NBP Internship Report

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN
INTRODUCTION TO BANKING
I
There are many definitions of the word “Bank” even the standard N
encyclopedia and law books find it difficult to state exactly what a
Bank is. T
There have been many attempts by different writers to explain the R
exact significance of the term “Bank”. Here some of the definitions are
quoted as follows. O
According to the Banking Companies Ordinance 1962” D
Section 5 (b) defines
U
“Banker means a person transacting the business of
accepting, for the purpose of lending or investment, of C
deposits from the public, and withdrawal by cheques,
drafts, order of otherwise, and include any post office T
saving banks”
I
According to Crowther
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”Bank is a dealer of debt, his own and of other people.”
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According to Gilbert
“A bank is a dealer in capital or dealer in money. He is an

intermediary party between the borrowers and lenders.”
According to Samulelson
“Commercial banks provide certain services for customers

and in return receive payments from them.”
According to Holder
“The modern banker is primarily a dealer in credit.”
University of the Punjab, Gujranwala Campus 1

IMPORTANCE OF BANKING
We can take bank just like a heart in the economic

structure and capital provided by it is like blood in it
Banks play very important role in the economic life of a

nation. The growth of the economy is dependent upon
the soundness of its banking system. Although banks do
not create new wealth but borrow, exchange and consume. These
make generation of wealth. In this way they become most effective
partners in the development of that country.
To encourage the habit of saving and to mobilize these savings is its

basic purpose. Banks deposit surplus from the public and then
advances these surpluses in the form of loans to the industrialists,
agriculturists, businessmen and unemployed people under different
schemes so that they set up their own business. Thus banks help in
capital formation.
If there are no banks, then there would be concentration of wealth in

few hands and great portion of wealth of a country would be idle. In
the fewer developing countries rate of saving is very low and due to
this, rate of investment and rate of growth is also very low. We can
take bank just like a heart in the economic structure and capital
provided by it is like blood in it. As long as the blood is in circulation,
the organs will remain sound and healthy. If the blood is not provided
is not provided to any organ then the organ would become useless. So
if the finance is not provided to agriculture sector or to industrial
sector, it will be destroyed.
Loan facility provided by bank works as an incentive to the producer to

increase production. Banks provide transfer of payment facility, which
is cheaper, quicker and safe. Many difficulties in the international
payment have been overcome and volume of transactions has been
increased. These facilities are very much helpful for the development
of trade and commerce.

COMMERCIAL BANKING IN PAKISTAN
It was very difficult for Pakistan to build up its own Banking system
immediately after independence without sufficient resources. Following
the announcement of the partition plan in June 1947 there was a haste
movement on the parts of banks to transfer their funds and accounts
across the borders. The banks having their registered offices in
Pakistan were transferred to India. In an effort to bring about the
collapse of the new state by the persecuting an international policy of
withdrawal, the Indian bank offices closed quickly. Those banks, which
stayed, were considering the winding up of their business. By 30th June
1948 the number of schedule banks in Pakistan declined from mere
scratch.
Today there are more than 7000 branches of commercial banks along
with an established network of supplementary financial institutions. All
this development in the banking sect is the result of untiring efforts of
four decades.
PHASES OF BANKING IN PAKISTAN
Broadly speaking we can divide the development of commercial

banking into four phases
PHASE-1 1947-1974 Establishment of commercial banking system

PHASE-2 1974-1979 Nationalization of banks
PHASE-3 1979-1991 Islamisation process
PHASE-4 1991-2000 Privatization process

FIRST PHASE (1947-74)
SET UP OF COMMERCIAL BANKING SYSTEM
This was the first phase of development of Pakistan’s commercial

banking system, which consist of the circumstances under which the
development of banking was started in the country.
INITIAL POSITION OF BANKING IN PAKISTAN
There were 19 non-Indian foreign banks in Pakistan at the time of

independence with the status of small branch network, whose policies
and operations were controlled by their head offices abroad. These
banks were engaged solely in export of corps from Pakistan. There
were only two Pakistani banks, the Habib bank, which had transferred
its head office from Bombay to Karachi after the announcement of the
partition plan, and Australian bank which has been working in
Pakistani territories prior to June 1947. The government of Pakistan
tried hard to eliminate the banking crises. Banking Companies
Ordinance 1947 was promulgated to safe guard the interest of both
the bankers and the company’s customers. The situation however
showed no significant improvements. The imperial bank of India
closed down most of its offices in Pakistan, which had been working as
the agent of the reserve bank of India was not willing to purchase
even token amounts of the government of Pakistan. Securities on the
plea that these securities were not marketable. The reserve bank of
India was hardly of any help. It refused to help government of
Pakistan with advance argument adhoc securities to enable them to
make essential disbursements such as salaries and other obligations to
add to the difficulties.
The Indian government withheld Pakistan’s share of Rs. 75 crore in
cash balances held by her at the time of independence. The foregoing
developments clearly brought home the urgency of assuming control
and currency in Pakistan and brought to the fore the need to setup a
central banking institution to take the place of reserve bank of India.

Therefore it was agreed between the government of India and Pakistan

to authority of Pakistan from 30th September 1947 to 30th June 1948
In order to make necessary arrangements of the establishment of the
central bank of Pakistan a committee was appointed to recommend the
necessary steps. Consequently the Governor General of Pakistan and
father of the nation Quaid-e-Azam Muhammad Ali Jinnah Inaugurated
the State Bank of Pakistan on 1st July 1948. After the State Bank order
was promulgated on 12th May 1948.
When it assumed full control of banking and currency in Pakistan the
first important task before the SBP was to issue of currency notes and
withdrawal of reserve bank of India, which had been in circulating in
Pakistan so far.
SECOND PHASE (1974-1979)
NATIONALIZATION OF BANKS
The banking reforms turned out to be a transitional and temporary

step and hardly after 18 months had the government nationalized the
banking system. Thus through the Nationalization Bank Act 1974, SBP
and all commercial banks incorporated in Pakistan and carrying on
business in or outside the country were brought under the government
ownership with effect from January 1974. The ownership and
management of all Pakistan banks stood transferred and rested in the
federal government. The shareholders were provided compensation in
the form of federal government bonds redeemable at par any time
within a period of fifteen years. The amount of compensation was
equal to the break up value of the shares in case of commercial banks.
For the State Bank shares the amount of compensation was estimated
on the basis of average of the clearing quotations during the six
working days preceding nationalization. The chairman, director and
chief executives of various banks were remove from their offices other
than those appointed by the federal government and the state bank.
The central board of banks, managing committees and similar other
bodies were dissolved. A Pakistani banking counsel was established for
nationalized commercial banks to co-ordinate their activities.
As a result of merger of banks the following five major banking
companies were formed:

1. National Bank of Pakistan

2. Habib Bank Limited
3. United Bank Limited
4. Muslim commercial Bank Limited
5. Allied Bank of Pakistan
THIRD PHASE (1979-91)
INTRODUCTION OF ISLAMIC BANKING
In 1977 the Bhutto government was toppled. The martial law

government planned to reform the banking sector in a novel way. The
overall policy was to Islamize the economy and the banking system,
being based on interest was an important target of the new policy. The
most preferred form of Islamic bank financing profit and loss sharing
would require banks to receive deposit without guaranteeing any
return.
The Islamic bank has to acquire a high degree of confidence of the
saver to make him deposit his money with them. Not even the return
of the principle amount if guaranteed. The Islamic bank cannot finance
the project of an investor merely on the furnishing of collateral. The
bank will have to be a partner in the project. This will require to
careful security of the project and the assessment of risk involved
because profits are the function of the amount of risk in the project.
Honesty and trust form both sides of the market are more important to
the system of Islamic Banking.

FOURTH PHASE (1991-2000)
PRIVATIZATION AND DE-REGULATION
The government headed by Prime Minister Nawaz Sharif was not fully
satisfied with the performance of nationalized. The areas, which were
severely criticized, were the falling standard of banking services and
common red-tapism. There were complaints about the services as
delay in home remittances, dispatch of cheques, drafts, inefficient
counter services, bad debts of the banks etc. were on the rise. The
government decided to privatize these banks. In order to implement
privatization policy a privatization commission was established on 22nd
January 1991. The commission has transferred two banks MCB and
ABL to the private sector. Application for privatization of other banks
namely UBL and HBL were also invited but the bidding response was
quite poor. The privatization of these banks is under consideration.
Legislation was enacted to permit the establishment of new banks and
the government approved 10 application from the private sector for
the grant of commercial bank licenses by SBP, out of these 9 new
banks have since been incorporated. Till March 1994 there were 20
domestic scheduled banks with 9825 branches and 21 foreign banks
with 66 branches in operation in the country. Overall investment of the
scheduled banks in the current year rose to 76.7%. at present there
are 24 domestic scheduled with 8137 branches and 19 foreign banks
with 71 branches are in operation in the country. Total assets of
domestic scheduled banks amounting to Rs. 1563.73 billion on 30th
March 1996. Overall investment of the domestic scheduled banks in
the current year declined by 80% over the same period last year.
1. Bank of Commerce Al Habib Ltd.
2. Soneri Bank Ltd
3. Union Bank Ltd.
4. Indus Banks Ltd.
5. Mehran Bank Ltd.
6. Prime Commercial Bank Ltd.
7. Askari Commercial Bank Ltd.
8. Bolan Bank Ltd.
Now Mehran bank has been absorbed by National Bank Ltd, due to its
poor performance and ultimate failure. Now the ABN Amro Bank has
also been included in the list of foreign scheduled banks

BRIEF HISTORY OF NATIONAL BANK OF

PAKISTAN
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The normal procedure of establishing a banking company under the I
Companies Law was set aside and the Bank was established through
S
the promulgation of an Ordinance due to the crisis situation that had
developed with regard to financing of jute Trade. The Bank
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commenced its operations from November 20, 1949 at six important O
jute centers in the then East Pakistan and directed its resources in
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financing of jute crop. The Bank’s Karachi and Lahore offices were
subsequently opened in December 1949.
Y
State bank of Pakistan after its formation demanded from the Indian O
Reserve Bank the assets against the Indian currency retired from
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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 N
June 1950, the Bank was engaged exclusively on jute operation.
B
Thereafter, it was felt that it could expand its business to include other
commodities as well. Bank took a big stride in 1952, when it replaced P
the Imperial Bank of India, as an agent of State Bank of Pakistan.
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.
The government floated its 10 % of the shares in the open market in

past and the ratio became 60: 40 and in future they trying to make it
55: 45.
In 1999 national bank celebrated its golden jubilee during the last fifty
years bank has made substantial strides in the financial services
industry in Pakistan.
In 1999 its market share was around 22% and it remains the largest
financial institution in Pakistan.
We aim to be an organization that is founded on…
• Growth through creation of sustainable relationships with our

customers.
• Prudence to guide our business conduct.
• A national presence with a history of contribution to our communities

We shall work to…
• Meet expectations through Market-based solutions and products.

• Reward entrepreneurial efforts.
• Create value for all stakeholders
We aim to be people who…
• Care about relationships.

• Lead through the strength of our commitment and willingness to
excel.
• Practice integrity, honesty and hard work. We believe that these are
measures of true success
We have confidence that tomorrow we will be…
• Leaders in our industry.

• An organization maintaining the trust of stakeholders.
• An innovative, creative and dynamic institution responding to the
changing needs of the internal and external environment

Vision and Guide
To be the pre-eminent financial

institution in Pakistan and achieve
market recognition both in the quality
and delivery of service as well as the
range of product offering

Mission
Statement
To be recognized in the market place by

Institutionalizing a merit & performance
culture, Creating a powerful &
distinctive brand identity, Achieving top-
tier financial performance, and Adopting
& living out our core values

We aim to be an organization that is founded on…
• Growth through creation of sustainable relationships with our

customers.
• Prudence to guide our business conduct.
• A national presence with a history of contribution to our communities.
We shall work to…
• Meet expectations through Market-based solutions and products.

• Reward entrepreneurial efforts.
• Create value for all stakeholders
We aim to be people who…
• Care about relationships.

• Lead through the strength of our commitment and willingness to
excel.
• Practice integrity, honesty and hard work. We believe that these are measures of
true success
We have confidence that tomorrow we will be…

• Leaders in our industry.

• An organization maintaining the trust of stakeholders.
• An innovative, creative and dynamic institution responding to the
changing needs of the internal and external environment
M
A
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MANAGEMENT OF NATIONAL BANK OF
PAKISTAN O
F
An Executive Board composed of six Senior Executives of the Bank and
the President who is also the Chief Executive supervises the affairs and
business of the Bank. N
B
P

Syed Ali Raza Dr. Waqar

Masood
Chairman & President
M
Director A
N
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M
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Iftikhar Ali Malik Syed
Shafqat Ali N
Director
Director T
O
F
N
B
Azam Faruque
M. Zubair Motiwala
P

Director
Director
H
I
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Security boardR
Sikandar Hayat Jamali ikhlaq Ahmad
Director
of directors
A
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Y
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HIERARCHY OF NATIONAL BANK OF PAKISTAN
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PRESIDENT
B
P
SENIOR EXECUTIVE
VICE PRESIDENT
EXECUTIVE VICE
University of the Punjab, Gujranwala Campus
PRESIDENT
16
OFFICERS GRADE
ASSISTANT
SENIOR VICEVICE
VICEASSISTANTS
CASHIER
PRESIDENT
I PEONS
II III
PRESIDENT
H
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A
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Branch Manger
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H
Manager Operation
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Managers
BRANCH HIERARCHY OF NATIONAL BANK O

GONDLAWALA
AssistantROAD,
Manager GUJRANWALA F
Officers
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Deputy Officers B
P
Assistant officers
Clerks
Peons and Guards

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The branch manager is the head of the branch is assisted by A the
manger operations in carrying out the main functions of the branch.
Remaining organizational structure is divided according toR the
requirements of different departments. There are currently three
Kand
managers, two deputy managers, seven offices, 4 deputy officers
2 assistant officers working in the branch. The total number of
employees working in the branch is 18. E
T
MARKETING MIX OF NATIONAL BANK OFI
PAKISTAN N
G
Marketing is the task of creating, promoting and delivering goods and
services to consumers and businesses. Organizations identify and
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profile distinct group of buyers who might prefer or require varying
products and marketing mixes. The customer seeks for value and
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satisfaction. The organizations can increase the value of the customer
4 P’s 4 C’s
Product/ Service Customer Solution
Price University of the Punjab, Gujranwala Campus
Customer Cost 18
Place Convenience
Promotion Communication
offering in several ways e.g. raising benefits, reducing costs etc.

marketing mix is a set of marketing tools that the firm uses to pursue
its marketing objectives in the target market. These marketing tools
are known as 4 p’s of marketing. These four marketing tools are
viewed as 4c’s by the consumers.
To identify the customer needs and fulfilling hem is the basic objective
of an organization. Marketing is not just satisfying your customers, you
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have to delight them and this can be done by acting upon this phrase.
“Under Promise and Over Deliver”
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National Bank provides a winning combination of products and services
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to its prime customers. It is one of the country’s leading commercial
D
banks, which ensures complete security, and reliability in all-financial
transactions.
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PRODUCTS T
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A product is anything that can be offered to a market to satisfy a want
or need and a service is an act or performance that is essentially
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intangible and does not result in the ownership of anything. What
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products or services have to be offered to the target market depends
on the market requirement and also the organization’s profits. The
organization will offer those products and services, which result in
maximum profits and minimum costs.
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B
A bank is an organization rather a financial institution that provides
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products such as different types of deposits and services like foddering
financing facilities to its customers.

National Bank offers a diversified line of products and services to its

customers. The unique products and services offered by National Bank
are as follow:
 Consumer banking
 Corporate banking
 Commercial banking
 NBP advance salary
 NBP cash card
 NBP cash & gold
 NBP Karobar
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 NBP Kisan Dost R
 NBP online banking
 NBP Saibaan O
 SWIFT
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CORPORATE BANKING C
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These are branches which have an exposure of over Rs. 100 million.
Usually includes multinational & public sector companies.
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COMMERCIAL BANKING
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The branches which has a credit exposure of less than Rs. 100 million
F
but having a credit portfolio of more than Rs. 20 million (excluding
staff loans)
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Usually branches in large markets and commercial areas come under
this category.
B
CONSUMER BANKING P

These are the branches which have exposure up to Rs. 20 million and
these include all the branches which are neither corporate nor
commercial branches.
NBP ADVANCE SALARY
Affordable installments from 1 to 60

Months, Take up to 15 advance salaries.
Currently for NBP account holders of government or related
organization employees.
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D
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NBP CASH CARD
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ATM plus debit card in one -------- One Card T
does it all
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NBP CASH & GOLD
Meet your need for ready cash against your

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idle gold jewelry with no minimum limits F
GET EXTRA BENEBIT FROM YOUR GOLD
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NBP KAROBAR B
This is a Rozgar scheme introduced by P
President of Pakistan recently, this includes

NBP Sasti Savari

NBP Chalti Pharti Dukan
NBP Rabata Duniya Se
NBP Maal atao Pasey Kamao
NBP KISAN DOST
NBP affordable agriculture program offers

you a wide range of financing
P
R
O
D
Recently National Bank of Pakistan has U
introduces home finance scheme with name of
Saibaan.
C
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Affordable
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• Easy installment
No surprises
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•
Flexible F
• Mark-up choices
• Grace period option N
Convenient B
• Structured and programmed P

• Minimum approval and disbursement timing
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PRICE E
S
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It is second important tool of marketing mix because it plays
a major role in determining the customer’s choice. Also it is
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the only marketing tool that results into revenue. The banks
offer advances to their clients by charging ascertain rate of
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mark up or interest. This mark up or interest charged is the
price. The customer makes a comparison between the prices B
offered by other financial institutions and National Bank P
and
then selects the most suited offer.

The charges are stated in a schedule of charges for every

facility. Some of them are given:
NBP Products Rate of charges

Cash & Gold 12% per annum
NBP Karobar 7.5% per annum
Kisan Dost 6.5% per annum
NBP Saibaan 7.5% per annum
P
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PLACE A
C
Punjab 732 E
Sindh
NWFP
290
110
S
Blochistan 32
Azad Kashmir 31
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Regional Offices 29
Domestic 1224 F
Overseas 18
Total 1242
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B
The location of the bank plays a vital role in making its
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operations profitable. If the bank is located in some business
center then it will be very easy for it to attract business

people as its customers. Therefore NBP has most of its

branches at places where it can reach its targets customer
easily. The branch network of National Bank is given as
follows:
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O
F
Here is a list of the banks locations in Pakistan accordance
to each province or territory;
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• Sindh: Dadu, Sanghar, B
Hyderabad, Jacobabad, Shikarpur, P

Karachi, Larkana, Mirpurkhas, Badin, Nawabshah,

Sukkur, Khairpur, Tharparkar.
• Punjab: Bahawalpur, D.G. Khan, RYKhan, Faisalabad,
Gujranwala, Sialkot, Narowal, Jhang, Jhelum, Gujrat,
Chakwal, Darya Khan , Bhakkar, Lahore, Multan,
Murree, Attock, Gilgit, Rawalpindi, Sahiwal, Sargodha,
Sheikhupura.
• NWFP: Abbottabad, Mansehra, Bannu, D.I. Khan,
Kohat, Mingora, Mardan, Peshawar.
• Baluchistan: Quetta, P
• Azad Kashmir: Muzaffarabad, Mirpur. L
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N
B
P

29 Regional Offices
1,195 Branches
143 Online Branches
4 Subsidiaries
INTERNATIONAL NETWORK

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NBP also has branches in USA, Canada, Germany, France,
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Bahrain, Egypt, Bangladesh, Hong Kong, Japan, South
A
Korea, The Peoples Republic of China, Afghanistan,
C and
Turkmenistan, Kyrgyz Republic, Kazakhstan, Uzbekistan
Azerbaijan E
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F
N
B
P
18 Overseas Branches
4 Representative Offices
1 Subsidiary
1 Joint Venture
PROMOTION

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INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN R
O
Mits
National Bank is actively participating in promotion of
products and services through advertisement and other
promotional schemes. O
T
Initially, the bank focused on the upper class customer’s
only and offered products for a limited class of people. But
now the strategy has been changed and the bank DI is now
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targeting the middle market also. The products offered
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of diverse nature to cater the needs of maximum number of
are
people. PN
Customer Oriented Attitude A
RO
National Bank values its customers. Customers’ complaints
are encouraged because it gives an opportunity toTknow the
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needs of the customer and build more confidence in them.
Most of the promotional efforts are done through M
 Direct marketing EN
 Public relations NB
National bank sometimes gets TP and
suggestions
recommendations from its good customers.
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Branch layout is being designed in such a way that more and
more customers are attracted. Some of the branches of
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National Bank have a very good entrance and outlook but
many still need to be improved.
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FIELD OF ACTIVITIES OF BNBP
P

This is the practical portion of my report and here I will

explain different departments of NBP and how these
departments work. Following are the main department of
National Bank of Pakistan.
• DEPOSIT DEPARTMENT
• ADVANCES DEPARTMENT
• CLEARING DEPARTMENT D
• BILLS DEPARTMENT E
• REMMITTANCE DEPARTMENT P
• ACCOUNT DEPARTMENT
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• TECHNOLOGY DEPARTMENT
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DEPOSIT DEPARTMENT T
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University of the Punjab, Gujranwala Campus N 30
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The function of deposit department is to collect deposits

from customers. Following type of deposits are offered by
National Bank.
1. Current deposit
2. Saving bank deposit
3. Profit and loss saving account
4. Fixed deposit
5. Short notice term deposit
6. Foreign currency deposit
7. Cumulative deposit certificate (other) D
E
CURRENT DEPOSIT P
In this type of account the client is allowed toOdeposit or
withdraw money as and when he likes. He may, thus,
deposit or with draw several times in the dayS if he likes.
Usually the bank allows this and service chargers are
deducted by the bank. I
SAVING BANK DEPOSIT
T
This type of account is for those persons who want to make
D
small savings. This type of account is opened with Rs. 500.
In this case deposits can be made only up to a costing
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amount and with drawls are allowed twice a week. If the
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depositors wants to withdraw more than Rs. 15000 a seven
days notices is required before the withdrawal.
A
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PROFIT & LOSS SAVING A/C
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These types of accounts are one step towards the
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Islamisation of Banking system in the Pakistan. Under such
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University of the Punjab, Gujranwala CampusN 31
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types of accounts the bank allows no interest to the

customers. The executive board of the bank declares profit
or loss every year. PLS saving account having a running
minimum credit balance of Rs. 100 would be eligible for
sharing profit/loss of the bank. The rate of profit or loss on
PLS saving accounts shall be determined by the bank at the
close of each half year, in its sole discretion and the banks
decisions shall be final and binding on the PLS account
holder
Fixed Deposit
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In this type of account a certain amount is deposited for a
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certain, period such as six-month, two years or longer. A fix
deposit receipts is issued in the same of the depositor. The
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officer incharge and the bank manager sign the receipt. A
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notice is given to the depositor requesting the depositor to
withdraw his money or to renew this deposit. The interest
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allowed on fixed varies with the period for which the
deposits are made.
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SHORT NOTICE TERM DEPOSIT T
This kind of deposit is for a short period. The depositor may
D
withdraw his deposit at any time by giving seven days notice
to the banker. In this type of deposit facility the trader is
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allowed to withdraw his amount with interest of the
deposited period.
P
A
FOREIGN CURRENCY DEPOSIT R
T
Foreign currency account is opened by depositingM foreign
currency. In NBP, you can open foreign currency account in:
E
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1. Us Dollar ($)
2. Pound Sterling (£)
3. Japanese Yen (¥)
4. Deutsche Mark (DM)
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CLEARING DEPARTMENT A
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Every bank acts in two way i.e. T
1. Paying Bank
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2. Collection Bank
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Here in theory no legal obligation on a banker to collect

cheques, drawn up to other banks for a customer. It is,
however, an important function of crossed cheques. A large
part of this work is carried out though the bankers clearing
house wherever it is established.
CLEARING HOUSE
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A clearing house is the place where representatives, of all
the banks get together for the purpose of off setting the
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inter bank indebtedness arising from the transfer of deposits
by a customer of a particular bank to another bank.
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ADVANTAGES OF CLEARING HOUSE A
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The advantages are manifold. It prevents the cost and waste
involved in collection each and every chequeIand claim.
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Which a banker holds against another, across the counter
with all the danger of loss in the transit incumbent upon it.
Great economy is also achieved in the employment G of liquid
cash by setting the difference by simpler transfer of credit
from one account to another, there by minimizing the
necessity of holding large wash balances, clearing house
works under the control of State Bank of Pakistan.D
E
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A banker has no legal obligation to collect cheque drawn
upon other banks for the customers, though modern A banks
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have assumed this important function of their own choice.
Therefore, it is very important that since they have assumed
this function, the banker should be very careful T in their
performance, otherwise they will face more difficulties. So, if
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they provide this facility when the cheques are crossed.
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FUNCTIONS OF CLEARING DEPARTMENT
The following are the main functions of clearing department.

1. To accept transfer deliveries and clearing cheques from
the customer of the branch and to arrange for their
collection.
C
2. To arrange the payment of cheque drawn on the branch
and given for collection to any other branchLof National
Bank of Pakistan or any other members, or sub-members
of the local clearing house. E
A
3. R sub-
To collect amounts of cheques drawn on members,
I
members of the local clearing house, sent for collection
by those National Bank Limited branches which are not
represented the local clearing house. N
G
D
E
PROCEDURE OF DEPOSITING CHEQUES IN CLEARING P
HOUSE
A
Whenever a customer wants to deposit cheque, etc, R he fills a
pay in slip and hands it over the counter along with the
instruments he wants to deposit with bank.TAs far as
possible, the customer desire that on of the staff member fill
in a slip for him, he should be obliged promptly. M
E
T
The smaller portion of the perforated pay in slip is handed

over to the depositor and the portion becomes the regular
portion of a credit voucher.
1. Transfer Cheques
Transfer cheques are those cheques, which are collected and
paid by the same branch of bank.
C
2. Transfer Delivery Cheques
L
Transfer Delivery cheques are those cheques, which are
collected and paid by two different branches E of a bank,
situated in the same city.
A
3. Clearing Cheques R
I
Clearing cheques are those cheques in which the payee
(Person who deposit cheques for collection) and the drawer
N
of a cheque maintain the account with different banks.
D
E
SCRUTINY OF CHEQUE
P
When the cashier receives the cheques, which are to be
A must be
deposited for clearing purpose the following points
verified.
R
• The instrument should be neither stale nor post dated.
• If the instruments is crossed, not negotiable, T
it can be for
the third party (can be endorsee of an order cheque, or a
holder of bearer cheque) M
E
T
• The instrument should not bear any unauthorized

alteration.
• The amount in words and figures should be the same.
• The instruments should be drawn on a member, or any of
local branches.
• If the cheque is crossed “Account payee’s” “Account
payee only” or “Payee’s Account”, it should be accepted
for collection for the payee’s account.
• The cheques or drafts should not be crossed specially to
any other bank. C
• A cheque payable to one of the joint account holderL
should not be collected for the joint account without the
payee’s endorsement, or consent. E
A
• A cheque payable to a firm should not be accepted for
credit to a partner’s account.
• A cheque drawn by a customer in the capacity of an R
agent. Attorney, or Manager of his company or firm,
I
should not be collected for credit to his personal account.
N
• Pay orders, although negotiable, should not be collected
for third parties.
G
• Do not collect an instrument in the account of an agent,
or of the servant of the payees of endorsee of the
instruments.
D
•
E
Mail transfer Receipts pay ships and treasury receipt
should not be collected for persons other than the payee.
• P
If an account is new, or the balance or operation of the
account is not satisfactory, satisfy yourself about the
A the titles
titles of the customer to the instruments before
R
of the customer to the instrument before accepting the
deposit.
• Brach agent’s permission should be obtained T before
accepting a third party cheque or draft for creditor the
account of the staff member. M
E
N
T
• If the payee is a government department, government

official, or a trust account, the instrument cannot be
collected, but of the payee’s account.
• If the payee of an instrument is NBP, it can collected for
credit of the drawer’s account, or the amount of the
instrument may be utilized as desired be the drawer in
writing.
• Cheque payable to a trust, account should not be
collected for credit to at trustee account.
• All the endorsement should be regular, and on C
endorsement should be missing. After the cashier
L
scrutinizes the cheques he must also scrutinize the pay in
slip.
E
SCRUTINY OF PAY-IN-SLIP A
R
Following steps are involved in the scrutiny of pay in slip.
1. On both the counterfoil and the pay in slip I following
should be checked.
N
I. Date of Deposits
II. Account number G
III. Title of the account
IV. The cheque/number and the drawer bank/name.
V. Total amount in words and figures
D
2. Customer should use separate pay in slip for transfer,
transfer delivery, and clearing cheques. E
P
3. The amount noted should be the same as the amount of
the instruments, and the amount in words A
and figures
should be same
R
PROCEDURES AFTER SCRUTINIZING T
M
E
T
After scrutinizing the cheques and other deposit instruments

and paying slip at the counter the following procedure is
under taken by cashier if he is satisfied.
1. Fixing the stamp.
2. Scrutiny, and receipt by the authorized officer
3. Returning the counter foil to the depositor. C

L
4. Certificates and confirmation by the officer-incharge of the
department. E
A
5. Separating the cheque into transfer delivery, and clearing
cheque R
I
N
G
D
E
PROCEDURE OF CLEARING AT CLEARING HOUSE
P
The mechanism of setting inters bank indebtednessA operates
as follows:
R
T place,
Clerks representing various banks meet at a common
The Clearinghouse, everyday. Every clerk thenM delivers to
the others the cheques and the other claims which their
E
T
respective banks hold against his banks hold against his

bank cheques and other documents dishonored will be
returned to the representative of the respective bank. The
various amounts of receipts and deliveries are now added up
and a balance is struck there in and the final settlement is
effected by the supervisor of the clearing house by
transferring balance kept and the central bank by these
various clearing banks.
A
D
V
A
N
C
E
S
D
E
ADVANCES DEPARTMENT P
A
INTRODUCTION
R
The function of advances department is to lend in the form
of clean advances, against promissory notes, as T well as
secured advances against tangible and marketable
M of the
securities. According to the Prudential Regulations
E
T
State Bank of Pakistan, No bank can issue a clean advance

of more than Rs. 100,000/-. The bankers prefer such
securities that do not run the risk of general depreciation
due to market fluctuations.
Common Securities for the banker’s advances are as under:
SECURITIES
GUARANTEES A
D
When an application for advance cannot offer any tangible
security, the banker may rely on personal guarantees to
protect himself against loss on advances or V overdraft to
the applicant.
A
MORTGAGE N
A mortgage is the transfer of an interest in specific
immovable property for the purpose of security C the
E
payment of money advanced or to be advanced by; way
of loan, and existing or future debt, or the performance of
an engagement which may rise to a pecuniary S liability.
The transfer is called a mortgagor, the transferee a
mortgage.
D
HYPOTHECATION E
When property in the shape of goods is chargedPas security
A
for a loan form the bank the ownership and possession is left
with the borrower, the goods are said to be hypothecated.
The essence of hypothecation is that neither theRproperty in
the goods not the possession of them are possessed by the
lender, but the security is granted by means T of letter of
hypothecation, which usually provides for a banker’s charge
on the hypothecation goods. M
E
T
PLEDGE
In a pledge the ownership remains with pledge, but the

pledgee has the exclusive possession of property until the
advance in repaid in full. While in case of the default the
pledgee has the power of sale after giving due notice.
PROMISSORY NOTE
A
Sometimes promissory note is also accepted asDa security,
“A promissory note is an instruments in writing containing
V to pay
an unconditional undertaking signed by the maker,
;on demand or at a fixed or determinable future time a
certain sum of money only, to or to the order A of certain
N
persons, or to the bearer or the instrument.” A promissory
note is incomplete until has been delivered to payee or the
C
bearer. Moreover, the sum promised in a promissory note
may be made by two or more makers who may be liable
there on jointly and severally. E
S
D
KINDS OF ADVANCES
E
The advances which are given by National Bank are as
under: P
RUNNING FINANCE (Overdraft)
A
R
Running finance (old name overdrafts) is a short T term loan
allowed by the bank for a period of one year. The running
M
finance account can be operated and daily sale proceeds can
E
T
be deposited into the account. The mark-up is recovered on

the products of daily outstanding balance. The running
finance is suitable for meeting day to day financial needs of
the business.
CLASSIFICATION OF RUNNING FINANCE

1. Unsecured
Under such type of overdraft the bank pay upon the
personal security of the customer’s mentioned on the
customer’s account. A
2. Secured
D
Under this type of overdraft the bank allows his customer to
V against
withdraw more than his deposits after giving security
the amount overdrawn.
The Securities against which they given are:
A
• Share certificate, Saving Certificate N
• Deposits C
• Mortgage of property
• Guarantee of person E
S
D
DEMAND FINANCE (DF) E
Demand Finances are those advances which are allowed in
lump sum for fixed period and are repayable lumpP sum or
biannually or annually.
A
gradually in installments which could be monthly, quarterly,
R
CLASSIFICATION OF (DF) T
M
E
T
1. Demand Finance (Packing Credit)

Scheme introduced by SBP for exporter of carpet, surgical
instruments, at zero percent rate of interest. While banks
provides at concessional rate of interest.
2. Ordinary Loan
Qarz-e-Hasana Scheme Loans are allowed to the students,
teachers without any interest or mark up with the
recommendation of the MPA or MNA. A
D
3. Loan for Staff
V
Loans are offered to the staff of the following categories.
A
• House Building Loans against mortgage of property.
• Loan for purchasing vehicles. N
• Loan equivalent to month’s salary.
C
E
S
D
CASH FINANCE (COMMERCIAL LOANS INWARD) E
These type of loans are given against following:
P
• Against locally manufactured goods. A
• Against pledge R
• Against commodities
• Against Trust Receipts T
M
FINANCE AGAINST FOREIGN BILLS (FAFB)
E
T
This facility is available to both local and foreign bills
1. FAFB (local) advance against Railway receipts and truck

receipt, a company with bills of exchange and invoices,
are given under this head.
2. FAFB (foreign) advances against foreign bill covering bills

A
of exchange, bills of lading airway bills of exchange etc.
AGRICULTURE LOANS
D
V
Loans to the farmers with holding up to 25 acresA
for meeting
their short term, medium and long term agricultural
production requirements, such as: N
• Agricultural inputs C
• Tube Wells
• Live Stock Framing
E
• Land improvements S
D
INDUSTRIAL LOANS
E part in
Besides the short-term loans which play an important
P
working capital requirements, medium and long-term
are also given to industrial sector for purchases of
loans
machinery and other capital nature goods. A

R
IMPORT EXPORT BUSINESS/TRADE FINANCE T
M
NBP Provides highly efficient trade finance services for
import/export business for our clients/customers through
E
T
large number of authorized branches where trained and

motivated staff is available to handle the business on behalf
of customer
B
I
L
L
S
D
BILLS DEPARTMENT E
P
Bills department the following functions:
A
1. Inward Bills for Collection (IBC) R
2. Outward Bills for collection (OBC)
T
INWARD BILLS FOR COLLECTION (IBC) M
E
N
T
These are bills or cheques etc. which is collected locally.

These are received from outstation branches banks and
parties.
Demand Draft
It refers to the payment of money on demand of the holder

of draft. Demand draft includes DD issues and DD payable.
OUTWARD BILLS FOR COLLECTION (OBC)
Clean Bills
B
These are negotiable instruments, drawn on outstation
I
branches, bills sent for collection on behalf of the customers
i.e. cheques, drafts or treasury bills etc.
L
Documentary Bills L
These are bills accompanied by documents such as R.R.T.R.
S by the
Bills of lading etc. having title to goods, collected
bankers on behalf of their customers.
D
PAY SLIP E
P
Pay slip is an instrument in receipt, issued by the bank in
the following cases: A
1. On account of expenditure incurred by the Rbank.
2. On account of refund of a payment to a persons under
certain circumstances. T
PAY ORDER M
E
N
T
Pay order is issued to other banks for collection of payments

as said.
A
C
C
O
U
N
T
S
D
ACCOUNTS DEPARTMENT
E
Usually accounts are maintained in two ways:
P
1. Journal System A
2. Voucher System R
T
In journal system entries are posted in Journal Books and
M institutions.
then posted to ledger. It is adopted by industrial
E
N
T
Voucher system is use for every transaction. Voucher has to

be prepared either in cash or in transfer or in clearing. The
sheet upon which these vouchers are summarized
transactions-wise and consolidated into a figure is called
supplementary.
Types of Supplementary
A
Supplementary are of two types:
C
1. Debit Supplementary
C
2. Credit Supplementary O
U
Debit Supplementary is used for debit voucher and credit
N
supplementary is used for credit voucher books.
T
S
BOOKS AND REGISTERS D

E
Books and registers used by bank are as follows:
• General ledger P
• Ledger of A/Cs
• Balance Book (for a/c ledger)
A
• Token Book R
• Cashier Long Book T
• Cash Order Register (SND, DAC & Pay
recorded)
M order is
E
N
T
• Daily Transaction Long Book

• Day Book
• Transfer Book
• Open/Close Register
• Pak A/C Book
• Suspense A/C Book
• Weekly Telegram Book (Cost is written)
• T.T. Issued Register
• A
T.T. or Telegraphic Transfer Payable Register
• D.D. Issued Register C
• D.D. or Demand Draft Payable Register
• Law Charges Recoverable A/C Book (under suitC
account)
O
• Office Order Book
• P/L Income and Expenditure Accounts Book U
• N
P/L Balance Book for Income and Expenditure A/C
(weekly balances of expenditure A/C are recorded)
• Cheque Book Issue Register T
• Stock Register Cheque Books in hand S
• PLS (TDR) Term Deposit Register
• Stationery in Hand Register
• D
OBC (Outward Bills for Collection) Register
• Dak Inward Register
• Dak Outward Register
E
• Stationery in Hand Register P
•
•
Cash in Transit Register
Clearing Register Inward/Outward
A
• Running Finance Register R
Office Attendance Register
•
T
INCOMES M
E
N
T
Income Includes
1. Brokerage (A bank sells and buys shares, stocks,
R
debentures, other securities and receives payments for
these services)
2. Discount E
3. Service Charges M
4. Rent (On Building)
5. Commission (from utility services) M
I
EXPENDITURES
T
Expenditures Includes T
1. Salaries, allowances and provident fund A
2. Rent, taxes, insurance, lighting etc.
3. Profit paid on deposits and borrowings N
4. Postage, telegram, and stamps C
5. Stationary, printing and advertisement charges etc.
6. Auditor’s fee and legal charges E
S
REMMITTANCES DEPARTMENT
D
E
Remittance department performs following functions:
1. Mail Transfer (MT) P
2. Telegraphic Transfer (TT) A
3. Demand Drafts (DD)
R
MAIL TRANSFER (MT) T
M
When a customer requests the bank to transfer his money
from one branch of bank to another branch of the same
E
N
T
bank or from one city to another city to the same bank or

any other bank. Customer fills the form given by bank. If the
customer has an account with that amount as mentioned in
R
the application form then concerned officer will undertake
E
the following procedure to make the mail transfer complete.
1. Branch Mail transfer form
2. Receiving Branch Register copy M
3. Issuing branch register Copy M
4. beneficiary advice
5. advice to customer I
T
In case where the customer is not account holder of the
bank then the customer will have to deposit T the amount
which he wants to transfer under Mail. Then the above said
procedure will be done. A
TELEGRAPHIC TRANSFER (TT)
N
C
This type of transfer is simple. After filling the application
E
form the concerning officer shall fill the telegraphic transfer
S
form. Then it is sent to the required bank which on receiving
it immediately makes the payment to the customer and
afterwards the voucher are sent to that bank by ordinary
mail.
D
DEMAND DRAFT (DD)
E
Demand draft is just like cheques and issued when the
P
customer wants to take cash with him personally. The idea
behind is to avoid the risk and burden of currency notes in
huge quantity. Demand draft can easily A be handled
R
whatever amount it has and the money can easily be taken
from the bank when it is presented. In fact, the bank
persuades the customer to transfer money T by drafts and
avoid the risk of frauds involves in MT and T.T. Draft is only
M
E
N
T
issued when the bank knows customer and bank has the
confidence in him T
E
In case of transfer of money by drafts, the customer has to
fill an application form. Then the concerned officer fills the
following forms: C
1. Customer’s advice
2. Customer’s debit form
H
3. Register copy N
4. Cover Advice
O
A foreign bank uses the cover advice L if draft is issued to
National Bank of Pakistan.
O
FOREIGN DEMAND DRAFT
G
I
Foreign Demand Draft is just like demand draft. The only
difference is that a bank issues FDD to the bank of another
C it involves seven
country. It requires foreign exchange and
forms, which are to be filled.
A
L
TECHNOLOGICAL DEPARTMENT D
E
P
Technological advancements are also affecting the banking
industry. The foreign banks have a competitive edge over all
local banks in their technologies' A advancements and
automated systems. Local banks have also realized the
gravity oil this situation and are striving R
to add computerized
systems to their branches
T
NBP is now fully concentrated on it. There are more than
1242 branches of NBP all over Pakistan M and out of these
E
University of the Punjab, GujranwalaN Campus 53
T
more than 143 branches are fully computerized Almost all

T
.the branches of big cities are computerized; therefore, the
need for a technology department at each branch is
E
growing. Now a day, a computer division is working in each
city to provide service to ad the branches of that area. ATM
C
system is also introduced in many branches in major cities.
H
Following is the brief description of these ATM machines.
N
O
NBP ATM NETWORK
L
CITIES O
NUMBER OF ATMS
1. Burewala G 01
2. Faisalabad I 06
C
3. Gujar Khan 01
4. Gujranwala 04
5. Gujrat A 01
6. Hyderabad
L 06
7. Islamabad 16
8. Karachi D 21
9. Lahore
10. Mirpur
E 13
02
11. Multan P 04
12. Muzaffarabad
A 03
13. Peshawar 04
14. Quetta
R 04
15. Rawalpindi T 05
16. Sheikhupura
M 01
E
N
T
17. Sialkot 03
18. Taxila 01
19. Wah Cantt 01
W
O
R
K
D
WORK DONE BY O ME
N
During
E
my internship in the National Bank of Pakistan
Limited, I really enjoyed to work with the staff of
B
Branch, Gondlawala Road, Gujranwala from
20th July to 2nd September, 2006Yand have a wish
to be employee of National Bank of Pakistan
M
Limited. It was almost impossible to work in all the
E
departments within that limited time. But on my

request, the staff of the branch provided me the
opportunity to work in the different departments
for the sake of practical knowledge. I am really
very thankful to branch manager Sir Ashraf
Meher sb that provides me a learning environment
in the branch.
During my internship training in the National Bank of

Pakistan as I early mentioned that I have worked in different
departments & seats and learnt the followings.
F
OPENING OF NEW ACCOUNT
I
R
S
Account opening and closing is the function of accounts
departments. Bank’s customers may be individuals
(Single or T
Joint), firms
(partnership/proprietorship), Autonomous
corporations, Limited Companies, Charitable
W
Institutions, Associations Educational Institutions or
Local Bodies. NBP normally opens following types
of accounts. E
E
University of the Punjab, Gujranwala K
Campus 56
• Current account
• Saving account
BASICS TO OPEN AN ACCOUNT
During the span of mine internship in National Bank, I

learned and observed a lot of about the opening of an
account. Basically I think that the opening of an account is
the establishment of a contractual relationship between the
banker and the customer. By opening an account at a bank
a person becomes a ‘customer’ of a bank. Further I am
going to express the basic requirements and steps involved
in the opening of an account.
INTRODUCTION AND PRELIMINARY INVESTIGATION
Before opening an account National Bank of Pakistan as like

the other banks in Pakistan ascertain whether or not the
person who is going to open the account is a desirable
customer or not. Then National Bank of Pakistan determine
the prospective customer’s integrity, respectability,
occupation and the nature of business by the introductory
references given at the time of account opening. Negligence
in this informal preliminary investigation may result in
serious consequences not only for the banker concerned

directly but also for other bankers and the general public
who may be affected indirectly.
In order to further strengthen and streamline this process,
the Federal Ombudsman of Pakistan, vide his ruling on
complaint No. II/31/5186, has directed the banks to retain
with the account opening form a Photostat copy each of the
National Identity Cards of the person desiring to open an
account as well as that of the introducer. As per these
directions, the concerned Branch Managers are required to
obtain the original National Identity Cards along with their
Photostat copies and then return the original after attesting
the authenticity of the retained copy.
Preliminary investigation is necessary because of the
following reasons:
Avoid Frauds: In this regard I learned that if a banker does
not make the necessary inquiries mentioned above he may
enable dishonest persons to possess cheque books for
fraudulent purposes. If any such person happens to be an
undercharged bankrupt, the banker might be placed in an
awkward position for having allowed such a person to open
and open a bank account.
Safeguard against unintended overdrafts: Sometimes

due to a mistake an account may be given an overdraft, For
instance, the ledger keeper, misreading the balance of an
account honors a cheque for an amount larger than the
balance. Similarly a credit entry belonging to a customer
may be made by mistake in another customer’s account. In
such situations the excess amount withdrawn by the
customer can only be realized if the customer is a
respectable person.

Inquiries about clients: Being a banker I think National

Bank of Pakistan has a business obligation to respond to
inquiries from other banks etc. about his customer’s financial
position. Though the banker gives only a general ideal about
the financial standing of his customer, it should nevertheless
have the necessary information available with him.
SPECIMEN SIGNATURE
When an account is opened with National Bank of Pakistan

customer provides to the bank a specimen of the form of
signature which would appear on all his cheques to express
his authority for the payment of cheques drawn on his
banker. This specimen is taken generally on a card specially
designed for this purpose, and rule for the customers, full
name, and account number are entered on it.
If the bank has reasons to doubt the genuineness of a
signature, he should either get it confirmed for his
satisfaction or return the cheque with the remark ‘Signature
differs’. If the signature of the customer is forged the banker
cannot escape his liability because he has actually acted on
his customer’s mandate.
SIGNATURE OTHER THAN IN ENGLISH
If a customer signs in a language other than English or

Urdu, he is requested to fill a Vernacular Form. This is a type
of indemnity whereby the customer relieves the bank of any
responsibility in case there is any mis-verification of
signatures by the bank and the cheque is paid. The
vernacular Form is obtained because the bank officers are
not used to verification of signatures other than in English or
Urdu; hence there is likelihood of misverification.

HOW TO OPEN AN ACCOUNT (GENERAL)
Before opening an account in National Bank of Pakistan I

observed that the following points must be considered in this
regard.
• Another account holder of the bank should properly
introduce the new customer.
• The account holder should sign the account opening
form in the presence of bank officer and the signature
is duly verified.
• A copy of identity Card is required by Bank.
• Against submission of the Bank’s prescribed application
form, duly introduced in the manner provided and on
supplying such document, as may be required and
account may be opened. The Bank reserves to itself the
right to refuse to open and account without assigning
any reason.
• Each account shall be allotted a distinct number that is
to be quoted in all correspondence with the bank
relation to the account.
• Minimum amount for opening and continued

maintenance of various types of accounts is as follows:
Rs.
Saving 500
Current 500
Term Deposit 1000

The bank reserves the right to change the above mentioned

minimum balance requirement at any time without any
notice.
PROCEDURE TO OPEN AN ACCOUNT
According to my practice in National Bank of Pakistan, When

a customer wants to open an account, the bank officer gives
him an application form. All information, which is necessary
to be known by the bank, are requirements of the
application form. Form also requires the essential documents
to be attached by the customer.

Basically following information is required to open an

account with National Bank of Pakistan.
• Title of Account
• Full Name of Applicant
• Occupation
• Address
• Telephone No.
• Currency of account
• Nature of Business
• Introducer’s Name, Address & Signatures
• Special instruction regarding the account
• Initial Amount of the Deposit
• Signature of the applicant
DOCUMENTS TO BE ATTACHED
Further I learned that if you wanted to open an account with

National Bank of Pakistan then you should attach the
following documents with your application form which are
different for different categories.
SOLE PROPRIETOR’S ACCOUNT

In order to open an account with National Bank of Pakistan

Limited Sole Proprietors have to submit their business
registration certificate number.
PRIVATE / JOINT ACCOUTS
For individual or private or joint accounts National Identity

Card is required.
JOINT STOCK COMPANY
Before an account of a Public Limited Company is opened

National Bank of Pakistan Limited must ask the person
authorized to do so to submit the certified copies or the
following documents:
• Certified true copy of the Memorandum and Articles of
Association of the company.
• Certified true copy of the resolution of the board of
directors / managing committee / governing body
regarding conduct of the account.
• Certified list containing names and signatures of the
directors / office bearers.
• Certified true copy of the certificate of incorporation or
registration.
• Certified true copy of the certificate of commencement

of business (in case of public limited companies).
• Balance Sheet
• I.D. Card copy of each director
• Original is also enclosed for inspection and return
• List of persons authorized to operate the account.

• Power of Attorney in favor of the person opening

account.
PARTNERSHIP FIRM ACCOUNT
Information which is required to be submitted to National

Bank of Pakistan Limited by a partnership firm in this case is
as follows:
• Full Names
• Address
• Specimen of signatures of the partners
• Certified true copy of partnership deed
• Registration No. if the Partnership is registered
SOCIETIES / CLUBS AND ASSOCIATIONS ACCOUNT
National Bank of Pakistan Limited is authorized to open the

accounts of the societies/clubs and associations, These are
non-trading organizations, formed for the promotion of
culture, science, education, recreational activities and
charitable purposes etc. some of these institution are
registered under the Societies Registration Act, 1866, and
are issued a certificate of registration after they have been
found fit for registration.
ISSUANCE OF CHEQUE BOOK
When a customer opens an account with the bank, he is

provided with cheque book for withdrawals from account.
However, the first cheque book is given to the customer only
when all the required documents are checked. A cheque
book contains ten, twenty five, fifty or hundred leaves. The

cheque book also carries a requisition slip for the issuance of

the new cheque book. This slip is duly filled and singed by
the customer. The signature of the customer is verified by
the bank and new cheque book is issued to the customer
and serial numbers of the cheque are duly entered in the
book of the bank. Along with the signature, person should
also write his full name & address.
Usually only one cheque book is issued at a time, however
big concerns who need a number of cheque books at a time,
may ask the bank to stock as number of cheque books in
their name and to point their name on these cheque books.
Bank debits the client’s account for excise duty of Rs.2.50/-
per cheque and keeps the cheque book ready for the
customer, as on his advice.
The officer keeps and maintains the cheque book register
Cheque book inventory and cheque books issued are
recorded in this register. The account number for which the
cheque book is issued and the number of leaves are also
recorded in this register when the cheque book issued an
entry is passed in the cheque book issue register.
In case of loss of cheque book or requisition slip on cheque
S
book the customer has to fill the Form No. 216-B to obtain a
new cheque book.
E
C
O
PAYMENT OF CHEQUES
N
D
In the National Bank of Pakistan Limited I learnt how to
W
make payment of a cheque. In fact I done the duty of token
clerk mostly but I also worked and participated the
E
E
K
procedure followed for the payment of cheques. Actually the

customer is required to withdraw its deposits through the
cheques out of cheque book issued to him drawn on the
branch where he is maintaining the account. The cheques
are paid in one of the following ways:-
• By cash payment over the counter
• By transfer (from one account to an other)
• By collection/clearing
TOKENS / HANDLING / ISSUANCE
Before commencement of business, the cashier incharge

shall hand over the stock of tokens (supplied by C. O. K) to
the token issuing official against acknowledgement in the
token issue (hand over) Register R-84, indicating therein the
number of tokens received. Token issuing official shall count
the tokens received, arrange them in serial order in a poker
ready for issuance.
At the close of the business, all un-issued tokens shall be
received back by the cahier incharge, against his initials in
the register from the token issuing official. He shall tally the
total with the number of tokens issued in the morning by
adding the number of tokens received back by him (from
customers) and number of tokens pending with the
customer (if any). When the quantity of tokens physically
held by him agrees with the number of tokens issued in the
morning, these shall be placed in the cash safe along with
the closing cash of the day.
The loss of any token need not to be circulated amount the
branches and be treated as local issue to be dealt by branch
at its own. The paying cashier will keep a list of numbers of
the tokens which have been lost.

On presentation of cheque instrument for cash payment a

token shall be issued by the token issuing official after
scrutinizing its following aspects:-
1. The cheque/instrument presented relates to the branch
and is not crossed.
2. The cheque/instrument is bearer or order, in case it is an
order one the payee is known to the branch.
3. The date on the cheque/instrument is in order. The
instrument is not undated or post-dated or stale. A
cheque is stale or out of date, which is more than six
months old on the date of presentation.
4. Amount in words and figures agrees and is absolutely
certain.
5. It has been duly signed by drawer i. e. the account
holder/issuing branch and is also signed by the
payee/bearer.
6. There is no alteration/cutting/over-writing.
7. The cheque/instrument is not mutilated, torn or cancelled.
8. All cancellations and alterations on the cheque
instruments have been authenticated by the drawer under
his full signature.
9. Crossed cheques/instrument presented by a bank for
payment at the counter is accompanied by its memo dully
signed by authorized person (s) of the presenting bank.
10. In case of telegraphic transfers the payee has signed
revenue stamps of adequate value affixed on the receipt,
and his signatures have been verified.
11. Cash Payment voucher has been signed:
a) By manager and accountant/authorized officer of the
branch.
b) By the payee on the reverse.

12. In case of demand draft/pay order payee has been

identified and has signed on the back of the instrument.
National BANK OF PAKISTAN LTD.
………………………………...…..Branch
Token No…………………………...……..
Date ……………………………...……….
Time Token Issued…………………...…...
Initial …………………………………......
Time of Payment …………………...…….
Cashier’s Initial …………...………...……
After verifying the above points and satisfying that

cheque/instrument is apparently in order the token issuing
official will affix the rubber stamp on the reverse of the
cheque/instrument as per specimen given below. He shall
give token No. of the token being issued by him against the
cheque, record the date and time of issuance and shall put
his initials at the relevant column. At the time of payment,
cashier making the payment shall note down the time of
payment under his initial:-
After recording token No., date and time on the back of the
cheque, token issuing official shall state in the relevant
column. Token No. and Nature of Account, Name of Account
through bearer or self and amount on the payment side of
the cash book. In case of telegraphic transfer demand draft,
pay order and cash payment vouchers relevant head of
account, amount and other particulars shall be noted by
him.
The token made of brass, engraved with bank and branch
name and serial number shall be delivered to the bearer of
cheque and other instruments ensuring that it is being
delivered to the presenter only and in case of any doubt
fresh signature of the presenter shall be taken before
delivering the taken.

SCRUTINY OF THE CHEQUE BY LEDGER KEEPER BEFORE

ITS POSTING IN THE LEDGER OR ACCOUNT CARD
On completion of formalities referred above the cheque is

handed over to the ledger keeper and other instruments to
the concerned departments. Ledger keeper will again
scrutinize check and verify the points as given below:-
• The account on which cheque is drawn is neither closed

nor dormant or inoperative.
• It bears token stamp on the reverse.
• The cheque is of our bank and the branch.
• The cheque is out of the cheque book(s) issued.
• The signature of drawer is there.
• The account number, title of account is there.
• Is not un-dated, post-dated, stale or out of date.
• Payment of the cheque has not been stopped by the
drawer.
• There is no legal bar for the payment of cheque
account is not attached, under lien or the account
holder is deceased.
• The funds are available/sufficient to honor the cheque
i.e. the amount does not exceed the credit balance of
the account (or the un-drawn portion of the sanctioned
drawing power in case of cash finance account or
current account) having approved running finance
facility.
• Amount in words and figures tallies.
• No. previous entry in the ledger is un-authenticated.

• In case it is drawn on account marked as similar

account, it should be ensured that the cheque is being
posted to the correct account.
• Endorsement made thereon is prima facie in order.
• Alternations/mutilations/cuttings/over-writings, (if any)
is confirmed by the drawer under his full signatures.
• In case cheque is presented in transfer delivery,
“Transfer Delivery” stamp is affixed.
• The collecting bank’s discharge is in order.
• Crossings of other bank (if any) are properly cancelled.
• Where the cheque has been presented through
clearing, it bears crossing and clearing stamps of the
same bank with date.
POSTING OF CHEQUES/OTHER INSTRUMENTS AND

FIXATION OF STAMP AS PER NATURE OF PAYMENT
After proper scrutiny the cheque is posted in the ledger/card

folio number/sheet number of the account is entered on the
top left corner of the cheque and “Pay Cash” or “TRANSFER”
stamp as the case may be is affixed on the face of the

cheque. The ledger keeper shall sign on the cheque with the
narration “Entered” to signify that it has been posted after
proper checking and is in order.
In case transfer cheques another stamp as per
specimen given, is affixed:
“P A S S E D”
Manager Accountant
Debits to an account against unlearned cheque are not

allowed without the authority of the branch manager. The
credit slips on local banks shall be retained till receipt of
proceeds from them. The credits to the accounts in respect
of cheque in clearing shall be posted in the evening on
receipt of advices from the main branch (clearing) and
withdrawal against such credits will be allowed on the next
morning.
If payment of a cheque creates an authorized or
unauthorized finance or a debit balance is within or excess
of the authorized drawing power, then all such cheques be
entered in the payment Authority Register (R-No. 65) with
full particulars of the cheque, the balance of the account
against which they are drawn and the amount of the
authorized drawing power and /or unlearned cheques (if
any) be presented in register to the manager, who shall
write “Pay” or “Return” in the register under his initials. In
case of “Return” he shall add the objection under which it is
to be dishonored. The officer incharge Deposits must see by
reference to this register that no such cheque is paid without
the sanction of the manager.
WHEN CHEQUES ARE RETUNED FOR INSUFFICIENT

FUNDS THE RELATIVE MEMOS MUST BE INITIALED BY
THE MANAGER / ACCOUNTANT

The Officer Incharge Deposits/Accountants/Manager shall

again scrutinize the cheque and after satisfying himself that
the cheque is in order in all respects he will pass it in the
ledger or in the account card for payment under his full
signatures. The cheques shall be cancelled in red ink in such
a way that signatures of authorized officer cross out the
signatures of the drawer. Cheques shall be passed by
authorized officers singly or jointly in accordance with the
signing/passing powers delegated.
The Cheque cancelled/passed for cash payment shall be
forwarded to the paying cashier for payment.
HOW TO CLOSE AN ACCOUNT
The account can be closed by the customer at any point in

time. The customer is required to submit and application for
closing the account. Then the account is closed out and his
balance is paid to him. Cheque book is returned back to
bank and the officer cancel and the remaining cheques in
cheque book.
T
H
I
UTILITY BILLS COLLECTION
R
D
I worked in the utility bills collection department as the
W
National Bank of Pakistan collects utility bills on behalf of
WAPDA, Sui Gas E
Companies, and Pakistan
E
K Campus
University of the Punjab, Gujranwala 72
Telecommunication Corporation Limited by putting the

stamp on the utility bills “Paid”, Date of payment, Signature
of the officer receiving the utility bills. After receiving utility
bills a list is made on the form which is called Bills scroll
form. One copy of the scroll is with the bank for evidence
whereas the original copy with the receipt of the bills is sent
to the billing department of the respective corporation. The
bank charge commission on the bills.
F
O
U
CASH MANAGEMENT
R
T
The most important department of National Bank of Pakistan
H
limited which deals in money (receiving deposits at lower
rates and lend them out at higher rates of interest). This
department also called as Chest Department and manager of
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it is called Cash Manager or Chest Manager. In those
branches where this department is not separately existed,
E
E
K
the branch manager performs the duties of the Chest

Manager.
The excess cash (More than its insured limit by the
insurance company) of the branches of the region is
collected by the main branch. The main branch is also bound
to send its excess cash (more than its insured limit) to the
State Bank of Pakistan. No branch can have cash its safe
more than its insurance at any time at the time of closing
cash, if it is so the manager will be responsible (not the
insurance company) whether or not he informed to the
regional office (exception to the limit which is insured for the
day).
New Notes and Prize Bonds are also part and parcel of the
Cash Management. Keys of the Safe lockers are with the
three authorized persons each one of them is responsible for
cash as at the time of closing the cash the officers including
Cash officer presented and lock the safe after counting and
scrutinize the cash. The cash officer maintain its daily cash
book with specification of notes (Bonds are also recorded in
the books in relation with cash) and other vouchers, after
being satisfied the manager authenticates the books and
vouchers regarding cash with stamp and signature. at the
end I would like to conclude that the cash management is
F
being done in the National Bank of Pakistan Limited very
effectively.
I
PROCEDURE FOR ADVANCING F LOAN
T
H
I also worked in the credit department, where I learnt about
credit applications. In this regard the bank adopts the
following procedure in order to grant a loan. A customer
W
applies for a loan to the manager, who says him to give
details of his property. The details of the proposal and the
E
photocopies of the document to the title of property are sent
E
K
to the legal advisor of bank. The legal advisor gives his

legal opinion upon the documents. The branch manager, in
the light of the opinion received from the legal advisor,
discusses the proposal with the advancing manager whether
to give or not the loan to the applicant. If manager allows
granting the loan all the documents along with request letter
are sent to regional office for approval. In the regional
office the proposal is analyzed and if the office is satisfied a
consent letter prepared which is signed by the regional
controller credit. This letter is sent to the branch manager.
After receiving it the manager finance reviews the consent
letter, and prepares a DAC (Disbursement Authorization
Certificate). DAC can be made only for people who have a
bank account.
The following documentation is made for loan.
• An application or request letter for loan by the
customer
• Legal opinion of the legal advisor of the bank (for the
title deeds)
• Consent letter from the regional office
• Vetting Certificate (includes consent No., Facility
whether fund based or no-fund based, addresses etc.)
• Valuation of property any consultant or any panel of
consultants approved by State Bank of Pakistan
• Original title deed or sale deed
• Affidavit
• General power of attorney (made by advocate for the
person/owner taking loan for the company)
• Mortgage deed
• Mutation document made
• Verification of the property by the bank from the
competent authority

• Hypothecation of stock certificate (Running is to be

given against 75% margin of stock)
• IB-25R Letter of hypothecation (duly signed by the
party)
• IB-12 , DP Note/Promissory Note (Bank prepared itself,
duly signed by the party, revenue stamps of Rs. 100
put on it)
• IB-6R Agreement of finance mark up (Contract with
party for taking mark up on quarterly basis)
• IB-24 (used for title deed)
• IB-29 (used for guarantee from party)
• IB-26 (used for pledge of stock, margin is different for
different goods)
• No. IB-28 (used for lien) etc.
After that Loan is sanctioned to the party fulfilling all the

terms and conditions for the purpose. The procedure given
above is for both short and long term loans. The thing which
is most important here is that the banks first keeps in mind
and analyzes according to the rules prudential regulations of
the State Bank of Pakistan.
L BY MY BRANCH
ASSIGNMENT GIVEN
A
MANAGER
S
Saibaan is the home finance T
scheme of National bank of
Pakistan which is recently introduced by Prime Minister of
Pakistan. During last week my Branch manager gave me
W
assignment on Saibaan in order to completely study it and
compare it with other banks home finance scheme. The
E
results of my assignment are as follow:
E
K
Open the door to your dream home the NBP
What is NBP Saibaan?

NBP Saibaan is the most affordable House Financing
Scheme. You can avail now and repay over a 3 to 20 years
period
• Home purchase loans up to 10 million

• Home reconstruction loans up to 10 million
• Home improvement loans up to 2.0 million (3 to 15

years)

Introduction
National Bank of Pakistan (NBP) has announced the
launch of a housing scheme to cover all sections of the
society with monthly income starting from as low as Rs.
5000/- per month.
Branded as 'NBP Saibaan' (Housing for all), the scheme

offers a maximum loan of Rs 10 million in accordance with
the debt burden criterion. Loans are available for Home
Construction, Home Purchase and Home Improvement. For
Home Improvement Loans the maximum amount is Rs. 2.00
Million.
Home Construction and Home Purchase loans can be repaid

over a period of 20 years, whereas the repayment period for
Home Improvement loan is 15 years.
The scheme was launched at a function in Karachi presided

over by Mr. Shaukat Aziz, Pakistan's Finance Minister
How can apply

• You are a Resident Pakistani national
• You are aged between 21 and 62 years at the time of application/

disbursement of loan
• You are a Salaried person, self-employed professional or business

person

• You have a Net Take Home income not less than Rs. 5,000 per
month (Govt. and related organization employees) and Rs. 10,000
per month (for other salaried class) Rs. 15,000 per month (for
business persons and self employed)
• Your property is located in NBP approved localities
• Your duration of service is: Two years for salaried and Three years
for Self-Employed/ Business Persons.
Required
Documentation
With
Application
With Applications Form
• Two attested passport size photographs

• Two attested copies of your National Identity Card

• Cheque for the processing charges
Property Documents
Any title document available (other documents may be required)
AND
FOR SALARIED PERSONS, WHOSE SALARIES ARE DISBURSED
THROUGH NBP BRANCH
• Employer Undertaking for remittance of salary at relevant NBP

branch for credit to customer’s account (to be provided at a later
stage, format available at relevant branch)
• Employee ID Copy attested by NBP Branch (where applicable)
• Attested copies of last three (3) months salary slips
• Attested copies of last three (3) months bank statements
2) FOR SALARIED PERSONS OF MNCs AND NBP APPROVED

COMPANIES
• Employer Undertaking duly attested by relevant NBP Branch, where

applicable (to be provided at a later stage, format available at relevant
branch)
• Attested copies of last three (3) months Salary Slips
• Letter of Verification of Employment on Company Letterhead

mentioning the date of joining
• Attested copies of last three (3) months bank statements

3) FOR OTHER SALARIED PERSONS

•
Letter of Verification of Employment on Company Letterhead
mentioning the date of joining
• Attested copies of last three (3) months Salary Slips
• Attested copies of last twelve (12) months bank statements
• Attested copies of last three (3) months paid bills for electricity and telephone OR
copies of last (12) twelve months credit card bills (which ever is available)
4) FOR BUSINESS PERSONS
• Bank Certificate stating applicant maintaining Business Account and

the date of account opening.
• Attested copy of latest Form 29 in case of Private or Public Limited

Company
• Attested copy of Partnership Deed (where applicable)
5) FOR SELF-EMLPLOYED PERSONS
• Attested copy of current professional association

membership/practicing certificate. Adequate proof of professional
engagement like bank certificates
• Attested copy of Partnership Deed (where applicable)
Instructions for completing the

Application Form:

• Fill-in the form completely

• Print the "completely filled" form
• Get it signed by Referees
• Sign it yourself
• Attach the Required Documents
• and submit "In PERSON" to NBP Saibaan Team
Mark Up Rates
Fixed Rate Option
• Priced at 10 years PIB rates plus 3.5 % with re-pricing after 10 years
(subject to a minimum floor)
Variable Rate Option
• SBP Discount Rate with 12 months re-pricing

(subject to a minimum floor)
Processing Fee

• For government employees including NBP employees irrespective of

the finance amount Rs. 500/=
• For Others:
Financing below Rs. 1 million: Rs. 1,000

Financing between Rs. 1 to 4 million: Rs. 3,000
Financing above Rs. 4 million: Rs. 6,000
Other Charges
• Income Estimation, Legal and valuation Fee will be charged as per

actual
Prepayment (Complete/ Partial) Charges
• 2% of the amount being prepaid if pre-payment occurs during the first

(5) years of loan period. No penalty will be charged after five (5)
years
Mark Up Rates
Home Finance
Mark-up Rates of other Banks
As on 29-08-2006
BANK MARK-UP RATE REMARKS
For Salaried Class For Business Class
Prime 7.00% 7.00%
NBP 7.50% 7.50% If govt. employee

then 6.5%
UBL 7.80% 7.80% Free Property
Insurance
ABN Amro 8.25% 9.75%

HBL 8.25% 8.25% Minimum salary req.

Rs. 12000/-
Askari 8.50% 8.50% (7-8 % for Army
Officials)
Citibank 8.50% 9.50%
Union 8.50% 9.50% 8% if loan is above

of 4M & free Pl
Meezan 8.50% 9.50%
MCB 8.75% 9.25%
Standard 9.00% 10.0% (Less 0.6% if age is

Chartered
Faisal Bank 9.00%F 9.00%
less then 40 years)
Soneri 9.00% I
9.00% Max. Loan limit upto
PICIC 9.50% N
9.50%
5M
Bank AlHabib 9.50% A

9.50%
HBFC N Variable rate from 7

to 16%
C
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FINANCIAL ANALYSIS
A
L
"Financial statement analysis is the process of identifying of
financial strengths and weaknesses of the firm by properly
A
establishing relationship between the items of the balance
N
sheet and the profit &loss account," and it is done through
ratio analysis.
A
RATIO ANALYSIS:
L
Ratio means “one number expressed in term of another a
ratio is statistical yardstick by mean Y of which relationship
S
I Campus
University of the Punjab, Gujranwala 84
S
between two or various figures can be compared or

measured. Here we are going to explain the ratio analysis
of NBP.
Financial ratios can be divided into the following six parts.
A. Liquidity ratios
B. Activity ratios
C. Leverage ratios
D. Profitability ratios
E. Investor ratios
F. Bank special ratios
A. Liquidity ratios
 Current ratios
 Quick ratios
 Absolute Liquid ratio

B. Activity ratios
 Inventory turnover ratio
 Average collection period
 Average payment period
 Total assets turnover ratio
C. Leverage ratios
 Proprietary ratio
 Debt ratio
 Debt to Equity ratio
 Debt to Tangible net worth ratio
 Debt to Funds ratio
 External-Internal Equity ratio
D. Profitability ratio
 Return on total assets
 Return on-equity
 Return on investment
 Return on fixed assets
 Average profit per branch
 Net profit Margin
 Interest income to total income
 Interest expense to total expense
 Return on advances
E. Investor Ratios
 Earning per share
 P/E ratio

 Dividend per share

 Dividend yield ratio
 Dividend payout ratio
 Break up value/Book value per share
 M/B ratio
F. Bank special Ratios

 Earning assets to total assets
 Return on earning assets
 Net margin to earning assets
 Loan loss coverage ratio
 Equity to total assets
 Deposit time equity
 Loan to deposit ratio
Because here we are discussing ratio analysis of bank, therefore we will not
discuss A & B category of ratios.

2005 2004
(Rupees in thousands)
ASSETS
Cash 71196956 94446552
Balance with other banks 31019330 49784884
Lending to financial institutions 16282942 10511322
Investments_ net 156985686 149350096
Advances – net 268838779 220794075
Operating fixed assets 21941056 19141569
Other assets_net 23941056 9202969
Deferred tax assets_net ------------ -----------
577719114 553231467
LIABILITIES
Deposits and other accounts 463426602 465571717
Borrowings from financial inst. 8756847 11084790
Bills payable 1741156 7214671
Other liabilities 24974450 23068314
Deferred tax liabilities 4462718 29185
Sub ordinated loans ----------- -----------
Liabilities against assets 16629 17058
503378402 506985735
NET ASSETS 74340712 46245732
REPRESENTED BY
Share capital 5908927 4924106
Reserve 13526041 10812914
Unappropriated profit 16713506 9161747
36158474 24899767
Surplus on revaluation of assets 38182238 21345965
74340712 46245732

2005 2004
(Rupees in ‘000)
Mark-up/return/interest earned 33633735 20947333
Mark-up/return/interest expensed 10321768 6559398
Net mark-up/interest income 23311967 14387925
Provision against non-performing loans and 2446739 1515354
advances
Provision for diminution in the value of (245881) 185707
investments
Bad debts written off directly 23069 14297
Provision of balance sheet obligations --------- 32807
2223927 1748165
Net mark-up/interest income after 21088040 12639770
provisions
NON MARK-UP/INTEREST INCOME
Fee commission and brokerage income 4926604 2099195
Dividend income 1718478 1273563
Income from dealing in foreign currencies 1205638 1008988
Other income 1573905 875113
Total non-mark-up/interest income 9424625 8257159
30512665 20896926
NON MARK-UP/INTEREST
EXPENSES
Administrative expenses 11195133 887801
(Reversal) / Other provisions 198298 32243
Other charges 63206 8284
Total non-mark-up/interest expenses 11456637 8919328
Compensation on delayed tax refund ---------- -----------
PROFIT BEFORE TAXATION 19056028 6195372
Taxation – current year 7154002 4950000
Prior years (1098709) 847958
Deferred 291291 (15729)
PROFIT AFTER TAXATION 12709444 6195372
Unappropriated profit brought forward 9161747 5892902

Transferred from surplus on revaluation of 43221 45496
fixed Assets
9204968 5938398

Profit available for appropriation 21914412 12133770

APPROPRIATIONS
Transfer to
Statutory reserve (2541889) (1248586)
General reserve ---------- -----------
Capital reserve ----------- -----------
Reserve for issue of bonus shares (1181785) (984821)
Proposed cash dividend (1477232) (738616)
(5200906) (2972023)
Unappropriated profit carried forward 16713506 9161747
Basic and diluted earning per share after 21.51 10.48
tax
2005 2004

(Rupee in 000)
CASH FLOW FROM OPERATING
ACTIVITIES
Profit/(Loss) before taxation 19056028 11977601
Less: Dividend income 1718478 1273863
17337550 10703738
Adjustments for non-cash charges
Depreciation 567458 598928
Amortization – intangible assets 2446739 ----------
Provision against non-performing advances (245881) 442595
Provision for diminution in the value of ----------- (172876)
investment
Provision for diminution in the value of other 23069 149593
assets
Bad debts written off directly (28635) 8771
Gain on sale of non banking assets (17922) -------
Loss on sale of fixed assets 2216 (39324)
Provision for potential lease losses 198298 1200
2945322 988887
20283872 4667695
(Increase)/Decrease in operating assets
Lendings to financial institutions (5473515) (534847)
Advances 279072 (40570180)
Others assets (50514512) 26142
(8176486) (41422187)
(Increase)/Decrease in operating assets
Bills Payable (5473515) (829636)
Borrowings from financial institutions (1724818) (25037087)
Deposits (2145115) 9557765
Other liabilities 1166962 26142
(7994564) (16282816)
(54928862) (53037308)
Income tax paid 8019454 (683995)
Income tax refund 27106 370208
Net cash flow operating activities (54928562) 30892555
CASH FLOW FROM INVESTING
ACTIVITIES
Net investments in available-for-sale 6189586 105292873
securities

Net investments in held-to-maturity securities 7193074 (45878054)

Net investments in held-for trading securities 1718478 ---------------
Dividend received (804423) 181258
Investments in operating fixed assets (29705) (1265675)
Investment in subsidiary and associated 23861 --------------
companies
Net cash flow from investing activities 14290871 30040288
CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds from issue of right shares (736529) (640)
Dividend paid (20779) (818306)
Net cash flow from financing activities (575308) (536208)
Ex. difference in cash transactions in foreign (16726) (56354)
branches
Increase/(Decrease) in cash and cash (41412025) 60540128
equivalents
Cash and cash equivalent at beginning of 142995560 82455432
the year
Cash and cash equivalents at end of the 101583535 142995560
year

SOLVENCY ANALYSIS

Solvency analysis of a firm indicates the amount of the other

people’s money being used to generate profit. In general,
these analyses are more concerned with long term debts,
because these commit the firm to a stream of payments
over the long run. Solvency analysis includes:
 Proprietary ratio
 Debt ratio
 Debt to Equity ratio
1. PROPRIETARY RATIO
Total equity
=
Total Assets

Year 2005 (000) 2004 (000)

Total Equity 74340712 46245732
Total Assets 577719114 553231467
ratio 0.13 0.08
2. DEBT RATIO/ SOLVENCY RATIO
=
Total equity L
Total Assets
E
Year
V
2005 (000) 2004 (000)
Total Debts 503378402 506985735 E
Total Assets 577719114 553231467 R
ratio 0.87 0.92 A
G
E
3. DEBT TO EQUITY RATIO
A
Long term Debt
1) = Equity
N
A
Year 2005 (000) 2004 (000)
L
Long term Debts 85781848 83122476 Y
Equity 74340712 46245732 S
ratio 1.15 1.80
I
DEBT TO EQUITY RATIO S
Total Debt
2) = Equity

Year 2005 (000) 2004 (000)

Total Debts 503378402 506985735
Equity 74340712 46245732
ratio 6.77 10.96
INTERPRETATION
The overall leverage position is showing better trend as
compare to previous year. The contribution of equity in total
assets is increasing, while the debt contribution is
decreasing which is better for business. Equity ratio is
increased which shows the better condition of the bank.
Solvency Ratio is in good condition. So we can say that
overall Solvency condition of the NBP is better with the
comparison to the previous year.

PROFITABILITY ANALYSIS

Profitability analysis of a firm indicates the overall efficiently

of the management. Without profit a company can not
attract the outside capital. Profitability analysis includes:
 Return on total assets

 Return on-equity
 Return on investment
 Return on fixed assets
 Average profit per branch
 Interest income to total income
 Interest expense to total expense
1. RETURN ON ASSETS
= Net Profit after Tax × 100

Total Assets

Year 2005 (000) 2004 (000)

Net Profit after Tax 12709444 6195372
Total Assets 577719114 553231467
return 2.20% 1.12%
2. RETURN ON EQUITY
= Net Profit after Tax × 100

Equity
Year 2005 (000) 2004 (000)

Equity 74340712 6295372
return 17.09% 13.40%
3. RETURN ON INVESTMENT
Net Profit after Tax
= × 100
Investment
Year 2005 (000) 2004 (000)

Investment 156985686 149350096
return 8.10% 4.15%
4. RETURN ON FIXED ASSETS

= × 100
Fixed Assets
Year 2005 (000) 2004 (000)


Fixed Assets 9454365 9202969
return 134% 67%
5. AVERAGE PROFIT PER BRANCH

= No. of branches
Year 2005 2004

No. of branches 1242 1226
Average Profit 10233047 5053321
6. INTEREST INCOME TO TOTAL INCOME
= Interest Income × 100

Total Income
Year 2005 (000) 2004 (000)

Total Income 43058360 29204492
Interest Income 33633735 20947333
return 54.89% 71.72%
7. INTEREST EXPENSE TO TOTAL EXPENSE
= Interest Expense × 100

Total Expense

Year 2005 (000) 2004 (000)

Total Expense 21778405 15478726
Interest Expense 10321768 6559398
return 29.76% 21.67%
INTERPRETATION
Profitability analysis shows the entire performance of a business
and if we study the profitability trend of bank then it will clear to
us that it showing a positive trend. Net profit after tax is
increased as compare to previous year, due to it return on
assets, equity and investment is increasing. Not only overall
profit is increasing but also average profit of all the branches is
increasing. Bank interest income is also increasing due to more
advances in this year. This year bank total deposits are also
increased and that’s why interest expenses are showing up ward
trend.

INVESTOR ANALYSIS

Investor analysis or market analysis are related to firm

market valve, as measure by its current share price to
certain accounting values. Investor analysis includes:
 Earning per share

 P/E ratio
 Dividend per share
 Dividend yield ratio
 Dividend payout ratio
 Break up value/Book value per share
 M/B ratio
1. EARNING PER SHARE
= Net Profit after Tax

No. of Shares

Year 2005 2004

No. of Shares 590892700 492410600
Earning 21.51 10.48
2. P/E RATIO
MP Per Share
=
EPS
Market price per share is Rs.284.90 on 3rd Feb.2007
Year 2005 2004

MP Per Share 284.90 284.90
EPS 21.51 10.48
ratio 13.25 27.19
3. DIVIDEND PER SHARE
= Total Dividend
No, of Shares
Year 2005 2004

Total Dividend 1477232000 738616000
No. of Shares 590892700 492410600
DPS 2.5 1.5
4. DIVIDEND YIELD RATIO
= DPS
MV Per Share
Year 2005 2004

DPS 2.5 1.5

MV Per Share 284.90 284.90
ratio 0.008 0.005
5. DIVIDEND PAYOUT RATIO
= DPS × 100
EPS
Year 2005 2004

DPS 2.5 1.5
EPS 21.51 10.48
ratio 12% 14%
6. BOOK VALUE PER SHARE
= Equity
No. of Shares
Year 2005 2004

Equity 74340712000 46245732000S
No. of Shares 590892700 492410600
ratio 125.8 93.9
7. M/B RATIO
= MV Per Share
BV Per Share
Year 2005 2004

BV Per Share 125.8 93.9
MV Per Share 284.90 284.90

ratio 2.26 3.03
INTERPRETATION
NBP has also has good investment opportunities for the
investors. This bank has more attraction for investors as
compare to previous year. Earning per share is increased
due to increase in profit. Book value and market valve of
one share in also increased as compare to 2004. Only
dividend payout ratio is decreased fewer dividends but it is
also in favor of investors because it will increase wealth of
shareholders and ultimate benefit to investors.

BANK SPECIAL ANALYSIS
Bank ratio analysis is little bit different from other

organizations and if we want to see the real picture of a
bank we have to focus on given special ratios.

 Earning assets to total assets

 Return on earning assets
 Net margin to earning assets
 Loan loss coverage ratio
 Equity to total assets
 Deposit time equity
 Loan to deposit ratio
1. EARNING ASSETS TO TOTAL ASSETS
= Earning Assets
Total Assets
Year 2005 (000) 2004 (000)

Earning Assets 473126737 430440377
Total Assets 577719114 553231467

ratio 0.81 0.77
INTERPRETATION
The efficiency of the banking firm is measured by its ability to
utilize its assets in a manner that they could be profitable for
the firm. Bank earning assets are increasing as compare to last
year but it is just a little bit increase. Advances of bank are
increasing and investment as compare to 2004 is also
increased. Lending to financial institutions is also very well.
Balance with other banks is not desirable this year but overall
earning assets showing satisfactory position in 2005.
2. RETURN ON EARNING ASSETS
= NP before Tax × 100

Earning Assets
Year 2005 (000) 2004 (000)

Earning Assets 473126737 430440377
Net Profit before tax 12709444 6195372
return 2.6% 0.14%

INTERPRETATION
Return on earning assets is increased as compare to
previous year because there is increased in net profit in
2005 as compare to 2004. The increasing trend in this ratio
is beneficial for business and investors because this ratio
shows real profitability position of business.
3. NET MARGIN TO EARNING ASSETS
= Net Margin × 100

Earning Assets
Year 2005 (000) 2004 (000)

Earning Assets 473126737 430440377

Net Margin 23311967 14387935

ratio 4.9% 3.34%
INTERPRETATION
Spread is difference between interest income and interest
expense. This ratio shows the spread position of a bank. In
this year bank net margin is increased due to increase in
advances and interest income as compare to 2004. Interest
expenses are also increased but their increasing trend is
lesser as compare to interest income so that’s why spread
position of bank is increased in this year.
4. LOAN LOSS COVERAGE RATIO
= Pre tax Income + Provision for loan loss

Net Charges off + Provision for loan loss
Year 2005 (000) 2004 (000)

Pre tax Income 19056028 11977601

Provision for loan loss 2446739 1515354

Net Charges Off 23069 32807
ratio 8.8 times 8.7 times
INTERPRETATION
This ratio shows how much money is there against Rs 1 loss.
This ratio provides a protection to customers who are going
to deposit their money in bank. Higher the ratio is beneficial
for the bank and customers. In this year loan loss coverage
ratio is increased due to decrease in bad debts but in 2004
the ratio of bad debts is more as compare to this year. This
shows the efficiency of bank in this year instead of 2004.
5. EQUITY TO TOTAL ASSETS
= Equity
Total Assets
Year 2005 (000) 2004 (000)

Total Equity 74340712 46245732

Total Assets 577719114 553231467

ratio 0.13 0.08
INTERPRETATION
This ratio shows the position of equity in total assets of
business. In both years this ratio is better. The bank should
increase its equity by increasing the wealth of shareholders.
6. DEPOSIT TIME EQUITY
= Debt
Equity
Year 2005 (000) 2004 (000)

Total Debts 503378402 506985735

Equity 74340712 46245732

ratio 6.77 10.96
INTERPRETATION
This ratio is also known as debt to equity ratio. This shows
how much outsiders share in business total equity. Lesser
ratio is better for a business and this year bank ratio is
decreasing which showing better trend as compare to
previous years.
7. LOAN TO DEPOSIT
= Loan × 100
Deposit
Year 2005 (000) 2004 (000)

Loan 268838779 220794075
Deposit 463426602 465571717

ratio 58.01% 47.42%
INTERPRETATION
Loans or advances are the major assets of a bank while
deposits are major liabilities of a bank. Higher ratio shows
the better solvency of bank. This ratio is increased instead of
previous years because advances of the bank are increased
as previous years although deposits are also increased this
years but its ratio is less.

TREND ANALYSIS
In trend analysis we done two types of analysis, these are

Horizontal Analysis
It is conducted by setting consecutive balance sheet, income

statement or statement of cash flow side-by-side and
reviewing changes in individual categories on a year-to-year
or multiyear basis.
A comparison of statements over several years reveals

direction, speed and extent of a trend(s). The horizontal
financial statements analysis is done by restating amount of
each item or group of items as a percentage.
Vertical Analysis
Like horizontal analysis this can also done for balance sheet
and income statement. Here we assign 100% value to any
key item of balance sheet or income statement and then see
portion of other items in this percentage.


Particulars 2001 2002 2003 2004 2005 Avg. Comments

Change
ASSETS
Cash 100% 70% 75% 119% 90% 88.5% Favorable
Balance with other banks 100% 120% 81% 169% 103% 118.2% Favorable
Lending to financial 100% 116% 160% 87% 94% 114.2% Favorable
institutions
Investments_ net 100% 200% 222% 312% 358% 273% Favorable
Advances – net 100% 83% 95% 107% 112% 99.25% Favorable
Operating fixed assets 100% 74% 52% 54% 57% 59.25% Favorable
Other assets_net 100% 112% 124% 132% 141% 102.2% Favorable
Deferred tax assets_net 100% 0% 0% 0% 0% 0% Favorable
100% 104% 112% 132% 138% 122% Favorable
LIABILITIES
Bills payable 100% 150% 244% 289% 310% 248.2% Unfavorable
Borrowings from 100% 87% 126% 131% 145% 122.2% Unfavorable
financial inst.
Deposits and other 100% 104% 118% 121% 131% 248% Favorable
accounts
Sub ordinated loans 100% --- --- --- --- ----
Liabilities against assets 100% 160% 81% 78% 82% 100.25% Unfavorable
Other liabilities 100% 87% 82% 87% 85% 85.25% Unfavorable
Deferred tax liabilities 100% 0% 0% 0% 0% 0%
100% 103% 111% 171% 181% 141.2% Unfavorable
NET ASSETS 100% 136% 157% 245% 424% 240.5% Favorable
REPRESENTED BY 1
Share capital 100% 100% 104% 112% 136% 113% Favorable
Reserve 100% 96% 108% 206% 284% 173.5% Favorable
Unappropriated profit 100% 452% 787% 814% 984% 759.25% Favorable
100% 119% 121% 125% 132% 124% Favorable
Surplus on revaluation of 100% 174% 189% 202% 360% 231% Favorable F
assets
100% 136% 157% 245% 424% 240% Favorable

450
400 2001
350
300 2002
250 2003
200
150 2004
100 2005
50
0
Total Assets Total Total Equity
Liabilities
The horizontal analysis of the balance sheet of the bank over

all give the positive trend .The result of the balance sheet
depict that there is a constant increasing trend in cash, total
assets, total liability and equity. There is extraordinary high
trend in 2005 in all factors of balance sheet as compare to
2001.
The trend of cash is increasing to upward with 88.5%. The

trend of Total asset is also increasing to upward with 22%,
and the trend of total liabilities is also increasing with 41.2%
to upward. Equity is increased by 140%.


Particulars 2001 2002 2003 2004 2005

Mark-up/return/interest earned 100% 60% 67% 59% 115%
Mark-up/return/interest expensed 100% 47% 48% 34% 46%
Net mark-up/interest income 100% 81% 80% 75% 161%
Provision against non-performing 100% 685684% 705787% 442575% 1242153%
loans and advances
Provision for diminution in the value 100% -146522% -150000% -172876% -98982%
of investments
Bad debts written off directly 100% 22% 31% 1.2% 0.16%
Provision for potential lease losses 100% 145% 168% 234% 0%
100% 104% 108% 39% 159%
Net mark-up/interest income after 100% 68% 77% 79% 161%
provisions
INCOME
Fee commission and brokerage 100% 112% 115% 220% 270%
income
Dividend income 100% 106% 125% 127% 161%
Income from dealing in foreign 100% 57% 66% 193% 106%
currencies
Other income 100% 130% 149% 116% 217%
Gain on Investments 100% 435% 532% 209% 226%
Gain / Loss on trading in government 100% 0% 0% -11440% -851%
securities
Total non-mark-up/interest 100% 145% 175% 163% 209%
income
100% 55% 100% 92% 172%
EXPENSES
Administrative expenses 100% 75V 87% 96% 87%
(Reversal) / Other provisions 100% 43000% 50000% 149593% -72740%
Other charges 100% 4261% 4496% 3189% 13468%
Total non-mark-up/interest expenses 100% 93% 94% 92% 81%
Compensation on delayed tax refund 100% 0% 0% 513852% 340596%
PROFIT BEFORE TAXATION 100% 114% 117% 130% 420%
Taxation – current year 100% 75% 79% 102% 301%
Prior years 100% 0% 0% 0% -149763%
Deferred 100% 215% -101% -42% 216%
PROFIT AFTER TAXATION 100% 120% 128% 140% 513%

Unappropriated profit brought 100% 201% 219% 69% 58%

forward
Transferred from surplus on 100% 33% 41% 42% 137%
revaluation of fixed Assets
Profit available for appropriation 100% 122% 126% 116% 402%
APPROPRIATIONS
Transfer to
Statutory reserve 100% 127% 128% 146% 256%
General reserve 100% 5000000% 1000000% 800000% 5500000%
Capital reserve 100% 0% 0% 0% 0%
Reserve for issue of bonus 100% 63% 77% 84% 213%
shares
Interim cash dividend Rs 1.75 per 100% 69% 69% 51% 97%
share
Interim cash dividend Rs 1.50 per 100% 54624% 383159% 50577% 639799%
share
100% 145% 157% 156% 541%
Unappropriated profit carried 100% 24% 45% 26% 34%
forward
According to horizontal analysis of profit and loss account

there is increasing trend. In 2005 there is increase in all
factors such as interest income interest income interest
income after provision and profit before and after tax
because the trust of people on banks is increasing day by
day. The increase in profit in 2005 is almost 5 times as
compare to 2001.


Particulars 2001 2002 2003 2004 2005

ASSETS 100% 100% 100% 100% 100%
Cash 19 12 13 17 12
Balance with other banks 7 8 5 9 5
Lending to financial institutions 5 5 6 2 3
Investments_ net 17 39 35 27 27
Advances – net 41 30 34 39 47
Operating fixed assets 8 6 4 4 4
Other assets_net 2 2 3 2 2
Deferred tax assets_net 1 0 0 0 0
100% 100% 100% 100% 100%
LIABILITIES
Deposits and other accounts 88 88 92 92 89
Borrowings from financial inst. 3 2 2 2 4
Bills payable 1 1 1 1 1
Other liabilities 7.5 6 4.6 3 5
Deferred tax liabilities 0 2.5 0.5 1.5 0.5
Sub ordinated loans 0 0 0 0 0
Liabilities against assets 0.5 0.5 0.5 0.5 0.5
100% 100% 100% 100% 100%
NET ASSETS 100% 100% 100% 100% 100%
REPRESENTED BY
Share capital 21 16 15 11 15
Reserve 43 30 29 23 29
Unappropriated profit 4 14 21 20 21
68 60 65 54 65
Surplus on revaluation of assets 32 40 35 46 35
100% 100% 100% 100% 100%

INTERPRETATION
In balance sheet of bank the most important item is earning
assets. There are four earning assets. Bank has strong
earning assets like advances investments and lending to
financial institutions has major percentage in of assets of
bank. In liability and equity analysis the Borrowings from
financial institutions and deposits have major portion and
reserve and share capital has major portion in equity


Particulars 2001 2002 2003 2004 2005

Mark-up/return/interest earned 100% 100% 100% 100% 100%
Mark-up/return/interest expensed 60 54 35 31 31
Net mark-up/interest income 40 46 65 69 69
Provision against non-performing 9 6 9 7 7
loans and advances
Provision for diminution in the value -3 0.3 2 1 -1
of investments
Bad debts written off directly 1.5 0.7 2 0.3 1
Provision for potential lease losses 0.5 1 0 0.7 0
8 8 13 9 7
Net mark-up/interest income after 32% 38% 52% 60% 62%
provisions
Particulars 2001 2002 2003 2004 2005

NON MARK-UP/INTEREST 100 100% 100% 100% 100%
INCOME
Fee commission and brokerage 64 65 45 64 52
income
Dividend income 13 19 16 15 18
Income from dealing in foreign 19 14 10 12 13
currencies
Other income 4 2 29 12 17
Total non-mark-up/interest 100 100 100 100 100
income
NON MARK-UP/INTEREST 100 100 100 100 100
EXPENSES
Administrative expenses 59 50 99 99 97
(Reversal) / Other provisions 9 17 0.6 0.9 2
Other charges 32 33 0.4 0.3 1
Total non-mark-up/interest expenses 100 100 100 100 100

INTERPRETATION
In vertical analysis of profit and loss account the interest

expense has decreasing trend from 2001 to 2005 but in
2005 there little bit increase in net interest income but
almost have same trend. According to this analysis fee,
commission and brokerage income has some worth in our
income statement its almost one fourth or one fifth of our
interest income and it has increasing trend.
The administrative expenses are also increasing from 2001

to 2005 but overall management is able to reduce expenses,
so due to which there is continuous increase in profit before
and after tax.


COMPARATIVE ANALYSIS
In comparative study of financial statements, we compare

the given year statements with different years or compare
with competitors in industry. For this we conduct two types
of analysis.
Liquidity ratios
 Time Series Analysis
 Cross Sectional Analysis


Ratios 2004 2005 Comments

Leverage Ratios
Proprietary Ratio 0.13 0.08 Good
Debt Ratio 0.87 0.92 Good
Debt to Equity 6.77 11.82 Good
Profitability Ratios
Return on Assets 2.20% 1.12% Good
Return on Equity 17.09% 13.4% Good
Return on Investment 8.10% 4.15% Good
Return on fixed Assets 134% 67% Good
Average profit Per Branch 10233047 5053321 Good
Investors Ratios
EPS 21.51 10.48 Good
P/E Ratio 13.25 27.19 Bad
Dividend Yield Ratio 0.008 0.005 Good
Dividend Payout Ratio 12% 14% Bad
Book valve per Share 125.8 93.9 Good
Bank Special Ratios
Earning assets to Total assets 0.81 0.77 Good
Return on earning assets 2.6% 0.14% Good
Net margin to Earning assets 4.9% 3.34% Good
Loan loss coverage Ratio 8.8 times 8.7 times Good
Equity to Total assets 0.13 0.08 Good
Deposit time Equity 6.77 10.96 Good
Loan to Deposit 58.01% 47.42% Good

INTERPRETATIPN
Solvency Ratios
Proprietary Ratio, Solvency Ratio, Debt to Equity are all in
good position but only debt to fund ratio showing poor
condition in this year.
All the ratios involved in profitability showing better trend as
compare to 2004 and this shows the efficient management
of bank.
Investor Ratios
Price Earning Ratio, Market/Book Ratio are both in good
condition the difference as per previous year is very large.
Only dividend yield and payout is decreasing due to lesser
declaration of dividend in this year.
Bank Special Ratios

These ratios shows real picture of a bank. All these ratios
showing better position as compare to 2004 so overall bank
showing better position.


Ratios NBP MCB Comments

Leverage Ratios
Proprietary Ratio 0.13 0.08 Good
Debt Ratio 0.87 0.92 poor
Debt to Equity 6.77 11.82 Good
Return on Assets 2.20% 3.0% poor
Return on Equity 17.09% 38.28% poor
Return on Investment 8.10% 12.84% poor
Return on fixed Assets 134% 109% Good
Investors Ratios
EPS 21.51 21 Good
P/E Ratio 13.25 11.80 Good
Dividend Yield Ratio 0.008 0.012 Poor
Dividend Payout Ratio 12% 14.38% Poor
Book valve per Share 125.8 54.64 Good
Bank Special Ratios
Earning assets to Total assets 0.81 0.87 Poor
Return on earning assets 2.6% 4.98% Poor
Net margin to Earning assets 4.9% 5.73% Poor
Loan loss coverage Ratio 8.8 times 11.47 times Poor
Equity to Total assets 0.13 0.08 Good
Deposit time Equity 6.77 11.82 Good
Loan to Deposit 58.01% 78.62% Poor

INTERPRETATIPN
NBP Limited is not only showing better trend in this year but
also showing better position in industry. The major
competitor of NBP is MCB and it is necessary to depict the
real scenario of NBP financial ratios, we compare these with
MCB ratios, so for this purpose we have done cross sectional
analysis of NBP with MCB.
In this analysis, overall leverage position of NBP is good as

compare to MCB. Profitability analysis is not better as
compare to MCB. In investor analysis, Dividend payout ratio
is bad but overall market value of NBP is good as compare
to MCB. Bank special ratios of NBP are also not very good as
compare to MCB.

SUGGESTIONS & RECOMMENDATIONS
Although NBP is included in ten top most banks of the world

equity as well as assets wise, and it is only bank that got
“AAA” from Pacra. But for the further improvement in
various sectors my recommendations to the bank would be
as follows:
• NBP should become very specific about its competitors,

so that it can understand who its competitor is in the
first degree and who is in the second degree. Then the
first-degree competitors should be watched closely
• A research cell should continuously try to gather
information about the present action so its competitors
and expected future actions. So in this way more
effective strategies can be formulated.
• The performance reward linkage should be making
strong as it is said, "A happy employee delivers more
than he receives from the organization." The NBP
should also try to make its employees happier.

There is immediate need, to reconstruct the personnel

policies. Selection should be through newspaper
advertisements. In this way more intelligent, efficient
and qualified staff can be formulated.
• It is strongly recommended that NBP should go for

computerization rather than manual work, which is very
slow and time, consuming process. In this age NBP
even does not have a partially computerized system
where as other new competitor banks are now going
towards on-line banking services.
• Govt. should take keen interest to recover its bad

debts, which can improve its financial position.
In case of giving the loans, it is necessary to check the
repute of customer towards loan repayment. Bank
shouldn’t advance the money to those people who are
addict of rescheduling of loans due to their political
influences. Instead providing loans to these persons,
loans must be advanced to the well-reputed businesses
and industries having good record of loan repayment.

• Along with the officers, the training must also be given

to the clerical staff. Because of NBP are running on
manual system and the training of its staff directly
improving their efficiency of work.
• Present training program for its officers is need to be

improved, as this program instead of improving the
efficiency of officers is merely a burden for the bank in
the form of heavy T.A. , D.A. and cost.
• Working conditions must be improved for the

employees. Bank will definitely get more benefits after
some expenditure on the working conditions as it
improves efficiency and productivity of the employees.
• NBP should flourish certain marketing plans to attract

the customers by giving them certain incentives and
beneficial schemes to the customers as other
competitor banks are doing so.
• There is also a need of proper recruitment and selection

program. New young talent should be introduced to
inject the new ideas.

• Deterioration in efficiency is mostly due to promotion

without merit. So promotions must be awarded on
merit and also when due.
• Special attention should be given to the behavior of the

employees towards the customers, as customer is the
most important person for any bank.
• There are many employees who are working on ad-hoc

basis creating dissatisfaction. The deserved should be
made permanent employees.
• Political influences in the bank should be eliminated.
• To motivate the employees of the bank, regular

bonuses and incentives should be given to them.
• There must be a friendly environment among all the
employees as it enhances the trust and sincerity.
• NBP should be focusing its attention towards the share

of traveler cheque.
• Branch manager should be trained in the field of selling

to serve better according to the expectation of
customers.

• The recruitment policy should be fair and transparent.
• Management should increase the branch limit of

expenditure to fulfill the necessary expenditure of
personnel.relation.

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INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

“A bank is a dealer in capital or dealer in money. He is an

“Commercial banks provide certain services for customers

“The modern banker is primarily a dealer in credit.”

University of the Punjab, Gujranwala Campus 1

We can take bank just like a heart in the economic

Banks play very important role in the economic life of a

To encourage the habit of saving and to mobilize these savings is its

If there are no banks, then there would be concentration of wealth in

Loan facility provided by bank works as an incentive to the producer to

University of the Punjab, Gujranwala Campus 2

COMMERCIAL BANKING IN PAKISTAN

PHASES OF BANKING IN PAKISTAN

Broadly speaking we can divide the development of commercial

PHASE-1 1947-1974 Establishment of commercial banking system

University of the Punjab, Gujranwala Campus 3

FIRST PHASE (1947-74)

SET UP OF COMMERCIAL BANKING SYSTEM

This was the first phase of development of Pakistan’s commercial

INITIAL POSITION OF BANKING IN PAKISTAN

There were 19 non-Indian foreign banks in Pakistan at the time of

University of the Punjab, Gujranwala Campus 4

Therefore it was agreed between the government of India and Pakistan

SECOND PHASE (1974-1979)

The banking reforms turned out to be a transitional and temporary

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1. National Bank of Pakistan

THIRD PHASE (1979-91)

INTRODUCTION OF ISLAMIC BANKING

In 1977 the Bhutto government was toppled. The martial law

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FOURTH PHASE (1991-2000)

PRIVATIZATION AND DE-REGULATION

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BRIEF HISTORY OF NATIONAL BANK OF

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It is working as the agent of the state bank of Pakistan and performs

The government floated its 10 % of the shares in the open market in

We aim to be an organization that is founded on…

• Growth through creation of sustainable relationships with our

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We shall work to…

• Meet expectations through Market-based solutions and products.

We aim to be people who…

• Care about relationships.

We have confidence that tomorrow we will be…

• Leaders in our industry.

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Vision and Guide

To be the pre-eminent financial

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To be recognized in the market place by

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We aim to be an organization that is founded on…

• Growth through creation of sustainable relationships with our

We shall work to…

• Meet expectations through Market-based solutions and products.

We aim to be people who…

• Care about relationships.

We have confidence that tomorrow we will be…

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• Leaders in our industry.

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