riaz faiz nbp final report

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Brief History of Banking and NBP

The partition plan was announced on June 3, 1947 and August 15, 1949 was

fixed as the date on which independence was to take effect. It was decided that

the Reserve bank of India should continue to function in the dominion of Pakistan

until September 30, 1948 due to administrative and technical difficulties involved

in immediately establishing and operating a Central Bank.

At the time of partition, total number of banks in Pakistan were 38 out of these

the commercial banks in Pakistan were 2, which were Habib Bank Limited and

Australia Bank of India. The total deposits in Pakistani banks stood at Rs.880

million whereas the advances were Rs.198 million. The Governor General of

Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State

Bank of Pakistan on 1st of July 1948.

In 1949, National Bank of Pakistan was established. It started with six

offices in former East Pakistan. There were 14 Pakistani scheduled commercial

banks operating in the country.

The Pakistan Banking Council prepared banks amalgamation schemes in

1974 for amalgamation of smaller banks with the five bigger banks of the country.

These five banks are as under:

• National Bank of Pakistan

• Habib Bank Limited

• United Bank Limited

• Muslim Commercial Bank Limited

• Allied Bank Limited

So, through the nationalization of Bank Act 1974, the State Bank of

Pakistan, all the commercial banks incorporated in Pakistan and carrying on

business in or outside the country were brought under the government ownership

with effect from Jan. 1, 1974. The ownership, management, and control of all

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banks in Pakistan stood transferred to and vested in the Federal Government.

The Finance Minister announced plans to start Islamic Banking system in

Pakistan in the budget speech on June 26, 1980, but it could not be possible till

August, 2003.

INTRODUCTION

National Bank of Pakistan maintains its position as

Pakistan's 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

Pakistan's economic growth through aggressive and

balanced lending policies, technologically oriented products

and services offered through it large network of branches

locally, internationally and representative offices. Where SBP

(State Bank of Pakistan) is not available, NBP works as its

agent. NBP follows the rules of SBP on the basis of ‘SPM’ (stands for standard

procedural manual).

Although in technology other banks are leading in technology,

NBP has the broader network of its branches in Pakistan. NBP has:

• 29 regions

• Every region has different branches

• 8 audit offices

• 12 IT Centers

• These IT centers are handling 115 online branches

• No. of deposits in NBP are more than any other bank in Pakistan.

• 24 branches of NBP are established in other countries ex Europe,

US, Korea etc.

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• NBP has made joint ventures with different banks and they are

given authority to work as representative of NBP.

JOINT VENTURE: means to give authority to other bank to provide services

of another bank.

VISION & GOALS

“To be recognized as a leader and a brand

synonymous with trust, highest standards of

service quality, international best practices

and social responsibility,

To enhance profitability and maximization of NBP share

through increasing leverage of existing customer base

and diversified range of products”.

MISSION

NBP will aspire to the values that make

NBP truly the Nation’s Bank, by:

• Institutionalizing a merit and performance

culture

• Creating a distinctive brand identity by

providing the highest standards of services

• Adopting the best international management

practices

• Maximizing stakeholders value

• Discharging our responsibility as a good

corporate citizen of Pakistan and in countries where we operate

CORE VALUES

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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

• Value creation for all stakeholders

NBP CORPORATE BANKING

NBP further consolidated its position as One of the

top players in corporate and Investment banking of

the country in 2007 and has built a strong customer

relationship with the premier corporate clients.

The departments in which I worked

OPERATIONS DEPARTMENT OF NBP

Operations department of the National Bank of Pakistan is responsible for the

overall operations of the bank.

Operations department has following segments.

a) Cash

b) Clearing

c) Remittance

d) Account opening

e) Accounts department

The details of those departments that are controlled under operation department

are as under.

a) Account opening

b) Cash department

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c) Clearing

d) Remittances

DEPOSIT DEPARTMENT

National Bank of Pakistan accepts/collects deposit from their accountholders. An

account opening form is provided to prospective Customer. At the same time

introduction of that Customer is an integral condition so that provided information

by that Customer may be got authenticated. An existing Accountholder may

introduce the incoming Customer. The Manager takes the Account holder’s

specimen signatures on signature Card in order to avoid future problems. At the

occasion withdrawal of fund Accountant compares the signature on cheque to

the provided Specimen of Signatures

IMPORTANCE

Bank deals in money and they are merely mobilizing funds within the economy.

They borrow from one person and lend to another. These deposits are liability of

the bank so from the viewpoint of bank we can refer to them as liabilities.

Account opening department

It is the most important department of bank. Following procedure is adopted for

this purpose.

Procedure of Account Opening

It is very simple and quick procedure. A person who wants to open an account

must have the introduction of bank’s staff or an already existing account holder of

bank. The customer is required to fill an account opening form. Then signatures

of the Introduce are verified from S.S. Card before opening account.

They also have to give identity letter

• Photocopy of National Identity Card of each director

• Application form

• Copy of company’s memorandum and articles of association

• List of directors

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• Copy of board resolution

• Certificate of incorporation

• Their signature cards

• Certificate to commence business

Following Factors Prior To Opening of Account Should Be

Consider

1) The suitability of the perspective customers.

2) Verification of customer credentials.

3) The perspective possibility of profitability of the relationship.

The proposed relationship does not violate:

a) SBP rules and regulations

b) Applicable local laws

C)The bank’s internal policies

TYPES OF DEPOSITS:

Deposits can be segregated on two bases, one is the duration in which these

funds are expected to be with the bank, and second is the cost of getting these

funds. So we can divide deposits into two classes according to duration:

1 ... ... Time Deposits

2 ... ... Demand Deposits

And on the basis of the cost of acquire these funds, a deposit can be classified

as any one of the following four:

a ... ... High Cost

b ... ... Medium Cost

c ... ... Low Cost

d ... ... No Cost

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Bank has different kind of deposit schemes in order to induce deposits, out of

large variety of deposit schemes some are as follows:

FIXED DEPOSITS:

In this type of account a certain amount is deposited for a certain period such assix months, one year, two year or longer. A fixed deposit receipt is issued in the

name of the depositor. The receipt is signed by the officer in charge and the bank

manager. A notice is given to the depositor on a prescribed from two weeks

before the Fixed Deposit Receipt (FDR) falls due, requesting the depositor to

withdraw his money or to renew his deposits. The interest is allowed on fixed

deposit varies with the period for which the deposit is made.

SHORT NOTICE TERM DEPOSIT:

This kind of deposit is for a short period as the name indicates. The depositor

may withdraw his deposit at any time by giving seven days notice to the banker.

This type of deposit facilitates the trader to withdraw his amount with interest of

the deposited period.

CALL DEPOSIT:

Call Deposits are the sorts of deposits, which are deposited with the banker

against any tender. This is with out interest deposit, this may be with interest

provided with the depositor has agreed to keep this amount with the banker for

some fixed period.

TYPES OF ACCOUNTS

CURRENT ACCOUNT:

In this type of accounts, the client is allowed to deposit or withdraw money as

and when he likes, but there is requirement of maintaining the minimum balance

of Rs.5000/- other wise Rs.50/- will be deducted every month. Usually thebusinessmen open this type of account and the bank pays no profit on it. These

types of deposits are also exempt from compulsory deduction of Zakat.

PLS SAVING BANK ACCOUNT:

This type of account is for those persons who want to make small savings. This

type of account is opened with a minimum deposit if Rs.200/- If the balance in the

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account falls below the minimum requirement then a flat charge of Rs.150/- is

made in the account once in a half year. Zakat and other withholding taxes are

deducted as per rules of the government.

The bank deals in other different accounts opening which are:

1. Individual Account

2. Joint Account

3. Business Account

4. Partnership Account

CHEQUE BOOK ISSUENCE

When the Account is opened, then the customer is given a cheque book to sign

upon and withdraw money.

Retail section

This section deals with the retail products of National bank of Pakistan. These

products are offered to the people by the National bank of Pakistan in order to

support their lives. By this the NBP aims to give them the confidence to earnsomething fro themselves and fro their families, build their houses, get the

advance salaries to fulfill their urgent needs, it also supports agriculture sector of

the country in order to give confidence and courage to kisns.

Retail Products of NBP.

• President's Rozgar Scheme – NBP Karobar

• NBP Saiban

• Advance Salary

• Cash N Gold

• NBP Kisan Taqat

• Kisan Dost

• NBP Online

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• NBP Premium Aamdani

• NBP Premium Saver

Clearing Department

Before discussing it is necessary to know what is “Clearing”.

“The process by which cheques exchanged between the collecting and paying

bank and the ensuing financial settlement is called “Clearing”.

Every banker acts both as a paying as well as a collecting banker. It is however

an important function of crossed cheques. A large part of this work is carried out

through the bankers clearing house. A clearing house is a place where

representatives of all the banks of a city get together and settle the receipts and

payments of cheques drawn on each other bank. As the collecting banker runs

the certain risks in receipt of their ownership, the law has provided certain

protections to the banks.

This facility is provided by the state bank of Pakistan for offsetting of cross

obligations between the different banks. Clearing is of two types:

1) Inward clearing

2) Outward clearing

Types Of Cheques Collected

Transfer Cheques

Transfer cheques are those cheques which are collected and paid by two

different branches of the same bank situated in the same city.

Clearing Cheques

Clearing Cheques are those cheques which are drawn on the branches of some

other bank of the same city or of the same area which covers a particular

clearing house.

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Collection Cheques

Collection Cheques are those cheques which are drawn on the branches of

either the same bank or of another bank, but branches are not in the same city or

they are not the members of clearing house.

Remittance department

The need of remittance is commonly felt in today’s business. A major function of

any bank is to transfer of funds from one place to another place . Banks in this

regard provide the facility of transfer of money from on place to another. This

transfer of money is a source of profit for Bank.

Functions Of Remittance Department:

At National Bank of Pakistan remittance department perform the

following functions:

• To issue Demand Drafts

• To issue Govt. Drafts

•

To issue Mail Transfers• To issue Telegraphic Transfers

• To issue Payment

DEMAND DRAFT:

If you are looking for a safe, speedy and reliable way to transfer money, you can

now purchase NBP’s Demand Drafts at very reasonable rates. Any person

whether an account holder of the bank or not, can purchase a Demand Draft

from a bank branch.

PAY ORDER:

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NBP provides another reason to transfer your money using our facilities. Our

pay orders are a secure and easy way to move your money from one place to

another. And, as usual, our charges for this service are extremely competitive.

MAIL TRANSFER:

Move your money safely and quickly using NBP Mail Transfer service and receipt

is given to the customer. And we also offer the most

competitive rates in the market.

SCLS: A tariff containing all the information of above

services.

Telegraphic Transfer ( TT)

It is said to be the fasted mean of transfer of funds from one place to the other.

In this method a telex massage is used to make an order of payment to the

responding branch. For issue of TT request has to be made to the manager who

gives the permission. It is a costly mean and the

charges are comparatively higher than other means.

TRAVELER’S CHEQUE:

Negotiability: Pak Rupees Traveler’s Cheques

are a negotiable instrument

Validity: There is no restriction on the period of

validity

Availability: At 700 branches of NBP all over the country

Encashment: At all 400 branches of NBP

Limitation: No limit on purchase

Safety: NBP Traveler’s Cheques are the safest way to carry our

money

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FOREIGN EXCHAGE DEPARTMENT

“The transfer of credits to a foreign country to settle debts or account between

resident of home country and those of the foreign country” or “the Foreign bills

currencies etc used to settle such accounts”.

Foreign Exchange department deals within exports imports and Money transfer.

National Bank of Pakistan acts as importer bank as well as exporter bank for

different parties who are interested in the business of export & import.

DEFINE IMPORT

All goods and services brought into a country that were purchased from

organizations located in other countries.

DEFINE EXPORT

All goods and services sent from one country to another country.

CERTIFICATE OF ORIGIN

This certificate shows that goods are from Pakistan.

COVERING SCHEDULE

If in covering schedule, it is given that “Please remit proceed to our Karachi office

account # 574348812 with (Standard Chartered Bank) USA for onward credit to

National Bank of Pakistan.

BENEFICIARY CERTIFICATE

If L/C requires some information as proof of anything from exporter then exporter

has to present beneficiary certificate for that proof.

E-FORM

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E-form has four copies:

One for custom officer

One for exporter Triplicate copy for SBP

Duplicate copy for bank

Bank reporting or duplicate and triplicate is done by bank. Custom officer should

clear product. (Date is given on the foot form).

PAYMENT FROM IMPORTER BANK

It is the choice of importer to open L/C from any bank and the bank from which

L/C is opened can also refer to some other bank for payment. So bill of exchange

is sent to refer bank and other documents are sent to L/C opening bank.

LETTER OF CREDIT

It is a document issued by a NBP authorizing the bearer to receive money from

one of its foreign branches or from another bank abroad. The order is

nonnegotiable, and it specifies a maximum sum of money not to be exceeded.

Widely used by importers and exporters, the letter of credit is made available so

that they may draw foreign currency while traveling abroad. When the instrument

is directed to more than one agent, it is called a circular letter of credit. NBP is

committed to offering its business

customers the widest range of options in the area of money transfer. If you are acommercial 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.

SWIFT SYSTEM

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The SWIFT system (Society for Worldwide Inter bank Financial

Telecommunication) has been introduced for speedy services in the area of

home remittances. The system has built-in features of computerized test keys,

which eliminates the manual application of tests that often cause delay in thepayment of home remittances. The SWIFT Center is operational at National

Bank of Pakistan with a universal access number NBP-APKKA. All NBP

overseas branches and overseas correspondents (over 450) are drawing

remittances through SWIFT.

Using the NBP network of branches, you can safely and speedily transfer money

for our business and personal needs.

CREDIT DEPARTMENT

Credit means belief or trust. “The quality of being credible or trustworthy”. Other

words we can use for credit as “trust in one’s integrity in money matters and ones

ability to meet payment when due”.

The function of Advances and Credit Department is to lend money in the form of

clean advances, against the promissory note, as well as secured advances

against tangible and marketable securities. The bankers prefer such securities,

which do not run the risk of general depreciation due to market fluctuations.

Common securities for the banker’s advances are as under:

SECURITIES

BANKERS’ LIEN

(Moveable property possessed to the lender cannot be sold in case of default)

Lien is the bankers’ right to hold the property until the claim on the property is

paid. The bankers look at their lien as a protection against loss on loan or

overdraft or any other credit facility.

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In ordinary lien, the borrower remains the owner if the property, but the actual or

constructive possession remains with the creditors, though he has no right to sell

it.

GUARANTEES

When an application for an advance can offer any tangible security, the banker

may rely on personal guarantees to protect himself against loss on advances or

overdraft to the applicant.

MORTGAGE

(Immoveable property possessed to the lender can be sold in case of default)

A mortgage is the transfer of an interest in specific immoveable property for the

purpose of securing the payment of money advanced or to be advanced by wayof loan, and existing of future debt, or the performance of an engagement, which

may rise to a particular liability. The person in whose interest the property is

transfer is called mortgagee.

HYPOTHICATION

(Immoveable property possessed to the borrower can be sold in case of default)

When property in the shape of goods is charged as security for a loan from the

bank, the ownership and possession is with the borrower, the goods are said to

be hypothecated. The essence of hypothecation is that neither the property in

goods nor the possession of them passes to the lender, but the security is

granted by means of letter of hypothecation which usually provides for a banker’s

charge on the hypothecated goods.

PLEDGE:

(Moveable property possessed to the lender can be sold in case of default)

In a pledge, the ownership remains with pledger (borrower), but the pledgee has

the possession of property until the advance is repaid in full. While in case of

defaulter, the pledge has the right of sale after giving due notice .

TYPES OF LOANS

RF (RUNNING FINANCE)

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CF (CASH FINANCE)

DF (DEMAND FINANCE)

ADVANCE SALARY

DF GOLD (GOLD DEPOSITS)

NBP KAROBAR

NBP SAIBAN

DEBT SWAP

BANK GUARANTEES

IT DEPARTMENT

RDC (REGIONAL DATA CENTRE)

IT platform with specific automation and MIS generation capabilities for the

scheme, as under:

Product type sales i.e. GNG auto Rickshaw, Utility Store & PCO etc.

Geographical distribution of loans

Processing Turn Around Time

Performance evaluation reports on Turn Around Time

By classification of applicant

Loan limits

Loan tenure

Mark-up rates wise

Govt. mark up share collection and loss sharing reports etc.

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ONLINE STRUCTURE:

NBP uses main frame computers as servers.

Specification: IBM computers

There are 30 IT departments of NBP, these departments handles online bankingand ATM’s

RDC in Multan supports 182 branches. Out of these 182 branches 15 branches

are online, remaining are offline. These offline branches process data in form of

batches.

Offline branches work via:

• VPN (Virtual private Network)

• E-mail

• And modem to modem configuration

Online branches work via:

• VAN Connectivity

• Cables

• Wireless

• Radioactive Waves Satellites

In remote areas where PTCL is not available:

• Frequency radio waves are used

• 2 interacting antennas are used

• Dishes are set that catch signals from satellite

Advantage of radio waves: It can be property of NBP.

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Disadvantage of radio waves: Where distance is greater radio waves are

useless.

For satellites NBP use:

VSAT (Very Small Aperture Satellite)

Online Branches:

• Main branch is attached with LAN

• 1 is connected with DXX

• 1 is connected with Satellite

• 1 is connected with radioactive waves

Other branches are connected through mail or VSAT

Software named EBS (electronic batching system) is used for mainframecomputers.

On client pc’s small software is installed and connected to EBS. NBP generate

DTR (daily transaction report) on daily basis. At end of the day this data is

compiled and sent to the head office in Karachi.

EBS uses the tools of IBM

The software is designed in foxpro named BBO used in offline systems.

One of the major advantage of foxpro is that it is very safe and secure software.

For recovery purpose, at the end of each day, a backup report is made. For this

purpose a cottage tape is used.

Online Applications:

Application of different schemes for example: Saiban, Karobar Schemes. All info

about them is available on net.

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NBP has its own systems department which makes softwares for NBP.

Application of classroom concepts

I observed that in the bank I observed that job specification is observed over job

rotation. Employee working on a particular position is not given the experience of

other similar ranked activities. Following type of hierarchy is followed in NBP.

Work Management Skills

In the office environment a person is known by the work he or she does, the

better one performs the more is one praised. So the work management skills that

I had gained during the BBA(IT) program helped me manage the work. I also got

the chance to improve those skills because skills become more effective with

practice.

Communication Skill

Concepts of Business communication that I observed are the different types of

communication like horizontal and vertical communication. Business

communication is the heart of the effective and efficient working of an

organization.

Financial Management

Concepts about this course are relates with Time value of money, capital

budgeting techniques and ratio analysis to evaluate bank performance.

This is important because every organization develops its own Accounting

system according to its own requirement. By utilizing these skills I performed

these important tasks: .Revise the pay scales Documentation

I T SKILLS

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In this modern world, office work has shifted from manual to computer. So it is

very important to have good knowledge and sharp computer skills to work

efficiently in an office environment. Almost all of my work was done on computer

so the computer skills, which I possessed, help me a lot Different types of application software’s and databases are used for data managent. Other type of

IT applications is used for online banking, NADRA verification, ECIB and others.

SWOT ANALYSIS

SWOT analysis is careful evaluation of an

organization’s internal strengths and weakness as

well as its environment opportunities and threats.

In SWOT analysis the best strategies accomplish

an organization’s mission by:

1. Exploiting an organizations opportunities and

strength.

2. Neutralizing it threats.

3. Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps

in formulating strategy using the organization

mission as a context, managers assess internal strengths distinctive

competencies and weakness and external opportunities and threats. The goal is

to then develop good strategies and exploit opportunities and strengths

neutralize threats and avoid weaknesses.

STRENGTHS

• OLDEST INSTITUTION

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NBP in one of the oldest bank of Pakistan and first nationalized bank Hence itscustomer base is strength from this plus point as customers have moreconfidence in the bank. The additional value services as the privilege for thebank.

• 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.

• MORE DEPOSITS THAN OTHER

BANK

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.

• EMPLOYEE BENEFITS

The employers at NBP are offered reasonable monetary benefit. Normally two

bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional

benefit and competency for the bank and a source of motivation for the

employees.

• BROAD NETWORK

The bank has another competency i.e. it has broad-basses network of branchesthroughout 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.

• STRICTLY FOLLOWED RULES &REGULATION:

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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.

• 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.

• HEALTHY ENVIROMNMENT

The working condition in the NBP branch here is very

conductive and favorable for better

output. The informal environment affects the performance of the employees in a

positive way.

• RELATION BETWEEN STAFF AND OTHER EMPLOYESS

The bank enjoys a good plus point when it comes to the employee manager

relationship the hearing as removing of discrepancies if any, between the

employees, and between the manager and employees.

WEAKNESSES

• LACK OF MARKETING EFFORT:

The bank does not promote its corporate image, services, etc on a competitiveway. 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.

• NBP UNDER POLITICAL PRESSURE

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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.

• FAVORITISM AND NEPOTISMThe promotions and bonuses etc in the bank are often powered by senior’s

favoritism or depends upon their wills and decision. This adds to the negative

factors, which denominate the employees thus resulting in affecting their

performance negatively.

• LACK OF FINACIAL 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.

• 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.• 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

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employees have currently. This would add to the strength if it were powered by

network of computers.

• 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

• UNEVEN WORK DISTIBUTION.

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 ademotivation factor for employees performing above average

work.

OPPORTUNITIES

• 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.

• MICRO FINANCING

Because of the need for micro financing in the

market, there are lot of opportunities in this regard.Other banks have already initiated, now the time has

arrived when the NBP must realize it and take on step

to cater an ongoing demand.

THREATS

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• 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 GOVERNMENT

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 asemployees.

• DOWNSIZING

The bank is currently acting upon the policy of downsizing which threaten the

environment of the bank Employees feel insecurity in doing their jobs and work,

hence affecting the over all performance of employees negatively.

• CUSTOMERS 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.

Pest analysis

• Politically

• Economically

• Social

• Technologically

• Politically

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setup in Pakistan is supporting banking industry as whole, bal being a part of

this industry is also repaying benefit of the friendly policies of government

visa-a-vise the economic situation

• Economy

is currently moving forward, a bit of recovery from the stock received due to

its international sub prime crisis

Stock exchange

International donor agencies stopped to Pakistan

Major restituting by imf and world bank

New economy is in relaxing phase.

Obviously bank alfalh is getting benefit from improved economic

condition.

• Social

has now a political image of banking although Pakistan in Muslim country

still the banking industry is gaining growth. nevertheless Islamic banking is

gaining more popularity therefore the bank like bal have come up with there

Islamic banking division. nonetheless their economic social barrier

forward .banking on inters based system is not very acceptable due to theIslamic background of our country.

• Technologically

bal is at but disadvantageous position ,since internally the banking ia very

fast paced with the use of auto machine with technology. bal is aty slack

level in auto machine and technological advancement have in phone to

international competition on banking

FINANCIAL ANALYSIS

Liquidity Analysis

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1. Current Ratio = Current Assets

Current Liabilities

2006 2007 2008 2009

= 142,279,638

22,309,742

= 153,810,681

17,947,965

= 161,976,396

50,677,987

=163,820608

55,899,307

6.37 8.57 3.19 2.93

Explanation:

The current ratio for this bank has been showing a very good trend in

previous years. It means bank was in good position to meet their short term

obligations. It increased from 2006-2007 because assets increased and

current liabilities decreased in 2007 as compared to 2006. But in 2008 this

ratio decreased from 8.57 to 3.19 because liabilities increased due to more

borrowings and this year the ratio also sustain its trend of decreasing due to

same reason.

2. Cash Ratio = Cash + Cash Equivalent

Current Liabilities

2006 2007 2008 2009

= 119,266,906

22,309,742

= 132,346,081

17,947,965

= 144,848,364

50,677,987

=144,233,432

55,899,307

5.34 7.37 2.86 2.58

Explanation:

This ratio shows the ability of the bank to meet short term obligations with

sufficient cash. This ratio increased from 2006-07 because of low current

liability and high cash. But this ratio decreased from2007-2008

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upto2.86.This is because the current liability increased due to more

borrowings. And from 2008-2009 it also decreased as the current liabilities

going on increasing.

3. Net Working Capital = Current Assets _ Current Liabilities

2006 2007 2008 2009

= 142,279,638= 153,810,681-17,947,965= 161,976,396-50,677,987=163,820,608-55,899,307

119,969,896135,862,716 111,298,409 107,921,301

Explanation:

It shows ability of the bank to meet their current liability with their current

assets.Net working capital increased from 2006 to 2007 because of high

current assets. But NWC decreased in 2008 due to high current liabilities.

Current assets also increased in 2008 but the proportion of increase of

current liabilities is more than current assets.Current assets also increased in

2009 as compared to 2008 but the liabilities increased in high proportion

when compared to assets increase.

4. Net Worth = Total Assets _ Total Liabilities

Explanation:

It is showing increasing trend from year 2006-07. This shows that bank’s

total assets are increasing with greater change as compared to liabilities.

So, bank’s overall business increased from 2006 to 2007.But it decreased

2006 2007 2008 2009

= 635,132,711-553,178,593= 762,193,593-645,855,939= 817,758,326-715,299,108=944,232,762-824,676,384

81,954,118 116,337,654 102,459,218 89,556,378

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from 2007 to 2008 due to more liabilities. In 2009 the net worth decreased a

lot due to a very high increase in liabilities as the bank’s borrowings in this

year increased.

5. Total Asset Turnover = Mark-up earned

Total assets

2006 2007 2008 2009

= 43,788,628

635,132,711

= 50,569,481

762,193,593

= 60,942,798

81,758,326

= 77,947,697

944,232,762

0.069 0.066 0.074 0.082

Explanation:

It indicates the efficiency with which the bank used its assets to generate

more interest/ mark up income. It shows almost an increasing trend from

2006 to 2009 because its mark up income increased in 2009 and bank is

using its assets efficiently to generate mark up income.

Debt / Leverage Ratios

6. Debt Ratio = Total liabilities

Total assets

2006 2007 2008 2009

= 553,178,593

635,1321,711

= 645,855,939

762,193,593

= 715,299,108

817,758,326

= 824,676,384

944,232,762

87.1 84.7 87.5 87.3

Explanation:

This ratio shows a mixed trend. It decreased from 2006 to 2007 because

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total assets were high in 2007. But it increased from 2007 to 2008 because

total liabilities increased. And in 2009 it decreased by a very minor factor but

still decreased. However there is control of the bank over its debts and its

liabilities are in proportion to assets.

7. Debt To Equity Ratio = Total Liabilities

Share Holders Equity

2006 2007 2008 2009= 553,178,593

81,954,118

= 645,855,939

116,337,654

= 715,299,108

102,459,218

= 824,676,384

119,556,378

6.75 5.55 6.98 6.89

Explanation:

This ratio again shows the mixed trend. It decreased from 2006 to 2007

because SHE is more in 2007. But it increased from 2007 to 2008 because

SHE decreased from 2007 to 2008.And again this ratio is decreased in

2009. This ratio shows how much liabilities are being maintained with

respect to share holder’s equity.

Profitability Ratios

8. Gross Profit Margin = Net Interest income * 100

Mark-up earned

2006 2007 2008 2009

= 30,153,716

43,788,628

= 33,629,470

50,569,481

= 37,058,030

60,942,798

=38,458,048

77,947,697

68.8 % 66.5 % 60.8 % 49.3%

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Explanation:

This ratio shows a decreasing trend from 2006 to 2008. Because mark up

earned increased from 2006 to 2009 and net interest income does not

increased in proportion to mark up earned.

9. Operating Profit Margin = Profit before taxation * 100

Mark-up earned

2006 2007 2008 2009

= 26,310,577

43,788,628

= 28,060,501

50,569,481

= 23,000,998

60,942,798

=22,300,173

77,947,697

60 % 55.5 % 37.7 % 28.6%

Explanation:

This ratio shows decreasing trend. It decreased from 2006 to 2007, 60% to

55.5% this is because that mark up earned was more in 2007 as compared

to 2006. But this ratio decreased a lot from 2007 to 2008 because profit

before tax decreased from 2006 to 2008 and the mark up earned is more in

2008.And again this trend is same as in 2009 that it decreased a lot due to

high mark up and a very low profit after taxation.

10. Net Profit Margin = Profit after taxation * 100

Mark-up earned

2006 2007 2008 2009= 17,022,346

43,788,628

= 19,033,773

50,569,481

= 15,458,590

60,942,798

=18,211,846

77,947,697

38.8 % 37.6 % 25.3 % 23.3%

Explanation:

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This ratio also shows a decreasing trend from 2006 to 2009. The reasons are

same as in operating profit margin.

11. Return On Total Assets = Profit after taxation

Total Assets

2006 2007 2008 2009

= 17,022,346

635,132,711

= 19,033,773

762,193,593

= 15,458,590

817,758,326

=18,211,846

944,232,762

2.6 % 2.5 % 1.9 % 1.9%

Explanation:

This ratio also shows a decreasing trend from 2006 to 2008.In 2009 it

remained same as in 2008. This is because that total assets increased from

2006 to 2009 but net profit after tax also decreased from 2006 to 2009 .

12. Return On Equity = Profit after taxation

Share Holders Equity

2006 2007 2008 2009

= 17,022,346

81,954,118

= 19,033,773

116,337,654

= 15,458,590

102,459,218

=18,211,846

119,556,378

20.7 % 16.3 % 15.1 % 15.2%

Explanation:

It shows return earned on SHE. This ratio also shows a decreasing trend from

2006 to 2008, but in 2009 it shows a bit improved one as compared to

pevious year because net profit also increased in 2009.

Marketability Ratios

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13. Earning Per Share = Profit after taxation

Outstanding Common Stock

2006 2007 2008

= 17,022,346

709,071

= 19,033,773

815,432

= 15,458,590

896,975

=18,211,846

1,076,370

24.01 23.34 17.23 16.91

Explanation:

Earning Per Share is decreasing from 2006 to 2008. It may lead towards

less confidence and less attraction for the investors. Earning Per Share

decreased because Net Profits decreased from 2006 to 2009 but number of

outstanding shares increased from 2006 to 2009.

14. Book Value Per Share = Share Holders Equity

Outstanding Common Stock

2006 2007 2008 2009

= 81,954,118

709,071

= 116,337,654

815,432

= 102,459,218

896,975

=119,556,378

1,076,370

115.6 142.6 114.2 111.0

Explanation:

Bank’s book value per share increased from 2006 to 2007 because stock

holders equity increased. But book value decreased from 2007 to 2008

because SHE also decreased. And book value decreased from 2008 to 2009

as the outstanding common stock increased very much .

If I was the Manager there?

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While working as internee there at NBP main branch, I saw some good and bad

things happening there in the branch. Some of which are quite easily avoidable

with some proper guidance. Some of these are in the following:

• The most important step that should be taken as soon as possible is in

accordance with implementation of latest technology. National Bank of

Pakistan is not using latest system and technology. All the work is being

done through manually .It is the age of information technology but NBP is

using outdated system & procedure.

• If I was manager there I should have taken some necessary steps

regarding online banking. It is not fully introduced in all the branches dueto this it is facing difficulty in transferring the funds from one place to

another.

• Mostly workload increase on the employees. They often remain in office till

9-7P.M. To decrease this load appropriate number of employees should

be there in each department.

• There I also saw some need of improvement in counter service. The Bank

has poor quality counter services in branch .It does not give equal importance

to all the customers.

• I also would have tried to bring some professional attitude in employee’s

behavior. As due to lack of it, they think that as they are the permanent Govt.

employees and now if they perform well or not it does not makes any

difference instead of doing this they should work diligently to increase bank’s

business.

• Being an internee there I didn’t feel good as Customers have to wait more for

encashment of their cheques or any other transactions.

• There I felt a need of having a schedule for the internees or the rotation time

period be reduced in those department, which have less work for internees.

Because during the internship the internees come her to learn and know

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about the working of the organization. They should try to tell as much to the

internees as possible. So that they can learn how they have to work in an

organization when they get the job. Even if they get job in any other

organization they know how working in the organization goes on.

Recommendations

• National Bank of Pakistan did good progress in Multan. But lack of

automation and implementation of Information Technology the system’s

efficiency is still slow. Only few officials have computers to enter data. So

it is recommended that to make the system faster and reliable more and

more technology should be adopted.

• I also observed that there is lack of security and surveillance system in the

bank premises. There not a single Camera which can observe the

behavior of the customers as well as the employees.

• At the Mian Branch Multan there is no parking area for customers.A

customer has to face too much problem when they come to bank. They

have to park their vehicles at their own risk. There are many cases of

Motorcycle disappearing of the customers.

• There is no Information Desk at the bank customer dealing area. Most of

the people wander around to find where they need to go. There should be

a proper information desk where young people should be present to guide

the customers according to their need.

• Those branches which are dealing with NBP Karobar and offering QINQCI

Rickshaws on installments are facing huge number of complaints from the

Scheme holders. They often report that the quality of Rickshaw is verylow. And the spare parts are very expensive. There should be a committee

which should check the quality of the products they use to offer under

such Schemes. This brings bad impact on the goodwill of the bank.

• All advances should be made by getting the maximum security and should

focus on productive work

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• The Bank should develop a comprehensive recruitment policy to make

only the competent ones to be on the job

• There is a possibility of establishing a task force to ascertain the

effectiveness of the policies being implemented

Bibliography

Annual Report of National Bank of Pakistan.

Meetings

Collected data from Regional office NBP Multan.

Internet.

My experience.

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riaz faiz nbp final report

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