The Banking And Financial Services Sector

Published Date: 02 Nov 2017

EXECUTIVE SUMMARY

My research was conducted by using survey and interview from various employees of ALLIED BANK LIMITED (ABL) related to the effectiveness of practices such as recruitment and selection, the performance appraisal, including training and development compensation and benefits and employee relationships and the dissatisfaction of the employees with the performance appraisal methods of the Allied Bank being poor. This research led me to conclude that the practices performed in ABL are not implemented in a systematic and organized manner that eventually makes them a low performer and the efficiency of the work being performed highly depends on the level of employees satisfaction with the rules, regulations, policies and procedures , moreover fair judgment should be made while promoting or appraising an employee. Merit or seniority should be considered the basis for promotion not personal contacts and approach. Seniority has to be regarded and the job profile must include areas that are under the person’s capability. At the same time, rewarding an employee for his exponential talent or hard work is extremely necessary. Setting up an ideal team and lateral thinking is the manager’s main motive. Failing to avoid hearing an employee grievance or the uncomfortable working conditions have a slow but surely a negative impact on the employee morale. The management on the whole will benefit from employee motivation. Many offices have a gym or an in-house game area to lower the stress of the employee. Bonding in office will automatically erase the grapevine gossip and hence the group on the whole contributes to the profit of the company. Profit is also a ratio that is highly affected by the human resource. Offering educational programs and upgrading the knowledge level of the employee is enriching which is conducive to the better health of the organization.

INTRODUCTION

RATIONALE OF THE STUDY:

This study is conducted in order to have an insight in the Banking System and the way it carries out its procedures. This research will help us to gather all relevant information to analyze the problems that are being faced by the employees of ABL due to the poor performance appraisal methods used in the bank. This Study would also enable ABL to overcome the difficulties and to continue to grow. It will help us to observe, analyze and interpret all the relevant data completely and in a useful manner. The bank can have an insight that what is the root cause of the problem and what steps can be taken to resolve the issues based on research.

RESEARCH OBJECTIVES:

The objectives of this study are:

• Understanding the working and managerial processes of the organization by analyzing its management functions.

• To identify the unfair practices used at the bank.

• To have a deep insight in the organization to find out any problem that is faced by it and to look for all the possible responsible reasons.

• To conduct a SWOT analysis of the Bank.

• To know the opinion of the employees and to project the demand to the higher authorities.

• To help the bank by recommending them with possible solutions and strategies that could help them to overcome their problems.

PROBLEM IDENTIFICATION:

The Bank started out in Lahore by the name Australasia Bank before independence in 1942; and became Allied Bank of Pakistan in 1974.

In August 2004, because of capital reconstruction, ownership of Allied bank was transferred to a consortium comprising Ibrahim Group; and therefore in 2005, the bank was renamed as Allied Bank Limited. Today, with its existence of over 70 years, Allied bank has built a foundation for itself with a very strong equity, including assets and deposit base. It provides universal banking services and putting on a major emphasis on the retail banking. Allied Bank Limited has a large network of more than 830 online branches in Pakistan and offers various technology-based products and services to its diverse clientele yet it is facing some problems. There are certain issues related to the satisfaction among employees.

To identify this problem detailed interviews were conducted with some employees at ABL.Two of them belonged to the Top-Level Management and the remaining were from the Middle-Level Management. They belonged to different positions. They were interviewed so that we could have a clear idea about the problem that is being faced by Bank.

The main problem identified is the dissatisfaction of employees with the poor performance appraisal of ABL.

The Employee Dissatisfaction in ABL is due to the following reasons:

• Work Stress

• Lack of distributive justice

• Biasness

• Nepotism

HYPOTHESIS:

Ho: Work stress of employees is related to dissatisfaction.

H1: Work stress of employees is not related to dissatisfaction.

Ho: Dissatisfaction of employees is due to lack of distributive justice.

H1: Dissatisfaction of employees is not due to lack of distributive justice.

Ho: Dissatisfaction of employees is due to biasness

H1: Dissatisfaction of employees is not due to biasness.

Ho: Dissatisfaction of employees is due to nepotism.

H1: Dissatisfaction of employees is not due to nepotism.

RESEARCH PLAN:

• Research Technique:

My research was conducted using survey and interview from various employees of ALLIED BANK LIMITED (ABL) regarding the effectiveness of practices such as recruitment and selection, the training and development, the performance appraisal of the employees, including compensation and benefits, the employee relations and the dissatisfaction of the employees with the performance appraisal methods of the bank being poor. This research enabled me that the practices performed in ABL are not implemented in a systematic and organized manner that eventually makes them a low performer and the efficiency of the work is highly dependent on the level of satisfaction of the employees with the rules, regulations, policies and procedures, moreover fair judgment should be made while promoting or appraising an employee. Merit or seniority should be made the basis for promotion rather than personal contacts and approach.

• Target Population:

The target Population consisted of all the employees working in ABL.

• Sample Size:

The sample size of 65 is used. The main source of information were the employees of Allied Bank Limited .65 employees from the different departments of the bank were asked few questions about their opinion on the culture of the organization, meritocracy, promotion policy and appraisal methods used.

• Sampling Technique:

The sampling technique applied to gather the data was simple judgmental sampling. In this technique, the judgment of the researcher has been used to select what seems like an appropriate sample.

• Analysis Technique:

Descriptive statistics are used to analyze the data using graphs and frequency tables. Inferential statistics have also been used to test the hypothesis, in which chi-square testing was applied.

• Analysis Tool:

The statistical that has been used for data analysis is SPSS 20.00(Statistical Package for Social Sciences Inc.)

INTRODUCTION OF THE ORGANIZATION

CENTRAL BACKGROUND INFORMATION

Banking in the primitive times existed in some form. The biggest invention of all the times is largely considered to be the invention of wheel which made transportation easy and transportation opened a new gateway to business and hence the exchange of goods flourished. Initially the business was done on "barter" which basically meant an exchange of commodity for another commodity. A myth also exists regarding the invention of money; it tells that king Midas of Libya invented money in 800 B.C. Another statement states that the king of the Babylonian empire who was named as King Hummorabi in 1700 B.C. made all the rules and regulations regarding the lending and borrowing and interest and so on. He wrote these on an eight feet stone that was placed in the center of the city. Two very famous temples are also remembered for the lending and borrowing in different transactions. One was the temple of Ephesus and the second was known as the temple of Delphi.

A bank is known as a financial institution that deals with money and credit. It accepts the deposits from individuals, firm and different companies at a lower rate of interest and gives at a higher rate of interest to those individuals, firm and companies who need them. A bank thus is a profit earning institution. The first public bank was formed in Germany in later part of the time.

Banking is considered as one of the most important businesses all over the world. Banks play a pivotal role in the economy of the country and including Pakistan which is no exception.

BANKING IN PAKISTAN

Before the partition of the India and Pakistan in 1947, the branches of the British banks dominated the banking system in Pakistan. The first domestic banking institutions were introduced in the 1940s that was immediately after Pakistan gained independence from Britain. The domestic banking institutions include the Australasia Bank (today, Allied Bank Limited or ABL), Muslim Commercial Bank (MCB), Habib Bank Limited (HBL), and the National Bank of Pakistan (NBP). The NBP was completely owned by the government but prominent merchant families established the other three. SBP was formed in 1948. It assumed the supervisory and monetary policy powers of the State Bank of India. From 1960 to 1970, a large number of specialized development finance institutions (DFIs) such as the Agricultural Bank and industrial Development Bank of Pakistan (IDBP) emerged. These DFIs were controlled either directly by the state or through SBP, and were intended to focus on lending to long-term projects in specific priority sectors.

The Banking and Financial services sector in Pakistan comprises the commercial banks and the non-banking financial institutions, while also including the development finance institutions (DFIs), modarabas (Islamic Mutual Funds) ,leasing companies and investment banks. All of these are monitored ,controlled and regulated by the State Bank of Pakistan (SBP). Pakistan is in the process of adopting an Islamic (Shariah) financial system, under which interest-based banking is prohibited. However, this has not been converted into a law as yet, and this exists only on paper, and many of the banks provide an anticipated profit rate in advance. Since 1990 the Government of Pakistan (GOP) has introduced many different reforms in the financial services sector that are enhancing the level of autonomy enjoyed by the SBP. The number of banks that are operating in Pakistan has increased, which has in turn resulted in an increase in the competition. The banking sector has generally shown positivity and good progress during the last few years. During the previous five years, combined total assets of the domestic banks have showed an average annual increase of 22 percent, while the combined deposits have recorded an increase of 27 percent per year. An overall total of forty-six commercial banks and including twenty-one foreign banks are operating in Pakistan. In addition to this, sixteen Investment Banks, fifty-three Modaraba Companies and twenty-nine Leasing Companies provide a mix of financial services.

A number of opportunities for the new foreign banks exist in consumer banking, investment banking corporate bonds, leasing and housing finance sectors. The good reputation of the existing foreign banks would be helpful for the new entrants. Some of the challenges, however, do currently exist in the form of weak economic conditions prevailing in Pakistan and the turnaround possibilities in Nationalized Commercial Banks (NCBs) through privatization.

THE INSTITUTE OF BANKERS PAKISTAN (IBP)

The institute of bankers Pakistan was incorporated in 1951.Until now it has benefited from many financial sector institutions through its product and services that exist mainly in field of HRM and HRD. Advancement in this concern involves the recruitment and selection of human resource for the financial institutions. Institute of Bankers Pakistan conducts interviews, group discussions and tests that are according to the needs of the respective institution.

Initially the State bank of Pakistan was benefited from the services that it provides but now the major financial institutions and the banks can also be benefited.

Major members of IBP are as follows:

1. Allied Bank Limited

2. Crescent commercial bank

3. Habib Bank Limited.

4. House building finance corp. Ltd.

5. Mezan Bank Limited

6. Pak Omen Microfinance bank Ltd.

7. Securities and Exchange Commission of Pakistan.

8. State Bank of Pakistan

9. Bank of Punjab

10. ZaraiTarqiyati Bank Limited.

11. Bank Islami Pakistan Limited

12. First women bank Limited

13. Soneri Bank Limited.

14. MCB bank Limited

15. Tameer Microfinance Bank Ltd.

16. United Bank Limited.

17. National bank of Pakistan.

HISTORY OF ALLIED BANK PAKISTAN

Allied Bank was the first Muslim bank that was established in Pakistan. The bank was established in December 1942 by the name of Australasia Bank in Lahore with a paid-up share capital of Rs.0.12 million, Allied Bank attracted deposits that are equivalent to Rs.0.431 million during the first eighteen months of its business. At that time, the total assets of ABL amounted to Rs.0.572 million. The current Allied Bank's paid up Capital & Reserves amount to Rs.10.5 billion, its deposits exceed Rs.143 billion and the total assets are equal Rs.170 billion.

The journey of ABL has been about commitment, dedication, and professionalism and adapting to the environmental changes, all of this has led to its immense growth and stability.

The Pre Independence History (1942 to 1947)

In the early 1940s, the Muslim community was starting to realize the importance and need for its active participation in the area of trade and industry. Since the late 1880s, Hindus had developed a major presence in the fields of industry, trade and commerce and they were especially dominating in the area of the Sub-continent. Banking was particularly the exclusive forte of the Hindus and it was commonly and wrongly believed that Muslims were temperamentally not well-suited for this field of profession.

It was upsetting for Khawaja Bashir Bux to hear that:

"Muslims could not be successful bankers".

He planned to step-up to this challenge and took the main lead in establishing this first Muslim bank that was known as Australasia Bank Limited in Punjab.

The initial equity of the Bank summed up to Rs.0.12 million and this was increased to Rs.0.5 million till the end of the first year of the operation, and by the end of 30th June 1947 capital raised to Rs.0.673 million and the deposits increased to Rs.7.728 million.

Australasia Bank (1947 to 1974)

Australasia Bank was the only operational Muslim bank in Pakistan on August 14th, 1947. However, it was hit by the riots in the East Punjab in seriously worse manner. The Bank was identified with the Pakistan Movement. During independence all the branches in India that include Amritsar, Batala, Jalandhar, Ludhiana, Delhi and Angra (Agra)) were closed down. New branches were setup in Karachi, Rawalpindi, Peshawar, Sialkot, Sargodha, Jhang, Gujranwala and Kasur. Later, the network had spread to Multan and Quetta as well.

The Bank financed trade in cloth and food grains and thus played a pivotal role in the maintainenace of consumer supplies during the early months of 1948 affected by riots. Despite the prevalence of the difficult conditions and the substantial set back in the Bank’s business in India, Australasia Bank build a profit of Rs.50,000 during 1947-48 and by the end of 1970 it had 101 branches but unfortunately it had lost 51 branches due to the separation of East Pakistan but the Bank did well even though losing a lot of its assets and by the end of 1973 owned 186 branches in the West Pakistan.

Allied Bank (1974 to 1991)

In 1974, the Board of Directors of Australasia Bank was dissolved and it was renamed as Allied Bank. The first year was very successful whereby the profit exceeded to Rs.10 million and the deposits rose by over 50 percent and they approached to Rs.1460 million. Investments increased by 72 percent and advances exceeded Rs.1080 million for the very first time in the banking history. 116 branches were opened during 1974 and the Bank started to participate in the Government’s spot procurement agriculture program.

Those seventeen years experienced a rapid growth for the Bank. The number of branches had increased from 353 in 1974 to 748 in 1991. Deposits increased from Rs.1.46 billion and Advances & Investments rose from Rs.1.34 billion to Rs.22 billion in this span of time. It also setup three branches in the U.K.

Allied Bank (1991 to 2004)

As a result of privatization in September 1991, Allied Bank entered into a new phase, and it became the world’s first bank to be owned and managed by its employees. After its privatization Allied Bank had become one of the main financial institutions of Pakistan. Allied Bank’s capital and reserves amounted Rs.1.525 billion; its assets were Rs.87.536 billion and deposits raised to Rs.76.038 billion. Allied Bank enjoyed a dominant position in the financial sector of Pakistan and was known as one of the most superior amongst the major banks in Pakistan. In August 2004 the Bank’s ownership was transferred to a consortium comprising Ibrahim Leasing Limited and Ibrahim Group. This was a result of capital reconstruction.

Today, the Bank has built a solid foundation that has been gained through over 63 years of hard work and commitment, thereby giving the bank a strong equity, a deposit and asset base and the ability to offer its customers universal banking services with special emphasis on retail banking. Allied Bank Limited has the greatest network of online branches in Pakistan and it offers various technology-based products and services to its diverse clientele through its network of more than 700 branches.

Allied Bank (2005 to Date)

In May 2005, Ibrahim Leasing Limited was dissolved and the company was empowered into Allied Bank Limited. All of its shareholders were issued ABL shares rather than all shares held by them. An application was developed for the listing of ABL shares in all the Stock Exchange Companies of Pakistan; ABL was formally listed and the Bank’s share trading started on the following dates:

• Islamabad Stock Exchange 8th August 2005

• Lahore Stock Exchange 10th August 2005

• Karachi Stock Exchange 17th August 2005

Currently, all the Allied Bank Limited shareholders can trade in the Bank’s shares at their will and the Bank lies on a solid foundation of over 63 years of its existence having a strong equity, assets and deposits base offering universal banking services with greater emphasis on the retail banking. Now all the shareholders of Allied Bank Limited can trade the shares of the Bank at their free will.

ALLIED BANK AND IBRAHIM GROUP:

The Ibrahim Group owns more than 75% of Allied Bank. The Group beside the interest in financial sector is involved in the manufacturing of yarn and polyester staple fiber, power generation and trading.

The consortium of Ibrahim Leasing Limited And Ibrahim Group, which has invested Rs.14.2 billion in the capital of Allied Bank of Pakistan for acquiring its 325 million additional shares, has today assumed the authority of the bank. The Governor, State Bank of Pakistan, Dr. IshratHussain gave over the necessary documents to Mr. Mohammad NaeemMukhtar at a simple ceremony that was held at SBP, Karachi. Among those who were present at the ceremony include Deputy Governor, Mr. Tawfiq A. Hussain and other senior officials of the State Bank of Pakistan who are the representatives of the Allied Bank and the consortium. The State Bank Governor has termed the successful reconstruction of ABL as beneficial both for the organization as well as for the banking industry. He declared the hope that the transfer of the management of ABL to a strategic investor will create a new era of growth and stability in the banking sector. He emphasized upon the new Board of the Bank to run it professionally and with the highest standards of corporate governance. It could be recalled that the auction of 325 million additional shares as a part of reconstruction of Allied Bank of Pakistan was held under the chairmanship of the deputy Governor of the State Bank of Pakistan (Mr. Tawfiq A. Hussain) at Islamabad on 23rd July, 2004. The consortium of Ibrahim Leasing Limited And Ibrahim Group were the successful bidder in the auction as they offered the highest bid of Rs.14.2 billion for obtaining these additional shares, which includes 75.35% of the revised capital of ABL. The Federal Government accepted the scheme for the reconstruction of Allied Bank Limited that came under section 47 of the Banking Companies Ordinance 1962 on July 24, 2004.

After the acceptance of scheme by the Federal Government, the State Bank gave the Letter of Acceptance (LOA) to the consortium of Ibrahim Leasing Limited And Ibrahim Group on July 26, 2004 in terms of that the full payment of Rs.14.2 billion was completed on August 19, 2004. On receiving the full payment by the Allied Bank of Pakistan Limited and verification of the sources of funds by the State Bank of Pakistan, the control of the Bank was given in the hands to consortium of Ibrahim Leasing Limited And Ibrahim Group.

Branch Network

Allied Bank Limited runs through a network branches that are 779 in number and in over 300 cities and towns, which is approximately 67% i.e. 573 and these are located in large metropolitan area, mostly Islamabad, Karachi, Faisalabad, Lahore, Peshwar,Multan and Hyderabad. This network of 779 branches allows the bank to generate a substantial and stable deposit base that provides a wide variety of banking products and other financial services and diversify the risks of lending geographically and also on the basis of credit and customer type.

Allied Bank divided into four Centers which include North, Central-I, Central- II and South. These Centers have the regions and these regions further have the sub branches of Allied Bank Limited. The details are provided below:

Central I Group Central II Group North Group South Group

Region Branches Region Branches Region Branches Region Branches

Gujrat 22 Jhang 19 Abbottabad 21 Hyderabad 26

Sialkot 25 Multan 31 Kohat 18 Nawabshah 17

Gujranwala 34 Sahiwal 25 Peshawar 41 Sukkur 22

Gulberg, LHR 41 Bahwalpur 22 Mardan 32 City Region, KHI 34

City Region, LHR 35 Rahimyar Khan 12 Islamabad 31 Sadar& Society, Khi 34

Faislabad 35 Rawalpindi 46 Nazimabad, KHI 35

Sargoda 36 Mirpur 33 Quetta 34

Muzzafarabad 18

TOTAL 228

TOTAL 109

TOTAL 240

TOTAL 202

Provincial Headquarters

PUNJAB SINDH KHYBER PAKHTUNKHWA BALUCHISTAN

196/Upper Mall, Lahore Jubilee Insurance House, I.I. Chundrigar Road, Karachi 1st floor, State Life Building, The Mall, Peshawar Cantt. C.C. & I Building, Zarghoon Road, Quetta

NATURE OF THE ORGANIZATION

Allied Bank Limited provides commercial, retail including corporate banking products and services to the individuals and businesses in Pakistan. It functions in five segments: Corporate Finance, Retail Banking, Trading and Sales including Commercial Banking, and the Payment and Settlement. The Corporate Finance segment is involved in the investment banking activities, such as mergers and acquisitions, privatization, underwriting, securitization, initial public offers, and the secondary private placements. The Trading and Sales segment engages in the treasury, money market, and the capital market activities. The Retail Banking segment generally offers loans and deposit products to its consumers, small and medium enterprises, and borrowers in the agriculture sector. The Commercial Banking segment provides loans, deposit products, and other products and services to corporate customers. The Payment and Settlement segment arranges payments and collections, clearing and settlement services as well as funds transfer. The company works for various businesses, including forestry, agriculture, hunting as well as fishing, beverages, spinning and weaving, textile, including readymade garments, footwear and leather garments, rubber and plastic, power, gas, petroleum products, water and sanitary, construction, financial, and wholesale and retail trade.

Allied Bank Limited (the Bank), incorporated in Pakistan, is a scheduled Bank,involved in the commercial banking and related services. Allied Bank Limited is listed on all stock exchanges in Pakistan. The Bank manages and operates a total of 779 (2008: 766) branches in Pakistan also including the Karachi Export Processing Zone Branch (overseas business unit). The long term credit rating of Allied Bank Limited assigned by The Pakistan Credit Rating Agency Limited (PACRA) is ‘AA’. Short term rating of the Bank is ‘A1+’. The Bank is a holding company of ABL Asset Management Company Limited.

ABL is a commercial bank, which transacts the business of banking in accordance with the provisions of Banking Companies Ordinance (BCO), 1962. Authorizes banks to engage in the prescribed form of business. In the light of this ordinance ABL’s functions can be categorized as under:

• Agency services

• General Utility Services

• The underwriting of loans that are raised by the Government or public bodies and trading by corporations etc.

• Provision of specialized services to the customers

• Hajj-related services.

INTRODUCTION TO ORGANIZATION

ABL is one of the largest banks in Pakistan. The bank has been serving the Country for over 60 years in all areas at banking and financial Services.

Allied Bank Limited operates by the following Vision, Mission & Values

VISION

• To become a dynamic and efficient bank providing integrated solutions in order to be the first choice bank for the customers.

MISSION

• To provide value added services to our customers.

• To provide high tech innovative solutions to meet customers requirements.

• To create sustainable value through growth, efficiency and diversity for all stakeholders.

• To provide a challenging work environment and reward dedicated team members according to their abilities and performance.

• To play a proactive role in contributing towards the society.

CORE VALUES

• Integrity

• Excellence in Service

• High Performance

• Innovation and Growth

Allied Bank Objectives:

• Allied bank has following objectives:

• Prime focus to earn profit by providing values to its customers

• To provide superior services to its customers

• To provide assistance in the development of the commerce and trade industry

• Focus on blending skills and experience towards creating an enabling environment

• Core focus is to inculcate a culture of collaboration intended to deliver world class customer service

Allied bank also have one more responsibility and that is to provide service to their communities. It monitors the growth and development of its community with main focus on the commerce and business of the area.

ORGANIZATIONAL STRUCTURE

None of the bank can be expected to function efficiently until and unless all of the employees within a department, division or section understand:

• From whom they are to receive the work they have to do.

• What they are supposed to do with the work they receive.

• How they are supposed to handle the operation of item.

• When they are supposed to do their work and perform the operation.

• To whom they have to hand over the item or function after finishing.

MANAGEMENT SYSTEM OF ABL

Successful and profitable banking management is based on two main principal factors.

a. The way in which the functions of banking are performed such as, the acquiring of deposits, the investing or conversion of such deposits into the earning assets and servicing of such deposits.

b. The extent to which the officers and the employees contribute their talents to the progress and the welfare of the bank in discharging duties and responsibilities.

BOARD OF DIRECTORS

 Mohammad NaeemMukhtar - Chairman / Non Executive Director

 Sheikh Mukhtar Ahmad - Non Executive Director

 Muhammad WaseemMukhtar - Non Executive Director

 Abdul Aziz Khan - Independent Director

 Mubashir A. Akhtar - Independent Director

 PervaizIqbal Butt - Independent Director

 Akbar Sharifzada - Independent Director

 Sheikh Jalees Ahmed - Executive Director

 Khalid A. Sherwani - Chief Executive Officer

ALLIED BANK MANAGEMENT

Banks are managed by the board of director or a similar group of men who are responsible and answerable to the owners, creditors and as well as the government for the well-being of their institutions. The government picks all or some of directors of ABL. The Management of ABL is as follows:

1. Khalid A. Sherwani (Chief Executive Officer)

2. ShaikhJalees Ahmed (Executive Director Strategic Planning)

3. FareedVardag (Chief Audit)

4. Khawaja Mohammad Almas (Chief Commercial and Retail Banking)

5. Shafique Ahmed Uqaili( Chief Human Resources)

6. Tariq Mehmood( Chief Banking Systems Implementation)

7. Zia Ijaz (Chief Banking Services)

8. Muhammad Raffat (Company Secretary)

9. Mohammad Abbas Sheikh (Chief Islamic Banking/Advisor to the chief Executive Officer)

10. Muhammad JawaidIqbal( Chief Corporate & Investment Banking)

11. Muhammad ShahzadSadiq (Chief Risk Officer)

12. Mujahid Ali ( Chief Information Technology)

13. Tahir Hassan Qureshi (Chief Financial Officer

14. Abdul HafeezButt(Chief Compliance)

15. SaifUlIslam(Chief Special Assets Management)

MANAGEMENT HIERARCHY

The management hierarchy shows the different positions and the designations in the hierarchy of the ABL.The management hierarchy is the ranking of authority showing each of the individuals designation of their position starting from the top to the bottom level.

FUNCTIONAL HIERARCHY

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

NUMBER OF EMPLOYEES

The organization have minimum of 8713 Employees.

SWOT ANALYSIS PROVIDED BY THE ORGANIZATION

STRENGTHS

• Allied Bank Limited is the first Muslim Bank in the world.ABL which is owned and managed by its own employees. This is the biggest strength of the Bank. A feeling of ownership is prevalent in every employ and this not only helps in increasing the productivity of employs but it also helps to create sincerity with the Bank in them.

• Allied Bank Limited have large area network throughout the country, so that this way they are able cover a lot of portion of cash transactions and make their customers satisfied.

• Allied Bank Limited proudly extends its hand over the nationwide or Internationally by setting up new and more branches to facilitate the customers and having more than 850 branches in Pakistan.

• Allied Bank has become the first bank to take part in the Sustainability Finance Facility of the IFC’s Global Trade Finance Programme. IFC is a member of the World Bank Group.

• The bank emphasizes on the high performance, innovation and delivering value to its customers with a vision to make ABL as one of the most technologically advanced organization in Pakistan with the capability to provide real time services to its clients.

• ABL has set up the Management Development Center MDC that caters to the growing needs of ABL staff with the help of computerized training workshops and seminars.

• ABL recognizes the training gaps for its employees and for this purpose training needs analysis is conducted on an annual basis.

• ABL has the largest network of ATM throughout the nation.

• ABL does the time to time monitoring over its different wings and groups in order to increase efficiency.

• The Bank has the most experienced and as well as the least experienced staff which is generally a good combination of experienced heads and exuberance of youth.

• The Bank has been successful in launching new Product Lines.

• A centralized Special Asset Management Division has been set up for the expeditious recovery and the settlement of non-performing loans.

• ABL offers the facility of using thousands of ATMs of all banks without the extra charge of Rs 15 to its customers.

• The customers who have more than one account at the Bank can have the facility of the same account number only the suffix is changed for the easy remembrance.

• For the entertainment and relaxation of the employees, ABL provides the facility that the employees may get the 36 medical leaves and 1-month vacation in one year along with their pay.

• The bank has extremely strict rules and regulations regarding the customer’s complaints. The customers are treated fairly and honestly.

WEAKNESSES

• No Islamic product has been introduced by ABL.

• The controls of the Heads are not effective.

• Many of the jobs are performed manually in spite of the presence of technology.

• ABL credit group does not sanction the loan to the lawyers, politicians and the female having no blood relative.

• In back offices the employees are less so it creates more work burden on the existing one.

• The bank does not provide any entertainment facilities for example when customer goes to the Bank and wait for a longer time. These facilities could be the newspaper, magazines and so on.

OPPORTUNITIES

• The policies developed by the new government to uplift the economy and pursue financial sector reforms are expected to produce positive results in the banking industry of Pakistan. ABL is well praised to avail promising opportunities.

• As a result of different steps taken by the government relating to the betterment of the economy, many small borrowers are attracted to acquire the financing and start business.

• ABL has an opportunity to entice the customers by giving them more attracted schemes.

THREATS

• The biggest threat in the banking sector is the continuous downfall of the country economy over the last few years. If the downfall remains for more than two years then it can create a hindrance for the bank in achieving the desired objectives.

• The growth of the banking sector can be adversely affected by a sudden rise and fall in the trade and industry conditions and stock exchange business of the country.

• As the situation of Frontier Province of Pakistan is not sound and ratio of dacoity cases in branches is high so it is the big threat to the Bank.

• The default ratio of customers who are availing the credit facilities from the ABL is extremely high because of the economic recession in Pakistan.

• Also the threat of new entrants is prevalent there.

ORGANIZATION’S MANAGERIAL FUNCTIONS/OPERATIONS

PLANNING

Planning is the process that includes the identification of an organization's immediate and long-term objectives, and then formulating and monitoring specific strategies to achieve them. It also includes staffing and resource allocation. Planning is considered as one of the most important responsibilities of the management team.

Planning is the basic function of management. It is concerned with chalking out a future course of action and then deciding in advance of the most appropriate course of actions to achieve the pre-determined goals.

According to KOONTZ, "Planning is deciding in advance - what to do, when to do and how to do. It bridges the gap from where we are and where we want to be".

A plan is a future course of actions. It focuses on the problem solving and decision making. Planning involves the determination of courses of action in order to achieve the desired goals. Therefore planning is a systematic thinking about ways and means for accomplishment of pre-determined goals.

Importance of Planning for Allied Bank Limited

• Planning provides directions

• Planning helps to reduce the risks of uncertainty

• Planning enables to reduce the overlapping and unnecessary activities

• Planning promotes innovative ideas

• Planning facilitates decision making

• Planning sets up the required standards for controlling.

Features of Planning

• Planning emphasizes on achieving objectives

• Planning is one of the prime functions of management

• Planning is pervasive

• Planning is continuous

• Planning is futuristic

• Planning involves decision making

• Planning is a mental exercise

Steps involved in the process of planning include

1. Setting objectives: Objectives are established for the entire organisation and each department or unit within the bank.

2. Developing premises: Planning is concerned with the future which is uncertain and every planner is using conjucture about what might happen in future.

3. Identifying alternative courses of action: Once the objectives have been set up and the assumptions are made therefore the next step would be to act upon them.

4. Evaluating alternative courses: The next step is to weigh the pros and cons of each and every alternative.

5. Selecting an alternative: This is the real point of decision making. The best plan has to be adopted and executed.

6. Implement the plan: This step is concerned with putting up the plan into action.

7. Follow-up action: This involves monitoring the plans which is equally important to ensure that objectives are met.

Strategic Planning at Allied Bank Limited

Allied Bank Limited has built its business on very strong foundations. The strategy continues to build the business by focusing on SME and Agriculture sector and strengthening its corporate and commercial relationships, including product innovation and focusing continually on the service quality.

Customer is the main focus at Allied Bank. Understanding the banking needs of the customers and then fulfilling these needs by offering the customers with superior innovative solutions is the nucleus of the bank’s strategy. Advancement in technology and Innovation are the key enablers of Allied Bank’s strategy. Management is working tirelessly to enhance the customer experience by offering them better, relevant and state of the art products and services in the future. Bank stands on solid foundations as reflected by long term rating of "AA" and short term rating of "A1+" by PACRA.

The bank continues to pursue the strategy of having a mixture of youth and experience by investing in best of industry talent and inducting young MBAs as Management Trainees. Competency based recruitment along with market based compensation has enabled the bank to attract the best of industry talent. The banks Human Resource policy is based on a clearly defined performance management system,including career planning and development, meritocracy and succession planning.

In these testing times Allied Bank is focusing on strengthening the risk management framework.. According to the chairman Mohammad NaeemMukhtar "We are constantly learning and embracing change in a dynamic environment. Learning and acquiring new skills to better evaluate and optimize risk will be our focus".

Planning can be highly specialized based on the organizational goals, division goals, departmental goals, and team goals. It is up to the managers to identify which goals need to be planned within his or her individual department or area.

CENTRALIZED DECISION MAKING IN ABL

Decision making in ABL is centralized. The decision making at ABL is in the hands of the most senior management that is at the top of its hierarchy.

This has many advantages:

• Common policies and practices are easier to implement in the bank.

• It prevents other departments and areas from becoming too independent.

• It is easier for ABL to coordinate and control from the center.

• Centralized decision making in ABL enables the top management to develop the banks mission and vision, and set objectives for the lower management to follow.

STRATEGIC OBJECTIVES:

• Formulation and implementation of effective cost control strategies

• Timely finalization and dissemination of periodical financial statements Allied Bank is ranked as one of top investment banks in the country because of its key role in the major investment and corporate banking transactions. In recognition of its achievements in this area, the Bank was awarded "The Corporate Finance House of the Year - Banks 2005-06" by CFA Association of Pakistan. At ABL Finance Group plays pivotal role in strategic planning, formulation of business strategy, budgetary control, MIS, Tax management and Financial and Regulatory Reporting. The Group provides proactive support to business groups by providing analysis and information for efficient decision making.

Finance plays dynamic role in enhancing the economic value and realization of corporate objectives of the Bank. The Group also provides support in the following:

• Strategic planning and budgeting

• Automation initiatives

• Performance measurement for various business segments and products

The strategic objectives of ABL include:

To give a strategic direction and vision for transforming the Bank into a dynamic and world class financial institution. In this context, Finance Group played a key role in formulation of 5 years strategic plan of the Bank.

The Group in coordination with other business groups also prepares robust annual business and operating plans. The annual budgetary exercise is done in coordination with other supporting and business groups to have a realistic but challenging budgetary targets in the back drop of economic environment and business competition. A robust monitoring mechanism to track the actual results with the budgetary targets is in place.

The bank has structured management reporting system in place which gives the management key performance indicators and has drill down capability to trace variances. We have also developed MIS for various internal business segments of the Bank which helps the senior management in timely decision making and monitoring.

Operations Group is well positioned to meet the challenges of the changing business environment. To achieve it, the Group is working on optimal use of information technology coupled with increased awareness of the customer’s preferences. The Group is involved in achieving efficiencies through reengineering the existing processes and procedures. This will allow the Bank to offer easy, convenient and hassle free products and services at most economical pricing. It was considered imperative to introduce latest and state of art technology in banking operations which will considerably reduce manual intervention ensuring enhanced productivity, accuracy and economy in processing cost.

During the short span of two years, the Bank managed to upgrade its image and captured a visible market share. Besides automation of process, the Engineering Division initiated the remodeling and renovation of the branch network to introduce a corporate outlook across the branches as well as to provide comfortable and convenient environment to its customers. Alternate Delivery Channel function focus greatly on reducing the transactions on the counters. We were instrumental in establishing the niche for its ATMs throughout the country by extending the network of 290 ATMs in more than 90 cities (December 31, 2006).

This is an impressive milestone as number of ATMs was only 45 in September 2004 when the Bank was recapitalized. The Bank has clearly emerged out as market leader in establishing the largest network of ATMs while offering value added services like interbank / branch funds transfer and facility for utility bills payment. The Bank also managed to cross 300,000 landmarks of ATM card holders and became the largest issuer and acquiring bank among the member banks. Internet bank facility was launched in the beginning of the year which further boosted the Bank’s image in the local market equally supported by helpdesk facility being run on 24/7 basis.

One of the objectives of ABL is to keep the branches well informed about the changes in rules and regulation. It also ensures that adequate controls from risk perspective are in place and initiatives like online verifications of customer information and most importantly to implement them timely.

Bank would focus on widening the scope of electronic distribution channels to reduce the dependencies on the branches, reducing the transactions costs and enhancing the value added services. This coupled with the repositioning of the branches and helps in increasing the market share and customer satisfactions. There would be special focus on creating awareness programs for the staff about the retention of customers by fulfilling their demands, cross selling and managing their expectation proactively.

The core objective of the human resource group is to recruit and retain competent pool of human resource for the Bank and to look after the employees, in terms of their motivation, competency enhancement and training and development. Allied Bank is an equal opportunity and affirmative action employer where females and minorities are given equal opportunity to apply. However, merit and individual competences are the most significant factors for the selection in the Bank.

The Human Resource Group (HRG) is sub divided into six wings, namely, Personnel Wing, Compensation and Benefits Wing, Management Development Wing, Employee Relations Wing, Human Resource Planning Wing and Human Capital Management Wing. All the human resource management practices and activities are uniformly distributed amongst these wings.

In early 2005, a major reorganization was undertaken across the Bank and various activities were structured on functional basis. The purpose of this reorganization was to achieve the maximum professionalism and specialization in various functions and to put internal check and balances in place, for the implementation of best management practices. Along with this reorganization, a constant process of induction of best available resources from within and outside the country was initiated and as a result, the Bank now has professionals with number of years of experience in specified fields. Uptil now, we have completed placement of all key positions for the top two tiers of the management.

One of the major tasks which are also undertaken as a continuous process is to change the culture of the Bank by not only introducing technology but also to induct fresh human capital by way of an efficient and effective management training program. So far, six batches of these trainees have been inducted and after comprehensive training at Allied Bank Management Development Centers, they have been placed in various functions. We have ambitious training and development programs with three management development centers at Karachi, Lahore and Islamabad, with full time principals and faculty members imparting training on a wide variety of subjects, including the training in soft skills. We have a plan to upgrade these management development centers and to bring them to the international standards. We are also planning to work with the leading educational institutions to provide training to our employees specific to banking requirements. Last year, the management development centers conducted 109 different in house training courses. In addition to these in house training courses, 20 employees holding key positions were sent to 14 international courses around the world. In addition, 334 staff members were sent for 154 local training courses in reputable training institutes within Pakistan.

ORGANIZATION POLICIES

The organizational policies in ABL will define how the bank will conduct its operations.Organizational policies are formed by the following Committees:

Audit Committee

The primary responsibilities of the Audit Committee are to identify appropriate measures to safeguard the bank’s assets, to assure consistency of the accounting policies, to review the financial statements and to recommend the appointment of and to coordinate with the external auditors. The committee is responsible to check the internal control system including the financial and operational controls, also ensuring adequate and effective accounting and reporting structure, including the determining and monitoring compliance with the best practices of the corporate governance and the satisfactory implementation of the internal control over financial reporting. Execution of the management testing plan, assessing the testing results and recommending appropriate corrective action is also considered as the major responsibilities of the Audit Committee.

Human Capital Committee

The Human Capital Committee defines the organizational structure and the functional responsibilities of each group. It approves staff strength, salary revisions, key appointments, bonuses and including any special allowances. The Human Capital Committee does the job of nominating the management personnel on the boards of other companies / subsidiaries. It also suggests amendments in Human Resources Policy to the Board. Besides controlling the performance of Human Resources Group, the committee also supervises certain H.R. related management committees.

E-Vision Committee

One of the key missions of the e-Vision committee is to give strategic direction for e-banking and adoption of emerging technology. Strategic plans for IT infrastructure and review or the implementation of medium to long term plans including the alternative delivery channels are also examined by the e-Vision committee. This Committee give assistance to the Board with insights relating to the international developments in the field of e-banking adoption. It also manages the performance of Project Steering Committee (T24 Core Banking Project) ,the IT steering Committee, and the IT Group.

Board Risk Management Committee

The primary functions of Board Risk Management Committee (BRMC) is the monitoring of management’s adherence to prudent and sound risk policies, also the assessment of the ever changing risk profile and providing risk appetite to the business units. It also assures the development of the risk management principles to build stakeholders confidence, safeguard and to enhance its reputation. The committee approves risk limits for Credit, Credit approval grid market and operational risks and proposals relating to the rescheduling/write-offs and filling of recovery suits. Overseeing of specific management committees and groups is also performed by the BRMC. The Committee also supervises the initiatives and expenses related to Basel II and up gradation of Risk Management Systems.

Strategic Planning & Monitoring Committee

Strategic plans of the bank, including the annual operating plan, proposals regarding the acquisition, divestures and alliances are considered by the committee for recommendation to the Board. Among may other things the committee monitors the progress against the annual plan or budget. Besides overseeing specific management groups and committees, it also approves filing of legal suits and criminal complaints.

RULES AND REGULATION’S

The rules and regulations for ABL bank are discussed below.

The Statement of Ethics and Business Practices

• All employees of the Allied Bank Limited, herein after called ABL, shall conform to and abide by the ABL rules and obey all lawful orders and directives which may from time to time be given by any person or persons under whose jurisdiction, control or superintendence they may be placed for the time being.

• They shall comply with and observe all the applicable laws, rules and regulations and policies of Allied Bank Limited.

• Stand firmly against supporting the activities of any group or individual that unlawfully threatens public order and safety.

• The employees shall not be a member of any political part and take part in, or assist in any way in any political movement.

• They shall not express views that are detrimental to the sovereignty ideology or integrity of our country.

• Not canvass or otherwise interfere or use influence in connection with or take part in any election as a candidate to a legislative / local body or issue an address to the electorate or in any manner announce or allowed to be announced publicly as a candidate or prospective candidate. However, they may exercise their right to vote.

• Shall not bring or even attempt to bring political or other pressure/influence directly or indirectly to bear on the authorities / superior officers or indulge in derogatory pamphleteering, contribute, or write letters to the newspapers, anonymously or in their own name with an intent to induce the authority/superior officers to act in a manner that is inconsistent with the rules, in respect of any matter regarding the appointment, promotion, transfer, punishment, retirement or for any other conditions of service of employment.

Integrity

• Not accept any benefits from the estate of, or a trust that is created by a customer, or any benefit from an estate or trust of which ABL’s Company is an executor or administrator or a trustee.

• Equip themselves with the highest standards of ethics, professional integrity and dignity in all dealings with the public, clients, investors, employees, and fellow bankers and not engage in acts discreditable to ABL, profession and nation.

• If they become aware of any irregularity that might have an effect on the interests of Allied Bank Limited, they shall inform the senior management immediately.

• Maintain all books, data, information and records with scrupulous integrity, reporting in the correct and timely manner all transactions / reports.

• Avoid all such circumstance in which there is personal interest conflict, or which may appear to be in conflict with the interests of Allied Bank Limited or its customers.

• Not use their employment status to seek personal gain from those doing business or seeking to do business with the bank, nor should they accept such type of gain if offered.

• They shall not accept any sort of gift, including a favor, entertainment or other benefits the size of frequency of which exceeds normal business contacts from a constituent or a subordinate employee of ABL or from persons likely to have dealings with ABL and candidates for employment in ABL.

Confidentiality

• Maintenance of privacy and confidentiality of all the information acquired during the course of professional activities and abstain from disclosing the same unless or otherwise it is required by statutory authorities/law.

• All such information would remain as a trust and will be used only for the purpose for which it is intended and would not be used for the personal benefits of any individual or people.

• Inside information about ABL’s customers or affairs should not be used for their own benefit or gain or for that of others either directly or indirectly.

Professionalism

• Serve the bank honestly and faithfully and should strictly serve affairs of the and as well as the affairs of its constituents.

• They shall use utmost effort to promote the interest and goodwill of ABL and shall show courtesy and deliberation in all the transactions or correspondence with the officers of the Government, State Bank of Pakistan(SBP), other Banks and including the Financial Institutions, as well as the others establishments dealing with ABL, the banks constituents and the public.

• Disclose as wells as assign to ABL all interest in any development, advancement, identification or work of authorship that they may make or either conceive and which may arise out of their employment with ABL.

• If their employment is terminated then all rights to property and the information generated or obtained as a part of their employment relationship will remain the exclusive property of ABL.

• Shall not engage in Money Laundering and will be extremely careful in protecting the bank from being misused by anyone to launder money by strictly complying with "Know Your Customer" policies and procedures.

Business/Work Ethics

• Respect all the fellow colleagues and work with them as a team. They shall at all times be faithful and not let any personal differences have an effect on their work.

• They will treat every customer of the bank with high respect and courtesy.

• Ensure good attendance and promptness and shall demonstrate a consistently good record in this area.

• For any absence during the working hours, employees shall obtain a written permission of their supervisor. They shall not be absent from their duties, nor leave their station overnight, without obtaining the permission of the competent authority.

• All employees must maintain a standard of personal hygiene and dress appropriately for attendance at work.

• As a personal responsibility employees must safeguard both the tangible and intangible assets of ABL and its customer(s) that are under their personal control and should not use the bank’s assets for their personal benefits except where permitted by the bank.

• The employees or workers shall not use any ABL facilities including a telephone to promote trade union activities, nor should they carry weapons into ABL premises until and unless they are authorized by the management, nor carry on trade union activities during office hours, nor shall they subject ABL officials to physical harassment.

• Not indulge in any sort of harassment including sexual harassment or intimidation.

• Employees and workers shall ensure strict adherence to all the health and safety policies as may be implemented from time to time by the bank.

• Not to give any interview in either the print or electronic media or have their photograph displayed or acts in television or stage plays or in cinema without having permission from the competent authority.

• Employees shall also not take part in any of the following activities except with the prior permission of the competent authority:

• Borrow money from or in any way place themselves under pecuniary obligation to broker or moneylender or any employee of ABL or any firm or person having dealings with ABL.

• Buy or sell stock, share or securities of any description without funds to meet the full cost in the case of purchase or scrips for delivery in the case of sale. However they can make a valid investment of their own funds in such stock, shares and securities as they may prefer to buy.

• Lend money in their private capacity to a constituent of ABL or have personal dealings with a constituent in the purchase or sale of Government paper,bills of exchange or any other securities.

• Act as agent for an insurance company otherwise than as agent for on behalf of ABL.

• Be connected with the formation or management of a joint stock company.

• Engage in any other commercial business or pursuit either on their own account or as agent for another or others.

• Accept or seek any outside employment or office whether stipendiary or honorary.