Internship Report 2010

Internship Report on National Bank of Pakistan 1

1. Executive Summary

This report is based on internship in National Bank of Pakistan Abdullah

Pur Branch Faisalabad. It is a famous and reputed bank of Pakistan. National

Bank of Pakistan maintains first position in banking sector in Pakistan. This

report is based on the activities which are performed in this bank. This report

contains Historical overview, Organizational structure, Vision and mission

statement, core values and goals, Functions performed by NBP, Services &

Products, Financial highlights of previous five years, Ratio analysis, Financial

analysis, SWOT analysis of National Bank of Pakistan. There are also stated the

activities which I performed during my internship in the branch. The problems in

this branch are also discussed.

National Bank of Pakistan was established under National Bank of

Pakistan Ordinance 1949 nd it came into existence on 21st November 1949 with

issued capital of 1.5 million. The bank has a vast network of 1287 branches

across the country. It has 22 overseas branches. The no of employees are 16248

in 2009. Syed Ali Raza is the president of NBP.

NBP has the departments like deposit, clearing, advance, foreign

exchange, billing, accounts and remittance. Deposit department collects deposits

from customers. Deposits offered by NBP include current, saving, PLS, fixed, call

deposit, short term deposit, and foreign currency deposit. Clearing department

accept transfer deliveries and clearing cheques from the customer of the branch

and to arrange for their collection. It also includes clearing house. Advances

department lends money in the form of clean advances, against promissory

notes, as well as secured advances against tangible and marketable securities.

The bankers prefer such securities that do not run the risk of general

depreciation due to, market fluctuations. Securities include guarantees,

Mortgage, Hypothecation, Pledge, Promissory Note. Types of advances include

demand finance, running finance, fianance against the foreign bills (FAFB),

agricultural loans Industrial loans. Foreign Exchange department includes

Hailey College of Commerce


foreign exchange transactions. The foreign exchange transactions are usually

of two types i.e. Merchandise Transaction and Service Transaction. Capital

Account Transactions includes short term and long capital transfers. Bills

department performs the functions i.e. Inward Bills for Collection (IBC) and

Outwards Bill for Collection (OBC). IBC includes demand draft and OBC includes

clean bills, documentary bills, pay slip and pay order. Usually Accounts are

maintained in Accounts Department in two ways (a) Journal System (b) Vouchers

System. Journal system is adopted by some commercial industrial institutions. In

journal system entries are reported in Journal Books and then posted to ledger.

Voucher system is used for every transaction. Voucher has to be prepared either

in cash or in transfer or in clearing, the Sheet upon which these vouchers are

summarized transactions-wise and consolidated into a figure is called

supplementary. Remittance department performs following functions (a) Mail

Transfer (MT) (b) Telegraphic transfer (TT) (c) Demand Drafts (DD).

NBP products includes Premium Aamdani, PLS Saving Account, Mera

Apna Karobar, Saiban, Advanced Salary, Cash card, Investor Advantage, Cash n

Gold, Kisan Taqat, Kisan Dost, Pak Remit and Protection Shield.

NBP strengths includes its strong organizational culture, best top level

management, strong industrial policies, best research appraisal team, lenient

policy with clients and best quality services. Weaknesses include less attention to

rural development, poor advertisement, poor networking. Main opportunities are

sponsor the IT based projects, Goodwill and better image, growth in industrial

sector. Threats for NBP are political influence and instability, sick projects, lack of

Modern Banking techniques. Problems include lack of information technology,

limited timing of banking services for customers, staff shortage, lack of female

staff for dealing with women, unsatisfied promotion policies, improper standard

for recruitment of clerical staff etc.

VISION



“To be the pre-eminent financial institution in Pakistan and achieve

market recognition both in the quality and delivery of service as well

as the range of product offering”

MISSION STATEMENT

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

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.

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


http://www.nbp.com.pk/About_Us/CoreValues.htm


GOALS

“To enhance profitability and maximization of NBP share through leverage of

existing customer base diversified range of products.”

INTRODUCTION

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 nation wide

branches.

ESTABLISHMENT

National Bank of Pakistan was established under the National Bank of Pakistan

ordinance 1949 and it came into existence on November 20; 1949.Its main aim

was to provide all types of banking services to the government and private sector.

The bank also handles treasury transactions for the Govt. of Pakistan as agent to

State Bank of Pakistan.



SHARE CAPITAL

Issued Capital

The bank was setup with an issued capital of Rs.1.5 million.

Authorized Capital

Authorized capital of National Bank of Pakistan in 2000 was Rs.2.5 Billion.

Issued, Subscribed, and Paid-up Capital

Issued, subscribed and paid-up capital in year 2000 was Rs.1.46 Billion.

Corporate Information

Chairman & President

Syed Ali Raza



Muhammad Ayub Khan Tarin

Mian Kausar Hameed

Ibrar A. Mumtaz

Tariq Kirmani

Haniya Shahid Naseem

Nazrat Bashir

(Joined as member board of Directors on 1st

march, 2010 in place of Mr.Ayub khan Tarin)

Audit Committee

Chairman Ibrar A. Mumtaz

Mian Kausar Hameed

Tariq Kirmani

Auditors

Anjum Asim Shahid Rahman & Co

Chartered Accountants



M.Yousaf Adil Saleem & Co

Chartered Accountants

Legal Advisors

Mandviwala & Zafar

Advocates & Legal Consultants

Registered & Head Office

NBP Building

I.I Chundrigar Road,

Karachi, Pakistan.

Registrar &

Share Registration office

Central Depository Co. of Pakistan,

CDC House, 99-B, Block-B,

S.M.C.H.S.,Mian Shara-e-Faisal

Karachi, Pakistan.

Website www.nbp.com.pk


http://www.nbp.com.pk/


Senior Management:

Qamar Hussain : Chief Operating Officer , Head of Credit & Risk Management Group

Dr. Asif A. Brohi:SEVP & Group Chief, Operations Group

Shahid Anwar Khan:SEVP & Group Chief, Overseas Banking Group / Corporate & Investment Banking Group

Ziaullah Khan:SEVP & Group Chief Agriculture Finance Group

Dr. Mirza Abrar Baig:SEVP & Group Chief, Human Resources Management & Administration Group

Amer Siddiqui:SEVP & Group Chief, Commercial & Retail Banking Group

Tariq Jamali :SEVP & Group Chief, Compliance Group

Nadeem A. Ilyas:SEVP Group Chief, Assets Recovery Group / Corporate & Investment Banking Group

Muhammad Nusrat Vohra:SEVP & Group Chief, Treasury Management Group

Khalid Bin Shaheen:SEVP & Group Chief, Global Home Remittance Management Group

Imam Bakhsh Baloch:SEVP & Group Chief, Audit & Inspection Group

N. B. Soomro: SEVP , Special Assignments, President's Secretriate

Agha Fidaullah: EVP/Group Chief, Special Assets Management Group

Shafique Ahmed Khan: EVP & Divisional Head, Islamic Banking Division

Ekhlaq Ahmed:EVP & Secretary Board of Directors

Fazal-ur-Rehman:EVP & Head P&IR Division, HRM&A Group

Muhammad Hanif:



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

Muhammad Iqbal Qasim: EVP & Head SC & CSR Division, HRM&A Group

Ali Hassan:SVP & Head Project Management office Core Banking

Overseas Management:

Zubair Ahmed: SEVP & Regional Chief Executive, Middle East, Africa & South Asia Region

R.A. Kaleemi:SEVP & Chief Representative, Canada Office

M. Rafiq Bengali: SEVP & Regional Chief Executive, Americas Region

Asif Hassan: SEVP & Regional Chief Executive, Far East Region

Nausherwan Adil: SEVP & Regional Chief Executive, Europe Region

Khawar Saeed: SVP & Regional Chief Executive, Central Asian Republics Region

Muhammad Hanif Khan: SVP & Coordinator, Afghan Operations

Management Hierarchy

FROM TOP TO BOTTOM



CHAIRMAN

Board of Directors

Executive Committee

President

Regional Headquarter

Zonal Chiefs

Zones

Branch Managers

Finance Deptt.

Officer

Cash Deptt.

Officer

Admn. Deptt.



Officer

Banking Deptt.

officer

MANAGEMENT AND ORGANIZATION OF BANK

Board of Directors:

In the management of the bank the board of directors is at the top of the controlling

bodies. Since there are no private shareholders, so there is no general meeting of

shareholders and no directors are elected. The board consists of a nominated

president, a secretary and 6 other members.

After nationalization in1974 most of the powers have been transferred to the

executive board.

Executive Board:



It is also called the management committee. The general direction and supervision

of the affairs of the bank lies in their respective executive boards. The president,

secretary and 6 other members of the board are appointed by the federal govt.

The president being the chief executive controls the affairs of the bank.

Chief Executive:

The president is the administrative head of the bank. He manages and controls the

affairs of the bank. The president holds the office at the pleasure of the federal

government.

Regional chiefs:

In order to improve the performance of the banking system, the bank has appointed

regional chiefs also. The regional chief has the powers of sanctioning finance and

other credit facilities.

There are 7 regional head quarters of the regional chiefs of the N.B.P., 1 is in the

N.W.F.P., 1 is in Balochistan, 3 are in Punjab, and 2 are situated in Sindh.

Zonal Chiefs:



Each region is divided into number of zones. They hold the post of VP or AVP and

administer these zones.

N.B.P. has 37 zonal offices in Pakistan.

Branch managers:

Each zone is then sub divided into a no. of branches. The control and supervision of

each branch is mostly entrusted to AVP or officer of grade II.

BRANCH MANAGER

2 SECOND OFFICERS

2 ASISTANTS

2 CASHIERS

2 MESSANGERS

3-ARMED GUARDS

Deposits are important to the bank as a backbone is to the body of a man. They are

the lifeblood of the bank. National Bank of Pakistan and all other commercial banks



perform the function of deposit accepting from the general public by offering suitable

rates of interest on them, or on simply a promise to repay on demand.

Branches:

National bank of Pakistan carries on its business through a wide network of

branches. These branches perform their functions under the supervision of local

principal offices and head office in Karachi.

Local Branches

The bank has a vast network of 1265 branches across the country.

Its subsidiaries are:

NBP Leasing Limited (formly NBP capital limited)

NBP modaraba management company limited

NBP Exchange Company limited

Taurus Securities Limited

Overseas Branches



NBP has 22 overseas Branches

United States America 2

France 1

Germany 1

Bahrain 1

Pakistan KEPZ 1

Bangladesh 4

Hong Kong 2

Republic of Korea 1

Japan 2

Afghanistan 4

Turkmenistan 1

Kyrgyzstan 1



Azerbaijan 1

Financial Highlights

1950

(1st year of operations) (Rs. in million)

Total Assets 120

Deposits 56

Advances 49

Investments 49

Profit 0.3

No. of branches 17

No. of Employees 390

2009

(60th year of operations) (Rs. in Million)

Total Assets 944,233



Deposits 726,465

Advances 475,243

Investments 217,643

Profit 18,212

No. of branches 1287

No. of Employees 16,248

Training and Management Development Wing:

National bank of Pakistan has its national and development centers and 4 staff

collages at: -

1. Karachi

2. Lahore

3. Peshawar

4. Islamabad



In these centers and staff colleges, the banking training is provided to the officers,

managers, and to potential managers. It arranges courses and seminars for middle

and higher management in all. Each year almost 1500 persons receive training over

there.

DEPARTMENT OF NATIONAL BANK OF PAKISTAN

National Bank is performing its activities through the following functions:

1. DEPOSIT DEPARTMENT

The function of deposit department is to collect deposits from customers.

Following type of deposits are offered by NBP.

i. Current deposit

ii. Saving bank deposit

iii. Profit and loss saving account

iv. Fixed deposit

v. Call deposit

vi. Short notice term deposit

vii. Foreign currency deposit



viii. Cumulative deposit certificate (other)

1. Current Deposits

In the type of account the client is allowed to deposit or withdraw money

as and when he likes. He may, thus, deposit or with draw several times in the

day if he likes. Usually the bank allows this and service chargers are deducted by

the bank and current deposit account.

2. Saving Bank Deposits

This type of account is for those persons who want to make small savings.

This type of account is opened with Rs. 100. In this case deposits can be made

only up to a costing amount and with drawls are allowed twice a week. If the

depositors wants to withdraw more than Rs. 15000 a seven days notices is

required before the withdrawal.

3. Profit and Loss Sharing Deposits

These types of accounts are one step towards the Islamisation of Banking

system in the Pakistan. Under such types of accounts the bank allows no interest

to the customers. The executive board of the bank declares profit or loss every

year. PLS saving account having a running minimum credit balance of Rs. 100

would be eligible for sharing profit/loss of the bank. The rate of profit or loss on

PLS saving accounts shall be determined by the bank at the close of each half

year, in its sole discretion and the banks decisions shall be final and binding on

the PLS account holder.

4. Fixed Deposits

In the type of account a certain amount is deposited for a certain, period

such as six-month, two years or longer. A fix deposit receipts is issued in the

same of the depositor. The receipt is signed by the officer incharge and the bank

manager. A notice is given to the depositor requesting the depositor to withdraw

his money or to renew this deposit. The interest allowed on fixed varies with the

period for which the deposits are made.



5. Call Deposits

Call deposits are the sorts of deposits, which are deposited with the

banker against any tender. This is without interest deposits, this may be with

interest provided the depositor has agreed to keep its amount with the banker for

some fixed period.

6. Short Notice Term Deposits (S.N.T.D)

This kind of deposit is for a short period. The depositor may withdraw his

deposit at any time by giving seven days notice to the banker. In this type of

deposit facility the trader is allowed to withdraw his amount with interest of the

deposited period.

7. Foreign Currency Accounts

Foreign currency account is opened by depositing foreign currency. In ABL

you can open foreign currency account in:

i. US DOLLAR

ii. POUND STERLING

iii. JAPANESE YEN

iv. DEUTSCHE MARK

BOOKS RELATING TO CUSTOMERS

a) Pay-in-Slip



When money is to be deposited in the bank the pay in slip is to be filled. The

object of this book is to provide the customer with the bank’s

acknowledgement for receipt of money to be credited his account.

b) Cheque Book

A chequebook contains a number of cheques, which is given to a

customer upon written request and after marking the payment for the

chequebook. It enables a customer to make withdrawal from his account or make

payment to various parties by issue of cheques.

c) Pass Book

Passbook is a copy of the customer account as it appears in the books of

the bank. The clerk in this book records balance. But now a day due to

computerization the concept of passbook is not in practice.

GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT

The banker may close the account of the customer due to following reasons:

i. Notice by a Customer

ii. Death of a Customer

iii. Customer’s Insolvency

iv. Customer’s Insanity

v. By order of court

vi. Unsatisfactory operation

I) NOTICE BY CUSTOMER



The banker closes the account of the customer on the application of the

customer for closing his account.

II) DEATH OF CUSTOMER

On death of his customer, the bank must stop payment on cheques drawn

on him by the deceased customer because the death revokes his authority to pay

such cheque. The heirs or the executors of the deceased customer are not

authorized to operate on the account; it can act only in accordance with

provisions mentioned in the letter of probate issued by a competent courts.

III) CUSTOMER’S INSANITY

If the customer becomes insane or mental it terminates the banker’s

authority to act as his customer’s agent. Since the banker customer relationship

comes to end, in such as situation, it is usually considered that the banker’s

authority to pay his customer’s cheques is revoked by notice of insanity.

However, the bankers treat their customers as it unless a fairly inclusive

evidence of the customer’s insanity is available to them.

IV) ORDER OF COURT

A court of law may serve a banker with an order in garnish proceeding in

execution of a decree prohibiting him from honoring a customer’s cheques.

V) CUSTOMER INSOLVENCY

Insolvency is civil death therefore, the insolvent adjusting loses his rights

receiver or liquidator as the banker receives the notice of insolvency of the

adjusting, or petition filed for adjusting a filled customer insolvency.





2. CLEARING DEPARTMENT

1. Introduction

2. Clearing House

3. Advantage of Clearing House

4. Function of Clearing Department

5. Procedure of depositing cheque

6. Types of cheques collected by clearing department

7. Scrutiny of pay in slip

8. Procedure after scrutinizing

9. Procedure of clearing at clearing house

INTRODUCTION

Every bank acts in two way i.e.

i. Paying Bank

ii. Collecting Bank

Here in theory no legal obligation on a banker to collect cheques, drawn up to

other banks for a customer. It is, however, an important function of crossed

cheques. A large part of this work is carried out through the bankers clearing

house wherever it is established.

CLEARING HOUSE

A clearing house is the place where representatives, of all the banks get together

for the purpose of off setting the inter bank indebtedness arising from the transfer

of deposits by a customer of a particular bank to another bank.



ADVANTAGE OF CLEARING HOUSE

The advantages are manifold. It prevents the cost and waste involved in

collection each and every cheque and claim. Which a banker holds against

another, across the counter with all the danger of loss in the transit incumbent

upon it. Great economy is also achieved in the employment of liquid cash by

setting the difference by simpler transfer of credit from one account to another,

there by minimizing the necessity of holding large cash balances, clearing house

works under the control of State Bank of Pakistan.

A banker has no legal obligation to collect cheques drawn upon other

banks for the customers, though modern banks have assumed this important

function of their own choice. Therefore, it is very important that since they have

assumed this function, the banker should be very careful in their performance,

otherwise they will face more difficulties. So, if they provide this facility when the

cheques are crossed.

FUNCTION OF CLEARING DEPARTMENT

The following are the main functions of clearing department.

1. To accept transfer deliveries and clearing cheques from the customer of

the branch and to arrange for their collection.

2. To arrange the payment of cheque drawn on the branch and given for

collection to any other branch of National Bank of Pakistan or any other

members, or sub-members of the local clearing house.

3. To collect amounts of cheques drawn on members, sub-members of the

local clearing house, sent for collection by those NBP branches which are

not represented a the local clearing house.

PROCEDURE OF DEPOSITING CHEQUES IN CLEARING DEPARTMENT

Whenever a customer wants to deposit cheque, etc, he fills a pay in slip

and hands it over the counter along with the instruments he wants to deposit with



bank. As far as possible, the customer desire that on of the staff member fill in a

slip for him, he should be obliged promptly.

The smaller portion of the perforated pay in slip is handed over to the depositor

and the portion becomes the regular portion of a credit voucher.

TYPES OF CHEQUES COLLECTED BY CLEARING DEPARTMENT

a. Transfer Cheques

Transfer cheques are those cheques, which are collected and paid by the

same branch of bank.

b. Transfer Delivery Cheques

Transfer Deliver cheques are those cheques, which are collected and paid

by two different branches of a bank, situated in the same city.

c. Clearing Cheques

Clearing cheques are those cheques in which the payee (Person who deposit

cheques for collection) and the drawer of a cheque maintain the account with

different banks. When the cashier receives the cheques, which are to be

deposited for clearing purpose, the following points must be verified.

1) The instruments should be neither stale nor post dated.

2) If the instruments is crossed, not negotiable, it can be for the third party (can

be endorsee of an order cheque, or a holder of bearer cheque).

3) The instrument should not bear any unauthorized alteration.

4) The amount in words and figures should be the same.

5) The instruments should be drawn on a member, or any of local branches.

6) If the cheque is crossed "Account payee’s" "Account payee only" or "Payee’s

Account", it should only be accepted for collection for the payee’s account.

7) The cheques or drafts should not be crossed specially to any other bank.



8) A cheque payable to one of the joint account holder should not be collected

for the joint account without the payee’s endorsement, or consent.

9) A cheque payable to a firm should not be accepted for credit to a partner’s

account.

A cheque drawn by a customer in the capacity of an agent, Attorney, or

Manager of his company or firm, should not be collected for credit to his personal

account.

10) Pay orders, although negotiable, should not be collected for third parties.

11)Do not collect an instrument in the accounts of an agent, or of the servant

of the payees of endorsee of the instruments.

12) Mail transfer Receipts pay ships and treasury receipt should not be collected

for persons other than the payee.

13) If an account is new, or the balance or operation of the account is not

satisfactory, satisfy yourself about the titles of the customer to the instruments

before the titles of the customer to the instrument before accepting the

deposit.

14) Branch agent’s permission should be obtained before accepting a third party

cheque or draft for credit of the account of the staff member.

15) If the payee is a government department, government official, or a trust

account, the instrument cannot be collected, but for the payee’s account.

16) If the payee of an instrument is Habib Bank Limited, it can be collected for

credit of the drawer’s account, or the amount of the instrument may be utilized

as desired by the drawer in writing.

17) Cheque payable to a trust, account should not be collected for credit to at

trustee account.



18) All the endorsement should be regular, and on endorsement should be

missing. After the cashier scrutinizes the cheques he must also scrutinize the

pay in slip.

SCRUTINY OF PAY-IN-SLIP

The following steps are involved in the scrutiny of pay in slip.

1. On both the counterfoil and the pay in slip following should be checked.

i. Date of Deposits

ii. Account number

iii. Title of the account

iv. The cheque/number and the drawer bank/name.

v. Total amount in words and figures

2. Customer should use separate pay in slip for transfer, transfer delivery,

and clearing cheques.

3. The amount noted should be the same as the amount of the instruments,

and the amount in words and figures should be same.

PROCEDURES AFTER SCRUTINIZING

After scrutinizing the cheques and other deposit instruments and paying slip

at the counter the following procedure is under taken by cashier if he is satisfied.

1. Fixing the stamp.

2. Scrutiny, and receipt by the authorized officer

3. Returning the counter foil to the depositor.

4. Certificates and confirmation by the officer-incharge of the department.

5. Separating the cheque into transfer delivery, and clearing cheque.



PROCEDURE OF CLEARING AT CLEARING HOUSE

The mechanism of setting inter bank indebtedness operates as follows.

Clerks representing various banks meet at a common place, the

clearinghouse, everyday. Every clerk then delivers to the others the cheques and

the other claims which their respective banks hold against his banks hold against

his bank cheques and other documents dishonored will be returned to the

representative of the respective bank. The various amounts of receipts and

deliveries are now added up and a balance is struck there in and the final

settlement is effected by the supervisor of the clearing house by transferring

balance kept and the central bank by these various clearing banks.

3. ADVANCES DEPARTMENT

1. Introduction

2. Securities.

3. Types of advances

INTRODUCTION

The function of advances department is to lend money in the form of clean

advances, against promissory notes, as well as secured advances against

tangible and marketable securities. The bankers prefer such securities that do

not run the risk of general depreciation due to market fluctuations.

Common Securities for the banker’s advances are as under:-

SECURITIES

1. Guarantees

When an application for advance cannot offer any tangible security, the

banker may rely on personal guarantees to protect himself against loss on

advances or overdraft to the applicant.



2. Mortgage

A mortgage is the transfer of an interest in specific immovable property for

the purpose of security the payment of money advanced or to be advanced by

way of loan, and existing or future debt, or the performance of an engagement

which may rise to a pecuniary liability. The transfer is called a mortgagor, the

transferee a mortgage.

3. Hypothecation

When property in the shape of goods is charged as security for a loan

form the bank the ownership and possession is left with the borrower, the goods

are said to be Hypothecated The essence of hypothecation is that neither the

property in the goods not the possession of them are possession is left with the

borrower, the goods are said to be Hypothecated the essence of hypothecation is

that neither the property in the goods not the possession of them are possessed

by the lender, but the security is granted by means of letter of hypothecation,

which usually provides for a banker’s charge on the hypothecation goods.

4. Pledge

In a pledge the ownership remains with pledge, but the pledge has the

exclusive possession of property until the advance is repaid in full. While in case

of the default the pledge has the power of sale after giving due notice.

5. Promissory Note

Sometimes promissory note is also accepted as a security, "A promissory

note is an instruments in writing containing an unconditional undertaking signed

by the maker, to pay on demand or at a fixed or determinable future time a

certain sum of money only, to or to the order of certain persons, or to the bearer

or the instrument." A promissory note is incomplete until has been delivered to

payee or the bearer. Moreover, the sum promised in a promissory note may be

made by two or more makers who may be liable there on jointly and severally.



TYPES OF ADVANCES

The advances which are given by Habib Bank Limited are as under:-

1. DEMAND FINANCE (Ordinary Loan)

Demand Finances are those advances which are allowed in lump sum for

a fixed period and are repayable lump sum or gradually in installments.

TYPES OF ADVANCES

a. Demand Finance (Packing Credit)

Scheme introduced by State Bank of Pakistan for exporter of carpet,

surgical instruments, at zero percent rate of interest. While banks provides

at concessional rate of interest.

b. Loan ordinary (Demand Finance to Students)

Qarz-e-Hasana Scheme Loans are allowed to the students, teachers

without any interest or mark up with the recommendations of the MPA or

MNA.

c. Demand Finance (Staff)

Loans are offered to the staff of the following four categories.

i. House Building Loans against mortgage of property.

ii. Loan for purchasing vehicles.

iii. Loan equivalent to months salary.

. RUNNING FINANCE (Overdraft)

Running finance (old name overdrafts) are advances, which are generally,

given to meet temporary requirements of the customers. A good customer use

the banks running finance limit as a mean of protecting his credit in the market

and as a line of security defense to meet his commitments.



TYPES OF RUNNING FINANCE

I. Unsecured

Under such type of overdraft the bank pay upon the personal security of

the customer’s mentioned on the customer’s account.

II. Secured

Under this type of overdraft the bank allows his customer to withdraw

more than his deposits after giving security against the amount overdrawn.

The securities against which they given are:

i. Share certificate, Saving certificate

ii. Deposits

iii. Mortgage of property

iv. Guarantee of person

3. CASH FINANCES (Commercial Loans Inward)

This type of loans are given against following:

i. Against locally manufactured goods.

ii. Cash finance against Rice and Paddy

iii. Against pledge

iv. Against commodities

Besides advances against the above commodities parties for advances

against other commodities like tobacco, oil, may approach bank.

v. Against Trust Receipts

To obtain adjustment of an overdue account or to facilitate the borrower to

self the pledged good it is some times necessary to deliver a portion of the

goods, against the trust receipt and promise from the borrower to deposited the

sale proceeds with the bank.



SMALL LOANS

Loan is allowed to contractors clearing and forwarding agents.

5. FINANCE AGAINST THE FOREIGN BILLS (FAFB)

The advance facility is allowed both to local foreign bills and is classified

as under:-

i. FAFB (Local) advance against Railway receipts and truck receipt, a

company with bills of exchange and invoices, are given under this head.

ii. FAFB (Foreign) advances against foreign bill, covering bills of exchange

bills of lading airway bills of exchange bills of lading airways bills etc.

6. AGRICULTURE LOANS

Loans to the farmers with holding up to 25 acres for meeting their short

terms, medium and long terms Agricultural production requirements, such as:

i. Agricultural inputs

ii. Tube wells

iii. Live Stock Framing

iv. Land improvement

7. INDUSTRIAL LOANS

Besides the short-term loans which play a part in working capital medium

and long-term loans are also given to industrial sector for purchase of machinery

and other capital nature goods.



4. FOREIGN EXCHANGE DEPARTMENT

International trade is growing and with the development of international

trade it has become more imperative.

For countries to devote more and more attention to the complicated

mechanism of Foreign Exchange. It is more important in case of

developing countries. It is need of time, that a country should conserve its

foreign exchange resources.

MEANING OF FOREIGN EXCHANGE

The foreign exchange term refers to the principles that determine the rate of

exchange. It covers following three senses:

i. The mechanism or system by which international obligations or

indebtedness are fulfilled.

ii. The currency of one country is exchanged for that of another.

iii. The principles on which the people of the world settle their debts to one

another.

I. FOREIGN EXCHANGE TRANSACTIONS

The foreign exchange transactions are usually of two types.

i. Merchandise Transaction

These consist of visible imports and exports, i.e. the purchase of goods for

abroad and sale of goods to abroad.

ii. Service Transaction

These represent inward and outward payments in respect of shipping,

insurance, banking and travel services. It includes payments in respect of

interest, dividends, rents and profits etc.



iii. Unrequited Transfers

In indicates the payments and receipts from of reign countries in shape of

such items as home remittances by workers abroad, gifts, aids etc.

II. Capital Account Transactions

These are further divided into two classes:

i. Long Term Capital Transfers

Those transfers whereby residents of one country acquire securities

(stocks and bonds) and tangible assets (land etc.) in foreign countries with the

purpose of earning profits in future.

ii. Short Term Capital Transfers

Those transfer which move relatively quickly from country to country;

a. Fore speculative purposes

b. To take advantages of differences in interest rates

c. As balancing items where a country has a debit or credit balance on

current accounts.

The important examples are:

1. Money Gold, and

2. Holdings of commercial credit, bills, cheques etc.

3. Transactions with I.M.F

5. BILLS DEPARTMENT

Bills department performs the following functions.

a. Inward Bills for Collection (IBC)

b. Outwards Bill for Collection (OBC)



INWARD BILLS FOR COLLECTION (IBC)

These are bills or cheques etc. which are collected locally. They are

received from outstation branches banks and parties.

DEMAND DRAFT:

If refers to the payments of money on demand of the holder of draft.

Demand draft includes DD issues and DD payable.

OUTWARDS BILL FOR COLLECTION (OBC)

CLEAN BILLS:

These are negotiable instruments, drawn on outstation branches, bills sent

for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.

DOCUMENTARY BILLS:

These are bills accompanied by documents such as R.R.T.R Bills of

landing etc. having title to goods, collected by the bankers on behalf of their

customers.

PAY SLIP:

Pay slip is an instrument in receipt, issued by the bank in the following

cases:

a. On account of expenditure incurred by the bank.

b. On account of refund of a payment to a persons under certain

circumstances.

PAY ORDER:

Pay order is issued to other banks for collection of make the payment as

said.



6. ACCOUNTS DEPARTMENT

Usually Accounts are maintained in two ways:

a. Journal System

b. Vouchers System

Journal system is adopted by some commercial industrial institutions. In journal

system entries are reported in Journal Books and then posted to ledger.

Voucher system is used for every transaction. Voucher has to be prepared either

in cash or in transfer or in clearing, the Sheet upon which these vouchers are

summarized transactions-wise and consolidated into a figure is called

supplementary.

Types of Supplementary

a. Debit Supplementary

b. Credit Supplementary

Debit supplementary is used for debit voucher and credit supplementary is used

for credit voucher books and registered maintained by bank are as follows:

1. General ledger

2. Statement of daily affairs.

3. Cash book or Cash cum day book.

4. Transfer book

5. Income and expenditure ledger, etc.

INCOME INCLUDES

1. Brokerage (A bank sells and buys share, stocks, debentures, other

securities and receives payment for these services).

2. Discount

3. Service Charges



4. Rent (On building)

5. Commission (from utility services)

EXPENDITURES INCLUDES

1. Salaries, allowances and provident fund

2. Rent, taxes, insurance, lighting etc.

3. Profit paid on deposits and borrowings

4. Postage, telegram and stamps

5. Stationary, printing and advertisement charges etc.

6. Auditor’s fee and legal charges.

7. REMITTANCE DEPARTMENT

Remittance department performs following functions:

i. Mail Transfer (MT)

ii. Telegraphic transfer (TT)

iii. Demand Drafts (DD)

MAIL TRANSFER (M.T)

When a customer requests the bank to transfer his money from one

branch of bank to another branch of the same bank or from one city to another

city to the same bank or any other bank. Customer fills the form given by bank. If

the customer has an account with that amount as mentioned in the application

form then concerned officer will undertake the following procedure to make the

mail transfer complete.

i. Branch Mail Transfer form



ii. Receiving Branch Register copy

iii. Issuing Branch register copy

iv. Beneficiary advice

v. Advice to Customer

In case where the customer is not account holder of the bank then the

customer will have to deposit the amount which he wants to transfer under Mail.

Then the above said procedure will be done.

TELEGRAPHIC TRANSFER (T.T.)

This type of transfer is simple. After filling the application form the

concerning officer shall fill the telegraphic transfer form. Then it is sent to the

required bank which on receiving it immediately makes the payment to the

customer and after wards the voucher are sent to that bank by ordinary mail.

DEMAND DRAFT (D.D.)

Demand draft is just like cheques and issued when the customer wants to take

cash with him personally. The idea behind it is to avoid the risk and burden of

currency notes in huge quantity. Demand draft can easily be handled whatever

amount it has and the money can easily be taken from the bank when it is

presented. In fact, the bank persuades the customer to transfer money by drafts

and avoid the risk of frauds involves in M.T and T.T Draft is only issued when

theBank shows customer and bank has confidence in him.

NBP products



1. Premium Aamdani

Monthly Income Scheme

• Earn up to 11% p.a. +

• Minimum deposit of Rs. 20,000/- and a maximum deposit of Rs. 5,000,000/- for

5 years

• Free Demand Draft, Pay Order and Cheque Book*

• Convenience of NBP online Aasan Banking (for online banking customers)

• Free NBP Cash Card (ATM + Debit)

• Running finance facility up to 90%

2. PLS Saving Account

• Earn up to 7.25% p.a. +

• Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs.

300,000/-*

• Free NBP Cash Card (ATM + Debit)

• Convenience of NBP Online Aasan Banking (for online banking

customers)

• Two debit withdrawals allowed in a month & no limit on number of

deposit transactions

• Profit calculated on monthly and paid on half yearly basis

3. Mera Apna Karobar



• Minimum down payment, 10% of asset price (5% for PCO & Telecaster)

• Tenure 1 to 5 years (for PCO 2 years)

• Grace period 3 months

• Maximum loan amount Rs. 200,000/-

• Age 18-45 years

• Mark-up (variable) 1 year KIBOR + 2.00% p.a.

• The customer will pay markup @ 6% p.a., rest will be borne by GOP*

• Life & disability insurance paid by GOP*

* subject to the availability of subsidy from GOP

4. Saiban

Home Financing

• Home Purchase

• Home Construction

• Home Renovation

• Purchase of Land + Construction



• Balance Transfer Facility (BTF)

NBP Saibaan

NBP Saibaan

(Open the Door to Your Dream Home)

Home Financing

5. Advanced Salary

Personal Loan

• Easy installments of 1 to 60 months at your choice

• No minimum income collateral & insurance charges required

• Quick processing and fastest disbursement

• The product is for permanent employees of Government, Semi

Government

and Autonomous bodies receiving salaries through NBP accounts

6. Cash card

ATM + Debit Card

• Use it as an ATM in any of the ATM’s in Pakistan

• Use it as Debit Card in any of the outlets with ORIX POS machine

• Cash withdrawal up to Rs. 20,000/- per day

• Account Balance Enquiry



• Mini Statement (Only at NBP ATM)

• PIN Change facility (Only at NBP ATM

7. Investor Advantage

Financing Facility for Stock Investors

• Comfortable environment for trading

• No security requirement, except for the customer’s equity

• Customer’s equity freely available for investment

• Equity acceptable in cash or approved shares

8. Cash n Gold

Financing Facility for Stock Investors

• Comfortable environment for trading

• No security requirement, except for the customer’s equity

• Customer’s equity freely available for investment

• Equity acceptable in cash or approved shares



9. Kisan Taqat

10. Kisan Dost

Agriculture Farming Program

• Competitive mark-up rate

• Quick & easy processing

• Delivery at the farmer’s doorstep

• Technical guidance to farmers



• Wide range of financing schemes for farmers

• Finance facility up to Rs. 500,000/- for landless farmers against

personal guarantee

• Financing available against pass book, residential/commercial

property, gold ornaments and paper security

• Loan facility on revolving basis for three years (renewable on yearly basis

without documentation and approval)

NBP Kisan Dost

( Agriculture Made Easy)

11. Pak Remit

Product Information

Pak Remit is an internet based Home Remittance Service. This service is

available to U.S. residents for sending money to their family and friends in

Pakistan. One must have a valid US Dollar account with a U.S. bank or a US

Dollar credit or debit card in order to remit funds through this channel.

Remitters in USA can log on to our user friendly website, www.pakremit.com and

easily remit funds to Pakistan from the comfort of their homes, in a matter of

minutes.

The service is fully secure with advance encryption application and is

available for use 24 hours a day, 7 days a week. Fees and exchange rate

have been set at competitive levels and the remitters have the ability to track

delivery of funds as well.



Process

Remitters log on to www.pakremit.com and after completing the

registration process, are able to remit funds. The whole process takes a

few minutes.

Funds in Pak Rupees can be sent to beneficiaries, having an account with

any bank in Pakistan, including NBP. While funds are credited directly to

beneficiaries maintaining accounts with NBP, a pay order or demand

draft can also be couriered directly to the beneficiary’s office or home, if

requested by the remitter.

Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar

account with one of NBP’s Foreign Exchange Branches.

12. Protection Shield

Personal Accident Insurance

• No documentation

• No medical required

• Premium Auto Debit facility & choice of deactivation

Coverage includes death due to

• Natural Calamities e.g. Earthquake, Flood, Cyclone etc.

• Accident

• Riots*

• Civil Commotion*

• Strikes*



• Acts of Terrorism*

NBP Protection Shield

(Life is Precious)

* Provided the insured is not actively involved in these activities

Performance Analysis

(Rs Bn)

ITEMS

Year

2005

Year

2006

Year

2007

Year

2008

Year

2009

% Growth 2009

Over 2005

Total Assets 577.7 635.1 762.2 817.8 944.2 63.4



Deposits 463.4 501.9 591.9 624.9 726.5 56.8

Advances 268.8 316.1 340.7 413.0 475.2 76.8

Investments 157.0 139.9 211.1 170.8 217.6 38.6

Equity 37.6 53.0 69.3 81.4 94.8 152.1

Pre-Tax Profit 19.06 26.3 28.1 23.0 22.3 17.0

Profit After-Tax 12.71 17.02 19.0 15.5 18.2 43.2

Net Income 32.8 42.3 47.2 53.5 57.5 75.3

Admin Expenses 11.2 13.4 14.2 18.2 22.6 101.8

Return on Assets 2.25 2.81 2.72 1.96 2.07 -8.0

Return on Equity 40.61 37.57 31.12 20.57 20.6 -49.2



Number of

Branches

1428 1431 1434 1445 1565

3.6

Number of

Employees

15351 15541 15785 18096 23730 17.5

SWOT ANALYSIS

The SWOT analysis is done by the organization for the environmental scanning.

The strength and weaknesses and opportunities and threats are analyzed by

organization from the external environment. NBP SWOT analysis is given below:

STRENGTH



A National Bank brand image is its major strength. It has always been

considered as the pillar of the country's economic scenario asset wise or balance

sheet wise. Its image, work force, network and reputation have created a

sentimental and emotional attachment of the people with the bank.

Complete computerized networking is another strength of the bank. Now the

bank has the ability to compete with any multinational bank as to keep pace with the

changing and fast growing world of today computer have become necessities. The

reserve funds indicate positive sign as they have increased as compared to the

previous years.

Another competitive edge that the bank has on the rest of the competitors is its

expanding business worldwide catering for a large and vast group of customer and

maintaining standards of excellence globally and other strength of NBP.

ORGANIZATION CULTURE

NBP's organization culture was very friendly and interesting. Employees has

created a very cooperative environment among each other. They have created

loyalty toward the organization by deviating their future efforts and energies. The



employees take the organizational problem personals and try their best for the

prosperity of the organization.

STRATEGIC TOP MANAGEMENT

Fortunately NBP has got from time to time best top management. Currently

the NBP Chairman and as well as President S. Ali Raza Sahid, he is the person

who has saved the life of the organization and contributed a lot.

INDUSTRIAL POLICIES

NBP helps the government on the implementation of its industrial policies with

respect to economic growth of the country.

BEST RESEARCH APPRAISAL TEAM

Before the project financing NBP has the research appraisal team that justifies the

economic and financial feasibility of not project in the future. That is the strength is

the scare that it helps the organization from any loss that is to over in the future in

case of failure of the project.

LENIENT POLICY WITH THE CLIENTS



This is one of the best policies of NBP that it does not kept rude behavior with this

client if they make late in their repayment of loan. But it has adopts lenient way in

dealing with them, it helps its customers in the repayment making rescheduling and

restructuring of their loans.

YOUNG BLOOD

NBP has young generation aged 27 to 30 graduates that would be helpful to

maintain the quality of their service by hiring new graduates but also would be

helpful changing the overall culture of the organization.

WEAKNESSES

National Bank created its own weakness by downsizing. Due to downsizing

various experienced and devoted employees were either forced or given the option

to leave. Only those people were left who had no organization better to join.

Due to right sizing a lot of confusions have taken place as well. For example

higher-level management have come from institution or others organizations where

everything is computerized. Whereas have by ten staff members (over staffing)



hence, the higher management finds it difficult to get work done. From 1995 onward

bank exhibits a downward trend indicating its low performance-showing decline in

total assets. Total deposits, saving deposits advances investment and total income.

This downward trend can caused a great threat to the bank as its competitors are

talking its market share, which can cause ruining the image and reputation of the

bank thus posing danger in the long run. The graph depicts a decline in the

performance of the bank. NBP's major weaknesses are given below:

LESS ATTENTION TO THE RURAL DEVELOPMENT

NBP's portfolio shows that it has made project financing only in the major

cities of Pakistan. But a reasonable attention is needed in the project financing of

the rural based industrial project of the country.

POOR ADVERTISEMENT

I keenly observe this that as compared to other banks. NBP is very poor in

advertising itself and institution, which works a lot in the development of the country,

but unfortunately in the business community most of the people are in award of it.



POOR NETWORK

NBP has only 1287 branches all over the Pakistan and in major cities of

Pakistan in which other competitors has their branches NBP don't have:

- The formalities involved in getting loans are time concerning and complicated

enough.

- It is observed that most of the loans, which have been granted on political basis,

are either default or their loans are forcefully written off.

- It is seemed that the recovery system of NBP is not effective that's why number of

defaulters are increasing at the growing age.

- Political interference in the recruitment system.

- Uncertainly among the employees due to threat of downsizing.

OPPORTUNITIES

National Bank has very bright prospects for the future. They plan to region their lost

glory not only in terms of profitability but also include latest technology and

competent work force. Furthermore, NBP is the only bank which is providing facility



of bills collecting from 9 AM to 5 PM. NBP is considering setting up an exclusive

utility bank in collaboration with a private firm, which would provide this service for

12 hours.

SPONSOR THE IT BASED PROJECTS

This is the best opportunity available to all banks and NBP as well, to sponsor the IT

and computer based projects because the coming century is the century of

information technology as new a days all the business community is diverting its

attention towards this field.

GOODWILL AND BETTER IMAGE

NBP has advantage of generating more deposits and attracting valuable customers

due to its better image in the business community. NBP has also advantage of

increasing credit lines. This is only due to good dealing and better image that NBP

has directly acquired those lines of credit from abroad that are only acquired by it,

this better image can help further NBP in explanation of its activities.

GROWTH IN THE INDUSTRIAL SECTOR



NBP's major function is the project financing and it is doing it with full efforts.

Fortunately industrial sector is now-a-days is Pakistan is again growing thus

increasing the business opportunities of NBP. Especially the textile sector is one

again improving even the sick projects has resumed their operations.

THREATS:

If there is a threat to the whole economy, it will pose a threat for National Bank.

National bank does not consider small bank a threat to its existence because the

way national bank can accommodation large customer, these small banks cannot

sanctions imposed against Pakistan will affect exchange. Business whereas the

freezing of accounts by State Bank of Pakistan have also caused problems for

National Bank. But the recent facts and figures indicate that the banks major rivals

lime MCB and HBL are causing threats to the bank in the long run thus snatching

away the market share by attracting a large number of customer due to the their

rising standards giving quality service and value added products and other major

threats are as under:

POLITICAL INFLUENCE AND INSTABILITY



　 This is the major threat for any business organization in Pakistan because

the political officials influence NBP in financing those projects which are not viable

or write off those loans which are still able to pay, this political influence cause many

problems in daily business thus profitability of NBP. Political industrial is even a

threat for NBP in the sense that once the policies and procedures are approved by

government.

SICK PROJECTS

NBP's sick projects are increasing day by day due to economic downfall. As

our economy is weakening day by day the no of side projects are becoming sick

increasingly thus influencing the profitability even survival of NBP.

LACK OF MODERN BANKING TECHNIQUES

NBP is following fifty years old style of banking, in the computers of NBP

symphony word processor is still used. Which is the oldest word processor due

to this the deposits are looking to be corded, because of the provision of credit



cards and other such services by its competitors both local and foreign banks is

proving to be limiting factor in the deposit mobilization efforts of the corporation.

During my internship period at National Bank of Pakistan .I found out certain

problems, which are written below along with their solutions, which need proper

attention of the top management:

These are given below:

Information technology.

Evening Banking Services

Staff Shortage

Dealing With Women

Frequent Transfers

Promotion

Locker Services

Standard Of Education　



1. INFORMATION TECHNOLOGY

This age is the age of information technology. Today the world has become a

global village and the fastest mediums of communication are adopted all over the

world. And it is a fact that more the latest technology and methods of work are

adopted more will be the productivity.　

In the National Bank of Pakistan (circular road branch) there is only one computer

available for carrying on the business of the bank.I suggest that the computer

should be on every counter of the bank and they should be interlinked together

(NETWORKING) so that various services provided by the bank can be provided in a

more efficient and fast way.

2. EVENING BANKING

I observed that the bank is closed for public dealing in after 1:30PM and then

the staff do their own banking jobs.

I suggest that at least one counter should be specified for the customer services till

evening. In this way, the people having jobs in other offices can get benefit from this

counter.



3. STAFF SHORTAGE

I discussed with bank personnel and they gave their views about staff

shortage. They told me that staff is very short and all the staff is overloaded with

work. That’s why the staff posted in the branch has to face many problems to finish

its daily work.

I suggest that number of staff in the branch should be increased so that they can

meet their customers’ requirements quickly and efficiently.

4. TRANSFERS

I observed that staff members of the Bank are frequently transferred not only

from one branch to another but from one city to another and sometimes from one

province to another.

I suggest that no one is to be transferred to another city or province without

the consent and will of the employee and if transferred, the facilities like residence

etc should be provided to them.

5. PROMOTION



I observed those employees; particularly officers are not satisfied with

promotion policies. There is no clear-cut promotion policy of National Bank.

I suggest that there should be a clear-cut policy about the promotion of employees,

particularly for the officers and they must aware of it that is polices must be

communicated. When policies are communicated to the employees then they can

perform their task more efficiently and will utilize their full efforts.

6. LOCKER SERVICES

The area of circular road branch is full of business activities. The

businessmen also have some important documents, papers and valuable things to

deposit for safe custody.

In order to provide these facilities, locker services must be provided in this Branch.

7. STANDARD OF EDUCATION

The standard of education for recruitment of clerical staff should at least be

graduation. Because in this way efficiency of work will increase and their dealing

with public will be better.



WORK DONE AT THE BRANCH

As every body knows that "Knowledge without practice is sterile "In order

to give vent to this idea an Internship program of two months has been arranged

in different esteemed organizations during B.Com Hons/M.Com. In this regard on

1st of July 2010, I was asked by my principal to go to National Bank of Pakistan to

have an internship of two months there. So as per standing order of my Zonal

Chief I was assigned to work under the supervision of Manager of Abdullah Pur

Branch, Faisalabad.

As three departments namely Accounts, Cash and Billing, and Clearing

were being managed by the Manager in this particular branch. I started my

practical training by Mail Transfer received. I received electricity bills of Fesco

and Wapda and then entered them into MT Register. This was the routine work

which I had to daily performed, it I spent two weeks on it. Then I learnt to make



demand draft, Payment Order and then entering into register for recording

purpose.

After two weeks I performed tockening the cheques for withdrawals and

entering them into token book and, at the time of closing exact position of cash in

hand, Receipts and Payments was evaluated. The Manager and the Accountants

duly signed this evaluation.

Secondly I was advised by my Manager to be remained vigilant about the

fake cheques giving some instructions for the scrupulous examination of cheques

like signature verification from specimen card. Right after tswo weeks, the date of

balancing came. Here balancing means balancing of ledgers of Current Deposit

and Saving Deposits. The balancing of Current Deposit Ledgers was done on

weekly basis while Saving Deposits Ledgers were balanced on semi monthly

basis.

Then I collected bills of FESCO, PTCL and SUIGAS during period of my

internship. I also used to write scrolls, which are written to keep record of bills

collected by the branch and one copy of them is sent to the concerned

organization.

I consumed lot of my time in scrolling the Utility bills of WAPDA,

TELEPHONE, and SUIGAS, the collection from these bills were to be performed

by me and after the proper vouchering of these bills, a copy of collections was

sent to respective departments.

After Six Weeks My Manager tells me about the transfer book which

keeps the record of the transfer of funds between clients of bank.



RATIO ANALYSIS


2008 2009

Current Ratio 1

.3218

1.0205

Liquid Ratio -

Loan to Deposits Ratio 66.0

843 65.4186

Loans to Assets Ratio 50

.1049 5

4.1628

Return on Assets1.89 1.93

Return on Shareholder's Fund 8

.6806

4.8667

Return on Equity Capital 15.08 15.23

Earning per Share14.36 16.92

Net Profit Ratio 4

.1601

2.5112


Return on Equity Ratio

The past two years data shows an

improvement in the return on equity which is

a positive sign. The Bank should have to

continue its policies. By observing the

audited account we find that this

improvement is due to increase in the Net

profit which is good sign.


Return on Equity Ratio

2009 2008

Net Profit after tax X 100Owner EquityNet Profit after tax 18,211,846 15,458,590

Owner Equity119,556,378 102,459,218

Return on equity 15.23 15.08

Return on equi capital

15.08 15.23

0

2

4

6

8

10

12

14

16

18

20

2008 2009

Years

Perc

en

tag

e

Series1


Return on Assets

Return on assets ratio shows

an improving trend. This ratio shows that

the both the Net profit and Total Assets

has improved in the previous years.

Current Ratio 2009 2008


Return on Assets

2009 2008

Net Profit after tax X 100Total AssetsNet Profit after tax 18,211,846 15,458,590

Total Assets944,232,762 817,758,326

Return on Assets 1.93 1.89

Return on Assets

1.93 1.89

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2008 2009

Years

Series1


Current AssetsCurrent LiabilitiesCurrent Assets 919,085,570 793,540,671

Current Liabilities 310,646,613

248,053,807

Current Ratio 1.2742

1.3218

Current Ratio


Current Ratio

1.27 1.32

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2008 2009

Years

% a

ge

Series1


Current ratio has decreased in comparison to 2008 but it is still above than 1.1. The

data shows that this is due to increase both in current assets and current liabilities but the

current liabilities raises more rapidly than current Assets.

Loan to Asset Ratio


Loan to Assets ratio

2009 2008

Loans / Assets

Advances 475,243,431 412,986,865

Assets 944,232,762 817,758,326

Loan to Assets ratio 50.3312 50.50


Loan to Asset Ratio is decreasing in

comparison to previous year. The figures

reveal that this trend was due to decrease in

Advances of the bank but on the other hand

the Asset of the Bank increases rapidly.

Net Profit Ratio


Loan to Assets Ratio

50.33

50.5

50.2

50.25

50.3

50.35

50.4

50.45

50.5

50.55

2008 2009

Years

Series1

Net Profit Ratio

2009 2008

Net profit / Interest Income X 100

Net profit 18,211,8

46 15,458,59

0

Interest Income 77,947,697 60,942,798

Net profit ratio 23.36 25.36


Net profit Ratio is giving downward

trend. This trend is observed due to

increase in Net profit but on the other hand

the interest income also increases.


Net Profit Ratio

25.3623.36

0

5

10

15

20

25

30

2008 2009

Year s

Series1

Loan to Deposit

2009 2008

Loans/Deposits

Advances 475,243,431 412,986,865

Deposits 726,464,825 624,939,016

Loan to deposit ratio 65.4186 66.0843


Loan to Deposit Ratio

Loans to deposit ratio show a

decreasing trend in the previous years.

This trend is observed as The advances

of the bank decreases but on the other

hand total Deposits of the bank increases

which result in decrease in this ratio.

Recommendations

As we seen from the previous analysis of the financial statements we have

realized that that National Bank is performing very well since its inception. It is

quite difficult to give suggestion to improve the banking conditions National Bank

of Pakistan. As we know that nothing is perfect, there is always a room for


Loan to deposit Ratio

66.08 66.42

0

10

20

30

40

50

60

70

2008 2009

Years

% a

ge

Series1


improvement, so I have found during msy internship can be made up taking into

account the following suggestions.

NBP is in the process of providing the services of Automated Teller

Machine. In order to complete with the other banks ATM services

must be provided throughout the country as this service is becoming

very popular in bank customers.

The bank is also in process of computerizing its records which is good

sign but it is going on with small progress Computerization must be

done on early basis. This will help in increasing efficiency of work

done, customer satisfaction decreases the stationary cost and

resultantly it will increase profits.

In Past National Bank of Pakistan has always being suffered from bad

Government policies. Government intervention should avoided

completely.

Employees Training Programme must be introduced on continuous

basis so that Employees have understanding with the latest

developments especially with the customers.

Bank should introduced incentive plans for employees on regular basis

so that if employees may work whole heartedly for the welfare of their

organization. While giving incentives qualification, work, experience,

hard work and such other factors must be considered.

Mismanagement of resources must be avoided as much as possible as

it decreases profit but also discourage hard worker and honest

employees.

Fresh graduates must be recruited. As the combination of

Experienced and fresh can produce better results and it will improve

the efficiency of management.



National Bank is going towards mobile banking but the problem is that

a common client has no idea of its usage due to lack of marketing. I

think that a proper marketing programme must be launched for client’s

awareness.

Banks different schemes must be conveyed to the targeted customers

so that to have a reasonable share in market.

Bank should help the society by providing interest free loans to the

Talented Students.

Financial Analysis (Supplementary material)



Financial AnalysisNational Bank of Pakistan

Balance sheetAs on 31 December 2009

Assets 2009Rs.(000)

2008Rs.(000)

Cash and balances with treasury bank

115,827,868 106,503,756

Balances with other banks 28,405,564 38,344,608

Lendings to financial institutions-net 19,587,176 17,128,032

Investments-net 217,642,822 170,822,491

Advances-net 475,243,431 412,986,865

Operating fixed assets 25,147,192 24,217,655

Deferred tax asset-net 3,062,271 3,204,572

Other Assets 59,316,438 44,550,347

Total Assets 944,232,762 817,758,326



National Bank of PakistanBalance sheet

As on 31 December 2009

Liabilities 2009Rs.(000)

2008Rs.(000)

Bills payable 10,621,169 10,219,061

Borrowings from financial Institutions 45,278,138 40,458,926

Deposits and other accounts 726,464,825 624,939,016

Subordinated loans _ _

Liabilities against assets subject to financial lease

42,629 25,274

Deferred tax liabilities _ _

Other liabilities 42,269,623 39,656,831

Total Liabilities (1) 824,676,384 715,299,108

Shareholder Equity: 2009 2008Share Capital 10,763,702 8,969,751

Reserves 22,681,707 19,941,047

Unappropriated profit 61,346,510 52,456,204

94,791,919 81,367,002

Surplus on revaluation of assets-net

24,764,459 21,092,216

Total Equity (2) 119,556,378 102,459,218



Total liabilities and Owners Equity (1+2)

944,232,762 817,758,326

National Bank of Pakistan Profit and Loss AccountFor the year Ended Dec 31-2009

Description2009

Rs.(000)2008

Rs.(000)Mark-up\return\Interest earnedMark-up\Return\Interest expensed

Net mark-up interest IncomeProvision against non performing loans and advancesProvision against Diminution in value of investmentsBad Debts written off directly

Net mark-up\Interest Income after provision

Non mark up Interest IncomeFee, Commission and brokerage IncomeDividend IncomeIncome from dealing in foreign currenciesGain on sale and redemption of securities-netUnrealized gain on revaluation of investments classified as held-for-tradingOther Incomes

77,947,697

39,489,649

38,458,048

11,669,335

26,788,713

60,942,798

23,884,798

37,058,030

10,970,814

26,087,216


11,043,469

605,629

20,237-

8,930,3911,920,3363,028,165

4,591,894

2,355

552,216

10,593,565

373,2494,000

-

7,925,3702,878,9323,969,057

395,427

1,707

1,245,369


Total Non mark up and Interest Income

Non markup\ Interest ExpensesAdministrative expensesOther provision\write off-NetOther Charges

Total Non mark up and Interest expensesExtraordinary/unusual itemsProfit before taxation

Taxation – Current – Prior years – Deferred

Profit after taxationUnappropriated profit brought forwardTransfer from surplus on revaluation of fixed assets on account of incremental depreciation

Profit available for appropriation

Basic earning per share

19,025,375

45,814,070

23,513,897

22,300,173 ---

22,300,173

4,088,32718,211,84652,456,204

123,934

70,791,984

16.92

16,415,862

42,503,078

19,502,080

23,000,998---

23,000,998

7,542,408 15,458,590

45,344,188

130,456

60,933,234

14.36


9,221,513(4,133,282)

(999,904)

18,171,198747,521583,361

11,762,650---

(4,220,242)

22,571,470620,780321,647


National Bank of PakistanBalance Sheet

Horizontal AnalysisAs on 31st Dec 2009


ASSETS

Increase (decrease)2009-2008

% ageCash and balances with treasury bank

8.7%

Balances with other banks (25.9)Lendings to financial institutions-net 14.4Investments-net 27.4Advances-net 15.1Operating fixed assets 3.8Deferred tax asset-net (4.4)Other assets 33.1Total Assets 15.5LiabilitiesBills payable 3.93Borrowings from financial institutions 11.9Deposits and other accounts 16.2


68.7

Other liabilities 6.6Total Liabilities and Owner equity

15.3


National Bank of PakistanProfit and Loss Account

Horizontal AnalysisFor the year Ended Dec 31-2009


Shareholder equity

increase(decrease)2009-2008

% age

Share Capital 20%

Capital reserves 13.7

Unappropriated profit 16.9

Surplus on revaluation of fixed assets17.4



Vertical AnalysisAs on 31 December 2009


ITEMS Increase (decrease)

2002-2001% age

Mark up\Interest\return earned 27.9

Mark up\interest\expenses65.3

Provisions6.4

Non mark up\Interest Income12.84

Non mark up\Interest expensed20.5

Profit before Taxation(3.0)

Taxation(72.7)

Profit after Taxation17.8

Earning per share17.82


Assets2009

Rs.(000)% age

2008Rs.(000)

% age

Cash and balances with treasury bank

115,827,868 12.3 106,503,756 13.02

Balances with other banks

28,405,564 3.0 38,344,608 4.68

Lending to financial institutions

19,587,176 2.1 17,128,032 2.1

Investments 217,642,822 23.0 170,822,491 20.8

Advances 475,243,431 50.3 412,986,865 50.5

Operating fixed assets

25,147,192 2.7 24,217,655 2.96

Deferred tax asset-net

3,062,271 0.32 3,204,572 0.39

Other Assets 59,316,438 6.3 44,550,347 5.45

Total Assets 944,232,762 100 817,758,326 100





Liabilities2009

Rs.(000)% age

2008Rs.(000)

% age

Deposits and other accounts

726,464,82588.0

624,939,01687.4

Borrowings from financial Institutions

45,278,1385.49

40,458,9265.6

Bills payable 10,621,1691.28

10,219,0611.43


42,629 0.005225,274

0.0035

Other liabilities 42,269,6235.13

39,656,8315.54

Deferred tax liabilities - 0.00 - 0.00

Subordinated loans - 0.00 - 0.00Total liabilities and owners equity 824,676,38

4100 715,299,108 100





Share Holder Equity

2009Rs.(000)

% age2008

Rs.(000)% age

Share Capital 10,763,702 9.0 8,969,751 8.75

Reserves 22,681,707

18.9719,941,047 19.46

Unappropriated profit

61,346,51051.31 52,456,204 51.19

Surplus on revaluation of fixed assets

24,764,459 20.71 21,092,216 20.58

Total 119,556,378 100 102,459,218 100


Vertical AnalysisFor the year Ended Dec 31-2009



Income2009

Rs.(000)% age

2008Rs.(000)

% age

Markup\Interest\Return earned

77,947,69780.38

60,942,79878.78

Fee Commission & Brokerage

8,930,3919.20

7,925,37010.25

Gain on sale and redemption of securities-net

4,591,8944.74

395,4270.51

Income from Dealing in foreign currencies\Sec

3,028,1653.12

3,969,0575.13

Other Income552,216

0.571,245,369

1.60

Dividend Income 1,920,3361.98

2,878,9323.72

Total 96,970,699 100 77,356,953 100


Vertical AnalysisFor the year Ended Dec 31-2009



BIBLIOGRAPHY

1. The first important thing is the discussions with the staff of the bank especially

with Operations Manager Sir Faisal and M.T.O Miss Sana Noureen.

2. The Bank Book of Instructions for the National Bank of Pakistan called the B.B.I.


Expenses2009

Rs.(000)% age

2008Rs.(000)

% age

Mark up\Interest Expenses

39,489,64950.14

23,884,79827.14

Provisions11,669,335

14.82 37,058,030

42.12

Admin Expenses22,571,470

28.65 18,171,198

20.65

Other Charges321,647

0.41583,361

0.66

Other Provisions\Writes off

620,7800.79

747,5210.85

Taxation4,088,327

5.27,542,408

8.57

Total 78,761,208 100 87,987,316 100


3. Surfing the website of the National Bank of Pakistan (www.nbp.com.pk)

4. Reading the annual reports of the bank.

5. Reading the economic bulletin of the bank which is published by the economic

and business research wing of the bank.


http://www.nbp.com.pk/

Date post:	10-Apr-2015
Category:	Documents
Upload:	nadeem-manzoor
View:	173 times
Download:	4 times

Internship Report 2010

Documents