INTERNSHIP CONCLUSIVE REPORT

2009

Master of Business Administration Program

Internee name: Farhan Ali

Registration No: FA07-MBA-041

Specialization: Finance

Telephone: 03455917074

E-mail address: farhanalimir@hotmail.com

COMSATS INSTITUTE OF INFORMATION TECHNOLOGY

Company Name: NATIONAL BANK OF

PAKISTAN

Postal address: NBP NIH BRANCH P/O NIH IBD

Supervisor Name: Muhammad NAZIR

Telephone Number: 03335646875

Start Date for Internship: JULY 15, 2008

Evaluation

FA07-MBA-041 1
 Farhan Ali

FA07-MBA-041

NATIONAL BANK OF PAKISTAN

Masters in Business Administration

It is certified that the internship report and the

working contained in it conforms to all the standards
set by the institute for the evaluation of any such
work

1.
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2
._______________________________________________________________________

3.
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_

4.
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FA07-MBA-041 2
PREFACE
In order to be able to cope with the changing environment it is necessary to have some
practical experience. As the students of Business Administration we have to pass through
a series of various managerial techniques. During this practical course we are provided
with an opportunity to learn that how the theoretical knowledge can be implemented in
practical grounds.

I was selected to do my internship in National Bank of Pakistan NIH Branch

Islamabad. I worked there for six weeks & it gave me a greater practical knowledge about
the operations of a bank.

FA07-MBA-041 3
 ACKNOWLEDGEMENT
I am highly grateful to almighty Allah who gave me the power to complete this report.

I am also highly thankful to my honorable teachers for theirs guidance.

I am indebted to all the employees of National Bank of Pakistan NIH Branch Islamabad
Special thanks to “MR: Nazir Ahmed” OM of National Bank of Pakistan NIH Branch)
and all other employees of the branch for their cooperation.

Table of contents

7
Summary

About NBP 9

Functions of NBP 11

Services 14

Branches all over the Country 22

FA07-MBA-041 4
Oversea Branches 23

Organogram 24

Departmentation 27

Horizontal Analysis 33

Vertical Analysis 37

Ratio Analysis 41

SWOT Analysis 43

Problems With Branch 49

General suggestions 52

Learning 56

Annexure

VISION

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

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

MISSION

FA07-MBA-041 5
NBP will aspire to the values that make NBP truly
the Nation’s Bank, by:
• Institutionalizing a merit and performance culture
• Creating a distinctive brand identity by providing the
highest standards of services
• Adopting the best international management practices
• Maximizing stakeholders value
• Discharging our responsibility as a good corporate
citizen of Pakistan and in countries where we operate

CORE VALUES

• Highest standards of Integrity

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

GOALS

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To enhance profitability and maximization of NBP share through increasing
leverage of existing customer base and diversified range of products

Summary
The NBP was established vide NBP Ordinance No. National Bank of Pakistan maintains
its position as Pakistan's premier bank determined to set higher standards of
achievements. Growth in Deposits was accompanied by increase in Bank portfolio in
advances. NBP advances reached Rs.554.4 million by December 1959, which was one
third of the total schedule bank credit National Bank of Pakistan is the largest commercial
bank operating in Pakistan . In today's competitive business environment, NBP needed to
redefine its role and shed the public sector bank image, for a modern commercial bank.
National Bank of Pakistan is today a progressive, efficient, and customer focused
institution. The Bank has expanded its range of products and services to include Shariah
Compliant Islamic Banking products. The Bank's joint ventures are, United National
Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint
venture with NIB Bank & Fullerton Fund Management of Singapore).Since NBP is a
commercial bank, it performs a variety of functions. Like other commercial banks, NBP
is engaged in financing international trade. Profit Before taxation shows declining trend
18% decrease in current year profit with decreasing rate of 6% this decrease is caused by
greater increase in Interest expense increase from 5% to 35% with 200% growth rate this
increase is because of greater increase in other charges with growth rate of 1655%,

FA07-MBA-041 7
Admin expense increase from 5% to 27%, Profit after tax in current year less than the
previous year because of greater increase in Current taxation by 37% as compare to last
year tax. Cash & balance with treasury Banks is increase in current year from 12% to
13% of total assets portion of balance with other banks shows decreasing trend in current
year 4.7% of total assets as compare to 4.9% and 6.4% in 2007 and 2006 respectively,
lending to financial institution decreasing other assets portion is increasing in current year
which is 5.4% of total assets as compare to 4.06% and 4.3% in 2007 and 2006
respectively. Net assets portion is decreasing this decrease because of increase in
liabilities which means in NBP’s debts increase, equity portion also increasing as
compare to previous year of equity portion this increase because of increasing in reserves,
the increase in equity show that the NBP’s dependence on equity financing increasing
while the dependence on debt financing decreasing, Markup/ interest unearned show
increasing trend last few years but markup/ expensed increase which is 64.5% of interest
income as compare to 50% and 46% in 2007 and 2006, markup interest income after
provisions show decreasing trends since 2006 this decrease because of greater increase in
provision against non performing advances and provision for/ diminution in the value to
investment. NBP has the relative competence in having more deposits than the other
bank. Customers feels secure their money in NBP. NBP can utilize the electronic banking
opportunity to ensure on line banking 24 hours a day. Banks are played role in trade and
commerce. So the business of commercial banks is increase. The bank is facing threats
with the emergence of new competitors especially in terms of foreign banks. So increase
in no. of banks is a threat for NBP, Modern and computerized banking is required to
fulfill the customer’s need. Net assets portion is decreasing this decrease because of
increase in liabilities which means in NBP’s debts increase, equity portion also increasing
as compare to previous year of equity portion this increase because of increasing in
reserves, the increase in equity show that the NBP’s dependence on equity financing
increasing while the dependence on debt financing decreasing Markup/ interest unearned
show increasing trend last few years but markup/ expensed increase which is 64.5% of
interest income as compare to 50% and 46% in 2007 and 2006, markup interest income
after provisions show decreasing trends since 2006 this decrease because of greater

FA07-MBA-041 8
increase in provision against non performing advances and provision for/ diminution in
the value to investment. NBP has the relative competence in having more deposits than
the other bank. Customers feels secure their money in NBP. NBP can utilize the
electronic banking opportunity to ensure on line banking 24 hours a day. Banks are
played role in trade and commerce. So the business of commercial banks is increase. The
bank is facing threats with the emergence of new competitors especially in terms of
foreign banks. So increase in no. of banks is a threat for NBP Modern and computerized
banking is required to fulfill the customer’s need. NBP have wide network of branches.
Employee can also be how to control the bank expenses.

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

British Govt. devalued its currency in September 1949, India devalued its rupees but
Pakistan did not. It led to a crisis in trading between the two countries and India refused
to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established
through an Ordinance of GOP. National Bank of Pakistan maintains its position as
Pakistan's premier bank determined to set higher standards of achievements. It is the
major business partner for the Government of Pakistan with special emphasis on fostering
Pakistan's economic growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large network of
branches locally, internationally and representative offices.

The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by
the former Bahawalpur State.NBP was undertaking Treasury Operations and Managing
Currency Chests or Sub Chests at 57 of its offices where the turnover of the business
under the head amounted to Rs.2460 million. Deposits held by NBP constituted about
3.1% of total deposits of all Pakistani Banks in 1949, which rose to 38% in 1952. Growth
in Deposits was accompanied by increase in Bank portfolio in advances. NBP lent out to
Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and

FA07-MBA-041 9
commerce. NBP advances reached Rs.554.4 million by December 1959, which was one
third of the total schedule bank credit

National Bank of Pakistan is the largest commercial bank operating in Pakistan . Its
balance sheet size surpasses that of any of the other banks functioning locally. It has
redefined its role and has moved from a public sector organization into a modern
commercial bank. The Bank's services are available to individuals, corporate entities and
government. While it continues to act as trustee of public funds and as the agent to the
State Bank of Pakistan (in places where SBP does not have a presence) it has diversified
its business portfolio and is today a major lead player in the debt equity market, corporate
investment banking, retail and consumer banking, agricultural financing, treasury
services and is showing growing interest in promoting and developing the country's small
and medium enterprises and at the same time fulfilling its social responsibilities, as a
corporate citizen.
In today's competitive business environment, NBP needed to redefine its role and shed
the public sector bank image, for a modern commercial bank. National Bank of Pakistan
is today a progressive, efficient, and customer focused institution. It has developed a wide
range of consumer products, to enhance business and cater to the different segments of
society. It has implemented special credit schemes like small finance for agriculture,
business and industries, administrator to Qarz-e-Hasna loans to students, self employment
scheme for unemployed persons, public transport scheme. The Bank has expanded its
range of products and services to include Shariah Compliant Islamic Banking products.
For the promotion of literature, NBP recently initiated the Annual Awards for Excellence
in Literature. NBP will confer annual awards to the best books in Urdu and in all
prominent regional languages published during the defined period. Patronage from NBP
would help creative work in the field of literature. The Bank is also the largest sponsor of
sports in Pakistan. In 2002 the Bank signed an agreement with Western Union for
expanding the base for documented remittances. This project introduces technology based
system to handle inward remittances efficiently, by ensuring that the Bank's branches
keep a track of the remittance received from abroad till its final receipt.
National Bank of Pakistan has built an extensive branch network in Pakistan and

FA07-MBA-041 10
operates in major business centre abroad. The Bank has representative offices in Beijing,
Tashkent, Chicago and Toronto. It has agency arrangements with more than 3000
correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd, NBP
Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd,
and CJSC Bank, Almaty, Kazakhstan. The Bank's joint ventures are, United National
Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint
venture with NIB Bank & Fullerton Fund Management of Singapore).

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

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

Accepting Deposits

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

• Current deposits

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

• PLS saving deposit

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

FA07-MBA-041 11
 • PLS term deposits

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

Discounting bills of exchange

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

Agency service

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

• Collection of dividends

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

• Collection of Cheques

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

• Acting as an agent

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

FA07-MBA-041 12
 • General utility services:

Utilities provided by NBP are as follows:

a. Clearance of utility bills

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

b. Lockers facility

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

c. Acts as a referee

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

d. Supply of information

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

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

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

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

FA07-MBA-041 13
SERVICES

DEMAND DRAFTS

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

SWIFT SYSTEM

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

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

LETTERS OF CREDIT

NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then their Letter of Credit

FA07-MBA-041 14
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.

TRAVELER'S CHEQUES

Negotiability:

Pak Rupees Traveler’s Cheques are a negotiable instrument

Validity:

There is no restriction on the period of validity

Availability:

At 700 branches of NBP all over the country

Encashment:

At all 400 branches of NBP

Limitation:

No limit on purchase

Safety:

NBP Traveler’s Cheques are the safest way to carry our money

PAY ORDER

NBP provides another reason to transfer customer’s money using their facilities. Their
pay orders are a secure and easy way to move customer’s money from one place to
another. And, as usual, their charges for this service are extremely competitive.

FA07-MBA-041 15
Issuance of Pay order

1. For NBP Account Holder Rs. 50/-

2. For NBP Non-Account Holder Rs. 100/-

Rs. 25/- from student for payment of fee favoring educational institution

Issuance of duplicate Pay order

1. for NBP Account Holder Rs. 100/-

2. for NBP Non-Account Holder Rs. 150/-

MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service. And they also
offer the most competitive rates in the market.

FOREIGN REMITTANCES

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

• Increase home remittances through the banking system

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

remittances to the beneficiaries

New Features:

The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home

FA07-MBA-041 16
remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides
Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

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

charges.

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

security.

• Special courier services are hired for expeditious delivery of home

remittances to the beneficiaries.

SHORT TERM INVESTMENTS

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

National Income Daily Account (NIDA)

The scheme was launched in December 1995 to attract corporate customers. It is a

current account scheme and is part of the profit and loss system of accounts in operation
throughout the country.

EQUITY INVESTMENTS

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

NBP is involved in the following:

• Investment into the capital market

FA07-MBA-041 17
 • Introduction of capital market accounts (under process)

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

COMMERCIAL FINANCE

Let them help make your dreams become a reality

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

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

TRADE FINANCE OTHER BUSINESS LOANS

AGRICULTURAL FINANCE

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

Agricultural Finance Services:

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

Agricultural Credit:

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

• Providing reliable infrastructure for agricultural customers

FA07-MBA-041 18
 • Help farmers utilize funds efficiently to further develop and achieve
better production

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

inputs, technical knowledge, and supervision of farming.

Agricultural Credit (Medium Term):

• Production and development

• Watercourse improvement

• Wells

• Farm power

• Development loans for tea plantation

• Fencing

• Solar energy

• Equipment for sprinklers

Farm Credit:

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

• Operating loans

• Land improvement loans

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

equipment

FA07-MBA-041 19
 • Livestock loans for the purchase, care, and feeding of livestock

Production Loans:

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

CORPORATE FINANCE

Working Capital and Short Term Loans:

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

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

Medium term loans and Capital Expenditure Financing:

NBP provides financing for its clients’ capital expenditure and other long-term
investment needs. By sharing the risk associated with such long-term investments, NBP
expedites clients’ attempt to upgrade and expand their operation thereby making possible
the fulfillment of their clients’ vision. This type of long term financing proves the bank’s
belief in its client's capabilities, and its commitment to the country.

Loan Structuring and Syndication:

National Bank’s leadership in loan syndicating stems from ability to forge strong
relationships not only with borrowers but also with bank investors. Because they
understand their syndicate partners’ asset criteria, they help borrowers meet substantial
financing needs by enabling them to reach the banks most interested in lending to their
particular industry, geographic location and structure through syndicated debt offerings.

FA07-MBA-041 20
Their syndication capabilities are complemented by their own capital strength and by
industry teams, who bring specialized knowledge to the structure of a transaction.

Cash Management Services:

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

INTERNATIONAL BANKING

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

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

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

correspondence

• Manage the monetary aspect of NBP’s relationship with the

correspondents to support trade, treasury and other key business areas,
thereby contributing to the bank’s profitability

• Generation of incremental trade-finance business and revenues

NBP offers:

• The lowest rates on exports and other international banking products

FA07-MBA-041 21
 • Access to different local commercial banks in international banking

BRANCHES ALL OVER THE COUNTRY

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29 Regional Offices
1,189 Branches
4 Subsidairies

Oversea Branches

16 Overseas Branches 29 Regional Offices

4 Representative Offices 1,189 Branches

1 Subsidiary 4 Subsidiaries

1 Joint Venture

FA07-MBA-041 23
ORGANANIZATIONAL STRUCTURE

PRESIDENT & CHAIRMAN

CHIEF REPRESENTATIVE
PSO & SECRETARIAT

BOARD OF
DIRECTOR SECRETARY

OPERATION CREDIT ASSET &

COMMITTEE COMMITT LIABILITY
EE COM

FINANCE GROUP

OPERATIONS GROUP

EMPLOYE
E
FINANCE & INSURANC CORPORAT
ACCOUNTS E E
DEPT INVESTME
PENSION
FA07-MBA-041 RETIREME 24 NT
NT BANKING
BENEFIT GROUP
 LOGISTICS
IT SUPPORT
OPERATIONS ENGINEERI
& SERVICES NG
REGIONA REGIONAL GENERAL
L COMPUTER SERVICES
OPERATIO CENTERS SECURITY
N FOUR OVERSEAS REGIONAL
SWIFT STAFF
OFFICERS CENTERS WELFARE
OPERATIO
N
DEPARTM FAR EUROPE & CENTRAL MIDDLE
EAST USA ASIA EAST

AUDIT
GROUP

RISK
MANAGEME
NT GROUP REGIONAL
AUDIT IT PLANNING STRATEGIC
OFFICE DEVELOPME PLANNING
HEAD NT GROUP AND
OFFICE ECONOMIC
AUDIT RESEARCH
REGIONAL GROUP
CREDIT
CHIEF
CREDIT SPECIAL
DEPT HEAD ASSET
MANAG
EMENT HR
GROUP MANAGEME
NT DEPT

IT SYSTEM
DEVELOPMENT HR
MANAGEMEN
NETWORKING T
RETAIL RECRUITMEN
SOFTWARE
BANKING T
DEVELOPMENT
/PLACEMENT
ELECTRONIC COMPENSATI
PRODUCT AND ON BENEFIT
FA07-MBA-041 SERVICES 25
PERSONAL
DELIVERY TO
DATA
OPERATIONS
DISCIPLINE
 ALL ORGANIZA
REGIONAL TIONAL
CHIEF DEVELOPM
OFFICER ENT &
ALL TRAINING
RETAIL
BANKING

PROMOTION TRAINING
PERFORMANCE
UNION AFFAIRS
APPRAISAL
GOAL SETTING

FA07-MBA-041 26
DEPARTMENTALIZATION

CASH DEPARTMENT

Cash department performs the following functions

Receipt

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

Payments

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

The Requisites of Cheque

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

a) It should be in writing

b) The unconditional order

c) Drawn on specific banker only

d) Payment on Demand

e) Sum Certain in money

f) Payable to a specific person

FA07-MBA-041 27
g) Signed by the drawer

Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

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

b) Order cheque

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

c) Crossed Cheque

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

CLEARANCE DEPARTMENT

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

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

In-Word Clearing Books

FA07-MBA-041 28
The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing. All details of the cheques are recorded in this
book.

Out-Word Clearing Book:

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

ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank.
The major portion of the profit is earned through this department. The job of this
department is to make proposals about the loans. The Credit Management Division of
Head Office directly controls all the advances. As we known bank is a profit seeking
institution. It attracts surplus balances from the customers at low rate of interest and
makes advances at a higher rate of interest to the individuals and business firms. Credit
extensions are the most important activity of all financial institutions, because it is the
main source of earning. However, at the same time, it is a very risky task and the risk
cannot be completely eliminated but could be minimized largely with certain techniques.

Forms of Loans

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

a) Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.
In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending

FA07-MBA-041 29
due to the facility of paying markup/services charges only on the amount he actually
utilizes.

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

b) Overdraft/Running Finance

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

c) Demand Financing/Loans

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

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

FA07-MBA-041 30
the borrower gets a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security

REMITTANCE DEPARTMENT

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

• Demand Draft

• Telegraphic Transfer

• Pay Order

• Mail Transfer

HUMAN RESOURCE MANAGEMENT

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

DEPOSIT DEPARTMENT: -

It controls the following activities:

a) A/C opening.

b) Issuance of cheque book.

FA07-MBA-041 31
a) Current a/c

b) Saving a/c

c) Cheque cancellation

d) Cash

FOREIGN EXCHANGE/DEPARTMENT:

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

a) L/C dealing.

b) Foreign currency accounts dealing.

c) Foreign Remittance dealing.

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

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

Foreign Remittance dealing. This is very important function of this deptt.

Horizontal Analysis Balance Sheet

FA07-MBA-041 32
Assets 2008(%) 2007(%) Growth
Cash & Balances with treasury Banks 112 121 16.5

Balances with other banks 102 92 -3

Lending to financial institutions-net 80 93 -13

Investment-net 81 151 16
Advances-net 121 108 14.5
Operating fix assets 93 268 80.5
Deferred tax Assets-net
Other assets 144 114 29
107 120 14
Liabilities
Bill payables 145 67 6
Borrowings 374 92 133

Deposit and other accounts 106 118 12

Liabilities against assets subject to finance 75 253 64
lease
deferred tax liabilities-net 0 214 7
other liabilities 128 116 22
111 117 14
Net Assets 88 142 15
Represented By
Share capital 110 115 12.5
Reserves 126 114 20
Unappropriated profit 116 141 28.5
117 131 24
Surplus on revaluation of Assets-net 45 163 4
88 142 15

ANALYSIS

FA07-MBA-041 33
Total assets growth rate is 140% this is because of Cash and Balances with treasury
banks grow by 60% which caused by increase 21% in 2007 and 12% in 2008, Advances-
net grow by 40.5% in current year increase by 21% as compare to 8% in 2007. Operating
fixed assets growth rate 80.5% but current year Operating fixed decrease by 7% Other
assets also show a greater increase from 14% to 44% in current year and its growth rate
approximately 29%,while lending to financial institution shows declining trend since last
few years over all declining 13% and Balance with other banks declining at rate of 3%.
Liabilities growing by 14% Other liabilities increase from 16% to 28% with growth rate
22%, Borrowing and Liabilities against subject to finance lease show greater increase
with growth rate of 133% and 64% respectively, and Bill payable & deposit in other
banks also increasing with growth rate of 6%-12% respectively, Equity show positive
trend with growth rate of 24% this is because of Reserves and Un-appropriated profit
increasing with rate of 20% and 28.5% & Share capital increasing with 12.5%.

Income Statement

FA07-MBA-041 34
 2008(%) 2007(%) Growth
Mark-up/Return/Interest earned 120.5 115 17.6
Mark-up/Return/Interest expensed 141 121 31
Net-Mark-up/interest Income 110 111 10.5
provision against non-performing advances 224 153 89
Provision for/(reversal of) diminution in the value of
investment -927 5 -561
Provision against off balance sheet obligations 755.09 327.5
Bad debt written off directly 232 199 116
Mark-up/interest Income after provisions 90.25 104.048 -2.85
Non-Mark-up/interest Income
fee,commision and brokerage income 117 110 13.6
dividend income 88.22 113 0.53
Income from dealing in foreign currencies 380.6 78 179
Gain on sale and redemption of securities-net 17 200.2274 9
Unrealized/(loss) on revaluation of investments
classified as held-for-trading -5.34 716 310
Other income 845 23.5 384
Total Non-Mark-up/interest Income 121 111 16
100 106 3
Non-Mark-up/interest expenses
Administrative expenses 127 105 16
Other provisions/write offs 445 -972 -264
Other charges 3403 8 1655
Total Non-Mark-up/interest expenses 135 105 20
82 107 -6
Profit Before Taxation 82 107 -6
Taxation-current 141 96 19
-prior years 74 -63
-deferred -1304 522 -390
84 97 -10
Profit After Taxation 76 112 -6
Un-appropriated profit brought forward 141 166 54
Transfer from surplus on revaluation of fix assets on
account of incremental depreciation 334 95 164
Profit available for appropriation 119 140 30

FA07-MBA-041 35
ANALYSIS

Markup/interest earned increasing at the rate of 17.7% on other hand Interest expenses
also increasing with the rate of 31% that’s why, Net markup/interest income after
provisions decrease by 10% as compare to last year Interest Income After provision
decreasing with rate of approximately 3% this decrease is because of increase in
Provision against off balance sheet obligations and Bad debts written off directly with
rate of 218% & 116%,and Provisions against Non performing assets with greater increase
rate about 81% but on the other hand Provisions for/diminution in the rate of investment
shows greater decrease at rate of 561%,Total Non Markup/Interest Income increase in
current year increase from 11% to 21% with rate of 16% this increase is because of
greater increase in Other Income and Unrealized/on revaluation of investment classified
as held for trading with rate of 384%& 310 respectively and Income from dealing in
foreign currencies, current year shows greater increase of 380% as compare to last year
with rate of 179%.
Profit Before taxation shows declining trend 18% decrease in current year profit with
decreasing rate of 6% this decrease is caused by greater increase in Interest expense
increase from 5% to 35% with 200% growth rate this increase is because of greater
increase in other charges with growth rate of 1655%, Admin expense increase from 5% to
27%, Profit after tax in current year less than the previous year because of greater
increase in Current taxation by 37% as compare to last year tax.

VERTICAL ANALYSIS

FA07-MBA-041 36
 BALANCE SHEET

Assets 2008 2007 2006

Cash & Balances with treasury Banks 13.02 12.4 12.38
Balances with other banks 4.7 4.9 6.4
Lending to financial institutions-net 2.1 2.81 3.6
Investment-net 21 27.7 22
Advances-net 50.5 44.7 49.77
Operating fix assets 3 3.4 1.5
Deferred tax Assets-net 0.4 0 0
Other assets 5.5 4.066 4.3

Liabilities
Bill payables 1.43 1.1 1.7
Borrowings 5.7 1.7 1.8
Deposit and other accounts 87 92 79
Sub-ordinate loans
Liabilities against assets subject to finance lease 0.0035 0.0052 0.0021
deferred tax liabilities-net 0 0.8 0.4
other liabilities 5.5 5 4
87.5 85 87
Net Assets 12.5 15 13
Represented By
Share capital 11 11.77 1
Reserves 24.5 23 2
Un-appropriated profit 64.5 65.5 5
10 9 8
Surplus on revaluation of Assets-net 2.5 6 4.5
12.5 15 13

ANALYSIS

FA07-MBA-041 37
 Cash & balance with treasury Banks is increase in current year from 12% to 13%
of total assets portion of balance with other banks shows decreasing trend in current year
4.7% of total assets as compare to 4.9% and 6.4% in 2007 and 2006 respectively, lending
to financial institution decreasing other assets portion is increasing in current year which
is 5.4% of total assets as compare to 4.06% and 4.3% in 2007 and 2006 respectively.
Total liabilities show increasing trend in current year which is 87.5% of total
assets as compare to 84.7% and 87.1% in 2006 and 2007, this increase is because to
greater increase in bill payable, borrowing and other portion of liabilities. Net assets
portion is decreasing this decrease because of increase in liabilities which means in
NBP’s debts increase, equity portion also increasing as compare to previous year of
equity portion this increase because of increasing in reserves, the increase in equity show
that the NBP’s dependence on equity financing increasing while the dependence on debt
financing decreasing.

INCOME STATEMENT

2008(%) 2007(%) 2006 (%)

FA07-MBA-041 38
Mark-up/Return/Interest earned 164.45234 150.3725 146.2537
Mark-up/Return/Interest expensed 64.452341 50.37252 46.25373
Net-Mark-up/interest Income 100 100 100
provision against non-performing advances 28.586422 14.04448 10.20015
Provision for/(reversal of) diminution in the value of
investment 1.0072014 -0.11968 -2.35281
Provision against off balance sheet obligations 0.0107939 0 0
Bad debt written off directly 0 0.118643 0.017524
29.604418 14.04344 7.864855
Mark-up/interest Income after provisions 70.395582 85.95656 92.13515
Non-Mark-up/interest Income
fee,commision and brokerage income 21.386377 20.16589 20.37768
dividend income 7.768713 9.703531 9.590045
Income from dealing in foreign currencies 10.710383 3.100932 4.423468
Gain on sale and redemption of securities-net 1.0670481 6.963208 3.87851
Unrealized/(loss) on revaluation of investments
classified as held-for-trading 0.0046063 -0.09505 -0.0148
Other income 3.3605915 0.438196 2.081395
Total Non-Mark-up/interest Income 44.297719 40.27671 40.3363
114.6933 126.2333 132.4714
Non-Mark-up/interest expenses
Administrative expenses 49.034441 42.24245 44.58303
Other provisions/write offs 2.0171634 0.499642 -0.05732
Other charges 1.5741824 0.05097 0.690883
Total Non-Mark-up/interest expenses 52.625787 42.79306 45.2166
62.067514 83.44021 87.25484
Profit Before Taxation 62.067514 83.44021 87.25484
Taxation-current 31.741164 24.71493 28.83757
-prior years 0 1.164149 1.759823
-deferred -11.3882 0.962641 0.20555
20.352965 26.84172 30.80294
Profit After Taxation 39.016078 56.59849 56.4519
Un-appropriated profit brought forward 122.35995 95.37669 64.24589
Transfer from surplus on revaluation of fix assets on
account of incremental depreciation 0.3520317 0.115991 0.136169
Profit available for appropriation 164.42653 152.0912 120.834

ANALYSIS

Markup/ interest unearned show increasing trend last few years but markup/ expensed
increase which is 64.5% of interest income as compare to 50% and 46% in 2007 and

FA07-MBA-041 39
2006, markup interest income after provisions show decreasing trends since 2006 this
decrease because of greater increase in provision against non performing advances and
provision for/ diminution in the value to investment. Total no markup/ interest income
show increasing trend which is because of greater increase in income from dealing in
foreign currency and fee, commission and brokerage income and other income, profit
before taxation show declining trend this is because of increase in the portion of interest
expense in current year which is 52.6% as compare to 43% and 45% in 2007 and 2006,
interest expense increase in because of increase in admin expenses, other provision/ write
off and other charges also increasing. Profit after taxation show greater declining which is
because of increasing in taxation which was 31.74% of interest income, the decrease in
profit after taxation most effective decreasing profit before taxation.

RATIO ANALYSIS

FA07-MBA-041 40
 2008 (%) 2007 (%) 2006 (%)

Return on Assets 2.8 3.7 4.1

Return on equity 17.7 27.4 32.1

Rate paid on funds 3.05 2.36 2.6

Net Interest Margin 5.8 5.5 5.8

Reserve as a percentage 188 334 451

of loans

Debt to Equity 879 932 1043

Advances to Assets

50.5 45 50
Equity to Assets 10 9 8.4

Equity to advances

30 48 17
Deposit times capital

1 times 1 times 9.5 times

FA07-MBA-041 41
 • The ROA shows declining trend which means the overall effectiveness in
generating profit with available assets is decreasing in current year 2.8% as
compare to 3.7% in 2007 &4.1% in 2006 which means the assets not properly
utilizing to generating profit,ROA major Effected by declining in Net profit.
• ROE also shows declining trend since last few years return against equity is
decreasing because of decrease in Profit before taxation in current year is less as
compare to 2007 & 2006.
• Rate of interest paid from assets is improving this is because of increase in
interest expense.
• Net interest margin is greater in 2008 which is 5.8% as compare to 5.5% in 07,
this improvement is because of increase in Net interest income which is caused by
increase in interest earned.
• Reserves as percentage of loan decreasing means reserve account to cover un
expected default on loans by borrowers is decreasing, non performing loans
decreasing and the effect on provision for loan losses decreasing and Net income
& earning/share also less.
• Debt to Equity shows declining which means the dependency on debt is
decreasing and also the difficulty regarding to borrow more funds.
• Advances to Asset measure total Advances outstanding as percentage of total
asset, current year ratio is 50.5% which is more than 07 & 06 which indicates that
NBP is loaned up and its liquidity is decreasing this increase risk to default.
• Equity to assets is common measure used to analyze capital adequacy of bank,
The adequacy of NBP shows increasing trend.
• Equity to advances reflects the degree of equity coverage to outstanding
advances/loans, the degree of equity coverage to outstanding is decreasing, and
this decrease is because of increase in loans/advances in current year.
• Deposit time capital in 2008 & 2007 shows that deposits and equity are equal but
in 2006 deposit was 9 times greater than equity which was because of greater
increase in deposits.

FA07-MBA-041 42
SWOT Analysis

STRENGTHS

Oldest Institution:

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

Alternate duties in SBP Absence:

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

More deposits than other Banks:

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

Broad Network:

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

Strictly followed rules & regulations:

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

FA07-MBA-041 43
Professional Competence:

The employees at NBP here have a good hold on their descriptions, as they are highly
skilled Professionals with back ground in business administration, banking, economics
etc. These professional competencies enable the employees to understand and perform
the function and operation in better way.

Western union facility:

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

ATM finder:

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

Customer satisfaction:

Because of government’s bank, it is enjoying the customer’s satisfaction. Customers feels

secure their money in NBP.

Online banking:

There is also strength of NBP that 130 branches are online. It helps the speedy services
giving to the customers. There is also help in checking the balances and daily transactions
just at one key press.

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

FA07-MBA-041 44
WEAKNESSES:

Lack of Marketing Effort:

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

NBP under Political Pressure:

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

Lack of Financial Product:

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

Inefficient Counter Services in the Rush Hours:

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

Lack of Computerized Network:

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

Lack of Modern Equipment:

FA07-MBA-041 45
The bank lacks the modern Equipment that is note counting machine computers. Even if
there is any equipment they lack to fall in the criteria of being rearmed as update and
upgraded

Uneven Work Distribution:

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

Lack of communication between employees:

During the internship in NBP I found the problem of lack of communication between the
employees and management. They have not very much understanding with each other
and not share the work of each other.

Public dealing is not very effective:

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

Staff shortage:

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

OPPORTUNITIES

Electronic Banking:

The world today has become a global village because of advancement in the
technologies, especially in communication sector. More emphasis is now given to avail
the modern technologies to better the performances. NBP can utilize the electronic

FA07-MBA-041 46
banking opportunity to ensure on line banking 24 hours a day. This would give a
competitive edge over others.

Growing banking system:

Nowadays banking system is growing quickly so NBP have opportunities to improve the
standard and get the more share in the market.

.Increase in economic activities:

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

THREATS

Emergence of New Competitors:

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

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

FA07-MBA-041 47
Customer Complaints:

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

Increase in no. of banks:

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

Modern type of banking:

Modern and computerized banking is required to fulfill the customer’s need. So

maximum branches of NBP are worked in old traditional ways.

The whole structure changes to online:

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

Problems with Branch

FA07-MBA-041 48
Customer Satisfaction

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

Poor record management and filing system

During my internship I observed that filing system of branch is not good. When certain
record is needed the staff has to struggle

Unequal distribution of work

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

Bank duty to maintain secrecy.

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

Excessive paper work

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

More accounts fewer deposits.

FA07-MBA-041 49
Efficient banking is one which does not emphasize on number of accounts but on greater
amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide
personalize service to all the account holders and does not improve its quality and
services

Delegation of authority

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

Carelessness in opening of account

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

Lack of specialized training

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

Low Profit Rates

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

FA07-MBA-041 50
Delays in Loan Advancement

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

Lack of business communication

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

GENERAL SUGGETIONS

NBP is an effectively operating and profit making organization and carrying out its
activities under a specified system of procedure. The main regulatory body is State Bank
of Pakistan, which provides policy guidelines and ensures that the money market operates
on sound professional basis. While the head office specifies the whole procedure of

FA07-MBA-041 51
function and operations. This procedure has been modernized with the passage of time
with a view to streamline the approach and underlying procedure for effective
overhauling of its own capabilities so as to bring them at par with international practices.

Here I am giving some suggestions, which in my view can add some input for efficiency
and better performance of NBP.

The recommendations are as follows:

Professional training

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

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

Delegation of authority

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

Performance Appraisal

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

Changes in Policies

FA07-MBA-041 52
There should not be any abrupt policies change by the upper management, as this practice
hurts the customer confidences in the bank. Government should make long term policies.

Need of Qualified Staff

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

Utility Bill Charges

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job
despite this working resulting in a loss to then Rs 3 to5 per transaction. These charges
should be increased to RS 10 per bill to enable the branch to cover their handling costs
and make some profit.

Link with the Head Quarter

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

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

Credit Card

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

Decreasing Administrative Expenses

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

FA07-MBA-041 53
Needs to be Flexible in credit Policy

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

Technological Advancement

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

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

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

Marketing Policy

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

The most important in my opinion is personal marketing; it is the most effective of all
when you think in term of branch level. But on the whole organization level, they should
arrange the seminar with in the bank and outside the bank. They should introduce various

FA07-MBA-041 54
prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly
income earning scheme) and various others.

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

Complaints of Customer

There should be an information desk to provide the information and to receive the
complaints of the customer in the bank. There is no complaint box available in the branch
and not any person appointed to hear the complaints. Every person cannot go to the
manager for the complaint because most of the people are hesitant. So I suggest
management to install a compliant box in the branch, and recruit a special person for that
guidance of the customer when they are unable to manage some difficulties in banking
matters.

LEARNING AS A STUDENT INTERN:

There are following learning points for me in the bank.

Duties

FA07-MBA-041 55
 In my 1st and 2nd week in NBP I work under the assistance of Mr.Muhammad Nazir
(Operation Manager) from him I learn about activities related to Deposit Dept: and
performed such activities like:

• Opening an account
• Issue new cheques books

And I also scroll the challan of Government and pass vouchers.

In my 3rd and 4th week in NBP, they assign me work related to pension department. Mr.
Muhammad Nazir (Operation Manager) guides me very nicely and I learned lot of things
pension related activities. They give the pension to retired Govt. employees. There are
three types of pensions given,

• Provincial
• Central
• Defense

These are different according to their PPO numbers

For example:

Provincial PPO 123456

Central PPO 12345/pak

Defense PPO da/dg1/gh/4 etc.

I am full trained now in this particular job and I serve lot of people in this week. How to
fill farm? How to enter in ledgers and balance account and what are file and book and all
other things concerning to pension department.

FA07-MBA-041 56
In 5th and 6th week I work under the assistance of Mr.Muhammad Nazir (Operation
Manager) from him I learn about remittance activities:

• Demand Draft

• Telegraphic Transfer

• Pay Order

• Mail Transfer

FA07-MBA-041 57
FA07-MBA-041 58