NBP Internship Report

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN
2013
2013
INTRODUCTION
INTERNSHIP REPORT ON NATIONAL BANK EVOLUTION OF BANKS IN PAKISTAN OF PAKISTAN

National Bank of Pakistan
There are different opinions that how the word Bank originated. Some of the authors opinion that this word is derived from the word Bancus or Banque, which means a bench. The explanation of this origin is attributed to the fact that the Jews in Lombard transacted the business of money exchange on benches in the market place; and when the business failed, the people destroyed the bench. Incidentally the word Bankrupts said to have evolved from this practice. Some of the authors are of opinion that the word Bank is derived from the German word back, which means joint stock fund. Later on when the German occupied major part of the Italy the word Back was italicized into Back.
National bank of Pakistan

Shorkot City Branch,
In fact human left the need of bank when it begins to realize the importance of money as a medium of exchange. Perhaps it where the Babylonian who developed banking system as early as 2000 B.C. At Advisor: that time temples were used as banks because of their prevalent respect. During the rule of king Hamurabi (1788 1686 BC) the founder of Babylonians Empire, loans were started being granted for interest. The borrower has to provide guarantee or he(Lecturer) had to pledge his goods or valuables. King Hamurabi drew up a code wherein he laid down standards rules for procedures for banking operations
Mr. Shehzad Hassan
Muhammad Kamran by temples and great landowners. Also in Greece, the temples were used as banks, where the people
deposited their money and other valuables for safe custody and security. In Europe with the revival of civilization (Renaissance) in the middle of twelve century, trade and commerce started expanding and this development compelled the business community to borrow the money from the Hebrew Page no
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moneylenders on high rates of interest and usury. Seeing the great demand, these moneylenders started organizing themselves and bank started up at the principle seaports of southern Europe. Soon Venice and Geneva became the most important money markets of the time and banking though different from its present form, flourished. What we know as modern banking originated in the 14th century in Barcelona.
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I dedicate this work of mine to my Teachers, My Parents and to all My Friends, who truly help and guide me in completing this project.
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B.com (hons) is a program in which we studied about business and finance. In Pakistan the banking sector is at the maturity stage and banking sectors are the best institutes in which we are easily understand the practical experience. B.com (hons) gives us an opportunity to touch the practical experience about business and finance as the internship. The Internship program is an important part to give students an opportunity to have experience of practical field. Unless and until the students experience the novelty of practical work, their knowledge of what they study in theoretical courses remains incomplete. The most important point in an Internship program is that the student should spend their time in a true manner and with the spirit to learn practical orientation of theoretical study framework. This Internship Report is on my seven weeks practical training at National bank of Pakistan shorkot city branch. In this Internship Report I have tried to give details about the national Bank Pakistan, working and the functions of different departments of the bank. In the end, I'll like to thank all my other fellow internees, here and in branch, for their unconditional support and help in making me learn in a good environment.
Muhammad Kamran
Roll No#BCOF10E044 B.com (Hons) Secession: 2010-2014
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First of all, I thank my respected teachers for providing me comprehensive knowledge about Commerce Courses and also for providing me the opportunity to complete my Internship Program in NBP to enhance my practical knowledge about banking sector of Pakistan. I am also indebted to the followings because without their help, I would not be able to achieve this practical knowledge.
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Table of Contents:1. Industry introduction 2. An overview of organization 08 17
a. b. c. d. e. 3. 4. 5. a) b) 6. 7. 8. 9.
History of organization Nature of organization Vision statement Mission statement Board of Directors Main offices Main Features Competitors Organizational Structure:Introduction of all departments Comments on organizational structure Work done by internee Financial Analysis of organization Financial data of last 5 years Horizontal analysis Vertical analysis Significance of ratio Components of ratio(formulas used) Horizontal analysis of ratios Interpretation of ratios SWOT Analysis Conclusion Reference Bibliography
18 18 19 19 21 23 28 57 58 59 61 61 62
73 76 77 78
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Industry introduction
"A financial institution, which deals with money and credit. It accepts deposits from individuals, firms and companies at a lower rate of Interest and gives at higher rate of interest to those who need them. A financial establishment which uses money deposited by customers for investment, pays it out when required, makes loan at interest, exchanges currency, etc. J.W Gilbert in his principles and practice banking defines a banker in these words: A banker is dealer in capital or more properly, a dealer in money. He is intermediate party between the borrower and the lender. He borrows of one and lends to another. Sir John Paged defines banker in these terms: That no person or body, corporate or otherwise, can be a banker who does not Take deposits accounts. Take current accounts, Issue and pay Cheques and Collect Cheques crossed and uncrossed for his customers The American defined the term banker in a very broad sense as under: By banking, we mean the business of dealing in credits and by a Bank we include every person, firm or company having a place of business where credits are opened by deposits of collection of money or currency. Subjects to be paid or remitted on Cheques or order, money is advanced or loaned on stocks, bonds, bullion, bill of exchange, promissory notes are received for discount or sale.
Evolution of Banking in Pakistan

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The first phase in evolution of banking in Pakistan sees very hard days for the whole banking sector. Starting virtually from scratch in 1947, the country today possesses a full range of banking and financial institutions to cope with various needs of the economy. The area now constituting Pakistan was, relatively speaking, fairly well provided with banking facilities in undivided India, in March 1947 there were 3496 offices of Indian scheduled banks out of which as many as 487 were situated in territories now constituting Pakistan. The Reserve bank of India was the central banking authority in India. At the time of partition it was decided that in the interest of smooth transition it should continue to function in newly emerging state of Pakistan, until 30th Sep.1948. In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. This resulted in a negative effect on baking service in Pakistan. The banks, which had their registered offices in Pakistan, transferred them to India. In an effort to bring about the collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank offices closed quickly. Those banks, which stayed, operated only in name pending the winding up of their business. The number of scheduled banks thus declined from 487 branches before independence to only 195 branches by 30th June1948.
Banking Growth during (1948-1970)

In this tense situation, a committee was immediately setup to formulate a scheme of central banking legislation for Pakistan. Many specialists were of the opinion that in view of the acute shortage of trained staff, any idea of establishing a central bank was I impractical and the best that could be attempted was the setting up of a currency board until such times as sufficient staff could be organize to operate a central bank. The questions as to whether the institution should be only a currency board or a full-fledged central bank had exercised the mind of the Pakistan government since independence. Through, it was realized that the shortage of trained personal to run the central bank would present serious difficulty in view of the tangible advantages that a central bank enjoyed over currency board, the government ultimately Page no
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decided to take the bold step of setting up a fully fledged central banking authority. Among other factors, which led to this decision, there was the fact the banking facilities in the country had been totally disrupted and there was an urgent need for their rehabilitation, which a central bank alone could meet. As there was hardly any time to pass as Act, an order was drafted, known as the state bank of Pakistan order, which was promulgated by the government of Pakistan on 12th may 1948. The state bank declared open on 01 July, 1948 by the father of the nation. One of the first tasks of the state bank was to arrange for the replacement of the Reserve bank of India notes, which had continued to circulate in Pakistan during the transitional period, by Pakistan currency. The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 & 100. An equally urgent task, which the new central bank had to address itself, was the creation of a national banking system. To this end, while extending every help and encouragement to Habib Bank to expand its organization, the state bank recommended the setting up of a new banking institution to serve both as an agent to the state bank recommended the setting up of a new banking institution to serve both as an agent of the state bank as well as the spearhead of its credit policies. Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in November 1949. It started with six offices in the former East Pakistan. In view of the special role assigned to the new institution, contrary to traditional practices the Governor of the state bank was appointed to head its Board of Director in 1950. Under the fostering care of the state bank and the support of the government, the new institution developed rapidly. By using its special powers, the state bank made liberal advances to the new bank to help it expand credit facilities in the country. By 1952, the National bank of India shortly, afterwards, in November 1952, the governor of the state bank ceased to function as the president of National bank of Pakistan. With a view to broadening the institutional framework of the financial system, the state bank also sponsored the establishment of specialized credit institutions in the filed of agriculture and industry. Banking companies (control) act was passed in December 1948 specifically empowering the state bank to control the operations of banking companies in Pakistan.
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Moreover realizing that the most serious limitation on the expansion of banking services in Pakistan was the lack of trained personal, the state bank sponsored a banking training scheme, which was repeated after year and turned out a large number of bankers. As the Commercial Banking facilities continued to expand, a new Pakistani bank, the National Commercial Bank was established and registered as a scheduled bank. In the filed of industrial finance a new institution known as the industrial credit and investment cooperation was set up. The year 1958 marked the completion of the first decade of the working of the State Bank of Pakistan. When it was established there were only 195 bank offices in existence. At the end of June 1958 their number had increased to 307, of which Pakistani banks accounted for 232 against 25 in mid 1948. Moreover at the end of June 1958, Pakistani banks held 60% of the total banks deposits, and were responsible for 65 of total bank credit. When the Ayub Khan Government took over in 1958, the banking and monetary scene was significantly affected by developments such as the liberalization of imports, transfer of business in food grains to the private sector, and the firming up of commodity markets. The demand of funds picked up and there was a substantial expansion of bank credit to the private sector. The pace of expansion in the institutional frameworks of the countrys banking system quickened and a new Pakistani, bank, namely the United Bank Limited was established. Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The bank extended its network by opening six new offices located at Chitagong, Peshawar, Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to the list of scheduled banks. Two principal additions were the commerce bank, and the standard bank. The number of scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965. Under the impact of economic growth and dear scope of private enterprises, bank credit to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total expansion in bank credit to the private sector during this period amounted to Rs. 4300 million, which gave a annual expansion of Rs. Page no
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860 million compared to the annual average increase of Rs. 144 million over the preceding five years. Banks deposits increased from Rs. 2,493 million to Rs. 6883 million during the five years period ended June 1965 compared to Rs. 231 million in the proceeding five years. Time deposits during this period increased from Rs. 946 million to Rs. 3228 million, where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at 49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of banking development during this period was that since the rate of increase in bank deposits lagged behind the rate of expansion in bank credit, the banked has to depend increasingly on central bank finance. They borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen demand for bank credit, banks investments could not increase as rapidly as their advances. Their investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231 million in June 1960. Investments, which were almost equal to their advances in June 1960, were only about one third of the advances in June 1965.The third plane period witnessed a further expansion of banking facilities in the country the total number of scheduled banked offices increased from 1,591 at the end of June 1965 to 3133 at the close of June 1970. During the same bank credit to the private sector rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end of June 1970. A remarkable change occurred during this period related to the composition of deposits. Time deposit becomes greater than demand deposits forming about 54 percent age of the total deposits. As oppose to what happened in the previous period, banks were able to finance a much higher level of credit expansion without having to increase their borrowings from the central bank.
Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms were introduced to make the banks more responsive to the requirements of economics growth with social justice. The reforms aimed at bringing about a more purposeful and equitable distribution of bank credit, improving the soundness and efficiency of the banks, and securing greater social accountability of the banking system as a whole. Page no
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The role of the banking system had been truly spectacular in mobilizing savings of the community and meeting the credit needs of the economy. But at the same time, the banks had generally neglected their role in promoting social justice and had failed to play an effective role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In particular the inter locking of ownership with commercial and industrial interests had led to the misuse of bank resources. There was a heavy concentration of credit in big accounts and in urban area. Credit facilities for agriculture, small business, newly emerging exports and housing had remained obviously inadequate while the banks indulged in capital financing in few selected business sectors and issued guarantees on behalf of favored clients, term clients, term financing facilities for industry were wholly absent. Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider powers. It was authorized to remove directors or managerial personnel, if necessary and supersede the board of directors of a banking company and appoint administrators during the period of such super session. It was also empowered to nominate directors on the board of every bank. As regard bank directors, it was provided that anyone defaulting in meeting his obligations to bank would forfeit his directorship. Moreover, it was laid down that no person could serve as director of a bank for more than six years continuously. Each bank was required to have a paid up capital of not less than 5 percent age of its deposits to be progressively build up to 10 percent age over a period of time. The banks were also required to transfer 10 percentage of their profit their reserves every years after the reserve became equal to the paid up capital. With a view to diversity the ownership of the banks, the banks were required to raise new capital from the market. Unsecured loans to directors, their families or firms and companies, were totally prohibited. The bank reforms also brought about the establishment of new institutions to achieve new objectives. A national credit consultative was setup under the supervision of the state bank with representation from the government and the private sector. It was assigned the task of determining of economys annual credit needs within the safe limits of monetary and credit expansion with reference to the annual development plan. Such a credit plan was to cover the public and private sectors. Alongside the National credit council and Agricultural Advisory Committee was formed to allocate agriculture credit Page no
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for various purposes, to coordinate the operation or the agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing committee on exports in general and the new emerging exports in particular, was also established. With a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme was introduced under which the state bank under took to share any bonfire losses incurred by the commercial banks in case of small loans of advances to agriculture. At the same time two financing institutions were established. The peoples Finance Corporation was designed to provide finance to people of small means while the National Development Finance Corporation was set up of finance public sector owned and managed industries and enterprises.
Nationalization of Banks (1974) In Pakistan

The banking reforms turned to be transitional and interim step and when they were hardly eighteen months old the government nationalized the banking systems, with the following main objectives. To enable the government to use the capital concentrated in the hands of a few rich bankers for the rapid economic development of the country and the more urgent social welfare objectives. To distribute equitably credit too different classes sectors and regions. To coordinate the banking policies in various area of feasible joint activity without eliminating healthy competition among banks. The act passed for the nationalization of banks is known as the banks Nationalization Act 1974. Thus under this act the state bank of Pakistan and all the commercial banks incorporated in Pakistan and carrying business in or outside the country were brought under government ownership with effect from Jan 1, 1974. The ownership, management and control of all Pakistani banks stood transferred to and vested in the Federal government. The shareholders were provided compensation in the form of federal government bonds redeemable at par anytime within the period of fifteen years. Under the Nationalization act, the Chairman, Directors and Executives of various banks, other than those Page no
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appointed by federal government were removed from their offices and the central boards of the banks and all local bodies were dissolved. Pakistan banking council was established to coordinate the activities of the Nationalized Commercial banks. At the time of Nationalization on December31, 1973 there were following 14 Pakistani commercial banks with 3323 offices allover Pakistan and 74 offices in foreign countries: National banks of Pakistan Habib bank limited Habib bank (overseas) limited United bank limited Muslim commercial bank limited Commerce bank limited Standard bank limited Australia bank limited Bank of Bahawalpur limited Premium bank limited Pak Bank limited Sarhad bank limited Lahore commercial limited Punjab provincial co-operative bank limited The Pakistan banking council prepared a scheme for the recognition of banks. The bank (amalgamation) scheme 1974 was notified in April, providing for the amalgamation of the smaller banks with bigger ones and following the five units in there phases: National bank limited Habib bank limited United bank limite Muslim commercial bank limited Allied bank of Pakistan limited Page no
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The first phase was completed on 30th June. 1974. When the bank Bahawalpur was merged with the National Bank of Pakistan. The premier Bank Limited with Muslim Commercial Bank limited and Sarhad Bank Limited and Pak bank limited and renamed as Allied Bank of Pakistan limited. The second phase was completed on 31st Dec.1974, when the commerce bank limited merged with the United Bank limited. The third and the final phase were completed on 30th June 1975 when the standard bank limited was merged with Habib Bank limited. The nationalization was very smooth and gave very positive results. The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end June 1992. The bank deposits, which stood at Rs. 1925 corers at the end 1973 reached the highest, mark about 323 corers.
Islamization of Banking
Another major development in the history of Pakistan Banking System was the introduced of interest free banking in selected Commercial Banks with effect from 01 January, 1981. This followed the effort to eliminated interest from the operation of Nation investment trust, the House Building Finance Corporation of Pakistan. Certain amendments were made in banking and other laws with the object of ushering in a new system of banking, which would confirm of Sharia. A new law Modaraba Companies Ordinance 1980 was promulgated. Separate interest free counters began to operate in all the nationalized commercial banks free counters began to operate in all the nationalized commercial banks. The state bank provides finance against participation term certificate and also against promissory notes supported by Modaraba certificate. In order to cover interest free transactions certain banking definitions such as creditors, debtor, and advances credits and deposits were revised. Stipulations concerning form of business in which banking companies may engage may also have been modified schemes were introduced to provide interest free loans to formers and deserving students. Page no
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A private Limited Company named as Bankers Equity limited was incorporated in 1979 to provide financial assistance to the industrial sector primarily on interest free basis. A scheme to extend interest free productive loans to farmers and fisherman has also been introduced. Instead of interest, a system based on mark-up in price, exchange rate differential, and profit and loss sharing accounts were introduced. Different financial schemes introduced in the Islamization process are: Musharika Financing. Hire Purchase Financing. Modaraba Financing. Specific Purpose Modaraba.
Dis-investments and Deregulation of Banking 1991

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

A new concept of interest free banking was introduced in 1981 and by now it has been established on sound footing and new trends and techniques are being implemented to make this system result oriented. New products and their systematic consumption are making Pakistani banking comparable to their several modern counterparts anywhere in the developed world.
HISTORY OF NBP:
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The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The Bank in 1950 had one subsidiary The Bank of Bahawalpur on December4, 1947 by the former Bahawalpur State. NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at 57 of its offices where the turnover of the business under the head amounted to Rs.2460 million. i) Deposits held by NBP constituted about 3.1% of total deposits of all
Pakistani Banks in 1949, which rose to 38% in 1952. ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances. NBP lent out
to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and commerce.
iii)
NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule bank credit.
MISSION STATEMEN
To make the Bank complete and competitive with all international Standard in performing, quality of, operations, staff, financial strength. And products and services To develop a culture of excellence in every spare of activity of the bank.
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VISION
To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility.
Core values
Highest standards of Integrity
Institutionalizing team work and performance culture
Excellence in service
Advancement of skills for tomorrows challenges
Awareness of social and community responsibility
Value creation for all stakeholder
GOALS AND OBJICTIVES

An organizational objective is the intended goal that prescribes definite scope and suggests direction to the panning efforts of an organization.
GOALS AND OBJICTIVES NBP

To be the pre-eminent financial institution in Pakistan and achieve market recognition both in the quality and delivery of service as well as the range of product offerings. Page no
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BOARD OF DIRECTORS
NBP, Board of Directors list consist the following members and their designation.
BOARD OF DIRECTORS
Syed Ali Raza Chairman Board
Qamar Hussain President
Nazrat Bashir Director
Tariq Kirmani Director
Haniya Shahid Naseem Director
Audit Committee
Tariq Kirmani Chairman Member Nazrat Bashir

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Member Haniya Shahid Naseem
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MANAGEMENT
Management is a distinct process consisting of activities of planning, organizing, actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources.The management has two types. Centralized. Decentralized. Centralized Management tends to concentrate decision making at the top of the Organization Decentralized disperses decision-making and authority throughout and further down the organizational hierarchy. NBP have a centralized type of management because the top management takes all the decisions.
SENIOR MANAGEMENT OF NBP

Senior Management of NBP consists of following member and their respective designation. Qamar Hussain Dr. Asif A. Brohi Shahid Anwar Khan Group Ziaullah Khan President SEVP & Group Chief, Commercial & Retail Banking Group SEVP & Group Chief, Credit Management Group , Overseas Banking SEVP & Group Chief Assets Recovery Group and Divisional Head,
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Islamic Banking Division Dr. Mirza Abrar Baig Administration Group Nausherwan Adil SEVP & Group Chief, Operations Group Tariq Jamali Nadeem A. Ilyas Group & PSO to President Muhammad Nusrat Vohra Khalid Bin Shaheen Management Group Imam Bakhsh Baloch\ Asif Hassan Recovery Group Tahira Raza Management Group Sheharyar Qaisrani C&RB Group Muhammad Hassan Khaskheli Division, HRM&A Group Qamar Hussain Group Moizuddin Khan Page no EVP & Divisional Head, Human Resources Division, HRM&A EVP & Divisional Head, Training & Organizational Development EVP & Divisional Head, Personnel & Industrial Relations EVP/Divisional Head Agriculture Business Division, EVP & Head Risk Management Division, Credit SEVP & Group Chief, Audit & Inspection Group SEVP & Group Chief, Small and Medium Assets SEVP & Group Chief, Treasury Management Group SEVP & Group Chief, Global Home Remittance SEVP & Group Chief, Compliance Group SEVP & Group Chief, Corporate & Investment Banking SEVP & Group Chief, Human Resources Management &
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Division, HRM&A Group Aamir Sattarc Raza Mohsin Qizilbash Mahmood Siddique Javaid Haider CM Group Aamir Abbasi S.M. Ali Zamin Committees Muhammad Ebrahim VP, Head PMO (A) (Source www.nbp.com.pk) SVP & Divisional Head, Corporate Communication Division SVP, Secretary Board of Directors & Secretary Operations & Credit EVP & Financial Controller, Financial Control Division EVP & Head, Legal Division EVP & CIO, IT Division SVP & Divisional Head, Logistic Support & Engineering Division,
Net Work of Branches:

NBP have wide range of branches inside the country and outside the country. In Pakistan it has 29 regional offices, 1189 Branches and 4 Subsidiaries. In overseas it has 16 overseas branches, 6 other branches.
Objectives of NBP
National bank of Pakistan is also a commercial organization and its main objective is profit maximization. This is achieved in two ways: Page no
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1. By increasing deposits. 2. By charging interest on loans provided to the private sector and business community. These are explained as:
Increase in deposits:
Competition in banking is intense and every bank whether it is Pakistani, foreign, private or nationalized tries to increase its deposits by providing better facilities to its customers. By increasing its deposits a bank can extend greater amount of loan and hence achieves higher profit. NBP is also improving its facilities and services to attract customers with higher volume of deposits. There are two main factors involved in increasing the deposits. These factors are improving the services and courtesy. NBP is continuously working on these two factors to increase its deposits.
Extension of loans:
The profitability of a bank largely depends on the amount given to people as loan and the type of people to whom credit is given i.e. the credit worthiness of the borrowers. This strategy has worked quite well for NBP. Deposits are collected from the people and invested in different projects. NBP prefers to give loans to financially sound and reliable parties, after securing the collators. NBP has an extremely well organized section. The staff is adequately trained, and educated and competent. They carry out extensive financial analysis before deciding on the loan. Interest charged on the loans potentially contributes to higher profits. Some of the other objectives of NBP are: i. Improve customer services. ii. Quick disposal of credit cases. iii. Efficient operation of the branches. iv. Better Public Relations. v. Operational and advisory services for foreign exchange accounts activities
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Functions of NBP
Since NBP is a commercial bank, it performs a variety of functions. Like other commercial banks, NBP is engaged in financing international trade. Its other major
functions include receiving deposits, advancing loans and discounting of exchange. The functions performed by NBP are:
Accepting Deposits
This function is important because banks largely depend on the funds deposited with them by its customers. Deposits are of many types: i.
Current Deposits
Current deposits are also called demand liability on current deposits. NBP pays practically no interest on current deposits. Businessmen usually open current accounts. In NBP current account can be opened with a minimum amount of Rs.500/-. ii.
PLS Saving Deposit
Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit and draw money easily. Profit on PLS is calculated every month but paid after six months. PLS account can be opened with a minimum amount of Rs.500/iii.
PLS Term Deposits
Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they cannot be withdrawn unless giving due notice. In this case the rates of profit will be different depending upon the time period.
Discounting Bills of Exchange

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Discounting of bill is practically speaking lending for exchange at their market rate i.e. it pays to holder of the bill an amount equal to the face value after deducting interest at the current market rate for the period. This bill has to be mature. This is the common way used for keeping a part of assets of the bank in a liquid form.
Agency Service
NBP also provides best and unique service to its valued customers. NBP provide the following agency services to the customers:
i.
Collection of Dividends
As NBP deals with the purchase and sale of various types of securities, therefore NBP also provide dividend or interest earned on share or bonds or invested money. ii.
Collection of Cheques
In the collection and payment of Cheques, bills and promissory notes etc. National bank of Pakistan acts as an agent for its customers. iii. Acting as an Agent NBP also acts as an agent correspondent or representative for its customer at home or abroad. iv.
General Utility Services:

Utilities provided by NBP are as follows:
a.
Clearance of Utility Bills
NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone bills of its customers. For this purpose it also provides evening banking services b.
Lockers Facility
National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in it. The charges of different size of lockers are different. c. Acts as a Referee Page no
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NBP provides useful services to its customers by acting as a referee to their credit worthiness. d.
Supply of Information
NBP provides operational and advisory service for foreign exchange accounts/activities.
Unmatched Banking Facilities

Deposit security, Guaranteed by Government of Pakistan. Highest rates of return to attract the savings. Lowest rates on exports and other borrowings. Largest contribution towards Government and Semi-Government requirements. Agents of the SBP handling Treasury Functions, receipts of Taxes & other Revenues. Handling of salaries & pensions of federal/provincial/defense personnel. Utility Bills collections. Hajj arrangements. Sale and encashment of prize Bonds. Sale and encashment of Defense Savings and Special Savings Certificates. Safe Deposit Lockers for customers. Rational Human Resource Management. The prestigious periodical The Banker UK recognized NBP as the best bank for 2001-2002 and NBP is the bank of the year for 2004-2004 of Pakistan. i. AAA rating awarded JCR-VIS Credit Co. Ltd and affiliated of Japan Credit Rating Agency for 2001. ii. AAA+1 rating awarded JCR-VIS Credit Co. Ltd and affiliated of Japan Credit Rating Agency for 2002
NBP at the forefront of Pak-Afghan trade

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i. Booth at dry port Peshawar ii. Booth at Pak Afghan border (Torkham) NWFP iii. Booth at Pak Afghan border (Chamman) Baluchistan. iv. Establishing branch at Kabul.
New Features:
The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

Zero Tariffs: NBP is providing home remittance services without any charges. Strict monitoring of the system is done to ensure the highest possible security. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.
SHORT TERM INVESTMENTS

NBP now offers excellent rates of profit on all its short-term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBPs rates of profit are extrem ely attractive, along with the security and service only NBP can provide.
National Income Daily Account (NIDA)

The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country.
Salient Features:
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Rs 2-million are required to open an account and there is no maximum limit. Profit is paid on half yearly basis on monthly balances. The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2 million to 2,000 million, the rate fluctuates from 1.4 to 1.75 It is a checking account and there is no limit of withdrawals.
Rates on NIDA
From Rs 2/- million to Rs 50/- the rate is 1.4%. From Rs50/- million but less than Rs 500/-million, the rate is 1.5%. From Rs 500/- million but below Rs 1000/- the rate is 1.6%. From Rs 1000/- and above the rate is 1.75%.
EQUITY INVESTMENTS
NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market.
NBP is involved in the following:

Investment into the capital market Introduction of capital market accounts (under process)
NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders
COMMERCIAL FINANCE
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NBP dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customers best resource in making NBPs products and services work for them.
TRADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.
AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World.
Agricultural Finance Services:

I Feed the World program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production.
Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:
Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.
Agricultural Credit (Medium Term):

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Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy Equipment for sprinklers
Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis.

Operating loans Land improvement loans Equipment loans for purchase of tractors, farm implements or any other equipment
Livestock loans for the purchase, care, and feeding of livestock.
Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme. If your equireany further information, please do not hesitate to e-mail us.
Working Capital and Short Term Loans:
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NBP specializes in providing Project Finance Export Refinance to exporters Pre-shipment and Post-shipment financing to exporters Running finance Cash Finance Small Finance Discounting & Bills Purchased Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans.
Medium term loans and Capital Expenditure Financing:

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

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

With National Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, youll be provided everything, which takes to manage your cash flow more accurately
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INTERNATIONAL BANKING
National Bank of Pakistan is at the forefront of international banking in Pakistan, which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, NBP have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is:
To effectively manage NBPs exposure to foreign and domestic correspondence Manage the monetary aspect of NBPs relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability
Generation of incremental trade-finance business and revenues
NBP offers:

The lowest rates on exports and other international banking products Access to different local commercial banks in international banking
Cash and Gold Finance.

Cash and Gold finance means that loan is given against the gold. The gold is mortgaged with the bank and loan is taken. It is the area of consumer finance. And borrower can take loan for common use.
Advance salary loan:
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This loan is given to those people who are govt servants. They can get a loan up to the salary of fifteen months.
DEPARTMENTALIZATION 2
Dividing an organization into different parts according to the functions is called departmentation. So NBP can be divided into the following main departments.
A) DEPARTMENTATION OF NBP CASH DEPARTMENT

Cash department performs the following functions.
Receipt
The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards.
Payments
It is a bankers primary contract to repay money received for this customers account usually by honoring his cheques.
Cheques and their Payment

The Negotiable Instruments. Act, 1881 3 Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
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Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say that a Cheque can be defined as an: An unconditional order in writing drawn on a specified banker, signed by the drawer, requiring the banker to pay on demand a sum certain in money to, or to the order of, a specified person or to the bearer, and which does not order any act to be done in addition to the payment of money.
The Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following. a) b) c) d) e) f) g) It should be in writing The unconditional order Drawn on specific banker only Payment on Demand Sum Certain in money Payable to a specific person Signed by the drawer
Parties to Cheque
The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no payee but bearer. a) b) c) The Drawer The Drawee The Payee
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Types of Cheques
Bankers in Pakistan deal with three types of cheques
a) Bearer Cheques
Bearer cheques are cashable at the counter of the bank. These can also be collected through clearing. b) Order cheque
These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification. It can also be collected through clearing.
c) Crossed Cheque
These cheques are not payable in cash at the counters of a banker. It can only be credited to the payees account. If there are two persons having accounts at the same bank, one of the account holder issues a cross-cheque in favour of the other account holder. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque.
Payment of Cheques
It is a bankers primary contract to repay money received for his customers account usually by honouring his cheques. Payment of money deposited by the customer is one of the root functions of banking. The acid test of banking is the receipt of money etc. from the depositors, and repayment to them. This paying function is one, which is the distinguishing mark of a banker and differentiates him from other institutions, which receive money from the public. However the bankers legal protection is only when payment is in Due Course. The payment in due course means payment in accordance with the apparent tenor of the instrument, in good faith and without negligence to any person in possession thereof under circumstances, which do not afford a reasonable ground of believing that he is not
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entitled to receive payment of the amount therein mentioned. It is a contractual obligation of a banker to honor his customers cheques if the following essentials are fulfilled. a) b) c) d) e) f) g) Cheques should be in a proper form: Cheque should not be crossed: Cheque should be drawn on the particular bank: Cheque should not mutilated: Funds must be sufficient and available: The Cheque should not be post dated or stale: Cheque should be presented during banking hours:
CLEARANCE DEPARTMENT
A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. The function of clearinghouse is performed by the central bank of a country by tradition or by law. In Pakistan, the clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as a clearinghouse. After the World War II, a rapid growth in banking institutions has taken place. The use of cheques in making payments has also widely increased. The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at the bank of the drawer, the mutual obligation are settled by the internal bank administration and there arises no inter bank debits from the use of cheques. The total assets and total liabilities of the bank remain unchanged. In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer. He deposits the cheque with his bank other than of payer for the collection of the amount. Now the bank in which the cheque has been deposited becomes a creditor of the drawers bank. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions. The banks on which the cheques are drawn become in debt to the Page no
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bank in which the cheques are deposited. At the same time, the creditors banks receive large amounts of cheques drawn on other banks giving claims of payment by them. The easy, safe and most efficient way is to offset the reciprocal claims against the other and receive only the net amount owned by them. This facility of net interbank payment is provided by the clearinghouse. The representatives of the local commercial banks meet at a fixed time on all the business days of the week. The meeting is held in the office of the bank that officially performs the duties of clearinghouse. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank. The cheques are then sorted according to the bank on which they are drawn. A summary sheet is prepared which shows the names of the banks, the total number of cheques delivered and received by them. Totals are also made of all the cheques presented by or to each bank. The difference between the total represents the amount to be paid by a particular bank and the amount to be received by it. Each bank then receives the net amount due to it or pays the net amount owed by it.
In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. All details of the cheques are recorded in this book.
Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the details of the cheques that the bank has delivered to other banks.
ADVANCES DEPARTMENT
Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans. The Credit Management Division of Head Office directly controls all the advances. As we known bank is a profit seeking institution. It attracts surplus balances from the customers at low Page no
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rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all financial institutions, because it is the main source of earning. However, at the same time, it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques.
Any individual or company, who wants loan from NBP, first of all has to undergo the filling of a prescribed form, which provides the following information to the banker. Name and address of the borrower.
a) b) c) d) e)
Existing financial position of a borrower at a particular branch. Accounts details of other banks (if any). Security against loan. Exiting financial position of the company. (Balance Sheet & Income Statement). Signing a promissory note is also a requirement of lending, through this note borrower promise that he will be responsible to pay the certain amount of money with interest.
Principles of Advances
There are five principles, which must be duly observed while advancing money to the borrowers.
a. b. c. d. e.
Safety Liquidity Dispersal Remuneration Suitability
a. Safety
Bankers funds comprise mainly of money borrowed from numerous customers on various accounts such as Current Account, Savings Bank Account, Call Deposit Account, Special Notice Account and Fixed Deposit Account. It indicates that whatever money the banker holds is that of his Page no
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customers who have entrusted the banker with it only because they have full confidence in the expert handling of money by their banker. Therefore, the banker must be very careful and ensure that his depositors money is advanced to safe hands where the risk of loss does not exist. The elements of character, capacity and capital can help a banker in arriving at a conclusion regarding the safety of advances allowed by him.
b. Character
It is the most important factor in determining the safety of advance, for there is no substitute for character. A borrowers character can indicate his intention to repay the advance since his honesty and integrity is of primary importance. If the past record of the borrower shows that his integrity has been questionable, the banker should avoid him, especially when the securities offered by him are inadequate in covering the full amount of advance. It is obligation on the banker to ensure that his borrower is a person of character and has capacity enough to repay the money borrowed including the interest thereon.
c.
Capacity
This is the management ability factor, which tells how successful a business has been in the
past and what the future possibilities are. A businessman may not have vast financial resources, but with sound management abilities, including the insight into a specific business, he may make his business very profitable. On the other hand if a person has no insight into the particular business for which he wants to borrow funds from the banker, there are more chances of loss to the banker.
d.
Capital
This is the monetary base because the money invested by the proprietors represents their faith
in the business and its future. The role of commercial banks is to provide short-term capital for commerce and industry, yet some borrowers would insist that their bankers provide most of the capital required. This makes the banker a partner. As such the banker must consider whether the amount requested for is reasonable to the borrowers own resources or investment. Page no
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e.
Liquidity
Liquidity means the possibilities of recovering the advances in emergency, because all the
money borrowed by the customer is repayable in lump sum on demand. Generally the borrowers repay their loans steadily, and the funds thus released can be used to allow fresh loans to other borrowers. Nevertheless, the banker must ensure that the money he is lending is not blocked for an undue long time, and that the borrowers are in such a financial position as to pay back the entire amount outstanding against them on a short notice. In such a situation, it is very important for a banker to study his borrowers assets to liquidity, because he would prefer to lend only for a short period in order to meet the shortfalls in the wording capital. If the borrower asks for an advance for the purchase of fixed assets the banker should refuse because it shall not be possible for him to repay when the banker wants his customer to repay the amount. Hence, the baker must adhere to the consideration of the principles of liquidity very careful.
f.
Dispersal
The dispersal of the amount of advance should be broadly based so that large number of
borrowing customer may benefit from the bankers funds. The banker must ensure that his funds are not invested in specific sectors like textile industry, heavy engineering or agriculture. He must see that from his available funds he advances them to a wide range of sector like commerce, industry, farming, agriculture, small business, housing projects and various other financial concerns in order of priorities. Dispersal of advances is very necessary from the point of security as well, because it reduces the risk of recovery when something goes wrong in one particular sector or in one field.
g.
Remuneration
A major portion of the bankers earnings comes form the interest charged on the money
borrowed by the customers. The banker needs sufficient earnings to meet the following: a) b) Interest payable to the money deposited with him. Salaries and fringe benefits payable to the staff members.
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c) d) e) f)
+Overhead expense and depreciation and maintenance of the fixed assets of the bank. An adequate sum to meet possible losses. Provisions for a reserve fund to meet unforeseen contingencies. Payment of dividends to the shareholders.
h.
Suitability
The word suitability is not to be taken in its usual literary sense but in the broader sense of
purport. It means that advance should be allowed not only to the carefully selected and suitable borrowers but also in keeping with the overall national development plans chalked out by the authorities concerned. Before accommodating a borrower the banker should ensure that the lending is for a purpose in conformity with the current national credit policy laid down by the central bank of the country.
Forms of Loans
In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the form of cash finance, overdrafts and loans. NBP provides advances to different people in different ways as the case demand.
a) Cash Finance
This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods, produce or merchandise. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit, either at once or as and when required. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. If the borrower does not utilize the full limit, the banker has to lose return on the un-utilized amount. In order to offset this loss, the banker may provide for a suitable clause in the cash finance Page no
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agreement, according to which the borrower has to pay markup/service charges on at least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount.
b) Overdraft/Running Finance
This is the most common form of bank lending. When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance, which the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is generally allowed against collateral securities. When it is against collateral securities it is called Secured Overdraft and when the borrowing customer cannot offer any collateral security except his personal security, the accommodation is called a Clean Overdraft. The borrowing customer is in an advantageous position in an overdraft, because he has to pay service charges only on the balance outstanding against him. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis, while an overdraft is a temporary accommodation occasionally resorted to.
c) Demand Financing/Loans
When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time, it is called a loan. When ban kers allow loans to their customers against collateral securities they are called secured loans and when no collateral security is taken they are called clean loans. The amount of loan is placed at the borrowers disposal in lump sum for the period agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security
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REMITTANCE DEPARTMENT
Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. NBP offers the following forms of remittances. a) b) c) d) Demand Draft Telegraphic Transfer Pay Order Mail Transfer
Demand Draft
Demand draft is a popular mode of transfer. The customer fills the application form. Application form includes the beneficiary name, account number and a senders name. The customer deposits the amount of DD in the branch. After the payment the DD is prepared and given to the customer. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch. The account of the customer is credited when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. DD are of two types. a) b) Open DD: Cross DD: Where direct payment is made. Where payment is made though account.
NBP CHARGES FOR DD

I. II. Up to Rs. 50,000/- is Rs 50/- only Over Rs. 50,000/- is 0.1%
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Pay Order
Pay order is made for local transfer of money. Pay order is the most convenient, simple and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay order from the account holder and Rs. 100 from a non-account holder.
Telegraphic Transfer
Telegraphic transfer or cable transfer is the quickest method of making remittances. Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the specified person. The customer for requesting TT fills an application form. Vouchers are prepared and sent by ordinary mail to keep the record. TT charges are taken from the customer. No excise duty is charged on TT. The TT charges are: Telegram/ Fax Charges on TT = Actual-minimum Rs.125. Cable telegram transfer costs more as compared to other title of money. In cable transfer the bank uses a secret system of private code, which is known to the person concerned with this department and branch manager.
Mail Transfer
When the money is not required immediately, the remittances can also be made by mail transfer (MT). Here the selling office of the bank sends instructions in writing by mail to the paying bank for the payment of a specified amount of money. Debiting to the buyers account at the selling office and crediting to the recipients account at the paying bank make the payment under this transfer. NBP taxes mail charges from the applicant where no excise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/- if sent by registered post locally Rs.40/- if sent by registered post inland on partys request.
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HUMAN RESOURCE MANAGEMENT

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

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

Like the employee of public sector organizations in Pakistan, the employees of NBP also enjoy their job for life. Since there is no risk of early retirement or redundancy in rank, they do not perform with their full potentials. This is one redundancy in rank, they do not perform with their full potentials, and this is one of the reasons responsible for the low productivity of the employees of the Bank.
Performance Appraisal
The performance of employees of the Bank are appraised though their annual confidential reports at the end of each year. This has become an outdated method of performance appraisal and no longer used due to the following reasons:
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1. 2. 3. 4.
The performance of employees is evaluated after quite a long time. Element of subjectivity is involved in this method. Employees participation is not ensured in the process of evaluation. Objectives of employees are not quantified.
Inter Personal Relationship

Modern management acknowledges human resources as one of the most important assets of an organization. But by their very nature, human beings are also the most unpredictable. Where a number of persons work together, interactions among them, of necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in NBP can be traced back to the following major heads.
Lack of Communication
Lack of communication is for the biggest reason for conflicts. Not only it is due to the failure to send a massage but to an interpretation given to the massage by the receiver is different from that intended.
Diversity in Values
Diversity in values, perceptions, cultural background and life-style is another reason responsible for inter personal conflicts in NBP. Different values and perceptions about the same issue, event or personality hinder understanding. When things come to such a pavement, therefore, interpersonal conflicts are generated. The dominant trend in all modern industrial societies of the world is merit and expertise, which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still very strong in our set up and there is no tradition of tolerance for differing viewpoints. Hence, interpersonal conflicts are generated.
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Corruption
Our social acceptance of corruption gives rise to corruption at every level of social and organizational set up. Corruption involves financial embezzlement, favoritism, nepotism and other number of such practices. All these cause resentment that keep building up and lead to conflict sooner or later. In the past few years, some cases of frauds have happened in different branches. The reasons can be linked with the employee dissatisfaction of NBP.
Discipline & Authority

Maintaining discipline and implementation of authority (tables) in letter and spirit is the key to success of any organization. In NBP, The authority tables are not strictly maintained. Line managers are not fully equipped with the authority with no vertical or horizontal interference.
DEPOSIT DEPARTMENT: It controls the following activities: a) b) c) d) e) f) A/C opening. Issuance of chequebook. Current a/c Saving a/c Cheque cancellation Cash
Account opening
The opening of an account is the establishment of banker customer relationship. Before a banker opens a new account, the banker should determine the prospective customers integrity, respectability, Page no
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occupation and the nature of business by the introductory references given at the time of account opening. Preliminary investigation is necessary because of the following reasons. i. ii. iii. iv. Avoiding frauds Safe guard against unintended over draft. Negligence. Inquiries about clients.
There are certain formalities, which are to be observed for opening an account with a bank. 1. 2. 3. Formal Application Introduction Specimen Signature Minimum Initial Deposit Operating the Account Pay-In-Slip Book Pass Book Issuing Cheque Book
a) Qualification of Customer The relation of the banker and the customer is purely a contractual one, however, he must have the following basic qualifications. He must be of the age of majority. He must be of sound mind. Law must not disqualify him. The agreement should be made for lawful object, which create legal relationship Not expressly declared void.
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b) Types of Accounts
Following are the main types of accounts 1) 2) 3) Individual Account Joint Account Accounts of Special Types Partnership account Joint stock company account Accounts of clubs, societies and associations Agents account Trust account Executors and administrators accounts Pak rupee non-resident accounts Foreign currency accounts
Issuing of chequebook:
This deptt issue cheque books to account holders. Requirements for issuing chequebook a) The account holder must sign the requisition slip b) Entry should be made in the chequebook-issuing book d) Three rupees per cheque should be recovered from a/c holder if not then debit his/her account.
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Current account
These are payable to the customer whenever they are demanded. When a banker accepts a demand deposit, he incurs the obligation of paying all cheques etc. drawn against him to the extent of the balance in the account. Because of their nature, these deposits are treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on these deposits, and customers are required to maintain a minimum balance, failing which incidental charges are deducted from such accounts. This is because the depositors may withdraw Current Account at any time, and as such the bank is not entirely free to employ such deposits. Until a few decades back, the proportion of Current Deposits in relation to Fixed Deposits was very small. In recent years, however, the position has changed remarkably. Now, the Current Deposits have become more important; but still the proportion of Current Deposits and Fixed Deposits varies from bank to bank, branch to branch, and from time to time.
Saving account
Savings Deposits account can be opened with very small amount of money, and the depositor is issued a chequebook for withdrawals. Profit is paid at a flexible rate calculated on six-month basis under the Interest-Free Banking System. There is no restriction on the withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder. It discourages unnecessary withdrawals from the deposits. In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme for school and college students and industrial labor also. The purpose of these accounts is to inculcate the habit of savings in the constituents. As such, the initial deposit required for opening these accounts is very nominal.
Cheque cancellation:
This deptt can cancel a cheque on the basis of; Page no
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a) Post dated cheque b) Stale cheque c) Warn out cheque d) Wrong sign etc
Cash
This deptt also deals with cash. Payment of cheques, deposits of cheques etc.
FOREIGN EXCHANGE/DEPARTMENT:
This deptt mainly deals with the foreign business. The main functions of this deptt are: a) L/C dealing. b) Foreign currency accounts dealing. c) Foreign Remittance dealing.
L/C dealing
NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
Foreign currency account dealing:

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

This is very important function of this deptt. Page no
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B) DEPARTMENTATION OF BALAKOT BRANCH, BALAKOT NBP. Dividing an organization into different parts according to the functions is called departmentation. So NBP Balakot Branch,Balakot is divided into two main parts. 1. 2. Cash Department General Banking Department.
Cash Department:
To facilitate people in the payments of their bills and taxes and repayments of cash There are two main functions of cash department. i. i. ii. Payment ii. Receipts
Payments are the function that they pay their cheques and pay cash. Receipts mean collection of utilities bills, taxes etc.
General Banking
In this section of the bank the general banking function is performed. It is divided into five departments Marketing Department Remittances Department. Computer Department. Advances Establishment Department Department. Clearing Department..
Remittances Department:
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The objective of this department is:-
To transfer the money of people from one place to another place in safe and comparable way The main functions of this department are: i. ii. iii. iv. v. vi. vii. Issuing of demand draft. Issuing of Mail transfer. Issuing of Telegraphic transfer. Issuing of payment order. Issuing of call deposit. Pension payments etc. Closing and scrolling of government collections.
Advances department:
Every bank has a department, which advances money to borrowers. The objective of Advances Department is To facilitate people by giving short term and long term loans on easy terms and conditions. The main function of this Department is to take surplus money from the people at low rates and lend this money to borrowers at high rates to earn profit.
Clearing Department:
A clearinghouse is an association of commercial banks set in State Bank of Pakistan for the purpose of interchange and settlement of credit claims. The objective of this department is to To facilitate customers for payment their Cheques of other banks.
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Two type of clearing books are maintained. i.
In word clearing books:

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

The bank uses outward clearing register for the purpose of recording all the details of the cheques that the banks have delivered to other banks.
Computer Department:
The objective of this Department is to facilitate customers in payment of their cheques. The main functions performed by this department are: a) b) c) d) Checking balance. Deduction from balance on clearing cheques. Issuing bank statements. Dealing Western Union.
Establishment Department:
This department mainly deals with the branch employees. The main objective of this department is to To regulate bank business. Main functions of this department are: Page no
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a) b) c)
Keeps the record of attendance of employees. Employees salaries distribution. Employees bonuses etc.
List of main clients of NBP

Govt. of Pakistan PTCL PIA Pak Railways EOBI (Employee old age benefit institution) PSO PMTF (Pakistan Machine Tool Factory) PCSIR TV one Anoud Textile. Najma Sugar Mills TCP (Trading Corporation of Pakistan
List of main competitors

Habib Bank of Pakistan Muslim commercial bank of Pakistan Page no
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INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN United bank of Pakistan Allied bank of Pakistan Standard chartered bank Bank Alfalah Faysal bank KASB bank Soneri bank Js bank Bank Al-habib Arif Habib Bank Bank of Punjab & Khyber bank
2013
Dubai Islamic Bank.
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ORGNIZATION STRUCTURE ORGNIZATION HIERARCHY CHART
INFORMATION & DEPARTMENTALIZATION OF NBP
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INTRODUCTION
This chapter presents the services and departmentalization of NBP. Services are outputs of the firm, which are in intangible form. Which are the backbones of any organization to earn profit. NBP offers the following services to the people.
DEMAND DRAFTS
If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBPs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch.
SWIFT SYSTEM
The SWIFT system (Society for Worldwide Interbank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. The system has built-in features of computerized test keys, which eliminates the manual application of tests that often cause delay in the payment of home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs.
LETTERS OF CREDIT *
NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
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TRAVELER'S CHEQUES
Travelers cheques are negotiable instruments, and there is no restriction on the period of validity of the cheques. Rupee travelers cheque is available at all 700 branches of NBP. This can be encashed in all 400 branches of NBP. There is no limit on purchase of this cheque. It is one of the safest ways for carrying money.
PAY ORDER
NBP provides another reason to transfer your money using our facilities. NBP pay orders are a secure and easy way to move your money from one place to another. And, as usual, NBP charges for this service are extremely competitive. The charges of NBP are very low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order. And charges Rs 100/- for NBP nonaccount holders on issuing one payment order. It charges Rs 25/- for students on payment of fees of educational institutions. If some one want a duplicate of payment order they charges Rs 100/- for NBP account holders and Rs 150/- for non account holders.
AIL TRANSFERS
Move your money safely and quickly using NBP Mail Transfer service. And NBP also offers the most competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage charges on issuing mail transfer.
FOREIGN REMITTANCES:
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to:

Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries
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COMMNETS ON ORGNIZATION STRUCTURE

NBP organization structure is showing very good and strong position to control very matter of business fairly and concisely, every branch is giving reports to its head officer related to issue like if a person is not giving the amount back in particular period then OM of branch will write letter to COO risk and management to auction the property of customers, it is showing the great control, coo ordination and commitment between upper level to lower level It is good sign for organization success.
PLAN OF MY INTERNSHIP PROGRAMME

National bank of Pakistan branch code (0471) Shorkot city
STARTING DATE OF INTERNSHIP PROGRAMME: ENDING DATE OF INTERNSHIP PROGRAMME:
05-07-2013 03-08-2013
I completed my internship training in National bank of Pakistan shorkot city branch (0471), I started
my internship from ninth July 2012 during the internship period I learnt about Brach back office, which is very confidential and secret system software, in which I learnt following things, like in financial branch office I have done posting of cheques, posting of credit vouchers, enquires of balances, transfer money of another bank account, enquires of account balance, account statement, account wise, amount wise, account number find out through national identification number, customer reposts, certificate of NBP salary advance clearance.
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FINANCIAL ANALYSIS OF NBP
ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets
2008 94,446,552 49,784,884 10,511,322 149,350,096 220,794,075 19,141,569 9,202,969 _ 553,231,467
2009 71,196,956 31,019,330 16,282,942 156,985,686 268,838,779 23,941,056 9,454,365 _ 577,719,114
2010 78,625,227 40,641,679 23,012,732 139,946,995 316,110,406 27,113,698 9,681,974 _ 635,132,711
2011 94,873,249 37,472,832 21,464,600 210,787,868 340,677,100 30,994,965 25,922,979 _ 762,193,593
2012 106,503,756 38,344,608 17,128,032 170,822,491 412,986,865 44,550,347 24,217,655 3,204,572 817,758,326
LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts 7,214,671 11,084,790 465,571,717 1,741,156 8,756,847 463,426,602 10,605,663 11,704,079 501,872,243 7,061,902 10,886,063 591,907,435 10,219,061 40,458,926 624,939,016
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_ _ 16,629 24,974,450 4,462,718 503,378,402 74,340,712 13,235 26,596,300 2,387,073 553,178,593 81,954,118 _ 33,554 30,869,154 5,097,831 645,855,939 116,337,654 715,299,108 102,459,218 _ 25,274 39,656,831 _
Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities net
_ 17,058 23,068,314 29,185 506,985,735
NET ASSETS
46,245,732
REPRESENTED BY Share capital Reserves Unappropriated Profit 4,924,106 10,813,914 9,161,747 24,899,767 Surplus 21,345,965 46,245,732 5,908,927 13,536,041 16,713,506 36,158,474 38,182,238 74,340,712 7,090,712 13,879,260 32,074,677 53,044,649 28,909,469 81,954,118 8,154,319 15,772,124 45,344,188 69,270,631 47,067,023 116,337,654 8,969,751 19,941,047 52,456,204 81,367,002 21,092,216 102,459,218
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INCOME STATEMENT Rupees in Millions

2008 Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations bad debts written off directly 185,707 14,297 32,807 1,748,165 Net markup/interest income after provisions NON MARKUP/ INTEREST INCOME Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) Nil 875,113 8,304,716 20,944,486 5,099,195 1,273,863 1,008,988 47,557 4,926,604 1,718,478 1,205,638 1,365,771 -1,979 177,839 9,392,351 30,539,321 6,144,628 2,891,755 1,333,840 1,169,515 -4,464 627,618 12,162,892 39,945,062 6,781,683 3,263,246 1,042,827 2,341,690 -31,964 147,363 13,544,845 42,451,580 7,925,370 2,878,932 3,969,057 395,427 1,707 1,245,369 16,415,862 42,503,078 12,639,770 -245,881 Nil 23,069 2,223,927 21,146,970 -709,461 Nil 5,284 2,371,546 27,782,170 Nil 39,899 4,722,735 28,906,735 Nil 10,970,814 26,087,216 -40,248 373,249 4,000 20,947,333 6,559,398 14,387,935 1,515,354 2009 33,692,665 10,321,768 23,370,897 2,446,739 2010 44,100,934 13,947,218 30,153,716 3,075,723 2011 50,569,481 16,940,011 33,629,470 4,723,084 2012 60,942,798 23,884,768 37,058,030 10,593,565
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NON MARKUP/ INTERSET EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT TAXATION Taxation Current Prior years Deferred BEFORE 11,977,601 4,950,000 847,958 -15,729 5,782,229 PROFIT AFTER TAXATION Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation 45,496 12,133,770 43,221 21,914,412 41,060 36,435,929 39,007 51,147,457 130,456 60,933,234 6,195,372 5,892,902 19,056,028 7,154,002 -1,098,709 291,291 6,346,584 12,709,444 9,161,747 26,310,577 8,695,598 530,652 61,981 9,288,231 17,022,346 19,372,523 28,060,501 8,311,500 391,497 323,731 9,026,728 19,033,773 32,074,677 23,000,998 11,762,650 Nil -4,220,242 7,542,408 15,458,590 45,344,188 8,878,801 32,243 8,284 8,919,328 11,221,789 198,298 63,206 11,483,293 13,443,441 -17,283 208,327 13,634,485 14,205,911 168,027 17,141 14,391,079 18,171,198 747,521 583,361 19,502,080
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Horizontal Analysis of Balance Sheet

Horizontal Analysis (%) ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total Assets LIABILITIES Share Capital Reserves Unappropriated profit Surplus On Reval. of assets Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total Liabilities 100 100 100 15291 108 104 8179 115 117 17467 134 138 Nil 172 133 2008 100 100 100 100 100 100 100 100 2007 100 100 100 100 100 100 100 100 2009 75 62 155 105 122 103 125 104 2008 120 125 182 179 24 79 100 97 2010 83 82 219 94 143 105 194 117 2009 144 128 350 135 147 106 108 78 2011 100 75 204 141 154 282 162 138 2010 166 146 495 221 98 98 127 197 2012 113 77 163 114 187 263 233 148 2011 182 184 573 99 142 365 134 148
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INTERPRETATION
Analysis
1) The National Bank of Pakistans Cash & balance with treasury banks shows a mixed trend during all years. It was decreased by 25% in 2008 and 17% in 2009. There was a marginal increase in the year 2009. In 2010 the percentage is increased by 13% as compare to base year. 2) The Balances of National Bank of Pakistan with other banks shows a decreasing trend as compare to base year. The year 2008 represents lower percentage (38%), while the year 2009 represents highest percentage of 18% 3) The lendings to financial institutions by National Bank of Pakistan fluctuates during all years. The lendings increased 55 % in 2008. The year 2009 represents highest percentage of 119 % among all years on account of lendings to financial institutions. The year 2009 also shows an increase of 104 % as compare to base year. The year 2011 indicates an increase of 63% as compare to base year but lendings decreased by 41 % in 2011 as compare to the year 2010. . 4) The advances made by National Bank of Pakistan shows an increasing trend in all years as compare to base year. This implies that National Bank of Pakistan is keener to advance money to lenders. The advances were increased 22 % in the year 2008 and 43 % in 2009 as compare to base year. The year 2010 represents an increase of 54 % and 2011 represents highest percentage among all years that is 87 % as compare to base year.
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Vertical Analysis of Balance Sheet

Vertical Analysis (%) ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total LIABILITIES Share Capital Reserves Unappropriated profit Surplus On Reval. of assets Bills payable Borrowings Deposits and other accounts Liabilities against assets Deferred tax liabilities net Other liabilities
2008 2009 2010 2011 2012
17.07 9.00 1.90 27.00 39.91 1.66 3.46 100

2008
12.32 5.37 2.82 27.17 46.53 1.64 4.14 100

2009
12.19 6.30 3.57 21.69 49.00 1.50 5.75 100

2010
12.45 4.92 2.82 27.66 44.70 3.40 4.07 100

2011
13.02 4.69 2.09 20.88 50.50 2.96 5.45 100

2012
0.89 1.95 1.66 3.86 1.30 2.00 84.15 0.0031 0.01 4.17
1.02 2.34 2.89 6.61 0.30 1.52 80.22 0.0029 0.77 4.32
1.10 2.15 4.97 4.48 1.64 1.81 77.79 0.0021 0.37 4.12
1.07 2.07 5.95 6.18 0.93 1.43 77.66 0.0044 0.67 4.05
1.09 2.43 6.41 2.57 1.25 4.94 76.42 0.0030 Nil 4.85
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Interpretation
1) The cash balance of National Bank of Pakistan fluctuates during all years. The year 2007 representing highest percentage of cash balance among all years that is 17.07%. The cash balance percentage is decreasing in 2008 (12.32 %) and 2009 (12.19%). There was a slight increase in the year 2010 as compare to the years 2009 & 2010, of 12.45%. The year 2011 indicates second highest level of National bank of Pakistans cash balance as it was 13.02%. 2) The lendings to financial institutions by National Bank of Pakistan shows a mixed trend. In the year 2007 percentage is 1.90%. The year 2008 along with the year 2010 indicates the same percentage of 2.82%. The year 2009 represents peak percentage of 3.57% for National Bank of Pakistan regarding its lendings to financial institutions. The percentage is decreased in 2011 indicating a percentage of 2.09%, second lowest among all years.
HORIZONTAL ANALYSIS OF INCOME STATEMENT

Rupees in Millions
2008 2009 2010 2011 2012
Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations Bad debts written off directly
100 100 100 100
161 157 162 161
211 213 210 203
241 258 234 312
291 364 258 699
100 100 Nil 100 100
-132
-382 Nil Nil 16 136
-22
201 28
70 127
122 Nil 270 628
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167 220 229 206
Net markup/interest income after provisions NON MARKUP/ INCOME INTEREST
100
Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) NON MARKUP/ EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT TAXATION Taxation Current Prior years Deferred BEFORE INTERSET Nil
100 100 100 100
97 135 119 2,872 Nil
121 227 132 2,459 Nil
133 256 103 4,924 Nil Nil 17 163 203
155 226 393 831
100 100 100
20 113 146
72 146 191
142 198 203
100 100 100 100 100 100 100 100 100
126 615 763 129 159 145 -130 -1,852 110 205
151 -54 2,515 153 220 176 63 -394 161 275
160 521 207 161 234 168 46 Nil -2,058 156 307
205 2,318 7,042 219 192 238
26,831 130 250
PROFIT TAXATION
AFTER 100
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155 329 544 769
Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation Total
100
100 100 100
95 181 100
90 300 100
86 422 100
287 502 100
Interpretation 2
1) The interest expense of National Bank of Pakistan shows an increasing trend in all years, as it was increased 57 % (2008) and 113 % (2009). The year 2010 represents second highest percentage on account of interest expensed as it was increases to 158% as compare to base year. The year 2011 shows an increase of 264 %, highest among all years. 2) The Total non- markup/ Interest income of National Bank of Pakistan shows an increasing trend during all years. It was increased 13% in 2008 and 46% in 2009. The income is increased 63 % in 2010, second highest among all years. There was an increase of 98% in 2011, highest among all years.
Vertical Analysis of Income Statement

2008 2009 2010 2011 2012
Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations Page no
100 31 69 7
110 34 77 8
110 35 75 8
119 40 79 11
143 56 87 25
1 0 Nil
-1 Nil
-2 Nil
1 0
72
2013
0 7 69 0 6 70 0 Nil 11 68 26 61
bad debts written off directly
0 8
Net markup/interest income after provisions NON MARKUP/ INCOME INTEREST
60
Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) NON MARKUP/ EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT TAXATION Taxation Current Prior years Deferred BEFORE INTERSET Nil
24 6 5 0
16 6 4 4 0
15 7 3 3 0 2 30 100
16 8 2 6 0 0 32 100
19 7 9 1 0 3 39 100
4 40 100
1 31 100
42 0 0 43 57 24 4 0 28
37 2 0 38 62 23 -4 1 21
34 0 1 34 66 22 1 0 23
33 1 0 34 66 20 1 Nil 1 21
43 5 1 46 54 28
-10 18
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42 30 43 48 45 76 36 107
PROFIT TAXATION
AFTER 30 28
Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation
0 58
0 72
0 91
0 120
0 143
Interpretation
1) The interest earned by National Bank of Pakistan fluctuates and shows an increasing trend during all years. The year 2011 is unique in terms of banks interest earned. The bank earned 143% interest in this year. All other years shows an increasing trend that is 100% in 2007, 110% in 2008, 110% in 2009 and 119% in 2010. 2) The Total non markup/ Interest income of National Bank of Pakistan fluctuates and indicates a mixed trend during all years. The year 2007 represents highest percentage of 40% among all years. The percentage is decreased in 2008 as it was 31%. There was a slight decrease in 2009 as percentage is 30%. The years 2010 and 2011 indicates an increasing trend as percentage is 32% & 39% respectively.
Ratio Analysis
Ratio analysis enables the analyst to compare items on a single financial statement or to examine the relationships between items on two financial statements. After calculating ratios for each year's financial data, the analyst can then examine trends for the company across years. Since ratios adjust for size, using this analytical tool facilitates intercompany as well as intercompany comparisons. Ratios are often classified using the following terms: profitability ratios (also known as operating ratios), liquidity ratios, and solvency ratios. Profitability ratios are gauges of the company's operating success for a given period of time. Liquidity ratios are measures of the short-term ability of the company to pay its debts when they come due and to meet unexpected needs for cash. Solvency ratios indicate the Page no
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ability of the company to meet its long-term obligations on a continuing basis and thus to survive over a long period of time. Financial ratios allow for comparison: Between companies Between industries Between different time periods for one company Between a single company and its industry average
Current Ratio
Formula = Current Assets / Current Liabilities Year Ratio
2008 2009 2010 2011 2012
0.83
0.96
1.02
1.00
1.12
Analysis The year 2007 (0.83) and 2008 (0.96) were not satisfied for bank as current assets are less than current liabilities. However, in 2009 (1.02) the management of National Bank of Pakistan is able to overcome this problem. The year 2010 (1.00) is also good for bank as per standards of this ratio. Again in the year 2011 (1.12) the management of bank is able to increase its current ratio
Cash Ratio
Formula = Cash / Current Liabilities Year Ratio
2008 2009 2010 2011 2012
4.09
2.85
2.96
3.07
2.69
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Analysis The cash ratio of National Bank of Pakistan shows a mixed trend during five years of operations. During all years, the ratio is satisfactory as per standards of this ratio. The year 2007 (4.09), representing highest and 2008 (2.85) & 2011 (2.69), representing lowest ratio in all five years.
Return on equity
Formula = Net markup received / equity Funds Year Ratio
2008 2009 2010 2011 2012
2.92
3.95
4.25
4.12
4.13
Analysis The above given ratios suggest that the profitability of the bank has a mixed trend during five years. The first three years 2007 (2.92), 2008 (3.95), 2009 (4.95) shows an increasing trend, indicating more profitable operations of the bank. It was decreased in the year 2010 (4.12) and has increased in 2011 as the ratio was 4.13.
Return on Deposits.
Formula = Net income before taxes / Total Deposits Year Ratio
2008 2009 2010 2011 2012
0.025
0.041
0.052
0.047
0.036
Analysis During all five years the return on deposits ratio of National Bank of Pakistan shows a mix trend. The year 2009 (0.052) was the best year for bank in terms of its funds mobilization. Although Page no
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the ratio was decreasing in 2011 (0.036), indicating Bank is more keen to kept deposits and a change in policy of the Bank regarding its funds mobilization.
Working capital
Formula current assets-current liabilities Year Ratio in M
2008 2009 2010 2011 2012
91.6
108.0
119.9
135.8
111.2
Analysis
It has more working capital available for its daily expenses during first three years .as it has an increasing trend during 2007 to 2010.
Time interest earned ratio

Net profit before tax + interest expense Interest Expense This ratio shows that number of time a company can cover or meet its financial charges or obligation. Year Ratio
2008 2009 2010 2011 2012
0.83
0.96
1.02
1.00
1.12
Interest expense to total expense

=Interest expense/total expenses Year 2008 2009 2010 2011 2012 .735 .898 .981 1.11 1.21 Ratio
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Analysis It has an upward move from 2007 to 2011.
Return on assets
Year
2008 2009 2010 2011 2012
Ratio 1.21% 2.25% 2.81% 2.72% 2.07% Analysis The ratio has increasing trend in first three years then a little decline in last two years. It means it got more income on assets during 2007 to 2009.
Cash to deposit ratio

Cash Deposit This ratio shows the company advances employed per unit of deposit.
Analysis
It has increasing trend in first three years then falling in next two. From 2009 to 2010.
2008 2009 2010 2011 2012
Ratio
10.31
12.61
13.59
12
10.54
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Average profit per branch

Total net profit/total branches Year
2008 2009 2010 2011 2012
Ratio 11422 12076 13845 15094 12115 It is maximum in 2010 and minimum in 2007.
SWOT ANALYSIS
Introduction
To carry out the SWOT and Financial Analysis of NBP through the help of calculating necessary ratios in this section. SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats SWOT analysis is careful evaluation of an organizations internal strengths and weakness as well as its environment opportunities and threats. SWOT analysis is a situational which includes strengths, weaknesses, opportunities and threats that affect organizational performance. The overall evaluation of a company strengths, weaknesses, opportunities and threats is called SWOT analysis. In SWOT analysis the best strategies accomplish an organizations mission by: 1. Exploiting an organizations opportunities and strength. 2. Neutralizing it threats. 3. Avoiding or correcting its weakness.
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SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context; managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses.
Strength
Declared Worlds best Foreign Exchange bank in 2009 Stable AAA/A-1+ (Tipple A/a-One Plus) rated bank Best Return on Capital Bank for 2007 amongst all the banks in Asia Highest Profitability bank of Pakistan 10 the Best Bank in terms of Profit on Capital in the world Having Highest Assets and Capital in Pakistan Functioning as an agent of State Bank of Pakistan Dealing Government Treasury where SBP has not its own branch Having unshakable trust of the public and its stakeholders Giving Loans alone in the market against Gold Ornaments Performing social responsibilities and claiming The Nations Bank Disbursing Salaries and Pensions to the Government employees and earning high profit on NBP-Advance Salary Loan Scheme Earning commission from SBP on Government transaction Facing never problem of cash/currency being its Chest and Sub-chest Branches all over the country NBP have presence in the countries having sizeable trade volumes with Pakistan by its overseas operations Holds largest deposit base in the market share in terms of number of accounts Leading bank in agriculture financing amongst commercial banks with the market share of 15% Helping in earning of foreign exchange, remittances and leading agent of Western Union Money Transfer SBP rated Fair for capital & human resources, Strong for assets, Fair for management and Satisfactory for both earning (Rs.24.1 for per share) and liquidity Page no
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Weakness
Lowest Internal Control and Compliance System, SBP rated Marginal which is alarming for the Bank Unsatisfactory corporate culture of the Bank Physical environment and atmosphere compare to other banks is not meet the standard Less number of Online Branches Ineffectively use of technologies i.e. Information technology Shortage of staff- per employee customer is very high side Technical education and training of staff is insufficient
Opportunities
Being a Government Bank NBP having wide scope in economic market. Trust and reliability creates chances to enhance deposit and profitability. Its vast network of domestic and overseas branches can help to expand business. Banks deposit is increasing rapidly so there is a great opportunity to enhance its investment and financing. Being an agent of State Bank of Pakistan it can play vital role in local economy. Earning commission/exchange on Government transactions.
Threats
SBP penalties due to low internal control and compliance. Government, SBP and Prudential Rules and Regulations. Schedule banks and Multinational/International banks profit rates. Its staff switching over to other private banks due to more facilities. Other banks charming atmosphere and relaxation in documentation. SBP rated just Marginal in respect of System & Control which is alarming for the Bank to Page no
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survive its license. NBP staff code of ethics and practices. High number of complaints regarding staff behavior. Government Schemes, Government Revenue Collection, Government. Payments and FBR Collections create heavy workload.
CONCLUSION
According to my practice and analysis of NBP Branch I will suggest some more improvement on lower level, because in modern recent period it is not important what you want to give to customer, it is important what is customer expected from you? How NBP can give maximum satisfaction to their valuable customers. This concept is totally ignored by NBP branch, lack of communication style, public dealing and wastage of customer precious time is popular factors there. No organization can survive without these important factors, and NBP also start the online work on all over the Pakistan not only in particular cities, due to it NBP value is decreasing because competitors are taking benefit edge form NBP.
References
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Employees hand book of National bank of Pakistan by Human resource Management and administration group. NBP service standard book. Economic bulletin of NBP volume 37,no 2 May -June 2010 hard copy, and softcopy link Anonymous, n.d., retrieved from (http://nbp.com.pk/EconomicBulletin/index.aspx) www.nbp.com.pk Anonymous, n.d., retrieved from http://nbp.com.pk/Publications/index.aspx 2009,2008,2007 unconsolidated reports for critical analysis, SBP Prudential Regulations http://www.nbp.com.pk/nbp/NBP_Treasury.jsp http://www.nbp.com.pk/nbp/Treasury_Products.jsp http://www.nbp.com.pk/nbp/About_Us/DReport3.jsp http://www.nbp.com.pk/nbp/About_Us/DReport3.jsp NBP Annual Report 2009 Management 7 Ed Robbins & coulter NBP Annual Report 2008 http://www.jcrvis.com.pk
BIBLIOGRAPHY
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www.nbp.com.pk Mr. Naveed UllahHR Manager Mr.Waseem shah.Branch Manager Mr. Muhammad Asad abbas Mr. Asghar Clearing Incharge Mr. Muhammad Iqbal Bills Incharge Mr. Ajaz bhatti (Credit Officer)
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INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK EVOLUTION OF BANKS IN PAKISTAN OF PAKISTAN

National bank of Pakistan

Mr. Shehzad Hassan

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Roll No#BCOF10E044 B.com (Hons) Secession: 2010-2014

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Table of Contents:1. Industry introduction 2. An overview of organization 08 17

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Evolution of Banking in Pakistan

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Banking Growth during (1948-1970)

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Banking Reforms 1972

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Nationalization of Banks (1974) In Pakistan

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Dis-investments and Deregulation of Banking 1991

Interest Free Banking

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Institutionalizing team work and performance culture

Advancement of skills for tomorrows challenges

Awareness of social and community responsibility

Value creation for all stakeholder

GOALS AND OBJICTIVES

GOALS AND OBJICTIVES NBP

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Qamar Hussain President

Nazrat Bashir Director

Tariq Kirmani Director

Haniya Shahid Naseem Director

Tariq Kirmani Chairman Member Nazrat Bashir

Member Haniya Shahid Naseem

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

SENIOR MANAGEMENT OF NBP

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Net Work of Branches:

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

PLS Saving Deposit

PLS Term Deposits

Discounting Bills of Exchange

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

General Utility Services:

Clearance of Utility Bills

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Unmatched Banking Facilities

NBP at the forefront of Pak-Afghan trade

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

SHORT TERM INVESTMENTS

National Income Daily Account (NIDA)

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN