National Bank of Pakistan-Best Report

8/6/2019 National Bank of Pakistan-Best Report

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DEDICATIONDEDICATION

HAILEY COLLEGE OF COMMERCE

Salma Bashir

Roll number: 126B.com (Hons.)

Session : 2005 - 2009

Supervisor : Sir. Hassan Mubeen Alam

National Bank of Pakistan

Samnanabad Branch

Date of joining : 25-7-09 t0 24-09-09

Dedicated to my Parents

who always care me

and most formative teachers,

Sir Zafar & Sir. Yasin

for their unwavering support and guidance.



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All praise to Allah, the most merciful, kind and beneficent,and the source of all knowledge, wisdom within and beyondmy comprehension. He is the only God, who can help us inevery field of life. All respect and possible tributes goes to

my Holy Prophet Mohammad (SAW), who is forever guidance and knowledge for all human beings on this earth.

I am proud to say that I am very grateful to my family whose kind prayers and cooperation helped me at every step of my work.

Special thanks go to my parents for their cooperation for the sake of my knowledge.

I am greatly indebted to my learned teachers, Sir.Kumail Abbas

Rizvi, Sir. Yasin, Miss. Shamaila, Miss Hafza, Sir. Zafar who havegreat influence on me during my formative years. This reportreflects the knowledge which I have gained from my valuableteachers. I acknowledge with deep gratitude the invaluable help

extended to me by Mr. Rana Ahsaan-ul-Haq, one of the officer of the National Bank of Pakistan, without his co-operation it was not

possible for me to complete my Internship Report. He guided andhelped me and specially the sympathetic attitude, which alwaysinspired me for hard work.

I am really very thankful to Muhammad Rafi Operational Manager of National Bank Samanabad Branch, Lahore and all the bank staff for their cooperative attitude during my internship.

In the end thanks are due to one of my friend Miss. Sana Khalid for her cooperative attitude during the completion of my project work.She helped and supported me during gathering and analyzinginformation.

SALMABASHIR

B.com(Hons.)



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To interpret my skills and educational knowledge of Finance I done myinternship in National Bank of Pakistan Samanabad Branch, Lahore and toknow how I will work in financial institutions and among various types of

people have different attitude.

The objective of this Internship was to explore the issues relating to Financeand to find out problems regarding the theoretical concepts with practical

experience working in an organization during the internship and study thesystem of National Bank of Pakistan. There are many possible improvements,which we can make positive changes in the system.

The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary aswell as secondary data. The biggest source of information is my personalobservation while working with staff and having discussion with them.

The report summarizes the National bank of Pakistan with its workingdivided into three parts first part deals with the description of the NBP thesecond part covers the theory and practices adopted by NBP and third partdiscuss the financial position of NBP, its analysis and at the end concludingremarks and suggestions are given for improvements. It was too muchdifficult for me to describe the functioning of such a vast organization withinthe limits. In spite of this I tried my best to describe.

Finally, for any all too fallible errors, omissions and shortcomings in the

writing of the report only I am responsible for which I hope that allconcerning regards of this report will forgive us.

SALMA BASHIRB.com(Hons.)



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During this eight weeks long practical glimpse the theories and ideas whichwe received from the books have been women in the texture of our actuallife. No doubt, it has helped us in cultivating the qualities of courage, hope,

initiatives and capacity to turn our knowledge to practical purpose.

Banking sector owes a pivotal importance in the economy of any countrythrough its vibrant functions. This is the deep seated motivator that geared upme to join any bank for internship.

National Bank of Pakistan (NBP) was established in 1949 under the NationalBank of Pakistan Ordinance 1949 and was 100% government owned. NBPacted as an agent of the Central Bank wherever the State Bank did not haveits own Branch. It also undertook Government Treasury operations. Insidethe bank, in branch banking it has Clearing and Collection Department,Government Receipts Processing Department, Account Opening Department,

Remittance Department, Customer Services Department Cash Department,Deposit Department, Advances and Credit Department. These are the mostcommon departments exist in almost each branch. It is offering differentdeposit choices, advances, credits and securities etc for its customers throughits corporate branches.

Yet there are many possible improvements, which we can be made and thatcan bring positive changes in the system. There is shortage of employees inthe organization. With development of online banking system the load of work can be decreased. All the staffs do not know about computer. There is

almost one or two employees are trained to operate the system in every branch. Especially, the cash department is not familiar with computer andinformation system. It is not easy for it to implement a new systemimmediately it takes a lot of time to replace systems. Once implemented itstesting takes more time. So it is important for the Bank to develop a researchdepartment for redesigning the operations of the Bank

SALMA BASHIR



b r i e f

BRIEFc o n t e n t s

CONTENTSIntroduction and National Bank of Pakistan

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Bank's Profile 2

Introduction 3

Overview of Organization 4

Historical Background 5-8

Background 6

Establishment 7

Organizational Structure9-15

Organizational Network 16-20

Registered and Head office 17

Share Registration Office 17

Share Capital 17

Branch Network 17

Management of NBP21-26

Management System 22

Management Structure 22

Corporate Information 24

Senior Management 25

Oversea Management 26

Departments 27-72

Departmentalization in NBP28

General Banking Department 29



Deposit Section 29

Account opening Section 33

Locker Service Section 42

Cash Dealing Department 43

Clearing Section 47Remittance Section 53

Advances Department 58

Accounts department 6

Billing and Government Receipt/ Payment Department70

Commercial and Retail Banking73-84

Premium Aamadni Scheme74

Premium Saver Scheme 75

Karobar Scheme 75

Saiban scheme 76

Advance Salary Scheme 77

Cash card Scheme 79

Cash n Gold Scheme 80

Kisan Dost 81

Kisan Taqat 81

Pak Remit 82

NBP Protection Shield 82

NBP Student Loan Scheme 84

Financial Analysis 85

Horizontal Analysis 86

Vertical Analysis 90

Ratio Analysis 93

SWOT Analysis 101

Work Performed 104-114



Learning and Personal Experience105

Branch Profile 106

Branch Hierarchy 107

Departments of training 107 Issues Faced by Branch 113

Findings and Conclusion 115-121

Dilemmas faced by organization 116

Recommendation 119

Conclusion 121

Annexure and Documents122



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In this section three topics are discussed:

• Bank's Profile

• NBP Introduction

• Overview of Organization

• Vision

• Mission

• Core values

• Goals



Bank's Profile

THE NATIONS'S BANK Type Government

KSE:LSE

Established 1949

Headquarter Principal Office, Karachi Pakistan

Key People S. Ali Raza (President & Chairman)

Industry Banking, capital Market

Products Loans, Credit Card, Savings,Consumer Banking etc

Deposit 624938 Million

Net income 15459 Million

Total Assets 817758 Million

Number of Employees 15204

Number of Branches 1276

Home page www.nbp.com.pk

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

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



Internship Report National Bank of Pakistan

INTRODUCTIONINTRODUCTION(Incorporated under the National Bank of Pakistan Ordinance, 1949)

National Bank of Pakistan is the largest commercial bank operating in Pakistan NationalBank of Pakistan was incorporated in Pakistan under the National Bank of PakistanOrdinance, 1949 and is listed on all the stock exchanges in Pakistan. It's registered and headoffice is situated in Karachi.

The bank is engaged in providing commercial banking and related services in Pakistan andoverseas. The Bank's services are available to individuals, corporate entities and government.While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business

portfolio and is today a major lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is

showing growing interest in promoting and developing the country's small and mediumenterprises and at the same time fulfilling its social responsibilities.

NBP headquarters in Karachi, Pakistan with over 1,200 branches country wide. In today'scompetitive business environment, NBP needed to redefine its role and shed the public sector

bank image, for a modern commercial bank. It has offloaded 23.2 percent share in the stock market, and while it has not been completely privatized like the other three public sector

banks, partial privatization has taken place. It is now listed on the Karachi Stock Exchange.

• Handling of treasury transactions for the Government of Pakistan as agent to

the State Bank of Pakistan.

• Accepting of deposits of money on current, fixed, saving, term deposit and

profit and loss sharing accounts.

• Borrowing money and arranging finance from other banks and advancing and

lending money to its clients.

• Buying, selling, dealing, including entering into forward contracts of foreignexchange.

• Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.

• Carrying on agency business of any description other than managing agent, on behalf of clients including Government and local authorities.

• Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc.

• Transacting guarantee and indemnity business.

• Undertaking and executing trusts.

• Joint venturing with foreign dealers, agents and companies for itsrepresentation abroad.

• Participating in "World Bank" and "Asian Development Bank's" lines of credit.

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OVERVIEW OF THE ORGANIZATIONOVERVIEW OF THE ORGANIZATION

VISION

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

MISSION

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

Institutionalizing a merit and performance culture

Creating a distinctive brand identity by providing the highest standards of services

Adopting the best international management practices.

Maximizing stakeholder’s value.

Discharging our responsibility as a good corporate citizen of Pakistan and incountries where we operate.

CORE VALUES

Highest standards of Integrity.

Institutionalizing teamwork and performance culture.

Excellence in service.

Advancement of skills for tomorrow’s challenges.

Awareness of social and community responsibility.

Value creation for all stakeholders.

GOALS

To enhance profitability and maximization of NBP share throughincreasing leverage of existing customer base and diversified rangeof products.

Excellence in Direction

Excellence in Growth

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Excellence in

PerformanceExcellence in

Management Excellence in

Achievement

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In this section two topics are discussed:

• Background of Foundation

• Establishment




HISTORY OF NATIONAL BANK OFHISTORY OF NATIONAL BANK OF

PAKISTANPAKISTAN

BACKGROUND

At the time of partition the total number of Commercial Banks in Pakistan was 38 .Out of these Pakistan had 2 banks, India had 29 and there were 7 exchange banks. Before the

partition of Sub Continent the entire banking business was almost controlled and managed bynon-Muslims. The Muslims were deliberately kept cut of banking profession by the wealthyHindu community. When Hindu capitalists became sure of the division of Sub Continent,they secretly began transferring their funds and the other valuables at an accelerated pace toIndia and there was a mass scale migration of non Muslims from West Pakistan to India

which also caused the drain on the bank deposits. The Hindus closed down most of the headoffices and the branches of scheduled and non-scheduled banks in Pakistan. The number of scheduled bank’s branches was reduced from 619 to 213 in both the wings of the countryafter independence.

The non-scheduled banks also suffered a severe jolt and their number was reduced from 411to 106 over the same period. West Pakistan from where there was greater exodus of non-Muslims to India suffered a great deal, as a number of branches fell down (from 487 to 69).The mass scale closure of branches and withdrawal of the deposits caused a dead lock in the

banking business in Pakistan.

The government of Pakistan was quite aware of the serious banking situation caused by thewithdrawal of deposits and wholesale migration of banking staffs to India. It took up thechallenge and started reorganizing the crippled banking immediately after partition.

In 1949 September U.K. devalued its currency, India followed the suit but we did not. Indiasaid we had contravened the agreement. On October 3, 1949 the two central banks have toannounce the new par value of both currencies but India denied the day earlier. India alsofroze our trade balance surplus that is still an unsettled dispute. India also draws the Marwarimerchants who were employed annually for movement of jute crop by financing it. There

being no jute industry, prices fell sharply, and an agrarian unrest was threatening. TwoOrdinances were therefore issued.

1 Jute board Ordinance &

2 NBP ordinance dated 08.11.1949

In order to regulate both of the banking on sound footings, the following measures were

taken to develop the banking system in Pakistan.

• The State Bank of Pakistan, which is the central bank of the country, was establishedin July 1948.

• The National Bank of Pakistan was established on 1949,to serve as an agent to the

SBP.

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• The Industrial Development Bank of Pakistan was set up on August 1, 1961 with aPaid up Capital of Rs; five crore. The Agricultural Development Bank of Pakistan(ADBP) was set up in 1961. it provides short , medium and long term loans to thefarmers. In Jan, 1974 the entire commercial banks were Nationalized. The weaker commercial banks were merged with the stronger once and in all Five major bankingcompanies were formed. MCB and ABL have again been privatized.

ESTABLIHMENT

The normal procedure of establishing a banking company under the Companies Law was setaside and the Bank was established through the promulgation of an Ordinance due to thecrisis situation that had developed with regard to financing of jute Trade. The Bank commenced its operations from November 20, 1949 at six important jute centers in the thenEast Pakistan and directed its resources in financing of jute crop. The Bank’s Karachi andLahore offices were subsequently opened in December 1949.

State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assetsagainst the Indian currency retired from Pakistan territory. Government of India refused tohand over the assets worth about five hundred million rupees. The dispute is still unsettledand these assets are still not delivered to Pakistan. Until June 1950, the Bank was engagedexclusively on jute operation. Thereafter, it was felt that it could expand its business toinclude other commodities as well. Bank took a big stride in 1952, when it replaced theImperial Bank of India, as an agent of State Bank of Pakistan.

There were 14 Pakistani scheduled commercial banks operating in the country on December 1973, the name of these were:

1. National Bank of Pakistan

2. Habib Bank Limited

3. Habib Bank (Overseas) Limited

4. United Bank Limited

5. Muslim Commercial Bank Limited

6. Commerce Bank Limited

7. Australia Bank Limited

8. Standard Bank Limited

9. Bank of Bahawalpur Limited

10. Premier Bank Limited

11. Pak Bank Limited

12. Lahore Commercial Bank Limited

13. Sarhad Bank Limited

14. Punjab Provincial Co-operative Bank Limited

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The Pakistan Banking Council prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. These five banksare as under:

1. National Bank of Pakistan

2. Habib Bank Limited

3. United Bank Limited

4. Muslim Commercial Bank Limited

5. Allied Bank Limited

So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan, all thecommercial banks incorporated in Pakistan and carrying on business in or outside the countrywere brought under the government ownership with effect from Jan. 1, 1974. The ownership,management, and control of all banks in Pakistan stood transferred to and vested in theFederal Government.

With the passage of time its functioning diversified as they take over the function of differentinstitution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation). It is working as theagent of the state bank of Pakistan and performs its functions wherever state bank of Pakistanis not present.

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In this section topic is:

• Overall Organizational Structure of NBP

and it's hierarchical View




ORGANIZATIONAL STRUCTUREORGANIZATIONAL STRUCTURE

In National Bank of Pakistan, the head is called “Chairman” or “President” of the Bank.And after President there is Five Broad of Directors. National Bank of Pakistan has

eleven Groups which control the working of the Divisions, Wing, Department, Sectionand Regional of the national bank of Pakistan. In NBP, “Department” is called “Wings”.

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Corporate &

Investment

Banking Group

Chairman &

President

Credit

Management

Group

Audit & Inspection

GroupCompliance Group

President’s

Secretariat

Board of

Directors

HRM &

Administration

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Operation

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Commercial &

Retail Banking

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Treasury

Management

Group

Special Assets

Management

Group

OverseasManagement

GroupI.T. Group

Secretary Board

of Directors




National bank of Pakistan divided their task in to separate jobs. Basically national Bank of Pakistan having different groups, and each group perform different task specializationin their department. National Bank of Pakistan Categories their departments through their work specialization. And NBP hire their employees also through work specialization. Thefollowing Chart shows the Work Specialization in the bank. HRM & Administration,

Operation, Commercial & Retail Banking, and I.T Group are performing differentworking in the Organization.

National Bank of Pakistan is structurally divided into Groups and groups are alsosubdivided into Departments, Wings, and Divisions. National Bank of Pakistan hasdifferent Department in the Group and each department performing work, as their task assign. Department also subdivided into working bases.

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Administrati

on Wing

CreditMonitoring

Wing

Industrial

ResearchWing

Credit Policy

& SME Wing

Credit ManagementGroup

(Functional Deptt)

HRM &Administratio

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Operation GroupCommercial &Retail Banking

Group

I.T. Group




GEOGRAPHIC DEPARTMENT

PROCESS DEPARTMENT

CUSTOMER DEPARTMENT

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SAMG -North

(Lahore)

SAMG – South(Karachi)

SAMG – HeadOffice

Special AssetsManagement Group

(Geographic Deptt)

Administrati

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SBP

Inspection

Market &

LiquidityRisk

Credit Risk

Compliance Group(Process Deptt)

CustomerFacilitation &

Admn.

CustomerServices &

Govt. Business

FinancialInstitutional &Cash Manag.

OperationGroup

(CustomerDeptt)




National Bank of Pakistan (NBP) provides Services through more than 1200 branches inPakistan and 22 branches in overseas. And there are 29 Regions. All Branches of National Bank of Pakistan report to five Head of RMT Members. And these fivemembers reported to regional Offices. Regional Offices report to the Group Chief of theGroups. All the process is working very quickly and it not consume more time. And the

Group Chief of each Group Report to the President of the National Bank of Pakistan. Allthe data were proceed to the President of the bank.

National Bank of Pakistan is relatively Wide span of control and Flat Structure. National

Bank of Pakistan are less layers of management to pass a message through, so the

message reaches more employees faster. More skillful Group Chief Managers can control

a greater number of employees. National Bank of Pakistan assess that the internal Controlenvironment is showing signs of improvement as compared to previous year in all areas

of the Bank.

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Operation Group

Chief

HRM Group

Chief Audit & InspectionGroup Chief

Compliance Group

Chief

South Region North Region West Region East Region Overseas Reg

Head 1 Head 2 Head 3 Head 4 Head 5

Chairman &

President

Branch 1 Branch 2 Branch 3 Branch 4 Branch 5




National Bank of Pakistan is having Decentralization in the Bank. And give the authority

of Decision Making to their Group Chief of every Group, to take decision, which is

benefit for the Organization. National Bank of Pakistan provides facility of making

decision to their Senior Vice President as well as Vice President of the every Group.

National Bank of Pakistan has low Formalization in the bank. And Employees are free to

take action or decision in their work specialization. Employees are follow the rules and

regulation in the bank is very little formalized. Employees’ behavior is little bit guided by

rules and regulation.

National Bank of Pakistan follow the Organic Model Organization. In NBP, there are

Cross- Functional teams, as well as Cross-hierarchical teams. There are free flow of

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Chairman & President

HRM Group Operation Group CMG TMG

OD Wing IRD Wing T & S Wing Tech Wing C. M Wing Admn. Wing C. M Wing Admn. Wing

President (NBP)

Group Chief (Group)

SVP or VP (Group)

AVP (Group)

Grade Officers (Group)




Information and Wide span of Control. NBP is Decentralization in nature and very low

formalization in the bank. Basically National Bank of Pakistan is high Diagonal

Differentiation and every employee of any department can easily communicate to other

department of the Bank.

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In this section topics are:

• Registered & Headoffice

• Share Registration Office

• Share Capital

• Branch Network

• Global Network

• Domestic Network

• Present Status of Bank




ORGANIZATIONAL NETWORKORGANIZATIONAL NETWORK

REGISTERED & HEAD OFFICE

Head office of NBP in NBP Building, I.I. Chundrigar Road, Karachi, Pakistan which is“the city of lighting” in Urdu “Uroos-ul-Bilad” which was also the first capital andancient place of Pakistan. It carried out its successful journey to make it an “AsianTiger”.

SHARE REGISTERATION OFFICE

THK Associates (Pvt.) Ltd.

Shares Department, Ground Floor,State Life Building #3,Dr. Ziauddin Ahmed Road,Karachi, 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.25 Billion.

Issued, Subscribed, and Paid-up Capital

Issued, subscribed and paid-up capital in year 2008 was 10763702260

BRANCH NETWORK

Presently the Bank is divided into 10 Groups headed by SEVPs/EVPs. 9 Regionsreporting to as many Regional Chiefs and 15 Single Branch Zones headed by ZonalChiefs; 12 corporate branches and 1,254 domestic branches headed by Branch Managerscontrol its field operations.

With the geographical development of its branches, the Bank has been able to extend itsservices to a much larger number of Pakistanis all over the country. Today it has morethan 8.5 million accounts.

Bank maintains its presence in all the major financial centers of the world through its21overseas branches and 4 representative offices. Of these, three representative offices

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have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and Almaty(Kazakhstan) to take advantage of the emerging opportunities in CIS countries.

Apart from having a vast branch network, Bank is at the forefront in the acquisition andapplication of new technologies in every aspect of its banking facilities. It has acquired

leased telephone lines for on-line banking. The Bank has 12 Regional Computer Centersto cover various on-line and batch system requirements of branches and controllingoffices. Bank has also a presence on the Internet. It has modernized its services byinstalling Automated Teller Machines (ATMs) called "CASH LINK" at selected branchesand presently 17 ATMs are operational in major cities.

GLOBAL NETWORK

18 Overseas Branches

5 Representative Offices

1 overseas Subsidiaries

Joint Venture.

Overseas Branch Network:

Paris

Baku

Seoul

Kabul

Tokyo

Osaka

Dhaka

Bahrain

Bishkek

Kowloon

Ashgabat

Jalalabad

Frankfurt

Chittagong

New York

Hong Kong

Washington D.C.

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KEPZ Offshore Banking Unit, Cairo

Oversea Representative Offices

Baku

Beijing

Toronto

Chicago

Tashkent

Oversea Subsidary

CJSC Almaty, Kazakhstan

DOMESTIC NETWORK

1254 Domestic Branches

6 domestic Subsidiaries

29 domestic regional offices

Domestic Subsidiaries

NBP Capital Ltd.

Taurus Securities Ltd.

NBP Exchange Company Ltd

National Bank Modaraba Management Co.

National Agricultural and Storage company Ltd.

Cast – N- Link Products Ltd

Joint Venture

United National Bank Ltd., UK (Economic Indicators Pakistan, Published by Economic research Wing NBP, Head Office Karachi)

PRESENT STATUS OF BANK

The new management team having extensive experience of management of largefinancial institutions both within and outside the country is expected to further enhancethe profitability and operational efficiency of the Bank.

Prospects

The Bank's principal strategic going forward objective is to make the transition from a public service institution to a modern commercial bank. Being the country's largest

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financial institution, the Bank is uniquely positioned to leverage its large branch network and its 8.5 million-customer base to consolidate its core businesses as well as developnew revenue generating opportunities.The new management team is in place combining the Bank's existing personnel with professionals recruited from outside. Operating procedures are being re-defined and

internal controls strengthened utilizing a revamped IT architecture. A brief on the progress on some critical areas is as follows:

Corporate & Investment Banking

A new approach to corporate banking is underway. The Bank has initiated a structuredapproach to corporate banking by introducing a single point of contact throughRelationship Managers (RMs). For this purpose, new RMs as well as team leaders have been inducted to expedite this process. Area Managers will be appointed to managerelationships and to better service the needs of multinationals and large local corporates.

In investment banking team has also been formed to offer specialized services to major

relationships including advisory and debt syndications (TFCs). Furthermore, to stem thegrowth in non-performing loans, the existing risk / credit management practices at theBank are being revamped.

Treasury / International Banking

The deregulation of foreign exchange treasury business has ensured that a growingVolume of business now flows through the inter-bank market where rates are determined by the market forces. This can prove to be an immense profitable proposition for theBank. Towards this objective, the Bank is shifting focusing on expanding its market sharein trade finance, home remittance and foreign investment related forex-denominatedflows.

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• Management System

• Management Structure

• Central Board

• Local Board

• New Management Structure

• Corporate Information

• Board of Directors

• Audit committee

• Auditors

• Legal Advisor

• Senior Management

• Oversea Management




MANAGEMENT OF ORGANIZATIONMANAGEMENT OF ORGANIZATION

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

and controlling performed to determine and accomplish stated objectives with the use of human being and other resources.

MANGEMENT SYSTEM

The management has two types.

• Centralized

• Decentralized

Centralized Management tends to concentrate decision making at the top of the organization

Decentralized disperses decision making and authority throughout and further down theorganizational hierarchy.

NBP have a centralized type of management because all the decisions are taken bythe top management.

MANAGEMENT STRUCTURE

Central board

The general superintendent and direction of the affairs and business of the bank shall be

entrusted to the central board which may exercise all powers and things as may be exercisedor done or done by the bank and or not by this ordinance expressly directed or required to bedone by the bank in general meeting.

The Central bank consist of the following directors namely:

• Managing director

• President

Managing Director

The Managing director appointed by the central government under section 16, nine directorsis directed in local or special meeting by the share holder in the following manners. The shareholder registered in a branch, register maintained for an area mentioned in sub section (5) of section 8, shall elect from amongst themselves, such number of directors for that area as may

be decided before election by the central government having regard to the proportion whichthat share capital subscribed by the share holders of that area bears to the whole. Providedthat shareholders registered in branch register maintain at Dacca shall elect from amongthemselves at least two directors.

Three directors appointed by the central government, provided that total number of elected

directors representing the area for which the decca register is maintained shall not be lessthan three.

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President

The president of a Central board shall be appointed by the central government from amongthe directors.

Local Board

The local board shall be established for the area mentioned in sub section (5) of section B ,one each at Karachi ,Dacca and the Lahore ,and shall without prejudice to the powersconferred by the sections 12, have power ,within the prescribed limits generally to transact allusual business of the bank. A local board should consist of following members namely;

The Managing director

One member appointed by the central board from amongst the directors elected bythe share holder register in the branch register of the area.

Two members appointed by the central government from the area in which thelocal board is situated.

Three members elected in local or special board meeting from among themselves by the shareholder register in the branch register of the area.

The Managing director shall be appointed by the central government for a period notexceeding five years and on such salary and terms and condition of the service as the centralgovernment may determined.

New Management Structure

The previous management was removed by the bank nationalization ordinance 1974. the generaldirection and superintendent of the affairs and business of the banks vests in the Executive boardconsisting of President (Chief executive) and five senior executives of the bank . The federalgovernment in 1980 constituted a board of directors comprising the president and the members of executive board of the bank and two additional members one representing the ministry of finance andthe other Pakistani banking council.

Thus therefore, all nationalized commercial banks are controlled by the Pakistani banking council being subject to State bank of Pakistan regulation as well. The federal ministry is responsible for bank operations in the ministry of finance. Recently by the order of president of Pakistan, banking councilof Pakistan is removed.

Board of Directors.An executive board composed of six senior executives of the bank and the president who isalso the chief executive supervises the affairs and business of the bank, called the Board of

Directors.

Management Committee:

Also there is a Management Committee consisting of nine senior executives of the bank,called the members and the president who is also the chairman of the committee.

TRAINIG and MANAGEMENT DEVELOPMENT WING

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National bank of Pakistan has its national and development centers and 4 staff collages at: -

• Karachi

• Lahore

• Peshawar

• 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.

CORPORATE INFORMATION

Board of Directors

Syed Ali Raza Chairman & President, Chief

M. Ayuub Khan Tarin Director

Ibrar A. Mumtaz Director and SEVP and Group

Chief, Human Resources

Management & Administration

Group

Tariq Kimrani Director

M. Arshad Chaudhry Director

Sikandar Hayat Jamali Director

Mian Kausar Hameed Director

Audit Committee

M. Ayuub Khan Tarin Chairman

Ibrar A. Mumtaz Chairman

Tariq Kimrani Chairman

M. Arshad Chaudhry Chairman

Mian Kausar Hameed Chairman

Auditors

24




Ford Rhodes Siddat Hyder Charterd Accountant

M. Yousuf Adil Saleem & Co. Charterd Accountant

Legal Advisors

Mandviwala & Zafar Charterd Accountant

SENIOR MANAGEMENT

Qamar Hussain Chief Operating Officer & Head of Credit &

Risk Management

Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment

Banking Group

Shahid Anwar Khan SEVP & Group Chief, Overseas Banking

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

Amer Siddiqui SEVP & Group Chief, Commercial & RetailBanking Group

Muhammed Nusrat SEVP & Group Chief, Treasury ManagementGroup

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

Management & Administration Group

Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection

Ziaullah Khan Senior Executive Vice President

Nabi Bakhsh Soomro SEVP & Group Chief, Islamic Banking Group

Ekhlaq Ahmed EVP & Secretary Board of Directors

Tajammal Hussain EVP & Group Chief, Special AssetsManagement Group

Nadeem Anwar Ilyas EVP, PSO to the President & Group Chief,Compliance Group (A)

Naeem Syed EVP & Divisional Head-Project ManagementOffice & Core Banking Applications

Aamir Sattar SVP & Financial Controller/ Divisional Head,

Financial Control Division

25




Atif Hassan Khan SVP & Group Chief (A) Information Technology Groups

OVERSEA MANAGEMENT

R.A. Kaleemi SEVP & Chief Representative, Canada

OfficeM. Rafiq Bengali SEVP & Regional Chief Executive, Americas

Shahid Anwar Khan SEVP & Group Chief, Overseas Banking

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

Amer Siddiqui SEVP & Group Chief, Commercial & Retail

Banking Group

Muhammed Nusrat

Vohra

SEVP & Group Chief, Treasury Management

Group

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

Management & Administration Group

Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection

Ziaullah Khan Senior Executive Vice President

Nabi Bakhsh Soomro SEVP & Group Chief, Islamic Banking GroupEkhlaq Ahmed EVP & Secretary Board of Directors

Tajammal Hussain

Bokharee

EVP & Group Chief, Special

Assets Management Group

Nadeem Anwar Ilyas EVP, PSO to the President & Group Chief,

Compliance Group (A)

Naeem Syed EVP & Divisional Head-Project Management

Office & Core Banking Applications

Aamir Sattar SVP & Financial Controller/ Divisional Head,

Financial Control Division

26



DE

EP

PA

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TM

ME

EN

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TL

LI

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ZA

AT

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• General Banking Department

• Deposit Section

• Accounts Opening Section

• Lockers Services

• Cash Dealing Section

• Clearing Section

• Remittance Section

• Advances Department

• Accounts Department

• Government Receipt & Payment

Department




DEPERTMENTALIZATIONDEPERTMENTALIZATIONDividing an organization into different parts according to the functions is calleddepartmentalization. NBP Main branch ,Lahore offer a wide range of banking services to

public and private sector corporation ,partnership ,individual and others .

The National Bank of Pakistan has various departments. Brief description of all thesedepartments are given here one by one under separate heads for better understanding.

• General Banking Department

Account opening Section

Deposit Section

Cash Dealing

Clearing Section

Remittance

• Credit and Advances Department


• Government Department

• Consumer & Retailing Department

• Foreign Exchange Department

• Import and Export Department•

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GENERAL BANKING DEPARTMENT

General banking involves the following sections

1. Deposit Section

2. Accounts Opening Section

3. Cash dealing Section

4. Clearance Section

5. Remittance Section

6. Lockers Handling Section

Deposit Section

Deposits are the lifeblood of commercial banks. The main function of a commercial bank isto mobilize deposits of money from the savers and lend into for most profitable purposes. The

process of collection deposits is Deposits Mobilization.

Commercial banks donor receive these deposits for safe keeping purpose only .but theyaccept deposits as debts. When a bank receives a deposit from a customer becomes a creditor and the bank a debtor. When the bank receives the amount of deposits as a debtor, it becomesthe owner of it but there is an implicit agreement that the amount owned would be paid back

by the bank to depositor on demand or often at specified time.

The classification is based on duration and purpose for which the deposits are to be kept atthe bank before the depositor can withdraw them. Deposits can be divided into twocategories.

29

Deposits

Checking Non-Checking

PLS SavingAccount

PLS TDR’s

Current DepositAccounts

NIDA

Special NoticeDeposit Accounts

Foreign CurrencyAccounts




Categories of Deposits

There are two broad categories of deposits. These are

• Time deposits

• Demand deposits

Time Deposits Demand Deposits

• These are payable on maturity

• Receive profit with respect to time

period

• All TDRs, saving accounts and

other profit bearing accounts are

included.

• These are not payable of maturity

but on demand

• No profit is given on demand

deposits

• They include current accounts and

call deposits etc.

TYPES OF ACCOUNT/ DEPOSIT

Following types of accounts are open in NBP

1. Current or demand account

2. Saving account

3. Fixed account

4. Call Deposit Accounts

5. Foreign Currency Accounts

1. Current

This account is also known as running balance account. Simply we can say “ A bank account

which may be used to lodge payments or to withdraw money on demand .”Its main purpose isto serve the businessman. Form number F-53 is provided to the person to open the account. Itis a statutory requirement to maintain current account.

Its main features are: -

Minimum amount for opening this account is Rs.500

Any person can open the account with the bank

According to inter banks agreement interest is not paid on current account.

Bank act as custodian of money

Over draft facility is provided to the customers

Customer can withdraw money through cheque supplied by bank No limitation to the number of withdrawal

30




No zakat is deducted on current account.

Basic Bank Account (BBA)

BBA’s are opened on proper introduction and submission of required documents.

BBA’s are opened for individuals single or joint only.

Free ATM issuance

Minimum balance is 1000/-.

In BBA’s maximum two deposits transactions and two chequing withdrawals areallowed free of charge through cash/clearing in a month.

Nill accounts are closed after 3 months

2. Saving account

This type of account is designed to encourage the saving habit of the customer and lead to along-term banking or investment relationship. Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Rates of interest are typicallyahead, by a small margin.

NBP offered the three types of saving accounts

a. Profit and Loss Sharing/Saving Account (PLS Acc)

b. National Income Daily Account (NIDA account)

a. Profit and Loss Sharing/Saving Account (PLS Acc)

In general it is also called saving account .To provide interest free banking facilities inPakistan, this type of account was introduced in January 1982 after the islamization of

banking.

The main features of this account are: -

Instead of having fixed return in the form of interest the deposited money will beshared in profit and loss of the bank.

One can open the account by depositing minimum Rs.100

The bank is authorized to deduct service charges on half yearly basis.

Profit on PLS Saving Account is calculated on minimum monthly basis and is paidhalf yearly basis announced by the Head Office after June 30 and December 31.

Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.

No limit of withdrawals

31






Available to all types of investors i.e. individuals, partnership firms, public and private limited companies, corporation, trusts, and government bodies.

Profit is paid on maturity.

Fixation Schemes of NBP

NBP offered following types of fixation and saving schemes

• PLS Special Notice Term Deposit Reciept- PLS SNTDR

• PLS Monthly income Scheme – PLS MIS

• Premium Saver Scheme- PLS Saving Account

• Premium Amdani Scheme

5. Foreign Currency AccountsThese are the accounts in US $, Pound, Euro, yen etc. of different account holders and either saving or current accounts. Profit is fluctuating as determined by the State Bank of Pakistanon six monthly bases whereas return on Term deposits/SNTD will paid on maturity. Thetransactions in these accounts are translated into Pak. Rupees at the exchange rate prevailingon the date of transaction.

Account Opening Section

Account opening section of the bank can be considered the most important department because banking starts with the account opening. Every customer of the bank either he is of credit section or foreign section or any other department must have his account in order to get

benefit and transaction with the bank. Therefore it is considered the most important section of the bank. Account opening officer take special consideration for the proper recognition of thecustomers. This section performs the following functions:

• Opening of Accounts

• Issuance of cheque books

• Closing of accounts

OPENING OF ACCOUNTS

The opening of an account is the establishment of banker customer relationship. Before a banker opens a new account, the banker should determine the prospective customer’sintegrity, respectability, occupation and the nature of business by the introductory referencesgiven at the time of account opening. Preliminary investigation is necessary because of thefollowing reasons.

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Avoiding frauds

Safe guard against unintended over draft.

Negligence.

Inquiries about clients.

i. Terms and conditions

There are certain formalities, which are to be observed for opening an account with a bank.

Formal Application

Verification of customer's CNIC through the NADRA

Copy of NIC of the customer

Specimen Signature

Minimum Initial Deposit

To open an account the customer has to meet the general banking manager with an introducer with the ID card. Manager verifies the customer's ID card through the connection of

NADRA. NADRA send the verification report to the bank with the concluding remarkscalled VERISIS. If the customer's id card is fake then bank has right not to accept thecontract and if the contract is acceptable to both, now it is ready to open the account formally.After the identification of the customer along with the form a card for specimen signature isalso supplied to customer. Manager has every right not to accept this contract if he is notsatisfied by the details provided by the customer.

ii. Qualification of Customer

The relation of the banker and the customer is purely a contractual one, however, he musthave the following basic qualifications.

He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.

The agreement should be made for lawful object, which create legal relationship

Not expressly declared void.

iii. Steps for Opening of Account

After entering into bank premises the person goes through the following steps for opening anaccount in the bank and for becoming a bank customer.

1. A Verfication:

The first important step to take place in bank is to get satisfactory verification of the person,who wants to become bank’s customer. This verification is made through the NADRA.

2. Account Opening Form and Specimen Signature Card:

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Now the person is provided with an application form known as Account Opening Form(AOF).

This form contains: -

i. Type of account

Current Account

PLS SNTDR

PLS Term

BBA

PLS Saving

Premium Saver

Premium Amdani

Call Deposit

NIDA

ii. Nature of Account

NBP has the offered services to following types of individuals.

Accounts of general customers (Individual accounts)

Minor account

Illiterate person account

Joint account

Accounts of special customers

Proprietorship account

Partnership account (Registered/ Unregistered)

Limited company’s account (Public/ Private)

Accounts of clubs, societies and associations

Corporate Body (Incorporated/ Unincorporated )

Trust account

Govt Institutions (Federal/ Provincial)

iii. Initial Deposit Amount

Deposit can be accepted in the form of:

Pak Rs.

US $

UK

EURO

JY

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iv. Particulars of customers e.g;

Title of Account

Adress

CNIC Number

NTN Number (if available)

Profession

Telephone number may be of office, mobile or residential

v. Next of Kin

(all above mentioned particulars of introducing him)

In this customer mention the name and address of person to be contacted for ascertaining his whereabouts after the expiry of three years from the date of last

operation in his account or last communication from him to the branch to inform himthe existence of account when the customer is not available at the given address.

This is simply the refrence of the 2nd person if the bank fails to communicate with thecustomer then bank can contact with the next of kin / the mentioned person to knowabout its customer.Customer provide in this all the personal details of the next of kin.e.g;

Name of person

CNIC Number

Address

Telephone number etc.

vi. Operating Instructions

The account can be operated by

Singly

Jointly

Either/ survivor

vii. Zakat Deduction

Zakat is deducted on each type of account accept current account in the 1st day of theRamzan at the rate of 2.5%. If customer wants no zakat deduction then he have tosubmit affidavit/declaration as per zakat rules.

viii. Signatures of the applicant

ix. Service charges deduction

In this category customer authorize the bank to deduct service charges as per bank'srariff.

Service charges are exempted for;

Government employee

Pensioner

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Student

Widows

State Bank of Pakistan now authorize all the banks to deduct service charges on alltypes of accounts when the balance of the customer become less from 5000/-. Rs. 55/-

per month is deducted from the customer's account. 5000/- is the minimum amountwhich should be kept by the customer in his account.

Specimen Signature Card (SS card)

Specimen of signatures will be obtained from depositor at the time of opening his account. Aspecially designed card is used for this purpose; the card must be countersigned by an officialof the bank not below the rank of an officer.

For illiterate person a recent picture of the newly account holder is taken and attached withSS Card. To reduce the risk of frauds and misuse of the cheques of an illiterate person the

specimen signature card and account opening form both are stamped by the Personal Visit stamp. Person who use thumb impression as a mean of signature can operate their accountonly by Personal Visit.

3. Account Opening Register

Now the name of the customer is recorded in account opening register, and from here theaccount no. of the customer will be written on (top most corners) account opening form andon specimen signature card.

4. Letter of thanks

Letter of thanks is the latter issued by the bank to the customer for two purposes

1st purpose is to say thanks to the customer for opening the account in their bank

2nd purpose is to confirm the address provided by the customer while opening theaccount.

5. Issuance Of Cheque Book And Pass Book

The cheque book will ordinarily be issued to all customers desiring to have chequing facility.First Cheque book is issued to the customer after sending the letter of thanks when the

customer comes with the latter of thanks and requests for the issuance of the cheque book.

A Cheque book consists of

PLS 25 leaves or pages per order

CD 50 leaves or pages per order

100 leaves or pages per order

CD 50 leaves or pages per bearer

100 leaves or pages per bearer

37




∗ Order - if a person appears himself for new cheque book or who is the holder of account

∗ Bearer - if the person other than account holder appears then he is bearer

Rs. 3 per leaf as postage charges is charged to the customer . A special cheque book register

is kept to enter the name of the person having cheque book. Customer can withdraw money

by signing a cheque and writing the amount he wants to withdraw from his account.

6. Pass Book

Pass book is another important type of book handed over to the customer as he opens theaccount with the bank. The withdrawal and deposit of money is recorded date wise in this

book.

7. Recording into General Ledger:

The concerned officer records the name and amount deposited with the bank in to generalledger. Separate ledgers are maintained for different types of accounts e.g.

Current Account Ledger

Saving Account Ledger

Fixed Deposit Account Ledger

Call Deposit Account Ledger

As and when customer will deposit the money, amount will be credited in general ledger andthe withdrawal will be followed by a debit entry in the ledger.

iv. Documents Enclosed by Customer

Documents required to be attached by the customer are different for different categories.

Documentation In case of Individuals Account

∗ Copy of CNIC/NICOP/POC

∗ Copy of Driving license in case CNIC is without photograph

∗ Applicant photograph and VNIC copy

∗ Copy of service card/ evidence of employment in case of salaried person

∗ Photographs in case of illetrate person

∗ Copy of CNIC of Next of Kin.

∗ Zakat exemption Declarartion

∗ Evidence for exe,ption of account from levy of service charges

∗ Proof of age in case opening of account with minor

Documentation In case of Private/ Public limited company accounts:∗ Photocopy of National Identity Card of each director

38




∗ Application form

∗ Copy of company’s memorandum and articles of association

∗ List of directors

∗ Copy of board resolution

∗Certificate of incorporation

∗ Their signature cards

∗ Certificate to commence business

∗ Power of Attorney

Documentation In case of Partnership Account


∗ A copy of partnership deed

∗ Signature cards of partners

∗ Registration certificate copy

∗ A copy of National Identity Card of each partner

∗ Authority letter favoring persons authorized to operate the account

Documentation In case of Club, Society, Association or Trust


∗ Copy of rules

∗ Certified copy of resolution

∗ Signature cards

Documentation in case of agents Account

∗ Copy of power of attorney

∗ Id card of each agent

Documentation in case of trust Account

∗ Certificate of registration

∗ CNIC of all trustees

∗ Copy of instrument of Trust

v. Stamping and Scrutinizing

After the fulfillment of all the necessary terms and conditions and checking of the form therelevant officer of Account Opening then affixed stamps on the AOF for the sake of completion of all the formal rules and regulations. He affixed three types of stamps on theform and two types of documents.

Affixed stamps:

National Bank of Pakistan Stamp

Authorized Stamp

39




Personal Visit Stamp---in case of illiterate person or the person nothaving specific sign

Affixed Documents:

Know Your Customer Form (KYC)

Summarizing the context of AOF briefly

Signature Card

For identification and verification of signatures

vi. Loose Cheques

If any customer forgets or leaves his cheque book at his home, which is far away from the bank or whatever the case may be, the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money isurgently required, the this cheque is called the loose cheque.

NBP issues a loose cheque for Rs.150 as charges for the issuance of the loose cheque.

NEW CHEQUE BOOK ISSUANCE

All subsequent cheque books to be issued against the requisition cheque extracted from the previous cheque book. This slip is duly filled and signed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serialnumbers of cheques are duly entered in the book of the bank. Along with the signature, the

person should also write his full name and address.

The authorized officer filled the cheque book requisition card for the customer and sends

them to Head office which is present in Karachi through the NIFT (National Institutional of Facilitation Technology) (PVT) Ltd. The customer can obtain the cheque book after at leasttwo days of submission of requisition slip.

Cheque books issued in the running serial order with the name of the customer printedon the book.

Rs. 3 per page of book is charged for the postage services through NIFT

Enter particulars in the cheque book issue register.

Enter detail in the system.

These records should be daily checked by the Daily Cheque Book Report, whichshould be signed by the authorized officer after checking cheque book series inputnumber.

At the end of the day all the cheque books should be checked and balanced with thehelp of requisition slips.

In case of cheque book is issued without the requisition cheque of previous cheque book caremust be taken to establish the genuineness of the customers and Form should be obtained. Insome cases when cheque book is issued by the person duly authorized by the account holder for obtaining cheque book, a letter of issuance of cheque book is sent to the account holder

for his acknowledgement.

40




In rare cases when customer demand printed cheque book, requisition slip with demand letter is sent to the NIFT (National Institutional of Facilitation Technology) (PVT) Ltd.

CLOSING OF ACCOUNTS

Account Closing by CustomerThe customer can close the account. Customer is required to submit an application for closing the account. Then the account is closed out and his balance is paid to him after deducting the closing charges, i.e., Rs. 200 and the application is filed in Account ClosingFile. Remaining leaves of cheques will also be collected from the customer.

Account Closing by Bank

i. Dormant Account

All current accounts which have not been operated for six months or all saving accounts

which have not been operated upon for one year classify as dormant account.

ii. Inoperative Account

All the current accounts which have not been operated upon for 2 years or all savingaccounts which have not been operated since 3 years are classified under inoperativeaccounts.

Operations in accounts classified as dormant or inoperative will remained suspended unlessrequest in writing for activation or restoration is received from the Account Holder. If theaccount holder fails to reactive the account despite of bank's notice, the bank will have theright of exercising option of closing of account and in such case will refund the balance to thecustomer after deducting all applicable charges.

iii. Treatment of Deposit declared Unclaimed

Unclaimed Deposit

A debt payable owing by bank due to the reason of deposit in respect of which no transactionhas taken place and no statement of account has been requested by the creditor during a

period of ten years are classified under unclaimed deposit.

These are simply a debt owned by bank when a customer has not been operating his account

during a period of 10 year. The bank serves a 3 month Final Notice in writing to the accountholder at his latest known address for his reciving balnce lying in account. Upon expiry of such period NBP then surrender the deposit to the SBP.

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Locker Services Section

National bank of Pakistan also provides lockers facility in the country. It means a box operate by a customer of holder on permanent basis. Locker operation account is allowed for a

account holder, Non-account holder not able to operate it.

There are four types of locker depending upon the size of lockers operate in banks.

• Small size locker

• Medium size locker

• Large size locker

• Extra large size locker

An application form is necessary for customer with desire documents and approval made bythe head of department. Lien is placed on the account of a locker holder on drawing of amount. Entries are made on “ Locker Register ” as well as on the system. Locker No and Key

No is allotted to the locker holder for further operation.

The dual control system is used for lockers. The officer has Master Key to apply on thelocker but he cannot open the locker of any person. The locker holder provides the bank hisspecimen signature. Whenever the locker holders come to open the locker, his signatures areverified by the officer and then will be able to open his locker.

If the key of the locker is lost company providing these lockers breaks the locker and new

lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the presence of his as mentioned in his will or and his belongings are given to them and thelocker is closed.

Customers paid the rent of lockers on annual basis. The annual rent of different lockers, their security charges and insurance is shown in table.

Annual Rent of Lockers

SIZE OFLOCKERS

RENT SECURITY INSURANCE

Small 4000 25000 500,000

Medium 5000 30,000 500,000

Large 6000 200,000 700,000

Extra-Large 6000 200,000 1000,000

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Cash Dealing Department

Cash department of NBP is given the complete responsibility of handling all receipts &disbursements of cash as a result of transaction in both local and foreign currencies & near cash items such as traveler's cheque etc. (when they are issued against cash).As aconsequence it is also responsible for the book keeping of these transactions & the safecustody of cash and near cash securities of NBP.

Cash department of NBP is separate close part; no one other than cash departments'employees is allowed to enter into that area. Cash department performs the followingfunctions.

Cash receipts for receive deposits.

Cash payment for encashment of cheques. Receipt

The money, which either comes or goes out from the bank, its record should be kept. Cashdepartment performs this function. The deposits of all customers of the bank are controlled

by means of ledger accounts. Every customer has its own ledger account and has separateledger cards.

Payments

It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques.

CASH RECEIPTS

The depositor uses pay-in-slip for depositing the amount in their account. There are two typesof pay-in-slip. Both are in different colors for clear identification.

i. Cash Pay-in-Slip

ii. Cheque Pay-in-Slip

There are two parts of deposit slips:

• Counter foil

•Adjacent credit voucher

i. Cash Pay-in-Slip

It is used whenever the account holder deposit cash in his account. For this he have to fill the both parts i.e; counter foil and adjacent foil of the slip properly writing the amount in figuresas well as in words. Cashier of cash receipt accept the deposit slip with cash and then signedthe both parts of deposit slip, affixed cash received stamps on it and returned the counterfoilto the customer. The amount is credited to the customer's account by the computer terminals.

ii. Cheque Pay-in-Slip

It is used whenever the account holder deposit amount in his account by the cross cheques.This slip is used for transfer of funds from one customer's account to another. The processing

43




of the cross cheques held in the clearing department. The cashier just check the cross chequesto confirm whether it is acceptable or not.

CASH PAYMENT

It is the primary function of bank to repay the money received from his customer’s accountusually by honoring the cheques. It is the contractual obligation of a banker to honor hiscustomer’s cheque. Bankers in Pakistan deal with three types of cheques.

Types of collected Cheques

Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be collected throughclearing.

Order chequeThese types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show hisidentification. It can also be collected through clearing.

Crossed Cheque

These cheques are not payable in cash at the counters of a banker. It can only be credited tothe payee’s account. If there are two persons having accounts at the same bank, one of theaccount holder issues a cross-cheque in favor of the other account holder. Then the chequewill be credited to the account of the person to whom the cheque was issued and debited from

the account of the person who has actually issued the cheque.

The Requisites of Cheques

There is no prescribed form of words or design of cheques but in order to fulfill therequirements the cheques must have the following:

It must be in writing

It must contain an order to pay and addressed a specified bank.

The order must be unconditional

The order must direct to pay on demand

The sum ordered to be paid must be certain

The payment should be ordered to be paid to a certain or to his order or the bearer

Payment of Cash Cheques at Counter

Acceptance of Cheques

Whenever a cheque is presented at counter for payment, the officer examines the cheque before issuing a token. The following is looked into:

The cheque is drawn on the same branch of the bank.

44




The cheque is not crossed that it is open cheque.

It is not stale or post dated.

The drawer has signed the cheque.

The amount written in words and figure is same.

The drawer of the cheque duly signs all alteration or cancellation.

The presenter has signed at the back of the cheque.

Cheque should not be damaged

Funds must be sufficiently available

No legal bar prohibiting payment

Affirmation of Signatures

The accountant/authorized officer examine the cheque for the above mention things. Whencheque is found acceptable in all aspect, the signature of the drawer compared with hissignature on the Specimen Signature Card. When it is found similar to specimen signature, heaffixes SIGNATURE VERIFIED stamp, near the drawer signature in the cheque and sign it.

Computer Terminal Process

The cheque is received in computer terminal , where the computer operator cheques the balance of the account holder . the operator also sees whether the stop payment instructionsare received from the account holder or not. After considering these two points he checks the

balance in the account through a software of Bank Back Office (BBO). If the account has the

sufficient balance, the cheque is posted. The cheque is then handed over to the cashier after the allotment of the token number to the cheque. The token is given to the presenter.Thecheque is cancelled after posting & is returned to cashier .

Payment of Cash

The cashier calls the presenter and takes his token and compares the token number with thenumber written at backside of the cheque. He takes out the cash to be handed over to the

presenter and writes its denomination at the back of cheque. Thereafter, he gets signature of the presenter at the back of the cheque and hands over cash to him and affixes Cash Paid

stamp on cheque.

Stopping the Payment of Cash on Presentation of Cheques

The payment of cheques is stopped dishonored on the following grounds:

Effects not yet cleared then request to present again

Irregularity endorsed

Drawer’s signature differ

Payee’s endorsement requires bank’s guarantee

Alteration requires full signatures

Cheques is not post dated

45




Cheques is without date

Amount in figures and words differs

Crossed cheques must be presented through the bank

Payment stopped by the drawer

Payment of Cheques in Transfer

The customer of the branch deposits the cheque drawn on the same branch, for the paymentto the credited into his account, attached with pay in slip. The officer accepts it after lookinginto the following:

The person depositing the instrument for collection is the customer of branch.

The correct pay in slip (current/saving) is attached with the cheque.

The depositor signature is presented on the slip.

The account number of depositor is written on both the sides of the slip.

The word and figure of the amount tally with each other.

The cheque is neither post dated nor stale.

The drawer signature is present on the cheque.

The drawer signs the alteration on the cheque.

The cheque in name of the company, firm etc is not going into the account of any person.

The cheque with Payee Account Only crossing is not being deposited into theaccount of any other person other than the person mention on the cheque.

Processing of Transfer Cheques

The cross cheques are then transferred to the Clearing Department. All the cross cheques are processed through Clearing Houses. The local cheques are cleared through local clearing andoutstation cheques are cleared through intercity or short credit clearing.

CASH LINK

NBP ATM SERVICES FOR CONVENIENCE

Cash withdrawal according to your cycle limit.

Transfer of funds between PLS saving account and current account of the samecustomer through the same ATM card

Account balance inquiry.

Instant mini statements of accounts listing the last 15 transactions in account. Requestfor a new cheque book ,which might be collected by the customer from the branch.

How much cash can be withdrawn

There is a 24 hours cycle cash withdrawal limit imposed on all ATM cards. Withdrawal limitdepends upon the type of customer.

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Personal identification number (PIN)

A pin mailer issued to the ATM card holder carries the pin number in a sealed envelope. Cardholder is required to keep the PIN number in a safe place as all the operation are carried outon the ATM are carried out through the same.

Clearing Section

Clearing

"The transfer of funds from one branch of bank to the other branch of the same bank or theother bank on which the instrument is drawn , without involving cash through “State bank’s

clearing house "

We can say that cheques which cannot be cashed at the cash counter of the bank or cross

cheques go through the clearing process.

Clearing Department

The major function of Clearing Department is to receive the cheques, which are drawn onsome other bank. The customer can get the money in his account at NBP, from the chequesdrawn on another bank. The bank accepts these cheques and collects the amount from that

bank on which cheque is drawn through the Clearing House. Bank charges some commissionfor this function.

Clearing House

A clearing house is an association of commercial banks set in State Bank of Pakistan for the

purpose of interchange and settlement of credit claims

National Institutional Facilitation Technology (NIFT) Pvt. Limited is performing thefunction of clearing and charges commission against it. Before the NIFT, the State Bank of Pakistan (SBP) with efficient controlling staff performed the process of clearing. If SBP hadno office at a place, then NBP, as a representative of SBP acted as a clearinghouse.

NIFT is a joint venture between a six major banks and private sector. The clearing operationswere commenced by the establishment of first centre at Karachi and now it has been extended

to all major cities of Pakistan. At such places where the area is not covered by NIFT theclearing and settlement services are provided by National Bank of Pakistan.

TYPES OF THE CROSS CHEQUES Some specific types of cheques are being entertained in the clearing department of NBP are:

i. Local Cheques

By local cheques we mean collection of cheques from the banks which are located within thecity. It means the presenting bank and the bank on which the cheques is drawn are situated in

the same city.

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ii. Outstation Cheques

By outstation cheques we mean collection of cheques from the bank, which are situatedoutside the city. It means the presenting bank and the bank on which the cheques is drawn arenot situated in the same city.

iii. In House Cheques

In house cheques are drawn on one branch of NBP and presented to another branch of NBPsuch cheques are marked with the transfer stamp.

TYPES OF CLEARING

i. Local Clearing

ii. Short Credit Service

iii. Local Short Credit

iv. Inter City

i. Local Clearing

All cheques and other Negotiable Instruments payable locally is presented through the localclearing system. NIFT provides the local and intercity services. Cheques deposited at branchcounters presented for clearing on the same day. Bank give credit to the customer 's account

on the day when clearing settlement takes place. No charges levied for local collection of cheques or instruments which are collected through local clearing.

Time Frame for Collection of Local Cheques/ Instruments

The customer 's account credited in respect of local cheques on the next day from the date of acceptance of the cheque.

ii. Short Credit Services (SC)

For small cities where there are no NIFT services then branch bank clears the cheque either through mail/ TCS or bank can own provide service and charge commission for providingservices. Bank give credit to the customer's account on the day when clearing settlementtakes place.

Time Frame for Collection of SC Cheques/ Instruments

The customers account are credited in respect of outstation cheques on 4th 0r 5th day from thedate of acceptance of the cheques.

iii. Local Short Credit (LSC)

This arrangement has been set up if the customer wants amount in his account on urgent basis. Bank then provide service to its customer for those in house cheques when presentedand draw on NBP. Both can be of different branches of the bank but must be located withinthe city. No Bank charges are recovered from customers for these services.

Time Frame for Collection of LSC Cheques/ Instruments

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The customer 's account credited in respect of local cheques on the same day from the date of

acceptance of the cheque.

iv. Inter City

NIFT pvt. limited is responsible for the clearance of the outstation cheques. Cheques drawnon bank 's own branches at outstation centers or outstation other banks both are collectedusing the inter city arrangements maintain by NIFT network. Its offices are present in all thelarge cities of Pakistan. NIFT network is present in:

∗ Islamabad

∗ Karachi

∗ Quetta

∗ Sukhar

∗Hyderabad

∗ Peshawar

∗ Gujranwala

∗ Sialkot

∗ Daera ismael khan

∗ Bhawalpur

∗ Muzafarabad

∗ Faisalabad

∗ Rawalpindi

∗ Multan

Time Frame for Collection of Inter City Cheques/ Instruments

The customer 's account credited in respect of local cheques on the 2nd day from the date of

acceptance of the cheque.

CLEARING PROCESS

The process of clearing is carried in two categories.

i. Inward clearing

ii. Outward clearing

i. Inward Clearing

Cheque received of other parties after clearing are lodged in the system by vouching date,signature, documents numbers is noted. The cheque without sufficient balance, changing inamount, signature and verifying other formalities returned to the customer by attaching return

memo explaining the cause of cheque return. Return cheques also enter into the return

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register by writing dates, causes of return, and amount. After posting summary of cheques is prepared and cheques return to third parties through NIFT.

ii. Outward Clearing

These are the cross cheques deposited by the customers for credit the same amount to itsaccount. Before posting following is being performed.

Crossing cheque stamp if not place it.

Title of account and account number from deposit slip is checked.

The deposits slip is handed over to the customers by branch stamping.

Entry is done in daily register.

Add list is being prepared.

Special crossing clearing stamp of next day is affixed.

The payee’s amount will credit stamp is affixed on back of the cheque.

In case of outside city clearing Inter-Branch Clearing Stamp is affixed.

Place all the cheque in a bag with special closing and sent to NIFT.

Excess of outward clearing over inward clearing produces a net increase in clearing account balance. Excess of inward clearing over outward clearing produces a net decrease in clearingaccount balance. The first case is reffered to as favorable clearing & the second case isunfavorable clearing.

CHARGES ON SC & INTERCITY CLEARANCE IN NBP

On clearance of instruments through SC and inter City three types of charges are deductedfrom the depositor's account

i. Commission

ii. Federal excise

iii. Postage

i. Commission rates are

NBP to NBP -------------------------- 0.15%

NBP to Other Banks----------------- 0.20%

ii. Postage rates are ------------------------------------------ 75 Rs.

iii. Federal excise rates are ------------------------------------------- 16% of Commission

On clearing of cheques the minimum amount of commission is 50 Rs. and if it is less thanminimum amount then Rs. 50 and in case if it is greater then greater amount is considered.

PROCEDURE FOR CLEARING THE CHEQUES

Procedure for Outward Clearance

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i. Pay-in Slip- Cheque

The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date,amount and account number must be written on this slip.

Stamping and Scrutinizing

The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “chequereceived” and give a portion of slip to customer and the remaining portion is attached withthe original cheque. The original cheque will be marked with two stamps in case of localclearing.

Endorsement stamp of NBP

Clearing Stamp

The original cheque will be marked with three stamps which are called OBC stamps (over branch clearing stamp) in case of intercity clearing.

Endorsement stamp of NBP

Crossing Stamp

Next Date stamp

At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the NIFT for local as well as intercity clearing. Entry is done in daily register.

Procedure for Inward ClearanceAll the remittance which are received from other banks then go through the inward clearancewhich include all the steps for lodging of amount into customer's account.

i. Fanfold

The drawer bank then verify the payer's account for clearance of the cheque and send back the amount to the presented bank or NBP through the fanfold. In case if the customer accountis short of balance then the original cheque is returned back to the presented or collected bank with the reason of returning the cheque on the clearing return form. NBP receive theseamount in form of remittance.

ii. Charge Deduction

On receiving the amount through fanfold bank deduct service charges of clearance which areexcise duty, commission and postage for the intercity and SC payments.

Vouchering is done on four types of fanfold;

Debit voucher for---------------- total amount charged for sevice

Credit voucher for--------------- commission

Pay –in-slip of cheques for----- Federal excise

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Pay-in-slip of cheques for------ postage

No any charge levy for local clearing so no vouchering is required for this. Customer'saccount is credited on the next day of clearance.

iii. Credit of the customers account

After deduction of charges the amount is transferred and credited to the customer's account.

Remittance SectionRemittance means a sum of money sent in payment for something. This department dealswith either the transfer of money from one bank to other bank or from one branch to another

branch for their customers. NBP offers the following forms of remittances.

Main modes of remittance are:

•

Pay Order • Mail Transfer

• Demand Draft

• Telegraphic Transfer

PAY ORDER

Pay order issued from one branch is only payable from the same branch. It is issued for payment in the same city.

Issuance of pay order Gets application form from the customer.

Issues pay order after vouchering all necessary formalities.

Gets recovering charges and withholding tax in case of cheque deposit for PO.

Makes entry in PO issue register.

All pay order must be crossed “payee’s account only”.

It must be noted that Inter-Branch Clearing Advice is not involved because it is payable at the same branch and same city only.

Cancellation of PO

Application for cancellation with original pay order.

Recovers cancellation charges.

Signature verified by the officer.

Duplicate PO

Checks the record that payment has never been made.

Gets application for issuing of duplicate PO.

Recovers charges as per schedule.

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Issues duplicate PO by writing “ink red” pen “Duplicate PO”.

Issuance Procedure to an Account Holder

Applicant fills an application form, which is general credit voucher and tells the name

of person in whom favour it is to be drawn. Account Holder draws a cheque (it can be in cash as well) of the amount of which

Payment Order is to be issued and the amount of commission to be paid by him,which is Rs.50 for Account Holder.

A general credit voucher is filled by Bank for commission charges and Account Number is debited (in case of cash, cash is debited).

Issuance to a Non-Account Holder

Applicant fills an application form, which is general credit voucher and tells the nameof person in whom favour it is to be drawn.

Non-Account Holder deposits the amount of Payment Order, to be issued on cashcounter along with the amount of commission to be paid by him, which is Rs.100 for

Non-Account Holder.

A general credit voucher is filled by Bank for commission charges and Account Number is debited (in case of cash, cash is debited).

MAIL TRANSFER

The same application form is used for draft and mail transfers generally in NBP.The mailtransfer is not delivered to purchaser but instead the issuing office to beneficiary’s branch on

its own risk and responsibility sends it. This type of remittance facility is provided only whenthe beneficiary happens to be customer of the bank.

The amount is directly credited to the beneficiary’s account and as such loss of mail transfer has no concern with the applicant. Also the credit balance of customer is transferred from one

branch to another branch with the help of this instrument in case theCustomer so desire.

The applicant desiring to remit the funds by way of mail transfer can either deposit cash or hemay ask the bank to debit his account with the cost of mail transfer including bank charges.An exchange memo is issued to the applicant in case he desires to have some sort of receipt

from the bank for his office record. The participants of mail transfer are recorded in mailtransfer register just like drafts while at the paying branch instrument istreated as branch voucher for credit into beneficiary’s account.

If the customer is not he account holder of this bank, then firstly he has to deposit the moneyand then rest of the procedure will be adopted to transfer his money. Secret test apply onMT. If the amount is less than 5000 rs then test will not apply.

It is the quick and safe mode of transfer of funds.

Application form submission is same as DD.

In MT funds are transfer through system within seconds if 2nd

branch is online.

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Funds transfer only same branch of the banks.

It is necessary that the customer must have the Branch Code of the host branch,

account number of a drawer, name of place, etc.

Inter-Branch Clearing Advice is involved.

DEMAND DRAFT

A method used by individuals to make transfer payments from one bank account to another.Demand drafts are marketed as a relatively secure method for cashing checks. It is made for

both account holders and non account holders. Secret test apply on DD. If the amount is lessthan 5000/- Rs. then test will not apply.

Types

Junior draft

Senior draft

Junior Draft

For 1 to 1000/- Rs. junior draft is made.

Senior Draft

For 1000 to 10 million Rs. senior draft is made.

Particulars of DD

Date

Name of the office on which it is drawn

Name of beneficiary

Amount in words and figures

Bank exchange rates

Signature and address of the applicant

Issuance of Demand Draft

The customer on standard DD application form makes request.

All information such as name of beneficiary, place where the DD is drawn, amountmode of payment, cash/cheque/debit authority, signature with name and address isfilled.

The issuer checks the information.

Commission as per schedule of charges is charged.

Federal excise duty is charged.

After the customer has made payment by cash/cheque, get the voucher from cash

department. The DD of required amount is prepared.

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The DD in NBP is manually prepared.

Entry of DD

Entry is made in DD issued register as well as on the system on which following entry is

passed.

Dr: Cash/Customer’s A/C

Cr: DD issued

Cr: DD issuance charges

Drawing branch of bank will give credit to the drawee branch on same date the draft isissued; through their account for settling inter branch transactions.NBP does not pay beforethe receipt of relative advice.

On the receipt of relative advice the drawee branch will credit the amount into their draft

payable account and each time draft is paid, this account will be debited with the amount of draft paid. In case the draft receipt is not received the draft will be paid “ex-advice” dulyentered in the ex-advice register and entry in said register will be marked off on receipt of relative advice.

Cancellation of DD

If any customer wants to cancel DD, bank obtains application in writing along withoriginal DD.

Verifies the signature of applicant. This signature should tally with the signature of DD application form.

Checks the DD account into system of payment made or not.

Marks cancellation in DD issued register.

Recovers cancellation charges.

Payment is made from Suspense Account DD cancelled after recovery of cancellationcheque is per schedule charges.

Inform the drawee branch regarding cancellation and ask for Inter-Branch CreditAdvice (IBCA).

On the receipt of IBCA adjustment is made.

Issuance of Duplicate DD

In case draft is lost or destroyed by mistake, its duplicate can be issued at the request of purchaser after obtaining indemnity bond on stamped paper of appropriate value. This is doneto cover the risk of double payment by mistake.

Application form received from purchaser and verifies the signature.

Informs the drawee branch of the loss of DD and advise them to mark caution against payment if presented.

After necessary checking, the drawee branch will inform the branch about the statusof DD whether it has been paid or still outstanding.

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Writes on the face of duplicate DD in red ink Duplicate in lien of original DD No---

dated ---reported lost.

The signing officer must check all the particulars before signing.

TELEGRAPHIC TRANSFER

It is the message, which is sent from one branch to another on the order of payer to payeethrough wire. It is one of the quickest means to transfer fund through the use of Telex/fax/internet or cable. Secret test apply on TT. If the amount is less than 5000 rs thentest will not apply.

It is quickest way of transfer funds from one branch to another of the same bank through telephone, fax/telex.

Procedure of application and vouchering is same as a DD.

Apply test on the TT message and appropriate codes and instructions such as advice

& credit or advice & debit.

It is mostly cleared through main branch of the same area.

Recovers commission, and other charges as per applicable rate.

The entries at issuing office are recorded in telegraphic transfer issued issued register while atthe other end it is entered in the tt payable register.

Issuance and Payment of Telegraphic Transfer Outgoing

Application form is filled by the client in whom the name and account number of the

beneficiary, which is to be credited and name of customer, is required. For telegraphictransfer, the payment can be made in case or by cheque or by debiting the customer’s accountif he is the account holder.

The amount of Telegraphic Transfer should be written on the form. The amount istransferred to beneficiary’s account in the other bank. An advice is given to the customer butapplication is filled in the record of the bank.

Issuance and Payment of Telegraphic Transfer Incoming

When a TT is received then an entry is passed in TT incoming register after verifying the test.

When a person comes and wants to encash his TT, bank checks the statements of that person.If the bank finds any account credited to the person’s account against TT, bank prepares avoucher for this payment against that TT. The customer then presents that certificate to thecash counter and collects money.

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Remittance charges

Exchange on DD/MT/TT

From 1 to Rs.100,000/- 0.10% minimumRs.50/-

From Rs.100,000 to 500000 0.05% minimumRs.100/-

From 500000 to 100000000.4 % minimumRs.400/-

Issuance of Duplicate Draft

For A/C Holder Rs. 200/-

For Non-A/C Holder Rs. 250/-

FED on DD,MT, PO 16% of commission

Postage charges on MT & DDonly

Rs. 75/-

Pay order

For A/C Holder Rs. 50/- (flat)

For Non-A/C Holder Rs. 100/- (flat)

Issuance of Duplicate PO

For A/C Holder Rs. 100/- (flat)

For Non-A/C Holder Rs. 150/- (flat)

ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank. Themajor portion of the profit is earned through this department. The Credit ManagementDivision of Head Office directly controls all the advances. As we known bank is a profitseeking institution. It attracts surplus balances from the customers at low rate of interest andmakes advances at a higher rate of interest to the individuals and business firms. Creditextensions are the most important activity of all financial institutions, because it is the mainsource of earning. However, at the same time, it is a very risky task and the risk cannot becompletely eliminated but could be minimized largely with certain techniques.

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To assist a large-scale business operator to carry on his day to day requirements of liquidfunds, this account is opened is made operation in his favor. Running finance is providedwhere the amount goes beyond rupees three hundred thousand. The mark-up/interest iscalculated the same way as in case of cash finance. Security against running finance is thatwhich is easily convertible in to cash and bank kept 25% margins with it.

iv. Loans

When a customer borrows a fixed amount from a banker repayable either in periodicinstallments or in lump sum at a fixed future time, it is called a "loan". When bankers allowloan to their customers against collateral securities they are called secured loan and when nocollateral; security is taken it is called "clean loans"

Types Of Loans

The credit department of NBP has providing the following types of loans

a. Short term loans

b. Long term loans

c. Working capital loan

d. Syndicate (project) loan

e. Monitoring

CRITERIA CHECKED FOR LOANS

Major areas requiring focused attention of the analyst are:

Financial Condition

Which is reflected in the trends of:

∗ Net sales

∗ Gross sales

∗ Operating profits

∗ Net profits (at least for the last 3 years)

Structural Liquidity

It refers to the extent of liquidity usually available in the business, or which is the routinerequirement of the borrower based on the nature of his periodically maturing liabilities.

Industry/Business Of Operation

The banker has to check that in which industry or segment of market the loan is being giventhis is important because if there were a recession in that industry for decades then it wouldnot be feasible to invest in such a business. Certain traditionally stable industries are inPakistan in which NBP feels satisfied while investing. For example if they feel satisfied byinvesting in ICI.

Debt Equity Management

Excessive reliance on debt, rather than plough back of profits or injection of fresh equity, to

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maintain a healthy combination of debt and equity is thought with danger because ultimatelythe debt servicing requirements place a heavy burden on its liquidity thereby its survival.

Asesst Management

Asset management involves the analysis of how productively the assets of the company are being used. Sales and profitability can be measured with this.

Borrower’s Credit Worthiness

In order to get a complete picture of the borrower’s credit worthiness, inquiries will have to be made about:

∗ His business.

∗ Trade experience.

∗ Assets and liabilities.

∗ His account with bank or with other banks.

∗ His financial statements and income tax returns.

∗ An interview with him will be necessary to elucidate or supplement theinformation that may have been collected.

Management

Before giving loan NBP also checks whether the management have the depth, skill and

experience. If the management is aggressive and adoptive to the new changes then it is mostlikely that the banker may receive the loan back on due date

Securities

In case the borrower is not in a position to meet his obligations, there must be something elseto call back upon. So bankers take securities to have a resource to them to guard liquidity,that is, security is an insurance against calamities.In case of cash finance the customer have to give the same amount of money to the NBP as asecurity for which it takes loan.

The bank provides the following securities to the customers.

Mortgage

Transfer of interest in movable property for securing the payment of money lend on existingor future liability. The bank provides the following two types of mortgage.

Registered mortgage

Equitable mortgage

Registered mortgage

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Registered mortgage is provided on the residential property, commercial industrial property, raw plot, etc. A party can get registered mortgage if they provide the followingdocuments to the bank.

∗ Title deed

∗ Non encumbrance (NEC)

∗ pit form (in case a constructed hose)

∗ Valuation certificate

∗ Affidavit

∗ Mortgage deed

∗ Personnel guarantee of mortgagor

∗ Power of attorney

∗ Legal opinion.

Banks examine all these reports, and if they are correct then issue the mortgage to the party. The bank examines these reports to see that the property they want to mortgage isregistered and is not already pledged. The bank also calculates the value of the propertyand the legal opinion of the customer in case of non-payment.

Equitable mortgage

Equitable mortgage is provided on the residential property, commercial industrial property, raw plot, etc.

∗ Title deed

∗ Non encumbrance certificate (nec)

∗ Pti form (in case a constructed house)

∗ Valuation certificate

∗ Affidavit

∗ Memorandum of deposit of title deed

∗ Personal guarantee of mortgagor

∗ Power of attorney

∗ Legal opinion

In this mortgage a charge form bound the customer for any legal action in case of non- payment. In this type of mortgage hypothecation of stocks involves.

Pledge

A pledge is an “a class security given to customers for stocks ware house, customs, and etc. itis defined as actual delivery of movable property to lender as security for a loan. When the

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customer makes the payment of the loan in full he can back his mortgage property from the bank i.e. when full payment is made the stock is released.

PROCEDURE OF SANCTION OF LOAN

Any individual or company, who wants loan from NBP, first of all has to undergo the fillingof a prescribed form, which provides the following information to the banker.

Purpose of loan

Details of all firms or companies associated with business

Name of proprietor/ partner/directors

Accurate and up-to-date balance sheet and profit and loss statement of last two yearsof business

Market report of the borrower repute

Report from the bank if borrower has maintain his account with the bank

CIB report

Full details of existing limit and actual liability against the business

Particular about the foreign exchange deposits and bills given by the borrower to the bank

Memorandum and article of association in case of limited company

Audited report of balance sheet and income statement of last two years

After checking all the securities, customer verification the manager done the followingtasks

1. Preparation of credit proposal

2. Prepare the about the customer

3. Sanction of loan

Preparation of credit proposal

After formal application for the credit the party submits approval. For this purpose borrower can use coarse paper or the form provided by the bank. Along with the application borrower also submits the documents required by the bank. The bank manager evaluates the documents

provided by the borrower. He gets the party’s credibility report confidentially from the other commercial banks. He checks the balance sheet and income against the assets in thecompany. He also measures the percentage of owner’s equity.Then he doses the ratios analysis of the company. If the party is involved in the export andimport business then the data of the last three years of this business is considered. Themanager of the bank also examine the project violability, the securities provided by thedebtor to the bank are evaluated by measuring their worth. In the case of pledge is assessed

by the manager while in case of new party manger checks from where the party is financingfor their business

Prepare the Proposal about the customer

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After preparing the proposal manger prepare the report about the customer. Report containsthe following information

∗ Name of the company

∗ Date of establishment

∗ Address

∗ Nature of business

∗ Branch office

∗ Worth of business

∗ Date

∗ Banker’s opinion

∗ Head cashier opinion

∗ Branch manger opinion

In case of partnership business following information are included in the report

∗ Partner, their share in capital, profit and loss

∗ Deed of partnership

∗ Partnership letter

∗ Turn over

∗ Net profit

∗ Personal property of partners

∗ Bank balance of partners

∗ Advance payment of suppliers

∗ Particular of machinery installed in the factory through financing

Incase of corporation/limited companies the following information are included

∗ Incorporation and commencement of company

∗ Sales offices

∗ Capital information

∗ Directors and their contribution to capital

∗ Balance sheet with explanation and evaluation

∗ Net worth of the company

Sanction of Loan

If the limit of the loan lies within the power of manger then he sanction the loan otherwise

manger with the covering letter along with all necessary documents sends it to the concernedsanctioning authority.

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ACCOUNTS DEPARTMENT

The main function of account department of NBP is to maintain general ledger accounts and

after the business hours the function of the account officer is to close books. There are manyother important functions performed by accounts department of NBP so broadly they can becategorized in three heads

• Routing of expenses vouchers

• Preparation of daily activity reports

• Preparation of weekly and monthly statements

• Preparation of statements for tax purpose

ROUTING of EXPENSES

Vouchers of all expenses and material purchases are routed out through this department. Asfar as the expenses are concerned, they include the

Heads of salaries paid to confirmed employees of bank

Wages paid to employees that are on contractual basis

Rent of the building

Lease installment

Insurance premium paid to insurance company for the insurance of vehicles and cash

in safe and counter. Utility bill, which consists of courier, electricity, water and gas bills

Medical expenses (reimbursed)

Voucher System

Voucher is written authorization sued in approving a transaction for recording and payment.Voucher is a system, which is generally designed to provide strong internal control over thetransaction, which takes place during the business hours. It is prepared whenever

A transaction takes place in any department of the bank.

One debit and one credit voucher is prepared

At the end of the day these vouchers are collected and recorded,

In bank two vouchers are used

i. Debit Voucher

ii. Credit Voucher

Debit Voucher

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Different types of debit vouchers are used by the bank as an evidence of the transaction. For identification they are differentiated by using different colors.

Debit vouchers are used in three cases:

Whenever any expense is incurred

For the preparation of two negotiable instruments i.e; MT, DD.

When Account holder transfer money in his account then bank deduct charges onintercity and SC clearing. The account of the customer is debited with the amountdeducted for services and debit voucher is prepared.

Accounts department used debit voucher mainly for expenses while the other two purposes of debit voucher is used by the remittance department. The format of the debit voucher includes:

Name of the branch

Date

Branch No.

Account No.

Transaction code

Amount and other details (Narration)

Credit Vouchers

Different types of credit vouchers having different colors and format are used by the bank.There are three types transaction in which credit vouchers are used.

When a depositor deposits any amount in his account because it is the liability of the bank therefore credit voucher is prepared.

Any income received by the bank e.g . bank draft.

For the preparation of PO

Salary Structure

Salary included

i. Bonuses

These bonuses are credited after every six months i.e. June and December . These are firstand second profit bonuses and are equal to one month’s basic salary.

ii. Allowances

Allowances included house allowance ,transport allowance and medial allowance.

iii. Provident fund

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Provident fund is provided to each employee on his retirement, contribution by employer andemployee is 8.3%.

DAILY ACTIVITIES REPORT

The main function of this department is to check daily transactions whether cash, transfer of payments, billing, and clearing of all the departments. It includes the details of the following:

Loan transactions.

general ledger transactions

Foreign currency related transactions.

Fixed deposits transactions.

Following procedure is followed in checking daily activities carried out in differentdepartments of the branch.

All the vouchers, advices both manual as well as computerized obtained for posting inthe system of each department.

All the vouchers and advices are further sorted in ascending and descending order for the sake of convenience in checking and tally information.

It is checked whether or not the account number, instrument number, documentnumber and amount appearing in words and figures are agreed with the informationappearing in the computerized record.

In case of changing or discrepancy informed to the concerned department.

All the credit, debit and billing voucher bunched separately.

The name of the branch, date of vouchering, title and number of vouchers is writtenon voucher must be cover authorized signature.

All the above vouchers assist in case of any enquiry and audit.

PREPARATION OF STATEMENTS

Second major function of accounts department is the preparation of various statements. Thesestatements are:

Weekly statements:

These weekly statements are sent first to NBP head office Karachi. These statements aregenerated on weekly basis for the purpose of sending it to Head Office. These also include:

Statement of affair

Deposit and advances position of the bank

Monthly statements:

These monthly statements are sent first to NBP head office Karachi and then these statementsare sent to head office in consolidated form. All vouchers and statements signed and

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approved by manager accounts or who has authority to sign on behalf of the bank and whosesignature appears in one of the bank’s book of specimen signature of a person who hasauthority to sign internal vouchers and record extents of its authority will be made by thecounter manager. All vouchers prepared by different relative departments on computer.

These statements are prepared on monthly basis and also sent to Head Office (Qatar). Theseinclude:

Provisional statement of income and expenses. This statement adjusted for accruals and pre-payments.

Monthly Balance Sheet and Income Statement

Comparative Statement

In third and last step the following functions of accounts department of NBP are described asfollows:

Approval of daily expenses voucher

SBP balance

Tax returns

Budgeting

Forward cover fee

Debit balance calculation.

Pay order /telegraphic commission transfer

Deposit entry

Depreciation

Result/budget

Head office report

Trail balance /fax position

Commitment return

Source and uses

Activity report

Monthly assets and liability

Liquidity 1,2,3,4,5, years

Excise duty balancing

Customers internal account statements

Computer complete back up

Quaterly statement size wise

FCY interest reporting

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FCY interest checking

Services charges

A/c to be dormant

Letters to customer

Classification of deposits

Lists of deposits

A/c opening and closing

Staff loans

A/c blocked and unblocked

Monthly resident and non resident

Zakat calculation

TAX PURPOSE STATEMENT

The department also prepares two statements for the purpose of paying tax on monthly andannual basis. These statements are generated for the purpose of submitting to Central Boardof Revenue. These are:

Statement of deduction of income chargeable under the head salary under Section 53(Tax deducted at source)

Withholding Tax from the payments made to vendors, suppliers and other parties providing various services. The rate of withholding tax is as follows:

Suppliers------------------------ 3.5%

For other partie s------------- 5%

Data Entry

The next task after receiving the data is to enter that data in to a computer. The floppydisk is directly inserted in the computer. The program in used is based on “COBOL”language. This program is designed in away that it demand “Hash Value” value beforeopening the floppy for further action this value serve the purpose of password or pin codesend by the branch on entering that value the data enter in to the computer. This computer is

attached with the terminal of central computer. The operator of that terminal takes the datafrom the computer and converted it in to a text file through that terminal the data finally goesto the central computer.

ACCOUNTING PROCEDURE IN NBP:

1. Various departments use debit and credit vouchers for regarding the transactions.

2. Accounting department receives the departmental journal from the departmentstogether with all vouchers.

3. Verify correction of total of all into departmental entries in departmental journal.

4. Sort vouchers into general ledger a/c order debit separately from debit for each

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account.

5. From departmental journals add all debits and all credits for each general ledger account and write total for each accounting relative account and extend new balances.

6. Prove debit and credit totals to department journal total. Write total obtained from

machines list for each contingent accident in general ledger and up data balances.7. Date and sign general ledger and obtain signature of an officer .

8. Place general ledger includes leaf binder in chronological order.

BILLING & GOVERNMENT RECEIPT/PAYMENT DEPARTMENT

In this department all types of Government receipts i.e. Revenues, Taxes,

Agriculture Tax, Government Fees, EOBI Funds and Utility Bills aredeposited. This way NBP is serving great job of revenue collection andcharges commission for providing services. This department is performingfollowing functions

• Payment of Provident Fund

• Payment of Benevolent Fund

• Payment of pension

• Collection of utility bills

• Collection of property taxes and Challans

• Collection of dues of education institution

• Payment of salaries

• Payment of zakat

The investment by the NBP in the provident fund for the benefit of their employees in 2008 isRs. 8507300/- and in pension schemes reached to Rs. 17738992/-

PAYMENT OF PROVIDENT FUND

Provident fund are maintained by many organizations for the benefit of their employees.There are three types of provident fund granted by the organizations.

Government provident fund: fund maintained by government institutions

Recognized provident fund: fund maintained by private organizations fulfils theconditions maintained by law.

Unrecognized Provident Fund: fund maintained by private organization which hasnot been granted recognition by law

BENEOVALENT FUND

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The Funds are utilized for the relief of Government servants and their families by givingfinancial assistance to the families of deceased Government servants; to Government servantsinvalided out of service.

COLLECTION OF UTILITY BILLS

NBP as an agent of the SBP collects bills from the general public and charge commission for the services rendered. The commission on each type of bill is Rs. 8/- per bill. The branchescollect the utility bills and the proceeds are then send to head office through MT.

PAYMENT OF PENSION

Pension is the Post-retirement benefits that an employee might receive from some employers. It is a payment, not wages, made regularly to a person who has fulfilled certain conditions of service, reached a certain age. The date up to which pension is payable may vary dependingupon the employee services. It can be payable for Life, Death , Remarriage

Types of Pension

i. Employment based Pension

ii. State Pension

iii. Employees Old Age Benefits

Employment-based pensions

A retirement plan is an arrangement to provide people with an income during retirementwhen they are no longer earning a steady income from employment. Often retirement plansrequire both the employer and employee to contribute money to a fund during their

employment in order to receive defined benefits upon retirement.

The GOP has been introduced two types of pension are given to the employees on retirementon the basis of the services which they have rendered.

Retirement Pension: refers to pension granted upon 25 year of services

Superannuation Pension: refers to pension granted upon 30 years of services

State pensions

Many countries have created funds for their citizens and residents to provide income whenthey retire. GOP has been introduced pension for their employees who are working in theState owned Institutions; e.g WAPDA, WASA, PIA etc

Provincial Pension : granted to the employees who work under the government of Punjab.

Central Pension: granted to the employees who are employed under the federalgovernment. Recently GOP increased the pension of central employees by givingthem an arial of 20% and 15%:

• 20% increase: For employees who have retired before 1999

•

15% increase: For employees who have retired after 1999

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http://www.investorwords.com/461/benefit.html


http://www.investorwords.com/1696/employee.html


http://www.businessdictionary.com/definition/receive.html


http://www.businessdictionary.com/definition/employer.html









Defensive Pension: It is given to the employees who work in forces e.g; PIAemployees, Army, Navy, Police

Railway Pension: It is given to the employees who work in railway under the three

head:

• LHR: Lahore Railway Head

• WS: Work Shop Head

• RHQ: Railway Head Quarter

Employees Old Age Benifit

Non government employees having 5 or more than 5 employees grant EOBI funds to their employees. The contribution towards the fund by the employee is 5% of the basic pay scaleof employee and by the employer is 1% of the basic pay scale.

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In this section products offered by NBP arediscussed:

• Premium Aamadni Scheme

• Premium Saver Scheme


• President Karobar Scheme

• Saiban Scheme

• Advance Salary Scheme

• Cash Card Scheme

• Cash n Gold Scheme

• Kisan Dost Scheme

• Kisan Taqat Scheme

• Pak Remit




COMMERCIAL & RETAIL BANKING National Bank of Pakistan serving following product lines:

Premium Aamdani Scheme Unprecedented Safety - Unprecedented Return

Monthly Income Scheme

A monthly income scheme introduced by National Bank of Pakistan for investors as well asfor general public. Incentives are available for investors providing finance facility againstthese certificates and also allowed to customers to convert existing deposits into NationalBank Premium Aamdani Certificates.

• Earn up to 11% p.a.

• Minimum deposit of Rs. 20,000/-

• Maximum deposit of Rs. 5,000,000/-

• Investment period is 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%

• Profits paid on monthly basis

Period Profit Rates

1st year 7.50%

2nd year 8.50%

3rd year 9.50%

4th year 10.50%

5th year 11%

Premium Saver Scheme your's saving reward

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(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

President's Karobar Scheme Mera Apna Karobar

National Bank of Pakistan is providing financing under President Karobar Scheme with thecooperation of government of Pakistan. The purpose of this scheme is to reduceunemployment from the country. Main features are as under

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

• Tenure of loans 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

• NBP’S loan available for:

Utility Store,

Transport

PCO/Tele-centers

Procedure to Apply

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• Customer to visit any NBP branch to obtain loan application form and scheme details.Application form could also be downloaded from the NBP web site. Photo copy of theform will also be accepted. Each form will cost Rs. 5. In case of photocopy or down-loaded form, form fees will be charged at the time of application submission

• Branch to provide details of the scheme along with the required documents to besubmitted with the application form

• Customer to submit the application form along with all the required documents aswell as the verification and the processing fees.

• The application form and all the relevant papers of the customer will be checked bythe Branch staff and if found complete, application processing will commence

• If the case is approved then the customer will be informed accordingly and will beadvised to deposit the Down payment and fulfill all the other product specificformalities

• Upon fulfillment of all the details and approval of the loan by the competentauthority, Purchase Order in favor of vendor will be issued and a copy of the samewill be given to the customer

• Delivery of the financed asset will be made directly to the customer by the NBPselected vender

Saibaan Scheme Open the Door to Your Dream Home

(Home Financing)

National Bank of Pakistan lending for construction of home to general public as well asemployees of government and non-government institutions. Main features of this scheme areas under.

• Finance is available for:

Home Purchase

Home Construction

Home Renovation

Purchase of Land + Construction

• Period of repayment ranges between 30-20 years.

• Loan available up to a maximum of Rs. 15-20 million.

• NBP provide markup choices to its consumer i.e. Variable Discount Rate, Fixed Rate.

• Minimum approval and disbursement timing.

• Limited to areas where there are no documentations, fee, resale and foreclosurerelated issues, so to protect the bank’s interest.

Mark Up RatesVariable Rate Option: SBP Discount Rate with (+2%) with12 months re-pricing

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Processing Fee Government Employees: Rs. 500/- irrespective of financing amount.For Others :

Financing below Rs. 1 Million Rs. 1000Financing between Rs. 1 to 4 Million Rs. 3000

Financing above Rs. 4 Million Rs. 6000

Eligibility

• Balance Transfer Facility (BTF)

• Must be Pakistani Resident (National)

• Aged between 21 and 65 years at the time of application/disbursement of loan

•

Salaried Person, Self-employed professionals and businessmen• Property located in NBP approved localities.

• Service duration: Two years for salaried class Three years for self-employed/businessclass.

Advance Salary Scheme Personal Loan

Take up to 20 times of Your Take Home Salary

NBP Advance Salary , the leading personal loan product of the country, is maintaining itsinimitability ever since it was launched. This was only possible due to its swift growth and

remarkable loan disbursement of over 138 billion.

Employees can avail up to 20 net take home salaries with easy repayment installments. It'shassle free acquisition with no prior formalities and easy availability in a short turn roundtime are attributed as the most distinguishing features of the product. The product is offeredcountrywide. It's salient features are;

• Easy installments of 1 to 60 months at your choice

• Take upto 20 advance salaries

•

Quick processing and fastest disbursement• The product is for permanent employees of Government, Semi

Government and Autonomous bodies receiving salaries through NBPaccounts

EligibilityPermanent Employees of Govt., Semi-Govt., Autonomous,Semi Autonomous, Local & other bodies who are maintainingtheir Salary A/Cs at NBP.

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Repayment Direct deduction from Salary A/C

Maximum LoanAmount

Rs. 490,000/-

Security

Employer will provide undertaking that borrower’s Salary andend of service benefits will route through his/her Salary A/Cmaintained at NBP during the tenure of the loan and his/her end of service benefits are at least equal to the amount of Advance Salary required.

Hypothecation of Consumer durables owned by the borrower.

Three (3) Undated Cheques

Max. RepaymentPeriod

5 years (60 months)

Advance in terms of # of net take homesalaries

Up to 20 net take home salaries

Markup Rate SBP Discount Rate + 5%

Processing Fee 1% of Loan Amount

Verification Charges Rs 500/-

Life Insurance No Insurance of any kind.

DocumentationCharges

at actual

Contact Your Salary disbursing NBP Branch.

Remaining ServiceAge

At the time of approval and disbursement the applicant’sremaining service age should be 6 months after maturity of theloan

Debt Burden 50%

Minimum net takehome salary no minimum take home requirement

Cash Card Scheme one card does it all

ATM + Debit Card

NBP Cash Card is a 24-hour direct access ATM/ Debit card to bank account, which lets paydirectly from the account as an alternative payment method to cash. The transaction is

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authorized and processed by entering PIN. The NBP Cash Card holders are able to transact atany of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP,1-Link & M-NET ATM’s across the count.

• 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)

Advantages

• Customers don’t need to carry a lot of cash with you every time you go out.

• Secure and Safe transaction.

• Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill

Payment etc.)

• Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.

• Enable to make purchases round 4000 POS (Merchants) Countrywide including2500+ POS in Karachi.

• No Card Issuance Fee for first 12 Months

Investor Advantage Scheme easier financing ,profitable trading

Financing Facility for Stock / Retail Investors

• Comfortable and secure environment for trading

• NBP financing at very easy terms requiring minimum documentation

• Minimum turn around time

• No security requirement from the customer except for the customer's equity

• Customer's equity freely available for investment.

• Equity acceptable in cash or approved share.

Eligibility

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• Pakisani National with vaid computerized national ID Card

• Over 21 years of age

• An account with NBP designated Branch

• Equity in the form of cash or NBP approved shares

• No default with any financial institution

Application Procedure

• Obtain facilty application form the NBP Marginal Desk at designated branches

• Fill in the application form and submit it to the branch

• On application approval, deposit equity as cash in the margin financing account at the bank. Alternatively NBP approved shares can also be deposited in the NBP CDCAccount (CDC A/c No. 2345)

• Start trading through comfortable & friendly trading centers establishment for you (In

collaboratino with Taurus Security Limited a subsidiary of NBP)

• Trading limit available for the amount of equity + bank financing.

Cash n Gold Scheme encash and meet your needs

Ready Cash Against Gold

With NBP's Cash n Gold, provide facility for ready cash against idle gold jewelry with nominimum limit and provide extra benifit. The main features are:

• Facility of Rs. 10, 000/-against each 10 gms of net weight of Gold Ornaments

• No maximum limit of cash

• Repayment after one year

• Roll over facility

• No penalty for each repayment

• Rate of mark-up 13% p.a.

• Weight and quality of gold to be determined by NBP's appointed schroffs

Kisan Dost Scheme Agriculture Made Easy

Agriculture Farming Program

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National Bank of Pakistan is lending in agricultural field. National Bank of Pakistan islending farmers for development of agriculture sector of the country under certain terms andconditions.

NBP provide loan to farmers for production, development purposes, for purchase of tractors,

for installation of tube wells, for purchase of agricultural instruments, micro loan, for construction of godwon, for construction of fish pond, for development of livestock andfarming, for mil processing, for cold storage, bio-gas plants.

• interest @ 14.5 percent per annum

• 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, goldornaments and paper security

• Loan facility on revolving basis for three years (renewable on yearly basis withoutdocumentation and approval)

Kisan Taqat Scheme promise of prosperity

Dairy Farm Scheme

National Bank of Pakistan is providing loans for the dairy farms and for the development of the livestock and dairy farms.

• NBP facilitates with livestock experts

• Less documentation and easy to repay

• Available at the next door step

• Scheme is available in more than 50 branches of NBP

PakRemit Scheme NBP's Internet Based Home Remittence Service

Product Information

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Pakremit 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 validUS Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit fundsthrough this channel.

Remitters in USA can log on to our user friendly website, www.pakremit.com and easilyremit funds to Pakistan from the comfort of their homes, in a matter of minutes. The serviceis fully secure with advance encryption application and is available for use 24 hours a day, 7days a week. Fees and exchange rate have been set at competitive levels and the remittershave 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 inPakistan, including NBP. While funds are credited directly to beneficiariesmaintaining accounts with NBP, a pay order or demand draft is couriered to other

banks for their customers. Pay order or demand draft can also be couriered directly tothe 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. Click here for details of NBPForeign Exchange Branches.

USPs ( Unique Selling Propositions)

Convenient and Fast

Reliable and Secure

Available 24 x 7

NBP Protection Shield Scheme Life is Precious

Personal Accident Insurance

Insurance Coverage- In case of Accidental Death (Including death due to Riots, Strikes, Civilcommotion, Acts of Terrorism and Natural Calamities like Flood, Earth Quake, Cyclones etc)

provided that the insured is not directly involved in these activities

Coverage of Rs. 200,000/- for Rs. 20/- per month

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Accident means unintentional, unfortunate or a harmful event by chance or apparent cause.

Accidental Death means death due to accidental injuries, but not illness.

Insured Person means a National Bank of Pakistan PLS account holder, aged between 18years and above, and whose premium is deducted & details are reported to the selectedinsurance company by NBP.

Policy means Group Personal Accident Policy dated 26/09/05 executed between NBP andInsurer.

Principal Sum means the amount stated in the Policy’s Schedule of Benefits as respects each

Insured Person.

Features

• 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

Eligibility

• NBP PLS account holders

• 18 years and above

NBP Student Loan Scheme

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget

speech, a STUDENTS LOAN SCHEME (SLS) for Education was launched by theGovernment of Pakistan in collaboration with major commercial banks of Pakistan (NBP,

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HBL, UBL, MCB and ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the meritorious students who have financial constraints for pursuingtheir studies in Scientific, Technical and Professional education within Pakistan.

The Scheme is being administered by a high powered committee comprising Deputy

Governor, State Bank of Pakistan, Presidents of the commercial banks and representative of Ministry of Finance, Government of Pakistan.

Eligibility

Under the scheme the students are eligible to apply for loans provided: He/She has obtainedadmission on merit through normal course/procedure in the approved Universities/Collegesof the public sector mentioned hereunder. He/She falls at the time of admission within the age

bracket of:-

For Graduation Not exceeding 21 YearsFor Post-Graduation Not exceeding 31 Years

For Ph.D Not exceeding 36 Years

He/She has secured 70% marks in the last public examination.

He/She is unable to pursue studies due to financial constraints.

Repayment

The maximum period of repayment of loan is 10-Years from the date of disbursement of firstinstallment. The borrower shall repay the loan in monthly installment after six months fromthe date of first employment or one year from the date of completion of studies, which ever is

earlier.

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• Horizontal Analysis

• Vertical Analysis

• SWOT Analysis

• Strength

• Weaknesses

• Opportunity

• Threats




FINANCIAL ANALYSISFINANCIAL ANALYSISThe financial statement of any organization shows the results of its operation and its position in business. It is a process which involves reclassification and summarization of information

through the establishment of ratios and trends. The overall objective of financial statementanalysis is the examination of a firm’s financial position.

Horizontal analysisThrough this analysis we can check that what are changes with in years in the items of balancesheet and profit and loss account. Last year become base for next year. And change can be easilyanalyzed.

Vertical analysisIn vertical analysis of balance sheet the percentage of each item of statement is calculated to total

and then the change in the percentages is checked with in years.

Horizontal Analysis of Balance Sheet

ASSETS

2008 2007 Percentage

change

Cash balances with other treasury

banks

106503756 94873249 12.3%

Balances with other banks 38344608 37472832 2.33%

Lending to financial institutions 17128032 21464600 (20.92%)

Investments 170822491 210787868 (19%)

Advances 412986865 340677100 21.2%

Operating fix assets 24217655 25922979 (6.6%)

Deferred tax assets 3204572 - -

Other assets 44550347 30994965 43.73%

Total assets 817758326 762193593 7.3%

LIABILITIES 2008 2007 Percentage

Bills payable 10219061 7061902 44.7%

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Borrowing from financial

institutions

40458926 10886063 272%

Deposits & other accounts 624939016 591907435 5.6%

Subordinated loans - - -

Liabilities against assets of

leasing

25274 33554 (24.7%)

Deferred tax liabilities-net - 5097831 -

Other liabilities 39656831 30869154 28.5%

Total liabilities 715299108 645855939 10.75%

Net assets 102459218 116337654 (11.93%)

REPRESENTED BY 2008 2007Percenta

ge

Share capital 8969751 8154319 10%

Reserves 19941047 15772124 26.43%

Unappropriated profit 52456204 45344188 15.7%

81367002 69270631 17.5%

Surplus on revaluation of assets 21092216 47067023 (55.2%)

102459218 11633765

4

(11.93

%)

Horizontal Analysis of Profit And Loss Account

PARTICULARS 2008 2007 Percentage

Mark-up/return/interest earned 60942798 50569481 20.5%

Mark-up/return/interest expenses 23884768 16940011 41%

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Net mark-up/ interest income 37058030 33629470 10.2%

Provisions against non

performing advances

10593565 4723084 124.3%

Provision for/(reversal of)diminution in the value of

investment

373249 (40248) 1027.4%

Provision against off balancesheet obligations

4000 - -

Bad debt written off directly - 39899 -

10970814 4722735 132.3%

Net Mark-up/interest Incomeafter provisions

26087216 28906735 (9.75%)

Non-Mark-up/interest Income

Fee,commision and brokerageincome

7925370 6781683 17%

dividend income 2878932 3263246 11.8%

Income from dealing in foreigncurrencies

3969057 1042827 281%

Gain on sale and redemption of securities-net

395427 2341690 (83.11%)

Unrealized/(loss) on revaluationof investmentsclassified as held-for-trading

1707 (31964) 105%

Other income 1245369 147363 745%

Total Non-Mark-up/interestIncome

16415862 13544845 21.2%

42503078 42451580 0.12%

Non-Mark-up/interestexpenses

Administrative expenses 18171198 14205911 28%

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Other provisions/write offs 747521 168027 345%

Other charges 583361 17141 3303%

Total Non-Mark-up/interest expenses

19502080 14391079 35.5%

23000998 28060501 (18%)- - -

Extraordinary/unusual items 23000998 28060501 (18%)

Profit Before Taxation

Taxation-current 11762650 8311500 41.5%

-prior years - 391497 -

-deferred (4220242) 323731 1403%

7542408 9026728 (16.4%)Profit After Taxation 15458590 19033773 18.8%

Un-appropriated profit broughtforward

45344188 32074677 41.4%

Transfer from surplus onrevaluation of fix assets

130456 39007 234%

Profit available forappropriation

60933234 51147457 19.13%

Vertical Analysis of Balance Sheet

ASSETS 2008 Percentage 2007 Percentage

Cash balances with other

treasury banks

10650375

6

13.02% 94873249 12.45%

Balances with other banks 38344608 4.7% 37472832 4.92%

Lending to financial

institutions

17128032 2.1% 21464600 2.82%

Investments 17082249

1

21% 21078786

8

27.7%

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Advances 41298686

5

50.5% 34067710

0

44.7%

Operating fix assets 24217655 3% 25922979 3.4%

Deferred tax assets 3204572 0.4% - -

Other assets 44550347 5.45% 30994965 4.07%

LIABILITIES 2008 Percentage 2007 Percentage

Bills payable 10219061 1.43% 7061902 1.1%

Borrowing from financial

institutions

40458926 5.7% 10886063 1.7%

Deposits & other accounts 62493901

6

87.4% 59190743

5

91.65%

Subordinated loans - - - -

Liabilities against assets of

leasing

25274 .0035% 33554 .0052%

Deferred tax liabilities-net - - 5097831 0.79%

Other liabilities 39656831 5.5% 30869154 4.78%

REPRESENTED BY 2008 Percentage 2007 Percentage

Share capital 8969751 11.02% 8154319 11.77%

Reserves 19941047 24.5% 15772124 22.77%

Unappropriated profit 52456204 64.5% 45344188 65.46%

Vertical Analysis of Profit And Loss Account

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PARTICULARS 2008 Percentage 2007 Percentage

Mark-up/return/interest

expenses

23884768 39.2% 1694001

1

33.5%

Net mark-up/ interest

income

37058030 60.81% 3362947

0

66.5

Provisions against non

performing advances

10593565 17.4% 4723084 9.34%

Provision for/(reversal

of) diminution in the

value of investment

373249 0.61% (40248) (0.08%)

Provision against off balance sheetobligations

4000 0.007% - -

Bad debt written off

directly

- - 39899 0.08%

10970814 18% 4722735 9.34%

Net Mark-up/interest

Income after provisions

26087216 43% 2890673

5

57.16%

Non-Mark-up/interestIncomeFee,commision andbrokerage income

7925370 13% 6781683 13.41%

dividend income 2878932 4.72% 3263246 6.5%

Income from dealing inforeign currencies

3969057 6.51% 1042827 2.1%

Gain on sale andredemption of securities-net

395427 0.65% 2341690 4.63%

Unrealized/(loss) onrevaluation of investments classifiedas held-for-trading

1707 0.003% (31964) (0.063) %

Other income 1245369 2.04% 147363 0.29%

Total Non-Mark-up/interest Income

16415862 27% 1354484

5

26.8%

42503078 70% 4245158

0

83.95%

Non-Mark-up/interestexpensesAdministrativeexpenses

18171198 30% 1420591

1

28.1%

Other provisions/writeoffs

747521 1.23% 168027 0.33%

Other charges 583361 0.96% 17141 0.034% Total Non-Mark- 19502080 32% 1439107 28.5%




RATIO ANALYSIS

Ratio analysis includes method of interpreting financial ratios to access the performance of anyorganization. The basic input to ratio analysis is profit and loss account and balance sheet. Rationanalysis of any organization is in interest of its creditors, employees, shareholders and of its

management as well. Both existing and prospective customer are interested in the ratio analysisof organization

Ratio analysis is a valuable aid to management in the discharge of its basic functions such as planning, forecasting, control etc. these ratios describe the relationship with the functioning of the business and helpful for controlling cost of goods manufactured. The great advantage of ratioanalysis is that it reduces raw data of widely varying magnitude to a common comparative basis.Thus, ratio analysis is the most meaningful to compare financial information regarding a givingcompany.

Current Ratio

Formula:

Current ratio= Current assetsCurrent liabilities

93

Year 2007 Year 2008

Current assets 153810681 161976396

Current liabilities 481381235 53667962

Current ratio .3195 .3035




Interpretation

An increase in the current ratio represents improvement in the liquidityposition of bank while a decrease in the current ratio indicates that there hasbeen deterioration in the liquidity position of the bank. Current ratio in 2008is decreasing as compared with 2007. It should be improved.

Working Capital

Formula:

Working Capital=current assets-current liabilities

Interpretation

Working capital should increase which will show that there is increase incurrent assets. But here working capital is decreasing in 2008 as comparedwith 2007. it should be improved.

Total asset turnover

Formula:Total asset turnover= sales

Total assets

94

Year 2007 Year 2008

Current assets 153810681 161976396

Current liabilities481381235 533667962

Working Capital (327570554) (371691566)




Interpretation

Higher the total asset turnover the more efficiently its assets have beenused. This measure is probably of greatest interest to management, because

it indicates whether the efficient operations have been financially efficient. Total asset turnover is increasing in 2008 as compared with 2007 which is agood sign.

Debt Ratio

Formula:

Debt Ratio=Total liabilitiesTotal assets

95

Year 2007 Year 2008

Sales 50569481 60942798

Total assets 762193593 817758326

Total assetturnover

0.0663 0.0745




Interpretation

The debt ratio measures the proportion of total assets by the creditors. Thegreater this ratio the greater the amount of other people’s money being used

to generate profits. The higher this ratio greater the degree of indebtednessan more financial leverage. NBP’s debt ratio is increasing in 2008 ascompared with 2007 which is not favorable.

Time interest earned ratio

Formula

Time interest earned ratio=Earning before interest and taxesInterest

96

Year 2007 Year 2008

Total liabilities 645855939 715299108

Total assets 762193593 817758326

Debt ratio 84.74% 87.47%




Interpretation

Time interest earned ratio sometimes called interest coverage ratio,measure the ability to make contractual interest payments. The higher itsvalue the better able the organization is to fulfill its interest obligations. Timeinterest earned ratio is decreasing in 2008 as compared with 2007. It shouldbe improved.

Gross profit margin

Formula

Gross profit margin= Sales-cost of goods soldSales

= Gross profitSales

97

Year 2007 Year 2008

Earning beforeinterest and taxes

42451580 42503078

Interest 14391079 19502080

Time interestearned ratio

2.95 2.18




Interpretation

Gross profit margin measures the percentage of each sales rupee remainingafter the organization has paid for its goods. The higher the gross profitmargin, the better (that is the lower the relative cost of merchandise sold).Gross profit margin is decreased in 2008 as compared with 2007. It shouldbe improved.

Operating profit margin

Formula

Operating profit margin= Operating profitSales

98

Year 2007 Year 2008

Gross profit 33629470 37058030

Sales 50569481 60942798

Gross profitmargin

66.5% 61%

Year 2007 Year 2008

Operating profit 42451580 42503708

Sales 50569481 60942798

Operating profitmargin

83.95% 69.74%




Interpretation

Operating profits are pure because they measure only the profits earned onoperations and ignore interest, taxes and preferred stock dividend. A higheroperating profit margin is preferred. Operating profit margin is decreased in2008 as compared with 2007. It should be improved.

Net profit margin

Formula

Net profit margin= Earning available for common stock holderSales

Earning per share

Formula

99

Year 2007 Year 2008Earning available forcommon stockholder

19033773 15458590

Sales 50569481 60942798

Net profit margin 37.64% 25.4%




Earning per share= Earning available for common stock holderNo. of shares of common stock outstanding

Interpretation

Earnings per share (EPS) are the earnings returned on the each share. Highereps is good but here EPS is decreased in 2008 as compared with 2007 whichis not good.

Return on total assets

Formula:

Return on assets= Earning available to common stock holder

Total assets

100

Year 2007 Year 2008Earning availablefor common stock holder

19033773 15458590

No. of shares of common stock outstanding

815500 897190

EPS 23.34 17.23




Interpretation

Return on assets often called the return on investment. It measures theoverall effectiveness of management in generating profit with its availableassets. The higher the firm’s return on total assets, the better. ROA in 2008is decreased as compared with 2007. It should be improved.

Return on common equityFormula

Return on common equity= Earning available to common stock holderCommon stock equity

Interpretation

ROE measures the return earned on common stockholders investment. Thebetter the ROE, the better. ROE is decreased in 2008 as compared with

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Year 2007 Year 2008Earning availablefor common stock holder

19033773 15458590

Total assets 762193593 817758326

EPS 2.5% 1.9%

Year 2007 Year 2008Earning availablefor common stock

holder

19033773 15458590

Common stock equity

69270631 81367002

ROE 27.5% 19%




2007. It should be improved.

Book value per share of common stock

Formula

BV per share of common stock= common stock equityNo. of shares of common stockoutstanding

Interpretation

Book value per share of common stock is increased as in 2008 as comparewith 2007, which is a good sign.

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Year 2007 Year 2008Common stock equity 69270631 81367002

No. of shares of common stock outstanding

815500 897190

BV per share of common stock

85 91




SOWT ANALYSIS

SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threatsSWOT analysis is careful evaluation of an organization’s internal strengths and weakness as

well as its environment opportunities and threats. In SWOT analysis the best strategiesaccomplish an organization’s mission by:

Exploiting an organizations opportunities and strength

Neutralizing it threats

Avoiding or correcting its weakness

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

weaknesses.

STRENGHTS

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

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

United Kingdom, Europe and the Far East.

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

NBP cash provision as percentage of non performing loans equal to 60% this coveragefactor for the non performing loans is the highest amongst the nationalized commercial

bank.

NBP is working as right arm government of Pakistan as it is responsible for all claims of government for recovery as well as payment. All depositor of NBP are in relief that their money security is guaranteed by government of Pakistan.

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

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

Performing social responsibilities and claiming “The Nation’s Bank”

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

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

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

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

THREATS

SBP penalties due to low internal control and compliance.

Government, SBP and Prudential Rules and Regulations.

Schedule banks and Multinational/International bank’s profit rates.

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

Other bank’s charming atmosphere and relaxation in documentation.

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

NBP staff code of ethics and practices.

High number of complaints regarding staff behavior.

Government Schemes, Government Revenue Collection, Government.

Payments and FBR Collections create heavy workload.

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WO

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• Lesson learned and Personal experience

• Branch Profile

• Introduction of branch & Establishmemt

• Branch Hierarchy

• Training Departments

• Remittance and Account opening

• Deposit Section

• Pension Section

• Cash Section

•

Use of Information Technology• Issues Faced by the Branch




LEARNING AND PERSONAL

INTERNSHIP

EXPERIENCE

105

In Hailey College of Commerce, Quaid-e-Azam Campus, thestudents are required to undergo for four weeks of internship tocomplete the B.com (Hons.) degree. For this reason, I carried outmy internship in National Bank of Pakistan, Samanabad Branch,Lahore and tried to prepare my report.

This branch was founded in July 1962. From last many years thisbranch is not only achieving its targets of deposits and advancesrather it remains above the targets. According to the financial recordof last year this branch was earning more than 20% of total profit of the region.

Every year the targets of this branch are increasing by 20 to 25percent but still there is a potential in the market to meet theseadditional targets. This branch is performing its functions intraditional style and most of the work is done manually but in spiteof all challenges and lack of resources the branch is now trying tomake most of its activities computerized.

During the session of four weeks I work in different departments onweekly basis. The employees of the bank help me and provide meall required information. I studied major functions, objectives andfuture planning. I worked in different departments during working asan internee which proves to me very beneficial and me able to getbasic concepts of banking operations.




BRANCH PROFILEBRANCH PROFILE

Name of BranchNational Bank of PakistanSamanabad Branch

Region Lahore

Establishment 1967

Region Code 0015

Branch Code 0449

Address

National Bank of Pakistan

Samanabad Branch

Poonch Road

Lahore

Phone Number 042-7579464

Fax Number 7536555

Name of Manager Abdullah Munir

Number of Working Staff

15

(Including contractual & outsourcedstaff)

Number of Non- WorkingStaff 04

Branch category II

Starting and ending dates of internship

Starting Date------ 25-07-2009

Ending Date------ 24-09-2009

INTRODUCTION OF BRANCH AND ESTABLISHMENT

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The branch was established in 1967 in order to cope the financial needs of the people. As it isan agent of the State Bank of Pakistan so its main objective is to provide credit in order tofostering growth in all the sectors so with the view of this Samanabad Branch of NationalBank of Pakistan came into existence. From last many years this branch is not only achievingits targets of deposits and advances rather it remains above the targets.

At present here Chief Manager is Mr. Abdullah Munir and operation manager is Mr.Muhammad Rafi. It is a branch II category working with 15 employees. Mr. Aasir Butt, inaddition to perform his duties, also acts as a second manager in case when chief manager isnot available due to any unfavorable reason.

BRANCH HIERARCHY

Number of Employees -------------------- 15

Name of Manager------------------------ Abdullah Munir

Name of Operations Manager-------------- M. Rafi

DEPARTMENTS OF TRAINIG

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MANAGER

MANAGER OPERATION

ESTABLISHMENT

OFFICER GRADE - I

OFFICER GRADE - II

OFFICER GRADE - III

MESSENGER

PEON

SWEEPER




During the internship period of 4 weeks I got training in various departments in the branch.This branch do not deals with foreign exchange and online bank but foreign remittance iscarried out. The branch is divided into two parts:

1. Cash Department

2. Operations Manager Department3. General Banking Department

General banking is divided into following sections;

i. Remittance and Accouts Opening Section

ii. Deposit department

iii. Pension

iv. Establishment

But I did my internship in deposit, remittance, pension and cash sections. The computer system was not allowed to me due to the secrecy and rules of the management. A brief introduction of the departments in which I performed my work is as under:

1. Genearal Banking Department

i. Remittance and Accounts Opening Section

It is transfer of money payable at a certain place within or outside the country through variousway i.e. Bank draft, Telegraphic Transfer, Mail Transfer, Coupons, Govt. Draft. It works both

inward and outward. It was my first department. Mr. Rana Ahsaan-ul-Haq is the controller of section who is a very competent person. Duties performed by him are;

Issuing of demand draft

Issuing of Mail transfer

Issuing of Telegraphic transfer

Issuing of payment order

Issuing of call deposit

Closing of government collections

Intercity and Short Credit Clearing

Accounts opening

Issuance of cheque books

Handling of lockers

Maintenance of outward Mail Register

Issuance of Benevolent fund

In this section I learnt about issuance of PO, DD, MT, and T.T. I made all the four categories

of funds transfer. Sir. Rana helped me a lot to achieve this target. I only made vouchers of PO, CDR and DD. The Manger only does TT because it is a secret way of transfer funds. I

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sorted all the daily remittances; handed them to the respective officers. Sir Rana helped me alot in general understanding of the bank functioning.

I prepared several cheque books and enter the detail into the cheque books issuance register.I also learnt to cheque posting on system. In the cheque book posting something which are

necessary, account number, cheque number and amount to be debit or credit should bematched.

D.D & P.O: P.O is used locally and to transfer amount within the city whereas D.D is used for outside the city.

Demand draft:

Procedure

First on the request of the customer all the details for issuance are demanded fromcustomer

The customer can be account holder or non- account holder.

While issuing the bank draft the care is taken that draft should be free fromalternations.

All the details must be clearly written in ink.

After deduction of charges, issuance of demand draft is handed over to the applicant .

Its advice containing the particulars of the draft is sent to the drawer branch with itsnecessary information and payment of draft is make on its presentation.

Payment order

Procedure

Two applications forms called credit vouchers for payment and for bank commissionare made.

Application form is attached with cheques , debit authority or make payment in cash.

Then the payment order is made.

Then payment order is given to the customer.

Pay order for clearing again come to National bank of Pakistan.

Nothing is sent to next branch ,no fanfold is made.

Mail transfer

This is the facility just for account holders. Amount of M.T & T.T is transferred in account of payee. Mail transfer is time consuming while telegraphic transfer is fast.

Procedure

Filling of application form.

Then make payment.

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Preparation of M.T advice.

Then fanfold is made on F15.

M.T advice plus fanfold ( red copy ) is sent to responding branch.

M.T code is 22.

Telegraphic Transfer:

Procedure

Filling of application/ request form.

Then payment is made.

Then make massage voucher (telephone number is written at top of it ).

Then telegram transfer confirmation is made (F-15).

Massage is sent immediately by fax and T.T confirmation is sent by telegram.

F15 blue is filled and original red is sent to responding branch.

T.T code is 21.

Accounts Opening

In this department, I also gain the practical knowledge about account opening also, as thisdepartment also deals in opening account and saving account for its customers and all mattersregarding thereof. The customers mainly opens current and saving account and these can beopened by Individual , firms , Company , Trust , staff etc. I got training in this department for

one week and after understand the basic concept I practically opened account of walk-in-customers.

Procedure

Customer fills A/C opening form prescribed by the bank.

Then he submit the I.D card copy and other related documents

Specimen signature card is filled

2 officers attested the form.

The form is entered into computer and account opening register.

The amount in Rupees is submitted in new account.

Then letter of thanks is send to customer.

When letter is send back to bank by customer then bank issue cheque book to

customer.

Deposit Section

All banks depend on deposits. It is a very important department where customers deposit and

withdrawal their money. Banks use this money for loaning on higher rate to earn profit.Mr.

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Shahid with his colleague Miss. Shazia has been performing the activities of this section. Themain function of this department are

Maintaining records of saving, current, call deposit, and NIDA accountholders

Record of signatures of account holders

Record of balances of customers

Scrutiny of cheques issued

Withdrawal through order/berarer cheques

Local clearing

Preparation of accounts holder activity report

Procedure of Withdrawals

There is a complete process in case of cash withdrawal.

Customer deposited cheque in deposit department for withdrawals or transfer of amount through cross cheques.

The deposit department verifies the signature of the account holder through SS andother requisites of the cheque. In case of any discrepancy the cheque is returned to thecustomer.

The deposit department checks the balance in the account of the customer throughcomputer in BBO.

If the a/c of the account holder has balance equal to the cheque amount they passesthe cheque to cash department and post a Cash Paid stamp on it.

Deposit department debit A/C holder in computer and cash scroll register.

The cash department pays the amount to the customer on counter and cancels theoriginal cheque.

SS cards verification is one of the most difficult works of this department; I also go throughonly specific activities in which the heads of verified informed me.

Procedure of Cross cheques

Whenever customer deposit amount in his account through cross cheques or securitydecouments by transferring he has to fill the cheque pay-in-slip and is deposited into thedeposit department. The deposit department after verification and scrutiny of cheque passedthe cheque to remittance department.

Pension Section

Ms. Sarwat Jabeen is the head of pension department. The following activities are performed by her;

Maintenance of Pension Register

Scrolling of Pensions Paid

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Arials in case of any increase announced by government

Maintenance of the Inward Mail Register

During my internship, I learnt how to handle with new pensioner’s cases, entries made intothe “pension register”, recommend payments of pension on monthly basis, transfer of

payments into the accounts of the customer. The most obligatory thing for payment of pension is to check pension slip in form of cash payment P.P.O.No., name of the pensioner,signature, and payment period. In case of pension holder does not come to receive, it islegally recommended that the pensioner holder issue authority letter to the desire personotherwise pension will never be paid in cash.

2. Cash Department

Cash department mainly deals in cash. In this department all types of Government receiptsi.e. Revenues, Taxes, Abyana, Agriculture Tax, Government Fees and Utility Bills are

deposited. This way NBP is serving great job of revenue collection. The Head Cashier is Mr.Abdul Aslam and two cashier Mr. Wajid and Mr. Akram Cheema all are fulfilling theobjective of cash department by facilitating people in the payments of their bills and taxesand repayments of cash.

This section deals with;

i. Cash Payment

Payments are the function that they pay their cheques and pay cash.

ii. Cash Receipts

Receipts mean collection of utilities bills, taxes etc.

Cash Payment Procedure

In this branch of NBP, this section deals with the

withdrawals of the cheques

deposit of amount

pension receipt

ProcedureFor deposit:

Whenever account holder deposit amount in their accounts they fill cash-pay-in-slip.

Then handed over cash and slip to the cahier

Cashier after counting amount sign the slip and stamped it with cash receivedafter entering it to the cash scroll register

The counterfoil is given to the customer after signing while the adjacent creditvoucher is held by the bank

For withdrawals:

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After the clearance of the cheque from deposit department the customer recived cash from thecahier by giving him token. The original cheque is then crossed by the cashier.

For pension receipt

After the approval of the pension officer the pensioner comes in this section for reciving cash

amount of pension.Cash Receipts Procedure

Customer deposited their bills and taxes to cashier

Cashier after counting the amount signs the receipts of bill and taxes and affixedstamp of NBP and cash received stamp.

A portion of receipt is handed over to customer.

The cashier entered the amount into the scrolls.

At the end of day all the total and balances of receipts is transferred to the remittance

section.

Use of Information Technology in Decision making

Today banking is becoming more and more complex with the introduction of new products,services and enhancing regulatory compliance requirements. It is the use of informationtechnology that can improve the customer’s services and reduce the cost at the same time.

NBP adopted “IBM Software” for service providing motives, the “IBM Software” categoriesinto two sections.

• BBO (Bank Branch Office)

• EBS (Electronic Banking System)

Electronic Banking System

EBS is used for any kind of transaction within the bank .i.e. Receipts and payments, BillsCollection, Tax receipts, etc.

Bank Branch Office

BBO is use for remittances.

The use of IBM Software is one of the main purposes of collection electronic data for the

bank that further helpful in future in decision making. Now a day, the bank plans for transformation of the entire I.T. architecture by implementing a core Banking Solutions.

The bank prepares financial statements, agricultural reports, customer’s management, risk management and other reports for decision-making purposes. The I.T. system of the bank notonly increases distribution capabilities but also simplify internal procedures thereby reducingthe cost and lead-time for services. Now the Samanabad Branch of NBP is trying tocomputerized its all of activities for this purpose various aspects of extension anddevelopment have been taking into consideration.

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ISSUES FACED BY THE BRANCH

During the internship I got practical experience that does not meet the theoretical concepts inB.com(hons.) Program. I present here some critical analysis:

i. Training: NBP has no great facility for their employees for training of new

technologies. This situation creates difficulty for handling new challenge.

ii. Departmentalization: An employee deals various nature of work.

iii. Staff Attitude: Due to heavy load of work staff attitude does not ideal for an

organization where public dealing is at large scale.

iv. Work Environment: Work environment was not ideal due to heavy customers visit

in a single day. Furniture, light and sitting arrangement was not good for customersand bank employees.

v. Professional Approach: Work specialization and job specification are found very

low in bank’s employees. Business administration qualities and education is at lowside.

vi. Shortage of Staff: There is shortage of staff in the Bank. Number of customer per

employee is very high. Cash department is suffering very badly and facing great dealof over workload.

vii. Less use of Technologies: Staff hesitate to use new technologies especially the

cash department. Even old employees are not able to operate PCs.

viii. Communication Gap: I feel that there is communication gap between top

management and workers. They have fewer chances to communicate effectively.

ix. Unjustified Appraisal Criteria: No justified appraisal criteria are implemented for

annual increase in salary and promotion of staff. It creates un-satisfaction among theemployees of the Bank.

x. Undemocratic Decision Making: I observed that some times employees are not

involved in decision-making process. Manager himself takes decision and orders tomake changes.

xi. Pensioner's sitting Arrangement: Bank should take step for the sitting

arrangement of the old age employees and pensioners for. Also management should purchase more furniture and arrange them in such a way which provides maximum

114




space and convenient specially in deposit department and there should also beconvenient sitting place for customers.

xii. Need of Telephone Operator: Branch has the problem of telephone operator

which can save the time of not only manager but other staff as well. On the other hand bank’s communication system was not doing well. Therefore as an internee I felt thatthere should be a telephone operator who can easily handle this situation.

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FI

IN

ND

DI

IN

NG

GS

S & CO

ON

NC

CL

LU

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SI

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ON

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• Dilemmas Faced by Organization

• Problems at branch

• Functional Problems

• Administrative Problems

• Personal Management Problems

• Recommendations for improvement

• Conclusion




DILEMMA FACED BY ORGANIZATIONDILEMMA FACED BY ORGANIZATION

Rather NBP is a nation's bank but like any other organization NBP also is not free from problems and crisis. In SWOT analysis I have already discussed the major internal

weeknesses and flaws of the system. In this topic the most important problems are includedwhich are widely present at the branch level. For this purpose the topic is divided into thefour parts which are as under.

• Problems at the branch.

• Functional Problems

• Administrative Problems.

• Personal management’s Problems

PROBLEMS AT THE BRANCH

∗ Customer Satisfaction

In NBP customer dealing is will, but during rush hour the customer has to wait for along time for their turn. It’s quite hard for a new customer or potential customer to getthe required information.

Poor record management and filing system

During my internship I observed that filing system of branch is not good. Whencertain record is needed the staff has to struggle to find it out and a lot of time iswasted.

∗ Unequal distribution of work Work is not equally distributed. On one hand some employee have to work all daywithout relaxing while some others have nothing to do at all. This not only createsconfusion among employees but also hurting and disturbing for overall setup of the

bank. And above all it results in dissatisfaction among customers as well.

∗ Marketing visits

A useful mode of contact is through personal marketing visits. Such visits areimportant in informing and perusing the existing and potential customers about the

products and creating a sense of belongingness with them.

FUNNCTIONAL PROBLEMS

∗ Formal Organization

Formal organization includes the activities of two or more person, which arecautiously determined groups and coordinated towards a given objective. It provides

base when people are able to communicate with other, when they have common purpose and they are willing to work. In NBP, we find a formal organization.

In this formal organization of NBP the activities are carried out in a more formal way.In theoretical terms it provides basis for communication with one another but in

practice it is not exercised because an employee at high level cannot get straight away

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to manager or SVP and ask him about of his problem faced by him, because first hehas to talk to his immediate superior and follow a proper channel of communication.

∗ Excessive paper work

It is notified that due to the lengthy procedure of paper work the bank employee are

over burdened. They are unable to give proper attention to the clients and facedifficulties in getting their job done. One reason for lengthy procedure and excessive

paper work in the bank is the lack of computerized technology.

∗ More accounts fewer deposits.

Efficient banking is one which does not emphasize on number of accounts but ongreater amount of deposits. NBP is more interested in increasing its number of account irrespective to its deposit.

ADMINISTRATIVE PROBLEMS

∗ Job analysis is not effective

Only on the basis of job analysis it can be decided how a right person can be hired,trained, compensated or promoted. It is very important for an organization that natureof the job is described and job specifications are mentioned. Most of the employeesare simple graduate and do not have proper background about their job. This creates

problems both for organization and for the employees.

∗ Lack of specialized training

NBP does not provide adequate facility of specialized training to their staff. Trainingis generalized rather than specialized. As the worker finishes his training, he is

inducted into a specific field without having great deal of knowledge about the field.

∗ Poor job rotation.

There is absence of job rotation in NBP Samanabad branch. A person placed in onedepartment remains their forever. It reduces career opportunities as well boredom andin the end results in career plaguing. The newly recruit should be rated in alldepartment of the banking in order to get familiar with working of differentdepartments so that when they get a responsible position they have know how of thewhole system.

∗Lack of appreciationAnother very important thing which is ignored in the bank is appreciation if theemployee on their good performance. If hard work and performance of employees isnot recognized and appreciated they become dishearten which results in decline in

performance.

PERSONAL MANAGEMENT PROBLEMS

∗ Need for better training program

Need of training is greatly emphasized all around the world. Training of the personnelis part of human resource management. It has been noticed that the training program

of NBP is not adequate.

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Once the candidate is selected and placed on the respective job. It becomes essentialto train him adequately for the task. They should learn new methods for motivatingcustomers. The training programmed of the bank should include scientific techniquesto improve the decision making and interpersonal as will individual needs of theemployee both specialized to fresh as well as on job.

∗ Developing Managerial Leadership

Leadership is a practical term of visible, clear on objective and communicating better control on financial and administrative matters. Manager is not only responsible for their own units in business, but also in people terms i.e. training, recruiting, grievancehandling and taking immediate initiative in crisis situation to take major decisionaffection the future of the bank and banking community.

∗ Recruitment policy

Human resources are the lifeblood of the organization. If the personnel are recruitedcarefully they can become asset to the organization in the case of carelessness aliability on the organization. Bank is not following its recruitment policy properly dueto favoritism, nepotism and political pressure.

∗ Promotions

Promotion in NBP is purely on the basis of seniority, so the new young person havinghigh qualification remains behind for quite a lot of time. Top management and staff union put pressure for the promotion of their favorites.

∗ Transfer

Transfer means when a person is shifted from one place to another place. It is done

either that person is needed more on the other branch or for improving his skillvariety. It is the policy of the Bank to transfer each employee 3 to 4 years.

∗ Marketing at desk

Bank employee come in daily contact with many people who happen to deal with thecasual remittance, travelers cheques, safe custody, pensioners, depositing license feeand variety of other functions and variety of other people with whom the Bank has noaccount or regular business relationship. The Bank employees are doing very little ontheir own to explore the possibilities of selling banking services to them as amarketing contributor. The market opportunities are hidden in every dealing a banker handles; the question is that if he has the art and urge to seize such opportunities.

Lack of business communicationThere is no proper way to give information to their customer. To avoid this minor dissatisfaction and tension in the mind of customer, and deficiency of the service, it isrecommended that the bank should provide brochures etc containing information indetails. Some general information should be placed in information notice board on theentrance where customer can see it easily or it should be self-attractive.

RECOMMENDATIONSRECOMMENDATIONS

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As analysis shows that NBP is a most growing organization with highest return on capital,The bank has been able to strategically manage and build on its competitive advantage, byknowing customer’s requirements, understanding employee’s need, modern technology, tomaking social responsibility and looking towards stakeholder’s values. But there is further need for improvement. To overcome weaknesses and to maintain its position as an “Asian

Tiger” in banking field, following recommendations are made:

∗ Staff strength should be enhanced and professional qualified persons should be recruited.

∗ It is recommended that proper training be provided to the staff members that will

ultimately increase the performance of Bank over all.

∗ It is suggested that promotion be given to the staff in due time and on the basis of

performance to provide job satisfaction.

∗ The bank should spend more on renovation of the branches to improve environment and

atmosphere to attract the customers.

∗ There should be a proper desk for customer’s information in every branch.

∗ Sitting arrangement, air conditioning and new furniture should be facilitated

∗ The Bank should introduce the computers software to cope the heavy load of work and

better control.

∗ Extra counters should be established in order to facilitate during the rush days the

difficulties faced by the bank staff as well as the customers.

∗ All Branches of the Bank must be online.

∗ All the departments should be established separately in every branch.

∗ The Bank should locate new market for its operational activities in the country as well as

abroad.

∗ The Bank should increase profit rate on deposits and saving schemes especially for

pensioners and old age citizens.

∗ For improvement of internal control and system the compliance wing and surpriseinspection system should work more effectively.

∗ The bank should use broad casting media for promotion of its products and services and

to further expand its area through more aggressive marketing. Customer services must be

better to improve the efficiency of branch, which results in quality work and causes the

customer attraction that will create lucraturable activities.

These and many other that can make a good set of recommendations, which have to be made

possible to escape from the threats and weaknesses and the risks in environment thatsurrounds the Bank. The management do considers the policy matter that is not helping the

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Bank, but are still in practice due the absence of prudentially regulated system to protect themand the Bank.

Efforts have been made with serious concern to give NBP a status that it has to maintain byhaving practices of:

∗ Right sizing of the employees.

∗ By closing unprofitable branches.

∗ By introducing a merit based selection criteria.

∗ Promotions made conditional with qualifications.

CONCLUSIONCONCLUSIONThe report is all about National Bank of Pakistan, one of the leading bank of Pakistan

banking industry with 1254 nationwide and almost 25 branches operating in other countriesincluding USA, China, France, Hong Kong, Azerbaijan, Bangladesh, Hong Kong. It has

maximum coverage with facilities of ATM and online banking throughout Pakistan. NationalBank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance

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1949. The primary objective of NBP was to purchase jute from the growers in the former EastPakistan and also to perform the commercial banking functions in the country.

It is a part of State Bank of Pakistan and it is its major strength. It is providing differentfacilities to its customers. Inside the bank, in branch banking it has Clearing and Collection

Department, Government Receipts Processing Department, Account Opening Department,Remittance Department, Customer Services Department Cash Department, DepositDepartment, Advances and Credit Department. These are the most common departmentsexist in almost each branch. It is offering different deposit choices, advances, credits andsecurities etc for its customers.

Its Human Resource is its major strength that is leading this bank in this way but there ismuch gap to cover yet. The other strengths this bank has are that it is acting as Agent of StateBank of Pakistan, providing Agency Arrangements for different government organizationsinclude WAPDA and PIA, Profitability and a vide coverage throughout Pakistan through itsCorporate Branches. And also it has comprehensive range of products it is offering in market.

The challenge it is facing are currently the lack of implementation of rules and regulationsthat may lead to weak organizational culture, old organizational culture, no regular

promotions practices and not much use of IT technology in bank as other are using. There aremany workers and employees’ unions exist in National Bank of Pakistan that use to playorganizational politics instead of doing productive work that leads to wastage of time.

As analysis shows that NBP is a most growing organization with highest return on capital,largest market share amongst all Pakistani banks and cost to income ratio is the highest in

banking sector. But there is further need for improvement to overcome weaknesses and tomaintain its position as an “Asian Tiger” in banking field.

As far as my internship and experience is concern, I learnt a lot during my internship becauseI got practical knowledge before entering in the practical life after completion of myB.com(hons.) degree. I learn a lot about banking practicing in Pakistan, rules and regulations

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