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Internship Report on NBP, Balakot branch Balakot

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CHAPTER # 1 INTRODUCTION OF STUDY 1.1

Introduction

As part of the academic requirement for completing MBA (Marketing) Master of Business
Administration. The students are required to under go for two (2) months of internship with an
organization. The internship is to serve the purpose of acquainting the students with the practice of
knowledge of the discipline of banking administration. This report is about National Bank of Pakistan.
NBP was established in 1949 and since then, it has expended its network, becoming the largest
commercial Bank of the country. It offers different products of services to its customers.

1.2

Purpose of the Study

The main purpose of the study in hand is together relevant information to compile internship report on
National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a
useful manner.

To work practically in an organization.

To develop interpersonal communication.

1.3

Scope of Study
As an internee in National Bank of Pakistan the main focus of my study research was on general banking
procedures in one of the branches of NBP. These operations include remittances, deposits, advances
and foreign exchange. Similarly different aspects of overall of NBP are also covered in this report.

Internship Report on NBP, Balakot branch Balakot

1.4

Objectives

of the Study

Discuss thorough study of National Bank of Pakistan.

To understand the various operations and to equip with practical knowledge of the National bank of
Pakistan.

1.5

Limitation of The Study

Some thing is better than nothing. No matter how efficiently a study is conducted, it cannot be perfect
in all respects. This study was conducted in accordance with the objectives of the study. The study may
not include broad explanations of facts and figures due to the nature of the study.

Secondly

, the limitation, which affects the study, is the restriction on mentioning every fact of the bank due to
the problem of secrecy of the bank. In addition, the availability of required data was a problem as all the
documents and files are kept strictly under lock and key due to their strictly confidential nature. Thirdly,
the problem of short time period also makes the analysis restricted as one cannot properly understand
and thus analyze all the operations of a bank just a very short time of eight weeks.

1.6 Benefit of The Study

The study done will benefit the finance students in particular and banking students in general because
the financial analysis section of this report comprehensively encompasses all respects of financial
analysis. Furthermore, NBP Balakot Branch, Balakot may also benefit from the recommendations made
at the end of the report.

1.7 Research Methodology

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.
Formally arranged interviews and discussions also helped me in this regards.

Internship Report on NBP, Balakot branch Balakot

Primary data: Primary data include, Personal observation and Interviews of The Staff Members

Secondary data: Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet

1.8 Scheme of Study SECTION 1

Chapter 1:

An introductory chapter that discuss the introduction of study of report, its Background, Purpose,
Scope, Methodology, limitations and Scheme of the report.

SECTION 11

Chapter2:
This chapter concludes brief history of banking in general, evolution of banking, Nationalization of
banking in Pakistan, History of NBP, mission statement, and its objectives, functions of National Bank of
Pakistan.

Chapter3:

In this chapter the services of NBP were discussed and the departmentation of NBP is explained as well
as NBP Balakot Branch

SECTION III

Chapoter4:

It tells about Strengths, Weaknesses, Opportunities and Threats of i.e. SWOT analysis of NBP

Internship Report on NBP, Balakot branch Balakot

Chapter5:

It consists of comprehensive performance of NBP through past several years. Ratio analysis and those
parties that are interested in financial performance of Bank.

SECTION IV

Chapter 6:

It covers the critical analysis of the bank. This chapter has been divided into four parts i.e. Problems at
the Branch, Functional analysis, Administrative analysis, and Personal Management Analysis.

Chapter 7:

In this chapter recommendation for improvement on all aspects of the Bank are given.

Chapter 8:

Two implementation plans are given in this chapter. “Mare Gare Car Financing Scheme”

and Need for Telephone Operator.

Internship Report on NBP, Balakot branch Balakot

CHAPTER # 2 EVOLUTION OF BANKS IN PAKISTAN

2.1 INTRODUCTION

There are different opinions that how the word „Bank‟ originated. Some of the author‟s opinion that
this word is derived from the word „Bancus‟ or Banque‟, which means a

bench. The explanation of this origin is attributed to the fact that the Jews in Lombard transacted the
business of money exchange on benches in the market place; and when the

business failed, the people destroyed the „bench‟. Incidentally the word „Bankrupt‟s said

to have evolved from this practice. Some of the authors are o

f opinion that the word „Bank‟ is derived from the German word back, which means „joint stock fund‟.
Later on when the German occupied major part of the Italy the word „Back‟ was italicized into „Back‟.

In fact human left the need of bank when it begins to realize the importance of money as a medium of
exchange. Perhaps it where the Babylonian who developed banking system as early as 2000 B.C. At that
time temples were used as banks because of their prevalent respect. During the rule of king Hamurabi
(1788

1686 BC) the founder of Babylonians Empire, loans were started being granted for interest. The
borrower has to provide guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a
code wherein he laid down standards rules for procedures for banking operations by temples and great
landowners. Also in Greece, the temples were used as banks, where the people deposited their money
and other valuables for safe custody and security. In Europe with

the „revival of civilization‟ (Renaissance) in

the middle of twelve century, trade and commerce started expanding and this development compelled
the business community to borrow the money from the Hebrew moneylenders on high rates of interest
and usury. Seeing the great demand, these moneylenders started organizing themselves and bank
started up at the principle seaports of southern Europe. Soon Venice and Geneva became the most
important money markets of the time and banking though different from its
Internship Report on NBP, Balakot branch Balakot

present form, flourished. What we know as „modern banking‟ originated in the 14

th

century in Barcelona.

2.2 Definitions of Bank

"

A financial institution, which deals with money and credit. It accepts Deposits from individuals, firms and
companies at a lower rate of Interest and gives at higher rate of interest to those who need them

.”

A financial establishment which uses money deposited by customers for investment, pays it out when
required, makes loan at interest, exchanges currency, etc. J.W Gilbert in his principles and practice
banking defines a banker in these words:

A banker is dealer in capital or more properly, a dealer in money. He is intermediate

party between the borrower and the lender. He borrows of one and lends to another”.

Sir John Paged defines banker in these terms:

“That no person or body

, corporate or otherwise, can be a banker who does not

Take deposits accounts.


Take current accounts,

Issue and pay Cheques and

Collect Cheques crossed and uncrossed for his customers” The American

defined the term banker in a very broad sense as under:

By banking, we mean the business of dealing in credits and by a „Bank‟ we

include every person, firm or company having a place of business where credits are opened by deposits
of collection of money or currency. Subjects to be paid or remitted on Cheques or order, money is
advanced or loaned on stocks, bonds, bullion, bill of

exchange, promissory notes are received for discount or sale”.

Internship Report on NBP, Balakot branch Balakot

2.3 Evolution of Banking in Pakistan

The first phase in evolution of banking in Pakistan sees very hard days for the whole banking sector.
Starting virtually from scratch in 1947, the country today possesses a full range of banking and financial
institutions to cope with various needs of the economy. The area now constituting Pakistan was,
relatively speaking, fairly well provided with banking facilities in undivided India, in March 1947 there
were 3496 offices of Indian scheduled banks out of which as many as 487 were situated in territories
now constituting Pakistan. The Reserve bank of India was the central banking authority in India. At the
time of partition it was decided that in the interest of smooth transition it should continue to function in
newly emerging state of Pakistan, until 30

th
 Sep.1948. In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. This
resulted in a negative effect on baking service in Pakistan. The banks, which had their registered offices
in Pakistan, transferred them to India. In an effort to bring about the collapse of the new state by
pushing a deliberate policy of withdrawals the Indian bank offices closed quickly. Those banks, which
stayed, operated only in name pending the winding up of their business. The number of scheduled
banks thus declined form 487 branches before independence to only 195 branches by 30

th

June1948.

2.4 Banking Growth during (1948-1970)

In this tense situation, a committee was immediately setup to formulate a scheme of central banking
legislation for Pakistan. Many specialists were of the opinion that in view of the acute shortage of
trained staff, any idea of establishing a central bank was I impractical and the best that could be
attempted was the setting up of a currency board until such times as sufficient staff could be organize to
operate a central bank. The questions as to whether the institution should be only a currency board or a
full-fledged central bank had exercised the mind of the Pakistan government since independence.
Through, it was realized that the shortage of trained personal to run the

Internship Report on NBP, Balakot branch Balakot

central bank would present serious difficulty in view of the tangible advantages that a central bank
enjoyed over currency board, the government ultimately decided to take the bold step of setting up a
full fledged central banking authority. Among other factors, which led to this decision, there was the fact
the banking facilities in the country had been totally disrupted and there was an urgent need for their
rehabilitation, which a central bank alone could meet. As there was hardly any time to pass as Act, an
order was drafted, known as the state bank of Pakistan order, which was promulgated by the
government of Pakistan on 12

th

may 1948. The state bank declared open on July 1

1948 by the father of the nation. One of the first tasks of the state bank was to arrange for the
replacement of the Reserve bank of India notes, which had continued to circulate in Pakistan during the
transitional period, by Pakistan currency. The first Pakistan notes were issued in October 1948 in the
denominations of Rs. 5, 10 & 100. An equally urgent task, which the new central bank had to address
itself, was the creation of a national banking system. To this end, while extending every help and
encouragement to Habib Bank to expand its organization, the state bank recommended the setting up of
a new banking institution to serve both as an agent to the state bank recommended the setting up of a
new banking institution to serve both as an agent of the state bank as well as the spearhead of its credit
polices. Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in November 1949.
It started with six offices in the former East Pakistan. In view of the special role assigned to the new
institution, contrary to traditional practices the Governor of the state bank was appointed to head its
Board of Director in 1950. Under the fostering care of the state bank and the support of the
government, the new institution developed rapidly. By using its special powers, the state bank made
liberal advances to the new bank to help it expand credit facilities in the country. By 1952, the National
bank of India shortly, afterwards, in November 1952, the governor of the state bank ceased to function
as the president of National bank of Pakistan.

Internship Report on NBP, Balakot branch Balakot

With a view to broadening the institutional framework of the financial system, the state bank also
sponsored the establishment of specialized credit institutions in the filed of agriculture and industry.
Banking companies (control) act was passed in December 1948 specifically empowering the state bank
to control the operations of banking companies in Pakistan. Moreover realizing that the most serious
limitation on the expansion of banking services in Pakistan was the lack of trained personal, the state
bank sponsored a banking training scheme, which was repeated after year and turned out a large
number of bankers. As the Commercial Banking facilities continued to expand, a new Pakistani bank, the
National Commercial Bank was established and registered as a scheduled bank. In the filed of industrial
finance a new institution known as the industrial credit and investment cooperation was set up. The
year 1958 marked the completion of the first decade of the working of the State Bank of Pakistan. When
it was established there were only 195 bank offices in existence. At the end of June 1958 their number
had increased to 307, of which Pakistani banks accounted for 232 against 25 in mid 1948. Moreover at
the end of June 1958, Pakistani banks held 60% of the total banks deposits, and were responsible for 65
of total bank credit. When the Ayub Khan Government took over in 1958, the banking and monetary
scene was significantly affected by developments such as the liberalization of imports, transfer of
business in food grains to the private sector, and the firming up of commodity markets. The demand of
funds picked up and there was a substantial expansion of bank credit to

the private sector. The pace of expansion in the institutional frameworks of the country‟s

banking system quickened and a new Pakistani, bank, namely the United Bank Limited was established.
Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The bank extended
its network by opening six new offices located at Chitagong, Peshawar, Quetta, Khulna, Layallpur and
Rawalpindi. The number of scheduled bank offices rose
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from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to the list of
scheduled banks. Two principal additions were the commerce bank, and the standard bank. The number
of scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965. Under the impact of
economic growth and dear scope of private enterprises, bank credit to the private sector rose from Rs.
1,458 millions to Rs. 5759 million. Thus the total expansion in bank credit to the private sector during
this period amounted to Rs. 4300 million, which gave a annual expansion of Rs. 860 million compared to
the annual average increase of Rs. 144 million over the preceding five years. Banks deposits increased
from Rs. 2,493 million to Rs. 6883 million during the five years period ended June 1965 compared to Rs.
231 million in the proceeding five years. Time deposits during this period increased from Rs. 946 million
to Rs. 3228 million, where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase
in time deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at
49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of banking
development during this period was that since the rate of increase in bank deposits lagged behind the
rate of expansion in bank credit, the banked has to depend increasingly on central bank finance. They
borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965.
Owing keen

demand for bank credit, bank‟s investments could not increase as rapidly as their

advances. Their investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231
million in June 1960. Investments, which were almost equal to their advances in June 1960, were only
about one third of the advances in June 1965.The third plane period witnessed a further expansion of
banking facilities in the country the total number of scheduled banked offices increased from 1,591 at
the end of June 1965 to 3133 at the close of June 1970. During the same bank credit to the private
sector rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank
deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end of June 1970.
A remarkable change occurred during this period related to the

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composition of deposits. Time deposit becomes greater than demand deposits forming about 54
percent age of the total deposits. As oppose to what happened in the previous period, banks were able
to finance a mush higher level of credit expansion without having to increase their borrowings from the
central bank.
2.5 Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms were
introduced to make the banks more responsive to the requirements of economics growth with social
justice. The reforms aimed at bringing about a more purposeful and equitable distribution of bank
credit, improving the soundness and efficiency of the banks, and securing greater social accountability of
the banking system as a whole. The role of the banking system had been truly spectacular in mobilizing
savings of the community and meeting the credit needs of the economy. But at the same time, the
banks had generally neglected their role in promoting social justice and had failed to play an effective
role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In particular
the inter locking of ownership with commercial and industrial interests had led to the misuse of bank
resources. There was a heavy concentration of credit in big accounts and in urban area. Credit facilities
for agriculture, small business, newly emerging exports and housing had remained obviously inadequate
while the banks indulged in capital financing in few selected business sectors and issued guarantees on
behalf of favored clients, term clients, term financing facilities for industry were wholly absent. Under
the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider powers. It
was authorized to remove directors or managerial personnel, if necessary and supersede the board of
directors of a banking company and appoint administrators during the period of such super session. It
was also empowered to nominate directors on the board of every bank. As regard bank directors, it was
provided that anyone defaulting in meeting his obligations to bank would forfeit his directorship.
Moreover, it was laid down that no person could serve as director of a bank for more than

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six years continuously. Each bank was required to have a paid up capital of not less than 5 percent age of
its deposits to be progressively build up to 10 percent age over a period of time. The banks were also
required to transfer 10 percentage of their profit their reserves every years after the reserve became
equal to the paid up capital. With a view to diversity the ownership of the banks, the banks were
required to raise new capital from the market. Unsecured loans to directors, their families or firms and
companies, were totally prohibited. The bank reforms also brought about the establishment of new
institutions to achieve new objectives.A national credit consultative was setup under the supervision of
the state bank with representation form the government and the private sector. It was assigned the task

of determining of economy‟s annual credit needs within the safe limits of monetary and

credit expansion with reference to the annual development plan. Such a credit plan was to cover the
public and private sectors. Alongside the National credit council and Agricultural Advisory Committee
was formed to allocate agriculture credit for various purposes, to coordinate the operation or the
agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing
committee on exports in general and the new emerging exports in particular, was also established. With
a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme was
introduced under which the state bank under took to share any bonfire losses incurred by the
commercial banks in case of small loans of advances to agriculture. At the same time two financing
institutions

were established. The people‟s Finance

Corporation was designed to provide finance to people of small means while the National Development
Finance Corporation was set up of finance public sector owned and managed industries and enterprises.

2.6 Nationalization of Banks (1974) In Pakistan

The banking reforms turned to be transitional and interim step and when they were hardly eighteen
months old the government nationalized the banking systems, with the following main objectives.

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To enable the government to use the capital concentrated in the hands of a few rich bankers for the
rapid economic development of the country and the more urgent social welfare objectives. To distribute
equitably credit too different classes sectors and regions. To coordinate the banking policies in various
area of feasible joint activity without eliminating healthy competition among banks. The act passed for
the nationalization of banks is known as the banks Nationalization Act 1974. Thus under this act the
state bank of Pakistan and all the commercial banks incorporated in Pakistan and carrying business in or
outside the country were brought under government ownership with effect from Jan 1, 1974. The
ownership, management and control of all Pakistani banks stood transferred to and vested in the
Federal government. The shareholders were provided compensation in the form of federal government
bonds redeemable at par anytime within the period of fifteen years. Under the Nationalization act, the
Chairman, Directors and Executives of various banks, other than those appointed by federal government
were removed from their offices and the central boards of the banks and all local bodies were dissolved.
Pakistan banking council was established to coordinate the activities of the Nationalized Commercial
banks. At the time of Nationalization on December31, 1973 there were following 14 Pakistani
commercial banks with 3323 offices allover Pakistan and 74 offices in foreign countries: National banks
of Pakistan Habib bank limited Habib bank (overseas) limited United bank limited Muslim commercial
bank limited

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Commerce bank limited Standard bank limited Australia bank limited Bank of Bahawalpur limited
Premium bank limited Pak Bank limited Sarhad bank limited Lahore commercial limited Punjab
provincial co-operative bank limited The Pakistan banking council prepared a scheme for the recognition
of banks. The bank (amalgamation) scheme 1974 was notified in April, providing for the amalgamation
of the smaller banks with bigger ones and following the five units in there phases: National bank limited
Habib bank limited United bank limite Muslim commercial bank limited Allied bank of Pakistan limited
The first phase was completed on 30

th

June. 1974. When the bank Bahawalpur was merged with the National Bank of Pakistan. The premier
Bank Limited with Muslim Commercial Bank limited and Sarhad Bank Limited and Pak bank limited and
renamed as Allied Bank of Pakistan limited.

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The second phase was completed on 31

st

Dec.1974, when the commerce bank limited merged with the United Bank limited. The third and the
final phase were completed on 30

th

June 1975 when the standard bank limited was merged with Habib Bank limited. The nationalization
was very smooth and gave very positive results. The number of branches, which stood at 3397 on
Dec31, 1973, reached on 7661 by end June 1992. The bank deposits, which stood at Rs. 1925 corers at
the end 1973 reached the highest, mark about 323 corers.

2.6.1 Islamization of Banking

Another major development in the history of Pakistan Banking System was the introduced of interest
free banking in selected Commercial Banks with effect form Jan1, 1981. This followed the effort to
eliminated interest from the operation of Nation investment trust, the House Building Finance
Corporation of Pakistan. Certain amendments were made in banking and other laws with the object of
ushering in a new system of banking, which would confirm of Sharia. A new law Modaraba Companies
Ordinance 1980 was promulgated. Separate interest free counters began to operate in all the
nationalized commercial banks free counters began to operate in all the nationalized commercial banks.
The state bank provides finance against participation term certificate and also against promissory notes
supported by Modaraba certificate. In order to cover interest free transactions certain banking
definitions such as creditors, debtor, and advances credits and deposits were revised. Stipulations
concerning form of business in which banking companies may engage may also have been modified
schemes were introduced to provide interest free loans to formers and deserving students. A private
Limited Company named as Bankers Equity limited was incorporated in 1979 to provide financial
assistance to the industrial sector primarily on interest free basis.

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A scheme to extend interest free productive loans to farmers and fisherman has also been introduced.
Instead of interest, a system based on mark-up in price, exchange rate differential, and profit and loss
sharing accounts were introduced. Different financial schemes introduced in the Islamization process
are:

Musharika Financing.

Hire Purchase Financing.

Modaraba Financing.


Specific Purpose Modaraba.

2.6.2 Dis-investments and Deregulation of Banking

1991

When it was realized that the role of public sector in the economy is over extended and the banking
sector has more earning potential in the private sector the process of privatization banking sector
restarted in 1991 by the Muslim League Government. Muslim Commercial Bank was Dis-invested in to
two phases while ABL was sold to its employees. Since then allot of investment is being made in the
banking sector and several new banks were established and still the process is going on. Now only NBP is
government bank other than SBP. The performance of this bank will be analyzed and judged in the
following chapters.

2.63 Interest Free Banking

A new concept of interest free banking was introduced in 1981 and by now it has been established on
sound footing and new trends and techniques are being implemented to make this system result
oriented. New products and their systematic consumption are making Pakistani banking comparable to
their several modern counterparts anywhere in the developed world.

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2.6.4 HISTORY OF NBP :

The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its
currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading
between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export
jute NBP was established through an Ordinance of GOP.

National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher
standards of achievements. It is the major business partner for the Government of Pakistan with special
emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large network of branches locally,
internationally and representative offices.

The Bank in 1950 had one subsidiary „The Bank of Bahawalpur‟ on December4, 1947 by

the former Bahawalpur State. NBP was undertaking Treasury Operations and Managing Currency Chests
or Sub Chests at 57 of its offices where the turnover of the business under the head amounted to
Rs.2460 million. i)

Deposits held by NBP constituted about 3.1% of total deposits of all Pakistani Banks in 1949, which rose
to 38% in 1952. ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances.
NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and
commerce. iii)

NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule
bank credit.

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MISSION STATEMEN

“To make the Bank complete and competitive with all international

Standard in performing, quality of, operations, staff, financial strength

And products and services To develop a culture of excellence in every spare of activity of the bank

2.6.4.2 GOALS AND OBJICTIVES

“An organizational objective is the intended goal that prescribes definite scope and suggests direction to
the panning efforts of a organization.”
2.6.4.3 GOALS AND OBJICTIVES NBP

“To be the pre

-eminent financial institution in Pakistan and achieve market recognition

both in the quality and delivery of service as well as the range of product offerings.”

2.6.4.4 BOARD OF DIRECTORS

NBP, Board of Directors list consist the following members and their designation.

Table 1

NAME

DISIGN

ATION

Ali Raza

Chairman & President

Dr Waqar Masood

Director

Ifthikhar Ali Malik

Director
Syed Shafqat Ali Shah Jamoti

Director

M Zubair Motiwala

Director

Sikandar Hayat Jamali

Director

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M. Khalid Malik

Director

S.M. Rafique

SEVP & Sectorary to BD

(Source Annual report 2004)

2.6.4
BOARD OF DIRECTORS

Syed Ali Raza

(President)

Dr. Waqar Masood khan

(Director)

M.Arshad Chaudry

(Director)

Iftikhar Ali Malik

(Director)

Syed Shafaqat Ali Shah

(Director)

Skindar Hayat Jamali

(Director)

M.Zubair Motiwala

(Director)

Mohd Khalid Malik

(Secretary)

Source:

Annual Report of NBP (2003)

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2.6.5 MANAGEMENT

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

The management has two types. 1. Centralized. 2. 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 the top management takes all the decisions.

2.6.5.1 SENIOR MANAGEMENT OF NBP .

Senior Management of NBP consists of following member and their respective designation.

Table 2

Masood Karim Sheikh

SEVP & Group Chief, Corporate &

Investment Banking Group and Chief

Financial Officer

S. M. Rafique

SEVP & Secretary Board of Directors

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Derick Cyprian

SEVP & Group Chief, Special Assets

& Remedial Management Group

Imam Bakhsh Baloch

SEVP & Group Chief, Compliance

Group

Shahid Anwar Khan

EVP & Group Chief, Commercial &

Retail Banking Group

Nadeem A. Dogar

EVP & Group Chief, Information

Technology Group

Muhammad Sardar Khawaja

EVP & Group Chief, Audit &

Inspectio

n Group

Dr. Asif A. Brohi

EVP & Group Chief, Operations Group

Javed Mehmood
EVP & Group Chief, Risk Management

Group

Muhammad Nusrat Vohra

EVP & Group Chief, Treasury

Management Group

Amim Akhtar

EVP & PSO to the President

Dr. Mirza Abrar Baig

Group

Chief, Human Resources

Management & Administration Group

Uzma Bashir

Group Chief,

Organization D&T Group

(Source www.nbp.com.pk

2.6.6 Net Work of Branches:

NBP have wide range of branches inside the country and outside the country. In Pakistan it has 29
regional offices, 1189 Branches and 4 Subsidiaries.

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In overseas it has 16 overseas branches, 6 other branches.

2.6.7 Objectives of NBP

National bank of Pakistan is also a commercial organization and its main objective is profit
maximization. This is achieved in two ways: 1. By increasing deposits. 2. By charging interest on
loans provided to the private sector and business community. These are explained as:

2.6.7.1 Increase in deposits:

Competition in banking is intense and every bank whether it is Pakistani, foreign, private or nationalized
tries to increase its deposits by providing better facilities to its customers. By increasing its deposits a
bank can extend greater amount of loan and hence achieves higher profit. NBP is also improving its
facilities and services to attract customers with higher volume of deposits. There are two main factors
involved in increasing the deposits. These factors are improving the services and courtesy. NBP is
continuously working on these two factors to increase its deposits.

2.6.7.2 Extension of loans:

The profitability of a bank largely depends on the amount given to people as loan and the type of
people to whom credit is given i.e. the credit worthiness of the borrowers. This strategy has worked
quite well for NBP. Deposits are collected from the people and invested in different projects. NBP
prefers to give loans to financially sound and reliable parties, after securing the collators. NBP has an
extremely well organized section. The staff is adequately trained, and educated and competent. They
carry out extensive financial analysis before deciding on the loan. Interest charged on the loans
potentially contributes to higher profits.

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Some of the other objectives of NBP are: i. Improve customer services. ii. Quick disposal of credit cases.
iii. Efficient operation of the branches. iv. Better Public Relations. v. Operational and advisory services
for foreign exchange accounts activities

2.6.8 Functions of NBP

Since NBP is a commercial bank, it performs a variety of functions. Like other commercial banks, NBP is
engaged in financing international trade. Its other major functions include receiving deposits,
advancing loans and discounting of exchange. The functions performed by NBP are:

2.6.8.1 Accepting Deposits

This function is important because banks largely depend on the funds deposited with them by its
customers. Deposits are of many types:

i. Current deposits

Current deposits are also called demand liability on current deposits. NBP pays practically no interest on
current deposits. Businessmen usually open current accounts. In NBP current account can be opened
with a minimum amount of Rs.500/-.

PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit and draw
money easily. Profit on PLS is calculated every month but paid after six months. PLS account can be
opened with a minimum amount of Rs.500/-

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iii. PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they
cannot be withdrawn unless giving due notice. In this case the rates of profit will be different depending
upon the time period.

2.6.9 Discounting bills of exchange

Discounting of bill is practically speaking lending for exchange at their market rate i.e. it pays to holder
of the bill an amount equal to the face value after deducting interest at the current market rate for the
period. This bill has to be mature. This is the common way used for keeping a part of assets of the bank
in a liquid form.

2.6.10 Agency service

NBP also provides best and unique service to its valued customers. NBP provide the following agency
services to the customers:

i. Collection of dividends

As NBP deals with the purchase and sale of various types of securities, therefore NBP also provide
dividend or interest earned on share or bonds or invested money.

ii. Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National bank of Pakistan acts
as an agent for its customers.

iii. Acting as an agent

NBP also acts as an agent correspondent or representative for its customer at home or abroad.

iv. General utility services:

Utilities provided by NBP are as follows:

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a. Clearance of utility bills

NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone bills of its
customers. For this purpose it also provides evening banking services

b. Lockers facility

National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in
it. The charges of different size of lockers are different.

c. Acts as a referee

NBP provides useful services to its customers by acting as a referee to their credit worthiness.

d. Supply of information
NBP provides operational and advisory service for foreign exchange accounts/activities.

2.6.11 Unmatched Banking Facilities

Deposit security, Guaranteed by Government of Pakistan.

Highest rates of return to attract the savings.

Lowest rates on exports and other borrowings.

Largest contribution towards Government and Semi-Government requirements.

Agents of the SBP handling Treasury Functions, receipts of Taxes & other Revenues.

Handling of salaries & pensions of federal/provincial/defense personnel.

Utility Bills collections.

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

Hajj arrangements.

Sale and encashment of prize Bonds.

Sale and encashment of Defense Savings and Special Savings Certificates.

Safe Deposit Lockers for customers.

Rational Human Resource Management. The pr

estigious periodical “The Banker” UK recognized NBP as the best bank for 2001

-2002 and NBP is the bank of the year for 2004-2004 of Pakistan. i. AAA rating awarded JCR-VIS Credit
co. Ltd and affiliated of Japan Credit Rating Agency for 2001. ii. AAA+1 rating awarded JCR-VIS Credit
Co.Ltd and affiliated of Japan Credit Rating Agency for 2002

2.6.12

NBP at the forefront of Pak-Afghan trade

i. Booth at dry port Peshawar ii. Booth at Pak Afghan border (Torkham) NWFP iii. Booth at Pak Afghan
border (Chamman). Baluchistan. iv. Establishing branch at Kabul.

2.6.13 Summation
We discussed in this chapter the evaluation of banking in Pakistan, banking reforms 1972,
Nationalization of banks, History of NBP, Mission Statement of NBP. The next and onward chapter we
will discuss the general banking information and departmentalization of NBP.

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REFRENCES

1.

Israr, Siddiqi H. (1998). Practice and Law of banking in Pakistan. Karachi: Decent Print Enterprises. Page
15-17

2.

Sir, Paged John. The law of Banking. The Law of Banking. McGraw Hill Publication: page 51-58

3.

Nasir, Saeed H.(2001).

Money and Banking.

Pakistan, Kitab Markaz: Page.105-106

4.

www.nbp.com.pk

5.

Bank Nationalization act 1974.

6.

www.google.com.pk

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CHAPTER # 3 INFORMATION & DEPARTMENTALIZATION OF NBP 3.1 INTRODUCTION

This chapter presents the services and departmentalization of NBP.

Services are outputs of the firm, which are in intangible form. Which are the backbones of any
organization to earn profit. NBP offers the following services to the people.

3.2 DEMAND DRAFTS

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

purchase NBP‟s Demand Drafts at very reasonable rates. Any person whether an account

holder of the bank or not, can purchase a Demand Draft from a bank branch.

3.3 SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced
for speedy services in the area of home remittances. The system has built-in features of computerized
test keys, which eliminates the manual application of tests that often cause delay in the payment of
home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access
number

NBP-APKKA

. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through
SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business
and personal needs.

3.4
LETTERS OF CREDIT *

NBP is committed to offering its business customers the widest range of options in the area of money
transfer. If you are a commercial enterprise then our Letter of Credit service is just what