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Intership report on nbp Intership report on nbp Document Transcript

  • NATIONAL BANK OF PAKISTAN INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 M.COM (FINANCE). GOVERNMENT COLLEGE UNIVERSITY FSD. B.ED(2012) Mirza Ihsan Ullah-30633324072009 2010 2011 2012 Dedication I dedicated my ReportTo all Muslim invaders who gives their life, time ,blood, family and other resourcesfor the expansion of Deen MUHAMMAD (SAW) without any cares. Such as MusaIbn Nusayr and Tariq Ibn Ziyad, Muhammad bin Qasim Sultan Salahuddin, AyubiTipu sultan. &To Templar knight and Freemason in very sad manner who wants to changethe world but happen only ALLAH wants. MAIN BRANCH JARANWALA
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Dedication I dedicated my Report To all Muslim invaders who gives their life, time ,blood, family and other resources for the expansion of Deen MUHAMMAD (SAW) without any cares. Such as Musa Ibn Nusayr and Tariq Ibn Ziyad, Muhammad bin Qasim Sultan Salahuddin, Ayubi Tipu sultan. & To Templar knight and Freemason in very sad manner who wants to change the world but happen only ALLAH wants. 2
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Executive summary National Bank of Pakistan is a Govt. bank. It has its head office in Karachi. It has over 1,283 branches in Pakistan & 23 abroad. National Bank of Pakistan maintains its position as Pakistans 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 Pakistans economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The National Bank of Pakistan offers a wide range of products& services to its customers & recognizes the importance of efficient business delivery & providing timely solutions. Now online facility of fund or cash transfer increases the strength of NBP. cash in gold facility very popular in the market. Their competitors are untied bank, Allied bank, Habib bank, First women bank, Bank of Punjab etc. The essence of business philosophy is to cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Its products are Pay Order, Mail Transfer, Foreign Remittance, Foreign Currency Account, Short Term Investment, cash in gold, Commercial Finance etc. In Jaranwala, Main Branch of National Bank of Pakistan. Branch code is 0342 & phone number is 0414-312631 3
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Preface In order to be able to cope with the changing environment it is necessary to have some Practical experience It is requirement of GOVERNMENT COLLEGE UNIVERSITY FSD. that all students of have to spend Six Week in any organization to get practical exposure and to get familiarized with the ways to live in the organizational environment which is dramatically different from the educational environment. That six week period called “Internship period”, if spent properly and sincerely, enables the students to be more confident, more knowledgeable, more responsible and more committed to its work in the practical field. I have also been assigned to do internship of six weeks period in National Bank of Pakistan Main Branch jaranwala.It has enabled me to understand the practical scenario and sharpen our decision making power and utilizing the resources in an effective manner, so that our resources generate maximum profit. In preparing this report, I have put all of my best efforts and tried my level best to give maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always be a room for improvement in the efforts of learner like me 4
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Acknowledgement First, all praises go to the Almighty Allah, the most gracious, the most merciful, the most kind & generous to man & his action. And who granted me a wealth of knowledge, love and respect to share with my fellow beings. He gave me courage to pursue my passion against all odds. I owe my greatest gratitude to my parents for their continuous support, assistance, guidance, love and patience without which I could not have completed this internship and report in such a short span of time. I am deeply indebted to my chosen bank i.e. NBP and their customers who participated in the study. I am especially thankful to Branch manager & Mr. Muazzam in charge of clearing department who give me cooperative company and all the staff for agreeing to provide the required data and give me priceless knowledge. 5
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Table of contents Topics page # CHAPTER NO. 1 Evolution of banking & Introduction of NBP 1.1 Evolution & Introduction of banking --------------------------------------------------- 2 1.2 Banking history in Pakistan------------------------------------------------------------ 3 1.3 National bank of Pakistan ------------------------------------------------------------- 5 1.4 Role & Function of NBP------------------------------------------------------------------ 11 1.5 Business volume of NBP ----------------------------------------------------------------- 13 1.6 Branch Network of NBP------------------------------------------------------------------- 14 1.7 Competitors of NBP----------------------------------------------------------------------- 15 1.8 Awards and Achievements of NBP---------------------------------------------------- 16 CHAPTER NO. 2 Organizational structure & Branch Structure 2.1 Organization structure and management------------------------------------------- 18 2.2 Organizational Hierarchy chart---------------------------------------------------------- 19 2.3 Board of Directors of NBP---------------------------------------------------------------- 20 2.4 What BOD does----------------------------------------------------------------------------- 21 2.5 Senior management of NBP------------------------------------------------------------- 23 2.6 Branch structure & Branch employees Chart & of NBP--------------------------- 25 2.7 Authority &decision making in Branch------------------------------------------------- 26 2.8 Chart of hierarchy of Branch to Head office------------------------------------------ 27 2.9 Head of management in NBP----------------------------------------------------------- 27 CHAPTER NO. 3 Products of National Bank OF Pakistan Introduction of NBP products------------------------------------------------------------ 31 3.1 NBP Premium Amdani--------------------------------------------------------------------- 31 3.2 NBP premium Saver----------------------------------------------------------------------- 32 3.3 NBP Saibaan--------------------------------------------------------------------------------- 33 3.4 NBP Advance Salary----------------------------------------------------------------------- 34 3.5 NBP Cash Card- --------------------------------------------------------------------------- 36 3.6 NBP Investor Advantage------------------------------------------------------------------ 37 3.7 NBP Cash n Gold-------------------------------------------------------------------------- 38 3.8.9 NBP Kisan Taqat & NBP Kisan Dost ------------------------------------------------ 39 3.9 NBP Pak Remit---------------------------------------------------------------------------- 39 3.10 NBP Protection Shield-------------------------------------------------------------------- 40 6
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 CHAPTER NO. 4 Departments in NBP Branch Jaranwala 4.1 Cash Department-------------------------------------------------------------------------- 43 4.2 Accounts Department---------------------------------------------------------------------- 46 4.3 Advance Department·--------------------------------------------------------------------- 50 4.4 Remittances Department----------------------------------------------------------------- 51 4.5 Clearance Department----------------------------------------------------------------- 53 4.6 Govt. Collection Department---------------------------------------------------------------- 55 CHAPTER NO.5 MY Learning as a Trainee 5.1 Introduction of Branch and learning--------------------------------------------------- 57 5.2 1st department where I worked (Remittances) ------------------------------------- 57 5.3 2st department where I worked (Account Opening) ------------------------------- 59 5.4 Government Department (FEW DAYS) ---------------------------------------------- 63 CHAPTER NO.6 SOWT Analysis of NBP 6.1 Introduction of SWOT Analysis--------------------------------------------------------- 66 6.2 Swot analysis of NBP---------------------------------------------------------------------- 67 CHAPTER NO.7 Financial Analysis NBP 7.1Introduction of FSA------------------------------------------------------------------------ 70 7.2 3 Years Statement of Financial Position of NBP------------------------------------ 71 7.3 3 Years Statement of comprehensive income--------------------------------------- 72 7.4 Ratio analysis of NBP---------------------------------------------------------------------- 73 7.5 Horizontal analysis of Financial statement----------------------------------------- 83 7.6 Vertical analysis of Financial statement--------------------------------------------- 88 Conclusion---------------------------------------------------------------------------------- 93 Findings &Recommendation--------------------------------------------------------- 95 References -------------------------------------------------------------------------------- 98 7
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Chapter no 1  Evaluation& Introduction of Baking  Formation, Introduction, Function ,role ,Business volume, Branch network &Achievement of organization Page 2-17 8
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 1.1 Evaluation& Introduction of Baking The word “banking” is derived from the words Bancus, Banque or Back. The history of Banking is traced to as early as 2000BC. The origin of banking is also traced to early goldsmith. The first stage in the development of modern banking thus was the accepting of deposits of cash from these persons who had surplus money with themselves. In the second step, goldsmiths used issue receipts for the money deposits with them. These receipts began to pass from hand to hand in settlement of transaction. In the same time they thought it profitable to lend at least some of the money deposited with them to the needy persons. This proved quite a profitable business for the gold smiths. In order to create confidence among the people, different steps were taken to regulate the banking organization. A conference was held in Nuremberg, 1584. It was decided that a bank should be set up by the state, which should streamline the banking organization and technique. The first central bank was formed in Genoa in 1587. Banks of England were established in 1694. With the passage of time the activities of the commercial banks have greatly increased. They now deal with large number of matters such as obtaining funds, advancing loans to businesses, farmers, households, and making investment in stocks discount bills of exchange etc. MODERN BANKING By the year 1700 the bank of England was not only 100 issuing notes but also conducting accounts for customers. In 1853 bank of England further impetus for cheques, currency, and they became very popular among the customers who would either pass them from hand to hand. In 1946 the labor government nationalized the Bank of England. 9
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 1.2 BANKING HISTORY IN PAKISTAN: At the time of partition, the total number of commercial bank on Pakistan was 38 out of these: the Pakistan banks were 2; Indian banks 29 and the exchange banks & the total deposits of Pakistan banks stood at Rs.880.0 millions where the advance is were Rs.198.0 million. Before partition of sub continent, the entire banking business was almost controlled and managed by non-Muslims. The Muslims were deliberately kept cut of banking profession by the healthy Hindu community. When Hindu capitalists became sure of the division of sub continent: they secretly began transfer their capital to the safe place in India, when Pakistan declared an independent state in august 1947. The fund and other valuables were transferred at an accelerated pace to India. . The numbers of scheduled banks branches were reduced from 619 to 213 only both wings of the country after in dependence. The non-schedules banks also suffered a severe jolt and their number was reduced from 411 to 106 over the same period. West Pakistan where there was greater exodus of non-Muslims to India suffered a great deal as a number of branches fall down from 487 to 69.In the East Pakistan though the number of branches were not closed in such a great number as in West Pakistan, a large number of portion of the deposit were withdrawn from the banks and transferred to transferred to India by the non Muslims. The mass scale closure of branches and with drawl of the deposits caused a dead lock in the banking business in Pakistan .The government of Pakistan was quite aware of the serious banking situation caused by the withdrawal of deposits and whole scale migration of banking staffs to India. It took up the challenge and started recognizing the crippled banking immediately after partition .A moratorium of free months was also allowed to banks that had financial difficulty due to sudden with drawl of deposits. In addition to above the following arrangements were made for facilitating settlement of claims by the governments .Each bank was to declare on to its offices both in India and Pakistan as clearing house for transfer of accounts. Each bank was open at lea stone central office in Pakistan Where it could consolidate work of all its branches and Start Paying out to depositors. The government took some effective measures for providing banking Training facilities to Muslims. 10
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 There were some complaints that Hindu banks were not honoring the cheques of Pakistani national and were also refusing to give securities kept in their custody. The government issued an ordinance which empowered it to investigate all such complaints and if satisfied of their bonfires, the payment should be realized. In case the bank insisted on non-payments, the government should realize the assets of the banks, which were sufficient to discharge such liabilities. The government of Pakistan also allowed the removal of Valuables, kept in save deposits vaults and lockers by Submitting an application and getting necessary approval from the custodian of evacuee property .The government of Pakistan tried to provide all kinds of facilities with sincerity to the known Muslims bankers for restoring normal banking facilities in the country but the response was discouraging. An inter dominion agreement was reached between India and Pakistan in April1949.The main provisions of the agreement were as under; The inter dominion agreement could not be fully implemented. India delayed the transfer of Muslim deposits to Pakistan. The non devaluations decision of Pakistan government further led to the suspension of remittance facilities through normal banking channels. Due to panicky with drawl of deposits; some banks went into liquidation and the payments could not be made to the depositors. In order to regulate the both of banking on sound footing, the following measures were taken to develop the banking system in Pakistan. The state bank of Pakistan which is the central bank of the country was established in July 1948. The national bank of Pakistan was established on 1949. This bank is to serve as an agent to the SBP in the areas ,where SBP has no set-up. DEFINITION OF BANK Banking companies ordinance 1962 section 5(b) defines bank as, “Banking means the accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, an draw able by cheques, drafts order or otherwise. In other words, 11
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 A bank is an institution which Accept deposits at lower rate of interest and give advances at higher rate of interest. 1.3 NATIONAL BANK OF PAKISTAN History and growth of NBP The history of National Bank of Pakistan is part of Pakistan‟s struggle for economic independence. National Bank of Pakistan was established on November 9, 1949 under the National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions which were developed after trade deadlock with India and devaluation of Indian Rupee in 1949. Initially the Bank was established with the objective to extend credit to the agriculture sector. The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance, due to the crisis situation that had developed with regard to financing of jute trade. The Bank commenced its operations from November 20, 1949 at six important jute centers in the then, East Pakistan and directed its resources in financing of jute crop. The Bank‟s Karachi and Lahore offices were subsequently opened in December 1949. National Bank of Pakistan is the Pakistans 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 Pakistans economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. In modern business services provided by organizations are termed as Products The National Bank of Pakistan came forward to establish its offices in the Cotton growing areas and extended credit facilities liberally in order to restore stability to the market. In 1951, the country was once again faced with a crisis in the cotton trade when prices was crashed and touched the lowest level since independence following the cessation of hostilities in Korea. The bank in collaboration with the cotton board provided the necessary Credit facilities to the trade and the crisis was tided over. The nature of responsibilities of the Bank is different and unique from other banks/financial institutions. The Bank acts as the agent to the State Bank of Pakistan for handling Provincial/Federal Government Receipts and Payments on their behalf. 12
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 National Bank of Pakistan is today a progressive, efficient, and customer focused institution. It has developed a wide range of consumer products, to enhance business and cater to the different segments of society. Some schemes have been specifically designed for the low to middle income segments of the population. These include NBP Advance Salary, NBP Saibaan, NBP Kisan Dost, and NBP Cash n Gold Nowadays and credit rating At present day nbp is the main hand of government and state bank of Pakistan .nbp performs many functions on behalf of government .NBP works in Pakistan as well as in abroad. Short term & long term credit rating Sr. Name of Rating Short Long Date of Remarks # Bank Agency Term Term Rating National Rating Bank of JCR-VIS A-1+ AAA JUNE Outlook - Pakistan 2011 Stable Definition of A-1’ The term A-1 when rating an insurers ability to meet debt obligations in the short term. A-1 indicates that the insurer has a strong ability to meet its debt obligations. A-1 is the highest rating that Standard & Poors issues for short-term debt. Definition of AAA The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has an exceptional degree of creditworthiness and can easily meet its financial commitments. Ratings agencies such as Standard & Poors and Fitch Ratings use the AAA nomenclature to indicate the highest credit quality, while Moodys uses AAA. 13
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 VISION STATEMENT OF NATIONAL BANK OF PAKISTAN To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility 14
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 MISSION STATEMENT OF NATIONAL BANK OF PAKISTAN • 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 15
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 CORE VALUE OF NATIONAL BANK OF PAKISTAN • 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 16
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 GOAL OF NATIONAL BANK OF PAKISTAN To enhance profitability and maximization of NBP share through increasing leverage of existing customer base and diversified range of products. 17
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 1.4 Role of the organization in Pakistan NBP is playing a vital role in development of Pakistan; NBP is making a pioneer role in development of agriculture sector, which is the main production sector in Pakistan. As we all knows that agriculture sector is major part of our exports e.g. cotton, sugar, rice, wheat etc. so its helps to earn major part of foreign exchange through our exports. The nature of responsibilities of the Bank is different and unique from other banks/financial institutions. The bank also handles treasury transactions for the Government of Pakistan as an agent to the State Bank of Pakistan for handling provincial/Federal Government receipts and payments on their behalf. The National Bank of Pakistan has also played an important role in financing the country‟s growing trade, which has expanded through the years as diversification. 1.5 FUNCTIONS OF NATIONAL BANK OF PAKISTAN National Bank of Pakistan is a commercial bank, so like other commercial banks it is engaged in financing internal trade and also in other ordinary banking business of receiving deposits, advancing loans and discounting bills of exchange. Accepting Deposits The most important function is to receive surplus money from the public. They throw their nets as wide as possible to collect surplus balances of individuals, firms and public institutions. In order to attract funds they have introduced various types of deposit schemes that may suit the needs and tastes of a large body of depositors.  Current account  Saving account  Fixed deposit account. Advancing Loans Every bank has learnt by experience that depositors do not draw whole of their deposits at a time. They only draw a part of it for day to day transactions; therefore a bank keeps a part of the total deposits as “cash reserve” to meet the cash demand of depositors and advances the Tijarat Ganj part of deposits to businessmen on interest. 18
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 National Bank of Pakistan gives loans in following ways.  By opening a loan account  By means of overdraft  By discounting bills of exchange  By purchasing bond and securities Creation of the Medium of Exchange It is neither safe nor easy to make payment in the form of metallic coin or paper notes; therefore cheques make payments. Almost 90% of the financial transactions are made through cheques. National Bank of Pakistan collects and makes payment of cheques for its customers. Transfer Money National Bank of Pakistan provides facility to transfer from one place to another at very nominal charges. When a person wants to transfer his money from one place he handover money to the bank and gets a draft at the name of the particular branch were he needs the money and gets money at that place safely. Agency Service National Bank of Pakistan performs many services as an agent of its clients or depositors. It makes payment on order cheques receives amount of money on crossed cheques issued in favor of its clients and deposits the amount tin their accounts.It purchases bonds and shares of joint stock companies for its clients under their consent. General Utility Services It keeps their precious documents, gold ornaments, bonds, and shares etc in safe custody in its locker. National Bank of Pakistan provides the services of clearing the utility bills i.e. electricity, gas and telephone bills of its customer and provide evening banking service. 19
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 1.6 Business volume: The National Bank of Pakistan is the foremost bank determined to set higher standards of achievements. It is the key business partner for the Govt. of Pakistan with special emphasis on nurturing Pakistan‟s economic growth through aggressive & impartial lending policies. As we look to the business side volume of NBP.NBP has strong position of assets and deposits. The assets and deposits of NBP increasing day by day. it shows the trust of people on NBP. With the help of this it can expand their business. Loan and equity of NBP increases from previous years. It means more equity means more share and it means more capital. Years from 2009 to 2011 Particulars 2009 2010 2011 Total Assets 946,253,269 1,038,018,467 1153480100 Total Deposits 727,513,013 832,134,054 927415127 Total Equity 10,763,702 13,454,629 16818286 Total Loans 727,513,013 832,134,054 927415132 Total Investments 217,596,037 301,078,498 319527524 Net Profit 21119 24662 26116 Earnings per share 12.97 13.24 10.53 20
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 1.7 Branch Network of National Bank of Pakistan With the geographical development of its branches, the National Bank of Pakistan has been able to extend its services to a much larger number of Pakistanis all over the country. Today the Bank has more than 8.8 million accounts & Bank maintains its presence in all the major financial centers of the world through its 23 (2011) overseas branches and 5 representative offices. Of these, three representative offices have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS countries. Bank‟s role Apart from having a vast branch network, Bank is at the forefront in the acquisition and application of new technologies in every aspect of its banking facilities. It has acquired leased telephone lines for on-line banking. The Bank has 12 Regional Computer Centers to cover various on-line and batch system requirements of branches and controlling offices. Presently the National Bank of Pakistan is divided into various Groups headed by SEVPs/EVPs. Its field operations are controlled by 23 regions reporting to as many Regional chiefs, who control 40 zones and 15 single Branch zones headed by Zonal Chiefs; 12 corporate branches and 1283 domestic branches headed by Branch Managers. The bank has 13 SWIFT local centers. Apart from having a vast branch network, Bank is at the forefront in the acquisition and application of new technologies in every aspect of its banking facilities. It has acquired leased telephone lines for on-line banking. Bank has also a presence on the internet. The of Pakistan has 1274 online branches throughout the country. It has modernized its services by installing Automated Teller Machines (ATMs) called “CASH LINK” at selected branches. The Banks organizational structure reflects the three levels at which it operates: international, national and local. The Head Office formulates and implements the strategic, management and operational policies. The Banks geographical organization consists of branches located in the regional capitals and in some provincial capitals. The branches activities relate to the State treasury service, payment system services, currency circulation, banking and financial supervision, and the analysis of economic and financial developments at the local level. 21
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 The Bank has representative offices abroad, in London, New York and Tokyo; a number of officers are seconded as financial experts to Italian embassies and consulates. The Bank has representative offices in Beijing, Tashkent, Chicago and Toronto 1,283 Branches 23 Overseas Branches 29 Regional Offices 10 Representative Offices 1274 Online branches 5 Subsidiaries 149……………. ATM 4 Joint ventures 8 Islamic baking 1.8 COMPETITORS OF NBP The competitors of the National Bank of Pakistan are as follows: Askari Bank National Savings Habib Bank Limited Allied Bank Limited United Bank Limited Faysal Bank First Woman Bank Standard Charter Muslim Commercial Bank Bank Al-Falah Bank of Punjab Silk Bank Dubai Islamic Bank Sonehri Bank 22
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 1.9 NBP Awards and Achievements. 2011 &2012  Listed in top 1000 banks of the world for the year 2012" by the world renowned “The Banker” magazine owned by the Financial Times Group, London.  “Pakistan: Transaction of the Year Award - 2011”, awarded by Islamic Finance News, for two wind farm projects of 50MW each in which the bank acted as international inter-creditor agent (for the Islamic Development Bank, the Asian Development Bank and syndicates of local banks).  “Transaction of the Year Award - 2011”, awarded by CFA Association of Pakistan for the private placement and offer-for-sale of Engro Foods Limited.  "Bank of the Year" awarded for the year 2011 by the world renowned "The Banker" magazine owned by the Financial Times Group, London  "Top Corporate Finance House (Fixed Income) Award of the Year 2011", awarded by the "CFA Association of Pakistan".  National Bank of Pakistan Awarded “Best Emerging Markets Bank 2011” Awarded By Global Finance Magazine.  “Bank of the Year” awarded for the year 2010 by the world renowned “The Banker” magazine owned by the Financial Times Group, London  "Runner up of Corporate Finance House (Fixed Income) Award of the Year 2010", awarded by the "CFA Association Pakistan".  NBP is awarded “President of Pakistan Trophy”, a top slot award by Federation of Pakistan Chambers of Commerce and Industry in 2010.  NBP is awarded “Prime Minister of Pakistan Trophy”, a top slot award by Lahore Chambers of Commerce and Industry in 2010  Among the global leading banks, NBP is the only Pakistani bank appearing in top 500 banks of the world in “The Banker” magazine owned by the Financial Times Group, London 23
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Ch no. 2 Organizational Structure and Management & Branch Structure and Management Page 18 - 29 24
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 2.1 Organizational Structure and Management A well-developed and properly coordinate structure is an important requirement for the success of any organization. It provides the basic framework within which functions and procedures are performed. Any organization needs a structure, which provides a framework for successful operations. The operation of an organization involves a number of activities, which are related to decision making, and communication of these decisions. These activities must be well coordinated so that the goals of the organization are achieved successfully The Organization Structure shows the internal operations and reporting lines of the National Bank of Pakistan. The bank has clearly defined organizational structure, which supports clear lines of communications and reporting relationships. There exists a properly defined financial and administrative power of various committees and key management personnel, which supports delegations of authority and accountability. The internal operations of the Bank are organized into 15 main departments and divisions headed by senior management of the bank and are report directly to the Board of Directors. The organizational structure of National Bank of Pakistan is centralized because all the decisions of the bank are taken by the top Management. The National Bank of Pakistan‟s Departmental key roles and functions are as follows: The ownership, management, and control of all the commercial banks were taken over by the Government of Pakistan on January 1 st, 1974. A banking council was formed under the Nationalization Act 1974. The banking council was set up for making policy.Recommendations to the Federal Government, formulating policy guidelines for the banks and their reorganization. The management and organizational structure of the nationalized banks have uniformity. This management and organizational structure is briefly described as und 25
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 2.3 BOARD OF DIRECTORS Pursuant to Section 11 of The Banks‟ (Nationalization) Act, 1974, the number of Directors of the Bank shall not be less than 5 and not more than 7, excluding the President. The Federal Government may, if deems necessary, appoint a Chairman of the Board in respect of the Bank. At present National Bank of Pakistan‟s Board of Directors consist of 6 Directors and a President who is the Chief Executive of the Bank and presides over the meetings of the Board 1.Qamar Hussain Chairman Board, President , NBP Mr. Qamar Hussain is the President of National Bank of Pakistan (NBP), the largest Commercial Bank of the country. He holds an MBA degree in International Business & Finance from Mcgill University, Montreal, Canada and has undergone extensive training in business leadership abroad. Mr. Hussain started his banking career from Bank of America N.T. & S.A., Pakistan in the year 1981. Prior to joining NBP in 2009, he has worked with American Express Bank Limited as Senior Director Global Credit, New York and earlier as Senior Director Country Manager, Bangladesh. He had also been associated with the CHASE MANHATTAN BANK in Pakistan and USA. 2.Mr. Tariq Kirmani Director Soon after completing his Masters in Business Administration (MBA) Mr. Kirmani embarked upon a rewarding career, starting with a multi-national Oil Company (Caltex later Chevron Pakistan) in 1969 and worked for seven years in the United States of America, United Arab Emirates and Australia in different senior management positions in Marketing, Operations and Finance. In 1991, Mr. Kirmani became the first Pakistani to be elected as a Company Director of the mentioned multi-national company. 3.Mrs. Haniya Shahid Naseem Director 27
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Mrs. Haniya Shahid Naseem has done her Masters in Business Administration with honors in 1995. She is a certified director from the Pakistan Institute of Corporate Governance and has also done various short courses in management and banking. Mrs. Haniya Shahid has more than 15 years of diversified experience in the education, agriculture and corporate sectors.. 4,Mr.Aftab Anwar Baloch Director Mr. Aftab Anwar Baloch an officer of Pakistan Customs Service belongs to Seventh Common Training Programmed. He joined service of Government of Pakistan during 1980 and possesses 32 years of rich experience both in formulation and implementation of fiscal policy relating to levy charge and collection of Federal Taxes i.e. Customs Duty, Sales Tax, Federal Excise Duty etc. 5.Mr. Shahid Aziz Siddiqi Director Mr. Shahid Aziz Siddiqi is presently Chairman State Life Insurance Corporation of Pakistan. Mr. Siddiqi holds a Master Degree from the Karachi University and a Post Graduate Diploma in Development Studies from the University of Cambridge UK. Mr. Siddiqi topped the Civil Services examination of 1968. 6.Mr. Zahid Hussain Director Zahid Hussain started his career with Pakistan Tobacco Company Ltd. and subsequently worked for British American Tobacco Co. Ltd, London. Later he joined Pakistan Automobile Corporation and served Suzuki, followed by Toyota as General Manager Marketing. He was promoted as Chief Executive MAZDA. 2.4 What directors do…..? 1. The Board of Directors shall assume its role independent of the influence of the Management and should know its responsibilities and powers in clear terms 2. The Board shall approve and monitor the objectives, strategies and overall business plans of the institution. 28
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 3. All the members of the Board should undertake and fulfill their duties &responsibilities keeping in view their legal obligations under all the applicable laws and regulations. 4. The Board shall clearly define the authorities and key responsibilities of Senior Management without delegating its policymaking powers to the Management and shall ensure that the Management is in the hands of qualified personnel. 5. The Board shall approve and ensure implementation of policies, including but not limited to, in areas of Risk Management, Credit, Treasury & Investment, Internal Control System and Audit, IT Security, Human Resource, Expenditure, Accounting & Disclosure, and any other operational. 6. As regards Internal Audit or Internal Control, a separate department shall be created which shall be manned preferably by professionals responsible to conduct audit of the Bank, Various Divisions, Offices, and Units Branches etc. The Head of this department will report directly to the BOD or Board Committee on Internal Audit. 7. The business conditions and markets are ever changing and so are their requirements. The Board, therefore, is required to ensure existence of an effective „Management Information system‟ to remain fully informed of the Activities 8. The Board should meet frequently (preferably on monthly basis, but in any event, not less than once every quarter) and the individual directors of an institution should attend at least half of the meetings held in a financial year. The Board should ensure that it receives sufficient information from Management on the agenda items well in advance of each meeting to enable it to effectively participate in and contribute to each meeting. 9. The Board should carry out its responsibilities in such a way that the external auditors and supervisors can see and form judgment on the quality of Board‟s work and its contributions through proper and detailed minutes of the deliberations held and decisions taken during the Board meetings. 10. To share the load of activities, the Board may form specialized committees with well-defined objectives, authorities and tenure. 11. The Board should ensure that it receives management letter from the external auditors without delay. It should also be ensured that appropriate action is taken in consultation with the Audit Committee of the Board to deal with control or other weaknesses identified in the management letter. 29
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 2.5 Senior management of National Bank of Pakistan Dr. Asif A. Brohi SEVP, Operating Officer & Group Chief Shahid Anwar Khan SEVP &, Credit Management Group Ziaullah Khan SEVP Chief Assets Recovery Group SEVP, Training & Organization Development Dr. Mirza Abrar Baig Group Nausherwan Adil SEVP & Group Chief, Operations Tariq Jamali SEVP & Group Chief, Compliance Group SEVP & Group Chief, Corporate & Nadeem A. Ilyas Investment Banking Group SEVP & Group Chief, Treasury Management Muhammad Nusrat Vohra Group Khalid Bin Shaheen SEVP & Group Chief, Global Home Remittance Management Group Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection Group Asif Hassan SEVP & Group Chief, Small and Medium Assets Recovery Group M. Rafiq Bengali SEVP & Group Chief, Overseas Banking Group and RCE Americas Region 30
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Zubair Ahmed SEVP & Group Chief, Logistics & Engineering Group Tahira Raza SEVP & Group Cheif, Risk Management Group Sheharyar Qaisrani EVP & Divisional Head Agriculture Business Division Muhammad Hassan Khaskheli EVP & Divisional Head, Personnel & Industrial Relations Division, HRM&A Group Qamar Hussain EVP & Divisional Head, Human Resources Division Aamir Sattar EVP & Financial Controller, Financial Control Division Raza Mohsin Qizilbash EVP & Head, Legal Division Mahmood Siddique EVP & CIO, IT Division S.M. Ali Zamin EVP, Secretary Board of Directors & Secretary Credit Committees Aamir Abbasi SVP & Divisional Head, Corporate Communication Division Kashif Aziz SVP, Head PMO Muhammad Naeem Ansari VP / Secretary Operations Committee 2.6 ORGANIZATION STRUCTURE OF THE BRANCH 31
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 .Any organization needs a structure, which provides a framework for successful operations. The operation of an organization involves a number of activities, which are related to decision making, and communication of these decisions. These activities must be well coordinated so that the goals of the organization are achieved successfully Chart of Hierarchy of Branch Branch Employees  Manager MR. Main Zulfiqar  Deputy manager MR. Saraj ul din  Operation manager MR. Shahnawaz  Accountant MR M.Mubarik ali  Credit officer MR. Rai Sohail  Recovery officer MR. Allah Datta  Clearing & ATM officer MR. Muazzam  Remittance officer MR. Hassan  Collection officer MR. Akbar ali 32
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Bill collection officer MR, M.Asif  Cashier MR, Abdul Majeed  Massager MR, Mian Saleem  Helper MR, Sohail Ahmed  Peon MR,M. Arshad  Sweeper MR,M. Ibrahem  Guard MR. M.Sahkeel No. of Employees in Branch 17 Official ……………………...... 13 Non official ……………………… 4 ________________ Total Employees 17 2.7 Authority And Decision Making of Branch  Centralize Decision Making The Branch Manager of National Bank of Pakistan is responsible for all the affairs of the Bank. All the decisions relating to Branch are made by him and the subordinates have to obey these decisions. All the employees of the Bank are report directly to the Branch Manager. The branch has one operation Managers. Operation Manager I controls Deposits, Advance & Branch accounts department.  Authority The chain of command illustrates the authority structure of National Bank of Pakistan Main Branch Jaranwala. Authority is the formal and legitimate right of the manger to make decisions, issues orders and allocates resources to achieve organizational desired outcomes. By analyzing the chain of command of NBP, one can come to the conclusion that, as there is scalar pattern followed at the organizational setup of NBP, therefore 33
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Delegation Delegation is the process, which managers use to transfer the authority and responsibility to position below in the hierarchy At National Bank of Pakistan Jaranwala branch Operation Managers have some authority & responsibility relating to affairs of the Branch. 2.8 Chart of Hierarchy of Branch to Head office 2.9 Heads of Management in Nation Bank of Pakistan  Executive Board  Board of Directors  Chief Executive  Divisional Chiefs  Provisional Chiefs  Circle Executive 34
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Zonal Heads  Branch Managers 1) Executive Board The general direction and supervision of the affairs of commercial banks lies in their respective Executive Boards. An EB also consists of a President, a Secretary, and 9 other members, appointed by the Federal Government 2) Board of Directors In the management of the banks, the board of directors is at the top of the controlling body. Since there are no private share holders now, so there is no general meeting of the share holders and no elected directors. The board has limited administrative powers because after the Nationalization Act 1974, most of powers are transferred to the Banking Council and Executive Board. 3) Chief Executive The President of the Executive Board is the Chief Executive. He is the administrative head of a bank and presides over the meetings of Executive Board. 4) Divisional Chiefs In order to improve the management and operation of a bank, it has been split up into a numbers of divisions. Each division of a bank is placed under the supervision and control of Divisional Chief (also called the Senior Executive Vice President or Executive Vice President) 5) Provisional Chiefs In order to improve the performance of banking system, each bank has a Provisional Chief. PC has the powers for sanctioning finance and other credit facilities. Each headquarter is situated in each province e.g. in Lahore, Peshawar, Quetta, and Karachi. 6) Circle Executive Each commercial bank has a number of circles placed directly under the control and supervision of Chief Executive. 7) Zonal Heads 35
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Each circle is divided into a number of zones. These zones are administered by Zonal Heads who hold the posts of Vice President or Assistant Vice President. 8) Branch Managers Each zone of commercial bank is divided into several branches. The control and supervision of each branch is mostly entrusted to Assistant Vice President or Officer G-I Comments on the organization structure: The National Bank has great contribution towards building wide Banking structure in Pakistan and serving all aspects of the National life and all classes of society. NBP is fully aware of the developments taking place in the world as well as the changes occur in the economic and social condition with in the country. The bank is determined to meet new challenges by redefining its goals and strategy. 36
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Chapter no. 3 Products of NBP Page 31 - 41 37
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Products of National Bank OF Pakistan A product is anything that can be offered to a market to satisfy a want or need and a service is an act or performance that is essentially intangible and does not result in the ownership of anything. What products or services have to be offered to the target market depends on the market requirement and also the organization‟s profits. The organization will offer those products and services, which result in maximum profits and minimum costs. A bank is an organization rather a financial institution that provides products such as different types of deposits and services like foddering financing facilities to its customers National Bank of Pakistan always makes efforts to improve its goodwill in the general public. It introduces different kind of schemes time to time. The most popular schemes conducted by NBP are as under: 1. NBP Premium Amdani 2. NBP premium Saver 3. NBP Saibaan 4. NBP Advance Salary 5. NBP Cash Card 6. NBP Investor Advantage 7. NBP Cash n Gold 8. NBP Kisan Taqat 9. NBP Kisan Dost 10. NBP Pak Remit 11. NBP Protection Shield 3.1. Premium Aamdani 38
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Feather • Earn up to 12.25% p.a. • Minimum deposit of Rs. 20,000/- with maximum balance of Rs. 10 million for 5 years • Free Demand Draft, Pay Order and Cheque Book* • Convenience of NBP online Aasan Banking (for online banking customers) • Free NBP Cash Card (ATM+Debit) • Running finance facility up to 90% • Profit paid every month as follows Profit rates are expected Year Profit Rates % 1st 11.25 2nd 11.50 3rd 11.75 4th 12.00 5th 12.25 3.2. NBP Premium SaverVER 39
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Feather 1. Earn up to 8.50% p.a. 2. Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 1million*. 3. Free NBP Cash Card (ATM + Debit). 4. Convenience of NBP Online Aasan Banking (for online banking customers). 5. Two debit withdrawals allowed in a month & no limit on number of deposit transactions. 6. Profit calculated on monthly and paid on half yearly basis. 3.3. NBP Saibaan  Home Purchase  Home Construction  Home Renovation  Purchase of Land + Construction Home Purchase& Home Construction Financing Amount Upto 35 million Financing Period 3 to 20 years Debt to Equity 85: 15 (Maximum) Home Renovation& Purchase of Land Financing Amount Upto 15 Million 40
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Financing Period 3 to 15 Years Debt to Equity 80:20 (Maximum) Eligibility *  Must be Pakistani Resident (National)  Aged between 21 and 65 years at the time of application/disbursement of loan.  Salaried Person, Self-employed professionals and businessmen.  Minimum income requirement Rs. 5000 for Govt. Employees, Rs. 10,000 for other salaried persons and Rs. 15,000 for self employeed and businessmen.  Property located in NBP approved localities.  Service duration: Two years for salaried class Three years for self- employed/business class. Required document With Applications Form ** Two attested passport size photographs • Two attested copies National Identity Card • Cheque for the processing charges 4.4. NBP Advance Salary In January 2003 National Bank of Pakistan has launched a unique product, NBP Advance Salary. Currently this product is for fixed income permanent employees of 41
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Federal & Provincial Government, Semi-Government, Autonomous, Semi- autonomous, local bodies and other Government organizations NBP Advance Salary, the leading personal loan product of the country, is maintaining its inimitability ever since it was launched. This was only possible due to its swift growth and remarkable loan disbursement of over 138 billion. You can avail up to 20 net take home salaries with easy repayment installments. Its hassle free acquisition with no prior formalities and easy availability in a short turn- around time is attributed as the most distinguishing features of the product. The product is offered country wide . • Easy installments of 1 to 60 months at your choice. • No minimum income, collateral & insurance charges required. • Quick processing and fastest disbursement. • For permanent employees of Government, Semi Government and Autonomous bodies receiving salaries through NBP. Terms and Conditions Permanent Employees of Govt., Semi-Govt., Autonomous, Eligibility Semi Autonomous, Local & other bodies who are maintaining their Salary A/Cs at NBP. Repayment Direct deduction from Salary A/C Maximum Loan Amount Rs. 490,000/- Max. Repayment 5 years (60 months) Period Advance in terms of # of net take home Up to 20 net take home salaries salaries 42
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Markup Rate SBP Discount Rate + 5% Processing Fee 1% of Loan Amount Verification Charges Rs 500/- Life Insurance No Insurance of any kind. Documentation at actual Charges Contact Your Salary disbursing NBP Branch. At the time of approval and disbursement the Remaining Service applicant’s ,,remaining service age should be 6 Age months after maturity of the 3.5. Cash card+ ATM  Comfortable and secure environment for trading  NBP financing at very easy terms requiring minimum documentation  Minimum turn around time  No security requirement from the customer except for the customers equity  Customers equity freely available for investment.  Equity acceptable in cash Eligibility  Pakistani CNIC COPY  Over 21 years of age 43
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  An account with NBP  Equity in the form of cash  NO default with any financial institution. NBP Cash Card Safety Tips Never share your Personal Identification Number (PIN) or given it out over telephone.  Never write your PIN Code on your card.  Never keep your card and PIN at the same place.  As you approach an ATM, beware of your surroundings, if you notice anything unusual, visit the ATM later.  Immediately report a lost of stolen card to your NBP branch.  Stand close to the ATM machine while entering your PIN and do not allow anyone to watch.  Ensure that the merchant has entered the correct amount of transaction before you enter your PIN code.  Maintain your POS receipt as a record and ensure that he card returned to you by the cashier/attendant is yours.  Protect your card from direct sunlight and magnetic fields.  Do not bend your card.  Carefully dispose off your old card when you are issued a new one. 3.6. NBP Investor Advantage A margin financing facility developed for retail investors in line with Government‟s efforts to promote Pakistani capital markets and will replace the Badla (COT) system 44
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 with a stable financing system in line with international financial markets. Besides offering a comfortable environment to the retail stock investors, a financing facility will also be available. Willing investors can avail NBP financing at very easy terms requiring minimum documentation and least turn around time. The NBP financing also does not require any security from the customer except for the customer‟s equity. Requirements of document  Photograph of Applicant  NBP Account - Current or PLS  Copy of CNIC  Copy of CNIC of Two (2) References  Borrower Basic Fact Sheet 3.7. Cash in Gold Meet your need for ready cash against your idle gold jewellery with no minimum or maximum limits. Facility of Rs. 40000/- against 10 grams of gold Feather  Rate of mark up 15.50% p. a.  Facility of Rs.40000/- against each 10 grams of net content of Gold.  NO maximum limits of cash.  Repayment after one year.  Roll over facility.  Only Gold ornaments are acceptable.  Weight and quality of Gold to be determined by NBP‟s appointed shroff Required documents  Photograph of Applicant 45
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Application form  NBP Account - Current or PLS  Copy of CNIC  Copy of CNIC of Two (2) References  Stamp papers five.  Open new account 3.8. NBP Kisan Taqat National Bank Pakistan Dairy Form Scheme Advantage to Getting Loan from NBP Very Near Banks Branch from you Easy and Short Paper working Get ride from the tension payment of Installments Experience Staff‟s Help and Guide 3.9. NBP KISAN DOST Agriculture Farming Program • Competitive mark-up rate. • Quick & easy processing. • Provision of technical guidance to farmers at their doorstep. • Wide range of financing schemes for farmers. • Finance facility up to Rs. 100,000/- for landless farmers on personal guarantee. • Financing available against Pass Book, Residential / Commercial property, Gold ornaments and paper security. 3.10. NBP Pakremit 46
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Pakremit is an internet based Home Remittance Service. This service is available to U.S. residents for sending money to their family and friends in Pakistan. One must have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit funds through this channel. Remitters in USA can log on to our user friendly website, and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a Week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well. Process  Remitters log on to and after completing the registration process, are able to remit funds. The whole process takes a few minutes.  Funds in Pak Rupees can be sent to beneficiaries, having an account with any bank in Pakistan, including NBP. While funds are credited directly to beneficiaries maintaining accounts with NBP, a pay order or demand draft is couriered to other banks for their customers. Pay order or demand draft can also be couriered directly to the beneficiary‟s office or home, if requested by the remitter.  Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar account with one of NBP‟s Foreign Exchange Branches. 3.11.NBP Protection Shield Insurance Coverage In case of Accidental Death (Including death due to *Riots, Strikes, Civil commotion, Acts of Terrorism and Natural Calamities like Flood, Earth Quake, Cyclones etc.) Coverage of Rs. 200,000/- for Rs. 20/- per month Definitions Provided the insured is not directly involved in these activities 47
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Accident Unintentional, unfortunate or a harmful event by chance or apparent cause. Accidental Death Death due to accidental injuries, but not illness. Insured Person A National Bank of Pakistan PLS account holder, aged between 18 years and above, and whose premium is deducted & details are reported to the selected insurance company by NBP. Policy Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer. Principal Sum The amount stated in the Policy‟s Schedule of Benefits as respects each Insured Person. Product Detail  No medical Required  No Documentation  Fixed Auto Premium deduction Facility (After customer consent)  Choice of Deactivation Eligibility  NBP PLS Account holder 48
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 DEPARTMENTS OF NBP MAIN BRANCH Departmentation is arranging the activities into meaningful groups. It distributes the workload and increases efficiency and effectiveness. Departmentation can be done on various bases for example, Departmentation for customers, by function or by location. National bank of Pakistan, Main Branch Jaranwala consists of various departments based on its different functions. So it can be said that the basis for Departmentation at NBP is purely functional. DEPARTMENTS OF NBP MAIN BRANCH JARANWALA NBP Main Branch Jaranwala is operating following departments 1. Cash Department 2. Deposits Department. 3. Advance Department· 4. Remittances Department. 5. Clearance Department 6. Govt. Collection Department 4.1CASH DEPARTMENT This department consisted of three sections namely. 1. Cash Receipts 2. Token Department 3. Cash Payments 1.1Cash Receipt In this section the cashier was receiving cash. He recorded the cash received with a pay in slip and other documents (it necessary) and recorded it in the cash receipt register. There were two separate types of pay-in-slips, which were used for depositing cash, checks, and drafts. There were prescribed forms in which the information was fed. After filling the pay-in-slip with the amount, the cash and slip 50
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 both were received by the cashier who entered those in the cash register and fixed a stamp on the pay-in-slip. A part of this slip is given to the customer for his record and other was maintained with the bank. 1.2Token Section As the checks holders were used to go to the section. They presented the checks to the person at the section. He checked that whether the check belonged to the same bank, the amount in words and figures were same, check was not outdated and the signature was there etc. Then he handled a number to the check and a token was given to the customer/check hold Cash Payments The check allotted with a number by the token department is sent to the clearing officer/passing officer. After the proper verification of the signature of account holder‟s, cash balances and posting of that particular check to the account, the check was passed to the cashier who ultimately called on the number fixed on the check. The customer bearing that token number arrived at the counter. The cashier checked out the number and paid the amount as per checks and entered number and amount in the cashbook maintained with him. The Negotiable Instruments. Act, 1881, “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”2. Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say that a Cheque can be defined as an: “An unconditional order in writing drawn on a specified banker, signed by the drawer, requiring the banker to pay on demand a sum certain in money to, or to the order of, a specified person or to the bearer, and which does not order any act to be done in addition to the payment of money”3. (Law of Banking by Dr. Hart, p.327). The Requisites of Cheque Define cheque 51
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 There is no prescribed form of words or design of a Cheque, but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following. a) It should be in writing b) The unconditional order c) Drawn on specific banker only d) Payment on Demand e) Sum Certain in money f) Payable to a specific person g) Signed by the drawer h) Date on cheque i) Signature on back. Payments of cheque 1. Receiving of Cheques The cash is paid against the cheques of the client. The following points are important. Cheque is drawn on same branch Cheque is not post dated. Amount in words and figure are same. It should be bearer cheques so the word bearer should not cross. 2. Verification of signature. After receiving the cheques the cheques the operation manager verify the signature of the account holder and the signature on the cheques. If the signature is not same it is returned back otherwise forward to BBO Operator for posting. 3. Token assign. After verification of signature , a token given to the bearer of cheque for the of of payment of cheque. 4. Computer Terminal Process 52
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 The cheque is received in computer terminal, where BBO operator checks the balance of the account holder. The BBO operator also sees the stop payment instructions, whether received from account holder or not. After considering these points BBO Operator post the cheque in BBO (Branch back office system) and forward to operation manager. 5. Payment of Cash After posting the cheque the operation manager cancelled the cheque and returned back to cashier. The cashier enters the cheque in cash paid registered and pays against the second signature of receiver on the back of the cheque. 4. 2. ACCOUNTS DEPARTMENT In modern time, very few business enterprises are carried out solely with the capital of the owners. Borrowing funds from different sources has become and essential feature of today‟s business enterprises. But in the case of a bank, borrowing funds from the outside parties is all the more vital because the entire banking system is based on it. The borrowed capital of bank is much greater than theirs own capital. Bank‟s borrowing is mostly in the form of deposits. These deposits are lent out to different parties. The larger the difference between the rate at which these deposits are borrowed and the rate at which they are lent out the greater will be the profit margin of the bank Furthermore. larger the funds lent out the greater will be the return earned on them; and greater the amount of return the greater will be the profits of the bank. It is because of this interrelated relationship that deposits are referred to as the “life blood” of the bank Current account Current deposits are also called demand liability on current deposits. NBP pays practically no interest on current deposits. Businessmen usually open current accounts. In NBP current account can be opened with a minimum amount of Rs.500/-.  Minimum amount for opening this account is Rs.500  Any person can open the account with the bank  According to inter banks agreement interest is not paid on current account. 53
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Bank act as custodian of money  Over draft facility is provided to the customers  Customer can withdraw money through cheque supplied by bank Profit And Loss Sharing Account In general it is also called saving account .To provide interest free banking facilities in Pakistan, this type of account was introduced in January 1982 after the islamization of banking. The main features of this account are: -  Instead of having fixed return in the form of interest the deposited money will be shared in profit and loss of the bank.  One can open the account by depositing minimum Rs.100  Withdrawal is allowed 8 times in the month total not exceeding Rs.15000.  To withdraw a large amount a notice of 7 days to the bank is necessary.  There is not any kind of interest is provided on money deposited.  Rate of profit is declared at the close of each half-year. Fixed Deposit Account: This account is the major source of funds for the banks. This account is best for people who have surplus money and don‟t need such funds in nearer future. The money is deposited for a fixed period of time. Main features of this account are: -  Fixed amount is deposited for fixed period.  Amount of profit can be obtained after each six months.  Higher will be the time period, higher will be the rate of profit, and vice versa.  A receipt is used for the amount deposited called fixed deposit receipt.  Period of deposit can vary from 3 months to 5 years.  The amount can be withdrawn before maturity after surrendering interest.. Types of Accounts Holders. Following are the main categories of accounts.  Individual Account  Joint Account  Company Account  Club, Society, Association or Trust A/C 54
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Partnership Account i). Individual Account: Any account or proprietor of a business can open an individual account in National Bank Limited. PLS (Profit & Loss Sharing) Saving account can be opened without any minimum requirement. The client has to the following documents to the bank in order to open an individual account with the bank. One copy of National Identity The customer has to fill the account opening form and have to put his signature at the signature specimen cards and also have to fill the Cheque Book Application form. After the approval from the branch manager, the bank opens a new individual account. II). Joint Account When more than one person opens a single account, it is called joint account. The names of both persons are written on the title of the account at the signature specimen cards. One person cannot operate joint account. Both persons have to put their signatures on the Cheque in order to encash the Cheque.. iii). Company Account Public as well as Private Limited companies can open a bank account at the name of the company. They have to submit the following documents to the bank in order to open an account at their company‟s name.  One copy of Certificate of Incorporation  Memorandum of Association and Article of Association  List of Directors of the Company  Copy of Board Resolution  The Company‟s certificate of Commencement of Business (In case of Public Limited Company)  Signature Specimen Cards. iv). Club, Society, Association or Trust Any club, association or Trust can open an bank account at their own name. The requirements of the bank regarding this type of account are:  Copy of the rules of the club/ society  Copy of office Bearers  Certificate Copy of Resolution 55
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Copy of NIC  Name of person authorized to sign, their office, position and  Specimen signature. v). Partnership account Partnership account can also be opened with the National Bank Limited. Account title will be name of the partnership firm. Partners who are willing to become the authorized signature will have to sign the account opening form of the bank. Other requirements are  Copy of partnership deed  Copy of Registration Certificate  Specimen Signature Cards. Procedure to Open an Account Step by step 1.Get accont opening form 2.Filling the form 3.Submit form 4.Specimen signature 5.Account number 7.Initial deposit 8.Pass book 9.Cheque book 56
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 4.3. ADVANCE DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans. The Credit Management Division of Head Office directly controls all the advances. As we known bank is a profit seeking institution. It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all financial institutions, because it is the main source of earning. However, at the same time, it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. TYPES OF CREDIT FACILITY In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the form of cash finance, overdrafts and loans. NBP provides advances to different people in different ways as the case demand. a. Cash Finance b. Running Finance c. Demand Finance 4.3.1 Cash Finance This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods, produce or merchandise. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit, either at once or as and when required. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. If the borrower does not utilize the full limit, the banker has to lose return on the unutilized amount. In order to offset this loss, the banker may provide for a suitable clause in the cash finance agreement, according to which the borrower has to pay markup/service charges on at least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount. 4.3.2 Overdraft/Running Finance 57
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 This is the also a common form of bank lending. When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance which the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is generally allowed against collateral securities. When it is against collateral securities it is called “Secured Overdraft” and when the borrowing customer cannot offer any collateral security except his personal security, the accommodation is called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an overdraft, because he has to pay service charges only on the balance outstanding against him. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis, while an overdraft is a temporary accommodation occasionally resorted to. 4.3.3Demand Financing/Loans When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time, it is called a “loan”. When bankers allow loans to their customers against collateral securities they are called “secured loans” and when no collateral security is taken they are called “clean loans”. The amount of loan is placed at the borrower‟s disposal in lump sum for the period agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security 4.4 .REMITTANCES DEPARTMENT NBP also provides facility of money transfer. NBP uses all the three means to transfer money. This department is also known as Bills department 4.4.1 Bank or Demand draft: Demand draft is a popular mode of transfer. The customer fills the application form. Application form includes the beneficiary name, account number and a sender‟s name. The customer deposits the amount of DD in the branch. After the payment the DD is prepared and given to the customer. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch. The account of the customer is credited 58
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. DD are of two types. a) Open DD: Where direct payment is made. b) Cross DD: Where payment is made though account. 4.4.2Payment Order (PO) Payment order is made for local transfer of money. Pay order is the most convenient, simple and secure way of transfer of money. NBP takes fixed commission of Rs. 93Per payment order from the account holder and Rs. 100 from a non-account holder. 4.4Mail transfer (MT): An account holder of a bank, who maintains accounts in more than one branches of the bank, may want to transfer the funds from his one account to another account. Other than this, non-constituent wishes to remit funds in a particular account at some place with the branch of the bank to another branch can resort to the transfer by mail, described as mail transfer remittance. Bank is responsible for mailing and remittance. 4.5Telegraphic transfer (TT): A more quick system of TT is also present to assure the requirements of fast growing business community, which have no time. If the amounts are deposited in cash, a sample cash vouchers is passed, giving credit to the main office Karachi, and a telegraphic message is sent to the bank on which the TT is drawn, specifying the TT number, date, name of the party in whose favor it is drawn and the test member. There are two types of telegraphic transfers:  In case of advice and credit  In case of advice and pay 4.6Demand Draft Purchaser (DDP) DDP is an instrument purchased by National bank on behalf of government for the compensation of government employees as well semi government etc. After purchases of DDP, The copy of this instrument sent to the government for the 59
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 purpose of clearing .Government employees takes the payments on monthly and quarterly basis. 4.5. Clearing Department The major function of Clearing Department is to receive the cheques, which are drawn on some other bank. The customer can get the money in his account at NBP, from the cheques drawn on another bank. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House. Bank charges some commission for this function. SC (Short Credit) SC is the short credit, which consists of the cheque outside the district. These cheques are sent in SC outside the district for clearance. Once they are cleared bank charge a certain amount of money spent on the process form the customer. LSC (Local Short Credit) LSC is the short credit, which consists of the cheques inside the district. Separate register is maintained for it. Local branches for clearance send these cheques for clearance. Bank has no charges on the process form the customer 5.1Types of clearing: 5.1.1. Inward clearing Inward clearing means the cheques received by the bank from other banks. These - Inward clearing - cheques are the cheques drawn by the bank/branch customers on their account in favour of other parties. On receipt of the inward clearing, the cheques are posted to the various accounts on which they are drawn -meaning the accounts of the cheque issuer or drawer with the bank is debited to the account and the payment is made to the bank presenting the cheque. So if in your bank statement there is a debit as inward clearing, it means that your account has been debited with the amount of cheque you have issued to someone for that amount. Since you will be having details as to the issue of cheques, you can find out. 5.1.2. Outward clearing Cheques deposited in the bank for credit to their accounts, drawn on a bank other than that of the collecting bank,i.e., not a transfer cheque. Cheques are bound outward to the payee/ drawee bank (the bank that is making the payment/ on whom the cheque is drawn) 60
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Outward cheques could be  Local cheques (within the same geographical/ clearing zone),  Outstation cheques (drawn on a bank outside the local clearing zone)  Foreign cheques (drawn on a bank/ location outside the country of the collecting bank) 5.1.3Procedure for Clearing the Cheques 1. Pay-in Slip The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date, amount and account number must be written on this slip. 2. Stamping and Scrutinizing The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with“cheque received” and give a portion of slip to customer and the remaining portion is attached with the original cheque. The original cheque will be marked with two stamps. 3. Clearing Stamp At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the Clearing House. The stamp is used of next date . 4. Cover letter It is attach on the face of the bundle of clearing cheques. It includes date, signature of authority, No. of cheque, and stamp of home branch. 4.5.2 NIFT National Institutional Facilitation Technologies Pvt. Ltd. (NIFT) is the leading service provider in the IT industry of Pakistan and is playing a proactive role in modernizing payment systems in Pakistan. It is a joint venture between a consortium of six banks and entrepreneurs from the private sector. The group of six equity holder banks (HBL, NBP, MCB, ABL, UBL, and FWBL) is majority shareholder in NIFT. All 36 banks including State Bank of Pakistan (SBP) are participating members of NIFT for Cheque clearing services. 61
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Since its inception in 1995, NIFT has always been in the forefront in building IT infrastructure in the country and providing range of different technical services to organizations all over Pakistan. NIFT offers services in different domains which include Cheque Clearing services to the banking industry, Reconciliation services to large utility companies, image archiving services (which include scanning, printing, archiving & retrieval) to large institutions, 4.5.3Why cheques are not cleared. A cheque is sometime returned unpaid by the bank to the customer. The reason is usually given on the cheque or upon a slip of paper attached to it. The principal reasons for dishonoring the cheque are as follows: - (1) It does not satisfy the conditions specified in the Negotiable Instrument Act (2) Drawers signature s differs from specimen recorded with the bank. (3) A cheque is stale (in circulation for more than 6 months) or post dated. (4) Amount expressed in words and figures differ. (5) Cheque mutilated (cut torn part of cheque missing) (6) Material alternations (change in date, crossing, amount, name of payee cheque) (7) Order cheque not properly endorsed. (8) Do not tally with directions contained in the crossing. 4. 6.GOVERNEMNT COLLECTION DEPARTMENT 4.6.1Government Collections/ Receipts NBP Main Branch Jaranwala carries the responsibility of Govt. collection and perform different services for Govt. NBP collects taxes, duties, challans, renewal of weapons and collection of utility bills which includes Sui Gas, PTCL and PESCO bills. This department also collects the dues of the educational institutes. 4.6.2Government Payments This department also performing the function of payments of salaries, payment of zakat and payment of pensions and salaries to Air Force, Army and civilians is given through Govt. Department. For this purpose pension books are issued to the pensioners. The record of the accounts is also maintained in this department. 62
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Chapter no. 5 MY Learning as a Trainee Page 57-64 63
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 MY Learning as a Trainee After joining the bank for internship initially it was so difficult for me to get the attention of the employees, everybody was terribly engaged in their own activities, nobody was Having time to accommodate me. This was a crucial time for me to get the attention of NBP bank‟s management and to make them realize that their valuable information is so much necessary for the up gradation of my knowledge and for the completion of the task which I was assigned by the institution. But very soon I succeeded in making relationship with the top influence people and with the help of these people I started permeated in the system. This was my first step towards the completion of my task and with the passage of time they realized that they could also utilize my efforts in a productive way to minimize heir burden. They provided me their time and information, which helped me to enhance my knowledge, and they also shared their experiences with me, which I believe that it would be helpful in my practical life. First two weeks I worked in Remittance department, for next two weeks I worked in Accounts department and for rest of the time I worked with Business Manager where I learned lot of things including how to deal with corporate customers, with individual customer and how loans can be recovered from the customers. During the internship session I got the chance to perform on different activities, which are listed below, and short explanation is also given. 5.1. 1st department where I worked (Remittances) 5.1.1Demand Draft DDs are always a secure way of paying remittances in other cities. Both account holders and walk in customers can avail the facility of DDs. Charges tend to differ for both customers but the advantage tend to be same. DDs are made in the favour of beneficiary and remitter either pays in cash or through cheque. Required document for demand draft Copy of Nadra CNIC card Name of person to whom it made 64
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Form of demand draft includes  Date  Name of institution to which it is made  Branch name  Branch code  Amount of DD  Exchange for DD  Signature of person Issuance of Demand Draft After the payment of demand draft to the cashier, now DD makes on cheque and crass the cheque to secure the payment and give to the person. Charges for DDs are Up to Rs. 100,000/- 0.10%, Min Rs. 100 for A/C holders 0.20%, Min Rs. 200 for Non A/C holders Over Rs. 100,000/- 0.05%, Min Rs. 150 for A/C holders 0.15%, Min Rs. 250 for Non A/.C holders Issuance of duplicate DD Rs. 150 for A/C holders Rs. 250 for Non A/.C holders When DDs are issued, head office account are debited and remitters account is credited, on presentation, head office account is credited and beneficiarys account is debited. 5.1.2Pay Order POs are another safe way of paying your remittances within the city. They are payable at any branch and then are forwarded for clearing. There charges are Issuance of PO Rs. 75 for A/C holders Rs. 250 for Non A/C holders Cancellation of PO Rs. 75 for A/C holders Rs. 250 for Non A/.C holders Issuance of duplicate PO Rs. 150 for A/C holders Rs. 300 for Non A/.C holders In case of PO, remitter account is credited and PO A/C of branch is debited. At presentation, Beneficiary is debited and PO A/C of branch is credited. 65
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 5.1.3Mail Transfer An account holder of a bank, who maintains accounts in more than one branches of the bank, may want to transfer the funds from his one account to another account. Other than this, non-constituent wishes to remit funds in a particular account at some place with the branch of the bank to another branch can resort to the transfer by mail, described as mail transfer remittance. Bank is responsible for mailing and remittance. Form of Mail Transfer includes  Date  Name of person to which it is made  Branch name  Branch code  Amount of MT  Account name  Account number  Nature of transaction  CNIC 5.2 Account Opening; (2nd department) Whenever a new customer enters in the bank with the intention to open an account, the banker is required to determine his/her category according to his status and needs. NBP has following categories of accounts: Individual Account Joint Account Partnership Account Company Accounts Accounts of the Welfare/ Societies/Clubs/ NGOs 5.2.1 Procedure Of Account Opening; A. Account Opening Form; The first step in the procedure of opening an account is the filling of Account Opening form. At NBP the account opening form is titled as the Relationship Contract. It contains all the requisite information needed to open and operate an account according to the specified rules and regulations. 66
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Contents Of Account Opening Form; The following details are required to furnish the Relationship Contract. 1. Title Of Account: It is the name through which the customer is intended to operate an account. 2. Account Number: This is the serial number given to each account number through which an account is accessed whenever it is needed. 3. Personal Information: After giving the title to the account, the personal information of the customer is written down in the Account Opening form, like Name, Father‟s name, Mother‟s name, Employment information (Address of employer, Name of employer, job title) in case of a salaried person, NIC #, Nationality, Residential Address, Phone number etc. In case of joint account the personal information of each account-holder is taken. 4. Next of kin Mention Name & address of person/next of kin to be contacted for ascertaining consumer‟s whereabouts after the expiry of three years from the date of last operation in his account, to inform him/her of the existence of his account when customer were not available at the given date. 5. Address for the correspondence Address of the customer is needed to contact the customer. 6. Corporate account In case of company account the additional information regarding the address of the Head office and Date and Place of the incorporation is required. 7. Type of entity That either the applicant falls under the category of individual, sole proprietor or company etc. 8. Nature of the account e.g. example current account. 9. CURRENCY OF ACCOUNT Customer has to mention the currency, in which he is going to operate. 10. Details of the term, notice & call deposit It includes No. of receipt, Amount, Period of the deposit. 11. Zakat deduction instruction 67
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 12. Instruction for operation of account Under this head the applicant specify that how he/ she will operate the account. If applicant is individual then he will select the option of „Single‟ but in case of a joint account the customers have to make choice among the options of the „Joint‟ and 13. Introducer‟s detail The introducer‟s name, account no., introducer‟s signature and the signature and stamp of the verifying officer are also required to fill in the account opening form. 14. Declaration In the end the applicant(s) agree with the rules and regulations governing the account operating activities by signing the Relationship Contracts. In case of sole proprietor or company account the stamp of the business should be affixed. 15. Terms & conditions governing the account The account opening form of every bank has the terms and condition governing the account as its complementary part so that the customer will be aware of all these terms at the time of entering this contract. These terms and conditions should be read and signed by the applicant(s). 5.2.2 Acceptance and verification of documents: After filling the Relationship contract the bank officer asks the required documents from the customer as mentioned above in case of each entity. The necessary verification is done. 1. Verification of the CNIC According to the regulation of the SBP now the banker is responsible to verify the CNIC from NADRA. For this purpose the customer signs an authority letter by which he/ she gives him the authority to verify the CNIC through the on-line CNIC verification service of NADRA. 2. Signature different from CNIC If the customer wishes to use a signature to operate his account which is different from the one on his national identity card, then he will give an Undertaking under the witness of the Introducer, that he will be responsible for this change of signature. 3. Signature specimen card An important and foremost thing to be signed by a customer is the Signature Specimen Card (SSC). Afterward this card is used to match the signature of the 68
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 customer every time he or she deals with the bank. The original card is sent to the head office after scanning it to the system. 4. Account of the illiterate person In case of the account of an illiterate person the only photo account can be opened. In this account the customer has to come personally to the bank every time he/ she will deposit to or withdraw from his/ her accounts. So, some additional documents are required to obtain from such applicant at the time of opening a photo account like two photographs of applicant(s), one is put on the account opening form and the other one is out on the signature card. Also a declaration is signed by the customer in order to open a photo account, on which the thumb impression are taken of the customer. This is done under the witness of the introducer. 5. Application for the on-line arrangement for Clearing/transfer/cash transaction If the customer wants to have the account to be on-line, so that he can avail the facility of the on-line banking, then he will sign the application for the use of this facility at time of opening an account or at any time later on. 6. Know your customer (kyc) It is a document which is prepared under the special instruction of the SBP. As per SBP regulation it is very important for the banker to know his customer very well. This form is prepared by the account opening officer according to the information given by the customer to him.. 5.2.3 Issuance of cheque book: 1. First time issue of the cheque book After the account is opened, the customer requires a cheque book to conduct operation in his account. In order to have a cheque book the account holder signs an application to issue a personalized or blank cheque book.  Personalized cheque book: A cheque book having the account title and account number printed on it is called as Personalized Cheque Book. This assures the safety of the cheques to be used.  Blank cheque book: It is the simple cheque book with no account title or account number on it. 2. Reissuance of cheque book 69
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 When two or three leaves are left in the cheque book, the account holder can demand for a new cheque book, so customer fills “requisition slip” which is attached in cheque book and gives to banker and receives a new cheque book for continuing the account. An account holder can also any other person to receive the new cheque book by giving the authority in the requisition slip. The authorized person should bring the copy of CNIC to receive the cheque book. 3. Loss of the cheque book In case the cheque book is lost by the customer then first step the customer should take is to stop the payment of all the cheques. The charges for stopping the payment are Rs.200/- per cheque or Rs.500/- for the whole cheque book. The report the cheque numbers of the remaining cheques at the time of the lost. The officer of the NBP will enter these numbers in the system as stopped. Now nobody can encash these cheques all over the Pakistan at any branch. 5.2.3 Closing of account; There are number of reasons, why an account is closed. Some of most common reasons are mentioned below:  At the client‟s own request  Death of account holder  Bankruptcy of account holder  Liquidation or winding up under the companies act. 5.3 GOVERNMENT DEPARTMENT (few days) Government Department is very important section of the Bank because it is responsible for any penalty imposed by SBP due to the negligence / non completion of work / books and balancing. All officers monitor all heads of Govt. Section for well in time reporting in monthly, quarterly, annual return to controlling office. 5.3.1 Government receipts: Government receipts means collection of the following  Income tax  Property tax  Sales tax  Traffic challans  Court fine 5.3.2 Government payments: 70
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Government payments include; 1. Salary payments 2. Pension Payments Department of Government section receives all the provincial and central receipts. NBP makes payments to following:  Civilian  Defense civilian pensioners  Retired officers of Armed forces  Retired officers of PAF and families  Others ( KRL, Oil Gas Development Corporation , Pakistan Aero E Complex /  PR, RANGERS) Documents required for the pension payments:  Pension payment order  No and date of CNIC  Two specimen signature, thumb and finger impression  Photographs of the pensioner  Pension book Officer enters them in a ledger to keep permanent record. Documentation: Disburser portion of the PPO is filed in serial No and kept in lock and key with accountant. All particular of PPO are entered in PPO register. The first payment is made to pensioner after proper identification. In case any clarification staff referred the pensioner to general accountant or Head office. 71
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Chapter no 6 SOWT Analysis of NBP Page 66 - 68 72
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 6.1SWOT analysis SWOT analysis, method, or model is a way to analyze competitive position of your company. SWOT analysis uses so-called SWOT matrix to assess both internal and external aspects of doing your business. The SWOT framework is a tool for auditing an organization and its environment. Swot matrix includes both internal and external factors ;  Strengths: characteristics of the business, or project team that give it an advantage over others  Weaknesses (or Limitations): are characteristics that place the team at a disadvantage relative to others  Opportunities: external chances to improve performance (e.g. make greater profits) in the environment  Threats: external elements in the environment that could cause trouble for the business or project. 73
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 6.2 Swot analysis of NBP STRENGTHS of Nation‟s Bank  National Bank is the Nation‟s Bank  Oldest institution  Outspread network  In Top 5th bank  AAA credit rating  Experience & all round staff  Government institution  Its paid-up capital is very high  Very less uncertainty because of a Govt. bank  The biggest customer of NBP is Govt. of Pakistan  Provide High packages to employees.  Provide high staff benefits  Western union and express money transfer  On line system  Transfer of fund or cash with few minute  Strong security system  Efficient record of customer  Agency Arrangements  Advance salary &Attractive product  High ratio certificates WEAKNESSES:  Lengthy procedure in nbp  Poor environment  Poor image in mind of people  No proper marketing effort  Lack of coordination among employee  Favoritism and Nepotism 74
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012  Political interfering  Poor working equipment  In many branches management is not up to date.  In small area‟s branches employees have less education.  Award and promotion policies are not implemented in all branches.  There is no concept of job rotation  Inefficient counter services in the rush hours  Uneven work distribution  Lack of staff OPPORTUNITIES  Electronic banking  Efficient staff available in marketing  Starting of the retail banking initial working.  Market penetration available in local as well as in foreign market.  Basic and business equipment offers on loan  It can introduce comprehensive form of bound  Award for employee performance  Corporate planning learning THREATS:  Customer complaint  Major competitors offers attractive product  24 hours banking &E banking  Larger facility of ATM by other bank  Denationalized commercial bank  The hiring of uneducated people  Saving of people decreasing 75
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Chapter no .7 Financial Statement Analysis of NBP Pages 70 - 92 76
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 7.1 Financial statement analysis Financial statement analysis is the process of identifying of financial strengths and weaknesses of the firm by properly establishing relationship between the items of the balance sheet and the profit &loss account," It is a valuable tool used by investors and creditors, financial analysts, and others in their decision-making processes related to stocks, bonds, and other financial instruments. The goal in analyzing financial statements is to assess past performance and current financial position and to make predictions about the future performance of a company. Investors who buy stock are primarily interested in a companys profitability and their prospects for earning a return on their investment by receiving dividends and/or increasing the market value of their stock holdings. Creditors and investors who buy debt securities, such as bonds, are more interested in liquidity and solvency: the companys short-and long-run ability to pay its debts. Financial analysts, who frequently specialize in following certain industries, routinely assess the profitability, liquidity, and solvency of companies in order to make recommendations about the purchase or sale of securities, such as stocks and bonds. The analysis of financial statement refers to the examination of the statements for the purpose of acquiring additional information regarding the activities of the business. The users of the financial information often find analysis desirable for the interpretation of the firm‟s activities. Techniques of Analysis Three techniques may be used in evaluating financial statement data:  Ratio Analysis  Horizontal Analysis,  Vertical Analysis 7.2 77
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 3 Years Statement of Financial Position of NBP National Bank of Pakistan Statement of Financial Position Rupees in „000‟ PARTICULARS 2009 2010 2011 ASSETS AMOUNT AMOUNT AMOUNT Cash and balances with treasury 116,668,514 115,657,025 131,843,291 banks Balances with other banks 28,786,397 30,743,368 28,069,897 Lendings to financial institutions 19,683,526 23,051,171 44,360,727 Investments – net 217,596,037 301,078.498 319,527,254 Advances – net 475,338,439, 478,886,775 527,109,209 Operating fixed assets 25200,870 27,620,697 28,126,754 Deferred tax assets – net 3064,459 6,954,228 7,973,084 Other assets – net 59,915,027 54,026,725 66,469,884 TOTAL ASSETS 946,253,269 1,038,018,467 1,153,480,100 LIABILITIES Bills payable 10,621,169 8,006631 9,104,710 Borrowings 44,828,138 19,657,207 26,371,675 Deposits and other accounts 727,513,013 832,134,054 927,415,132 Sub–ordinate loan - – – Liabilities against assets 42,629 123,413 92,739 Deferred tax _ _ _ Other liabilities 42,455,768 46,798,330 54,701,435 TOTAL LIABILITIES 825,460,717 906,719,635 1,017,685,691 NET ASSETS 58,436,054 69,740,013 79,204,209 OWNER‟S EQUITY 2009 2010 2011 Share capital 10,763,702 13,454,629 16,818,286 Reserves 23,395,059 25,129,425 26,206,507 78
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Inappropriate profit 61,696,594 67,103,611 69,712,113 Surplus on revaluation of assets 24,826,267 25,113,091 22,462,015 Non controlling. 110930 498076 495488 120,681,622 130,800,756 135,298,921 7.3 3 Years Profit & Loss A/C: For the year ended December, 31 Particulars 2009 2010 2011 Mark–up / return / interest earned 78,124,796 88,681,381 95,689,741 Mark–up / return / interest expensed 40,448,291 45,169,744 48,516,517 Net mark–up / interest income 37,676,505 43,511,637 47,173,224 Provision against non performing 11,148,773 7,007,975 6,219,671 advances-net Provision for diminution in the value of 651,282 2,904,949 3,138,494 investments – net Impairment of goodwill 92,593 Provision against off balance sheet 20,237 3,965 obligations 11,820,292 10,009,482 9,358,165 Net mark–up / interest income after 25,856,213 33,502,155 37,815,059 provisions Non–mark–up / interest income Fee, commission and brokerage 8,996,973 9,871,667 9,948,547 income Dividend income 1,896,817 1,067,273 1,595,192 Income from dealing in foreign 3,103,673 2,278,898 3,196,630 currencies 79
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Gain on sale of securities – net 4,593,041 2,512,363 2,390,211 Unrealized gain on revaluation of investments 2,355 6,730 (35039) Share of loss from joint ventures (41,715) (16,976) 32,181 Share of profits from associates 5,238 66,906 83,559 Gain on revaluation of previously held _ 180,131 _ equity interest Other income 552,950 2,183,891 2,543,139 Total non–mark–up / interest 19,109,332 18,150,883 19754420 income 44,965,545 51,653,038 57569479 Non–mark–up / interest expenses Administrative expenses 22,816,665 26,732,045 30760815 Other provision – net 628,391 179,819 554,810 Other charges 321,647 118,887 137852 Total non–mark–up / interest expenses 23,766,703 27,030,751 31453477 Profit before taxation 21,198,842 24,662,287 26116002 Taxation – Current year 8,890,206 9,871,640 9229882 – Prior years (4,137,307) (938,158) 2,60,000 – Deferred (1,003,099) (2,049,600) (1083045) 3,749,800 6,883,882 8406837 Profit after taxation 17,449,042 17,738,405 17709165 1 7.4. RATIO ANALYSIS Ratio analyses are the most popular form of analyses all over the world and the trusted one also. In ratio analyses as the name suggests ratios are used in analyzing the financial standings of the organization. Ratio analysis is a powerful tool of financial analysis. A ratio is defined as: “The quotient of two mathematical expressions” OR 80
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 “The relationship between two or more elements” In financial ratio analysis a ratio is used as benchmark for evaluating the financial Position and performance of a firm. Ratio analysis enables the analyst to compare items on a single financial statement or to examine the relationships between items on two financial statements. After calculating ratios for each years financial data, the analyst can then examine trends for the company across years. Since ratios adjust for size, using this analytical tool facilitates intercompany as well as intercompany comparisons. CALCULATION OF DIFFERENT RATIOS: Here we are going to calculate different ratios, which include both the balance sheet and income statement ratios. These ratios are quite important for analyzing the financial position of a firm. These ratios are calculated for the years 2009, 2010 and 2011 from the „balance sheet‟ and „profit and loss statement‟ of NBP. 7.1.1. Liquidity Ratios A class of financial metrics that is used to determine a companys ability to pay off its short terms debts obligations. Generally, the higher the value of the ratio the larger the margin of safety that the company possesses to cover short-term debts. 1.1Current Ratio: The current ratio is the ratio of current assets to current liabilities. Formula Current Ratio = Current Assets / Current Liabilities Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firms assets are working to grow the business. 81
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Particulars Years 2009 Years 2010 Year 2011 640476876/ 646363744 728683464/ Formula 781962320 /860262110 962897823 Ratio 0.82 0.75 0.76 Interpretation: The current ratio of NBP decreasing in 2010 and in 2011because of increase in current liabilities. The ratio is 0.82in 2009 and 0.75 in 2010 and in 2011 it is 0.76.This means that for every 1 rupee liability of the bank it has 0.76 rupees IN 2011.It shows the poor short term financial position of NBP. 1.2 Cash ratio The cash ratio is an indication of the firms ability to pay off its current liabilities if for some reason immediate payment were demanded. NBP cash ratios are Formula Cash Ratio = Cash / Current liabilities Particulars Years 2009 Years 2010 Year 2011 145454911/ 146400393/ 159913188/ Formula 781962320 962897823 860262110 Ratio 0 .18 0.17 0.16 Interpretation: The cash ratio of the bank is 0.18, 0.17 and 0.16 in 2009, 2010 and 2011 respectively. This shows an decrease in 2010 and 2011. This means that NBP have 82
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 some cash than their liability, and NBP not easily cover their liabilities with cash in hard times. 1.3Advances to deposits ratio The loan to deposit ratio is used to calculate a lending institutions ability to cover withdrawals made by its customers Formula Advances to deposits ratio= Advances / Total Deposits Particulars Years 2009 Years 2010 Year 2011 Formula 475338439 / 478886775 / 527109209 / 727513013 8321344054 927415132 Ratio 0.65 0.57 0.56 Interpretation: It means the efficiency on NBP is good and they use their deposits efficiently in advancing to borrowers. Here high ratio is required. The next side of the picture is that the people will think that is risky to deposit the money in the bank 7. 2. Solvency ratio analysis Solvency analysis of a firm indicates the amount of the other people‟s money being used to generate profit. In general, these analyses are more concerned with long term debts, because these commit the firm to a stream of payments over the long run. Solvency analysis includes 2.1 Proprietary Ratio Proprietary ratio refers to a ratio which helps the creditors of the company in seeing that their capital or loans which the creditors have given to the company are safe. Proprietary ratio can be calculated as follows Formula: 83
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Proprietary Ratio = Total Asset / Total Equity Particulars Years 2009 Years 2010 Year 2011 135298921 120681622 / 130800756/ Formula 946253269 /1153480100 103828467 Ratio 0.12 0.12 0.10 Interpretation . This ratio shows the solvency position of the bank. In 2009, 2010 there is an increases trend as .i2 but in 2011 it decline .10. it shows that very small amounts of shareholders in asset contribution. 2.2Debt-to-owners equity The ratio of debt-to-owners equity or net worth indicates the degree of financial leverage youre using to enhance your return. A rising debt-to-equity ratio may signal that further increases in debt caused by purchases of inventory or fixed assets should be restrained Formula: Debt-to-owners equity= Total Debt / Equity Particulars Years 2009 Years 2010 Year 2011 Formula 825460717/ 906719635/ 1017685691/ 120681622 130800756 135298921 Ratio 6.83 6.93 7.52 Interpretation 84
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 it shows increases trend in 2009 to 2011 which means NBP financing more through debt and NBP business depend on debt .it also increases the right of outsiders against assets .it is high and not better for owners. 2.3Earning assets to total assets ratio Earning assets to total assets ratio tells us about the bank management efficiency to utilize the earning assets. Formula: Earning assets to total assets ratio=Earning assets/ Total assets Particulars Years 2009 Years 2010 Year 2011 827286516/ 918673469 / 1022840481/ Formula: 946253269 1038018467 1153480100 Ratio 0.87 .88 0.89 Interpretation The earning assets to total assets ratio increases which means efficiency of bank improves. It means earning capacity of earning assets .89 against 1 rupee. 3. Profitability analysis Profitability analysis of a firm indicates the overall efficiently of the management. Without profit a company cannot attract the outside capital. Profitability analysis includes: 3.1Return on total assets The return on assets ratio provides a standard for evaluating how efficiently financial management employs the average dollar invested in the firms assets, whether the dollar came from investors or creditors. Formula Return on total assets ratio= Net Profit after Tax/ Total Assets*100 85
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Particulars Years 2009 Years 2010 Year 2011 17738405/ 17709165/ Formula 17449042/ 103818467 1153480100 946253269 Ratio 1.80% 1.70% 1.53% Interpretation It shows the decrease trend of profitability. It means the assets of business are fully utilized in 2009 and ratio is 1.80 but the assets of the business are fully not utilized in more and efficient way in 2011 and ratio is 1.53 and also shows the unfavorable trend of the business. 3.2Return on investment A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments Formula Return on investment= Net Profit after Tax/ Investment *100 Particulars Years 2009 Years 2010 Year 2011 17449042 / 17738405/ 17709165/ Formula 217596037 301078498 319527254 Ratio 8.01% 5.89% 5.50% Interpretation It means the investment of the business are fully utilized in more and efficient way it also shows that NBP have large amount of investment but it needs some improvement and also shows the unfavorable trend of the business 86
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 3.3Return on equity Return on equity measures a corporations profitability by revealing how much profit a company generates with the money shareholders have invested. Formula: Net Profit after Tax/ Total Equity*100 Particulars Years 2009 Years 2010 Year 2011 17738405/ 17449042 / 17709165/ Formula 130800756 120681622 135298921 Ratio 14.45% 13.56% 13.08% Interpretation This ratio is more meaningful for share holders who are interested to know the profit earned by the company because the dividend paid from available profit higher ratio means factor of production fully utilized and good position but here there is decline in ratio. 3.4Average Profit Per Branch. It shows ration ship between ne profits and branches Particulars Years 2009 Years 2010 Year 2011 17449042 /1189 17738405/1245 17709165/1283 Formula Ratio 14675 14247 13802 Interpretation. The average profit per branch is decreasing due to increases in no. of branches of NBP It is not healthy for bank. 3.5Net profit margin 87
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Net profit margin is the percentage profit your business makes for every dollar of revenue – whether you‟re making a profit after covering all of your costs. Formula = net profit/ Interest Earned Particulars Years 2009 Years 2010 Year 2011 17738405/ 17449042 17709165/ Formula 88,681,381 /78,124,796 95,689,741 Ratio 22% 20% 19% Although bank is earning huge income but its expenses increased quite a bit simultaneously. Ultimately result is decrease in the net profit of the bank. It is decreased 20%to 19% in 2011 4. Market analysis Investor analysis or market analysis are related to firm market valve, as measure by its current share price to certain accounting values. Investor analysis includes 4.1Earnings per Share - EPS The portion of a companys profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a companys profitability. Formula: (Net profit after tax − Preference dividend)/No. of equity shares Particulars Years 2009 Years 2010 Year 2011 17449042/ 17738405/ 17709165/ 1345338 Formula 1339758 1680186 Ratio 12.97 13.24 10.54 88
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Interpretation: Earnings per share is a good measure of profitability when compared with similar other business. Here decreasing EPS, which will surely decrease share price. 4.2 Price to Earnings Ratio The P/E looks at the relationship between the stock price and the company‟s earnings. In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E Formula: Market price/ Earnings per share Particulars Years 2009 Years 2010 Year 2011 45/ 39/ 44/ Formula 12.97 13.21 10.54 Ratio 3.46 2.94 4.17 Interpretation: Price to Earnings (PE) is ratio often considered to be the most important ratio in the fundamental analysis of stocks. in 2011 it is high and more attractive for investors. 4.3 Dividend per Share The amount of dividend that a stockholder will receive for each share of stock held Formula: =Total Dividends/ No of shares Particulars Years 2009 Years 2010 Year 2011 5820338/ 8060510/ 10077218/ Formula 1345338 1339758 1680186 Ratio 4.32 6.01 5.99 Interpretation: 89
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 DPS shows positive trend in 2010 and 2011.due to increase in shares of bank there is a little decline in 2011, but over all better. 4.4 Dividend payout ratio The dividend payout ratio measures the percentage of a companys net income that is given to shareholders in the form of dividends. Formula: Dividend per share/ Earnings per share*100 Particulars Years 2009 Years 2010 Year 2011 Formula 3.46/12.97 2.94/13.24 4.17/10.54 Ratio 27% 22% 39% Interpretation: It shows the percentage of net incomes that is paid to the share holders. it is increases from 27% to 39% in 2011.and more attractive for investors and outsiders. 7.5. HORIZONTAL ANALYSIS This technique is also known as comparative analysis. It is conducted by setting consecutive balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in individual categories on a year-to-year or multiyear basis. The most important item revealed by comparative financial statement analysis is trend. A comparison of statements over several years reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is done by restating amount of each item or group of items as a percentage. Such percentages are calculated by selecting a base year and assign a weight of 100 to the amount of each item in the base year statement. Thereafter, the amounts of similar items or groups of items in prior or subsequent financial statements are expressed as a 90
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 percentage of the base year amount. The resulting figures are called index numbers or trend ratios. Formula = Current Year amount / Base Year amount * 100. Horizontal analysis of Statement of Financial Position Rupees in „000‟ ASSETS 2009 %age 2010 %age 2011%age Cash and balances with treasury banks 100% 99.% 114% Balances with other banks 100% 107% 97% Lendings to financial institutions 100% 117% 225% Investments – net 100% 138% 146% Advances – net 100% 100% 110% Operating fixed assets 100% 109% 111% Deferred tax assets – net 100% 226% 260% Other assets – net 100% 90% 110 TOTAL 100% 109% 111% LIABILITIES %age %age %age Bills payable 100% 75% 85% Borrowings 100% 44% 58% Deposits and other accounts 100% 114% 127% Sub–ordinate loan Liabilities against assets 100% 289% 217% Deferred tax liabilities – net _ _ _ Other liabilities 100% 110% 128% TOTAL 100% 109% 123% PRSEENTED BY 2009 %age 2010 %age 2011%age Share capital 100% 125% 156% Reserves 100% 107% 112% Inappropriate profit 100% 109% 112% 91
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Surplus on revaluation of assets 100% 101% 90% Non controlling 100% 449% 446% 100% 108% 112% Interpretation . Assets sides. The horizontal analysis of the balance sheet of the bank over all give the positive trend .The result of the balance sheet depict that there is a constant increasing trend in cash about 14% in 2011as compare to last year. Lendings to financial and advance increases very huge amounts such as 125% (lending to financial) and 10%(advances) total assets .investments increases in 2011 by 46 %. fixed assets & others assets also increases as 10% and 11%. Liabilities & equity. Bills payable decreased in 2010 by 25% and in 2011 by 15%. Borrowing decreases in 2010 as 56 % and 42 % in 2011.Deposits increases in 2010 as 14 % and 27 % in 2011.Others liabilities increases 10 %in 2010 and 28 % in 2011. Shares capital of NBP increases in 2010 as 25 % and 56% in 2011.Reserves increases in 7 %in 2010,12%in 2011. Inappropriate profit increases 7% in 2010,12%in 2011. Horizontal analysis Profit & Loss A/C: Particulars 2009 % 2010 % 2011 % Mark–up / return / interest earned 100% 113% 122% Mark–up / return / interest 100% 111% 119% expensed Net mark–up / interest income 100% 15% 8% Provision against non 100% 62% 55% performing advances-net 92
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Provision for diminution in the value of investments – net 100% 446% 481% Impairment of goodwill Provision against off balance 100% 19% sheet obligations 100% 85% 79% Net mark–up / interest income 100% 129% 146% after provisions Non–mark–up / interest income Fee, commission and 100% 109% 110 brokerage income Dividend income 100% 56% 84% Income from dealing in foreign 100% 73% 102% currencies Gain on sale of securities – 100% 45% 4% net Unrealized gain on revaluation 100% 185% 420% of investments Share of loss from joint 100% 159% 101% ventures Share of profits 100% 177% 24% Gain on revaluation of previously held equity interest 100% 294% 16% Other income Total non–mark–up / interest 100% (5) 8% income 100% 114% 128% Non–mark–up / interest expenses 93
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Administrative expenses 100% 117% 122% Other provision – net 100% 28% 88% Other charges 100% 36% 42% Total non–mark–up / interest 100% 113% 133% expenses Profit before taxation 100% 117% 123% Taxation – Current year 100% 111% 103% – Prior years 100% 22% 6% – Deferred 100% 204% 107% 100% 183% 224% Profit after taxation 100% 102% 101% Interpretation: The interest earned by National Bank of Pakistan fluctuates and shows an increasing trend during all years. It shows an increasing trend that is 13% in 2010, 22%in 2011. The interest expense of National Bank of Pakistan shows an increasing trend during all years. It increases in 2010 as 11%,19 % in 2011. The net markup/ interest income of National Bank of Pakistan fluctuates and shows a mixed trend during all years. Provision against non performing advances decreases in 2010 by 32 % & in 2011 as 45%. Net markup increases as 26% in 2010 and 46 % in 2011. The Fee, Commission & brokerage income of National Bank of Pakistan fluctuate and show increases as 9% in 2010 and 10% in 2011. The dividend income of National Bank of Pakistan is showing a mixed trend during all years .it decreases in 2010 by 44% and 16%in 2011. The administrative and operating expenses of National Bank of Pakistan increase 22% in 2011 and 17 % in 2010 and profit before tax 1ncreases as compared to last years. Profit after tax stable in 2011 94
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 7.6. VERTICAL ANALYSIS Vertical analysis is a technique for identifying relationship between items in the same financial statement by expressing all amounts as the percentage of the total amount taken as 100. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an income statement, each expense is shown as a percentage of the sales revenue. In Vertical analysis, various components of the financial statements are standardized by expressing them as a percentage of some bases. Examples of common-sized statements include:  Components of the balance sheet expressed as a percentage of total assets  Components of the income statement expressed as a percentage of sales or Interest earned  Formula: The formula for Vertical Analysis is: / Individual item of financial statement total of items head *100 Vertical analysis of Statement of Financial Position Rupees in „000‟ ASSETS 2009 %age 2010 %age 2011%age Cash and balances with treasury banks 13% 11% 12% Balances with other banks 2% 3% 2% Lendings to financial institutions 2% 2% 2.7% Investments – net 22% 28% 26.5% Advances – net 50% 46% 44.3% Operating fixed assets 2% 3% 2% Deferred tax assets – net 3% 5% 6% Other assets – net 6% 4% 5% TOTAL 100% 100% 100% 95
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 LIABILITIES Bills payable 1% .008% .008% Borrowings 5% 1% 2% Deposits and other accounts 79% 81% 83% Sub–ordinate loan Liabilities against assets .0042 % .0012% .0011% Deferred tax liabilities _ _ _ Other liabilities 3% 3% 4% TOTAL LIABILITIES 88% 86% 89% NET ASSETS 12% 14% 11% PRSEENTED BY Share capital 1.5% 2% 1% Reserves 2.5% 2.4% 2.6% Inappropriate profit 5.9% 6% 5.2% Surplus on revaluation of assets 2% 2.2% 2% .1% .4% .2% 12% 14% 11% Interpretation: Assets analysis In balance sheet of bank the most important item is earning assets. There are four earning assets. Bank has strong earning assets like advances investments and lending to financial institutions has major percentage in of assets of bank. There was a slight increase in the year 2011 as compare to the years 2009& 2010, of 12%. %. In cash and Lendings increasing trend and investment increases in 2010 28 % and decline in 2011 2% as compared to last years. Advances decreases in 2010 and 2011 In liability deposits of the bank increases as compared to last year‟s 2%. The operating fixed assets of National Bank of Pakistan shows a percentage of 2% in the year 2011. There was a slight decrease of 1% in 2011, The other assets of National Bank of Pakistan fluctuate during all years. The percentage of other assets is decreased to 6% in the year 2011 96
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Liabilities & Equity analysis The bills payable by National Bank of Pakistan indicates a stable percentage. The borrowings are increased in 2011 shows a percentage of 3%. The deposits and other liabilities of National Bank of Pakistan increased during all years. The share capital of National Bank of Pakistan shows a mixed trend in all years. It was 10% in 2010 and shows an increasing trend of 13% in 2011. The unappropriate profit & Reserves of National Bank of Pakistan is increased during all years Vertical analysis of Profit & loss account Rupees in „000‟ Particulars 2009 % 2010 % 2011 % Mark–up / return / interest earned 100% 100 % 100% Mark–up / return / interest expensed 49% 52% 51% Net mark–up / interest income 47% 49% 49% Provision against non performing 14% 8% 6% advances-net Provision for diminution in the value of .9% 3% 4% investments – net Impairment of goodwill .1% Provision against off balance sheet .1% -.oo2% obligations 15% 11% 10% Net mark–up / interest income after 33% 40% 39% provisions Non -mark–up / interest income Fee, commission and brokerage 11% 13% 11% income Dividend income 3% 1% 2% Income from dealing in foreign 4% 2% 3% currencies 97
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Gain on sale of securities – net 6% 3% 2% Unrealized gain on revaluation of investments .01% % 0.1% Share of loss from joint ventures (.1)% .009 0.1% Share of profits from associates .02% 0.1 % .1% Gain on revaluation of previously .2% equity interest Other income .7% 2% 3% Total non–mark–up / interest income 24.5% 20% 21% N 57% 58% 60% Administrative expenses 29% 31% 32% Other provision – net .8% .2% 0.6% Other charges .7% .1% 0.2% Total non–mark–up / interest expenses 31% 30% 33% Extra ordinary / unusual item 27% 28% 28% Profit before taxation 11% 11% 10% Taxation – Current year (5)% (1)% .3% – Prior years (1)% (3)% (9)% – Deferred 4% 7% 9% Profit after taxation 23% 20% 19% Interpretation. The interest earned by National Bank of Pakistan fluctuates and shows an increasing trend during all years. The interest expense of National Bank of Pakistan shows an decreasing trend during all years. In the year 2011, the interest expensed is 51%. The Fee, Commission & brokerage income of National Bank of Pakistan fluctuate and show a decreasing flow. The dividend income of National Bank of Pakistan is 98
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 show growing. Gain on sale of securities decreases in 2011. The Total non markup/ Interest income of National Bank of Pakistan fluctuates and indicates a mixed trend during all years. The administrative and operating expenses of National Bank of Pakistan are 32% in 2011, representing second highest percentage among all years The total non markup/ Interest expenses of National Bank of Pakistan are 30% in 2010 and increases 33% in 2011.current tax and profit decreases in 2011 as compared to 2010. 99
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Conclusion About Nation‟s Bank The economy of the country is booming and with the investment favorable policies and their smooth implementation, the role of banks in today‟s economy have become an important one. The banking industry is also reaping the fruits of this economic boom by growing rapidly over the past few years. There are a number of mergers happening in the economy with foreign investments coming into the banking sector. NBP has aimed to become the leading bank of Pakistan by that provides outstanding services to its customers. The bank has seen phenomenal growth in the past year by opening more branches in the country, increasing the deposit base, while also increasing the assets and profits of the bank. The services that provides have a great market penetration not only because of their features but also the profit and markup rates that they charge. Also the products that NBP provides cater to sector of the economy. The National Bank of Pakistan plays a key role in the strategic national development. The bank has historically been the financial arm of the government and has enjoyed the blessings of state support in the form of huge public sector funds and deposits. National Bank of Pakistan is the second largest bank of Pakistan by all means; National Bank of Pakistan is widely used as an agent for State Bank of Pakistan and is also involved in commercial banking. National bank of Pakistan has a vital role in Pakistan‟s banking history as well as in the economy of Pakistan, so it has a great significance. At present the national bank of Pakistan has improving its internal and external conditions, but due to the largest operations in Pakistan (because this is only bank which must cover the backward regions of the country where no any other commercial bank want to go) it still faces many problems, These problems are new marketing strategies, organizational and management problems at the branches of backward regions, and motivation. 100
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 I got a lot of experience from National Bank during my internship. During Internship I came to know that how different activities take place in organizations, what are the rules and procedures Followed in National Bank. National Bank of Pakistan is one of the leading in the Pakistan‟s Banking industry with almost 1283 plus national and 23 branches in foreign countries. The Bank is still growing and growing on the way of the prosperity. The management is highly qualified and experience in its fields. I had a very great opportunity to work as internee so as to gain an over view of practical life and working in industry before entering in practical life. Practical things and knowledge is very much different from the theory and bookish knowledge. I had a very great chance to gain practical experience and to implement my bookish and to very refine theoretical knowledge in practical things. Furthermore, as the bank is growing, the number of employees at NBP are increasing, which shows that NBP is being considered as an employer, that provides its employees with a challenging environment to work in, where they can harness their full potential and shows confidence as an employer by the employees of the bank. Lastly to become the leading bank of Pakistan, NBP has to benchmark its services to its major competitors in the industry or the market leader in the industry and provide a continuous mean of improvement in its existing products and services, while introducing new ones to the industry 101
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 Findings and Recommendations NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. The main regulatory body is State Bank of Pakistan, which provides policy guidelines and ensures that the money market operates on sound professional basis. The head office specifies the whole procedure of function and operations. This procedure has been modernized with the passage of time with a view to streamline the approach and underlying procedure for effective overhauling of its own capabilities so as to bring them at par with international practices. Here I am giving some recommendations, which in my view can add some input for efficiency and better performance of NBP as an organization in general and NBP Main Branch Jaranwala in particular. The recommendations are as follows:  Training of its employees The bank should improve the quality of training of its employees and the integrity, controls and efficiency of its systems, processes and financial reporting.  Job Rotation There should be Job rotation of employees, so that they should know about all departments. This will enhance the capabilities of the employees, as due to change in work they will escape monotony. This will refresh and motivate employees.  Equal Distribution of Workload The employees of the branch should be given equal workload.. Nobody should be given undue relaxation. The personal contacts of some of the employees should not spoil the environment of the branch  IT capability The Bank should improve IT capability in the analytical areas and to develop a medium term strategy for banking and market operations.  Micro Finance 102
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 The bank should provide support to the Micro, Small and Medium enterprises thereby reducing unemployment and helping to create a more equitable distribution of wealth.  Modern Banking The NBP should adopt modern banking tools and techniques. Quality leadership, clear vision, investment in IT infrastructure and human resource development.  Improve product NBP, being the only lending arm to the government for public sector development should design, develop and deliver product and services for economic growth  Proper Planning Bank should make a plan to gear up its recovery efforts on war footing and reorganize the recovery function of global bases. In addition, bank should tighten up control on expenditure  Supervision The National Bank of Pakistan should introduce a framework for consolidated supervision and reorganize the regulatory architecture to allow better regulation and supervision of financial control division of bank.  Adoption OF Advertising Bank should launch advertising campaigns through out the year to promote the habits of savings in the people. Bank should open more branches in the remote areas of the country to get deposits and idle resources.  Rank Influence Should Be Avoided Sometimes high rank officers come and want themselves to be given priority. In these cases bank should strictly follow the rule of „first come first serve‟. This will maintain the trust of other customers that they are not neglected just because they have no rank.  Consumer satisfaction The National bank of Pakistan has to improve services provided to the pensioners and also they have to adopt scientific methods of paying utility bills. If the consumers are satisfied from the service they will expand his business with the bank. 103
  • INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012 References Books of money banking finance 104