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Transcript of FINI619 Internship Report on NBP 2(1)
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Submitted to:
Prof. Ch. Nazir Ahmed
Submitted By:
Muhammad ImranShahid
Roll NO 170M.Com (Finance)
Hailey College OfCommerce
University Of The Punjab
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National Bank Of Pakistan 2
Lahore.
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National Bank Of Pakistan 3
DEDICATION
This Report is dedicated to
My DearParentsMy DearFriends
&
My HonorableTeachersWhose Guidance is Always
With me.
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ACKNOWLEDGE
My report will remain incomplete if I do not mention the
efforts of those people who helped me in completing this work.
First of all I will thank to Ch. Nazir Ahmad Principal of Hailey
College who gave me opportunity to work in such a prestigious
organization which are well known in the country. I also tribute to
my all teachers who able me to work with experienced persons
and enable me to work very efficiently throughout the period of
Internship.
The administration department ofNBP prepared my internship
program. Administration officer Mr. Ehtesham with special
attention prepared this program. The program was organized in
such a way that sufficient time was given to each department
according to its importance. I am really thankful for his co-
operation during the internship.
At last, I would like to thank all those persons who helped me in
completing this report.
Muhammad Imran
Shahid
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M.Com
CONTENTS
CHAPTER:1
BANKS AND SCOPE OF BANKING
What is Bank?Banking in Developing Societies
New Challenges of Contemporary
CHAPTER:2
INTRODUCTION OF NATIONAL BANK
Present Status and HistoryManagementMission/ObjectivesServices Provided by NBPOrganizational Chart
CHAPTER:3
PROSUCT / SERVICES MIX OF NBPProduct/ Service MixDepositsAdvancesForeign Services
CHAPTER:4
ACCOUNT OPENING AND CLOSING DEPARTMENT
Account opening and closing DepartmentTypes of AccountHow to open an Account
Document RequiredDeposit DeportmentTerms and Conditions
CHAPTER:5
CASH DEALING DEPARTMENT
Cash Dealing Department
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Cash ReceiptInformation Required
Acceptance of ChequePayment of Cash
CHAPTER:6
CLEARING DEPARTMENT
Clearing DepartmentClearingTypes of ClearingItems to be Checked on Clearing House
Cheque Returned
CHAPTER:7
REMITTANCE DEPARTMENT
Remittance DepartmentLocal RemittancesForeign Remittance
CHAPTER:8
ACCOUNTS DEPARTMENT
Accounts Department
Functions of Accounts DepartmentTypes of VouchersAccounting Procedure in NBP
CHAPTER 9
MY INTERSHIP PROGRAMME
Work Done by Me at the Branch
CHAPTER:10
MANAGEMENT OF ORGANIZATION
Management of Organization
Other Information about Branch
CHAPTER:10
FINANCIAL ANALYSIS
Horizontal AnalysisVertical Analysis
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Ratio AnalysisComments on Ratio Analysis
CHAPTER:11RECOMMENDATIOS
Recommendations
CHAPTER # 1
BANKS AND SCOPE OF BANKING
WHAT IS BANK?
A bank is an institution for the custody, loan or exchange of money for sanctioning
credit, for transferring funds by domestic foreign bills of exchange. It is a pipeline through
which currency moves into and out of circulation.
As it is clear from the definition of banking, the main activity or function of
banking is borrowing and lending of money with a margin of gain. However, as far as the
present day banking is concerned, there are a number of different banks, set up under
specific different objectives, performing various functions.
BANKING IN DEVELOPING SOCIETIES.
In the developed societies, the banks do not have to make many efforts in
mobilizing savings, as it has become a second habit with the people. The commercial
banks are financing the short and long term capital needs of the business. The loans and
discounts of commercial banks include real state mortgages and long term loans, which
extend to as long a period as ten years. These banks also administer estates, acts as
insurance agents and underwriters, provide brokerage services and implement domestic as
well as foreign economic polices of the government.
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Commercial banks in developing countries have to make vigorous efforts of
resource mobilization at all levels. However, with the passage of time the commercial
banking operations are under going remarkable qualitative change. In Pakistan for
instance, banking facilities are being extended to the un-banked places. Planned efforts are
being made to enhance the supply of bank advances to the new priority sectors in
consonance with the present day socio-economic needs.
A special scheme to induct commercial banks in the field of agricultural credit was
introduced in December 1972. The scheme provides for short and medium term loans to
farmers under a much simplified procedure. State Banks measures aimed at increasing the
flow of credit to the small man in business and industry as well as to housing and non-
traditional exports have also yielded positive results. The large risk to the commercial
banks in the sphere of agricultural finance and small loans are being covered to a
reasonable extent by the Credit Guarantee Scheme. Mandatory targets for small loan
credit to the agriculture sector and for housing have been prescribed and are being
enforced. Corporate banking is also being reorganized and reactivated on a more
viable fines.
NEW CHALLENGES OF CONTEMPORARY AGE
Banks play a vital role in the economic development of country. They accumulate
the idle savings of the people and makes them available for investment. They also create
new demand deposits in the process of granting loans and purchasing investment
securities. They facilitate trade both inside and outside the country by accepting and
discounting of bills of exchange. Banks also increase the mobility of capital. They provide
a variety of facilities for remitting a large amount of money from one place to another by
the transfer of a small slip of paper.
In a country like Pakistan, which is still in the initial stages of economic
development, and well organized banking system is the need of the day. There is acute
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National Bank Of Pakistan 9
shortage of capital in Pakistan. The banks have to play an important role in promoting
capital formation, in controlling speculation in maintaining a balance between
requirements and availability and in direction physical resources in to desired channels. In
advanced countries of the world like America, Japan, Germany, the rate of capital
formation ranges from 12% to 25% of their Gross National Product. Whereas in Pakistan
the rate of saving has varied from 5% to 8% only. In order to accelerate the rate of
economic development the Government has been acquiring foreign capital. The banks by
launching a vigorous campaign both in the villages and cities can mobilize the idle savings
and can increase the rate of investment. The country thus becomes independent of foreign
capital, which in fact has let us down on almost all the crucial happenings in the country.
This deficiency of capital accumulation is due to so many reasons like, lower per capital
income, disparity of wealth, unorganized banking system, ineffective fiscal measures etc.
One reason of this capital deficiency is the non-adoption of modern marketing tools, such
as market research, sales organization, sales training, sales management, advertising etc.
for attracting deposits. So these are the new challenges for banks which are to be achieved
for the betterment of the economy.
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CHAPTER # 2
INTRODUCTION OF NATIONAL BANK
PRESENT STATUS AND HISTORY
National Bank of Pakistan maintain its position as Pakistanis premier Bank
determined to set higher standards of achievements. It is the major business partner for the
government of Pakistan with special emphasis on fostering Pakistanis economic growth
through aggressive and balanced lending policies, technologically oriented branches.
The National Bank of Pakistan came into existence on 20 th November 1949
under the National Bank of Pakistan Ordinance No.21 of 1949.It is a semipublic bank and
functions like other commercial banks. Therefore it receives funds from the depositors and
provides loans/credit facilities in all sectors including trade, industry and agriculture. It
also functions as an agent of the Central Bank and operates the treasuries at places where
no branch of State Bank of Pakistan exists. The National Bank of Pakistan was also
nationalized, along with other banks, in January 1974. The Bank of Bahawalpur was also
merged into this Bank.
MANAGEMENT
An Executive Board composed of six Senior Executives of the Bank and the
President who is also the Chief Executive supervises the affairs and business of the Bank.
CAPITAL
The authorized capital of the Bank is Rs.2500 million divided into 100 million ordinary
shares of Rs.10 each. After nationalization, all the shares held by persons other than the
Federal Government or Corporations i.e, owned and controlled by the Federal
Government were considered as transferred and vested in the Government.
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BRANCHES
The Bank had a network of 1531branches in the country and 28 branches in
foreign countries. These countries are as follows:
1)- United States of America
2)- United Kingdom
3)- France
4)- Germany
5)- Africa, Middle East Region
6)- Bahrain Obu
7)- Asia Pacific Region
8)- Japan
9)- Republic of Korea
10)- Central Asian States
11)- Bangladesh
12)-Peoples Republic of China
13)-Pakistan.
ACTIVITIES AND ACHIEVEMENTSFOREIGN EXCHANGE
The branches of the Bank in foreign countries handled the export business and
import business.
National Bank of Pakistan started a joint venture in collaboration with the
Bank of Al-Jazira. Its head office is at Jeddah and also includes twelve other branches.
National Bank of Pakistan as a trustee of the National Investment Trust Limited, and also
operates a subsidiary for the promotion of agricultural production named the National
Agriculture Limited.
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MISSION/OBJECTIVES OF NATIONAL BANK OF PAKISTAN
MISSION STATEMENT
To make the Bank comparable and competitive with all International standards
in performing, quality of operations, quality of staff, quality of financial strength and
quality of products and services.
Objectives & missions are the means to reach some beneficial end. No one can
achieve any target before setting it firstly.
So in the same way National Bank has some objectives, which it is trying to
achieve. Following are some of them:
1)_ To maximize profit
2)_ To provide all sort of banking services.
3)_ To serve the humanity in all parts of the world through its network of branches
throughout the world.
4)_ To satisfy customers beyond their expectations by providing personalized effective &
efficient services in best & possible manner.
5)_ To serve Pakistan better in order to give socio-economic uplift.6)_ To provide the maximum profit to depositors by achieving sound profitable growth.
7)_ To develop & enhance its system & technology.
8)_ To train its staff.
9)_ Providing information & advice to its customers.
10)_ Providing facilities of foreign currency accounts.
SERVICES PROVIDED NATIONAL BANK OF PAKISTAN
National Bank of Pakistan provides following main services to its customers:
It acts like a financial intermediary between importers and exporters.
It provides services in share of deposits, advances guarantees etc.
Full and efficient services of foreign trade.
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Better computer system through which statement of accounts of a client could be
made rapidly.
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ORGANIZATION CHART OF NATIONAL BANK OF PAKISTAN
DESIGNATIONS FO 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)
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CHAPTER # 3
PRODUCT / SERVICE MIX OF NATIONAL BANK
Product of a bank include all those services, which a customer can useeffectively in has general and business live.
NBP Main Branch, Lahore offer a wide range of banking services to publicand private sector corporations, partnership, individuals and others. However, there aresome basic services which NBP at present offered to his customers include:
Receipts f customer deposits.
Collection of his cheques drawn on other banks.
Making payments through cheques drawn on it.
Making remittances
Foreign trade services.
At present NBP offering the following financial services and investmentsoptions to customers.
1- Deposits2- Advances
3- Foreign Services
DEPOSITS
To receive deposits is a basic function of all commercial banks. Commercial banks do not
receive these deposits for save keeping purpose only. But they accept deposits as debts.
When a bank receives a deposit from a customer becomes the creditor and the bank a
debtor. When the bank receives the amount of deposit as a debtor, it becomes the owner
of it. It may, therefore, use it as it deems appropriate. But there is an implicit agreement
that the amount owned would be paid back by the bank to depositor n demand or often aspecified time.
Deposits are the lifeblood of a bank and their classification is based on the
duration and purpose for which the deposits are to be kept at the bank before the
depositors can withdraw them. At present NBP accepts deposits in bother local & foreign
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currencies and provides a variety of accounts where these sums are put in at the desire of
the customers.
LOCAL CURRENCY DEPOSITS
In local currency (PkR) the following type of accounts are available at the bank
1-Cruuent Account
2-Saving A/c
3-Short term deposits
4-Fixed deposit receipts
A brief explanation of the above stated accounts is given below:
CURRENT ACCOUNT
These are payable to the customer whenever they are demanded. The bank
treats these deposits as current liabilities. No profit is given on these accounts and there is
no restriction of minimum balance to be kept in these accounts.
SAVING ACCOUNT
In such types of account, the depositors are normally allowed to withdraw alimited amount of money only twice a week.
FIXED DEPOSIT RECEIPTS
In these accounts the amounts are deposited for fixed period which may be 1
month, 3 months,6 months and 1 year.
SHORT TERM DEPOSITS
In these accounts the amounts are deposited for fixed period but shorter than
that of fixed deposit receipts, which may be 7 days ,and 30 days.
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FOREIGN CURRENCY DEPOSITS
At present NBP Main Branch accepts US$, GBR, YEN and DM in shape of
foreign currency deposits. For these foreign currency deposits bank has offered the
following accounts.
1-Foreign Currency Accounts.
2-Foreign Currency Saving Accounts.
A brief description of above stated accounts is given under.
i- FOREIGN CURRENCY CURRENT ACCOUNTS
In these accounts depositors can deposit a sum of money in any of the above
mentioned currencies. The depositor can also withdraw any amount subject to he
availability of the amount. No profit is given on these accounts and no restriction as per
the minimum balance required.
ii-FOREIGN CURRENCY SAVING ACCOUNTS
NBP pays the interest that is earned on the sums available in the accounts by
making investments.
ADVANCES
Advances are the major source of earning income for commercial banks; it is
the interest charged on the money lend to customers. Bank advances to customers are
made either by way of loan or by overdraft on current account.
At present NBP provides short term loans as well as long term loans.
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FOREIGN SERVICES
Following is the list of major foreign services provided by NBP to its
customers :e .g:
a- Documentary Letter of Credit
b- Bills of Negotiation
c- Foreign Services
d- Bills for collection
A brief description on of above stated services is given under;
DOCUMENTARY LETTER OF CREDIT
A documentary letter of credit may be defined as an authority issued by the
opening bank on behalf of the importer in favor of the exporter with the stipulation that
the drafts drawn there under will be duly honored provided that the terms and conditions
as mentioned there in are duly compiled with .
With respect to the documentary credit the following types of documentary letter of creditare offered by NBP;
Revocable LC
Irrevocable LC
Confirmed LC
Transferable LC
Back to back LC
Stand by LC
Sight LC
Usance LC
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BILLS FOR NEGOTIATION
In some cases the exporter is not willing to wait for the proceeds of collection to be
remitted. In such cases exporter requests the Bank to negotiate the bills i.e. he sends the
documents to Bank. In this case Bank examines the documents and arranges them with the
requirements mentioned in the Letter of Credit. When bank satisfied it pays to the
exporter. Now Bank has the right to collect the proceeds on his own behalf from the
importers Bank
NBP performs the functions of both the exporters and the importers Bank as
per its customers status.
BILLS FOR COLLECTION
The exporters and bank receives the documents from the exporter, examines
and dispatches them to the importer,s bank. The importer, s bank confirms these, as per
the requirements stated in the letter of credit. If founds correct gets the amount from the
customer, advice the exporter ,s bank about the receipt of payment and in the end makes
the payment to the exporters bank.
REMITTANCE
It includes local and foreign currency fund transfer. NBP also provide the
facility to its customers in remitting funds from one place to another place. The remittance
(between two countries). At present bank provides the following instrument that
facilitates the transfer of funds.
TT ( telegraphic Transfer)
DD (Demand Draft)
PO (Pay Order)
These will be discussed in detail in the remittance department.
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UNMATCHED BANKING FACILITIES
Deposit security, Guaranteed by Government of Pakistan
Highest rates of return to attract the savings.
Lowest rates on exports and other borrowings.
Largest contribution towards Government and Semi- Government Requirements.
Agent of the State Bank Of Pakistan handling Treasury Functions, receipts of
Taxes & other Revenues.
Handling of salaries and pensions of federal/ provincial employees and defence
personnel.
Utility Bills collections.
Haj arrangements.
Sale and encashment of Prize Bonds through its 266 authorized branches.
Sale and encashment of Defence Savings and Special Savings Certificates.
Safe Deposit Lockers for customers.
Rational Human Resource Management.
CASH LINK
NBP ATM SERVICES FOR YOUR CONVENIENCE
SERVICES AVAILABLE ON NBP ATMS
Cash withdrawal according to your cyclic limit.
Transfer of funds between PLS Savings Account and Current Account of the same
customer through the same ATM Card.
Account Balance Inquiry.
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Instant mini- statement of account listing the last 15 transactions in account.
Request for a new Cheque book which might be collected by the customer from
the branch.
HOW MUCH CASH CAN BE WITHDRAWN
There is a 24 hours cyclic cash withdrawal limit imposed on all ATM cards.
Withdrawal limits depend on the type of customers.
PIN (PERSONAL IDENTIFICATION NUMBER) MAILER
A pin mailer issued to the ATM card holders carries the PIN number in a sealed
envelope. Card holder is required to keep the PIN number in a safe place as all the
operation on the ATM are carried out through the same.
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CHAPTER # 4
ACCOUNT OPENING AND CLOSING DEPARTMENT
Basically function of A/c opening & closing in NBP is performed under Accounts
department but I am discussing it with separate heading for better understanding.
Firstly all types of Accounts which can be opened in NBP has been described:
TYPES OF ACCOUNTS
I) Current account
II) Saving account
Brief explanation of these accounts is as follows:
CURRENT ACCOUNTS
Current A/c is basically used to meet the daily transactions. Current account
provides safety to the customers money, gives the advantage for paying debts by the
convenient and safe means of sending cheques through the post thus avoiding the trouble
and loss that units in PKR, Us$ GBP and DM.
SAVING ACCOUNT
In case of saving accounts, account holder gets profit. There is a time limit for
drawing cash; customer cannot draw money before a certain time.
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In NBP saving a/c is used as current a/c & there is no main difference between
current & saving account except profit.
This account can be opened by limited company, partnership company ,club
societies & associations, joint & sole proprietorship.
HOW TO OPEN AN ACCOUNT (GENERAL)
When a person intend to open account. A card is filled & signed by customer. This card
contain:
i)- Six boxes for name.
ii)- Opening date
iii)-Special instructions
iv)-Space for first a/c No.
v)-Space for other accounts.
Following points are considered by the bank in this regard.
1)- Another account holder of the bank should properly introduce the new customer.
2)- The account holder should sign the account opening form in the presence of bank
officer and the signature is duly verified.
3)- A copy of identity Card is required by Bank.
4)- Against submission of the Banks 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.
5)- Each account shall be allotted a distinct number that is to be quoted in all
correspondence with the bank relation to the account.
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6)- Minimum amount for opening and continued maintenance of various types of accounts
is as follows:
Rs. US$
Current 2000 2000
Saving 500 500
The bank reserves the right to change the above mentioned minimum balance requirement
at any time without any notice.
PROCEDURE TO OPEN AN ACCOUNT
When a customer wants to open an account, the bank officer gives application
form to him. All information, which is necessary to be known by the bank, is requirements
of the application form. From also requires the essential documents to be attached by the
customer.
Following persons can open an account:
1)-Sole proprietors
2)-Private accounts (individual A/Cs)3)-Joint account
4)-Limited Company
5)-Partnership Company
6)-Club, Society & Association
Basically following information is required:
Name
Address
Telephone no.
Currency of account
Nature of Business
Residential status
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Special instruction regarding the account
Signature of the applicant
DOCUMENTS TO BE ATTACHED
Documents required to be attached are different for different categories.
1)- SOLE PROPRIETORS ACCOUNT
They have to submit their business registration certificate number.
2)- PRIVATE ACCOUNTS
For individual or private accounts following documents & information has to
be given:
Name
Residence address
Mail address
Foreign address
office address & office ph. No.
position to title
passport or identification No/
matrimonial status
Date and place of birth
Nationality
Residence visa No.
Name and address of other Banks in Pakistan
3)- JOINT ACCOUNT
If some one wants to open joint account the following information is needed:
- Full name
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- Address
-Specimen of signatures of the joint account holders
4)- JOINT COMPANY
In this case following information & documents are required:
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).
I.D. Card copy of each director
Original is also enclosed for inspection and return
List of persons authorized to operate on the account.
5)- PARTNERSHIP COMPANY ACCOUNT
Documents required in this case are as follows:
Full Names
Address
Specimen of signatures of the partners
Certified true copy of partnership deed
6)- SOCIETIES / CLUBS AND ASSOCIATION ACCOUNT
Documents required in this case are as follows:
Copy of the rules certified by the president and the secretary.
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Certified copy of a resolution of the committee and the specimen signatures of the
persons authorized to sign.
OTHER FORMALITIES
The majority of the new customers are introduced either by an existing customer or by
bank staff. When the concerned officer is satisfied then he opens the account and gives an
account number that will be used in all communications with the bank in regard to the
account and when making deposits and withdrawal.
Bank has a right not to open and account without assigning any reason or to
close the account, if it is not operated in a satisfactory manner by the head office
instructions.
So, opening questionnaire for companies & business accounts includes:
Company name
Address
Mail address
Telephone, Cable & Telex
Nature of Company
Business registration certificate number
Date of incorporation
Nature of Business
Names of main managers & director
Names & address of parent companies
Names & address of other banks
And, introducers declaration
And opening questionnaire for private accounts includes:
Name
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Residence address
Mail address
Residence telephones No.
Foreign address
Office address
Office Telephone No.
Position or Title
Passport or identification cards No.
Matrimonial status
Nationality
Residence Visa No.
Name & address of other banks in Pakistan
Name & address of other banks in abroad
& Their account No.
& Introducers declaration
ISSUANCE OF CHEQUE BOOK
When a customer opens an account with the bank, he is provided with cheque
book for withdrawals of account. However, the first cheque book is given to the customer
only when all the required documents are checked. A cheque book contains 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.
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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 clients 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.
THE REQUISITES OF A CHEQUE
There is no prescribed form of words or design of a cheque but in order to
fulfil the requirements the cheque must have the following:
It must be in writing
It must contain an order to pay and addressed a specified bank.
The order must be unconditional
The order must direct to pay on demand
The sum ordered to be paid must be certain.
The payment should be ordered to be paid to a certain person or to his
order or the bearer.
CHECKING AND PAYMENT OF CHEQUES
It is the primary function of the bank to repay the money received from his customersaccount usually by honouring his cheques. It is a contractual obligation of a banker to
honour his customers cheque, if he has checked the following on a cheque:
Name of the Bank & branch
Amount in figure and words
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Signature of the Drawer (verification)
Posting mark by the computer operator
Cancellation by the authorized
Cheque should not be damaged
Funds must be sufficiently available
No legal bar prohibiting payment.
STOPPING THE PAYMENT OF CASH ON PRESENTATION OF CHEQUE
The payment of cheque is stopped dishonored on the following grounds:
Effects not yet cleared ,then request to present again.
Irregularity endorsed
Drawers signatures differ
Payees endorsement requires banks guarantee
Alteration requires full signatures
Cheque is post dated
Cheque is without date
Amount in figures and word differs
Crossed cheque must be presented through the bank
Payment stopped by the drawer.
HOW TO CLOSE AN ACCOUNT
The account can be closed by the customer. 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.
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CHAPTER # 5
CASH DEALING DEPARTMENT
Cash department of NBP is given the complete responsibility of handling all
receipts & disbursement of cash. As a result of transaction in both local & foreign
currencies & near cash items such as traveler cheque etc ( when they are issued against
cash).
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As a consequence it is also responsible for the book keeping of these
transactions & the safe custody of cash & near cash securities of NBP.
a)- Cash receipts for receive deposits.
b)- Encashment of cheque
Cash department of NBP is a separate close part covered with glasses. No one
other than cash departments employee is allowed to enter into that area.
CASH RECEIPT
The depositor uses cheque deposit slip (or cash deposit slip) for depositing the
amount. There are two types of cash deposit slip:
a)- One for current account holders &
b)- Other for saving account holders.
Both are in different colors for clear identification. There are two parts of cash deposits
slips:
a)- Counter foil
b)- Adjacent credit voucher.
ACCEPTANCE OF CHEQUE
The cash is paid against the cheque of the client. The following points are kept
in mind while receiving the cheque from the client.
Cheque should be drawn on NBP.
It should not be post dated.
It should be bearer cheque so the word bearer should not be crossed.
Payment is not stopped by the drawer.
Amount in words & figure should be same.
Alternation in date / figure / word require drawers full signature with signature on
the cheque.
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AFFIRMATION OF SIGNATURES
After receiving the cheque the officer verifies the signature of the account
holder with the signature on the cheque. It signatures are not the same then it is returned
back otherwise forwarded to computer terminal.
COMPUTER TERMINAL PROCESS
The cheque is received in computer terminal, where the computer operator
checks the balance of the account holder. The operator also sees whether the stop payment
instructions are received from account holder or not. After considering these two points
computer operator posts the cheque in account holder ledger & returns the cheque back to
the officer.
PAYMENT OF CASH
The cheque is cancelled after posting & is returned to cashier. The cashier
enters the cheque in cash paid register & pays against the second signature of the
receiver on the back of the cheque.
CHAPTER # 6
CLEARING DEPARTMENT
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Nearly all the banks provide a wide variety of services to their depositors. One
valuable service provided is that of clearing. Clearing department also plays an important
role in performing the activities of the bank.
The basic function of clearing department is to provide services to customers in
collection of their cheques of other banks, whether they are in city or outside the city. The
customer can get the money in his account at NBP from the cheques drawn on another
bank. The bank accepts the cheque in the clearing which it is drawn through the clearing
house i.e, State Bank of Pakistan.
CLEARING
We can define clearing as, the transfer of funds from one branch of bank to the other
branch of the same bank or the other bank on which the instrument is drawn, without
involving cash through State Banks clearing house or we can say in other that cheques
which can not be cashed at the ash counter of the bank.
CLEARING HOUSE
It is of the service provided by central bank i.e, State Bank of Pakistan to theother commercial banks. SBP acts as a clearing house. A representative of each bank
represents his bank in the clearing house.
A clearing house is an association of commercial banks set up in a given locality for the
purpose of interchange & settlement of credit claims.
The SBP maintains the accounts of the NBP like other scheduled banks and
debits the account of the drawee bank and credits the presented bank which is NBP in that
case.
TYPES OF CHEQUE
Some specific types of cheque are being entertained in the clearing department
of NBP Main Branch, Lahore.
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These types of cheque are:
1)- Local cheque
2)- Out station cheque
3)- In house cheque
1)- LOCAL CHEQUE
By local cheque we mean collection of cheque from the banks which are the
members of the clearing house and which are located within the city.
2)- OUT STATION CHEQUE
By out station cheque we mean collection of cheque from the banks which are
situated outside the city. It means that presenting bank and the bank on which the cheque
is drawn are not situated in the same city.
3)- IN HOUSE CHEQUE
In house cheque are drawn on one branch of NBP and presented to another
branch of NBP such cheques are marked with transfer stamp.
TYPES OF CLEARING
Clearing department deals with the two type of the clearance.
These are stated below:
1)- Inward clearance
2)- Outward clearance
INWARD CLEARANCE
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Cheque drawn on NBP and presented to other Banks or handed over to NBP
agent in clearing house. That is inward clearance for NBP. So inward clearing results in
outflow of funds to collecting bands reducing the balance in the clearing account.
OUTWARD CLEARANCE
Similarly cheque which are drawn on other bank and presented to NB Main
branch, Lahore are known as outward clearance for NBP Main Branch. So outward
clearing results in inflow of funds from paying bank into the clearing account maintained
with clearing house increasing the balance in the clearing account.
Outward clearing thus may be:
Local clearing
Outstation clearing
Excess of outward clearing over inward clearing produces a net increase in the
clearing account balance. Excess of inward clearing over outward. Clearing produces a
net decrease in the clearing account balance. The first case is referred to as favorable
clearing & the second case as unfavorable clearing.
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CHAPTER # 7
REMITTANCE DEPARTMENT
Remittance is the monitory transfer from one place to another place or from
one country to another country to fulfill the requirements of the customers by the order of
the customer.
Remittance Department at NBP Main Branch Lahore can be divided into two
sections due to its activities.
1)- Local Remittance
2)- Foreign Remittance
1)- LOCAL REMITTANCE
Local remittance section deals with remittance ( incoming and outgoing but
only in local i.e, Pakistan rupee and within Pakistan.
Local remittance include the following eight functions in NBP:
a)- Transfer through pay order
b)- Transfer through demand draft
c)- Telegraphic transfer
d)- Issuing of SBP cheques
e)- Mail transfer
f)- Local / internal transferg)- Preparation of balance certificates.
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Chapter - 8
ACCOUNT DEPARTMENT
The main function of the accounts department of NBP is to maintain general ledger
accounts and after the business hours the function of the accounts officer is to close books.
FUNCTIONS
There are many other important functions performed by accounts department of
NBP. So I ma going to discuss these functions in three steps:
-General Ledger;
-Voucher system;
-Types of voucher used.
GENERAL LEDGER:
It is the prime record of the branch reflecting its assets and liabilities and serves as
the master control of accounting system of the branch. It consists of only those accounts,
which are authorized by the head office.
VOUCHER SYSTEM:
Voucher is a written authorization sued in approving a transaction for
recording and payment. Voucher is a system, which is generally designed to provide strong internal
control over the transaction, which take place during the business hours.
Whenever a transaction takes place in any department of the bank.
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One debit and one credit voucher is prepared. At the end of the day, these
vouchers are collected and recorded i.e.,
Debit vouchers are used in two cases:
When ever any expense is incurred.
When a depositor withdraws some amount from his account
The account of the customer is debited with the amount and debit voucher is
prepared.
The format of the debit voucher includes:
-Name of branch
-Date
-Branch No.
-Account No.
-Transaction Code
-Amount and other details (Narration)
CREDIT VOUCHERS:
There are two types of transaction in which credit vouchers are used.
When a depositor deposits any amount in his account because the
liability of bank.
Any income received by the bank e.g. bank draft.
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Different types of credit vouchers are used.
Now in second set these three important functions of Account department of NBP
are described briefly.
1. All expenses vouchers are routed ask through Accounts Department.
2. Preparation of various statements.
3. Preparation daily activity report at the end of each day.
EXPENSE VOUCHER:
All the expense vouchers passed by each department are routed through accounts
department. These expenses include:
a) Salaries given to all employees of the bank
b) Wages
c) Rentd) Lease installments
e) Insurance - vehicle
f) Insurance - cash
g) Utility Bills
h) Medical allowances (reimbursed)
i) Cash carrying charges etc.
SALARY STRUCTURE:
Salary included
Bonuses
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These bonuses are credited after every six months i.e. June and December.
These are first and second profit bonuses and are equal to one month's basic salary.
Allowances:
Allowances included house allowances, transport allowance and utility
allowance.
Provident Fund:
Provident fund is provided to each employee on his retirement.
Contribution by employer and employee is 8.3%.
Preparation of statements:
Second major functions of accounts department are the preparation of
various statements. These statements are:
1)- Weekly Statements:
These weekly statements are sent at first to NBP head office Karachi.
2)- Monthly Statements:
These monthly statements are sent at first to NBP head office
Karachi and then these statements are sent to head office affairs in consolidated form. All
vouchers and statements signed and approved by manager accounts or who has authority
to sign on behalf of the bank and whose signatures appear in one of the banks book of
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specimen signatures or a person who has authority to sign internal vouchers and records
extent of its authority will be made by the country manager.
3)- Preparation of Daily Activity Reports:
It is also duty of accounts department to prepare daily activity
report at the end of each day. It includes the details of the following:
A)- loans transactions
B)- general Ledger transactions
C)- Foreign currency related transactions
D)- fixed deposits transactions
All vouchers prepared by different relative departments on computer.
In third and last step the following functions of accounts department of
NBP are described as follows:
Approval of daily expenses voucher
SBP balance
Tax returns
Budgeting
Forward Cover Fee
Debit Balance Calculation
Pay order/telegraphic commission transfer
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Deposit entry
Depreciation
Result/budget
Head office report
Trial balance / Fx position
Commitment return
Sources and uses
Activity report
Statistics of activity
Monthly assets and liability
Liquidity 1, 2, 3, 4, 5 years
Excise duty balancing
EOM/EOY Print files floppy
Customer's/internal A/c statements
Computer complete back up
Quarterly statements size wise
FCY interest reporting
FCY interest checking
Service Charges
A/c to be dormant
Letters to customers
Classification of deposits
List of deposits
A/c opening and closing
Staff loans
A/c blocked and unblocked
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Monthly resident and non resident
Zakat Calculations.
ACCOUNTING PROCEDURE IN NBP:
1. Various departments use debit and credit voucher for recording the
transactions.
2. Accounting department receives the departmental journal from the
departments to gather with all the vouchers.
3. Verify correction of total of all into departmental entries in departmental
journals.
4. Sort vouchers into general ledger a/c order debit separately from debit for
each account.
5. From departmental journals add all debits and all credits for each general
ledger account and write total for each account in relative account and extend
new balances.
6. Prove debit and credit totals to department journal total. Write total
obtained from machines list for each contingent accident in general ledger and
up data balances.
7. Date and sign general ledger and obtain signature of an officer.
8. Place general ledger includes leaf binder in chronological order.
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CHAPTER # 9
MY INTERNSHIP PROGRAMME
WORK DONE BY ME AT THE BRANCH
Major activities performed during my internship program are as follows;
ACCOUNT OPENNING DEPARTMENT:
In this department, I gain the practical knowledge about opening account. This
department deals with opening current and saving account for its customers and all matters
regarding thereof. The customers opening current and saving accounts can be categorized
as following.
-Individual
-Firm
-Company
-Trust
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-Staff
-Others
OPENING AN ACCOUNTS:
In order to open an account, first of all the customers have to fill a form prescribed
by the bank. The person is required to bring some reference or introduction for opening
the account. Introducer may be the person who has any account with NBP.
Some important information regarding introducer e.g. the name and account
number of the introducer is written on the space provided on the specimen signature card.
Then in order to find out whether he is a true introducer or not, a letter is sent to him
thanking him for this introduction so that anything wrong may come into notice.
There are different requirements for different types of accounts and
accountholders.
DEPOSITS:
The procedure undertaken upon receiving deposits from the customers is as
follows:
Examining the deposit slip to ensure that the name and the account
numbers are clearly indicated.
Counting the cash and cheques and agree the total with the amount on the
deposit slip.
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After that the pay in slip is validated for cash transaction and transfer and
clearing transfer as appropriate before the counterfoil is handed over to the
customer.
Cheques signed by directors, partners or employees of a company, drawn in
favor of them and credited in their account in the bank are to be scrutinized.
WITHDRAWALS:
Cheques can withdraw amount. The withdrawals can be made only at the branch
where the account is maintained. The officer under his full signature authorizes all cash
withdrawals. No third party withdrawal is permitted. In current account, the bank does
not offer any interest. We can deposit or withdraw any amount during banking hours.
ISSUANCE OF CHEQUE BOOK:
The accountholders request for the new chequebook by presenting the requisition
slips along with the authority letter to the concerned office. His signatures are verifiedbefore giving him a new chequebook. The presence of the accountholders is compulsory
to get a new chequebook. But if he sends a third person to get his chequebook then the
procedure is as follows;
An authority letter is given to the third party by the accountholders.
The accountholders verify the signature of the third person on that authority letter.
The bank officer gets the signature of that third person to confirm whether he is thesame to whom the accountholder has sent.
The bank issues the new cheques book and authority letter is kept buy the bank.
CLEARING DEPARTMENT:
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In this department, I have worked for two weeks. Main branch receives the
cheques from all of its branches and makes the lots of these cheques again. Main branch
sends these cheques to the state bank of Pakistan where a clearinghouse exits. In this
clearinghouse the representatives receive their cheques and go back to their bank's main
branch. Then the main branch sends these cheques to their relevant branches where the
validity of these cheques is verified and the accounts of the relevant clients are affected.
The statement of clearing was submitted before 1.00 P.M. daily. The whole
procedure of clearing is completed within two days.
REMITTANCES DEPARTMENT:
I worked in this department for one week. This department deals in transfer of
money from one place to another or country by:
-Demand drafts -Mail transfer
-Telegraphic transfer
In this department internees are advised only to observe the working of transfer of
money from one place to another place of the country by the above modes of transferring
money. During my stay in this department I observed that how demands draft be issued.
The procedure is as follows.
First the bank receives a written request from the customer to issue a bank draft.
The written request is either in banks standard form or separate paper signed by the
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applicant enclosed with cash or cheques covering the amount of the draft and other
charges of the bank.
While issuing a bank draft it is necessary that the draft should be free from
alternations. All the details must be written clearly in ink. After issuance a demand draft
it is handed over to the applicant and its advice containing the particulars of the draft is
sent to drawer branch with its necessary information and payment of the draft is make on
its presentation.
BILLS COLLECTION DEPARTMENT:
I spent one week of my training in bills collection department. Here I collected
utility bills like gas, electricity, water and telephone etc.
DETAIL OF BRACH DEPOSITS
NO. HAVE PLS SAVING ACCOUNT HOLDERS 26527
NO. OF CURRENT ACCOUNT HOLDERS 5773
NO. OF FIXED DEPOSIT ACCOUNT HOLDERS 9800
NO. OF FOREIGN CURRENCY ACCOUNT HOLDERS 3050
RECOVERY OF LOAN ( 242517 MILLION
STUCK UP LOAN 800 MILLION
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GROWTH OF BRANCES BY NBP
YEAR TOTAL (CORES)
1950 17
1951 29
1952 40
1953 52
1954 65
1955 67
1956 73
1957 85
1958 105
1959 129
1960 156
1961 194
1962 2391963 330
1964 450
1965 519
1966 618
1967 1421
1991 1537
1995 1468
1997 1434
1998 0000
1999 0000
2000 0000
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GROWTH OF DEPOSITS MOBILIZED BY NBP
YEAR TOTAL (CORES)
1950 1.51
1951 5.58
1952 17.36
1953 27.90
1954 29.27
1955 33.03
1956 40.19
1957 48.58
1958 58.04
1959 67.50
1960 83.54
1961 88.511962 104.60
1963 124.72
1964 157.53
1965 191.44
1966 198.88
1967 227.31
1991 10574.8
1995 20828.3
1997 25486.2
1998 27339.0
1999 0000
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2000 0000
Ratio Analysis
1- Return on shareholders Investment= Net Profit(after tax) x100Shareholders Equity
1999 = 31316 x100 =0.30%10357847
2000 = 461227 x100=4.05%11377527
2- Return on Equity Capital = Net Profit(after tax) x100Paid up Capital
1999 = 31316 x100 =2.14%
1463880
2000 = 461227 x100=31.51%1463880
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3- Equity per share = Net Profit(after tax)No. of Equity Shares
1999 = 31316 =Rs.0.21per share146388
2000 = 461227 =Rs.3.15per share146388
4- Current Ratio = Current AssetsCurrent Liabilities
1999 =202926341 = 1.58:1191551291
2000 = 328968829 =1.57:1208991751
5- Working Capital = Current Assets Current Liabilities
1999 = 202926341-191551291 = Rs.111375050
2000 = 328968829 208991751=Rs.119977078
6- Debt- Equity Ratio = Out Siders FundShareholders Equity
1999 = 191551291 = 18.49:110357847
2000 = 208991751 = 18.37:111377527
7- Equity Ratio = Shareholders Fund x100Total Assets
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1999 = 10357847 x100 = 2.96%350406373
2000 = 11377527 x100=3.06%370747280
8- Current Assets to Proprietors fund =Current AssetsShareholders Fund
1999 =302946341 =29.24:1
10357847
2000 =328968829 =28.91:1
11377527
9- Return on Assets =Net profit (after Tax) x 100Total Assets
1999 = 31316 x100 =0.009%350406373
2000 = 461227 x100=0.12%370747280
10- Assets Turn over Ratio =Total incomeTotal Assets
1999 =35291180 =0.10:1
350406373
2000 =33732443 =0.09:1370747280
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11- Return on Deposits =Net Profit after TaxTotal Deposits
1999 = 31316 =0.0001:1294754493
2000 = 461227 =0.0014:1316493342
12- Advance to Total Deposits = Advances x 100Total Deposits
1999 = 122559342 x 100 =41.58%294754493
2000 =140325289 x 100 =44.34%316493342
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CHAPTER # 11
SUGGESTIONS & RECOMMENDATIONS
Although NBP is included in ten top most banks of the world equity as well asassets wise, but for the further improvement in various sectors may recommendations to
the bank would be as follows:
PLANNED AND HEALTHY COMPETITIONS:
NBP should become very specific about its competitors, so that it can
understand who is its competitor in the first degree and who is in the second degree. Then
the first-degree competitors should be watched closely.
FORMATION OF A RESEARCH CELL:
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A research cell should continuously try to gather information about the
present action so its competitors and expected future actions. So in this way more effective
strategies can be formulated.
REWARD SYSTEM:
The performance reward linkage should be make strong as it is said, "A
happy employee delivers more than he receives from the organization." The NBP should
also try to make its employees happier.
There is immediate need, to reconstruct the personnel policies. Selection
should be through newspaper advertisements. In this way more intelligent, efficient and
qualified staff can be formulated.
It is strongly recommended that N.B.P. should go for computerization rather than
manual work, which is very slow and time, consuming process. In this age N.B.P.even does not have a partially computerized system where as other new competitor
banks are now going towards on-line banking services.
Govt. should take keen interest to recover its bad debts, which can improve its
financial position.
In case of giving the loans, it is necessary to check the repute of customer towards
loan repayment. Bank shouldnt advance the money to those people who are addict
of rescheduling of loans due to their political influences. Instead providing loans to
these persons, loans must be advanced to the well-reputed businesses and
industries having good record of loan repayment.
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Along with the officers, the training must also be given to the clerical staff.
Because of N.B.P. are running on manual system and the training of its staff
directly improving their efficiency of work.
Present training program for its officers is need to be improved, as this program
instead of improving the efficiency of officers is merely a burden for the bank in
the form of heavy T.A. , D.A. and cost.
Working conditions must be improved for the employees. Bank will definitely get
more benefits after some expenditure on the working conditions as it improves
efficiency and productivity of the employees.
N.B.P. should flourish certain marketing plans to attract the customers by giving
them certain incentives and beneficial schemes to the customers as other
competitor banks are doing so.
There is also a need of proper recruitment and selection program. New young
talent should be introduced to inject the new ideas.
Deterioration in efficiency is mostly due to promotion without merit. So
promotions must be awarded on merit and also when due.
Special attention should be given to the behavior of the employees towards the
customers, as customer is the most important person for any bank.
There are many employees who are working on ad-hoc basis creatingdissatisfaction. The deserved should be made permanent employees.
Political influences in the bank should be eliminated.
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To motivate the employees of the bank, regular bonuses and incentives should be
given to them.
There must be a friendly environment among all the employees as it enhances the
trust and sincerity.
NBP should be focus its attention towards the share of traveler cheque.
Branch manager should be trained in the field of selling to serve better according
to the expectation of customers.
The recruitment policy should be fair and transparent.
Management should increase the branch limit of expenditure to fulfill the
necessary expenditure of personnel relation.