NBP

Internship Report on NBP
An Internship Report On
NATIONAL BANK OF PAKISTAN
Submitted To:
Incharge Internship and Placement,
Sir. Nazik Hussain.
Submitted By:
Nazia Yasmeen
MBA (IT)-A
Roll No. 14
DEPARTMENT OF MANAGEMENT SCIENCES
ISLAMIA UNIVERSITY BAHAWALPUR
1
DEDICATION
To my parents, especially to my kind father. I
cannot forget their cooperation and sacrifices.
2
ACKNOWLEDGEMENT
With the name of Allah who is the most beneficial & merciful. I
am very thankful to Allah for his unlimited blessings for me. I have
completed this task with the help of my Allah, my parents & my teachers
especially Mr. Nazik Hussain (Incharge Internship). I am very thankful
to the staff members of NBP FG branch for their cooperation & kindness,
especially I am thankful to Mr. Sharafat Hussain, Mr.Shoaib Mailk, Mr.
Abd-ul-Rehman, Mr. Saeed Khan, Mr. Ahmad Karim Soomro, Mr.
Ghazali.
I cannot forget the kindness &cooperation of Miss Uzma & Mrs.
Naghma. I am very thankful to them for their guidance &support.
I am also very thankful to the staff members of NBP main branch for
their cooperation especially Mr. Syed Ibrar Shah Bukhari & Mr.Amir
Abbasi both of them are very honest to their work & org. They provide
me a lot of information & knowledge of foreign exchange with in very
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short period of time. I cannot forger their cooperation & kindness, many
regards to them.
I have gain practical knowledge of banking functions & their
processes during my internship. I have tries to get more & more
information &knowledge about banking from senior & experienced
employers of NBP during my internship period.
NAZIA YASMEEN
MBA(IT)-A
ROLL NO,14(4th Semester)
4
PREFACE
Internship, a practical training, is an integral part of MBA study.
For internship I was sent to National Bank of Pakistan Farid Gate Branch
Bahawalpur. It is a six weeks training period in which I tried my best to
get complete knowledge and training in different sections of the branch.
This report contains the necessary information about the sections and
functions of NBP. This report is prepared in simple and understandable
format so that ordinary person can also take benefit from this report.
Nazia Yasmeen
MBA (IT)-A
Roll No. 14.
5
CONTENTS
♦ Executive Summary 7
♦ History of NBP 10
♦ Mission/ Vision and Objectives 15
♦ Organizational Structure 20
♦ Structure of various divisions 22
♦ Functions of various divisions 23
♦ Deposit Section 27
♦ Remittance & Collection Section 41
♦ Advances Section 54
♦ Govt. Receipts & Payment Section 63
♦ Establishment Section 67
♦ Foreign Exchange Section 73
♦ Dispatch Section 86
♦ Cash Deptt. 90
♦ Accounting Section 94
♦ Financial Analysis 98
♦ SWOT Analysis 108
♦ Suggestions & Recommendatios 117
♦ Conclusion 120
♦ Annexure 124.
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Executive Summary
I have completed my 6 weeks internship at National Bank Of
Pakistan. I tried my best to gain something practically from this
opportunity. This report starts from the introduction of word ‘Banking’,
and then History of National Bank of Pakistan. History of NBP shows
that how it helps its Nation and Country in both war & peace.
Bank Mission statement & Vision shows its focus on overall performance
of the bank and quality of services and products.
After restructuring of the bank the objectives of the bank are changed.
Now it has objectives to overcome past mistakes, realize the real
importance of customer so now it has main objective to achieve
customization.
A commercial bank has basic functions that are must be performed by
them as a bank i.e.
• Accept money as deposits.
• Investing deposits to earn profit.
• Miscellaneous functions.
Each branch of the bank is divided on the basis of these functions into
different sections.
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Deposit section opens different accounts of clients and maintains record
of deposited money from the customer & credited it into his account. It
also maintains record of payment to the customer when he presents
cheque.
Advances section deals the customers who demand loans against required
security.
Remittance & collection section deals customers who want to transfer or
collect their money from/to other city.
Foreign Exchange section deals customers who have foreign account in
the bank & deals exchange of foreign currencies.
Bank also provides facility of L.C to support export and import in the
region.
SWOT analysis of National Bank Of Pakistan shows that it has small
number of strengths and lot of weaknesses. The bank should give
attention to this drawback. But bank has lot of opportunities to improve
its quality of services, and do efficient banking. Bank should give proper
attention to overcome its threats.
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WHAT IS BANK?
No satisfactory definition of bank is available although various
attempts have been made by different authorities;
Americans defined Banking as “By banking we mean the business of
dealing credits; and by bank we mean include every person firm or
company having a place of business where credits are opened by deposits
or collection of money or currency, subject to be paid or remitted on
cheque or order or money is advanced or loaned or stocks, bonds,
bullion, bills of exchange, promissory notes are received for discount or
sale”.
Our Negotiable Instrument Act 1881 define a banker under its section
3 (b) as “Banker means a person transacting the business if accepting, for
the purpose of lending or investment of deposit of money from the
public, repayable on demand or otherwise and withdraw able by cheque,
draft or otherwise and includes any Post Office Savings Bank.”
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HISTORICAL BACKGROUND OF NATIONAL BANK
When we won political independence, Non- Pakistanis, mostly
Hindus, controlled our economy. After partition over 7 million people
came to West Pakistan & about 5 million went out. East Pakistan was
spared from massive migration but its economy was also, being
dependent on Calcutta, badly hurt. Most bankers & business experts left
Pakistan and the economic life was brought to a standstill: mostly
branches of Imperial bank of India were only in partial operation with
little staff. The number of bank offices fell from 631 to 195 after
partition.
After this commercial phase, in 1950 started the industrial phase – Jute
and cotton industries were started during 1950-55.
It was decided that Reserve of India would act as the common
monetary authority of both countries up to September 1948. But this
arrangement did not prove well. In August 1947, we were given a first
installment of Rs. 200 million (20 crore) as our share, leaving a balance
of Rs. 550 million (55 crore) but it was not paid when ask for.
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In October 1947 there was fighting in Kashmir, when India refused
to give us the amount of Rs.55 crore if we did not give up all interest in
Kashmir, which we refused. In response, Reserve Bank of India refused
to make even an advance for ways and means. Despite that India had to
pay our 50 crore, (the remaining 5 crore still remains unpaid). There was
a controversy on establishment of our central band because we had no
experience or expertise but it was resolved and SBP was created, 3
months ahead of schedule, on July 1,1948, which was the last public
appearance of the Quaid-a-Azam. SBP claimed its share of Assets of
Reserve Bank of India against the Indian currency retired from Pakistan,
but this 50crore India disputed and virtually refused to settle this dispute
until now.
In 1949 (September) U.K. devalued its currency, India
followed suit but we did not, India said we had contravened the
agreement of keeping both currencies at par. We said we had not done
that, India had done it arbitrarily without consulting us. On October
1949, the two central banks were to announce the new par value of both
currencies but India denied a day earlier. India also froze our trade
balance surplus, which is still an unsettled dispute. India also withdraws
the Marwari merchants who were employed annually for movement of
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jute crop by financing it. There was being no jute industry, prices fell
sharply, foreign banks and foreign merchants stood aside and an agrarian
unrest was threatening. Two ordinances were, therefore, issued.
1-Jute Board Establishment Ordinance &
2- NBP Ordinance dated 08-11-1949.
NBP was established on 20-11-1949 to provide finance to suitable
parties. NBP stood behind jute trade, SBP stood behind NBP and the
Govt. stood behind SBP. Speedy it was such that 6 branches came into
being at once and the doubts on our ability to handle this situation were
dispelled forever. Now, as the jute Board and NBP were in the field, the
foreign merchants and bankers also rushed in to get their share in the
business and consequently NBP had to lay out much less finance than it
could. Mr. Ghulam Farooq was chairman jute Board & Mr. Mumtaz
Hassan was chairman NBP. Until June, 1950, NBP remained exclusively
in jute operations, there after other commodities were also taken-up.
After that Mr. Zahid Hussain, Governor SBP assumed additional charge
also as chairman NBP’s Board of Directors, & Mr. M.A. Muhajir
became its first M.D.
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In 1952 NBP replaced Imperial Bank of India. Mr. Mumtaz Hassan
negotiated this arrangement as acting Governor of SBP. In 1962 when
Mr. Mumtaz Hassan became M.D, the number of branches increased
from 6 to 239 & deposits from Rs. 5 crore to 106 crore, profit from Rs. 3
lac to 21 million & the staff increased from 380 to 7091. In Des.1966 its
600th branch was opened raising the deposits to 2.31 bn, and staff to
14,963.
In 1964 people’s credit scheme was started to finance small business.
During the 1965 war, NBP worked 7 days a week, actively and
wholeheartedly, even at branches on the hostile borders. Mr. Mumtaz
Hassan wrote in his book, “ The Story Of NBP”, “ I shall always
remember the performance of my officers and staff during these difficult
days, with pride and gratitude. He wrote, “ we had, instead built up sound
business traditions. NBP had been the instrument of National policy in
the past, its doors have ever been open to high & low, rich & poor, from
every where in Pakistan. We helped small parties to grow bigger, we
dedicated ourselves to building up a strong middle class in the country &
we sought to broaden the base of the economy”. “ NBP will continue to
perform these tasks with the same enthusiasm and vigor &, whenever in
the years ahead, the Bank is mentioned, I trust & believe it will be always
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be said that the National Bank Of Pakistan truly exists in the service of
the nation”.
Now (2003) it has 1204 branches and 12,195 employees. Its Head
Office is situated in Karachi. Sayed Ali Raza is the present president and
chairman of Board of directors of the Bank. Board of directors consists of
seven members including chairman.
On the basis of profit rate, NBP stands first in ASIA and at 8th
position in all over the world (as on June 2003).
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MISSION STATEMENT
To be recognized in the market place by
institutionalizing a merit & performance culture,
creating a powerful & distinctive brand identity,
achieving top-tier financial performance, and adopting
& living out our core values.
VISION
To be pre-eminent financial institution in Pakistan and
achieve market recognition both in the quality and
delivery of services as well as the range of product
offering.
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OBJECTIVES
TO BE AN ORGANIZATIN THAT IS FOUNDED ON…
 Growth through creation of sustainable relationship with
customers.
 A national presence with a history of contribution to
communities.
 Prudence to guide business conduct.
NBP SHALL WORK TO…
 Meet expectations through Market-based solutions and
products.
 Reward entrepreneurial efforts.
 Create values for all stakeholders.
TO BE PEOPLE WHO…
 Care about relationship.
 Lead through the strength of commitment and willingness to
excel.
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 Practice integrity, honesty and hard work.
HAVE CONFIDENCE THAT TOMORROW NBP 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.
TO HANDLE THE CRISES
The major objective of NBP is to handle the crises because when it
came into being there were jute crises in East Pakistan and it was
assigned to handle those crises.
TO SUPPORT THE ECONOMY
At present the main objective of NBP is to support the economy
with the help of its financial policies rather to maximize profit.
TO CAPTURE THE MAXIMUM DEPOSIT
It is objective of NBP to capture the deposits of the Govt. as well
public.
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TO SUPPORT THE INDUSTRIAL SECTOR
The National bank provides different types of loans to the
industrial sector to increase their business activity.
TO PROVIDE ASSISTANCE TO THE AGRICULTURE
National bank provides the different types of loans to assist the
formers on short-term basis.
TO INCREASE THE FOREIGN RESERVES
By issuing the foreign currency bonds and advancing loans against
the gold National bank support the Govt. to increase the foreign reserves.
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ORGANIZATIONAL STRUCTURE
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President
Commercial Regional
& Retail Corporate &
Business
banking Regional Investment
Group chief Chief Marketing Managers Banking
Branch
Operations Regional
Operations Regional Manager
Group Operations
Group Operations
Chief Chief
Chief Chief
Corporate Head
North &
Regional Operations Branch Corporate Head
Compliance Departments Operations South
Chief of the Manager
Region
Risk Regional
Risk
Management Risk Management Corporate
Management
Group Chief Branches
Group Chief
Credit Credit
Department of Department of
the Region the Region
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Layout Of the Branch Of NBP
D.C-Branch
Commercial banking Govt. banking
Deposit Advances Foreign Cash deptt. Remittance Collection

Section Sec. Exchange Sec. Sec.
Govt. Receipts Govt. Payments Utility Bills
21
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FUNCTIONS & DEPARTMENTS
FUNCTIONS OF NATIONAL BANK
BASIC FUNCTIONS
 Receiving of Money as Deposits
 Lending and inverting the deposited money
 Miscellaneous Functions
MISCELLANEOUS FUNCTIONS:
 Collecting Negotiable Instruments on behalf of customers.
 Issuing Letters of Credits for Customers.
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 Buying and Selling Bullion and Foreign Exchange.
 Discounting Bills of Exchange and other Negotiable Instruments.
 Receiving valuables for Safe Custody.
 Dealing in Stocks, Shares and Debentures and other Securities on
behalf of Customers.
 Acting as Agents to His Customers and the Government.
 Undertaking and Executing Trust.
 Issuing Guarantees and LC’s.
 Dealing of any Property that may come to it as Security in
Satisfaction of its outstanding claims.
 Acting as Executor, Administrator and Attorney for their
Customers.
 Transfer of Money from one Place to Another Place.
 To arrange for payment of subscriptions, premier, rents etc, and
collection of notes, Dividends, Interest, Salaries, Premium etc. on
behalf of their Customers.
 To act as correspondent of other banks and financial corporation.
 Act as Income Tax Advisors.
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 Collection of Fees and money for people proceeding on Hajj
Pilgrimage.
 Utility Services.
 Agent to SBP for Collecting Government dues both Provincial and
Central Government.
 Payment of Pension on behalf of Provincial and Central
Governments.
 Treasury Business.
DEPARTMENTS
1. Deposit
2. Advances
3. Bills and Remittance
4. Establishment
5. Foreign Exchange
6. Govt. receipt & payment
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Now we see the functions of each department working at each
branch of National Bank of Pakistan.
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DEPOSIT SECTION
DEPOSIT SECTION
All types of accounts of customers are managed and maintained in
this section. All the money deposited and withdrawn is properly recorded
in each specific account number.
TYPES OF THE ACCOUNTS
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Depositors can open the following types of accounts with the
National Bank of Pakistan: -
i- Current account
ii- P.L.S. saving account.
iii- P.L.S. Term Deposit Account.
iv- M.I.S. (Monthly Income Scheme)
v- N.I.D.A. (National Income Daily Account)
vi- Call Deposit
vii- Cumulative Deposit Account
A brief introduction of these accounts is given below.
CURRENT ACCOUNT
It is a running account between the customer and the banker. As
the name signifies the depositor can draw or demand amount at any time
by presenting the cheque in the bank. Unlike term deposits there is no
restriction of withdrawals. The bank neither pays any kind of interest nor
deducts the Zakat from the deposits of this account. The bank also does
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not take any service charges up to the minimum balance of account from
the depositors. The minimum balance required to an account to be
opened is Rs. 5000/-. If balances in account reduce from the minimum
balance then the bank charges Rs. 25/- as incident charges. Overdraft
facility can be provided through the agreement with the bank. In
developed and developing countries a very significant amount of money
is kept under current account. Businessman normally opens this kind of
account.
PROFIT & LOSS SHARING SAVING ACCOUNT
In Pakistan the profit & Loss Sharing Account is introduced
in January 1982.
In these P.L.S. accounts the bank gives no fixed rate of
profit. These types of deposits are designed to encourage the
saving habits of the people. The minimum deposit to open this
account is Rs. 300/-. After every six months a rate of profit is
announced by the Head Office and after calculating the amount,
it is credit to the depositor account. Now a day, if an account
holder maintains Rs.2000/- minimum balance throughout the
month then his account is eligible for profit.
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On 1st day of RAMADAN, Zakat is deducted at the rate of
2.5 %. If any customer does not want to pay Zakat from his
account then he must give an undertaking that he will pay Zakat
himself or he belongs to Fiqah-e-Jafriya.
Restriction on withdrawal of heavy balances is now
abolished. Customer can withdraw heavy amount within the
banking hours without giving any notice.
Profit Calculation
Profit is calculated on the basis of Product & Days. Product &
Days include number of months for which the bank retains balance
multiply with the amount of balance, and then apply the rate of profit on
net balance.
P.L.S. TERM DEPOSIT
In this type of account the amount is deposited for a specified
period of time. This period varies from 7 days minimum to maximum 5
years. The profit rate is also changes with respect to period. There is
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higher rate of profit on long term P.L.S. T.D.R. The minimum balance
required to open this type of account is Rs. 10000/-. Profit is announced
after six months and then credited to the respective accounts.
Monthly Income Scheme
For this scheme the required minimum balance is Rs.10000/- Profit
is announced after every six months but it is credited to the customer’s
account in every month. Mostly retired persons are like to open this type
of account.
National Income Daily Account (NIDA)
Mostly big organizations open this type of account.
Minimum balance for this account is Rs. 2,50,000 & profitable balance is
Rs. 2 million. Profit is given on daily basis & profit rate is same as P.L.S
account.
Call Deposits
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This deposit is used for Govt. services e.g. Tender Notice fees,
advance payment for participating in Nilami of govt. property. No profit
is given on this account.
Cumulative Deposit Account
In this account certificates are issued of certain amount for the
period of 20 years. Profit on this account is calculated as compound
interest.
ACCOUNT OPENING PROCEDURE
Requirements for opening an account;
(i) A copy of ID card of both introducer & customer.
(ii) Original ID cards for verification.
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(iii) If customer use thumb impression then he must gives his
recent 3 snaps & female customer also gives a written
statement on P.L.S form that “ I do not observe Parda ”.
(iv) Next to kin. The customer must clear that who is responsible
for the account in his absence.
(v) Customer must be appearing at the time of account opening.
IN CASE OF CURRENT ACCOUNT;
(i) For partnership firm account, a copy of partnership Deed &
Article of association is required.
(ii) For Corporation account, a copy of Memorandum of
association is required.
(iii) All the Executives of the firm must be present at the time of
account opening.
(iv) A copy of registration of the firm.
(v) Number of partners & who will operate the account must be
cleared.
Terms and conditions for Account Opening;
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(i) Customer must be a citizen of the city in which he wants to
open his account.
(ii) Introducer must have the balance of Rs. 4000 in his account.
(iii) A blind person can open a joint account with a partner who
must not blind.
(iv) Insane person cannot open an account.
(v) A person who sometimes normal & sometimes abnormal
then he must operate his account only in normal condition.
(vi) Endorement Account. If account holder does not operate his
account more than one year then his account will be ceased
& he cannot draw the cheque without giving an application.
Procedure of opening an account;
(i) Customer to fill application to open an account on bank’s
prescribed form.
(ii) Account opening form is properly filled in.
(iii) Banker takes customer’s signature on specimen card &
keeps it in record.
(iv) A letter of thanks on prescribed form should be sent to new
account holder under certificate of posting.
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(v) When customer comes with that letter of thanks then
chequebook & Passbook is issued to him.
Issuance of chequebook
Size of chequebook is varies. It contains 10 leaves to 100 leaves.
The assistant writes the following information on the title page of the
chequebook and chequebook issuance register.
• Issuance date
• Name of account holder
• Account number
• Type of account
After authentication by the authorized officer on the chequebook
register, the chequebook is handed over to the account holder.
• First time chequebook is issued when customer
presenting letter of thanks of the bank.
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• Empty chequebook has a requisition slip. Customer can
get a new chequebook by giving that requisition slip to
the banker.
• If chequebook or requisition slip has stolen then
customer must reported a FIR & submit a copy of that
FIR to bank for stopping payment & issuance of new
chequebook.
Mode of operation
The customer can operate an account with the National Bank
of Pakistan in the following ways: -
• Individually
• Jointly
Individual Account
When a single person operates an account is called
individual account. After his death, the person who is
authorized by court will operate the account.
Joint Account
There are two ways to operate a joint saving account:
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1. Either or survivor
For payment a cheque is required with signed by anyone
partner. In case of death of any partner of joint account, the
survivor will operate the account.
2. Jointly operate
For payment cheque is required with signed by all partners
of joint account. If cheque is missing a sign of any partner
then it will not discounted.
DEPOSITING OF THE AMOUNT
Account holder can deposit the amount in cash or
transfer in his account through credit voucher. In N.B.P. two
types of vouchers are used for this purpose.
1. Blue voucher which is used for Cash Receipts
2. Pink voucher, which is used for all Non Cash Receipts
like drafts, cheques, payment orders etc.
ENCASHMENT OF CHEQUES
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• Issuance of Token
After scrutinizing the apparent tenure of cheque, a token is
issued to the account holder. An assistant writes the number of
issued token on the back of cheque and transfer it to his officer.
• Verification of Signature
After affixing the two stamps i.e. Pay Cash and Signature
Verified, a cheque is sent to the accountant for the verification
of signature from signature specimen card. After authentication
of signature and posting in his account the cheque is sent to the
cash department for the payment.
• Payment of Cash
Cashier pays the amount to the token holder after getting
back the token from customer and matching the number with
cheque.
DEDUCTION OF ZAKAT
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From the PLS Saving account Zakat is deducted at the rate of
2.5% annually on the outstanding balance of account on the first day of
every valuation date i.e. first day of Ramadan. Minimum balance for
deduction of Zakat is fixed by the Central Zakat authority (CZA) before
the valuation date.
DISHONOR OF CHEQUE
When a bank refuses to make payment of his customer’s
cheque that is duly presented at the counter of the bank, the cheque is
said to be dishonor.
Following are main reasons for dishonoring of a cheque:
1. Effects not yet cleared.
2. Refer to drawer.
3. Amount in words & figures differ.
4. Payment stopped by the drawer.
5. Requires revalidation.
6. Drawer’s signature differs.
7. Cheque is post dated.
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CLOSING OF ACCOUNT
There are many reasons for closing or ceasing of an account. It
is not a good indication for the business of the bank. Some of the more
common reasons are as follows:
• Account holder’s own request
• Death of the account holder
• Bankruptcy of the account holder
• Closing of account due to bad conduct of account
holder etc.
• By the order of Govt.
• Insanity of the account holder.
• Account is not operated for the period of 3 years.
Before closing an account the bank sends a letter to the account
holder that his account will be closed. So after fulfilling the legal
requirements, it is marked of the accounts holders number that the
account has been closed.
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REMITTANCE &
COLLECTION
DEPARTMENT
41
REMITTANCE DEPARTMENT
Remittance is a major function of the bank. It is the transfer of money
from one place to another place without directly involving cash.
By proving this service to the customers the National Bank earns a lot of
income in the form of “Exchange”. There are two types of bills
remittance:
I) Remittance inward.
II) Remittance outward.
Remittance inward.
“Cheques & Drafts received for payment and clearance or
drawn on us from customer or other banks on behalf of their customers ,
is called remittance inward”.
Remittance outward.
“All instruments issued by us, which are drawn on other
branch of the same bank or instruments deposited for collection from
other bank locally or out of the city are called outward remittances”.
Bills remittances & collection are mainly lie under two heads i.e.:
• Local Short Credit (LSC).
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• Short Credit (SC).
Local Short Credit (LSC)
All bills for remittance & collection from customer or bank
within the city are recorded under this head in LSC book. These bills are
passed along with a covering schedule & Advice/ Ex-advice to main
branch of the bank, from where an agent of SBP received that bills for
clearance.
Short Credit
All bills for remittance & collection from customer or bank
outside the city/ country are recorded under this head in SC book.
If bill is drawn on the bank itself then it passed along with a covering
schedule & an Advice/ Ex-advice directly by courier service to the
concerned branch on which it is drawn for realization.
If bill is drawn on another bank then it is passed to the main branch of
our bank of mentioned city for realization.
National Bank of Pakistan deals with the following type of remittances: -
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 Demand Draft (DD)
 Mail Transfer (MT)
 Telegraphic Transfer (TT)
 Pay Order
 Demand Draft Purchase (DDP)
 Home Remittance Purchase (HRP)
 Traveler Cheques (TC)
Now we discuss all these in detail: -
DEMAND DRAFT (DD):
“Demand draft is a written order given by the one branch of a bank
on behalf of customer to another branch outside the city of the same bank
for a certain amount to the certain person”.
It is an unconditional order. The payee is not bound to have an account in
the bank. It is issued on the request of customer and bank receives the
charges & exchange. Exchange rate is based on the amount of the
instrument.
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Procedure for Prepare Demand Draft
1. A draft request slip is filled which contains the following
information
Name of the parties involved
Date
Amount to be sent
Account number (if DD is crossed)
2. A credit voucher is filled in order to get the exchange
commission & preparation charges.
3. The sender deposits the total amount of the two vouchers i.e.
the debit and credit vouchers.
4. Then the cashier sends the cash receipt voucher to the accounts
department and the account records the amount paid in his cash
scroll.
5. Accountant gives the DD leaf along with the DD voucher to his
assistant who records the sender’s name, amount and receiver’s
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name. After writing all the information in the DD register he
gives it to the officer along with the DD for authentication.
6. Head Cashier and Operations Manager make a secret code with
the help of code book, this code is written on the advice
&Frankfort.
7. After authentication the DD is handed over to the sender and
bank sends the advice with a Frankfort (debit f-15) to the
concerned branch. DD documents must have a TR code which
is 22. So when the party presents the DD in the concerned
branch, its payment could be made.
Parties involved in the Demand Draft
The following parties are involved in demand draft;
1. Purchaser or Sender
The purchaser is the person who sends the money to a particular person
who is paid by certain branch.
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2. Issuing or Drawing Branch
The branch from where the demand draft is issued to another branch of
the same bank.
3. Drawee Branch
Branch in which the draft has drawn and called upon to pay the
amount
4. Payee
The person who is entitled to receive the amount after presenting the
demand draft in the Drawee branch.
MAIL TRANSFER (MT)
It is the transfer of money from one branch to another branch of
the same bank through mail service. In mail transfer there is no need of
advice as the amount is directly credited to the receiver’s account. It is
necessary for both parties to have accounts in the same bank. Its TR code
is also 22.
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Procedure:
1. First a request slip is filled in which the sender writes the amount
to be sent, name, account number of the receiving person with the
branch name and date.
2. A credit voucher is filled in order to deduct exchange, postage
charges according to the amount of the mail transfer.
3. The sender deposits the total amount of the two vouchers in the
cash department.
4. The cashier gives the voucher to the accountant after affixing
received stamp and writing the amount by red ink.
5. Then the accountant writes the amount paid in the cash scroll and
gives the MT to his assistant.
6. MT leaf is filled according to the information provided in credit
voucher. He also writes the same information in the MT register.
Then he gives the MT leaf and MT register to the officer for
authentication.
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7. He takes two signature of the sender on the counter foil of the MT
and counter foil is handed over to the sender. He must applied his
signature code with his signatures on MT & its other documents, at
the end the MT along with the Frankfort is sent to the concerned
branch through mail.
TELEGRAPHIC TRANSFER (TT)
This is the most urgent method of remitting the money from one
place to another place. This method is used when the sender desires to
send money urgently, in this case the sender request the manager of the
branch to issue TT.
Procedure
For sending the TT the manager applies a test. In the test the
manager uses a coding technique. He writes his own signature code,
which is allotted to him as the bank branch code. After making all the
confirmation, the concerned branch makes the payment to the receiver. If
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the sender wants to convey the same message through telephone then he
has to pay the charges of telephone along with the TT charges. First the
person deposit the TT amount along with the charges through the credit
voucher then his TT sent to the relevant branch. Its TR code is 21.
Pay Order (PO):
A pay order is a written order issued by the bank on its own
branch, drawn upon and payable by itself to pay a specified sum of
money to the person. The purpose of a pay order is to transfer the fund
from one place to another. It is usually not issued in favor of the parties
of other cities. Usually the pay order is issued for the local transfer of
money between two parties. Every purchase of bank is paid through
Payment Order e.g Establishment charges.
Procedure
If the purchase of the branch is of huge amount then first the
manager writes a letter to the Zonal Chief in order to get sanction of the
purchase. Then the advertisement of the purchase is given in the
newspaper in order to invite the contractors. But if the work is small then
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the branch manager has discretionary power to select the party whose
rate is lowest. After finishing the work the contractor submits the bill of
purchase on his stamp pad. Then the bank issues a pay order, against the
pay order the contactor gets the amount from the issuing branch.
Demand Draft Purchase:
It is an internal banking. It has great facility to operate an account
at a time in all over the country. It is for companies & govt. Institutions.
e.g. Hero scratch Cards, company has its main account in Islamabad
branch of NBP but its Inami Scheme Cards are accepted by each branch
of NBP in all over Pakistan & then money is recovered from main
account of company.
Home Remittance Purchase (HRP)
Foreign drafts & MT are first cleared by National Exchange
Company (NEC) then transferred to concerned branch of the bank in Pak
Rs. That branch passes it to its Headquarters after holding a carbon copy
of HRP. After authentication of HQ, concerned branch will purchase that
draft & transfer its amount to the customer’s account.
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COLLECTIONS
There are two main types of collections.
a) Collection inward
b) Collection outward
Collection inward:
All cheques and drafts deposited by the customer for collection
from other bank locally or out of the city is called collection inward.
Collection outward:
All cheques and drafts of NBP when deposited in any other bank
for collection then those banks send that cheques to NBP for clearance &
collection through the agent of SBP, on behalf of their customers.
Procedure:
i) Endorsement checking
Every cheque received for collection must be checked by
Deposit section to ensure that the cheque is genuine, its Apprentiner
(date, amount, drawer’s signature, crossing stamp, name of title, & A/c
No.) is accurate etc.
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ii) Test Code Checking
After check he apprentiner of the cheque, then it passes over to
Operations Manager for checking the accuracy of test code applied on it.
iii) Signature Code Checking
After test code checking, Signature Code must be check by the
Incharge of remittance & collection section.
iv) Record the Cheque
All the particulars of the cheque are written in an advices
received folder.
v) Clearance
After checking all requirements, a Frankfort affixing with a stamp
Of “ your LSC/SC is paid” & TR code i.e. 27 is send to SBP.
vi) TRV (Transfer Voucher Register)
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Before sending back the cheque with an advice, the date of
sending, advice number, & sender bank name must be recorded
in TRV register.
ADVANCES SECTION
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Advances section:
Advances are investments of bank to earn profit. After
restructuring of National Bank Of Pakistan, Head Office gives loan
targets to each branch that must be achieved for its survival. The
Manager is responsible to achieve these targets in the given period.
TYPES OF LOANS /FINANCES:
There are three major types of loans that are offered by NBP
mostly at the rate of 11%, they are as follows:
1. Short Term Finances
2. Medium Term Finances
3. Long Term Finances
SHORT TERM FINANCES:
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Short-term finances are sanctioned for increasing Working
Capital & Production. These are given for the period of one year to 3
years maximum. Short Term finance includes the following types:
1. Cash Finance
The bank gives this loan to the customer &
businessman against certain specified immovable
property. It is issued for establishment & extension of
industry.
2. Demand Finance
This loan is given against movable property (called
Secure Finance) or may be given against personal
guarantee (called Clean Finance). Demand finance is
further divided into three types:
(i) Staff Finance
This finance is given to the employees of
National Bank for improving their living
standard e.g. for purchasing a motorcycle, car,
house building, computer etc. There is no
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markup on this loan except on car & computer
buying @ 4%.
(ii) Gold Finance
It is sanctioned for the period of 11 months
by pledging gold ornaments.
(iii) Agricultural (Seasonal Finance)
It is given for supporting seasonal crops like
‘Rabi’ & ‘Kharif’. It is sanctioned for six month only
at high markup rate.
3. Running Finance
This finance is only a secured finance which is
sanctioned against movable security that is easily convertible
into cash e.g. security bonds, Govt. certificates & bonds etc.
Example for this loan is Three Advance Salary. It is newly
commenced credit scheme by NBP.
Three Advance Salaries is given to Govt. or semi
govt. registered company’s employees. The only condition for
this type of credit is that the salary must be directly credited
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into the bank. The borrower must give a blank cheque for
security.
Medium & Long Term Finance:
These finances are issued for production & development of
industry & agriculture e.g. for buying input or building for industry.
These are issued for the period of 5 years or more. The main types of this
finance are:
1. Project Finance
2. Agriculture (Development)
3. House building Finance.
All the loans may be fund base or non-fund base.
FUND BASE loans are those which given in cash form to the borrower.
NON-FUND BASE loans are those which given other than cash e.g.
Guarantee, L.C, Promissory Note etc.
Banks run their business with the money of depositor, which
is repayable to them on demand. Banker is very conscious while using
these funds. They think thousands times before lending to the borrower.
They must keep in mind the following factors before advancing the loan:-
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1. Character:
The first and most important factor considered in the credit
analysis is character. The credit character is base on the borrowers
willingness to pay his obligation. The willingness can be judged by the
banker to see his family background, stability of employment, personal
habits, nature of business, previous record moral reputation, importance
of values to him etc.
2.Capacity To Pay:
The bank should judge the financial condition of the
borrower. Whether he is able to repay that amount of loan which he
wants to get. Before advancing the loan bank must be satisfied with the
repayment of fund by checking following resources of borrower;
(a) Sale of Assets
(b) Income
(c) Location of Plant etc.
3.Capital:
The asset of the consumer may be in form of horse
motorcar, furniture etc. The businessman may own assets in the form of
new material, plant, machinery, building etc. The bank should extend the
loan in the proportion to the asset head by them. If the assets of borrower
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are liquid, he may be giver large amount of credit. If assets are not
liquid, then less amount of credit may be given against the value of
assets. Before landing the loan the banker should examine the value of
his business and its prospectus in future. The banker should keep in his
maid the owners participation in his business. The banker should not
provide loan more than capital.
4.Collateral:
Collateral means an additional security given against the
loan. Before advancing the loan the banker should preferred get the
security of liquid assets because they can be converted into cash easily.
The collateral security may be consisting of stock, bill of exchange, bill
of lading warehouse receipt, bonds etc. Bank must be carefully
examining this collateral security before advancing the loan for security
purpose. Banker should not extend loan on up to the full value of
collateral security. The securities, which are issued by the govt., may be
given 100% loan against them. The other collateral may set 40%, 50%
etc. loan against the value.
Main Requirements For Sanctioning Loan
• ID card copy.
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• Legal contract between bank & borrower on a security bond.
• A written application.
• Promissory Note.
• Valuable security.
• Lien mark in favor of bank.
• References (at least two)
• Latest Financial statements.
• Financing Agreement on a prescribed form.
• Authority letter.
• Trust Receipt.
• Insurance of securities.
Securities:
Before giving a loan to borrower a bank required a valuable
security in three ways:
• Hypothecation
• Pledge
• Mortgage
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Hypothecation:
In This type of security, immovable property is pledged
by the bank & bank is required a real value of that property for
sanctioning a loan. Margin for this security is 50%. In hypothecation
bank does not interfere in the business of borrower.
Pledge:
In Pledge the bank has 90% shares in business of the
borrower. The bank has a right to sold the production & interfere in
business transactions. In this type of security bank pledge the stock &
raw material. The stock must be insured. Stock is controlled & managed
by the bank, borrower cannot use raw material & cannot sold its
production without the presence & permission of the agent of bank.
Mortgage:
All documents of ownership & registration of movable
property is submitted to the bank with an authority letter which has an
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agreement to give authority of selling property in case when borrower
will not repay the loan after a fixed period.
GOVT. RECEIPT &
PAYMENT
DEPARTMENT
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GOVT. RECEIPT & PAYMENT DEPARTMENT
Govt. Receipts:
1. Utility bills:
Electricity Bills
BLT Bills
Telephone Bills
Sui Gas Bills
Procedure:
The cashier in cash section receives utility bills. The cashier posts
the amount of bill in respective scroll and at the end all the amount of
collected bills is transferred to the respective account. Then
representative of the concerned department collects the amount in the
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shape of M.T. (Mail Transfer). The bank takes the collection commission
of Rs. 2 per bill from each type of bill.
2. Federal And Provincial Taxes:
Federal Taxes are:
• Income Tax
• Central excise Tax
• Sales Tax
• Domicile fees
Provincial Taxes are:
• Provincial Excise Duty
• Provincial Motor Vehicle Duty:
1. Duplicate fee
2. Transfer fee
3. Token Tax
• Provincial Misc. Tax
• Provincial property Tax
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• Agricultural Tax
Procedure:
The customer deposits two or three copies of tax Performa with
cash or through transfer. The cashier enters this Performa in govt. scroll
and one copy returned to the customer. At the end of the day a summary
is prepared and the total amount is credited to the relevant head.
3. Admission Fee of AIOU
GOVT. PAYMENTS:
1. DISBURSEMENT OF PENSION
National bank is fully authorized to disburse the pension to the
Govt. and Army retired personnel.
Procedure:
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For the distribution of pension the branch maintains the
pension register. In order to get the pension, first the pensioner
submits his pension voucher with his pension book, that voucher
sent to the cash department for the payment to the pensioner after
posting into his account.
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ESTABLISHMENT
DEPARTMENT
ESTABLISHMENT DEPARTMENT
In National Bank, establishment department works for
the maintenance of different types of expenses and for the
provision of funds for different activities in the branch. The
Incharge of this department has two types of register.
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1. Charges account register.
2. Suspense account register.
CHARGES ACCOUNT REGISTER:
All routine expenses of the branch are recorded in the
charges account register under the specific heads as follows:
Expenses for Existing Employees:
• Basic salary
This account deals with the salaries of the employees
within that branch when bank have to pay the salary of any
employee the amount of salary is debited to the charges
account.
• Allowances
Under this head different allowances are paid to
employees. But these are attached with salary and paid with
the salary.
• Provident fund
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It is deduction from the employee’s salaries, which is
paid out at his retirement.
• Medical attendance
When some employee suffer from any disease the
bank allocate fund for him and this amount is debited to
charges account of the patient.
• Staff welfare
To improve the efficiency, the bank provides some
special facilities and the fund is provided from the welfare
account.
• Bonus
When the efficiency of employees increases and bank
earn profit more than expectation then bank gives bonus to
the employees. The provision of bonus is done through
bonus account by debiting to the charges account.
• Liveries
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If the bank needs some uniform for some employees
like messengers, peons, guards etc. the funds are provided
from liveries account.
• Traveling Expenses
It is for officers who visit different branches for the
purpose of auditing. The bank through this account pays
their traveling expenses.
Under this account the transportation expenses of
employees are also maintained for example, when a manager
goes to attend the meeting in any other city or country his
expenses on transportation are paid from this account.
Similarly when some one goes for any official work to other
branch or head office the traveling expenses are paid from
this account.
Expenses for office use:
• Cash carry expenses
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• Taxes
• General Insurance
• Lighting & Power:
(a) Electricity bill of the branch
(b) Sui Gas bill // // // //
(c) Generator Oil etc.
• Telephone bill
• Repairs & Renovation
• Postage &Stamp
• Books & News papers
• Maintenance exp.
• Computer exp.
• Freight exp.
• Petty exp.
• Sundries
• Protested bills etc.
Suspense Account:
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All accidentally losses happen in branch are recorded in
suspense account e.g. medical expenses of ex-employees,
loss of fire etc. These are not routine expenses.
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FOREIGN
EXCHANGE
FOREIGN EXCHANGE
This section deals in foreign currency. NBP authorizes only two
branches in Bahawalpur to deal in foreign currency i.e. District Court
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branch & Farid Gate branch. These branches are authorized to deal in
Euro, Dollar, Japanese Yen, & Pounds sterling.
The rates of foreign currencies in Pak Rupees are
announced daily by Head Office Karachi. These rates are
different from market rates.
Each Foreign Exchange section send report to Head
Office & SBP, for its foreign exchange transactions (FET)
daily, weekly, & monthly with required details.
PROCEDURE TO OPEN AN ACCOUNT IN FOREIGN
CURRENCY
There are two types of foreign currency accounts,
 FOR RESIDENTS
In order to open the account of a Pakistani resident in
foreign currency, all the requirements are same as P.L.S account.
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 FOR NON RESIDENTS
For non-residents following documents are required.
i- Photo copy of Passport
ii- Photo copy of Visa
The remaining process is same to open an account in local
currency. This account can be opened with any Dollar
amount.
CLOSING OF A FOREIGN CURRENCY ACCOUNT
To close the foreign currency account the same procedure is
used as in local currency.
FOREIGN REMITTANCES
To transfer funds abroad and to bring the funds from the other
countries foreign remittances are used. NBP has contract with different
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foreign companies that deal in foreign remittances e.g. NEC (National
Exchange Company Dubai) has link with NBP by opening an account at
Head Office Karachi. Other mentionable company is Western Union.
Bank has contract with Western Union only for remittance inward.
Western Union can pay its clients through NBP within 10 minutes via
computer networking.
NBP pays to Western Union’s clients in Pak Rupees only
but receives foreign exchange from Western Union in adjustment. NBP
does not receive service charges from these contracted companies.
NBP receives foreign advices or messages for foreign
remittances through Swift / Telex. SWIFT messages are received via
Satellite. It combines the world banking organizations & has information
of linked banks.
 Access to Telex / Swift area is restricted to authorized staff only.
 Request for outgoing Telex / Swift message is authorized by
competent Officers.
 Telex / Swift messages are promptly coded / decoded & delivered
to the relevant Department against acknowledgment.
Working Procedure With Western Union:
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Before making payment to a customer, the concerned
Officer must check;
 The goodwill of the customer.
 ID card information
 Properly filled form prescribed by Western Union.
Then all this information is feed in computer & directly sent
to Western Union Through computer networking. After authentication of
customer by computer payment is made to him immediately by NBP.
Western Union has Customer Service Counter (CSC) at
NBP Head Office Karachi. It has its main account in Chapal Plaza Branch
Karachi. This branch maintains whole day transactions of Western Union
with NBP.
TYPES OF FOREIGN REMITTANCES:
The customer who has a foreign currency account in bank
can easily remit his amount outward through foreign currency
instruments. If a customer who has not a foreign currency account but a
Pak Rupee account in the bank then he must give an acceptable reason
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for remitting outside the country in foreign currency. When GOVT. &
SBP approve that reason then he can remit.
1. FOREIGN CURRENCY DEMAND DRAFT
The debtor can make the foreign payment by purchasing a
bank draft from the branch. The debtor to creditor dispatches the draft.
He can claim the amount of the draft from the responding branch.
2. FOREIGN MAIL TRANSFER
The debtor can makes the payment to the creditor in foreign
currency by Foreign Mail Transfer. The NBP’s branch issue the order for
the payment to the responding branch by mail. After receiving the letter
responding branch will make the payment to the creditor.
3. FOREIGN TELEGRAPHIC TRANSFER
The same procedure is followed here as in local account
Telegraphic Transfer.
4. FOREIGN TRAVELER CHEQUES
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If a customer has a local currency account but wants to remit
a certain amount in foreign currency for an approved purpose e.g. for
Haj, Umra or education purpose etc. then bank gives him foreign
currency Traveler Cheques to transfer money from one country to
another.
MAIN REQUIREMENTS FOR REMIT OUTWARD:
• The debtor must be foreign account holder of NBP.
• He must mention the name of the foreign bank.
• The purpose of the remittance should be permitted by the
GOVT.
• The account number of the ultimate client should be told to
the bank.
MAIN REQUIREMENTS FOR RMIT INWARD:
Before making payment against any instrument or bill, the
relevant Officer must check;
• Genuineness of instrument.
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• Goodwill of customer.
• The amount in figures & words.
• Type of currency.
• The way from which instrument is received.
• Purchase agreement for T.C’s.
Assignment Account
It is foreign loan account for local authorities or
organizations. At a fixed date bank receives an assignment of advance in
foreign currency from foreign bank & pays it only in Pak Rupees to
concerned party. The concerned party must has an advice for that
assignment.
Reports & Statements
The foreign exchange section sent daily & monthly Foreign
Exchange Transactions Report to Head Office Karachi & SBP for FC
account only.
• FET (C):
This is a foreign exchange conversion transaction daily
report.
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• FET (A):
This is a foreign exchange assignment transaction daily
report.
• S-1:
Monthly statement for foreign remittances.
• S-4:
Monthly statement for Pak Rupee remittances.
• S-6:
Monthly statement for foreign currency notes.
IMPORT& EXPORT FINANCE
For promoting business import & export activities in the
area, NBP offers Import/ export finance in the way of ;
 Letter of credit (LC).
 Guarantee.
LETTER OF CREDIT:
It is a means of payment for importing goods. Bank issued
LC on the request of exporter in favor of importer.
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Opening bank issued LC on IB-500 financing agreement in which all
necessary information is written by importer such as: Type of goods
imported, quantity, quality, mode of shipment, By which way goods are
imported & by whom, & when etc.
Types of LC:
There are two types of LC i.e.
 Inland LC
 Foreign LC.
Parties Involved In LC.
The parties involved in a Letter of Credit are :
 Exporter
 Importer
 Opening Bank
 Advising Bank
 Negotiating Bank
DOCUMENTS REQUIRED FOR OPENING LC:
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 Application for opening LC
 Performa invoice
 Contract between parties
 Insurance of shipment
 Bill of lading
 Weighting note
 Genuine securities with acceptable margin.
 Mode of payment
 Signed terms & conditions of importing goods
 Agreed rate per unit/ ton.
 Bill of exchange.
 Trust Receipt.
Opening bank send a message by Telex / swift to the
concerned city’s branch of the bank, this bank is called advising bank, it
send advice to seller / importer. Seller then produces goods according to
LC conditions received. Seller presents all documents to his bank called
negotiating bank that negotiates the documents. It checks all terms &
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conditions then attach a letter of conduct with that document & send to
the opening bank. Negotiating bank confirms that the credit is secure &
safe & also confirms the negotiating bank & its issuing LC.
When the shipment of goods reached at destination then the
opening bank is responsible for payment & receiving goods.
FIM: (Finance Against Imported Merchandise)
It is a type of import finance. If exporter cannot pay the
amount of LC at the time of goods received in lump sum amount then he
can pay in installments by pledging his imported goods with the bank &
gives a Trust Receipt which is a legal document issued by buyer in which
he promises to pay the debt at due date.
GUARANTEE:
It is non-fund finance. In LC the payment of debt is at the
destination point of goods immediately for receiving goods as goods
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arrived. But if a certain period is involved to complete a commitment
then other party requires a bank guarantee to avoid fraud e.g.
consignment of readymade clothes etc.
Bank gives guarantee of an exporter by pledging valuable securities to
the importer’s bank & becomes responsible for the payment of goods.
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DISPATCHES
SECTION
DISPATCHES SECTION
Dispatch section maintains the record of mail of branch.
Mail is received & sending by this section through different ways. Before
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the handing over the mail to the courier service clerk, the dispatch section
assistant notes the document in a register and issues a number, which is
used to maintain the proper records. After handing over to the courier
service, now it is the responsibility of the courier service company. In
case of misplacement they have to pay for the damages. Assistant of this
department sort out the receiving mail and then sent to the different
sections.
WAYS OF SENDING MAIL:
There are four ways by which NBP sends its mails that are;
1. Ordinary Dak
It is internal messaging from one section / employee to
another section / employee of the same branch. This mail can be send by
peon or memorandum. It is recorded in a separate register with its
charges of that message.
2. Ordinary Postal Dak:
In this way of sending mail, mail is send through General
Post Office (GPO). It is used mostly when bank want to give any
message to customer.
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3. By Courier Service:
Bank hires different courier services for sending mail
outside the city.
4. Register A/D Dak:
It is register acknowledgment dak send through a registry. It
involves mailing of important documents that are not money related
Dispatch section maintains two main books;
 Postage Book
All postal charges & expenses are recorded with date. It also
has the record that: where the mail is send, by which way & date & what
type of mail is send.
 Peon Book
Ordinary dak from one branch to another of the same bank is
send through a peon. Record of information about mail is maintained in
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peon book. Peon carry the mail along with peon book to take signatures
of mail receiving Officer.
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CASH
DEPARTMENT
CASH DEPARTMENT
The cash department is that through which all the receipts
and payments of bank are made. Also the bank’s cash record remains
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with this department. There are two types of books used in this
department.
1. Cash Receipts Book.
2. Cash Payment Book.
CASH RECEIPT BOOK
In which the cashier records the entry when some one comes
to deposit some amount. The clients come with pay-in or deposit slips
and the cashier receives the amount according to the pay-in slip, sort outs
the notes, puts a signature on slip, stamps it and record in cash receipt
book. After stamping the slip the cashier returns the pay-in slip to the
customer. Then customer goes to another bank officer, he again record
this voucher into his cash scroll and returns one part of the pay-in slip to
the customer and keeps the other part for the record.
CASH PAYMENT BOOK
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When some client comes to the branch to withdraw some
amount from his account, after getting the token from deposit section he
goes to the cashier, cashier checks his token and cheque which is referred
to him from deposit section. The cashier makes to him required payment
and receives the token from the customer. After recording all the cheques
in his book he returned the cheques to the deposit section.
PETTY CASH
Petty cash (Rs. 100 only) for the stationary expenses of the
branch is handled by this section. But cheques of Rs.10 each can only
withdraw it.
HAND CASH
Head Cashier is allowed to retain a limited amount as hand
cash that is Rs.1000 now a day. Remaining balance of cash collection at
the end of the day is locked in safe. This safe opens with two keys, one is
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hold by cashier & other is hold by operational Manager. Only one key
cannot open the safe.
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ACCOUNTING
SECTION
Accounting Section
This is the last section of the branch; whole day’s work is
officially ended in this section. Incharge of this section send information
of whole day’s business in branch to Main branch Multan via computer
networking.
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Computer operator retained a copy of that information in floppy
for branch record daily. He also reconciled all transactions with Head
Office transactions received daily.
This section maintains its record in three books that are;
1. CASH SCROLL
Daily transactions of cash are recorded in cash scroll at the
end of each day. Total cash received in the date is added up in opening
balance (closing balance of previous day) then cash payments are
subtracted from it. End balance is recorded in computer & mails it
directly through networking to Multan IT section of NBP.
2. TRANSFER SCROLL
Al transfers inward & outward of the branch is recorded
with all details of accounts in transfer scroll. It is also mailed to Multan
(IT) section of NBP daily at the end of day.
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3. NBP GENERAL ACCOUNT
General account is an account of each branch of the bank in
its Head Office for transactions among branches. All transactions among
branches are through Head Office by sending F-16 Frankfort, that are
reconciled at Head Office.
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PERFORMANCE OF
NATIONAL BANK OF
PAKISTAN
FINANCIAL ANALYSIS
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RATIO ANALYSIS
Ratio Formula Applied For
Calculation 1998 1999 2000 2001 2002

Regulatory Ratios
Advances to Deposits Advances / Deposits
Ratio 40% 42% 44% 49% 39%

Cash to Deposits Ratio Cash / Deposits
19% 22% 22% 23% 15%
Capital Adequacy
Equity to Asset Total Equity / Total
Assets 3.1% 2.9% 3.1% 2.9% 3.3%

Equity to Deposits Total Equity / Deposits
3.7% 3.5% 3.6% 3.4% 3.9
Profitability Ratio
Return on Equity Net Profit / Equity
5.31% 0.30% 4.1% 9.6% 15.7%
Return on Total Assets Net Profit / Total Assets
0.16% 0.01% 0.12% 0.28% 0.52%
Net profit margin Profit after tax /Income
1.54% -0- 1.4% 3.2% 7%
Operating profit margin Operating profit
/Income 13.7% 8.2% 10.9% 16.4% 19.7%

Investments / Total Investments / Total
Assets Assets 32% 26% 20% 17% 33%

Deposit / Tot. Liabilities
88% 88% 89% 88% 89%
ADVANCES TO DEPOSIT RATIO
RATIO
1998 1999 2000 2001 2002
Advances to Deposits
39%
Ratio
COMMENTS 40% 42% 44% 49%
99
This ratio shows the relationship between total deposits and the advances
by the bank. There is no considerable change in this ratio. It was 41% in
the year 1997 and 40% in the year 1998. After that this ratio has the
increasing trend, It means the bank is giving more and more advances.
And the increase in advance rate is greater than the increase in deposits.
This is a positive sign. In 2002 this rate is falling which is a negative
sign. The management should also consider the risk of bad debts and take
the steps regarding this.
CASH TO DEPOSIT RATIO
RATIO 1998 1999 2000 2001 2002

Cash to Deposits Ratio 19% 22% 22% 23% 15.3%
COMMENTS
100
This ratio shows the relationship between the cash and the total deposits
of the NBP. This ratio also has the increasing trend every year. The
highest ratio is in the year 2000, And the lowest in 2002.
EQUITY TO ASSETS
RATIO 1998 1999 2000 2001 2002

Equity to Asset 3.1% 2.9% 3.1% 2.9% 3.3%
COMMENTS
This ratio calculated to show the relationship between the equity and the
total assets. This ratio was highest in the year 2002 i.e. 3.3%.
Management also should try their best to increase this ratio because the
101
main concern of the management should be to increase the shareholder
equity.
EQUITY TO DEPOSITS
RATIO 1998 1999 2000 2001 2002

Equity to Deposits 3.7% 3.5% 3.6% 3.4% 4%
COMMENTS
This ratio shows the relationship between the total equity and the total
deposits of the customers. The highest ratio was in the year 2002, while
102
in 1999 it was lowest i.e. 3.4%. As the deposits increase the management
also try to increase the share holder equity.
NET PROFIT MARGIN
RATIO 1998 1999 2000 2001 2002

Net Profit Margin
1.54% -0- 1.4% 3.2% 7%
COMMENTS
This ratio shows the relationship between the net profit and the total
income. From the year 98 to 2001 it is very low which is discouragable.
103
In 2002 bank improve this ratio by giving special attention. It is a
positive sign.
DEPOSITS / TOTAL LIABILITIES
RATIO 1998 1999 2000 2001 2002

Deposits/Total Liabilities 88% 88% 89% 88% 89%
COMMENTS
This ratio shows the relation ship between the Deposits and total
liabilities. It is almost stable from 98 to 2002. This shows that deposits
are the main portion of the total liabilities.
104
INVESTMENT/TOTAL ASSETS
RATIO 1998 1999 2000 2001 2002

Investments / Total Assets 32% 26% 20% 17% 33%
COMMENTS
When we compare the investment against the total assets we find that
investment is decreasing as a percentage of total assets but now bank has
105
handled this situation in 2002. This is because bank’s advances are
increasing and bank is now lending and financing to businesses.
RETURN ON EQUITY
RATIO 1998 1999 2000 2001 2002

Return on Equity 5.31% 0.3% 4.1% 9.6% 16%
COMMENTS
When the total profits of the bank are compared with the total equity of
the shareholders. we find up and down fluctuations in the return on
equity ratio. This ratio was maximum in 2002, which is very
incouragable due to the record profit earned by the bank this year. And
this ratio was very low in the year 1999.
106
RETURN ON TOTAL ASSETS
RATIO 1998 1999 2000 2001 2002

Return on Total Assets 0.16% 0.01% 0.12% 0.28% 0.52%
COMMENTS
This ratio shows the relationship between the total assets and the net
profit. During last 5 years this ratio for the NBP fluctuates very much. It
was highest in the year 2002. In the year 1999 it was in negative due to
loss in this year.
107
108
SWOT ANALYSIS
109
SWOT ANALYSIS:
It is very important for any organization to know about its
strengths, weaknesses, opportunities and threats to compete in the
industry. So, by the help of environmental analysis and
organizational structure we can find out the opportunities and
threats and then match with the capabilities of the organization.
STRENGTHS:
 National bank of Pakistan is a government owned bank. This is the
reason that the Pakistani nation has complete trust over the bank
that its deposits are fully secured.
 National bank of Pakistan is enjoying the deposit of different
government organization like P.I.A., Pakistan Railway, WAPDA
and Sui gas.
110
 There are more than six million clients of National bank. Its
customers are served all over the Pakistan and abroad. Its branch
network is one of the largest in Pakistan.
 It has strong financial position.
 The most important point of National bank is that it is agent of
State bank of Pakistan, where the State bank branches are not
working; National bank controls its function.
 Only the NBP is authorized to advance loan against Gold. This
function makes the NBP able to earn profit on the Gold. This
function becomes the major source of income of NBP.
 When Govt. starts any new scheme of loan to assist the public,
then normally NBP is authorized to implement it. It is provided
with the funds from the Govt. to advance this loan to public, it
earns profit on it which increases its over all income.
111
 National Bank Of Pakistan has the safe advances because it is a
Govt. bank. Which increase the profitability of the bank.
 NBP has now restructures itself to provide better services
efficiently to the customers of the bank. Upper management aims
to achieve high customization.
 NBP has contracts with foreign exchange companies for foreign
remittances, due to this NBP earns more foreign exchange than
before and more than any other bank in Pakistan.
Weaknesses
 Being a Govt. bank, Govt. imposes many policies, which proves
harm full for the bank..
 The private bank’s employees are provided more facilities so they
become more efficient. For example Askari bank has a power full
computer network while in NBP most of the branches including all
branches of Bahawalpur are not still computerized. The employees
112
have to complete their work manually, which is very time
consuming. Even employee’s daily works till nights.
 As National bank of Pakistan is a Govt. owned organization so
there is strong political influence on its operations.
 Lack of implementation of rules and regulation
 Unskilled staff. The staff is not skilled and professionals are very
few in number.
 Generally, the attitudes of the employees are not serious with each
other and have professional jealousy, which is not healthy for the
bank.
 NBP Has adopted very strict policies in case of sanctioning the
loan, which are difficult to fulfill and time consuming.
113
 HRM department of NBP is not working properly. It results lack of
motivation, creates confusion among employees because many
employees are placed at seats which are totally irrelevant to them.
 There is no attention toward internal decoration of the branches of
bank.
114
Opportunities
 NBP must develop its IT section in each branch. It must be
computerized and commence online banking.
 NBP should concentrate more industrial sector and agriculture
sector. They should provide finances to the farmers both on short
term and long term basis.
 Since the Govt. has offered Golden Hand Shake scheme only in
NBP. So the NBP can reduce its huge establishment expenses.
 The bank by establishing new branches in the foreign countries can
expand its business and earn more foreign exchange.
 NBP can diversify its funding base and earn foreign exchange by
investing into capital markets of other countries.
 New schemes for deposits and finances should be introduced
regularly.
115
 Proper advertising of the products of the bank.
Threats:
 With the passage of time the other banks are introducing efficient
information technology sections & computer networks. But use of
the modern technology is very less in NBP as compared to the
other banks. So there may be a time come when those banks
would snatch the market share of NBP.
 Being the Govt. employees it is often seen that the employees are
not so much efficient and hard working. When employees of some
organization are not so much hard working ultimately that
organization will remain behind the competitors.
 Employees are involving so much in internal politics & lobbies
among them, which disturb working conditions & goodwill of the
bank.
116
 Lack of customization.
 The number of banks in Pakistan is increasing day by day and they
are providing good customer services as compared with the NBP,
so it may lose its market share in the future.
117
SUGGESTIONS
&
RECOMMENDATIONS
118
SUGGESTIONS & RECOMMENDATIONS
 It is strongly recommended that N.B.P. should computerize its
braches & develop a powerful computer network for on-line
banking.
 Govt. should take keen interest to recover its bad debts, which can
improve its financial position.
 HRM department must have a proper plan for placement of
employees.
 NBP must give the proper attention toward increasing the
customization. It should establish a customer-oriented section in
each branch for receiving him respectfully & provide proper
guidance that he requires.
119
 Along with the officers, the training must also be given to the
clerical staff. Because of N.B.P. are running on manual system and
the training of its staff directly improving their efficiency of work.
 Working conditions must be improved for the employees.
 Upper management should take decisions for promotion of
employees on the basis of professional justice.
 Internal politics & lobbies should be minimized.
 There is also a need of proper recruitment and selection program.
New young talent should be introduced to inject the new ideas.
 Political influences on the banking operations should be
eliminated.
 The recruitment policy should be fair and transparent.
120
121
CONCLUSION
CONCLUSION
122
Being a Govt. bank it is ignored from the beginning. It has to
followed strict rules & regulations imposed by SBP & Govt. It has
great burden of Govt. services, which is not much beneficial for the
bank. Due to the pressure of Govt. activities like payment of pension
and receipt of Govt. a rush of work is there, which disturb the normal
banking business. Also such type of activities is performed by the
National Bank without any services charges.
Another burden for the National Bank is salaried accounts. Those
are in large numbers. National Bank is not gaining any advantages
from these types of accounts besides of wasting the time. These
salaried accounts are dead assets for the bank.
National Bank is still working on manual basis. It is very time
consuming activity that’s why customers feel uncomforted as they
have to wait for long time even for a single cheque and also the
chances of mistakes and frauds are greater in manual work system.
Motivation plays an important role in the success of any organization.
So, there is late schedule for upgrading the employee’s status.
Promotion should be in time and according to the individual’s
performance.
123
Due to the manual work system employees have to spent most of
their time in the bank to complete even their daily routine work. They
have to sit till 9:00 or 10:00 PM. For this reason their normal life is
disturbing which create the irritation in the behavior of employees.
As compare to the other banks the working environment of
National Bank is very poor. Most of its branches are still in old decors
and poorly conditioned buildings. These working conditions effect in
two ways. First from employees side if the working conditions are not
reasonable then their work efficiency will be very low and Second
from the customer’s side that the customers don’t like to go in such
type of environment.
Being a Govt. Bank, political and beurucratic pressure is much
more as compared to the other banks. As a result the bad debts are
high.
Due to all above-mentioned factors the customers of NBP are
shifting towards other banks and also the deposits of National Bank is
decreasing.
124
125
ANNEXURE
126

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Internship Report on NBP

NATIONAL BANK OF PAKISTAN

Incharge Internship and Placement,

Sir. Nazik Hussain.

DEPARTMENT OF MANAGEMENT SCIENCES

ISLAMIA UNIVERSITY BAHAWALPUR

To my parents, especially to my kind father. I

cannot forget their cooperation and sacrifices.

especially Mr. Nazik Hussain (Incharge Internship). I am very thankful

especially I am thankful to Mr. Sharafat Hussain, Mr.Shoaib Mailk, Mr.

Abd-ul-Rehman, Mr. Saeed Khan, Mr. Ahmad Karim Soomro, Mr.

I cannot forget the kindness &cooperation of Miss Uzma & Mrs.

Naghma. I am very thankful to them for their guidance &support.

me a lot of information & knowledge of foreign exchange with in very

I have gain practical knowledge of banking functions & their

processes during my internship. I have tries to get more & more

information &knowledge about banking from senior & experienced

employers of NBP during my internship period.

ROLL NO,14(4th Semester)

Internship, a practical training, is an integral part of MBA study.

Bahawalpur. It is a six weeks training period in which I tried my best to

get complete knowledge and training in different sections of the branch.

functions of NBP. This report is prepared in simple and understandable

Roll No. 14.

Pakistan. I tried my best to gain something practically from this

opportunity. This report starts from the introduction of word ‘Banking’,

and then History of National Bank of Pakistan. History of NBP shows

of the bank and quality of services and products.

Now it has objectives to overcome past mistakes, realize the real

importance of customer so now it has main objective to achieve

A commercial bank has basic functions that are must be performed by

them as a bank i.e.

• Accept money as deposits.

• Investing deposits to earn profit.

Deposit section opens different accounts of clients and maintains record

also maintains record of payment to the customer when he presents

Remittance & collection section deals customers who want to transfer or

collect their money from/to other city.

Foreign Exchange section deals customers who have foreign account in

the bank & deals exchange of foreign currencies.

SWOT analysis of National Bank Of Pakistan shows that it has small

number of strengths and lot of weaknesses. The bank should give

attention to this drawback. But bank has lot of opportunities to improve

attention to overcome its threats.

No satisfactory definition of bank is available although various

attempts have been made by different authorities;

Americans defined Banking as “By banking we mean the business of

dealing credits; and by bank we mean include every person firm or

company having a place of business where credits are opened by deposits

or collection of money or currency, subject to be paid or remitted on

cheque or order or money is advanced or loaned or stocks, bonds,

bullion, bills of exchange, promissory notes are received for discount or

3 (b) as “Banker means a person transacting the business if accepting, for

the purpose of lending or investment of deposit of money from the

public, repayable on demand or otherwise and withdraw able by cheque,

draft or otherwise and includes any Post Office Savings Bank.”

HISTORICAL BACKGROUND OF NATIONAL BANK

When we won political independence, Non- Pakistanis, mostly

Hindus, controlled our economy. After partition over 7 million people

Pakistan and the economic life was brought to a standstill: mostly

branches of Imperial bank of India were only in partial operation with

and cotton industries were started during 1950-55.

It was decided that Reserve of India would act as the common