Week # 01

National Bank of Pakitan:

Introduction:

National Bank of Pakistan maintains its position as Pakistan's premier bank, determined

to set higher standards of achievements. It is the major business partner for the

Government of Pakistan with special emphasis on fostering Pakistan's economic growth

through aggressive and balanced lending policies, technologically oriented products and

services offered through its nation wide branches.

Establishment:

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

1949 and it came into existence on November 20; 1949.Its main aim was to provide all

types of banking services to the government and private sector. The bank also handles

treasury transactions for the Govt. of Pakistan as agent to State Bank of Pakistan.

Management

Board of Directors:

An executive board composed of six senior executives of the bank and the president who

is also 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.

Branches:

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

These branches perform their functions under the supervision of local principal offices

and head office in Karachi.

Training and Management Development Wing:

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

at: -

1. Karachi1

2. Lahore

3. Peshawar

4. Islamabad

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

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

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

Objectives of National Bank of Pakistan:

National Bank of Pakistan’s primary objectives are:

To earn the profit

To develop the economy

To provide the latest banking facilities to its customers

To improve customer service

To offer specialized services to major corporate

To reduce the size of non performing loans (NPL’S)

Functions Performed By National Bank of Pakistan:

To fulfill the basic objectives of socio-economic nature the bank perform following

important functions:

1. Accepting of deposits:

This function is performed by the bank by opening of the different type of accounts,

which are as follows:

Saving Account Current Account Fixed Deposits N.I.D.A. account

2. Advancing of loans

Different types of loans are granted to different type of people and industries these

include:

Running Finance

Over Draft

Demand Finance Gold

3. Payment of cheques:

Cheques drawn against various deposits are honored and paid in cash

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4. Payment of pensions:

This function is performed by N.B.P. as a govt. treasurer all the pensions of federal govt.

provincial Govt: and semi Govt: employees is paid by NBP

5. Salary management of different governmental institutions:

The salary of govt. and semi govt. employees is first credited to the account of NBP and

is then credited to there personel accounts

6. Issuing of traveler’s cheques:

The traveler’s cheques are issued by NBP for secure transfer of money from one place to

another, without charging any commission.

7. Collection and sale of prize bonds:

The national prize bonds are purchased and sold at the branches of the NBP according to

the rules formulated by the SBP.

8. Collection of fees and money from people proceeding on Hajj

pilgrimage:

National Bank collects the fee from the people proceeding for hajj and act as there agent.

9. Transfer of funds from one place to another:

Money is transferred from one place to another by different means like

Bank Draft Mail Transfer Telegraphic or Telephonic Transfer Travelers Cheques

10.Collection of Chalans:

Various Govt. revenues are collected by NBP in the form of chalans

11.Issue Guarantee And Indemnity

12.Collection Of Negotiable Instruments

13. Act As Income Tax Advisor

14.Act As An Agent Or Representative Of His Customer:

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Week # 02

Hierarchy:

From Top to Bottom

Management and Organization of Bank

Board of Directors4

Regional Headquarter

Zonal Chiefs

Branch Managers

Finance Deptt.

Officer

Cash Deptt.

Officer

Admn. Deptt.

Officer

Banking Deptt.

Officer

Executive Committee

Board of Directors

Chairman

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

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

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

secretary and 6 other members.

After nationalization in 1974 most of the powers have been transferred to the executive

board.

Executive Board:

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

affairs of the bank lies in their respective executive boards. The president, secretary and 6

other members of the board are appointed by the federal govt.

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

Chief Executive:

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

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

Regional chiefs:

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

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

credit facilities.

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

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

Zonal Chiefs:

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

administer these zones.

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

Branch managers:

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

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

Branch Hierarchy:

Branch Manager

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2 Second Officers

2 Asistants

2 Cashiers

2 Messangers

3-Armed Guards

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Week # 03

Deposits:

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

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

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

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

Opening of account by an individual:

After entering into bank premises the person goes through the following steps for

opening an account in the bank and for becoming a bank customer.

1. An Introduction:

The first important step to take place in bank is to get satisfactory introduction of the

person, who wants to become bank’s customer.

This introduction is made from the person /party who are respectable and honorable and

have an account with the bank.

In N.B.P (Khana Dak Branch) the branch manager takes great care of this step and gets

introduced with the person himself. His main intention is to determine the prospective

customer’s integrity, respectability, occupation, and nature of business he is doing at the

time of opening an account.

2.Account Opening Form and Specimen Signature Card:

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

This form contains: -

i. Title of account

ii. Address

iii. I.D. Card number

iv. Telephone No. (Office and Residence)

v. Introductory reference (all above mentioned particulars of introducing him)

vi. Signatures of the applicant

vii. Amount deposited

viii. Check book series No.

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The customer will attach a copy of National Identity Card with the form.

Specimen Signature Card:

Specimen of signatures will be obtained from depositor at the time of opening his

account. A specially designed card is used for this purpose; the card must be

countersigned by an official of the bank not below the rank of an officer.

3.Account Opening Register:

Now the name of the customer will be recorded in account opening register, and from

here the account no. of the customer will be written on (top most corners) account

opening form and on specimen signature card.

4.Issuance Of Cheque Book And Pass Book:

The cheque book will ordinarily be issued to all customers desiring to have chequing

facility.

Cheque book consists of 10, 25, 50, or 100 leaves depending upon customer requirement.

Customer can withdraw money by signing a cheque and writing the amount he wants to

withdraw from his account.

A special cheque book register is kept to enter the name of the person having cheque

book.

5. Passbook

Passbook is another important type of book handed over to the customer as he opens the

account with the bank. The withdrawal and deposit of money is recorded date wise in this

book.

6. Recording into General Ledger:

The concerned officer records the name and amount deposited with the bank in to general

ledger. 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

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As and when customer will deposit the money, amount will be credited in general ledger

and the withdrawal will be followed by a debit entry in the ledger.

Week # 04

Types of Accounts Maintained by National Bank of Pakistan (Khana

Dak Branch)

National Bank of Pakistan maintain following types of accounts:

1. Current accounts.

2. Profit and loss sharing account.

3. Fixed deposit account.

4. N.I.D.A. Account

Current Account

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 is to serve the businessman. Form number F-53 is provided to the

person to open the account. It is 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

Profit And Loss Sharing Account

In general it is also called saving account .To provide interest free banking facilities in

Pakistan, this type of account was introduced in January 1982 after the islamization of

banking.

The main features of this account are: -

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Instead of having fixed return in the form of interest the deposited money will be

shared in profit and loss of the bank.

One can open the account by depositing minimum Rs.100

Withdrawal is allowed 8 times in the month total not exceeding Rs.15000.

To withdraw a large amount a notice of 7 days to the bank is necessary.

There is not any kind of interest is provided on money deposited.

Rate of profit is declared at the close of each half-year.

Fixed Deposit Account:

This account is the major source of funds for the banks. This account is best for people

who have surplus money and don’t need such funds in nearer future.

The money is deposited for a fixed period of time. Main features of this account are: -

Fixed amount is deposited for fixed period.

Amount of profit can be obtained after each six months.

Higher will be the time period, higher will be the rate of profit, and vice versa.

A receipt is used for the amount deposited called fixed deposit receipt.

Period of deposit can vary from 3 months to 5 years.

The amount can be withdrawn before maturity after surrendering interest.

N.I.D.A. Account

The NIDA Account can be opened in N.B.P. N.I.D.A. stands for national income daily

account the features of this account are same to the features of the saving or pls account

except the following ones:

1. In this account the minimum balance required to acquire the benefits of this account is

Rs 2 million, and the maximum limit is 5.0 million.

2. When the above condition is fulfilled, then the bank will pay interest on daily basis,

which is that if the deposit is minimum of 2 million than the mark up rate is 5.2%p.a.and

if it is at maximum that is 5.0 million than the rate is 7.00 %p.a.

3. In this account the daily balance of account is taken, products are calculated and the

interest is calculated on that balance.

4. If the balance on any day comes below the lower limit, which is Rs 2 million then

interest will not be given.10

Week # 05

Finance section:

National bank of Pakistan maintains a separate finance section. Its purpose is to grant

loans to the needy people, small & large business concerns, and to industries. Advances

in the form of money are the most remunerative use of bank resources. The management

of the bank will be very careful while granting the loans. The person/proprietor of the

business will go through a long process of application, documentation, securitization etc.

while requesting for loan. After proper satisfaction from the party concerned the bank

will grant loan to the party.

Under the Islamic modes of financing from 1982 onwards, National bank of Pakistan

gives loans on the basis of “Mark-up” instead of interest. Mark-up rate is different

depending upon the type loan.

Procedure for Granting Of Loans

The following procedure is maintained by National bank while granting loan to any

person: -

Loan Application Form & Specimen Signature Card

The bank provides a prescribed application form to the borrower. The borrower will fill

the form. In that form the borrower will tell about: -

Type of the loan.

Amount of the loan he needs.

Period of time.

Applicant will also be provided a specimen signature card, which he will fill.

Declaration of Properties Form:

This form will provide the information about the business he is involved, and also

provide the information about his properties in Pakistan.

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Investigation:

Now the bank after analyzing his application, investigate about the applicant’s credit

worthiness, and also the information’s he provided about his properties.

In case of business owner’s request for loan, investigation will be made on following

ways for different businesses: -

Sole Proprietorship:

Investigation will be about: -

Personal reputation of the borrower

Nature of the business

Types of properties (shop, houses, and land) their locations with their present

market value.

Cash, jewelry, shares, security, bonds etc.

Stock in trade

Their liabilities

Partnership Firm

Name and addresses of the partners

Partnership deed

Branches if they exist

Nature of the business

Amount invested in the firm

Purpose of the loan

List of assets and liabilities

Import export registration

Private and Public Ltd. Companies

Name of the company

Addresses with telephone numbers

Whether private or public

Date of incorporation

Nature of the business

Branches if any12

Authorized capital

Paid-up capital

Financial highlights of the company

Details of security offered to other banks under each head and charges created

against fixed assets.

Certificate copy of memorandum of association

Copies of certificates of incorporation

Certificate of commencement of business

Auditor’s certificate regarding paid-up capital

Granting of Loan:

After detailed investigation, and documentation if the finance section finds the party well

satisfactory and feasible then they sanction the finance to the party concerned.

Types of Securities

The word security means any thing given to protect or safeguard the repayment of an

advance and to justify this term the thing so given should itself be safe; otherwise the

object for which it is given is defeated.

The National Bank of Pakistan usually has three ways in which securities can be made

available in the bank against finances.

These types are: -

Pledge

Hypothecation

Mortgage

In each case the bank does not become the owner of the, property but the bank has only

the right over the property until the borrower makes payment of his debt.

Pledge:

In a pledge, the possession of the property but not the ownership passes to the creditor.

The pledgee is entitled to the exclusive possession of the property until the debt is repaid

but the ownership remains in the pledgor subject to the pledgee’s right.

Hypothecation:

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In case of hypothecation, the property in goods is charged as security for a loan from the

bank. But the ownership and possession is left with the borrower.

In case of hypothecation, neither the property in goods and nor the possession of property

pass to bank, but only the security is granted in a form of letter of hypothecation, which

usually gives the banker'’ charge on the hypothecated goods.

Mortgage:

In a mortgage, the property in the thing mortgage is conveyed to the mortgagee

conditionally. The possession, until default in repaying the loan, generally, remains in the

original owner subject to the mortgagee’s rights.

Types of Loans:

National Bank of Pakistan provides various types of loans depending upon the

requirement of the borrowers. Some of the important types of loans are: -

Demand Finance

Under a demand loan arrangement, a fresh demand loan account is opened through the

borrower may be having other deposit accounts with the banks. The amount of loan has

to be drawn by the borrower in lump sum and is to be repaid in installments or as agreed

upon. The borrower can not operate a demand loan account by depositing and

withdrawing amounts periodically.

Demand Finance Gold:

Characteristics:

Security

Gold is used as a security.

Recording

Single debit entry is recorded at the time of granting loan.

Loan type

Short-term loan.

Rate of markup

43.84 pptdr (paisa per thousand on daily product)

Required Documents:

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Application form

Introductory reference sanction advice

Secured running finance:

Secured running finance is the type of loan in which some guarantee or security may be

obtained from the borrower.

Rate of return:

43.84 PPTDR

Type of loan

Short term loan.

Payment

In installment or lump sum as mentioned in conditions.

3.Cash Finances:

Under this type of credit N.B.P grant loan to its customers in cash. Under the cash credit

arrangement a customer is granted an advance up to certain limit, which he can draw time

to time as required by him. In this case, a new cash credit account is opened in the name

of customers. These are long term loans.

Securities:

Hypothecation of stock

Mortgage of properties

Personel guarantees of all the partners of directors.

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Week # 06

Remittances:

Money or some thing equivalent to money sent by any person to another on another

station, either in cash, money order, postal order, bill of exchange, cheque, bank draft, etc

is known as a remittance. The National Bank of Pakistan, now-a-days provides this

facility to its customers and to the general public in general in the following modes: -

Bank drafts.Mail transfer. Telegraphic transfer.Traveler’s cheques.

Now I will explain the procedure and importance of each type of remittance.

Bank Draft:

Bank draft can be defined as:

“An un-conditional instrument in writing drawn by a bank in favor of any person on a

branch of its own bank or any other bank to pay a certain sum of money to his order, for

value received.”From the definition it is clear that the draft is payable to the beneficiary

himself or to his order. The beneficiary or payee has to prove his identification at the

paying office of the bank, which sometimes causes inconvenience to the public.Draft is

the most popular and common form of remitting funds from one place to another.Any

person who may or may not happen to be the bank’s customer against payment of bank

charges can purchase drafts. It is considered to be a source of income for the bank.

Procedure:

In National Bank of Pakistan the drafts are issued on submission of application form

(always printed) filled in and signed by the purchaser with his full name and address.The

following particulars are generally required in the application form: -

1. Date

2. The Name of the Office on Which It Is Drawn16

3. The name of the beneficiary

4. Amount in words and figures

5. Bank exchange rates

6. The signature and address of the applicant

The draft is issued after the applicant tenders the money. Two authorized signatories of

the bank always sign draft.A separate book “Draft issued register” is kept to record the

particulars of the draft issued. The drawing branch of the bank will give credit to the

drawee branch on the same date the draft is issued; through their account for settling inter

branch transactions.Usually all the banks insert special code number known as CHECK

SIGNAL on the relative draft advices for all the drafts for more than Rs.5000/-.

National bank of Pakistan does not pay the drafts before the receipt of relative advice.

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

payable account” and each time a draft is paid this account will be debited with the

amount of the draft paid.

In case the draft advice is not received, the draft will be paid “ex advice” duly entered in

the "ex-advice register” and the entry in the said register will be marked off on receipt of

the relative advice.

Issue of Duplicate Draft:

In case a draft is lost or destroyed by mistake, its duplicate can be issued at the request of

the purchaser after obtaining indemnity bond on “stamped” paper of appropriate value.

This is done to cover the risk of double payment by mistake.

Drafts of most banks in Pakistan are valid for a period of six months only. After the

expiry of this period the draft will have to be revalidated from the issuing branch of the

bank.

Mail Transfer:

The same application form is used for drafts and mail transfers generally in National

Bank of Pakistan. The mail transfer instrument is not delivered to the purchaser but

instead the issuing office to the beneficiary’s branch on its own risk and responsibility

sends it.

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This type of remittance facility is provided only when the beneficiary happens to be the

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. A bank customer can very

conveniently remit the funds from one place to another regularly if he so desires by

giving standing instructions to his bank.

Also the credit balance of a customer’s account is transferred from one branch to another

branch with the help of this instrument in case the customer so desire. The applicant

desiring to remit the funds by way of mail transfer can either deposit cash or he may 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 the mail transfer issue register just like

drafts while at the paying branch the instrument is treated as branch voucher for credit

into the beneficiary’s account.

Telegraphic Transfer:

The money sent by mail has been described as “mail transfer” which takes three to four

days, or more depending upon the distance between the two branches. When the

applicant wants to save the time wasted in transit of the instrument, he can request for

transfer of funds by means of a telegraphic transfer.

In this case he will have to bear the telegram charges in addition to usual bank exchange.

The amount so remitted will reach its destination within 24 hours. Business community

generally avails of this facility in order to save time in their business dealings. The funds

so remitted are either credited directly into the account of the beneficiary or paid by

means of pay order in case he is not keeping his account at the paying office of the bank.

It should be noted that such remittances are affected between two stations having

telegraph office.

The remitting office sends the message by telegram in code language instructing “check

signal” number at both ends of the message for security purpose. As check signal books

are supplied to all the branches of the bank in order to verify the genuineness of the

message. All banks have their separate “check signal” apparatuses.

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The entries at issuing office are recorded in the telegraphic transfer issued register while

at the other end it is entered in the T.T. Payable register.

The papers pertaining to such transfer are properly kept in separate files “telegraphic

transfer issued and paid files” and kept in the custody of an officer

(Accountant/Manager). In case “check signal” number turns out to be incorrect at the

paying office, the message is got repeated till such time it is found correct. It is therefore,

necessary to be vigilant at the time of calculating the “special numbers” otherwise the

very purpose of urgency is defeated and the bank will be responsible for the delay.

Travelers Cheques:

When a traveler proceeds from one place to another he needs money at different places.

The remittances explained so far will be available to the beneficiary only at a particular

place, and that too all in one time; where as the requirement of a traveler may be

otherwise.

National Bank of Pakistan has designed its own traveler’s cheques to be used in Pakistan

only. For different denominations their colors are different.

The denominations of travelers cheques provided by National Bank of Pakistan are: -

Rs.5, 000/-Rs.10, 000/-Rs.50, 000/-Rs.100, 000/-The face of Traveler Cheque consists of:

-Signature of the purchaser Name of issuing office and the date of issue

On the back of the cheque this can preferably be done by means of small rubber

stamp.Application for the purchase of the cheque application forms is taken. The original

remains with the issuing office as voucher and the duplicate is passed to the main branch

of the bank where account of bank is kept.

Recording:

The issuance of cheque is recorded in the travelers cheque issue register .The total

amount of T.C. sold is credited to the main branch of the bank and the exchange charged

credited to the branch exchange account.

Delivery:

The traveler’s cheques are delivered to the purchaser in thick cardboard cover for their

safety.

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Conclusion:

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

which are written below along with their solutions, which need proper attention of the top

management

These are given below:

1. Information technology.

2. Staff Shortage

3. Frequent Transfers

4. Promotion

5. Locker Services

1. Information technology:

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

village and the fastest mediums of communication are adopted all over the world. And it

is a fact that more the latest technology and methods of work are adopted more will be

the productivity.

In the National Bank of Pakistan (Khana Dak Branch) there is only one computer

available for carrying on the business of the bank.

I suggest that the computer should be on every counter of the bank and they should be

interlinked together (Networking) so that various services provided by the bank can be

provided in a more efficient and fast way.

2. Staff shortage20

I discussed with bank personnel and they gave their views about staff shortage. They told

me that staff is very short and all the staff is overloaded with work. That’s why the staff

posted in the branch has to face many problems to finish its daily work.

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

their customers’ requirements quickly and efficiently.

3. Transfers:

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

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

another.

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

and will of the employee and if transferred, the facilities like residence etc should be

provided to them.

4. Promotion:

I observed those employees; particularly officers are not satisfied with promotion

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

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

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

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

their task more efficiently and will utilize their full efforts.

5. Locker services:

The area of khana Dak branch is full of business activities. The businessmen also have

some important documents, papers and valuable things to deposit for safe custody.

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

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BIBLIOGRAPHY:

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

the manager of the branch.

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

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

4. Reading the annual reports of the bank.

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