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INTERNSHIP REPORT
National Bank of Pakistan

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An internship report submitted in partial satisfaction
Of the requirements for the degree of
MBA
In
Finance
By
 HAAD IRAN (


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^ATTER OF TRANSITTA^
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Head of Management science department,

National University of Modern Languages,
Lahore Campus,

Dear Sir,

It is to present you the internship report which is executed to National Bank of Pakistan
as required by the university as a degree requirement for MBA Program.
This report has been prepared in accordance with the guidelines issued by the department.
It is the result of my first professional experience. In this report I have covered the
introduction of NBP, detail of my working and learning in the organization, impact of
internship on career in future.
I worked in different department. I feel that this experience would be great help in future.
I have pull at the efforts to summarize my knowledge and experience in this report, to
make it compressive and to meat reader¶s expectations.

Your faithfully,

Muhammad Imran

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NATIONA^ NIVERSITY OF ODERN ^ANG AGES

Faculty of anagement Sciences

It is hereby certified that the report has been thoroughly and carefully read and
recommended to the faculty of management sciences for acceptance of final internship
report by Ahmad Aleem, Roll No: M-9034 session (August 2008 to June 2010) Morning,
in partial fulfillment of the requirements for the degree of Master in Business
Administration of National University of Modern Languages.

Dated:

Supervisor Name _________________________

Supervisor Signature ________________________

Panel Member Name ________________________

Panel Member Signature ________________________

Head of Department _____________________________

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Serial No TAB^E OF CONTENTS PAGE

No
c Acknowledgment I

c Executive Summary Ii

CHAPTER 1 INTROD CTION OF ST DY 1


1.1 Background Of Studies 01

1.2 Purpose Of The Studies 01

1.3 Scope Of Studies 01

1.4 Research Methodology 02

CHAPTER  EVO^ TION OF BANKS IN PAKISTAN 
11

2.1 Definitions Of Bank 03

2.2 Evolution Of Banking In Pakistan 05

2.3 Banking Growth During (1948-1970) 06

2.4 Banking Reforms 1972 09

CHAPTER  NATIONA^IZATION OF BANKS (1  1
16

3.1 Islamization of Banking 14

3.2 Dis-Investment And Deregulation Of Banking 1991 15

3.3 Interest Free Banking 16

CHAPTER INTROD CTION OF NBP 16


4.1 History Of NBP 18

4.2 Organization Profile 18

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4.3 Aims & Objective Of Bank 20

4.4 Product & Services 21

4.5 Major Customers Of NBP 25

CHAPTER
ORGANIZATION NETWORK 6


5.1 Branch Network 27

5.2 Domestic Network 29

5.3 Present Status Of Bank 29

CHAPTER 6 ANAGEENT OF ORGANIZATION 1


6.1 Management System 31

6.2 Management Structure 31

6.3 Training & Management Development Wing 34

6.4 Corporate Information 34

6.5 Senior Management 35

6.6 Oversea Management 37

CHAPTER  BRANCH PROFI^E & DEPARTENT 

1

7.1 Branch Profile 38

7.2 Introduction of Branch And Establishment 39

7.3 Branch Hierarchy 39

7.4 Departments of Training 40

CHAPTER  ANA^YSIS OF NBP




8.1 Financial Analysis 52

8.2 Ratio Analysis 60

8.3 SWOT Analysis 68

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8.4 Competitive Analysis 72

CHAPTER  GENERA^ OBSERVATION 


9.1 General Observationc 74

9.2 Objectives And Purpose Of Internshipc 81

9.3 Identification Of Main Problemsc 82

9.4 Suggestionsc 82

9.5 Conclusionc 83

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ACKNOWLEDGMENT
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CHAPTER # 1

INTROD CTION OF ST DY

1.1 BACKGRO ND OF ST DIES

As part of the academic requirement for completing MBA (Finance) Master Business
Administration of the students are required to undergo twomonths 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 expanded its network, becoming the largest commercial Bank of the country.
It offers different products and services to its customers.

1. P RPOSE OF THE ST DIES

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.

1c To work practically in an organization.

2c To develop interpersonal communication.

1. SCOPE OF ST DIES

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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1. RESEARCH ETHODO^OGY

The report is based on my six weeks 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.

1. .1 Primary data:

i.c Personal observation

ii.c Interviews of staff

1. . Secondary data:

i.c Manuals
ii.c Journals
iii.c Magazine
iv.c Annual reports
v.c Internet

STARTING AND ENDING DATES OF INTERNSHIP

Starting Date------14-06-2010

Ending Date------ 26-07-2010

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CHAPTER # 

EVO^ TION OF BANKS IN PAKISTAN

There have different opinions that how the word µBank¶ originated. Some of the author¶s
opinion that this word is derived from the word µBancus¶ or Banque¶, which means a
bench. The explanation of this origin are 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 µbench¶. Incidentally the word µBankrupt¶s said
to have evolved from this practice.

Some of the authors have of opinion that the word µBank¶ was derived from the German
word back, which means µjoint stock fund¶. Later on when the German occupied major
part of the Italy the word µBack¶ was italicized into µBack¶.

In fact human left the need of bank when it begins to realize the importance of money as
a medium of exchange. Perhaps it was 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 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 have used as banks, where the people deposited their money
and other valuables for safe custody and security. In Europe with the µrevival 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.

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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 µmodern
banking¶ originated in the 14th century in Barcelona.

.1 DEFINITIONS OF BANK

Bank´

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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:

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Sir John Paget defines banker in these terms:

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

1c Take deposits accounts.

2c Take current accounts,
3c Issue and pay Cheques and
4c Collect Cheques crossed and uncrossed for his customers´ (The law of Banking by
Sir John Paged, page 51).

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

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. EVO^ TION 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 are 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 has the central banking authority in India. At the time of
partition it has decided that in the interest of smooth transition it should continue to
function in newly emerging state of Pakistan, until September 30 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 have
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 from 487
branches before independence to only 195 branches by June 30 1948.

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. BANKING GROWTH D RING (1 
1

In this tense situation, a committee has immediately setup to formulate a scheme of

central banking legislation for Pakistan. Many specialists give of the opinion that in view
of the acute shortage of trained staff, any idea of establishing a central bank has 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 has realized that the shortage of trained personal to run the
central bank would present serious difficulty in view of the tangible advantages that a
central bank enjoy over currency board.The government ultimately decided to take the
bold step of setting up a fully fledged central banking authority. Among other factors,
which led to this decision, there was the fact the banking facilities in the country has been
totally disrupted and there has an urgent need for their rehabilitation, which a central
bank alone could meet. As there has 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 May 12 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 has 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 have 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, has 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

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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 policies.

Accordingly the National Bank of Pakistan has 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.

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 field 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 have the lack of trained personal, the state bank sponsored a banking training
scheme which has 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 has established and registered as a scheduled bank. In the
field of industrial finance a new institution known as the industrial credit and investment
cooperation was set up.

In 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.

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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 have responsible for 65 of total bank
credit.

When the Ayyub Government took over in 1958, the banking and monetary scene has
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 has 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 Chittagong, Peshawar,
Quetta, Khulna, Lyallpur 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 was added to
the list of scheduled banks.

Two principal additions have 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 an 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.

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Time deposits during this period increased from Rs: 946 million to Rs: 3,228 million,
where demand deposits rose from Rs: 1,997 million to Rs: 3,655 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 has that since the rate of
increase in bank deposits lagged behind the rate of expansion in bank credit.The bank 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 banks offices increased from Rs: 1,591 million 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: 6,883 million June 1965 to Rs:
13,147 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 happen in
the previous period, bankwas able to finance a much higher level of credit expansion
without having to increase their borrowings from the central bank.

. BANKING REFORS 1

After the assumption of office by a new government in 1971, toMay 1972 different
reforms have introduced to make the banks more responsive to the requirements of
economics growth with social justice?

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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 has been
truly spectacular in mobilizing savings of the community and meeting the credit needs of
the economy. But at the same time the banks has 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 has 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 has
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 has also empowered to
nominate directors on the board of every bank.

As regard bank directors, it has provided that anyone defaulting in meeting his
obligations to bank would forfeit his directorship. Moreover, it has lain down that no
person could serve as director of a bank for more than six years continuously. Each bank
has required having 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 have also
required to transfer 10 percentage of their profit their reserves every year after the reserve
became equal to the paid up capital.

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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 and have 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 from 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

REFRENCES

1.c Siddiqi H Israr Law and practice banking in Pakistan.

2.c Gilbert J.W principles and practice.
3.c Sir Paged John The law of Banking, page 51.

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CAHAPTER # 

NATIONA^IZATION OF BANK (1 

The banking reforms turned to be transitional and interim step and when they have hardly
eighteen months old the government nationalized the banking systems which 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 have 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 have 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 have 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.

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At the time of Nationalization on December31 1973, there have following 14 Pakistani

commercial banks with 3,323 offices allover Pakistan and 74 offices in foreign countries:

1.c National banks of Pakistan

2.c Habib bank limited
3.c Habib bank (overseas) limited
4.c United bank limited
5.c Muslim commercial bank limited
6.c Commerce bank limited
7.c Standard bank limited
8.c Australia bank limited
9.c Bank of Bahawalpur limited
10.cPremium bank limited
11.cPak Bank limited
12.cSarhad bank limited
13.cLahore commercial limited
14.cPunjab provincial co-operative bank limited

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

1.c National bank limited

2.c Habib bank limited
3.c United bank limited
4.c Muslim commercial bank limited
5.c Allied bank of Pakistan limited

The first phase was completed on June 30 1974. When the bank Bahawalpur has merge
with the National Bank of Pakistan. The premier Bank Limited with Muslim

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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 December 311974, when the commerce bank
limited merged with the United Bank limited.

The third and the final phase were completed on June 30 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 3,397 on December 31, 1,973, reached on 7,661
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 IS^AIZATION 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 from 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 have 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 has 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.

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Stipulations concerning form ofbusiness in which banking companies may engage may

also have been modified schemes were introduced to provide interest free loans to

formers and deserving students.

A private Limited Company name as Bankers Equity limited´has incorporated in 1979

to provide financial assistance to the industrial sector primarily on interest free basis.

Schemes to extend interest free productive loans to farmers and fisherman have 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:

i.c Musharika Financing.

ii.c Hire Purchase Financing.

iii.c Modaraba Financing.

iv.c Specific Purpose Modaraba.

. DIS
INVESTENT AND DEREG ^ATION OF BANKING 11

When it has realize 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 analyze and
judged in the following chapters.

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. INTEREST FREE BANKING

A new concept of interest free banking has introduce 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 has
making Pakistani banking comparable to their several modern counterparts anywhere in
the developed world.

REFRENCES

1.c Bank Nationalization act 1974.

2.c Islamic Banking
3.c www.nbp.com.pk
4.c Annual report 2009

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CHAPTER #

INTROD CTION OF NBP

The National Bank of Pakistan is a Commercial Bank and transacts all types of Banking
Business. The National Bank of Pakistan was established on November 29 1949 as a
semi public commercial bank. The Bank has the distinction of acting agent of the State
Bank of Pakistan and operates treasuries where the State Bank of Pakistan does not have
any office. The Head Office of the Bank is at Karachi. Ever since its establishment in
1949 it has been leading

Commercial Bank of the nation sole agent of the Government of Pakistan¶s batter trade
with countries and of State Bank of Pakistan for the Government Treasury, It has offices
at all the major financial centers of the including at pride places likes 100 wall streets,
New York and United nations Plaza. Its International net work includes Branches at
Bahrain, Cairo, Paris, Frankfurt, Hong Kong, Londonand Washington D. C of shore
banking unit at export processing zone. Karachi and representative offices functioning at
Beijing and Seoul, In Pakistan, the bank provides complete bank facilities to the people at
over 1436 Branches operating even at the far lug Northern Areas.

National Bank of Pakistan is the first bank in the country to introduce and implement
supervised Ruler Credit Programmed help small farmer to obtain loans at his doorsteps
on easy terms and conditions. It was also played a pioneering role in introduction of
profit and loss sharing System (PLS) as a major towards Islamization of economy. In
addition to the normal business operations the bank provides special loan facilities for
higher education for studies abroad and Qarz-e-Hasna to deserving poor students of
Medical and Engineering Colleges in Pakistan. The well equipped research department to
work on the developing trends of finance, and banking besides a very well managed
library at the Head Office.

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The banks carry on its business through a wide network of branches locally and
internationally. These branches execute their function under the supervision of local

Regional Offices and regional offices was supervised by the Head Office located a
magnificent building in the heart of Karachi¶s center. In the forty five years that were
followed the bank has made remarkable progress testifying to several things. It is now
extending the operations of the Bank to all branches to Banking, to commerce, to industry
to trustee services as well as to agriculture and to the need of the small or big
businessman. It was rapidly advanced from an institution with restricted power to the
biggest commercial banks in the country it also shows it soundness of the policies that the
bank has pursued in the execution its tasks. The National Bank was leaded the trial in this
respect, other banks have followed it. The National Bank has great contribution towards
building wide Banking structure in Pakistan and serving all aspects of the National life
and all classes of society.

.1 HISTORY OF NBP

The normal procedure of establishing a banking company under the Companies Law has
set aside and the Bank was established through the promulgation of an Ordinance due to
the crisis situation that had developed with regard to financing of jute Trade. The Bank
commenced its operations from November 20 1949 at six important jute centers in the
then, EastPakistan and directed its resources in financing of jute crop. The Bank¶s
Karachi and Lahore offices were subsequently open in December 1949. 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. The dispute is still unsettled and
these assets are still not delivered to Pakistan. Until June 1950, the Bank has engaged
exclusively on jute operation. Thereafter, it has 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.

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With the passage of time its functioning diversified as they take over the function of
different institution with the passage of time like in past they took over the function of
Imperial bank of India and now of NDFC (National Development Finance Corporation),
It is working as the agent of the state bank of Pakistan and performs its functions
wherever state bank of Pakistan is not present.

. ORGANIZATION PROFI^E

Type Government, KSE, LSE

Headquarter Principal office, Karachi Pakistan

Key People Syed Ali Raza (President, & Chairman)

Industry Banking, Capital Market

Products Loan, Credit Card, Saving, Consumer Banking etc.

Deposit Rs: 624,938 Million

Net income Rs: 15,459 Million

Total Assets Rs: 817,758 Million

No of Employees Rs: 15,204

No of Branches Rs: 1,276

Home page www.nbp.com.pk

..1 Vision

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

service quality, international best practices and social responsibility.

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.. ission

NBP will aspire to the values that make NBP trulythe Nation¶s Bank, by:

i.c Institutionalizing a merit and performance culture

ii.c Creating a distinctive brand identity by providing the highest standards of
services
iii.c Adopting the best international management practices
iv.c Maximizing stakeholders value
v.c Discharging our responsibility as a good corporate citizen of Pakistan and in
countries where we operate

.. Core values

i.c Highest standards of Integrity

ii.c Institutionalizing team work and performance culture
iii.c Excellence in service
iv.c Advancement of skills for tomorrow¶s challenges
v.c Awareness of social and community responsibility
vi.c Value creation for all stakeholders

.. Goals

To enhance profitability and maximization of NBP share through increasing leverage of

existing customer base and diversified range of products£c

..
Corporate Banking

NBP further consolidated its position as one of the top players in corporate and
investment banking of the country in 2007and has built a strong customer relationship
with the premier corporate clients.

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. AIS & OBJECTIVE OF BANK

The main objective of National Bank of Pakistan has been to include and spread banking
habits among the people mobilize their savings and thus make an ever increasing
contribution to the economic development of the country.

It has all along pursued a policy of rapid development extending, its facilities to almost
every center of economic potential in the country. Its services have been increasing
continuously and are being brought within an easy reach of the ever-growing number of
people.

Today it provides the largest network of offices in the country 1436, Being in Pakistan
and 22 aboard.

It offers remittance facilities to almost every important center in the country to provide
facilities to the traveling public the bank has introduced its own traveler¶scheque which
are en cashable at a branch of the bank in Pakistan.

. PROD CT & SERVICES

. .1 Premium Aamdani

i.c Monthly Income SchemeEarn up to 11% p.a. +

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

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. . Premium Saverc

i.c PLS Saving Account Earn up to 7.25% p.a. +

ii.c Minimum saving balance of Rs. 20,001/- & a
maximumbalance of Rs. 300,000/-*

iii.c Free NBP Cash Card (ATM + Debit)

iv.c Convenience of NBP Online Aasan Banking (for onlinebanking customers)
v.c Two debit withdrawals allowed in a month & no limit on number of deposit
transactions
vi.c Profit calculated on monthly and paid on half yearly basis

. . Karobar

era Apna Karobar

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

. . Saibaan
Home Financingc
i.c Home Purchasec
ii.c Home Constructionc
c

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iii.c Home Renovationc
iv.c Purchase of Land + Constructionc
v.c Balance Transfer Facility (BTF)
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Advance salary

Personal ^oan
i.c Easy installments of 1 to 60 months at your
choice
ii.c Quick processing and fastest disbursement
iii.c The product is for permanent employees of
Government, Semi Government and Autonomous
bodies receiving salaries throughNBP accounts

. .6 Cash and Card

AT + Debit Card

i.c Use it as an ATM in any of the ATM¶s in

Pakistan
ii.c Cash withdrawal up to Rs. 20,000/- per day
iii.c Account Balance Enquiry
iv.c Mini Statement (Only at NBP ATM)
v.c PIN Change facility (Only at NBP ATM)

. . Investor Advantage

Financing Facility for Stock Investors

i.c Comfortable environment for trading

ii.c No security requirement, except for the customer¶s
iii.c equity Customer¶s equity freely available for
investment
iv.c Equity acceptable in cash or approved shares

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. . Cash & Gold

Ready Cash against Gold

i.c Facility of Rs. 10, 000/-against each 10 gms of net

weight of Gold Ornaments
ii.c No maximum limit of cash
iii.c Repayment after one year
iv.c Roll over facility
v.c No penalty for each repayment

. . KisanTaqat

Features of NBP ^oan:

i.c Nearest Bank Branches

ii.c Easy & Less paper working
iii.c Relief in deposit installment
iv.c Experience staff helping for Customers
v.c Establish more than 50 years Govt. Bank

. .1 Kisan Dost

Agriculture Farming Program

i.c Competitive mark-up rate

ii.c Quick & easy processing
iii.c Delivery at the farmer¶s doorstep
iv.c Technical guidance to farmers
v.c Wide range of financing schemes for farmers

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. .11 Protection Shield

Personal Accident Insurance

i.c No documentation
ii.c No medical required
iii.c Premium Auto Debit facility & choice of deactivation
iv.c Coverage includes death due to:
v.c Natural Calamities e.g. Earthquake, Flood, Cyclone etc.
vi.c Accident
vii.c Riots
viii.c Civil Commotion
ix.c Strikes

.
AJOR C STOERS OF NBP

Some of the major customers of Bank of Punjab are:

i.c Educational Institutes

ii.c Agriculturists
iii.c Pakistan Telecommunication Private Limited
iv.c WAPDA
v.c Private Companies
vi.c LDA

REFRENCES

1c http/www.nbp.com.pk .services
2c Annual reports 2008, 2009.

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CHAPTER #

ORGANIZATION NETWORK

Registered & Head Office

The Head office of National Bank of Pakistan in NBP Building, I.I.Chandigarh Road,
Karachi. Pakistan which is The City of Lighting´ in Urdu Uroos-ul-Bilad´ which was
also the first capital and ancient place of Pakistan. It carried out its successful journey to
make it an Asian Tiger´.

Share Registration Office

THK Associates (Pvt.) Ltd.

Shares Department, Ground Floor,

State Life Building #3,

Dr. Ziauddin Ahmed Road,

Karachi, Pakistan.

SHARE CAPITA^

Issued Capital

The bank was setup with an issued capital of Rs.1.5 million.

Authorized Capital

Authorized capital of National Bank of Pakistan in 2000 was Rs.25 Billion.

Issued, Subscribed, and Paid
up Capital

Issued, subscribed and paid-up capital in year 2009 was 10763702260

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.1 BRANCH NETWORK

Presently the Bank is divided into 10 Groups headed by SEVPs/EVPs. 9 Regions

reporting to as many Regional Chiefs and 15 Single Branch Zones headed by Zonal
Chiefs; 12 corporate branches and 1,254 domestic branches headed by Branch Managers
control its field operations.

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

Bank maintains its presence in all the major financial centers of the world through its
21overseas branches and 4 representative offices. Of these, three representative offices
have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and Almaty
(Kazakhstan) to take advantage of the emerging opportunities in CIS countries.

Apart from having a vast branch network, Bank is at the forefront in the acquisition and
application of new technologies in every aspect of its banking facilities. It has acquired
leased telephone lines for on-line banking. The Bank has 12 Regional Computer Centers
to cover various on-line and batch system requirements of branches and controlling
offices. Bank has also a presence on the Internet.

It has modernized its services by installing Automated Teller Machines (ATMs) called
"CASH LINK" at selected branches and presently 17 ATMs are operational in major
cities.

.1.1 Global Network

1.c 18 Overseas Branches

2.c 5 Representative Offices
3.c 1 overseas Subsidiaries
4.c Joint Venture

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.1. Overseas Branch Network:

1.c Paris

2.c Baku

3.c Seoul

4.c Kabul

5.c Tokyo

6.c Osaka

7.c Dhaka

8.c Bahrain

9.c Bishkek

10.cKowloon

11.cAshgabat

12.cJalalabad

13.cFrankfurt

14.cChittagong

15.cNew York

16.cHong Kong

17.cWashington D.C.

18.cKEPZ Offshore Banking Unit, Cairo

.1. Oversea Representative Offices

1c Baku
2c Beijing
3c Toronto
4c Chicago

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5c Tashkent

.1. Oversea Subsidiary

i.c CJSC Almaty, Kazakhstan

. DOESTIC NETWORK

i.c 1254 Domestic Branches

ii.c domestic Subsidiaries
iii.c 29 domestic regional offices

..1 Domestic Subsidiaries

i.c NBP Capital Ltd.

ii.c Taurus Securities Ltd.
iii.c NBP Exchange Company Ltd
iv.c National Bank Modaraba Management Co.
v.c National Agricultural and Storage company Ltd.
vi.c Cast-N-Link Products Ltd

.. Joint Venture

i.c United National Bank Ltd., UK

(Economic Indicators Pakistan, Published by Economic research Wing NBP, Head Office
Karachi)

. PRESENT STAT S OF BANK

The new management team having extensive experience of management of large

financial institutions both within and outside the country is expected to further enhance
the profitability and operational efficiency of the Bank.

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..1 Prospects

The Bank's principal strategic going forward objective is to make the transition from a
public service institution to a modern commercial bank. Being the country's largest
financial institution, the Bank is uniquely positioned to leverage its large branch network
and its 8.5 million-customer base to consolidate its core businesses as well as develop
new revenue generating opportunities. The new management team is in place combining
the Bank's existing personnel with professionals recruited from outside.

.. Corporate & Investment Banking

A new approach to corporate banking is underway. The Bank has initiated a structured
approach to corporate banking by introducing a single point of contact through
Relationship Managers (RMs). For this purpose, new RMs as well as team leaders has
been inducted to expedite this process. Area Managers will be appointed to manage
relationships and to better service the needs of multinationals and large local corporate.In
investment banking team has also been formed to offer specialized services to major
relationships including advisory and debt syndications (TFCs). Furthermore, to stem the
growth in non-performing loans, the existing risk / credit management practices at the
Bank are being revamped.

.. Treasury / International Banking

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

REFERENCE

1c http://www.nbp.com.pk/BRNTWRK/OverseasBranchFinder.aspx

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CHAPTER # 6

ANAGEENT OF ORGANIZATION

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

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

6.1 ANGEENT SYSTE

The management has two types.

6.1.1Centralized anagement

Tends to concentrate decision making at the top of the organization

6.1. Decentralized anagement

Disperses decision making and authority throughout and further down the organizational
hierarchy.

ÊÔ


 &















 

6. ANAGEENT STR CT RE

6..1 Central board

The general superintendent and direction of the affairs and business of the bank shall be
entrusted to the central board which may exercise all powers and things as may be
exercised or done or done by the bank and or not by this ordinance expressly directed or
required to be done by the bank in general meeting.

The Central bank consists of the following directors namely:

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i.c Managing director

ii.c President

6.. anaging Director

The Managing director appointed by the central government under section 16, nine
directors is directed in local or special meeting by the share holder in the following
manners. The share holder registered in a branch, register maintained for an area
mentioned in sub section (5) of section 8, shall elect from amongst themselves, such
number of directors for that area as may be decided before election by the central
government having regard to the proportion which that share capital subscribed by the
share holders of that area bears to the whole. Provided that shareholders registered in
branch register maintain at Dacca shall elect from among themselves at least two
directors.

Three directors appointed by the central government, provided that total number of
elected directors representing the area for which the Decca register is maintained shall
not be less than three.

6.. President

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

6.. ^ocal Board

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

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i.c The Managing director

ii.c One member appointed by the central board from amongst the directors elected by
the share holder register in the branch register of the area.
iii.c Two members appointed by the central government from the area in which the
local board is situated.
iv.c Three members elected in local or special board meeting from among themselves
by the shareholder register in the branch register of the area.

The Managing director shall be appointed by the central government for a period not
exceeding five years and on such salary and terms and condition of the service as the
central government may determine.

6..
New anagement Structure

The previous management has removed by the bank nationalization ordinance 1974,the
general direction and superintendent of the affairs and business of the banks vests in the
Executive board consisting of President (Chief executive) and five senior executives of
the bank.

The federal government in 1980 constituted a board of directors comprising the president
and the members of executive board of the bank and two additional member¶s one
representing the ministry of finance and the other Pakistani banking council.

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

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6..6 Board of Directors.

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

6.. anagement Committee:

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

6. TRAINIG & ANAGEENT DEVE^OPENT WING

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

i.c Karachi
ii.c Lahore
iii.c Peshawar
iv.c Islamabad

In these centers and staff colleges, the banking training is provided to the officers,
managers, and to potential managers. It arranges courses and seminars for middle and
higher management in all. Each year almost 1500 persons receive training over there.

6. CORPORATE INFORATION

6. .1 Board of Directors

1.c Syed Ali Raza Chairman & President, Chief executive Officer
2.c M. Ayyub Khan Tarin Director
3.c Ibrar A. Mumtaz Director & President, Chief executive Officer
4.c Tariq Kimrani Director
5.c M. ArshadChaudhary Director

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6.c Sikandar Hayat Jamali Director

7.c MianKausarHameed Director

6. . Audit Committee

1.c M. Ayyub Khan Tarin Chairman

2.c Ibrar A. Mumtaz Chairman
3.c Tariq Kimrani Chairman
4.c M. ArshadChaudhry Chairman
5.c MianKausarHameed Chairman

6. . Auditors

1.c Ford Rhodes SiddatHyder& Co. Chartered Accountant

2.c M. YousufAdilSaleem& Co. Chartered Accountant

6. . ^egal Advisors

1.c Mandviwala&Zafar Chartered Accountant

6.
SENIOR ANAGEENT

1.c Qamar Hussain Chief Operating Officer , Head of Credit &

RiskmManagement Group
2.c Dr. Asif A. Brohi SEVP & Group Chief, Operations Group
3.c Shahid Anwar Khan SEVP & Group Chief, Overseas Banking Group / m
Corporate & Investment Banking Group
4.c Ziaullah Khan SEVP & Group Chief Agriculture Finance Group
5.c Dr. Mirza Abrar Baig SEVP & Group Chief, Human Resources .
Management & Administration Group
6.c Amer Siddiqui SEVP & Group Chief, Commercial & Retail z
Banking Group
7.c Tariq Jamali SEVP & Group Chief, Compliance Group

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8.c Nadeem A. Ilyas SEVP Group Chief, Assets Recovery Group /..
Corporate & Investment Banking Group
9.c M. Nusrat Vohra SEVP & Group Chief, Treasury
Management.Group
10.cKhalid Bin Shaheen SEVP & Group Chief, Global Home Remittance..
Management Group
11.cImam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection Group
12.cN. B. Soomro SEVP , Special Assignments, President's Secretriate
13.cAgha Fidaullah EVP/Group Chief, Special Assets Management m
Group
14.cShafique Ahmed Khan EVP & Divisional Head, Islamic Banking Division
15.cEkhlaq Ahmed EVP & Secretary Board of Directors
16.cFazal-ur-Rehman EVP & Head P&IR Division, HRM&A Group
17.cMuhammad Hanif EVP & Head HR & OD Division, HRM&A Group
18.cMuhammad Iqbal Qasim EVP & Head SC & CSR Division, HRM&A Group
19.cTahira Raza EVP & Head Risk Review Division, Credit and.
Risk Management
20.cAli Hassan SVP & Divisional Head, IT Division / Chief.
Information Security Officer / Secretary . Information Technology
Board Committee
21.cAamir Sattar SVP & Divisional Head, Financial Control Division

22.cFaisal Mahmood VP & Divisional Head (A) , PMO & Project m

Director CBA

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6.6 OVERSEA ANAGEENT

1.c Zubair Ahmed SEVP & Regional Chief Executive, Middle East, m
Africa & South Asia Region
2.c R.A. Kaleemi SEVP & Chief Representative, Canada Office
3.c M. Rafiq Bengali SEVP & Regional Chief Executive,
AmericasmRegion
4.c Asif Hassan SEVP & Regional Chief Executive, Far East Region
5.c Nausherwan Adil SEVP & Regional Chief Executive, Europe Region
6.c Khawar Saeed SVP & Regional Chief Executive, Central Asian m
Republics Region
7.c Muhammad Hanif Khan SVP & Coordinator, Afghan Operations

REFRENCES

1.c www.nbp.com.pk

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CHAPTER # 

BRANCH PROFI^E &DEPARTENTS

.1 BRANCH PROFI^E

Name of Branch National Bank of Pakistan LDA Plaza Model Branch

Region Lahore

Establishment 30-09-1966

Branch Code 0466

Address National Bank of Pakistan LDA Plaza Model Branch

Lahore

Phone Number 042-9204536

Fax Number 042-9200435

Name of Manager Muhammad Ayyub

No of Working Staff 20

Branch category III

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. INTROD CTION OF BRANCH AND ESTAB^ISHENT

The branch has established in 30-09-1966 in order to cope the financial needs of the
people. As it is an agent of the State Bank of Pakistan so its main objective is to provide
credit in order to fostering growth in all the sectors so with the view of this LDA Plaza
Model Branch of National Bank of Pakistan came into existence. From last many years
this branch is not only achieving its targets of deposits and advances rather it remains
above the targets.

. BRANCH HIERARCHY

BRANCH MANAGER OPERATIONS MANAGER

CREDIT OFFICER ESTABLISHMENT

OFFICER GRADE- I

OFFICER GRADE-II

OFFICER GRADE-III

MESSENGER

PEON

SWEEPER

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. DEPARTENTS OF TRAINIG

I was learned in different department of bank. One of my trainingwas to deal with the
customers in almost every department. Different customers ask for different things. Like
in the Account opening department, they ask about the procedure, charges, balance
inquiry etc. In the clearing department they ask about the bonus back of cheques and
related things. In pension I fill their pension form. Some customer also got confused
where to start, I had also guided them. The names of department are as follow:

i.c Account Opening Department

ii.c Cash Department
iii.c Clearing Department
iv.c Pension Department
v.c Remittances Department
vi.c Accounts Department
vii.c Credit Department
viii.c Human Resource Department

. .1 Account Opening Department

In Account opening department I was learn a lot. Maintaining good relationship with the
customers were polished my interpersonal skills and resolving customer¶s Problems give
them a feeling that the company employees care for them. There were several types of
accounts such as:

i.c Individual/ Joint Account

ii.c Sole Proprietorship/ Partnership/ Joint Stock
iii.c BBA (Basic Banking Account)
iv.c PLS

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Documents required for opening Account are:

i.c Original NIC
ii.c Copy of CNIC which verified/attested
iii.c If he/she is Govt. employee then he must give certified letter of that institution
where he/she is working.
iv.c If he/she is illiterate person then he/she give his/her three photographs.
v.c The copy of the utility bill.
. .1.1 for Partnership

i.c Copy of NIC (see original NIC)

ii.c Attested copy of Partnership Deed´ duly signed by all partners of the firm.
iii.c Attested copy of Registration Certificate with Registrar of Firms. In case the
partnership is unregistered, this fact should be clearly mentioned on the
Account Opening form.
iv.c Authority letter, in original, in favor of the person authorized to operate on the
account of the firm.
v.c Copy of registration certificate( if registered)
vi.c Company Letter Head

The persons which opened their account in bank when they receive the letter from
bank they return the letter to bank after they do sign on it or they bring that letter then
bank issue cheque book.

. . Cash Department

In cash department different facilities was given to the customer such as: received
cheques, receive cash, pay cash, online transaction. Online service is provided by the
bank to transfer money from one account to another.

Work in cash department and learned how to accomplish different tasks like deposit,
credit card slips and how it build the scroll of PTCL, Electricity and SNGPL bills.

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I was counted bundles of cash, sorted the cash and make their packets and bundles again.
The spoiled cash is sent to the head office. Head office sent this to State Bank, which
after checking to burn the spoiled notes.In cash department when I wasreceived the
cheques from the customer, I was to verify the signatures of the issuer. The date of issue
of cheque, signature and amounts are checked. Cheque can be encased after six months of
its issue.

If that period is over then the cheque is returned unpaid. There is a limit, different officers
verify up to different amounts. If there was any problem in the signatures, then bank call
the issuer on the phone to confirm whether he draws the cheque or not. On the back of
the cheque there should be the sign of the issuer. If any other person presented the cheque
then he has to give a photocopy of CNIC of issuer. The person who do not able to do
signature and he paste thumb impression with copy of CNIC.In cash department I also
learnt how to identify original cheque, this could save from frauds.

. . Clearing Department

Work in clearing department and learned how documents was cheeked in clearing
department. If the customer deposited the cheque of another bank to our branch then we
use the stamp of clearing and sent it to the clearing house (NIFT). They have the
representatives from all banks. They checked the stamping, signatures, date, amount; etc.
if it is correct then they clear it. Otherwise these are returned to the branch. State Bank of
Pakistan Dr. or Cr. the amount of these cheques.

There are three types of clearing:

. ..1 Inward Clearing:

In inward clearing the bank was pay on the behalf of their customer. In it bank give the
payment to other bank.

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. .. Outward Clearing:

In outward clearing the bank was receiving the amount on the behalf of their customers.
In it bank collect the payment from other banks. In it there was two further types which
are:

7.4.3.2.1 Clearing

In it the cheque of bank own account holder of within city is cleared. Bank take the
cheque posted stamp on it & NIFT collect these cheques in evening. If all the things like
amount, date, signature etc is correct then NIFT sent it to the bank whose cheque is this.
And something is incorrect or amount was not sufficient then they return the cheque. The
entry of the clearing is recorded in clearing registered

7.4.3.2.2 Intercity clearing

In it the cheques of out of city is cleared these cheques are also stamped and intercity
clearing stamp wasalso required. These cheques were raped in the envelope of that city
and entry is recorded in intercity clearing register and NIFT collect these.

. .. SC (Short Credit:

It is out of city where the branch of SBP does not exist. The SC is made when the
customer is bank own account holder and he/she give the bank a cheque of any other
bank or of NBP of other city where NIFT is not working.

SC stamp is required& SC serial no was written in it which is according to the serial no

of the SC register in which the record is kept. SC form is filled. Bank keeps the credit
voucher with them and cheque with SC form is sent.

Separate register for SC sent and received is prepared. When the bank who sends SC
received the fan code then bank credited the customer account and debited general
account.

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. . Pension Department

There are three types of pension which is paid by the bank which are:

i.c Provincial Pension

ii.c Defense Pension
iii.c Central Pension
iv.c EOBI (Private pension)

Requirement for taking pension

The pensioner must fill the pension form

He paced the ticket on pension form according to the amount of pension

i.c Up to Rs 1,000 (two rupee ticket is pasted )

ii.c For more than 10,000 (five rupee ticket is pasted)

The bank checks the following things for giving pension:

i.c Their PPO no.

ii.cThe people whose pension is this he/she his/her own self collect the
pension.
iii.cRevenue Ticket on pension form
iv.cBank do entry in the pension book of the pensioner and also make the entry
in the banks register.

The start of the month from 1st to 10th bank gives them pension in cash. And from 15to 25
the banks take the pension form and transfer their pension in their account on 1st of next
month.

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At the end of the day the scroll of the pensions which is paid in the whole day is made.
Separate pension scroll is prepared for defense, provisional and central. Two scrolls are
prepared one for bank record and other is sent to head office.

. .
Remittances Department

Remittance department provide a facility to a customer to transfer money from one place
to another. And can also refer to the accounting concept of a monetary payment
transferred by a customer to a business. Remittances are transfers of money by foreign
workers to their home countries. In remittances they tell me different functions. They
issue pay orders, demand drafts, fixed deposit receipt (FRD), telegraphic (TT) and mail
transfer (MT).

They can transfer money through

i.c Pay Order (PO)

ii.c Demand Draft (DD)
iii.c Tele Transfer (TT)
iv.c Mail Transfer (MT)

. .
.1 Pay Order (PO

This is used to transfer money within city. The customer making the pay order from bank
for giving money to any other party, they fill the pay order slip and give to the bank.
After that they deposited money in bank and bank give them pay order. The charges was
taken it depend upon the amount. The bank takes the following charges:

i.c Commission

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. .
. Demand Draft (DD

This was used to transfer money outside city. The customer making the demand draft
from bank for giving money to any other party who is live , they fill the demand draft slip
and give to the bank. After that they deposited money in bank and bank gives them
demand draft. The charges were taken it depend upon the amount. The bank takes the
following charges:

i.c Commission
ii.c FED (it is taken on bank charges which is 16%)

. .
. Tele Transfer (TT

This was used to transfer money outside or within the country. In Tele Transfer the bank
transfers money through fax. The charges was taken it depend upon the amount. The
bank takes the following charges:

i.c Exchange is taken

a.c Rs.1,000 to Rs.100,000 (0.01 or Rs. 50 whichever is higher is
taken)
b.c Rs.100,001 to Rs.1000,000 (0.05 or Rs. 100 whichever is higher is
taken)
c.c above Rs.1000,000 (0.04 or Rs. 400 whichever is higher is
taken)
ii.c Postage Charges
iii.c FED (it is taken on bank charges which is 16%)

. .
. ail Transfer (T

This was used to transfer money outside or within the country. For making MT it was
necessary that to whom the customer send money they have account in NBP bank. The
charges were taken it depend upon the amount. The bank takes the following charges:

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i.c Exchange is taken

a.c Rs.1,000 to Rs.100,000 (0.01 or Rs. 50 whichever is higher is
taken)
b.c Rs.100,001 to Rs.1000,000 (0.05 or Rs. 100 whichever is higher is
taken)
c.c above Rs.1000,000 (0.04 or Rs. 400 whichever is higher is
taken)
ii.c Postage Charges
iii.c FED (it is taken on bank charges which is 16%)

. .6 Accounts Department

I was worked in accounts department and learned how the daily activities are being
handled. I was rechecked entries, vouchers and matched them with the entries in the
report. I was identified errors in it like missing stamps, wrong entry of document number;
etc. Here I was checked their different reports of daily working like online report,
reconciliation report, and customer report. Here I was checked G/L account in which
there are different types of accounts like refreshment, suspense, depreciation account; etc.
In customer account report I was to see the vouchers of their day to day transactions. In
this they make the budget for their monthly and daily expenses (refreshment, stationary;
etc.) Salaries of the staff are prepared in this department.

. . Credit Department

Work in credit department and learned how loans was being approved and how proposals
are send to valued customers. Here Iwas to see different things like worth of customers,
there financial strengths, market repute; etc.There were different types of finances and for
them there were different requirements like requirements of working capital, mark up rate
was been decided and clean up requirements has also taken into consideration.

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National bank of Pakistan also provides finance facility for:

i.c Loan against gold

ii.c Advance salary loan
iii.c Advances in current account for pledge
iv.c Saibaan

. ..1 Cash & Gold

Ready Cash against Gold

i.c Facility of Rs. 10, 000/-against each 10 gms of net weight of Gold Ornaments
ii.c No maximum limit of cash
iii.c Repayment after one year
iv.c Roll over facility
v.c No penalty for each repayment

. .. Advance Salary

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

.. Saibaan

Home Financing

i.c Home Purchase

ii.c Home Construction
iii.c Home Renovation

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iv.c Purchase of Land + Construction

v.c Balance Transfer Facility (BTF)

. . Human Resource anagement

The human resource management was workingh in regional head office Lahore. In the
last week I was work in regional head office in Human resource Dapartment. 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 was 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:

. ..1 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.

. .. Job for ^ife

Like the employee of public sector organizations in Pakistan, the employees of NBP also
enjoy their job for life. Since there was no risk of early retirement or redundancy in rank,
they do not perform with their full potentials.

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This was one redundancy in rank, they do not perform with their full potentials, and this
was one of the reasons responsible for the low productivity of the employees of the Bank.

. .. Performance Appraisal

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

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

ii.c Element of subjectivity is involved in this method.
iii.c Employee¶s participation is not ensured in the process of evaluation.
iv.c Objectives of employee¶s are not quantified.

. .. Inter Personal Relationship

Modern management acknowledges human resources as one µof the most important
assets of an organization. But by their very nature, human beings are also the most
unpredictable. Where a number of persons work together, interactions among them, of
necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in
NBP can be traced back to the following major heads.

Lack of Communication

Lack of communication was for the biggest reason for conflicts. Not only it is due to the
failure to send a massage but to an interpretation given to the massage by the receiver is
different from that intended.

. ..
Diversity in Values

Diversity in values, perceptions, cultural background and life-style is another reason

responsible for inter personal conflicts in NBP.

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Different values and perceptions about the same issue, event or personality hinder
understanding. When things come to such a pavement, therefore, interpersonal conflicts
are generated.The dominant trend in all modern industrial societies of the world is merit
and expertise, which helps promote cohesion and reduce conflicts. But the feudalistic
mindset is still very strong in our set up and there was no tradition of tolerance for
differing viewpoints. Hence, interpersonal conflicts are generated.

. ..6 Corruption

Our social acceptance of corruption gives rise to corruption at every level of social and
organizational set up. Corruption involves financial embezzlement, favoritism, nepotism,
cronyism and other number of such practices. All these cause resentment that keep
building up and lead to conflict sooner or later.

In the past few years, some cases of frauds have happened in different branches. The
reasons can be linked with the employee dissatisfaction of NBP.

. .. Discipline & Authority

Maintaining discipline and implementation of authority (tables) in letter and spirit is the
key to success of any organization. In NBP, The authority tables are not strictly
maintained. Line managers are not fully equipped with the authority with no vertical or
horizontal interference.

REFRENCES

1c The Negotiable Instruments. Act, 1881.

2c Circular bank charges June 2003.page 15.

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CHAPTER # 

ANA^YSIS OF NBP

.1 FINANCIA^ ANA^YSIS

The financial statement of any organization shows the results of its operation and its
position in business. It was a process which involves reclassification and summarization
of information through the establishment of ratios and trends. The overall objective of
financial statement analysis was the examination of a firm¶s financial position.

Horizontal analysis

Through this analysis I can check that what changes waswithin years in the items of
balance sheet and profit and loss account. Last year become base for next yearand change
can be easily analyzed.

Vertical analysis

In vertical analysis of balance sheet the percentage of each item of statement is calculated
to total and then the change in the percentages was checked with in years.

.1.1 Horizontal Analysis of Balance Sheet

.1.1.1^iability Side

.1.1.1.1 Share Capital:

If the share capital of the company will increase its means that company were issue right
share or bonus share.

If the share capital is constant its means further share is issued.

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.1.1.1. Right Share

i.c Light share is issued to existing shareholders

ii.c It is issued at par, Premium or discount
iii.c When right share is issued, equity will increase, stake of shareholder will
increase, confidence of shareholder will increase, worth of Company will
increase, growth of company will increase when owner¶s take increase the
creditor confidence automatically increase.

.1.1.1. Bonus Share

i.c Bonus share is issued out of reserve

ii.c It is free of cost
iii.c When bonus share is issued, reserve will decrease and bonus share will
increase

.1.1.1. Reserve

i.c If profit increase, the reserve also increase. It is beneficial for the company and it
is belongs to the share holder.
ii.c It the reserve is decrease its means the company may issue bonus share

Jc ^ong term loan

i.c When installment is paid by the company long term loan will decrease, which
shows a positive sign.
ii.c If it is increased due to increase fixed assets, it also shows a positive sign
iii.c It is negative for business if it is due to non-payment and penalties

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.1.1.1.
Current ^iabilities

i.c It means working capital increase which shows capacity level will also increase.
ii.c Longer the process of liquidity,
iii.c The company has more working process, more finished goods, more Debtors the
company refuse more Working capital for its survival.

.1.1. Assets Side

.1.1..1Fixed Assets:

i.c If asset is decreased due to depreciation it is not a negative impact.

ii.c If asset is decreased due to sale, it shows a negative impact, and which means
company is curtailing its operation
iii.c When asset is replaced, it is a positive effect which means company has optimistic
in its operation.
iv.c Asset is purchased for BMR (Balancing Modernization Replacement)

.1.1.. Balancing:

If company has two developments, cutting and finishing Department cutting department
has capacity of 1000 units and finishing department has 700 units. It is called operational
unbalancing. The company would buy fixed assets for finishing units

.1.1.. odernization

When company change its assets due to modernization it means manual production will
shifted into mechanical production

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.1.1.. Replacement

When asset is worthless, it should be replaced.

.1.1..
Current Assets

i.c Increase in raw material is best its shows that more raw material is available on
credit.
ii.c Increase in finished good it is bad, it shows goods are unsold
iii.c Increase in work in process more days one required to convert raw material into
finished goods,
iv.c Increase in trade receivable It is negative sign, it means that company¶s money is
in the hand of customer because if the debt is old, it is doubtful.

ASSETS   Percentage

Rs µ¶ Rs µ¶ Change

Cash balances with other treasury 115,827,868 106,503,756 10.87%

banks

Balances with other banks 28,405,564 38,344,608 7.40%

Lending to financial institutions 19,587,176 17,128,032 11.43%

Investments 217,642,822 170,822,491 12.74%

Advances 475,243,431 412,986,865 11.50%

Operating fix assets 25,147,192 24,217,655 10.38%

Deferred tax assets 3,062,271 3,204,572 9.55%

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Other assets 59,316,438 44,550,347 13.31%

Total assets 944,232,762 817,758,326 11.54%

^IABI^ITIES   Percentage

Bills payable 10,621,169 10,219,061 10.39%

Borrowing from financial institutions 45,278,138 40,458,926 11.19%

Deposits & other accounts 726,464,825 624,939,016 11.62%

Subordinated loans - - -

Liabilities against assets of leasing 42,629 25,274 16.86%

Deferred tax liabilities-net - - -

Other liabilities 42,269,623 39,656,831 10.65%

Total liabilities 824,676,384 715,299,108 11.52%

Net assets 119,556,378 102,459,218 11.67%

REPRESENTED BY   Percentage

Share capital 10,763,702 8,969,751 12%

Reserves 22,681,707 19,941,047 11.37%
Unappropriated profit 61,346,510 52,456,204 11.69%
94,791,919 81,367,002 11.64%
Surplus on revaluation of assets 24,764,459 21,092,216 11.74%
119,556,378 102,459,218 11.66%

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.1. Horizontal Analysis of Profit And ^oss Account

.1..1 Increase in Sales:

If the Sales of the Company Is Increase there may be

i.c If the no of units sold is more than the sale will increase
ii.c If the sale price of the product will increase it will increase the sales.
iii.c Mixing of price and quantity
iv.c Product switch over to value added product.

.1.. Increase in Cost of Goods Sold:

If the cost of goods will increase it mat due to the following

i.c Increase in volume of production

ii.c Increase in the Cost price of following (Material, Lab our, Overhead)
iii.c Mixing of above two
iv.c Value added product is produced.

.1.. Comparative Analysis (Sales & CGS:

i.c If sales increase 10% and cost increase 10%,it is good.

ii.c If sales increase 10% and cost increase 15% it means company has no control
over casting.
iii.c If sale increase 10% and cost increase 8% the company has a better control of
cost, enjoy max. Profit and achieve economy o0f scale.

.1.. Increase in Gross Profit:

i.c Its mean that CGS is less and Sales is more, which resultantly increase the Gross
profit.

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ii.c The market demand of the product increase. Which increase gross profit?
iii.c Expansions due to marketing strategy.
iv.c If gross profit is more it shows that company has a cushion, to meet its selling and
administrating expenses.

.1..
Operating Expense:

i.c It is always related with the growth of sale.

ii.c If sale increase, these expenses will also increase.
iii.c Admin expenses link with the office administration, if business is expand it will
also increase.
iv.c If sales promotional expenses increases it will provide the benefit for more than 1
year, it means that the company has expansionary policy.
v.c If sale and selling expense, both increase in same production, it is good.
vi.c If sale is constant and selling expense is increased, it allows that company is
falling perfect competition in the market.
vii.c Sometimes, these expenses one necessary for the survival of business.
viii.c Selling expenses and promotional expenses is considered as investment in certain
industry such as
ix.c Pharmaceutical Company, Fashion Company because these companies have a
great effect on the long term sales of the companies.
x.c If the operating expense is increase, but on the other hand sales is not increasing it
is not good for the company, sales manager and admin manager is responsible for
that increase.

.1..6 Operating profit:

i.c It is the actual profit of the company, which is available after meeting all
operational expense.
ii.c It is the combination of 3 elements, CGS, Selling expense, Adm. Expense

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iii.c If sale increase, operating profit will increase

iv.c If cost decreases , operating profit will increase
v.c If selling And Administrative expenditure decrease, operating profit will increase
it increase
vi.c If is the overall performance of the company after maintaining all expenses.

.1.. Profit before interest and tax:

i.c If this profit is more than the operating profit its means that company is getting
profit not from its operations.
ii.c The company gets profit due to gain on the sale of Asset and other items like
dividend, Interest.
iii.c This is due to the gain on the sale of assets (Particularly of This Company).
iv.c Profit is more but not due to operation of the business.
v.c This is available in this year but not in the coming year.
vi.c This is not a good policy to sale the asset and increase the profitability.
vii.c The company¶s real earning is not increasing, creditors have doubt about repaying
capacity, and this is not good for creditors.
viii.c This company abnormally gets huge profit margin on the sale of Assets, which
indicate that the portfolio of the investment is better or Selection of portfolio is
better at the time of purchase Investment.

.1.. Increase in Financial cost:

If the financial cost is increase as to compare the previous year it may due to the
following.

i.c Increase in borrowing

ii.c No borrowing but rate of interest is increased.
iii.c This finance cost includes both short term cost and long term cost.

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.1.. Finance Cost and ^ong Term ^oan:

i.c If the company increases its long term loan, which is used for the acquisition of
fixed asset, logical result will be affected in next year, the production will
automatically increase and company will get more profit as compare last year.

.1..1 Finance Cost and Short Term ^oans;

i.c It means working capital increase which shows capacity level will also increase.
ii.c Longer the process of liquidity,
iii.c The company has more working process, more finished goods, more Debtors the
company refuse more Working capital for its survival.

Financial cost is bad when loan is default re-schedule and penalty will impose.

.1..11 Profit before Taxation

Profit before taxation is used for the calculation of taxation, if more profit then tax will be
paid

.1..1 Profit after Taxation:

Profit after taxation is used for the payment to the share holders towards dividend.

i.c If after taxation profit will increase, its means that the entitlement of shareholder
in the company will increase.
ii.c The company EPS will increase.
iii.c Market capitalization will increase.
iv.c Share prices will automatically will increase

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PARTIC ^ARS   Percentage

Mark-up/return/interest earned 77,944,697 60,942,798 27.89%

Mark-up/return/interest expenses 39,489,649 23,884,768 65.33%

Net mark-up/ interest income 38,458,048 37,058,030 03.77%

Provisions against non performing 11,043,469 10,593,565 4.24%

advances

Provision for/(reversal of) 605,629 373,249 62.32%

diminution in the value of
investment

Provision against off balance sheet 20,237 4,000 05.92%

obligations

Bad debt written off directly - - -

11,669,335 10,970,814 06.63%

Net Mark-up/interest Income after 26,788,713 26,087,216 10.26%

provisions

Non
ark
up/interest Income c

Fee, commission and brokerage 8,930,391 7,925,370 12.68%

income

Dividend income 1,920,336 2,878,932 66.70%

Income from dealing in foreign 3,028,165 3,969,057 7.62%

currencies

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Gain on sale and redemption of 4,591,894 395,427 61.24%
securities-net

Unrealized/(loss) on revaluation of 2,355 1,707 37.96%

investments

classified as held-for-trading

Other income 552,216 1,245,369 44.34%

Total Non-Mark-up/interest Income 19,025,357 16,415,862 15.89%

45,814,070 42,503,078 7.79%

Non
ark
up/interest expenses c

Administrative expenses 22,571,470 18,171,198 24.21%

Other provisions/write offs 620,780 747,521 8.30%

Other charges 321,647 583,361 55.13%

Total Non-Mark-up/interest 23,513,897 19,502,080 20.57%

expenses

22,300,173 23,000,998 96.95%

Extraordinary/unusual items 22,300,173 23,000,998 96.95%

Profit Before Taxation

Taxation-current 9,221,513 11,762,650 78.39%

-prior years - - -

-deferred (999,904) (4,220,242) 23.69%

4,088,327 7,542,408 54.20%

Profit After Taxation 18,211,846 15,458,590 17.81%

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Un-appropriated profit brought 52,456,204 45,344,188 15.68%
forward

Transfer from surplus on 123,934 130,456 9.5%

revaluation of fix assets

Profit available for appropriation 7,0791,984 60,933,234 16.17%

.1. Vertical Analysis of Balance Sheet

Perce
Perce

ASSETS  
ntage ntage

Cash balances with other 115,827,868 12.26% 106,503,756 13.02%

treasury banks

Balances with other banks 28,405,564 3.30% 38,344,608 4.7%

Lending to financial 19,587,176 2.07% 17,128,032 2.1%

institutions

Investments 217,642,822 23.04% 170,822,491 21%

Advances 475,243,431 50.33% 412,986,865 50.5%

Operating fix assets 25,147,192 2.66% 24,217,655 3%

Deferred tax assets 3,062,271 3.24% 3,204,572 0.4%

Other assets 59,316,438 6.28% 44,550,347 5.45%

Percen Percen
^IABI^ITIES  
tage tage

Bills payable 10,621,169 1.28% 10,219,061 1.43%

Borrowing from financial 45,278,138 5.49% 40,458,926 5.7%

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institutions

Deposits & other accounts 726,464,825 88.09% 624,939,016 87.4%

Subordinated loans - - - -

Liabilities against assets of 42,629 5.16% 25,274 .0035%

leasing

Deferred tax liabilities-net - - - -

Other liabilities 42,269,623 5.12% 39,656,831 5.5%

REPRESENTED BY  Percentage  Percentage

Share capital 10,763,702 11.35% 8,969,751 11.02%

Reserves 22,681,707 23.92% 19,941,047 24.5%

Unappropriated profit 61,346,510 64.71% 52,456,204 64.5%

.1. Vertical Analysis of Profit And ^oss Account

PARTIC ^ARS  Percentag  Percentag

e e

Mark-up/return/interest 39,489,649 50.64% 23,884,768 39.2%

expenses

Net mark-up/ interest 38,458,048 49.33% 37,058,030 60.81%

income

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Provisions against non 11,043,469 14.16% 10,593,565 17.4%
performing advances

Provision for/(reversal of) 605,629 14.16% 373,249 0.61%

diminution in the value of
investment

Provision against off 20,237 0.0002% 4,000 0.007%

balance sheet obligations

Bad debt written off - - - -

directly

11,669,335 14.97% 10,970,814 18%

Net Mark-up/interest 26,788,713 34.36% 26,087,216 43%

Income after provisions

Non
ark
up/interest
Income

Fee, commission and 8,930,391 7,925,370 13%

brokerage income

dividend income 1,920,336 2,878,932 4.72%

Income from dealing in 3,028,165 3,969,057 6.51%

foreign currencies

Gain on sale and 4,591,894 395,427 0.65%

redemption of securities-
net

Unrealized/(loss) on 2,355 1,707 0.003%

revaluation of investments
classified as held-for-

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trading

Other income 552,216 1,245,369 2.04%

Total Non-Mark- 19,025,357 16,415,862 27%

up/interest Income

45,814,070 42,503,078 70%

Non
ark
up/interest
expenses

Administrative expenses 22,571,470 28.95% 18,171,198 30%

Other provisions/write 620,780 0.007% 747,521 1.23%

offs

Other charges 321,647 0.004% 583,361 0.96%

Total Non-Mark- 23,513,897 30.16% 19,502,080 32%

up/interest expenses

22,300,173 28.60% 23,000,998 37.74%

Extraordinary/unusual - - -
items

Profit Before Taxation 22,300,173 8.68% 23,000,998 37.74%

Taxation-current 9,221,513 3.59% 11,762,650 19.3%

-prior years - - - -

-deferred (999,904) 0.003% (4,220,242) (6.92%)

4,088,327 0.01% 7542,408 12.4%

Profit After Taxation 18,211,846 7.09% 15,458,590 25.4%

Un-appropriated profit 52,456,204 20.42% 45,344,188 74.4%

brought forward

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Transfer from surplus on 123,934 0.004% 130,456 0.21%
revaluation of fix assets on
account of incremental
depreciation

Profit available for 7,0791,984 27.57% 60933234 100%

appropriation

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. RATIO ANA^YSIS

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. Ration 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.

8.2.1 Current Ratio

Formula:

Current ratio= Current assets/Current Liabilities

Year  Year 

Current assets 15,3810,681 161,976,396

Current liabilities 481,381,235 533,667,962

Current ratio .1

.

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Interpretation

An increase in the current ratio represents improvement in the liquidity position of bank
while a decrease in the current ratio indicates that there has been deterioration in the
liquidity position of the bank. Current ratio in 2008 is decreasing as compared with 2009.
It should be improved.

.. Working Capital

Formula: Working Capital=current assets-current liabilities

Year  Year 

Current assets 153,810,681 161,976,396

Current liabilities 481,381,235 533,667,962

Working Capital (



 (161
66

Interpretation

Working capital should increase which will show that there is increase in current assets.
But here working capital is decreasing in 2008 as compared with 2009. it should be
improved.

.. Total asset turnover

Formula:

Total asset turnover= sales / Total assets

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Year  Year 

Sales 50,569,481 60,942,798

Total assets 762,193,593 817,758,326

Total asset turnover .66 .

Interpretation

Higher the total asset turnover the more efficiently its assets have been used. This
measure was probably of greatest interest to management, because it indicates whether
the efficient operations have been financially efficient. Total asset turnover is increasing
in 2008 as compared with 2009 which is a good sign.

.. Debt Ratio

Formula:

Debt Ratio = Total liabilities / Total Assets

Year  Year 

Total liabilities 645,855,939 715,299,108

Total assets 762,193,593 817,758,326

Debt ratio  .  . 

Interpretation

The debt ratio measures the proportion of total assets by the creditors. The greater this
ratio the greater the amount of other people¶s money being used to generate profits. The
higher this ratio greater the degree of indebtedness an more financial leverage. NBP¶s
debt ratio is increasing in 2008 as compared with 2009 which is not favorable.

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..
Time interest earned ratio

3ormula

ccccccccccccccc
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Year 2009 Year 2008

Earning before interest ·
·
c · 
c

and taxes
c

Interest ·

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c

Time interest earned 2.95 2.18

ratio

Interpretation

Time interest earned ratio sometimes called interest coverage ratio, measure the ability to
make contractual interest payments. The higher its value the better able the organization
was to fulfill its interest obligations. Time interest earned ratio is decreasing in 2008 as
compared with 2009. It should be improved.

..6 Gross Profit argin

Formula

Gross profit margin

= Sales-cost of goods sold / Sale

= Gross profit / Sale

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Year  Year 

Gross profit 33,629,470 37,058,030

Sales 50,569,481 60,942,798

Gross profit margin 66.

 61

Interpretation

Gross profit margin measures the percentage of each sales rupee remaining after the
organization has paid for its goods. The higher the gross profit margin, the better (that is
the lower the relative cost of merchandise sold). Gross profit margin is decreased in 2008
as compared with 2009. It should be improved£cc

.. Operating Profit argin

Formula

Operating profit margin l Operating profit / Sale

Year  Year 

Operating profit 42,451,580 42,503,708

Sales 5,056,9481 6,094,2798

Operating profit margin .

 6. 

Interpretation

Operating profits are pure because they measure only the profits earned on operations and
ignore interest, taxes and preferred stock dividend. A higher operating profit margin is
preferred. Operating profit margin is decreased in 2008 as compared with 2009. It should
be improved.

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.. Net Profit argin

Formula l Earnings available for common stock holder / Sale

Year  Year 

Earnings available for 19,033,773 15,458,590

common stock holder

Sales 50,569,481 60,942,798

Net profit margin .6  

. 

.. Earning Per Share

Formula

Earnings available for common stock holder / No. of shares of common stock
outstanding

Year  Year 

Earnings available for 19,033,773 15,458,590

common stock holder

No. of shares of common 815,500 897,190

stock outstanding

EPS . 1.

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Interpretation

Earnings per share (EPS) are the earnings returned on the each share. Higher eps is good
but here EPS is decreased in 2008 as compared with 2009 which is not good.

..1 Return on total assets

Formula:Earning available to common stock holder / Total Assets

Year  Year 

Earnings available for 19,033,773 15,458,590

common stock holder

Total assets 762,193,593 817,758,326

EPS .
 1.

Interpretation

Return on assets often called the return on investment. It measures the overall
effectiveness of management in generating profit with its available assets. The higher the
firm¶s return on total assets, the better. ROA in 2008 is decreased as compared with 2009.
It should be improved.

..11 Return on common equity

Formula lEarnings available to common stock holder / Common Stock Equity

Year  Year 

Earnings available for 19,033,773 15,458,590

common stock holder

Common stock equity 69,270,631 81,367,002

ROE .
 1

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Interpretation

ROE measures the return earned on common stockholders¶ investment. The better the
ROE, the better. ROE is decreased in 2008 as compared with 2009. It should be
improved.

..1 Book Value per Share of Common Stock

Formula lcommon stock equity /No. of shares of common stock outstanding

Year  Year 

Common stock equity 69270631 81367002

No. of shares of 815500 897190

common stock
outstanding

BV per share of 
1
common stock

Interpretation

Book value per share of common stock is increased as in 2008 as compare with 2009,
which is a good sign.

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. SOWT ANA^YSIS

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

1.c Exploiting an organizations opportunities and strength

2.c Neutralizing it threats
3.c 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.

..1 Strengths

i.c NBP one of the largest financial institutions of Pakistan with eight million of
customer base NBP holds 24.6% share of time and demand deposits in the
country. Local currency deposits comprise 67% of bank's total deposits while
foreign currency deposits account for the rest.
ii.c NBP has an extensive domestic branch network of 1254 branches located all over
Pakistan. The Bank also has a presence in 23 international locations including the
USA, United Kingdom, Europe and the Far East.
iii.c NBP's total assets stood at Pak Rs.370 billion on December 2008. This included
total earning assets of about Pak Rs.268 billion with gross loan portfolio of Pak
Rs.140 billion. The bank also has an investment portfolio of Pak Rs.91 billion,
which comprises treasury securities, corporate bonds, shares and other securities.

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iv.c NBP cash provision as percentage of nonperforming loans equal to 60% this
coverage factor for the non performing loans is the highest amongst the
nationalized commercial bank.
v.c NBP is working as right arm government of Pakistan as it is responsible for all
claims of government for recovery as well as payment. All depositor of NBP are
in relief that their money security is guaranteed by government of Pakistan.
vi.c It acts as an agent of the Central Bank wherever the State Bank does not have its
own Branch.
vii.c 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.
viii.c Performing social responsibilities and claiming The Nation¶s Bank´
ix.c Disbursing Salaries and Pensions to the Government employees and earning high
profit on NBP-Advance Salary Loan Scheme·
x.c Earning commission from SBP on Government transaction
xi.c Facing never problem of cash/currency being its Chest and Sub-chest
xii.c Holds largest deposit base in the market share in terms of number of accounts
xiii.c Leading bank in agriculture financing amongst commercial banks with the market
share of 15%
xiv.c Helping in earning of foreign exchange, remittances and leading agent of Western
Union Money Transfer NBP has decided to diversify the fund base by investing in
capital markets not only in Pakistan but also in the foreign countries.

.. Weaknesses

i.c Lowest Internal Control and Compliance System, SBP rated Marginal´ which is
alarming for the Bank.
ii.c Unsatisfactory corporate culture of the Bank
iii.c Physical environment and atmosphere compare to other banks is not meet the
standard

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iv.c Less number of Online Branches

v.c Ineffectively use of technologies i.e. Information technology
vi.c Shortage of staff- per employee customer is very high side
vii.c Technical education and training of staff is insufficient 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
demonization factor for employees performing above average work.
viii.c In NBP the individual difference have strong impact on the organization¶s
performance due to the wrong criteria of selection of the employee. So with the
passage of time individual differences are increasing which are undermining the
good will of the organization.
ix.c Uncertainly among the employees due to threat of downsizing

.. Opportunities

i.c Being a Government Bank NBP having wide scope in economic market.
ii.c Trust and reliability creates chances to enhance deposit and profitability.
iii.c Its vast network of domestic and overseas branches can help to expand business.
iv.c Bank¶s deposit is increasing rapidly so there is a great opportunity to enhance its
investment and financing.
v.c Being an agent of State Bank of Pakistan it can play vital role in local economy.
vi.c Earning commission/exchange on Government transactions.
vii.c Amongst highest bank is Asia, NBP further expand its services proudest and earn
more profit.
viii.c The bank is reshaping its portfolios by investing into higher area of growth
developing core competing as a result to get maximum return.
ix.c I.T and HR are important factors for development in any organization, NBP
continue struggle to achieve this target.

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.. Threats

i.c SBP penalties due to low internal control and compliance.

ii.c Government, SBP and Prudential Rules and Regulations.
iii.c Schedule banks and Multinational/International bank¶s profit rates.
iv.c Its staff switching over to other private banks due to more facilities.
v.c Other bank¶s charming atmosphere and relaxation in documentation.
vi.c SBP rated just Marginal´ in respect of System & Control which is alarming for
the Bank to survive its license.
vii.c NBP staff code of ethics and practices.
viii.c High number of complaints regarding staff behavior.
ix.c Government Schemes, Government Revenue Collection, Government.
x.c Payments and FBR Collections create heavy workload.

. COPETITIVE ANA^YSIS

Porter¶s five forces model:

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

. .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´

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. . Potential entry of new competitors:

Whenever new firms can 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.

. .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 deposit in GPOs.

People concentration high rates so that¶s why sawing PLS accounts are more than 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.

. . 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.

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. .
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.

REFERENCES

1.c Daft l Richerd Management´ 4th Edition Pages 254, 256, 269.
2.c Kottler Philip Marketing Management´ Millennium Edition Page 76.
3.c Fred R. David Strategic Management Concepts Cases´ 7th edition.
4.c www.onlinewbc.gov/docs/finance/fs.ratio/. Html
5.c National Bank of Pakistan (2008, 2009) Annual Report.

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CHAPTER # 

GENERA^ OBSERVATION

.1 GENERA^ OBSERVATION

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

i.c Problems at the branch

ii.c Function analysis.
iii.c Administrative analysis
iv.c Personal management¶s analysis

.1.1 Problems at the Branch

.1.1.1 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.

.1.1. 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.

.1.1. nequal distribution of work

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.

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.1.1. arketing 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.

.1. F NCTIONA^ ANA^YSIS

.1..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.

.1.. Difference between theory and practice

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.

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.1.. 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 cheques the person can
easily get the whole information from the ledge. The deposit clerk must be careful while
passing any cheques. In this regard another shortfall is in giving the information about the
balance on telephone.

.1.. 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.

.1..
ore 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

.1..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

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.1. ADINISTRATIVE ANA^YSIS

.1..1 Job analysis is not effective

Only on the basis of job analysis it can be decided how a right person can be hired,
trained, compensated or promoted. It is very important for an organization that 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.

.1.. 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.

.1.. ^ack 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 Hayatabad branch the newly recruited employee training was not imparted, they all
learned things on the job.

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.1.. ^ow 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.

.1..
Poor job rotation.

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

.1..6 Delays in ^oan Advancement

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

.1.. ^ack 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.

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.1. PERSONA^ ANAGEENT ANA^YSIS

.1. .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.

.1. . Developing anagerial ^eadership

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

.1. . Recruitment policy

Human resources are the lifeblood of the Bank. 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.

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.1. . 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 was
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.

.1. .
Transfer

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

.1. .6 arketing 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 were 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 were hidden in
every dealing a banker handles; the question is that if he has the art and urge to seize such
opportunities.

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.1. . ^ack of business communication

There was 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 was
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.

. OBJECTIVES AND P RPOSE OF INTERNSHIP

I was worked as an internee in National Bank of Pakistan to gain and experience the
knowledge and working of banking sector. These have the major objectives of my
internship:

i.c To learn how the bank¶s departments function. I wanted to have myself in the
environment where I could get interact with the customer and be courtesy with
them as much as possible.
ii.c To learn about the techniques and processes used in Operations Department.
iii.c Dealing with the problems regarding their Accounts or any other related problem.
iv.c Guiding customers and making the banking function convenient for them.
v.c To get the thorough knowledge of different credits offered by bank.
vi.c To be a part of a competitive environment and enhances my skills.

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. IDENTIFICATION OF AIN PROB^ES

The main problem that I think National Bank of Pakistan facing was the lack of
motivated staff. I worked under many people and most of them have not satisfied with
what they are being paid. Actually when we compare the salaries being paid by with
those of other banks, they are far lesser. Another problem is that of favoritism. People
werebelieved that employees, who are favored, get promoted earlier than those who are
not.

They think that their hard work was not being properly awarded. This was a big problem,
which the National Bank of Pakistan are currently facing because we all know that lack
of motivation causes sharp fall in the performance of the employees and thus the
organization.

One of the more problem is employee over burden by the work mostly they do the work
of two or three seats. The other main problem is that there was on computer system for
every employee which reduces their work efficiency. Photocopy machine is not available
in the bank for photocopy of any document they sent outside for it due to which their lot
of time is wasted.

. S GGESTIONS

1.c Computer must be available to every employee whomakes their work easier
and record keeping becomes very easy.
.c The computer system should be up to date or checked every week that will
remove computer problems like virus.
.c There must be a photocopy machine in the bank which will reduce the
wastage of time.
.c The bank should use efficient Internet facility, which is available in the
market very easily. They used internet but not using DSL that¶s why

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sometimes the speed of internet is very slow which create great problem
especially for online transactions.

.c There must be separate parking for both employees and the customers, in
order to facilitate them both. It is better for the bank employees to arrive at
bank 10 to15 minutes early then there bank timings, so they could have the
proper parking space for them.
6.c Internees are given less importance. They do not have proper procedure for
training. Internees should be given more formal training.
.c In LDA Plaza Branch is a model branch, so there is less staff. So, they should
hire more employees to meet there working requirements efficiently.
.c Training programs offered by National Bank of Pakistan was less. They
should increase them to enhance the skills of their employees.
.c Many customers complaint that the bank numbers are busy all the time.
Actually one was not working properly, so they should remove this fault to
avoid customer dissatisfaction.

.
CONC^ SION

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 Ê 
Ô


 
'
()*)
+

" 

ÊÔ



ase jute from the
growers in the former East Pakistan and also to perform the commercial banking
functions in the country.

It wasthe 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

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Department, Remittance Department, Customer Services Department Cash Department,
Deposit Department, Advances and Credit Department.

These have the most common departments 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 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 MBA 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.