Internship Report on National Bank of Pakistan 1
1. Executive Summary
This report is based on internship in National Bank of Pakistan Abdullah
Pur Branch Faisalabad. It is a famous and reputed bank of Pakistan. National
Bank of Pakistan maintains first position in banking sector in Pakistan. This
report is based on the activities which are performed in this bank. This report
contains Historical overview, Organizational structure, Vision and mission
statement, core values and goals, Functions performed by NBP, Services &
Products, Financial highlights of previous five years, Ratio analysis, Financial
analysis, SWOT analysis of National Bank of Pakistan. There are also stated the
activities which I performed during my internship in the branch. The problems in
this branch are also discussed.
National Bank of Pakistan was established under National Bank of
Pakistan Ordinance 1949 nd it came into existence on 21st November 1949 with
issued capital of 1.5 million. The bank has a vast network of 1287 branches
across the country. It has 22 overseas branches. The no of employees are 16248
in 2009. Syed Ali Raza is the president of NBP.
NBP has the departments like deposit, clearing, advance, foreign
exchange, billing, accounts and remittance. Deposit department collects deposits
from customers. Deposits offered by NBP include current, saving, PLS, fixed, call
deposit, short term deposit, and foreign currency deposit. Clearing department
accept transfer deliveries and clearing cheques from the customer of the branch
and to arrange for their collection. It also includes clearing house. Advances
department lends money in the form of clean advances, against promissory
notes, as well as secured advances against tangible and marketable securities.
The bankers prefer such securities that do not run the risk of general
depreciation due to, market fluctuations. Securities include guarantees,
Mortgage, Hypothecation, Pledge, Promissory Note. Types of advances include
demand finance, running finance, fianance against the foreign bills (FAFB),
agricultural loans Industrial loans. Foreign Exchange department includes
Hailey College of Commerce
Internship Report on National Bank of Pakistan 2
foreign exchange transactions. The foreign exchange transactions are usually
of two types i.e. Merchandise Transaction and Service Transaction. Capital
Account Transactions includes short term and long capital transfers. Bills
department performs the functions i.e. Inward Bills for Collection (IBC) and
Outwards Bill for Collection (OBC). IBC includes demand draft and OBC includes
clean bills, documentary bills, pay slip and pay order. Usually Accounts are
maintained in Accounts Department in two ways (a) Journal System (b) Vouchers
System. Journal system is adopted by some commercial industrial institutions. In
journal system entries are reported in Journal Books and then posted to ledger.
Voucher system is used for every transaction. Voucher has to be prepared either
in cash or in transfer or in clearing, the Sheet upon which these vouchers are
summarized transactions-wise and consolidated into a figure is called
supplementary. Remittance department performs following functions (a) Mail
Transfer (MT) (b) Telegraphic transfer (TT) (c) Demand Drafts (DD).
NBP products includes Premium Aamdani, PLS Saving Account, Mera
Apna Karobar, Saiban, Advanced Salary, Cash card, Investor Advantage, Cash n
Gold, Kisan Taqat, Kisan Dost, Pak Remit and Protection Shield.
NBP strengths includes its strong organizational culture, best top level
management, strong industrial policies, best research appraisal team, lenient
policy with clients and best quality services. Weaknesses include less attention to
rural development, poor advertisement, poor networking. Main opportunities are
sponsor the IT based projects, Goodwill and better image, growth in industrial
sector. Threats for NBP are political influence and instability, sick projects, lack of
Modern Banking techniques. Problems include lack of information technology,
limited timing of banking services for customers, staff shortage, lack of female
staff for dealing with women, unsatisfied promotion policies, improper standard
for recruitment of clerical staff etc.
VISION
Hailey College of Commerce
Internship Report on National Bank of Pakistan 3
“To be the pre-eminent financial institution in Pakistan and achieve
market recognition both in the quality and delivery of service as well
as the range of product offering”
MISSION STATEMENT
NBP will aspire to the values that make NBP truly
the Nation’s Bank, by:
• Institutionalizing a merit and performance culture
• Creating a distinctive brand identity by providing the
highest standards of services
• Adopting the best international management practices
• Maximizing stakeholders value
• Discharging our responsibility as a good corporate
citizen of Pakistan and in countries where we operate
To be recognized in the market place by Institutionalizing a merit & performance
culture, Creating a powerful & distinctive brand identity, Achieving top-tier
financial performance, and Adopting & living out our core values.
CORE VALUES
Highest standards of Integrity
Institutionalizing team work and performance culture
Excellence in service
Advancement of skills for tomorrow’s challenges
Awareness of social and community responsibility
Value creation for all stakeholders
Hailey College of Commerce
Internship Report on National Bank of Pakistan 4
GOALS
“To enhance profitability and maximization of NBP share through leverage of
existing customer base diversified range of products.”
INTRODUCTION
National Bank of Pakistan maintains its position as Pakistan's premier bank,
determined to set higher standards of achievements. It is the major business
partner for the Government of Pakistan with special emphasis on fostering
Pakistan's economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its nation wide
branches.
ESTABLISHMENT
National Bank of Pakistan was established under the National Bank of Pakistan
ordinance 1949 and it came into existence on November 20; 1949.Its main aim
was to provide all types of banking services to the government and private sector.
The bank also handles treasury transactions for the Govt. of Pakistan as agent to
State Bank of Pakistan.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 5
SHARE CAPITAL
Issued Capital
The bank was setup with an issued capital of Rs.1.5 million.
Authorized Capital
Authorized capital of National Bank of Pakistan in 2000 was Rs.2.5 Billion.
Issued, Subscribed, and Paid-up Capital
Issued, subscribed and paid-up capital in year 2000 was Rs.1.46 Billion.
Corporate Information
Chairman & President
Syed Ali Raza
Hailey College of Commerce
Internship Report on National Bank of Pakistan 6
Muhammad Ayub Khan Tarin
Mian Kausar Hameed
Ibrar A. Mumtaz
Tariq Kirmani
Haniya Shahid Naseem
Nazrat Bashir
(Joined as member board of Directors on 1st
march, 2010 in place of Mr.Ayub khan Tarin)
Audit Committee
Chairman Ibrar A. Mumtaz
Mian Kausar Hameed
Tariq Kirmani
Auditors
Anjum Asim Shahid Rahman & Co
Chartered Accountants
Hailey College of Commerce
Internship Report on National Bank of Pakistan 7
M.Yousaf Adil Saleem & Co
Chartered Accountants
Legal Advisors
Mandviwala & Zafar
Advocates & Legal Consultants
Registered & Head Office
NBP Building
I.I Chundrigar Road,
Karachi, Pakistan.
Registrar &
Share Registration office
Central Depository Co. of Pakistan,
CDC House, 99-B, Block-B,
S.M.C.H.S.,Mian Shara-e-Faisal
Karachi, Pakistan.
Website www.nbp.com.pk
Hailey College of Commerce
Internship Report on National Bank of Pakistan 8
Senior Management:
Qamar Hussain : Chief Operating Officer , Head of Credit & Risk Management Group
Dr. Asif A. Brohi:SEVP & Group Chief, Operations Group
Shahid Anwar Khan:SEVP & Group Chief, Overseas Banking Group / Corporate & Investment Banking Group
Ziaullah Khan:SEVP & Group Chief Agriculture Finance Group
Dr. Mirza Abrar Baig:SEVP & Group Chief, Human Resources Management & Administration Group
Amer Siddiqui:SEVP & Group Chief, Commercial & Retail Banking Group
Tariq Jamali :SEVP & Group Chief, Compliance Group
Nadeem A. Ilyas:SEVP Group Chief, Assets Recovery Group / Corporate & Investment Banking Group
Muhammad Nusrat Vohra:SEVP & Group Chief, Treasury Management Group
Khalid Bin Shaheen:SEVP & Group Chief, Global Home Remittance Management Group
Imam Bakhsh Baloch:SEVP & Group Chief, Audit & Inspection Group
N. B. Soomro: SEVP , Special Assignments, President's Secretriate
Agha Fidaullah: EVP/Group Chief, Special Assets Management Group
Shafique Ahmed Khan: EVP & Divisional Head, Islamic Banking Division
Ekhlaq Ahmed:EVP & Secretary Board of Directors
Fazal-ur-Rehman:EVP & Head P&IR Division, HRM&A Group
Muhammad Hanif:
Hailey College of Commerce
Internship Report on National Bank of Pakistan 9
EVP & Head HR & OD Division, HRM&A Group
Muhammad Iqbal Qasim: EVP & Head SC & CSR Division, HRM&A Group
Ali Hassan:SVP & Head Project Management office Core Banking
Overseas Management:
Zubair Ahmed: SEVP & Regional Chief Executive, Middle East, Africa & South Asia Region
R.A. Kaleemi:SEVP & Chief Representative, Canada Office
M. Rafiq Bengali: SEVP & Regional Chief Executive, Americas Region
Asif Hassan: SEVP & Regional Chief Executive, Far East Region
Nausherwan Adil: SEVP & Regional Chief Executive, Europe Region
Khawar Saeed: SVP & Regional Chief Executive, Central Asian Republics Region
Muhammad Hanif Khan: SVP & Coordinator, Afghan Operations
Management Hierarchy
FROM TOP TO BOTTOM
Hailey College of Commerce
Internship Report on National Bank of Pakistan 10
CHAIRMAN
Board of Directors
Executive Committee
President
Regional Headquarter
Zonal Chiefs
Zones
Branch Managers
Finance Deptt.
Officer
Cash Deptt.
Officer
Admn. Deptt.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 11
Officer
Banking Deptt.
officer
MANAGEMENT AND ORGANIZATION OF BANK
Board of Directors:
In the management of the bank the board of directors is at the top of the controlling
bodies. Since there are no private shareholders, so there is no general meeting of
shareholders and no directors are elected. The board consists of a nominated
president, a secretary and 6 other members.
After nationalization in1974 most of the powers have been transferred to the
executive board.
Executive Board:
Hailey College of Commerce
Internship Report on National Bank of Pakistan 12
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:
Hailey College of Commerce
Internship Report on National Bank of Pakistan 13
Each region is divided into number of zones. They hold the post of VP or AVP and
administer these zones.
N.B.P. has 37 zonal offices in Pakistan.
Branch managers:
Each zone is then sub divided into a no. of branches. The control and supervision of
each branch is mostly entrusted to AVP or officer of grade II.
BRANCH MANAGER
2 SECOND OFFICERS
2 ASISTANTS
2 CASHIERS
2 MESSANGERS
3-ARMED GUARDS
Deposits are important to the bank as a backbone is to the body of a man. They are
the lifeblood of the bank. National Bank of Pakistan and all other commercial banks
Hailey College of Commerce
Internship Report on National Bank of Pakistan 14
perform the function of deposit accepting from the general public by offering suitable
rates of interest on them, or on simply a promise to repay on demand.
Branches:
National bank of Pakistan carries on its business through a wide network of
branches. These branches perform their functions under the supervision of local
principal offices and head office in Karachi.
Local Branches
The bank has a vast network of 1265 branches across the country.
Its subsidiaries are:
NBP Leasing Limited (formly NBP capital limited)
NBP modaraba management company limited
NBP Exchange Company limited
Taurus Securities Limited
Overseas Branches
Hailey College of Commerce
Internship Report on National Bank of Pakistan 15
NBP has 22 overseas Branches
United States America 2
France 1
Germany 1
Bahrain 1
Pakistan KEPZ 1
Bangladesh 4
Hong Kong 2
Republic of Korea 1
Japan 2
Afghanistan 4
Turkmenistan 1
Kyrgyzstan 1
Hailey College of Commerce
Internship Report on National Bank of Pakistan 16
Azerbaijan 1
Financial Highlights
1950
(1st year of operations) (Rs. in million)
Total Assets 120
Deposits 56
Advances 49
Investments 49
Profit 0.3
No. of branches 17
No. of Employees 390
2009
(60th year of operations) (Rs. in Million)
Total Assets 944,233
Hailey College of Commerce
Internship Report on National Bank of Pakistan 17
Deposits 726,465
Advances 475,243
Investments 217,643
Profit 18,212
No. of branches 1287
No. of Employees 16,248
Training and Management Development Wing:
National bank of Pakistan has its national and development centers and 4 staff
collages at: -
1. Karachi
2. Lahore
3. Peshawar
4. Islamabad
Hailey College of Commerce
Internship Report on National Bank of Pakistan 18
In these centers and staff colleges, the banking training is provided to the officers,
managers, and to potential managers. It arranges courses and seminars for middle
and higher management in all. Each year almost 1500 persons receive training over
there.
DEPARTMENT OF NATIONAL BANK OF PAKISTAN
National Bank is performing its activities through the following functions:
1. DEPOSIT DEPARTMENT
The function of deposit department is to collect deposits from customers.
Following type of deposits are offered by NBP.
i. Current deposit
ii. Saving bank deposit
iii. Profit and loss saving account
iv. Fixed deposit
v. Call deposit
vi. Short notice term deposit
vii. Foreign currency deposit
Hailey College of Commerce
Internship Report on National Bank of Pakistan 19
viii. Cumulative deposit certificate (other)
1. Current Deposits
In the type of account the client is allowed to deposit or withdraw money
as and when he likes. He may, thus, deposit or with draw several times in the
day if he likes. Usually the bank allows this and service chargers are deducted by
the bank and current deposit account.
2. Saving Bank Deposits
This type of account is for those persons who want to make small savings.
This type of account is opened with Rs. 100. In this case deposits can be made
only up to a costing amount and with drawls are allowed twice a week. If the
depositors wants to withdraw more than Rs. 15000 a seven days notices is
required before the withdrawal.
3. Profit and Loss Sharing Deposits
These types of accounts are one step towards the Islamisation of Banking
system in the Pakistan. Under such types of accounts the bank allows no interest
to the customers. The executive board of the bank declares profit or loss every
year. PLS saving account having a running minimum credit balance of Rs. 100
would be eligible for sharing profit/loss of the bank. The rate of profit or loss on
PLS saving accounts shall be determined by the bank at the close of each half
year, in its sole discretion and the banks decisions shall be final and binding on
the PLS account holder.
4. Fixed Deposits
In the type of account a certain amount is deposited for a certain, period
such as six-month, two years or longer. A fix deposit receipts is issued in the
same of the depositor. The receipt is signed by the officer incharge and the bank
manager. A notice is given to the depositor requesting the depositor to withdraw
his money or to renew this deposit. The interest allowed on fixed varies with the
period for which the deposits are made.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 20
5. Call Deposits
Call deposits are the sorts of deposits, which are deposited with the
banker against any tender. This is without interest deposits, this may be with
interest provided the depositor has agreed to keep its amount with the banker for
some fixed period.
6. Short Notice Term Deposits (S.N.T.D)
This kind of deposit is for a short period. The depositor may withdraw his
deposit at any time by giving seven days notice to the banker. In this type of
deposit facility the trader is allowed to withdraw his amount with interest of the
deposited period.
7. Foreign Currency Accounts
Foreign currency account is opened by depositing foreign currency. In ABL
you can open foreign currency account in:
i. US DOLLAR
ii. POUND STERLING
iii. JAPANESE YEN
iv. DEUTSCHE MARK
BOOKS RELATING TO CUSTOMERS
a) Pay-in-Slip
Hailey College of Commerce
Internship Report on National Bank of Pakistan 21
When money is to be deposited in the bank the pay in slip is to be filled. The
object of this book is to provide the customer with the bank’s
acknowledgement for receipt of money to be credited his account.
b) Cheque Book
A chequebook contains a number of cheques, which is given to a
customer upon written request and after marking the payment for the
chequebook. It enables a customer to make withdrawal from his account or make
payment to various parties by issue of cheques.
c) Pass Book
Passbook is a copy of the customer account as it appears in the books of
the bank. The clerk in this book records balance. But now a day due to
computerization the concept of passbook is not in practice.
GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT
The banker may close the account of the customer due to following reasons:
i. Notice by a Customer
ii. Death of a Customer
iii. Customer’s Insolvency
iv. Customer’s Insanity
v. By order of court
vi. Unsatisfactory operation
I) NOTICE BY CUSTOMER
Hailey College of Commerce
Internship Report on National Bank of Pakistan 22
The banker closes the account of the customer on the application of the
customer for closing his account.
II) DEATH OF CUSTOMER
On death of his customer, the bank must stop payment on cheques drawn
on him by the deceased customer because the death revokes his authority to pay
such cheque. The heirs or the executors of the deceased customer are not
authorized to operate on the account; it can act only in accordance with
provisions mentioned in the letter of probate issued by a competent courts.
III) CUSTOMER’S INSANITY
If the customer becomes insane or mental it terminates the banker’s
authority to act as his customer’s agent. Since the banker customer relationship
comes to end, in such as situation, it is usually considered that the banker’s
authority to pay his customer’s cheques is revoked by notice of insanity.
However, the bankers treat their customers as it unless a fairly inclusive
evidence of the customer’s insanity is available to them.
IV) ORDER OF COURT
A court of law may serve a banker with an order in garnish proceeding in
execution of a decree prohibiting him from honoring a customer’s cheques.
V) CUSTOMER INSOLVENCY
Insolvency is civil death therefore, the insolvent adjusting loses his rights
receiver or liquidator as the banker receives the notice of insolvency of the
adjusting, or petition filed for adjusting a filled customer insolvency.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 24
2. CLEARING DEPARTMENT
1. Introduction
2. Clearing House
3. Advantage of Clearing House
4. Function of Clearing Department
5. Procedure of depositing cheque
6. Types of cheques collected by clearing department
7. Scrutiny of pay in slip
8. Procedure after scrutinizing
9. Procedure of clearing at clearing house
INTRODUCTION
Every bank acts in two way i.e.
i. Paying Bank
ii. Collecting Bank
Here in theory no legal obligation on a banker to collect cheques, drawn up to
other banks for a customer. It is, however, an important function of crossed
cheques. A large part of this work is carried out through the bankers clearing
house wherever it is established.
CLEARING HOUSE
A clearing house is the place where representatives, of all the banks get together
for the purpose of off setting the inter bank indebtedness arising from the transfer
of deposits by a customer of a particular bank to another bank.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 25
ADVANTAGE OF CLEARING HOUSE
The advantages are manifold. It prevents the cost and waste involved in
collection each and every cheque and claim. Which a banker holds against
another, across the counter with all the danger of loss in the transit incumbent
upon it. Great economy is also achieved in the employment of liquid cash by
setting the difference by simpler transfer of credit from one account to another,
there by minimizing the necessity of holding large cash balances, clearing house
works under the control of State Bank of Pakistan.
A banker has no legal obligation to collect cheques drawn upon other
banks for the customers, though modern banks have assumed this important
function of their own choice. Therefore, it is very important that since they have
assumed this function, the banker should be very careful in their performance,
otherwise they will face more difficulties. So, if they provide this facility when the
cheques are crossed.
FUNCTION OF CLEARING DEPARTMENT
The following are the main functions of clearing department.
1. To accept transfer deliveries and clearing cheques from the customer of
the branch and to arrange for their collection.
2. To arrange the payment of cheque drawn on the branch and given for
collection to any other branch of National Bank of Pakistan or any other
members, or sub-members of the local clearing house.
3. To collect amounts of cheques drawn on members, sub-members of the
local clearing house, sent for collection by those NBP branches which are
not represented a the local clearing house.
PROCEDURE OF DEPOSITING CHEQUES IN CLEARING DEPARTMENT
Whenever a customer wants to deposit cheque, etc, he fills a pay in slip
and hands it over the counter along with the instruments he wants to deposit with
Hailey College of Commerce
Internship Report on National Bank of Pakistan 26
bank. As far as possible, the customer desire that on of the staff member fill in a
slip for him, he should be obliged promptly.
The smaller portion of the perforated pay in slip is handed over to the depositor
and the portion becomes the regular portion of a credit voucher.
TYPES OF CHEQUES COLLECTED BY CLEARING DEPARTMENT
a. Transfer Cheques
Transfer cheques are those cheques, which are collected and paid by the
same branch of bank.
b. Transfer Delivery Cheques
Transfer Deliver cheques are those cheques, which are collected and paid
by two different branches of a bank, situated in the same city.
c. Clearing Cheques
Clearing cheques are those cheques in which the payee (Person who deposit
cheques for collection) and the drawer of a cheque maintain the account with
different banks. When the cashier receives the cheques, which are to be
deposited for clearing purpose, the following points must be verified.
1) The instruments should be neither stale nor post dated.
2) If the instruments is crossed, not negotiable, it can be for the third party (can
be endorsee of an order cheque, or a holder of bearer cheque).
3) The instrument should not bear any unauthorized alteration.
4) The amount in words and figures should be the same.
5) The instruments should be drawn on a member, or any of local branches.
6) If the cheque is crossed "Account payee’s" "Account payee only" or "Payee’s
Account", it should only be accepted for collection for the payee’s account.
7) The cheques or drafts should not be crossed specially to any other bank.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 27
8) A cheque payable to one of the joint account holder should not be collected
for the joint account without the payee’s endorsement, or consent.
9) A cheque payable to a firm should not be accepted for credit to a partner’s
account.
A cheque drawn by a customer in the capacity of an agent, Attorney, or
Manager of his company or firm, should not be collected for credit to his personal
account.
10) Pay orders, although negotiable, should not be collected for third parties.
11)Do not collect an instrument in the accounts of an agent, or of the servant
of the payees of endorsee of the instruments.
12) Mail transfer Receipts pay ships and treasury receipt should not be collected
for persons other than the payee.
13) If an account is new, or the balance or operation of the account is not
satisfactory, satisfy yourself about the titles of the customer to the instruments
before the titles of the customer to the instrument before accepting the
deposit.
14) Branch agent’s permission should be obtained before accepting a third party
cheque or draft for credit of the account of the staff member.
15) If the payee is a government department, government official, or a trust
account, the instrument cannot be collected, but for the payee’s account.
16) If the payee of an instrument is Habib Bank Limited, it can be collected for
credit of the drawer’s account, or the amount of the instrument may be utilized
as desired by the drawer in writing.
17) Cheque payable to a trust, account should not be collected for credit to at
trustee account.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 28
18) All the endorsement should be regular, and on endorsement should be
missing. After the cashier scrutinizes the cheques he must also scrutinize the
pay in slip.
SCRUTINY OF PAY-IN-SLIP
The following steps are involved in the scrutiny of pay in slip.
1. On both the counterfoil and the pay in slip following should be checked.
i. Date of Deposits
ii. Account number
iii. Title of the account
iv. The cheque/number and the drawer bank/name.
v. Total amount in words and figures
2. Customer should use separate pay in slip for transfer, transfer delivery,
and clearing cheques.
3. The amount noted should be the same as the amount of the instruments,
and the amount in words and figures should be same.
PROCEDURES AFTER SCRUTINIZING
After scrutinizing the cheques and other deposit instruments and paying slip
at the counter the following procedure is under taken by cashier if he is satisfied.
1. Fixing the stamp.
2. Scrutiny, and receipt by the authorized officer
3. Returning the counter foil to the depositor.
4. Certificates and confirmation by the officer-incharge of the department.
5. Separating the cheque into transfer delivery, and clearing cheque.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 29
PROCEDURE OF CLEARING AT CLEARING HOUSE
The mechanism of setting inter bank indebtedness operates as follows.
Clerks representing various banks meet at a common place, the
clearinghouse, everyday. Every clerk then delivers to the others the cheques and
the other claims which their respective banks hold against his banks hold against
his bank cheques and other documents dishonored will be returned to the
representative of the respective bank. The various amounts of receipts and
deliveries are now added up and a balance is struck there in and the final
settlement is effected by the supervisor of the clearing house by transferring
balance kept and the central bank by these various clearing banks.
3. ADVANCES DEPARTMENT
1. Introduction
2. Securities.
3. Types of advances
INTRODUCTION
The function of advances department is to lend money in the form of clean
advances, against promissory notes, as well as secured advances against
tangible and marketable securities. The bankers prefer such securities that do
not run the risk of general depreciation due to market fluctuations.
Common Securities for the banker’s advances are as under:-
SECURITIES
1. Guarantees
When an application for advance cannot offer any tangible security, the
banker may rely on personal guarantees to protect himself against loss on
advances or overdraft to the applicant.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 30
2. Mortgage
A mortgage is the transfer of an interest in specific immovable property for
the purpose of security the payment of money advanced or to be advanced by
way of loan, and existing or future debt, or the performance of an engagement
which may rise to a pecuniary liability. The transfer is called a mortgagor, the
transferee a mortgage.
3. Hypothecation
When property in the shape of goods is charged as security for a loan
form the bank the ownership and possession is left with the borrower, the goods
are said to be Hypothecated The essence of hypothecation is that neither the
property in the goods not the possession of them are possession is left with the
borrower, the goods are said to be Hypothecated the essence of hypothecation is
that neither the property in the goods not the possession of them are possessed
by the lender, but the security is granted by means of letter of hypothecation,
which usually provides for a banker’s charge on the hypothecation goods.
4. Pledge
In a pledge the ownership remains with pledge, but the pledge has the
exclusive possession of property until the advance is repaid in full. While in case
of the default the pledge has the power of sale after giving due notice.
5. Promissory Note
Sometimes promissory note is also accepted as a security, "A promissory
note is an instruments in writing containing an unconditional undertaking signed
by the maker, to pay on demand or at a fixed or determinable future time a
certain sum of money only, to or to the order of certain persons, or to the bearer
or the instrument." A promissory note is incomplete until has been delivered to
payee or the bearer. Moreover, the sum promised in a promissory note may be
made by two or more makers who may be liable there on jointly and severally.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 31
TYPES OF ADVANCES
The advances which are given by Habib Bank Limited are as under:-
1. DEMAND FINANCE (Ordinary Loan)
Demand Finances are those advances which are allowed in lump sum for
a fixed period and are repayable lump sum or gradually in installments.
TYPES OF ADVANCES
a. Demand Finance (Packing Credit)
Scheme introduced by State Bank of Pakistan for exporter of carpet,
surgical instruments, at zero percent rate of interest. While banks provides
at concessional rate of interest.
b. Loan ordinary (Demand Finance to Students)
Qarz-e-Hasana Scheme Loans are allowed to the students, teachers
without any interest or mark up with the recommendations of the MPA or
MNA.
c. Demand Finance (Staff)
Loans are offered to the staff of the following four categories.
i. House Building Loans against mortgage of property.
ii. Loan for purchasing vehicles.
iii. Loan equivalent to months salary.
. RUNNING FINANCE (Overdraft)
Running finance (old name overdrafts) are advances, which are generally,
given to meet temporary requirements of the customers. A good customer use
the banks running finance limit as a mean of protecting his credit in the market
and as a line of security defense to meet his commitments.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 32
TYPES OF RUNNING FINANCE
I. Unsecured
Under such type of overdraft the bank pay upon the personal security of
the customer’s mentioned on the customer’s account.
II. Secured
Under this type of overdraft the bank allows his customer to withdraw
more than his deposits after giving security against the amount overdrawn.
The securities against which they given are:
i. Share certificate, Saving certificate
ii. Deposits
iii. Mortgage of property
iv. Guarantee of person
3. CASH FINANCES (Commercial Loans Inward)
This type of loans are given against following:
i. Against locally manufactured goods.
ii. Cash finance against Rice and Paddy
iii. Against pledge
iv. Against commodities
Besides advances against the above commodities parties for advances
against other commodities like tobacco, oil, may approach bank.
v. Against Trust Receipts
To obtain adjustment of an overdue account or to facilitate the borrower to
self the pledged good it is some times necessary to deliver a portion of the
goods, against the trust receipt and promise from the borrower to deposited the
sale proceeds with the bank.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 33
SMALL LOANS
Loan is allowed to contractors clearing and forwarding agents.
5. FINANCE AGAINST THE FOREIGN BILLS (FAFB)
The advance facility is allowed both to local foreign bills and is classified
as under:-
i. FAFB (Local) advance against Railway receipts and truck receipt, a
company with bills of exchange and invoices, are given under this head.
ii. FAFB (Foreign) advances against foreign bill, covering bills of exchange
bills of lading airway bills of exchange bills of lading airways bills etc.
6. AGRICULTURE LOANS
Loans to the farmers with holding up to 25 acres for meeting their short
terms, medium and long terms Agricultural production requirements, such as:
i. Agricultural inputs
ii. Tube wells
iii. Live Stock Framing
iv. Land improvement
7. INDUSTRIAL LOANS
Besides the short-term loans which play a part in working capital medium
and long-term loans are also given to industrial sector for purchase of machinery
and other capital nature goods.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 34
4. FOREIGN EXCHANGE DEPARTMENT
International trade is growing and with the development of international
trade it has become more imperative.
For countries to devote more and more attention to the complicated
mechanism of Foreign Exchange. It is more important in case of
developing countries. It is need of time, that a country should conserve its
foreign exchange resources.
MEANING OF FOREIGN EXCHANGE
The foreign exchange term refers to the principles that determine the rate of
exchange. It covers following three senses:
i. The mechanism or system by which international obligations or
indebtedness are fulfilled.
ii. The currency of one country is exchanged for that of another.
iii. The principles on which the people of the world settle their debts to one
another.
I. FOREIGN EXCHANGE TRANSACTIONS
The foreign exchange transactions are usually of two types.
i. Merchandise Transaction
These consist of visible imports and exports, i.e. the purchase of goods for
abroad and sale of goods to abroad.
ii. Service Transaction
These represent inward and outward payments in respect of shipping,
insurance, banking and travel services. It includes payments in respect of
interest, dividends, rents and profits etc.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 35
iii. Unrequited Transfers
In indicates the payments and receipts from of reign countries in shape of
such items as home remittances by workers abroad, gifts, aids etc.
II. Capital Account Transactions
These are further divided into two classes:
i. Long Term Capital Transfers
Those transfers whereby residents of one country acquire securities
(stocks and bonds) and tangible assets (land etc.) in foreign countries with the
purpose of earning profits in future.
ii. Short Term Capital Transfers
Those transfer which move relatively quickly from country to country;
a. Fore speculative purposes
b. To take advantages of differences in interest rates
c. As balancing items where a country has a debit or credit balance on
current accounts.
The important examples are:
1. Money Gold, and
2. Holdings of commercial credit, bills, cheques etc.
3. Transactions with I.M.F
5. BILLS DEPARTMENT
Bills department performs the following functions.
a. Inward Bills for Collection (IBC)
b. Outwards Bill for Collection (OBC)
Hailey College of Commerce
Internship Report on National Bank of Pakistan 36
INWARD BILLS FOR COLLECTION (IBC)
These are bills or cheques etc. which are collected locally. They are
received from outstation branches banks and parties.
DEMAND DRAFT:
If refers to the payments of money on demand of the holder of draft.
Demand draft includes DD issues and DD payable.
OUTWARDS BILL FOR COLLECTION (OBC)
CLEAN BILLS:
These are negotiable instruments, drawn on outstation branches, bills sent
for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.
DOCUMENTARY BILLS:
These are bills accompanied by documents such as R.R.T.R Bills of
landing etc. having title to goods, collected by the bankers on behalf of their
customers.
PAY SLIP:
Pay slip is an instrument in receipt, issued by the bank in the following
cases:
a. On account of expenditure incurred by the bank.
b. On account of refund of a payment to a persons under certain
circumstances.
PAY ORDER:
Pay order is issued to other banks for collection of make the payment as
said.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 37
6. ACCOUNTS DEPARTMENT
Usually Accounts are maintained in two ways:
a. Journal System
b. Vouchers System
Journal system is adopted by some commercial industrial institutions. In journal
system entries are reported in Journal Books and then posted to ledger.
Voucher system is used for every transaction. Voucher has to be prepared either
in cash or in transfer or in clearing, the Sheet upon which these vouchers are
summarized transactions-wise and consolidated into a figure is called
supplementary.
Types of Supplementary
a. Debit Supplementary
b. Credit Supplementary
Debit supplementary is used for debit voucher and credit supplementary is used
for credit voucher books and registered maintained by bank are as follows:
1. General ledger
2. Statement of daily affairs.
3. Cash book or Cash cum day book.
4. Transfer book
5. Income and expenditure ledger, etc.
INCOME INCLUDES
1. Brokerage (A bank sells and buys share, stocks, debentures, other
securities and receives payment for these services).
2. Discount
3. Service Charges
Hailey College of Commerce
Internship Report on National Bank of Pakistan 38
4. Rent (On building)
5. Commission (from utility services)
EXPENDITURES INCLUDES
1. Salaries, allowances and provident fund
2. Rent, taxes, insurance, lighting etc.
3. Profit paid on deposits and borrowings
4. Postage, telegram and stamps
5. Stationary, printing and advertisement charges etc.
6. Auditor’s fee and legal charges.
7. REMITTANCE DEPARTMENT
Remittance department performs following functions:
i. Mail Transfer (MT)
ii. Telegraphic transfer (TT)
iii. Demand Drafts (DD)
MAIL TRANSFER (M.T)
When a customer requests the bank to transfer his money from one
branch of bank to another branch of the same bank or from one city to another
city to the same bank or any other bank. Customer fills the form given by bank. If
the customer has an account with that amount as mentioned in the application
form then concerned officer will undertake the following procedure to make the
mail transfer complete.
i. Branch Mail Transfer form
Hailey College of Commerce
Internship Report on National Bank of Pakistan 39
ii. Receiving Branch Register copy
iii. Issuing Branch register copy
iv. Beneficiary advice
v. Advice to Customer
In case where the customer is not account holder of the bank then the
customer will have to deposit the amount which he wants to transfer under Mail.
Then the above said procedure will be done.
TELEGRAPHIC TRANSFER (T.T.)
This type of transfer is simple. After filling the application form the
concerning officer shall fill the telegraphic transfer form. Then it is sent to the
required bank which on receiving it immediately makes the payment to the
customer and after wards the voucher are sent to that bank by ordinary mail.
DEMAND DRAFT (D.D.)
Demand draft is just like cheques and issued when the customer wants to take
cash with him personally. The idea behind it is to avoid the risk and burden of
currency notes in huge quantity. Demand draft can easily be handled whatever
amount it has and the money can easily be taken from the bank when it is
presented. In fact, the bank persuades the customer to transfer money by drafts
and avoid the risk of frauds involves in M.T and T.T Draft is only issued when
theBank shows customer and bank has confidence in him.
NBP products
Hailey College of Commerce
Internship Report on National Bank of Pakistan 40
1. Premium Aamdani
Monthly Income Scheme
• Earn up to 11% p.a. +
• Minimum deposit of Rs. 20,000/- and a maximum deposit of Rs. 5,000,000/- for
5 years
• Free Demand Draft, Pay Order and Cheque Book*
• Convenience of NBP online Aasan Banking (for online banking customers)
• Free NBP Cash Card (ATM + Debit)
• Running finance facility up to 90%
2. PLS Saving Account
• Earn up to 7.25% p.a. +
• Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs.
300,000/-*
• Free NBP Cash Card (ATM + Debit)
• Convenience of NBP Online Aasan Banking (for online banking
customers)
• Two debit withdrawals allowed in a month & no limit on number of
deposit transactions
• Profit calculated on monthly and paid on half yearly basis
3. Mera Apna Karobar
Hailey College of Commerce
Internship Report on National Bank of Pakistan 41
• Minimum down payment, 10% of asset price (5% for PCO & Telecaster)
• Tenure 1 to 5 years (for PCO 2 years)
• Grace period 3 months
• Maximum loan amount Rs. 200,000/-
• Age 18-45 years
• Mark-up (variable) 1 year KIBOR + 2.00% p.a.
• The customer will pay markup @ 6% p.a., rest will be borne by GOP*
• Life & disability insurance paid by GOP*
* subject to the availability of subsidy from GOP
4. Saiban
Home Financing
• Home Purchase
• Home Construction
• Home Renovation
• Purchase of Land + Construction
Hailey College of Commerce
Internship Report on National Bank of Pakistan 42
• Balance Transfer Facility (BTF)
NBP Saibaan
NBP Saibaan
(Open the Door to Your Dream Home)
Home Financing
5. Advanced Salary
Personal Loan
• Easy installments of 1 to 60 months at your choice
• No minimum income collateral & insurance charges required
• Quick processing and fastest disbursement
• The product is for permanent employees of Government, Semi
Government
and Autonomous bodies receiving salaries through NBP accounts
6. Cash card
ATM + Debit Card
• Use it as an ATM in any of the ATM’s in Pakistan
• Use it as Debit Card in any of the outlets with ORIX POS machine
• Cash withdrawal up to Rs. 20,000/- per day
• Account Balance Enquiry
Hailey College of Commerce
Internship Report on National Bank of Pakistan 43
• Mini Statement (Only at NBP ATM)
• PIN Change facility (Only at NBP ATM
7. Investor Advantage
Financing Facility for Stock Investors
• Comfortable environment for trading
• No security requirement, except for the customer’s equity
• Customer’s equity freely available for investment
• Equity acceptable in cash or approved shares
8. Cash n Gold
Financing Facility for Stock Investors
• Comfortable environment for trading
• No security requirement, except for the customer’s equity
• Customer’s equity freely available for investment
• Equity acceptable in cash or approved shares
Hailey College of Commerce
Internship Report on National Bank of Pakistan 44
9. Kisan Taqat
10. Kisan Dost
Agriculture Farming Program
• Competitive mark-up rate
• Quick & easy processing
• Delivery at the farmer’s doorstep
• Technical guidance to farmers
Hailey College of Commerce
Internship Report on National Bank of Pakistan 45
• Wide range of financing schemes for farmers
• Finance facility up to Rs. 500,000/- for landless farmers against
personal guarantee
• Financing available against pass book, residential/commercial
property, gold ornaments and paper security
• Loan facility on revolving basis for three years (renewable on yearly basis
without documentation and approval)
NBP Kisan Dost
( Agriculture Made Easy)
11. Pak Remit
Product Information
Pak Remit is an internet based Home Remittance Service. This service is
available to U.S. residents for sending money to their family and friends in
Pakistan. One must have a valid US Dollar account with a U.S. bank or a US
Dollar credit or debit card in order to remit funds through this channel.
Remitters in USA can log on to our user friendly website, www.pakremit.com and
easily remit funds to Pakistan from the comfort of their homes, in a matter of
minutes.
The service is fully secure with advance encryption application and is
available for use 24 hours a day, 7 days a week. Fees and exchange rate
have been set at competitive levels and the remitters have the ability to track
delivery of funds as well.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 46
Process
Remitters log on to www.pakremit.com and after completing the
registration process, are able to remit funds. The whole process takes a
few minutes.
Funds in Pak Rupees can be sent to beneficiaries, having an account with
any bank in Pakistan, including NBP. While funds are credited directly to
beneficiaries maintaining accounts with NBP, a pay order or demand
draft can also be couriered directly to the beneficiary’s office or home, if
requested by the remitter.
Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar
account with one of NBP’s Foreign Exchange Branches.
12. Protection Shield
Personal Accident Insurance
• No documentation
• No medical required
• Premium Auto Debit facility & choice of deactivation
Coverage includes death due to
• Natural Calamities e.g. Earthquake, Flood, Cyclone etc.
• Accident
• Riots*
• Civil Commotion*
• Strikes*
Hailey College of Commerce
Internship Report on National Bank of Pakistan 47
• Acts of Terrorism*
NBP Protection Shield
(Life is Precious)
* Provided the insured is not actively involved in these activities
Performance Analysis
(Rs Bn)
ITEMS
Year
2005
Year
2006
Year
2007
Year
2008
Year
2009
% Growth 2009
Over 2005
Total Assets 577.7 635.1 762.2 817.8 944.2 63.4
Hailey College of Commerce
Internship Report on National Bank of Pakistan 48
Deposits 463.4 501.9 591.9 624.9 726.5 56.8
Advances 268.8 316.1 340.7 413.0 475.2 76.8
Investments 157.0 139.9 211.1 170.8 217.6 38.6
Equity 37.6 53.0 69.3 81.4 94.8 152.1
Pre-Tax Profit 19.06 26.3 28.1 23.0 22.3 17.0
Profit After-Tax 12.71 17.02 19.0 15.5 18.2 43.2
Net Income 32.8 42.3 47.2 53.5 57.5 75.3
Admin Expenses 11.2 13.4 14.2 18.2 22.6 101.8
Return on Assets 2.25 2.81 2.72 1.96 2.07 -8.0
Return on Equity 40.61 37.57 31.12 20.57 20.6 -49.2
Hailey College of Commerce
Internship Report on National Bank of Pakistan 49
Number of
Branches
1428 1431 1434 1445 1565
3.6
Number of
Employees
15351 15541 15785 18096 23730 17.5
SWOT ANALYSIS
The SWOT analysis is done by the organization for the environmental scanning.
The strength and weaknesses and opportunities and threats are analyzed by
organization from the external environment. NBP SWOT analysis is given below:
STRENGTH
Hailey College of Commerce
Internship Report on National Bank of Pakistan 50
A National Bank brand image is its major strength. It has always been
considered as the pillar of the country's economic scenario asset wise or balance
sheet wise. Its image, work force, network and reputation have created a
sentimental and emotional attachment of the people with the bank.
Complete computerized networking is another strength of the bank. Now the
bank has the ability to compete with any multinational bank as to keep pace with the
changing and fast growing world of today computer have become necessities. The
reserve funds indicate positive sign as they have increased as compared to the
previous years.
Another competitive edge that the bank has on the rest of the competitors is its
expanding business worldwide catering for a large and vast group of customer and
maintaining standards of excellence globally and other strength of NBP.
ORGANIZATION CULTURE
NBP's organization culture was very friendly and interesting. Employees has
created a very cooperative environment among each other. They have created
loyalty toward the organization by deviating their future efforts and energies. The
Hailey College of Commerce
Internship Report on National Bank of Pakistan 51
employees take the organizational problem personals and try their best for the
prosperity of the organization.
STRATEGIC TOP MANAGEMENT
Fortunately NBP has got from time to time best top management. Currently
the NBP Chairman and as well as President S. Ali Raza Sahid, he is the person
who has saved the life of the organization and contributed a lot.
INDUSTRIAL POLICIES
NBP helps the government on the implementation of its industrial policies with
respect to economic growth of the country.
BEST RESEARCH APPRAISAL TEAM
Before the project financing NBP has the research appraisal team that justifies the
economic and financial feasibility of not project in the future. That is the strength is
the scare that it helps the organization from any loss that is to over in the future in
case of failure of the project.
LENIENT POLICY WITH THE CLIENTS
Hailey College of Commerce
Internship Report on National Bank of Pakistan 52
This is one of the best policies of NBP that it does not kept rude behavior with this
client if they make late in their repayment of loan. But it has adopts lenient way in
dealing with them, it helps its customers in the repayment making rescheduling and
restructuring of their loans.
YOUNG BLOOD
NBP has young generation aged 27 to 30 graduates that would be helpful to
maintain the quality of their service by hiring new graduates but also would be
helpful changing the overall culture of the organization.
WEAKNESSES
National Bank created its own weakness by downsizing. Due to downsizing
various experienced and devoted employees were either forced or given the option
to leave. Only those people were left who had no organization better to join.
Due to right sizing a lot of confusions have taken place as well. For example
higher-level management have come from institution or others organizations where
everything is computerized. Whereas have by ten staff members (over staffing)
Hailey College of Commerce
Internship Report on National Bank of Pakistan 53
hence, the higher management finds it difficult to get work done. From 1995 onward
bank exhibits a downward trend indicating its low performance-showing decline in
total assets. Total deposits, saving deposits advances investment and total income.
This downward trend can caused a great threat to the bank as its competitors are
talking its market share, which can cause ruining the image and reputation of the
bank thus posing danger in the long run. The graph depicts a decline in the
performance of the bank. NBP's major weaknesses are given below:
LESS ATTENTION TO THE RURAL DEVELOPMENT
NBP's portfolio shows that it has made project financing only in the major
cities of Pakistan. But a reasonable attention is needed in the project financing of
the rural based industrial project of the country.
POOR ADVERTISEMENT
I keenly observe this that as compared to other banks. NBP is very poor in
advertising itself and institution, which works a lot in the development of the country,
but unfortunately in the business community most of the people are in award of it.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 54
POOR NETWORK
NBP has only 1287 branches all over the Pakistan and in major cities of
Pakistan in which other competitors has their branches NBP don't have:
- The formalities involved in getting loans are time concerning and complicated
enough.
- It is observed that most of the loans, which have been granted on political basis,
are either default or their loans are forcefully written off.
- It is seemed that the recovery system of NBP is not effective that's why number of
defaulters are increasing at the growing age.
- Political interference in the recruitment system.
- Uncertainly among the employees due to threat of downsizing.
OPPORTUNITIES
National Bank has very bright prospects for the future. They plan to region their lost
glory not only in terms of profitability but also include latest technology and
competent work force. Furthermore, NBP is the only bank which is providing facility
Hailey College of Commerce
Internship Report on National Bank of Pakistan 55
of bills collecting from 9 AM to 5 PM. NBP is considering setting up an exclusive
utility bank in collaboration with a private firm, which would provide this service for
12 hours.
SPONSOR THE IT BASED PROJECTS
This is the best opportunity available to all banks and NBP as well, to sponsor the IT
and computer based projects because the coming century is the century of
information technology as new a days all the business community is diverting its
attention towards this field.
GOODWILL AND BETTER IMAGE
NBP has advantage of generating more deposits and attracting valuable customers
due to its better image in the business community. NBP has also advantage of
increasing credit lines. This is only due to good dealing and better image that NBP
has directly acquired those lines of credit from abroad that are only acquired by it,
this better image can help further NBP in explanation of its activities.
GROWTH IN THE INDUSTRIAL SECTOR
Hailey College of Commerce
Internship Report on National Bank of Pakistan 56
NBP's major function is the project financing and it is doing it with full efforts.
Fortunately industrial sector is now-a-days is Pakistan is again growing thus
increasing the business opportunities of NBP. Especially the textile sector is one
again improving even the sick projects has resumed their operations.
THREATS:
If there is a threat to the whole economy, it will pose a threat for National Bank.
National bank does not consider small bank a threat to its existence because the
way national bank can accommodation large customer, these small banks cannot
sanctions imposed against Pakistan will affect exchange. Business whereas the
freezing of accounts by State Bank of Pakistan have also caused problems for
National Bank. But the recent facts and figures indicate that the banks major rivals
lime MCB and HBL are causing threats to the bank in the long run thus snatching
away the market share by attracting a large number of customer due to the their
rising standards giving quality service and value added products and other major
threats are as under:
POLITICAL INFLUENCE AND INSTABILITY
Hailey College of Commerce
Internship Report on National Bank of Pakistan 57
This is the major threat for any business organization in Pakistan because
the political officials influence NBP in financing those projects which are not viable
or write off those loans which are still able to pay, this political influence cause many
problems in daily business thus profitability of NBP. Political industrial is even a
threat for NBP in the sense that once the policies and procedures are approved by
government.
SICK PROJECTS
NBP's sick projects are increasing day by day due to economic downfall. As
our economy is weakening day by day the no of side projects are becoming sick
increasingly thus influencing the profitability even survival of NBP.
LACK OF MODERN BANKING TECHNIQUES
NBP is following fifty years old style of banking, in the computers of NBP
symphony word processor is still used. Which is the oldest word processor due
to this the deposits are looking to be corded, because of the provision of credit
Hailey College of Commerce
Internship Report on National Bank of Pakistan 58
cards and other such services by its competitors both local and foreign banks is
proving to be limiting factor in the deposit mobilization efforts of the corporation.
During my internship period at National Bank of Pakistan .I found out certain
problems, which are written below along with their solutions, which need proper
attention of the top management:
These are given below:
Information technology.
Evening Banking Services
Staff Shortage
Dealing With Women
Frequent Transfers
Promotion
Locker Services
Standard Of Education
Hailey College of Commerce
Internship Report on National Bank of Pakistan 59
1. INFORMATION TECHNOLOGY
This age is the age of information technology. Today the world has become a
global village and the fastest mediums of communication are adopted all over the
world. And it is a fact that more the latest technology and methods of work are
adopted more will be the productivity.
In the National Bank of Pakistan (circular road branch) there is only one computer
available for carrying on the business of the bank.I suggest that the computer
should be on every counter of the bank and they should be interlinked together
(NETWORKING) so that various services provided by the bank can be provided in a
more efficient and fast way.
2. EVENING BANKING
I observed that the bank is closed for public dealing in after 1:30PM and then
the staff do their own banking jobs.
I suggest that at least one counter should be specified for the customer services till
evening. In this way, the people having jobs in other offices can get benefit from this
counter.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 60
3. STAFF SHORTAGE
I discussed with bank personnel and they gave their views about staff
shortage. They told me that staff is very short and all the staff is overloaded with
work. That’s why the staff posted in the branch has to face many problems to finish
its daily work.
I suggest that number of staff in the branch should be increased so that they can
meet their customers’ requirements quickly and efficiently.
4. TRANSFERS
I observed that staff members of the Bank are frequently transferred not only
from one branch to another but from one city to another and sometimes from one
province to another.
I suggest that no one is to be transferred to another city or province without
the consent and will of the employee and if transferred, the facilities like residence
etc should be provided to them.
5. PROMOTION
Hailey College of Commerce
Internship Report on National Bank of Pakistan 61
I observed those employees; particularly officers are not satisfied with
promotion policies. There is no clear-cut promotion policy of National Bank.
I suggest that there should be a clear-cut policy about the promotion of employees,
particularly for the officers and they must aware of it that is polices must be
communicated. When policies are communicated to the employees then they can
perform their task more efficiently and will utilize their full efforts.
6. LOCKER SERVICES
The area of circular road branch is full of business activities. The
businessmen also have some important documents, papers and valuable things to
deposit for safe custody.
In order to provide these facilities, locker services must be provided in this Branch.
7. STANDARD OF EDUCATION
The standard of education for recruitment of clerical staff should at least be
graduation. Because in this way efficiency of work will increase and their dealing
with public will be better.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 62
WORK DONE AT THE BRANCH
As every body knows that "Knowledge without practice is sterile "In order
to give vent to this idea an Internship program of two months has been arranged
in different esteemed organizations during B.Com Hons/M.Com. In this regard on
1st of July 2010, I was asked by my principal to go to National Bank of Pakistan to
have an internship of two months there. So as per standing order of my Zonal
Chief I was assigned to work under the supervision of Manager of Abdullah Pur
Branch, Faisalabad.
As three departments namely Accounts, Cash and Billing, and Clearing
were being managed by the Manager in this particular branch. I started my
practical training by Mail Transfer received. I received electricity bills of Fesco
and Wapda and then entered them into MT Register. This was the routine work
which I had to daily performed, it I spent two weeks on it. Then I learnt to make
Hailey College of Commerce
Internship Report on National Bank of Pakistan 63
demand draft, Payment Order and then entering into register for recording
purpose.
After two weeks I performed tockening the cheques for withdrawals and
entering them into token book and, at the time of closing exact position of cash in
hand, Receipts and Payments was evaluated. The Manager and the Accountants
duly signed this evaluation.
Secondly I was advised by my Manager to be remained vigilant about the
fake cheques giving some instructions for the scrupulous examination of cheques
like signature verification from specimen card. Right after tswo weeks, the date of
balancing came. Here balancing means balancing of ledgers of Current Deposit
and Saving Deposits. The balancing of Current Deposit Ledgers was done on
weekly basis while Saving Deposits Ledgers were balanced on semi monthly
basis.
Then I collected bills of FESCO, PTCL and SUIGAS during period of my
internship. I also used to write scrolls, which are written to keep record of bills
collected by the branch and one copy of them is sent to the concerned
organization.
I consumed lot of my time in scrolling the Utility bills of WAPDA,
TELEPHONE, and SUIGAS, the collection from these bills were to be performed
by me and after the proper vouchering of these bills, a copy of collections was
sent to respective departments.
After Six Weeks My Manager tells me about the transfer book which
keeps the record of the transfer of funds between clients of bank.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 64
RATIO ANALYSIS
Hailey College of Commerce
2008 2009
Current Ratio 1
.3218
1.0205
Liquid Ratio -
Loan to Deposits Ratio 66.0
843 65.4186
Loans to Assets Ratio 50
.1049 5
4.1628
Return on Assets1.89 1.93
Return on Shareholder's Fund 8
.6806
4.8667
Return on Equity Capital 15.08 15.23
Earning per Share14.36 16.92
Net Profit Ratio 4
.1601
2.5112
Internship Report on National Bank of Pakistan 65
Return on Equity Ratio
The past two years data shows an
improvement in the return on equity which is
a positive sign. The Bank should have to
continue its policies. By observing the
audited account we find that this
improvement is due to increase in the Net
profit which is good sign.
Hailey College of Commerce
Return on Equity Ratio
2009 2008
Net Profit after tax X 100Owner EquityNet Profit after tax 18,211,846 15,458,590
Owner Equity119,556,378 102,459,218
Return on equity 15.23 15.08
Return on equi capital
15.08 15.23
0
2
4
6
8
10
12
14
16
18
20
2008 2009
Years
Perc
en
tag
e
Series1
Internship Report on National Bank of Pakistan 66
Return on Assets
Return on assets ratio shows
an improving trend. This ratio shows that
the both the Net profit and Total Assets
has improved in the previous years.
Current Ratio 2009 2008
Hailey College of Commerce
Return on Assets
2009 2008
Net Profit after tax X 100Total AssetsNet Profit after tax 18,211,846 15,458,590
Total Assets944,232,762 817,758,326
Return on Assets 1.93 1.89
Return on Assets
1.93 1.89
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2008 2009
Years
Series1
Internship Report on National Bank of Pakistan 67
Current AssetsCurrent LiabilitiesCurrent Assets 919,085,570 793,540,671
Current Liabilities 310,646,613
248,053,807
Current Ratio 1.2742
1.3218
Current Ratio
Hailey College of Commerce
Current Ratio
1.27 1.32
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2008 2009
Years
% a
ge
Series1
Internship Report on National Bank of Pakistan 68
Current ratio has decreased in comparison to 2008 but it is still above than 1.1. The
data shows that this is due to increase both in current assets and current liabilities but the
current liabilities raises more rapidly than current Assets.
Loan to Asset Ratio
Hailey College of Commerce
Loan to Assets ratio
2009 2008
Loans / Assets
Advances 475,243,431 412,986,865
Assets 944,232,762 817,758,326
Loan to Assets ratio 50.3312 50.50
Internship Report on National Bank of Pakistan 69
Loan to Asset Ratio is decreasing in
comparison to previous year. The figures
reveal that this trend was due to decrease in
Advances of the bank but on the other hand
the Asset of the Bank increases rapidly.
Net Profit Ratio
Hailey College of Commerce
Loan to Assets Ratio
50.33
50.5
50.2
50.25
50.3
50.35
50.4
50.45
50.5
50.55
2008 2009
Years
Series1
Net Profit Ratio
2009 2008
Net profit / Interest Income X 100
Net profit 18,211,8
46 15,458,59
0
Interest Income 77,947,697 60,942,798
Net profit ratio 23.36 25.36
Internship Report on National Bank of Pakistan 70
Net profit Ratio is giving downward
trend. This trend is observed due to
increase in Net profit but on the other hand
the interest income also increases.
Hailey College of Commerce
Net Profit Ratio
25.3623.36
0
5
10
15
20
25
30
2008 2009
Year s
Series1
Loan to Deposit
2009 2008
Loans/Deposits
Advances 475,243,431 412,986,865
Deposits 726,464,825 624,939,016
Loan to deposit ratio 65.4186 66.0843
Internship Report on National Bank of Pakistan 71
Loan to Deposit Ratio
Loans to deposit ratio show a
decreasing trend in the previous years.
This trend is observed as The advances
of the bank decreases but on the other
hand total Deposits of the bank increases
which result in decrease in this ratio.
Recommendations
As we seen from the previous analysis of the financial statements we have
realized that that National Bank is performing very well since its inception. It is
quite difficult to give suggestion to improve the banking conditions National Bank
of Pakistan. As we know that nothing is perfect, there is always a room for
Hailey College of Commerce
Loan to deposit Ratio
66.08 66.42
0
10
20
30
40
50
60
70
2008 2009
Years
% a
ge
Series1
Internship Report on National Bank of Pakistan 72
improvement, so I have found during msy internship can be made up taking into
account the following suggestions.
NBP is in the process of providing the services of Automated Teller
Machine. In order to complete with the other banks ATM services
must be provided throughout the country as this service is becoming
very popular in bank customers.
The bank is also in process of computerizing its records which is good
sign but it is going on with small progress Computerization must be
done on early basis. This will help in increasing efficiency of work
done, customer satisfaction decreases the stationary cost and
resultantly it will increase profits.
In Past National Bank of Pakistan has always being suffered from bad
Government policies. Government intervention should avoided
completely.
Employees Training Programme must be introduced on continuous
basis so that Employees have understanding with the latest
developments especially with the customers.
Bank should introduced incentive plans for employees on regular basis
so that if employees may work whole heartedly for the welfare of their
organization. While giving incentives qualification, work, experience,
hard work and such other factors must be considered.
Mismanagement of resources must be avoided as much as possible as
it decreases profit but also discourage hard worker and honest
employees.
Fresh graduates must be recruited. As the combination of
Experienced and fresh can produce better results and it will improve
the efficiency of management.
Hailey College of Commerce
Internship Report on National Bank of Pakistan 73
National Bank is going towards mobile banking but the problem is that
a common client has no idea of its usage due to lack of marketing. I
think that a proper marketing programme must be launched for client’s
awareness.
Banks different schemes must be conveyed to the targeted customers
so that to have a reasonable share in market.
Bank should help the society by providing interest free loans to the
Talented Students.
Financial Analysis (Supplementary material)
Hailey College of Commerce
Internship Report on National Bank of Pakistan 74
Financial AnalysisNational Bank of Pakistan
Balance sheetAs on 31 December 2009
Assets 2009Rs.(000)
2008Rs.(000)
Cash and balances with treasury bank
115,827,868 106,503,756
Balances with other banks 28,405,564 38,344,608
Lendings to financial institutions-net 19,587,176 17,128,032
Investments-net 217,642,822 170,822,491
Advances-net 475,243,431 412,986,865
Operating fixed assets 25,147,192 24,217,655
Deferred tax asset-net 3,062,271 3,204,572
Other Assets 59,316,438 44,550,347
Total Assets 944,232,762 817,758,326
Hailey College of Commerce
Internship Report on National Bank of Pakistan 75
National Bank of PakistanBalance sheet
As on 31 December 2009
Liabilities 2009Rs.(000)
2008Rs.(000)
Bills payable 10,621,169 10,219,061
Borrowings from financial Institutions 45,278,138 40,458,926
Deposits and other accounts 726,464,825 624,939,016
Subordinated loans _ _
Liabilities against assets subject to financial lease
42,629 25,274
Deferred tax liabilities _ _
Other liabilities 42,269,623 39,656,831
Total Liabilities (1) 824,676,384 715,299,108
Shareholder Equity: 2009 2008Share Capital 10,763,702 8,969,751
Reserves 22,681,707 19,941,047
Unappropriated profit 61,346,510 52,456,204
94,791,919 81,367,002
Surplus on revaluation of assets-net
24,764,459 21,092,216
Total Equity (2) 119,556,378 102,459,218
Hailey College of Commerce
Internship Report on National Bank of Pakistan 76
Total liabilities and Owners Equity (1+2)
944,232,762 817,758,326
National Bank of Pakistan Profit and Loss AccountFor the year Ended Dec 31-2009
Description2009
Rs.(000)2008
Rs.(000)Mark-up\return\Interest earnedMark-up\Return\Interest expensed
Net mark-up interest IncomeProvision against non performing loans and advancesProvision against Diminution in value of investmentsBad Debts written off directly
Net mark-up\Interest Income after provision
Non mark up Interest IncomeFee, Commission and brokerage IncomeDividend IncomeIncome from dealing in foreign currenciesGain on sale and redemption of securities-netUnrealized gain on revaluation of investments classified as held-for-tradingOther Incomes
77,947,697
39,489,649
38,458,048
11,669,335
26,788,713
60,942,798
23,884,798
37,058,030
10,970,814
26,087,216
Hailey College of Commerce
11,043,469
605,629
20,237-
8,930,3911,920,3363,028,165
4,591,894
2,355
552,216
10,593,565
373,2494,000
-
7,925,3702,878,9323,969,057
395,427
1,707
1,245,369
Internship Report on National Bank of Pakistan 77
Total Non mark up and Interest Income
Non markup\ Interest ExpensesAdministrative expensesOther provision\write off-NetOther Charges
Total Non mark up and Interest expensesExtraordinary/unusual itemsProfit before taxation
Taxation – Current – Prior years – Deferred
Profit after taxationUnappropriated profit brought forwardTransfer from surplus on revaluation of fixed assets on account of incremental depreciation
Profit available for appropriation
Basic earning per share
19,025,375
45,814,070
23,513,897
22,300,173 ---
22,300,173
4,088,32718,211,84652,456,204
123,934
70,791,984
16.92
16,415,862
42,503,078
19,502,080
23,000,998---
23,000,998
7,542,408 15,458,590
45,344,188
130,456
60,933,234
14.36
Hailey College of Commerce
9,221,513(4,133,282)
(999,904)
18,171,198747,521583,361
11,762,650---
(4,220,242)
22,571,470620,780321,647
Internship Report on National Bank of Pakistan 78
National Bank of PakistanBalance Sheet
Horizontal AnalysisAs on 31st Dec 2009
Hailey College of Commerce
ASSETS
Increase (decrease)2009-2008
% ageCash and balances with treasury bank
8.7%
Balances with other banks (25.9)Lendings to financial institutions-net 14.4Investments-net 27.4Advances-net 15.1Operating fixed assets 3.8Deferred tax asset-net (4.4)Other assets 33.1Total Assets 15.5LiabilitiesBills payable 3.93Borrowings from financial institutions 11.9Deposits and other accounts 16.2
Liabilities against assets subject to financial lease
68.7
Other liabilities 6.6Total Liabilities and Owner equity
15.3
Internship Report on National Bank of Pakistan 79
National Bank of PakistanProfit and Loss Account
Horizontal AnalysisFor the year Ended Dec 31-2009
Hailey College of Commerce
Shareholder equity
increase(decrease)2009-2008
% age
Share Capital 20%
Capital reserves 13.7
Unappropriated profit 16.9
Surplus on revaluation of fixed assets17.4
Internship Report on National Bank of Pakistan 80
National Bank of PakistanBalance sheet
Vertical AnalysisAs on 31 December 2009
Hailey College of Commerce
ITEMS Increase (decrease)
2002-2001% age
Mark up\Interest\return earned 27.9
Mark up\interest\expenses65.3
Provisions6.4
Non mark up\Interest Income12.84
Non mark up\Interest expensed20.5
Profit before Taxation(3.0)
Taxation(72.7)
Profit after Taxation17.8
Earning per share17.82
Internship Report on National Bank of Pakistan 81
Assets2009
Rs.(000)% age
2008Rs.(000)
% age
Cash and balances with treasury bank
115,827,868 12.3 106,503,756 13.02
Balances with other banks
28,405,564 3.0 38,344,608 4.68
Lending to financial institutions
19,587,176 2.1 17,128,032 2.1
Investments 217,642,822 23.0 170,822,491 20.8
Advances 475,243,431 50.3 412,986,865 50.5
Operating fixed assets
25,147,192 2.7 24,217,655 2.96
Deferred tax asset-net
3,062,271 0.32 3,204,572 0.39
Other Assets 59,316,438 6.3 44,550,347 5.45
Total Assets 944,232,762 100 817,758,326 100
National Bank of PakistanBalance sheet
Vertical AnalysisAs on 31 December 2009
Hailey College of Commerce
Internship Report on National Bank of Pakistan 82
Liabilities2009
Rs.(000)% age
2008Rs.(000)
% age
Deposits and other accounts
726,464,82588.0
624,939,01687.4
Borrowings from financial Institutions
45,278,1385.49
40,458,9265.6
Bills payable 10,621,1691.28
10,219,0611.43
Liabilities against assets subject to financial lease
42,629 0.005225,274
0.0035
Other liabilities 42,269,6235.13
39,656,8315.54
Deferred tax liabilities - 0.00 - 0.00
Subordinated loans - 0.00 - 0.00Total liabilities and owners equity 824,676,38
4100 715,299,108 100
National Bank of PakistanBalance sheet
Vertical AnalysisAs on 31 December 2009
Hailey College of Commerce
Internship Report on National Bank of Pakistan 83
Share Holder Equity
2009Rs.(000)
% age2008
Rs.(000)% age
Share Capital 10,763,702 9.0 8,969,751 8.75
Reserves 22,681,707
18.9719,941,047 19.46
Unappropriated profit
61,346,51051.31 52,456,204 51.19
Surplus on revaluation of fixed assets
24,764,459 20.71 21,092,216 20.58
Total 119,556,378 100 102,459,218 100
National Bank of PakistanProfit and Loss Account
Vertical AnalysisFor the year Ended Dec 31-2009
Hailey College of Commerce
Internship Report on National Bank of Pakistan 84
Income2009
Rs.(000)% age
2008Rs.(000)
% age
Markup\Interest\Return earned
77,947,69780.38
60,942,79878.78
Fee Commission & Brokerage
8,930,3919.20
7,925,37010.25
Gain on sale and redemption of securities-net
4,591,8944.74
395,4270.51
Income from Dealing in foreign currencies\Sec
3,028,1653.12
3,969,0575.13
Other Income552,216
0.571,245,369
1.60
Dividend Income 1,920,3361.98
2,878,9323.72
Total 96,970,699 100 77,356,953 100
National Bank of PakistanProfit and Loss Account
Vertical AnalysisFor the year Ended Dec 31-2009
Hailey College of Commerce
Internship Report on National Bank of Pakistan 85
BIBLIOGRAPHY
1. The first important thing is the discussions with the staff of the bank especially
with Operations Manager Sir Faisal and M.T.O Miss Sana Noureen.
2. The Bank Book of Instructions for the National Bank of Pakistan called the B.B.I.
Hailey College of Commerce
Expenses2009
Rs.(000)% age
2008Rs.(000)
% age
Mark up\Interest Expenses
39,489,64950.14
23,884,79827.14
Provisions11,669,335
14.82 37,058,030
42.12
Admin Expenses22,571,470
28.65 18,171,198
20.65
Other Charges321,647
0.41583,361
0.66
Other Provisions\Writes off
620,7800.79
747,5210.85
Taxation4,088,327
5.27,542,408
8.57
Total 78,761,208 100 87,987,316 100
Internship Report on National Bank of Pakistan 86
3. Surfing the website of the National Bank of Pakistan (www.nbp.com.pk)
4. Reading the annual reports of the bank.
5. Reading the economic bulletin of the bank which is published by the economic
and business research wing of the bank.
Hailey College of Commerce