INTERNSHIP REPORT

ON NBP

(Submitted as per requirements of the completion of

the Degree of Master of Business Administration)
Roll No.: 21279
Name: Noreen Anwar

Reg. No.: 04-PKL-5015

Class: MBA (2005-07)

MOHI-UD-DIN ISLAMIC UNIVERSITY

NERIAN SHARIF AJ&K

I dedicate this
humble effort to my
dear Parents whose
love and affection
made me able to
receive education
upto this extent and
whose prayers has
been a source of my
constant
encouragement and
success.
2

ACKNOWLEDGEMENT

All praise is for ALLAH, the most merciful and his prophet Muhammad for every torch
of guidance and knowledge for humanity. I offer humblest and sincerest words of thanks
to GOD Almighty WHO blessed me with potential and ability to make material
contribution to already existing ocean of knowledge.
Allah, the Exalted, says: Say: Are those who know equal to those who know not? It is
only men of understanding who will remember.

I would also like to thank my family, teachers and friends who added a boost to my
confidence, and are always praying for my success.

PREFACE
Internship is considered to be a compulsory practical training for the MBA
students. Its duration is six weeks and has proved to be golden chance of training for the
students in the concerned organization.
The main purpose of such training is to make students able to apply theoretical
knowledge in practical environment. Students come to know about the knowledge like
organization planning, policies, management structure, activities and objectives.
My internship was arranged in the year 2014 started from November 03, 2014 to
December 13, 2014. I did it in National Bank of Pakistan, Main Branch Multan. As I am
specializing in Marketing, therefore this reputable organization suited me up to the best
of my satisfaction. I did my internship training there very successfully where the Bank
staff welcomed me in a very positive manner, provided me a lot of information about
NBP, its working and objectives and policies. The staff also cooperated with me in
practical work.
At present I am going to present all work of NBP there in shape of this report
according to instruction given by our internship in charge. I am hopeful of the positive
outcome of such training in the upcoming days.

EXECUTIVE SUMMARY
We are living in a time of extraordinary change. The ecological and economic threat is
looming large on the entire sphere of Pakistanis economy. Pakistani firms must design
and make better products and services and should find better ways to market them. What
was once regarded enough is no longer competitive. What were once limitless resources
are now to be used more efficiently. Today an organization is on the leading edge, or it is
on the bleeding edge
National Bank of Pakistan is the largest commercial bank operating in Pakistan .Its
balance sheet size surpasses that of any of the other banks functioning locally. It has
redefined its role and has moved from a public sector organization into a modern
commercial bank. The Banks 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 countrys small
and medium enterprises and at the same time fulfilling its social responsibilities, as a
corporate citizen.
This report is based on internship in National Bank of Pakistan Main Branch
Multan. It is a famous and reputed bank of Pakistan. National Bank of Pakistan maintains
first position in banking sector in Pakistan. This report is based on the activities which are
performed in this bank. This report contains history, mission, vision, core values,
products and services, departments, management, SWOT analysis and financial analysis
of NBP. There are also stated the activities which I performed during my internship in the
branch. There are also mentioned the future prospects and recommendations of the Bank.
I have prepared it with full dedication and hard work and I hope anyone reading this
report will surely get familiar with the basics of this treasury bank

Table of Contents
CHAPTER NO: 1
Introduction of the study.............................................................................................................
Purpose of studying the Organization.......................................................................................
Scope of study...............................................................................................................................
Research Methodology................................................................................................................
Evolution of Banking..................................................................................................................
Definitions and types of Banks...................................................................................................
Evolution of Banking in Pakistan...............................................................................................
Nationalization, Privitization and Islamization of Banks.......................................................
CHAPTER NO: 2
Brief History of National Bank of Pakistan..............................................................................
Nature of National Bank of Pakistan.........................................................................................
Business volume of National Bank of Pakistan.........................................................................
Branch Network of National Bank of Pakistan........................................................................
Awards and Credit Rating of NBP............................................................................................
Vision Statement..........................................................................................................................
Mission Statement........................................................................................................................
Core Values and Objectives........................................................................................................
Number of Employees of National Bank of Pakistan...............................................................
CHAPTER NO: 3
Product Lines...............................................................................................................................
1.

Deposits..............................................................................................................................
a)

Current Deposits.............................................................................................................

b)

PLS Saving Deposits.......................................................................................................

c)

Fixed Deposit Account (Time Deposits).........................................................................

d)

Foreign Currency Account..............................................................................................

e)

NBP Premium Aamdani..................................................................................................

e)

NBP Saver ( PLS)...........................................................................................................

f)

National Income Daily Account (NIDA).......................................................................

2.

Advances.............................................................................................................................
a)

NBP Saibaan...................................................................................................................

b)

NBP Advance Salary.......................................................................................................

c)

NBP Gold Card...............................................................................................................

d)

Students Loan Scheme....................................................................................................

d)

NBP Karobar ( President Rozgar Scheme).................................................................

3.

Corporate Advances............................................................................................................
a)

Cash Finance...................................................................................................................

b)

Running Finance/ Overdraft............................................................................................

c)

Demand Finance.............................................................................................................

4.

Remittances.........................................................................................................................
a)

Demand Drafts................................................................................................................

b)

Travelers Cheques...........................................................................................................

c)

Letter Of Credit...............................................................................................................

d)

Foreign Remittances.......................................................................................................

e)

Swift System...................................................................................................................

f)

Mail Transfer...................................................................................................................

g)

Telegraphic Transfer........................................................................................................

h)

Pay Order........................................................................................................................

5.

Miscellaneous.....................................................................................................................
a)

Lockers............................................................................................................................

b)

NBP Cash Card........................................................................................................

CHAPTER NO: 4
Organizational Structure of National Bank of Pakistan..........................................................
Board of Directors and their Qualifications...................................................................................
Senior Management.......................................................................................................................
8

Provincial & Regional Management.............................................................................................

Branch Management......................................................................................................................
Organization Structure of the Branch.......................................................................................
Hierarchy of National Bank of Pakistan....................................................................................
a)

Centralized Decision Making.............................................................................................

b)

Downward Communication................................................................................................

c)

Chain of Command.............................................................................................................

d)

Authority and Responsibility..............................................................................................

e)

Delegation...........................................................................................................................

CHAPTER NO: 5
Departments of the Branch.........................................................................................................
1.

Clearing House Department...............................................................................................

2.

Remittance Department......................................................................................................

3.

Account Opening Department............................................................................................

4.

Cash Department................................................................................................................

5.

Deposits Department..........................................................................................................

6.

Advances Department.........................................................................................................

7.

Computer Department........................................................................................................
a)

Online branches...............................................................................................................

b)

Batch Branches...............................................................................................................

c)

Manual Branches.............................................................................................................

8.

Pension Disbursement Department.....................................................................................

9.

Accounts Department.........................................................................................................

9.

Human Resource Department.............................................................................................

9.

Compliance Department.....................................................................................................

9.

Foreign Exchange Department...........................................................................................

CHAPTER NO: 6
Introduction of the Branch.........................................................................................................
Learning as an Internee ( 6 weeks explanation).......................................................................
Accomplishments.........................................................................................................................
Problems Encountered................................................................................................................
How learning impacts my Career...............................................................................................
CHAPTER NO: 7
Financial Statements Analysis....................................................................................................
Ratio Analysis................................................................................................................................
Horizontal Analysis......................................................................................................................
Vertical Analysis...........................................................................................................................
CHAPTER NO: 8
Future prospects of National Bank of Pakistan........................................................................
SWOT Analysis............................................................................................................................
Conclusions...................................................................................................................................
Recommendations........................................................................................................................
References.....................................................................................................................................

10

CHAPTER NO: 1
INTRODUCTION

11

INTRODUCTION
Introduction of Study:
As part of the academic requirement for completing MBA, the students are required to
under go 6-8 weeks of internship with any organization. This is the primary purpose of
this report. The internship is to serve the purpose of acquainting the students with the
practice of knowledge of the discipline of banking administration and to familiarize them
with the working environment.
This report is about National Bank 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 and services to its customers.

Purpose Of The Study:

The secondary purpose of this internship is to understand how the theoretical knowledge
can be applied to the practical situations and examine an organizations financial issues
and identify its opportunities, problems and also suggest corrective measures. This
internship is also very necessary to gain confidence and become aware of the mechanism
of an organization. As an internee I wanted to achieve following objectives during my
internship and organizational study:

To familiarize me with a business organization.

To familiarize me with the different departments in the organization and their
functioning.
To enable myself to understand how the key business process are carried out in an
organization.
To understand how information is used in an organization for decision making at
various levels.
To relate theory with practice.
I was also keen to gain professional experience in an actual testing environment.
I wanted to develop my skills in the application of theory to practical work
situations.
To develop my attitude conducive to effective interpersonal relationships.
To acquire good work habits and sense of responsibility.
To enhance my learning experience by application of fundamental concepts
previously learned.
To observe, analyze and interpret the relevant data competently and in a useful
manner.
To develop my interpersonal communication.
I wanted to enhance my knowledge of the discipline of banking administration.

12

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.

Research Methodology:
The report is based on my six weeks 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 regard.

Primary data:

1. Personal observation
2. Interviews of staff

Secondary data:

1.

Manuals

2.

Journals

3.

Magazine

4.

Annual reports

5.

Internet

Evolution Of Banking
There are different opinions that how the word Bank originated. Some of the authors
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 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 is said to have evolved from
this practice. Some of the authors are of opinion that the word Bank is derived from the
German word back, which means joint stock fund.

13

In fact human left the need of bank when they began to realize the importance of money
as a medium of exchange. Perhaps the Babylonian developed banking system as early as
2000 BC. At that time temples were used as banks because of their prevalent respect.
During the rule of king Hamurabi 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 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 money lenders 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. What we know as modern banking today
originated in the 14th century.

Definitions Of Bank
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 Paget 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,
Collect Cheques crossed and uncrossed for his customers.

Types Of Banks
Primarily all banks gather temporarily idle money for the purpose of lending to
other and investment gain in the form of return, profits and dividends etc. However due
to the verity of resources of money and the diversity in lending and investment
operations banks have been place in various categories, such as
Commercial bank
Savings bank
Merchant banks

14

Mortgage banks
Investment bank
Central bank

Evolution of Banking In Pakistan

The first phase in evolution of banking in Pakistan saw very hard days for the whole
banking sector. Starting virtually from 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 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 30th Sep.1948.
In 1947 due to uncertainty and unsuitability the banking sector suffered heavy losses.This
resulted in a negative effect on baking services 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 30th June1948.
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
impractical and the best that could be attempted was the setting up of a currency board
until such times as sufficient staff could be organized to operate a central bank.
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 12th
may 1948. The state bank declared open on July 1, 1948 by the father of the nation. 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 the state bank recommended the setting up of a
new banking institution to serve both as an agent to 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, 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.
15

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. The
number of scheduled banks rose from 430 at the end of June 1960 to 1591 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

Banking Reforms 1972:

After the assumption of office by a new government in 1971, 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.
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
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 or reserves
every year 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 from the government and the private sector. It was assigned the
task of determining of economys annual credit needs within the safe limits of monetary
and credit expansion with reference to the annual development plan. Such a credit plan

16

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

Nationalization of Banks (1974):

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.

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. Pakistan
banking council was established to coordinate the activities of the Nationalized
Commercial banks. At the time of Nationalization there were 14 Pakistani commercial
banks with 3323 offices allover Pakistan and 74 offices in foreign countries.
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 five units were nationalized.

National bank limited

Habib bank limited
United bank limited
Muslim commercial bank limited

17

Allied bank of Pakistan limited

The first phase was completed on 30th June. 1974. When the bank Bahawalpur
wasmerged 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. The second phase was completed on 31st Dec.1974,
when the commerce bank limited merged with the United Bank limited. The third and the
final phase were completed on 30th 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.

Islamization of Banking:
Another major development in the history of Pakistan Banking System was the
introduction of interest free banking in selected Commercial Banks with effect form Jan1,
1981. This was an effort to eliminate 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 conform to 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 provided 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 were also modified. Schemes were
introduced to provide interest free loans to farmers 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. 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.

18

Dis-Investment 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 a lot 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.

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.

19

CHAPTER NO: 2
HISTORY AND OVERVIEW OF
NATIONAL BANK OF PAKISTAN

20

HISTORY OF NATIONASL BANK OF

PAKISTAN
NBP is the largest commercial bank in the Pakistan and was established under the
National Bank of Pakistan Ordinance on November 8, 1949 in Pakistan. It was
established in crisis conditions following the deadlock with India. The original intention
was to setup it sometime in 1950. The plans for its establishment had to be advanced in
view of the critical situation which developed especially in the jute trade as a result of
Indias refusal to accept the exchange rate of Pakistans rupee. The timely opening of the
bank branches enabled the jute growers in East Pakistan to obtain a fair price of their
products and helped the country in maintaining its foreign exchange earnings from raw
jute.
The national bank of Pakistan took over the agency work of the State Bank of Pakistan in
1952 for transacting Government business and managing currency chests at places where
the State Bank of Pakistan does not has an office of its own. The National Bank of
Pakistan in view of its relationships with the Government and as agent of the State Bank
of Pakistan holds unique position among commercial banks in Pakistan. For example for
years it had a monopoly in Government and Semi-Government deposits. This is both a
privilege and a responsibility. On the one hand the bank is given special support and
assistance and on the other it is also expected to serve as an instrument for the promotion
of national objectives and policies. It also undertakes Government Treasury operations.
National Bank of Pakistan maintains its position as Pakistans premier Bank determined
to set higher standards of achievements. It is the major business partner for the
Government of Pakistan with the special emphasis on fostering Pakistans economic
growth through aggressive and balanced lending policies, technologically oriented
products and services offered through its large network of branches.
While continuing its journey of success NBP got highest profit in 2007 in banking
history. As December 31, 2007 the bank has total assets worth of 12.293 billion.
NBP is a commercial organization. It provides both commercial and public sector
banking services. The liability side remains focused on the middle and upper class, retired
and serving government servants. It is also a big contributor of foreign trade and serving
as a treasury bank. In 1971 NBP acquired Bank of Chinas two branches, one in Karachi
and one at Chittagong. At separation of East Pakistan NBP lost its branches there. NBP
merged with Eastern Mercantile Bank and with Eastern Bank Corporation. In June 30,
1974 the government of Pakistan nationalized NBP when the part of bigger bank
amalgamated and NBP acquired Bank of Bahawalpur. In 1994 NBP continued to increase
its strength and merged Mehran Bank.

21

In 2001, with the cooperative agreement of Pakistani Central Bank SBP and Bank of
England allow only 2 Pakistani banks to operate in the UK. NBP and United Bank agreed
to merge their operations to form Pakistan International Bank of which NBP would own
45% and United Bank 55%. In 2002 Pakistan International Bank renamed itself United.
National Bank Limited. The ownership structure of the UNB remained as before. The
only change to the shareholding structure is that UBL had recently been privatized in
Pakistan and was now owned 49% by the Government of Pakistan and 51% by a joint
foreign consortium of Abu Dhabi. In 2003, NBP received permission to open new
branches in Afghanistan and Bangladesh, the inaugurated ceremonies of these branches
held in 2007.uptill now in 2010 it has become so advace and well equipped that it is
providing the services of internet banking, online banking, Islamic banking in a very
efficient manner.

Nature Of National Bank Of Pakistan

National Bank of Pakistan was incorporated in Pakistan under the National Bank of
Pakistan Ordinance 1949 and is listed on all the stock exchanges in Pakistan. The bank is
engaged in providing commercial banking and related services in Pakistan and overseas.
Under a Trust Deed the bank also provides services as trustee to National investment
Trust including safe custody of securities on behalf of NIT.
The nature of responsibilities of the Bank is different and unique from other banks. The
bank also handles treasury transactions for the Government of Pakistan as an agent to the
State Bank of Pakistan for handling Government receipts and payments on their behalf.
The National Bank of Pakistan has also played an important role in financing the
countrys growing trade which has expanded through the years as diversification took
place. The bank is providing all banking services of mercantile and commercial banking
permissible in the country, which include:

Accepting of deposits of money on current, fixed, saving, term deposit and profit
and loss sharing accounts.
Borrowing money and arranging finance from other banks.
Advancing and lending money to its clients.
Financing of projects, including technical assistance, project appraisal through
long term/ short term loans, term finance and musharika certificates, etc.
Buying, selling, dealing, including entering into forward contracts of foreign
exchange.
Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
Receiving of bonds, valuables, etc. for safe custody.
Carrying on agency business for any description other than managing agent, on
behalf of clients including Government and local authorities.
Generating, undertaking, promoting, etc. of issue of shares and, bonds etc.
Transacting guarantee and indemnity business.

22

Undertaking and executing trusts.

Joint venturing with foreign dealers, agents and companies for its representation
abroad.
Participating in World Bank and Asian Development Banks lines of credit.
Providing personalized Hajj services to intending Hajjis.

Business volume of National Bank of Pakistan

The business volume of National Bank of Pakistan is stated in terms of total assets,
deposits, advances, reserves and investments given as follows:
Rupees in
Millions
Year

2009

2010

2011

2012

2013

Total Assets

577,719,114

645,132,711

762,193,593

817,758,326

944,232,762

Deposits

463,426,602

501,872,243

591,907,435

624,939,016

726,464,825

Advances

268,838,779

316,110,406

340,677,100

412,986,865

475,243,431

Reserves

13,536,041

13,879,260

15,772,124

19,941,047

22,681707

Investments

156,985,686

139,946,995

210,787,868

170,822,491

217,642,822

Branch Network of National Bank Of Pakistan

With the geographical development of its branches the National Bank of Pakistan has
been able to extend its services to a much larger number of Pakistanis all over the
country. Today the Bank has more than 8.8 million accounts & Bank maintains its
presence in all the major financial centers of the world through its 22 overseas branches
and 5 representative offices. Banks role Apart from having a vast branch network, Bank
is at the forefront in the acquisition and application of new technologies in every aspect
of its banking facilities. It has acquired leased telephone lines for on-line banking. The
Bank has 12 Regional Computer Centers to cover various on-line and batch system
requirements of branches and controlling offices.
Presently the National Bank of Pakistan is divided into various Groups headed by SEVPs
and EVPs. Its field operations are controlled by 29 regions reporting to as many Regional
chiefs, who control 40 zones and 15 single Branch zones headed by Zonal Chiefs, 12
corporate branches and 1249 domestic branches headed by Branch Managers. The bank
has 12 SWIFT local centers. Bank has also a presence on the internet. The National Bank
23

of Pakistan has all online branches throughout the country. It has modernized its services
by installing Automated Teller Machines called CASH LINK at selected branches.
The Bank's organizational structure reflects the three levels at which it operates:
international, national and local. The Head Office formulates and implements the
strategic, management and operational policies. The Bank has representative offices
abroad in London, New York and Tokyo. A number of officers are seconded as financial
experts to Italian embassies and consulates. The Bank has representative offices in
Beijing, Tashkent, Chicago and Toronto. The Bank's joint ventures are, United National
Bank, First Investment Bank and NAFA, an Asset Management Company. The Branch
network of National Bank of Pakistan is divided into following categories:

ATM network ( Total ATMs 101 & Total ATMs machines 104)
Domestic network ( 1249 Branches)
Islamic network ( 5 Branches)
Overseas network ( 29 Branches)
Swift network ( 12 Branches)
Customer Facilitation Centers (6 Customer Facilitation Centers)
Agriculture branches ( 825 Branches)

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

Awards And Recognitions

Over the years, NBP has received several awards for its better quality of
providing banking services to the individual and businesses. Some of its Awards are
given below:

Best Foreign Exchange Bank 2008

Stable AAA/A-1+ rating (Standalone Basis) by JCR-VIS (July 2007)
Best Return on Capital for 2006 amongst all Banks in Asia
The Best Emerging Market Bank from Pakistan for the year 2006
Best Foreign Exchange Bank Pakistan award for the year 2006
Best Foreign Exchange Bank Pakistan award for the year 2005
Best Bank - Pakistan award for the year 2005
The Asian Banker adjudged National Bank of Pakistan as the Strongest Bank in
Pakistan. 10th Best Bank in terms of Profit on Capital' in the world
Bank of the Year award for the year 2005
Kissan Times Award for the year 2005 by the Prime Minister
24

Bank of the Year award for the year 2004 by the world renowned
Bank with the highest return on capital in Asia and No.8 in the world in 2008
Best banks in the emerging markets.
Bank of the Year award for the year 2002.
Bank of the Year award for the year 2001

25

Credit Rating
According to annual report the year ended December 31, 2009 the JCR- VIS Credit
Rating Company Limited NBP enjoyed the highest credit rating amongst Pakistani banks.
The rating company awarded highest standalone credit rating of AAA. The JCR-VIS
credit rating Co signifies that the organization has been able to strategically manage and
build on its competitive advantages which has translated into the strong and well
managed in profitability.

Vision Statement
To be recognized as a leader and a brand synonymous with trust, highest standards of
service quality, international best practices and social responsibility

Mission Statement
NBP will aspire to the values that make NBP truly the Nations 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 stakeholders value.
Discharging our responsibility as a good corporate citizen of Pakistan and in
countries where we operate.

26

Core Values:

Highest standards of Integrity.

Institutionalizing team work and performance culture.
Excellence in service.
Advancement of skills for tomorrows challenges.
Awareness of social and community responsibility.
Value creation for all stakeholders.

Goal Of NBP
To enhance profitability and maximization of NBP share through increasing leverage of
existing customer base and diversified range of products.

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:
By increasing deposits.
By charging interest on loans provided to the private sector and business
community.
These are explained as:

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.

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

27

financial analysis before deciding on the loan. Interest charged on the loans potentially
contributes to higher profits. Some of the other objectives of NBP are:
Improve customer services.
Quick disposal of credit cases.
Efficient operation of the branches.
Better Public Relations.
Operational and advisory services for foreign exchange account activities.

Number of Employees Of National Bank Of Pakistan

In most modern economies, the term employee refers to a specific defined relationship
between an individual and a corporation, which differs from those of customer, or client.
The relationship between National Bank of Pakistan and its employees is usually handled
through the Human Resource Management & Administration Group & Employees
benefit disbursement & trustee division. These groups handle the incorporation of new
hires, and the disbursement of any benefits which the employee may be entitled or any
grievances that employee may have.There are differing classifications of workers within
National Bank of Pakistan, these are:

Permanent
Temporary / On Contractual
Outsourced

The Employees of National Bank of Pakistan are organizing into trade unions which
represent most of the available work force in National Bank of Pakistan. These trade
Unions utilize their representative power to collectively bargain with the management of
bank in order to advance concerns and demands of their membership

Number Of Employees
Permanent
Temporary/ On Contractual basis
Bank's own staff strength at the end of the year
Outsourced
Total Staff Strength

13237
842
14079
2350
16429

28

CHAPTER NO: 3
PRODUCTS AND SERVICES OF NBP

29

PRODUCT LINES
The most precise definition of product is anything capable of satisfying needs including
tangible items, services and ideas. In marketing a product is anything that can be offered
to a market that might satisfy a want or need. The economic or commercial meaning of
product was first used by political economist Adam Smith. The consumer banking
products include personal accounts, credit cards, loans, investment products, treasury
products and many more. The National Bank of Pakistan is offering for sale several
related products individually which are commonly known as product lines. The
followings are the main consumer banking products of NBP:

Deposits:
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes with
personalized services at competitive rates of interest. Any Pakistani citizen can open an
account for any deposit scheme at any of its Branches strategically located throughout
Pakistan. The Bank with its huge network garners savings from both the rich and the poor
in urban as well as rural areas. Even a poor farmer in a remote village feels secure to keep
his savings in National Bank of Pakistan, because National Bank of Pakistan has a long
heritage of trust and professional commitment. Deposits are of the following types:

a) Current Deposits:
These are payable to the customer when ever they are demanded. When a banker accepts
a demand deposit he incurs the obligation of paying all cheques etc drawn against him to
the extent of the balance in the account. Because of their nature these deposits are treated
as current liabilities by the banks. Bankers in Pakistan do not allow nay profit on these
deposits and customers are required to maintain a minimum balance failing which
incidental charges are deducted from such accounts. This is because Current Deposits
may be withdrawn by the depositors at any time and as such the bank is not entirely free
to employ such deposits.
Current Accounts are opened on proper introduction and submission of required
documents along with initial deposit prescribed from time to time. Basic banking
accounts are opened for individuals (single or joint) only whereas current accounts are
opened for individuals (single or joint) and other companies and in all other cases where
the accounts are opened under the order of a competent court of law. The bank is
authorized to deduct service charges on current accounts levied through its half yearly
schedule of charges, in case the average balance falls below the minimum balance as
prescribed by the bank. No balance maintenance condition is applied on basic banking
accounts.

30

b) PLS Saving Deposits:

In Pakistan a Savings Deposits Account can be opened with a very small amount of
money and the depositor is issued a cheque book for withdrawals. Profit is paid at a
flexible rate calculated on six monthly basis under the Interest Free Banking System.
There is no restriction on the withdrawals from the deposit accounts but the amount of
money withdraw is deleted from the amount to be taken for calculation of products for
assessment of profit to be paid to the account holder. It discourages unnecessary
withdrawals from the deposits. In order to popularize the scheme the SBP has allowed the
Savings Scheme for school and college students and industrial labour also. The purpose
of these accounts is to inculcate the habit of savings in the constituents. As such the initial
deposits required for opening these accounts are very nominal. NBP charge Rs.500 for
opening of PLS Savings deposits.
The silent features of profit and loss sharing and saving accounts of NBP are as fallows:

These accounts can be opened by individuals in their own single or joint name.
The PLS savings account can also be opened for provident fund or other
benevolent funds of companies, firms, organizations, NGOs and educational
institutions.
PLS saving account can be opened with a minimum amount of Rs.500 only.
To share in the profit a minimum balance of Rs.500 must be maintained in the
account. The minimum balance on sixth and last of month will qualify for the
profits. The profits will be calculated on the basis of monthly minimum balance
for the periods of six months i.e. from January to June and July to December.
The head office of NBP determines the profit or loss on PLS saving deposits and
advice its branches the rate and time of distribution of these profits.
There shall be no restrictions on maintaining the maximum balance in PLS saving
account.
On the first day of Ramzan each year the Zakat at the rate of 2.5% will be
deducted from these deposits on the balance of that day. But if depositors affix an
affidavit of Zakat deduction along with account opening form or he is a nonMuslim, no Zakat will be deducted from his account.

c) Fixed Deposit Account (Time Deposits):

The deposits that can be withdrawn after a specified period of time are referred to as
Fixed or Term Deposits. The period for which these deposits are kept by the bank
ordinarily varies from three months to five years in accordance with the agreement made
between the customer and the banker. Profit is paid to the depositors on all fixed or Time
deposits and the rate of profit varies with the duration for which the amount is kept with
the banker. By lending out or investing these funds the bank earns more than the Profit
that it has to pay on them to the depositors. By giving an advance notice to the bank the
deposit can be withdrawn from the bank before the expiry of the period. Fixed deposit
accounts have higher rate of interest as compare to other accounts. The rate of interest
31

rises with the length of period and the amount of deposit. The bank grants to the depositor
a fix deposit which is not transferable to any other person.
The silent features of fixed deposit account of NBP are as fallows:

The PLS term deposit are opened for individuals in their own single or joint
names, companies firms and other organizations.
The PLS term deposit receipt are issued for any amount. There is minimum or
maximum limit or deposits in a single term deposit account.
PLS term depositors may be allowed some facilities against the security of these
receipt credits after making Lien on the relevant receipt and subject to recovery of
service charges.
Under term deposit scheme the depositors not cease to earn the profit immediately
after the respective maturity date.

d) Foreign Currency Account:

Government of Pakistan has introduced many important reforms in Foreign Exchange
Control in the country since February 1990 for the purpose of strengthening the Foreign
Exchange Reserves. One of these reforms relates to foreign currency accounts, which can
be opened in United States Dollars, Pound Sterling, Euro and Japanese Yen the
authorized branches. Foreign currency accounts are opened on proper introduction and
submission of required documents along with an initial deposit prescribed from time to
time. Rates of return on foreign currency deposits are subject to fluctuation as determined
in accordance with State Bank of Pakistan directives and will be paid on six monthly
basis whereas the return on term deposit will be paid on maturity or as prescribed by SBP.
The bank shall have no responsibility for or liability to the account holders for any
diminution due to taxes imposed or depreciation in the value of funds credited to the
account whether due to devaluation or fluctuation in the exchange rate or other wise.

e) NBP Premium Aamdani (Monthly Income Scheme):

NBP Premium aamdani is a retail product of the bank. The amount of investment
required for this account is Rs. 20,000 to Rs. 5,000,000.The investment period is 5 years.
Zakat and withholding tax will be deducted as per rules. In NBP premium aamdani the
account holders have benefit of free demand draft, pay order; free cheque book and NBP
cash card (ATM + Debit). The Financing facility is available up to 90% of the deposit
value. Profit is paid every period as follows:

32

Period**
1 year
2 year
3 year
4 year
5 year

Profit Rates***
7.50%
8.50%
9.50%
10.50%
11.00%

e) NBP Premium Saver (PLS Saving Account):

NBP Premium saver is a retail product of the bank. The minimum saving balance of Rs.
20,001 and a maximum balance of Rs. 300,000 are required for opening a premium saver
account. Two debit withdrawals are allowed in a month and there is no limit on number
of deposit transactions. The profit is calculated monthly and Paid on half yearly basis.
Free NBP Cash Card (ATM + Debit) facility is available to account holder.

g) National Income Daily Account (NIDA):

The scheme of National income daily account was launched in December 1995 to attract
corporate customers. It is a current account scheme and is part of the profit and loss
system of accounts in operation throughout the country. Deposits in the NIDA accepted
on the condition that the depositor shall always maintain a minimum balance as
prescribed by the bank in his account. In the event however that any depositor wishes to
withdraw the amount and the balance in his account is less than the required amount the
account will be converted to the ordinary PLS account for the purpose of calculating
profit. An example of how the NIDA accounts are maintained is shown below.

Rates On National Income Daily Account:

From Rs 2 million to Rs 50 the rate is 1.4%.

From Rs50 million but less than Rs 500million, the rate is 1.5%.
From Rs 500 million but below Rs 1000 the rate is 1.6%.
From Rs 1000 and above the rate is 1.75%.

Salient Features:

33

Rs 2 million are required to open an account and there is no maximum limit.

Profit is paid on half yearly basis on monthly balances.
The rates of profit vary according to the slabs of deposit. On Deposit of Rs.2
million to 2,000 million, the rate fluctuates from 1.4 to 1.75
It is a checking account and there is no limit of withdrawals.

Advances
National Bank of Pakistan plays a pivotal role in translating the government's
development plans in terms of growth in industrial, commercial and agricultural sectors
in Pakistan. Accordingly the Bank has formulated its Credit Policy under the guidelines
of SBP. Following are the advances products of the Bank:

a) NBP Saibaan:

The NBP Saibaan is retail product of the bank. It has different product items which are
home purchase, home construction, home renovation and purchase of land plus
construction. If anyone has a Home Finance Facility outstanding with another bank he
can have it transferred to NBP through a hassle-free process. A brief description of these
products is as fallows:
TYPE OF
ADVANCE
Home Purchase (House or
Apartment)
Home
Construction
Home
Renovation
Purchase of land Plus Construction

Financing
Amount
Rs. 35 Million

Financing
Period
3 to 20 years

Rs. 35 Million

3 to 20 years

Rs. 15 Million

3 to 15 years

Rs.35 Million

3 to 20 years

Debt to equity
Ratio
85:15
(maximum)
85:15
(maximum)
80:20
(maximum)
80:20
(maximum)

Eligibility:

34

Must be Pakistani Resident (National).

Aged between 21 and 65 years at the time of disbursement of loan.
Salaried Person, Self-employed professionals and businessmen.
Property located in NBP approved localities.
Service duration: Two years for salaried class and Three years for selfemployed or business class.

Required Documents:

Two attested passport size photographs.

Two attested copies of your National Identity Card.
Cheque for the processing charges.
Property Documents.
Any title document available (other documents may be required).

b) NBP Advance Salary:

The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary
the leading personal loan product of the country is maintaining its inimitability ever since
it was launched. You can avail up to 20 net take home salaries with easy repayment
installments. Its free acquisition with no prior formalities and easy availability in a short
turn around time is attributed as the most distinguishing features of the product. The
product is offered countrywide. The terms and conditions of NBP Advance salary are:

35

Terms & Conditions:

Eligibility

Repayment
Maximum Loan
Amount
Security

Permanent Employees of Govt., Semi-Govt.,

Autonomous, Semi Autonomous, Local &
other bodies who are maintaining their Salary
A/Cs at NBP.
Direct deduction from Salary A/C
Rs. 1,000,000/Employer will provide undertaking that
borrowers Salary and end of service benefits
will route through his/her Salary A/C
maintained at NBP during the tenure of the
loan and his/her end of service benefits are at
least equal to the amount of Advance Salary
required.
Hypothecation of Consumer durables owned
by the borrower.
Three (5) Undated Cheques

Max. Repayment
Period
Advance in terms of #
of net take home
salaries
Markup Rate
Processing Fee
Verification Charges
Life Insurance
Documentation
Charges
Contact
Remaining Service Age
Debt Burden
Minimum net take
home salary

5 years (60 months)

Up to 20 net take home salaries
19%
(Based on diminishing balance method)
1.5% of Loan Amount
Rs 500/No Insurance of any kind.
at actual
Your Salary disbursing NBP Branch.
At the time of approval and disbursement the
applicants remaining service age should be 6
months after maturity of the loan
50%
no minimum take home requirement

36

c) NBP Cash n Gold:

With NBPs Cash & Gold the customers meet their need for ready cash against their idle
gold jewelry. The current rate of mark up is 15.5% p.a. This product has following
features:

Facility of Rs. 35000/ against each 10 grams of net contents of gold

No maximum limits of cash
Repayment after one year
Only gold ornaments acceptable
Weight and quality of gold to be determined by NBP's appointed schroffs
No penalty for early repayment

d) Students Loan Scheme:

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002
budget speech a Student Loan Scheme for Education was launched by the Government of
Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL,
MCB and ABL). Under the Scheme financial assistance is provided by way of Interest
Free Loans to the meritorious students who have financial constraints for pursuing their
studies in Scientific, Technical and Professional education within Pakistan. The Scheme
is being administered by high powered committees.

37

e) NBP Karobar (Another step towards your prosperity):

The solution of Pakistans major socio-economic problems primarily lies in the

development and growth of small & micro businesses. These will not only provide
employment opportunities to ever-growing population demand but will also become the
catalyst for breaking the vicious circle of poverty. In this regard NBP has developed a full
range of Products under the Presidents Rozgar Scheme with a brand name of NBP
KAROBAR. The scheme is offered to eligible young and literate citizens of Pakistan
falling within an age group of 18-40 years having a minimum qualification of
Matriculation. The eligible borrowers will be required to make a down payment of 15%.
Asset and Life & Disability insurances will be mandatory under this scheme. The 15%
down payment will include 1st years asset insurance premium. However, the cost of life
and disability insurance will be borne by GOP. The mark-up rate for the 1st year will be
12% and for the subsequent years it will be 1 year KIBOR + 2%. Fifty percent of this rate
will be paid by the customer i.e. 6% and the balance of 6% will be borne by GOP.
Additionally first 10% of the losses under the scheme will be taken-up by GOP. Initially
under the Presidents Rozgar scheme NBP offers following products:

NBP Karobar Utility Store (under a Franchise)

NBP Karobar Mobile General Store
NBP Karobar Transport
NBP Karobar PCO
NBP Karobar Tele-center

a) NBP Karobar Utility Store:

The product has been designed in collaboration with UTILITY STORES
CORPORATION OF PAKISTAN to provide financing facility of an average amount of
Rs.100, 000 for a maximum period of five years with grace period of three months. This
is available to all eligible citizens of Pakistan for setting-up small-scale Retail Outlet or
Mobile Utility Store. The USC will give its franchise to qualifying Pakistani citizens.
Following two financing options are available under this product:

38

1. NBP Karobar Utility Store (Shop):

The Financing facility is available to set-up a small scale Retail Outlet) for purchase of
furniture & fixtures. This is also applicable on payment of security deposit / advance rent
under franchise from the USC. However stocks will be purchased by the customer.

2. NBP Karobar Mobile Utility Store:

Financing facility available to purchase a 2/3 wheeler, 4 stroke Petrol/CNG/LPG Vehicle
(Auto Scooter / Motorcycle Rickshaw) with attached Loader body (Thehla type) under
franchise from the USC to carry utility goods for retail sale ideally in areas where
accessibility to conventional utility stores is difficult.

b) NBP Karobar Mobile General Store (without USC

Franchise):
This financing program has been designed on the similar pattern of Mobile Utility Store.
The only difference is that the borrower will have the liberty of procuring
stock/supplies/grocery items from open market. Under this product the average loan size
of Rs.100, 000 will be given for a maximum period of five years with a grace period of
three months.

c) NBP Karobar Transport:

The NBP Karobar Transport is designed to finance 2/3 wheeler, 4 stroke
Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) to the eligible citizens
of Pakistan for providing less expensive environment friendly transport facility. Under
this product average loan size of Rs.100, 000 will be provided for a maximum period of
five years with a grace period of three months.

d) NBP Karobar PCO:

This product is designed to finance setting-up a PCO. NBP will be providing financing
for the purchase of Mobile/Wireless Telephone Set with connection, Credit Balance. The
average amount of financing under this product will be Rs.5, 000 for a maximum period
of two years with a grace period of three months.

e) NBP Karobar Tele-center:

This product is specially designed to finance setting-up a Tele-center. NBP will be
providing financing for the purchase of Mobile/Wireless Telephone Set with connection,

39

Computer, Printer and Fax machine cum Photocopier etc. to establish tele-center on a
rented shop or owned premises. The average amount of financing under this product will
be Rs.50, 000 for a maximum period of two years with a grace period of three months.

Corporate Advances
a) Cash Finance:
This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.
In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit either at once or as and when required. The borrower prefers this form of lending
due to the facility of paying services charges only on the amount he actually utilizes. If
the borrower does not utilize the full limit the banker has to lose return on the un-utilized
amount. In order to offset this loss the banker may provide for a suitable clause in the
cash finance agreement according to which the borrower has to pay service charges on at
least on self or one quarter of the amount of cash finance limit allowed to him even when
he does not utilize that amount.

b) Running Finance/ Overdraft:

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance
which the borrowing customer has in credit and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called Secured Overdraft and when the borrowing customer
cannot offer any collateral security except his personal security the accommodation is
called a Clean Overdraft. The borrowing customer is in an advantageous position in an
overdraft because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis while an overdraft is a temporary accommodation occasionally resorted.

c) Demand Finance:
When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time it is called a loan. When bankers allow
loans to their customers against collateral securities they are called secured loans and
when no collateral security is taken they are called clean loans.
The amount of loan is placed at the borrowers disposal in lump sum for the period
agreed upon and the borrowing customer has to pay interest on the entire amount. Thus
the borrower gets a fixed amount of money for his use while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security.

40

Remittances
a) Demand Drafts:
Drafts are drawn by one branch on another branch or on the Head Office of same bank or
vice versa and are not cheques or bills as these have no distinct drawer and drawee.
When a person requires a draft he is asked to complete the prescribed application form in
which he states the amount of the draft, the name of the payee, and the place of payment.
This application form is then signed by the purchaser or by those persons who have been
duly authorized to act on his behalf.
When a customer requests his banker to provide him with a bankers draft the amount of
which is to be debited to his account he should enclose with his written request a cheque
covering the amount of the required draft and other charges etc. payable to banker. The
National Bank of Pakistan provides demand drafts at very reasonable rates with safety,
speedy and reliable way to transfer money. Any person whether an account holder of the
bank or not, can purchase a Demand Draft form a bank. The charges are only 50 Rs.

b) Travelers Cheques:
They are generally issued for the convenience of person travelling abroad but some
Pakistani banks issue them in Pakistan currency also for use within the country as well.
Before issuing the bankers receive an amount equal to the face value of the cheques and
also charge a small commission. The travelers cheques are for fixed amount and are
treated as Order cheques payable only to the purchaser whose specimen signature appears
on each travelers cheque itself. While making payment, the paying banker must insist that
the holder signs in his presence
The National Bank of Pakistan provides their services for travelers cheque at very
reasonable and competitive rates. It has following features:

Negotiability
Validity
Availability
Encashment
Limitation
Safety

Pak Rupees Travelers Cheques are a negotiable

instrument
There is no restriction on the period of validity
At 700 branches of NBP all over the country
At all 400 branches of NBP
No limit on purchase
NBP Travelers Cheques are the safest way to carry our money

41

c) Letter Of Credit:
Letters of credit are very useful instruments in facilitating commercial relations between
businessmen at various places. Letter of credit state the limit of the credit and the time
during which it is held at the disposal of the grantee but they are neither negotiable nor
transferable. Letter of credit may be revocable. There are many kinds of letter of credit
such as Revolving credit, Back to Back credit, Claused credit etc. 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 its Letter of Credit service is just what you are
looking for. With competitive rates, security, and ease of transaction, NBP Letters of
Credit are the best way to do your business transactions.

d) Foreign Remittances:
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan
has taken a number of measures to increase home remittances through the banking
system and to meet the SBP instructions for timely and prompt delivery of remittances to
the beneficiaries.
The new features of NBP foreign remittances include:

The existing system of home remittances has been revised/significantly improved

and well-trained field functionaries are posted to provide efficient and reliable
home remittance services to nonresident Pakistanis at 15 overseas branches of the
Bank besides United National Bankand Bank Al-Jazira, Saudi Arabia.
Zero Tariffs: NBP is providing home remittance services without any charges.
Strict monitoring of the system is done to ensure the highest possible security.
Special courier services are hired for expeditious delivery of home remittances to
the beneficiaries

e) Swift System:
The SWIFT system 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-PKKA. All NBP overseas branches and overseas
correspondents are drawing remittances through SWIFT. Using the NBP network of
branches, every one can safely and speedily transfer money for his business and personal
needs.

f) Mail Transfer:

42

A Mail Transfer is a form of remittance in which the amount remitted by a customer or a

non customer is directly credited to the account of the beneficiary with another branch.
Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offer the most competitive rates in the market. They charges Rs 50 exchange rate and Rs
75/ postage charges on issuing mail transfer. When the money is not required
immediately the remittances can also be made by mail transfer .Here the selling office of
the bank sends instructions in writing by mail to the paying bank for the payment of a
specified amount of money. Debiting to the buyers account at the selling office and
crediting to the recipients account at the paying bank make the payment under this
transfer. NBP taxes mail charges from the applicant where no excise duty is charged.
Postage charges on mail transfer are actual minimum Rs. 40 if sent by registered post
locally Rs.40/ if sent by registered post inland on partys request.

g) Telegraphic Transfer:
Telegraphic Transfer is a form of remittance which is advised by telegram, telex or fax
machines. The fundamental principles of such transfer are otherwise identical with the
Mail Transfer. It is the message which is sent from one branch to another on the order of
payer to payee through wire. Payment to the beneficiary is affected directly by the drawee
office upon identification or through credit into beneficiarys bank account. As such
remitting office is not required to issue any instrument payment to the remitter for
delivery to the beneficiary.

h) Pay Order:
NBP provides another reason to transfer your money using our facilities. NBP pay orders
are a secure and easy way to move your money from one place to another. NBP charges
for this service are extremely competitive. The charges of NBP are very low all over the
Pakistan. It charges Rs 50 for NBP account holders on issuing one payment order and
charges Rs 100 for NBP non account holders on issuing one payment order. It charges Rs
25 for students on payment of fees of educational institutions. If some one want a
duplicate of payment order they charges Rs 100 for NBP account holders and Rs 150 for
non account holders.

Miscellaneous
a) Lockers:
National of Pakistan also provides lockers facility in the country. The lockers issued only
to the depositors. No lockers are issued to any unknown person. The dual control system
is used for lockers. The officer has master key to apply on the locker but he cannot open

43

the locker of any person. The locker holder provides the bank has 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 heir as mentioned
in his will or and his belongings are given to them and the locker is closed.

b) NBP Cash Card:

NBP Cash Card is a 24 hour direct access ATM Debit card to your bank account which
lets you pay directly from your account as an alternative payment method to cash. The
transaction is authorized and processed by entering PIN. The NBP Cash Card holders are
able to transact at any of the 4000 + Merchants where Orix logo is displayed and can
withdraw cash from NBP, 1-Link & M-NET ATM across the country. The followings are
the main features of this product:

You won't need to carry a lot of cash with you every time you go out.
Secure and Safe transaction.
Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill
Payment etc.)
Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.
Enable to Make Purchases from Around 4000 POS Countrywide including 2500+
POS in Karachi.
No Card Issuance Fee for first 12 Months

C ) NBP ISLAMIC BANKING

44

Deposits Schemes

Deposit Schemes being offered by NBPs Islamic Banking Branches would include
the following:
Current Deposit Scheme

Profit & Loss Sharing (PLS) Deposit Scheme

Current Deposit Scheme

Ideal for customers looking for security of their funds along with absolute
convenience in its use, in the form of Current accounts
Funds deposited with the bank will be utilized by the bank at its sole
discretion in Shariah acceptable avenues.
The Customer will have the flexibility to withdraw a part or the whole of
their balances at any time as per their requirement
This is a non remunerative deposit scheme and thus the customer will not be
sharing the profits nor will be sharing losses (if any). However, the Bank may
at its absolute discretion give rewards to these Depositors depending upon the
operational results of the Bank. Losses will not be passed on to these
Depositors.

Other terms, conditions and rules for Current Deposit Accounts to be advised
by the Bank at the time of opening of Account.

Profit & Loss Sharing Deposit (PLS) Scheme

45

PLS Saving Deposits Scheme will accept deposits on Mudaraba basis, where
the depositor will be Rabb-ul-Mal and Bank will be Mudarib. The Bank will
invest the deposited funds at its (Banks) sole discretion in Shariah acceptable
avenues
The Depositor will have the flexibility to withdraw a part or the whole of
their balances at any time as per their requirement.
The Bank will give profit to the Depositors on the basis of agreed ratio of
actual profits to be announced by the Bank from time to time.
In the event of financial loss, the PLS depositors will bear the loss in
proportion of their investment.
The Depositors will not participate in the management of the business of the
Bank
Other terms and conditions as well as rules for PLS Deposit Account to be
advised by the Bank at the time of opening of Account.

Financing Facilities

Commercial and Corporate customers requiring financing will have the

following financing facilities available to them to meet their requirements:
Murabaha
Murabaha may be defined as a contract between a Buyer and Seller under which
the Seller discloses to the Buyer the cost of goods being sold and adds an agreed
profit. Price is payable on spot or at a certain future date, in lump sum or in
installments (deferred payments).
Murabaha Facility
Under the MURABAHA FACILITY, the Bank will first purchase the required
goods directly or through an Agent. All costs incurred on such purchases will be
borne by the Bank.
Subsequently the Bank will sell the goods to the customer on deferred payment
basis (30 days to one year) at an agreed price comprising cost of goods
purchased and Bank's profit.
On due date the customer will pay to the Bank the agreed price, in lump sum or
as per the agreed installment schedule.
Ijara (Leasing)

46

Ijarah means to give something on rent.The term IJARAH is analogous to

the English term leasing.
Firstly the Bank will purchase the Assets as required by the Customer and
subsequently the assets will be leased to the Customer on the terms and
conditions as agreed with him.
Ijarah Facility will be offered for the following assets:

Vehicles (both Commercial and Private)

Office Equipment

Plant and Machinery

CHAPTER NO: 4
MANAGEMENT OF NBP AND ITS
HIERARCHY
47

Organizational Structure Of National Bank Of Pakistan

A well-developed and properly coordinate structure is an important requirement for the
success of any organization. It provides the basic framework within which functions and
procedures are performed. Any organization needs a structure which provides a
framework for successful operations. The operation of an organization involves a number
of activities which are related to decision making and communication of these decisions.
These activities must be well coordinated so that the goals of the organization are
achieved successfully.
The Organization Structure shows the internal operations and reporting lines of the
National Bank of Pakistan. The bank has clearly defined organizational structure which
supports clear lines of communications and reporting relationships.The internal
operations of the Bank are organized into 15 main departments and divisions headed by
senior management of the bank and are report directly to the Board of Directors. The
organizational structure of National Bank of Pakistan is centralized because all the
decisions of the bank are taken by the top Management.

Board Of Directors:
Pursuant to Section 11 of The Banks Act, 1974, the number of Directors of the Bank shall
not be less than 5 and not more than 7 excluding the President. The Federal Government
may, if deems necessary, appoint a Chairman of the Board in respect of the Bank. At

48

present National Bank of Pakistans Board of Directors consist of 6 Directors and a

President who is the Chief Executive of the Bank and presides over the meetings of the
board. Their designations, qualifications and responsibilities are given below:

NAMES

DISIGNATION

Syed Ali Raza

Chairman & President

Mr Tariq Kirmani

Director

Mrs. Hania Shahid Naseem

Director

Ms. Nazrat Bashir

Director

Mohammad Ayub Khan Tarin

Director

Mian Kausar Hameed:

Director

Ibrar A. Mumtaz:

Director

Mr Ekhlaq Ahmed

Secretary Board of Directors

Qualifications Of The Board Of Directors

QAMAR HUSSAIN:
Qamar Hussain is the Chairman and President of National Bank of Pakistan (NBP), the
largest commercial bank of the country. He had been the President/ Vice President of the
American Business Council of Pakistan and Member of the Managing Committee of the
Chamber of Commerce and Industry of Pakistan. Qamar Hussain is a graduate of the
London School of Economics and a M.Sc. in Administration Sciences as well as a Fellow
Member of The Institute of Bankers in Pakistan.

49

Mohammad Ayub Khan Tarin:

Mr. Mohammad Ayub Khan Tarin is a government official. He is an MBA from Western
Michigan University, USA. At present, he is working as Additional Finance Secretary
(Budget), Ministry of Finance.

Mian Kausar Hameed:

Mian Kausar Hameed, is the director in National Bank of Pakistan. He is an MBA from
IBA, Karachi. He is also Chairman of the Board Committee on Human Resource and
Member of other Committees of the NBP Board.

Ibrar A. Mumtaz:
Mr. Ibrar A. Mumtaz is director in NBP. He is a businessman. He was born in 1947 and
comes from a prominent business family of Lahore. He was educated at Aitchison
College, Lahore, F.C. College, Lahore and the Institute of Business Administration, (IBA)
University of Karachi.

Tariq Kirmani:
He is also director in NBP. He is also an MBA. In 1991, Mr. Kirmani became the first
Pakistani to be elected as a Company Director of the multi-national company.

Hania Shahid Naseem:

She has become the director of NBP last year. She is an MBA with more than fifteen
years of working experience in education, social, industrial, textile and agriculture sector
of Pakistan. Presently, she is actively involved in the administration of Pakistan Public
School Multan.

Nazrat Bashir:
She has joined as member of Board of Directors on 1st March 2010 in place of Mr. Ayub
Khan Tarin. She is Masters in Economics from New York University,USA and Masters in
psychology from Peshawar University.

Responsibitilties Of The Board Of Directors

The Board of Directors shall assume its role independent of the influence of the
Management and should know its responsibilities and powers in clear terms. It
should be ensured that the Board of Directors focus on policy making and general
50

direction, oversight and supervision of the affairs and business of the Bank and
does not play any role in the day-to-day operations as that is the role of the
Management.
The Board shall approve and monitor the objectives, strategies and overall
business plans of the institution and shall oversee that the affairs of the institution
are carried out prudently within the framework of existing laws & regulations and
high business ethics.
All the members of the Board should undertake and fulfill their duties &
responsibilities keeping in view their legal obligations under all the applicable
laws and regulations.
The Board shall clearly define the authorities and key responsibilities of both the
Directors and the Senior Management without delegating its policy-making
powers to the Management and shall ensure that the Management is in the hands
of qualified personnel.
The Board shall approve and ensure implementation of policies, including but not
limited to in areas of Risk Management, Credit, Treasury & Investment, Internal
Control System and Audit, IT Security, Human Resource, Expenditure,
Accounting & Disclosure, and any other operational area which the Board may
deem appropriate from time to time. The Board shall also be responsible to review
and update policies periodically and whenever circumstances justify.
As regards Internal Audit or Internal Control, a separate department shall be
created which shall be manned preferably by professionals responsible to conduct
audit of the Bank, Various Divisions, Offices, and Units Branches etc. The Head
of this department will report directly to the BOD or Board Committee on Internal
Audit.
The business conditions and markets are ever changing and so are their
requirements. The Board is required to ensure existence of an effective
Management Information system to remain fully informed of the activities
operating performance and financial condition of the institution the environment
in which it operates the various risks it is exposed to and to evaluate performance
of the Management at regular intervals.
The Board should meet frequently (preferably on monthly basis but in any event
not less than once every quarter) and the individual directors of an institution
should attend at least half of the meetings held in a financial year. The Board
should ensure that it receives sufficient information from Management on the
agenda items well in advance of each meeting to enable it to effectively
participate in and contribute to each meeting.
The Board should carry out its responsibilities in such a way that the external
auditors and supervisors can see and form judgment on the quality of Boards
work and its contributions through proper and detailed minutes of the
deliberations held and decisions taken during the Board meetings.
To share the load of activities the Board may form specialized committees with
well-defined objectives, authorities and tenure. These committees preferably
comprising of Non- Executive Board members, shall oversee areas like audit risk
management, credit, recruitment, compensation etc. these committees of the

51

Board should neither indulge in day-to-day affairs of the bank and enjoy any
credit approval authority for transaction/limits. These committees should apprise
the Board of their activities and achievements on regular basis.
The Board should ensure that it receives management letter from the external
auditors without delay. It should also be ensured that appropriate action is taken in
consultation with the Audit Committee of the Board to deal with control or other
weaknesses identified in the management letter. A copy of that letter should be
submitted to the State Bank of Pakistan so that it can monitor follow-up actions.

Senior Management
The senior management of National Bank of Pakistan is consists of Group chiefs, who
report directly to the Directors of Bank. The whole functions of National Bank of
Pakistan are performed under these Groups. The National Bank of Pakistan has following
groups and divisions:

Corporate and investment Banking Group

Operations Group
Credit Management Group
Audit & Inspection Group
Compliance Group
HRM & Administration Group
Commercial & Retail Banking Group
Treasury Management Group
Special Assets Management Group
Employees benefit & Disbursements Group
Overseas & Coordination Group
Islamic Banking
Core Banking Application, PMO
Financial Control Division
Information Technology Group

Names and Designation:

Zaheer ud din Babar

Chief Operating Officer , Head of Credit & Risk

Management Group

Dr. Asif A. Brohi

SEVP & Group Chief, Operations Group

Shahid Anwar Khan

SEVP & Group Chief, Overseas Banking Group /

52

Corporate & Investment Banking Group

Ziaullah Khan

SEVP & Group Chief Agriculture Finance Group

Dr. Mirza Abrar Baig

SEVP & Group Chief, Human Resources

Management & Administration Group

Amer Siddiqui

SEVP & Group Chief, Commercial & Retail Banking

Group

Tariq Jamali

SEVP & Group Chief, Compliance Group

Nadeem A. Ilyas

SEVP Group Chief, Assets Recovery Group /

Corporate & Investment Banking Group

Muhammad Nusrat
Vohra

SEVP & Group Chief, Treasury Management Group

Khalid Bin Shaheen

SEVP & Group Chief, Global Home Remittance

Management Group

Imam Bakhsh Baloch

SEVP & Group Chief, Audit & Inspection Group

N. B. Soomro

SEVP , Special Assignments, President's Secretriate

Agha Fidaullah

EVP/Group Chief, Special Assets Management Group

Shafique Ahmed Khan

EVP & Divisional Head, Islamic Banking Division

Ekhlaq Ahmed

EVP & Secretary Board of Directors

Fazal-ur-Rehman

EVP & Head P&IR Division, HRM&A Group

Muhammad Hanif

EVP & Head HR & OD Division, HRM&A Group

Muhammad Iqbal
Qasim

EVP & Head SC & CSR Division, HRM&A Group

Tahira Raza

EVP & Head Risk Review Division, Credit and Risk

Management

Mohammad Kumail
Dehradunwal

EVP & Chief Information Officer /Head Of

Information Technology Division

Aamir Sattar

SVP & Divisional Head, Financial Control Division

Faisal Mahmood

VP & Divisional Head (A) , PMO & Project Director

53

CBA

Provincial & Regional Management

There are four executives of National Bank of Pakistan to supervise the Banks maters of
every province, as they are called Provincial Chiefs. These provincial chiefs are
responsible for the entire banking operations in their respective provinces. The provincial
management includes:

The Provincial Chief Punjab

The Provincial Chief Sind
The Provincial Chief Baluchistan
The Provincial Chief N.W.FP & Kashmir

These provinces are sub-divided into regions, the regions are controlled and manage by
Regional heads, which are responsible for the supervision in their circles and deal with
the problems of their respective Regions.
The regional management of National Bank of Pakistan is divided into two areas which
are:
Overseas
Countrywide
The overseas regions include Middle East, Far East, Europe & USA, and Central Asia.
The country has been divided into 29 regions by National Bank of Pakistan to facilitate
its functions. The detail about National Bank of Pakistans regions is shown as AnnexedII at the end of the report. These regions are sub divided into Zones, the in charge of a
Zone is called Zonal Chief.

Branch Management
The National Bank of Pakistan, in order to facilitate its functions on branch level appoints
Branch Managers & other staff according to branchs activities and volume of business.
The branch managers are responsible for all functions and staff within the branch office.
The job of branch managers is to take charge of the entire operation of his branch,
making sure that everything runs smoothly. The other functions involves scheduling of
employee work hours, overseeing training, hiring and firing, assuring that proper
procedures are followed, and reporting to upper management any problems or providing
reports and updates as required by banks protocol.

54

Hierarchy Of National Bank Of Pakistan

55

Organizational Structure Of The Branch

A well-developed and properly coordinate structure is an important requirement for the
success of any organization. It provides the basic framework within which functions and
56

procedures are performed. Any organization needs a structure, which provides a

framework for successful operations. The operation of an organization involves a number
of activities, which are related to decision making, and communication of these decisions.
These activities must be well coordinated so that the goals of the organization are
achieved successfully.

Hierarchy Of The Branch

This chart defines the line of authority in the branch and its departments. It is a sort of
visual presentation of the organizational structure. It specifies the duties and
responsibilities of the personnel or staff of the branch. The purpose of an organizational
structure is to help in creating an environment for human performance. Although the

57

structure must define the task to be done, the rules so established must also be designed
in the light of abilities and motivation of the human recourse available. By analyzing the
organization structure of the branch following elements can be found in the structure.

Centralized Decision Making:

The Branch Manager of National Bank of Pakistan is responsible for all the affairs of the
Bank. All the decisions relating to Branch are made by him and the subordinates have to
obey these decisions. All the employees of the Bank are report directly to the Branch
Manager. The branch has two operation Managers. Operation Manager I controls
Clearing house & Remittance Department and Operation Manager II controls Deposits,
Advance & Branch accounts department. Both of them are report directly to the Manager
regarding affairs of their departments. The Chief Accountant controls Accounts
department & is report directly to branch Manager. The branch also has two cashiers
responsible for cash & Pension disbursement department reports directly to branch
Manger. The EBS Operator controls computer department of the branch and is report
directly to Operation Manager I and Branch Manager.

Downward Communication:
Communication is the process by which information is exchanged and understood by two
or more people usually with the interest to motivate or influence the behavior of others in
the organization. Downward communication is the message and information sent from
top management to subordinates in a downward direction. The same pattern is followed
at National Bank of Pakistan Modelbranch, the Manager of the branch send orders,
information & messages to following subordinates:

Operation Manager I
Operation Manager II
EBS Operator
Chief Accountant
Cashier I
Cashier II
Clerk I
Clerk II
Non Clerical Staff

Chain Of Command:

58

The chain of command is an unbroken line of authority that links all persons in an
organization and shows who reports to whom. By analyzing the organizational structure
of the National Bank of Pakistan Model branch it can be found that there is a scalar
principle followed with in the branch because each and every employee of the branch
knows to whom they can report. The authority and responsibility for different tasks and
duties are different, as well as every one knows the successive levels of management all
the way to the top.

Authority And Responsibility:

The chain of command illustrates the authority structure of National Bank of Pakistan
Rawat Branch. Authority is the formal and legitimate right of the manger to make
decisions, issues orders and allocates resources to achieve organizational desired
outcomes. By analyzing the chain of command of NBP, one can come to the conclusion
that, as there is scalar pattern followed at the organizational setup of NBP, therefore it is
implied that everyone in his position knows that what is ones authority and what is the
responsibility and the authority it allocated.

Delegation:
Delegation is the process, which managers use to transfer the authority and responsibility
to position below in the hierarchy. Most organizations today encourage managers to
delegate authority to the lowest possible level to provide maximum flexibility to meet
customer needs and adapts to the environment. At National Bank of Pakistan Model
branch Operation Managers have some authority & responsibility relating to affairs of the
Branch.

59

CHAPTER NO: 5
OPEARTIONS & DEPARTMENTS

OPERATIONS & FUNCTIONS OF NBP

60

The operations and functions of NBP are divided among different departments. The main
operations and Functions that are performed by the NBP are as follows:

Accepting the Deposits of money from the customer

Borrowing money and arranging finance from other banks
Advancing and lending money to its clients and customers
Financing of projects including technical assistance, project appraisal through
long term short term loans
Buying selling dealing and discounting of bills of exchange, promissory notes,
drafts bill of lading, and other instruments of securities.
Foreign exchanger business
Financing of seasonal crops
Receiving of bonds scrip valuable for safe custody
Generating, Undertaking promoting etc of issue of shares. Bonds
Undertaking and executing trusts
Making investment in Other Companies
Joint Venture with foreign dealers, agent and companies for its representation
abroad
Utility Services
Providing Hajj Services to intending persons
Agent of SBP for collecting
Payment of pension on behalf of provincial and central government
Treasury business
Gold Finances
Through mail transfer, demand drafts, telegraphic transfers, payment orders
Locker services
Establishing Letter of Credit for importers
Negotiating the Letter of Credits
Collection based Export Document Selling
Foreign Remittances through SWIFT
Foreign Currency Accounts handling
SBP Export Refinance Scheme
Remittances both inward and outward

Departments Of The Branch

The above mentioned functions and operations are divided between various departments.
Different departments do their jobs in occurrence with the bank policies. In National
Bank of Pakistan each branch is divided into various departments depending on their size
and volume of business. Head of department manages each department & officials of the

61

branch follow procedures. The departments working within National Bank of Pakistan
are as under:
1. Clearing House Department
2. Remittance Department
3. Computer Department
4. Deposits Department
5. Advances Department
6. Account Opening Department
7. Accounts Department
8. Cash Department
9. Pension Disbursement Department
10. Human Resource Department
11. Compliance Department
12. Foreign Exchange Department

Clearing Department:
As part of their daily business activity banks receive cheques and other financial
instruments from their customers drawn on other banks to be collected and credited to
their accounts. Similarly banks receive cheques from other banks deposited by customers
of the banks drawn on the customers of the drawee banks. Therefore the banks act as
Collecting Banks when they send cheques and other instruments for collection and as
paying Banks when they receive cheques for collection from other banks. Since each
bank receive and sends cheques for collection to and from a number of banks the process
of settlement would clearly be very cumbersome and time consuming if every cheques
had to be sent by the collection bank to each of the drawee banks or branch upon which
different collection items are drawn and to individually pay the proceeds to each of the
bank sending cheques in for collection. Therefore the banks have evolved what is called
the Bankers Clearing arrangement.
The Clearing System enables cheques to be paid or cleared centrally and settlement made
for receivables and payables between the banks. The SBP coordinates clearing activity
through its offices called the Clearing Houses set up in big cities and towns. Where SBP
does not maintain its own office some other bank usually National Bank of Pakistan
performs this function. But the clearing house facility is available only for cheques drawn
on banks situated within the same city.

Working Of The Clearing Process:

Under the clearing arrangements the State Bank of Pakistan offers a Clearing House or a
centralized exchange facility which works on the following general lines:

All the banks operating in a city who are members of the Clearing House maintain
an account with the SBPs Clearing House.

62

Every day representatives of all the banks in every city meet the Clearing House
first meeting in the morning, at an appointed time for the purpose of depositing
their own customers , cheques to be collected from other banks and receiving
cheques drawn on their account holders from the others banks.
At the Clearing House accounts of all the banks are debited by the total amount of
cheques drawn on their customers accounts and credited with the amount of their
customers cheques drawn on other banks as per the list of cheques submitted by
each bank.
The cheques received, also called Inward Clearing and are taking back by each
bank to its branch. The amounts of each cheque is debited or recovered from each
drawee customers account and credited to the Clearing House account. Similarly
against the amount credited by the Clearing House as Outward Clearing the
appropriate customers accounts are credited and clearing House account is
debited.
Any cheque received by a bank that cannot be paid due to insufficient balance in
its customers account or for any other reason are returned back to the Clearing
House and a credit is claimed and obtained there against.

Rules & Regulations Of Clearing House:

Timing:(Monday to Saturday)
1st Clearing at 10:00 a.m.
2nd Clearing at 2.30 p.m.
Each bank will send competent representative to exchange the cheques.
Each bank is required to insure that all cheques and other negotiable instruments
are properly stamped and suitably discharged.
An objection memo must accompany each and every cheque when return unpaid
duly initialed.
Each bank is required to maintain sufficient funds in the principal account with
SBP to meet the payment obligations.
The State Bank of Pakistan debit the account of each member of the
clearinghouse with the proportionate working expenses incurred on the operation
of clearing house. These expenses are very nominal.

Outward Clearing At The Branch:

The following points are to be taken into consideration while an instrument is accepted at
the counter to be presented in outward clearing:

The name of the branch appears on its face where it is drawn o.

It should not stale or post dated or without date.
Amount in words and figures does not differ.
Signature of the drawer appears on the face of the instrument.
Instrument is not mutilated.

63

There should be no material alteration. If so, it should be properly authenticated.

If order instrument suitably indorsed and the last endorsees account being
credited.
Endorsement is in accordance with the crossing if any.
The amount of the instrument is same as mentioned on the paying-in-slip and
counterfoil.
The title of the account on the paying-in-slip is that of payee or endorsee (with the
exception of bearer cheque).
If an instrument received other than National Bank of Pakistan then special
crossing stamp is affixed across the face of the instrument. Clearing stamp is
affixed on the face of the instruments paying-in-slip and counterfoil (The stamp is
affixed in such a manner that half appears on counterfoil and pay-in-slip). The
instrument is suitably discharged where a bearer cheque does not require any
discharge and also an instrument in favor a bank not need be discharged.

The instrument along with pay-in-slip is retained while the counterfoil is given to the
customer duly signed. Then the following steps are to be taken:
1. The particulars of the instrument and the pay-in-slip or credit voucher are entered
in the outward clearing register.
2. Serial no is given to each voucher.
3. The register is balanced the credit vouchers are balanced from the instruments and
are released to the respective departments against acknowledgement in the
register.
4. The instruments are arranged bank wise.
5. The schedules are prepared in triplicate, two copies which are attached with the
relevant instrument and the third is kept as office copy.
6. The house page is prepared from schedules in triplicate.
7. The schedules and house pages are signed by the house in charge with branch
stamp.
8. The grand total of the house page is taken and agreed with that of the outward
clearing register.
9. The instrument along with duplicate schedule and house page are sent to the main
office.
10. The entry of the instrument returned unpaid is made in Cheques returned Register.
If the instrument is not to be presented again in clearing then a covering memo is
prepared. The covering memo along with returned instrument and objection
memo is sent to the customer who sent the same to his account.

Inward Clearing Of The Branch:

1. The particulars of the instruments are compared with the list.
2. The instruments are detached and sort out department wise.
3. The entry is made in the inward clearing register (serial no. Instrument no.
Account No)
4. The instruments are sent top the respective departments
64

5. The instruments are scrutinized in each respect before honoring the same.

Special Clearing:
In addition to the normal clearing function at Clearing house it is mutually agreed to hold
an extra clearing at the clearing house on the particular day and time which is known as
special clearing. It is arranged due to the rush of work arising out of say more Holidays
declared by the Central Govt. at a time but normally special clearing is held on last
working day of half yearly and yearly closing i.e. 30th June and 31st Dec. every year.

Remittance Department:
The Remittance department deals with the transfer of money from one place to another.
Funds transfer facility or remittance of funds is on of the key functions of the banks all
over the world. Remittances through banking channels save time, costs less and eliminate
the risks involved in physical transportation of money from one place to another. National
Bank of Pakistan transfers money in the following ways:

Pay Order
Demand Draft
Mail Transfer
Telegraphic Transfer
Pay Slip
Call Deposit Receipt
Letter of Credit
Travelers Cheque

The Job responsibilities & requirements of remittance department include:

Responsible for money transfers, issuance of pay-orders & drafts, collection

items, maintenance of cheque books & ATM cards and all other counter specific
products and services
Ensure highest level of customer service in a professional and competent manner
Must ensure that the activities are carried out strictly in accordance with the laid
down procedures and Compliance guidelines of SBP
Responsible for Cash, Clearing, Inland remittances including Demand Drafts and
Pay Orders.
Ensure high standards of customer services within the assigned turn around time.
Ensure compliance with SBP's regulations and internal controls.
Handling cash, clearing, local remittances, and other related activities at branch
level.

65

Parties Involved In Remittances:

There are four parties involved in Remittance which are:

Remitter:
One who initiates or requests for a remittance. The remitter comes to the issuing or
originating branch and asks for a remittance to be made and deposits the money to be
remitted. The bank charges him a commission for this service. He may or may not be the
branchs customer.

Remittee:
A Remittee is also called the beneficiary or the payee. The person in whose name the
remittance is made. A Remittee is also the one who receives the payment.

Issuing Bank:
The bank that sends or affects the remittance through demand drafts, telegraphic
transfers, Mail Transfers, Pay order etc

Paying Bank:
Paying Bank also knows as the drawee branch, the branch on which the instrument is
drawn. It has to make the payment (usually located in a different city or country).

Kinds Of Remittances:

Transfer within the branch.

Transfer from one branch to another.
Transfer from one bank to another bank in the same city.
Transfers from one bank to another bank in two cities.

Account Opening Department:

The opening of an account is the establishment of banker customer relationship. This
department performs the duty of opening accounts for customers. It also issues
checkbooks to customers. A person who wishes to open an account with the bank has to
fill an account opening form obtained from any branch of National Bank of Pakistan. The
bank officer tactfully obtains information about character, integrity, responsibility,
occupation and the nature of business of the perspective customer. Any individual who
has attained the age of majority and is of sound mind can open and maintain an account.
Two or more individuals may open an account jointly. Similarly business organizations

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such as sole proprietary concerns, partnership firms, and limited liability companies as
well as non-profit organizations like clubs, trusts, societies, associations and NGOs etc
may open their accounts. The following requirements are necessary for opening an
account:

Identification of the new customer.

Ascertaining the genuineness of the stated occupation business of the customer.
Determining the correct residential and permanent address.
Completion of all relevant columns of the Account opening form.
Proper completion of documentation.

Functions Of Account Opening Department:

Providing account opening form according to the customer's requirements.

Guide the customer about the requirements of the account opening and form
filling.
Check the forms whether they are correctly completed or not.
Preparing checklist.
Stamping on the form.
Maintaining account opening register.
Pasting of forms in register after release from general banking in charge.
Issuance of cheque books.
Issuance of accounts maintenance certificate.
Closure of account.
Verification of signature in case of cheque presented before releasing of account
opening from SS card is not yet scanned.

Cash Department:
All physical movement of cash in the bank is made through the cash department. As bank
is borrowing and lending institution therefore cash is the top most priority of Bank.
Another aspect is that cash department is for the security purpose. Security in a sense,
that there should be no embezzlement of funds or in money leaded to bank by any party
or person. The efficiency of bank is also related to this department the more efficient the
bank is the stronger and busy is the cash department.
Cash department owes its important to the fact that it is a major point of contract between
the bank and the customer. This department is the showcase of the bank and conveys the
first impressions about the banks commitment to professionalism in its systems and
procedures and to courteous and efficient customer service. Normally cash department
performs following functions:

Collection of funds
Acceptance of deposits
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 Collection of utility bills

Payment of checks
Remittances
Act according to any standing instructions
Transfer of funds from one account to another
Verification of signatures
Posting
Handling of Prize bond
The two main activities of cash department are as fallows:

Deposit Cash In Customers Account:

When the customer want to deposit amount in his account at opening of account or after
that then he has to fill a deposit slip that shows the amount and the account in which the
cash will be deposited. Then teller will receive amount and credit the customers account
that shows increase in customers bank account.

Make Payments From Customers Account:

When the customer draws a cheque on the bank to pay a certain amount then EBS
Operator will debit the customers account that shows reduction in his account balance.

Cheque Encashment Procedure:

Receiving Of Cheques:
The cash is paid against the cheques of the client. The following points are important:

Cheque is drawn on same branch

Cheque is not post dated.
Amount in words and figure are same.
It should be bearer cheques so the word bearer should not cross.

Verification Of Signature
After receiving the cheques the cheques the operation manager verify the signature of the
account holder and the signature on the cheques. If the signature is not same it is returned
back otherwise forward to EBS Operator for posting.
Computer Terminal Process:
The cheque is received in computer terminal where EBS operator checks the balance of
the account holder. The EBS operator also sees the stop payment instructions whether

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received from account holder or not. After considering these points EBS Operator post
the cheque in EBS and forward to operation manager.
Payment Of Cash:
After posting the cheque the operation manager cancelled the cheque and returned back
to cashier. The cashier enters the cheque in cash paid registered and pays against the
second signature of receiver on the back of the cheque.

Deposits Department:
The primary function of National Bank of Pakistan is to accept and receive surplus
money from the people which they willingly deposit with the Bank. Like all other Banks
National Bank of Pakistan also take incitation to attract as many depositors as it can. The
deposit department accepts/collects deposit from accountholder. The National Bank of
Pakistan offer different deposit schemes to its customers which includes the following:

Current Deposits
PLS Saving Deposits
Fixed Deposit Account ( Time Deposits)
Foreign Currency Account
NBP Premium Aamdani
Foreign Currency Account
National Income Daily Account (NIDA)

Advances Department
The bank is profit seeking institution. It attracts surplus balance from the customer at low
rate of interest and makes advances at a higher rate of interest to the individuals and
business firms. Credit extensions are the most important activity of all the financial
institutions, because it is the main source of earnings. Advances department is one of the
most sensitive and important department of the bank. The major portion of the profit is
usually earned through this department. The job of this department is to make proposals
about the loans. The credit management division of head office directly controls all the
advances.
The advances Department receive application from intending borrowers. After receiving
application the advance department processes it further. After analyzing and detailed
investigation they decide whether to approve the loan or not. Some loan approvals are
made by the Manager of the branch within his powers as prescribed by the banks higher
authorities while some loan applications are submit to higher authorities for their
approval. Some advances are of the following nature:

Loan against Gold

Agriculture advance to farmers

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Medium term advance for working capital

Long term advance for setting industry
Short term advance to businessman

The National Bank of Pakistan offer following products (Advances) to its customers:

NBP Saibaan
NBP Advance Salary
NBP Cash & Gold
Students Loan Scheme
NBP Karobar

The Advances department deals in following transactions:

1. Preparation and submission of proposals of Running finance, Cash finance,
Demand finance, Export finance, Staff finance, Finance against imported
merchandise etc for sanction of finance limit from the hire authority.
2. Preparation and posting of vouchering of all type of finance.
3. Accruals & recovering of Markup on finances on periodical basis.
4. Approval of transfer of funds through DD-TT, PO, MT etc to various branches by
debiting the limits.
5. Preparation of weekly, monthly, quarterly, and annually statement to the hire
authority.
6. Transfer of funds from one account to another account of the party taking the
authority letter.
7. Preparation of advances record.
8. Timely submission of returns and reports, daily, weekly, monthly & quarterly.
9. Checking of computer outputs of the department on daily basis.
10. Balancing of all financing heads.

Computer Department:
This department is playing a very important role in making the banking procedures faster
and helping the bank for providing better services to its customers. The National Bank of
Pakistan has three types of branches in all over Pakistan, these includes:

a) Online Branches:
The branches which are directly linked with central computer AS-400 through wide area
networking through fiber optics are online branches. These branches have dumb terminal
directly linked with central computer.

b) Batch Branches:

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The branches where all transactions are carried out with the computer base system but
these branches are not connected to the central computer with wide area net working.
Batch branches are using three type of system, Branch Back Office (EBS), Branch
Automated System based (BAS), Branch Integrated System (BIS) based in Karachi. As
was establish in the beginning while EBS is currently implemented now efforts are under
way to convert all branches into Electronic Banking System which is used by online
branches as this system does not require a person to remain sitting till the branch closed
its daily operation but the system automatically close it self when the branch timing is
over. The database in head office is also based on this system.

c) Manual Branches:
The branches where all transactions are carried out manually and records are maintained
on registers usually stored in big wardrobes. Manual branches reports Regional head
office regarding their daily transactions. In Regional head office through On Line
terminal data goes to head office central computer, Except for branches those are On Line
as they transfer there daily data directly through there own terminal. Day-to-day activities
of all branches are recorded in a central computer.

Pension Disbursement Department:

The National Bank of Pakistan was Pakistan is leading institution which performs the
function of pension payments or disbursements to pensioners. The pension disbursement
department is responsible for making pension payments to Government Pensioners. The
person who wants to receive his/her pension from National Bank of Pakistan can open an
account with any branch of National Bank of Pakistan. The bank performs this function
through Demand Draft Purchase or simply called DD Purchase. This department
performs following functions:

Making Pension Payments

Opening of Account of Pensioner
Entry of amount paid to pensioner in Government Pensioners Register
Verifications of Signatures of Pensioners
Making Demand Draft Purchase Register

Accounts Department:
Accounts Department of the bank can be considered the most important department. This
department is basically concerned with processes and activities of recovering, sorting,
summarizing and reporting data resulting from the whole day transactions of all the
departments. Actually the process of this activity starts from the preparation of all the
required vouchers by different related departments. When these vouchers are prepared
these are posted into respective computer terminals by the relevant departments. Before
merging a batch list is printed out by Computer Department and duly checked by the
respective departments. After this merging stage comes after which a proof list is printed
out. This is the stag, where Accounts Department starts performing its function. Proof

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list is checked by the Accounts Department. The account department prepare following
vouchers and reports:

Monthly Profit & Loss account

General Ledger
General Ledger- Abstract
Check Book Issue Register
Western Union payments Register
Demand Notices
Miscellaneous Book
Bank Transfer scroll
Posting NBP Advance Salary
Daily Statement- F21
General Ledger- Head wise
Hash Value Register
End of Day register
Posting National Income Daily Account (NIDA)
Monthly return register
Charges A/c register
P-L-S Profit list
Weekly Telegram
Mail Transfer Register
Government Scroll
Provident file
Government Scroll Debit & Credit
Transfer Responding Advice Dispatched Register-F15
Cash Remittance IN
Cash Remittance OUT
NBP General Account
Utilities register
Statement of affairs
Closing entries
Daily activity checking
Minor expense recording

Human Resource Department:

Personnels are the main asset of the NBP. The primary objective of the Hr department is
to get the jobs done effectively, economically and with as little friction as possible. The
department is focusing mainly on the policies that are focused on the personnel.

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Most talented people are hired through proper recruitment process. Discrimination of any
kind is counter productive to performance. Following are the main features of this
department:

The functions that have to be performed by the personnel are clearly mentioned in
the JOB DESCRIPTION.
The code of conduct provides s framework of NBPs values and ethical standards.
The following principles must be applied for the governing the code of conduct of
the bank employees while on the job.
All decisions and actions must be confirmed with all applicable laws, regulations
and corporate policies.
Business must only be succored for NBP on the basis of the belief in competitive
market system and the appropriateness of earning a profit by providing our
customer with efficient services.
Individual must be honest and trust worthy in all actions and relationships for, and
in behalf of the NBP.
Each decision or act must be proper, in terms of both our own sense of integrity
and the scrutiny of others.
Ethical conduct should be recognized and valued by all employees and agents of
the bank.
Formal appraisal is a year round activity and a formal appraisal report is prepared
at least once a year. The appraisal comments are based on achievements against
key job objectives. In NBP the good performance of the employees is always
acknowledged by giving them monetary rewards. Excellence awards, merit
increments, gifts, visiting tickets to abrade and promotions.
Transfers are usually made on the promotions from one country to another or
from one branch to another or maybe from one department to another.

Compliance Department:
The department that deals with the Audit/Checking and inspection is known as the
Compliance department. The department is being run under the supervision of the
COMPLIANE OFFICER. It is involved in the checking of all types of work that is being
conducted in the branch. The inspection is carried out on daily, weekly and monthly basis
depending upon the nature of the work.
Generally it includes the following type of functions:

Checking of all type of registers that are maintained by the officers of remittances,
and that are:
Demand Draft issued Register
Telegraphic Transfer issued Register
Main Transfer issued Register
Pay Order issued Register

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Register of all type of Advices received against DD, MT, and TT

Demand Draft received Register
Telegraphic Transfer received Register
Main Transfer received Register
Pay Order received Register

Inspection of the Mail register issued and received

Inspection of all books that are maintained at the clearing
Inspection of the Cash Book
Inspection of the Scroll Book
Inspection of the Cheque Book Issued Register
Inspection of the all the payments made to pensioners
Inspection of the all type of Receipts
Inspection of the Cash issued to the branches
Inspection of the utility bills collected
Inspection of the receipts and the payments of the Govt. Counter
Inspection of the all type of Deposits
Inspection of the of the all type of loans
Inspection of the Corporate Cell

Foreign Exchange:
Foreign Exchange means expression of value of local currency when exchanged in terms
of currencies of other nations. The Foreign Exchange Department of NBP is the most
competent department and is contributing a lot in the overall performance of the Branch.
The main operations of the Foreign Exchange department are:

Imports
Exports
Remittances
Foreign Exchange Account handling

Imports:
The import deals primarily with the letter of Credit, Contract and the Advance payment.
An LC is a familiar instrument in setting trade between buyer and seller located in
different countries for the purchase and sale of goods. It is usually a guarantee by the
bank for the payment of the goods delivered by the exporter to the importer.
Important documents for the Import are

Bill of Exchange
Commercial Invoice
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Transportation Documents e.g. Air way bill or bill of lading

Insurance documents for the goods
Packing List
Pre-shipment inspection certificate
Form I

In contract the most popular is CAD. That is the payment will be made at the collection
of the documents that were involved in the negotiation process.
The third way is the advance payment that will be made to the exporter either full or
partial depending upon the nature of the transaction.

Exports:
Export is mainly involved with the collection of the documents or the discounting of the
LC. In the negotiation process Export Bill negotiation A/c will be debited.

Documents Required For The Negotiation:

Form-E
Bill of Exchange
Commercial Invoice
Transportation Documents e.g. Air way bill or bill of lading
Packing List
Letter of Credit

Documents To Be Forwarded:

Bill of Exchange
Commercial Invoice
Transportation Documents e.g. Air way bill or bill of lading
Packing List
Other specific Documents

Documents Remained In Hand:

Form-E
Copy of Commercial Invoice
Copy of Packing List
Letter of Credit
At the month end the reporting will be made to the SBP for Form-E

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Remittances:
The process of receiving the payment from the other countries and paying to the people
in Pak Rupees is called the remittances. The payment is received through SWIFT and
the popular ways used for the remittances are:

Telegraphic Transfer
Mail Transfer
Demand Draft

Foreign Exchange Account Handling:

The accounts are also handled for the customer in foreign currencies.

CHAPTER NO: 6
ASSIGNMENTS HANDLED IN
INTERNSHIP

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INTRODUCTION OF THE BRANCH

I did my internship in NBP Main Branch Multan. I joined this branch on 3 rd November
and completed my internship on 13th of December. Once this branch only dealt with huge
deposits of above 5o,ooo and due to some other unique dealings the name Model Branch
was given to it. Now it works like a normal branch and handle the deposits of lower
amounts as well but the word Model branch has become its identity and it still sticks to
its name. Spending only 6 weeks in such a large organization is obviously not sufficient
to study whole of the organization in details, but still I worked hard to learn as much
things as I can during my internship.

Departments:
According to the capacity of that branch following departments work here:

Clearing Department
Deposit department
Advances Department
Account Opening Department
Cheque books and lockers Department
Remittance Department
Compliance Department
Pension Disbursement Department
Bills collection Department
Cash Department

Names Of The Employees I Dealt With:

All the staff was very nice and cooperative with us. The environment was very good for
the females to work. I directly worked with these employees:
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Mr. Agha Abbas

Mr Ghulam Abbas
Mr. Tahir
Mr. Muhammad Amir
Mr. Noman Ijaz
Mr. Nadeem
Mr. Saddique
Mr. Babar

Learning As An Internee:
During my internship period at National Bank, initially I was assigned no particular
duties. It was completely up to me how much I could dig out according to my
strength and capabilities. But after that there were some regular duties that I was needed
to accomplish efficiently and with great responsibility. The time period of my internship
was 6 weeks. I spent each week in the following departments:

1ST WEEK
Accounts Opening:
During my first week in the bank I worked in account opening department. During my
training in that department I was taught that how to open the account of the customers in
the bank and That whenever a customer comes how he should be explained about the
types of accounts and the benefits provided in each Account. My supervisor Mr. Saddique
used to tell me that how to fill the form of account Opening and which documents are
required for opening the account. But I didnt have the opportunity to enter the accounts
opened on daily bases in the software system because its a very sensitive issue and I was
not so much trained thats why I used to only fill the forms and do stamping on them.
At NBP its very easy to open an account just an introducer and a copy of NIC is
required. Customer just needs to fill up account opening forms and can enjoy the
facilities of any type of account they want.

Documents Required For Opening An Account:

A signature card
Requisition slip
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The main account opening form

Acknowledgement
Know your customer profile

These all forms are to be filled by the customer and following things will be required
From the customer to attach with this form:

A copy of NIC
A copy of job evidence or contract or student id card copy

If the customer wants to change his signature on the account opening form then
he has to fill another form. The minimum amount of money for opening account is Rs:
100, which has to be deposited by the customer at the time of account opening.
Those people who are not literate do not need to do a sign; they can give their
Thumb impressions instead of Signatures. After a few days the Bank sends or mails
another copy of Letter of thanks to the customer as well.

Reason For Closing The Customers Account:

The banker may close the account of the customer due to following reasons:
i. Customer Request
ii. Death of a Customer
iii. Court order
iv. Having zero balance till six months

2ND WEEK:
Cheque Books And Lockers:
I also spent a week in this department. I learned to send cheques book and lockers request
of the customers. And I also learned to issue them cheques books and to operate lockers.
Whenever any customer used to come to collect his or her cheque book then I used to
take his sign on the record register, do stamping, write date of issuance, match his sign
with sign card and then provide him his cheques book. It was also my duty to explain him
the working procedure so that if any customer had any query in his mind he could ask me
the details.

Cheque Book:
Cheque books are issued after three days of opening of account. Books are reissued on
request of the customer. Customer has to submit a request form for issuance of another

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cheque book.There are many types of cheque books, the first one is of 100 leaves and the
second one is of 75 leaves and third one is of 25 leaves & last one is of 10 leaves.

Issuance Of Check Book:

Whenever a person opens an account with NPB, then he is issued a cheque book. But for
this purpose he has to fill a requisition slip and then he gets his cheque book. There is
also another requisition slip inside each cheque book which is used for the purpose of
reissue of a new cheque book. If the leaves of first cheque book start finishing he is
reissued with the cheque book There is written the title of account holder, his account
number, the stamp of NBP and the A/C of the person on every page of cheque book and
also on the requisition slip.

Lockers facility:
I did not handle the direct work of lockers but I learnt from my observation that National
bank of Pakistan provides locker facilities to its customers to keep their valuable assets in
it. Locker holders need to have an account in the bank. The customers get back the
security fees when they close their locker facility by the bank. The lockers could also be
operated jointly. Annual locker rent is 4500 security & 2500 /annum as fee for one locker.

3rd WEEK:
Checking Counter:
The person who sits on this counter is Mr. Agha Abbas and I spent 1 week on his counter.
Here we dealt with new customers who wanted to get information and to deal with the
branch. This is a very interesting department because here we met people of different
types and deal with them accordingly. In this section, I observed the following functions:

Cheque At Counter:
A cheque to withdraw the amount is presented on the counter with the following
requisites:

Name of the Account Holder

Current or previous date
Amount in figures
Amount in wording

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One signature of the account holder in the right bottom corner of the cheque and
two signature of the bearer on the back
Branch Stamp in front of the cheque if the Account Holder uses thumb instead of
signature then the Pass Book is necessary with the cheque.
Operations officer checks and verifies all these requisites. If it fulfills all the
requisites it is forwarded for payment after a certain procedure.

Cheque Payment Procedure:

After all the requisites are verified and then the excessive balance is checked and
prescribed amount is deducted narrated on the cheque, then SIGNATURE VERIFIED
stamp (in case of signature only) on the signature and a PAY CASH stamp are fixed and a
Token is given to the cheque bearer after writing Token No. on the specified cheque.
Then the Officer G-II verified the cheque and forwarded it to the cashier where the
cheque bearer receives the amount from the account. I was mostly assigned the work of
signature verification from the specimen on this counter.

4TH WEEK:
Utility Bills Collection Department:
I spent 1 week in utility bills collection and observed the following things. All branches
of NBP collect utility bills of electricity, gas and telephones. For convenience of the
customers, utility bills are collected by the branches during banking hours and also in the
evening-banking on all working days. Bills can be paid through cash or cheques. Tax is
also collected in heavy amounts in this department. I was assigned the work of stamping
on bills collected and to tear the lower portion of the bill for retention purposes.

Tax Collection:
Sales tax, income tax, property tax and all kinds of taxes are collected by NBP on this
counter. The tax payer is required to fill the tax challan form himself and pays the tax on
the counter. A receipt is issued to him to show the NBP after 3 or 4 days so that he can
take the final receipt after showing it to the bank. NBP is the only bank which collects
tax.

Utility Bills Collection Department:

Utility bills are collected here. Banks charges 8 Rs per bill from the principal. Bill with
the payment is presented on this counter by the depositor. The collector counts the
money, affixes stamp of amount received on it and tears the bill from below and keeps it
with the bank as evidence. The other portion of the bill is given to the customer as a
receipt. The bank then sends all the bill receipts which it kept with itself to the concerned
parties e.g. PTCL, WAPDA, SUI GAS STATION through dispatch department.

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5TH WEEK:
Clearing Department:
I spent 1 week in clearing department. The incharge of this department was also Mr. Agha
Abbas. In his department I learnt the following things. This department that is responsible
for the clearing of the cheques that are drawn on the other banks or the cheques that have
been drawn on the NBP. My incharge told me, in the past it was a more complicated
process because SBP was the custodian so it had to make the arrangements for the
clearance of cheques that have been drawn on the others. So a person representing his or
her bank had to go to SBP for the Clearance of these cheques which was a time
consuming method and it was taking at least 4 to 5 days for the clearance.
Now the SBP has made the thing so easy for all the banks by making a contract to a
privatized institution NIFT. Now all the clearing is being done through the NIFT
against a Fee that is Rs.2.5 for every cheque that has got cleared.

Types Of Cheques Collected By The Clearing:

Following types of cheques were collected in the clearing department:

a) Transfer Cheques: The cheques that are collected and paid by the same
branch of the bank
b) Transfer Delivery Cheques: The cheques that are collected and paid by two
different branches of a bank situated in the same city.
c) Clearing Cheques: When the endorsee (the person who deposit the cheque for
collection) and the person on whom the cheque has been drawn are the account
holders of two different banks then these type of cheques can be get cleared
through the NIFT.

Types Of Clearing:
Three types of clearing takes place in the branch:

Inward Clearing
Outward Clearing
Same Day Clearing

Rules & Regulations Of Clearing House:

I came to know about the following rules and regulations:
Clearing comes twice a day. And the Timings:(Monday to Saturday) are:

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o 1st Clearing at 10:00 a.m.

o 2nd Clearing at 2.30 p.m.
Each bank sends competent representative to exchange the cheques.
Each bank is required to insure that all cheques and other negotiable instruments
are properly stamped and suitably discharged
An objection memo must accompany each and every cheque when return unpaid
duly initialed.
Each bank is required to maintain sufficient funds in the principal account with
SBP to meet the payment obligations.

The State Bank of Pakistan debit the account of each member of the clearinghouse with
the proportionate working expenses incurred on the operation of clearing house. These
expenses are very nominal
I spent my time in inward clearing only and most of the times I was assigned the task of
checking the instruments received in clearing whether they are properly stamped or not.
Their date, amount in figures and words were also checked by me. When the checks were
returned unpaid due to insufficient funds etc, I used to fill the objection memo
mentioning the reason of objection. And then making the debit voucher and entering in
the register for future reference.

6TH WEEK:
Deposit Department:
I spent my last week in the deposit department. There I observed that Deposit department
deals with Current, Savings, and Fixed Accounts. In current account the bank does not
give any interest and we can deposit the whole amount in lump sum in business hours.
The rate of interest is higher more than that of in Current and PLS savings Account but
the amount cannot be withdrawn before a specific time fixed by the client. To open the
account customer have to fulfill an application form and submit to the concerning
authority. In Current and PLS saving Account, a Cheque Book is issued to the client and
he becomes the Account Holder of NBP. In this department I was not assigned any
specific task. I used to fill the deposit slip of customers and answer their queries.
OTHER TASKS HANDLED:

I also worked in Dispatch for some hours. Its work is supervised by Mr. Ghulam
Ahmed. I handled his work with him. I dispatched the letters and other
documentation, sent the letters of thanks to the account holders. I wrote addresses
on envelope stamped them and entered them in the register for the evidence. Also
I opend the inward mail, affixed the stamp of mail inward on them and after
making an entry I gave them to the concerned parties in the bank.I also made the
entries in mail outward register.

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I also tellied the day books with the daily statements.In this regard I had to check
the amount and account number form the statement and crossed the imstrument
with red ball pen. In this regard if I had any query Mr. Babar and Mr. Amir were
there to help me.
I also made deit and credit vouchers and filled the Fanfolds and stamped them.
And during my internship I also helped the customers in getting their tasks done.

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ACCOMPLISHMENTS
New knowledge Acquired:
The core of my internship was the knowledge I acquired. Before internship I was entirely
ignorant of a banks business processes. But this internship program has made me aware
of most of banks business processes and hence it has built in me, immense confidence to
step into bank and carry out the routine banking tasks.

New Exposure:
My internship experience has given me a completely new industry exposure in the
banking sector which includes both the consumer banking and branch banking. I can say
that for me the best thing about MBA was this social and professional exposure that I
longed to have.

People Diversity:
Being an introvert personality, I never had the precious experience in people diversity.
During this internship period I interacted with so many people both customers and
employees with diverse personalities and behaviors, different age groups, some far too
senior and experienced that it has given me confidence to interact efficiently with people.

Tactful communication:
From this internship program I have realized that the skill to communicate tactfully is the
thing we should learn and polish especially in dealing with customers. It is not the most
important if you dont have the required skills at this moment.
Another important thing regarding communication that I have learnt is, no matter how far
we go in adopting English language; practically and within organizations staff prefer to
communicate in their mother language i.e. Urdu, because their priority is to efficiently
complete the work to attain the corporate goal of the organization in minimum time and
they simply do not let formalities come in their way because actions speak louder than
words.

Working Towards Corporation Goal:

During my internship in the last weeks, I started to feel part of that organization. I
actually felt working for that organization though I was merely an intern. Techniques like

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how to work towards the corporation goal, tackle a problem, are not something that can
be taught in classrooms and this internship has definitely trained me in it.

Larger Social Circle :

I have come to know and be respected by a number of professionals who are lending their
services to the banking sector for more than a decade. I feel honored that I have worked
with such seasoned professionals and have experienced broader social awareness.

Self-Discoveries:
During my internship period I self discovered that I could interact well with difficult
people and that I have the tendency of being liked by other people who is because I
believe that to earn respect one should give respect. Moreover people find me their secret
holder and trust me and that is perhaps because of my simple rule, which is no
backbiting.

Career Awareness:
This program was a career awareness program as well in the sense that it helped me in
identifying my interests. What I have identified is that I want to do some thing dynamic
and not an assembly line kind of job. Moreover, I have found that in Pakistan it doesnt
matter what is your field of education meaning that as long as you have the slightest idea
of job in hand and you are an active learner, you can work wonders.

Opening Up New Horizons:

I must admit that such interaction in that respectable professional community will help
me in seeking out job opportunities. All this experience has transformed me into a mature
person with multiple perspectives and has put me one step forward to a better career and
also broadened my horizon.

Confidence Building:
One thing I lacked and strived for was the lack of confidence in interacting in a
professional environment. National Banks supportive culture made me feel comfortable. I
learnt to always be responsible and have the sense of ownership when problems appear.
This all has definitely helped me build up confidence and had made me well equipped for
my career.

86

Problems Encountered
Difficult Time In Getting Used To New Environment:
Initially I had difficult time in mixing with organization members and felt uncomfortable
in that new place with new people. However, after some time I became a part of it just
like everyone else and felt completely comfortable.

Uses Of Terminology:
The other major problem was the hectic routine of the bank. It made me uneasy at first
but with the passage of time I became used to it. I had to face a great difficulty in
understanding banks terminology by the knowledgeable guidance of the staff I was able
to overcome the problem to a satisfactory level.

Practical Applications Differ From Books:

The real problem I faced in the bank was the difference between what I had learnt from
the books and what was being practiced. Practical application of the theories learnt during
academic sessions was a great challenge, which I overcame by the cooperation of the
staff.

How Experience Impacts My Career

My internship experience has given me a realistic preview of my field of education. Now
I feel that I am better prepared to enter the world of professional work. I have come to
know and been appreciated by a number of professionals who are lending their services
to the banking sector for more than a decade. I must admit that such interaction in this
respectable professional community will help me in seeking job in the near future.
Each task I performed was a different experience in itself. By the end of it, I must say
I realized my potentials. I have realized that earning money is not so easy after all, it
takes a lot of hard work and devotion and not to forget time. And I now know that if I
want I can make things possible, and I also know how good it feels to having
accomplished something and being appreciated for it. I definitely have learnt things
which will impact my career and my character.

87

The overall experience of my internship was very good. I have learnt the sense of
responsibility in its literal meaning. I am now capable of dealing with different sort of
customers and how to be patient while doing so. Besides this I also gained knowledge
about banking which I previously lacked and many more products being offered by the
bank. So in a nutshell this internship gave me the experience which would no doubt boost
my confidence to work in future.

CHAPTER NO: 7
FINANCIAL ANALYSIS OF NBP

88

FINANCIAL STATEMENT ANALYSIS

Financial analysis is a process which involves reclassification and summarization of
information through the establishment of ratios and trends. Financial statement analysis is
the process of examining relationships among financial statement elements and making
comparisons with relevant information. It is a valuable tool used by investors and
creditors, financial analysts, and others in their decision-making processes related to
stocks, bonds, and other financial instruments. The goal in analyzing financial statements
is to assess past performance and current financial position and to make predictions about
the future performance of a company.
The overall objective of financial statement analysis is the examination of a firms
financial position and returns in relation to risk. This must be done with a view to
forecasting the firms future prospective.
Analysts can obtain useful information by comparing a company's most recent financial
statements with its results in previous years and with the results of other companies in the
same industry. Three primary types of financial statement analysis are commonly known
as horizontal analysis, vertical analysis, and ratio analysis.

Ratio Analysis
Ratio analysis enables the analyst to compare items on a single financial statement or to
examine the relationships between items on two financial statements. After calculating
ratios for each year's financial data the analyst can then examine trends for the company
across years. Financial ratios allow for comparison:

Between companies
Between industries
Between different time periods for one company
Between a single company and its industry average

Types Of Ratios:

Profitability Ratios
Liquidity Ratios

89

Solvency Ratios
Investors Ratios

RATIOS

2011

2012

2013

Average rate of borrowing

2.81

3.59

5.12

Average rate of lending

8.83

10.14

10.94

Admin cost/Deposits

2.40

2.91

3.11

Average cost of funds

5.21

6.50

8.22

Spread

3.62

3.65

2.72

103.02

113.42

120.12

Return on Assets

2.50

1.89

1.93

Return on equity

27.48

19.0

18.8

Infection ratio

10.23

12.33

13.36

Advances/Deposits

57.56

66.08

65.42

Effective tax rate

0.32

0.32

0.18

Earning per share

23.34

17.23

16.93

Current Ratio

1.00

1.12

1.14

Liquid Ratio

3.07

2.69

3.00

Debt/Equity

93.47

91.17

90.1

Dividend Rate

35.31

32.1

40.02

Dividend payout Ratio

10.54

18.62

17.14

Net mark up income/Total income

Explanation:

As we see rate of Borrowing has increased constantly in all the years, it shows
that our cost of lending has also increased. Increase in this ratio is a very good
sign as the banks primary business is borrowing & lending.

90

The banks average cost of lending has also increased in all the years which shows
that its rate of borrowing has also increased. The two primary functions are
directly related and increase in them is a very good sign but lending at a very high
rate than the market means you are lending to the left overs and the principle is
lend at the lower rate but lend to the good.
Admin cost over deposits is a policy making ratio. Golden hand shakes come as a
result of increase in this ratio. Apparently increase in this ratio is a negative sign
as bank should control its admin cost but here constant increase in this ratio is due
to increase in new branches of NBP so its a good sign as volume of business is
increasing. But still it should not be more than 3 percent as in 2009 so the NBP
should also manage its admin cost besides increasing its volume of business.
Increase in the average cost of funds is apparently not a good sign but the reason
behind it decides it. Here this ratio is increasing in all the years due to increase in
average rate of borrowing as well as due to increase in admin ratio. Here due to
the expansion of volume of business increase in this ratio is not considered bad.
The spread of the bank is constantly reducing in all the years due to fierce
competition as well as due to high cost of funds in all the years. Spread is
important for giving credit lines and increase in it renders more profit to the firm.
Net mark up income of the bank is constantly increasing all the years and increase
in it is a very good sign. It shows NBP is earning more profit from its primary
business which is a very good sign for the banks to survive.
Its return on assets has decreased in 2008 due to decrease in net profit after taxes
but again it has increased in 2009 due to increase in net profit after tax. It is
acceptable as it is more than 1.
Its return on equity has decreased in all the years due to increase in equity in all
the years. NBP has issued the bonus shares due to which equity has increased.
Increase in this ratio is a very good sign. If equity has increased it means more
trust of the people.
Increase in infection ratio is a big criticism on bank and a very negative sign. It
may be due to bad security or bad customer. NBP should reduce its classified
advances and should lend to the people having good credit worthiness.
Advances over deposits ratio has increased in 2008 which is a very good sign but
it has decreased in 2009 which means NBP can advance to the more people and it
should as 80 to 90 percent deposits should be advanced.
EPS is a very vital ratio for the investors as it tells the earning capacity of each
share. Increase in this ratio is a good sign but here the EPS is decreasing due to
increase in equity. NBP has issued the bonus shares.
Current ratio of the bank is increasing in all the years which is a very good sign. It
has increased due to increase in current assets which means Banks ability to pay
off its debts has increased.
Quick ratio has decreased in 2008 due to high percentage of inventories in current
assets but this ratio has again improved in 2009 which is a good sign for the bank.
Debt over equity ratio shows the solvency position of a bank. It has decreased in
all the years due to increase in equity. So the debt of the company is very high. It

91

should decrease its debt by applying debt management policies as it should be

60:40.
Its dividend ratios show that NBP is not a miserly bank in rewarding its investors.
It pays them dividends according to its earnings so, an investor wishes to invest in
NBPs shares.

Horizontal Analysis
This technique is also known as comparative analysis. It is conducted by setting
consecutive balance sheet, income statement or statement of cash flow side-by-side and
reviewing changes in individual categories on a year-to-year or multiyear basis. The most
important item revealed by comparative financial statement analysis is trend. The
horizontal financial statements analysis is done by restating amount of each item or group
of items as a percentage. Such percentages are calculated by selecting a base year and
assign a weight of 100 to the amount of each item in the base year statement. Thereafter
the amounts of similar items or groups of items in prior or subsequent financial
statements are expressed as a percentage of the base year amount. The resulting figures
are called index numbers or trend ratios.
Formula = Current Year amount / Base Year amount * 100
Horizontal analysis has its limitations. These limitations include:

Being highly dependent on the selection of base year and the period under
examination in the financial model.
Horizontal analysis provides little insight into why the trend occurred in a
financial model.
Horizontal analysis does not provide insight into whether the trend in the financial
model results was superior/inferior to some benchmark.
Horizontal analysis does not address the challenge of negative numbers.

Horizontal Analysis
Balance Sheet
Increase (decrease)
Assets

2010-2011

2011-2012

2012-2013

%age

%age

%age

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Cash and balances with treasury

8.76

12.26

20.67

Balances with other banks

(25.92)

2.33

(7.80)

Lending to financial institutions

14.36

(20.20)

(6.73)

Investments

27.41

(19.14)

50.62

Advances

15.07

21.35

7.77

Operating fixed assets

3.84

(6.58)

167.74

Deferred tax assets

(94.44)

(100)

Other assets

33.14

43.73

14.31

Bills payable

3.93

44.714

(33.41)

Borrowings

11.91

274.09

(6.99)

deposits & other assets

16.25

5.58

17.94

bank

Liabilities

Horizontal Analysis
Profit & Loss Account
Increase (decrease)
2010-2011

2011-2012

2012-2013

%age

%age

%age

Mark up\Interest\return earned

27.90

20.51

14.67

Mark up\interest\expenses

65.33

40.99

21.46

Provisions

4.25

124.29

53.56

Bad debts written off

(100)

655.09

Net mark up /Interest Income

2.69

(9.75)

4.05

Items

93

Non Mark up/Interest Income

Fee, Commission & Brokerage

12.68

16.86

10.37

Dividend Income

33.30

11.78

12.85

Income from Dealing in Foreign

(23.71)

280.61

(21.82)

106.25

(83.11)

100.23

37.96

94.06

609.99

Other Income

55.60

745.10

76.52

Total Non mark up\Interest

15.89

21.20

11.36

Administration expenses

24.22

27.91

5.67

Other provisions /written offs

(16.95)

344.88

872.21

Other charges

(44.86)

330.3.

(91.77)

Total Non mark up\interest

20.57

35.52

5.55.

Profit before taxation

3.05

18.03

6.65

Taxation

45.80

16.44

2.82

Profit after taxation

17.81

18.78

11.82

Exchange
Gain on sale redemption of
securities
Unrealized loss on revaluation of
assets

Income
Non Mark up /Interest
Expensed

expensed

Vertical Analysis

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When using vertical analysis the analyst calculates each item on a single financial
statement as a percentage of a total. The term vertical analysis applies because each year's
figures are listed vertically on a financial statement. The total used by the analyst on the
income statement is net sales revenue while on the balance sheet it is total assets. This
approach to financial statement analysis also known as component percentages produces
common-size financial statements. Common-size balance sheets and income statements
can be more easily compared whether across the years for a single company or across
different companies.
Vertical analysis is a technique for identifying relationship between items in the same
financial statement by expressing all amounts as the percentage of the total amount taken
as 100. In a balance sheet for example cash and other assets are shown as a percentage of
the total assets and in an income statement each expense is shown as a percentage of the
sales revenue.
In Vertical analysis various components of the financial statements are standardized by
expressing them as a percentage of some bases.
Examples of common-sized statements include:

Components of the balance sheet expressed as a percentage of total assets

Components of the income statement expressed as a percentage of sales or
revenue.

Vertical Analysis
Balance Sheet

ASSETS
Cash and balances with treasury
bank
Balance with other banks
Lending to financial institutions
Investments
Advances
Operating fixed assets
Deferred tax assets
Other assets
Liabilities
Bills Payable
Borrowings
Deposits & other assets
Liabilities against assets subject
to finance lease

Increase(decrease)
2013
12.27

2012
13.02

2011
12.45

3.01
2.07
23.05
50.33
26.63
0.32
6.28

4.69
2.09
20.89
50.50
29.60
0.39
5.45

4.92
2.82
27.66
44.70
33.98
4.07

1012
4.80
76.94
0.005

1.25
4.95
76.42
0.003

0.93
1.42
77.66
0.004

95

Deferred tax liabilities

Other liabilities
Shareholders Equity
Share capital
Reserves
Unappropriated profit
Surplus on revaluation of assets

4.48

4.85

0.67
4.04

1.14
2.40
6.50
2.62

1.10
2.44
6.41
2.58

1.07
2.07
5.95
6.18

Vertical Analysis
Income Statement
Increase (decrease)
Items

2013

%age

2012

2011 %age

%age
Mark up\Interest\return earned

428.01

394.23

265.68

Mark up\interest\expenses

216.83

154.57

88.99

Provisions

60.63

38.53

24.81

Bad Debts Written off

0.21

Net Mark up/Interest Income

147.09

168.76

151.87

Fee, Commission & Brokerage

49.04

51.27

35.63

Dividend Income

10.54

18.62

17.14

Income from Dealing in foreign

16.63

253.68

5.48

25.21

2.56

12.30

0.013

0.01

(0.17)

3.03

8.06

0.77

NON-Mark UP /INTEREST
INCOME

Exchange
Gain on sale & Redemption of
securities
Unrealized loss on revaluation of
assets
Other Income

96

Total Non mark up\Interest

104.47

106.19

71.16

Administration expenses

123.94

117.55

74.63

Other provisions/write offs

3.41

4.84

0.88

Other Charges

1.77

3.77

0.09

Total Non mark up\interest

129.11

126.16

91.37

Profit before taxation

122.45

148.79

91.37

Taxation

22.45

4.79

47.42

Profit after taxation

100

100

100

Income
NON MARK UP /INTEREST
EXPENSED

expensed

97

CHAPTER NO: 8
CONCLUSION & RECOMMENDATIONS

SOWT ANALYSIS
SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and
threats SWOT analysis is careful evaluation of an organizations internal strengths and
weakness as well as its environment opportunities and threats. In SWOT analysis the best
strategies accomplish an organizations mission by:

Exploiting an organizations opportunities and strength

Neutralizing it threats

Avoiding or correcting its weakness

98

SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context, managers assess internal strengths distinctive
competencies and weakness and external opportunities and threats. The goal is to then
develop good strategies and exploit opportunities and strengths neutralize threats and
avoid weaknesses.

STRENGHTS

NBP one of the largest financial institutions of Pakistan with eight million of
customer base NBP holds 24.6% share of time and demand deposits in the country.
Local currency deposits comprise 67% of bank's total deposits while foreign
currency deposits account for the rest.

NBP has an extensive domestic branch network of 1254 branches located all over
Pakistan. The Bank also has a presence in 23 international locations including the
USA, United Kingdom, Europe and the Far East.

NBP's total assets stood at Pak Rs.370 billion on December 2008. This included
total earning assets of about Pak Rs.268 billion with gross loan portfolio of Pak
Rs.140 billion. The bank also has an investment portfolio of Pak Rs.91 billion,
which comprises treasury securities, corporate bonds, shares and other securities.

NBP cash provision as percentage of nonperforming loans equal to 60% this

coverage factor for the non performing loans is the highest amongst the nationalized
commercial bank.

NBP is working as right arm government of Pakistan as it is responsible for all

claims of government for recovery as well as payment. All depositor of NBP are in
relief that their money security is guaranteed by government of Pakistan.

It acts as an agent of the Central Bank wherever the State Bank does not have its
own Branch.

The working condition in the NBP branch here is very conductive and favorable for
better output. The informal environment affects the performance of the employees in
a positive way.

Performing social responsibilities and claiming The Nations Bank

99

Disbursing Salaries and Pensions to the Government employees and earning high
profit on NBP-Advance Salary Loan Scheme

Earning commission from SBP on Government transaction

Facing never problem of cash/currency being its Chest and Sub-chest

Holds largest deposit base in the market share in terms of number of accounts

Leading bank in agriculture financing amongst commercial banks with the market
share of 15%

Helping in earning of foreign exchange, remittances and leading agent of Western

Union Money Transfer NBP has decided to diversify the fund base by investing in
capital markets not only in Pakistan but also in the foreign countries.

WEEKNESSES

Lowest Internal Control and Compliance System, SBP rated Marginal which is
alarming for the Bank.

Unsatisfactory corporate culture of the Bank

Physical environment and atmosphere compare to other banks is not meet the
standard

Less number of Online Branches

Ineffectively use of technologies i.e. Information technology

Shortage of staff- per employee customer is very high side

Technical education and training of staff is insufficient The workload in NBP is not
evenly distributed and the workload tends to be more on some employees while
others abscond away from their responsibilities, which server as a de motivation
factor for employees performing above average work.

In NBP the individual difference have strong impact on the organizations

performance due to the wrong criteria of selection of the employee. So with the
passage of time individual differences are increasing which are undermining the
good will of the organization.

Uncertainly among the employees due to threat of downsizing

100

OPPORTUNITIES

Being a Government Bank NBP having wide scope in economic market.

Trust and reliability creates chances to enhance deposit and profitability.

Its vast network of domestic and overseas branches can help to expand business.

Banks deposit is increasing rapidly so there is a great opportunity to enhance its

investment and financing.

Being an agent of State Bank of Pakistan it can play vital role in local economy.

Earning commission/exchange on Government transactions.

Amongst highest bank is Asia, NBP further expand its services proudest and earn
more profit.

The bank is reshaping its portfolios by investing into higher area of growth
developing core competing as a result to get maximum return.

I.T and HR are important factors for development in any organization, NBP
continue struggle to achieve this target.

THREATS

SBP penalties due to low internal control and compliance.

Government, SBP and Prudential Rules and Regulations.

Schedule banks and Multinational/International banks profit rates.

Its staff switching over to other private banks due to more facilities.

Other banks charming atmosphere and relaxation in documentation.

SBP rated just Marginal in respect of System & Control which is alarming for the
Bank to survive its license.

NBP staff code of ethics and practices.

High number of complaints regarding staff behavior.

Government Schemes, Government Revenue Collection, Government.

Payments and FBR Collections create heavy workload.

101

Future prospects of National Bank of Pakistan

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 forward-looking management of NBP is a firm believer in focusing on niches
where there is critical mass and to create products that meet that demand.
National Bank of Pakistan is gearing up to the challenges faced by the domestic banking
industry due to innovations and advances in the international banking world, which is the
consequence of globalization. The bank wishes to effectively utilize the financial
assistance being extended by the Government of Pakistan for banking sector reforms
aimed at reducing operating costs and improving profitability. National Bank of Pakistan
is distinct from other banks in that it has a nonprofit and service oriented motive, which
has manifested itself in the area of salary deposits of government employees and payment
of utility bills. The bank renders these services across the country reaching as far as the
remotest regions; from our northern borders to the Arabian Sea. These services do not
contribute towards the earnings of the bank; rather they put pressure on banks resources.
Nevertheless, the bank is committed to serving small savers and the general public of the
country. National Bank of Pakistan is everyones bank and does not only serve corporate
customers. To extending and targeting research to improve bank earnings, through
customer focus of banks commercial and corporate branches, and by enhanced efforts
towards the development of human capital, the bank shall very soon transform from a
bureaucratic organization to a fast paced, modern, and competitive bank. In conclusion,
the National Bank of Pakistan have the vision, which will enable it to achieve even better
results, safeguard the interest of their customers and to assist them in their march towards
progress and prosperity in future.
The National Bank of Pakistan is confident that tomorrow it will be

Leaders in our industry

An organization maintaining the trust of stakeholders.
An innovative, creative and dynamic institution responding to the changing needs
of the internal and external environment
NBPs current management has boarder vision. They have taken steps to improve
customer services, streamline internal procedure and creating a delectating
climate for technology initiative.
Reorganizing efforts going on in the NBP has open many opportunities for NBP
to grow. For instance to achieve objectives NBP have taken following measures.
Setting of target for of making at least all branches country wide on line.
Closing of all those branches, which are burden on NBP.

102

Management to offer specialized services to major corporate including advisory

and debt syndication introduces the concept of relationship manager.
Comprehensive training programs has been develop to up grade the core banking
skills of the existing staff as well as integrate high quality hiring.
To improve the motivation of staff a merit-based culture is being promoted.
Through overhauling the manpower recruitment preservation and performance
appraisal system.

The actions taken by current management provide a great opportunity for NBP for
making it future prosper and can make NBP not less than any modern commercialize
bank in Pakistan. The Management of NBP assess that the Internal Control environment
is showing signs of improvement as compared to previous years in all areas of the bank.
The bank is endeavoring to further refine its internal control design and assessment
process as per guidelines issued by the State Bank of Pakistan Accordingly, Bank is
making all possible effort to improve the professional skills and competency level of the
staff through need based training programs and our valued customers for their support
and continued confidence in NBP.

Conclusion

The National Bank of Pakistan plays a key role in the strategic national
development. The bank has historically been the financial arm of the government
and has enjoyed the blessings of state support in the form of huge public sector
funds and deposits.
In contract to other banks populating the FSI sector, NBP is mandated to uphold
public interest. It is critical too as all other banks and NBFIs in public sector have
been closed down or merged with NBP.
In contract to other banks populating the FSI sector, NBP is mandated to uphold
public interest. It is critical too as all other banks and NBFIs in public sector have
been closed down or merged with NBP.
The current management of National Bank of Pakistan was hired purely for their
international experience, business orientation to turn around a purely public
institution into a sustainable and commercially viable bank serving public interest
along the lines of a large modern commercial bank.

103

The National Bank of Pakistan has effective budgeting system in place. Annual
budget of the bank is approved by the Board and monthly comparisons of actual
results with the budget are prepared and reviewed by the senior management.
The National Bank of Pakistan has a comprehensive framework of written
policies and procedures on all major areas of operations such as Credit, Treasury
Operations, Finance, Internal audit and Compliance approved by the Board.
The National Bank of Pakistan provides sustainable financing for growth of
industries of critical national importance such as energy, education, healthcare,
transport, shipping, Research & development.

Recommendations

The National bank of Pakistan should be fully prepared in its management of

financial crises and its business continuity planning, within the standing
committee framework, and should work with others to strengthen national crises
management preparations.
The bank should improve the quality of training of its employees and the integrity,
controls and efficiency of its systems, processes and financial reporting.
The bank should improve its recruitment, retention and development and to
reform the Banks pension scheme.
The bank should renegotiate the Banks long term financial framework and to
overhaul the Banks financial system.
The Bank should improve IT capability in the analytical areas and to develop a
medium term strategy for banking and market operations.
The National bank of Pakistan should monitor the impact of its operations on the
environment, which is mainly through the use of power and the generation of
waste.
NBP, being the only lending arm to the government for public sector development
should design, develop and deliver product and services for economic growth.
The bank should provide support to the Micro, Small and Medium enterprises
thereby reducing unemployment and helping to create a more equitable
distribution of wealth.
The NBP should adopt modern banking tools and techniques. Quality leadership,
clear vision, investment in IT infrastructure and human resource development.
The bank should develop software for pension disbursement.
As for as Islamic banking environment is concerned the management and
employees of NBP should work together for basic research for discovering their
own laws.
The branches should reduce its large expenses in order to increase the value of the
bank.
The NBP should strengthen incentives and accelerate a results-oriented training
and communications programs for management and staff.

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The National Bank of Pakistan should implement a financial inclusion program to

meet the needs of underserved economic sub sectors, including outreach programs
to meet the requirements of the agriculture, housing, SME and microfinance
sectors.
The National Bank of Pakistan should introduce a framework for consolidated
supervision and reorganize the regulatory architecture to allow better regulation
and supervision of financial control division of bank.

References
Employees Of The Bank:

Mr. Monam manager of the branch

Mr. Ijaz Ahmad Operation Manager
Mr. Wariach operation manager
Mr. Shahid pension officer
Mr. Iqbal assistant vice president
Mr. Sadique Account Opening Officer
Mr. Amir Current AC Manager
Mr. Ghulam Abbas Dispatch Manager

Websites:

www.nbp.com.pk
www.scribd.com
www.jcrvis.com.pk
www.dostoc.com.pk

Annual Reports:

NBP Annual Report 2011

NBP Annual Report 2012
NBP Annual Report 2013

Books:

Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui

Human error by James Reason
Terry and Franklin Principles of Management
105

106