Nbp internship-report-on-national-bank-of-pakistan-2012

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Nbp internship-report-on-national-bank-of-pakistan-2012

  1. 1. NATIONAL BANK OF PAKISTAN INTERNSHIP REPORT Muhammad Farhan Javed Federal Urdu University Art Science & Technology Islamabad@M.Farhan Javed: This Is The Approved Internship Report Of National Bank Of Pakistan.
  2. 2. P a g e |2TABLE OF CONTENTSFederal Urdu University Art Science & Technology Islamabad......................................................................................1Table of Contents............................................................................................................................................................2Objectives of Studying the Organization........................................................................................................................6Brief History of National Bank of Pakistan......................................................................................................................7Nature of National Bank of Pakistan.............................................................................................................................10Business volume of National Bank of Pakistan.............................................................................................................12Branch Network of National Bank of Pakistan..............................................................................................................16Number of Employees of National Bank of Pakistan....................................................................................................18Product Lines.................................................................................................................................................................19 1.Deposits..................................................................................................................................................................20 a)Current Deposits................................................................................................................................................20 b)PLS Saving Deposits...........................................................................................................................................21 c)Fixed Deposit Account (Time Deposits).............................................................................................................22 d)Foreign Currency Account.................................................................................................................................22 e)NBP Premium Aamdani.....................................................................................................................................23 g)National Income Daily Account (NIDA)..............................................................................................................23 2.Advances................................................................................................................................................................25 a)NBP Saibaan.......................................................................................................................................................25 b)NBP Advance Salary...........................................................................................................................................26 c)NBP Cash & Gold................................................................................................................................................28 d)Students Loan Scheme.......................................................................................................................................28 e)NBP Karobar- President’s Rozgar Scheme.........................................................................................................28 3.Corporate Advances...............................................................................................................................................32 a)Cash Finance......................................................................................................................................................32 b)Running Finance/ Overdraft..............................................................................................................................32 c)Demand Finance.................................................................................................................................................32 4.Remittances...........................................................................................................................................................33 a)Demand Drafts...................................................................................................................................................33 b)Travelers Cheques..............................................................................................................................................34 c)Letter Of Credit ..................................................................................................................................................34 d)Foreign Remittances .........................................................................................................................................35 e)Swift System.......................................................................................................................................................35
  3. 3. P a g e |3 f)Mail Transfer.......................................................................................................................................................36 g)Telegraphic Transfer..........................................................................................................................................36 h)Pay Order...........................................................................................................................................................36 5.Miscellaneous........................................................................................................................................................37 a)Lockers...............................................................................................................................................................37 b)NBP Cash Card...................................................................................................................................................37 c)International Banking.........................................................................................................................................38Organizational Structure of National Bank of Pakistan................................................................................................39 Board of Directors.....................................................................................................................................................40 Senior Management..................................................................................................................................................42 1.Corporate & Investment Banking Group...........................................................................................................44 2.Compliance Group.............................................................................................................................................46 3.Islamic Banking Group.......................................................................................................................................47 4.Treasury Management Group............................................................................................................................48 5.Credit Management Group................................................................................................................................50 6.Audit & Inspection Group..................................................................................................................................51 7.Human Resource Management & Administration Group.................................................................................53 8.Information technology group...........................................................................................................................54 9.Financial control Division...................................................................................................................................55 10.Overseas Coordination & Management Group...............................................................................................56 11.Commercial & Retail Banking Group ..............................................................................................................58 12.Special Assets Management Group.................................................................................................................59 13.Employee Benefits, Disbursements & Trustee Division...................................................................................59 14.Core Banking Application.................................................................................................................................61 15.Operations Group............................................................................................................................................63 Provincial & Regional Management..........................................................................................................................63 Branch Management.................................................................................................................................................64Organizational (Management) levels at NBP................................................................................................................64 Top Managers...........................................................................................................................................................65 Middle Managers......................................................................................................................................................65 First Line Managers or Lower Level Management....................................................................................................66 Non Managerial Employees......................................................................................................................................66Hierarchy of National Bank of Pakistan........................................................................................................................66Organization Structure of the Branch...........................................................................................................................67
  4. 4. P a g e |4 a)Centralized Decision Making..................................................................................................................................68 b)Downward Communication...................................................................................................................................69 c)Chain of Command.................................................................................................................................................69 d)Authority and Responsibility.................................................................................................................................70 e)Delegation..............................................................................................................................................................70 ...................................................................................................................................................................................70Departments of the Branch..........................................................................................................................................71 1.Clearing House Department..................................................................................................................................71 2.Remittance Department........................................................................................................................................75 3.Account Opening Department...............................................................................................................................78 4.Cash Department...................................................................................................................................................79 5.Deposits Department.............................................................................................................................................81 6.Advances Department...........................................................................................................................................81 7.Computer Department...........................................................................................................................................83 a)Online branches.................................................................................................................................................83 b)Batch Branches..................................................................................................................................................83 c)Manual Branches................................................................................................................................................84 8.Pension Disbursement Department......................................................................................................................85 9.Accounts Department............................................................................................................................................86Structure of Branch’s Accounts Department................................................................................................................88Bank Accounting Operations.........................................................................................................................................92Role Of CFO (Chief Financial Officer)............................................................................................................................94Use of Electronic Data in Decision Making...................................................................................................................98 Information System Resources of NBP.....................................................................................................................99 a)People Resources...............................................................................................................................................99 b)Hardware Resources..........................................................................................................................................99 c)Software Resources..........................................................................................................................................100 d)Data Resources................................................................................................................................................100 e)Network Resources..........................................................................................................................................100Sources of Funds.........................................................................................................................................................101Generation of funds....................................................................................................................................................104Allocation of Funds.....................................................................................................................................................108Critical Analysis (Theory vs Practical) .........................................................................................................................112Balance Sheet..............................................................................................................................................................114
  5. 5. P a g e |5Income Statement.......................................................................................................................................................115Financial Statements Analysis.....................................................................................................................................116 Ratio Analysis..........................................................................................................................................................117 a)Profitability Ratios............................................................................................................................................117 b)Liquidity Ratios.................................................................................................................................................123 c)Debt Ratios.......................................................................................................................................................128 d)Capital Adequacy Ratios..................................................................................................................................131 e)Operating Performance Ratios........................................................................................................................132 Horizontal Analysis..................................................................................................................................................134 Horizontal Analysis of Balance Sheet......................................................................................................................136 Horizontal Analysis of Income Statement...............................................................................................................145 .................................................................................................................................................................................146 .................................................................................................................................................................................147 Vertical Analysis......................................................................................................................................................154 Vertical Analysis of Balance Sheet..........................................................................................................................155 Vertical Analysis of Income Statement...................................................................................................................164.....................................................................................................................................................................................165Bank Analysis with refernce to commercial Banks listed on stock exchange............................................................172Future prospects of National Bank of Pakistan..........................................................................................................175Short falls/ Weaknesses of National Bank of Pakistan...............................................................................................177Conclusions.................................................................................................................................................................180Recommendations......................................................................................................................................................181References...................................................................................................................................................................183
  6. 6. P a g e |6OBJECTIVES OF STUDYING THE ORGANIZATIONThe primary purpose of this study is to fulfillment of the requirements for the degree of MBA(Finance).For this connection each student of this particular course is required to undertaketraining in a relevant organization selected by them, for a period of 6-8 weeks.The secondary purpose of this internship is to understand how the theoretical knowledge can beapplied to the practical situations and examine an organization’s financial issues and identify itsopportunities/ problems and also suggest corrective measures. This internship is also verynecessary to gain confidence and become aware of the mechanism of an organization. As aninternee I want to achieve following objectives during my internship and organization study: 1. To familiarize with a business organization. 2. To familiarize with the different departments in the organization and their functioning. 3. To enable myself to understand how the key business process are carried out in organization. 4. To understand how information is used in an organization for decision making at various levels. 5. To relate theory with practice. 6. I was also keen to gain professional experience in an actual testing environment. 7. I want to develop my skills in the application of theory to practical work situations. 8. To develop my attitude conducive to effective interpersonal relationships. 9. To acquire good work habits and sense of responsibility. 10. To enhance my learning experience by application of fundamental concepts previously learned. 11. To observe, analyze and interpret the relevant data competently and in a useful manner.
  7. 7. P a g e |7 12. To develop my interpersonal communication. 13. I want to enhance my knowledge of the discipline of banking administration.BRIEF HISTORY OF NATIONAL BANK OF PAKISTANThe history of National Bank of Pakistan is part of Pakistan’s struggle for economicindependence. National Bank of Pakistan was established on November 9, 1949 under theNational Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions whichwere 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 setaside and the Bank was established through the promulgation of an Ordinance, due to the crisissituation that had developed with regard to financing of jute trade. The Bank commenced itsoperations from November 20, 1949 at six important jute centers in the then, East Pakistan anddirected its resources in financing of jute crop. The Bank’s Karachi and Lahore offices weresubsequently opened in December 1949. The National Bank of Pakistan came forward toestablish its offices in the Cotton growing areas and extended credit facilities liberally in order torestore stability to the market. In 1951, the country was once again faced with a crisis in thecotton trade when prices was crashed and touched the lowest level since independence followingthe cessation of hostilities in Korea. The bank in collaboration with the cotton board provided thenecessary Credit facilities to the trade and the crisis was tided over. The nature ofresponsibilities of the Bank is different and unique from other banks/financial institutions. TheBank acts as the agent to the State Bank of Pakistan for handling Provincial/Federal GovernmentReceipts and Payments on their behalf. The Bank has also played an important role in financingthe country’s growing trade, which has expanded through the years as diversification took place.1The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The bank operates1249(2008) branches in Pakistan and 22(2008) overseas branches. Under a trust Deed, the bankalso provides services as trustee to National Investment Trust (NIT) including safe custody of
  8. 8. P a g e |8securities on behalf of NIT. The National Bank of Pakistan has assets worth Rupees 737976.44million on September 30, 2008.2National Bank of Pakistan is today a progressive, efficient, and customer focused institution. Ithas developed a wide range of consumer products, to enhance business and cater to the differentsegments of society. Some schemes have been specifically designed for the low to middleincome segments of the population. These include NBP Karobar, NBP Advance Salary, NBPSaibaan, NBP Kisan Dost, and NBP Cash n Gold.The National Bank of Pakistan has implemented special credit schemes like small finance foragriculture, business and industries, administrator to Qarz-e-Hasna loans to students, selfemployment scheme for unemployed persons, public transport scheme. The Bank has expandedits range of products and services to include Shariah Compliant Islamic Banking products. Forthe promotion of literature, NBP recently initiated the Annual Awards for Excellence inLiterature. NBP will confer annual awards to the best books in Urdu and in all prominentregional languages published during the defined period. Patronage from NBP would helpcreative work in the field of literature. The Bank is also the largest sponsor of sports in Pakistan.It has provided generously to philanthropic causes whenever the need arose.It has taken various measures to facilitate overseas Pakistanis to send their remittances in aconvenient and efficient manner. In 2002 the Bank signed an agreement with Western Union forexpanding the base for documented remittances. More recently it has started Electronic HomeRemittances Project. This project introduces technology based system to handle inwardremittances efficiently, by ensuring that the Banks branches keep a track of the remittancereceived from abroad till its final receipt.A number of initiatives have been taken, in terms of institutional restructuring, changes in thefield structure, in policies and procedures, in internal control systems with special emphasis oncorporate governance, adoption of Capital Adequacy Standards under Basel II framework, in theup gradation of the IT infrastructure and developing the human resources.National Bank has earned recognition and numerous awards internationally. It has been therecipient of The Bank of the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine,the Best Foreign Exchange Bank –– Pakistan for 2004, 2005, 2006 and 2007, Global Finance,
  9. 9. P a g e |9Best Emerging Market Bank from Pakistan for the year 2005, Global Finance, Kisan TimeAwards – 2005 for NBPs services in the agriculture field. It is listed amongst the Regionslargest banks and also amongst the largest banks in South Asia 2005, The Asian Banker. It hasalso been presented a Recognition Award –– 2004 for having a Gender Sensitive Managementby WEBCOP AASHA besides other awards.3 The precise summary of National Bank of Pakistan regarding its countrywide and overseasoperations is as fallows: • 1949 National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance 1949 and was 100% govt.-owned. NBP acted as an agent of the Central Bank wherever the State Bank did not have its own Branch. It also undertook Government Treasury operations. Its first branches were in jute growing areas in East Pakistan. Offices in Karachi and Lahore followed. • 1950 NBP established a branch in Jeddah, Saudi Arabia. • The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the former Bahawalpur State • 1955 By this time NBP had branches in London and Calcutta. • 1957 NBP established a branch in Baghdad, Iraq. • 1962 NBP established a branch in Dar-es-Salaam, Tanganyika. • 1964 The Iraqi government nationalized NBPs Baghdad branch. • 1965 The Indian government seized the Calcutta branch on the outbreak of hostilities between India and Pakistan. • 1967 The Tanzanian government nationalized the Dar-Es-Salaam branch. • 1971 NBP acquired Bank of Chinas two branches, one in Karachi and one at Chittagong. At separation of East Pakistan NBP lost its branches there. NBP merged with Eastern Mercantile Bank and with Eastern Bank Corporation.
  10. 10. P a g e | 10 • 1974 The government of Pakistan nationalized NBP. As part of the concomitant consolidation of the banking sector, NBP acquired Bank of Bahawalpur (est. 1947). • 1977 NBP opened an offshore brain Cairo. • 1994 NBP amalgamated Mehran Bank (est. 1991). • 1997 NBPs branch in Ashgabat, Turkmenistan commenced operations. • 2000 NBP opened a representative office in Almaty, Kazakhstan. • 2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani banks to operate in the UK. NBP and United Bank agreed to merge their operations to form Pakistan International Bank, of which NBP would own 45% and United Bank 55%. • 2003 NBP received permission to open a branch in Afghanistan. • 2005 NBP closed its offshore branch in Cairo.NATURE OF NATIONAL BANK OF PAKISTANNational Bank of Pakistan was incorporated in Pakistan under the National Bank of PakistanOrdinance, 1949 and is listed on all the stock exchanges in Pakistan. The bank is engaged inproviding commercial banking and related services in Pakistan and overseas. The bank operates1,249 (2007:1,232) branches in Pakistan and 22 (2007:18) overseas branches (including theExport Processing Zone branch, Karachi). Under a Trust Deed, the bank also provides servicesas trustee to National investment Trust (NIT) including safe custody of securities on behalf ofNIT.4The nature of responsibilities of the Bank is different and unique from other banks/financialinstitutions. The bank also handles treasury transactions for the Government of Pakistan as anagent to the State Bank of Pakistan for handling provincial/Federal Government receipts andpayments on their behalf. The National Bank of Pakistan has also played an important role infinancing the country’s growing trade, which has expanded through the years as diversification
  11. 11. P a g e | 11took place. The bank is providing all banking services of mercantile and commercial bankingpermissible in the country, which include: • Accepting of deposits of money on current, fixed, saving, term deposit and profit and loss sharing accounts. • Borrowing money and arranging finance from other banks. • Advancing and lending money to its clients. • Financing of projects, including technical assistance, project appraisal through long term/ short term loans, term finance and musharika certificates, etc. • Buying, selling, dealing, including entering into forward contracts of foreign exchange. • Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc. • Receiving of bonds, valuables, etc. for safe custody. • Carrying on agency business for any description other than managing agent, on behalf of clients including Government and local authorities. • Generating, undertaking, promoting, etc. of issue of shares and, bonds etc. • Transacting guarantee and indemnity business. • Undertaking and executing trusts. • Joint venturing with foreign dealers, agents and companies for its representation abroad. • Participating in “World Bank” and “Asian Development Bank’s” lines of credit. • Providing personalized Hajj services to intending Hajjis.
  12. 12. P a g e | 12BUSINESS VOLUME OF NATIONAL BANK OF PAKISTANRupees inMillionsYear 2004 2005 2006 2007 2008Total Assets 553,231,467 577,719,114 645,132,711 762,193,593 817,758,326Deposits 465,571,717 463,426,602 501,872,243 591,907,435 624,939,016Advances 220,794,075 268,838,779 316,110,406 340,677,100 412,986,865Reserves 10,813,914 13,536,041 13,879,260 15,772,124 19,941,047Investments 149,350,096 156,985,686 139,946,995 210,787,868 170,822,491 Horizontal Analysis (%)Total Assets 100 104 117 138 148Deposits 100 100 108 127 134Advances 100 122 143 154 187Reserves 100 125 128 146 184Investments 100 105 94 141 114The business volume of National Bank of Pakistan is stated in terms of total assets, deposits,advances, reserves and investments. To analyze the trend in these items the Horizontal analysisof each item is calculated.
  13. 13. P a g e | 13A NALYSISThe Total Assets of National Bank of Pakistan fluctuates during all years as they show anincreasing trend. The total assets are increased 4 % in 2005 and 17 % in 2006. The year 2007represents second highest percentage on account of total assets as it was increased to 38%. Therewas an increase of 48 % in 2008 as compare to base year and 10% as compare to 2007.A NALYSISThe deposits and other accounts of National Bank of Pakistan show a mixed trend during allyears. In the year 2005, the deposits were increased very marginally, with the year 2006represents an increase of 8%. The deposits are increased 27% & 34% in the years 2007 and 2008respectively.
  14. 14. P a g e | 14A NALYSISThe advances made by National Bank of Pakistan shows an increasing trend in all years ascompare to base year. This implies that National Bank of Pakistan is keener to advance money tolenders. The advances were increased 22 % in the year 2005 and 43 % in 2006 as compare tobase year. The year 2007 represents an increase of 54 % and 2008 represents highest percentageamong all years that is 87 % as compare to base year.A NALYSISThe Banks’ reserves are banks holdings of deposits in accounts with their central bank pluscurrency that is physically held in bank vaults (vault cash). The reserves of National Bank ofPakistan fluctuate during all years as they show an increasing trend. The reserves are increased25 %, 28 % & 46 % in the years 2005, 2006 & 2007 respectively. The year 2008 representshighest increasing percentage of 84% as compare to base and previous years.
  15. 15. P a g e | 15A NALYSISThe investments made by National Bank of Pakistan fluctuate during all years. There was anincrease of 5 % in 2005. The year 2006 indicates a decrease of 6% in investments. The year 2007represents an increase of 41 %, highest among all years. The investments are increased 14 % in2008 as compare to base year; however investments are decreased 27 % as compare to the year2007.
  16. 16. P a g e | 16BRANCH NETWORK OF NATIONAL BANK OF PAKISTANWith the geographical development of its branches, the National Bank of Pakistan has been ableto extend its services to a much larger number of Pakistanis all over the country. Today the Bankhas more than 8.8 million accounts & Bank maintains its presence in all the major financialcenters of the world through its 22 (2008) overseas branches and 5 representative offices. Ofthese, three representative offices have recently been set up at Tashkent (Uzbekistan), Baku(Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIScountries. Bank’s role Apart from having a vast branch network, Bank is at the forefront in theacquisition and application of new technologies in every aspect of its banking facilities. It hasacquired leased telephone lines for on-line banking. The Bank has 12 Regional ComputerCenters to cover various on-line and batch system requirements of branches and controllingoffices.Presently the National Bank of Pakistan is divided into various Groups headed by SEVPs/EVPs.Its field operations are controlled by 29 regions ( Annexed II) reporting to as many Regionalchiefs, who control 40 zones and 15 single Branch zones headed by Zonal Chiefs; 12 corporatebranches and 1249 domestic branches headed by Branch Managers. The bank has 12 SWIFTlocal centers.Apart from having a vast branch network, Bank is at the forefront in the acquisition andapplication of new technologies in every aspect of its banking facilities. It has acquired leasedtelephone lines for on-line banking. Bank has also a presence on the internet. The National Bank
  17. 17. P a g e | 17of Pakistan has 156 online branches throughout the country. It has modernized its services byinstalling 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 andoperational policies.The Banks geographical organization consists of branches located in the regional capitals and insome provincial capitals. The branches activities relate to the State treasury service, paymentsystem services, currency circulation, banking and financial supervision, and the analysis ofeconomic and financial developments at the local level.The Bank has representative offices abroad, in London, New York and Tokyo; a number ofofficers are seconded as financial experts to Italian embassies and consulates. The Bank hasrepresentative offices in Beijing, Tashkent, Chicago and Toronto. It has agency arrangementswith more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd,NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd,and CJSC Bank, Almaty, Kazakhstan. The Banks joint ventures are, United National Bank(UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture withNIB Bank & Fullerton Fund Management of Singapore).5The Branch network of National Bank of Pakistan is divided into following categories • ATM network ( Total ATMs 101 & Total ATMs machines 104) • Domestic network ( 1249 Branches) • Islamic network ( 5 Branches) • Online network ( 156 Branches) • Overseas network ( 29 Branches) • Swift network ( 12 Branches) • Customer Facilitation Centers (6 Customer Facilitation Centers)
  18. 18. P a g e | 18 • Agriculture branches ( 825 Branches)NUMBER OF EMPLOYEES OF NATIONAL BANK OF PAKISTANPermanent 13237Temporary/ On Contractual basis 842Banks own staff strength at the end of the year 14079Outsourced 2350Total Staff Strength 16429An employee may be defined as: "A person in the service of another under any contract of hire,express or implied, oral or written, where the employer has the power or right to control anddirect the employee in the material details of how the work is to be performed." 6An employeecontributes labor and expertise to an endeavor. Employees perform the discrete activity ofeconomic production. Of the three factors of production, employees usually provide the labour.Specifically, an employee is any person hired by an employer to do a specific "job". In mostmodern economies, the term employee refers to a specific defined relationship between an
  19. 19. P a g e | 19individual and a corporation, which differs from those of customer, or client. The relationshipbetween National Bank of Pakistan and its employees is usually handled through the HumanResource Management & Administration Group & Employees benefit disbursement & trusteedivision. These groups handle the incorporation of new hires, and the disbursement of anybenefits which the employee may be entitled, or any grievances that employee may have.There are differing classifications of workers within National Bank of Pakistan, these are: • Permanent • Temporary / On Contractual • OutsourcedThe Employees of National Bank of Pakistan are organizing into trade unions, which representmost of the available work force in National Bank of Pakistan. These trade Unions utilize theirrepresentative power to collectively bargain with the management of bank in order to advanceconcerns and demands of their membership.PRODUCT LINESThe most precise definition of product is anything capable of satisfying needs, including tangibleitems, services and ideas. In marketing, a product is anything that can be offered to a market thatmight satisfy a want or need.7 Since 1575, the word "product" has referred to anything produced.Since 1695, the word has referred to "thing or things produced”. The economic or commercialmeaning of product was first used by political economist Adam Smith. In general usage, productmay refer to a single item or unit, a group of equivalent products, a grouping of goods orservices, or an industrial classification for the goods or services. The consumer banking productsinclude personal accounts, credit cards, loans, investment products, treasury products and manymore. The National Bank of Pakistan offering for sale several related products individually,which is commonly known as product lining. A product line is defined as “A group of productsthat are closely related because they function in a similar manner, are sold to the same customer
  20. 20. P a g e | 20groups, are marketed through same types of outlets, or fall within the given price ranges”. 8 Thefollowings are the main consumer banking products of NBP. 1. DEPOSITSThe National Bank of Pakistan offers to their clients a variety of Deposit Schemes withpersonalized services at competitive rates of interest. Any Pakistani citizen can open his/heraccount for any deposit scheme at any of its Branches strategically located throughout Pakistan.The Bank with its huge network of 1243 branches garners savings from both the rich and thepoor in urban as well as rural areas. Even a poor farmer in a remote village, with his meagerannual income, feels secure to safe keep his minuscule savings in National Bank of Pakistan,Because National Bank of Pakistan has a long heritage of trust and professional commitment. A) CURRENT DEPOSITSThese are payable to the customer when ever they are demanded. When a banker accepts ademand deposit, he incurs the obligation of paying all cheques etc, drawn against him to theextent of the balance in the account. Because of their nature, these deposits are treated as currentliabilities by the banks. Bankers in Pakistan do not allow nay profit on these deposits, andcustomers are required to maintain a minimum balance, failing which incidental charges arededucted from such accounts. This is because Current Deposits may be withdrawn by thedepositors at any time, and as such the bank is not entirely free to employ such deposits. 9 CurrentAccounts/ Basic Banking accounts are opened, on proper introduction and submission ofrequired documents along with initial deposit prescribed from time to time. Basic bankingaccounts are opened for an individuals (single or joint) only whereas current accounts are openedfor individuals (single or joint) Charitable institution, provident and other funds of benevolentnature of local bodies, autonomous corporations, companies, associations, educationalinstitutions, firms etc. and in all other cases where the accounts are to opened under the order ofa competent court of law. No profit is paid on the balances of current/basic banking accounts.The bank is authorized to deduct service charges (incidental charges) on current accounts leviedthrough its half yearly schedule of charges, in case the average balance falls below the minimumbalance as prescribed by the bank. No balance maintenance condition is applied on basic bankingaccount.
  21. 21. P a g e | 21 B) PLS SAVING DEPOSITSIn Pakistan a Savings Deposits Account can be opened with a very small amount of money, andthe depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate calculatedon six monthly basis under the Interest Free Banking System. There is no restriction on thewithdrawals from the deposit accounts but the amount of money withdraw is deleted from theamount to be taken for calculation of products for assessment of profit to be paid to the accountholder. It discourages unnecessary withdrawals from the deposits. In order to popularize thescheme the SBP has allowed the Savings Scheme for school and college students and industriallabour also. The purpose of these accounts is to inculcate the habit of savings in the constituents.As such, the initial deposits required for opening these accounts are very nominal. 10NBP chargeRs.500 for opening of PLS Savings deposits.The silent features of profit and loss sharing and saving accounts of NBP are as fallows 1. These accounts can be opened by individuals in their own single or joint name. The PLS savings account can also be opened for provident fund or other benevolent funds of companies, firms, organizations, NGO’s and educational institutions. 2. PLS saving account can be opened with a minimum amount of Rs.500/- only 3. To share in the profit a minimum balance of Rs.500/- must be maintained in the account. The minimum balance on sixth and last of month will qualify for the profits. The profits will be calculated on the basis of monthly minimum balance for the periods of six months i.e. from January to June and July to December 4. The head office of NBP determines the profit or loss on PLS saving deposits and advice its branches the rate and time of distribution of these profits. 5. There shall be no restrictions on maintaining the maximum balance in PLS saving account. 6. On the first day of Ramzan each year the Zakat at the rate of 2.5% will be deducted from these deposits on the balance of that day. But if depositors affix an affidavit of Zakat
  22. 22. P a g e | 22 deduction along with account opening form or he is a non-Muslim, no Zakat will be deducted from his account. C) FIXED DEPOSIT ACCOUNT (TIME DEPOSITS)The deposits that can be withdrawn after a specified period of time are referred to as Fixed orTerm Deposits. The period for which these deposits are kept by the bank ordinarily varies fromthree months to five years in accordance with the agreement made between the customer and thebanker. Profit/Return is paid to the depositors on all fixed or Time deposits, and the rate ofprofit/Return varies with the duration for which the amount is kept with the banker. By lendingout or investing these funds, the bank earns more than the Profit/Return that it has to pay on themto the depositors.11 By giving an advance notice to the bank the deposit can be withdraw fromthe bank before the expiry of the period. Fixed deposit accounts have higher rate of interest ascompare to other accounts. The rate of interest rises with the length of period and the amount ofdeposit. The bank grants to the depositor a fix deposit (FDR) which is not transferable to anyother person. The silent features of fixed deposit account of NBP are as fallows 1. The PLS term deposit are opened for individuals in their own single or joint names, companies firms and other organizations. 2. The PLS term deposit receipt are issued for any amount. There is minimum or maximum limit or deposits in a single term deposit account. 3. PLS term depositors may be allowed some facilities against the security of these receipt credits, after making “Lien” on the relevant receipt and subject to recovery of service charges. 4. Under term deposit scheme the depositors not cease to earn the profit immediately, after the respective maturity date. D) FOREIGN CURRENCY ACCOUNTGovernment of Pakistan has introduced many important reforms in Foreign Exchange Control inthe country since February, 1990, for the purpose of strengthening the Foreign ExchangeReserves. One of these reforms relates to foreign currency accounts, which can be opened inUnited States Dollars, Pound Sterling, Euro and Japanese Yen in any of the authorized branches
  23. 23. P a g e | 23of commercial banks throughout the country. 12 Foreign currency accounts are opened, on properintroduction and submission of required documents along with an initial deposit prescribed fromtime to time. Rates of return on foreign currency deposits are subject to fluctuation as determinedin accordance with State Bank of Pakistan directives and will be paid on six monthly basiswhereas the return on term deposit/SNTD will be paid on maturity or as prescribed by SBP. Thebank shall have no responsibility for or liability to the account holders for any diminution due totaxes imposed or depreciation in the value of funds credited to the account whether due todevaluation or fluctuation in the exchange rate or other wise. E) NBP PREMIUM AAMDANINBP Premium aamdani is a retail product of the bank. The amount of investment required forthis account is Rs. 20,000/-to Rs. 5,000,000.The investment period is 5 years. Zakat andwithholding tax will be deducted as per rules. In NBP premium aamdani, the account holdershave benefit of free demand draft, pay order; free cheque book and NBP cash card(ATM+Debit). The Financing facility is available up to 90% of the deposit value. 13 Profit paidevery period as follows: Period Profit Rates 1st year 7.50% 2nd years 8.50% 3rd years 9.50% 4th years 10.50% 5th years 11% f) NBP Premium SaverNBP Premium saver is a retail product of the bank. The minimum saving balance of Rs. 20,001and a maximum balance of Rs. 300,000 are required for opening a premium saver account. Twodebit withdrawals allowed in a month and no limit on number of deposit transactions. The profitis calculated monthly and Paid on half yearly basis. Free NBP Cash Card (ATM + Debit) facilityis available to account holder.14 G) NATIONAL INCOME DAILY ACCOUNT (NIDA)The scheme of National income daily account was launched in December 1995 to attractcorporate customers. It is a current account scheme and is part of the profit and loss system of
  24. 24. P a g e | 24accounts in operation throughout the country. Deposits in the NIDA accepted on the conditionthat the depositor shall always maintain a minimum balance as prescribed by the bank in hisaccount. In the event however, that any depositor wishes to withdraw the amount and the balancein his account is less than the required amount, the account will be converted to the ordinary PLSSB account for the purpose of calculating profit. An example of how the NIDA accounts aremaintained is shown on the next page.R ATES ON N ATIONAL INCOME DAILY ACCOUNT • From Rs 2/- million to Rs 50/- the rate is 1.4%. • From Rs50/- million but less than Rs 500/-million, the rate is 1.5%. • From Rs 500/- million but below Rs 1000/- the rate is 1.6%. • From Rs 1000/- and above the rate is 1.75%.S ALIENT F EATURES • Rs 2-million is required to open an account and there is no maximum limit. • Profit is paid on half yearly basis on monthly balances. • The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2 million to 2,000 million, the rate fluctuates from 1.4 to 1.75 • It is a checking account and there is no limit of withdrawals.NIDA 1 Date Description of Transaction C Debit (-) Credit (+) Balance Days Products 01/05/2008 Balance 10,000,000 10,000,000 05/05/2008 Cash 500,000 9,500,000 4 38000000
  25. 25. P a g e | 25 08/05/2008 Cash 100,000 9,600,000 3 28800000 11/05/2008 Transfer 75,000,000 84,600,000 3 253800000 15/05/2008 Cash 3,000,000 81,600,000 4 326400000 18/05/2008 Cash 78,600,000 160,200,000 3 480600000 20/05/2008 Cash 1,000,000 159,200,000 2 318400000 22/05/2008 Cash 5,000,000 164,200,000 2 328400000 23/05/2008 Cash 700,000 163,500,000 1 163500000 25/05/2008 Cash 10,000 163,510,000 2 327020000 27/05/2008 Cash 300 163,509,700 2 327019400 31/05/2008 Transfer 500,000 164,009,700 4 656038800 01/06/2008 Cash 2,100,000 161,909,700 1 161909700 06/06/2008 Transfer 36,000,000 197,909,700 5 989548500 10/06/2008 Cash 9,870,000 188,039,700 4 752158800 2. ADVANCESNational Bank of Pakistan plays a pivotal role in translating the governments development plansin terms of growth in industrial, commercial and agricultural sectors in Pakistan. Accordingly theBank has formulated its Credit Policy under the guidelines of SBP-the Central Bank of Pakistan. A) NBP SAIBAANThe NBP Saibaan is retail product of the bank. It has different product items which are homepurchase, home construction, home renovation and purchase of land plus construction. If anyonehas a Home Finance Facility outstanding with another bank he can have it transferred to NBPthrough a hassle-free process. 15 A brief description of these products is as fallows
  26. 26. P a g e | 26TYPE OF ADVANCE Financing Amount Financing Period Debt to equity RatioHome Purchase (House or Apartment) Rs. 35 Million 3 to 20 years 85:15 (maximum)Home Rs. 35 Million 3 to 20 years 85:15 (maximum)ConstructionHome Renovation Rs. 15 Million 3 to 15 years 80:20 (maximum)Purchase of land Plus Construction Rs.35 Million 3 to 20 years 80:20 (maximum) B) NBP ADVANCE SALARYThe NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary, theleading personal loan product of the country, is maintaining its inimitability ever since it waslaunched. This was only possible due to its swift growth and remarkable loan disbursement ofover 118 billion.16 You can avail up to 20 net take home salaries with easy repaymentinstallments. Its hassle free acquisition with no prior formalities and easy availability in a shortturn around time is attributed as the most distinguishing features of the product. The product isoffered countrywide. The terms and conditions of NBP Advance salary is shown on next page:T ERMS & C ONDITIONS Eligibility Permanent Employees of Govt., Semi-Govt., Autonomous, Semi Autonomous, Local & other bodies who are maintaining their Salary A/Cs at NBP. Repayment Direct deduction from Salary A/C Maximum Loan Rs. 490,000/- Amount Security Employer will provide undertaking that borrower’s Salary and end of service benefits will route through his/her Salary A/C maintained at NBP during the tenure of the loan and his/her end of service benefits are at least equal to the amount of Advance Salary required. Hypothecation of Consumer durables owned by the
  27. 27. P a g e | 27 borrower. Three (3) Undated ChequesMax. Repayment 5 years (60 months)PeriodAdvance in terms of # Up to 20 net take home salariesof net take homesalariesMarkup Rate 15 % (Based on diminishing balance method)Processing Fee 1% of Loan AmountVerification Charges Rs 500/-Life Insurance No Insurance of any kind.Documentation at actualChargesContact Your Salary disbursing NBP Branch.Remaining Service At the time of approval and disbursement the applicant’sAge remaining service age should be 6 months after maturity of the loanDebt Burden 50%Minimum net take no minimum take home requirementhome salary
  28. 28. P a g e | 28 C) NBP CASH & GOLDWith NBP’s Cash & Gold, the customers meet their need for ready cash against their idle goldjewelry. The rate of mark up is 13% p.a. This product has following features17 • Facility of Rs. 7,000 against each 10 grams of net contents of gold • No maximum limits of cash • Repayment after one year • Only gold ornaments acceptable • Weight and quality of gold to be determined by NBPs appointed schroffs • No penalty for early repayment D) STUDENTS LOAN SCHEMEPursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budgetspeech, a Student Loan Scheme (SLS) for Education was launched by the Government ofPakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB andABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to themeritorious students who have financial constraints for pursuing their studies in Scientific,Technical and Professional education within Pakistan. The Scheme is being administered by ahigh powered committee comprising Deputy Governor, State Bank of Pakistan, Presidents of thecommercial banks and representative of Ministry of Finance, Government of Pakistan. 18 E) NBP KAROBAR- PRESIDENT’S ROZGAR SCHEMEThe solution of Pakistan’s major socio-economic problems primarily lies in the development andgrowth of small & micro businesses. These will not only provide employment opportunities toever-growing population demand but will also become the catalyst for breaking the vicious circleof poverty. In this regard, NBP has developed a full range of Products under the President’sRozgar Scheme with a brand name of “NBP KAROBAR”. The scheme will be offered to eligible
  29. 29. P a g e | 29young and literate citizens of Pakistan, falling within an age group of 18-40 years having aminimum qualification of Matriculation (except for females in the PCO/Tele-center product).The eligible borrowers will be required to make a down payment of 15%. Asset and Life &Disability insurances will be mandatory under this scheme. The 15% down payment will include1st year’s asset insurance premium. However, the cost of life and disability insurance will beborne by GOP. The mark-up rate for the 1st year will be 12% and for the subsequent years it willbe 1 year KIBOR + 2%. Fifty percent (50%) of this rate will be paid by the customer i.e. 6% andthe balance of 6% will be borne by GOP. Additionally, first 10% of the losses under the schemewill be taken-up by GOP. Initially, under the President’s Rozgar scheme, NBP will offerfollowing products: a) NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation) b) NBP Karobar Mobile General Store (without USC Franchise) c) NBP Karobar Transport d) NBP Karobar PCO e) NBP Karobar Tele-center A) NBP K AROBAR U TILITY S TOREThe product has been designed in collaboration with “UTILITY STORES CORPORATION OFPAKISTAN (USC)” to provide financing facility of an average amount of Rs.100, 000/- for amaximum period of five years with grace period of three months. This is available to all eligiblecitizens of Pakistan for setting-up small-scale Retail Outlet or Mobile Utility Store. The USCwill give its franchise to qualifying Pakistani citizens. Following two financing options areavailable under this product: 1. NBP KAROBAR Utility Store (Shop)The Financing facility is available to set-up a small scale Retail Outlet (Utility Store in a shop)for purchase of furniture & fixtures. This is also applicable on payment of security deposit /advance rent under franchise from the USC. However, stocks will be purchased by the customer.
  30. 30. P a g e | 30 2. NBP KAROBAR Mobile Utility StoreFinancing facility available to purchase a 2/3 wheeler, 4 stroke Petrol/CNG/LPG Vehicle (AutoScooter / Motorcycle Rickshaw) with attached Loader body (Thehla type) under franchise fromthe USC to carry utility goods for retail sale ideally in areas where accessibility to conventionalutility stores is difficult. B) NBP K AROBAR M OBILE G ENERAL S TORE ( WITHOUT USC F RANCHISE )This financing program has been designed on the similar pattern of Mobile Utility Store. Theonly difference is that the borrower will have the liberty of procuring stock/supplies/groceryitems from open market. Under this product the average loan size of Rs.100, 000/- will be givenfor a maximum period of five years with a grace period of three months. C) NBP K AROBAR T RANSPORTThe NBP Karobar Transport is designed to finance 2/3 wheeler, 4 stroke Petrol/CNG/LPGVehicle (Auto Scooter / Motorcycle Rickshaw) to the eligible citizens of Pakistan for providingless expensive environment friendly transport facility. Under this product average loan size ofRs.100, 000/- will be provided for a maximum period of five years with a grace period of threemonths. D) NBP K AROBAR PCOThis product is designed to finance setting-up a PCO. NBP will be providing financing for thepurchase of Mobile/Wireless Telephone Set with connection, Credit Balance. The averageamount of financing under this product will be Rs.5, 000/- for a maximum period of two yearswith a grace period of three months. E) NBP K AROBAR T ELE - CENTERThis product is specially designed to finance setting-up a Tele-center. NBP will be providingfinancing for the purchase of Mobile/Wireless Telephone Set with connection, Computer, Printerand Fax machine cum Photocopier etc. to establish tele-center on a rented shop or ownedpremises. The average amount of financing under this product will be Rs.50, 000/- for amaximum period of two years with a grace period of three months.
  31. 31. P a g e | 31
  32. 32. P a g e | 32 3. CORPORATE ADVANCES A) CASH FINANCEThis is a very common form of borrowing by commercial and industrial concerns and is madeavailable either against pledge or hypothecation of goods, produce or merchandise. In cashfinance, a borrower is allowed to borrow money from the banker up to a certain limit, either atonce or as and when required. The borrower prefers this form of lending due to the facility ofpaying markup/services charges only on the amount he actually utilizes. If the borrower does notutilize the full limit, the banker has to lose return on the un-utilized amount. In order to offsetthis loss, the banker may provide for a suitable clause in the cash finance agreement, accordingto which the borrower has to pay markup/service charges on at least on self or one quarter of theamount of cash finance limit allowed to him even when he does not utilize that amount. B) RUNNING FINANCE/ OVERDRAFTThis is the most common form of bank lending. When a borrower requires temporaryaccommodation his banker allows withdrawals on his account in excess of the balance which theborrowing customer has in credit, and an overdraft thus occurs. This accommodation is generallyallowed against collateral securities. When it is against collateral securities it is called “SecuredOverdraft” and when the borrowing customer cannot offer any collateral security except hispersonal security, the accommodation is called a “Clean Overdraft”. The borrowing customer isin an advantageous position in an overdraft, because he has to pay service charges only on thebalance outstanding against him. The main difference between a cash finance and overdraft liesin the fact that cash finance is a bank finance used for long term by commercial and industrialconcern on regular basis, while an overdraft is a temporary accommodation occasionally resortedto. C) DEMAND FINANCEWhen a customer borrows from a banker a fixed amount repayable either in periodic installmentsor in lump sum at a fixed future time, it is called a “loan”. When bankers allow loans to their
  33. 33. P a g e | 33customers against collateral securities they are called “secured loans” and when no collateralsecurity 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 afixed amount of money for his use, while the banker feels satisfied in lending money in fixedamounts for definite short periods against a satisfactory security. 4. REMITTANCES A) DEMAND DRAFTSDrafts drawn by one branch on another branch or on the Head Office of same bank or vice versa,are not cheques or bills, as these have no distinct drawer and drawee. Section 85-A reads:“ Where any draft, that is, an order to pay money, drawn by one office of bank upon anotheroffice of the same bank for a sum of money payable to order on demand, purports to be issued byor on behalf of the payee, the bank is discharged by payment in due course”.Banker’s drafts payable to order on demand are within the protection of Sections 10 and 131-Aof the Negotiable Instruments Act. However, if a demand draft drawn on a bank by its ownbranch bears a forged endorsement, the person in possession of it cannot compel that bank to payit. As far as possible the banker’s draft should be crossed and it should never be drawn payableto bearer.When a person requires a draft he should be asked to complete the prescribed application form inwhich he should state the amount of the draft, the name of the payee, and the place of payment.This application form should be signed by the purchaser or by those persons who have been dulyauthorized to act on his behalf. When a customer requests his banker to provide him with abanker’s draft, the amount of which is to be debited to his account, he should enclose with hiswritten request a cheque covering the amount of the required draft and other charges etc. payableto banker.19
  34. 34. P a g e | 34The National Bank of Pakistan provides demand drafts at very reasonable rates with safety,speedy and reliable way to transfer money. Any person whether an account holder of the bank ornot, can purchase a Demand Draft form a bank. B) TRAVELERS CHEQUESThey are generally issued for the convenience of person travelling abroad, but some Pakistanibanks issue them in Pakistan currency also for use within the country as well. Before issuing, thebankers receive an amount equal to the face value of the cheques, and also charge a smallcommission. The travelers’ cheques are for fixed amount and are treated as Order chequespayable only to the purchaser whose specimen signature appears on each traveler’s cheque itself.Foreign currency travelers cheques are issued and encashed in accordance with the provisions ofthe Exchange Control Regulation Act, 1947. While making payment, the paying banker mustinsist that the holder signs in his presence.20The National Bank of Pakistan provides their services for traveler’s cheque at very reasonableand competitive rates. It has following features Negotiability Pak Rupees Traveler’s Cheques are a negotiable instrument Validity There is no restriction on the period of validity Availability At 700 branches of NBP all over the country Encashment At all 400 branches of NBP Limitation No limit on purchase Safety NBP Traveler’s Cheques are the safest way to carry our money C) LETTER OF CREDITLetters of credit are very useful instruments in facilitating commercial relations betweenbusinessmen at various places. Letter of credit state the limit of the credit and the time duringwhich it is held at the disposal of the grantee, but they are neither negotiable nor transferable.Letter of credit may be revocable. There are many kinds of letter of credit such as Revolvingcredit, Back to Back credit, Claused credit etc. 21 NBP is committed to offering its businesscustomers the widest range of options in the area of money transfer. If you are a commercial
  35. 35. P a g e | 35enterprise then our Letter of Credit service is just what you are looking for. With competitiverates, security, and ease of transaction, NBP Letters of Credit are the best way to do yourbusiness transactions. D) FOREIGN REMITTANCESTo facilitate its customers in the area of Home Remittances, National Bank of Pakistan has takena number of measures to: • Increase home remittances through the banking system. • Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries.The new features of NBP foreign remittances include: • The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides United National Bank (the joint venture between NBP and UBL in UK)., and Bank Al- Jazira, Saudi Arabia. • Zero Tariffs: NBP is providing home remittance services without any charges. • Strict monitoring of the system is done to ensure the highest possible security. • Special courier services are hired for expeditious delivery of home remittances to the beneficiaries. E) SWIFT SYSTEMThe SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has beenintroduced for speedy services in the area of home remittances. The system has built-in featuresof computerized test keys, which eliminates the manual application of tests that often cause delayin the payment of home remittances. The SWIFT Center is operational at National Bank of
  36. 36. P a g e | 36Pakistan with a universal access number NBP-PKKA. All NBP overseas branches and overseascorrespondents (over 450) are drawing remittances through SWIFT. Using the NBP network ofbranches, we can safely and speedily transfer money for our business and personal needs. F) MAIL TRANSFERA Mail Transfer is a form of remittance in which the amount remitted by a customer or a non-customer is directly credited to the account of the beneficiary with another branch. Move yourmoney safely and quickly using NBP Mail Transfer service. And NBP also offer the mostcompetitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage chargeson issuing mail transfer. When the money is not required immediately, the remittances can alsobe made by mail transfer (MT). Here the selling office of the bank sends instructions in writingby mail to the paying bank for the payment of a specified amount of money. Debiting to thebuyer’s account at the selling office and crediting to the recipient’s account at the paying bankmake the payment under this transfer. NBP taxes mail charges from the applicant where noexcise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/- if sent byregistered post locally Rs.40/- if sent by registered post inland on party’s request. G) TELEGRAPHIC TRANSFERTelegraphic Transfer is a form of remittance, which is advised by telegram, telex or faxmachines. The fundamental principles of such transfer are otherwise identical with the MailTransfer. It is the message, which is sent from one branch to another on the order of payer topayee through wire. It is one of the quickest means to transfer fund through the use oftelex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee officeupon identification or through credit into beneficiary’s bank account. As such remitting office isnot required to issue any instrument payment to the remitter for delivery to the beneficiary. H) PAY ORDERNBP provides another reason to transfer your money using our facilities. NBP pay orders are asecure and easy way to move your money from one place to another. And, as usual, NBPcharges for this service are extremely competitive. The charges of NBP are very low all over thePakistan. It charges Rs 50/- for NBP account holders on issuing one payment order, and chargesRs 100/- for NBP non-account holders on issuing one payment order. It charges Rs 25/- for
  37. 37. P a g e | 37students on payment of fees of educational institutions. If some one want a duplicate of paymentorder they charges Rs 100/- for NBP account holders and Rs 150/- for non account holders. 5. MISCELLANEOUS A) LOCKERSNational of Pakistan also provides lockers facility in the country. The lockers issued only to thedepositors. No lockers are issued to any unknown person. The dual control system is used forlockers. The officer has master key to apply on the locker but he cannot open the locker of anyperson. The locker holder provides the bank has specimen signature. Whenever the lockerholders come to open the locker, his signatures are verified by the officer and then will be able toopen his locker. If the key of the locker is lost company providing these lockers breaks the lockerand new lock is fitted in its locker and lock is destroyed in the presence of the locker holder andbank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in thepresence of his heir as mentioned in his will or and his belongings are given to them and thelocker is closed. B) NBP CASH CARDNBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which lets youpay directly from your account as an alternative payment method to cash. The transaction isauthorized and processed by entering PIN. The NBP Cash Card holders are able to transact atany of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP, 1-Link & M-NET ATM’s across the country. The followings are the main features of this product: • You wont need to carry a lot of cash with you every time you go out. • Secure and Safe transaction.
  38. 38. P a g e | 38 • Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment etc.) • Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs. • Enable to Make Purchases from Around 4000 POS (Merchants) Countrywide including 2500+ POS in Karachi. • No Card Issuance Fee for first 12 Months C ) INTERNATIONAL BANKINGNational Bank of Pakistan is at the forefront of international banking in Pakistan which is provenby the fact that NBP has its branches in all of the major financial capitals of the world.Additionally, the Bank has recently set up the Financial Institution Wing, which is placed underthe Risk Management Group. The role of the Financial Institution Wing is:- • To effectively manage NBPs exposure to foreign and domestic correspondence • Manage the monetary aspect of NBPs relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability • Generation of incremental trade-finance business and revenues
  39. 39. P a g e | 39ORGANIZATIONAL STRUCTURE OF NATIONAL BANK OF PAKISTANA well-developed and properly coordinate structure is an important requirement for the successof any organization. It provides the basic framework within which functions and procedures areperformed. Any organization needs a structure, which provides a framework for successfuloperations. The operation of an organization involves a number of activities, which are related todecision making, and communication of these decisions. These activities must be wellcoordinated so that the goals of the organization are achieved successfully.The Organization Structure (Annexed I) shows the internal operations and reporting lines of theNational Bank of Pakistan. The bank has clearly defined organizational structure, which supportsclear lines of communications and reporting relationships. There exists a properly definedfinancial and administrative power of various committees and key management personnel, whichsupports delegations of authority and accountability. The internal operations of the Bank are organized into 15 main departments and divisionsheaded by senior management of the bank and are report directly to the Board of Directors. Theorganizational structure of National Bank of Pakistan is centralized because all the decisions ofthe bank are taken by the top Management. The National Bank of Pakistan’s Departmental keyroles and functions are as follows:
  40. 40. P a g e | 40BOARD OF DIRECTORSPursuant to Section 11 of The Banks’ (Nationalization) Act, 1974, the number of Directors ofthe Bank shall not be less than 5 and not more than 7, excluding the President. The FederalGovernment 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 Presidentwho is the Chief Executive of the Bank and presides over the meetings of the Board. Theresponsibilities of Directors include the followings:22 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. it should be ensured that the Board of Directors focus on policy making and general direction, oversight and supervision of the affairs and business of the Bank and does not play any role in the day-to-day operations, as that is the role of the Management. 2. The Board shall approve and monitor the objectives, strategies and overall business plans of the institution and shall oversee that the affairs of the institution are carried out prudently within the framework of existing laws & regulations and high business ethics. 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 both the Directors and the Senior Management without delegating its policy-making 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 area which the Board may deem appropriate from time to time. The Board shall also be responsible to review and update policies periodically and whenever circumstances justify. 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.
  41. 41. P a g e | 417. 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, operating performance and financial condition of the institution, the environment in which it operates, the various risks it is exposed to and to evaluate performance of the Management at regular intervals.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. These committees, preferably comprising of ‘Non- Executive’ Board members, shall oversee areas like audit, risk management, credit, recruitment, compensation etc. these committees of the Board should neither indulge in day-to-day affairs/operations of the bank and enjoy any credit approval authority for transaction/limits. These committees should apprise the Board of their activities and achievements on regular basis.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. A copy of that letter should be submitted to the State Bank of Pakistan so that it can monitor follow-up actions. The Following table mentioned the names & designation of Board of Directors of National Bank of Pakistan:
  42. 42. P a g e | 42 Name Designation Syed Ali Raza Chairman & President Mr. Sikandar Hayat Jamali Director Mian Kausar Hameed Director Mr. Ibrar A. Mumtaz Director Mr. Tariq Kirmani Director Mr. Muhammad Arshad Chaudhry Director Mr. Mohammad Ayub Khan Tarin Director Mr. Ekhlaq Secretary Board of Ahmed DirectorsSENIOR MANAGEMENTThe senior management of National Bank of Pakistan is consists of Group chiefs, who reportdirectly to the Directors of Bank. The whole functions of National Bank of Pakistan areperformed under these Groups. The National Bank of Pakistan has following groups anddivisions: • Corporate and investment Banking Group • Operations Group • Credit Management Group • Audit & Inspection Group • Compliance Group • HRM & Administration Group • Commercial & Retail Banking Group • Treasury Management Group
  43. 43. P a g e | 43• Special Assets Management Group• Employees benefit & Disbursements Group• Overseas & Coordination Group• Islamic Banking• Core Banking Application, PMO• Financial Control Division• Information Technology Group
  44. 44. P a g e | 44Name Group Name & DesignationMasood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking GroupShahid Anwar Khan SEVP & Group Chief, Credit Management GroupDr. Asif A. Brohi SEVP & Group Chief, Operations GroupImam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection GroupZiaullah Khan SEVP & Group Chief, Compliance GroupDr. Mirza Abrar Baig SEVP & Group Chief, Human Resources Management & Administration GroupAmer Siddiqui SEVP & Group Chief, Commercial & Retail Banking GroupMuhammad NusratVohra SEVP & Group Chief, Treasury Management GroupAmim Akhtar EVP & PSO to the PresidentEkhlaq Ahmed EVP & Secretary Board of DirectorsTajammal Hussain Bokharee EVP/Divisional Head, Special Assets Management GroupMrs. Khurshid Maqsood Ali EVP & Divisional Head Employee Benefits, Disbursements & Trustee DivisionTahir Yaqoob EVP & Group Chief, Overseas Coordination & Management GroupAnwar Ahmed Meenai EVP & Divisional Head, Islamic BankingNaeemSyed EVP & Head, Core Banking Application, PMOAamir Financial Controller & Divisional Head, Financial ControlSattar DivisionAtif Hassan Khan Group Chief (A), Information Technology Group 1. CORPORATE & INVESTMENT BANKING GROUP The corporate & investment banking group is headed by Mr. Masood Karim Shaikh. This group performs its function through its following two units: • Corporate Banking • Investment Banking The corporate and investment banking will continue to play a major role in loan syndications, structured financing and debt / capital raising transactions with the objective of providing entire range of corporate and investment banking solutions to its valued clients under one umbrella. The Corporate Banking Group achieved excellent results in 2007 with a number of landmark transactions in cement, energy, communication and fertilizer sectors. In addition to the funded income, our corporate and investment banking has substantially increased its fee base income this year by being the lead advisor in a number of transactions in the corporate world of Pakistan
  45. 45. P a g e | 45The challenges to corporate business in year 2007 were manifold including reduction in PrivateCredit Investment as a result of slowing down of economy as well as rising interest rates. Theincreasing pressure on the textile industry reduced the lending to this sector. In addition thebanks corporate loans yields also faced pressure as substitute form of funding sources areavailable in the market in form of Islamic financing, mutual funds, issuance of debt instrumentslike TFCs and Bonds and the Capital markets.Despite these threats and challenges at NBP, our corporate team not only increased the volumeas well as the yield of the loans they also maintained a strong franchise with the leadingPakistani corporate so as to ensure that NBP not only maintains its market share but is in aposition to meet any challenges in future. NBP during the year also participated in a number ofTFC issues and mutual funds subscriptions thereby increasing the overall yield on investmentportfolio.NBP has the largest equity portfolio in the banking sector primarily due to 27% holding in NITunits, the largest mutual fund in Pakistan. During the year 2008 the bank redeemed 10% of itsNIT holding covered under LoC, which resulted in capital gain of Rs. 1.8 billion in 2008. The National Bank of Pakistan has initiated a structured approach to corporate banking byintroducing a single point of contact through Relationship Managers. For this purpose, newRelationship Managers as well as team leaders has been inducted to expedite this process. TheArea Managers of National Bank of Pakistan are appointed to manage relationships and to betterservice the needs of multinationals and large local corporate. An investment banking team hasalso been formed by National Bank of Pakistan to offer specialized services to majorrelationships including advisory and debt syndications. The National Bank o Pakistan havespecial focus on Corporate Banking with a presence in all major locations through out thecountry, offering full range of Banking products / services and one window interface throughdesignated Relationship Managers. Corporate Banking offers tailor made products / solutions asrequired by corporate customers which includes:The key features of corporate Banking includes: • Funded facilities, ranging from short to medium and long term lending
  46. 46. P a g e | 46 • Trade related financing. • Foreign currency financing. • All sorts of non-funded facilities / services which include Cash receipts / payments, Remittances, Collections, guarantees, letter of credit etc. • Customized products / solutions 2. COMPLIANCE GROUPThe Compliance Group of National Bank of Pakistan is headed by Mr. Ziaullah Khan and isreport directly to the President/ Chief executive of NBP. In order to keep the working of AuditDepartment aligned with the best international practices Compliance Group’ has been created.This group is responsible for monitoring compliance of various administrative / operativeinstructions, rules, and regulations by constantly reviewing and reporting status of complianceand non-compliance. The Compliance Group of NBP is set to ensure that all relevant laws arecomplied with, in letter and spirit, and, thus, minimize legal and regulatory risks. TheCompliance officers will primarily be responsible for Bank’s effective compliance relating to: • Relevant provisions of existing laws and regulations. • Guidelines for KYC. • Anti money laundering laws and regulations. • Timely submission of accurate data / returns to regulator and other agencies. • Monitor and report suspicious transactions to President / Chief Executive Officer of the bank and other related agencies. • The Compliance Officers will serve as a contact point between President /Chief executive officers and senior management, with regard to functioning of compliance program provide assistance in this area to branches and other departments of the bank, and act as liaison with State Bank of Pakistan concerning the issues related to compliance.The functions of compliance group of National Bank of Pakistan are as fallows: • Study and emphasize compliance of best international practices in audit of various functions of NBP. • Monitor compliance of Administrative/Operational Instructions, Rules, Regulations issued from time to time by the Management.

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