NATIONAL BANK OF

PAKISTAN
INTERNSHIP REPORT

Presented to:
Dr. Naveed Iqbal Ch.

Presented by:
Utba Javid
(BB14042)

University of the Punjab

Gujranwala Campus
Supervised by:
Sir Kamran Ali
Lecturer,
IBA Department
Signature:

Presented by:
Utba Javid
(BB14042)
BBA (Hons.) 2014-18
IBA Department

Dedication
All praise to Allah, the most beneficial, merciful and kind, and source of all knowledge and
wisdom, within and beyond my comprehension. He is the only Allah, who can help us in every
field of life. All respects and possible tributes go to my Holy Prophet Muhammad (SAW) who is
forever guidance for all human beings on this earth.
Heartiest gratitude to my parents, without encouragement and support I could not be able to
accomplish this task. I dedicate this report to my parents and friends. Because of their prayer and
encouragement, I have been able to complete this report.
I am very thankful to my respected teachers who support me and encourage me. May Allah shower
his blessings on them always.

Acknowledgement
By the grace of almighty ALLAH, the most merciful, the most Beneficial, I’m today submitting
my report; I have the pearls of my eyes to admire the blessings of the compassionate, omnipotent,
the Merciful and the beneficial ALLAH who is the entire source of knowledge. Particular I would
like to acknowledge the total support and standards of excellence provided by my teachers.
TABLE OF CONTENTS
Introduction .....................................................................................................................................
6
Brief History of National Bank of Pakistan ....................................................................................
8
Current Position of NBP ...............................................................................................................
10
Vision and Mission of NBP ..........................................................................................................
11
Product Lines ................................................................................................................................
14
1. Deposits.............................................................................................................................. 14
a) Current Deposits ............................................................................................................. 14
 b) PLS Saving Deposits ......................................................................................................
13
c) Fixed Deposit Account (Time Deposits) ........................................................................
13
d) Foreign Currency Account .............................................................................................
14
e) NBP Premium Aamdani .................................................................................................
14
g) National Income Daily Account (NIDA) ....................................................................... 16
2. Advances ............................................................................................................................ 14
a) NBP Saibaan .................................................................................................................. 17
b) NBP Advance Salary ......................................................................................................
17
c) NBP Cash & Gold ..........................................................................................................
15
d) Students Loan Scheme ...................................................................................................
15
e) NBP Karobar- President’s Rozgar Scheme ....................................................................
16
3. Corporate Advances ........................................................................................................... 16
a) Cash Finance .................................................................................................................. 16
b) Running Finance/ Overdraft ...........................................................................................
17
c) Demand Finance .............................................................................................................
17
4. Remittances ........................................................................................................................ 17
a) Demand Drafts ............................................................................................................... 17
b) Travelers Cheques ..........................................................................................................
18
c) Letter Of Credit ..............................................................................................................
18
 d) Foreign Remittances .......................................................................................................
19
e) Swift System ..................................................................................................................
19
f) Mail Transfer ..................................................................................................................
19
g) Telegraphic Transfer ......................................................................................................
20
h) Pay Order........................................................................................................................
20
5. Miscellaneous .................................................................................................................... 20
a) Lockers ........................................................................................................................... 20
b) NBP Cash Card ..............................................................................................................
21
c) International Banking .....................................................................................................
21
Organizational (Management) levels at NBP ...............................................................................
22
Top Managers ............................................................................................................................
22
Middle Managers .......................................................................................................................
23
First Line Managers or Lower Level Management ...................................................................
23
Non Managerial Employees ......................................................................................................
23
Hierarchy of National Bank of Pakistan .......................................................................................
24
Organization Structure of the Branch ...........................................................................................
25 a) Centralized Decision Making ............................................................................................
25
 b) Downward Communication ...............................................................................................
25
c) Chain of Command ............................................................................................................
26
d) Authority and Responsibility .............................................................................................
26
e) Delegation ..........................................................................................................................
27
Departments of the Branch ...........................................................................................................
28
1. Clearing House Department ...............................................................................................
28
2. Remittance Department .....................................................................................................
29
3. Account Opening Department ...........................................................................................
29
4. Cash Department ................................................................................................................
30
5. Deposits Department ..........................................................................................................
31
6. Advances Department ........................................................................................................
31
7. Computer Department ........................................................................................................
32 a) Online branches
.............................................................................................................. 32
b) Batch Branches
............................................................................................................... 32
c) Manual Branches
............................................................................................................ 32
8. Pension Disbursement Department ....................................................................................
33
9. Accounts Department.........................................................................................................
33
Critical Analysis (Theory vs Practical) .........................................................................................
36
Work Experience .......................................................................................................................
34
Bank Analysis with Reference to Commercial Banks ..................................................................
37
Ratio Analysis ...............................................................................................................................
39 a) Profitability Ratios .........................................................................................................
39
b) Liquidity Ratios
.............................................................................................................. 41
c) Debt Ratios
..................................................................................................................... 44
d) Market Ratios
................................................................................................................. 46
e) Asset Turnover Ratios
.................................................................................................... 48 Horizontal Analysis
...................................................................................................................... 51
Horizontal Analysis of Balance Sheet ..........................................................................................
52
Horizontal Analysis of Income Statement ....................................................................................
56
Vertical Analysis ...........................................................................................................................
60
Vertical Analysis of Balance Sheet...............................................................................................
61
Vertical Analysis of Income Statement ........................................................................................
65
Future prospects of National Bank of Pakistan .............................................................................
69
Short falls/ Weaknesses of National Bank of Pakistan .................................................................
57
Conclusions ...................................................................................................................................
73
Recommendations .........................................................................................................................
74
References .....................................................................................................................................
75

INTRODUCTION:
National Bank of Pakistan (NBP) is a major Pakistani commercial bank with headquarters in
Karachi. National bank has a vide outreach throughout the country including the far flung areas of
all the provinces, and AJK, Gilgit and Bultistan also. NBP is chaired by the president having his
office at head office I.I. Chundrigar raod Karachi with 29 controlling offices named as
regional offices situated in different main cities. These regional offices are supposed to
supervise the whole operational control of 1345 online branches. National bank has its overseas
network also consisting of 23 branches with 10 regional representative offices working in various
Islamic and non-Islamic countries. Although state-owned, it operates as commercial bank, while
still continuing 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, as SBP is the major shareholder of
NBP.NBP is a Public Limited Bank. NBP was made under the National Bank of Pakistan
Ordinance 1949 in Pakistan and has played a vital role in the economy of Pakistan since
its inception. NBP involves a one of a kind position in the monetary division of Pakistan. It goes
about as an executor of the Central Bank wherever the State Bank does not have it
Branch. It additionally attempts Government Treasury operations. The National Bank of Pakistan
is a Commercial Bank and transacts numerous sorts of Banking Business. The National Bank of
Pakistan was made on November 29, 1949 as a semi open business bank. The Bank has the
qualification of acting operator of the State Bank of Pakistan and works treasuries where the State
Bank of Pakistan does not have any office. After its stronghold in 1949 it has been heading
Commercial Bank of the country, sole operator of the Government of Pakistan's hitter exchange
with nations and of State Bank of Pakistan for the Government Treasury. In Pakistan, the bank
gives complete bank offices to the individuals. NBP is 100% claimed by the Government
of Pakistan.

National Bank of Pakistan is the biggest business bank working in Pakistan. Its monetary record
size surpasses that of any of alternate banks working provincially. It has re-imagined its part
and has moved from an open segment association into an advanced business bank.
The Bank's administrations are accessible to people, corporate substances and government.
While it keeps on going about as trustee of open trusts and as the executor to the State Bank of
Pakistan (in spots where SBP does not have a vicinity) it has enhanced its business portfolio and
is today a significant player in the obligation value market, corporate financing banking, retail and
shopper banking, rural financing, treasury administrations and is indicating developing enthusiasm
toward pushing and creating the nation's little and medium ventures and in the meantime satisfying
its social obligations, NBP base camp in Karachi, Pakistan with in excess of 1,345 extensions
nationwide and 23 limbs abroad. The bank gives both business and open area banking
administrations.

The bank provides both commercial and public sector banking services. It is a lead player in the
debt equity market, corporate investment banking, retail and consumer banking, agricultural
financing, treasury services. As of March 2017 it has 1,450 branches across Pakistan with assets
of approximately USD 17.2 billion. The Bank also operates a network of 21 international branches,
2 international Subsidiaries and 3 international Representative Offices. The Bank also has presence
in the UK through United National Bank Ltd (UNBL), a banking institution incorporated in the
UK.

National Bank of Pakistan has developed a wide range of consumer products, to enhance business
and cater to the different segments of society and meet its social responsibilities. Loan, Credit
Cards, Savings, Consumer Banking, Corporate Banking, Investment Banking are included in
NBP’s products. Bank serves as an intermediary between depositors and borrowers. Bank receives
funds from surplus side (depositors) and lends it to the needy side (Borrowers). Decision of
lending depends upon different factors i.e. banks policy, available products, purpose of loaning,
type of population, type of requirements of the borrowers, repayment capacity and credit
worthiness of the intending clients. Some schemes have been specifically designed for the low to
middle income segments of the population. It has implemented special credit schemes like small
finance for agriculture, business and industries, administrator to Qarz-e-Hasna loans to students,
self-employment scheme for unemployed persons, public transport scheme. The Bank has
expanded its range of products and services to include Shariah Compliant Islamic Banking
products. It has also put in place a remittance service for overseas Pakistanis to send their money
back to Pakistan. Customer Social Responsibility is a new department which provides Social
services for Education, health and women empowerment.

BRIEF HISTORY OF NATIONAL BANK OF PAKISTAN:

The history of National Bank of Pakistan is part of Pakistan’s struggle for economic independence.
National Bank of Pakistan was established on November 9, 1949 under the National Bank of
Pakistan Ordinance, 1949 in order to cope with the crisis conditions which were developed after
trade deadlock with India and devaluation of Indian Rupee in 1949. Initially the Bank was
established with the objective to extend credit to the agriculture sector. The normal procedure of
establishing a banking company under the Companies Law was set aside and the Bank was
established through the promulgation of an Ordinance, due to the crisis situation that had developed
with regard to financing of jute trade. The Bank commenced its operations from November 20,
1949 at six important jute centers in the then, East Pakistan and directed its resources in financing
of jute crop. The Bank’s Karachi and Lahore offices were subsequently opened in December 1949.
The National Bank of Pakistan came forward to establish its offices in the Cotton growing areas
and extended credit facilities liberally in order to restore stability to the market. In 1951, the
country was once again faced with a crisis in the cotton trade when prices were crashed and touched
the lowest level since independence following the cessation of hostilities in Korea. The bank in
collaboration with the cotton board provided the necessary Credit facilities to the trade and the
crisis was tided over. The nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. The Bank acts as the agent to the State Bank of Pakistan for handling
Provincial/Federal Government Receipts and Payments on their behalf. The Bank has also played
an important role in financing the country’s growing trade, which has expanded through the years
as diversification took place.

The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The bank operates
1249(2008) branches in Pakistan and 22(2008) overseas branches. Under a trust Deed, the bank
also provides services as trustee to National Investment Trust (NIT) including safe custody of
securities on behalf of NIT. The National Bank of Pakistan has assets worth Rupees 737976.44
million on September 30, 2008.

A number of initiatives have been taken, in terms of institutional restructuring, changes in the field
structure, in policies and procedures, in internal control systems with special emphasis on corporate
governance, adoption of Capital Adequacy Standards under Basel II framework, in the up
gradation of the IT infrastructure and developing the human resources.

The precise summary of National Bank of Pakistan regarding its countrywide and overseas
operations is as follows:

1949 National Bank of Pakistan (NBP) was established under the National Bank of Pakistan
Ordinance 1949 and was 100% govt.-owned.
1950 NBP established a branch in Jeddah, Saudi Arabia.
The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by
the former Bahawalpur State
1955 By this time NBP had branches in London and Calcutta.
1957 NBP established a branch in Baghdad, Iraq.
1962 NBP established a branch in Dar-es-Salaam, Tanganyika.
1964 The Iraqi government nationalized NBP's Baghdad branch.
1965 The Indian government seized the Calcutta branch on the outbreak of hostilities
between India and Pakistan.
1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.
1971 NBP acquired Bank of China's 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.
 1974 The government of Pakistan nationalized NBP. As part of the concomitant
consolidation of the banking sector, NBP acquired Bank of Bahawalpur (est. 1947).
1977 NBP opened an offshore brain Cairo.
1994 NBP amalgamated Mehran Bank (est. 1991).
1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.
2000 NBP opened a representative office in Almaty, Kazakhstan.
2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani banks to
operate in the UK. NBP and United Bank agreed to merge their operations to form Pakistan
International Bank, of which NBP would own 45% and United Bank 55%.
2003 NBP received permission to open a branch in Afghanistan.
2005 NBP closed its offshore branch in Cairo.

CURRENT POSITION OF NBP:

NBP maintains its position as Pakistan's Premier Bank with a network of over 1450+ domestic
branches, 21 international branches, 2 international Subsidiaries and 3 international Representative
Offices.

The Bank also has presence in the UK through United National Bank Ltd (UNBL), a banking
institution incorporated in the UK and authorized by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority
(PRA). UNBL has six branches located in Central London, Ilford, Bradford, Birmingham,
Manchester and Glasgow. UNBL was formed in 2001 as a Joint Venture between NBP and UBL
through merger of the UK branches of United Bank Limited and National Bank of Pakistan, who
had been operating in the UK since the mid-1960s. The principal activities of UNBL are to provide
retail banking products through its branch network and Agents in major cities in the UK; wholesale
banking, treasury and money transmission services to Financial Institutions, and trade finance
facilities to businesses of all sizes. NBP currently employs more than 15,000 people worldwide.

NBP offers unlimited opportunities to its employees for continuous personal and professional
growth:
1) Change Management Program: NBP has started an ambitious Change Management
Program to further train its employees to meet the challenges of present day requirements.

2) Training of new staff: Training and development are the core issues of HR, which will
ultimately improve our customer service and help us attain the standard of a progressive bank.

3) Benefits: Besides a competitive financial package, we offer excellent working conditions,

job satisfaction, superior leadership, and a conducive environment for growth.

What we look for when recruiting personnel

• Team players with excellent interpersonal skills

• Knowledge and use of information technology

• Strong analytical and problem solving skills

VISION AND MISSION OF NBP:

Vision:

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

Mission:

NBP will aspire to the values that make NBP truly the Nation’s Bank, by:

• Institutionalizing a merit and performance culture

• Creating a distinctive brand identity by providing the highest standards of services
• Adopting the best international management practices
• Maximizing stakeholders value
• Discharging our responsibility as a good corporate citizen of Pakistan and in countries
where we operate

Core Values:

• Highest standards of Integrity

 • Institutionalizing team work and performance culture
• Excellence in service
• Advancement of skills for tomorrow’s challenges
• Awareness of social and community responsibility
• Value creation for all stakeholders Goals:

• To enhance profitability and maximization of NBP share through increasing leverage of

existing customer base and diversified range of products.

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. Since 1575, the word "product" has referred to anything produced.
Since 1695, the word has referred to "thing or things produced”. The economic or commercial
meaning of product was first used by political economist Adam Smith. In general usage, product
may refer to a single item or unit, a group of equivalent products, a grouping of goods or services,
or an industrial classification for the goods or services. The consumer banking products include
personal accounts, credit cards, loans, investment products, treasury products and many more. The
National Bank of Pakistan offering for sale several related products individually, which is
commonly known as product lining. A product line is defined as “A group of products that are
closely related because they function in a similar manner, are sold to the same customer groups,
are marketed through same types of outlets, or fall within the given price ranges”. The followings
are the main consumer banking products of NBP.

1. 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 his/her
account for any deposit scheme at any of its Branches strategically located throughout Pakistan.
The Bank with its huge network of 1243 branches garners savings from both the rich and the poor
in urban as well as rural areas. Even a poor farmer in a remote village, with his meager annual
income, feels secure to safe keep his minuscule savings in National Bank of Pakistan, Because
National Bank of Pakistan has a long heritage of trust and professional commitment.

a) Current Deposits
These are payable to the customer whenever 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/ Basic Banking
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 an individual
(single or joint) only whereas current accounts are opened for individuals (single or joint)
Charitable institution, provident and other funds of benevolent nature of local bodies, autonomous
corporations, companies, associations, educational institutions, firms etc. and in all other cases
where the accounts are used to opened under the order of a competent court of law. No profit is
paid on the balances of current/basic banking accounts. The bank is authorized to deduct service
charges (incidental charges) on current accounts 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 account.

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 bases 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
labor 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.

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/Return is paid to the depositors on all fixed or Time deposits, and the rate of profit/Return
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/Return that it has to pay on them to the depositors.
By giving an advance notice to the bank the deposit can be withdraw 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 rises with the length of period and the amount of deposit. The bank
grants to the depositor a fix deposit (FDR) which is not transferable to any other person.

d) NBP Premium Aamdani

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.

e) NBP Premium Saver

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 allowed in a month and 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.

f) 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 SB account for
the purpose of calculating profit. An example of how the NIDA accounts are maintained is shown
on the next page.

2. 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-the Central Bank of Pakistan.

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.

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. This was only possible due to its swift growth and remarkable loan disbursement of over
118 billion. You can avail up to 20 net take home salaries with easy repayment installments. Its
hassle 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.

c) NBP Cash & Gold

With NBP’s Cash & Gold, the customers meet their need for ready cash against their idle gold
jewelry. The rate of markup is 13% p.a. This product has following features:

Facility of Rs. 7,000 against each 10 grams of net contents of gold

No maximum limits of cash
Repayment after one year
 Only gold ornaments acceptable

d) Students Loan Scheme

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

e) NBP Karobar- President’s Rozgar Scheme

The solution of Pakistan’s 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 President’s Rozgar
Scheme with a brand name of “NBP KAROBAR”. The scheme will be offered to eligible young
and literate citizens of Pakistan, falling within an age group of 18-40 years having a minimum
qualification of Matriculation (except for females in the PCO/Tele-center product). The eligible
borrowers will be required to make a down payment of 15%. Asset and Life & Disability
insurances will be mandatory under this scheme. The 15% down payment will include 1st year’s
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 (50%) 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.

3. 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
markup/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 markup/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 to.

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 borrower’s disposal in lump sum for the period agreed upon,
and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets 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.
 4. Remittances a) Demand Drafts
Drafts drawn by one branch on another branch or on the Head Office of same bank or vice versa,
are not cheques or bills, as these have no distinct drawer and drawee.

Banker’s drafts payable to order on demand are within the protection of Sections 10 and 131-A of
the Negotiable Instruments Act. However, if a demand draft drawn on a bank by its own branch
bears a forged endorsement, the person in possession of it cannot compel that bank to pay it. As
far as possible the banker’s draft should be crossed and it should never be drawn payable to bearer.

When a person requires a draft he should be asked to complete the prescribed application form in
which he should state the amount of the draft, the name of the payee, and the place of payment.
This application form should be signed by the purchaser or by those persons who have been duly
authorized to act on his behalf. When a customer requests his banker to provide him with a banker’s
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.

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 traveler’s cheque itself. Foreign
currency travelers cheques are issued and encashed in accordance with the provisions of the
Exchange Control Regulation Act, 1947. While making payment, the paying banker must insist
that the holder signs in his presence.

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, Clause 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 our Letter
of Credit service is just what you are looking for.

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.

Meet the SBP directives/instructions for timely and prompt delivery of remittances to the
beneficiaries.

The new features of NBP foreign remittances include:

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 (Society for Worldwide Interbank Financial Telecommunication) has been
introduced for speedy services in the area of home remittances. The system has built-in features
of computerized test keys, which eliminates the manual application of tests that often cause delay
in the payment of home remittances. The SWIFT Center is operational at National Bank of
Pakistan with a universal access number NBP-PKKA. All NBP overseas branches and overseas
correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of
branches, we can safely and speedily transfer money for our business and personal needs.

f) Mail Transfer
A Mail Transfer is a form of remittance in which the amount remitted by a customer or a
noncustomer 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 charge 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 (MT). 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 buyer’s
account at the selling office and crediting to the recipient’s 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 party’s 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. It
is one of the quickest means to transfer fund through the use of telex/fax/internet or cable. Payment
to the beneficiary is affected directly by the drawee office upon identification or through credit
into beneficiary’s 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. And, as usual, 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 someone want a duplicate of payment order they
charges Rs 100/- for NBP account holders and Rs 150/- for non-account holder.

5. 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 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, 1Link &
M-NET ATM’s across the country.

c) International Banking
National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven
by the fact that NBP has its branches in all of the major financial capitals of the world.
Additionally, the Bank has recently set up the Financial Institution Wing, which is placed under
the Risk Management Group. The role of the Financial Institution Wing is: -

To effectively manage NBP's exposure to foreign and domestic correspondence

Manage the monetary aspect of NBP's relationship with the correspondents to support trade,
treasury and other key business areas, thereby contributing to the bank's profitability
Generation of incremental trade-finance business and revenues

ORGANIZATIONAL (MANAGEMENT) LEVELS AT NBP:

Successful and profitable banking management deepens upon two principal factors:

a) The manner in which the function of banking, that is, the acquiring of deposits, the
investing or converting such deposits into earning assets, and the servicing of each deposits,
are performed.

b) The degree to which officers and employees contribute their talents to the progress and
welfare of the bank in discharging duties and responsibilities.

Management is a distinct process consisting of activities of planning, organizing, actuating and

controlling performed to determine and accomplish stated objectives with the use of human being
and other resources. The management has two types i.e.,

a) Centralized (Centralized Management tends to concentrate decision making at the top of

the organization)

b) Decentralized (Decentralized disperses decision making and authority throughout and

further down the organizational hierarchy)

National Bank of Pakistan has a centralized type of management because all the decisions are taken
by the top management. The National Bank of Pakistan has four types of management levels
which are as follows:

Top Managers
Top managers are responsible for making organization-wide decisions and establishing the plans
and goals that affect the entire organization. These individuals typically have titles such as
executive vice president, president, managing director, chief operating officer, chief executive
officer or chairman of the board. The NBP have its top management in their head office at Karachi.
They are responsible for making the plans and establishing goals the run their business smoothly
all over Pakistan & around the globe. Among seven member of group Chief Executive is called
the president. The bank has directors for superintendence and direction of its business.

The Government appoints six directors as members and one president. These members are also
responsible for making the policy of the bank.
Middle Managers
Middle managers include all levels of management between the first line level and the top level of
the organization. These managers manage the work of first line managers and may have titles such
as department head, project leader, plant manager or division manager. NBP divided his
management into various regions such as Rawalpindi region, Gujranwala region etc. In NBP,
regional management falls under this category. They are responsible for the planning, organizing,
leading and controlling of the resources and staff of the whole region.

First Line Managers or Lower Level Management

First level managers are the lowest level of management and manage the work of non-managerial
individuals who are involved with the production or creation of the organizations products. The
branch managers of NBP fall under this category. These managers are responsible for planning,
organizing, leading and controlling the staff and all affairs of the branch.

Non Managerial Employees

Non managerial employees are not concerned with any decision making. They are normally
specialized in their work. The nature of their job is repetitive & clerical as they do same work again
& again. The non-managerial employees of NBP consist of OG-II, OG III and clerical staff.
HIERARCHY OF NATIONAL BANK OF PAKISTAN
The Hierarchy (An arrangement of objects, people, elements, values, grades, orders, classes etc.,
any system of persons or things ranked one above another) of National Bank of Pakistan is shown
as Annexed III at the end of this report. The hierarchy may include:

Categorization of a group of people according to ability or status.

A body of clergy organized into successive ranks or grades with each level subordinate to
the one above.
A series in which each element is graded or ranked
A body of officials disposed organically in ranks and orders each subordinate to the one
above it; a body of ecclesiastical rulers.
An organization with few things, or one thing, at the top and with several things below each
other thing.

The President of National Bank of Pakistan is ranked Top at the hierarchy. The other six directors
of National Bank of Pakistan are ranked second in the hierarchy. The Provisional, Regional &
Zonal chiefs are ranked 3rd, 4th & 5th respectively. The vice President & assistant vice Presidents
of National Bank of Pakistan are ranked 6th & 7th respectively. The Officers Grade I, II & III are
ranked 8th at the hierarchy of National Bank of Pakistan. The lower level of National Bank of
Pakistan is consist of Clerical & non- clerical staff.
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 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 chart & Organogram of National Bank of Pakistan Gujrat Branch is shown on
Annexed IV & Annexed V at the end of this report. 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 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.

a) 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 Manager. The BBO (Branch Back Office System) Operator controls computer department
of the branch and is report directly to Operation Manager I and Branch Manager.
 b) 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
Gujrat Branch, the Manager of the branch sent orders, information & messages to following
subordinates

Operation Manager I
Operation Manager II
BBO (Branch Back Office System) Operator
Chief Accountant
Cashier I
Cashier II
Clerk I
Clerk II
Non Clerical Staff

c) Chain of Command

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 Gujrat 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 everyone knows the successive
levels of management all the way to the top.

d) Authority and Responsibility

The chain of command illustrates the authority structure of National Bank of Pakistan Gujrat
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 one’s authority and what is the responsibility and the authority it allocated. e) 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 Gujrat Branch Operation Managers have
some authority & responsibility relating to affairs of the Branch.

DEPARTMENTS OF THE BRANCH:

Banking procedures 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 branch follow procedures. The departments working within
National Bank of Pakistan Gujrat Branch 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

1. Clearing House 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/instruments 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/instruments for collection and as paying Banks, when they receive
cheques/instruments for collection from other banks. Since each bank receive and sends
cheques/instruments for collection to and from a number of banks, the process of settlement would
clearly be very cumbersome and time consuming if every cheques/instrument 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/instrument 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 co-ordinates 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 (NBP) performs this function.
But the clearing house facility is available only for cheques/instruments drawn on banks situated
within the same city/clearing house area.

2. Remittance Department
The Remittance department deals with the transfer of money from one place to another. Funds
transfer facility or remittance of funds is one 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
Traveler’s Cheque

3. 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 his/her account. Two or more individuals may open an account jointly. Similarly,
business organizations such as sole proprietary concerns, partnership firms, and limited liability
companies as well as non-profit organizations like clubs, trusts, societies, associations and NGO’s
etc, may open their accounts. The documents required for National Bank of Pakistan’s Account
opening are showed as Annexed VII at the end of this report.
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.

4. 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 perform following functions

Cash department owes its important to the fact that it is a major point of contract between the bank
and the customer, the bank’s most valued relationships. This department is the showcase of the
bank and conveys the first impressions about the bank’s 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
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
 5. 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 much depositor’s as it can. The deposit department
accepts/collects deposit from accountholders.

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)

6. 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 bank’s higher authorities, while
some loan applications are submitting to higher authorities for their approval. Some advances are
of the following nature:
 Loan against Gold
Agriculture advance to farmers
Medium term advance for working capital
Long term advance for setting industry
Short term advance to businessman

7. 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 included

a) ONLINE BRANCHES
The branches, which are directly, link with central computer AS-400, through wide area
networking through fiber optics. These branches have dumb terminal directly linked with central
computer.

b) Batch Branches
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 networking. Batch branches are
using three type of system, Branch Back Office (BBO) based on FoxPro, Branch Automated
System based (BAS) on UNIX, Branch Integrated System (BIS) based on FoxPro in Karachi
mostly branches are facing this problem. BAS was establishing in the beginning while BBO is
currently implemented now efforts are under way to convert all branches into Electronic Banking
System (EBS) 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 report 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 their daily data directly
through their own terminal. As day-to-day, activities of all branches are recorded in a central
computer.

8. Pension Disbursement Department

The National Bank of Pakistan was Pakistan’s 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

9. 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 stage, where Accounts Department starts
performing its function. Proof list is checked by the Accounts Department.

CRITICAL ANALYSIS (THEORY VS PRACTICAL)

During Internship it was my prime objective to furnish my knowledge (Theory) to various practical
situations. The practical work presents an analytical problem while relating theory with practice.
As a result, analysis of practical versus theory requires a distinct approach. This part of report is
the essence of the internship, as this will help to better understand the working environment of the
bank by finding the relationship between what is written in the books and what is actually going
on in fields. The theory written in the books in cases is not implemented as it is. In some cases,
theory is implemented with a little modification but in other cases theory has nothing to do with
practice.

In accounting, banks don’t prepare worksheet, but part of worksheet is prepared like trial balance.
The securities for the loans are handled in the same way as theory says like mortgage, pledge,
hypothecation, advances against insurance policies or liquidation procedure is the same. There is
some difference lies in types of loans in bank that is theory talks about four or five types of loans
that is cash finance, overdraft, loans etc., but in practice there are some more types used by bank
like running finance, demand finance etc. All other concepts of remittances, bills, foreign exchange
deposits, letters of credit are in accordance with theory almost. A bank's balance sheet is different
from that of a typical company. You won't find inventory, accounts receivable, or accounts
payable. Instead, under assets, you'll see mostly loans and investments, and on the liabilities side,
you'll see deposits and borrowings.

Work Experience

After joining the bank for internship initially it was so difficult for me to get the attention of the
employees, everybody was terribly engaged in their own activities, nobody was having time to
accommodate me. This was a crucial time for me to get the attention of bank’s management and
to make them realize that their valuable information is so much necessary for the up gradation of
my knowledge and for the completion of the task which I was assigned by the institution. But very
soon I succeeded in making relationship with the top influence people and with the help of these
people I started permeated in the system. This was my first step towards the completion of my task
and with the passage of time they realized that they could also utilize my efforts in a productive
way to minimize their burden.

They provided me their time and information, which helped me to enhance my knowledge, and
they also shared their experiences with me, which I believe that it would be helpful in my practical
life. First two weeks I worked in account opening department, for next two weeks I worked in
operation department and for rest of the time I worked in remittance department of the bank.
During the internship session I got the chance to perform on different activities, which are listed
below, and short explanation is also given.

Account Opening Department:

In the first two weeks of the internship I worked in the account opening department. Where I got
a lot of knowledge about opening of different accounts.

To open an account, the customers have to meet the general banking manager with an introducer
(the person who is going to introduce that person in the bank) and get an application form used for
account opening. Different color-coded application forms are available for each type of account.
Along with the form a card for specimen signature is also supplied to customer. Manager has every
right not to accept this contract if he is not satisfied by the details provided by the customer. In
case the contract is acceptable to both, now it is ready to open the account formally.

Operation Department:

In the third and fourth week of my internship I got experience to work in the operation department.
This department mainly deals with different operations of the bank. For the purpose of ginning
information related to this department I was assigned the different duties and tasks Under the
supervision of Sheikh Sajid. I had a great experience working in this department and learned a lot
of things. Duties were assigned to me according to days of week. I tried my best to give a good
performance

In the operations department, the operation manager taught me following skills -efficiently and
effectively deliver services to highly valuable customers -how to supervise branch daily operations.
I performed all the tasks with my best efforts and they appreciated me and encourages me.

Remittance Department:

The Remittance department deals with the transfer of money from one place to another. Funds
transfer facility or remittance of funds is one 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.
 After spending my four weeks in the two different departments I work in the remittance
department. Here I learnt how bank transfer its funds and the facilities the bank provide for
transferring the funds.

My last two weeks of internship were quite informative and busy. And then my six weeks’
internship completed.

BANK ANALYSIS WITH REFERENCE TO COMMERCIAL BANKS LISTED

ON STOCK EXCHANGE
Financial Position of Commercial Banks
Registered in Pakistan

Name
of
As of June 2008
Commercial Paid up Reserves Assets Deposits Advances Profit Earnings Branch Credit
(Rs. After Per
Bn) Tax share
Bank Capital (Rs. Bn) (Rs. Bn) (Rs. Bn) Network Rating
 (Rs. (Rs.
Bn) Bn)
(Rs) (Nos)
Habib Bank 7.59 23.6 735.71 584.85 411.36 7.5 9.75 1400 AA+

NBP 8.97 18.54 788.12 621.53 173.42 8.1 9.03 1249 AAA

Allied Bank 6.46 5.48 344.7 293.97 168.45 2.51 3.88 757 AA

MCB 6.28 35.88 450.34 350.72 228.98 7.68 12.22 1038 AA+

United Bank 10.12 12.82 576.02 465.54 328.55 5.59 5.53 1100 AA+

First Women 0.28 0.22 8.04 6.4 3.09 0.05 1.67 38 BBB+

Bank of Punjab 5.29 7.43 217.85 180.82 142.85 -2.63 -4.97 272 AA-

Soneri Bank 4.11 1.88 81.61 64.73 45.83 0.47 1.13 90 AA-

Askari Bank 4.06 7.59 194.21 153.32 114.04 0.05 1.01 155 AA

Bank Al- Habib 4.79 2.8 167.36 136.75 93.25 1.25 2.61 203 AA

Bank of Khyber 4 1.34 34.43 24.4 11.14 0.11 0.27 34 BBB+

Bank Al- Falah 8 2.95 333.02 287.77 180.02 1.69 2.12 231 AA

Saudi Pak 5 0.22 50.83 42.35 27.62 -0.81 -1.54 55 A-

Faysal Bank 5.3 3.57 137.31 99.61 87.61 0.75 1.41 111 AA

KASB Bank 4.02 0.17 53.66 44.33 32.65 0.08 0.39 41 A

Meezan Bank 4.54 0.81 71.74 57.84 38.3 0.44 0.98 111 A+

NIB Bank 28.44 8.46 177.98 112.12 85.43 -0.73 0.23 240 AA-

Mybank 4.24 0.41 45.47 31.96 23.03 0.43 1.02 69 A

Atlas Bank 5.01 0.52 30.7 22.18 17.5 -0.2 -0.39 31 A-

A stock exchange is a corporation or mutual organization which provides "trading" facilities for
stock brokers and traders, to trade stocks and other securities. The securities traded on a stock
exchange include: shares issued by companies, unit trusts and other pooled investment products
and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. The
initial offering of stocks and bonds to investors is by definition done in the primary market and
subsequent trading is done in the secondary market.

The financial position of commercial banks registered on stock exchanges in Pakistan, are shown
in preceding page in terms of their:

Paid-up Capital
Reserves
Assets
Deposits
Advances
Profit after tax
Earnings per share
Credit rating

The best way to analyze these commercial banks is to analyze their credit ratings. The National
Bank of Pakistan enjoys the highest credit rating amongst Pakistani banks; JCR- VIS Credit Rating
Co. Limited awarded highest standalone credit rating of AAA to NBP. The JCRVIS Credit Rating
Co. comments about NBP say a lot about the bank:
“The organization has been able to strategically manage and build on its competitive advantages
which has translated into the strong and well managed improvement in profitability trend observed
over the last few years, a substantial balance sheet of sound asset quality, and strong liquidity and
capitalization levels”
NBP’s key strength remains its extensive outreach and a low cost, stable deposit base. Deposits
are also guaranteed by the Government of Pakistan under the Banking Nationalization Act, 1974.
There have also been significant improvements in the management practices of the bank and a
focus on enhancement of systems and controls. In this regard the management has entered into an
agreement for the acquisition of a core banking software which is likely to be implemented over
the next few years.

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 bank across years. Since ratios adjust
for size, using this analytical tool facilitates interbank as well as interbank comparisons. Ratios are
often classified using the following terms: profitability ratios (also known as operating ratios),
liquidity ratios, and solvency ratios. Profitability ratios are gauges of the bank's operating success
for a given period of time. Liquidity ratios are measures of the short-term ability of the bank to pay
its debts when they come due and to meet unexpected needs for cash. Solvency ratios indicate the
ability of the bank to meet its long-term obligations on a continuing basis and thus to survive over
a long period of time. Financial ratios allow for comparison:

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

1. Liquidity Ratios:
The liquidity position of a bank is like a reservoir. It may be adequate, although nearly depleted,
just before the start of the rainy season. Or it may be inadequate, although three quarters full just
before the summer drought.

Liquidity can be defined as:

“The bank’s ability not only to meet possible deposit withdrawals but also to provide for the
legitimate needs of the economy as well” Current Ratio:

Current ratio is a measure of the current adequacy of bank's current assets to meet its current
obligations. It must be greater than 1. If it is less than 1, liabilities exceed current assets. For every
Rs.1 of liabilities, the bank has a ratio amount of current assets available. In theory, the higher the
current ratio, the better.
 Year 2014 2015 2016
Ratio 0.395 0.378 0.41

The ratio is 0.395 in 2014, 0.378 in 2015 and 0.41 in 2016. This means that for every 1 rupee
liability of the bank it has 0.41 rupees in 2016. It shows poor short term financial position of the
bank.

Quick Ratio:
Year 2014 2015 2016
Ratio 0.33 0.34 0.37

This ratio relates to most liquid assets. The quick ratio of NBP is 0.33 in 2014. In 2015 ratio is 0.34
and 0.37 in 2016.

2. Financial Leverage Ratios:

Financial Leverage ratios shows the financial position of the bank.

Debt-to-equity Ratio:
It is alternative of debt ratio but it includes all the liabilities and tell how well are creditors are
protected.
Year 2014 2015 2016
Ratio 0.152 0.162 0.169

The ratio of debt is 0.152% in 2014. In 2015 the ratio was 0.162%. in 2016 the ratio was 0.169%.
This indicates that ratio of debt is gradually increasing.

3. Asset Utilization Ratios:

These ratios represent how efficiently bank is using its assets to generate profit.

Fixed Asset Turnover:

Fixed Asset Turnover measures the ability of bank to generate sales through use of fixed assets.
Year 2014 2015 2016
Ratio 0.09 0.08 0.08
Fixed asset turnover is showing a decreasing trend, it indicates that fixed assets are not properly
used. The ratio was 9% in 2014, 8% in 2015 and 8% in 2016.

Total Asset Turnover:

Total Asset Turnover measure the activity of assets and the ability of bank to generate sales
through use of assets.
Year 2014 2015 2016
Ratio 0.05 0.06 0.05

The ratio was 5% in 2014. In 2015 it was increased, and it was 6%. but in 2016 it was again 5%.
hat shows the ability of the bank generating sales is decreasing.

4. Profitability Ratios:
The continued viability of any bank depends on its ability to earn an appropriate return on its assets
and capital. Good earnings performance enables a bank to fund its operations, remain competitive
in the market and increase or decrease in market funds. Profitability ratios relate profit to sales and
investments. These ratios indicate the bank’s overall effectiveness of operations and give us idea
how well bank utilized its resources in generating profit and shareholder value.

Return on Asset:
ROA measures the bank’s ability to utilize its assets to generate profits by comparing profit with
assets that generate the profit.
Year 2014 2015 2016
Ratio 1.10 1.23 1.25

The year 2014 shows a ratio of 1.10%, lowest ratio among them all. In 2015 it is 1.23% which is
more than the previous ratio. Ratio is 1.25% in 2016, which is the highest in all these years.

Return on Equity:
ROE measures the return on both common and preferred stock
Year 2014 2015 2016
Ratio 9.41 11.36 13.15
In 2014 return on equity ratio was 9.41%. In 2015 the ratio was 11.36%. the ratio was 13.15% in
2016. This is the highest among them all.

5. Market Value Ratios:

Market Ratios represents the market condition of the bank.

Price-earnings Ratio:
Price Earnings Ratio measures what is being paid for dollar of recurring earning.
Year 2014 2015 2016
Ratio 9.83 7.86 7.12

The P/E Ratio was 9.83 in 2014. In the next year it was 7.86. and in 2016 it was 7.12. The ratio is
showing a decreasing trend.

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. A comparison of statements over several years
reveals direction, speed and extent of a trend(s). 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, whilst simple to execute and useful to a certain extent, 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 of Balance Sheet

Horizontal Analysis (%)

ASSETS 2016 2017 2018
Cash 100 154 161
Balances with other banks 100 165 115
Lending’s to fin. institutions 100 9.51 109
Investments 100 147 160
Advances 100 92 106
Operating fixed assets 100 100 102
Other assets 100 87.2 88
Total Assets
100 110 128
LIABILITIES 2014 2015 2016
Share Capital 100 100 100
Reserves 100 137 140
Unappropriated profit 100 88.2 93.4
Surplus On Reval. of assets 100 76.2 83
Bills payable 100 83.3 92.5
Borrowings 100 58.6 117
Deposits and other accounts 100 116 134
Liabilities against assets 100 5393 4909
subject to finance lease
Deferred tax liabilities net Nil Nil Nil
 Other liabilities 100 92.3 107
Total Liabilities 100 113 132

ASSET SIDE ANALYSIS:

TOTAL ASSETS ARE SHOWING AN INCREASING TREND FROM 2014 TO 2016. IN 2015 TOTAL ASSETS
WERE 110% AND IN 2016 TOTAL ASSETS WERE 128%. INVESTMENT AND CASH
BALANCE ARE SHOWING AN INCREASING TREND. BALANCES WITH OTHER BANKS INCREASED IN 2015
BUT DECREASED IN 2016. ADVANCES DECREASED IN 2015, WHICH IS 92% BUT INCREASED IN 2016,
WHICH IS 106%. OPERATING FIXED ASSETS REMAIN SAME IN 2015 BUT INCREASED IN 2016 BY 2%.
OTHER ASSETS WERE 87.2% IN 2015 AND 88% IN 2016.

Liability Side Analysis:

Total Liabilities are also showing an increasing trend from 2014 to 2016. In 2015 total liabilities
were 113% and 132% in 2016. Share Capital remain same in these three years. Reserves were
137% in 2015 and 140% in 2016. Unappropriated profit and surplus on revaluation of assets
decreased in 2015 and then increased in 2016. Bills payable and borrowings also decreased in 2015
and then increased in 2016. The balance of bills payable and borrowings were 83.3% and 58.6%
respectively in 2015 and 92.5% and 117% respectively in 2016. The balance of deposits and other
accounts was 116% in 2015 and 134% in 2016. Other tax liabilities decreased in 2015 but increased
in 2016.
Horizontal Analysis of Income Statement
Horizontal Analysis (%)

2014
100 99.2 100 2015
2016 100 87.6 87
Markup/return/interest earned
Markup/return/interest expensed
Net markup/interest income 100
116 118 100 98.0 6.39
Provisions against non-performing advances
provision for/(reversal of) diminution in the value
100 55.2 116
of investments
provision against off balance sheet obligations bad Nil Nil Nil
debts written off directly 100 36.2 Nil
100 107 10.4

Net markup/interest income after provisions 100 119 150

NON MARKUP/ INTEREST INCOME
 Fee, Commission & brokerage income 100 104 123
Dividend income 100 130 135
Income form dealing in foreign currencies 100 132 63.6
Gain on sale & redemption of securities-net
100 142 98.4
Investments classified as held for trading
100 4.07 -46.4
Other income
100 58.5 43.4

100 105 117

100 105 78.4
100 4.25 17.8
100 101 112
100 148 162
100 153 101
100 -54673 -31970
100 115 -139
Total non-markup/ Interest income 100 115 102
Total income ( Interest + non-Interest) 100 117 129
NON MARKUP/ INTERSET EXPENSES
Administration expenses
Other provisions written off
Other charges
Total non markup/ Interest expenses
PROFIT BEFORE TAXATION
Taxation Current
Prior years
Deferred
100 200 205

PROFIT AFTER TAXATION 100 125 144

Income Statement Analysis:

Total Income is showing an increasing trend from 2015 to 2016. Total income was 117% in 2015
and 129% in 2016. Profit before taxation and profit after taxation is showing an increasing trend.
Profit before taxation was 148% in 2015 and 162% in 2016. Profit after taxation was 125% in 2015
and 144% in 2016. Net markup was 116% in 2015 and 118% in 2016. Net markup after provisions
was 119% in 2015 and 150% in 2016. Total interest income increased in 2015 that was 115% but
decreased in 2016 that was 102%. Total interest expenses increased in 2015 that were 101% and
112% in 2016.

Vertical Analysis
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 of Balance Sheet

Vertical Analysis (%)
ASSETS 2014 2015 2016
Cash 6.34 8.83 8.08
Balances with other banks 0.81 1.21 0.73
Lending’s to fin. institutions 7.21 0.62 6.14
 Investments 36.3 48.3 45.2
Advances 40.7 33.9 33.8
Operating fixed assets 2.15 1.95 1.72
Other assets 5.93 4.68 4.08
Total 100 100 100
LIABILITIES 2014 2015 2016
Share Capital 1.56 1.38 1.18
Reserves 2.41 2.93 2.56
Unappropriated profit 4.37 3.42 3.10
Surplus On Reval. of assets 4.96 3.36 3.13
Bills payable 0.81 0.60 0.57
Borrowings 2.79 1.45 2.49
Deposits and other accounts 90.3 92.9 92
Liabilities against assets 0.00 0.01 0.00
subject to finance lease
Deferred tax liabilities net Nil Nil Nil
Other liabilities 6.10 5.00 4.94
Total 100 100 100

Asset Side Analysis:

In 2014 cash was 6.38% of its total assets. In 2015 it was 8.83% and 8.08% in 2016. In 2014 there
was 36.3% investments and 40.7% advances include in total assets. Operating fixed assets and
other assets were 2.15% and 5.93% of its total assets respectively. Lending to financial institution
was 7.21% of its total assets.

In 2015 there was 48.3% investments and 33.9% advances include in total assets. Operating fixed
assets and other assets were 1.95% and 4.68% of its total assets respectively. Lending to financial
institution was 0.62% of its total assets.

In 2016 there was 45.2% investments and 33.8% advances include in total assets. Operating fixed
assets and other assets were 1.72% and 4.08% of its total assets respectively. Lending to financial
institution was 6.14% of its total assets.

Liability Side Analysis:

In 2014 share capital, reserves unappropriated profit and surplus on revaluation of assets were
1.56%, 2.41%, 4.37% and 4.96% respectively. Bills payables were 0.81% of its total liabilities.
Borrowings were 2.79% of its total liabilities. Deposits and other accounts were 90.3% of its total
liabilities, which is maximum percentage. Other liabilities were 6.10% of its total liabilities.

In 2014 share capital, reserves unappropriated profit and surplus on revaluation of assets were
1.38%, 2.93%, 3.42% and 3.36% respectively. Bills payables were 0.60% of its total liabilities.
Borrowings were 1.45% of its total liabilities. Deposits and other accounts were 92.9% of its total
liabilities. Other liabilities were 5% of its total liabilities.

In 2014 share capital, reserves unappropriated profit and surplus on revaluation of assets were
1.18%, 2.56%, 3.10% and 3.13% respectively. Bills payables were 0.57% of its total liabilities.
Borrowings were 2.49% of its total liabilities. Deposits and other accounts were 92% of its total
liabilities, which is maximum percentage. Other liabilities were 4.94% of its total liabilities.

Vertical Analysis of Income Statement

Vertical Analysis (%)

2014 2015 2016

Markup/return/interest earned 170 144 132
Markup/return/interest expensed 101 75.5 68.2
Net markup/interest income 69
68.5 63.4
Provisions against non-performing advances 16.4 13.7 0.81
provision for/(reversal of) diminution in the value
of investments
2.13 1.00 1.92
provision against off balance sheet obligations bad
debts written off directly Nil Nil Nil
Nil Nil Nil

19.1 16.9 18.2

3.06 3.41 3.20
5.37 6.03 2.65
12.8 15.5 9.75
0.21 0.01 0.08
5.32 2.67 1.79
13.7 12.5 1.11

Net markup/interest income after provisions 55.3 56 64.5

NON MARKUP/ INTEREST INCOME

Fee, Commission & brokerage income

Dividend income
Income form dealing in foreign currencies
Gain on sale & redemption of securities-net
Investments classified as held for trading
Other income
Total non-markup/ Interest income 44.7 44.1 35.5
Total income ( Interest + non-Interest) 100 100 100
NON MARKUP/ INTERSET EXPENSES
 Administration expenses 61.2 55 55.4
Other provisions written off 2.07 1.86 1.26
Other charges 2.56 0.09 0.35
Total non markup/ Interest expenses 65.9 57 57
PROFIT BEFORE TAXATION 34.1
Taxation Current 14.1
Prior years 0.01
2.89 1.54
Deferred
3.69 3.62 3.98
10.4 17.7 16.6

PROFIT AFTER TAXATION 23.7 25.3 26.4

Income Statement Analysis:

In 2014 net interest income was 69%. And net interest income after provisions was 55.3% of total
income. Total interest income was 44.7% of total income. Provisions were 13.7% in 2014. And
other charges were 2.56%. Total interest expenses were 65.9%. Profit before taxation was 34.1%.
and profit after taxation was 23.7% in 2014.

In 2015 net interest income was 68.5%. And net interest income after provisions was 56% of total
income. Total interest income was 44.1% of total income. Provisions were 12.5% in 2015. And
other charges were 0.09%. Profit before taxation was 43%. and profit after taxation was 25.3% in
2015. Total interest expenses were 57%.

In 2016 net interest income was 63.4%. And net interest income after provisions was 64.5% of
total income. Total interest income was 35.5% of total income. Provisions were 1.11% in 2016.
And other charges were 0.35%. Total interest expenses were 57%. Profit before taxation was 43%.
and profit after taxation was 26.4% in 2016.
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 forwardlooking 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
bank’s resources. Nevertheless, the bank is committed to serving small savers and the general
public of the country. National Bank of Pakistan is everyone’s bank and does not only serve
corporate customers. To extending and targeting research to improve bank earnings, through
customer focus of bank’s 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 confidence that tomorrow we 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

NBP’s 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 300 branches country wide on line.
Closing of all those branches, which are burden on NBP.
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.

SHORT FALLS/ WEAKNESSES OF NATIONAL BANK OF PAKISTAN

The National Bank of Pakistan’s Advance salary, which has long been the flag-ship product
for NBP, is replete with charges of corruption, default and inefficiency.
The National Bank of Pakistan’s huge number of borrowers is untraceable or correct
whereabouts are not known.
The housing finance product of NBP lacks proper infrastructure including database support
even after five years of post-launch history. The similar products launched by other
commercial banks are much smaller in size are running on well-articulated systems and are
backed by proper policies and guidelines. The NBP product, despite boasting a sizeable
portfolio built around some reckless selling, is mostly infected.
The NBP Karobar scheme is designed around President’s Rozgar scheme. The scheme
which had all the potential to become a landmark was so badly mishandled by National
Bank of Pakistan.
The Quality of infrastructure added by National Bank of Pakistan during the last few years
is quite substandard as compared to that of peer banks.
In NBP’s five-year strategic plan 2007-2011 approved by board of directors does not
address any serious thinking on
Productivity improvement and benchmarking with the competition.
Development required for serving major sectors of the economy.
Infrastructure to support planned growth and vision.
Inducting and leveraging specialized human capital.
 Bringing the institution on international banking landscape in the coming five years,
not to speak of the seven years which the current management has already served.
As for as public interest is concerned there were no service standards benchmarks and
guidelines available in NBP. There were only old documents that were crafted at least a
decade or more back.
Due to poor planning the bank had book losses of over 1.2 billion rupees in the Karobar
Scheme.

The National Bank of Pakistan’s outsourced employees (2350) was obtained from a single
source. Most of these are performing the core function of the bank outside their assigned
duties without any training and supervision.

The National Bank of Pakistan is incurred large expenses in running those branches, which
are not producing any income.
The up gradation of human resource is very slow in NBP. The branches of NBP have less
number of employees as their requirements. The concept of “One Man Show” is adopted
in many branches to save salary expenditure; even most of the branches use their security
guards for various tasks. The one reason for this is that the senior management is able to
decrease salary expenditure of the bank, which result an increase in the net profit. For their
performance they received handsome amounts of bonus. But in long run it has a negative
effect on bank’s productivity.
The pension’s distribution service or payments to EOBI beneficiaries, utility payments;
workers’ remittances are occupied lowest priority level.
In NBP Karobar scheme the product selected by the NBP is of inferior quality and develops
faults in the first few months of delivery.
CONCLUSIONS
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 contrast 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 contrast 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.
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
Bank’s pension scheme.
The bank should renegotiate the Bank’s long term financial framework and to overhaul the
Bank’s 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, developing
theories or concepts for the better direction of their own business environment according
to Quran & Sunnah.
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.
The National Bank of Pakistan should implement a financial inclusion program to meet the
needs of underserved economic subsectors, including outreach programs to meet the
requirements of the agriculture, housing, SME and microfinance sectors.

REFERENCES:
http://www.nbp.com.pk/Aamdani/index.htm
http://www.nbp.com.pk/Premium/index.htm http://www.nbp.com.pk/Saibaan/index.htm
http://www.nbp.com.pk/advancesalary/index.htm
http://www.nbp.com.pk/CashnGold/index.htm
http://www.nbp.com.pk/StudentLoan/index.htm
NBP Annual Report 2015