TABALE OF CONTENTS

Sr.# CONTENTS Page #

1. EXECUTIVE SUMMERY 04
2. HISTORY OF NBP 06
3. VISION, MISSION & CORE VALUE 09
4. GOALS AND OBJECTIVES 10
5. IMPORTANCE OF NBP 11
6. BRANCHES 15
7. ORGANIZATIONAL STRUCTURE 16
8. MANAGEMENT HIERARCHY 17
9. DEPARTMENTALIZATION 19
10. NBP PRODUCTS 25
11. FINANCIAL ANALYSIS 41
12. RATIO ANALYSIS 27
13. SWOT ANALYSIS 29
14. PEST ANALYSIS 69
15. PROBLEM WITH NBP 46
16. GENERAL SUGGESTION 76
17. LEARNING AS A STUDENT 80
18. CONCLUSION 82
19. BIBLOGRAPHY 84

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 DEDICATION

I dedicate to my Dear Parents & my respectable teachers whose assistance is

always with me. And I personally do great respect by heart.

SYED SHABIH UL HASSAN

Acknowledgement

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Here very thanks to Almighty Allah whose guidance helped me to be trained in a
time.

My thanks also to young, dynamic, congenial, and qualified staff of NBP who
never let me alone in different situations related to my internship. Without
their humble help, it was not easy. I am thankful to the Bank Manager, all the
AVP who are the incharge of my concern . And their subordinates, they guide
me during my internship from 09 AUG to 22th SEP 2010.
After that my coworkers zahid ali, and EX hailian Mr. kashif (MTO trinee) always
helped me out whenever there’s been misconception. It was comfortable working
with colleague who is also from my college. We helped each other at various
points in report.

SYED SHABIH UL HASSAN

EXECUTIVE SUMMARY

First of all by the grace of Allah, because by his grace I am able to complete this
report. This report is consisting of four portions as under:

National Bank (Introduction and History)

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Banking and its Related Information

Financial Analysis (Ratios and analysis)

SWOT Analysis

Interpretation and recommendation

Skills Acquired

In the first portion of this report the introduction of the National Bank of Pakistan
is given. A brief history and introduction of the national bank of Pakistan is
starting point of the report. That consists of vision mission, core values and goals
and objectives. The second portion of the report is introduction to the sector that
consists of formal definition of bank and also types of bank. For example central
bank, commercial banks and investment banks. The third portion of the report
consists of financial analysis. This consists of analysis of ratios and horizontal
and vertical analysis. First portion is horizontal analysis and second is of vertical
analysis. After a comprehensive ratio analysis is given. This ratio analysis is
consisting of ratios like profit after tax ratios, return on equity, earning per share,
net profit margin etc. SWOT analysis is also a portion of analysis of the bank.
First of all the main strengths of the national Bank of Pakistan is given that are
followed by the important weaknesses of the Bank. Than opportunities for the
bank and threats that are likely to be faced by the bank are written down.

PEST analysis is also given and is important portion of the report. After the all
type of analysis problems of the National Bank of Pakistan are given in details.

And at the end the last one portion is of my skill acquired, in this portion a details
of skills and are given in which I worked during my tenure of internship program.

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This portion includes all the work which is according to the schedule given by the
bank for example:

Bills department

Deposit department

Foreign exchange department

Government receipt department

Accounts

Credit department

Administration department

History of National Bank of Pakistan

National bank of Pakistan was established on November 8,1949 through
passing of a special ordinance in the National Assembly. The need for the
establishment came due to the reason when at that time newly born country was
facing economic crises. To get rid the intervention form the Reserve Bank of
India, a self owned and operated Central Bank by the name of State Bank of
Pakistan was formed in July 1948 to carry on the responsibilities of issuing the

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currency and most importantly controlling the flow of money inside the
country.
State Bank of Pakistan after its formation demanded from the Indian Reserve
Bank the assets against the Indian currency retired from Pakistan territory.
Government of India refused to hand over the assets worth about five
hundred million rupees. This dispute is still unsettled and these assets are still
not delivered to Pakistan. When British decided to devalue its currency in
1949, India followed a suit against it, but Pakistan did not, a decision, which
attracted some criticism at that time, but was, certainly justified itself in the
way it facilitated the industrialization in of the country.

The arrangement have been made that the currencies of the countries were to be
at par with each other and neither could alter the par value of its currency without
consulting the other. India promptly challenged Pakistan’s decision as a
contravention of the agreement. After some correspondence between the
two Governments, India agreed to recognize the par value of the
Pakistani rupee and a date was decided on which both Central Banks would
announce the par value of their currencies. An attempt was made by the
Pakistan Government to persuade India to adhere to their previous agreement
and an officer of the Finance Ministry was sent on a one-man mission to
Delhi for this purpose.

The officer had discussion with the Indian Ministry of Finance at the
highest level but his mission could not fruitful.
As a result of the exchange rate controversy, regular trade and payments
between the two countries came to standstill. India froze the surplus earned by
Pakistan from a favorable balance of trade, and one more financial dispute,
which is still alive, was added to the unsettled list. One of the immediate
consequences of this situation was the withdrawal of Mrwari Merchants of the
Indian finance, which used to be employed annually for the movement of

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Pakistan's jute crop. A crisis of the first magnitude threatened because the jute
crop was already in the markets and, as there was no money to move so prices
began to fall precipitously. At that time, there was no jute industry in Pakistan, not
a single jute loom or a spindle and no possibility, therefore, of utilizing any of the
crops with in the country. As jute prices collapsed, foreign merchants and
foreign banks stood aside to watch the process and the seriousness of the
situation threatened to promote agrarian unrest. It was now very evident that the
government of Pakistan could not afford to continue that the special mission to
Delhi had failed, Government of Pakistan moved quickly.

Two ordinances were passed immediately, one setting up the Jute Board
and other National Bank of Pakistan. The objective of the Jute Board was to re-
organize and rehabilitate the jute trade by helping parties to handle it and to
stabilize the market. National Bank of Pakistan was established to provide
finance to suitable parties.

Thus it came about that National Bank of Pakistan stood behind the jute trade
and State Bank of Pakistan behind the National Bank, and government stood
behind the State Bank. It was all organized so rapidly (six branches came into
being at once) that any doubt that might have lurked in the minds of outsiders
about Pakistan's ability to tackle the situation were dispelled once and or all.
Until June 1950, the Bank was engaged exclusively on jute operation.
Thereafter, it was felt that it could expand its business to include other
commodities as well. Bank took a big stride in 1952, when it replaced the
Imperial Bank of India, as an agent of State Bank of Pakistan. Presently, there
are 24 overseas branches, and 11 regional offices, 1250 Domestic branches of
the National Bank of Pakistan.

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 Vision of national bank of Pakistan

“To be recognized as a leader and a brand synonymous with trust, highest

standards of service quality, international best practices and social
responsibility.”

Mission of national bank of Pakistan

NBP will aspire to the values that make NBP truly the Nation’s Bank, by:
• Institutionalizing a merit and performance culture.

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• Creating a distinctive brand identity by providing the
highest standards of services.
• Adopting the best international management practices.
• Maximizing stakeholder’s value.
• Discharging our responsibility as a good corporate citizen of Pakistan and in
countries where we operate

Core values of national bank of Pakistan

• Highest standards of Integrity.

• Institutionalizing team work and performance culture.
• Excellence in service.
• Advancement of skills for tomorrow’s challenges.
• Awareness of social and community responsibility

GOALS AND OBJICTIVES

“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.”

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.

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Increase in deposits

By increasing its deposits a bank can extend greater amount of loan and hence
achieves higher profit. NBP is also improving its facilities and services to attract
customers with higher volume of deposits. There are two main factors involved in
increasing the deposits. These factors are improving the services and courtesy.
NBP is continuously working on these two factors to increase its deposits.

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 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.

IMPORTANCE OF NBP/NBP FUNCTIONS

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

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

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. This demand draft facilitate the transfor of money out side
the city.

TRAVELER'S CHEQUES

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.

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 within the city.

INTERNATIONAL BANKING

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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, NBP 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

• 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

New Features:

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.

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 • 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.

MAIL TRANSFERS

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

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.

EQUITY 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.

National Income Daily Account (NIDA)

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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.

COMMERCIAL 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.

BRANCHES

The Bank had a network of 1531branches in the country and 28 branches

in foreign countries. These countries are as follows:
1) - United States of America
2) - United Kingdom

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3) - France
4) - Germany
5) - Africa, Middle East Region
6) - Bahrain
7) - Asia Pacific Region
8) - Japan
9) - Republic of Korea
10) - Central Asian States
11) - Bangladesh
12)-Peoples Republic of China
13) -Pakistan

ORGANIZATIONAL STRUCTURE

BOARD OF DIRECTORS

NAME DISIGNATION

Ali Raza Chairman & President

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Mr. Tariq Kirmani Director

Mrs. Haniya Shahid Naseem Director

Ms. Nazrat Bashir Director

Mr. Ekhlaq Ahmed Secretary Board of Directors

(Source Web site nbp.com.pk)

MANAGEMENT HIERARCHY

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISSTANT VICE
NON CLERICAL
CASHIER
PRESIDENT
STAFF
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OFFICER GRADE
OFFICER GRADE
OFFICER III
GRADEIII
 SENIOR MANAGEMENT OF NBP

Senior Management of NBP consists of following member and their respective

designation.

Chief Operating Officer , Head of

Qamar Hussain
Credit & Risk Management Group

SEVP & Group Chief, Operations

Dr. Asif A. Brohi
Group

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

SEVP & Group Chief Agriculture

Ziaullah Khan
Finance Group

SEVP & Group Chief, Human

Dr. Mirza Abrar Baig Resources Management &
Administration Group

SEVP & Group Chief, Commercial &

Amer Siddiqui
Retail Banking Group

SEVP Group Chief, Assets Recovery

Tariq Jamali Group / Corporate & Investment
Banking Group

SEVP & Group Chief, Treasury

Nadeem A. Ilyas
Management Group

SEVP & Group Chief, Global Home

Muhammad Nusrat Vohra
Remittance Management Group

SEVP & Group Chief, Audit &

Khalid Bin Shaheen
Inspection Group

Imam Bakhsh Baloch SEVP , Special Assignments,

President's Secretariats

EVP/Group Chief, Special Assets

N. B. Soomro
Management Group

(Source www.nbp.com.pk)

DEPARTMENTALIZATION
Dividing an organization into different parts according to the functions is called
departmentalization. So NBP can be divided into the following main.

CASH DEPARTMENT

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Cash department performs the following functions

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

Payments

It is a banker’s primary contract to repay money received for this customer’s

account usually by honoring his cheques.

The Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in

order to fulfill the requirements Cheque must have the following.

• It should be in writing

• The unconditional order

• Drawn on specific banker only

• Payment on Demand

• Sum Certain in money

• Payable to a specific person

• Signed by the drawer

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Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

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

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 favour 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.

CLEARANCE DEPARTMENT

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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 bylaw.
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
interbank 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.
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
interbank 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

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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.

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 details of the cheques are
recorded in this book.

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.

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CREDIT DEPARTMENT

Advances department is one of the most sensitive and important of this 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 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.
Name and address of the borrower

a)borrower basic fact sheet (BBFS).

b) Accounts details of other banks (if any).
c) Security against loan.
d) Exiting financial position of the company. And 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.
e) Undertaken of the employer
f) CIB report by state bank

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Principles of Advances
There are five principles, which must be duly observed while advancing money to
the borrowers.
a. Safety
b. Liquidity
c. Dispersal
d. Remuneration
e. Suitability

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. 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.

b) Running Finance The national bank deal in running finance secured loan,
and take the lien of govt. certificate e.g. DSC (defense saving certificate) as a
collateral by taking the 10% margin it will advances the

c) Demand Financing/Loans This is also an important service of NBP. 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”.

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Products of NBP:

NBP premium Amadani:

• Monthly Income Scheme

Earn up to 11% p.a. +
• Minimum deposit of Rs. 20,000/- and a maximum deposit of Rs.
5,000,000/- for 5 years
• Free Demand Draft, Pay Order and Cheque Book*
• Convenience of NBP online Aasan Banking (for online banking customers)
• Free NBP Cash Card (ATM+Debit)
• Running finance facility up to 90%

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NBP premium saver:

• PLS Saving Account

• Earn up to 7.25% p.a. +
• Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs.
300,000/-*
• Free NBP Cash Card (ATM + Debit)
• Convenience of NBP Online Aasan Banking (for online banking
customers)
• Two debit withdrawals allowed in a month & no limit on number of deposit
transactions
• Profit calculated on monthly and paid on half yearly basis

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NBP karobar Scheme:

Mera Apna Karobar

• Minimum down payment, 10% of asset price (5% for PCO & Telecaster)
• Tenure 1 to 5 years (for PCO 2 years)
• Grace period 3 months
• Maximum loan amount Rs. 200,000/-
• Age 18-45 years
• Mark-up (variable) 1 year KIBOR + 2.00% p.a.
• The customer will pay markup @ 6% p.a., rest will be borne by GOP*
• Life & disability insurance paid by GOP*

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NBP SAIBAN:

• Home Financing

• Home Purchase

• Home Construction
• Home Renovation
• Purchase of Land + Construction
• Balance Transfer Facility (BTF)
• NBP Saibaan
• (Open the Door to Your Dream Home)
Home Financing

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NBP Advance Salary:

• Personal Loan
• Easy installments of 1 to 60 months at your choice
• No minimum income collateral & insurance charges required
• Quick processing and fastest disbursement
• The product is for permanent employees of Government, Semi
Government and Autonomous bodies receiving salaries through NBP
accounts

NBP cash card:

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ATM + Debit Card

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

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

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

Account Balance Enquiry

Mini Statement (Only at NBP ATM)

PIN Change facility (Only at NBP ATM)

NBP investor advantage:

• Financing Facility for Stock Investors

Comfortable environment for trading
• No security requirement, except for the customer’s equity
• Customer’s equity freely available for investment
• Equity acceptable in cash or approved shares

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NBP cash and gold:

Ready Cash against Gold

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

Ornaments
• No maximum limit of cash
• Repayment after one year
• Roll over facility
• No penalty for each repayment

NBP kisan taqat:

Benefits of borrowing from

NBP:

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 • Nearest bak branches
• Easy paper work
• No need to make monthly payments
• Experienced staff

NBP kisan Dost:

• Agriculture Farming Program

Competitive mark-up rate
• Quick & easy processing
• Delivery at the farmer’s doorstep
• Technical guidance to farmers
• Wide range of financing schemes for farmers
• Finance facility up to Rs. 500,000/- for landless farmers against
personal guarantee
• Financing available against pass book, residential/commercial
• property, gold ornaments and paper security
• Loan facility on revolving basis for three years (renewable on yearly basis
without documentation and approval)
• NBP Kisan Dost
• NBP Kisan Dost
( Agriculture Made Easy)

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NBP Pak Remit:

Pakremit is an internet based Home Remittance

Service. This service is available to U.S. residents
for sending money to their family and friends in
Pakistan. One must have a valid US Dollar account
with a U.S. bank or a US Dollar credit or debit card in order to remit funds
through this channel.

Remitters in USA can log on to our user friendly website, www.pakremit.com and
easily remit funds to Pakistan from the comfort of their homes, in a matter of
minutes.

The service is fully secure with advance encryption application and is available
for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at
competitive levels and the remitters have the ability to track delivery of funds as
well.

Process:

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

registration process, are able to remit funds. The whole process takes a
few minutes.
• Funds in Pak Rupees can be sent to beneficiaries, having an account with
any bank in Pakistan, including NBP. While funds are credited directly to
beneficiaries maintaining accounts with NBP, a pay order or demand draft
is couriered to other banks for their customers. Pay order or demand draft
can also be couriered directly to the beneficiary’s office or home, if
requested by the remitter.

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 • Funds in US Dollars can be sent only to a Beneficiary maintaining a US
Dollar account with one of NBP’s Foreign Exchange Branches. Click here
for details of NBP Foreign Exchange Branches.

NBP protection shield:

• Personal Accident Insurance

• No documentation
• No medical required
• Premium Auto Debit facility & choice of deactivation
• Coverage includes death due to
Natural Calamities e.g. Earthquake, Flood, Cyclone etc
• Accident
Civil Commotion*
Strikes*
Acts of Terrorism*
• NBP Protection Shield
(Life is Precious)

REMITTANCE/BILLS DEPARTMENT

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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) Pay Order
c) Mail Transfer

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 DD

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

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

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.16% on PO commission as federal excise duty.
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.

DEPOSIT DEPARTMENT: -

It controls the following activities:

• A/C opening.
• Issuance of cheque book.
• Current a/c
• Saving a/c
• Cheque cancellation
• Cash

Account opening

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 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.
• Avoiding frauds
• Safe guard against unintended over draft.
• Negligence.
• Inquiries about clients.
There are certain formalities, which are to be observed for opening an account
with a bank.
• Formal Application
• Introduction
• Specimen Signature
• Minimum Initial Deposit
• Operating the Account
• Pay-In-Slip Book
• Pass Book
• Issuing Cheque Book
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.
Types of Accounts
Following are the main types of accounts

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 • Individual Account
• Joint Account
• Accounts of Special Types
• 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 accounts

Issuing of cheque book:

This department issue cheque books to account holders.

Requirements for issuing cheque book
• The account holder must sign the requisition slip
• Entry should be made in the cheque book issuing book
• Three rupees per cheque should be recovered from a/c holder if not then
debit his/her account.
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 incidental charges are
deducted from such accounts. This is because the depositors may withdraw

15
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.

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.

Cheque cancellation:
This department can cancel a cheque on the basis of;
• Post dated cheque
• Stale cheque
• Warn out cheque
• Wrong sign etc

Cash

15
 This department also deals with cash. Payment of cheques, deposits of
cheques etc.
FOREIGN EXCHANGE DEPARTMENT:

This department mainly deals with the foreign business. The main functions
of this department are:
• International trading (import & export)
• Foreign currency accounts dealing.
• Foreign Remittance dealing.

International trading (import & export)

The bank deal in international trade. The bank is only concern with the document
provide by the concern parties in the foreign trading. The dealing of bank in
export and import on the bases of following documentation
1. Performa invoice

2. Commercial invoice

3. Import foam (I form)

4. Export form (E form)

5. Undertaken by the parties

6. Bill of exchange

7. Bill of lading

8. Letter of credit

9. Inco. Terms

15
Foreign currency account dealing
This depts. deals with the foreign currency accounts which mainly include
dollar account, euro account etc. the process of account dealing is same as
home currency dealing but there is a change in the rate which is associated with
the foreign currency account.
Foreign Remittance dealing
This is very important function of this depts. It deals with different remittance
which is sent or received by the customer.

ACCOUNT DEPARTMENT
The account deals with following function,
1. Preparation the different type of debit and credit voucher.

2. Making the payroll of all his employees

3. Currency chest transaction which is done by the main branch. The

function of this department is to maintain the currency balances with
branches according to their specifying limit. And send the detail to SBP
within the specified period. This function is very strict as the SBP impose
large penalty in case of any delay or misrepresentation

ADMINISTRATION DEPARTMENT
THIS DEPARTMENT PERFORMS THE FOLLOWING FUNCTIONS:
• RECONCILIATION OF DIFFERENT ACTIVITIES

• STAFF LOAN

• WALFARE

• ADMINISTRATION

15
 FINANCIAL ANALYSIS

INTRODUCTION

Financial analysis, though varying according to the particular interests of the

analyst, always involves the use of various financial statements primarily the
balance sheet and income statement. The balance sheet summarizes the assets,
liabilities, and owner’s equity of a business at a point in time, and the income
statement summarizes revenues and expenses of the over a particular period of
time. A conceptual framework for financial analysis provides the analyst with an
interlocking means for structuring the financing.

Horizontal Analysis

National Bank of Pakistan

Balance Sheet
2008-2009
Assets CHANGE % CHANGE
(Rupees in ‘000)
Cash and balances with treasury banks 7,217,907 22.23
Balances with other banks (2,769,498) (42.11)
Lending to financial institutions (20,030,428) (95.01)

15
Investments – net 49,602,945 78.13
Advances – net 20,721,443 10.45
Operating fixed assets 6,969,967 76.98
Deferred tax assets – net (172373) (100)
Other assets – net 6,837,311 61.98
____________________
Total Assets 68,377,274 19.99

Liabilities
Bills payable 3,389,379 47.81
Borrowings 15,463,355 64.58
Deposits and other accounts 34,636,228 13.45
Sub-ordinate loan (1,118,208) (70)
Liabilities against assets subject to finance lease ------ ----
Deferred tax liabilities – net 1,180,162 100
Other liabilities 550,997 4.93
__________ _____
Total Liabilities 54,101,913 17.96

Net assets 14,275,361 34.95

Represented by:

Share capital 819,492 15

Reserves 9,338,212 37.86
Unappropriated profit (400,223) 07.24

Surplus on revaluation of assets - net of tax 4,517,880 87.09

________ _____
14,275,361 34.95

Horizontal Analysis
National Bank of Pakistan
Profit and Loss Account
2008-2009
CHANGE % CHANGE
(Rupees in ‘000)

Mark-up / return / interest earned 6,008,534 23.31

Mark-up / return / interest expensed 3,340,174 73.81
Net mark-up / interest income 2,668,360 12.56

15
Provision for diminution (15,928) 13.14
Provision against loans and advances 1,945,043 191.72
Bad debts written off directly (46,801) (99.58)
Net mark-up / interest income after provisions 786,046 03.92

Non-mark-up / interest income

Fee, commission and brokerage income 323,375 13.99
Dividend income (179,501) 22.11
Income from dealing in foreign currencies 1,398 0.20
Gain on sale of securities – net 895,000 147.72
Unrealized loss on revaluation of investments
classified as held for trading (13,105) (13105)
Other income – net (7,292) 01.28
Total non-mark-up / interest income 1,019,875 20.43
Total Income 1,805,921 07.21
Non-mark-up / interest expenses
Administrative expenses (1,460,176) 22.52

(Reversal) / Other provision – net (15,154) (132.80)

Other charges 473,886 710.39
Total non-mark-up / interest expenses (1,001,444) (15.26)
Extra ordinary / unusual item --------------- ---------
Profit before taxation 2,807,365 15.17

Taxation - Current year 740,913 13.00

- Prior years (1,887,970) (31.82)
- Deferred 831,258 1312.54
Profit after taxation 3,123,164 25.72
Unappropriated profit brought forward 540,713 10.84
Transfer from surplus on revaluation-
of fixed assets - net of tax (20,311) 63.14
Profit available for appropriation 3,643,566 21.23

Basic and diluted earnings per share - after tax 04.97 25.71

National Bank of Pakistan

Categories of shareholders
As of December 31, 2009

Particulars Shareholding Percentage

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Directors, CEO and children 29,414,134 4.6817
Associated Companies 49,601,842 7.8949
NIT & ICP 7,305 0.0011
Banks, DFI & NBFI 3,941,990 0.6274
Insurance Companies 39,538,161 6.2931
Modarabas & Mutual Funds 2,153,414 0.3427
Public Sector Cos. & Corp. 115,204,125 18.3365
General Public (Local) 143,491,134 22.8388
General Public (Foreign) 2,127,329 0.3385
Others 83,306,246 13.2594
Foreign Companies 159,491,163 25.3854
Company Total 628,276,843 100.00

INTERPRETATION
 Although the bank’s total assets have increased by 19.19% in 2009 but
the bank of NBP should take notice of its balance with other banks. NBP
Bank’s balance with other banks has decreased by 42.11% which is not a
positive sign for the bank of NBP.

15
 The investment made by NBP increased by 78.13% that is a good sign for
the bank of bank.

 In order to meet the expansion plans, the fixed assets have been
increasing but the borrowings form other banks that represent long term
liabilities have increased without a corresponding increase in the fixed
assets of the bank.

 Bills Payable increased by 47.81% which is no the positive sign for the
bank perspective. It increases the trend of short term liabilities.

 NBP has been successful in maintaining a handsome amount in Reserve

Account to meet the emergency requirements. And the balance has been
increasing for the past two years.

 A heavy decrease has been analyzed in lending to financial institutions,

which will decrease the efficiency of the bank.

 Profit after taxation increased by 25.72% which is a positive sign for NBP
Bank’s the bank.

 Total interest expenses decreased by 15.26% which is good for bank’s the
bank.

VERTICAL ANALYSIS

15
Vertical analysis is that analysis in which each item within the financial statement
is expressed in terms of a percentage of a base amount. For example, in
Balance Sheet individual asset is shown as percentage of total assets and in
income statement selling expenses are shown as percentage of total expenses.
For the purpose of analysis and comparison current year data shown in
percentage is compared with the data in percentage of the last year. One can
easily judge the favorable and unfavorable changes in two year’s financial
statements.
I have used the two years financial statement data years ending 2008 and
2009 and compared the each item of the financial statements and showed the
Bank’s trend from one year to another.

Vertical Analysis
NBP

15
 Balance Sheet
2008-2009

Assets 2009 2008

% %

Cash and balances with treasury banks 9.67 9.49

Balances with other banks 0.93 1.92
Lendings to financial institutions 0.23 6.16
Investments – net 27.57 18.56
Advances – net 53.35 57.95
Operating fixed assets 3.90 2.65
Deferred tax assets – net --- 0.05
Other assets – net 4.35 26.20

100 100
Liabilities
Bills payable 2.55 2.07
Borrowings 9.60 7.00
Deposits and other accounts 71.16 75.26
Sub-ordinated loan 0.12 0.47
Liabilities against assets subject to lease --- ---
Deferred tax liabilities – net 0.288 ---
Other liabilities 2.86 3.27
Represented by:
Share capital 1.53 1.60
Reserves 8.28 7.21
Unappropriated profit 1.25 1.62

Surplus on revaluation of assets - net of tax 2.36 1.52

100 100

Vertical analysis
Profit & Loss Account

15
 NBP
2008- 2009

% change in 09 % change in 08

Mark up /interest expensed/ return 25 17.56

Interest income 75.15 82.44
Provision for diminution In the value of investment 0.33 0.47
provision against loan and advances 9.31 3.94
bad debts written of directly 0.0006 0.18
Net markup/interest income after provision 65.61 77.86

fee/commission/brakeage income 8.28 8.97

dividend income 1.98 3.15
income from dealings of forghn currencies 2.18 2.68
gain of sale of securities net 4.72 2.35
unrealized loss on revaluatin of investment classified
as -0.041
other income net 1.77 2.21

total non markup/interest income 84.52 97.22

admin exp. 15.8 25.15
reversal/other provision net -0.011 0.044
other charges 1.7 0.25
profit before tax 67.03 71.77
Taxation 19 24.67
profit after tax 48 47.1

15
 RATIO ANALYSIS

Ratio analysis includes method of interpreting financial ratios to access the

performance of any organization. The basic input to ratio analysis was
profit and loss account and balance sheet. Ratio analysis of any
organization was in interest of its creditors, employees, shareholders and
of its management as well. Both existing and prospective customer are
interested in the ratio analysis of organization.

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

15
Return on Total Assets

This ratio shows the yield earned by the use of assets in financial year.
Formula:

Profit after tax /total assets * 100

2009 2008

Profit after tax 15,265,562 12,142,398

Total Assets 410,485,517 342,108,243

Return on total Assets 3.7189% 3.5493%

Interpretation:

This ratio is increased from 3.5493% in the year 2008 to 3.7189%in year 2009
due to increase in markup & interest earned during the year 2009 in spite of
increase in assets by the way of revaluation which is a sign of good performance
of the bank during a year from good performance we can say that the assets of
the bank has been increased.

15
Return on Equity

The purpose of calculating the ratio is to find out the yield after utilizing the
shareholder fund for one year. The way of calculating this ratio is given below:
Formula

Net profit after tax / shareholder’s equity * 100

2009 2008
Profit after tax 15,265,562 12,142,398

Shareholder’s equity 55,119,675 40,844,314

Return on shareholder’s fund 27.6953% 29.7285%

Interpretation

The yield on equity has decreased from 29.7285% to 27.6953% due to increase in
shareholder’s equity during the year 2009 as compare to 2008 and the mark up
and discount paid during the year 2008 has increased as compare to the year
2009. The decrease in equity and increase in markup is because it has earned
less profit .The Reason is,it low markup on issuing loans and high markup on
borrowing loans. This is not a positive sign for the bank. Because due to less
profitability customer will lose their faith on NBP.

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Earnings Per share

This is very important ratio for the shareholders and investors. The shareholders
and investors give the main emphasis to the earning per share while making the
decision to invest or to become a member of the company. This ratio is
calculated as follows:
Formula

Net profit after tax / total no. of shares

2009 2008
Profit after tax 15,265,562,000 12,142,398,000

No. of outstanding shares 628,276,843 628,276,843

Return on shareholder’s 24.298 19.327

fund
Interpretation
As discussed earlier the earning per share is of utmost importance to the
shareholders and investors, here in this case the earning per share has
increased to Rs. 24.298 in the year 2009 from Rs. 19.327 in the year 2008, which is
better sign from shareholders and investors perspective. Because now customer
will get more money on one share. This will help to attract customer.

15
NET PROFIT MARGIN

Formula:

Net Profit after tax/Interest and discount * 100

2009 2008
Profit after tax 15,265,562 12,142,398

Interest and discount 31,786,595 25,778,061

Net Profit Margin 48.0252 47.1036

Interpretation

There is a slight difference in net profit margin. Profit margin can be calculated
through subtracting Interest and discount from profit after tax. It increases from
47.1036 in year 2008 to 48.0252 in year 2009 which is a positive sign for the
organization. Now organization will earn more money.

15
Loan to Total assets

Loan to total assets shows the empirical relation between loan and assets
acquired by the bank. Lower the ratio is the better it is for the institution. This
ratio is carried out by the following method:
Formula

Total Loan / total assets * 100

2009 2008
Total Loan 218,960,598 198,239,155

Total Assets 410,485,517 342,108,243

Loan to Asset Ratio 53.3419% 57.9463%

Interpretation

The loan to assets ratio of NBP Bank is decreasing from 57.9463% in the year
2008 to 53.3419% in the year 2009 that shows improvement in policies and
working of the bank. Because employees are working better than previous. Bank
has issued more loan due to trust of the customer in bank hence assets are
increased. Improvement in policies mean bank is now improving its marketing
strategy.

15
Loan to Deposit Ratio

Formula

Total Loan/Total Deposits * 100

2009 2008
Total Loan 218,960,598 198,239,155

Total Deposits 292,098,066 257,461,838

Loan to Deposit Ratio 74.9613% 76.9975%

Interpretation

This ration shows a relationship between loans and advances and reveals how
much productively the deposits are used. Analysis shows a decrease in loan in
year 2009 as compare to year 2008. Due to attractive interest rates in year 2009
there are more lending in year 2009.

15
Cash to Deposit Ratio

Formula

Cash/Deposits * 100

2009 2008

Cash 43,491,402 39,042,993

Total Deposits 292,098,066 257,461,838

Cash to Deposit Ratio 14.8893% 15.1646%

Interpretation

This Ratio shows that how much cash is available to meet the obligations of the
depositors. In 2008 the ratio was 15.1646% but in year 2009 this ratio decreases
to 14.8893%. This decrease shows that the increase in cash is les than the
increase in deposits due to which the ratio has declined.

15
Fixed Asset to Long term Debt Ratio

Formula

Net Fixed Assets/Long term Debt * 100

2009 2008

Net Fixed Assets 16,024,123 9,054,156

Long Term Debt 331,984,129 283,002,754

F. Asset to L.T. Debt Ratio 4.8268% 3.1993%

Interpretation

This ratio shows the relationship between the total debts to be taken to generate
the fixed assets. Here the analysis shows that this situation is not favorable for
the band because there is more need to rely on external funds. Bank will have to
borrow more loans from others due to which he has to pay too much interest on
loan profit will decrease. That’s why this is not good for bank.

15
Return on Equity Capital

Formula

Net Profit after Tax/Equity Capital * 100

2009 2008
Net Profit after tax 15,265,562 12,142,398

Equity Capital 6,282,768 5,463,276

Return on Equity Capital 242.98% 222.25%

Interpretation

Calculation made on the base of data available shows that profit after taxes in
2009 has increased due to decreased financial cost of funds for which expected
investment avenues open up the situation. Here in this ratio we see that ratio is
disturbed by the single factor of increase in Equity Capital as therein further issue
of bonus shares.

15
Operating Ratio:

Formulae:

Operating Costs/Interest earned * 100

2009 2008
Operating Cost 5,559,267 6,560,711

Interest Earned 31,786,595 25,778,061

Operating Ratio 17.4893% 25.4508%

Interpretation:

Although the ratio is favorable as ratio shows the operating costs are increasing
year by year. The increasing trend of the operating costs shows the inefficiency
of the bank to control the operating costs. But the Operating costs itself as a
percentage of the interest earned is decreasing. Although the bank is trying to
control these costs they have succeeded in past years. We can say that bank is
improving its position from past.

15
 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. I
worked in different of NBP strength weaknesses and threats opportunities which
I found there are mentioned below

Strengths

Oldest Institution

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

15
bank.

Alternate duties in SBP Absence

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

More deposits than other Banks

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.

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.

Strictly followed rules & regulations

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.

15
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. These professional competencies enable the employees to
understand and perform the function and operation in better way.

Western union facility

National Bank of Pakistan is only one bank which has the facility of Western
union. In this particular scheme money is transfer in Pakistan from abroad. This
is the fastest way to money transfer. You can receive the money from bank to
see the name and password of particular client.

ATM finder

There is also strength of NBP that they are found the ATM. They now provide
this facility to the customers.

Customer satisfaction

Because of government's bank, it is enjoying the customer's satisfaction.

Customers feels secure their money in NBP.

Online banking

There is also strength of NBP that 130 branches are online. It helps the speedy

15
services giving to the customers. There is also help in checking the balances and
daily transactions just at one key press.

Employee's loyalty
Employees are very much loyal to NBP. Employee's turnover is very low
in NBP. Very few employees are leaving the jobs in NBP. So it is very
big strength that your employees are loyal to your organization.

WEAKNESSES

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.

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.

Lack of Financial 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.

15
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.

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.

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

Uneven Work Distribution

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 de-motivation factor for employees performing above average work.

15
Lack of communication between employees

During the internship in NBP I found the problem of lack of communication

between the employees and management. They have not very much
understanding with each other and not share the work of each other.

Public dealing is not very effective

Public respect is not very effective in NBP. Employees are not taking care
of the customers, especially in pension and bills department.

Staff shortage

There is also weak point for NBP that staff is very short and more staff
is required to meet the needs of the branch work.

OPPORTUNITIES

Electronic Banking:

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.

15
Growing banking system:

Nowadays banking system is growing quickly so NBP have opportunities to

improve the standard and get the more share in the market.

Increase in economic activities:

The economic activities are increase nowadays, so banks are

contributes more in economic activities. Banks are played role in trade
and commerce. So the business of commercial banks is increase.

Install Of New ATM

It has opportunity to install new ATM machine which will help NBP to attract and
satisfy its customers.

THREATS

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.

15
Political Pressure by Elected Govt.

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.

Customer Complaints

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

Increase in no. of banks

Increase in no. of banks is a threat for National Bank of Pakistan. No. of

private banks (commercial and private) are operating their business and provide
the same facilities. So increase in no. of banks is a threat for NBP.

Modern type of banking

Modern and computerized banking is required to fulfill the customer's

need. So maximum branches of NBP are worked in old traditional ways.

The whole structure changes to online

NBP have wide network of branches. Only 130 branches are online, so it is very
difficult and time consumed to convert all branches to online system. So there is
also risk involves that if one commuter of one branch suffers in problem, all

15
system and all commuters of all branches must be turnoff.

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,

PEST Analysis

A broad view of market is important when management is interested in

introducing better services for customers. Rapid technological change, global
competition and the diversity of buyers preferences in many markets require the
constant attention of the market vouchers to identify promises business
opportunities, see the shifting requirements of the buyers, evaluate changes in

15
competitors positioning and guide the choice of which buyers to target and
classify them according to respective segments.

Identification of external and macro factors that influence buyers and thus
change the size and composition of market overtime involves initially building
customer profiles. These influences include:

Political environment

Economic Indicators

Socio cultural environment

Technological factors

Political Environment
The events in the last couple of years; ever since the sacking of Chief Justice
Iftikhar Choudhary, Pakistan has faced crisis after crisis, including the lawyers’
movement, violence in Karachi, the Lal Masjid debacle, militancy in FATA and
NWFP and its impact on other parts of the country, the return of Benazir Bhutto
and her subsequent assassination, and current ongoing military operation in
Swat– all the above events indubitably made a huge impact on the economy.

15
Stability and law and order situation under the political regime is very important
for the economy as a whole. The present state of the government in Pakistan is
directly affecting the policies of banks. Continuous political changes have
disrupted the policies and objectives as each regime brings with it its own
agenda. Organizations need time to adjust to one regime and then work with it
towards economic enhancement. Due the wrong policies of the government, the
talibanization also develop in Pakistan and become the international issue in
Pakistan and badly affected the Pakistan repute in the world and promote the
uncertain conditions for the business in the Pakistan. Due to this the investors
are not interested in the Pakistan.

Economic Indicators
The economy of any country directly influences any financial organization.
Economic indicators include Gross Domestic Product (GDP), inflation, balance of
payment, debt of the government.

Pakistan’s economy has witnessed the most challenging period after posting six
consecutive years of healthy economic growth. However, the strong
fundamentals were compromised to prevailing global crises that’s shacked the
confidence of global investors and FDI flowing in the country. The steep rise in oil

prices to U$ 147 a barrel, soaring inflation hitting a 24% mark, huge fiscal deficits
and balance of payments issues coupled with plummeting forex reserves added
to the economy’s move to an unstable growth trajectory.

Also the load shading is another factor that affects the Pakistan economy badly.
This not the end of the story after this Pakistan’ economy face lot of problems like
bomb attacks in Pakistan no electricity and the unstable government, due to this
the investor are not invest in the Pakistan and the existing business men are
loosing their business unit due to the loss.

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Due to this poor economy, businesses are reaping low profits and stock market is
in great danger. Pakistan’s foreign debts are rising day by day so such a situation
is a big challenge for banking institution to survive. The financial crisis in Pakistan
has made the management of NBP tensed to work in such an environment.

Socio cultural environment

A low saving culture has offset the huge population advantage this is enjoyed by
Pakistan. Also culture is dedicated by the religion, and in Pakistan a significant
segment of the population is reluctant to accept interest for their deposits due to
the negative religious implications of such an act. About 70% of Pakistan’s
population is based on rural areas and literacy rate of the country is very much
low, thus making it harder for banks to mobilize their deposits within these
regions.

However, in today world, the customers are becoming more intelligent and
through media they keep themselves up to date. Thus, the lifestyle and
expectations of the customers from the service provider is inreasing day by day.

Technological Factors
Banks in the developed world have been turning to heavy IT investments, which
differentiate their products, provide response times, enhance accessibility and
improve customer satisfaction. Though investing in state-of-the-art host banking
solution, ATM and POS (point of sale) networks, visa, MasterCard, and, smart
cards, telebanking, internet banking and now mobile banking are common IT
investment in the developed world, it is now that these products and services are
gaining faster acceptance in Pakistan.

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 PROBLEMS WITH NBP

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.

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

Unequal distribution of work

Work is not equally distributed. On one hand some employee have to work all

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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.

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.

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.

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.

Delegation of authority

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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

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

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

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.

Delays in Loan Advancement

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

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.

GENERAL SUGGETIONS

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.

The recommendations are as follows:

Professional training

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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.
Delegation of authority

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

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.

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.

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.

Utility Bill Charges

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

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.

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.

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.

Needs to be Flexible in credit Policy

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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.

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 ).

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.
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.

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

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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.

Complaints of Customer

There should be an information desk to provide the information and to receive

the complaints of the customer in the bank. 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.

LEARNING AS A STUDENT INTERNEE

I have a work schedule which is given by the national bank main branch,
according the that schedule my work was designed by the following activities

General Banking department

Enquiry: In this section I have learned how to open an account from Mr. Naeem
(OG-II) and issuance of cheque book from Mr. Asif Butt (OG-I)
bills: in this section i have learn about TDR (TERM DEPOSIT RECEIPT) from
MISS MEHREEN (OG-II) and demand draft, meal transfer, payment order and
government payment from MR. HASSAN BUTT (OG-II),MR. NAEEM KHAN(OG-
III), MR. NAFEES AHMED incharge bills dept. (OG-I),MR. HAMID RAZA(OG-II)
and MISS ZENAT ABBAS (AVP)
Deposit: In this section I have learn about process of payment of cheque.

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Govt. Receipt: in this section I have learn about the collection of income tax,
sale tax, property tax etc from MR. AYUB BHATTI (AVP) and collection of utility
bills of LESCO,WASA,PTCL,and SUI NORTHERN with the assistance of
Accounts: in this section I have learn about the preparation of different voucher
from Mr. M. Butta (cashier), preparation of payroll form Mr. Rizwan(OG-III) and
currency chest transaction from

FOREIGN EXCHANG DEPARTMENT

F.C ACCOUNT, IMPORT&EXPORT: In this section I have learn different

techniques from F.C Account, and documentation of import and export
transaction.

CREDIT DEPARTMENT

CREDIT PROCESSING: In this department I have learn about who to deal

with business finance, running finance (secured) and advance salary from MISS
IRAM (AVP), MR FEYAZ (OG-II) AND MR. MUHAMMAD ZIA (OG-II)
RESPECTIVELY.

CAD: In credit administration department I have learn about the SME financing
SIABAAN HOUSE FINANCE: In this section I have learn the house finance
from MR. SHAHID (OG-II) and from MR. QARIB MUNEER
ADMINISTRATION DEPARTMENT
RECONCILIATION/WELFARE/STAFF LOAN/ADMINISTRATION:

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This section I have discussed about the reconciliation of different activities and
welfare like medical reimbursement, worker overtimes and TA, DA

CONCLUSION
The report is all about National Bank of Pakistan, one of the leading Bank
of Pakistan banking industry with 1254 nationwide and almost 25 branches
operating in other countries including USA, China, France, Hong Kong,
Azerbaijan, Bangladesh, and Hong Kong. It was maximum coverage with
facilities of ATM and online banking throughout Pakistan. National Bank of
Pakistan (NBP) have established under the National Bank of Pakistan Ordinance
1949. The primary objective of NBP was to purchase jute from the growers in
the former East Pakistan and also to perform the commercial banking
functions in the country.

It was the part of State Bank of Pakistan and it is its major strength. It is
providing different facilities to its customers. Inside the bank, in branch banking it
was Clearing and Collection Department, Government Receipts Processing
Department, Account Opening Department, Remittance Department, Customer
Services Department Cash Department, Deposit Department, Advances and
Credit Department.

These have the most common exist in almost each branch. It is offering
different deposit choices, advances, credits and securities etc. for its
customers. Its Human Resource is its major strength that is leading this
bank in this way but there is much gap to cover yet. The other strengths this
bank has are that it is acting as Agent of State Bank of Pakistan, providing
Agency Arrangements for different government organizations include

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WAPDA and PIA, Profitability and a vide coverage throughout Pakistan
through its Corporate Branches. And also it has comprehensive range of
products it is offering in market.

The challenge it was facing are currently the lack of implementation of

rules and regulations that may lead to weak organizational culture, old
organizational culture, no regular promotions practices and not much use of
IT technology in bank as other are using. There are many workers and
employees unions exist in National Bank of Pakistan that use to play
organizational politics instead of doing productive work that leads to
wastage of time.

As analysis shows that NBP are a most growing organization with highest
return on capital, largest market share amongst all Pakistani banks and cost
to income ratio is the highest in banking sector. But there is further need for
improvement to overcome weaknesses and to maintain its position as an Asian
Tiger´ in banking field.

As far as my internship and experience is concern, I learnt a lot during

my internship because I got practical knowledge before entering in the practical
life after completion of my B.Com. (Hons.) degree. I learn a lot about banking
practicing in Pakistan, rules and regulations and different procedures followed
by banks, the organizational culture and structure of the bank, National Bank
of Pakistan.

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 Bibliography

REFRENCES

1. Nasir, Saeed H.(2001). Money and Banking. Pakistan, www.nbp.com.pk

2. www.google.com.pk

3. President Office Mays 13, Circular No. 11/2000. Head Office.

National Bank of Pakistan, Karachi.

4. www.nbp.com.pk

5. . www.janggroup.com

6. Managerial Finance By Lawrence.J.Gitman

7. Official site of State Bank Of Pakistan

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