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National bank of pakistan

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An internship report on NBP (National Bank of Pakistan) a governmental financial institution. A detailed report on its organizational structure, its departments, and financial analysis with …

An internship report on NBP (National Bank of Pakistan) a governmental financial institution. A detailed report on its organizational structure, its departments, and financial analysis with recommendations and conclusions.

Published in Economy & Finance
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  • 1. Internship Report on NATIONAL BANK OF PAKISTAN The The Nation's Bank Nation's Bank National Bank of Pakistan government The Treasury Nation's Bank Te h Ntio'sBn a n ak HAILEY COLLEGE OF COMMERCE Salma Bashir Te h Ntio'sBn a n ak Roll number: 126 B.com (Hons.) Session : 2005 - 2009 Supervisor : Sir. Hassan Mubeen Alam National Bank of Pakistan Samnanabad Branch Date of joining : 25-7-09 to 24-09-09
  • 2. DEDICATION Dedicated to my Parents who always care me and most formative teachers, Sir Zafar & Sir. Yasin for their unwavering support and guidance. HAILEY COLLEGE OF COMMERCE Salma Bashir Roll number: 126 B.com (Hons.) Session : 2005 - 2009 Supervisor : Sir. Hassan Mubeen Alam National Bank of Pakistan Samnanabad Branch Date of joining : 25-7-09 t0 24-09-09
  • 3. ACKNOWLEDGEMENT C K N O W L E D G E M E N T All praise to Allah, the most merciful, kind and beneficent, and the source of all knowledge, wisdom within and beyond my comprehension. He is the only God, who can help us in every field of life. All respect and possible tributes goes to my Holy Prophet Mohammad (SAW), who is forever guidance and knowledge for all human beings on this earth. I am proud to say that I am very grateful to my family whose kind prayers and cooperation helped me at every step of my work. Special thanks go to my parents for their cooperation for the sake of my knowledge. I am greatly indebted to my learned teachers, Sir.Kumail Abbas Rizvi, Sir. Yasin, Miss. Shamaila, Miss Hafza, Sir. Zafar who have great influence on me during my formative years. This report reflects the knowledge which I have gained from my valuable teachers. I acknowledge with deep gratitude the invaluable help extended to me by Mr. Rana Ahsaan-ul-Haq, one of the officer of the National Bank of Pakistan, without his co-operation it was not possible for me to complete my Internship Report. He guided and helped me and specially the sympathetic attitude, which always inspired me for hard work. I am really very thankful to Muhammad Rafi Operational Manager of National Bank Samanabad Branch, Lahore and all the bank staff for their cooperative attitude during my internship. In the end thanks are due to one of my friend Miss. Sana Khalid for her cooperative attitude during the completion of my project work. She helped and supported me during gathering and analyzing information. SALMA BASHIR B.com(Hons .)
  • 4. EXECUTIVE S UMMARY X E C U T I V E U M M A R Y To interpret my skills and educational knowledge of Finance I done my internship in National Bank of Pakistan Samanabad Branch, Lahore and to know how I will work in financial institutions and among various types of people have different attitude. The objective of this Internship was to explore the issues relating to Finance and to find out problems regarding the theoretical concepts with practical experience working in an organization during the internship and study the system of National Bank of Pakistan. There are many possible improvements, which we can make positive changes in the system. The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal observation while working with staff and having discussion with them. The report summarizes the National bank of Pakistan with its working divided into three parts first part deals with the description of the NBP the second part covers the theory and practices adopted by NBP and third part discuss the financial position of NBP, its analysis and at the end concluding remarks and suggestions are given for improvements. It was too much difficult for me to describe the functioning of such a vast organization within the limits. In spite of this I tried my best to describe. Finally, for any all too fallible errors, omissions and shortcomings in the writing of the report only I am responsible for which I hope that all concerning regards of this report will forgive us. SALMA BASHIR B.com(Hons. )
  • 5. PREFACE R E F A C E During this eight weeks long practical glimpse the theories and ideas which we received from the books have been women in the texture of our actual life. No doubt, it has helped us in cultivating the qualities of courage, hope, initiatives and capacity to turn our knowledge to practical purpose. Banking sector owes a pivotal importance in the economy of any country through its vibrant functions. This is the deep seated motivator that geared up me to join any bank for internship. National Bank of Pakistan (NBP) was established in ١٩٤٩ under the National Bank of Pakistan Ordinance ١٩٤٩ and was ١٠٠% government 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. Inside the bank, in branch banking it has Clearing and Collection Department, Government Receipts Processing Department, Account Opening Department, Remittance Department, Customer Services Department Cash Department, Deposit Department, Advances and Credit Department. These are the most common departments exist in almost each branch. It is offering different deposit choices, advances, credits and securities etc for its customers through its corporate branches. Yet there are many possible improvements, which we can be made and that can bring positive changes in the system. There is shortage of employees in the organization. With development of online banking system the load of work can be decreased. All the staffs do not know about computer. There is almost one or two employees are trained to operate the system in every branch. Especially, the cash department is not familiar with computer and information system. It is not easy for it to implement a new system immediately it takes a lot of time to replace systems. Once implemented its testing takes more time. So it is important for the Bank to develop a research department for redesigning the operations of the Bank SALMA BASHIR
  • 6. b r i e f c o n t e n t s BRIEF CONTENTS Introduction and National Bank of Pakistan ٤ -١  Bank's Profile ٢  Introduction ٣  Overview of Organization ٤ Historical Background ٨ -٥  Background ٦  Establishment ٧ Organizational Structure ١٥-٩ Organizational Network ٢٠-١٦  Registered and Head office ١٧  Share Registration Office ١٧  Share Capital ١٧  Branch Network ١٧ Management of NBP ٢٦-٢١  Management System ٢٢  Management Structure ٢٢  Corporate Information ٢٤  Senior Management ٢٥  Oversea Management ٢٦ Departments ٧٢-٢٧  Departmentalization in NBP ٢٨  General Banking Department ٢٩ Deposit Section ٢٩ Account opening Section ٣٣ Locker Service Section ٤٢ Cash Dealing Department ٤٣ Clearing Section ٤٧ Remittance Section ٥٣
  • 7.  Advances Department ٥٨  Accounts department ٦  Billing and Government Receipt/ Payment Department ٧٠ Commercial and Retail Banking ٨٤-٧٣  Premium Aamadni Scheme ٧٤  Premium Saver Scheme ٧٥  Karobar Scheme ٧٥  Saiban scheme ٧٦  Advance Salary Scheme ٧٧  Cash card Scheme ٧٩  Cash n Gold Scheme ٨٠  Kisan Dost ٨١  Kisan Taqat ٨١  Pak Remit ٨٢  NBP Protection Shield ٨٢  NBP Student Loan Scheme ٨٤ Financial Analysis ٨٥  Horizontal Analysis ٨٦  Vertical Analysis ٩٠  Ratio Analysis ٩٣  SWOT Analysis ١٠١ Work Performed ١١٤-١٠٤  Learning and Personal Experience ١٠٥  Branch Profile ١٠٦  Branch Hierarchy ١٠٧  Departments of training ١٠٧  Issues Faced by Branch ١١٣ Findings and Conclusion ١٢١-١١٥  Dilemmas faced by organization ١١٦  Recommendation ١١٩  Conclusion ١٢١
  • 8. Annexure and Documents ١٢٢
  • 9. INTRODUCTION N T R O D U C T I O N & NATIONAL BANK OF PAKISTAN A T I O N A L A N K O F A K I S T A N In this section three topics are discussed: • Bank's Profile • NBP Introduction • Overview of Organization • Vision • Mission • Core values • Goals
  • 10. Bank's Profile THE NATIONS'S BANK Type Government KSE: LSE Established ١٩٤٩ Headquarter Principal Office, Karachi Pakistan Key People S. Ali Raza (President & Chairman) Industry Banking, capital Market Products Loans, Credit Card, Savings, Consumer Banking etc Deposit ٦٢٤٩٣٨ Million Net income ١٥٤٥٩ Million Total Assets ٨١٧٧٥٨ Million Number of Employees ١٥٢٠٤ Number of Branches ١٢٧٦ Home page www.nbp.com.pk
  • 11. Internship Report National Bank of Pakistan INTRODUCTION (Incorporated under the National Bank of Pakistan Ordinance, ١٩٤٩) National Bank of Pakistan is the largest commercial bank operating in Pakistan National Bank of Pakistan was incorporated in Pakistan under the National Bank of Pakistan Ordinance, ١٩٤٩ and is listed on all the stock exchanges in Pakistan. It's registered and head office is situated in Karachi. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The Bank's services are available to individuals, corporate entities and government. While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities. NBP headquarters in Karachi, Pakistan with over ١,٢٠٠ branches country wide. In today's competitive business environment, NBP needed to redefine its role and shed the public sector bank image, for a modern commercial bank. It has offloaded ٢٣.٢ percent share in the stock market, and while it has not been completely privatized like the other three public sector banks, partial privatization has taken place. It is now listed on the Karachi Stock Exchange. • Handling of treasury transactions for the Government of Pakistan as agent to the State Bank of Pakistan. • Accepting of deposits of money on current, fixed, saving, term deposit and profit and loss sharing accounts. • Borrowing money and arranging finance from other banks and advancing and lending money to its clients. • Buying, selling, dealing, including entering into forward contracts of foreign exchange. • Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc. • Carrying on agency business of any description other than managing agent, on behalf of clients including Government and local authorities. • Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc. • Transacting guarantee and indemnity business. • Undertaking and executing trusts. • Joint venturing with foreign dealers, agents and companies for its representation abroad. • Participating in "World Bank" and "Asian Development Bank's" lines of credit. 3
  • 12. Internship Report National Bank of Pakistan OVERVIEW OF THE ORGANIZATION VISION "To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility." MISSION NBP will aspire to the values that make NBP truly the Nation’s Bank, by :  Institutionalizing a merit and performance culture  Creating a distinctive brand identity by providing the highest standards of services  Adopting the best international management practices.  Maximizing stakeholder’s value.  Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate. CORE VALUES  Highest standards of Integrity.  Institutionalizing teamwork and performance culture.  Excellence in service.  Advancement of skills for tomorrow’s challenges.  Awareness of social and community responsibility.  Value creation for all stakeholders. GOALS To enhance profitability and maximization of NBP share through increasing leverage of existing customer base and diversified range of products. Excellence in Direction Excellence in Growth Excellence in Performance Excellence in Management Excellence in Achievement 4
  • 13. HISTORICAL BACKGROUND I S T O R I C A L A C K G R O U N D In this section two topics are discussed: • Background of Foundation • Establishment
  • 14. Internship Report National Bank of Pakistan HISTORY OF NATIONAL BANK OF PAKISTAN BACKGROUND At the time of partition the total number of Commercial Banks in Pakistan was ٣٨ .Out of these Pakistan had ٢ banks, India had ٢٩ and there were ٧ exchange banks. Before the 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 wealthy Hindu community. When Hindu capitalists became sure of the division of Sub Continent, they secretly began transferring their funds and the other valuables at an accelerated pace to India and there was a mass scale migration of non Muslims from West Pakistan to India which also caused the drain on the bank deposits. The Hindus closed down most of the head offices and the branches of scheduled and non-scheduled banks in Pakistan. The number of scheduled bank’s branches was reduced from ٦١٩ to ٢١٣ in both the wings of the country after independence. The non-scheduled banks also suffered a severe jolt and their number was reduced from ٤١١ to ١٠٦ over the same period. West Pakistan from where there was greater exodus of non- Muslims to India suffered a great deal, as a number of branches fell down (from ٤٨٧ to ٦٩). The mass scale closure of branches and withdrawal 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 wholesale migration of banking staffs to India. It took up the challenge and started reorganizing the crippled banking immediately after partition. In ١٩٤٩ September U.K. devalued its currency, India followed the suit but we did not. India said we had contravened the agreement. On October ١٩٤٩ ,٣ the two central banks have to announce the new par value of both currencies but India denied the day earlier. India also froze our trade balance surplus that is still an unsettled dispute. India also draws the Marwari merchants who were employed annually for movement of jute crop by financing it. There being no jute industry, prices fell sharply, and an agrarian unrest was threatening. Two Ordinances were therefore issued. 1Jute board Ordinance & 2NBP ordinance dated ٠٨.١١.١٩٤٩ In order to regulate both of the banking on sound footings, 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 ١٩٤٨. • The National Bank of Pakistan was established on ١٩٤٩,to serve as an agent to the SBP. 6
  • 15. Internship Report National Bank of Pakistan • The Industrial Development Bank of Pakistan was set up on August ١٩٦١ ,١ with a Paid up Capital of Rs; five crore. The Agricultural Development Bank of Pakistan (ADBP) was set up in ١٩٦١. it provides short , medium and long term loans to the farmers. In Jan, ١٩٧٤ the entire commercial banks were Nationalized. The weaker commercial banks were merged with the stronger once and in all Five major banking companies were formed. MCB and ABL have again been privatized. ESTABLIHMENT 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 ١٩٤٩ ,٢٠ 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 ١٩٤٩. State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assets against the Indian currency retired from Pakistan territory. Government of India refused to hand over the assets worth about five hundred million rupees. The dispute is still unsettled and these assets are still not delivered to Pakistan. Until June ١٩٥٠, the Bank was engaged exclusively on jute operation. Thereafter, it was felt that it could expand its business to include other commodities as well. Bank took a big stride in ١٩٥٢, when it replaced the Imperial Bank of India, as an agent of State Bank of Pakistan. There were ١٤ Pakistani scheduled commercial banks operating in the country on December ١ ٩٧٣, the name of these were: 1. National Bank of Pakistan 2. Habib Bank Limited 3. Habib Bank (Overseas) Limited 4. United Bank Limited 5. Muslim Commercial Bank Limited 6. Commerce Bank Limited 7. Australia Bank Limited 8. Standard Bank Limited 9. Bank of Bahawalpur Limited 10. Premier Bank Limited 11. Pak Bank Limited 12. Lahore Commercial Bank Limited 13. Sarhad Bank Limited 14. Punjab Provincial Co-operative Bank Limited 7
  • 16. Internship Report National Bank of Pakistan The Pakistan Banking Council prepared banks amalgamation schemes in ١٩٧٤ for amalgamation of smaller banks with the five bigger banks of the country. These five banks are as under: 1. National Bank of Pakistan 2. Habib Bank Limited 3. United Bank Limited 4. Muslim Commercial Bank Limited 5. Allied Bank Limited So, through the Nationalization of Bank Act ١٩٧٤, the State Bank of Pakistan, all the commercial banks incorporated in Pakistan and carrying on business in or outside the country were brought under the government ownership with effect from Jan. ١٩٧٤ ,١. The ownership, management, and control of all banks in Pakistan stood transferred to and vested in the Federal Government. With the passage of time its functioning diversified as they take over the function of different institution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation). It is working as the agent of the state bank of Pakistan and performs its functions wherever state bank of Pakistan is not present. 8
  • 17. ORGANIZATIONL STRUCTURE R G A N I Z A T I O N L T R U C T U R E In this section topic is: • Overall Organizational Structure of NBP and it's hierarchical View
  • 18. Internship Report National Bank of Pakistan ORGANIZATIONAL STRUCTURE In National Bank of Pakistan, the head is called “Chairman” or “President” of the Bank. And after President there is Five Broad of Directors. National Bank of Pakistan has eleven Groups which control the working of the Divisions, Wing, Department, Section and Regional of the national bank of Pakistan. In NBP, “Department” is called “Wings”. Chairman & President Board of Directors President’s Secretariat Secretary Board of Directors Corporate & Credit Audit & Inspection Investment Management Compliance Group Group Banking Group Group HRM & Commercial & Treasury Administration Operation Retail Banking Management Group Group Group Group Special Assets Overseas Management Group Management I.T. Group Group 10
  • 19. Internship Report National Bank of Pakistan National bank of Pakistan divided their task in to separate jobs. Basically national Bank of Pakistan having different groups, and each group perform different task specialization in their department. National Bank of Pakistan Categories their departments through their work specialization. And NBP hire their employees also through work specialization. The following Chart shows the Work Specialization in the bank. HRM & Administration, Operation, Commercial & Retail Banking, and I.T Group are performing different working in the Organization. HRM & Commercial & Administration Operation Group Retail Banking I.T. Group Group Group National Bank of Pakistan is structurally divided into Groups and groups are also subdivided into Departments, Wings, and Divisions. National Bank of Pakistan has different Department in the Group and each department performing work, as their task assign. Department also subdivided into working bases. Credit Management Group (Functional Deptt) Administration Credit Industrial Credit Policy & Wing Monitoring Research SME Wing 11
  • 20. Internship Report National Bank of Pakistan GEOGRAPHIC DEPARTMENT Special Assets Management Group (Geographic Deptt) SAMG - North SAMG – South SAMG – Head (Lahore) (Karachi) Office PROCESS DEPARTMENT Compliance Group (Process Deptt) Administration Market & Credit Risk SBP Inspection Wing Liquidity Risk CUSTOMER DEPARTMENT Operation Group (Customer Deptt) Customer Customer Services Financial Institutional Facilitation & & Govt. Business & Admn. Cash Manag. 12
  • 21. Internship Report National Bank of Pakistan National Bank of Pakistan (NBP) provides Services through more than ١٢٠٠ branches in Pakistan and ٢٢ branches in overseas. And there are ٢٩ Regions. All Branches of National Bank of Pakistan report to five Head of RMT Members. And these five members reported to regional Offices. Regional Offices report to the Group Chief of the Groups. All the process is working very quickly and it not consume more time. And the Group Chief of each Group Report to the President of the National Bank of Pakistan. All the data were proceed to the President of the bank. Chairman & President Operation Group HRM Group Audit & Inspection Compliance Group Chief Chief Group Chief Chief South Region North Region West Region East Region Overseas Reg Head 1 Head 2 Head 3 Head 4 Head 5 Branch 1 Branch 2 Branch 3 Branch 4 Branch 5 National Bank of Pakistan is relatively Wide span of control and Flat Structure. National Bank of Pakistan are less layers of management to pass a message through, so the message reaches more employees faster. More skillful Group Chief Managers can control a greater number of employees. National Bank of Pakistan assess that the internal Control environment is showing signs of improvement as compared to previous year in all areas of the Bank. 13
  • 22. Internship Report National Bank of Pakistan Chairman & President HRM Group Operation Group CMG TMG OD Wing IRD Wing T & S Wing Tech Wing C. M Wing Admn. Wing C. M Wing Admn. Wing National Bank of Pakistan is having Decentralization in the Bank. And give the authority of Decision Making to their Group Chief of every Group, to take decision, which is benefit for the Organization. National Bank of Pakistan provides facility of making decision to their Senior Vice President as well as Vice President of the every Group. President (NBP) Group Chief (Group) SVP or VP (Group) AVP (Group) Grade Officers (Group) National Bank of Pakistan has low Formalization in the bank. And Employees are free to take action or decision in their work specialization. Employees are follow the rules and regulation in the bank is very little formalized. Employees’ behavior is little bit guided by rules and regulation. National Bank of Pakistan follow the Organic Model Organization. In NBP, there are Cross- Functional teams, as well as Cross-hierarchical teams. There are free flow of 14
  • 23. Internship Report National Bank of Pakistan Information and Wide span of Control. NBP is Decentralization in nature and very low formalization in the bank. Basically National Bank of Pakistan is high Diagonal Differentiation and every employee of any department can easily communicate to other department of the Bank. 15
  • 24. ORGANIZATIONAL NETWORK R G A N I Z A T I O N A L E T W O R K In this section topics are: • Registered & Headoffice • Share Registration Office • Share Capital • Branch Network • Global Network • Domestic Network • Present Status of Bank
  • 25. Internship Report National Bank of Pakistan ORGANIZATIONAL NETWORK REGISTERED & HEAD OFFICE Head office of NBP in NBP Building, I.I. Chundrigar Road, Karachi, Pakistan which is “the city of lighting” in Urdu “Uroos-ul-Bilad” which was also the first capital and ancient place of Pakistan. It carried out its successful journey to make it an “Asian Tiger”. SHARE REGISTERATION OFFICE THK Associates (Pvt.) Ltd. Shares Department, Ground Floor, State Life Building #3, Dr. Ziauddin Ahmed Road, Karachi, Pakistan. SHARE CAPITAL Issued Capital The bank was setup with an issued capital of Rs.1.5 million. Authorized Capital Authorized capital of National Bank of Pakistan in 2000 was Rs.25 Billion. Issued, Subscribed, and Paid-up Capital Issued, subscribed and paid-up capital in year 2008 was 10763702260 BRANCH NETWORK Presently the Bank is divided into 10 Groups headed by SEVPs/EVPs. 9 Regions reporting to as many Regional Chiefs and 15 Single Branch Zones headed by Zonal Chiefs; 12 corporate branches and 1,254 domestic branches headed by Branch Managers control its field operations. With the geographical development of its branches, the Bank has been able to extend its services to a much larger number of Pakistanis all over the country. Today it has more than 8.5 million accounts. Bank maintains its presence in all the major financial centers of the world through its 21overseas branches and 4 representative offices. Of these, three representative offices 17
  • 26. Internship Report National Bank of Pakistan have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS countries. 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. Bank has also a presence on the Internet. It has modernized its services by installing Automated Teller Machines (ATMs) called "CASH LINK" at selected branches and presently 17 ATMs are operational in major cities. GLOBAL NETWORK  18 Overseas Branches  5 Representative Offices  1 overseas Subsidiaries  Joint Venture.  Overseas Branch Network:  Paris  Baku  Seoul  Kabul  Tokyo  Osaka  Dhaka  Bahrain  Bishkek  Kowloon  Ashgabat  Jalalabad  Frankfurt  Chittagong  New York  Hong Kong  Washington D.C.  KEPZ Offshore Banking Unit, Cairo 18
  • 27. Internship Report National Bank of Pakistan  Oversea Representative Offices  Baku  Beijing  Toronto  Chicago  Tashkent  Oversea Subsidary  CJSC Almaty, Kazakhstan DOMESTIC NETWORK  1254 Domestic Branches  6 domestic Subsidiaries  29 domestic regional offices  Domestic Subsidiaries  NBP Capital Ltd.  Taurus Securities Ltd.  NBP Exchange Company Ltd  National Bank Modaraba Management Co.  National Agricultural and Storage company Ltd.  Cast – N- Link Products Ltd  Joint Venture  United National Bank Ltd., UK (Economic Indicators Pakistan, Published by Economic research Wing NBP, Head Office Karachi) PRESENT STATUS OF BANK The new management team having extensive experience of management of large financial institutions both within and outside the country is expected to further enhance the profitability and operational efficiency of the Bank. Prospects The Bank's principal strategic going forward objective is to make the transition from a public service institution to a modern commercial bank. Being the country's largest financial institution, the Bank is uniquely positioned to leverage its large branch network and its 8.5 million-customer base to consolidate its core businesses as well as develop new revenue generating opportunities. 19
  • 28. Internship Report National Bank of Pakistan The new management team is in place combining the Bank's existing personnel with professionals recruited from outside. Operating procedures are being re-defined and internal controls strengthened utilizing a revamped IT architecture. A brief on the progress on some critical areas is as follows: Corporate & Investment Banking A new approach to corporate banking is underway. The Bank has initiated a structured approach to corporate banking by introducing a single point of contact through Relationship Managers (RMs). For this purpose, new RMs as well as team leaders have been inducted to expedite this process. Area Managers will be appointed to manage relationships and to better service the needs of multinationals and large local corporates. In investment banking team has also been formed to offer specialized services to major relationships including advisory and debt syndications (TFCs). Furthermore, to stem the growth in non-performing loans, the existing risk / credit management practices at the Bank are being revamped. Treasury / International Banking The deregulation of foreign exchange treasury business has ensured that a growing Volume of business now flows through the inter-bank market where rates are determined by the market forces. This can prove to be an immense profitable proposition for the Bank. Towards this objective, the Bank is shifting focusing on expanding its market share in trade finance, home remittance and foreign investment related forex-denominated flows. 20
  • 29. Internship Report National Bank of Pakistan MANAGEMENT OF NBP A N A G E M E N T O F In this section topics are: • Management System • Management Structure • Central Board • Local Board • New Management Structure • Corporate Information • Board of Directors • Audit committee • Auditors • Legal Advisor • Senior Management • Oversea Management
  • 30. Internship Report National Bank of Pakistan MANAGEMENT OF ORGANIZATION Management is a distinct process consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources. MANGEMENT SYSTEM The management has two types. • Centralized • Decentralized Centralized Management tends to concentrate decision making at the top of the organization Decentralized disperses decision making and authority throughout and further down the organizational hierarchy. NBP have a centralized type of management because all the decisions are taken by the top management. MANAGEMENT STRUCTURE Central board The general superintendent and direction of the affairs and business of the bank shall be entrusted to the central board which may exercise all powers and things as may be exercised or done or done by the bank and or not by this ordinance expressly directed or required to be done by the bank in general meeting. The Central bank consist of the following directors namely: • Managing director • President Managing Director The Managing director appointed by the central government under section ١٦, nine directors is directed in local or special meeting by the share holder in the following manners. The share holder registered in a branch, register maintained for an area mentioned in sub section (٥) of section ٨, shall elect from amongst themselves, such number of directors for that area as may be decided before election by the central government having regard to the proportion which that share capital subscribed by the share holders of that area bears to the whole. Provided that shareholders registered in branch register maintain at Dacca shall elect from among themselves at least two directors. Three directors appointed by the central government, provided that total number of elected directors representing the area for which the decca register is maintained shall not be less than three. 22
  • 31. Internship Report National Bank of Pakistan President The president of a Central board shall be appointed by the central government from among the directors. Local Board The local board shall be established for the area mentioned in sub section (٥) of section B , one each at Karachi ,Dacca and the Lahore ,and shall without prejudice to the powers conferred by the sections ١٢, have power ,within the prescribed limits generally to transact all usual business of the bank. A local board should consist of following members namely;  The Managing director  One member appointed by the central board from amongst the directors elected by the share holder register in the branch register of the area.  Two members appointed by the central government from the area in which the local board is situated.  Three members elected in local or special board meeting from among themselves by the shareholder register in the branch register of the area. The Managing director shall be appointed by the central government for a period not exceeding five years and on such salary and terms and condition of the service as the central government may determined. New Management Structure The previous management was removed by the bank nationalization ordinance ١٩٧٤. the general direction and superintendent of the affairs and business of the banks vests in the Executive board consisting of President (Chief executive) and five senior executives of the bank . The federal government in ١٩٨٠ constituted a board of directors comprising the president and the members of executive board of the bank and two additional members one representing the ministry of finance and the other Pakistani banking council. Thus therefore, all nationalized commercial banks are controlled by the Pakistani banking council being subject to State bank of Pakistan regulation as well. The federal ministry is responsible for bank operations in the ministry of finance. Recently by the order of president of Pakistan, banking council of Pakistan is removed. Board of Directors. An executive board composed of six senior executives of the bank and the president who is also the chief executive supervises the affairs and business of the bank, called the Board of Directors. Management Committee: Also there is a Management Committee consisting of nine senior executives of the bank, called the members and the president who is also the chairman of the committee. TRAINIG and MANAGEMENT DEVELOPMENT WING National bank of Pakistan has its national and development centers and ٤ staff collages at: - 23
  • 32. Internship Report National Bank of Pakistan • Karachi • Lahore • Peshawar • Islamabad In these centers and staff colleges, the banking training is provided to the officers, managers, and to potential managers. It arranges courses and seminars for middle and higher management in all. Each year almost ١٥٠٠ persons receive training over there. CORPORATE INFORMATION Board of Directors Syed Ali Raza Chairman & President, Chief executive M. Ayuub Khan Tarin officer Director Ibrar A. Mumtaz Director and SEVP and Group Chief, Human Resources Management & Administration Group Tariq Kimrani Director M. Arshad Chaudhry Director Sikandar Hayat Jamali Director Mian Kausar Hameed Director Audit Committee M. Ayuub Khan Tarin Chairman Ibrar A. Mumtaz Chairman Tariq Kimrani Chairman M. Arshad Chaudhry Chairman Mian Kausar Hameed Chairman Auditors Ford Rhodes Siddat Hyder &Co. Charterd Accountant 24
  • 33. Internship Report National Bank of Pakistan M. Yousuf Adil Saleem & Co. Charterd Accountant Legal Advisors Mandviwala & Zafar Charterd Accountant SENIOR MANAGEMENT Qamar Hussain Chief Operating Officer & Head of Credit & Risk Management Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking Group Shahid Anwar Khan SEVP & Group Chief, Overseas Banking Group Dr. Asif A. Brohi SEVP & Group Chief, Operations Group Amer Siddiqui SEVP & Group Chief, Commercial & Retail Banking Group Muhammed Nusrat Vohra SEVP & Group Chief, Treasury Management Group Dr. Mirza Abrar Baig SEVP & Group Chief, Human Resources Management & Administration Group Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection Group Ziaullah Khan Senior Executive Vice President Nabi Bakhsh Soomro SEVP & Group Chief, Islamic Banking Group Ekhlaq Ahmed EVP & Secretary Board of Directors Tajammal Hussain Bokharee EVP & Group Chief, Special Assets Management Group Nadeem Anwar Ilyas EVP, PSO to the President & Group Chief, Compliance Group (A) Naeem Syed EVP & Divisional Head-Project Management Office & Core Banking Applications Aamir Sattar SVP & Financial Controller/ Divisional Head, Financial Control Division Atif Hassan Khan SVP & Group Chief (A) Information Technology Groups 25
  • 34. Internship Report National Bank of Pakistan OVERSEA MANAGEMENT R.A. Kaleemi SEVP & Chief Representative, Canada Office M. Rafiq Bengali SEVP & Regional Chief Executive, Americas Region Shahid Anwar Khan SEVP & Group Chief, Overseas Banking Group Dr. Asif A. Brohi SEVP & Group Chief, Operations Group Amer Siddiqui SEVP & Group Chief, Commercial & Retail Banking Group Muhammed Nusrat Vohra SEVP & Group Chief, Treasury Management Group Dr. Mirza Abrar Baig SEVP & Group Chief, Human Resources Management & Administration Group Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection Group Ziaullah Khan Senior Executive Vice President Nabi Bakhsh Soomro SEVP & Group Chief, Islamic Banking Group Ekhlaq Ahmed EVP & Secretary Board of Directors Tajammal Hussain Bokharee EVP & Group Chief, Special Assets Management Group Nadeem Anwar Ilyas EVP, PSO to the President & Group Chief, Compliance Group (A) Naeem Syed EVP & Divisional Head-Project Management Office & Core Banking Applications Aamir Sattar SVP & Financial Controller/ Divisional Head, Financial Control Division 26
  • 35. DEPARTMENTLIZATION E P A R T M E N T L I Z A T I O N In this section topics are: • General Banking Department • Deposit Section • Accounts Opening Section • Lockers Services • Cash Dealing Section • Clearing Section • Remittance Section • Advances Department • Accounts Department • Government Receipt & Payment Department
  • 36. Internship Report National Bank of Pakistan DEPERTMENTALIZATION Dividing an organization into different parts according to the functions is called departmentalization. NBP Main branch ,Lahore offer a wide range of banking services to public and private sector corporation ,partnership ,individual and others . The National Bank of Pakistan has various departments. Brief description of all these departments are given here one by one under separate heads for better understanding. • General Banking Department  Account opening Section  Deposit Section  Cash Dealing  Clearing Section  Remittance • Credit and Advances Department • Accounts Department • Government Department • Consumer & Retailing Department • Foreign Exchange Department • Import and Export Department • 28
  • 37. Internship Report National Bank of Pakistan GENERAL BANKING DEPARTMENT General banking involves the following sections 1. Deposit Section 2. Accounts Opening Section 3. Cash dealing Section 4. Clearance Section 5. Remittance Section 6. Lockers Handling Section Deposit Section Deposits are the lifeblood of commercial banks. The main function of a commercial bank is to mobilize deposits of money from the savers and lend into for most profitable purposes. The process of collection deposits is Deposits Mobilization. Commercial banks donor receive these deposits for safe keeping purpose only .but they accept deposits as debts. When a bank receives a deposit from a customer becomes a creditor and the bank a debtor. When the bank receives the amount of deposits as a debtor, it becomes the owner of it but there is an implicit agreement that the amount owned would be paid back by the bank to depositor on demand or often at specified time. The classification is based on duration and purpose for which the deposits are to be kept at the bank before the depositor can withdraw them. Deposits can be divided into two categories. Deposits Checking Non-Checking Accounts Accounts PLS Saving PLS TDR’s Account Current Deposit Special Notice Accounts Deposit Accounts Foreign Currency NIDA Accounts 29
  • 38. Internship Report National Bank of Pakistan Categories of Deposits There are two broad categories of deposits. These are • Time deposits • Demand deposits Time Deposits Demand Deposits • These are payable on maturity • These are not payable of maturity • Receive profit with respect to time but on demand period • No profit is given on demand • All TDRs, saving accounts and deposits other profit bearing accounts are • They include current accounts and included. call deposits etc. TYPES OF ACCOUNT/ DEPOSIT Following types of accounts are open in NBP 1. Current or demand account 2. Saving account 3. Fixed account 4. Call Deposit Accounts 5. Foreign Currency Accounts 1. Current This account is also known as running balance account. Simply we can say “A bank account which may be used to lodge payments or to withdraw money on demand.”Its main purpose is to serve the businessman. Form number F-53 is provided to the person to open the account. It is a statutory requirement to maintain current account. Its main features are: -  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.  Bank act as custodian of money  Over draft facility is provided to the customers  Customer can withdraw money through cheque supplied by bank  No limitation to the number of withdrawal 30
  • 39. Internship Report National Bank of Pakistan  No zakat is deducted on current account. Basic Bank Account (BBA) BBA’s are opened on proper introduction and submission of required documents.  BBA’s are opened for individuals single or joint only.  Free ATM issuance  Minimum balance is 1000/-.  In BBA’s maximum two deposits transactions and two chequing withdrawals are allowed free of charge through cash/clearing in a month.  Nill accounts are closed after 3 months 2. Saving account This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship. Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Rates of interest are typically ahead, by a small margin. NBP offered the three types of saving accounts a. Profit and Loss Sharing/Saving Account (PLS Acc) b. National Income Daily Account (NIDA account) a. Profit and Loss Sharing/Saving Account (PLS Acc) 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  The bank is authorized to deduct service charges on half yearly basis.  Profit on PLS Saving Account is calculated on minimum monthly basis and is paid half yearly basis announced by the Head Office after June 30 and December 31.  Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.  No limit of withdrawals b. National Income Daily Account (NIDA account) 31
  • 40. Internship Report National Bank of Pakistan The scheme of NIDA was launched in December 1995 at attract at corporate customers. NIDA are opened for individuals single or joint, Charitable institutions, Provident funds, autonomous bodies, companies, associations, educational institutions, firms etc. the features of this account are same to the features of the saving or PLS account except the following ones:  In this account the minimum balance required to acquire the benefits of this account is Rs 2 million, and the maximum limit is 5.0 million.  When the above condition is fulfilled, then the bank will pay interest on daily basis, which is that if the deposit is minimum of 2 million than the mark up rate is 5.2%p.a.and if it is at maximum that is 5.0 million than the rate is 7.00 %p.a.  In this account the daily balance of account is taken, products are calculated and the interest is calculated on that balance.  If the balance on any day comes below the lower limit, which is Rs 2 million then interest will not be given.  This scheme did not gain popularity so NBP close this scheme. 3. Call Deposits Call deposits are the sorts of deposits, which are deposited in the bank against any tender. This is without interest deposit and may be with interest provided. The depositor has agreed to keep this amount with the bank for some fixed period. 4. 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 rates on this type of deposits are higher than the saving bank accounts. 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 depending upon the nature of scheme offered by bank. The amount can be withdrawn before maturity after surrendering interest. PLS Term The bank accepts these deposits with minimum sums as prescribed by the bank for a fixed period of time. Profit may be paid in cash, pay order, demand draft or any other form.  Terms deposits are accepted for a period of one month to five years.  Minimum deposit is accepted is Rs.25, 000/= with no upper limit.  Available to all types of investors i.e. individuals, partnership firms, public and private limited companies, corporation, trusts, and government bodies. 32
  • 41. Internship Report National Bank of Pakistan  Profit is paid on maturity. Fixation Schemes of NBP NBP offered following types of fixation and saving schemes • PLS Special Notice Term Deposit Reciept- PLS SNTDR • PLS Monthly income Scheme – PLS MIS • Premium Saver Scheme- PLS Saving Account • Premium Amdani Scheme 5. Foreign Currency Accounts These are the accounts in US $, Pound, Euro, yen etc. of different account holders and either saving or current accounts. Profit is fluctuating as determined by the State Bank of Pakistan on six monthly bases whereas return on Term deposits/SNTD will paid on maturity. The transactions in these accounts are translated into Pak. Rupees at the exchange rate prevailing on the date of transaction. Account Opening Section Account opening section of the bank can be considered the most important department because banking starts with the account opening. Every customer of the bank either he is of credit section or foreign section or any other department must have his account in order to get benefit and transaction with the bank. Therefore it is considered the most important section of the bank. Account opening officer take special consideration for the proper recognition of the customers. This section performs the following functions: • Opening of Accounts • Issuance of cheque books • Closing of accounts OPENING OF ACCOUNTS The opening of an account is the establishment of banker customer relationship. Before a banker opens a new account, the banker should determine the prospective customer’s integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening. Preliminary investigation is necessary because of the following reasons.  Avoiding frauds  Safe guard against unintended over draft. 33
  • 42. Internship Report National Bank of Pakistan  Negligence.  Inquiries about clients. i. Terms and conditions There are certain formalities, which are to be observed for opening an account with a bank.  Formal Application  Verification of customer's CNIC through the NADRA  Copy of NIC of the customer  Specimen Signature  Minimum Initial Deposit To open an account the customer has to meet the general banking manager with an introducer with the ID card. Manager verifies the customer's ID card through the connection of NADRA. NADRA send the verification report to the bank with the concluding remarks called VERISIS. If the customer's id card is fake then bank has right not to accept the contract and if the contract is acceptable to both, now it is ready to open the account formally. After the identification of the customer along with the form a card for specimen signature is also supplied to customer. Manager has every right not to accept this contract if he is not satisfied by the details provided by the customer. ii. Qualification of Customer The relation of the banker and the customer is purely a contractual one, however, he must have the following basic qualifications.  He must be of the age of majority.  He must be of sound mind.  Law must not disqualify him.  The agreement should be made for lawful object, which create legal relationship  Not expressly declared void. iii. Steps for Opening of Account After entering into bank premises the person goes through the following steps for opening an account in the bank and for becoming a bank customer. 1. A Verfication: The first important step to take place in bank is to get satisfactory verification of the person, who wants to become bank’s customer. This verification is made through the NADRA. 2. Account Opening Form and Specimen Signature Card: Now the person is provided with an application form known as Account Opening Form (AOF). This form contains: - 34
  • 43. Internship Report National Bank of Pakistan i. Type of account  Current Account  PLS SNTDR  PLS Term  BBA  PLS Saving  Premium Saver  Premium Amdani  Call Deposit  NIDA ii. Nature of Account NBP has the offered services to following types of individuals. Accounts of general customers (Individual accounts)  Minor account  Illiterate person account  Joint account Accounts of special customers  Proprietorship account  Partnership account (Registered/ Unregistered)  Limited company’s account (Public/ Private)  Accounts of clubs, societies and associations  Corporate Body (Incorporated/ Unincorporated )  Trust account  Govt Institutions (Federal/ Provincial) iii. Initial Deposit Amount Deposit can be accepted in the form of:  Pak Rs.  US $  UK  EURO  JY iv. Particulars of customers e.g;  Title of Account  Adress  CNIC Number 35
  • 44. Internship Report National Bank of Pakistan  NTN Number (if available)  Profession  Telephone number may be of office, mobile or residential v. Next of Kin (all above mentioned particulars of introducing him) In this customer mention the name and address of person to be contacted for ascertaining his whereabouts after the expiry of three years from the date of last operation in his account or last communication from him to the branch to inform him the existence of account when the customer is not available at the given address. This is simply the refrence of the 2nd person if the bank fails to communicate with the customer then bank can contact with the next of kin / the mentioned person to know about its customer.Customer provide in this all the personal details of the next of kin.e.g;  Name of person  CNIC Number  Address  Telephone number etc. vi. Operating Instructions The account can be operated by  Singly  Jointly  Either/ survivor vii. Zakat Deduction Zakat is deducted on each type of account accept current account in the 1st day of the Ramzan at the rate of 2.5%. If customer wants no zakat deduction then he have to submit affidavit/declaration as per zakat rules. viii. Signatures of the applicant ix. Service charges deduction In this category customer authorize the bank to deduct service charges as per bank's rariff. Service charges are exempted for;  Government employee  Pensioner  Student  Widows State Bank of Pakistan now authorize all the banks to deduct service charges on all types of accounts when the balance of the customer become less from 5000/-. Rs. 55/- per month is deducted from the customer's account. 5000/- is the minimum amount which should be kept by the customer in his account. 36
  • 45. Internship Report National Bank of Pakistan Specimen Signature Card (SS card) Specimen of signatures will be obtained from depositor at the time of opening his account. A specially designed card is used for this purpose; the card must be countersigned by an official of the bank not below the rank of an officer. For illiterate person a recent picture of the newly account holder is taken and attached with SS Card. To reduce the risk of frauds and misuse of the cheques of an illiterate person the specimen signature card and account opening form both are stamped by the Personal Visit stamp. Person who use thumb impression as a mean of signature can operate their account only by Personal Visit. 3. Account Opening Register Now the name of the customer is recorded in account opening register, and from here the account no. of the customer will be written on (top most corners) account opening form and on specimen signature card. 4. Letter of thanks Letter of thanks is the latter issued by the bank to the customer for two purposes  1st purpose is to say thanks to the customer for opening the account in their bank  2nd purpose is to confirm the address provided by the customer while opening the account. 5. Issuance Of Cheque Book And Pass Book The cheque book will ordinarily be issued to all customers desiring to have chequing facility. First Cheque book is issued to the customer after sending the letter of thanks when the customer comes with the latter of thanks and requests for the issuance of the cheque book. A Cheque book consists of  PLS 25 leaves or pages per order  CD 50 leaves or pages per order  100 leaves or pages per order  CD 50 leaves or pages per bearer  100 leaves or pages per bearer ∗ Order- if a person appears himself for new cheque book or who is the holder of account ∗ Bearer- if the person other than account holder appears then he is bearer Rs. 3 per leaf as postage charges is charged to the customer. A special cheque book register is kept to enter the name of the person having cheque book. Customer can withdraw money by signing a cheque and writing the amount he wants to withdraw from his account. 37
  • 46. Internship Report National Bank of Pakistan 6. Pass Book Pass book is another important type of book handed over to the customer as he opens the account with the bank. The withdrawal and deposit of money is recorded date wise in this book. 7. Recording into General Ledger: The concerned officer records the name and amount deposited with the bank in to general ledger. Separate ledgers are maintained for different types of accounts e.g.  Current Account Ledger  Saving Account Ledger  Fixed Deposit Account Ledger  Call Deposit Account Ledger As and when customer will deposit the money, amount will be credited in general ledger and the withdrawal will be followed by a debit entry in the ledger. iv. Documents Enclosed by Customer Documents required to be attached by the customer are different for different categories. Documentation In case of Individuals Account ∗ Copy of CNIC/NICOP/POC ∗ Copy of Driving license in case CNIC is without photograph ∗ Applicant photograph and VNIC copy ∗ Copy of service card/ evidence of employment in case of salaried person ∗ Photographs in case of illetrate person ∗ Copy of CNIC of Next of Kin. ∗ Zakat exemption Declarartion ∗ Evidence for exe,ption of account from levy of service charges ∗ Proof of age in case opening of account with minor Documentation In case of Private/ Public limited company accounts: ∗ Photocopy of National Identity Card of each director ∗ Application form ∗ Copy of company’s memorandum and articles of association ∗ List of directors ∗ Copy of board resolution 38
  • 47. Internship Report National Bank of Pakistan ∗ Certificate of incorporation ∗ Their signature cards ∗ Certificate to commence business ∗ Power of Attorney Documentation In case of Partnership Account ∗ Application form ∗ A copy of partnership deed ∗ Signature cards of partners ∗ Registration certificate copy ∗ A copy of National Identity Card of each partner ∗ Authority letter favoring persons authorized to operate the account Documentation In case of Club, Society, Association or Trust ∗ Application form ∗ Copy of rules ∗ Certified copy of resolution ∗ Signature cards Documentation in case of agents Account ∗ Copy of power of attorney ∗ Id card of each agent Documentation in case of trust Account ∗ Certificate of registration ∗ CNIC of all trustees ∗ Copy of instrument of Trust v. Stamping and Scrutinizing After the fulfillment of all the necessary terms and conditions and checking of the form the relevant officer of Account Opening then affixed stamps on the AOF for the sake of completion of all the formal rules and regulations. He affixed three types of stamps on the form and two types of documents. Affixed stamps:  National Bank of Pakistan Stamp  Authorized Stamp 39
  • 48. Internship Report National Bank of Pakistan  Personal Visit Stamp---in case of illiterate person or the person not having specific sign Affixed Documents:  Know Your Customer Form (KYC) Summarizing the context of AOF briefly  Signature Card For identification and verification of signatures vi. Loose Cheques If any customer forgets or leaves his cheque book at his home, which is far away from the bank or whatever the case may be, the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money is urgently required, the this cheque is called the loose cheque. NBP issues a loose cheque for Rs.150 as charges for the issuance of the loose cheque. NEW CHEQUE BOOK ISSUANCE All subsequent cheque books to be issued against the requisition cheque extracted from the previous cheque book. This slip is duly filled and signed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of cheques are duly entered in the book of the bank. Along with the signature, the person should also write his full name and address. The authorized officer filled the cheque book requisition card for the customer and sends them to Head office which is present in Karachi through the NIFT (National Institutional of Facilitation Technology) (PVT) Ltd. The customer can obtain the cheque book after at least two days of submission of requisition slip.  Cheque books issued in the running serial order with the name of the customer printed on the book.  Rs. 3 per page of book is charged for the postage services through NIFT  Enter particulars in the cheque book issue register.  Enter detail in the system.  These records should be daily checked by the Daily Cheque Book Report, which should be signed by the authorized officer after checking cheque book series input number.  At the end of the day all the cheque books should be checked and balanced with the help of requisition slips. In case of cheque book is issued without the requisition cheque of previous cheque book care must be taken to establish the genuineness of the customers and Form should be obtained. In some cases when cheque book is issued by the person duly authorized by the account holder for obtaining cheque book, a letter of issuance of cheque book is sent to the account holder for his acknowledgement. 40
  • 49. Internship Report National Bank of Pakistan In rare cases when customer demand printed cheque book, requisition slip with demand letter is sent to the NIFT (National Institutional of Facilitation Technology) (PVT) Ltd. CLOSING OF ACCOUNTS Account Closing by Customer The customer can close the account. Customer is required to submit an application for closing the account. Then the account is closed out and his balance is paid to him after deducting the closing charges, i.e., Rs. 200 and the application is filed in Account Closing File. Remaining leaves of cheques will also be collected from the customer. Account Closing by Bank i. Dormant Account All current accounts which have not been operated for six months or all saving accounts which have not been operated upon for one year classify as dormant account. ii. Inoperative Account All the current accounts which have not been operated upon for 2 years or all saving accounts which have not been operated since 3 years are classified under inoperative accounts. Operations in accounts classified as dormant or inoperative will remained suspended unless request in writing for activation or restoration is received from the Account Holder. If the account holder fails to reactive the account despite of bank's notice, the bank will have the right of exercising option of closing of account and in such case will refund the balance to the customer after deducting all applicable charges. iii. Treatment of Deposit declared Unclaimed Unclaimed Deposit A debt payable owing by bank due to the reason of deposit in respect of which no transaction has taken place and no statement of account has been requested by the creditor during a period of ten years are classified under unclaimed deposit. These are simply a debt owned by bank when a customer has not been operating his account during a period of 10 year. The bank serves a 3 month Final Notice in writing to the account holder at his latest known address for his reciving balnce lying in account. Upon expiry of such period NBP then surrender the deposit to the SBP. 41
  • 50. Internship Report National Bank of Pakistan Locker Services Section National bank of Pakistan also provides lockers facility in the country. It means a box operate by a customer of holder on permanent basis. Locker operation account is allowed for a account holder, Non-account holder not able to operate it. There are four types of locker depending upon the size of lockers operate in banks. • Small size locker • Medium size locker • Large size locker • Extra large size locker An application form is necessary for customer with desire documents and approval made by the head of department. Lien is placed on the account of a locker holder on drawing of amount. Entries are made on “Locker Register” as well as on the system. Locker No and Key No is allotted to the locker holder for further operation. The dual control system is used for lockers. The officer has Master Key to apply on the locker but he cannot open the locker of any person. The locker holder provides the bank his specimen signature. Whenever the locker holders come to open the locker, his signatures are verified by the officer and then will be able to open his locker. If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the presence of his as mentioned in his will or and his belongings are given to them and the locker is closed. Customers paid the rent of lockers on annual basis. The annual rent of different lockers, their security charges and insurance is shown in table. Annual Rent of Lockers SIZE OF LOCKERS RENT SECURITY INSURANCE Small 4000 25000 500,000 Medium 5000 30,000 500,000 Large 6000 200,000 700,000 Extra-Large 6000 200,000 1000,000 42
  • 51. Internship Report National Bank of Pakistan Cash Dealing Department Cash department of NBP is given the complete responsibility of handling all receipts & disbursements of cash as a result of transaction in both local and foreign currencies & near cash items such as traveler's cheque etc. (when they are issued against cash).As a consequence it is also responsible for the book keeping of these transactions & the safe custody of cash and near cash securities of NBP. Cash department of NBP is separate close part; no one other than cash departments' employees is allowed to enter into that area. Cash department performs the following functions.  Cash receipts for receive deposits.  Cash payment for encashment of cheques. Receipt The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards. Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. CASH RECEIPTS The depositor uses pay-in-slip for depositing the amount in their account. There are two types of pay-in-slip. Both are in different colors for clear identification. i. Cash Pay-in-Slip ii. Cheque Pay-in-Slip There are two parts of deposit slips: • Counter foil • Adjacent credit voucher i. Cash Pay-in-Slip It is used whenever the account holder deposit cash in his account. For this he have to fill the both parts i.e; counter foil and adjacent foil of the slip properly writing the amount in figures as well as in words. Cashier of cash receipt accept the deposit slip with cash and then signed the both parts of deposit slip, affixed cash received stamps on it and returned the counterfoil to the customer. The amount is credited to the customer's account by the computer terminals. ii. Cheque Pay-in-Slip It is used whenever the account holder deposit amount in his account by the cross cheques. This slip is used for transfer of funds from one customer's account to another. The processing 43
  • 52. Internship Report National Bank of Pakistan of the cross cheques held in the clearing department. The cashier just check the cross cheques to confirm whether it is acceptable or not. CASH PAYMENT It is the primary function of bank to repay the money received from his customer’s account usually by honoring the cheques. It is the contractual obligation of a banker to honor his customer’s cheque. Bankers in Pakistan deal with three types of cheques. Types of collected Cheques Bearer Cheques Bearer cheques are cashable at the counter of the bank. These can also be collected through clearing. Order cheque These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification. It can also be collected through clearing. Crossed Cheque These cheques are not payable in cash at the counters of a banker. It can only be credited to the payee’s account. If there are two persons having accounts at the same bank, one of the account holder issues a cross-cheque in favor of the other account holder. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque. The Requisites of Cheques There is no prescribed form of words or design of cheques but in order to fulfill the requirements the cheques must have the following:  It must be in writing  It must contain an order to pay and addressed a specified bank.  The order must be unconditional  The order must direct to pay on demand  The sum ordered to be paid must be certain  The payment should be ordered to be paid to a certain or to his order or the bearer Payment of Cash Cheques at Counter Acceptance of Cheques Whenever a cheque is presented at counter for payment, the officer examines the cheque before issuing a token. The following is looked into:  The cheque is drawn on the same branch of the bank.  The cheque is not crossed that it is open cheque. 44
  • 53. Internship Report National Bank of Pakistan  It is not stale or post dated.  The drawer has signed the cheque.  The amount written in words and figure is same.  The drawer of the cheque duly signs all alteration or cancellation.  The presenter has signed at the back of the cheque.  Cheque should not be damaged  Funds must be sufficiently available  No legal bar prohibiting payment Affirmation of Signatures The accountant/authorized officer examine the cheque for the above mention things. When cheque is found acceptable in all aspect, the signature of the drawer compared with his signature on the Specimen Signature Card. When it is found similar to specimen signature, he affixes SIGNATURE VERIFIED stamp, near the drawer signature in the cheque and sign it. Computer Terminal Process The cheque is received in computer terminal , where the computer operator cheques the balance of the account holder . the operator also sees whether the stop payment instructions are received from the account holder or not. After considering these two points he checks the balance in the account through a software of Bank Back Office (BBO). If the account has the sufficient balance, the cheque is posted. The cheque is then handed over to the cashier after the allotment of the token number to the cheque. The token is given to the presenter.The cheque is cancelled after posting & is returned to cashier . Payment of Cash The cashier calls the presenter and takes his token and compares the token number with the number written at backside of the cheque. He takes out the cash to be handed over to the presenter and writes its denomination at the back of cheque. Thereafter, he gets signature of the presenter at the back of the cheque and hands over cash to him and affixes Cash Paid stamp on cheque. Stopping the Payment of Cash on Presentation of Cheques The payment of cheques is stopped dishonored on the following grounds:  Effects not yet cleared then request to present again  Irregularity endorsed  Drawer’s signature differ  Payee’s endorsement requires bank’s guarantee  Alteration requires full signatures  Cheques is not post dated  Cheques is without date  Amount in figures and words differs 45
  • 54. Internship Report National Bank of Pakistan  Crossed cheques must be presented through the bank  Payment stopped by the drawer Payment of Cheques in Transfer The customer of the branch deposits the cheque drawn on the same branch, for the payment to the credited into his account, attached with pay in slip. The officer accepts it after looking into the following: The person depositing the instrument for collection is the customer of branch.  The correct pay in slip (current/saving) is attached with the cheque.  The depositor signature is presented on the slip.  The account number of depositor is written on both the sides of the slip.  The word and figure of the amount tally with each other.  The cheque is neither post dated nor stale.  The drawer signature is present on the cheque.  The drawer signs the alteration on the cheque.  The cheque in name of the company, firm etc is not going into the account of any person.  The cheque with Payee Account Only crossing is not being deposited into the account of any other person other than the person mention on the cheque. Processing of Transfer Cheques The cross cheques are then transferred to the Clearing Department. All the cross cheques are processed through Clearing Houses. The local cheques are cleared through local clearing and outstation cheques are cleared through intercity or short credit clearing. CASH LINK NBP ATM SERVICES FOR CONVENIENCE  Cash withdrawal according to your cycle limit.  Transfer of funds between PLS saving account and current account of the same customer through the same ATM card  Account balance inquiry.  Instant mini statements of accounts listing the last 15 transactions in account. Request for a new cheque book ,which might be collected by the customer from the branch. How much cash can be withdrawn There is a 24 hours cycle cash withdrawal limit imposed on all ATM cards. Withdrawal limit depends upon the type of customer. Personal identification number (PIN) A pin mailer issued to the ATM card holder carries the pin number in a sealed envelope. Card holder is required to keep the PIN number in a safe place as all the operation are carried out 46
  • 55. Internship Report National Bank of Pakistan on the ATM are carried out through the same. Clearing Section Clearing "The transfer of funds from one branch of bank to the other branch of the same bank or the other bank on which the instrument is drawn , without involving cash through “State bank’s clearing house " We can say that cheques which cannot be cashed at the cash counter of the bank or cross cheques go through the clearing process. 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. Clearing House A clearing house is an association of commercial banks set in State Bank of Pakistan for the purpose of interchange and settlement of credit claims National Institutional Facilitation Technology (NIFT) Pvt. Limited is performing the function of clearing and charges commission against it. Before the NIFT, the State Bank of Pakistan (SBP) with efficient controlling staff performed the process of clearing. If SBP had no office at a place, then NBP, as a representative of SBP acted as a clearinghouse. NIFT is a joint venture between a six major banks and private sector. The clearing operations were commenced by the establishment of first centre at Karachi and now it has been extended to all major cities of Pakistan. At such places where the area is not covered by NIFT the clearing and settlement services are provided by National Bank of Pakistan. TYPES OF THE CROSS CHEQUES Some specific types of cheques are being entertained in the clearing department of NBP are: i. Local Cheques By local cheques we mean collection of cheques from the banks which are located within the city. It means the presenting bank and the bank on which the cheques is drawn are situated in the same city. ii. Outstation Cheques By outstation cheques we mean collection of cheques from the bank, which are situated outside the city. It means the presenting bank and the bank on which the cheques is drawn are not situated in the same city. 47
  • 56. Internship Report National Bank of Pakistan iii. In House Cheques In house cheques are drawn on one branch of NBP and presented to another branch of NBP such cheques are marked with the transfer stamp. TYPES OF CLEARING i. Local Clearing ii. Short Credit Service iii. Local Short Credit iv. Inter City i. Local Clearing All cheques and other Negotiable Instruments payable locally is presented through the local clearing system. NIFT provides the local and intercity services. Cheques deposited at branch counters presented for clearing on the same day. Bank give credit to the customer's account on the day when clearing settlement takes place. No charges levied for local collection of cheques or instruments which are collected through local clearing. Time Frame for Collection of Local Cheques/ Instruments The customer's account credited in respect of local cheques on the next day from the date of acceptance of the cheque. ii. Short Credit Services (SC) For small cities where there are no NIFT services then branch bank clears the cheque either through mail/ TCS or bank can own provide service and charge commission for providing services. Bank give credit to the customer's account on the day when clearing settlement takes place. Time Frame for Collection of SC Cheques/ Instruments The customers account are credited in respect of outstation cheques on 4th 0r 5th day from the date of acceptance of the cheques. iii. Local Short Credit (LSC) This arrangement has been set up if the customer wants amount in his account on urgent basis. Bank then provide service to its customer for those in house cheques when presented and draw on NBP. Both can be of different branches of the bank but must be located within the city. No Bank charges are recovered from customers for these services. Time Frame for Collection of LSC Cheques/ Instruments The customer's account credited in respect of local cheques on the same day from the date of acceptance of the cheque. 48
  • 57. Internship Report National Bank of Pakistan iv. Inter City NIFT pvt. limited is responsible for the clearance of the outstation cheques. Cheques drawn on bank's own branches at outstation centers or outstation other banks both are collected using the inter city arrangements maintain by NIFT network. Its offices are present in all the large cities of Pakistan. NIFT network is present in: ∗ Islamabad ∗ Karachi ∗ Quetta ∗ Sukhar ∗ Hyderabad ∗ Peshawar ∗ Gujranwala ∗ Sialkot ∗ Daera ismael khan ∗ Bhawalpur ∗ Muzafarabad ∗ Faisalabad ∗ Rawalpindi ∗ Multan Time Frame for Collection of Inter City Cheques/ Instruments The customer's account credited in respect of local cheques on the 2nd day from the date of acceptance of the cheque. CLEARING PROCESS The process of clearing is carried in two categories. i. Inward clearing ii. Outward clearing i. Inward Clearing Cheque received of other parties after clearing are lodged in the system by vouching date, signature, documents numbers is noted. The cheque without sufficient balance, changing in amount, signature and verifying other formalities returned to the customer by attaching return 49
  • 58. Internship Report National Bank of Pakistan memo explaining the cause of cheque return. Return cheques also enter into the return register by writing dates, causes of return, and amount. After posting summary of cheques is prepared and cheques return to third parties through NIFT. ii. Outward Clearing These are the cross cheques deposited by the customers for credit the same amount to its account. Before posting following is being performed.  Crossing cheque stamp if not place it.  Title of account and account number from deposit slip is checked.  The deposits slip is handed over to the customers by branch stamping.  Entry is done in daily register.  Add list is being prepared.  Special crossing clearing stamp of next day is affixed.  The payee’s amount will credit stamp is affixed on back of the cheque.  In case of outside city clearing Inter-Branch Clearing Stamp is affixed.  Place all the cheque in a bag with special closing and sent to NIFT. Excess of outward clearing over inward clearing produces a net increase in clearing account balance. Excess of inward clearing over outward clearing produces a net decrease in clearing account balance. The first case is reffered to as favorable clearing & the second case is unfavorable clearing. CHARGES ON SC & INTERCITY CLEARANCE IN NBP On clearance of instruments through SC and inter City three types of charges are deducted from the depositor's account i. Commission ii. Federal excise iii. Postage i. Commission rates are NBP to NBP -------------------------- 0.15% NBP to Other Banks----------------- 0.20% ii. Postage rates are ------------------------------------------ 75 Rs. iii. Federal excise rates are ------------------------------------------- 16% of Commission On clearing of cheques the minimum amount of commission is 50 Rs. and if it is less than minimum amount then Rs. 50 and in case if it is greater then greater amount is considered. PROCEDURE FOR CLEARING THE CHEQUES 50
  • 59. Internship Report National Bank of Pakistan Procedure for Outward Clearance i. Pay-in Slip- Cheque 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. 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 in case of local clearing.  Endorsement stamp of NBP  Clearing Stamp The original cheque will be marked with three stamps which are called OBC stamps (over branch clearing stamp) in case of intercity clearing.  Endorsement stamp of NBP  Crossing Stamp  Next Date stamp At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the NIFT for local as well as intercity clearing. Entry is done in daily register. Procedure for Inward Clearance All the remittance which are received from other banks then go through the inward clearance which include all the steps for lodging of amount into customer's account. i. Fanfold The drawer bank then verify the payer's account for clearance of the cheque and send back the amount to the presented bank or NBP through the fanfold. In case if the customer account is short of balance then the original cheque is returned back to the presented or collected bank with the reason of returning the cheque on the clearing return form. NBP receive these amount in form of remittance. ii. Charge Deduction On receiving the amount through fanfold bank deduct service charges of clearance which are excise duty, commission and postage for the intercity and SC payments. Vouchering is done on four types of fanfold;  Debit voucher for---------------- total amount charged for sevice  Credit voucher for--------------- commission  Pay –in-slip of cheques for----- Federal excise 51
  • 60. Internship Report National Bank of Pakistan  Pay-in-slip of cheques for------ postage No any charge levy for local clearing so no vouchering is required for this. Customer's account is credited on the next day of clearance. iii. Credit of the customers account After deduction of charges the amount is transferred and credited to the customer's account. Remittance Section Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. NBP offers the following forms of remittances. Main modes of remittance are: • Pay Order • Mail Transfer • Demand Draft • Telegraphic Transfer PAY ORDER Pay order issued from one branch is only payable from the same branch. It is issued for payment in the same city. Issuance of pay order  Gets application form from the customer.  Issues pay order after vouchering all necessary formalities.  Gets recovering charges and withholding tax in case of cheque deposit for PO.  Makes entry in PO issue register.  All pay order must be crossed “payee’s account only”.  It must be noted that Inter-Branch Clearing Advice is not involved because it is payable at the same branch and same city only. Cancellation of PO  Application for cancellation with original pay order.  Recovers cancellation charges.  Signature verified by the officer. Duplicate PO  Checks the record that payment has never been made.  Gets application for issuing of duplicate PO.  Recovers charges as per schedule.  Issues duplicate PO by writing “ink red” pen “Duplicate PO”. 52
  • 61. Internship Report National Bank of Pakistan Issuance Procedure to an Account Holder  Applicant fills an application form, which is general credit voucher and tells the name of person in whom favour it is to be drawn.  Account Holder draws a cheque (it can be in cash as well) of the amount of which Payment Order is to be issued and the amount of commission to be paid by him, which is Rs.50 for Account Holder.  A general credit voucher is filled by Bank for commission charges and Account Number is debited (in case of cash, cash is debited). Issuance to a Non-Account Holder  Applicant fills an application form, which is general credit voucher and tells the name of person in whom favour it is to be drawn.  Non-Account Holder deposits the amount of Payment Order, to be issued on cash counter along with the amount of commission to be paid by him, which is Rs.100 for Non-Account Holder.  A general credit voucher is filled by Bank for commission charges and Account Number is debited (in case of cash, cash is debited). MAIL TRANSFER The same application form is used for draft and mail transfers generally in NBP.The mail transfer is not delivered to purchaser but instead the issuing office to beneficiary’s branch on its own risk and responsibility sends it. This type of remittance facility is provided only when the beneficiary happens to be customer of the bank. The amount is directly credited to the beneficiary’s account and as such loss of mail transfer has no concern with the applicant. Also the credit balance of customer is transferred from one branch to another branch with the help of this instrument in case the Customer so desire. The applicant desiring to remit the funds by way of mail transfer can either deposit cash or he may ask the bank to debit his account with the cost of mail transfer including bank charges. An exchange memo is issued to the applicant in case he desires to have some sort of receipt from the bank for his office record. The participants of mail transfer are recorded in mail transfer register just like drafts while at the paying branch instrument is treated as branch voucher for credit into beneficiary’s account. If the customer is not he account holder of this bank, then firstly he has to deposit the money and then rest of the procedure will be adopted to transfer his money. Secret test apply on MT. If the amount is less than 5000 rs then test will not apply.  It is the quick and safe mode of transfer of funds.  Application form submission is same as DD.  In MT funds are transfer through system within seconds if 2nd branch is online.  Funds transfer only same branch of the banks. 53
  • 62. Internship Report National Bank of Pakistan  It is necessary that the customer must have the Branch Code of the host branch, account number of a drawer, name of place, etc.  Inter-Branch Clearing Advice is involved. DEMAND DRAFT A method used by individuals to make transfer payments from one bank account to another. Demand drafts are marketed as a relatively secure method for cashing checks. It is made for both account holders and non account holders. Secret test apply on DD. If the amount is less than 5000/- Rs. then test will not apply. Types  Junior draft  Senior draft Junior Draft For 1 to 1000/- Rs. junior draft is made. Senior Draft For 1000 to 10 million Rs. senior draft is made. Particulars of DD  Date  Name of the office on which it is drawn  Name of beneficiary  Amount in words and figures  Bank exchange rates  Signature and address of the applicant Issuance of Demand Draft  The customer on standard DD application form makes request.  All information such as name of beneficiary, place where the DD is drawn, amount mode of payment, cash/cheque/debit authority, signature with name and address is filled.  The issuer checks the information.  Commission as per schedule of charges is charged.  Federal excise duty is charged.  After the customer has made payment by cash/cheque, get the voucher from cash department.  The DD of required amount is prepared.  The DD in NBP is manually prepared. 54
  • 63. Internship Report National Bank of Pakistan Entry of DD Entry is made in DD issued register as well as on the system on which following entry is passed. Dr: Cash/Customer’s A/C Cr: DD issued Cr: DD issuance charges Drawing branch of bank will give credit to the drawee branch on same date the draft is issued; through their account for settling inter branch transactions.NBP does not pay before the receipt of relative advice. On the receipt of relative advice the drawee branch will credit the amount into their draft payable account and each time draft is paid, this account will be debited with the amount of draft paid. In case the draft receipt is not received the draft will be paid “ex-advice” duly entered in the ex-advice register and entry in said register will be marked off on receipt of relative advice. Cancellation of DD  If any customer wants to cancel DD, bank obtains application in writing along with original DD.  Verifies the signature of applicant. This signature should tally with the signature of DD application form.  Checks the DD account into system of payment made or not.  Marks cancellation in DD issued register.  Recovers cancellation charges.  Payment is made from Suspense Account DD cancelled after recovery of cancellation cheque is per schedule charges.  Inform the drawee branch regarding cancellation and ask for Inter-Branch Credit Advice (IBCA).  On the receipt of IBCA adjustment is made. Issuance of Duplicate DD In case draft is lost or destroyed by mistake, its duplicate can be issued at the request of purchaser after obtaining indemnity bond on stamped paper of appropriate value. This is done to cover the risk of double payment by mistake.  Application form received from purchaser and verifies the signature.  Informs the drawee branch of the loss of DD and advise them to mark caution against payment if presented.  After necessary checking, the drawee branch will inform the branch about the status of DD whether it has been paid or still outstanding.  Writes on the face of duplicate DD in red ink Duplicate in lien of original DD No--- dated ---reported lost. 55
  • 64. Internship Report National Bank of Pakistan  The signing officer must check all the particulars before signing. TELEGRAPHIC TRANSFER It is the message, which is sent from one branch to another on the order of payer to payee through wire. It is one of the quickest means to transfer fund through the use of Telex/fax/internet or cable. Secret test apply on TT. If the amount is less than 5000 rs then test will not apply.  It is quickest way of transfer funds from one branch to another of the same bank through telephone, fax/telex.  Procedure of application and vouchering is same as a DD.  Apply test on the TT message and appropriate codes and instructions such as advice & credit or advice & debit.  It is mostly cleared through main branch of the same area.  Recovers commission, and other charges as per applicable rate. The entries at issuing office are recorded in telegraphic transfer issued issued register while at the other end it is entered in the tt payable register. Issuance and Payment of Telegraphic Transfer Outgoing Application form is filled by the client in whom the name and account number of the beneficiary, which is to be credited and name of customer, is required. For telegraphic transfer, the payment can be made in case or by cheque or by debiting the customer’s account if he is the account holder. The amount of Telegraphic Transfer should be written on the form. The amount is transferred to beneficiary’s account in the other bank. An advice is given to the customer but application is filled in the record of the bank. Issuance and Payment of Telegraphic Transfer Incoming When a TT is received then an entry is passed in TT incoming register after verifying the test. When a person comes and wants to encash his TT, bank checks the statements of that person. If the bank finds any account credited to the person’s account against TT, bank prepares a voucher for this payment against that TT. The customer then presents that certificate to the cash counter and collects money. 56
  • 65. Internship Report National Bank of Pakistan Remittance charges Exchange on DD/MT/TT From 1 to Rs.100,000/- 0.10% minimumRs.50/- From Rs.100,000 to 500000 0.05% minimumRs.100/- 0.4 % minimumRs.400/- From 500000 to 10000000 Issuance of Duplicate Draft For A/C Holder Rs. 200/- For Non-A/C Holder Rs. 250/- FED on DD,MT, PO 16% of commission Postage charges on MT & DD Rs. 75/- only Pay order For A/C Holder Rs. 50/- (flat) For Non-A/C Holder Rs. 100/- (flat) Issuance of Duplicate PO For A/C Holder Rs. 100/- (flat) For Non-A/C Holder Rs. 150/- (flat) ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The 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. 57
  • 66. Internship Report National Bank of Pakistan PRINCIPLES OF LENDING i. Character It is based on the borrower willingness to repay the obligation. The loan officer sees the family background mode of living, business nature, habits, moral reputation and etc. before giving the loan. ii. Capacity The ability of borrower to repay the loan when due. The borrower ability to repay the loan is assessed by the office so that he will be able to repay the loan in future. iii. Capital The officer assesses the capital of the borrower. If assets held by the borrower are liquid, they can be easily convertible in cash; but if non liquid is used then it is risky to given loan. iv. Collateral It is collateral security. It may consists of stocks bonds , bill of exchange, bills of lading, etc. the bank has protect himself from any discrepancy in the future. They increase the ability of the borrower to obtain the funds from the bank. v. Condition The economic condition of the borrower is determined. The economic conditions of the borrower in and outside the country effects the repayment of loan. If condition is favorable then loan is given otherwise vice versa. TYPES OF ADVANCES i. Demand Finance One time disbursement of the whole amount sanctioned, as the limit for the credit allows. Any person, individual, group, company, firm and all others can achieve this Mode of financing. The mark-up or interest is calculated on the total amount disbursed and requires to be paid before the date of final adjustment. Regarding the amount, limit and period, it depends on the nature of the case in review. ii. Cash Finance In this mode of financing the borrower is allowed to make withdrawals of funds as he requires, but the total amount outstanding cannot exceed the limit sanctioned. The mark- up/interest is calculated on the amount outstanding on his account. The calculation of mark-up/interest is based on the number of days a specific amount is withdrawn. This finance if normally borrowed by small traders or individuals for their petty matters involving cash transactions up to rupees three hundred thousand maximum. iii. Running Finance To assist a large-scale business operator to carry on his day to day requirements of liquid funds, this account is opened is made operation in his favor. Running finance is provided 58
  • 67. Internship Report National Bank of Pakistan where the amount goes beyond rupees three hundred thousand. The mark-up/interest is calculated the same way as in case of cash finance. Security against running finance is that which is easily convertible in to cash and bank kept 25% margins with it. iv. Loans When a customer borrows a fixed amount from a banker repayable either in periodic installments or in lump sum at a fixed future time, it is called a "loan". When bankers allow loan to their customers against collateral securities they are called secured loan and when no collateral; security is taken it is called "clean loans" Types Of Loans The credit department of NBP has providing the following types of loans a. Short term loans b. Long term loans c. Working capital loan d. Syndicate (project) loan e. Monitoring CRITERIA CHECKED FOR LOANS Major areas requiring focused attention of the analyst are: Financial Condition Which is reflected in the trends of: ∗ Net sales ∗ Gross sales ∗ Operating profits ∗ Net profits (at least for the last 3 years) Structural Liquidity It refers to the extent of liquidity usually available in the business, or which is the routine requirement of the borrower based on the nature of his periodically maturing liabilities. Industry/Business Of Operation The banker has to check that in which industry or segment of market the loan is being given this is important because if there were a recession in that industry for decades then it would not be feasible to invest in such a business. Certain traditionally stable industries are in Pakistan in which NBP feels satisfied while investing. For example if they feel satisfied by investing in ICI. Debt Equity Management Excessive reliance on debt, rather than plough back of profits or injection of fresh equity, to 59
  • 68. Internship Report National Bank of Pakistan maintain a healthy combination of debt and equity is thought with danger because ultimately the debt servicing requirements place a heavy burden on its liquidity thereby its survival. Asesst Management Asset management involves the analysis of how productively the assets of the company are being used. Sales and profitability can be measured with this. Borrower’s Credit Worthiness In order to get a complete picture of the borrower’s credit worthiness, inquiries will have to be made about: ∗ His business. ∗ Trade experience. ∗ Assets and liabilities. ∗ His account with bank or with other banks. ∗ His financial statements and income tax returns. ∗ An interview with him will be necessary to elucidate or supplement the information that may have been collected. Management Before giving loan NBP also checks whether the management have the depth, skill and experience. If the management is aggressive and adoptive to the new changes then it is most likely that the banker may receive the loan back on due date Securities In case the borrower is not in a position to meet his obligations, there must be something else to call back upon. So bankers take securities to have a resource to them to guard liquidity, that is, security is an insurance against calamities. In case of cash finance the customer have to give the same amount of money to the NBP as a security for which it takes loan. The bank provides the following securities to the customers. Mortgage Transfer of interest in movable property for securing the payment of money lend on existing or future liability. The bank provides the following two types of mortgage.  Registered mortgage  Equitable mortgage  Registered mortgage 60
  • 69. Internship Report National Bank of Pakistan Registered mortgage is provided on the residential property, commercial industrial property, raw plot, etc. A party can get registered mortgage if they provide the following documents to the bank. ∗ Title deed ∗ Non encumbrance (NEC) ∗ pit form (in case a constructed hose) ∗ Valuation certificate ∗ Affidavit ∗ Mortgage deed ∗ Personnel guarantee of mortgagor ∗ Power of attorney ∗ Legal opinion. Banks examine all these reports, and if they are correct then issue the mortgage to the party. The bank examines these reports to see that the property they want to mortgage is registered and is not already pledged. The bank also calculates the value of the property and the legal opinion of the customer in case of non-payment.  Equitable mortgage Equitable mortgage is provided on the residential property, commercial industrial property, raw plot, etc. ∗ Title deed ∗ Non encumbrance certificate (nec) ∗ Pti form (in case a constructed house) ∗ Valuation certificate ∗ Affidavit ∗ Memorandum of deposit of title deed ∗ Personal guarantee of mortgagor ∗ Power of attorney ∗ Legal opinion In this mortgage a charge form bound the customer for any legal action in case of non- payment. In this type of mortgage hypothecation of stocks involves. 61
  • 70. Internship Report National Bank of Pakistan Pledge A pledge is an “a class security given to customers for stocks ware house, customs, and etc. it is defined as actual delivery of movable property to lender as security for a loan. When the customer makes the payment of the loan in full he can back his mortgage property from the bank i.e. when full payment is made the stock is released. PROCEDURE OF SANCTION OF LOAN Any individual or company, who wants loan from NBP, first of all has to undergo the filling of a prescribed form, which provides the following information to the banker.  Purpose of loan  Details of all firms or companies associated with business  Name of proprietor/ partner/directors  Accurate and up-to-date balance sheet and profit and loss statement of last two years of business  Market report of the borrower repute  Report from the bank if borrower has maintain his account with the bank  CIB report  Full details of existing limit and actual liability against the business  Particular about the foreign exchange deposits and bills given by the borrower to the bank  Memorandum and article of association in case of limited company  Audited report of balance sheet and income statement of last two years After checking all the securities, customer verification the manager done the following tasks 1. Preparation of credit proposal 2. Prepare the about the customer 3. Sanction of loan Preparation of credit proposal After formal application for the credit the party submits approval. For this purpose borrower can use coarse paper or the form provided by the bank. Along with the application borrower also submits the documents required by the bank. The bank manager evaluates the documents provided by the borrower. He gets the party’s credibility report confidentially from the other commercial banks. He checks the balance sheet and income against the assets in the company. He also measures the percentage of owner’s equity. Then he doses the ratios analysis of the company. If the party is involved in the export and import business then the data of the last three years of this business is considered. The manager of the bank also examine the project violability, the securities provided by the debtor to the bank are evaluated by measuring their worth. In the case of pledge is assessed 62
  • 71. Internship Report National Bank of Pakistan by the manager while in case of new party manger checks from where the party is financing for their business Prepare the Proposal about the customer After preparing the proposal manger prepare the report about the customer. Report contains the following information ∗ Name of the company ∗ Date of establishment ∗ Address ∗ Nature of business ∗ Branch office ∗ Worth of business ∗ Date ∗ Banker’s opinion ∗ Head cashier opinion ∗ Branch manger opinion In case of partnership business following information are included in the report ∗ Partner, their share in capital, profit and loss ∗ Deed of partnership ∗ Partnership letter ∗ Turn over ∗ Net profit ∗ Personal property of partners ∗ Bank balance of partners ∗ Advance payment of suppliers ∗ Particular of machinery installed in the factory through financing Incase of corporation/limited companies the following information are included ∗ Incorporation and commencement of company ∗ Sales offices 63
  • 72. Internship Report National Bank of Pakistan ∗ Capital information ∗ Directors and their contribution to capital ∗ Balance sheet with explanation and evaluation ∗ Net worth of the company Sanction of Loan If the limit of the loan lies within the power of manger then he sanction the loan otherwise manger with the covering letter along with all necessary documents sends it to the concerned sanctioning authority. ACCOUNTS DEPARTMENT The main function of account department of NBP is to maintain general ledger accounts and after the business hours the function of the account officer is to close books. There are many other important functions performed by accounts department of NBP so broadly they can be categorized in three heads • Routing of expenses vouchers • Preparation of daily activity reports • Preparation of weekly and monthly statements • Preparation of statements for tax purpose ROUTING of EXPENSES Vouchers of all expenses and material purchases are routed out through this department. As far as the expenses are concerned, they include the  Heads of salaries paid to confirmed employees of bank  Wages paid to employees that are on contractual basis  Rent of the building  Lease installment  Insurance premium paid to insurance company for the insurance of vehicles and cash in safe and counter.  Utility bill, which consists of courier, electricity, water and gas bills  Medical expenses (reimbursed) Voucher System Voucher is written authorization sued in approving a transaction for recording and payment. Voucher is a system, which is generally designed to provide strong internal control over the transaction, which takes place during the business hours. It is prepared whenever  A transaction takes place in any department of the bank.  One debit and one credit voucher is prepared 64
  • 73. Internship Report National Bank of Pakistan  At the end of the day these vouchers are collected and recorded, In bank two vouchers are used i. Debit Voucher ii. Credit Voucher Debit Voucher Different types of debit vouchers are used by the bank as an evidence of the transaction. For identification they are differentiated by using different colors. Debit vouchers are used in three cases:  Whenever any expense is incurred  For the preparation of two negotiable instruments i.e; MT, DD.  When Account holder transfer money in his account then bank deduct charges on intercity and SC clearing. The account of the customer is debited with the amount deducted for services and debit voucher is prepared. Accounts department used debit voucher mainly for expenses while the other two purposes of debit voucher is used by the remittance department. The format of the debit voucher includes:  Name of the branch  Date  Branch No.  Account No.  Transaction code  Amount and other details (Narration) Credit Vouchers Different types of credit vouchers having different colors and format are used by the bank. There are three types transaction in which credit vouchers are used.  When a depositor deposits any amount in his account because it is the liability of the bank therefore credit voucher is prepared.  Any income received by the bank e.g . bank draft.  For the preparation of PO Salary Structure Salary included i. Bonuses 65
  • 74. Internship Report National Bank of Pakistan These bonuses are credited after every six months i.e. June and December . These are first and second profit bonuses and are equal to one month’s basic salary. ii. Allowances Allowances included house allowance ,transport allowance and medial allowance. iii. Provident fund Provident fund is provided to each employee on his retirement, contribution by employer and employee is 8.3%. DAILY ACTIVITIES REPORT The main function of this department is to check daily transactions whether cash, transfer of payments, billing, and clearing of all the departments. It includes the details of the following:  Loan transactions.  general ledger transactions  Foreign currency related transactions.  Fixed deposits transactions. Following procedure is followed in checking daily activities carried out in different departments of the branch.  All the vouchers, advices both manual as well as computerized obtained for posting in the system of each department.  All the vouchers and advices are further sorted in ascending and descending order for the sake of convenience in checking and tally information.  It is checked whether or not the account number, instrument number, document number and amount appearing in words and figures are agreed with the information appearing in the computerized record.  In case of changing or discrepancy informed to the concerned department.  All the credit, debit and billing voucher bunched separately.  The name of the branch, date of vouchering, title and number of vouchers is written on voucher must be cover authorized signature.  All the above vouchers assist in case of any enquiry and audit. PREPARATION OF STATEMENTS Second major function of accounts department is the preparation of various statements. These statements are: Weekly statements: These weekly statements are sent first to NBP head office Karachi. These statements are generated on weekly basis for the purpose of sending it to Head Office. These also include: 66
  • 75. Internship Report National Bank of Pakistan  Statement of affair  Deposit and advances position of the bank Monthly statements: These monthly statements are sent first to NBP head office Karachi and then these statements are sent to head office in consolidated form. All vouchers and statements signed and approved by manager accounts or who has authority to sign on behalf of the bank and whose signature appears in one of the bank’s book of specimen signature of a person who has authority to sign internal vouchers and record extents of its authority will be made by the counter manager. All vouchers prepared by different relative departments on computer. These statements are prepared on monthly basis and also sent to Head Office (Qatar). These include:  Provisional statement of income and expenses. This statement adjusted for accruals and pre-payments.  Monthly Balance Sheet and Income Statement  Comparative Statement In third and last step the following functions of accounts department of NBP are described as follows:  Approval of daily expenses voucher  SBP balance  Tax returns  Budgeting  Forward cover fee  Debit balance calculation.  Pay order /telegraphic commission transfer  Deposit entry  Depreciation  Result/budget  Head office report  Trail balance /fax position  Commitment return  Source and uses  Activity report  Monthly assets and liability  Liquidity 1,2,3,4,5, years  Excise duty balancing 67
  • 76. Internship Report National Bank of Pakistan  Customers internal account statements  Computer complete back up  Quaterly statement size wise  FCY interest reporting  FCY interest checking  Services charges  A/c to be dormant  Letters to customer  Classification of deposits  Lists of deposits  A/c opening and closing  Staff loans  A/c blocked and unblocked  Monthly resident and non resident  Zakat calculation TAX PURPOSE STATEMENT The department also prepares two statements for the purpose of paying tax on monthly and annual basis. These statements are generated for the purpose of submitting to Central Board of Revenue. These are:  Statement of deduction of income chargeable under the head salary under Section 53 (Tax deducted at source)  Withholding Tax from the payments made to vendors, suppliers and other parties providing various services. The rate of withholding tax is as follows:  Suppliers------------------------ 3.5%  For other parties------------- 5% Data Entry The next task after receiving the data is to enter that data in to a computer. The floppy disk is directly inserted in the computer. The program in used is based on “COBOL” language. This program is designed in away that it demand “Hash Value” value before opening the floppy for further action this value serve the purpose of password or pin code send by the branch on entering that value the data enter in to the computer. This computer is attached with the terminal of central computer. The operator of that terminal takes the data from the computer and converted it in to a text file through that terminal the data finally goes to the central computer. ACCOUNTING PROCEDURE IN NBP: 1. Various departments use debit and credit vouchers for regarding the transactions. 2. Accounting department receives the departmental journal from the departments 68
  • 77. Internship Report National Bank of Pakistan together with all vouchers. 3. Verify correction of total of all into departmental entries in departmental journal. 4. Sort vouchers into general ledger a/c order debit separately from debit for each account. 5. From departmental journals add all debits and all credits for each general ledger account and write total for each accounting relative account and extend new balances. 6. Prove debit and credit totals to department journal total. Write total obtained from machines list for each contingent accident in general ledger and up data balances. 7. Date and sign general ledger and obtain signature of an officer . 8. Place general ledger includes leaf binder in chronological order. BILLING & GOVERNMENT RECEIPT/ PAYMENT DEPARTMENT In this department all types of Government receipts i.e. Revenues, Taxes, Agriculture Tax, Government Fees, EOBI Funds and Utility Bills are deposited. This way NBP is serving great job of revenue collection and charges commission for providing services. This department is performing following functions • Payment of Provident Fund • Payment of Benevolent Fund • Payment of pension • Collection of utility bills • Collection of property taxes and Challans • Collection of dues of education institution • Payment of salaries • Payment of zakat The investment by the NBP in the provident fund for the benefit of their employees in 2008 is Rs. 8507300/- and in pension schemes reached to Rs. 17738992/- PAYMENT OF PROVIDENT FUND Provident fund are maintained by many organizations for the benefit of their employees. There are three types of provident fund granted by the organizations.  Government provident fund: fund maintained by government institutions  Recognized provident fund: fund maintained by private organizations fulfils the conditions maintained by law.  Unrecognized Provident Fund: fund maintained by private organization which has not been granted recognition by law BENEOVALENT FUND 69
  • 78. Internship Report National Bank of Pakistan The Funds are utilized for the relief of Government servants and their families by giving financial assistance to the families of deceased Government servants; to Government servants invalided out of service. COLLECTION OF UTILITY BILLS NBP as an agent of the SBP collects bills from the general public and charge commission for the services rendered. The commission on each type of bill is Rs. 8/- per bill. The branches collect the utility bills and the proceeds are then send to head office through MT. PAYMENT OF PENSION Pension is the Post-retirement benefits that an employee might receive from some employers. It is a payment, not wages, made regularly to a person who has fulfilled certain conditions of service, reached a certain age. The date up to which pension is payable may vary depending upon the employee services. It can be payable for Life, Death , Remarriage Types of Pension i. Employment based Pension ii. State Pension iii. Employees Old Age Benefits Employment-based pensions A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. The GOP has been introduced two types of pension are given to the employees on retirement on the basis of the services which they have rendered.  Retirement Pension: refers to pension granted upon 25 year of services  Superannuation Pension: refers to pension granted upon 30 years of services State pensions Many countries have created funds for their citizens and residents to provide income when they retire. GOP has been introduced pension for their employees who are working in the State owned Institutions; e.g WAPDA, WASA, PIA etc  Provincial Pension : granted to the employees who work under the government of Punjab.  Central Pension: granted to the employees who are employed under the federal government. Recently GOP increased the pension of central employees by giving them an arial of 20% and 15%: • 20% increase: For employees who have retired before 1999 • 15% increase: For employees who have retired after 1999 70
  • 79. Internship Report National Bank of Pakistan  Defensive Pension: It is given to the employees who work in forces e.g; PIA employees, Army, Navy, Police  Railway Pension: It is given to the employees who work in railway under the three head: • LHR: Lahore Railway Head • WS: Work Shop Head • RHQ: Railway Head Quarter Employees Old Age Benifit Non government employees having 5 or more than 5 employees grant EOBI funds to their employees. The contribution towards the fund by the employee is 5% of the basic pay scale of employee and by the employer is 1% of the basic pay scale. 71
  • 80. COMMERCIAL & RETAIL O M M E R C I A L E T A I L BANKING A N K I N G In this section products offered by NBP are discussed: • Premium Aamadni Scheme • Premium Saver Scheme • Accounts Department • President Karobar Scheme • Saiban Scheme • Advance Salary Scheme • Cash Card Scheme • Cash n Gold Scheme • Kisan Dost Scheme • Kisan Taqat Scheme • Pak Remit
  • 81. Internship Report National Bank of Pakistan COMMERCIAL & RETAIL BANKING National Bank of Pakistan serving following product lines: Premium Aamdani Scheme Unprecedented Safety - Unprecedented Return Monthly Income Scheme A monthly income scheme introduced by National Bank of Pakistan for investors as well as for general public. Incentives are available for investors providing finance facility against these certificates and also allowed to customers to convert existing deposits into National Bank Premium Aamdani Certificates. • Earn up to ١١% p.a. • Minimum deposit of Rs. ٢٠,٠٠٠/- • Maximum deposit of Rs. ٥,٠٠٠,٠٠٠/- • Investment period is ٥ 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 ٩٠% • Profits paid on monthly basis 74
  • 82. Internship Report National Bank of Pakistan Period Profit Rates ١st year ٧.٥٠% ٢nd year ٨.٥٠% ٣rd year ٩.٥٠% ٤th year ١٠.٥٠% ٥th year ١١% Premium Saver Scheme your's saving reward (PLS Saving Account) • Earn up to ٧.٢٥% p.a. • Minimum saving balance of Rs. ٢٠,٠٠١/- & a maximum balance of Rs. ٣٠٠,٠٠٠/-* • Free NBP Cash Card (ATM + Debit) • Convenience of NBP Online Aasan Banking (for online banking customers) • Two debit withdrawals allowed in a month & no limit on number of deposit transactions • Profit calculated on monthly and paid on half yearly basis President's Karobar Scheme Mera Apna Karobar National Bank of Pakistan is providing financing under President Karobar Scheme with the cooperation of government of Pakistan. The purpose of this scheme is to reduce unemployment from the country. Main features are as under 75
  • 83. Internship Report National Bank of Pakistan • Minimum down payment, ١٠% of asset price (٥% for PCO & Telecaster) • Tenure of loans ١ to ٥ years (for PCO ٢ years) • Grace period ٣ months • Maximum loan amount Rs. ٢٠٠,٠٠٠/- • Age ٤٥-١٨ years • Mark-up (variable) ١ year KIBOR + ٢.٠٠% p.a. • The customer will pay markup @ ٦% p.a., rest will be borne by GOP* • Life & disability insurance paid by GOP • NBP’S loan available for:  Utility Store,  Transport  PCO/Tele-centers Procedure to Apply • Customer to visit any NBP branch to obtain loan application form and scheme details. Application form could also be downloaded from the NBP web site. Photo copy of the form will also be accepted. Each form will cost Rs. 5. In case of photocopy or down- loaded form, form fees will be charged at the time of application submission • Branch to provide details of the scheme along with the required documents to be submitted with the application form • Customer to submit the application form along with all the required documents as well as the verification and the processing fees. • The application form and all the relevant papers of the customer will be checked by the Branch staff and if found complete, application processing will commence • If the case is approved then the customer will be informed accordingly and will be advised to deposit the Down payment and fulfill all the other product specific formalities • Upon fulfillment of all the details and approval of the loan by the competent authority, Purchase Order in favor of vendor will be issued and a copy of the same will be given to the customer 76
  • 84. Internship Report National Bank of Pakistan • Delivery of the financed asset will be made directly to the customer by the NBP selected vender Saibaan Scheme Open the Door to Your Dream Home (Home Financing) National Bank of Pakistan lending for construction of home to general public as well as employees of government and non-government institutions. Main features of this scheme are as under. • Finance is available for:  Home Purchase  Home Construction  Home Renovation  Purchase of Land + Construction • Period of repayment ranges between 30-20 years. • Loan available up to a maximum of Rs. 15-20 million. • NBP provide markup choices to its consumer i.e. Variable Discount Rate, Fixed Rate. • Minimum approval and disbursement timing. • Limited to areas where there are no documentations, fee, resale and foreclosure related issues, so to protect the bank’s interest. Mark Up Rates Variable Rate Option: SBP Discount Rate with (+2%) with12 months re-pricing Processing Fee Government Employees: Rs. 500/- irrespective of financing amount. For Others : Financing below Rs. 1 Million Rs. 1000 Financing between Rs. 1 to 4 Million Rs. 3000 Financing above Rs. 4 Million Rs. 6000 Eligibility • Balance Transfer Facility (BTF) • 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 • Property located in NBP approved localities. • Service duration: Two years for salaried class Three years for self-employed/business class. 77
  • 85. Internship Report National Bank of Pakistan Advance Salary Scheme Personal Loan Take up to 20 times of Your Take Home Salary NBP Advance Salary , the leading personal loan product of the country, is maintaining its inimitability ever since it was launched. This was only possible due to its swift growth and remarkable loan disbursement of over 138 billion. Employees can avail up to 20 net take home salaries with easy repayment installments. It's hassle free acquisition with no prior formalities and easy availability in a short turn round time are attributed as the most distinguishing features of the product. The product is offered countrywide. It's salient features are; • Easy installments of 1 to 60 months at your choice • Take upto 20 advance salaries • Quick processing and fastest disbursement • The product is for permanent employees of Government, Semi Government and Autonomous bodies receiving salaries through NBP accounts 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/- 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 Security Advance Salary required. Hypothecation of Consumer durables owned by the borrower. Three (3) Undated Cheques Max. Repayment Period 5 years (60 months) Advance in terms of # of net Up to 20 net take home salaries take home salaries Markup Rate SBP Discount Rate + 5% 78
  • 86. Internship Report National Bank of Pakistan Processing Fee 1% of Loan Amount Verification Charges Rs 500/- Life Insurance No Insurance of any kind. Documentation Charges at actual Contact Your Salary disbursing NBP Branch. At the time of approval and disbursement the applicant’s Remaining Service Age remaining service age should be 6 months after maturity of the loan Debt Burden 50% Minimum net take home no minimum take home requirement salary Cash Card Scheme one card does it all ATM + Debit Card NBP Cash Card is a 24-hour direct access ATM/ Debit card to bank account, which lets pay directly from the account as an alternative payment method to cash. The transaction is authorized and processed by entering PIN. The NBP Cash Card holders are able to transact at any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP, 1-Link & M-NET ATM’s across the count. • Use it as an ATM in any of the ATM’s in Pakistan • Use it as Debit Card in any of the outlets with ORIX POS machine • Cash withdrawal up to Rs. 20,000/- per day • Account Balance Enquiry • Mini Statement (Only at NBP ATM) • PIN Change facility (Only at NBP ATM) 79
  • 87. Internship Report National Bank of Pakistan Advantages • Customers don’t need to carry a lot of cash with you every time you go out. • Secure and Safe transaction. • Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment etc.) • Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs. • Enable to make purchases round 4000 POS (Merchants) Countrywide including 2500+ POS in Karachi. • No Card Issuance Fee for first 12 Months Investor Advantage Scheme easier financing ,profitable trading Financing Facility for Stock / Retail Investors • 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 customer's equity • Customer's equity freely available for investment. • Equity acceptable in cash or approved share. Eligibility • Pakisani National with vaid computerized national ID Card • Over 21 years of age • An account with NBP designated Branch • Equity in the form of cash or NBP approved shares • No default with any financial institution Application Procedure • Obtain facilty application form the NBP Marginal Desk at designated branches • Fill in the application form and submit it to the branch • On application approval, deposit equity as cash in the margin financing account at the bank. Alternatively NBP approved shares can also be deposited in the NBP CDC Account (CDC A/c No. 2345) • Start trading through comfortable & friendly trading centers establishment for you (In collaboratino with Taurus Security Limited a subsidiary of NBP) • Trading limit available for the amount of equity + bank financing. Cash n Gold Scheme encash and meet your needs Ready Cash Against Gold 80
  • 88. Internship Report National Bank of Pakistan With NBP's Cash n Gold, provide facility for ready cash against idle gold jewelry with no minimum limit and provide extra benifit. The main features are: • Facility of Rs. 10, 000/-against each 10 gms of net weight of Gold Ornaments • No maximum limit of cash • Repayment after one year • Roll over facility • No penalty for each repayment • Rate of mark-up 13% p.a. • Weight and quality of gold to be determined by NBP's appointed schroffs Kisan Dost Scheme Agriculture Made Easy Agriculture Farming Program National Bank of Pakistan is lending in agricultural field. National Bank of Pakistan is lending farmers for development of agriculture sector of the country under certain terms and conditions. NBP provide loan to farmers for production, development purposes, for purchase of tractors, for installation of tube wells, for purchase of agricultural instruments, micro loan, for construction of godwon, for construction of fish pond, for development of livestock and farming, for mil processing, for cold storage, bio-gas plants. • interest @ 14.5 percent per annum • Quick & easy processing • Delivery at the farmer’s doorstep • Technical guidance to farmers • Wide range of financing schemes for farmers • Finance facility up to Rs. 500,000/- for landless farmers against personal guarantee • Financing available against pass book, residential/commercial property, gold ornaments and paper security 81
  • 89. Internship Report National Bank of Pakistan • Loan facility on revolving basis for three years (renewable on yearly basis without documentation and approval) Kisan Taqat Scheme promise of prosperity Dairy Farm Scheme National Bank of Pakistan is providing loans for the dairy farms and for the development of the livestock and dairy farms. • NBP facilitates with livestock experts • Less documentation and easy to repay • Available at the next door step • Scheme is available in more than 50 branches of NBP PakRemit Scheme NBP's Internet Based Home Remittence Service Product Information 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, www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well. Process: • Remitters log on to www.pakremit.com 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 82
  • 90. Internship Report National Bank of Pakistan 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. Click here for details of NBP Foreign Exchange Branches. USPs ( Unique Selling Propositions)  Convenient and Fast  Reliable and Secure  Available 24 x 7 NBP Protection Shield Scheme Life is Precious Personal Accident Insurance 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) provided that the insured is not directly involved in these activities Coverage of Rs. 200,000/- for Rs. 20/- per month Accident means unintentional, unfortunate or a harmful event by chance or apparent cause. Accidental Death means death due to accidental injuries, but not illness. Insured Person means 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 means Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer. Principal Sum means the amount stated in the Policy’s Schedule of Benefits as respects each Insured Person. Features • No documentation • No medical required 83
  • 91. Internship Report National Bank of Pakistan • Premium Auto Debit facility & choice of deactivation • Coverage includes death due to: • Natural Calamities e.g. Earthquake, Flood, Cyclone etc. • Accident • Riots • Civil Commotion • Strikes • Acts of Terrorism Eligibility • NBP PLS account holders • 18 years and above NBP Student Loan Scheme Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget speech, a STUDENTS LOAN SCHEME (SLS) for Education was launched by the Government of Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB and ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the meritorious students who have financial constraints for pursuing their studies in Scientific, Technical and Professional education within Pakistan. The Scheme is being administered by a high powered committee comprising Deputy Governor, State Bank of Pakistan, Presidents of the commercial banks and representative of Ministry of Finance, Government of Pakistan. Eligibility Under the scheme the students are eligible to apply for loans provided: He/She has obtained admission on merit through normal course/procedure in the approved Universities/Colleges of the public sector mentioned hereunder. He/She falls at the time of admission within the age bracket of:- For Graduation Not exceeding 21 Years For Post-Graduation Not exceeding 31 Years For Ph.D Not exceeding 36 Years  He/She has secured 70% marks in the last public examination.  He/She is unable to pursue studies due to financial constraints. Repayment 84
  • 92. Internship Report National Bank of Pakistan The maximum period of repayment of loan is 10-Years from the date of disbursement of first installment. The borrower shall repay the loan in monthly installment after six months from the date of first employment or one year from the date of completion of studies, which ever is earlier. 85
  • 93. FINANCIAL ANALYSIS I N A N C I A L N A L Y S I S In this section topics are: • Horizontal Analysis • Vertical Analysis • SWOT Analysis • Strength • Weaknesses • Opportunity • Threats
  • 94. Internship Report National Bank of Pakistan FINANCIAL ANALYSIS The financial statement of any organization shows the results of its operation and its position in business. It is a process which involves reclassification and summarization of information through the establishment of ratios and trends. The overall objective of financial statement analysis is the examination of a firm’s financial position. Horizontal analysis Through this analysis we can check that what are changes with in years in the items of balance sheet and profit and loss account. Last year become base for next year. And change can be easily analyzed. Vertical analysis In vertical analysis of balance sheet the percentage of each item of statement is calculated to total and then the change in the percentages is checked with in years. Horizontal Analysis of Balance Sheet ٢٠٠٨ ٢٠٠٧ Percentage ASSETS change Cash balances with other treasury ١٠٦٥٠٣٧٥٦ ٩٤٨٧٣٢٤٩ ١٢.٣% banks Balances with other banks ٣٨٣٤٤٦٠٨ ٣٧٤٧٢٨٣٢ ٢.٣٣% Lending to financial institutions ١٧١٢٨٠٣٢ ٢١٤٦٤٦٠٠ (٢٠.٩٢%) Investments ١٧٠٨٢٢٤٩١ ٢١٠٧٨٧٨٦٨ (١٩%) Advances ٤١٢٩٨٦٨٦٥ ٣٤٠٦٧٧١٠٠ ٢١.٢% Operating fix assets ٢٤٢١٧٦٥٥ ٢٥٩٢٢٩٧٩ (٦.٦%) Deferred tax assets ٣٢٠٤٥٧٢ - - Other assets ٤٤٥٥٠٣٤٧ ٣٠٩٩٤٩٦٥ ٤٣.٧٣% Total assets ٨١٧٧٥٨٣٢٦ ٧٦٢١٩٣٥٩٣ ٧.٣% LIABILITIES ٢٠٠٨ ٢٠٠٧ Percentage Bills payable ١٠٢١٩٠٦١ ٧٠٦١٩٠٢ ٤٤.٧% Borrowing from financial ٤٠٤٥٨٩٢٦ ١٠٨٨٦٠٦٣ ٢٧٢% 86
  • 95. Internship Report National Bank of Pakistan institutions Deposits & other accounts ٦٢٤٩٣٩٠١٦ ٥٩١٩٠٧٤٣٥ ٥.٦% Subordinated loans - - - Liabilities against assets of leasing ٢٥٢٧٤ ٣٣٥٥٤ (٢٤.٧%) Deferred tax liabilities-net - ٥٠٩٧٨٣١ - Other liabilities ٣٩٦٥٦٨٣١ ٣٠٨٦٩١٥٤ ٢٨.٥% Total liabilities ٧١٥٢٩٩١٠٨ ٦٤٥٨٥٥٩٣٩ ١٠.٧٥% Net assets ١٠٢٤٥٩٢١٨ ١١٦٣٣٧٦٥٤ (١١.٩٣%) Percenta REPRESENTED BY ٢٠٠٨ ٢٠٠٧ ge Share capital ٨٩٦٩٧٥١ ٨١٥٤٣١٩ ١٠% Reserves ١٩٩٤١٠٤٧ ١٥٧٧٢١٢٤ ٢٦.٤٣% Unappropriated profit ٥٢٤٥٦٢٠٤ ٤٥٣٤٤١٨٨ ١٥.٧% ٨١٣٦٧٠٠٢ ٦٩٢٧٠٦٣١ ١٧.٥% Surplus on revaluation of assets ٢١٠٩٢٢١٦ ٤٧٠٦٧٠٢٣ (٥٥.٢%) ١٠٢٤٥٩٢١٨ ١١٦٣٣٧٦٥٤ (١١.٩٣%) Horizontal Analysis of Profit And Loss Account PARTICULARS ٢٠٠٨ ٢٠٠٧ Percentage Mark-up/return/interest earned ٦٠٩٤٢٧٩٨ ٥٠٥٦٩٤٨١ ٢٠.٥% Mark-up/return/interest expenses ٢٣٨٨٤٧٦٨ ١٦٩٤٠٠١١ ٤١% Net mark-up/ interest income ٣٧٠٥٨٠٣٠ ٣٣٦٢٩٤٧٠ ١٠.٢% Provisions against non performing ١٠٥٩٣٥٦٥ ٤٧٢٣٠٨٤ ١٢٤.٣% 87
  • 96. Internship Report National Bank of Pakistan advances Provision for/(reversal of) ٣٧٣٢٤٩ (٤٠٢٤٨) ١٠٢٧.٤% diminution in the value of investment Provision against off balance sheet ٤٠٠٠ - - obligations Bad debt written off directly - ٣٩٨٩٩ - ١٠٩٧٠٨١٤ ٤٧٢٢٧٣٥ ١٣٢.٣% Net Mark-up/interest Income after ٢٦٠٨٧٢١٦ ٢٨٩٠٦٧٣٥ (٩.٧٥%) provisions Non-Mark-up/interest Income Fee,commision and brokerage income ٧٩٢٥٣٧٠ ٦٧٨١٦٨٣ ١٧% dividend income ٢٨٧٨٩٣٢ ٣٢٦٣٢٤٦ ١١.٨% Income from dealing in foreign ٣٩٦٩٠٥٧ ١٠٤٢٨٢٧ ٢٨١% currencies Gain on sale and redemption of ٣٩٥٤٢٧ ٢٣٤١٦٩٠ (٨٣.١١%) securities-net Unrealized/(loss) on revaluation of ١٧٠٧ (٣١٩٦٤) ١٠٥% investments classified as held-for-trading Other income ١٢٤٥٣٦٩ ١٤٧٣٦٣ ٧٤٥% Total Non-Mark-up/interest Income ١٦٤١٥٨٦٢ ١٣٥٤٤٨٤٥ ٢١.٢% ٤٢٥٠٣٠٧٨ ٤٢٤٥١٥٨٠ ٠.١٢% Non-Mark-up/interest expenses Administrative expenses ١٨١٧١١٩٨ ١٤٢٠٥٩١١ ٢٨% Other provisions/write offs ٧٤٧٥٢١ ١٦٨٠٢٧ ٣٤٥% Other charges ٥٨٣٣٦١ ١٧١٤١ ٣٣٠٣% Total Non-Mark-up/interest expenses ١٩٥٠٢٠٨٠ ١٤٣٩١٠٧٩ ٣٥.٥% 88
  • 97. Internship Report National Bank of Pakistan ٢٣٠٠٠٩٩٨ ٢٨٠٦٠٥٠١ (١٨%) - - - Extraordinary/unusual items ٢٣٠٠٠٩٩٨ ٢٨٠٦٠٥٠١ (١٨%) Profit Before Taxation Taxation-current ١١٧٦٢٦٥٠ ٨٣١١٥٠٠ ٤١.٥% -prior years - ٣٩١٤٩٧ - -deferred (٤٢٢٠٢٤٢) ٣٢٣٧٣١ ١٤٠٣% ٧٥٤٢٤٠٨ ٩٠٢٦٧٢٨ (١٦.٤%) Profit After Taxation ١٥٤٥٨٥٩٠ ١٩٠٣٣٧٧٣ ١٨.٨% Un-appropriated profit brought ٤٥٣٤٤١٨٨ ٣٢٠٧٤٦٧٧ ٤١.٤% forward Transfer from surplus on revaluation ١٣٠٤٥٦ ٣٩٠٠٧ ٢٣٤% of fix assets Profit available for appropriation ٦٠٩٣٣٢٣٤ ٥١١٤٧٤٥٧ ١٩.١٣% Vertical Analysis of Balance Sheet ASSETS ٢٠٠٨ Percentage ٢٠٠٧ Percentage Cash balances with other ١٠٦٥٠٣٧٥٦ ١٣.٠٢% ٩٤٨٧٣٢٤٩ ١٢.٤٥% treasury banks Balances with other banks ٣٨٣٤٤٦٠٨ ٤.٧% ٣٧٤٧٢٨٣٢ ٤.٩٢% Lending to financial institutions ١٧١٢٨٠٣٢ ٢.١% ٢١٤٦٤٦٠٠ ٢.٨٢% Investments ١٧٠٨٢٢٤٩١ ٢١% ٢١٠٧٨٧٨٦٨ ٢٧.٧% Advances ٤١٢٩٨٦٨٦٥ ٥٠.٥% ٣٤٠٦٧٧١٠٠ ٤٤.٧% Operating fix assets ٢٤٢١٧٦٥٥ ٣% ٢٥٩٢٢٩٧٩ ٣.٤% Deferred tax assets ٣٢٠٤٥٧٢ ٠.٤% - - Other assets ٤٤٥٥٠٣٤٧ ٥.٤٥% ٣٠٩٩٤٩٦٥ ٤.٠٧% 89
  • 98. Internship Report National Bank of Pakistan LIABILITIES ٢٠٠٨ Percentage ٢٠٠٧ Percentage Bills payable ١٠٢١٩٠٦١ ١.٤٣% ٧٠٦١٩٠٢ ١.١% Borrowing from financial ٤٠٤٥٨٩٢٦ ٥.٧% ١٠٨٨٦٠٦٣ ١.٧% institutions Deposits & other accounts ٦٢٤٩٣٩٠١٦ ٨٧.٤% ٥٩١٩٠٧٤٣٥ ٩١.٦٥% Subordinated loans - - - - Liabilities against assets of ٢٥٢٧٤ .٠٠٣٥% ٣٣٥٥٤ .٠٠٥٢% leasing Deferred tax liabilities-net - - ٥٠٩٧٨٣١ ٠.٧٩% Other liabilities ٣٩٦٥٦٨٣١ ٥.٥% ٣٠٨٦٩١٥٤ ٤.٧٨% REPRESENTED BY ٢٠٠٨ Percentage ٢٠٠٧ Percentage Share capital ٨٩٦٩٧٥١ ١١.٠٢% ٨١٥٤٣١٩ ١١.٧٧% Reserves ١٩٩٤١٠٤٧ ٢٤.٥% ١٥٧٧٢١٢٤ ٢٢.٧٧% Unappropriated profit ٥٢٤٥٦٢٠٤ ٦٤.٥% ٤٥٣٤٤١٨٨ ٦٥.٤٦% Vertical Analysis of Profit And Loss Account 90
  • 99. PARTICULARS ٢٠٠٨ Percentage ٢٠٠٧ Percentage Internship Report National Bank of Pakistan Mark-up/return/interest ٢٣٨٨٤٧٦٨ ٣٩.٢% ١٦٩٤٠٠١١ ٣٣.٥% expenses Net mark-up/ interest ٣٧٠٥٨٠٣٠ ٦٠.٨١% ٣٣٦٢٩٤٧٠ ٦٦.٥ income Provisions against non ١٠٥٩٣٥٦٥ ١٧.٤% ٤٧٢٣٠٨٤ ٩.٣٤% performing advances Provision for/(reversal of) diminution in the value of ٣٧٣٢٤٩ ٠.٦١% (٤٠٢٤٨) (٠.٠٨%) investment Provision against off ٤٠٠٠ ٠.٠٠٧% - - balance sheet obligations Bad debt written off - - ٣٩٨٩٩ ٠.٠٨% directly ١٠٩٧٠٨١٤ ١٨% ٤٧٢٢٧٣٥ ٩.٣٤% Net Mark-up/interest ٢٦٠٨٧٢١٦ ٤٣% ٢٨٩٠٦٧٣٥ ٥٧.١٦% Income after provisions Non-Mark-up/interest Income Fee,commision and ٧٩٢٥٣٧٠ ١٣% ٦٧٨١٦٨٣ ١٣.٤١% brokerage income dividend income ٢٨٧٨٩٣٢ ٤.٧٢% ٣٢٦٣٢٤٦ ٦.٥% Income from dealing in ٣٩٦٩٠٥٧ ٦.٥١% ١٠٤٢٨٢٧ ٢.١% foreign currencies Gain on sale and ٣٩٥٤٢٧ ٠.٦٥% ٢٣٤١٦٩٠ ٤.٦٣% redemption of securities- net Unrealized/(loss) on ١٧٠٧ ٠.٠٠٣% (٣١٩٦٤) (٠.٠٦٣) % revaluation of investments classified as held-for- trading Other income ١٢٤٥٣٦٩ ٢.٠٤% ١٤٧٣٦٣ ٠.٢٩% Total Non-Mark- ١٦٤١٥٨٦٢ ٢٧% ١٣٥٤٤٨٤٥ ٢٦.٨% up/interest Income ٤٢٥٠٣٠٧٨ ٧٠% ٤٢٤٥١٥٨٠ ٨٣.٩٥% Non-Mark-up/interest expenses Administrative expenses ١٨١٧١١٩٨ ٣٠% ١٤٢٠٥٩١١ ٢٨.١% Other provisions/write ٧٤٧٥٢١ ١.٢٣% ١٦٨٠٢٧ ٠.٣٣% offs 91 Other charges ٥٨٣٣٦١ ٠.٩٦% ١٧١٤١ ٠.٠٣٤% Total Non-Mark- ١٩٥٠٢٠٨٠ ٣٢% ١٤٣٩١٠٧٩ ٢٨.٥% up/interest expenses
  • 100. Internship Report National Bank of Pakistan RATIO ANALYSIS Ratio analysis includes method of interpreting financial ratios to access the performance of any organization. The basic input to ratio analysis is profit and loss account and balance sheet. Ration analysis of any organization is in interest of its creditors, employees, shareholders and of its management as well. Both existing and prospective customer are interested in the ratio analysis of organization Ratio analysis is a valuable aid to management in the discharge of its basic functions such as planning, forecasting, control etc. these ratios describe the relationship with the functioning of the business and helpful for controlling cost of goods manufactured. The great advantage of ratio analysis is that it reduces raw data of widely varying magnitude to a common comparative basis. Thus, ratio analysis is the most meaningful to compare financial information regarding a giving company. Current Ratio Formula: Current ratio= Current assets Current liabilities Year ٢٠٠٧ Year ٢٠٠٨ Current assets ١٥٣٨١٠٦٨١ ١٦١٩٧٦٣٩٦ Current liabilities ٤٨١٣٨١٢٣٥ ٥٣٦٦٧٩٦٢ Current ratio .٣١٩٥ .٣٠٣٥ 92
  • 101. Internship Report National Bank of Pakistan Interpretation An increase in the current ratio represents improvement in the liquidity position of bank while a decrease in the current ratio indicates that there has been deterioration in the liquidity position of the bank. Current ratio in ٢٠٠٨ is decreasing as compared with ٢ ٠٠٧. It should be improved. Working Capital Formula: Working Capital=current assets-current liabilities Year ٢٠٠٧ Year ٢٠٠٨ Current assets ١٥٣٨١٠٦٨١ ١٦١٩٧٦٣٩٦ ٤٨١٣٨١٢٣٥ ٥٣٣٦٦٧٩٦٢ Current liabilities Working Capital (٣٢٧٥٧٠٥٥٤) (٣٧١٦٩١٥٦٦) Interpretation Working capital should increase which will show that there is increase in current assets. But here working capital is decreasing in ٢٠٠٨ as compared with ٢٠٠٧. it should be improved. Total asset turnover Formula: Total asset turnover= sales Total assets 93
  • 102. Internship Report National Bank of Pakistan Year ٢٠٠٧ Year ٢٠٠٨ Sales ٥٠٥٦٩٤٨١ ٦٠٩٤٢٧٩٨ Total assets ٧٦٢١٩٣٥٩٣ ٨١٧٧٥٨٣٢٦ Total asset turnover ٠.٠٦٦٣ ٠.٠٧٤٥ Interpretation Higher the total asset turnover the more efficiently its assets have been used. This measure is probably of greatest interest to management, because it indicates whether the efficient operations have been financially efficient. Total asset turnover is increasing in ٢٠٠٨ as compared with ٢٠٠٧ which is a good sign. Debt Ratio Formula: Debt Ratio=Total liabilities Total assets 94
  • 103. Internship Report National Bank of Pakistan Year ٢٠٠٧ Year ٢٠٠٨ Total liabilities ٦٤٥٨٥٥٩٣٩ ٧١٥٢٩٩١٠٨ Total assets ٧٦٢١٩٣٥٩٣ ٨١٧٧٥٨٣٢٦ Debt ratio ٨٤.٧٤% ٨٧.٤٧% Interpretation The debt ratio measures the proportion of total assets by the creditors. The greater this ratio the greater the amount of other people’s money being used to generate profits. The higher this ratio greater the degree of indebtedness an more financial leverage. NBP’s debt ratio is increasing in ٢٠٠٨ as compared with ٢٠٠٧ which is not favorable. Time interest earned ratio Formula Time interest earned ratio=Earning before interest and taxes Interest 95
  • 104. Internship Report National Bank of Pakistan Year ٢٠٠٧ Year ٢٠٠٨ Earning before interest ٤٢٤٥١٥٨٠ ٤٢٥٠٣٠٧٨ and taxes Interest ١٤٣٩١٠٧٩ ١٩٥٠٢٠٨٠ Time interest earned ٢.٩٥ ٢.١٨ ratio Interpretation Time interest earned ratio sometimes called interest coverage ratio, measure the ability to make contractual interest payments. The higher its value the better able the organization is to fulfill its interest obligations. Time interest earned ratio is decreasing in ٢٠٠٨ as compared with ٢٠٠٧. It should be improved. Gross profit margin Formula Gross profit margin= Sales-cost of goods sold Sales = Gross profit Sales 96
  • 105. Internship Report National Bank of Pakistan Year ٢٠٠٧ Year ٢٠٠٨ Gross profit ٣٣٦٢٩٤٧٠ ٣٧٠٥٨٠٣٠ Sales ٥٠٥٦٩٤٨١ ٦٠٩٤٢٧٩٨ Gross profit margin ٦٦.٥% ٦١% Interpretation Gross profit margin measures the percentage of each sales rupee remaining after the organization has paid for its goods. The higher the gross profit margin, the better (that is the lower the relative cost of merchandise sold). Gross profit margin is decreased in ٢ ٠٠٨ as compared with ٢٠٠٧. It should be improved. Operating profit margin Formula Operating profit margin= Operating profit Sales Year ٢٠٠٧ Year ٢٠٠٨ Operating profit ٤٢٤٥١٥٨٠ ٤٢٥٠٣٧٠٨ Sales ٥٠٥٦٩٤٨١ ٦٠٩٤٢٧٩٨ Operating profit ٨٣.٩٥% ٦٩.٧٤% margin 97
  • 106. Internship Report National Bank of Pakistan Interpretation Operating profits are pure because they measure only the profits earned on operations and ignore interest, taxes and preferred stock dividend. A higher operating profit margin is preferred. Operating profit margin is decreased in ٢٠٠٨ as compared with ٢٠ ٠٧. It should be improved. Net profit margin Formula Net profit margin= Earning available for common stock holder Sales Year ٢٠٠٧ Year ٢٠٠٨ Earning available for common stock holder ١٩٠٣٣٧٧٣ ١٥٤٥٨٥٩٠ Sales ٥٠٥٦٩٤٨١ ٦٠٩٤٢٧٩٨ Net profit margin ٣٧.٦٤% ٢٥.٤% Earning per share 98
  • 107. Internship Report National Bank of Pakistan Formula Earning per share= Earning available for common stock holder No. of shares of common stock outstanding Year ٢٠٠٧ Year ٢٠٠٨ Earning available for common stock holder ١٩٠٣٣٧٧٣ ١٥٤٥٨٥٩٠ No. of shares of common stock ٨١٥٥٠٠ ٨٩٧١٩٠ outstanding EPS ٢٣.٣٤ ١٧.٢٣ Interpretation Earnings per share (EPS) are the earnings returned on the each share. Higher eps is good but here EPS is decreased in ٢٠٠٨ as compared with ٢٠٠٧ which is not good. Return on total assets Formula: Return on assets= Earning available to common stock holder Total assets 99
  • 108. Internship Report National Bank of Pakistan Year ٢٠٠٧ Year ٢٠٠٨ Earning available for common stock holder ١٩٠٣٣٧٧٣ ١٥٤٥٨٥٩٠ Total assets ٧٦٢١٩٣٥٩٣ ٨١٧٧٥٨٣٢٦ EPS ٢.٥% ١.٩% Interpretation Return on assets often called the return on investment. It measures the overall effectiveness of management in generating profit with its available assets. The higher the firm’s return on total assets, the better. ROA in ٢٠٠٨ is decreased as compared with ٢ ٠٠٧. It should be improved. Return on common equity Formula Return on common equity= Earning available to common stock holder Common stock equity Year ٢٠٠٧ Year ٢٠٠٨ Earning available for common stock holder ١٩٠٣٣٧٧٣ ١٥٤٥٨٥٩٠ Common stock equity ٦٩٢٧٠٦٣١ ٨١٣٦٧٠٠٢ ROE ٢٧.٥% ١٩% Interpretation ROE measures the return earned on common stockholders investment. The better the 100
  • 109. Internship Report National Bank of Pakistan ROE, the better. ROE is decreased in ٢٠٠٨ as compared with ٢٠٠٧. It should be improved. Book value per share of common stock Formula BV per share of common stock= common stock equity No. of shares of common stock outstanding Year ٢٠٠٧ Year ٢٠٠٨ Common stock equity ٦٩٢٧٠٦٣١ ٨١٣٦٧٠٠٢ No. of shares of ٨١٥٥٠٠ ٨٩٧١٩٠ common stock outstanding BV per share of ٨٥ ٩١ common stock Interpretation Book value per share of common stock is increased as in ٢٠٠٨ as compare with ٢٠٠٧, which is a good sign. 101
  • 110. Internship Report National Bank of Pakistan SOWT ANALYSIS SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats SWOT analysis is careful evaluation of an organization’s internal strengths and weakness as well as its environment opportunities and threats. In SWOT analysis the best strategies accomplish an organization’s mission by:  Exploiting an organizations opportunities and strength  Neutralizing it threats  Avoiding or correcting its weakness SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context, managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses. STRENGHTS  NBP one of the largest financial institutions of Pakistan with eight million of customer base NBP holds ٢٤.٦% share of time and demand deposits in the country. Local currency deposits comprise ٦٧% of bank's total deposits while foreign currency deposits account for the rest.  NBP has an extensive domestic branch network of ١٢٥٤ branches located all over Pakistan. The Bank also has a presence in ٢٣ international locations including the USA, United Kingdom, Europe and the Far East.  NBP's total assets stood at Pak Rs.٣٧٠ billion on December ٢٠٠٨. This included total earning assets of about Pak Rs.٢٦٨ billion with gross loan portfolio of Pak Rs.١٤٠ billion. The bank also has an investment portfolio of Pak Rs.٩١ billion, which comprises treasury securities, corporate bonds, shares and other securities.  NBP cash provision as percentage of non performing loans equal to ٦٠% this coverage factor for the non performing loans is the highest amongst the nationalized commercial bank.  NBP is working as right arm government of Pakistan as it is responsible for all claims of government for recovery as well as payment. All depositor of NBP are in relief that their money security is guaranteed by government of Pakistan.  It acts as an agent of the Central Bank wherever the State Bank does not have its own Branch.  The working condition in the NBP branch here is very conductive and favorable for better output. The informal environment affects the performance of the employees in a positive way.  Performing social responsibilities and claiming “The Nation’s Bank”  Disbursing Salaries and Pensions to the Government employees and earning high profit on NBP-Advance Salary Loan Scheme· 101
  • 111. Internship Report National Bank of Pakistan  Earning commission from SBP on Government transaction  Facing never problem of cash/currency being its Chest and Sub-chest  Holds largest deposit base in the market share in terms of number of accounts  Leading bank in agriculture financing amongst commercial banks with the market share of 15%  Helping in earning of foreign exchange, remittances and leading agent of Western Union Money Transfer NBP has decided to diversify the fund base by investing in capital markets not only in Pakistan but also in the foreign countries. WEEKNESSES  Lowest Internal Control and Compliance System, SBP rated “Marginal” which is alarming for the Bank.  Unsatisfactory corporate culture of the Bank  Physical environment and atmosphere compare to other banks is not meet the standard  Less number of Online Branches  Ineffectively use of technologies i.e. Information technology  Shortage of staff- per employee customer is very high side  Technical education and training of staff is insufficien The workload in NBP is not evenly distributed and the workload tends to be more on some employees while others abscond away from their responsibilities, which server as a demotivation factor for employees performing above average work.  In NBP the individual difference have strong impact on the organization’s performance due to the wrong criteria of selection of the employee. So with the passage of time individual differences are increasing which are undermining the good will of the organization.  Uncertainly among the employees due to threat of downsizing OPPORTUNITIES  Being a Government Bank NBP having wide scope in economic market.  Trust and reliability creates chances to enhance deposit and profitability.  Its vast network of domestic and overseas branches can help to expand business.  Bank’s deposit is increasing rapidly so there is a great opportunity to enhance its investment and financing.  Being an agent of State Bank of Pakistan it can play vital role in local economy.  Earning commission/exchange on Government transactions.  Amongst highest bank is Asia, NBP further expand its services proudest and earn more profit. 102
  • 112. Internship Report National Bank of Pakistan  The bank is reshaping its portfolios by investing into higher area of growth developing core competing as a result to get maximum return.  I.T and HR are important factors for development in any organization, NBP continue struggle to achieve this target. THREATS  SBP penalties due to low internal control and compliance.  Government, SBP and Prudential Rules and Regulations.  Schedule banks and Multinational/International bank’s profit rates.  Its staff switching over to other private banks due to more facilities.  Other bank’s charming atmosphere and relaxation in documentation.  SBP rated just “Marginal” in respect of System & Control which is alarming for the Bank to survive its license.  NBP staff code of ethics and practices.  High number of complaints regarding staff behavior.  Government Schemes, Government Revenue Collection, Government.  Payments and FBR Collections create heavy workload. 103
  • 113. WORK PERFOMED O R K E R F O M E D In this section topics are: • Lesson learned and Personal experience • Branch Profile • Introduction of branch & Establishmemt • Branch Hierarchy • Training Departments • Remittance and Account opening • Deposit Section • Pension Section • Cash Section • Use of Information Technology • Issues Faced by the Branch
  • 114. Internship Report National Bank of Pakistan LEARNING AND PERSONAL INTERNSHIP EXPERIENCE In Hailey College of Commerce, Quaid-e-Azam Campus, the students are required to undergo for four weeks of internship to complete the B.com (Hons.) degree. For this reason, I carried out my internship in National Bank of Pakistan, Samanabad Branch, Lahore and tried to prepare my report. This branch was founded in July ١٩٦٢. From last many years this branch is not only achieving its targets of deposits and advances rather it remains above the targets. According to the financial record of last year this branch was earning more than ٢٠% of total profit of the region. Every year the targets of this branch are increasing by ٢٠ to ٢٥ percent but still there is a potential in the market to meet these additional targets. This branch is performing its functions in traditional style and most of the work is done manually but in spite of all challenges and lack of resources the branch is now trying to make most of its activities computerized. During the session of four weeks I work in different departments on weekly basis. The employees of the bank help me and provide me all required information. I studied major functions, objectives and future planning. I worked in different departments during working as an internee which proves to me very beneficial and me able to get basic concepts of banking operations. 105
  • 115. Internship Report National Bank of Pakistan BRANCH PROFILE Name of Branch National Bank of PakistanSamanabad Branch Region Lahore Establishment ١٩٦٧ Region Code ٠٠١٥ Branch Code ٠٤٤٩ National Bank of Pakistan Samanabad Branch Address Poonch Road Lahore Phone Number ٧٥٧٩٤٦٤-٠٤٢ Fax Number ٧٥٣٦٥٥٥ Name of Manager Abdullah Munir ١٥ Number of Working Staff (Including contractual & outsourced staff) Number of Non- Working Staff ٠٤ Branch category II Starting and ending dates of internship Starting Date------ ٢٠٠٩-٠٧-٢٥ Ending Date------ ٢٠٠٩-٠٩-٢٤ INTRODUCTION OF BRANCH AND ESTABLISHMENT 106
  • 116. Internship Report National Bank of Pakistan The branch was established in ١٩٦٧ in order to cope the financial needs of the people. As it is an agent of the State Bank of Pakistan so its main objective is to provide credit in order to fostering growth in all the sectors so with the view of this Samanabad Branch of National Bank of Pakistan came into existence. From last many years this branch is not only achieving its targets of deposits and advances rather it remains above the targets. At present here Chief Manager is Mr. Abdullah Munir and operation manager is Mr. Muhammad Rafi. It is a branch II category working with ١٥ employees. Mr. Aasir Butt, in addition to perform his duties, also acts as a second manager in case when chief manager is not available due to any unfavorable reason. BRANCH HIERARCHY MANAGER MANAGER OPERATION ESTABLISHMENT OFFICER GRADE - I OFFICER GRADE - II OFFICER GRADE - III MESSENGER PEON SWEEPER Number of Employees -------------------- 15 Name of Manager------------------------ Abdullah Munir Name of Operations Manager-------------- M. Rafi 107
  • 117. Internship Report National Bank of Pakistan DEPARTMENTS OF TRAINIG During the internship period of 4 weeks I got training in various departments in the branch. This branch do not deals with foreign exchange and online bank but foreign remittance is carried out. The branch is divided into two parts: 1. Cash Department 2. Operations Manager Department 3. General Banking Department General banking is divided into following sections; i. Remittance and Accouts Opening Section ii. Deposit department iii. Pension iv. Establishment But I did my internship in deposit, remittance, pension and cash sections. The computer system was not allowed to me due to the secrecy and rules of the management. A brief introduction of the departments in which I performed my work is as under: 1. Genearal Banking Department i. Remittance and Accounts Opening Section It is transfer of money payable at a certain place within or outside the country through various way i.e. Bank draft, Telegraphic Transfer, Mail Transfer, Coupons, Govt. Draft. It works both inward and outward. It was my first department. Mr. Rana Ahsaan-ul-Haq is the controller of section who is a very competent person. Duties performed by him are;  Issuing of demand draft  Issuing of Mail transfer  Issuing of Telegraphic transfer  Issuing of payment order  Issuing of call deposit  Closing of government collections  Intercity and Short Credit Clearing  Accounts opening  Issuance of cheque books  Handling of lockers  Maintenance of outward Mail Register  Issuance of Benevolent fund In this section I learnt about issuance of PO, DD, MT, and T.T. I made all the four categories of funds transfer. Sir. Rana helped me a lot to achieve this target. I only made vouchers of 108
  • 118. Internship Report National Bank of Pakistan PO, CDR and DD. The Manger only does TT because it is a secret way of transfer funds. I sorted all the daily remittances; handed them to the respective officers. Sir Rana helped me a lot in general understanding of the bank functioning. I prepared several cheque books and enter the detail into the cheque books issuance register. I also learnt to cheque posting on system. In the cheque book posting something which are necessary, account number, cheque number and amount to be debit or credit should be matched. D.D & P.O: P.O is used locally and to transfer amount within the city whereas D.D is used for outside the city. Demand draft: Procedure  First on the request of the customer all the details for issuance are demanded from customer  The customer can be account holder or non- account holder.  While issuing the bank draft the care is taken that draft should be free from alternations.  All the details must be clearly written in ink.  After deduction of charges, issuance of demand draft is handed over to the applicant .  Its advice containing the particulars of the draft is sent to the drawer branch with its necessary information and payment of draft is make on its presentation. Payment order Procedure  Two applications forms called credit vouchers for payment and for bank commission are made.  Application form is attached with cheques , debit authority or make payment in cash.  Then the payment order is made.  Then payment order is given to the customer.  Pay order for clearing again come to National bank of Pakistan.  Nothing is sent to next branch ,no fanfold is made. Mail transfer This is the facility just for account holders. Amount of M.T & T.T is transferred in account of payee. Mail transfer is time consuming while telegraphic transfer is fast. Procedure  Filling of application form.  Then make payment.  Preparation of M.T advice. 109
  • 119. Internship Report National Bank of Pakistan  Then fanfold is made on F15.  M.T advice plus fanfold ( red copy ) is sent to responding branch.  M.T code is 22. Telegraphic Transfer: Procedure  Filling of application/ request form.  Then payment is made.  Then make massage voucher (telephone number is written at top of it ).  Then telegram transfer confirmation is made (F-15).  Massage is sent immediately by fax and T.T confirmation is sent by telegram.  F15 blue is filled and original red is sent to responding branch.  T.T code is 21. Accounts Opening In this department, I also gain the practical knowledge about account opening also, as this department also deals in opening account and saving account for its customers and all matters regarding thereof. The customers mainly opens current and saving account and these can be opened by Individual , firms , Company , Trust , staff etc. I got training in this department for one week and after understand the basic concept I practically opened account of walk-in- customers. Procedure  Customer fills A/C opening form prescribed by the bank.  Then he submit the I.D card copy and other related documents  Specimen signature card is filled  2 officers attested the form.  The form is entered into computer and account opening register.  The amount in Rupees is submitted in new account.  Then letter of thanks is send to customer.  When letter is send back to bank by customer then bank issue cheque book to customer. Deposit Section All banks depend on deposits. It is a very important department where customers deposit and withdrawal their money. Banks use this money for loaning on higher rate to earn profit.Mr. Shahid with his colleague Miss. Shazia has been performing the activities of this section. The main function of this department are  Maintaining records of saving, current, call deposit, and NIDA account holders 110
  • 120. Internship Report National Bank of Pakistan  Record of signatures of account holders  Record of balances of customers  Scrutiny of cheques issued  Withdrawal through order/berarer cheques  Local clearing  Preparation of accounts holder activity report Procedure of Withdrawals There is a complete process in case of cash withdrawal.  Customer deposited cheque in deposit department for withdrawals or transfer of amount through cross cheques.  The deposit department verifies the signature of the account holder through SS and other requisites of the cheque. In case of any discrepancy the cheque is returned to the customer.  The deposit department checks the balance in the account of the customer through computer in BBO.  If the a/c of the account holder has balance equal to the cheque amount they passes the cheque to cash department and post a Cash Paid stamp on it.  Deposit department debit A/C holder in computer and cash scroll register.  The cash department pays the amount to the customer on counter and cancels the original cheque. SS cards verification is one of the most difficult works of this department; I also go through only specific activities in which the heads of verified informed me. Procedure of Cross cheques Whenever customer deposit amount in his account through cross cheques or security decouments by transferring he has to fill the cheque pay-in-slip and is deposited into the deposit department. The deposit department after verification and scrutiny of cheque passed the cheque to remittance department. Pension Section Ms. Sarwat Jabeen is the head of pension department. The following activities are performed by her;  Maintenance of Pension Register  Scrolling of Pensions Paid  Arials in case of any increase announced by government  Maintenance of the Inward Mail Register During my internship, I learnt how to handle with new pensioner’s cases, entries made into the “pension register”, recommend payments of pension on monthly basis, transfer of payments into the accounts of the customer. The most obligatory thing for payment of 111
  • 121. Internship Report National Bank of Pakistan pension is to check pension slip in form of cash payment P.P.O.No., name of the pensioner, signature, and payment period. In case of pension holder does not come to receive, it is legally recommended that the pensioner holder issue authority letter to the desire person otherwise pension will never be paid in cash. 2. Cash Department Cash department mainly deals in cash. In this department all types of Government receipts i.e. Revenues, Taxes, Abyana, Agriculture Tax, Government Fees and Utility Bills are deposited. This way NBP is serving great job of revenue collection. The Head Cashier is Mr. Abdul Aslam and two cashier Mr. Wajid and Mr. Akram Cheema all are fulfilling the objective of cash department by facilitating people in the payments of their bills and taxes and repayments of cash. This section deals with; i. Cash Payment Payments are the function that they pay their cheques and pay cash. ii. Cash Receipts Receipts mean collection of utilities bills, taxes etc. Cash Payment Procedure In this branch of NBP, this section deals with the  withdrawals of the cheques  deposit of amount  pension receipt Procedure For deposit:  Whenever account holder deposit amount in their accounts they fill cash-pay-in-slip.  Then handed over cash and slip to the cahier  Cashier after counting amount sign the slip and stamped it with cash received after entering it to the cash scroll register  The counterfoil is given to the customer after signing while the adjacent credit voucher is held by the bank For withdrawals: After the clearance of the cheque from deposit department the customer recived cash from the cahier by giving him token. The original cheque is then crossed by the cashier. For pension receipt After the approval of the pension officer the pensioner comes in this section for reciving cash amount of pension. Cash Receipts Procedure 112
  • 122. Internship Report National Bank of Pakistan  Customer deposited their bills and taxes to cashier  Cashier after counting the amount signs the receipts of bill and taxes and affixed stamp of NBP and cash received stamp.  A portion of receipt is handed over to customer.  The cashier entered the amount into the scrolls.  At the end of day all the total and balances of receipts is transferred to the remittance section. Use of Information Technology in Decision making Today banking is becoming more and more complex with the introduction of new products, services and enhancing regulatory compliance requirements. It is the use of information technology that can improve the customer’s services and reduce the cost at the same time. NBP adopted “IBM Software” for service providing motives, the “IBM Software” categories into two sections. • BBO (Bank Branch Office) • EBS (Electronic Banking System) Electronic Banking System EBS is used for any kind of transaction within the bank .i.e. Receipts and payments, Bills Collection, Tax receipts, etc. Bank Branch Office BBO is use for remittances. The use of IBM Software is one of the main purposes of collection electronic data for the bank that further helpful in future in decision making. Now a day, the bank plans for transformation of the entire I.T. architecture by implementing a core Banking Solutions. The bank prepares financial statements, agricultural reports, customer’s management, risk management and other reports for decision-making purposes. The I.T. system of the bank not only increases distribution capabilities but also simplify internal procedures thereby reducing the cost and lead-time for services. Now the Samanabad Branch of NBP is trying to computerized its all of activities for this purpose various aspects of extension and development have been taking into consideration. ISSUES FACED BY THE BRANCH During the internship I got practical experience that does not meet the theoretical concepts in B.com(hons.) Program. I present here some critical analysis: 113
  • 123. Internship Report National Bank of Pakistan i. Training: NBP has no great facility for their employees for training of new technologies. This situation creates difficulty for handling new challenge. ii. Departmentalization: An employee deals various nature of work. iii. Staff Attitude: Due to heavy load of work staff attitude does not ideal for an organization where public dealing is at large scale. iv. Work Environment: Work environment was not ideal due to heavy customers visit in a single day. Furniture, light and sitting arrangement was not good for customers and bank employees. v. Professional Approach: Work specialization and job specification are found very low in bank’s employees. Business administration qualities and education is at low side. vi. Shortage of Staff: There is shortage of staff in the Bank. Number of customer per employee is very high. Cash department is suffering very badly and facing great deal of over workload. vii. Less use of Technologies: Staff hesitate to use new technologies especially the cash department. Even old employees are not able to operate PCs. viii. Communication Gap: I feel that there is communication gap between top management and workers. They have fewer chances to communicate effectively. ix. Unjustified Appraisal Criteria: No justified appraisal criteria are implemented for annual increase in salary and promotion of staff. It creates un-satisfaction among the employees of the Bank. x. Undemocratic Decision Making: I observed that some times employees are not involved in decision-making process. Manager himself takes decision and orders to make changes. xi. Pensioner's sitting Arrangement: Bank should take step for the sitting arrangement of the old age employees and pensioners for. Also management should purchase more furniture and arrange them in such a way which provides maximum space and convenient specially in deposit department and there should also be convenient sitting place for customers. xii. Need of Telephone Operator: Branch has the problem of telephone operator which can save the time of not only manager but other staff as well. On the other hand bank’s communication system was not doing well. Therefore as an internee I felt that there should be a telephone operator who can easily handle this situation. 114
  • 124. FINDINGS & CONCLUSION I N D I N G S O N C L U S I O N In this section topics are: • Dilemmas Faced by Organization • Problems at branch • Functional Problems • Administrative Problems • Personal Management Problems • Recommendations for improvement • Conclusion
  • 125. Internship Report National Bank of Pakistan DILEMMA FACED BY ORGANIZATION Rather NBP is a nation's bank but like any other organization NBP also is not free from problems and crisis. In SWOT analysis I have already discussed the major internal weeknesses and flaws of the system. In this topic the most important problems are included which are widely present at the branch level. For this purpose the topic is divided into the four parts which are as under. • Problems at the branch. • Functional Problems • Administrative Problems. • Personal management’s Problems PROBLEMS AT THE BRANCH ∗ Customer Satisfaction In NBP customer dealing is will, but during rush hour the customer has to wait for a long time for their turn. It’s quite hard for a new customer or potential customer to get the required information. ∗ Poor record management and filing system During my internship I observed that filing system of branch is not good. When certain record is needed the staff has to struggle to find it out and a lot of time is wasted. ∗ Unequal distribution of work Work is not equally distributed. On one hand some employee have to work all day without relaxing while some others have nothing to do at all. This not only creates confusion among employees but also hurting and disturbing for overall setup of the bank. And above all it results in dissatisfaction among customers as well. ∗ Marketing visits A useful mode of contact is through personal marketing visits. Such visits are important in informing and perusing the existing and potential customers about the products and creating a sense of belongingness with them. FUNNCTIONAL PROBLEMS ∗ Formal Organization Formal organization includes the activities of two or more person, which are cautiously determined groups and coordinated towards a given objective. It provides base when people are able to communicate with other, when they have common purpose and they are willing to work. In NBP, we find a formal organization. In this formal organization of NBP the activities are carried out in a more formal way. In theoretical terms it provides basis for communication with one another but in practice it is not exercised because an employee at high level cannot get straight away 116
  • 126. Internship Report National Bank of Pakistan to manager or SVP and ask him about of his problem faced by him, because first he has to talk to his immediate superior and follow a proper channel of communication. ∗ Excessive paper work It is notified that due to the lengthy procedure of paper work the bank employee are over burdened. They are unable to give proper attention to the clients and face difficulties in getting their job done. One reason for lengthy procedure and excessive paper work in the bank is the lack of computerized technology. ∗ More accounts fewer deposits. Efficient banking is one which does not emphasize on number of accounts but on greater amount of deposits. NBP is more interested in increasing its number of account irrespective to its deposit. ADMINISTRATIVE PROBLEMS ∗ Job analysis is not effective Only on the basis of job analysis it can be decided how a right person can be hired, trained, compensated or promoted. It is very important for an organization that nature of the job is described and job specifications are mentioned. Most of the employees are simple graduate and do not have proper background about their job. This creates problems both for organization and for the employees. ∗ Lack of specialized training NBP does not provide adequate facility of specialized training to their staff. Training is generalized rather than specialized. As the worker finishes his training, he is inducted into a specific field without having great deal of knowledge about the field. ∗ Poor job rotation. There is absence of job rotation in NBP Samanabad branch. A person placed in one department remains their forever. It reduces career opportunities as well boredom and in the end results in career plaguing. The newly recruit should be rated in all department of the banking in order to get familiar with working of different departments so that when they get a responsible position they have know how of the whole system. ∗ Lack of appreciation Another very important thing which is ignored in the bank is appreciation if the employee on their good performance. If hard work and performance of employees is not recognized and appreciated they become dishearten which results in decline in performance. PERSONAL MANAGEMENT PROBLEMS ∗ Need for better training program Need of training is greatly emphasized all around the world. Training of the personnel is part of human resource management. It has been noticed that the training program 117
  • 127. Internship Report National Bank of Pakistan of NBP is not adequate. Once the candidate is selected and placed on the respective job. It becomes essential to train him adequately for the task. They should learn new methods for motivating customers. The training programmed of the bank should include scientific techniques to improve the decision making and interpersonal as will individual needs of the employee both specialized to fresh as well as on job. ∗ Developing Managerial Leadership Leadership is a practical term of visible, clear on objective and communicating better control on financial and administrative matters. Manager is not only responsible for their own units in business, but also in people terms i.e. training, recruiting, grievance handling and taking immediate initiative in crisis situation to take major decision affection the future of the bank and banking community. ∗ Recruitment policy Human resources are the lifeblood of the organization. If the personnel are recruited carefully they can become asset to the organization in the case of carelessness a liability on the organization. Bank is not following its recruitment policy properly due to favoritism, nepotism and political pressure. ∗ Promotions Promotion in NBP is purely on the basis of seniority, so the new young person having high qualification remains behind for quite a lot of time. Top management and staff union put pressure for the promotion of their favorites. ∗ Transfer Transfer means when a person is shifted from one place to another place. It is done either that person is needed more on the other branch or for improving his skill variety. It is the policy of the Bank to transfer each employee ٣ to ٤ years. ∗ Marketing at desk Bank employee come in daily contact with many people who happen to deal with the casual remittance, travelers cheques, safe custody, pensioners, depositing license fee and variety of other functions and variety of other people with whom the Bank has no account or regular business relationship. The Bank employees are doing very little on their own to explore the possibilities of selling banking services to them as a marketing contributor. The market opportunities are hidden in every dealing a banker handles; the question is that if he has the art and urge to seize such opportunities. ∗ Lack of business communication There is no proper way to give information to their customer. To avoid this minor dissatisfaction and tension in the mind of customer, and deficiency of the service, it is recommended that the bank should provide brochures etc containing information in details. Some general information should be placed in information notice board on the entrance where customer can see it easily or it should be self-attractive. 118
  • 128. Internship Report National Bank of Pakistan RECOMMENDATIONS As analysis shows that NBP is a most growing organization with highest return on capital, The bank has been able to strategically manage and build on its competitive advantage, by knowing customer’s requirements, understanding employee’s need, modern technology, to making social responsibility and looking towards stakeholder’s values. But there is further need for improvement. To overcome weaknesses and to maintain its position as an “Asian Tiger” in banking field, following recommendations are made: ∗ Staff strength should be enhanced and professional qualified persons should be recruited. ∗ It is recommended that proper training be provided to the staff members that will ultimately increase the performance of Bank over all. ∗ It is suggested that promotion be given to the staff in due time and on the basis of performance to provide job satisfaction. ∗ The bank should spend more on renovation of the branches to improve environment and atmosphere to attract the customers. ∗ There should be a proper desk for customer’s information in every branch. ∗ Sitting arrangement, air conditioning and new furniture should be facilitated ∗ The Bank should introduce the computers software to cope the heavy load of work and better control. ∗ Extra counters should be established in order to facilitate during the rush days the difficulties faced by the bank staff as well as the customers. ∗ All Branches of the Bank must be online. ∗ All the departments should be established separately in every branch. ∗ The Bank should locate new market for its operational activities in the country as well as abroad. ∗ The Bank should increase profit rate on deposits and saving schemes especially for pensioners and old age citizens. ∗ For improvement of internal control and system the compliance wing and surprise inspection system should work more effectively. ∗ The bank should use broad casting media for promotion of its products and services and to further expand its area through more aggressive marketing. Customer services must be 119
  • 129. Internship Report National Bank of Pakistan better to improve the efficiency of branch, which results in quality work and causes the customer attraction that will create lucraturable activities. These and many other that can make a good set of recommendations, which have to be made possible to escape from the threats and weaknesses and the risks in environment that surrounds the Bank. The management do considers the policy matter that is not helping the Bank, but are still in practice due the absence of prudentially regulated system to protect them and the Bank. Efforts have been made with serious concern to give NBP a status that it has to maintain by having practices of: ∗ Right sizing of the employees. ∗ By closing unprofitable branches. ∗ By introducing a merit based selection criteria. ∗ Promotions made conditional with qualifications. 120
  • 130. Internship Report National Bank of Pakistan CONCLUSION The report is all about National Bank of Pakistan, one of the leading bank of Pakistan banking industry with ١٢٥٤ nationwide and almost ٢٥ branches operating in other countries including USA, China, France, Hong Kong, Azerbaijan, Bangladesh, Hong Kong. It has maximum coverage with facilities of ATM and online banking throughout Pakistan. National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance ١٩٤ ٩. The primary objective of NBP was to purchase jute from the growers in the former East Pakistan and also to perform the commercial banking functions in the country. It is a part of State Bank of Pakistan and it is its major strength. It is providing different facilities to its customers. Inside the bank, in branch banking it has Clearing and Collection Department, Government Receipts Processing Department, Account Opening Department, Remittance Department, Customer Services Department Cash Department, Deposit Department, Advances and Credit Department. These are the most common departments exist in almost each branch. It is offering different deposit choices, advances, credits and securities etc for its customers. Its Human Resource is its major strength that is leading this bank in this way but there is much gap to cover yet. The other strengths this bank has are that it is acting as Agent of State Bank of Pakistan, providing Agency Arrangements for different government organizations include WAPDA and PIA, Profitability and a vide coverage throughout Pakistan through its Corporate Branches. And also it has comprehensive range of products it is offering in market. The challenge it is facing are currently the lack of implementation of rules and regulations that may lead to weak organizational culture, old organizational culture, no regular promotions practices and not much use of IT technology in bank as other are using. There are many workers and employees’ unions exist in National Bank of Pakistan that use to play organizational politics instead of doing productive work that leads to wastage of time. As analysis shows that NBP is a most growing organization with highest return on capital, largest market share amongst all Pakistani banks and cost to income ratio is the highest in banking sector. But there is further need for improvement to overcome weaknesses and to maintain its position as an “Asian Tiger” in banking field. As far as my internship and experience is concern, I learnt a lot during my internship because I got practical knowledge before entering in the practical life after completion of my B.com(hons.) degree. I learn a lot about banking practicing in Pakistan, rules and regulations and different procedures followed by banks, the organizational culture and structure of the bank, National Bank of Pakistan. 121