Internship Report on National Bank of Pakistan

Submitted By

Muhammad Ahmad

Submitted by the Partial fulfillment of the requirement for the degree of Master of
Business administration

National University of Modern Languages Islamabad

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DEDICATION

My

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 B
eloved Parents
ACKNOWLEDGEMENT

First of all I would like to prostrate Himself in front of “ALMIGHTY ALLAH” the
Omnipotent, the Omnipresent, the Merciful, the Beneficial who created us among the
Muslims and also bestowed and blessed us with such a lucid intelligence as we could
endeavor our services toward this manuscript. Countless salutations are upon the HOLY
PROPHET MUHAMMAD (May Peace Be upon Him), the fountains of knowledge, who
has guided his “Ummah” to seek knowledge for cradle to grave.

We feel much pleasure to intend our sincerest gratitude, inspiring cooperation and
appreciation to our teachers, espically Mr. Kashif for his keen interest, expert guidance and
invaluable suggestions during the entire study period and preparation of this manuscript.

We also want to thank our Honorable Parents for their inspiration and moral support,
who taught us the value of hard work by their own example and their encouragement and
motivation that was given to us to carry out our research work. Words are lacking to
express our humble obligation to our affectionate and extra caring Parents. We are very
grateful for the love and support of our parents.

I am indebted to all the employees of National Bank of Pakistan Abdullah branch fsd
Special thanks to “MR. FAiSAL IQBAL” Operation Manager of NBP Abdullah Branch
Fsd.
& M Shahid (OG III) and all other employees of the branch for their cooperation

Finally, I would like to thank all those whose direct and indirect support helped us
completing our thesis in time and attaining this position.

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EXECUTIVE SUMMERY

National Bank of Pakistan is the Public sector financial institution. The National Bank of
Pakistan was established on 1949, to serve as an agent to the SBP. NBP head office is in
Karachi. It has 1249 regional branches and 18 overseas branches. NBP is 52% shares
owned by the Government of Pakistan (GOP). NBP's total assets stood at PKR820 billion
on mid of 2009. This included total earning assets of about PKR268 billion with gross loan
portfolio of PKR140 billion. The bank also has an investment portfolio of PKR171 billion,
which comprises treasury securities, corporate bonds, shares and other securities.
This report is based on internship in National Bank of Pakistan branch name. 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
Banking services, competitive analysis, SWOT analysis, bank tariffs and exchange rates of
National Bank of Pakistan. There are also stated the activities which I performed during
my internship in the branch. In this report I also discuss the industry analysis of banking
system in Pakistan. During the internship I was observed the jobs task of the employees
and at the we find him a lot of problems at the management level.
So I Have mentioned all the problems from which the branch has been suffered have given
the suggestion who can they solve branch problems? There are also mentioned the way of
investment, rates of investment, all types of financing and loans facilities the National
Bank of Pakistan provides. The problems in this branch are also discussed. This report also
intimates about the daily reserves which are required by the branch to meet the need of its
daily transactions.

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TABLE OF CONTENT

Chapter No 1 Introduction of Study

Background of Studies …..………………………….….………………………………….……………….…..………..…9

Purpose of Study………………………………..….………………………………………….………..…….…………....9

1.3 Scope of Study………………………………………..……………………………………….

……...…..…….……..…….9

1.4 Research Methodology………………………………………………...……………………………..….……….………...10

Chapter No 2 Evaluations of Banks

2.1 Definitions of Banks ………..……..………………………………………….….…………………….………,………..…13

2.2 Evaluations of Banks in Pakistan ……..…………………………………………………………….….…………….……..14

2.3 Banking Growth in Pakistan (1948-1970)…………………………………………………………………………..………15

2.4 Banking Reforms 1972 …………………………………………………………………………….……………..………..19

Chapter No 3 Nationalization of Banks

3.1 Islamization of Banking……………..…………………..……………………………………..………….……..,.………..…26

3.2 Disinvestment & Deregulation of Banking 1991 ………..…..….….…………………………………………………….…..27

3.3 Interest free Banking ……………….……………………………………….…..….……………….…........……....….…….27

3.4 History of NBP………… …………………….………………………………………………………………………..……..28

3.5 Network of Branches …………………………………………………………………………………….……….….……….30

3.6 Branches Network………………………….…………………………………………………..……….…………………….30

3.7 Branches all over the Country……………………………………………...…………………………………………………31

3.8 Types of the Branches …..………………….…………………………………………………………….………….……….32

3.9 Objective of NBP …………………………………………………………..……………………………………….….…….33

3.10 Extension of loan …………………………………………………………….……………………………...……….……….33

3.11 Functions of NBP …………………………….…………………………….…………………………………….…………..34

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 3.12 Unmatched Banking Facilities ….…………..………………………………………………….…..………….…..…………36

3.13 Mission Statement ……………………………….…………………………………..….………...…………………….…..37

3.14 Core values of NBP ..…………………………………………………………………….…………………………………...38

3.15 Objectives & Goals of NBP …..…………………..………………………………………………………………………….39

3.16 Board of Directors ………………………………..……………………………………..……………………………………40

3.17 Senior Management ……..………………………..………………………………………………………………………….41

3.18 Organization Hierarchy ……………..…………..………………………………………………………….……….……….42

Chapter No 4 Services of NBP

4.1 Demand Draft…………………………..………………………………………………………...….…………,…….…..…46

4.2 Swift System………………………………………………..…………. ……………………………………..…………….46

4.3 Letter of Credit. ………………….…………..………..……………………………………….….…..…….……..……….47

4.4 Travreller Cheques……………………….………………..…….………….………………………..……………..……….47

4.5 Pay Order…………….. …………………..…………………………………………………………..…………………….47

4.6 Mail Transfer…………………………………………………………………………………….………………………….47

4.7 Foreign Remittance………………………….…..………………..……..…………………………………….……………48

4.8 Short Term Investment...……………………..…..………………..……………………………………….………………48

4.9 National Income Daily Account (NIDA)………….…………..…………………………………………………….…….49

4.1 Quality Investment…………………………………..……………………………………………………………….…….49

4.11 Commercial Finance………………………………………………………………………………….…………………….50

4.12 Rade Finance and Other Loans………………………..……………………………………….…….…………………….50

4.13 International Banking………………………………………………………………………………………………….…..53

4.14 Cash and Gold…. …………………………..……………………….…………………..……….………..……………...53

4.15 Advance Salary……………………… …………………………………………………………………………..……….54

Chapter No 5 Departmentaion in NBP.

5.1 Cash Department…………………………………………….….………..……….…………………….……,.…….…..…57

5.2 Clearance Department…………….………………………………………….….…..……….…. ……..………….……....61

5. 3 Advances Department………………..….………………………………….……..……..……..…..……………..….…….62

5.4 Remittance Department…………………..…………………………………..…….……..….….….……………..……….68

5.5 Deposit Department…………………….………………………………………………………………………..…...…….70

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 5.6 Foreign Exchange Department…………...….....………………………………………………………………..………….74

Chapter No 6 Human Resource Management

6.1 Human Resource Management..………….……….….……..………………………………………...….……,…….…..…80

6.2 Human Resource Mission……………………………………... ……..……………………………..…….………………..81

6.3 Human Resource Values…….……….……………….……………...……………………………….…..….……..……….81

6.4 HR Forum……………….………………………..………………………………………………….….…………..……….81

6.5 Induction of MTO…………………………….………..……….……….……………………………………….………….82

6.6 Job for Life………………………...………………….………………………………………………………..……….……82

6.7 Selection and Recruitment……..……………………….……...…………………………………………………………….83

6..8 Performance and Appraisal…….……...……………….……..……………………………………….…………..…………84

Chapter No 7 SWOT Analysis

7.1 Strength …………………………………….……………………………………………………..……………,…….…..…86

7.2 Weakness……………………………………………………………………………………….……. ……..……,….……..88

7.3 Opportunities….……….…….…..……………………………………………………………..………..…….……..……….89

7.4 Threats………………..………...….…………………….…..…….….……………………………………………..……….90

7.5 Competitive Analysis…………….....………………..…...…….…………………………………….……………………….91

Chapter No 8 General Observation

8.1 Branch Problems Analysis………………………….…………………………………………..….……………,…….…..…94

8.2 Functional Analysis……………………….…………..……….……. ……………………………………...….…,….……..95

8.3 Administrative Analysis…….……………………………….………..…….………………………………………...…..….96

8.4 Personal Management Analysis…..........................................................................................................................................98

Chapter No 9 General Suggestion

9.1 General Suggestion…………………….………….…………………………………………..……………,…….…..…102

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CHAPTER 1

INTRODUCTION OF STUDY

1.1 Background of Studies

As part of the academic requirement for completing MBA (Marketing)) Master Business
Administration of the students are required to under go six months of internship with an
organization. The internship is to serve the purpose of acquainting the students with the
practice of knowledge of the discipline of banking administration.

This report is about National Bank Pakistan. NBP was established in 1949 and since then,
it has expended its network, becoming the largest commercial Bank of the country. It
offers different products of services to its customers.

Purpose of the Studies

The main of the study in hand is together relevant information to compile internship report
on National Bank of Pakistan.

To observe, analyze and interpret the relevant data competently and in a useful manner.

• To work practically in an organization.

• To develop interpersonal communication.

Scope of Studies

As an internee in National Bank of Pakistan the main focus of my study research was on
general banking procedures in one of the branches of NBP. These operations include
remittances, deposits, advances and foreign exchange. Similarly different aspects of overall
of NBP are also covered in this report.

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Research Methodology

The report is based on my two months internship program in National Bank of Pakistan.
The methodology reported for collection of data is primary as well as secondary data. The
biggest source of information is my personal observation while working with staff and
having discussion with them. Formally arranged interviews and discussions also helped me
in this regards.

• Primary data:

Personal observation

Interviews of staff

• Secondary data:

Manuals

Journals

Magazine

Annual reports

Internet

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CHAPTER # 2

EVOLUTION OF BANKS IN PAKISTAN

There are different opinions that how the word ‘Bank’ originated. Some of the author’s
opinion that this word is derived from the word ‘Bancus’ or Banque’, which means a
bench. The explanation of this origin is attributed to the fact that the Jews in Lombard
transacted the business of money exchange on benches in the market place; and when the
business failed, the people destroyed the ‘bench’. Incidentally the word ‘Bankrupt’s said to
have evolved from this practice.

Some of the authors are of opinion that the word ‘Bank’ is derived from the German word
back, which means ‘joint stock fund’. Later on when the German occupied major part of
the Italy the word ‘Back’ was italicized into ‘Back’.

In fact human left the need of bank when it begins to realize the importance of money as a
Smedium of exchange. Perhaps it where the Babylonian who developed banking system as
early as 2000 BC. At that time temples were used as banks because of their prevalent
respect. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians
Empire, loans were started being granted for interest. The borrower has to provide
guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a code
wherein he laid down standards rules for procedures for banking operations by temples and
great landowners. Also in Greece, the temples were used as banks, where the people
deposited their money and other valuables for safe custody and security. In Europe with
the ‘revival of civilization’ (Renaissance) in the middle of twelve century, trade and
commerce started expanding and this development compelled the business community to
borrow the money from the Hebrew money lenders on high rates of interest and usury.
Seeing the great demand, these moneylenders started organizing themselves and bank
started up at the principle seaports of southern Europe. Soon Venice and Geneva became
the most important money markets of the time and banking though different from its
present form, flourished. What we know as ‘modern banking’ originated in the 14th century
in Barcelona.1

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2.1 Definitions of Bank

“Bank”

"A financial institution, which deals with money and credit. It accepts

Deposits from individuals, firms and companies at a lower rate of

Interest and gives at higher rate of interest to those who need them.”2

A financial establishment which uses money deposited by customers for investment, pays
it out when required, makes loan at interest, exchanges currency, etc.

J.W Gilbert in his principles and practice banking defines a banker in these words:

“A banker is dealer in capital or more properly, a dealer in money. He is intermediate

party between the borrower and the lender. He borrows of one and lends to another”.3

Sir John Paget defines banker in these terms:

“That no person or body, corporate or otherwise, can be a banker who does not

 Take deposits accounts.

 Take current accounts,

 Issue and pay Cheques and

 Collect Cheques crossed and uncrossed for his customers”4

The American defined the term banker in a very broad sense as under:

“By banking, we mean the business of dealing in credits and by a ‘Bank’ we include
every person, firm or company having a place of business where credits are opened by
deposits of collection of money or currency. Subjects to be paid or remitted on Cheques or
order, money is advanced or loaned on stocks, bonds, bullion, bill of exchange, promissory
notes are received for discount or sale”.5

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2.2 Evolution of Banking in Pakistan

The first phase in evolution of banking in Pakistan sees very hard days for the whole
banking sector. Starting virtually from scratch in 1947, the country today possesses a full
range of banking and financial institutions to cope with various needs of the economy.

The area now constituting Pakistan was, relatively speaking, fairly well provided with
banking facilities in undivided India, in March 1947 there were 3496 offices of Indian
scheduled banks out of which as many as 487 were situated in territories now constituting
Pakistan.

The Reserve bank of India was the central banking authority in India. At the time of
partition it was decided that in the interest of smooth transition it should continue to
function in newly emerging state of Pakistan, until 30th Sep.1948.

In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses.

This resulted in a negative effect on baking service in Pakistan. The banks, which had their
registered offices in Pakistan, transferred them to India. In an effort to bring about the
collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank
offices closed quickly. Those banks, which stayed, operated only in name pending the
winding up of their business. The number of scheduled banks thus declined form 487
branches before independence to only 195 branches by 30th June1948.5

2.3 Banking Growth during (1948-1970)

In this tense situation, a committee was immediately setup to formulate a scheme of central
banking legislation for Pakistan. Many specialists were of the opinion that in view of the
acute shortage of trained staff, any idea of establishing a central bank was I impractical and
the best that could be attempted was the setting up of a currency board until such times as
sufficient staff could be organize to operate a central bank.

The questions as to whether the institution should be only a currency board or a full-
fledged central bank had exercised the mind of the Pakistan government since
independence. Through, it was realized that the shortage of trained personal to run the

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central bank would present serious difficulty in view of the tangible advantages that a
central bank enjoyed over currency board, the government ultimately decided to take the
bold step of setting up a full fledged central banking authority. Among other factors,
which led to this decision, there was the fact the banking facilities in the country had been
totally disrupted and there was an urgent need for their rehabilitation, which a central ban
alone could meet. As there was hardly any time to pass as Act, an order was drafted,
known as the state bank of Pakistan order, which was promulgated by the government of
Pakistan on 12th may 1948. The state bank declared open on July 1 , 1948 by the father of
the nation.

One of the first tasks of the state bank was to arrange for the replacement of the Reserve
bank of India notes, which had continued to circulate in Pakistan during the transitional
period, by Pakistan currency.

The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 &
100.

An equally urgent task, which the new central bank had to address itself, was the creation
of a national banking system. To this end, while extending every help and encouragement
to Habib Bank to expand its organization, the state bank recommended the setting up of a
new banking institution to serve both as an agent to the state bank recommended the
setting up of a new banking institution to serve both as an agent of the state bank as well as
the spearhead of its credit polices.

Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in

November 1949. It started with six offices in the former East Pakistan. In view of the
special role assigned to the new institution, contrary to traditional practices the Governor
of the state bank was appointed to head its board of Director in 1950. Under the fostering
care of the state bank and the support of the government, the new institution developed
rapidly. By using its special powers, the state bank made liberal advances to the new bank
to help it expand credit facilities in the country. By 1952, the National bank of India.
Shortly, afterwards, in November 1952, the governor of the state bank ceased to function
as the president of National bank of Pakistan.

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With a view to broadening the institutional framework of the financial system, the state
bank also sponsored the establishment of specialized credit institutions in the filed of
agriculture and industry. Banking companies (control) act was passed in December 1948
specifically empowering the state bank to control the operations of banking companies in
Pakistan.

Moreover realizing that the most serious limitation on the expansion of banking services in
Pakistan was the lack of trained personal, the state bank sponsored a banking training
scheme, which was repeated after year and turned out a large number of bankers.

As the Commercial Banking facilities continued to expand, a new Pakistani bank, the
National Commercial Bank was established and registered as a scheduled bank. In the filed
of industrial finance a new institution known as the industrial credit and investment
cooperation was set up.

The year 1958 marked the completion of the first decade of the working of the State Bank
of Pakistan. When it was established there were only 195 bank offices in existence. At the
end of June 1958 their number had increased to 307, of which Pakistani banks accounted
for 232 against 25 in mid 1948. Moreover at the end of June 1958. Pakistani banks held
60% of the total banks deposits, and were responsible for 65 of total bank credit.

When the Ayub Government took over in 1958, the banking and monetary scene was
significantly affected by Developments such as the liberalization of imports, transfer of
business in food grains to the private sector, and the firming up of commodity markets.
The demand of funds picked up and there was a substantial expansion of bank credit to the
private sector. The pace of expansion in the institutional frame work of the country’s
banking system quickened and a new Pakistani, bank, namely the United Bank Limited
was established.

Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The
bank extended its network by opening six new offices located at Chitagong, Peshawar,
Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose
from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to
the list of scheduled banks.

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Two principal additions were the commerce bank, and the standard bank. The number of
scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965.

Under the impact of economic growth and dear scope of private enterprises, bank credit to
the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total
expansion in bank credit to the private sector during this period amounted to Rs. 4300
million, which gave a annual expansion of Rs. 860 million compared to the annual average
increase of Rs. 144 million over the preceding five years. Banks deposits increased from
Rs. 2,493 million to Rs. 6883 million during the five years period ended June 1965
compared to Rs. 231 million in the proceeding five years. Time deposits during this period
increased from Rs. 946 million to Rs. 3228 million, where demand deposits rose from Rs.
1997 million to Rs 3655 million. The increase in time deposits was particularly rapid. The
ratio of time deposits to total deposits in June 1965 stood at 49.6 percent age as against
32.01 percent age five years earlier. Another salient feature of banking development during
this period was that since the rate of increase in bank deposits lagged behind the rate of
expansion in bank credit, the banked has to depend increasingly on central bank finance.
They borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688
million in June 1965. Owing keen demand for bank credit, bank’s investments could not
increase as rapidly as their advances. Their investments totaled to Rs. 1,874 million at the
end of June 1965 compared to Rs. 1,231 million in June 1960. Investments which were
almost equal to their advances in June 1960 were only about one third of the advances in
June 1965.

The third plane period witnessed a further expansion of banking facilities in the country the
total number of scheduled banked offices increased from 1,591 at the end of June 1965 to
3133 at the close of June 1970. During the same bank credit to the private sector rose from
Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank
deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end
of June 1970. A remarkable change occurred during this period related to the composition
of deposits. Time deposit becomes greater than demand deposits forming about 54 percent
age of the total deposits. As oppose to what happened in the previous period, banks were

17
able to finance a mush higher level of credit expansion without having to increase their
borrowings from the central bank.7

2.4 Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms
were introduced to make the banks more responsive to the requirements of economics
growth with social justice. The reforms aimed at bringing about a more purposeful and
equitable distribution of bank credit, improving the soundness and efficiency of the banks,
and securing greater social accountability of the banking system as a whole.

The role of the banking system had been truly spectacular in mobilizing savings of the
community and meeting the credit needs of the economy. But at the same time, the banks
had generally neglected their role in promoting social justice and had failed to play an
effective role in ensuring a wider and more equitable dispersal of the benefits of economic
growth. In particular the inter locking of ownership with commercial and industrial
interests had led to the misuse of bank resources. There was a heavy concentration of credit
in big accounts and in urban area. Credit facilities for agriculture, small business, newly
emerging exports and housing had remained obviously inadequate while the banks
indulged in capital financing in few selected business sectors and issued guarantees on
behalf of favored clients, term clients, term financing facilities for industry were wholly
absent.

Under the banking reforms introduced in May 1972 the state bank of Pakistan was
accorded wider powers. It was authorized to remove directors or managerial personnel, if
necessary and supersede the board of directors of a banking company and appoint
administrators during the period of such super session. It was also empowered to nominate
directors on the board of every bank. As regard bank directors, it was provided that anyone
defaulting in meeting his obligations to bank would forfeit his directorship. Moreover, it
was laid down that no person could serve as director of a bank for more than six years
continuously. Each bank was required to have a paid up capital of not less than 5 percent
age of its deposits to be progressively build up to 10 percent age over a period of time. The
banks were also required to transfer 10 percentage of their profit their reserves every years

18
after the reserve became equal to the paid up capital. With a view to diversity the
ownership of the banks, the banks were required to raise new capital from the market.
Unsecured loans to directors, their families or firms and companies, were totally
prohibited.

The bank reforms also brought about the establishment of new institutions to achieve new
objectives.

A national credit consultative was setup under the supervise of the state bank with
representation form the government and the private sector. It was assigned the task of
determining of economy’s annual credit needs within the safe limits of monetary and credit
expansion with reference to the annual development plan. Such a credit plan was to cover
the public and private sectors. Alongside the National credit council and Agricultural
Advisory Committee was formed to allocate agriculture credit for various purposes, to
coordinate the operation or the agriculture credit agencies and to oversee the flow of credit
to the designated targets. A standing committee on exports in general and the new
emerging exports in particular, was also established. With a view to encourage the banks to
extend credit to small borrowers, a credit guarantee scheme was introduced under which
the state bank under took to share any bonfire losses incurred by the commercial banks in
case of small loans of advances to agriculture.

At the same time two financing institutions were established. The people’s Finance
Corporation was designed to provide finance to people of small means while the National
Development Finance Corporation was setup of finance public sector owned and managed
industries and enterprises.8

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20
CAHAPTER # 3

NATIONALIZATION OF BANKS (1974)

The banking reforms turned to be transitional and interim step and when they were hardly
eighteen months old the government nationalized the banking systems, with the following
main objectives.

To enable the government to use the capital concentrated in the hands of a few rich bankers
for the rapid economic development of the country and the more urgent social welfare
objectives.

To distribute equitably credit too different classes sectors and regions.

To coordinate the banking policies in various area of feasible joint activity without
eliminating healthy competition among banks.

The act passed for the nationalization of banks is known as the banks Nationalization Act
1974.

Thus under this act the state bank of Pakistan and all the commercial banks incorporated in
Pakistan and carrying business in or outside the country were brought under government
ownership with effect from Jan 1, 1974. The ownership, management and control of all
Pakistani banks stood transferred to and vested in the Federal government. The
shareholders were provided compensation in the form of federal government bonds
redeemable at par anytime within the period of fifteen years. Under the Nationalization act,
the Chairman, Directors and Executives of various banks, other than those appointed by
federal government were removed from their offices and the central boards of the banks
and all local bodies were dissolved. Pakistan banking council was established to coordinate
the activities of the Nationalized Commercial banks. At the time of Nationalization on
December31, 1973 there were following 14 Pakistani commercial banks with 3323 offices
allover Pakistan and 74 offices in foreign countries:

National banks of Pakistan

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Habib bank limited

Habib bank (overseas) limited

United bank limited

Muslim commercial bank limited

Commerce bank limited

Standard bank limited

Australia bank limited

Bank of Bahawalpur limited

Premium bank limited

Pak Bank limited

Sarhad bank limited

Lahore commercial limited

Punjab provincial co-operative bank limited

The Pakistan banking council prepared a scheme for the recognition of banks. The bank
(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of the
smaller banks with bigger ones and following the five units in there phases:

National bank limited

Habib bank limited

United bank limited

Muslim commercial bank limited

Allied bank of Pakistan limited

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The first phase was completed on 30th June. 1974. When the bank Bahawalpur was merged
with the National Bank of Pakistan. The premier Bank Limited with Muslim Commercial
Bank limited and Sarhad Bank Limited and Pak bank limited and renamed as Allied Bank
of Pakistan limited.

The second phase was completed on 31st Dec.1974, when the commerce bank limited
merged with the United Bank limited.

The third and the final phase were completed on 30th June, 1975 when the standard bank
limited was merged with Habib Bank limited.

The nationalization was very smooth and gave very positive results.

The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end
June 1992. The bank deposits which stood at Rs. 1925 corers at the end 1973 reached the
highest mark about 323 corers.1

3.1 Islamization of Banking

Another major development in the history of Pakistan Banking System was the introduced
of interest free banking in selected Commercial Banks with effect form Jan1, 1981. This
followed the effort to eliminated interest from the operation of Nation investment trust, the
House Building Finance Corporation of Pakistan. Certain amendments were made in
banking and other laws with the object of ushering in a new system of banking, which
would confirm of Sharia. A new law Modaraba Companies Ordinance 1980 was
promulgated. Separate interest free counters began to operate in all the nationalized
commercial banks free counters began to operate in all the nationalized commercial banks.
The state bank provides finance against participation term certificate and also against
promissory notes supported by Modaraba certificate.

In order to cover interest free transactions certain banking definitions such as creditors,
debtor, and advances credits and deposits were revised. Stipulations concerning form of
business in which banking companies may engage may also have been modified schemes
were introduced to provide interest free loans to formers and deserving students.

23
A private Limited Company named as Bankers Equity limited was incorporated in 1979 to
provide financial assistance to the industrial sector primarily on interest free basis.

A scheme to extend interest free productive loans to farmers and fisherman has also been
introduced. Instead of interest, a system based on mark-up in price, exchange rate
differential, and profit and loss sharing accounts were introduced.

Different financial schemes introduced in the Islamization process are: 2

♦ Musharika Financing.

♦ Hire Purchase Financing.

♦ Modaraba Financing.

♦ Specific Purpose Modaraba.

3.2 Dis-Investment and Deregulation of Banking – 1991

When it was realized that the role of public sector in the economy is over extended and the
banking sector has more earning potential in the private sector the process of privatization
banking sector restarted in 1991 by the Muslim League Government. Muslim Commercial
Bank was Dis-invested in to two phases while ABL was sold to its employees. Since then
allot of investment is being made in the banking sector and several new banks were
established and still the process is going on. Now only NBP is government bank other than
SBP. The performance of this bank will be analyzed and judged in the following chapters.

3.3 INTEREST FREE BANKING

A new concept of interest free banking was introduced in 1981 and by now it has been
established on sound footing and new trends and techniques are being implemented to
make this system result oriented. New products and their systematic consumption are
making Pakistani banking comparable to their several modern counterparts anywhere in
the developed world.

24
3.4 HISTORY OF NBP:

The NBP was established vide NBP Ordinance No. XIX of November 9. 1949.

British Govt. devalued its currency in September 1949, India devalued its rupees but
Pakistan did not. It led to a crisis in trading between the two countries and India refused to
lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through
an Ordinance of GOP. 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 large network of branches locally,
internationally and representative offices.

25
The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by
the former Bahawalpur State.

NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests
at 57 of its offices where the turnover of the business under the head amounted to Rs.2460
million.

i) Deposits held by NBP constituted about 3.1% of total deposits of all

Pakistani Banks in 1949, which rose to 38% in 1952.

ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances.

NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of
agriculture and commerce.

iii) NBP advances reached Rs.554.4 million by December 1959, which was one third
of the total schedule bank credit.3

26
3.5 Net Work of Branches:

NBP have wide range of branches inside the country and outside the country.

In Pakistan it has 29 regional offices, 1249 Branches and 6 Subsidiaries.

In overseas it has 18 overseas branches, 11represative offices and 1 subsidiary branches

Oversea Branches
Domestic Branches

18 Overseas Branches29 Regional Offices

11 Represative Offices1,249 Branches

1 Subsidiary 6 Subsidiaries

3.6 Branch Network:

NBP has an extensive domestic branch network of over 1500 branches located all over
Pakistan. The Bank also has a presence in 24 international locations including the USA,
United Kingdom, Europe and the Far East.

27
3.7 Branches all over the Country

28
3.8 Types of branch in NBP

There are three types of Branches in all over Pakistan of NBP

1. Online branches:
The branches, which are directly, link with central computer AS-400, through wide
area networking through fiber optics. These branches have dumb terminal directly linked
with central computer. Yet only forty-four branches all over Pakistan are online. Of these
forty-four, seventeen are located in Karachi, seven in Lahore, two in Islamabad and two in
Multan and two each in other regional head offices.

2. Batch Branches:

The branches where all transactions are carried out with the computer base system
but these branches are not connected to the central computer with wide area net working.
Batch branches are using three type of system, Branch Back Office (BBO) based on
FoxPro, Branch Automated System based (BAS) on UNIX, Branch Integrated System
(BIS) based on FoxPro in Karachi mostly branches are facing this problem. BAS was
establish in the beginning while BBO is currently implemented now efforts are under way
to convert all branches into Electronic Banking System (EBS) which is used by online
branches as this system does not require a person to remain sitting till the branch closed its
daily operation but the system automatically close it self when the branch timing is over.
The database in head office is also based on this system.

3. Manual Branches:

The branches where all transactions are carried out manually and records are
maintained on registers usually stored in big wardrobes.

29
All branches in Pakistan report to there regional head office regarding there daily
transaction. In the RHO through On Line, terminal data goes to head office central
computer; Except for branches those are On Line as they transfer there daily data directly
through there own terminal. As day-to-day, activities of all branches are recorded in a
central computer.

3.9 Objectives of NBP

National bank of Pakistan is also a commercial organization and its main objective is profit
maximization. This is achieved in two ways:

1. By increasing deposits.

2. By charging interest on loans provided to the private sector and business

community.

3.10 Extension of loans:

The profitability of a bank largely depends on the amount given to people as loan and the
type of people to whom credit is given i.e. the credit worthiness of the borrowers. This
strategy has worked quite well for NBP. Deposits are collected from the people and
invested in different projects. NBP prefers to give loans to financially sound and reliable
parties, after securing the collators. NBP has an extremely well organized section. The staff
is adequately trained, and educated and competent. They carry out extensive financial
analysis before deciding on the loan. Interest charged on the loans potentially contributes
to higher profits.

Some of the other objectives of NBP are:

i. Improve customer services.

ii. Quick disposal of credit cases.

iii. Efficient operation of the branches.

iv. Better Public Relations.

30
 v. Operational and advisory services for foreign exchange accounts activities

3.11 Functions of NBP

Since NBP is a commercial bank, it performs a variety of functions.

Like other commercial banks, NBP is engaged in financing international trade. Its other
major functions include receiving deposits, advancing loans and discounting of exchange.
The functions performed by NBP are:

3.11.1 Accepting Deposits

This function is important because banks largely depend on the funds deposited with them
by its customers. Deposits are of many types:

i. Current deposits

Current deposits are also called demand liability on current deposits. NBP pays practically
no interest on current deposits. Businessmen usually open current accounts. In NBP
current account can be opened with a minimum amount of Rs.500/-.

ii. PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit
and draw money easily. Profit on PLS is calculated every month but paid after six months.
PLS account can be opened with a minimum amount of Rs.500/-

iii PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the expiry of
which they cannot be withdrawn unless giving due notice. In this case the rates of profit
will be different depending upon the time period.

3.11.2. Discounting bills of exchange

31
Discounting of bill is practically speaking lending for exchange at their market rate i.e. it
pays to holder of the bill an amount equal to the face value after deducting interest at the
current market rate for the period. This bill has to be mature. This is the common way used
for keeping a part of assets of the bank in a liquid form.

3.11.3. Agency service

NBP also provides best and unique service to its valued customers. NBP provide the
following agency services to the customers:

i. Collection of dividends

As NBP deals with the purchase and sale of various types of securities, therefore NBP also
provide dividend or interest earned on share or bonds or invested money.

ii. Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National bank of
Pakistan acts as an agent for its customers.

iii. Acting as an agent

NBP also acts as an agent correspondent or representative for its customer at home or
abroad.

iv. General utility services:

Utilities provided by NBP are as follows:

a. Clearance of utility bills

NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone bills
of its customers. For this purpose it also provides evening banking services.

b. Lockers facility

32
National bank of Pakistan also provides locker facilities to its customers to keep their
valuable assets in it. The charges of different size of lockers are different.

c. Acts as a referee

NBP provides useful services to its customers by acting as a referee to their credit
worthiness.

d. Supply of information

NBP provides operational and advisory service for foreign exchange accounts/activities.

3.12 Unmatched Banking Facilities

 Deposit security, Guaranteed by Government of Pakistan.

 Highest rates of return to attract the savings.

 Lowest rates on exports and other borrowings.

 Largest contribution towards Government and Semi-Government requirements.

 Agents of the SBP handling Treasury Functions, receipts of Taxes & other
Revenues.

 Handling of salaries & pensions of federal/provincial/defense personnel.

 Utility Bills collections.

 Hajj arrangements.

 Sale and encashment of prize Bonds.

 Sale and encashment of Defense Savings and Special Savings Certificates.

33
  Safe Deposit Lockers for customers.

 Rational Human Resource Management.

The prestigious periodical “The Banker” UK recognized NBP as the best bank for 2001-
2002 and NBP is the bank of the year for 2003-2004 of Pakistan.

i. AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating
Agency for 2001.

ii. AAA+1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan Credit
Rating Agency for 2002

3.13 NBP at the forefront of Pak-Afghan trade

i. Booth at dry port Peshawar

ii. Booth at Pak Afghan border (Torkham) NWFP

iii. Booth at Pak Afghan border (Chamman).Baluchistan.

iv. Establishing branch at Kabul in near Future.11

34
MISSION STATEMENT

“To make the Bank complete and competitive with all international
Standard in performing, quality of, operations, staff, financial strength. And products and
services to develop a culture of excellence in every spare of activity of the bank4”.

35
CORE VALUE

“The bank will develop the highest standards of integrity, institutionalizing

team work and performance culture, Excellence in serives, advancement of skills for
tomorrow’s challenges and provide awareness of social and community responsibility and
value creation for all stakeholders”.

36
GOALS AND OBJECTIVES

“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 offerings.”7

37
BOARD OF DIRECTORS

TABLE 1

NAME DESIGNATION
Syed Ali Raza Chairman & President

Mian Kausar Hameed Director

Mr. Ibrar A. Mumtaz Director

Mr. Tariq Kirmani Director

Mr. Mohammad Ayub Khan Tarin Director

Mrs. Haniya Shahid Naseem Director

Mr. Ekhlaq Ahmed Secretary Board of Directors

38
 SENIOR MANAGEMENT

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

and controlling performed to determine and accomplish stated objectives with the use of
human being and other resources.8

The management has two types.

1- Centralized.

2 -Decentralized.

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

Organization.

Decentralized disperses decision making and authority throughout and further down the
organizational hierarchy.9

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

NAME DESIGNATION
Qamar Hussain Chief Operating Officer , Credit Management
Group
Dr. Asif A. Brohi SEVP & Group Chief, Operations Group and
Islamic Banking Group
Masood Karim Shaikh SEVP & Group Chief, Corporate &
Investment Banking Group
Ziaullah Khan SEVP , Special Projects

39
Dr. Mirza Abrar Baig SEVP & Group Chief, Human Resources
Management & Administration Group
Amer Siddiqui SEVP & Group Chief, Commercial & Retail
Banking Group
Shahid Anwar Khan SEVP & Group Chief, Overseas Banking
Group
Muhammad Nusrat Vohra SEVP & Group Chief, Treasury Management
Group
Khalid Bin Shaheen SEVP & Group Chief, Remittances
Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection
Group
N. B. Soomro SEVP , Special Projects
Agha Fidaullah EVP/Group Chief, Special Assets
Management Group
Ekhlaq Ahmed EVP & Secretary Board of Directors
Nadeem A. Ilyas EVP & PSO to President , Group Chief (A),
Compliance Group
Atif Hassan Khan Group Chief (A), Information Technology
Group
Aamir Sattar SVP, Divisional Head, Financial Control
Division
Ali Hassan SVP-Head PMO-CBA / Chief Information
Security Officer

ORGANIZATION HIERARCHY IN NBP

40
The organization hierarchies in the NBP From top to bottom are as follows

President

SEVP

EVP

SVP
SEVP

VP

AVP

OG-I

OG-II

OG-III

41
CHAPTER NO 4
SERVICES OF NATIONAL BANK OF PAKISTAN

42
SERVICES
Services are outputs of the firm which are in intangible form.

NBP offers the following services which are as follows.

4.1 DEMAND DRAFTS

If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account
holder of the bank or not, can purchase a Demand Draft from a bank branch.

4.2 SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has
been introduced for speedy services in the area of home remittances. The system has built-
in features of computerized test keys, which eliminates the manual application of tests that
often cause delay in the payment of home remittances. The SWIFT Center is operational
at National Bank of Pakistan with a universal access number NBP-APKKA. All NBP
overseas branches and overseas correspondents (over 450) are drawing remittances through
SWIFT.

Using the NBP network of branches, you can safely and speedily transfer money for our
business and personal needs.

4.3 LETTERS OF CREDIT *

NBP is committed to offering its business customers the widest range of options in the area
of money transfer. If you are a commercial enterprise then our Letter of Credit service is
just what you are looking for. With competitive rates, security, and ease of transaction,
NBP Letters of Credit are the best way to do your business transactions.

4.4 TRAVELER'S CHEQUES

43
Traveler’s cheques are negotiable instruments, and there is no restriction on the period of
validity of the cheques. Rupee traveler’s cheque is available at all 700 branches of NBP.
This can be encashed in all 400 branches of NBP. There is no limit on purchase of this
cheque. It is one of the safest ways for carrying money.

4.5 PAY ORDER

NBP provides another reason to transfer your money using our facilities. NBP pay orders
are a secure and easy way to move your money from one place to another. And, as usual,
NBP charges for this service are extremely competitive. The charges of NBP are very low
all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment
order. And charges Rs 100/- for NBP non-account holders on issuing one payment order. It
charges Rs 25/- for students on payment of fees of educational institutions. If some one
want a duplicate of payment order they charges Rs 100/- for NBP account holders and Rs
150/- for non account holders.

4.6 MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offer the most competitive rates in the market. They charges Rs 50/- exchange rate and RS
75/- postage charges on issuing mail transfer.

4.7 FOREIGN REMITTANCES:

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has
taken a number of measures to:

• Increase home remittances through the banking system

• Meet the SBP directives/instructions for timely and prompt delivery of remittances
to the beneficiaries.

4.7.1 New Features:

44
The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home remittance
services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan
International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

• Zero Tariffs: NBP is providing home remittance services without any charges.

• Strict monitoring of the system is done to ensure the highest possible security.

• Special courier services are hired for expeditious delivery of home remittances to
the beneficiaries.

4.8 SHORT TERM INVESTMENTS

NBP now offers excellent rates of profit on all its short term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are
extremely attractive, along with the security and service only NBP can provide.

National Income Daily Account (NIDA)

The scheme was launched in December 1995 to attract corporate customers. It is a current
account scheme and is part of the profit and loss system of accounts in operation
throughout the country.

4.9.1 Salient Features:

• Rs 2-million is required to open an account and there is no maximum limit.

• Profit is paid on half yearly basis on monthly balances.

• The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2
million to 2,000 million, the rate fluctuates from 1.4 to 1.75

• It is a checking account and there is no limit of withdrawals.

4.9.2 Rates on NIDA

45
 • From Rs 2/- million to Rs 50/- the rate is 1.4%.

• From Rs50/- million but less than Rs 500/-million, the rate is 1.5%.

• From Rs 500/- million but below Rs 1000/- the rate is 1.6%.

• From Rs 1000/- and above the rate is 1.75%.

4.9 QUITY INVESTMENTS

NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant
player in the development of the stock market.

4.10.1 NBP is involved in the following:

• Investment into the capital market

• Introduction of capital market accounts (under process)

NBP’s involvement in capital markets is expected to increase its earnings, which would
result in better returns offered to account holders

4.10COMMERCIAL FINANCE

NBP dedicated team of professionals truly understands the needs of professionals,

agriculturists, large and small business and other segments of the economy. They are the
customer’s best resource in making NBP’s products and services work for them.

4.11RADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.

46
4.11.1 AGRICULTURAL FINANCE

NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who
produce some of the best agricultural products in the World.

4.12.1.1 Agricultural Finance Services:

“I Feed the World” program, a new product, is introduced by NBP with the aim to help
farmers maximize the per acre production with minimum of required input. Select farms
will be made role models for other farms and farmers to follow, thus helping farmers
across Pakistan to increase production.

4.12.1.2 Agricultural Credit:

The agricultural financing strategy of NBP is aimed at three main objectives:-

• Providing reliable infrastructure for agricultural customers

• Help farmers utilize funds efficiently to further develop and achieve better
production

• Provide farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

4.12.1.3 Agricultural Credit (Medium Term):

• Production and development

• Watercourse improvement

• Wells

• Farm power

• Development loans for tea plantation

• Fencing

47
 • Solar energy

• Equipment for sprinklers

4.12.1.4 Farm Credit:

NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis.

• Operating loans

• Land improvement loans

• Equipment loans for purchase of tractors, farm implements or any other equipment

Livestock loans for the purchase, care, and feeding of livestock.

4.12.1.5 Production Loans:

Production loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertilizers, sprayers, etc are all covered under this scheme.

4.12.2 CORPORATE FINANCE

4.12.2.1 Working Capital and Short Term Loans:

NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-

shipment and Post-shipment financing to exporters – Running finance – Cash Finance –
Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-shipment /
Post Shipment Agricultural Production Loans

4.12.2.2 Medium term loans and Capital Expenditure Financing:

NBP provides financing for its clients’ capital expenditure and other long-term investment
needs. By sharing the risk associated with such long-term investments, NBP expedites
clients’ attempt to upgrade and expand their operation thereby making possible the

48
fulfillment of our clients’ vision. This type of long term financing proves the bank’s belief
in its client's capabilities, and its commitment to the country.

4.12.2.3 Loan Structuring and Syndication:

National Bank’s leadership in loan syndicating stems from ability to forge strong
relationships not only with borrowers but also with bank investors. Because we
understand our syndicate partners’ asset criteria, we help borrowers meet substantial
financing needs by enabling them to reach the banks most interested in lending to their
particular industry, geographic location and structure through syndicated debt offerings.
Our syndication capabilities are complemented by our own capital strength and by industry
teams, who bring specialized knowledge to the structure of a transaction.

4.12.3.4 Cash Management Services:

With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s total
financial position right from your desktop computer. They will also be able to take
advantage of our outstanding range of payment, ejection, liquidity and investment
services. In fact, with NBP, you’ll be provided everything, which takes to manage your
cash flow more accurately

4.13 INTERNATIONAL BANKING

National Bank of Pakistan is at the forefront of international banking in Pakistan which is

proven by the fact that NBP has its branches in all of the major financial capitals of the
world. Additionally, we have recently set up the Financial Institution Wing, which is
placed under the Risk Management Group. The role of the Financial Institution Wing is:-

• To effectively manage NBP’s exposure to foreign and domestic correspondence

49
 • Manage the monetary aspect of NBP’s relationship with the correspondents to
support trade, treasury and other key business areas, thereby contributing to the
bank’s profitability

• Generation of incremental trade-finance business and revenues

4.13.1 NBP offers:

• The lowest rates on exports and other international banking products

• Access to different local commercial banks in international banking

4.14 Cash and Gold Finance.

Cash and Gold finance means that loan is given against the gold. The gold is mortgaged
with the bank and loan is taken. It is the area of consumer finance. And borrower can take
loan for common use.

4.15 Advance salary loan:

This loan is given to those people who are govt servants. They can get a loan up to the
salary of fifteen months.

50
51
DEPARTMENTALIZATION

Dividing an organization into different parts according to the functions is called

departmentalization. So NBP Abdullah Pur Hierarchy of the organization is under as
Follows

Organization Hierarchy in National Bank of Pakistan Abdullah Branch.

Branch Manager

Departments

Corporate Banking Credit Sanction Deptt

Credit Deptt
Foreign Trade

Operation Deptt
I.T

Administration Deptt
Agriculture

Finance

52
DEPARTMENTATIONS

NBP have a different department so I am going to expound the performance of the indivual
departments.

5.1 CASH DEPARTMENT

Cash department performs the following functions

5.1.1) Receipt

The money, which either comes or goes out from the bank, its record should be kept. Cash
department performs this function. The deposits of all customers of the bank are controlled
by means of ledger accounts. Every customer has its own ledger account and has separate
ledger cards.

5.1.2) Payments

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

5.1.3) Cheques and their Payment

The Negotiable Instruments. Act, 1881,

“Cheque is a bill of exchange drawn on a specified banker and not expressed to be

payable otherwise than on demand”2.

Since a Cheque has been declared to be a bill of exchange, it must have all its
characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.
Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,
requiring the banker to pay on demand a sum certain in money to, or to the order of, a

53
specified person or to the bearer, and which does not order any act to be done in addition
to the payment of money”3.

5.1.4) the Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements mentioned in Section 6 above the Cheque must have the following.

a) It should be in writing

b) The unconditional order

c) Drawn on specific banker only

d) Payment on Demand

e) Sum Certain in money

f) Payable to a specific person

g) Signed by the drawer

5.1.5) Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no
payee but bearer.

a) The Drawer

b) The Drawee

c) The Payee

5.1.6) Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

54
Bearer cheques are cashable at the counter of the bank. These can also be collected through
clearing.4

b) Order cheque

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

c) Crossed Cheque

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

5.1.7) Payment of Cheques

It is a banker’s primary contract to repay money received for his customer’s account
usually by honoring his cheques. Payment of money deposited by the customer is one of
the root functions of banking. The acid test of banking is the receipt of money etc. from the
depositors, and repayment to them. This paying function is one, which is the distinguishing
mark of a banker and differentiates him from other institutions, which receive money from
the public. However the bankers’ legal protection is only when payment is in ‘Due
Course’. The payment in due course means payment in accordance with the apparent tenor
of the instrument, in good faith and without negligence to any person in possession thereof
under circumstances, which do not afford a reasonable ground of believing that he is not
entitled to receive payment of the amount therein mentioned. It is a contractual obligation
of a banker to honor his customer’s cheques if the following essentials are fulfilled.

a) Cheques should be in a proper form:

b) Cheque should not be crossed:

55
c) Cheque should be drawn on the particular bank:

d) Cheque should not mutilated:

e) Funds must be sufficient and available:

f) The Cheque should not be post dated or stale:

g) Cheque should be presented during banking hours:

5.2 CLEARANCE DEPARTMENT

A clearinghouse is an association of commercial banks set up in given locality for the

purpose of interchange and settlement of credit claims. The function of clearinghouse is
performed by the central bank of a country by tradition or by law. In Pakistan, the clearing
system is operated by the SBP. If SBP has no office at a place, then NBP, as a
representative of SBP act as a clearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The use of
cheques in making payments has also widely increased. The collection as settlement of
mutual obligations in the form of cheques is now a big task for all the commercial bank.
When Cheque is drawn on one bank and the holder (payee) deposits the same in his
account at the bank of the drawer, the mutual obligation are settled by the internal bank
administration and there arises no inter bank debits from the use of cheques. The total
assets and total liabilities of the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same
bank as the drawer. He deposits the cheque with his bank other than of payer for the
collection of the amount. Now the bank in which the cheque has been deposited becomes a
creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by
transferring it from cash reserves if there are no offsetting transactions. The banks on
which the cheques are drawn become in debt to the bank in which the cheques are
deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn
on other banks giving claims of payment by them.

56
5.2.1) In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing The easy, safe and most efficient way is to offset
the reciprocal claims against the other and receive only the net amount owned by them.
This facility of net inter bank payment is provided by the clearinghouse.

The representatives of the local commercial banks meet at a fixed time on all the business
days of the week. The meeting is held in the office of the bank that officially performs the
duties of clearinghouse. The representatives of the commercial banks deliver the cheques
payable at other local banks and receive the cheques drawn on their bank. The cheques are
then sorted according to the bank on which they are drawn. A summary sheet is prepared
which shows the names of the banks, the total number of cheques delivered and received
by them. Totals are also made of all the cheques presented by or to each bank. The
difference between the total represents the amount to be paid by a particular bank and the
amount to be received by it. Each bank then receives the net amount due to it or pays the
net amount owed by it.

. All details of the cheques are recorded in this book.

5.2.2) Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the details of the
cheques that the bank has delivered to other banks.

5.3 ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank.
The major portion of the profit is earned through this department. The job of this
department is to make proposals about the loans. The Credit Management Division of
Head Office directly controls all the advances. As we known bank is a profit seeking
institution. It attracts surplus balances from the customers at low rate of interest and makes
advances at a higher rate of interest to the individuals and business firms. Credit extensions
are the most important activity of all financial institutions, because it is the main source of

57
earning. However, at the same time, it is a very risky task and the risk cannot be
completely eliminated but could be minimized largely with certain techniques.

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

5.3.1) Name and address of the borrower.

a) Existing financial position of a borrower at a particular branch.

b) Accounts details of other banks (if any).

c) Security against loan.

d) Exiting financial position of the company. (Balance Sheet & Income Statement).

e) Signing a promissory note is also a requirement of lending, through this note

borrower promise that he will be responsible to pay the certain amount of money
with interest.

5.3.2) Principles of Advances

There are five principles, which must be duly observed while advancing money to the
borrowers.

Safety

Liquidity

Dispersal

Remuneration

Suitability

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a. Safety

Banker’s funds comprise mainly of money borrowed from numerous customers on various
accounts such as Current Account, Savings Bank Account, Call Deposit Account, Special
Notice Account and Fixed Deposit Account. It indicates that whatever money the banker
holds is that of his customers who have entrusted the banker with it only because they have
full confidence in the expert handling of money by their banker. Therefore, the banker
must be very careful and ensure that his depositor’s money is advanced to safe hands
where the risk of loss does not exist. The elements of character, capacity and capital can
help a banker in arriving at a conclusion regarding the safety of advances allowed by him.

b. Character

It is the most important factor in determining the safety of advance, for there is no
substitute for character. A borrower’s character can indicate his intention to repay the
advance since his honesty and integrity is of primary importance. If the past record of the
borrower shows that his integrity has been questionable, the banker should avoid him,
especially when the securities offered by him are inadequate in covering the full amount of
advance.

It is obligation on the banker to ensure that his borrower is a person of character and has
capacity enough to repay the money borrowed including the interest thereon.

c. Capacity

This is the management ability factor, which tells how successful a business has been in
the past and what the future possibilities are. A businessman may not have vast financial
resources, but with sound management abilities, including the insight into a specific
business, he may make his business very profitable. On the other hand if a person has no
insight into the particular business for which he wants to borrow funds from the banker,
there are more chances of loss to the banker.

d. Capital

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This is the monetary base because the money invested by the proprietors represents their
faith in the business and its future. The role of commercial banks is to provide short-term
capital for commerce and industry, yet some borrowers would insist that their bankers
provide most of the capital required. This makes the banker a partner. As such the banker
must consider whether the amount requested for is reasonable to the borrowers own
resources or investment.

e. Liquidity

Liquidity means the possibilities of recovering the advances in emergency, because all the
money borrowed by the customer is repayable in lump sum on demand. Generally the
borrowers repay their loans steadily, and the funds thus released can be used to allow fresh
loans to other borrowers. Nevertheless, the banker must ensure that the money he is
lending is not blocked for an undue long time, and that the borrowers are in such a
financial position as to pay back the entire amount outstanding against them on a short
notice. In such a situation, it is very important for a banker to study his borrower’s assets to
liquidity, because he would prefer to lend only for a short period in order to meet the
shortfalls in the wording capital. If the borrower asks for an advance for the purchase of
fixed assets the banker should refuse because it shall not be possible for him to repay when
the banker wants his customer to repay the amount. Hence, the baker must adhere to the
consideration of the principles of liquidity very careful.

f. Dispersal

The dispersal of the amount of advance should be broadly based so that large number of
borrowing customer may benefit from the banker’s funds. The banker must ensure that his
funds are not invested in specific sectors like textile industry, heavy engineering or
agriculture. He must see that from his available funds he advances them to a wide range of
sector like commerce, industry, farming, agriculture, small business, housing projects and
various other financial concerns in order of priorities.

Dispersal of advances is very necessary from the point of security as well, because it
reduces the risk of recovery when something goes wrong in one particular sector or in one
field.

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g. Remuneration

A major portion of the banker’s earnings comes form the interest charged on the money
borrowed by the customers. The banker needs sufficient earnings to meet the following:

a) Interest payable to the money deposited with him.

b) Salaries and fringe benefits payable to the staff members.

c) Overhead expense and depreciation and maintenance of the fixed assets of the
bank.

d) An adequate sum to meet possible losses.

e) Provisions for a reserve fund to meet unforeseen contingencies.

f) Payment of dividends to the shareholders.

h. Suitability

The word “suitability’ is not to be taken in its usual literary sense but in the broader sense
of purport. It means that advance should be allowed not only to the carefully selected and
suitable borrowers but also in keeping with the overall national development plans chalked
out by the authorities concerned. Before accommodating a borrower the banker should
ensure that the lending is for a purpose in conformity with the current national credit policy
laid down by the central bank of the country.

5.3.3 Forms of Loans

In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the
form of cash finance, overdrafts and loans. NBP provides advances to different people in
different ways as the case demand.

a) Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.

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In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending due
to the facility of paying markup/services charges only on the amount he actually utilizes.

If the borrower does not utilize the full limit, the banker has to lose return on the un-
utilized amount. In order to offset this loss, the banker may provide for a suitable clause in
the cash finance agreement, according to which the borrower has to pay markup/service
charges on at least on self or one quarter of the amount of cash finance limit allowed to
him even when he does not utilize that amount.

b) Overdraft/Running Finance

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance
which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called “Secured Overdraft” and when the borrowing customer
cannot offer any collateral security except his personal security, the accommodation is
called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis, while an overdraft is a temporary accommodation occasionally resorted to.

c) Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a “loan”. When bankers
allow loans to their customers against collateral securities they are called “secured loans”
and when no collateral security is taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed
upon, and the borrowing customer has to pay interest on the entire amount. Thus the

62
borrower gets a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security

5.4 REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This department deals
with either the transfer of money from one bank to other bank or from one branch to
another branch for their customers. NBP offers the following forms of remittances.

a) Demand Draft

b) Telegraphic Transfer

c) Pay Order

d) Mail Transfer

5.4.1) Demand Draft

Demand draft is a popular mode of transfer. The customer fills the application form.
Application form includes the beneficiary name, account number and a sender’s name. The
customer deposits the amount of DD in the branch. After the payment the DD is prepared
and given to the customer. NBP officials note the transaction in issuance register on the
page of that branch of NBP on which DD is drawn and will prepare the advice to send to
that branch. The account of the customer is credited when the DD advice from originating
branch comes to the responding branch and the account is debited when DD comes for
clearance. DD are of two types.

a) Open DD: Where direct payment is made.

b) Cross DD: Where payment is made though account.

NBP CHARGES FOR DD5

I. Up to Rs. 50,000/- is Rs 50/- only

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II. Over Rs. 50,000/- is 0.1%

5.4.2) Pay Order

Pay order is made for local transfer of money. Pay order is the most convenient, simple
and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay order
from the account holder and Rs. 100 from a non-account holder.

5.4.3) Telegraphic Transfer

Telegraphic transfer or cable transfer is the quickest method of making remittances.

Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to
the specified person. The customer for requesting TT fills an application form. Vouchers
are prepared and sent by ordinary mail to keep the record. TT charges are taken from the
customer. No excise duty is charged on TT. The TT charges are:

Telegram/ Fax Charges on TT = Actual-minimum Rs.125.

Cable telegram transfer costs more as compared to other title of money. In cable transfer
the bank uses a secret system of private code, which is known to the person concerned with
this department and branch manager.

5.4.4) Mail Transfer

When the money is not required immediately, the remittances can also be made by mail
transfer (MT). Here the selling office of the bank sends instructions in writing by mail to
the paying bank for the payment of a specified amount of money. Debiting to the buyer’s
account at the selling office and crediting to the recipient’s account at the paying bank
make the payment under this transfer. NBP taxes mail charges from the applicant where no
excise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/- if
sent by registered post locally Rs.40/- if sent by registered post inland on party’s request.

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5.5) DEPOSIT DEPARTMENT: -

It controls the following activities:

a) A/C opening.

b) Issuance of cheque book.

c) Current a/c

d) Saving a/c

e) Cheque cancellation

f) Cash

5.5.1 Account opening

The opening of an account is the establishment of banker customer relationship. Before a

banker opens a new account, the banker should determine the prospective customer’s
integrity, respectability, occupation and the nature of business by the introductory
references given at the time of account opening. Preliminary investigation is necessary
because of the following reasons.

i. Avoiding frauds

ii. Safe guard against unintended over draft.

iii. Negligence.

iv. Inquiries about clients.

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

• Formal Application

• Introduction

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• Specimen Signature

• Minimum Initial Deposit

• Operating the Account

1. Pay-In-Slip Book

2. Pass Book

3. Issuing Cheque Book

a) Qualification of Customer

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

• He must be of the age of majority.

• He must be of sound mind.

• Law must not disqualify him.

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

• Not expressly declared void.

b) Types of Accounts

Following are the main types of accounts

1) Individual Account

2) Joint Account

3) Accounts of Special Types

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  Partnership account

 Joint stock company account

 Accounts of clubs, societies and associations

 Agents account

 Trust account

 Executors and administrators accounts

 Pak rupee non-resident accounts

 Foreign currency accounts1

5.5.2 Issuing of cheque book:

This deptt issue cheque books to account holders.

Requirements for issuing cheque book

a) The account holder must sign the requisition slip

b) Entry should be made in the cheque book issuing book

c) three rupees per cheque should be recovered from a/c holder if not then debit his/her
account.

5.5.3 Current account

These are payable to the customer whenever they are demanded. When a banker accepts a
demand deposit, he incurs the obligation of paying all cheques etc. drawn against him to
the extent of the balance in the account. Because of their nature, these deposits are treated
as current liabilities by the banks. Bankers in Pakistan do not allow any profit on these
deposits, and customers are required to maintain a minimum balance, failing which

67
incidental charges are deducted from such accounts. This is because the depositors may
withdraw Current Account at any time, and as such the bank is not entirely free to employ
such deposits.

Until a few decades back, the proportion of Current Deposits in relation to Fixed Deposits
was very small. In recent years, however, the position has changed remarkably. Now, the
Current Deposits have become more important; but still the proportion of Current Deposits
and Fixed Deposits varies from bank to bank, branch to branch, and from time to time.

5.5.4 Saving account

Savings Deposits account can be opened with very small amount of money, and the
depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate
calculated on six-month basis under the Interest-Free Banking System. There is no
restriction on the withdrawals from the deposit accounts but the amount of money
withdrawn is deleted from the amount to be taken for calculation of products for
assessment of profit to be paid to the account holder. It discourages unnecessary
withdrawals from the deposits.

In order to popularize this scheme the State Bank of Pakistan has allowed the Savings
Scheme for school and college students and industrial labor also. The purpose of these
accounts is to inculcate the habit of savings in the constituents. As such, the initial deposit
required for opening these accounts is very nominal.

5.5.5 Cheque cancellation:

This deptt can cancel a cheque on the basis of;

a) Post dated cheque

b) Stale cheque

c) Warn out cheque

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 d) Wrong sign etc

5.5.6 Cash

This deptt also deals with cash. Payment of cheques, deposits of cheques etc.

5.6 FOREIGN EXCHANGE/DEPARTMENT:

This deptt mainly deals with the foreign business. The main functions of this deptt are:

a) L/C dealing.

b) Foreign currency accounts dealing.

c) Foreign Remittance dealing.

5.6.1 L/C dealing

NBP is committed to offering its business customers the widest range of options in the area
of money transfer. If you are a commercial enterprise then our Letter of Credit service is
just what you are looking for. With competitive rates, security, and ease of transaction,
NBP Letters of Credit are the best way to do your business transactions

. 5.6.2 Foreign currency account dealing:

This deptt deals with the foreign currency accounts which mainly include dollar account,
euro account etc.

5.6.3 Foreign Remittance dealing.

This is very important function of this deptt.

B) DEPARTMENTATION OF ABDULLAH PUR BRANCH FSD

Dividing an organization into different parts according to the functions is called

departmentalization. So NBP Abdullah pur Branch FSD. This branch is divided into two
main parts.

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 1 Cash Department

2 General Banking Department

Cash Department

Cash department is mainly deals with the cash.Mr Nizami is the head of this
department and Ahmed Nawaz is a cashier.

To facilitate people in the payments of their bills and taxes and repayments of cash”

There are two main functions of cash department.

i. Payment ii. Receipts

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

ii. Receipts mean collection of utilities bills, taxes etc.

General Banking

In this section of the bank the general banking function is performed. It is divided
into five departments.

i. Remittances Department.

ii. Computer Department.

iii. Advances Department.

iv. Clearing Department.

v. Establishment Department

Remittance Department

Remittance department is actually deals with the demand draft, Mail transfer,
Telephonic transfer, payment order etc.in NBP Abdullah pur branch FSD. Mr. Shahid
Shabir control and manage all the matters of this department.

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Advances Department

Every bank has a department which advances money to borrowers. In NBP AbdullahPur
branch the advances department is head by the Business Manager and Operation Manager
Ahmed jabber& Faisal iqbal both of them are very competent in his field .The function of
this department is

“To facilitate people by giving short term and long term loans on easy terms and
conditions”.

The main function of this Department is to take surplus money from the people at
low rates and lend this money to borrowers at high rates to earn profit.

Clearing Department:

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

Pakistan for the purpose of interchange and settlement of credit claims.

In NBP Abdullah Pur FSD Branch this department is headed by Muhammad sultan
experience of about five years. The objective of this department is to

“To facilitate customers for payment their Cheques of other banks”.

Two type of clearing books are maintained.

i. In word clearing books:

The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing. All detail of the cheques are recorded in this
book.

ii. Out word clearing book:

The bank uses outward clearing register for the purpose of recording all the details of
the cheques that the banks have delivered to other banks.

Computer Department:

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This department headed by the accountant Hafiz Faiz is performing the real function.

The objective of this Department is to facilitate customers in payment of their cheques”.

The main functions performed by this department are:

a) Checking balance.

b) Deduction from balance on clearing cheques.

c) Issuing bank statements.

d) Dealing Western Union.

5.2.5 Establishment Department:

NBP AbdullahPur Branch FSD Branch having an Establishment Department. This

Department consists of only one person Haji Abdul Rasheed is a very experienced person
and he has a more than thirty years experience about the banking.

The main function of this department is

“To regulate bank business”.

Main functions of this department are:

a) Keeps the record of attendance of employees.

b) Employee’s salaries distribution.

c) Employee’s bonuses etc.

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73
 6.1 HUMAN RESOURCE MANAGEMENT

Human Resource plays a vital role in the success of every service organization. They
interact between man and machine. Their attitude can win or loose the customer. The
positive attitude could only be created in a conducive environment, which can make the
staff dedicated towards the organization and its objectives. In reality the man is more
important than machine as it is the human which could get maximum out of machine to
keep a happy customer. However, most organizations give little importance to this very
important asset.

Various aspects related to human resource of National Bank of Pakistan are critically
examined in the following text:

6.2 HUMAN RESOURCE STRUCTURE

Vice President

Manager Compensation Manager People and Manager Labor Relation

organization deveopment

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6.2 HR Mission:

Provide more talented Human Resource in all NBP functional areas in relation to
competition keep motivated all the employees and maintain total industrial harmony.

6.3 Our Values:

We believe that;

• People make the organization

• People collectively yield results
• People have ambitions and aspirations to be distinguished and rewarded
• People form the human capital to be developed and invested in

6.4 HR Forum:

6.4.1 Employee Communication Programme

Employee Communication is considered a vital tool for employee motivation and

promoting their commitment and loyalty with the organization. It also helps the
organization to get the employee feedback on important matters.

Employee Communication Program has been developed to keep our employees informed
about the Bank's products and services, prudential regulations, system and controls,
compliance of standard procedure and regulatory requirements, customer service requisites
as well as technological developments particularly automation in banking functions.

6.5 INDUCTION OF MANAGEMENT TRAINEE

For NBP the dedicated, hardworking staff is one of the key strengths of the bank. NBP has
been investing in developing this valuable resource through need based training and career

75
growth development. Our HR objective is to become an employer of choice and to
maintain complete industrial harmony within the institution.

Our new hiring of top class MBAs as Management Trainee Officers (MTOs) and search
for talent within the bank has helped in preparing second and third tier leadership lines
which will shape our succession planning process and at the same time will ensure that
with the passage of time our employee refinement and skill enrichment program continues.
We also have started new ‘Employee Communication Program' and internal organizational
magazine to improve the interaction of top and middle level management with the lower
management. Female employees are being encouraged through female empowerment
program under which they are given responsible and challenging assignments. Currently
over 60 females are employed as branch managers all over the country and some females
hold senior management positions.

6.6 JOB FOR LIFE

Like the employee of public sector organizations in Pakistan, the employees of NBP also
enjoy their job for life. Since there is no risk of early retirement or redundancy in rank,
they do not perform with their full potentials. This is one redundancy in rank, they do not
perform with their full potentials, and this is one of the reasons responsible for the low
productivity of the employees of the Bank.

6.6 Selection & Recruitment

Although the Bank believes in merit but in practice the selection of employees is not done
on merit. Most of the employees are low educated. This shows that candidates with some
strong family background or political pressure are given preference in recruitment and
qualified candidates are sometimes left behind.

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 Selection and Recruitment Process:

The selection and recruitment of the employees are as follows. This process makes an
understanding about the functioning of the Human resource department.

Preliminary Entry Test Preliminary interview Human Resource

Screening by Software and initial interview selected candidate Interview

Final Panel /Group

Interview

Selection & Offer

6.8 Performance Appraisal

The performance of employees of the Bank are appraised though their annual confidential
reports at the end of each year. This has become an outdated method of performance
appraisal and no longer used due to the following reasons:

i. The performance of employees is evaluated after quite a long time.

ii. Element of subjectivity is involved in this method.

iii. Employee’s participation is not ensured in the process of evaluation.

Objectives of employee’s are not quantified

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78
Chapter #7

SWOT ANALYSIS

SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and
threats SWOT analysis is careful evaluation of an organization’s internal strengths and
weakness as well as its environment opportunities and threats.

“SWOT analysis is a situational which includes strengths, weaknesses, opportunities and

threats that affect organizational performance.”1

“The overall evaluation of a company strengths, weaknesses, opportunities and threats is

called SWOT analysis.”2

In SWOT analysis the best strategies accomplish an organization’s mission by:

1. Exploiting an organizations opportunities and strength.

2. Neutralizing it threats.

3. Avoiding or correcting its weakness.

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

7.1 STRENGTHS:

7.1.1 OLDEST INSTITUTION:

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NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its customer
base is strength from this plus point as customers have more confidence in the bank. The
additional value services as the privilege for the bank.

7.1.2 ALTERNATE DUTIES IN THE ABSENCE OF SBP

The NBP performs additional services for its customers as well as the other bank customer
in the absence of SBP.

7.1.3 MORE DEPOSITS THAN OTHER BANK

NBP has the relative competence in having more deposits than the other bank. This is
because of the confidence the customer have in the bank. The bank being the privileged
and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.

7.1.4 EMPLOYEE BENEFITS

The employers at NBP are offered reasonable monetary benefit. Normally two bonuses are
given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and competency
for the bank and a source of motivation for the employees.

7.1.5 BROAD NETWORK

The bank has another competency i.e. it has broad-basses network of branches throughout
the country also more than one branch in high productive cities. The customers are
provided services at their nearest possible place to confirm customer satisfied.

7.1.6 STRICTLY FOLLOWED RULES &REGULATION:

The employees at NBP are strict followers of rule & regulation imposed by bank. The
disciplined environment at NBP bolsters its image and also enhances the over all out put of
the organization.

7.1.7 PROFESSIONAL COMPETENCE

The employees at NBP here have a good hold on their descriptions, as they are highly
skilled Professionals with back ground in business administration, banking, economics etc.

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These professional competencies enable the employees to understand and perform the
function and operation in better way

7.1.8 HEALTHY ENVIROMNMENT

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

7.1.9 RELATION BETWEEN STAFF AND OTHER EMPLOYESS

The bank enjoys a good plus point when it comes to the employee manager relationship the
hearing as removing of discrepancies if any, between the employees, and between the
manager and employees.

7.2 WEAKNESSES

7.2.1 LACK OF MARKETING EFFORT:

The bank does not promote its corporate image, services, etc on a competitive way. Hence
lacks far behind in marketing effort .A need for aggressive marketing in there in the era
marketing in now becoming a part of every organization.

7.2.2 NBP UNDER POLITICAL PRESSURE

The strong political hold of some parties and government and their dominance is affecting
the bank in a negative way. They sometime have to provide loan under the pressure, which
leads to uneven and adjusted feeling in the bank employees.

7.2.3 FAVORITISM AND NEPOTISM

The promotions and bonuses etc in the bank are often powered by senior’s favoritism or
depends upon their wills and decision. This adds to the negative factors, which denominate
the employees thus resulting in affecting their performance negatively.

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7.2.4 LACK OF FINACIAL PRODUCT

The bank falls far behind when the innovative and new schemes are considered. It has not
been involved in the tug of war between the competitors to the accounts and strengthens
the existing customer base. This stands out to be the major incompetence and weakness of
the banks.

7.2.5 INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS

During the rush hours, the bank is founded out to be a total flop to handle the mob of
people peaking from windows and doors. The bank has deficiency to operate in the stages
of rush hours where the people find them services entangled in a situation of nowhere
because they are not well served.

7.2.6 LACK OF COMPUTERIZED NETWORK

The bank lack the strength of being powered by the network of computers, which have
saved time, energy and would have lessened the mental stress, the employees have
currently. This would add to the strength if it were powered by network of computers.

7.2.7 LACK OF MODERN EQUIPMENT

The bank lacks the modern Equipment that is note counting machine computers. Even if
there is any equipment they lack to fall in the criteria of being rearmed as update and
upgraded

7.2.8 UNEVEN WORK DISTIBUTION.

The workload in NBP is not evenly distributed and the workload tends to be more on some
employees while others abscond away from their responsibilities, which server as a
demotivation factor for employees performing above average work.

7.3 OPPORTUNITIES

7.3.1 ELECTRONIC BANKING

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The world today has become a global village because of advancement in the technologies,
especially in communication sector. More emphasis is now given to avail the modern
technologies to better the performances. NBP can utilize the electronic banking
opportunity to ensure on line banking 24 hours a day. This would give a competitive edge
over others.

7.3.2 MICRO FINANCING

Because of the need for micro financing in the market, there are lot of opportunities in this
regard. Other banks have already initiated, now the time has arrived when the NBP must
realize it and take on step to cater an ongoing demand.

7.4 THREATS

7.4.1 EMERGENCE OF NEW COMPETITORS

The bank is facing threats with the emergence of new competitors especially in terms of
foreign banks. These foreign banks are equipped with heavy financial power with
excellent and innovative ways of promoting and performing their services. The bank has
to take initiative in this regard or will find itself far back in competition.

7.4.2 POLITICAL PRESSURE BY ELECTED GOVERNMENT

The ongoing shift in power in political arena in the country effects the performance of the
bank has to forward loans to politically powerful persons which create a sense of insecurity
and demoralization in the customer as well as employees.

7.4.3 DOWNSIZING

The bank is currently acting upon the policy of downsizing which threaten the environment
of the bank Employees feel insecurity in doing their jobs and work, hence affecting the
over all performance of employees negatively.

7.4.4 CUSTOMERS COMPLAINTS

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There exists no regular and specific system of the removal of customer complaints. Now a
day a need for total customer satisfaction is emerging and in their demanding
consequences customer's complaints are ignored

7.5 COMPETITIVE ANALYSIS

Porter’s five forces model: 3

This approach is widely used for competitive analysis. It is because of the high intensity of
competition among companies there five main competitive forces.

7.5.1 Rivalry among competitive firms:

It is a very powerful force among the competitive forces the strategies pursued by one
firm can be successful only to extent that they provide competitive advantages over the
competitor. These competitive strategies may be lowering prices, best quality series.
The NBP offering very low charges an demand draft, telegraphy transfer, mail transfer
and give other additional services to the customers and to the Nation. Because NBP is a
“Nation’s Bank”.

7.5.2 Potential entry of new competitors:

Whenever new firms ca easily enters a particular industry, the competition increases.
The gout restriction, tariffs, patents etc can stop new firm to enter into the business as
per Banking industry is concerned this market is already very situated in Pakistan and
there are banks with quality services and low charges. So there is no threat to NBP
from potential entry and NBP is also a public sector bank because of that no other new
bank not takes over it.

7.5.3 Potential Development of substitute products:

This is the third factor affecting the competitions. There may be some other product
can be substitute the product of that industry. For example banks offering sawing
schemes in Pakistan and these schemes are also offered by GPOs in Pakistan so they
must compete them in this field. If they offer low rates than GPOs so people will go to

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 deposit in GPOs. People concentration high rates so that’s why sawing PLS accounts
are more then current accounts. The next examples will ATM which substitute
presenting cheques at counter and encash it. The NBP is lacking in this field. It must
improve in this field to compete the competitors.

7.5.4 Bargaining Power of Suppliers:

The bargaining power of supplier affects the intensity of competition, especially when
there are a large number of suppliers. In case of banks the suppliers are customers they
supply the money to banks. Now they must offer good services, quality, and safety.
Low charges etc to customers. In this field NBP is very good. B/C at offers good
quality services to customers. They charge low charges on remittances. So that’s it is
competitions other banks.

7.5.5 Bargaining Power of Consumers:

When customers are concentrated or large, or buy in volume, their bargaining power
represents a major force affecting intensity of competition. Now the number customers in
Pakistan for banks are very high. Banks offering variety of products and services to their
customers. NBP have a large number of customs. Now it must offer good services and
products to their customers to attract them to come to NBP.

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CHAPTER NO 8

GENERAL OBSERVATION

I have divided general observation in four parts. Which are as under. This analysis is
mainly based on my general observation.

• Problems at the branch.

• Function analysis.

• Administrative analysis.

• Personal management’s analysis.

PROBLEMS AT THE BRANCH

8.1.1 Customer Satisfaction

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

8.1.2 Poor record management and filing system

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

8.1.3 Unequal distribution of work

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Work is not equally distributed. On one hand some employee have to work all day without
relaxing while some others have nothing to do at all. This not only creates confusion
among employees but also hurting and disturbing for overall setup of the bank. And above
all it results in dissatisfaction among customers as well.

Marketing visits

A useful mode of contact is through personal marketing visits. Such visits are important in
informing and perusing the existing and potential customers about the products and
creating a sense of belongingness with them.

8.2 FUNCTIONAL ANALYSIS

8.2.1 Formal Organization

Formal organization includes the activities of two or more person, which are cautiously
determined groups and coordinated towards a given objective. It provides base when
people are able to communicate with other, when they have common purpose and they are
willing to work.

In NBP, we find a formal organization. Bernard referred to an organization as a formal

when the activities of two or more persons are coordinated towards a given objective. The
formal organization comes into being when people are able to communicate with one
another or willing to act and share a purpose.

In this formal organization of NBP the activities are carried out in a more formal way. In
theoretical terms it provides basis for communication with one another but in practice it is
not exercised because an employee at high level cannot get straight away to manager or
SVP and ask him about of his problem faced by him, because first he has to talk to his
immediate superior and follow a proper channel of communication.

8.2.2 Difference between theory and practice

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A vast difference exists between theory and practice and NBP has written procedure but
practical work done by employees is a bit different from written procedures.

8.2.3 Bank duty to maintain secrecy.

They don’t care about maintaining secrecy, especially during the rush hours. They speak
loudly about the account position and while getting clearance of cheque the person can
easily get the whole information from the ledge. The deposit clerk must be careful while
passing any cheque. In this regard another shortfall is in giving the information about the
balance on telephone.

8.2.4 Excessive paper work

It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology.

8.2.5 More accounts fewer deposits.

Efficient banking is one which does not emphasize on number of accounts but on greater
amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide
personalize service to all the account holders and does not improve its quality and services

8.2.6 Delegation of authority

Manager has very limited authority; he has to take the approval from his management
authority i-e. In case of advance he has to take the approval of general and regional
manager. The other problem is created, when the manager is not present in his office, the
customer have to wait for hours. This discourages both customer and officers because they
have to suffer a lot

8.3 ADMINISTRATIVE ANALYSIS

8.3.1 Job analysis is not effective

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Only on the basis of job analysis it can be decided how a right person can be hired, trained,
compensated or promoted. It is very important for an organization that nature of the job is
described and job specifications are mentioned. Most of the employees are simple graduate
and do not have proper background about their job. This creates problems both for
organization and for the employees. In NBP salaries are given according to the seniority
and grades. People with simple or complex responsibility are getting the same salary and
facilities. This creates dissatisfaction among employees.

8.3.2 Carelessness in opening of account

When customer comes to open an account, the staff does not bother to check his/her place
phone number and permanent address. It is important because in case of overdraft by
mistake or anything which places his account in debit it will be difficult to trace him. On
the other hand he may be involved in any fraudulent activities against the bank. In this case
the bank will be in awkward position.

8.3.3 Lack of specialized training

NBP does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted into
a specific field without having great deal of knowledge about the field.

In the AbdullahPur Branch FSD branch the newly recruited employee training was not
imparted, they all learned things on the job.

8.3.4 Low Profit Rates

Most of the customers shifted their account to the National Saving Center because of the
low rates of saving deposit discourages the customers. Bank should increase their profit
rates to attract customers.

8.3.5 Poor job rotation.

There is absence of job rotation in NBP AbdullahPur Branch FSD branch. A person placed
in one department remains their forever. It reduces career opportunities as well boredom

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and in the end results in career platueing. Job rotation is very important for employee
especially for those who are newly recruited. The newly recruit should be rated in all
department of the banking in order to get familiar with working of different departments so
that when they get a responsible position they have know how of the whole system.

8.3.6 Delays in Loan Advancement

It has been observed that there are delays in sanctioning of cases form the head office,
which results in customer dissatisfaction.

8.3.7 Lack of appreciation

Another very important thing which is ignored in the bank is appreciation if the employee
on their good performance. If hard work and performance of employees is not recognized
and appreciated they become dishearten which results in decline in performance.

8.4 PERSONAL MANAGEMENT ANALYSIS

8.4.1 Need for better training program

Need of training is greatly emphasized all around the world. Training of the personnel is
part of human resource management. It has been noticed that the training program of NBP
is not adequate.

Once the candidate is selected and placed on the respective job. It becomes essential to
train him adequately for the task. They should learn new methods for motivating
customers. The training programmed of the bank should include scientific techniques to
improve the decision making and interpersonal as will individual needs of the employee
both specialized to fresh as well as on job to maintain the high standards of service.

8.4.2 Developing Managerial Leadership

Leadership is a practical term of visible, clear on objective and communicating better

control on financial and administrative matters. Manager is not only responsible for their
own units in business, but also in people terms i.e. training, recruiting, grievance handling

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and taking immediate initiative in crisis situation to take major decision affection the future
of the bank and banking community.

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8.4.3 Recruitment policy

Human resources are the lifeblood of the organization. If the personnel are recruited
carefully they can become asset to the organization in the case of carelessness a liability on
the organization. Bank is not following its recruitment policy properly due to favoritism,
nepotism and political pressure. Both the top authority and staff union tries their best
recruit their favorites, indulgence of political pressure add salt to the wounds. The persons
selected through these channels are infantile and do not work for the betterment for the
bank.

8.4.4 Promotions

Promotion in NBP is purely on the basis of seniority, so the new young person having high
qualification remains behind for quite a lot of time. Top management and staff union put
pressure for the promotion of their favorites, which gives a sense of deprivation to the
deserving employee and their efficiency is affected. As the concept of promotion is
attached with better in terms of greater responsibility, more prestige, greater skills and
increased rate of salary. Thus a better and impartial policy of promotion needs to be
followed.

8.4.5 Transfer

Transfer means when a person is shifted from one place to another place. It is done either
that person is needed more on the other branch or for improving his skill variety. It is the
policy of the Bank to transfer each employee 3 to 4 years.

8.4.6 Marketing at desk

Bank employee come in daily contact with many people who happen to deal with the
casual remittance, travelers cheques, safe custody, pensioners, depositing license fee and
variety of other functions and variety of other people with whom the Bank has no account
or regular business relationship. The Bank employees are doing very little on their own to
explore the possibilities of selling banking services to them as a marketing contributor. The
entire Bank community should make a conscious effort in addition to their normal work to
explore the possibilities of selling banking services to them. The market opportunities are
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hidden in every dealing a banker handles; the question is that if he has the art and urge to
seize such opportunities.

8.4.7 Lack of business communication

There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc containing information in details.

Some general information should be placed in information notice board on the entrance
where customer can see it easily or it should be self-attractive.

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Chapter # 9

GENERAL RECOMENDATIONS

NBP is an effectively operating and profit making organization and carrying out its
activities under a specified system of procedure. The main regulatory body is State Bank of
Pakistan, which provides policy guidelines and ensures that the money market operates on
sound professional basis. While the head office specifies the whole procedure of function
and operations. This procedure has been modernized with the passage of time with a view
to streamline the approach and underlying procedure for effective overhauling of its own
capabilities so as to bring them at par with international practices.

Here I am giving some suggestions, which in my view can add some input for efficiency
and better performance of NBP as an organization in general and AbdullahPur in Particular

The recommendations are as follows:

10.1 Professional training

NBP staff lacks professionalism. They lack the necessary training to do the job efficiently
and properly. Although staff colleges in all major cities but they are not performing well.
For this purpose these staff colleges should be reorganized and their syllabus should be
made in such a way to help the employee understand the ever changing global economic
scenario.

Banking council of Pakistan should also initiate some programs to equip the staff with
much needed professional training.

9.2 Delegation of authority

Employees of the bank should be given a task and authority and they should be asked for
their responsibility.

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9.3 Performance Appraisal

The manager should strictly monitor the performance of every staff member. All of them
should be awarded according to their performance and result in the shape of bonuses to
motivated and incite them to work more efficiently.

9.4 To Over Come Problem of Space and Furniture

In the critical analysis this, problem is discussed. To overcome this problem it is suggested
that a special section should be made inside the branch. Which should only handle the
treasury function, salaries and pensions of federal personnel or the bank should do these
functions in the evening time. Also management should purchase more furniture and
arrange them in such a way which provides maximum space and convenient specially in
deposit department and there should also be convenient sitting place for customers.

9.5 Transfer

Transfer is not properly carried out. Some of the employees are continually serving at the
same post. They are simply rotated at the same branch. Therefore it is recommended that
evenly rotation of every employee should take place after every three years in different
braches of the bank.

9.6 Changes in Policies

There should not be any abrupt policies change by the upper management, as this practice
hurts the customer confidences in the bank. Government should make long term policies.

9.7 Need of Qualified Staff

Required, qualified staff should be provided to branch in order to improve the functioning
of the branch. Especially a telephone operator should be appointed.

9.8 Utility Bill Charges

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job despite
this working resulting in a loss to then Rs 3 to5 per transaction. These charges should be

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increased to RS 10 per bill to enable the branch to cover their handling costs and make
some profit.

9.9 Link with the Head Quarter

100 major branches of NBP should established a direct link with the, head quarter

In Karachi, through Internet or Intranet. This will make the functions and decision making
of the management easier and convenient.

9.10 Credit Card

National bank of Pakistan should start its operation in credit card. These cards are very
helpful for the ordinary customer in general and the business people in particular. To make
it mores secure and to eliminate the misuse of it, the management is required to keep
proper security against the card.

9.11 Installing Validator and ATM

Validator machine is used to count the currency notes and its installation will help to
eliminate to counting errors and will save time.

This branch is situated in the City, which is supported to be the hub of business activates.
In this area an auto teller machine (ATM) is the need of the hour businessmen can easily
check their balance in the bank and also with draw their money conveniently.

9.12 Interest on Overdraft:

Overdraft is a short-term credit facility provided by the bank to its trustworthy customers
free of interest. Only bank commission is charge small amount of mark-up on the
overdraft, which will help the bank to improve its revenue position.

9.13 Clean Loans

Clean loan or clean overdraft is the credit facility extended to the customers to the
customers without any security. These types of small term loans should not be extended to

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anybody, because sometime these loans are provided to blue-eyed people of the
management and they become a part of bad debts.

9.14 Cash Financing

In this mode of financing the amount of credit not utilized by the borrower is remained tax-
free. It is recommended that a small amount of interest should be charge on this amount as
well because the bank gas kept-aside the amount for that borrower and can not advance it
anywhere.

9.15 Decreasing Administrative Expenses

Bank should their administrative expenses. This was Rs 8 billion in the year 2000. That
can be done by lying off the surplus pool of employee with golden handshakes scheme.
The branches that are not much used could also be closed. Employee can also be how to
control the bank expenses. That will give positive results in the future.

9.16 Needs to be Flexible in credit Policy

As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces
the investment opportunities. Also loans should be given to the small businessmen and the
agriculture sector at the low markup rate. It should adopt flexible credit policy while giving
credit to the agriculture sector.

9.17 Technological Advancement

I would like to suggest that at least all the main branches of NBP should be fully
computerized in order to expedite the dealing process among bankers and their customers.
Every department should be provided a computer with adequate training (especially
Advances, Deposits and Foreign Exchange departments).

Daily records should be entered directly into these computers, (instead entering the overall
daily transactions after the banking hours). It will not only reduce transaction time, will
increase accuracy but will also be efficient as well.

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Not only it will be economical but will also reduce the extra burden of work of the bank. It
will also help in reducing the use of excessive paper work.

9.18 Staff Relationship

Good relationship among staff member leads to the peak performances in any organization.
I observed that the staff relationship was normal other wise but some time I noticed that
there existed a little conformity among the staff members. Another syndrome from which
the staff suffered was that all of them considered themselves more important than others.
Some of the officers used to say that if I am absent for a day the bank would stop working.
So this sort of attitude is not good because it mars bank image and juniors’ willingness
learn and work hard and in the end will hurt the whole team.

9.19 Improper Distribution of Work

Proper distribution work leads to success in every organization. Proper distribution of work
prevents the employee from over and under work situation. So for a smooth running of an
organization proper distribution of work is the hint to be followed.

During my internship I observed that there was no proper distribution of work in the bank.
I saw that some of the employee worked like ants other sat idle starting here and there. So
this created a lot of over work situation for while relaxation for other.

9.20 Favoritism and nepotism

In the City branch during my internship I saw that when some of the employees are
transfer to other places, due to their relation with influential people and with top
management they can cancel their transfer in few weeks, when they are unsatisfied at that
place.

So I suggest that in the organization there should be no favoritism, nepotism and politics
and their transfer and promotion should be made on merit and according to the rules and
regulations of the bank and provided favorable environment to the employee to show their
performances.

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9.21 Inter Departmental Transfer

I watched during my internship that, there is number of employee who have worked on one
seat for many a year. It can have negative effects motivation of employee who is hard
working and intelligent. Take the example of advances section. In advance section if the
employee is transfer after sixth month or seven month, how can he be able to show his
performances and how can he be able to know the bank customer in a short period of time.

9.22 Foreign currency Account

For the internship the place I have selected was Abdullah pur branch, which is my
forefather land and I know that from area many people have traveled to other country for
different kind of jobs, and I have heard personal complaint about the unavailability of
foreign currency account in banks. So I thick it is wonderful opportunity for the bank to
open foreign currency account.

9.23 Marketing Policy

The branch should adopt various marketing strategy and promotion strategy to promote the
bank and its product.

The most important in my opinion is personal marketing; it is the most effective of all
when you think in term of branch level. But on the whole organization level, they should
arrange the seminar with in the bank and outside the bank. They should introduce various
prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly income
earning scheme) and various others.

They should do more advertising through newspaper and media and through channel of
personal contacts.

9.24 Complaints of Customer

There should be an information desk to provide the information and to receive the
complaints of the customer in the bank.

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There is no complaint box available in the branch and not any person appointed to hear the
complaints.

Every person cannot go to the manager for the complaint because most of the people are
hesitant. So I suggest management to install a compliant box in the branch, and recruit a
special person for that guidance of the customer when they are unable to manage some
difficulties in banking matters.

9.25 Analysis of the Business:

Proper analysis of the business reports should be conducted before extending any type of
loan. For this purpose professional training of the stuff member is required.

9.26 Organizational Commitment

It is suggested that employees working on daily wages basis should be given some
benefits, which the other employees are getting. Their salaries must increase according to
efficiency, performance and service.

9.27 Managerial Leadership

In the analysis, we have discussed the difficulties of the assistant in taking any initiative;
therefore it is recommended that the assistants should he given special training to make
them ready for the leadership.

9.28 Credit Monitoring

The credit department of the bank should carries out vigilant credit monitoring. They
should ensure the proper payment of installments and the mark-up by the borrower.

The staff members who have done all the paper work of the loan extension should perform
the monitoring, as he/she will be having more information about the borrower.

9.29 Extended Banking Hours

The banking hours may be extended up to six, as being practiced by HBL opposite to it.

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Some of the business community due to law and order situation are now reluctant to keep
the fund in their premises and would want to depart with it. Therefore, City Branch may
extend the night banking to cater to demand of this business community. The branch could
also be opened to cater the requirements of this business community

Limited staff:

9.30 Housing and House Hold Goods loans

Bank should initiate these loans because most of bank’s customers are middle class and
they cannot afford to buy house or house hold goods at once by their own

9.31 Avoiding Bad Debts

Great care should be taking while extending the loan. Loans should be awarded against
reasonable securities, where market value should be equal to the loan granted.

Policies should be crafted in a way to ensure that no loan is extended on political pressure.
SBP regulation for loan approval should be strictly followed. According to which the
current ration of borrower’s business must be 1:1 and the debt to equity ratio should be
60:40, means the liquidity position of business should be healthy.

9.32 Car Financing Scheme

Another financing scheme with the name of “MARE GARE CAR FINANCING
SCHEME” should be initiated This finance scheme will help the general public to buy the
car of their choice in easy quarterly installments The bank monitors will do strict
monitoring and the car will be hypothecated with the bank against the car loan.

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REFERENCES

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