FINAL REPORT OF MANAGEMENT

PROJECT
TOPIC: AL-BARAKA Islamic bank limited
Objective of Study
The purpose of the study is to work in a real life situation and to
apply management skills. In this context its objectives are:
To review the Banking environment of Al Baraka Islamic
Bank (AIB).
To analyze different working areas associated with Bank.
To analyze the strengths and weaknesses of the Bank and
its Banking Practices.
To suggest possible solution in front of Bank Management in
order to devise their Practices in a better way.
To analyze banking operations i.e. operational analysis,
financial analysis etc,
To do practical work in field and apply the knowledge of
classroom lectures to the real life situations,
To suggest concrete and feasible recommendations.

Limitations of the Study

Due to the constraint of time the problem of short time
period makes the analysis restricted as one cannot properly
understand and thus analyze all the operations of a bank just
in eight weeks.
More over some of the data was confidential and was not
made available to me.
Sometimes due to the busy schedule of the bank, complete
information regarding different activities was not provided in

time. During the study it was tried to include only relevant

material and avoid irrelevant material.

Merits of the Study

The study conducted will benefit the finance students in particular
and banking students in general because the third chapter of this
report comprehensively encompasses most of the aspects of
banking, followed by SWOT analysis, conclusion and
recommendations. Furthermore Al Baraka Islamic Bank Abbott
bad may also benefit from the recommendations made at the end
of the report.

Methodology of the Study

The report is prepared using both primary and secondary data
that included the following methodological tools.
o Primary Data
o Secondary Data

Scheme of Study
This internship report is divided into five chapters the detail of
which is given below
Includes objectives, limitations, merits, methodology, and
scheme of study.
Includes background and history of banking in Pakistan,
Historical background of AIB Branch, Abbottabad,
Organizational Structure, roles, functions and branches.
Is about the Financial Position and Products and services
provided by Al Baraka Islamic Bank (AIB)
Describes financial, SWOT analysis and findings of the study

 Gives feasible and constructive recommendations for

different departments of AIB Branch, Abbottabad.

INTRODUCTION
Like many other subjects and social sciences no any precise
definition can be given for the study of banking also keeping
in view the particular function of banking. It is clear that
there is a big difference in functions performed by old
institutions and modern baking. But the basic idea is same
banking has now become a multi-service organization with
wider scope and area of its influence .Mr. Gilbert says bank
is dealer in capital or more peculiarly in money. He is an
intermediate party between borrower and lender. The
definition lay down in the banking companies Act 1962 is
"Bankers means a person, transacting the business of
accepting for the purpose of landing or investment, of
deposits of money from public, repayable on demand or
otherwise and withdraw able by cheque, grafts or orders or
otherwise and includes any "Post office saving Bank".
In view of the above definitions, in simple words a bank can
be defined as an institution dealing in money, accepting
deposits and advances loans.

BANKING IN PAKISTAN
Banking industry in Pakistan has passed through various
transitional phases. The State Bank of Pakistan regulates the
banking sector, consisting of the commercial banks, along
with all NBFIs, except for the leasing companies. The IMF
experts in their reports said that banking industry has
developed to cater to the local needs of the financial sector
as well as it is highly competitive to serve the customers
globally. In the past it never attracted the customers, as the
interest rates were higher as compared to other countries in
the region. Taxes were all time high. Recoveries were hardly

25%. Political pressures damaged the efficiency. The World

Bank and IMF never lent support to the industry.
The State Bank of Pakistan realizing the gravity of the
situation introduced reforms. Banking sector reforms have
brought in competition within the system, improved internal
efficiency, reduced the lending rates significantly and
broadened access to the middle class. While these results
are encouraging, a lot more needs to be done and, we have
spelled out the agenda for the second-generation reforms in
the financial sector covering the period 2005-2010. Banks in
Pakistan account for 95 % of the financial sector and hence
good health of banks is directly related to the economic
growth and development of Pakistan. Banks in Pakistan had
been catering basically to the needs of the government
organizations, subsidizing the fiscal deficit, serving a few
large corporations and engaging in trade financing. There
was no lending to small and medium enterprises, to the
housing sector or to the agricultural sector, which create
most of the growth and employment in Pakistan. Most
important, the financial sector suffered from political
interference in lending decisions and also in the appointment
of managers. The middle class which is the backbone of any
economy was not given due attention by the banking sector.
(Hussain, S; Rana, K & Shabbir, A (1991))
Pakistan is one of the few developing countries where the
public sector banks went to the private hands in a very short
span of time. The government only owns the National Bank,
while 80 % of the bank assets are in private hands. And
there is tough competition among the banks, as in the
private sector everything is performance-based. Unlike the
public sector or the government, any employee not
producing results is fired because he affects profit of the
organization. The bankers these days go out of their cozy
offices to market their financial products and build up
customer base. The seller market has changed into a buyer

market. The customer may choose the bank with best

products and services. There was a time, only a few years
back, people used to go the banks and the staff treated
them shabbily, was generally uncooperative and unfriendly.
Now, they are after the customers. Banking sector reforms
were thus needed badly to address these and other
constraints so that the banks could play their due role in the
economic development of the country. Although, there is no
room for complacency and a lot still needs to be done, even
the worst critics of this government do concede that if there
is one sector, which has undergone basic transformation that
is the banking sector.
Some of the major reforms achieved in the banking sector to-date
include:
Strong corporate governance by SBP, enforcement of
banking license regulations, transparent financial
transactions, independent appointment to Board
positions and Chief Executive Positions, arms length
transactions for Board family member representations,
inside trading, regulations of external auditors
profession, and prudential guidelines for Board of
Directors.
Strict monitoring and reduction of non-performing loans
by active involvement of the Corporate Industrial
Restructuring Corporation (CRIC) and Committee of
Revival of Sick Units (CRSU).
SBPs removal of restrictions imposed on nationalized
NCBs for commercial financing and incentive schemes
for encouragement of mortgage financing by the banks.
Implementation of Financial Institutions (recovery of
finances) Ordinance 2001, and relaxation of licensing
and regulatory environment for Micro Credit and Rural
Finance Institutions, encouraging their establishments

at districts, provincial and national levels with varying

capital requirements.
Mandatory requirement for all banks to get themselves
evaluated by credit rating agencies in order to facilitate
depositors to make informed judgments about placing
their savings with the banks.

Historical Background of Al Baraka Islamic Bank

(AIB)
Al-Baraka Islamic Bank (AIB) is a member of Al-Baraka
Banking Group (ABG) which is a Bahraini Joint Stock
Company listed on Bahrain and Dubai stock exchanges and
one of the well-known leading international Islamic banks.
ABG is committed to expanding its presence in Pakistan,
which is evident from the rapid growth being undertaken by
Al-Baraka Islamic Bank in the country and its plans to have
its Pakistan operations localized as a Bank registered in
Pakistan, over the next few weeks. Building on the expertise
and experience of its workforce and the growing awareness
Shariah compliant banking solutions among the masses, AIB
has successfully developed itself as a major unit of ABG
operating in the region, capitalizing on the Groups
geographical presence and high quality research and
development in Islamic financial products for its business
expansion in the country. Faced with growing challenges in
this rapidly developing market, AIB strongly relies on its
ability to be an effective and efficient market player through
renewed focus on superior customer service, development of
Islamic alternatives to conventional financing facilities, and
strict adherence to Shariah rulings and principles.

Al Baraka Islamic Group

Al-Baraka Banking Group is the biggest Islamic banking

group listed on the Bahrain Stock Exchange in terms of
capitalization. It has been rated by Standard & Poor's as
BBB- with a short-term rating of A-3. ABG offers retail,
corporate and investment banking and treasury services
strictly in accordance with the principles of the Shariah.
The authorized Capital of ABG is US$1.5 billion, while the
total equity amounts to about US$ 1.59 billion. With assets
of US$11.2 billion, the Group has a wide geographical
presence in the form of subsidiary banking Units in 12
countries, which in turn provide their services through more
than 250 branches. These banking Units are Jordan Islamic
Bank/ Jordan, Al Baraka Islamic Bank/ Bahrain, Al Baraka
Islamic Bank/ Pakistan, Banque Al Baraka D'Algerie/ Algeria,
Al Baraka Bank Sudan/Sudan, Al Baraka Bank Ltd/ South
Africa, Al Baraka Bank Lebanon/Lebanon, Bank Et-Tamweel
Al- Tunisi Al Saudi/ Tunisia, The Egyptian Saudi Finance
Bank/Egypt, Al Baraka Turk Participation Bank/Turkey, AlBaraka Bank Syria (under establishment), and representative
office, Indonesia.

Subsidiary Banking Units of ABG

Present Status
Currently the authorized capital of Al Baraka Islamic is US $ 1.5
billion, while the total equity amounts to about US $ 1.5 billion.
The Group has a wide geographical presence in the form of
Subsidiary banking units in, which in turn provide their services
through more than branches. Currently there are 496 employees
working at different branches of Al Baraka Islamic at Pakistan.

Credit Rating
JCR-VIS Credit Rating Company Ltd. has reaffirmed the medium
long term rating of Al-Baraka Islamic Bank BSC - Pakistan
Branches at A ( single A) with a stable outlook, the shot term
rating is A-1 (Single A-one).

Auditors
Ford Rhodes sidat Hyder & Co., Chartered Accountants, being
eligible, have offered themselves to act as auditors of the Bank
for the year ending December 31, 2016

Organizational Structure Al Baraka Islamic Bank

(AIB)
Organizational Structure of AIB
BOARD OF
DIRECTORS
EXECUTIVE
COMMITTEE

AUDIT
COMMITTEE

SHARIAH BOARD

COUNTRY
MANAGER

REGIONAL
MANAGER
BRANCH
MANAGER

Al Baraka Islamic Bank (AIB) Management

Structure Chart
BORAD OF
DIRECTOR

Regional
Manager
SOUTH
HJJ
Chief
financiof
Head
al
Officer

Head
of HR

COUNTRY
MANAGER
Regional
Manager
Central
Head
of
Audit

Head of
IT

Regional chief
Branch Manager

Regional
Manager
North
Head of
Treasury

Our Vision
To be a leading and a diversified International Islamic Bank,
Offering a wide range of Quality Products and Services and
forming strategic alliances for a Competitive Edge.

Mission Statement
We strive to be a Premier Regional Islamic Bank, Dedicated to the
Economic and Social Development of our target market,
Maximizing our Clients and Shareholders Value And focusing on
the Human Resource Development In an environment of
Creativity and Innovation.

Corporate Profile
The Corporate Profile provides a comprehensive summary of the
organization. The Profile contains the following information:

Company Business Description

Industry Classification (Major and Sub Industry)
Address (mailing), Phone Number, Web Address
Exchanges Listed, Ticker Symbol
Senior Officers
Number of Employees
Earnings/Dividends
Financial Ratio Analysis
Recent Stock Performance
Sales (recent year)
Shareholder Information
Up to 10-year Analysis Summary (Per Share) o Market Price
o Value Ratios
Price/Earnings
Price/Book Value
Dividend Yield o Equity Capital

% Earned Growth
% Profit Rate (ROE)
Beginning of the Year Book Value o Earnings
12 Month Earnings per Share
Annual percentage Change o Dividends
% Payout Ratio
12 Month Dividends per Share
Proprietary Wright Quality Rating

Departmentalization
The Al-Baraka Islamic Bank has number of interrelated
departments that works together to achieve the specific goals
and objectives of the organization. The AIB has built a
hierarchical system that includes the sub departments. The
AIBs exiting system includes following departments.

Cash department
Deposits department
Clearing department
Advances department
Remittances department
Government department

PRODUCTS & SERVICES OFFERED BY AL BARAKA

ISLAMIC BANK
Striving to develop and an integrated Islamic Financial System.
Compliance with the rules and principles of Islamic Sharia is the
core of the banking and financial activities of the Bank. To this
end, Albaraka has successfully sought the advice and expertise of
Islamic scholars acclaimed for their knowledge and piety from all
over the Islamic world to guide its path and monitor its
performance. The Banks activities and operations are regularly
scrutinized by its Sharia Advisory Board.

Products and Services of AIB Al-Baraka Islamic Bank in

Pakistan offers a comprehensive range of banking
products and services. They are:

Savings and Current Accounts

Term Deposit Accounts
Khazana Accounts
Incentive Accounts
Murabaha Investment Accounts
Housing Musharakah

Other Services of AIB Beside of these banks also offer a

large range of services.

Demand Draft
Letters of Credit (L/C)
Letter of Guarantee
Travelers Cheque
Pay order
Foreign Remittance Islamic Export Financing
Foreign Currency Accounts
Current Account
Saving Account
online Banking
ATM Network
Lockers Al Baraka Islamic Bank
Utility Bills

SWOT Analysis of AIB

SWOT stands for Strength, Weaknesses, Opportunities and
Threats. SWOT is useful tool for providing a framework for
analysis of an organization. It is widespread approach to make
assessments in terms of internal and external environment of the
organization and to formulate strategies by analyzing its internal
strengths and weaknesses, external opportunities and threats.

SWOT analysis for Al Baraka Islamic Bank is as follow:

STRENGTHS
Commitment to Islamic Shariah Striving to develop and an
integrated Islamic Financial System . Compliance with the
rules and principles of Islamic Shariah is the core of the
banking and financial activities of the Bank. To this end,
Albaraka has successfully sought the advice and expertise of
Islamic scholars acclaimed for their knowledge and piety
from all over the Islamic world to guide its path and monitor
its performance. The Banks activities and operations are
regularly scrutinized by its Shariah Advisory Board.
Experienced and Qualified Staff During the research it has
been observed that the staff/personnel of the organization is
qualified and experienced. Many of the bank officials have
got advance knowledge and experience in the fields of
management, banking law and practice.
Good PR with Customers The relationship of the manager
and the other staff of the organization is really good with the
customers, which results in good will and loyalty of the
customers towards the organization.
Good Managerial Skills The managers are fully aware of the
recent managerial concepts and are able to deal with any
type of scenario.
Job Satisfaction at All Levels
Job satisfaction is one of the important factors for the
employees to be motivated. The people in the organization
under consideration were found highly satisfied with there
jobs.
Quarterly Performance Appraisal Performance appraisal is
the way by which one can evaluate the employees
performance; it results in the enhancement of the
organizations overall performance. The performance

appraisal is done on quarterly basis in this organization,

which results in better performance.
Friendly environment
The environment of the organization is very friendly.
People over here are very cooperative, not only with the
customers but among themselves as well.
Competent senior management
The senior management in the organization is very
much competent and experienced; they successfully handle
different internal and external affairs.

WEAKNESSES

No HR department level at zonal and branch level-Human

resource department is one of the foremost requirements of
any organization of this age. The organization under
consideration, though contain a HR division at headquarter
but there are no sub divisions at the provincial or branch
level. So when different problems related to HR are raised,
they are left unaddressed.

Centralized decision making-The decision making in the

organization is completely centralized which results in the
loss of confidence of the employees over the management,
employees may not want to follow the dictates, rules and
regulations.

Lack of frequent training-Though there is training academy

at head office, but the training programs are usually
confined to the managerial staff, there is a need of training
at all the levels.

Lengthy recruitment process-The recruitment process is

quite lengthy which can discourage the new comers. So,
there is a need to shorten the whole process.

Less internal recruitment for new posts -It has been found
that in the organization under consideration, if new
vacancies are allocated there is a trend of external
recruitment, which results in the dissatisfaction of the
current employees.

Lack of Marketing Effort -The bank does not promote its

corporate image, services, etc on a competitive way. Hence
lacks far behind in marketing effort. A need for aggressive
marketing is there in the era marketing in now becoming a
part of every organization.

OPPORTUNITIES
More qualified people in the market Due to the increase of
interest of people in business field, many business
institutions have been established, which produces a good
lot of qualified and competent business professionals. So,
the organization under consideration can hire more qualified
people from market.
Effective utilization of internal human resources People
working in the organization get use to the norms and values
of the organization, so these expirees can be utilized with in
the organization whenever required.
Training can enhance the employees skills. Training and
development is one of the important function of human
resource management. If the staff of the organization are
properly trained and developed they will add to the value of
the organization.

THREATS
Increase in Competition-The increasing competition in local
as well as national and multinational level also lower down
the profitability of the bank and compelling the bank to use a
large amount of funds to meet out competition.

 Good job opportunities outside-The other organizations of

similar nature are offering more salaries and benefit
packages to their employees. So, there is a threat to the
organization that their current employees may leave it.
Uncertainty about future change-An uncertainty about the
future changes has been noticed among the employees of
the organization, it results in dissatisfaction and
demotivation of the employees, which is a serious threat to
the organization.
Other organizations are using better HR techniques-Other
organizations of similar nature are using better and recent
HR techniques, so they have got an edge to facilitate their
employees whenever they need. It can be a serious threat to
this organization as there employees would not be satisfied
of their own organization which will effect their performance.

CONCLUSION AND RECOMMENDATIONS

Conclusion
The Al Baraka Islamic Bank is a new emerging bank and it is
trying to get market share in the presence of national and foreign
banks operating in the country. It has played an important role in
boosting the economy of the country but there always exists
some room for improvement. After observing this AIB very closely
and its HR department in particular, following outcomes have
been concluded.
The decision making is still centralized as the middle and low
level management is not taken into confidence.
There are no sub divisions at the provincial or branch level.
So when different problems related to HR are raised, they
are left unaddressed.
Most of the employees working in this branch are not much
familiar with computer. They just know how to use their part

of software if any problem comes in the computer they can't

fix it.
The spacing requires expansion. The employees are seated
congested .If the customers exceed more than fifteen in
number, then the branch get filled with lot of disturbance.
The recruitment process is very lengthy it should be
trimmed.
The marketing efforts at the branch level are less disciplined
and there are no integrated efforts from all the staff
members. The mobilization of deposits is mainly considered
as the responsibility of the branch manager but the rest of
the staff is usually least interested.
Bank branches are restricted to some specific cities.
The bank has been applying the modern concepts of
management and marketing at both micro levels. The
interior and exteriors of the branch have been changed but
the staff of the branch has been found less motivated
towards the organizational objectives.

Recommendations
As I have spent two months in AIB Abbottabad Branch for the
Internship purpose. During this period I have tried my best to
observe the banking environment in the AIB. I have observed a lot
of strengths and weaknesses in the branch. On the basis of this
observation I have come up with certain recommendations
particularly related to the AIB, Abbottabad Branch but generally
can be applicable to the whole banking system of Pakistan
including all other branches of Al Baraka Islamic Bank for
improvement. These recommendations will help to cope with the
problems being faced by the Bank and will enhance the efficiency
and performance of the AIB in particular and all the banking
sector of the country in general.

From the previous analysis of the financial statements I have

realized that that Al Baraka Islamic Bank is performing very well
since its inception. It is quite difficult to give suggestion to
improve the banking conditions AIB. As we know that nothing is
perfect, there is always a room for improvement, so I will
recommend following suggestions for AIB:
Employees Training programmes must be introduced on
continuous basis so that Employees have understanding with
the latest developments especially with the customers.
Bank should introduced incentive plans for employees on
regular basis so that if employees may work whole heartedly
for the welfare of their organization. While giving incentives
qualification, work, experience, hard work and such other
factors must be considered.
Mismanagement of resources must be avoided as much as
possible as it decreases profit but also discourage hard
worker and honest employees.
Fresh graduates must be recruited. As the combination of
Experienced and fresh can produce better results and it will
improve the efficiency of management.
AIB is going towards mobile banking but the problem is that
a common client has no idea of its usage due to lack of
marketing. I think that a proper marketing programme must
be launched for client's awareness.
Banks different schemes must be conveyed to the targeted
customers so that to have a reasonable share in market.
To motivate the employees their remuneration / salaries
should be made at par with top tier Banks.
Aggressive publicity campaign must be introduced through
press and Electronic media for new products and scheme by
initiating vigorous marketing policy.
Bank should adopt such an induction plan that when a
customer opens his account with the bank he should be
supplied with a booklet which enables him to know the

procedure of filing the cheques, pay-in-slip etc. It will save a

lot of time of the bank staff afterward during the conduct of
the account of that customer.
The attitude of the bankers with all of their customers is not
the same; they pay more attention and good service to some
of the customers and neglect a major portion of them. Some
of the customers approach to the bank officials and get their
work done before others; it is not a good practice. All the
customers should be treated equally.
AIB should increase its communication with customers
about the terms and conditions of its different products and
services.
Misuse of telephone internet, fax machines and other
facilities available to the employees of the bank must be
handled properly.
In AIB mostly recruitments are done through
recommendations or references of employees. Recruitment
should be strictly on merit with no other favor given to any
candidate. Selection should be on the basis of test and
interview as like Muslim Commercial Bank (MCB) and other
banks etc. this will ensure the entry of competent and
worthy employees into the bank.
Scholarship programs should be designed for senior
employees and branch managers. The AIB should get into
contract with top foreign universities. Every year the bank
should finance and send their senior managers for further
education abroad. After completion of higher education
employees will be in a better position to attain the strategic
objectives of the bank and increase the overall business and
profitability portfolio of the bank.
The branch network should be improved and number of
branches should be increased to reach and provide services
to maximum number of customers.

AIB should conduct meaningful refresher courses, seminars

and workshop with a view to improve the knowledge of the
staff. The HR Departments arrangement for staff trainings
to coup with new demands that may become threats for
interests of the Company. The present conventional training
programs need to be made more comprehensive.
The coordination among employees and different
departments should be improved. The coordination between
top and lower management also needed to be improved.
To provide proper information to consumers, information
counter should be set where true professionals guide
consumers.

References
Al-Baraka Islamic Bank (2009), Annual report 2008, Lahore.
DeCenzo D.A & Robbins S.P (2004); Fundamentals of Human
Resource Management,8th ed. John Wiley & Sons .
Hussain, S; Rana, K & Shabbir, A (1991); Banking Currency and
Finance, Lahore: Ilmi Kutab Khana.
Waleed (2010); Interview with Mr. Waleed, Manager Operations,
Al-Baraka Islamic Bank, Abbottabad, 11 March, 2010
Tariq Mahmood (2010); interview with Mr. Tariq Mahmood, Branch
Manager AIB, Abbotabad branch, 15March,2010.
Tamuja Agarwala (2008); Strategic Human Resource Management,
7th ed. Oxford University Press, New Delhi, India .
www.ibp.org.pk (Accessed date 03-06-2010)
www.albaraka.com.pk (Accessed date 15-06-2010)
www.abg.bh/English/home2.html (Accessed date 20-06-2010)