques

8. Account Opening Forms
9. Vouching
Token Book
On my 1st day of internship I maintained this book. The

procedure for the maintenance of the book is here after.
When a customer of a bank wants to withdraw any amount,
he draws a cheque and gives to relevant officer who enters
this cheque in token book. The officer notes the kind of
account, number of cheque, account number and amount of
cheque. The officer stamps the cheque and gives the
relevant token to the customer.
On the credit side of the token book the officer records

all the receipts of the day, and a the end of public dealing
time the token book is closed and total of both sides must
tally with cashier’s book. I performed this duty for 10 days.
Cheque Return Register
When there is not enough balance in the credit of the

customer or the signature of the account holder does not
tally with the specimen signature available in the branch the
cheque is returned to the cheque holder and an entry is
made in the Cheque Return Register after taking the
signature of the holder. This book is maintained
simultaneously with the token book.

Mail Inward Register
The 11th day I was assigned with the duty of maintaining

the mail inward register and after that it was my duty to
record the daily inward mail in this book. In this register any
letter of instruction received by any branch is recorded. In
this register serial number, from which the mail is received,
object of mail and date of receiving is also written.
Mail Outward Register
In this register the serial number, the purpose of mail,

addresses and date of letter issue to the other branches and
head office is written. This register is quite the same as the
inward register and it also was included in my daily
responsibilities from the 11th day.
Clearing Inward Register
The next task assigned to me after successfully

maintaining the token book was the clearing inward register.
The clearing inward register shows all the sums, which are
received from other branches and other banks. In this
register the serial number, date of clearing, date of
instrument issued, amount of instrument and name of other
branches and banks to whom the funds are transferred are

recorded. I performed my services to this department for
one week.
OBC Register
In the mid of third week my duty was to maintain the

OBC register. The OBC register shows all the sums, which
are received by the branches from the same bank and the
other banks on the behalf of its customers. In this register
the serial number, date of the instrument, name of drawee
(branch of same bank or other bank) and amount of
instrument is also recorded. This register contain all the
instrument received by the branch other than the cities of
Lahore, Karachi, Rawalpindi, Islamabad.
Sorting of Cheques:
This was the duty included in my daily responsibilities.

While performing this duty I had to sort all the cheques
received by the branch separately showing the nature of
account and the pay-in-slips as well.
Account Opening:
I spent one week (starting from 25th July) of my

Internship Training in Account opening. Bank’s

customers may be individuals (Single or Joint), firms
(partnership/proprietorship), Autonomous
corporations, Limited Companies, Charitable
Institutions, Associations Educational Institutions or
Local Bodies. ABL normally opens following types of
accounts.
Current account
Saving account
Brief explanation of these accounts is as follows:
Current Account:
Current A/c is basically used to meet the daily transactions.

Current account provides safety to the customer’s money,
gives the advantage for paying debts by the convenient and
safe means of sending cheques through the post thus
avoiding the trouble and loss.
Saving Account:
In case of saving accounts, account holder gets profit. In

Allied Bank of Pakistan Ltd. saving a/c is operated just like a
current a/c and there is no main difference between current
& saving account except profit.
Basic information required to open an account:

The opening of an account is the establishment of
banker customer relationship. By opening an account at a
bank a person becomes a ‘customer’ of a bank.
Following are the steps involved in the opening of new

accounts
Introduction and preliminary investigation:
Before a banker opens a new account he should

ascertain whether or not the person desirous of opening the
account is a desirable customer. The banker should
determine the prospective customer’s integrity,
respectability, occupation and the nature of business by the
introductory references given at the time of account
opening. Negligence in this informal preliminary investigation
may result in serious consequences not only for the banker
concerned directly but also for other bankers and the general
public who may be affected indirectly. In Ladbroke & Co. V
Todd (1914), the banker did not obtain introduction at the
time of opening the account, and it was construed a
negligence within Section 82 of the Bills of Exchange Act
1882.
In order to further strengthen and streamline this

process, the Federal Ombudsman of Pakistan, vide his ruling
on complaint No. II/31/5186, has directed the banks to retain
with the account opening form a Photostat copy each of the
National Identity Cards of the person desiring to open an

account as well as that of the introducer. As per these
directions, the concerned Branch Managers are required to
obtain the original National Identity Cards along with their
Photostat copies and then return the original after attesting
the authenticity of the retained copy.
Specimen Signature:
When an account is opened with a banker customer

gives the banker a specimen of the form of signature which
would appear on all his cheques to express his authority for
the payment of cheques drawn on his banker. This specimen
is taken generally on a card specially designed for the
purpose, and rule for the customers, full name, and account
number are entered on it.
If the we have reasons to doubt the genuineness of a

signature, we should either get it confirmed for his
satisfaction or return the cheque with the remark ‘Signature
differs’. Because If the signature of the customer is forged
the banker cannot escape his liability because he has acted
on his customer’s mandate.
Illiterate Person:

A person is not disqualified to become a customer of the
bank merely because of his illiteracy. The extra precautions
to be taken in this case are as under:
As a matter of Rule I used to obtain 2 or 3 passport size

photographs of the prospective customer. One copy is pasted
on the account opening form, the other copy is pasted on the
specimen signatures card, and the third copy of photograph
is pasted with the cheque book.
Instead of specimen signature, the left hand thumb

impression from male, and right hand thumb impression
from female account holders is taken on the cards as well as
on the account opening form.
An illiterate customer must come personally to operate his

account, because he must put his thumb impression on the
cheque in the presence of the bank officer attesting his
thumb impression.
An illiterate account hold should be advised not to issue

cheques payable to other persons either for cash payment or
for collection and clearing.
Vouching:

The other responsibility of the accountant other than
account opening is of vouching different instrument received
in the branch i.e. DDs, TTs, DACs etc. While performing
duties with the accountant I helped him in the preparation of
vouchers as well.
 Accounts Department
In the second month I served for the accounts
department. Work done in accounts department is divided
into different classes
1. Salary Register
2. Demand Draft Issued Register
3. Demand Draft Payable Register
4. Telegraphic Transfer Issued Register
5. Telegraphic Transfer Payable Register
6. DAC Register
7. Cheque Book Issue Register
Salary Register
At the start of the second month the accountant told me

the procedure of maintaining salary register at the end of the
month. In the salary register the salaries of all the

employees are recorded. In salary register the basic salary
and all the facilities are recorded e.g. accommodation,
conveyance, utilities and provident fund recorded. In salary
register the amount of tax deducted at source on salary are
also recorded.
Demand Draft Issued Register
I worked in the department for another 7 days and for

these days I maintained different registers. The detail for all
of these is given ahead. On the second day I maintained the
DD issued Register. When a person wants to transfer some
amount form one place to another place he can transfer it
through draft. The branch orders to another branch or bank
to pay certain sum of money according to the apparent
tenure of the instrument. The bank charges commission
against this facility. In demand draft issue register the date
of draft issue, name of payee, name of drawee and the date
of issue is written. The bank issues the advice to the
drawee branch against the issuance of draft.
Demand Draft Payable Register
In demand draft payable register the bank record of all

the particulars of the demand draft payable. The bank only
pays that demand draft against which advices have been
received.

Telegraphic Transfer Issued Register
In telegraphic transfer issue register all the particulars

of telegraphic transfer e.g. drawee branch, the name,
number of beneficiary and amount of telegraphic transfer are
recorded.
Telegraphic Transfer Payable Register
When the branch receives the advice from other bank it

also records it in telegraphic transfer register with all the
particulars e.g. date, name of drawee, amount and name and
account number of the beneficiary also is recorded.
DAC Register
In DAC register the bank records all the relating matters

of deposit at call.
Cheque Book Issued Register
I maintained the cheque book register for three days in

the second month. When the customer of a bank wants to
withdraw his funds from the bank he/she uses cheque. For
this purpose he gives the application to the manager. The
officer and manager verify the application, and then the
cheque book is issued. In cheque book register the date of
issue of cheque book, kind of account, number of leaves, and
account number of the customer is recorded. The signatures

of the receiver are also taken on the cheque book issue
register.
 Cash Department:
In the last week of my internship period I performed two
duties in Cash department i.e.
Scrolling
Cashier Book
Scrolling:
Scrollng is a procedure of recording the bills received
the branch throughout the day. I made different scrolls for
different bills that include electricity, telephon, suigas and
water and sanitation. Four copies are prepared by the
branch. Out of these one is kept by the branch and other are
given to the concerned offices.
Cashier Book:
It was the final task of my duties and show my good
zeal to perform this task efficiently and effectively upto my
optimum level for the betterment of the branch. In response

I got the reward from the manager of the bank that he give
me a good party. The procedure that is adopted to maintain
the cashier book is very simple. I just enter the cheques
alongwith its particulars in the book and made a total of the
amount at each and every page and get grand total matched
with the token book.

Financial Analysis
Allied Bank of Pakistan Ltd.
Balance sheet
As on december 31, 1999
2005 2006 2007

Assets
Cash 8,601,193 7,646,937 6,316,337
Balance with other Banks 1,757,510 1,878,796 1,380,840
Money at call and short notice. 300,000 100,000 450,000
Investments 26,774,766 25,605,470 20,192,699
Advances net of provisions 55,263,762 42,719,179 36,231,357
Operating Fixed Assets 3,062,045 2,488,619 872,730
Capital work in Progress 44,246 37,472 33160
Net investments in Finance Lease 34,415 53,707 43,755
Other Assets 11,088,394 8,827,987 6,882,772
total assets 106,926,3 89,358,167 72,403,650
31
LIABILITIES
Deposits and other accounts 93,107,291 76,541,153 63,429,709
Borrowings from other bank agents 7,144,163 6,243,517 4,914,558
etc.
Bills Payable 1,073,491 1,084,151 802,367
Other Liabilities 2,588,936 2,487,440 1,741,598
total liabilities 103,913,88 86,356,261 70,888,232
1
Share capital 1,063,156 1,063,156 1,063,156
Reserve fund and Other Reserves 480,760 455,760 451,760
Unappropriate profit 1,638 16,094 502
Surplus on revaluation of Fixed 1,466,896 1,466,896 0
Assets.
Shareholders equity 3,012,450 3,001,906 1,515,418
106,926,3 89,358,167 72,403,650
31
MEMORANDUM ITEMS
Bills for collection 8,142,388 10,910,897 10,062,812
Acceptances endorsements and 18,360,244 13,354,826 13,622,536
other obligations
contingent liabilities and 0 0 0
commitments

Allied bank of Pakistan
Profit and loss account
For the year ended december 31, 1999
Particulars 2005 2006 2007
Mark up interest and discount or 7,287,4 6,059,06 5,026,7

return earned 32 0 84
Less Cost/Return on Deposits, 6,953,0 5,289,97 4,639,0
borrowing etc 06 1 53
334,42 769,089 387,73
6 1
Free commission and brokerage 358,99 426,229 361,32
7 2
Profit from dealing securities 1,172,0 1,033,31 1,130,2
40 0 42
Profit from investment securities 971,94 755,170 564,45
0 3
Dividend Income 21,791 14,401 18,398
Other operating income 995,31 607,820 1,191,1
0 76
3,520,0 2,836,93 3,265,5
78 0 91
3,854,5 3,606,01 3,653,3
04 9 22
OPERATING EXPENSES
Administrative Expenses 3,772,8 3,396,34 2,960,6
89 0 99
Provision written back and against non -53,131 -254,885 712,49
performing Advances 2
Loss from diminution value of 0 218,398 -9,649
investments
Other provisions 0 36,587 33,157
3,719,7 3,396,44 3,696,6
58 0 99
134,74 209,579 -43,377
6
Other Income 64,356 88,017 104,14
4
199,10 297,596 60,767
2
Other charges 128,00 128,004 32,001

4
Profit before taxation 71,098 169,592 28,766
Taxation – Current 60,554 150,000 335,12
5
Deferred 0 0 -
320,02
3
60,554 150,000 15,102
Profit after taxation 10,544 19,592 13,664
Unappropriated profit brought 16,094 502 338
forward
Profit available for appropriation 26,638 20,094 14,002
Appropriations
Transfer to statutory reserve 25,000 4,000 13,500
Unappropriated profit carry forward 1,638 16,094 502

Horizontal Analysis
Balance Sheet
Increase/de
Increase/de
Chang crease change
crease in
e in% in2006- in%
2005
2007
Assets
Cash 954,256 12.48 1,330,600 21.07
Balance with other Banks (121,286) 6.46 497,956 36.06
Money at call and short 200.0
notice. 200,000 0 (350,000) 77.78
Investments 1,169,296 4.57 5,412,771 26.81
Advances net of provisions 12,544,583 29.37 6,487,822 17.91
Operating Fixed Assets 573,426 23.04 1,615,889 185.15
Capital work in Progress 6,774 18.08 4,312 13.00
Net investments in Finance
Lease (19,292) 35.92 9,952 22.74
Other Assets 2,260,407 25.61 1,945,215 28.26
total assets 17,568,164 19.66 16,954,517 23.42
Liabilities
Deposits and other accounts 16,566,138 21.64 13,111,444 20.67
Borrowings from other bank
agents etc. 900,646 14.43 1,328,959 27.04
Bills Payable (10,660) 0.98 281,784 35.12
Other Liabilities 101,496 4.08 745,842 42.83
total liabilities 17,557,620 20.33 15,468,029 21.82
Share capital
Reserve fund and Other
Reserves 25,000 5.49 4,000 0.89
Unappropriate profit (14,456) 89.82 15,592 3105.98
Surplus on revaluation of
Fixed Assets.
Shareholders equity 10,544 0.35 1,486,488 98.09
17,568,164 19.66 16,954,517 23.42
Horizontal Analysis

Profit and Loss Account
Increase/
Increase/De
Change Decrease Change
Particulars crease in
in %age in 2006- in %age
2005-2006
2007
Mark up interest and discount or
return earned 1,228,372 20.27 1,032,276 20.54
Less Cost/Return on Deposits,
borrowing etc 1,663,035 31.44 650,918 14.03
(434,663) 56.52 381,358 98.36
Free commission and brokerage (67,232) 15.77 64,907 17.96
Profit from dealing securities 138,730 13.43 (96,932) 8.58
Profit from investment securities 216,770 28.70 190,717 33.79
Dividend Income 7,390 51.32 (3,997) 21.73
Other operating income 387,490 63.75 (583,356) 48.97
683,148 24.08 (428,661) 3.13
248,485 6.89 (47,303) 1.29
OPERATING EXPENSES
Administrative Expenses 376,549 11.09 435,641 14.71
Provision written back and
against non performing Advances 201,754 79.15 (967,377) 135.77
Loss from diminution value of
investments (218,398) 100.00 228,047 2363.43
Other provisions (36,587) 100.00 3,430 10.34
323,318 9.52 (300,259) 8.12
(74,833) 35.71 252,956 583.16
Other Income (23,661) 26.88 (16,127) 15.49
(98,494) 33.10 236,829 389.73
Other charges 96,003 300.00
Profit before taxation (98,494) 58.08 140,826 489.56
Taxation – Current (89,446) 59.63 (185,125) 55.24
Deferred 0 0 320,023 100.00
(89,446) 59.63 134,898 893.25
Profit after taxation (9,048) 46.18 5,928 43.38
Unappropriated profit brought
forward 15,592 3105.98 164 48.52
Profit available for appropriation 6,544 32.57 6,092 43.51
Appropriations
Transfer to statutory reserve 21,000 525.00 (9,500) 70.37
Unappropriated profit carry
forward (14,456) 89.82 15,592 3105.98

Comments on Horizontal Analysis:
• Although the bank’s total assets have increased by
23.42% in 1997-1998 and 19.66% in 1998-1999 but the
management of ABL should take notice of its balance
with other banks. ABL balance with other banks have
been increase by 36.06% in 1997-1998 but decrease
by 6.46% In 1998-1999 which is not positive sign for
the management of allied bank of Pakistan.
• The investment made by allied bank of Pakistan

increase by 26.81 in 1997-1998 and 4.57% in 1998-
1999. No doubt the investment decreases from the
previous year due to atomic blast even though the
investment in 1999 has increased by 4.57% from 1998
that is a good sign for the management of the Allied
Bank of Pakistan .
• In order to meet the expansion plans, the fixed assets

have been increasing at a continuous pace and
although that the borrowing from other banks that
represent long term liabilities have increased but there
is also a corresponding increase in the fixed assets of
the bank as well.

• The management of Allied Bank should take a notice of
the increased trend of required working capital in order
to meet the expansion plans.
• The bills payable had increased in 1997-1998 by

27.04% and have increased in 1998-1999 by only
14.43% which is a good sign that reflects
• the decreasing trend in the short term liabilities. So the

performance of Allied Bank in this field is good.
• Allied Bank has been successful in maintaining a
handsome amount of Reserve Account to meet the
emergency requirements. And the balance has been
continuously increasing for the past two years.
• The management of Allied Bank should take the notice

of the fact that the Commission and Brokerage earned
by the bank has been decreased by 15.77% from the
previous year. So the management should take active
measures to overcome this problem.
• The Dividend earned position was not satisfactory in

1997-1998 because there was decreasing trend in
Dividend by 21.73% but due to effective management

the Allied Bank of Pakistan has become able to earn
handsome dividend in 1998-1999 i.e. 51.32% which is
much more than the past years.
• The management should be careful about

Administrative Expenses which are increasing
continuously.
• Tax is a statutory requirement of the company but there

is a decreasing trend in the Tax liability of the company
it means that the management of Allied Bank is
enjoying a relief in its tax liability.
• Another reason of the low profit of ABL is that the other
incomes earned by the bank have decreased from the
previous years as well as the expenses are increasing.
So the management of Allied Bank must take notice of
the fact and it should adopt the better cost control
methods in order to eliminate the administrative
expenses in order to generate more profit.
Vertical Analysis
Balance Sheet
%age %age %age
(2005) (2006) (2007)
Assets
Cash 8.04 8.56 8.72
Balance with other Banks 1.64 2.10 1.91
Money at call and short
notice. 0.28 0.11 0.62
Investments 25.04 28.65 27.89

Advances net of
provisions 51.68 47.81 50.04
Operating Fixed Assets 2.86 2.78 1.21
Capital work in Progress 0.04 0.04 0.05
Net investments in
Finance Lease 0.03 0.06 0.06
Other Assets 10.37 9.88 9.51
total assets 100.00 100.00 100.00
Liabilities
Deposits and other
accounts 87.08 85.66 87.61
Borrowings from other
bank agents etc. 6.68 6.99 6.79
Bills Payable 1.00 1.21 1.11
Other Liabilities 2.42 2.78 2.41
total liabilities 97.18 96.64 97.91
Share capital 0.99 1.19 1.47
Reserve fund and Other
Reserves 0.45 0.51 0.62
Unappropriated profit 0.00 0.02 0.00
Surplus on revaluation of
Fixed Assets. 1.37 1.64 0.00
Shareholders equity 2.82 3.36 2.09
total liabilities and
shareholder equity 100 100 100
Vertical Analysis
Profit and loss Account
%age %age %age

Particulars
(2005) (2006) (2007)
Mark up interest and discount or return

earned 100 100 100
Less Cost/Return on Deposits, borrowing etc 95.41 87.31 92.29
4.59 12.69 7.71
Free commission and brokerage 4.93 7.03 7.19

Profit from dealing securities 16.08 17.05 22.48
Profit from investment securities 13.34 12.46 11.23
Dividend Income 0.30 0.24 0.37
Other operating income 13.66 10.03 23.70
48.30 46.82 64.96
52.89 59.51 72.68
OPERATING EXPENSES
Administrative Expenses 51.77 56.05 58.90
Provision written back and against non
performing Advances 0.73 4.21 14.17
Loss from diminution value of investments 0.00 3.60 -0.19
Other provisions 0.00 0.60 0.66
51.04 56.06 73.54
1.85 3.46 -0.86
Other Income 0.88 1.45 2.07
2.73 4.91 1.21
Other charges 1.76 2.11 0.64
Profit before taxation 0.98 2.80 0.57
Taxation – Current 0.83 2.48 6.67
Deferred 0.00 0.00 -6.37
0.83 2.48 0.30
Profit after taxation 0.14 0.32 0.27
Unappropriated profit brought forward 0.22 0.01 0.01
Profit available for appropriation 0.37 0.33 0.28
Appropriations
Transfer to statutory reserve 0.34 0.07 0.27
Unappropriated profit carry forward 0.02 0.27 0.01
Comments on Vertical Analysis
In the year 1999, cost of deposits and borrowing is

representing a soaring figure of 95.41% of mark up or
interest owned by Allied Bank of Pakistan while it was
87.31% last year. The management of ABL should take a

notice of it and make arrangements of investing and
depositing I more profitable avenues.
Net profit before tax of ABL for the year 1999 is only
0.96% of markup or interest earned, as compared to 2.80%
in the year 1998. The authorities of ABL should take notice
of cost on deposit first of all. Secondly fees, commission and
brokerage earned by ABL during 1999 has decreased as
compared to 1998.
Vertical analysis reflecting the fact that although

operating expenses are decreasing to last year but along
with this operating income is not increasing at a good pace.
Management of ABK should make sincere efforts to increase
its operating income at a good rate.

Ratio Analysis:
Ratio simply means one number expressed in term of

another. A ratio is a statistical yardstick by means of which
relationship between two or various figures can be compared
or measured. The term accounting ratio is used to describe
significant relationship between figures shown on a balance
sheet, profit and loss account or in any other part of
accounting organization. Accounting ratio thus shows the
relationship between the accounting data.
A. Return on Total Assets:

Net profit After Tax X 100
Total Assets
2005 2006 2007

Profit After Tax 10544 19592
13,664
Total Assets 106926331 89358167
72,403,650
Return on Total Assets 0.0099% 0.0219%
0.0186%
Comment:

In 1998 the ratio has increased from 0.0186% to 0.0219%.
This is due to increased in net profit after tax but in 1999 the
ratio has declined to 0.0099%. there are two reasons. One
reason is due to decline in net profit and second reason is
increase in total assets. Net profit after tax is decreased by
46% and this decrease is due to increase in Administrative
Expenses i.e. 11.09%.
B. Return on Shareholders Fund:

Net profit After Tax X100
Shareholder Equity
2005 2006 2007

Net Profit After Tax 10544 19592
13664
Shareholder Equity 3012450 3001906
1515418
Return on Equity 0.35% 0.66%
0.90%
Comments:
Return on Shareholder Fund is decreasing continuously

from 2006 to 2007. If this ratio decreases due to decrease in
Profit, it is not a positive sign, but if the ratio decreases due

to increase in shareholders’ equity, it is not bad. In this case
the net profit of year is more 2006 then that of year 2007,
but the ratio decreased due to increase in the shareholders’
equity, which is resultant of increased reserves. The sharp
decline in year 2007 is due to decrease in profits.
C. Net Profit Margin:
Net Profit After Tax X100

Interest and Discount
2005 2006 2007

13664
Interest and Discount 7287432 6059060
5,026,784
Net Profit Margin 0.1447% 0.3234%
0.2718%
Comments:
Net profit as percentage of Interest received increased

a little in 1998 (from 0.2718% to 0.3234%), but it is very low
and has a decreasing trend in year 1999 it decreased to
0.1447% from year 1998 i.e. 0.3234% the decrease in the
profit from year 1998 to year 1999 is too much than an

increase in profit volume from year 1997 to year 1998. The
decreasing Net Profit trend shows the management’s
inefficiencies to control the operating costs and maximize
the profit.
D. Earning Per Share
Net Profit After Tax X

No. of Outstanding Shares
2005 2006 2007

13664
No. of Outstanding Shares 106316 106316
106316
Earning Per Share 0.0992 0.1843
0.1285
Comments:
Because there is no issuance of share capitals in year

1998 and year 1999. The profit increased in year 1998, but
it has decreased in 1999 and that is why earning per share
has also decreased to 0.0992. This ratio has a great
importance for the shareholders point of view. The
shareholders want a higher return on their investment.

E. Loan to Deposit Ratio:
Total Loan X 100

Total Deposit
2005 2006 2007
Total Loan 55,263,762
42,719,179 36,231,357
Total Deposit 93,107,291 76,541,153
63,429,709
Loan to Deposit Ratio 59035% 55.81%
57.12%
Comments:
This ratio shows a relationship between loans and

advances and reveals how much productively the deposits
are used. Analysis shows an increase in loan to deposit
ratio, this is because of Govt. has decreased lending rate
that is why borrowing is more in 1999 as compared to in
1998 on the other hand bank’s deposits are also increasing
sharply if deposits increase by higher rate than an increase
in loan then bank has to face difficulty to pay its borrowing
cost to the lender.
F. Loan to Asset Ratio:

Total Loan X100
Total Assets
2005 2006 2007

Total Loan 5526376242719179
36231357
Total Assets 106,926,331
89,358,167 72,403,650
Loan to Asset Ratio 51.68% 47.81% 50.04%
Comments:
Total assets of the bank increased from Rs.89 (billion) to

Rs.107 (billion) in 1999 (72 billion to 89 billion in year 1998)
and advances/loans net of provision have increased from
Rs.43 (billion) in 1998 to Rs.55 (billion) in 1999. We have
22% increase in assets and 28% increase in total assets is
lesser than the increase in total advances which has resulted
in an increase in loan to assets ratio from 47.81% in 1998 to
51.68% in 1999.
G. Cash To Deposit Ratio:
Cash X 100
Deposits

2005 2006 2007
Cash 103587039525733 7697177
Deposit 93,107,291 76,541,153
63,429,709
Cash to Deposit Ratio 11.13% 12.45%
12.13%
Comments:
This ratio shows that how much cash is available to

meet the obligations of the depositors. In 1999 the ratio is
11.13% while it was 12.45% in 1998. This decrease shows
that the increase in cash is less than the increase in deposits
i.e. the increase in cash is 12.48% while the increase in
deposits is 21.64% as a result of which the ratio has
declined.
H. Equity Ratio:
Total External Debts

Total Internal Debts
2005 2006 2007
Total External Debts 103,913,881 86,356,261
70,888,232
Total Internal Debts 3,012,4503,001,9061,515,418
Equity Ratio 34.49 28.77
46.78

Comments:
Equity Ratio shows the relationship between the

external debt and the total internal debts. In 2005 the ratio
decrease as companred to 2006 to 28.77. This shows that
the increase in external debts is less than the increase in
internal debts. But in 2007 we see that the ABL relied on
external debts i.e. Rs.104 Billion to meet the obligations.
I. Proprietary Ratio:
Shareholder Fund X 100
Total Assets
2005 2006 2007
Shareholder Fund 3012450 3001906
1515418
89,358,167 72,403,650
Proprietary Ratio 2.82% 3.36%
2.09%
Comments:
This ratio explains that participation in the assets by the

shareholders funds is limited by outsiders fund but when we
take year under review (2007) we see ratio has further
decreased in 2005 as compared to the year 2006 that was

increased in year 2007. Reason behind this is that increase in
assets in financed by outsider’s fund rather than the fund
provided by the shareholders because there is lesser
increase in shareholders fund as compared to increase in
total assets.
J. Fixed Assets to Long Term Debt Ratio:
Net fixed Assets X 100

Long Term Debt
2005 2006 2007
Net Fixed Assets 3,062,0452,488,619
872,730
Long Term Debts 100251454 82784670
68344267
Fixed Assets to L.T. Debt Ratio 3.05% 3.01%
1.28%
Comments:
This ratio shows the relationship between the total

debts to be taken to getnerate the fixed assets. Here my
analysis shows that this position is favorable for the Bank
because it does not rely on external funds.

K. Return on Equity Capital:
Net Profit After Tax X100

Equity Capital
2005 2006 2007
13664
Equity Capital 1,063,1561,063,1561,063,156
Return 0.99% 1.84%
1.29%
Comments:
Calculation made on the base of data available shows

that profit earning after taxes in 1999 has decreased due to
increased financial cost of funds for which expected
investment avenues did not open up the situation rather
worsened with reduced return on lending. Here in this ratio
we see that ratio is disturbed by the single factor of
reduction in profit as there in no further flotation of share in
the stock exchange in current year.
L. Operating Ratio:
Operating Costs X100

Interest Earned
2005 2006 2007
Operating Costs 3,719,7583,396,440
3,696,699
Interest Earned 7,287,4326,059,060
5,026,784
Operating Ratio 51.04% 56.06%
73.54%
Comments:
As the ratio shows the operating costs are decreasing

year by year. In year 2007 it was 73.54 % of the interest
earned and it decreased in year 2oo6 to 56.06% in the next
year it again decreased to 51.04% of the interest earned.
The decreasing trend of the operating costs shows the
efficiency of the management to control the operating costs.
But the Operating costs itself as a percentage of the interest
earned is very heavy although the management is trying to
control these costs; these are still a very huge percentage of
interest earned.
M. Equity Capital to Assets:
Equity Capital X 100

Total Assets
2005 2006 2007

Equity Capital 1,063,1561,063,1561,063,156
89,358,167 72,403,650
Equity Capital to Assets 0.99% 1.19%
1.47%
Comments:
In current year bank’s assets have been increased from
Rs.89 billion to Rs.107 billion there by increase @ 20% over
the last year (year 2005: 23.42% increase). On the other
hand bank’s equity has not increased and remained
unchanged during the year 2006, so this is the reason that
equity to assets ratio has decreased from 1.19% in 2006 to
0.99% in 2007. Denominator total assets have increased
substantially during the year 2007 but no increase in equity
capital resulting in decreasing ratio.

Problems and Recommendations
Normally when we study the performance of ABL it is

considered that on the whole the bank is contributing a lot
toward the industrial development and capital formation in
the country. As it is exhibited from the data regarding the
banks financial performance as hsown in the report that the
bank is sharing major banking business in the country.
Further the policies and schemes as are introduced and
carried on the bank are of great source of help in industrial
and trading growth. All these things reflect the great and
valuable efforts on the part of executive command of the
bank, which is finally responsible for the productive
performance of the bank.
So Far my own observation is concerned, I have

concluded a major drawback in the inner system of ABL, in
addition to that I have also learnt some disciplinary wrong
practices on the part of staff of the bank. I will discuss these
problems one by one.
Problems:
No doubt that bank enhance and finance facilities to

persons and parties seeking financial assistance for the
establishment of industries, trading units, enhancement of

the existing projects etc. But some times the bank managers
and employees provides loans to their relatives and friends
without any securities and other things which are necessary
for getting the loan.
Sometimes some persons who are not financially strong
and having no arrangement of securities chalk out a very
useful and sould plan. But the bank rjects their application.
In this way a talented person of the country is discouraged.
The aforesaid issue was an important one and hence
needs the attention of the executives of the bank. The other
irregularities, which I observed, are as under.
1. It is usually observed that the staff members waste lot
of valuable time while performing their duties. In other
words they cause unnecessary delay and take extra
time in accomplishing their task.
2. There are certain shortcomings charged to the
executive’s management of the bank who is responsible
for maintaining discipline I the bank branches. They
shold regulate such rules and orders. Which may ensure
the maximum output with minimum imput by
eliminating irregular and disciplinary practices.
3. The bookkeeping and filing system of the bank are so
lengthy and time taking.
4. The attitude of the bankers with all their customers is
not same. They pay mare attention to some of the
customers and neglect the others. Some of the

customers approach the bank officials and get their
work done before the other customers. This is not a
good practice.
5. There are so many customers who don’t know how to
full the cheque, pay-in-slip, application form etc. they
waste lot of time of the bank staff.
6. The government should advise all the customers who
submit electricity, telephone, gas and water bills in the
bank should open their accounts I the branches of the
bank near to their homes. In this way the government
will get the payment of the bills prompltly and
customers will not waste their time.
7. During my internship I fee that the security system to
safeguard the deposit of the bank are not good. The
gunmen of the bank are busy in doing some irrelevant
jobs.
8. The officials who come to give and collect cash from the
branches are and put there weapons here and there in
the branch and get then in taking their friends I the
branch. So the bank should take step to improve their
security system.
Recommendations/Suggestions
1. With reference to Analysis
2. General
With reference to analysis

■ Pre tax profit decreased from Rs. 170 million in the
2005 to Rs. 71 million in 2006. Analysis has done on

the last pages reflect the fact that the factor
responsible for this reduction in the profitability of the
bank is increase in the financial cost of the funds. In my
opinion the management of the bank should explore
new and more profitable investment avenues, for
investing these funds.
■ Fees, commission and brokerage earned by the bank
have been reduced by approximately 16% in 2007 as

compared to 2006. In this highly competitive
environment, bank can charge higher commission only
by providing efficient services to its customers and by
developing good banker customer relationship.
■ Horizontal analysis done on last pages shows that the
total operating expenses of the bank has been
increased is infect an increase of 11.09% in
administrative expenses. For reducing the cost in the
administrative expenses the banks management will
have to follow the policy of “Down Sizing” besides
taking the other measures.
■ Bank’s borrowing from banks and agents has increased
in 2007. This is not a good sign. The bank should try to

generate the funds by introducing its own schemes.
General:

■ The Bank should spread its branch network throughout
the world especially in the countries involved in
international trade with Pakistan.
■ In order to complete with the other banks ATM services

should be expanded throughout the country.
■ All branches should be linked through network that can

better help to meet the daily transactions. In this regard
Internet, E-mail and Fax Services should be provided at
least in the main branches of each region.
■ Some of the schemes are not profit making where as

the bank is an institution that earn earns from them, so
those unprofitable schemes should be finished as
Karsaaz Scheme.
■ Separate counters must be set up to give the facility of

bills collection of all utilities like WAPDA, SUI GAS, and
TELEPHONE.
■ There should be separate cashiers for the Receipts &

Payments in the each branch office.
■ Door to door marketing in this regard especially media

and electronic marketing should be promoted in order
to acquire handsome share of banking sector.
■ Bank branches must be beautified internally and

externally by providing appropriate interior decoration.

■ As we know that only 15% of the people have their bank
accounts, so it is the need of the time to open the
branches in rural areas as well.
■ The bank should acquire the services of the highly

qualified people accompanied by lucrative incentives to
promote its status as desirable in the next millennium.
■ In order to market its products as Allied Tahaffuz

Deposit Scheme, it should accentuate to give
advertisements on both print and electronic media.
■ The bank should develop healthy relationships with the

renowned banks of the work in order to expand its
operations globally.
■ The individual efficiency of worthy employees should be

rewarded in the form of proper increments and
promotion in grades.

Concluding Remarks
In nutshell, it can be concluded that bank’s overall

performance is quite satisfactory. ABL’s total advances,
assits, investments, deposits and equity has increased, but
the profitability has decreased by a soaring percentage of
58.23%. The reasons, which I have traced out of my
analysis, are as follows:
1. Increased financial cost of funds for which the expected

investment avenues did not open.
2. Return o linding has been reduced.
3. Bank has increased its classified advances by 35% to
fulfill the requirement of the prudential regulation. The
fresh increase is mainly 51% in the other assets
especially mentioned (OAEM) classification. According
to the prudential requirement, accrued markup cannot
be credited to the incomes but to the suspense account.
Entry Passed is
Dr. Accrued income A/C
Cr. Suspense A/C
In spite of
Dr. Accured income A/C
Cr. Income A/C
This has adversely affectied the profitability of the bank.

4. During the year 2007, the economy of the country
remained sluggish in spite of the various policy

measures initiated by the government for the
confidence builing of the domestic investors and steps
taken such as:
• Creation of small and medium enterprises
development authority (SMEDA).
• Financing under the Prime Minister’s self
employment scheme.
• Launching of Mera Ghar scheme.
For the revival of the economy, the expected
investment environment could not be created and
economy did not pick-up.
5. The large number of non-commercial banking
institutions also competed for limited resources and
investment avenues. Thus further narrowing the spread
of the banking industry.

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INTRODUCTION TO BANKING

“BANK” AND ITS ORIGEN

Even the standard encyclopedia and the books of laws find

Hailey College of Commerce 1

Banks play very important role in the economic life of a

To encourage the habit of saving and to mobilize these

If there are no banks, then there would be

Hailey College of Commerce 2

Loan facility provided by bank works as an incentive to

HISTORY OF ALLIED BANK OF

Establishment of Australasia Bank

Hailey College of Commerce 3

Allied bank of Pakistan Limited (formerly Australasia

Hailey College of Commerce 4

In 1942, the situation was as follows:

In 1947, when the bank was in nascent age, it had to

Hailey College of Commerce 5

In 1965 the Bank shifted its operational head quarters

Deposits and Advances

Hailey College of Commerce 6

Allied Bank remained in the public sector for seventeen

After privatization, Allied Bank registered and

Hailey College of Commerce 7

In September 1991, Allied Bank entered in a new phase

During May/June 1991, almost all the officers, staff

Mr. Khalid Latif was thus in a strong advantageous

Hailey College of Commerce 9

Within a week the formal letter of acceptance of this bid was

the Allieds Management Group. In September 1991, the

The basic principle and features underlined by

Hailey College of Commerce 10

8. ESOP provides protection to the family retirement. It is

How ESOP was accomplished:

Hailey College of Commerce 11

On 11 August 1991 Allied management group deposited

in its notification dated 12th September 1991, transferred the

Hailey College of Commerce 12

Hailey College of Commerce 13

Justice Retd. Amir Raza Khan

Shukat Hayat Durani

Hailey College of Commerce 14

Shariq Umar Farooqi

Hailey College of Commerce 15

Central office Karachi

Hailey College of Commerce 16

SEVP SEVP SEVP

PHQ Islamic Banking Admin & Human International

Credit Audit &

Maintenance Engg. Environmental

Agriculture & President’s

10 Credit Audit Overseas

Business Promotion, Research & Investment &

Hailey College of Commerce 17

REGION WISE BRANCHES

REGIONAL OFFICE NO. OF BRANCHES

Hailey College of Commerce 18

Hailey College of Commerce 19

The top management of ABL is performing the various

A SEVP has to control the Islamic banking, credit