National bank of pakistan

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

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

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
.)

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.
)

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

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

 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

Annexure and Documents ١٢٢

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

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

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.

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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

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


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


• 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


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

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


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


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


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


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


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


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

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


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


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


 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


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


MANAGEMENT OF NBP
A N A G E M E N T O F

• 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


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.

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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: -

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• 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

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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

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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

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DEPARTMENTLIZATION
E P A R T M E N T L I Z A T I O N

• 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


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
•

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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

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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

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 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)

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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.

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 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.

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 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: -

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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


 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.

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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.

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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

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∗ Certificate of incorporation
∗ Their signature cards
∗ Certificate to commence business
∗ Power of Attorney
Documentation In case of Partnership Account


∗ 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


∗ 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

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 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


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.

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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


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


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


 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


 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


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


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

48


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

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


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

National bank of pakistan

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