Chapter 1 Banking Secior

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

CHAPTER # 1

INTRODUCTION OF BANKING

SECTOR

DEFINITIONS OF BANK

EVOLUTION OF BANKS IN PAKISTAN

NATIONALIZED SCHEDULES BANKS

De-NATIONALIZED SCHEDULE BANKS

SPECIALIZED BANKS

PRIVATE SCHEDULE BANKS

NATIONAL UNIVERSITY OF MODERN LANGUAGES LAHORE1


1.0 Introduction of Banking Sector

The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank.

This history of banking is traced to as early as 2000 B.C. The priests in Greece used to

keep money and valuables of the people in temples. These priests thus acted as financial

agents. The origin of banking is also traced to early goldsmiths. They used to keep strong

safes for storing the money and valuables of the people. The persons who had surplus

money found it safe and convenient of deposit their valuables with them. The first stage

in the development of modern banking, thus, was the accepting of deposits of cash from

those persons who had surplus money with them.

The goldsmiths used to issue receipts for the money deposited with them. These receipts

began to pass from hand to hand in settlement of transactions because people had

confidence in the integrity and solvency of goldsmiths. When it was found that these

receipts were fully accepted in payment of debts; then the receipts were drawn in such a

way that it entitled any holder to claim the specified amount of money from goldsmiths.

A depositor who is to make the payments may now get the money in cash from

goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank

notes. The second stage in the development of banking thus was the issue of bank notes.

The goldsmiths soon discovered that all the people who had deposited money with them

do not come to withdraw their funds in cash. They found that only a few persons

presented the receipts for encashment during a given period of time. They also found that

most of the money deposited with them was lying idle. At the same time; they found that



they were being constantly requested for loan on good security. They thought it profitable

to lend at least some of the money deposited with them to the needy persons.

1.1 Definitions of Bank

1.1.1 Bank

“A financial institution, which deals with money and credit. It accepts Deposits from

individuals, firms and companies at a lower rate of Interest and gives at higher rate of

interest to those who need them.”

A financial establishment which uses money deposited by customers for investment,

pays it out when required, makes loan at interest, exchanges currency, etc.

1.1.2 J.W Gilbert

In his principles and practice banking defines a banker in these words:

“A banker is dealer in capital or more properly, a dealer in money. He is intermediate

party between the borrower and the lender. He borrows of one and lends to another”.

1.1.3 Sir John Paget

Defines banker in these terms:

“That no person or body, corporate or otherwise, can be a banker who does not

Take deposits accounts.

Take current accounts,

Issue and pay Cheques and

Collect Cheques crossed and uncrossed for his customers”



1.2 Evolution of Banks in Pakistan

The first phase in evolution of banking in Pakistan sees very hard days for the whole

banking sector. Starting virtually from scratch in 1947, the country today possesses a full

range of banking and financial institutions to cope with various needs of the economy.

The area now constituting Pakistan was, relatively speaking, fairly well provided with

banking facilities in undivided India, in March 1947 there were 3496 offices of Indian

scheduled banks out of which as many as 487 were situated in territories now constituting

Pakistan.

The Reserve bank of India was the central banking authority in India. At the time of

partition it was decided that in the interest of smooth transition it should continue to

function in newly emerging state of Pakistan, until 30th Sep.1948.

In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses.

This resulted in a negative effect on baking service in Pakistan. The banks, which had

their registered offices in Pakistan, transferred them to India. In an effort to bring about

the collapse of the new state by pushing a deliberate policy of withdrawals the Indian

bank offices closed quickly. Those banks, which stayed, operated only in name pending

the winding up of their business. The number of scheduled banks thus declined form 487

branches before independence to only 195 branches by 30th June1948.5

1.2.1 Banking Growth during (1948-1970):

In this tense situation, a committee was immediately setup to formulate a scheme of

central banking legislation for Pakistan. Many specialists were of the opinion that in view

of the acute shortage of trained staff, any idea of establishing a central bank was I



impractical and the best that could be attempted was the setting up of a currency board

until such times as sufficient staff could be organize to operate a central bank.

The questions as to whether the institution should be only a currency board or a full-

fledged central bank had exercised the mind of the Pakistan government since

independence. Through, it was realized that the shortage of trained personal to run the

central bank would present serious difficulty in view of the tangible advantages that a

central bank enjoyed over currency board, the government ultimately decided to take the

bold step of setting up a full fledged central banking authority. Among other factors,

which led to this decision, there was the fact the banking facilities in the country had

been totally disrupted and there was an urgent need for their rehabilitation, which a

central ban alone could meet. As there was hardly any time to pass as Act, an order was

drafted, known as the state bank of Pakistan order, which was promulgated by the

government of Pakistan on 12th may 1948. The state bank declared open on July 1, 1948

by the father of the nation.

One of the first tasks of the state bank was to arrange for the replacement of the Reserve

bank of India notes, which had continued to circulate in Pakistan during the transitional

period, by Pakistan currency.

The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 &

100.An equally urgent task, which the new central bank had to address itself, was the

creation of a national banking system. To this end, while extending every help and

encouragement to Habib Bank to expand its organization, the state bank recommended

the setting up of a new banking institution to serve both as an agent to the state bank



recommended the setting up of a new banking institution to serve both as an agent of the

state bank as well as the spearhead of its credit polices.

Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in

November 1949. It started with six offices in the former East Pakistan. In view of the

special role assigned to the new institution, contrary to traditional practices the Governor

of the state bank was appointed to head its board of Director in 1950. Under the fostering

care of the state bank and the support of the government, the new institution developed

rapidly. By using its special powers, the state bank made liberal advances to the new

bank to help it expand credit facilities in the country. By 1952, the National bank of

India. Shortly, afterwards, in November 1952, the governor of the state bank ceased to

function as the president of National bank of Pakistan.

With a view to broadening the institutional framework of the financial system, the state

bank also sponsored the establishment of specialized credit institutions in the filed of

agriculture and industry. Banking companies (control) act was passed in December 1948

specifically empowering the state bank to control the operations of banking companies in

Pakistan.

Moreover realizing that the most serious limitation on the expansion of banking services

in Pakistan was the lack of trained personal, the state bank sponsored a banking training

scheme, which was repeated after year and turned out a large number of bankers.

As the Commercial Banking facilities continued to expand, a new Pakistani bank, the

National Commercial Bank was established and registered as a scheduled bank. In the

filed of industrial finance a new institution known as the industrial credit and investment

cooperation was set up.



The year 1958 marked the completion of the first decade of the working of the State Bank

of Pakistan. When it was established there were only 195 bank offices in existence. At

the end of June 1958 their number had increased to 307, of which Pakistani banks

accounted for 232 against 25 in mid 1948. Moreover at the end of June 1958. Pakistani

banks held 60% of the total banks deposits, and were responsible for 65 of total bank

credit.

When the Ayub Government took over in 1958, the banking and monetary scene was

significantly affected by Developments such as the liberalization of imports, transfer of

business in food grains to the private sector, and the firming up of commodity markets.

The demand of funds picked up and there was a substantial expansion of bank credit to

the private sector. The pace of expansion in the institutional frame work of the country’s

banking system quickened and a new Pakistani, bank, namely the United Bank Limited

was established.

Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The

bank extended its network by opening six new offices located at Chitagong, Peshawar,

Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose

from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to

the list of scheduled banks.

Two principal additions were the commerce bank, and the standard bank. The number of

scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965.

Under the impact of economic growth and dear scope of private enterprises, bank credit

to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total

expansion in bank credit to the private sector during this period amounted to Rs. 4300



million, which gave a annual expansion of Rs. 860 million compared to the annual

average increase of Rs. 144 million over the preceding five years. Banks deposits

increased from Rs. 2,493 million to Rs. 6883 million during the five years period ended

June 1965 compared to Rs. 231 million in the proceeding five years. Time deposits

during this period increased from Rs. 946 million to Rs. 3228 million, where demand

deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time deposits

was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at

49.6 percent age as against 32.01 percent age five years earlier. Another salient feature of

banking development during this period was that since the rate of increase in bank

deposits lagged behind the rate of expansion in bank credit, the banked has to depend

increasingly on central bank finance. They borrowing from the state bank rose from Rs.

11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen demand for bank

credit, bank’s investments could not increase as rapidly as their advances. Their

investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231

million in June 1960. Investments which were almost equal to their advances in June

1960 were only about one third of the advances in June 1965.

The third plane period witnessed a further expansion of banking facilities in the country

the total number of scheduled banked offices increased from 1,591 at the end of June

1965 to 3133 at the close of June 1970. During the same bank credit to the private sector

rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in

the bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million

at the end of June 1970. A remarkable change occurred during this period related to the

composition of deposits.



1.3 Pakistan Banking Sector

Nationalized Commercial Banks

Privatized Banks

Specialized banks

Private banks

Foreign banks

Other financial Institutions

1.3.1 Nationalized Schedule Banks:

First Women Bank Ltd.

National Bank of Pakistan

Habib Bank Ltd

1.3.2 De-nationalized Schedule Banks:

Allied Bank of Pakistan Limited

MCB Bank Limited

United Bank Ltd.

1.3.3 Specialized Banks:

Zarai Taraqiti Bank of Pakistan (ADBP)

Industrial Development Bank of Pakistan(IDBP)

Punjab Provincial Cooperative Bank

Federal bank for Cooperatives

1.3.4 Private Schedule Banks:

Askari Commercial Bank Ltd.

Bank Alfalah Ltd.



Bank Al-Habib Ltd.

Bolan Bank Ltd.

Faysal Bank Ltd.

Habib Credit & Exchange Bank

Indus Bank Ltd.

Metropolitan Bank Ltd.

Platinum Bank Ltd.

Prime Commercial Bank Ltd.

Prudential Bank Ltd.

Soneri Bank Ltd.

The Bank of Khyber

The Bank of Punjab

Union Bank Ltd.

1.3.5 Foreign Banks:

ABN AMRO Bank N.V.

Albaraka Islamic Bank BSC (EC)

American Express Bank Ltd.

ANZ Grindlays Bank Ltd.

Bank of America (NT & SA)

Bank of Tokyo Mitsubishi Ltd.

Bank of Ceylon

Banque Indosuez

Citibank N.A.



Credit Agricole A.G.

Deutche Bank A.G.

Doha Bank Ltd.

Emirates bank International Ltd. P.J.S.C.

Habib Bank A.G. Zurich

Hong Kong and Shangai Banking Crop. Ltd.

International Finance Investment and Commerce Bank Ltd.

Mashreq Bank PSC

Oman International Bank SOAG

Rupali Bank Ltd.

Societe Generale, the French Int. Bank Ltd.

Standard Chartered Bank

Trust Bank Ltd.

1.3.6 Development Financial Institutions (Dfis):

Investment Corp of Pakistan

National Development Finance Corp.

Pakistan Industrial Credit and Investment Corp.

Pak Kuwait Investment Company



CHAPTER # 2

INTRODUCTION OF NATIONAL BANK

OF PAKISTAN

INTRODUCTION OF NATIONAL BANK OF

PAKISTAN

HISTORISAL BACKGROUND

BANK PROFILE

VISSION

MISSION

CORE VALUES

GOAL



2.1 Introduction of National Bank Of Pakistan

National Bank of Pakistan is the largest commercial bank operating in Pakistan National

Bank of Pakistan was incorporated in Pakistan under the National Bank of Pakistan

Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. It's registered and

head office is situated in Karachi.

NBP headquarters in Karachi, Pakistan with over 1,200 branches country wide. In

today's competitive business environment, NBP needed to redefine its role and shed the

public sector bank image, for a modern commercial bank. It has offloaded 23.2 percent

share in the stock market, and while it has not been completely privatized like the other

three public sector banks, partial privatization has taken place. It is now listed on the

Karachi Stock Exchange.

Handling of treasury transactions for the Government of Pakistan as agent to

the State Bank of Pakistan.

Accepting of deposits of money on current, fixed, saving, term deposit and

profit and loss sharing accounts.

Borrowing money and arranging finance from other banks and advancing and

lending money to its clients.

Buying, selling, dealing, including entering into forward contracts of foreign

exchange.

Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.

Carrying on agency business of any description other than managing agent, on

behalf of clients including Government and local authorities.

Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc.

Transacting guarantee and indemnity business.

Undertaking and executing trusts.



2.2 Historical Background

The normal procedure of establishing a banking company under the Companies Law was

set aside and the Bank was established through the promulgation of an Ordinance due to

the crisis situation that had developed with regard to financing of jute Trade. The Bank

commenced its operations from November 20, 1949 at six important jute centers in the

then East Pakistan and directed its resources in financing of jute crop. The Bank’s

Karachi and Lahore offices were subsequently opened in December 1949.

State bank of Pakistan after its formation demanded from the Indian Reserve Bank the

assets against the Indian currency retired from Pakistan territory. Government of India

refused to hand over the assets worth about five hundred million rupees. The dispute is

still unsettled and these assets are still not delivered to Pakistan. Until June 1950, the

Bank was engaged exclusively on jute operation. Thereafter, it was felt that it could

expand its business to include other commodities as well. Bank took a big stride in 1952,

when it replaced the Imperial Bank of India, as an agent of State Bank of Pakistan.

With the passage of time its functioning diversified as they take over the function of

different institution with the passage of time like in past they took over the function of

Imperial bank of India and now of NDFC (national development finance corporation) It

is working as the agent of the state bank of Pakistan and performs its functions wherever

state bank of Pakistan is not present.

The government floated its 10 % of the shares in the open market in past and the ratio

became 60: 40 and in future they trying to make it 55: 45. In 1999 national bank

celebrated its golden jubilee during the last fifty years bank has made substantial strides



in the financial services industry in Pakistan. In 1999 its market share was around 22%

and it remains the largest financial institution in Pakistan.

2.2.1 Branch Network

With the geographical development of its branches, the Bank has been able to extend its

services to a much larger number of Pakistanis all over the country. Today it has more

than 8.5 million accounts. Bank maintains its presence in all the major financial centers

of the world through its 15 overseas branches and 5 representative offices. Of these, three

representative offices have recently been set up at Tashkent (Uzbekistan), Baku

(Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in

CIS countries. Bank’s role globally is well assisted by its network of correspondent banks

located strategically in Asia, America, Europe and Africa.

Apart from having a vast branch network, Bank is at the forefront in the acquisition and

application of new technologies in every aspect of its banking facilities. It has acquired

leased telephone lines for on-line banking. The Bank has 12 Regional Computer Centers

to cover various on-line and batch system requirements of branches and controlling



15 Overseas Branches4 Represative Offices

1 Subsidiary1 Joint Venture

29 Regional Offices1,189 Branches

4 Subsidiaries

NBP has an extensive domestic branch network of over 1500 branches located all over

Pakistan. The Bank also has a presence in 24 international locations including the USA,

United Kingdom, Europe and the Far East.

2.3 BRANCHES ALL OVER THE COUNTARY



2.3.1 Ownership

NBP is 100% owned by the Government of Pakistan (GOP).

2.3.2 Deposits

NBP holds 24.6% share of time and demand deposits in the country. Local currency

deposits comprise 67% of bank's total deposits while foreign currency deposits account

for the rest.

2.3.3 Assets

NBP's total assets stood at PKR350 billion on December 2001. This included total

earning assets of about PKR268 billion with gross loan portfolio of PKR140 billion. The

bank also has an investment portfolio of PKR 91 billion, which comprises treasury

securities, corporate bonds, shares and other securities.

2.3.4 Deposits

As of December 2001 NBP had a paid-up capital of PKR1.46 billion divided into 146

million shares of 10 rupees each. Total shareholders' equity was PKR10 billion, however,

revaluation reserve has increased shareholders' funds to PKR16 billion. NBP has,

however, increased its paid up capital from PKR Rs. 1.46 billion to Rs. 3.73 billion

through issuance of bonus shares (subject to corporate and shareholder approvals



2.4 Bank Profile

Type Government KSE:LSE

Established 1949

Headquarter Principal Office, Karachi Pakistan

Key People S. Ali Raza (President & Chairman)

Industry Banking, capital Market

Products Loans, Credit Card, Savings, Consumer Banking etc

Deposit 624,938 Million

Net income 15,459 Million

Total Assets 817,758 Million

Number of Employees 15,204

Number of Branches 1,276

Home page www.nbp.com.pk


http://www.nbp.com.pk/


2.4.1 Vision

“To be recognized as a leader and a brand synonymous with trust, highest standards

of service quality, international best practices and social responsibility”

2.4.2 Mission

“To be recognized in the market place by Institutionalizing a merit & performance

culture, Creating a powerful & distinctive brand identity, Achieving top-tier financial

performance, and Adopting & living out our values”

2.4.3 Core Values

Highest standards of Integrity

Institutionalizing team work and performance culture

Excellence in service

Advancement of skills for tomorrow’s challenges

Awareness of social and community responsibility



2.4.4 Objectives of National Bank

Objectives are ends towards which an enterprise activity is aimed. The purpose of

business is production and marketing of economic goods and services but to accomplish

these objectives to a number of enterprise objectives may be necessary.

National bank of Pakistan has certain objectives. These objectives are

Advancing loans

Accept deposits

Remitting of funds

Sale of promissory notes

Selling and realizing property of bank claims

Investment or underwriting of stocks



CHAPTER #3

ORGANAZATIONAL STRUCTURE

OVREALL ORGANIZATIONAL STRUCTURE

PROCESS DEPARTMENT

CUSTOMER DEPARTMENT

CREDIT MANAGEMENT GROUP



3.1 DESIGNATIONS OF HIGHER LEVEL OFFICERS

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

GRADE 22

EXECUTIVE VICE PRESIDENT

GRADE 21

VICE PRESIDENT

GRADE 20

ASSISTANT VICE PRESIDENT

GRADE 19

GRADE I OFFICER

GRADE 18

GRADE II OFFICER

GRADE 17

GRADE III OFFICER

(GRADE 16)



3.1.1 Process Department

3.1.2 Customer Department

3.1.3 Credit Management Group


Administration Wing

Administration Wing

SBP InspectionSBP Inspection Market & Liquidity Risk

Market & Liquidity Risk

Credit RiskCredit Risk

Compliance Group(Process Deptt)

Compliance Group(Process Deptt)

Customer Facilitation &

Admn.

Customer Facilitation &

Admn.

Customer Services & Govt. Business

Customer Services & Govt. Business

Financial Institutional &

Cash Manag.

Financial Institutional &

Cash Manag.

Operation Group(Customer Dep’t)Operation Group(Customer Dep’t)

Administration Wing

Administration Wing

Credit Monitoring

Wing

Credit Monitoring

Wing

Industrial Research

Wing

Industrial Research

Wing

Credit Policy & SME Wing

Credit Policy & SME Wing

Credit Management Group

(Functional Deptt)

Credit Management Group

(Functional Deptt)


CHAPTER #4PRODUCT AND SERVICES MIX

PRESIDENT KAROBAR SCHEME

ADVANCE SALARY SCHEME

CASH n GOLD SCHEME

KISAN DOST SCHEME

KISAN TAQAT SCHEME

PAK REMIT

CASH CARD SCHEME

PREMIUM AAMADNI SCHEM



4.1 Product & Services Mix of NBP

Marketing is the task of creating, promoting and delivering goods and services to

consumers and businesses. Organizations identify and profile distinct group of buyers

who might prefer or require varying products and marketing mixes. The customer seeks

for value and satisfaction. The organizations can increase the value of the customer

offering in several ways e.g. raising benefits, reducing costs etc. marketing mix is a set of

marketing tools that the firm uses to pursue its marketing objectives in the target market.

4.1.1 President Karobar Scheme

National Bank of Pakistan is providing financing under President Karobar Scheme with

the cooperation of government of Pakistan. The purpose of this scheme is to reduce

unemployment from the country. Main features are as under

Minimum down payment, 10% of asset price (5% for PCO & Telecaster)

Tenure of loans 1 to 5 years (for PCO 2 years)

Grace period 3 months

Maximum loan amount Rs. 200,000/-

Age 18-45 years

Mark-up (variable) 1 year KIBOR + 2.00% p.a.

The customer will pay markup @ 6% p.a., rest will be borne by GOP*

Life & disability insurance paid by GOP

NBP’S loan available for:

4.1.2 Advance Salary Scheme

NBP Advance Salary, the leading personal loan product of the country, is maintaining its

inimitability ever since it was launched. This was only possible due to its swift growth

and remarkable loan disbursement of over 138 billion.

Employees can avail up to 20 net take home salaries with easy repayment installments.

It’s hassle free acquisition with no prior formalities and easy availability in a short turn



round time are attributed as the most distinguishing features of the product. The product

is offered countrywide. Its salient features are;

Easy installments of 1 to 60 months at your choice

Take up to 20 advance salaries

Quick processing and fastest disbursement

The product is for permanent employees of Government, Semi Government

and Autonomous bodies receiving salaries through NBP accounts

4.1.3 Cash n Gold Scheme

With NBP Cash n Gold, provide facility for ready cash against idle gold jewelry with no

minimum limit and provide extra benefit. The main features are:

Facility of Rs. 10, 000/-against each 10 gms of net weight of Gold Ornaments

No maximum limit of cash

Repayment after one year

Roll over facility

No penalty for each repayment

Rate of mark-up 13% p.a.

Weight and quality of gold to be determined by NBP appointed schroffs

4.1.4 Kisan Dost Scheme

National Bank of Pakistan is lending in agricultural field. National Bank of Pakistan is

lending farmers for development of agriculture sector of the country under certain terms

and conditions. NBP provide loan to farmers for production, development purposes, for

purchase of tractors, for installation of tube wells, for purchase of agricultural

instruments, micro loan, for construction of godwon, for construction of fish pond, for

development of livestock and farming, for mil processing, for cold storage, bio-gas

plants.

interest @ 14.5 percent per annum

Quick & easy processing



Delivery at the farmer’s doorstep

Technical guidance to farmers

Wide range of financing schemes for farmers

Finance facility up to Rs. 500,000/- for landless farmers against personal

guarantee

Financing available against pass book, residential/commercial property, gold

ornaments and paper security

4.1.5 Kisan Taqat Scheme

Livestock and dairy farms.

NBP facilitates with livestock experts

Less documentation and easy to repay

Available at the next door step

Scheme is available in more than 50 branches of NBP

4.1.6 Pak Remit

Pak remit is an internet based Home Remittance Service. This service is available to U.S.

residents for sending money to their family and friends in Pakistan. One must have a

valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to

remit funds through this channel.

Remitters in USA can log on to our user friendly website, www.pakremit.com and easily

remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The

service is fully secure with advance encryption application and is available for use 24

hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels

and the remitters have the ability to track delivery of funds as well.



4.1.7 Cash Card Scheme

ATM + Debit Card

NBP Cash Card is a 24-hour direct access ATM/ Debit

card to bank account, which lets pay directly from the account as an alternative payment

method to cash. The transaction is authorized and processed by entering PIN. The NBP

Cash Card holders are able to transact at any of the 4000 + Merchants where Orix logo is

displayed and can withdraw cash from NBP, 1-Link & M-NET ATM’s across the count.

Use it as an ATM in any of the ATM’s in Pakistan

Use it as Debit Card in any of the outlets with ORIX POS machine

Cash withdrawal up to Rs. 20,000/- per day

Account Balance Enquiry

Mini Statement (Only at NBP ATM)

PIN Change facility (Only at NBP ATM)

Advantages

Customers don’t need to carry a lot of cash with you every time you go out.

Secure and Safe transaction.

Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment etc.)

Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.

Enable to make purchases round 4000 POS (Merchants) Countrywide including 2500+ POS in Karachi.

No Card Issuance Fee for first 12 Months



4.1.8 Premium Aamadni Scheme

A monthly income scheme introduced by National Bank of Pakistan for investors as well

as for general public. Incentives are available for investors providing finance facility

against these certificates and also allowed to customers to convert existing deposits into

National Bank Premium Aamdani Certificates.

Earn up to 11% p.a.

Minimum deposit of Rs. 20,000/-

Maximum deposit of Rs. 5,000,000/-

Investment period is 5 years

Free Demand Draft, Pay Order and Cheque Book

Convenience of NBP online Aasan Banking (for online banking customers)

Free NBP Cash Card (ATM+Debit)

Running finance facility up to 90%

Profits paid on monthly basis

Period Profit Rates

1st year 7.50%

2nd year 8.50%

3rd year 9.50%



4th year 10.50%

5th year 11%

CHAPTER # 5

DEPARTMENTALIZATION

CASH DEPARTMENT

CLEARANCE DEPARTMENT

ADVANCES DEPARTMENT

HUMAN RESOURCE MANAGEMENT

REMITTANCE DEPARTMENT

DEPOSIT DAPARTMENTS

FOREIGN EXCHANGE DEPARTMENTS



5.1 Cash Department

Cash department performs the following functions:

5.1.1 Receipt

The money, which either comes or goes out from the bank, its record should be kept.

Cash department performs this function. The deposits of all customers of the bank are

controlled by means of ledger accounts. Every customer has its own ledger account and

has separate ledger cards.

5.1.2 Payments

It is a banker’s primary contract to repay money received for this customer’s account

usually by honoring his cheques.

5.1.3 Cheques and their Payment

The Negotiable Instruments. Act, 1881, “Cheque is a bill of exchange drawn on a

specified banker and not expressed to be payable otherwise than on demand”.

Since a Cheque has been declared to be a bill of exchange, it must have all its

characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.

Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,

requiring the banker to pay on demand a sum certain in money to, or to the order of, a

specified person or to the bearer, and which does not order any act to be done in addition

to the payment of money”3. (Law of Banking by Dr. Hart, p.327).

5.1.4 The Requisites of Cheque



There is no prescribed form of words or design of a Cheque, but in order to fulfill the

requirements mentioned in Section 6 above the Cheque must have the following.

It should be in writing

The unconditional order

Drawn on specific banker only

Payment on Demand

Sum certain in money

Payable to a specific person

Signed by the drawer

5.1.5 Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no

payee but bearer.

The Drawer

The Drawee

The Payee

5.1.6 Types of Cheques

Bankers in Pakistan deal with three types of Cheques

Bearer Cheques



Bearer cheques are cashable at the counter of the bank. These can also be collected

through clearing.4

Order Cheques

These types of cheques are also cashable on the counter but its holder must satisfy the

banker that he is the proper man to collect the payment of the cheque and he has to show

his identification. It can also be collected through clearing.

Crossed Cheques

These cheques are not payable in cash at the counters of a banker. It can only be credited

to the payee’s account. If there are two persons having accounts at the same bank, one of

the account holder issues a cross-cheque in favour of the other account holder. Then the

cheque will be credited to the account of the person to whom the cheque was issued and

debited from the account of the person who has actually issued the cheque.

5.1.7 Payment of Cheques

It is a banker’s primary contract to repay money received for his customer’s account

usually by honoring his Cheques. Payment of money deposited by the customer is one of

the root functions of banking. The acid test of banking is the receipt of money etc. from

the depositors, and repayment to them. This paying function is one, which is the

distinguishing mark of a banker and differentiates him from other institutions, which

receive money from the public. However the bankers’ legal protection is only when

payment is in ‘Due Course’. The payment in due course means payment in accordance

with the apparent tenor of the instrument, in good faith and without negligence to any

person in possession thereof under circumstances, which do not afford a reasonable



ground of believing that he is not entitled to receive payment of the amount therein

mentioned. It is a contractual obligation of a banker to honor his customer’s cheques if

the following essentials are fulfilled.

Cheques should be in a proper form

Cheque should not be crossed

Cheque should be drawn on the particular bank

Cheque should not mutilated

Funds must be sufficient and available

The Cheque should not be post dated or stale

5.2 Clearance Department

A clearinghouse is an association of commercial banks set up in given locality for the

purpose of interchange and settlement of credit claims. The function of clearinghouse is

performed by the central bank of a country by tradition or by law. In Pakistan, the

clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a

representative of SBP act as a clearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The use of

cheques in making payments has also widely increased. The collection as settlement of

mutual obligations in the form of cheques is now a big task for all the commercial bank.

When Cheque is drawn on one bank and the holder (payee) deposits the same in his

account at the bank of the drawer, the mutual obligation are settled by the internal bank



administration and there arises no inter bank debits from the use of cheques. The total

assets and total liabilities of the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same

bank as the drawer. He deposits the cheque with his bank other than of payer for the

collection of the amount. Now the bank in which the cheque has been deposited becomes

a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by

transferring it from cash reserves if there are no offsetting transactions. The banks on

which the cheques are drawn become in debt to the bank in which the cheques are

deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn

on other banks giving claims of payment by them.

The easy, safe and most efficient way is to offset the reciprocal claims against the other

and receive only the net amount owned by them. This facility of net inter bank payment

is provided by the clearinghouse.

The representatives of the local commercial banks meet at a fixed time on all the business

days of the week. The meeting is held in the office of the bank that officially performs the

duties of clearinghouse. The representatives of the commercial banks deliver the cheques

payable at other local banks and receive the cheques drawn on their bank. The cheques

are then sorted according to the bank on which they are drawn. A summary sheet is

prepared which shows the names of the banks, the total number of cheques delivered and

received by them. Totals are also made of all the cheques presented by or to each bank.

The difference between the total represents the amount to be paid by a particular bank

and the amount to be received by it. Each bank then receives the net amount due to it or

pays the net amount owed by it.



5.2.1 In Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are being

received by the bank in the first clearing. All details of the cheques are recorded in this

book.

5.2.2 Out-Word Clearing Book

The bank uses outward clearing register for the purpose of recording all the details of the

cheques that the bank has delivered to other banks.

5.3 Advances Department

Advances department is one of the most sensitive and important departments of the bank.

The major portion of the profit is earned through this department. The job of this

department is to make proposals about the loans. The Credit Management Division of

Head Office directly controls all the advances. As we known bank is a profit seeking

institution. It attracts surplus balances from the customers at low rate of interest and

makes advances at a higher rate of interest to the individuals and business firms. Credit

extensions are the most important activity of all financial institutions, because it is the

main source of earning. However, at the same time, it is a very risky task and the risk

cannot be completely eliminated but could be minimized largely with certain techniques.

Any individual or company, who wants loan from NBP, first of all has to undergo the

filling of a prescribed form, which provides the following information to the banker.

5.3.1 Name and Address of the Borrower

Existing financial position of a borrower at a particular branch.



Accounts details of other banks (if any).

Security against loan.

Exiting financial position of the company. (Balance Sheet & Income Statement).

Signing a promissory note is also a requirement of lending, through this note

borrower promise that he will be responsible to pay the certain amount of money

with interest.

5.3.2 Principles of Advances

There are five principles, which must be duly observed while advancing money to the

borrowers.

Safety

Liquidity

Dispersal

Remuneration

5.3.3 Safety

Banker’s funds comprise mainly of money borrowed from numerous customers on

various accounts such as Current Account, Savings Bank Account, Call Deposit Account,

Special Notice Account and Fixed Deposit Account. It indicates that whatever money the

banker holds is that of his customers who have entrusted the banker with it only because

they have full confidence in the expert handling of money by their banker. Therefore, the

banker must be very careful and ensure that his depositor’s money is advanced to safe

hands where the risk of loss does not exist. The elements of character, capacity and



capital can help a banker in arriving at a conclusion regarding the safety of advances

allowed by him.

5.3.4 Character

It is the most important factor in determining the safety of advance, for there is no

substitute for character. A borrower’s character can indicate his intention to repay the

advance since his honesty and integrity is of primary importance. If the past record of the

borrower shows that his integrity has been questionable, the banker should avoid him,

especially when the securities offered by him are inadequate in covering the full amount

of advance.

It is obligation on the banker to ensure that his borrower is a person of character and has

capacity enough to repay the money borrowed including the interest thereon.

5.3.5 Capacity

This is the management ability factor, which tells how successful a business has been in

the past and what the future possibilities are. A businessman may not have vast financial

resources, but with sound management abilities, including the insight into a specific

business, he may make his business very profitable. On the other hand if a person has no

insight into the particular business for which he wants to borrow funds from the banker,

there are more chances of loss to the banker.

5.3.6 Capital

This is the monetary base because the money invested by the proprietors represents their

faith in the business and its future. The role of commercial banks is to provide short-term

capital for commerce and industry, yet some borrowers would insist that their bankers

provide most of the capital required. This makes the banker a partner. As such the banker



must consider whether the amount requested for is reasonable to the borrowers own

resources or investment.

5.3.7 Liquidity

Liquidity means the possibilities of recovering the advances in emergency, because all

the money borrowed by the customer is repayable in lump sum on demand. Generally the

borrowers repay their loans steadily, and the funds thus released can be used to allow

fresh loans to other borrowers. Nevertheless, the banker must ensure that the money he is

lending is not blocked for an undue long time, and that the borrowers are in such a

financial position as to pay back the entire amount outstanding against them on a short

notice. In such a situation, it is very important for a banker to study his borrower’s assets

to liquidity, because he would prefer to lend only for a short period in order to meet the

shortfalls in the wording capital. If the borrower asks for an advance for the purchase of

fixed assets the banker should refuse because it shall not be possible for him to repay

when the banker wants his customer to repay the amount. Hence, the baker must adhere

to the consideration of the principles of liquidity very careful.

5.3.8 Dispersal

The dispersal of the amount of advance should be broadly based so that large number of

borrowing customer may benefit from the banker’s funds. The banker must ensure that

his funds are not invested in specific sectors like textile industry, heavy engineering or

agriculture. He must see that from his available funds he advances them to a wide range

of sector like commerce, industry, farming, agriculture, small business, housing projects

and various other financial concerns in order of priorities.



Dispersal of advances is very necessary from the point of security as well, because it

reduces the risk of recovery when something goes wrong in one particular sector or in

one field.

5.3.9 Remuneration

A major portion of the banker’s earnings come form the interest charged on the money

borrowed by the customers. The banker needs sufficient earnings to meet the following:

Interest payable to the money deposited with him.

Salaries and fringe benefits payable to the staff members.

Overhead expense and depreciation and maintenance of the fixed assets of the

bank.

An adequate sum to meet possible losses.

Provisions for a reserve fund to meet unforeseen contingencies.

Payment of dividends to the shareholders.

Suitability

The word “suitability’ is not to be taken in its usual literary sense but in the broader sense

of purport. It means that advance should be allowed not only to the carefully selected and

suitable borrowers but also in keeping with the overall national development plans

chalked out by the authorities concerned. Before accommodating a borrower the banker

should ensure that the lending is for a purpose in conformity with the current national

credit policy laid down by the central bank of the country.

5.3.10 Forms of Loans



In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the

form of cash finance, overdrafts and loans. NBP provides advances to different people in

different ways as the case demand.

5.3.11Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is

made available either against pledge or hypothecation of goods, produce or merchandise.

In cash finance a borrower is allowed to borrow money from the banker up to a certain

limit, either at once or as and when required. If the borrower does not utilize the full

limit, the banker has to lose return on the un-utilized amount. In order to offset this loss,

the banker may provide for a suitable clause in the cash finance agreement, according to

which the borrower has to pay markup/service charges on at least on self or one quarter

of the amount of cash finance limit allowed to him even when he does not utilize that

amount.

5.3.12 overdraft/Running Finance

This is the most common form of bank lending. When a borrower requires temporary

accommodation his banker allows withdrawals on his account in excess of the balance

which the borrowing customer has in credit, and an overdraft thus occurs. This

accommodation is generally allowed against collateral securities. When it is against

collateral securities it is called “Secured Overdraft” and when the borrowing customer

cannot offer any collateral security except his personal security, the accommodation is

called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an



overdraft, because he has to pay service charges only on the balance outstanding against

him. The main difference between a cash finance and overdraft lies in the fact that cash

finance is a bank finance used for long term by commercial and industrial concern on

regular basis, while an overdraft is a temporary accommodation occasionally resorted to.

5.3.13Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodic

installments or in lump sum at a fixed future time, it is called a “loan”. When bankers

allow loans to their customers against collateral securities they are called “secured loans”

and when no collateral security is taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the period

agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus

the borrower gets a fixed amount of money for his use, while the banker feels satisfied in

lending money in fixed amounts for definite short periods against a satisfactory security

5.4 Human Recourse Management

Human Resource plays a vital role in the success of every service organization. They

interact between man and machine. Their attitude can win or loose the customer. The

positive attitude could only be created in a conductive environment, which can make the

staff dedicated towards the organization and its objectives. In reality the man is more

important than machine as it is the human which could get maximum out of machine to

keep a happy customer. However, most organizations give little importance to this very

important asset.



Various aspects related to human resource of National Bank of Pakistan are critically

examined in the following text:

5.4.1 Selection & Recruitment

Although the Bank believes in merit but in practice the selection of employees is not

done on merit. Most of the employees are low educated. This shows that candidates with

some strong family background or political pressure are given preference in recruitment

and qualified candidates are sometimes left behind.

5.4.2 Job for Life

Like the employee of public sector organizations in Pakistan, the employees of NBP also

enjoy their job for life. Since there is no risk of early retirement or redundancy in rank,

they do not perform with their full potentials. This is one redundancy in rank, they do not

perform with their full potentials, and this is one of the reasons responsible for the low

productivity of the employees of the Bank.

5.4.3 Performance Appraisal

The performance of employees of the Bank are appraised though their annual confidential

reports at the end of each year. This has become an outdated method of performance

appraisal and no longer used due to the following reasons:

The performance of employees is evaluated after quite a long time.

Element of subjectivity is involved in this method.

Employee’s participation is not ensured in the process of evaluation.

Objectives of employee’s are not quantified.

5.4.4 Inter Personal Relationship:



Modern management acknowledges human resources as one ‘of the most important

assets of an organization. But by their very nature, human beings are also the most

unpredictable. Where a number of persons work together, interactions among them, of

necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in

NBP can be traced back to the following major heads.

5.4.5 Lack of Communication:

Lack of communication is for the biggest reason for conflicts. Not only it is due to the

failure to send a massage but to an interpretation given to the massage by the receiver is

different from that intended.

5.4.6 Diversity in Values:

Diversity in values, perceptions, cultural background and life-style is another reason

responsible for inter personal conflicts in NBP. Different values and perceptions about

the same issue, event or personality hinder understanding. When things come to such a

pavement, therefore, interpersonal conflicts are generated.

The dominant trend in all modern industrial societies of the world is merit and expertise,

which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still

very strong in our set up and there is no tradition of tolerance for differing viewpoints.

Hence, interpersonal conflicts are generated.

5.4.7 Corruption:

Our social acceptance of corruption gives rise to corruption at every level of social and

organizational set up. Corruption involves financial embezzlement, favoritism, nepotism,



cronyism and other number of such practices. All these cause resentment that keep

building up and lead to conflict sooner or later.

In the past few years, some cases of frauds have happened in different branches. The

reasons can be linked with the employee dissatisfaction of NBP.

5.4.8 Discipline & Authority:

Maintaining discipline and implementation of authority (tables) in letter and spirit is the

key to success of any organization. In NBP, The authority tables are not strictly

maintained. Line managers are not fully equipped with the authority with no vertical or

horizontal interference

5.5 Remittance Department

Remittance means a sum of money sent in payment for something. This department deals

with either the transfer of money from one bank to other bank or from one branch to

another branch for their customers. NBP offers the following forms of remittances.

5.5.1 Demand Draft:

Demand draft is a popular mode of transfer. The customer fills the application form.

Application form includes the beneficiary name, account number and a sender’s name.

The customer deposits the amount of DD in the branch. After the payment the DD is

prepared and given to the customer. NBP officials note the transaction in issuance

register on the page of that branch of NBP on which DD is drawn and will prepare the

advice to send to that branch. The account of the customer is credited when the DD

advice from originating branch comes to the responding branch and the account is

debited when DD comes for clearance. DD are of two types.

Open DD: Where direct payment is made.



Cross DD: Where payment is made though account.

NBP CHARGES FOR DD

Up to Rs. 50,000/- is Rs 50/- only

Over Rs. 50,000/- is 0.1%

5.5.2 Pay Order:

Pay order is made for local transfer of money. Pay order is the most convenient, simple

and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay

order from the account holder and Rs. 100 from a non-account holder.

5.5.3 Telegraphic Transfer:

Telegraphic transfer or cable transfer is the quickest method of making remittances.

Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to

the specified person. The customer for requesting TT fills an application form. Vouchers

are prepared and sent by ordinary mail to keep the record. TT charges are taken from the

customer. No excise duty is charged on TT. The TT charges are:

Telegram/ Fax Charges on TT = Actual-minimum Rs.125.

Cable telegram transfer costs more as compared to other title of money. In cable transfer

the bank uses a secret system of private code, which is known to the person concerned

with this department and branch manager.

5.5.4 Mail Transfer:

When the money is not required immediately, the remittances can also be made by mail

transfer (MT). Here the selling office of the bank sends instructions in writing by mail to



the paying bank for the payment of a specified amount of money. Debiting to the buyer’s

account at the selling office and crediting to the recipient’s account at the paying bank

make the payment under this transfer. NBP taxes mail charges from the applicant where

no excise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/-

if sent by registered post locally Rs.40/- if sent by registered post inland on party’s

request

5.6 Deposit Department

It controls the following activities:

A/C opening.

Issuance of cheque book.

Current a/c

Saving a/c

Cheque cancellation

Cash

5.6.1 Account opening:

The opening of an account is the establishment of banker customer relationship. Before a

banker opens a new account, 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. Preliminary investigation is necessary

because of the following reasons.

Avoiding frauds

Safe guard against unintended over draft.



Negligence.

Inquiries about clients.

There are certain formalities, which are to be observed for opening an account with a

bank.

Formal Application

Introduction

Specimen Signature

Minimum Initial Deposit

Operating the Account

Pay-In-Slip Book

Pass Book

Issuing Cheque Book

5.6.2 Qualification of Customer:

The relation of the banker and the customer is purely a contractual one, however, he must

have the following basic qualifications.

He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.

The agreement should be made for lawful object, which create legal relationship

Not expressly declared void.

5.6.3 Types of Accounts:

Following are the main types of accounts



Individual Account

Joint Account

Accounts of Special Types

Partnership account

Joint stock company account

Accounts of clubs, societies and associations

Agents account

Trust account

Executors and administrators accounts

Pak rupee non-resident accounts

5.6.4 Issuing Of Cheque Book:

This department issue cheque books to account holders.

Requirements for issuing cheque book

The account holder must sign the requisition slip

Entry should be made in the cheque book issuing book

Three rupees per cheque should be recovered from a/c holder if not then debit

his/her account.

5.6.5 Current Account:

These are payable to the customer whenever they are demanded. When a banker accepts

a demand deposit, he incurs the obligation of paying all cheques etc. drawn against him

to the extent of the balance in the account. Because of their nature, these deposits are

treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on



these deposits, and customers are required to maintain a minimum balance, failing which

incidental charges are deducted from such accounts. This is because the depositors may

withdraw Current Account at any time, and as such the bank is not entirely free to

employ such deposits.

Until a few decades back, the proportion of Current Deposits in relation to Fixed

Deposits was very small. In recent years, however, the position has changed remarkably.

Now, the Current Deposits have become more important; but still the proportion of

Current Deposits and Fixed Deposits varies from bank to bank, branch to branch, and

from time to time.

5.6.6 Saving Account:

Savings Deposits account can be opened with very small amount of money, and the

depositor is issued a Cheques book for withdrawals. Profit is paid at a flexible rate

calculated on six-month basis under the Interest-Free Banking System. There is no

restriction on the withdrawals from the deposit accounts but the amount of money

withdrawn is deleted from the amount to be taken for calculation of products for

assessment of profit to be paid to the account holder. It discourages unnecessary

withdrawals from the deposits.

In order to popularize this scheme the State Bank of Pakistan has allowed the Savings

Scheme for school and college students and industrial labor also. The purpose of these

accounts is to inculcate the habit of savings in the constituents. As such, the initial

deposit required for opening these accounts is very nominal.

5.6.7 Cheque Cancellation:

This dept can cancel a cheque on the basis of;



Post dated cheque

Stale cheque

Warn out cheque

Wrong sign etc

5.7 Foreign Exchange Department

This dept mainly deals with the foreign business. The main functions of this dept are:

L/C dealing.

Foreign currency accounts dealing.

Foreign Remittance dealing.

5.7.1 L/C dealing:

NBP is committed to offering its business customers the widest range of options in the

area of money transfer. If you are a commercial enterprise then our Letter of Credit

service is just what you are looking for. With competitive rates, security, and ease of

transaction, NBP Letters of Credit are the best way to do your business transactions.

5.7.2 Foreign Currency Account Dealing:

This deptt deals with the foreign currency accounts which mainly include dollar account,

euro account etc.

5.7.3 Foreign Remittance Dealing.

This is very important function of this deptt.

Cash Department



General Banking Department.

5.7.4 Cash Department:

Cash department mainly deals in cash. The Head of department is Mr. Imdad Khan and

two cashier Mehraban Shah and Faiq Shah the objective of cash department.

“To facilitate people in the payments of their bills and taxes and repayments of cash”

There are two main functions of cash department.

Payment

Receipts

Payments are the function that they pay their cheques and pay cash.

Receipts mean collection of utilities bills, taxes etc.

5.7.5 General Banking:

In this section of the bank the general banking function is performed. It is divided into

five departments.

Remittances Department.

Computer Department.

Advances Department.

Clearing Department.

Establishment Department.

5.7.6 Remittances Department:



This department is header by Zahoor Ahmad a very competent person. The objective of

this department is:-

“To transfer the money of people from one place to another place in safe and comparable

way”

The main functions of this department are:

Issuing of demand draft.

Issuing of Mail transfer.

Issuing of Telegraphic transfer.

CHAPTER # 6

FINANCIAL ANALYSIS

FINANCIAL ANALYSIS OF BALANCE SHEET

ANALYSIS OF PROFIT AND LOSS ACCOUNT

FINANCIAL RATIO ANALYSIS



6.0 Financial Analysis

Financial analysis, though varying according to the particular interests of the analyst,

always involves the use of various financial statement primarily the balance sheet and

income statement. The balance sheet summarizes the assets, liabilities, and owner’s

equity of a business at a point in time, and thee income statement summarizes revenues

and expenses of the over a particular period f time. A conceptual framework for financial

analysis provides the analyst with an interlocking means for structuring the financing.

6.1.1 Horizontal Analysis:

It is conducted by setting consecutive balance sheet, income statement or statement of

cash flow side-by-side and reviewing changes in individual categories on a year-to-year

or multiyear basis.

A comparison of statements over several years reveals direction, speed and extent of a

trend(s). The horizontal financial statements analysis is done by restating amount of each

item or group of items as a percentage.



6.2 Horizontal Analysis

National Bank of Pakistan

Statement of Financial Position

As on December 31, 2008

Assets 2009(%) 2008(%) GrowthCash & Balances with treasury Banks 112 121 16.5

Balances with other banks 102 92 -3Lending to financial institutions-net 80 93 -13

Investment-net 81 151 16Advances-net 121 108 14.5Operating fix assets 93 268 80.5Deferred tax Assets-netOther assets 144 114 29

Liabilities107 120 14

Bill payables 145 67 6Borrowings 374 92 133

Deposit and other accounts 106 118 12Liabilities against assets subject to finance lease 75 253 64

deferred tax liabilities-net 0 214 7other liabilities 128 116 22

111 117 14Net Assets 88 142 15



Represented ByShare capital 110 115 12.5Reserves 126 114 20Unappropriated profit 116 141 28.5

117 131 24

Surplus on revaluation of Assets-net 45 163 488 142 15

6.2.1 Analysis

Total assets growth rate is 140% this is because of Cash and Balances with treasury

banks grow by 60% which caused by increase 21% in 2008 and 12% in 2009, Advances-

net grow by 40.5% in current year increase by 21% as compare to 8% in 2008. Operating

fixed assets growth rate 80.5% but current year Operating fixed decrease by 7% Other

assets also show a greater increase from 14% to 44% in current year and its growth rate

approximately 29%,while lending to financial institution shows declining trend since last

few years over all declining 13% and Balance with other banks declining at rate of 3%.

Liabilities growing by 14% Other liabilities increase from 16% to 28% with growth rate

22%, Borrowing and Liabilities against subject to finance lease show greater increase

with growth rate of 133% and 64% respectively, and Bill payable & deposit in other

banks also increasing with growth rate of 6%-12% respectively, Equity show positive

trend with growth rate of 24% this is because of Reserves and Un-appropriated profit

increasing with rate of 20% and 28.5% & Share capital increasing with 12.5%.



6.3 Income Statement

Income Statement

As on December 31, 2008

2009(%) 2008(%) GrowthMark-up/Return/Interest earned 120.5 115 17.6Mark-up/Return/Interest expensed 141 121 31Net-Mark-up/interest Income 110 111 10.5provision against non-performing advances 224 153 89Provision for/(reversal of) diminution in the value of investment -927 5 -561Provision against off balance sheet obligations 755.09 327.5Bad debt written off directly 232 199 116Mark-up/interest Income after provisions 90.25 104.048 -2.85Non-Mark-up/interest Incomefee,commision and brokerage income 117 110 13.6dividend income 88.22 113 0.53Income from dealing in foreign currencies 380.6 78 179Gain on sale and redemption of securities-net 17 200.2274 9Unrealized/(loss) on revaluation of investments classified as held-for-trading -5.34 716 310Other income 845 23.5 384Total Non-Mark-up/interest Income 121 111 16

100 106 3Non-Mark-up/interest expensesAdministrative expenses 127 105 16Other provisions/write offs 445 -972 -264Other charges 3403 8 1655



Total Non-Mark-up/interest expenses 135 105 2082 107 -6

Profit Before Taxation 82 107 -6Taxation-current 141 96 19 -prior years 74 -63 -deferred -1304 522 -390

84 97 -10Profit After Taxation 76 112 -6Un-appropriated profit brought forward 141 166 54Transfer from surplus on revaluation of fix assets on account of incremental depreciation 334 95 164Profit available for appropriation 119 140 30

6.3.1 Analysis:

Markup/interest earned increasing at the rate of 17.7% on other hand Interest expenses

also increasing with the rate of 31% that’s why, Net markup/interest income after

provisions decrease by 10% as compare to last year Interest Income After provision

decreasing with rate of approximately 3% this decrease is because of increase in

Provision against off balance sheet obligations and Bad debts written off directly with

rate of 218% & 116%,and Provisions against Non performing assets with greater increase

rate about 81% but on the other hand Provisions for/diminution in the rate of investment

shows greater decrease at rate of 561%,Total Non Markup/Interest Income increase in

current year increase from 11% to 21% with rate of 16% this increase is because of

greater increase in Other Income and Unrealized/on revaluation of investment classified

as held for trading with rate of 384%& 310 respectively and Income from dealing in

foreign currencies, current year shows greater increase of 380% as compare to last year

with rate of 179%.



Profit Before taxation shows declining trend 18% decrease in current year profit with

decreasing rate of 6% this decrease is caused by greater increase in Interest expense

increase from 5% to 35% with 200% growth rate this increase is because of greater

increase in other charges with growth rate of 1655%, Admin expense increase from 5%

to 27%, Profit after tax in current year less than the previous year because of greater

increase in Current taxation by 37% as compare to last year tax.

6.4 Ratio Analysis

2009 (%) 2008 (%) 2007 (%)

1. Return on Assets 2.8 3.7 4.1

2. Return on equity 17.7 27.4 32.1

3. Rate paid on

funds

3.05 2.36 2.6

4. Net Interest

Margin

5.8 5.5 5.8

5. Reserve as a

percentage of

188 334 451



loans

6. Debt to Equity 879 932 1043

7. Advances to

Assets50.5 45 50

8. Equity to Assets 10 9 8.4

9. Equity to advances30 48 17

10. Deposit times

capital 1 times 1 times 9.5 times

6.4.1 Interpretation:

The ROA shows declining trend which means the overall effectiveness in

generating profit with available assets is decreasing in current year 2.8% as

compare to 3.7% in 2008 &4.1% in 2007 which means the assets not properly

utilizing to generating profit,ROA major Effected by declining in Net profit.

ROE also shows declining trend since last few years return against equity is

decreasing because of decrease in Profit before taxation in current year is less

as compare to 2008 & 2007.

Rate of interest paid from assets is improving this is because of increase in

interest expense.

Net interest margin is greater in 2009 which is 5.8% as compare to 5.5% in

07, this improvement is because of increase in Net interest income which is

caused by increase in interest earned.



Reserves as percentage of loan decreasing means reserve account to cover un

expected default on loans by borrowers is decreasing, non performing loans

decreasing and the effect on provision for loan losses decreasing and Net

income & earning/share also less.

Debt to Equity shows declining which means the dependency on debt is

decreasing and also the difficulty regarding to borrow more funds.

Advances to Asset measure total Advances outstanding as percentage of total

asset, current year ratio is 50.5% which is more than 07 & 06 which indicates

that NBP is loaned up and its liquidity is decreasing this increase risk to

default.

Equity to assets is common measure used to analyze capital adequacy of bank,

The adequacy of NBP shows increasing trend.

Equity to advances reflects the degree of equity coverage to outstanding

advances/loans, the degree of equity coverage to outstanding is decreasing,

and this decrease is because of increase in loans/advances in current year.

Deposit time capital in 2009 & 2008 shows that deposits and equity are equal

but in 2007 deposit was 9 times greater than equity which was because of

greater increase in deposits.



CHAPTER # 7

INFORMATION ABOUT MY BRANCH

MANAGEMENT OF THE BRANCH

DEPOSITS

PROFIT



FINANCING & ADVANCES

NUMBER OF ACCOUNTS

I did my internship in National Bank of Pakistan Katchery Bazar Branch Okara. Some

important information about my branch which I observed is as follows:

7.1 Management of The Branch

Branch Manager Abrar Bari

Operational Manager Nadeem Rafi

Credit Manager Muhammad Asif

Forex Manager Muhammad Saeed

Chief Cashier Mirza Laqiat Beig



Cashier Gulzair Ahmed

CSO Rao Arif

Other General Information of the Branch

7.1.1 Deposits

The total deposits of this about to 510 million. In deposit there is increasing trend.

7.1.2 Profit

Total profit of this branch is 35 million in 2009.there is also increasing trend in profit

from 2008 to 2009 because of higher mark up rate charged on the finances. :

7.1.3 Financing & Advances:

Mainly, the short term financing such as cash finance, running finance, Demand finance,

ERF II, FAFB, FBP are being dealt here.

7.2 Number of accounts:

Accounts in this branch of MCB are as follows:

7.2.1 Current account:

Total numbers of current accounts are 7600.



7.2.2 PLS account:

Total numbers of profit and loss accounts are 18550.

7.2.3 NBP Saving account:

These are about to 700 accounts

7.2.4 NBP Gold Accounts

There are about to 110 accounts.

7.2.5 Foreign Currency Accounts:

There are about to 170 accounts.

CHAPTER # 8

WORK DONE BY ME

OPENING OF NEW ACCOUNT

PROCEDURE TO OPEN AN ACCOUNT

HOW TO CLOSE AN ACCOUNT

UTILITY BILLS COLLECTIONS



CASH MANAGEMENT

PROCEDURE FOR ADVANCING LOAN

Learning

8.1 Work Done By Me

During my internship in the National Bank of Pakistan Limited, I really enjoyed to work

with the staff of Branch, Katchery Bazar Branch from 21.06.2010 to 04.08.2010, 2010

and have a wish to be employee of National Bank of Pakistan Limited. It was almost

impossible to work in all the departments within that limited time. But on my request, the

staff of the branch provided me the opportunity to work in the different departments for

the sake of practical knowledge. I am really very thankful to branch Staff that provides

me a learning environment in the branch.

During my internship training in the National Bank of Pakistan as I early mentioned that I

have worked in different departments & seats and learnt the followings.

8.1.1 Opening of New Account

Account opening and closing is the function of accounts departments. Bank’s customers

may be individuals (Single or Joint), firms (partnership/proprietorship), Autonomous



corporations, Limited Companies, Charitable Institutions, Associations Educational

Institutions or Local Bodies. NBP normally opens following types of accounts.

Current account

Saving account

8.1.2 Basics to Open an Account

During the span of mine internship in National Bank, I learned and observed a lot of

about the opening of an account. Basically I think that the opening of an account is the

establishment of a contractual relationship between the banker and the customer. By

opening an account at a bank a person becomes a ‘customer’ of a bank. Further I am

going to express the basic requirements and steps involved in the opening of an account.

8.1.3 Introduction and Preliminary Investigation

Before opening an account National Bank of Pakistan as like the other banks in Pakistan

ascertain whether or not the person who is going to open the account is a desirable

customer or not. Then National Bank of Pakistan 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 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.

Preliminary investigation is necessary because of the following reasons:

Avoid Frauds: In this regard I learned that if a banker does not make the

necessary inquiries mentioned above he may enable dishonest persons to possess

cheque books for fraudulent purposes. If any such person happens to be an

undercharged bankrupt, the banker might be placed in an awkward position for

having allowed such a person to open and open a bank account.

Safeguard against unintended overdrafts: Sometimes due to a mistake an account

may be given an overdraft, For instance, the ledger keeper, misreading the

balance of an account honors a cheque for an amount larger than the balance.

Similarly a credit entry belonging to a customer may be made by mistake in

another customer’s account. In such situations the excess amount withdrawn by

the customer can only be realized if the customer is a respectable person.

Inquiries about clients: Being a banker I think National Bank of Pakistan has a

business obligation to respond to inquiries from other banks etc. about his

customer’s financial position. Though the banker gives only a general ideal about

the financial standing of his customer, it should nevertheless have the necessary

information available with him.

8.1.4 Specimen Signature

When an account is opened with National Bank of Pakistan customer provides to the

bank 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 this purpose, and rule for the customers,

full name, and account number are entered on it.

If the bank has reasons to doubt the genuineness of a signature, he should either get it

confirmed for his satisfaction or return the cheque with the remark ‘Signature differs’. If

the signature of the customer is forged the banker cannot escape his liability because he

has actually acted on his customer’s mandate.

8.1.5 Signature Other Than In English

If a customer signs in a language other than English or Urdu, he is requested to fill a

Vernacular Form. This is a type of indemnity whereby the customer relieves the bank of

any responsibility in case there is any mis-verification of signatures by the bank and the

cheque is paid. The vernacular Form is obtained because the bank officers are not used to

verification of signatures other than in English or Urdu; hence there is likelihood of mis-

verification.

8.1.6 How to Open an Account (General)

Before opening an account in National Bank of Pakistan I observed that the following

points must be considered in this regard.

Another account holder of the bank should properly introduce the new customer.

The account holder should sign the account opening form in the presence of bank

officer and the signature is duly verified.

A copy of identity Card is required by Bank.



Against submission of the Bank’s prescribed application form, duly introduced in

the manner provided and on supplying such document, as may be required and

account may be opened. The Bank reserves to itself the right to refuse to open and

account without assigning any reason.

Each account shall be allotted a distinct number that is to be quoted in all

correspondence with the bank relation to the account.

Minimum amount for opening and continued maintenance of various types of

accounts is as follows:

Rs.

Saving 500

Current 500

Term Deposit 1000

The bank reserves the right to change the above mentioned minimum balance

requirement at any time without any notice.

8.1.7 Procedure to Open an Account

According to my practice in National Bank of Pakistan, when a customer wants to open

an account, the bank officer gives him an application form. All information, which is

necessary to be known by the bank, are requirements of the application form. Form also

requires the essential documents to be attached by the customer.

Basically following information is required to open an account with National Bank of

Pakistan.

Title of Account



Full Name of Applicant

Occupation

Address

Telephone No.

Currency of account

Nature of Business

Introducer’s Name, Address & Signatures

Special instruction regarding the account

Initial Amount of the Deposit

Signature of the applicant

8.1.8 Documents to Be Attached

Further I learned that if you wanted to open an account with National Bank of Pakistan

then you should attach the following documents with your application form which are

different for different categories.

8.1.9 Sole Proprietor’s Account

In order to open an account with National Bank of Pakistan Limited Sole Proprietors

have to submit their business registration certificate number.

8.1.10 Private / Joint Accounts:

For individual or private or joint accounts National Identity Card is required.

8.1.11 Joint Stock Company



Before an account of a Public Limited Company is opened National Bank of Pakistan

Limited must ask the person authorized to do so to submit the certified copies or the

following documents:

Certified true copy of the Memorandum and Articles of Association of the

company.

Certified true copy of the resolution of the board of directors / managing

committee / governing body regarding conduct of the account.

Certified list containing names and signatures of the directors / office bearers.

Certified true copy of the certificate of incorporation or registration.

Certified true copy of the certificate of commencement of business (in case of

public limited companies).

Balance Sheet

I.D. Card copy of each director

Original is also enclosed for inspection and return

List of persons authorized to operate the account.

Power of Attorney in favor of the person opening account.

8.1.12 Partnership Firm Account

Information which is required to be submitted to National Bank of Pakistan Limited by a

partnership firm in this case is as follows:

Full Names

Address

Specimen of signatures of the partners

Certified true copy of partnership deed



Registration No. if the Partnership is registered.

8.2 Issuance of Cheque Book

When a customer opens an account with the bank, he is provided with cheque book for

withdrawals from account. However, the first cheque book is given to the customer only

when all the required documents are checked. A cheque book contains ten, twenty five,

fifty or hundred leaves. The cheque book also carries a requisition slip for the issuance of

the new cheque book. This slip is duly filled and singed by the customer. The signature of

the customer is verified by the bank and new cheque book is issued to the customer and

serial numbers of the cheque are duly entered in the book of the bank. Along with the

signature, person should also write his full name & address.

Usually only one cheque book is issued at a time, however big concerns who need a

number of cheque books at a time, may ask the bank to stock as number of cheque books

in their name and to point their name on these cheque books. Bank debits the client’s

account for excise duty of Rs.2.50/- per cheque and keeps the cheque book ready for the

customer, as on his advice.

The officer keeps and maintains the cheque book register Cheque book inventory and

cheque books issued are recorded in this register. The account number for which the

cheque book is issued and the number of leaves are also recorded in this register when the

cheque book issued an entry is passed in the cheque book issue register.

In case of loss of cheque book or requisition slip on cheque book the customer has to fill

the Form No. 216-B to obtain a new cheque book.

8.2.1 Payment of Cheques



In the National Bank of Pakistan Limited I learnt how to make payment of a cheque. In

fact I done the duty of token clerk mostly but I also worked and participated the

procedure followed for the payment of cheques. Actually the customer is required to

withdraw its deposits through the cheques out of cheque book issued to him drawn on the

branch where he is maintaining the account. The cheques are paid in one of the following

ways:-

By cash payment over the counter

By transfer (from one account to an other)

By collection/clearing

8.2.2 Tokens / Handling / Issuance

Before commencement of business, the cashier in charge shall hand over the stock of

tokens (supplied by C. O. K) to the token issuing official against acknowledgement in the

token issue (hand over) Register R-84, indicating therein the number of tokens received.

Token issuing official shall count the tokens received, arrange them in serial order in a

poker ready for issuance. At the close of the business, all un-issued tokens shall be

received back by the cahier in charge, against his initials in the register from the token

issuing official. He shall tally the total with the number of tokens issued in the morning

by adding the number of tokens received back by him (from customers) and number of

tokens pending with the customer (if any). When the quantity of tokens physically held

by him agrees with the number of tokens issued in the morning, these shall be placed in

the cash safe along with the closing cash of the day.



The loss of any token need not to be circulated amount the branches and be treated as

local issue to be dealt by branch at its own. The paying cashier will keep a list of numbers

of the tokens which have been lost.

On presentation of cheque instrument for cash payment a token shall be issued by the

token issuing official after scrutinizing its following aspects:-

The cheque/instrument presented relates to the branch and is not crossed.

The cheque/instrument is bearer or order, in case it is an order one the payee is

known to the branch.

The date on the cheque/instrument is in order. The instrument is not undated or

post-dated or stale. A cheque is stale or out of date, which is more than six months

old on the date of presentation.

Amount in words and figures agrees and is absolutely certain.

It has been duly signed by drawer i. e. the account holder/issuing branch and is

also signed by the payee/bearer.

There is no alteration/cutting/over-writing.

The cheque/instrument is not mutilated, torn or cancelled.

All cancellations and alterations on the cheque instruments have been

authenticated by the drawer under his full signature.

Crossed cheques/instrument presented by a bank for payment at the counter is

accompanied by its memo dully signed by authorized person (s) of the presenting

bank.

In case of telegraphic transfers the payee has signed revenue stamps of adequate

value affixed on the receipt, and his signatures have been verified.



Cash Payment voucher has been signed:

By manager and accountant/authorized officer of the branch.

By the payee on the reverse.

In case of demand draft/pay order payee has been identified and has signed on the

back of the instrument.

After verifying the above points and satisfying that cheque/instrument is apparently in

order the token issuing official will affix the rubber stamp on the reverse of the

cheque/instrument as per specimen given below. He shall give token No. of the token

being issued by him against the cheque, record the date and time of issuance and shall put

his initials at the relevant column. At the time of payment, cashier making the payment

shall note down the time of payment under his initial:-

After recording token No., date and time on the back of the cheque, token issuing official

shall state in the relevant column. Token No. and Nature of Account, Name of Account

through bearer or self and amount on the payment side of the cash book. In case of

telegraphic transfer demand draft, pay order and cash payment vouchers relevant head of

account, amount and other particulars shall be noted by him.

The token made of brass, engraved with bank and branch name and serial number shall

be delivered to the bearer of cheque and other instruments ensuring that it is being

delivered to the presenter only and in case of any doubt fresh signature of the presenter

shall be taken before delivering the taken.

8.2.3 Posting of Cheques/Other Instruments and Fixation of Stamp as Per Nature of

Payment:



After proper scrutiny the cheque is posted in the ledger/card folio number/sheet number

of the account is entered on the top left corner of the cheque and “Pay Cash” or

“TRANSFER” stamp as the case may be is affixed on the face of the cheque. The ledger

keeper shall sign on the cheque with the narration “Entered” to signify that it has been

posted after proper checking and is in order. In case transfer cheques another stamp as per

specimen given, is affixed:

Debits to an account against unlearned cheque are not allowed without the authority of

the branch manager. The credit slips on local banks shall be retained till receipt of

proceeds from them. The credits to the accounts in respect of cheque in clearing shall be

posted in the evening on receipt of advices from the main branch (clearing) and

withdrawal against such credits will be allowed on the next morning.

If payment of a cheque creates an authorized or unauthorized finance or a debit balance is

within or excess of the authorized drawing power, then all such cheques be entered in the

payment Authority Register (R-No. 65) with full particulars of the cheque, the balance of

the account against which they are drawn and the amount of the authorized drawing

power and /or unlearned cheques (if any) be presented in register to the manager, who

shall write “Pay” or “Return” in the register under his initials. In case of “Return” he

shall add the objection under which it is to be dishonored. The officer in charge Deposits

must see by reference to this register that no such cheque is paid without the sanction of

the manager.

8.2.4 When Cheques Are Retuned For Insufficient Funds The Relative Memos

Must Be Initialed By The Manager / Accountant



The Officer In charge Deposits/Accountants/Manager shall again scrutinize the cheque

and after satisfying himself that the cheque is in order in all respects he will pass it in the

ledger or in the account card for payment under his full signatures. The cheques shall be

cancelled in red ink in such a way that signatures of authorized officer cross out the

signatures of the drawer. Cheques shall be passed by authorized officers singly or jointly

in accordance with the signing/passing powers delegated.

The Cheque cancelled/passed for cash payment shall be forwarded to the paying cashier

for payment.

8.3 How to Close an Account

The account can be closed by the customer at any point in time. The customer is required

to submit and application for closing the account. Then the account is closed out and his

balance is paid to him. Cheque book is returned back to bank and the officer cancel and

the remaining cheques in cheque book.

8.4 Utility Bills Collection

I worked in the utility bills collection department as the National Bank of Pakistan

collects utility bills on behalf of WAPDA, Sui Gas Companies, and Pakistan

Telecommunication Corporation Limited by putting the stamp on the utility bills “Paid”,

Date of payment, Signature of the officer receiving the utility bills. After receiving utility

bills a list is made on the form which is called Bills scroll form. One copy of the scroll is

with the bank for evidence whereas the original copy with the receipt of the bills is sent

to the billing department of the respective corporation. The bank charge commission on

the bills.

8.4.1 Cash Management



The most important department of National Bank of Pakistan limited which deals in

money (receiving deposits at lower rates and lend them out at higher rates of interest).

This department also called as Chest Department and manager of it is called Cash

Manager or Chest Manager. In those branches where this department is not separately

existed, the branch manager performs the duties of the Chest Manager.

The excess cash (More than its insured limit by the insurance company) of the branches

of the region is collected by the main branch. The main branch is also bound to send its

excess cash (more than its insured limit) to the State Bank of Pakistan. No branch can

have cash its safe more than its insurance at any time at the time of closing cash, if it is so

the manager will be responsible (not the insurance company) whether or not he informed

to the regional office (exception to the limit which is insured for the day).

New Notes and Prize Bonds are also part and parcel of the Cash Management. Keys of

the Safe lockers are with the three authorized persons each one of them is responsible for

cash as at the time of closing the cash the officers including Cash officer presented and

lock the safe after counting and scrutinize the cash. The cash officer maintain its daily

cash book with specification of notes (Bonds are also recorded in the books in relation

with cash) and other vouchers, after being satisfied the manager authenticates the books

and vouchers regarding cash with stamp and signature. at the end I would like to

conclude that the cash management is being done in the National Bank of Pakistan

Limited very effectively.

8.4.2 Procedure for Advancing Loan

I also worked in the credit department, where I learnt about credit applications. In this

regard the bank adopts the following procedure in order to grant a loan. A customer



applies for a loan to the manager, who says him to give details of his property. The

details of the proposal and the photocopies of the document to the title of property are

sent to the legal advisor of bank. The legal advisor gives his legal opinion upon the

documents. The branch manager, in the light of the opinion received from the legal

advisor, discusses the proposal with the advancing manager whether to give or not the

loan to the applicant. If manager allows granting the loan all the documents along with

request letter are sent to regional office for approval. In the regional office the proposal

is analyzed and if the office is satisfied a consent letter prepared which is signed by the

regional controller credit. This letter is sent to the branch manager. After receiving it the

manager finance reviews the consent letter, and prepares a DAC (Disbursement

Authorization Certificate). DAC can be made only for people who have a bank account.

The following documentation is made for loan.

An application or request letter for loan by the customer

Legal opinion of the legal advisor of the bank (for the title deeds)

Consent letter from the regional office

Vetting Certificate (includes consent No., Facility whether fund based or no-fund

based, addresses etc.)

Valuation of property any consultant or any panel of consultants approved by

State Bank of Pakistan

Original title deed or sale deed

Affidavit

General power of attorney (made by advocate for the person/owner taking loan

for the company)



Mortgage deed

Mutation document made

Verification of the property by the bank from the competent authority

Hypothecation of stock certificate (Running is to be given against 75% margin of

stock)

IB-25R Letter of hypothecation (duly signed by the party)

IB-12 , DP Note/Promissory Note (Bank prepared itself, duly signed by the party,

revenue stamps of Rs. 100 put on it)

IB-6R Agreement of finance mark up (Contract with party for taking mark up on

quarterly basis)

IB-24 (used for title deed)

IB-29 (used for guarantee from party)

IB-26 (used for pledge of stock, margin is different for different goods)

No. IB-28 (used for lien) etc.

8.5 Learning as a Student Intern

There are following learning points for me in the bank.

8.5.1 Duties

In my 1st and 2nd week in NBP I work under the assistance of Operation Manager

from where I learn about activities related to Deposit Dept: and performed such

activities like:

Opening an account

Issue new cheques books



And I also scroll the challan of Government and pass vouchers.

In my 3rd and 4th week in NBP, I work in the Clearance Department and advance Dept: in

which I learn about the clearing of In-Word Clearing Books

Out-Word Clearing Book and about the proposal of loans and there procedure.

In 5th and 6th week I work in the remittance activities that includes

Demand Draft

Telegraphic Transfer

Pay Order

Mail Transfer

CHAPTER#9

SWOT ANALYSIS

STRENGTH

WEAKENESS

OPPERTUNITIES



THREAT

9.1 Strength

9.1.1 Oldest Institution:

NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its customer

base is strength from this plus point as customers have more confidence in the bank. The

additional value services as the privilege for the bank.

9.1.2 Alternate Duties in SBP Absence:

The NBP performs additional services for its customers as well as the other bank

customer in the absence of SBP.

9.1.3 More Deposits than Other Banks:

NBP has the relative competence in having more deposits than the other bank. This is

because of the confidence the customer have in the bank. The bank being the privileged

and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.

9.1.4 Broad Network:



The bank has another competency i.e. it has broad-basses network of branches throughout

the country also more than one branch in high productive cities. The customers are

provided services at their nearest possible place to confirm customer satisfied.

9.1.5 Strictly Followed Rules & Regulations:

The employees at NBP are strict followers of rule & regulation imposed by bank. The

disciplined environment at NBP bolsters its image and also enhances the over all out put

of the organization.

9.1.6 Professional Competence:

The employees at NBP here have a good hold on their descriptions, as they are highly

skilled Professionals with back ground in business administration, banking, economics

etc. These professional competencies enable the employees to understand and perform

the function and operation in better way.

9.1.7 Western Union Facility:

National Bank of Pakistan is only one bank which has the facility of Western union. In

this particular scheme money is transfer in Pakistan from abroad. This is the fastest way

to money transfer. You can receive the money from bank to see the name and password

of particular client.

9.1.8 ATM Finder:

There is also strength of NBP that they are found the ATM. They now provide this

facility to the customers.

9.1.9 Customer Satisfaction:

Because of government’s bank, it is enjoying the customer’s satisfaction. Customers feels

secure their money in NBP.



9.1.10 Online Banking:

There is also strength of NBP that 130 branches are online. It helps the speedy services

giving to the customers. There is also help in checking the balances and daily transactions

just at one key press. Employee’s loyalty: Employees are very much loyal to NBP.

Employee’s turnover is very low in NBP. Very few employees are leaving the jobs in

NBP. So it is very big strength that your employees are loyal to your organization.

9.2 Weakness

9.2.1 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 in there in

the era marketing in now becoming a part of every organization.

9.2.2 NBP under Political Pressure:

The strong political hold of some parties and government and their dominance is

affecting the bank in a negative way. They sometime have to provide loan under the

pressure, which leads to uneven and adjusted feeling in the bank employees.

9.2.3 Lack of Financial Product:

The bank falls far behind when the innovative and new schemes are considered. It has not

been involved in the tug of war between the competitors to the accounts and strengthens



the existing customer base. This stands out to be the major incompetence and weakness

of the banks.

9.2.4 Inefficient Counter Services in the Rush Hours:

During the rush hours, the bank is founded out to be a total flop to handle the mob of

people peaking from windows and doors. The bank has deficiency to operate in the stages

of rush hours where the people find them services entangled in a situation of nowhere

because they are not well served.

9.2.5 Lack of Computerized Network:

The bank lack the strength of being powered by the network of computers, which have

saved time, energy and would have lessened the mental stress, the employees have

currently. This would add to the strength if it were powered by network of computers.

9.2.6 Lack of Modern Equipment:

The bank lacks the modern Equipment that is note counting machine computers. Even if

there is any equipment they lack to fall in the criteria of being rearmed as update and

upgraded

9.2.7 Uneven Work Distribution:

The workload in NBP is not evenly distributed and the workload tends to be more on

some employees while others abscond away from their responsibilities, which server as a

de motivation factor for employees performing above average work.

9.2.8 Lack of Communication between Employees:

During the internship in NBP I found the problem of lack of communication between the

employees and management. They have not very much understanding with each other

and not share the work of each other.



9.2.9 Public Dealing Is Not Very Effective:

Public respect is not very effective in NBP. Employees are not taking care of the

customers, especially in pension and bills department.

9.2.10 Staff Shortage:

There is also weak point for NBP that staff is very short and more staff is required to

meet the needs of the branch work.

9.3 Opportunities

9.3.1 Electronic Banking:

The world today has become a global village because of advancement in the

technologies, especially in communication sector. More emphasis is now given to avail

the modern technologies to better the performances. NBP can utilize the electronic

banking opportunity to ensure on line banking 24 hours a day. This would give a

competitive edge over others.

9.3.2 Growing Banking System:

Nowadays banking system is growing quickly so NBP have opportunities to improve the

standard and get the more share in the market.

9.3.3 Increase In Economic Activities:

The economic activities are increase nowadays, so banks are contributes more in

economic activities. Banks are played role in trade and commerce. So the business of

commercial banks is increase.

9.4 Threats

9.4.1 Emergence of New Competitors:



The bank is facing threats with the emergence of new competitors especially in terms of

foreign banks. These foreign banks are equipped with heavy financial power with

excellent and innovative ways of promoting and performing their services. The bank

has to take initiative in this regard or will find itself far back in competition.

Political Pressure by Elected Govt: The ongoing shift in power in political arena in the

country effects the performance of the bank has to forward loans to politically powerful

persons which create a sense of insecurity and demoralization in the customer as well as

employees.

9.4.2 Customer Complaints:

There exists no regular and specific system of the removal of customer complaints. Now

a day a need for total customer satisfaction is emerging and in their demanding

consequences customer's complaints are ignored

9.4.3 Increase in No. Of Banks:

Increase in no. of banks is a threat for National Bank of Pakistan. No. of private banks

(commercial and private) are operating their business and provide the same facilities. So

increase in no. of banks is a threat for NBP.

9.4.4 Modern Type of Banking:

Modern and computerized banking is required to fulfill the customer’s need. So

maximum branches of NBP are worked in old traditional ways.

9.4.5 The Whole Structure Changes To Online:

NBP have wide network of branches. Only 130 branches are online, so it is very difficult

and time consumed to convert all branches to online system. So there is also risk involves



that if one commuter of one branch suffers in problem, all system and all commuters of

all branches must be turnoff.

CHAPTER # 10

RECOMMENDATIONA

CONCLUSIONS



10.0 Recommendations

"You cannot change your destination overnight, but you can change your direction

overnight."(Jim Rohn, 1997)

The branch daily expense are increase day by day branch management need to

control the extra expenses

At present, there is no prayer room for ladies in the bank. They either offer their

prayers in the locker’s room (or whatever space is available to them). A proper

prayer room for the ladies working in the bank may be made in for them to offer

their prayers comfortably.

At present, all over the bank, if a person is not on his/her seat, his or her phone

keeps ringing unless someone thinks of picking it up. The caller could be an



important customer, or for that matter, could any customer need urgent

information and when that information is not received, it creates a bad image

about the bank and its services.

There may be no discrimination between the contractual and the permanent

employee for training and promotion purpose. Even discrimination should not

take place in any where. Promotions should not be one the basis of seniority and

experience but also young people who are more motivated and thus should be

given an opportunity to grow.

Promotions should not be one the basis of seniority and experience but also young

people who are more motivated and thus should be given an opportunity to grow.

The employees may be given tasks according to their qualification so that the

work relates to them and they relate to the work.

The employees may be given time to socialize and this can be done by teamwork.

We can’t change everything at once. Change is difficult. Making large changes is

even more difficult.

10.2 Conclusion

The public sector banks focused on superior services, niche marketing and the intensive

use of technology to capture dissatisfied customers, in this industry segment, NBP widely

regarded as top level bank because of its financial strength in the term of its capital

position, prudent management and deposit security. NBP is in the unique position of

finding a balance between the strengths and weaknesses of a corporate image that

strongly identified main accounts. All the new private commercial bank suffered from a



problem of credibility, as well as the collapse of the Punjab Co-operatives, Pakistan’s

equivalent of the American savings and loan crisis

The bank has successfully penetrated key market through branch expansion and business

diversification. A system of regional management is in the place to ensure greater trust

and improved productivity. As far as internship is concerned it is a good career

opportunity in general is scarce in Pakistan. Internship opportunities in particular are

quite limited. Internship programs take some effort to set up and not/ all companies

support the internship programs.

In the end I want to say that my internship experience in United Bank Limited have

strengthened my career plans toward joining banking sector and I hope skills and

knowledge which I gained their will help in perusing my career plans.

10.3 References

www.nbp.com

www.sbp.org.pk

www.ibp.org.pk

www.google.com.pk

Annual report NBP 2008-09


http://www.google.com.pk/

http://www.ibp.org.pk/

http://www.sbp.org.pk/

http://www.nbp.com/

Chapter 1 Banking Secior

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