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ACKNOWLEDGEMENT

All praise is to ALLAH ALMIGHTY, for giving me knowledge, insight, devotion and
strength to accomplish this task. I am immensely thankful to all the teachers and friends who
helped me to complete the project. I am grateful to the staff of NBP as well as also thankful to
Mr. Khalid Mehmood (senior Officer at NBP Civic Centre Branch), who supported me lot during
this project and provided comprehensive knowledge of their products and services and banking
practices. Specially thanks to MR. Majid Khan General Manager of Taramri Branch MR.Nizamud-Din, Mr. Javeed and Mr.Afzaal. Their guidelines has lead me to display a picture of NBPs
Management in this report.
In the end I would like to thank all of my friends and family members for their support and
encouragement.

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OBJECTIVES OF STUDYING THE ORGANIZATION


The primary purpose of this study is to fulfilment of the requirements for the degree
of MBA (Finance).For this connection each student of this particular course is required to
undertake training in a relevant organization selected by them, for a period of 6-8 weeks.
The secondary purpose of this internship is to understand how the theoretical
knowledge can be applied to the practical situations and examine an organizations financial
issues and identify its opportunities/ problems and also suggest corrective measures. This
internship is also very necessary to gain confidence and become aware of the mechanism of an
organization. As an internee I want to achieve following objectives during my internship and
organization study:
1. To familiarize with a business organization.
2. To familiarize with the different departments in the organization and their functioning.
3. To enable myself to understand how the key business process are carried out in
organization.
4. To understand how information is used in an organization for decision making at various
levels.
5. To relate theory with practice.
6. I was also keen to gain professional experience in an actual testing environment.
7. I want to develop my skills in the application of theory to practical work situations.
8. To develop my attitude conducive to effective interpersonal relationships.
9. To acquire good work habits and sense of responsibility.
10. To enhance my learning experience by application of fundamental concepts previously
learned.
11. To observe, analyze and interpret the relevant data competently and in a useful manner.
12. To develop my interpersonal communication.
13. I want to enhance my knowledge of the discipline of banking administration.

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EXECUTIVE SUMMARY
To interpret my skills and educational knowledge of Finance I make report on National
Bank of Pakistan. The objective of this report was to explore the issues relating to Finance and to
find out problems regarding the theoretical concepts with practical experience working in an
organization and study the system of National Bank of Pakistan. There are many possible
improvements, which we can make positive changes in the system. The report summarizes the
National bank of Pakistan with its working divided into two parts first part deals with the
description of the NBP the second part covers the theory and practices adopted by NBP and at
the end concluding remarks and suggestions are given for improvements. It was too much
difficult for me to describe the functioning of such a vast organization within the limits. In spite
of this I tried best to describe. Finally, for any all too fallible errors, omissions and shortcomings
in the writing of the report only I responsible for whom I hope that all concerning regards of this
report will forgive me.

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TABLE OF CONTENTS
CHAPTER 1
1.4 CORE VALUES
1.5 OBJECTIVES OF THE NBP
1.8 NETWORK OF BRANCHES
1.9 EMPLOYEES BENEFITS OF NBP
1.9.1 PENSION SCHEME
1.9.2 POST-RETIREMENT MEDICAL BENEFIT
1.9.3 BENEVOLENT SCHEME
1.9.4 GRATUITY SCHEME
1.10 OTHER EMPLOYEE BENEFITS
1.10.1 EMPLOYEES COMPENSATED ABSENCES
1.11 TRUST ACTIVITIES OF NBP
1.11.1 NATIONAL INVESTMENT TRUST
1.11.2 LONG TERM CREDIT FUND
1.11.3 QARZ-E-HASNA FUND

CHAPTER 2
STUDENTS LOAN SCHEME
NBP KAROBAR- PRESIDENTS ROZGAR SCHEME
ADVANCES
FINANCE
FINANCE
FINANCE

CHAPTER 3
WORKING ENVIRONMENT OF NBP
REMITTANCE DEPARTMENT
CASH/CLEARANCE DEPARTMENT OF NBP

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CHAPTER 1
INTRODUCTION

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1.1 INTRODUCTION:
The history of National Bank of Pakistan is part of Pakistans struggle for
economic independence. National Bank of Pakistan was established on November 9, 1949 under
the National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions which
were developed after trade deadlock with India and devaluation of Indian Rupee in 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.The
Bank commenced its operations from November 20, 1949 at six important jute centres in the
then, East Pakistan and directed its resources in financing of jute crop. The Banks Karachi and
Lahore offices were subsequently opened in December 1949. The National Bank of Pakistan
came forward to establish its offices in the Cotton growing areas and extended credit facilities
liberally in order to restore stability to the market. In 1951, the country was once again faced
with a crisis in the cotton trade when prices was crashed and touched the lowest level since
independence following the cessation of hostilities in Korea. The bank in collaboration with the
cotton board provided the necessary Credit facilities to the trade and the crisis was tided over.
The nature of responsibilities of the Bank is different and unique from other banks/financial
institutions.
The Bank acts as the agent to the State Bank of Pakistan for handling Provincial/Federal
Government Receipts and Payments on their behalf. The Bank has also played an important role
in financing the countrys growing trade, which has expanded through the years as diversification
took place. The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The bank
operates 1249(2008) branches in Pakistan and 22(2008) overseas branches. Under a trust Deed,
the bank also provides services as trustee to National Investment Trust (NIT) including safe
custody of securities on behalf of NIT. The National Bank of Pakistan has assets worth Rupees
737976.44 million on September 30, 2008.

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National Bank of Pakistan is today a progressive, efficient, and customer focused


institution. It has developed a wide range of consumer products, to enhance business and cater to
the different segments of society. Some schemes have been specifically designed for the low to
middle income segments of the population. These include NBP Karobar, NBP Advance Salary,
NBP Saibaan, NBP Kisan Dost, and NBP Cash n Gold.
The National Bank of Pakistan has implemented special credit schemes like small finance
for agriculture, business and industries, administrator to Qarz-e-Hasna loans to students, self
employment scheme for unemployed persons, public transport scheme. The Bank has expanded
its range of products and services to include Shariah Compliant Islamic Banking products. For
the promotion of literature, NBP recently initiated the Annual Awards for Excellence in
Literature. NBP will confer annual awards to the best books in Urdu and in all prominent
regional languages published during the defined period. Patronage from NBP would help
creative work in the field of literature. The Bank is also the largest sponsor of sports in Pakistan.
It has provided generously to philanthropic causes whenever the need arose.
It has taken various measures to facilitate overseas Pakistanis to send their remittances in
a convenient and efficient manner. In 2002 the Bank signed an agreement with Western Union
for expanding the base for documented remittances. More recently it has started Electronic Home
Remittances Project. This project introduces technology based system to handle inward
remittances efficiently, by ensuring that the Bank's branches keep a track of the remittance
received from abroad till its final receipt.
The precise summary of National Bank of Pakistan regarding its countrywide and overseas
operations is as follows:
1949 National Bank of Pakistan (NBP) was established under the National Bank of
Pakistan Ordinance 1949 and was 100% govt.-owned. NBP acted as an agent of the
Central Bank wherever the State Bank did not have its own Branch. It also undertook
Government Treasury operations. Its first branches were in jute growing areas in East
Pakistan. Offices in Karachi and Lahore followed.
1950 NBP established a branch in Jeddah, Saudi Arabia.
The Bank in 1950 had one subsidiary The Bank of Bahawalpur on December4, 1947 by
the former Bahawalpur State
1955 By this time NBP had branches in London and Calcutta.
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1957 NBP established a branch in Baghdad, Iraq.


1962 NBP established a branch in Dar-es-Salaam, Tanganyika.
1964 The Iraqi government nationalized NBP's Baghdad branch.
1965 The Indian government seized the Calcutta branch on the outbreak of hostilities
between India and Pakistan.
1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.
1971 NBP acquired Bank of China's two branches, one in Karachi and one at Chittagong.
At separation of East Pakistan NBP lost its branches there. NBP merged with Eastern
Mercantile Bank and with Eastern Bank Corporation.
1974 The government of Pakistan nationalized NBP. As part of the concomitant
consolidation of the banking sector, NBP acquired Bank of Bahawalpur (est. 1947).
1977 NBP opened an offshore brain Cairo.
1994 NBP amalgamated Mehran Bank (est. 1991).
1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.
2000 NBP opened a representative office in Almaty, Kazakhstan.
2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani banks
to operate in the UK. NBP and United Bank agreed to merge their operations to form
Pakistan International Bank, of which NBP would own 45% and United Bank 55%.
2003 NBP received permission to open a branch in Afghanistan.
2005 NBP closed its offshore branch in Cairo.
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.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.


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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.

A number of initiatives have been taken, in terms of institutional restructuring, changes in


the field structure, in policies and procedures, in internal control systems with special emphasis
on corporate governance, adoption of Capital Adequacy Standards under Basel II framework, in
the up gradation of the IT infrastructure and developing the human resources. National Bank has
earned recognition and numerous awards internationally. It has been the recipient of The Bank of
the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine, the Best Foreign Exchange
Bank Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging Market Bank
from Pakistan for the year 2005, Global Finance, Kisan Time Awards 2005 for NBP's services
in the agriculture field. It is listed amongst the Region's largest banks and also amongst the
largest banks in South Asia 2005, The Asian Banker. It has also been presented a Recognition
Award 2004 for having a Gender Sensitive Management by WEBCOP AASHA besides other
awards.

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1.2 NATURE OF NATIONAL BANK OF PAKISTAN


The nature of responsibilities of the Bank is different and unique from other banks/financial
institutions. The bank also handles treasury transactions for the Government of Pakistan as an
agent to the State Bank of Pakistan for handling provincial/Federal Government receipts and
payments on their behalf. The National Bank of Pakistan has also played an important role in
financing the countrys growing trade, which has expanded through the years as diversification
took place. The bank is providing all banking services of mercantile and commercial banking
permissible in the country, which include:
Accepting of deposits of money on current, fixed, saving, term deposit and profit and loss
sharing accounts.
Borrowing money and arranging finance from other banks.
Advancing and lending money to its clients.
Financing of projects, including technical assistance, project appraisal through long term/
short term loans, term finance and musharika certificates, etc.
Buying, selling, dealing, including entering into forward contracts of foreign exchange.
Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
Receiving of bonds, valuables, etc. for safe custody.
Carrying on agency business for any description other than managing agent, on behalf of
clients including Government and local authorities.
Generating, undertaking, promoting, etc. of issue of shares and, bonds etc.
Transacting guarantee and indemnity business.
Undertaking and executing trusts.
Joint venturing with foreign dealers, agents and companies for its representation abroad.
Participating in World Bank and Asian Development Banks lines of credit.
Providing personalized Hajj services to intending Hajjis.

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1.3 MISSION STATEMENT:


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 .

1.4CORE VALUES:
Highest standards of Integrity.
Institutionalizing teamwork and performance culture.
Excellence in service.
Advancement of skills for tomorrows challenges.
Awareness of social and community responsibility.
Value creation for all stakeholders.

1.5 OBJICTIVES OF NBP:


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

1.6 GOALS OF 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.

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1.7 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.

1.8 NET WORK OF BRANCHES:


With the geographical development of its branches, the National Bank of Pakistan has
been able to extend its services to a much larger number of Pakistanis all over the country. Today
the Bank has more than 8.8 million accounts & Bank maintains its presence in all the major
financial canters of the world through its 22 (2008) overseas branches and 5 representative
offices.
NBP have wide range of branches inside the country and outside the country.

In Pakistan it has 28 regional offices, 1285Branches and 4 Subsidiaries.

In overseas it has 24 overseas branches, 6 other offices.

The Branch network of National Bank of Pakistan is divided into following categories
ATM network ( Total ATMs 101 & Total ATMs machines 104)

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Domestic network ( 1249 Branches)


Islamic network ( 5 Branches)
Online network ( 156 Branches)
Overseas network ( 29 Branches)
Swift network ( 12 Branches)
Customer Facilitation Centers (6 Customer Facilitation Centers)
Agriculture branches ( 825 Branches)

1.9 EMPLOYEE BENEFITS OF NATIONAL BANK OF


PAKISTAN
Defined Benefit Plans
1.9.1 Pension Scheme:
The bank operates defined benefit approved funded pension scheme for its eligible
employees. The banks costs are determined based on actuarial valuation carried out using
Projected Unit Credit Method. Net cumulative un-recognized actuarial gains/losses relating to
previous reporting period in excess of the highest of 10% of present value of defined benefit
obligation or 10% of the fair value of plan assets are recognized as income or expense over the
estimated working lives of the employees. Where the fair value of plan assets exceeds the present
value of defined benefit obligation together with unrecognized actuarial gains or losses and
unrecognized past service cost, the bank reduces the resulting asset to an amount equal to the
total of present value of any economic benefit in the form of reduction in future contributions to
the plan and unrecognized actuarial losses and past service costs.

1.9.2Post retirement medical benefits:


The bank operates an un-funded defined post-retirement medical benefits scheme for all of
its employees. Provision is made in the financial statements for the benefit based on actuarial
valuation carried out using the Projected Unit Credit Method. Actuarial gains/losses are
accounted for in a manner similar to the pension scheme.

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1.9.3Benevolent scheme:
The bank also operates an un-funded defined benefit benevolent scheme for its eligible
employees. Provision is made in the financial statements based on the actuarial valuation using
the Projected Unit Credit Method. Actuarial gains/losses are recognized in the period in which
they arise.

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1.9.4Gratuity scheme:
The bank also operates an un-funded defined benefit gratuity scheme for its eligible
contractual employees. Provision is made in the financial statements based on the actuarial
valuation using the Projected Unit Credit Method. Actuarial gains/losses are accounted for in a
manner similar to pension scheme.

1.10 Other employee benefits


1.10.1 Employees' compensated absences:
The bank accounts for all accumulating compensated absences when employees render
service that increases their entitlement to future compensated absences. The liability is
determined based on actuarial valuation carried out using the Projected Unit Credit Method.

1.11 Trust activities of National Bank of Pakistan:


1.11.1 National Investment Trust (NIT):
Under a trust deed, the bank provides services, as a trustee to NIT and is performing
functions of sale/purchase of NIT units, safe custody and maintaining unit holders accounts.

1.11.2 Long-term Credit Fund (LTCF):


Consequent upon the NDFC amalgamation, the bank manages on behalf of the Government of
Pakistan, LTCF established from the proceeds of loans disbursed by various international
funding agencies for financing private sector energy development projects. The National Bank of
Pakistan is in process of negotiating the charge of fee in consideration of administrative services
to the LTCF.

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1.11.3 Qarz-e-Hasna Fund:


The work relating to Qarz-e-Hasna Scheme was attended by Pakistan Banking Council (PBC)
since inception. PBC was dissolved in January 1997. In order to fill the void created by the
dissolution of PBC and in order to continue the scheme, SBP decided to entrust all funds and
transfer all record relating to Qarz-e-Hasna scheme for education to the bank with the
instructions to perform all work relating to the Fund.

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CHAPTER 2
PRODUCTS AND SERVICES

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The followings are the main consumer banking products of NBP.

2.1 DEPOSITS:
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes with
personalized services at competitive rates of interest. Any Pakistani citizen can open his/her
account for any deposit scheme at any of its Branches strategically located throughout Pakistan.
The Bank with its huge network of 1243 branches garners savings from both the rich and the
poor in urban as well as rural areas. Even a poor farmer in a remote village, with his meager
annual income, feels secure to safe keep his minuscule savings in National Bank of Pakistan,
Because National Bank of Pakistan has a long heritage of trust and professional commitment.

2.1.1 Accepting Deposits:


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

2.1.1.1 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/-

2.1.1.2 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/-

2.1.1.3 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.

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2.1.2 Foreign Currency Account:


Foreign currency accounts are opened, on proper introduction and submission of required
documents along with an initial deposit prescribed from time to time. Rates of return on foreign
currency deposits are subject to fluctuation as determined in accordance with State Bank of
Pakistan directives and will be paid on six monthly basis whereas the return on term
deposit/SNTD will be paid on maturity or as prescribed by SBP. Foreign currency accounts, can
be opened in United States Dollars, Pound Sterling, Euro and Japanese Yen in any of the
authorized branches of commercial banks throughout the country.

2.1.3 NBP Premium Aamdani:


NBP Premium aamdani is a retail product of the bank. The amount of investment
required for this account is Rs. 20,000/-to Rs. 5,000,000.The investment period is 5 years. Zakat
and withholding tax will be deducted as per rules. In NBP premium aamdani, the account holders
have benefit of free demand draft, pay order; free cheque book and NBP cash card (ATM+Debit).
The Financing facility is available up to 90% of the deposit value.

2.1.4 NBP Premium Saver:


NBP Premium saver is a retail product of the bank. The minimum saving balance of Rs.
20,001 and a maximum balance of Rs. 300,000 are required for opening a premium saver
account. Two debit withdrawals allowed in a month and no limit on number of deposit
transactions. The profit is calculated monthly and Paid on half yearly basis. Free NBP Cash Card
(ATM + Debit) facility is available to account holder.

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2.2 ADVANCES:
National Bank of Pakistan plays a pivotal role in translating the government's development
plans in terms of growth in industrial, commercial and agricultural sectors in Pakistan.
Accordingly the Bank has formulated its Credit Policy under the guidelines of SBP-the Central
Bank of Pakistan.

2.2.1NBP Saibaan:
The NBP Saibaan is retail product of the bank. It has different product items which are home
purchase, home construction, home renovation and purchase of land plus construction. If anyone
has a Home Finance Facility outstanding with another bank he can have it transferred to NBP
through a hassle-free process.

2.2.2NBP Advance Salary:


The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary, the
leading personal loan product of the country, is maintaining its inimitability ever since it was
launched. This was only possible due to its swift growth and remarkable loan disbursement of
over 118 billion. Any employee can avail up to 20 net take home salaries with easy repayment
instalments. Its hassle free acquisition with no prior formalities and easy availability in a short
turnaround time is attributed as the most distinguishing features of the product. The product is
offered countrywide.

2.2.3 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.

2.2.4Students Loan Scheme:


Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002
budget speech, a Student Loan Scheme (SLS) for Education was launched by the Government of
Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB and
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ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the
meritorious students who have financial constraints for pursuing their studies in Scientific,
Technical and Professional education within Pakistan.

2.2.5NBP Karobar- Presidents Rozgar Scheme:


The solution of Pakistans major socio-economic problems primarily lies in the development
and growth of small & micro businesses. These will not only provide employment opportunities
to ever-growing population demand but will also become the catalyst for breaking the vicious
circle of poverty. In this regard, NBP has developed a full range of Products under the Presidents
Rozgar Scheme with a brand name of NBP KAROBAR. The scheme will be offered to eligible
young and literate citizens of Pakistan, falling within an age group of 18-40 years having a
minimum qualification of Matriculation (except for females in the PCO/Tele-center product).
The eligible borrowers will be required to make a down payment of 15%. Asset and Life &
Disability insurances will be mandatory under this scheme. The 15% down payment will include
1st years asset insurance premium. However, the cost of life and disability insurance will be
borne by GOP. The mark-up rate for the 1st year will be 12% and for the subsequent years it will
be 1 year KIBOR + 2%. Fifty percent (50%) of this rate will be paid by the customer i.e. 6% and
the balance of 6% will be borne by GOP. Additionally, first 10% of the losses under the scheme
will be taken-up by GOP. Initially, under the Presidents Rozgar scheme, NBP will offer
following products:
NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation)
NBP Karobar Mobile General Store (without USC Franchise)
NBP Karobar Transport
NBP Karobar PCO
NBP Karobar Tele-center

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2.3 CORPORATE ADVANCES:


2.3.1 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 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.

2.3.2 Running Finance/ Overdraft:


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.

2.3.3 Demand Finance:


When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a loan. When bankers allow

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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.

2.4: REMITTANCES:
NBP offers the following services to the people.

2.4.1 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.

2.4.2 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.

2.4.3 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 cashed 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.

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2.4.4 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.

2.4.5 SWIFT SYSTEM:


The SWIFT system (Society for Worldwide Interbank Financial Telecommunication) has
been introduced for speedy services in the areas 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.

2.4.6 MAILTRANSFERS:
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.

2.4.7 Telegraphic Transfer:


Telegraphic Transfer is a form of remittance, which is advised by telegram, telex or fax
machines. The fundamental principles of such transfer are otherwise identical with the Mail
Transfer. It is the message, which is sent from one branch to another on the order of payer to
payee through wire.

It is one of the quickest means to transfer fund through the use of

telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office
upon identification or through credit into beneficiarys bank account. As such remitting office is
not required to issue any instrument payment to the remitter for delivery to the beneficiary.

2.4.8 PAY ORDER:

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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 non-account holders on issuing one payment order. It charges Rs 25/- for
students on payment of fees of educational institutions. If someone want a duplicate of payment
order they charges Rs 100/- for NBP account holders and Rs 150/- for non-account holders.

2.5 MISCELLANEOUS:
2.5.1 Lockers:
National of Pakistan also provides lockers facility in the country. The lockers issued only
to the depositors. No lockers are issued to any unknown person. The dual control system is used
for lockers. The officer has master key to apply on the locker but he cannot open the locker of
any person. The locker holder provides the bank has specimen signature. Whenever the locker
holders come to open the locker, his signatures are verified by the officer and then will be able to
open his locker. If the key of the locker is lost company providing these lockers breaks the locker
and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and
bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the
presence of his heir as mentioned in his will or and his belongings are given to them and the
locker is closed.

2.5.2 NBP Cash Card:


NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which
lets you pay directly from your account as an alternative payment method to cash. The
transaction is authorized and processed by entering PIN. The NBP Cash Card holders are able to
transact at any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash
from NBP, 1-Link & M-NET ATMs across the country. The followings are the main features of
this product:
You won't need to carry a lot of cash with you every time you go out.
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Secure and Safe transaction.


Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment
etc.)
Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.
Enable to Make Purchases from Around 4000 POS (Merchants) Countrywide including
2500+ POS in Karachi.
No Card Issuance Fee for first 12 Months

2.5.3 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, the Bank has recently set up the Financial Institution Wing, which is placed under
the Risk Management Group. The role of the Financial Institution Wing is: To effectively manage NBP's exposure to foreign and domestic correspondence
Manage the monetary aspect of NBP's relationship with the correspondents to support
trade, treasury and other key business areas, thereby contributing to the bank's
profitability.
Generation of incremental trade-finance business and revenues
.

2.6 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 extremely
attractive, along with the security and service only NBP can provide.

2.6.1 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.

2.6.2 QUITY INVESTMENTS:


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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.

2.6.3 COMMERCIAL FINANCE:


NBP dedicated team of professionals truly understands the needs of professionals, agriculturists,
large and small business and other segments of the economy. They are the customers best
resource in making NBPs products and services work for them.

2.7 TRADE FINANCE OTHER BUSINESS LOANS:


There are two types of trade finance.

2.7.1

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.

2.7.2

CORPORATE FINANCE:

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
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.

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2.7.3 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.

2.7.4 Advance salary loan:


This loan is given to those people who are Govt servants. They can get a loan up
to the salary of fifteen months.

2.8 CORE BANKING APPLICATION:


The single biggest achievement of implementing the Core Banking Solution is that each
customer is truly the customer of the Bank and not just the customer of the Branch, where his/her
account is maintained. The customer can go to a branch anywhere in the country and perform a
transaction. This is possible as the entire Customer Database is centrally located at the central
Data Centre and can be accessed throughout the network of branches. Business processes in all
the branches of National Bank of Pakistan update a common database in a central server located
at data centre, which gives a consolidated view of banks operations.

Key features of the Core banking application of NBP


24X7 Banking
As a result of implementing Core Banking, most of the facilities being offered by bank are
available to Customers 24 hours a day, 7 days a week. The transactions are performed using
multiple channels such as ATMs, Internet Banking, Phone Banking and Mobile Banking.
Anywhere Banking
Customers can avail of banking services across the branch and Channel network irrespective
of location where their account is maintained.
Integration with strategic sectors
Core Banking integrates all strategic sectors of Banking such as Trade Finance, Treasury,
Asset-Liability Management and Corporate Balance Sheet. As a result, the information related to
these areas is centrally available for use or reference.
Strengthening MIS, DSS and EIS
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Core banking application is more than just a transaction processing system. It provides
updated data for generating various reports for Management information system (MIS), and will
facilitate Decision Support System (DSS) and Executive Information System (EIS). As data is
located on CDC, branches and administrative offices can concurrently avail updated data when
required.
Business Process Re-engineering
Core Banking would enable implementation of BPR initiatives of a Bank and facilitate
centralized handling of various processes. Branches would do less and less back office work and
would be able to focus on marketing, customer relationship management and cross selling.

2.9

COLLECTION

OF

UTILITY BILLS,

TAXES

AND

CHALLANS:
NBP as an agent of the SBP collects bills from the general public and charge commission
for the services rendered. The commission on each type of bill is Rs. 8/- per bill. The branches
collect the utility bills and the proceeds are then send to head office.

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CHAPTER 3
DEPARTMENTS OF NATIONAL BANK OF PAKISTAN

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MAIN OBJECTIVES OF MY STUDY WERE TO SEE


FOLLOWING AREAS
Working Environment of NBP
Remittance Department
Cash/clearance Department of NBP

3.1 DEPARTMENTS OF NBP:


3.1.1 CASH DEPARTMENT:
Cash department performs the following functions

3.1.2 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.

3.1.3 Payments:
It is a bankers primary contract to repay money received for this customers account
usually by honouring his cheques.

3.1.4 Cheques and their Payment:


The Negotiable Instruments Act, 1881
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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3.1.5 Types of Cheques:


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

3.1.5.2 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.

3.1.5.3 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.

3.1.6

Payment of Cheques:
It is a bankers primary contract to repay money received for his customers account

usually by honouring his cheques. It is a contractual obligation of a banker to honor his


customers cheques if the following essentials are fulfilled.
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 postdated or stale
Cheque should be presented during banking hours

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3.2 CLEARANCE DEPARTMENT:


A clearinghouse is an association of commercial banks set up in given locality for the
purpose of interchange and settlement of credit claims. The function of clearinghouse is
performed by the central bank of a country by tradition or by law. In Pakistan, the clearing
system is operated by the SBP. If SBP has no office at a place, then NBP, as a representative of
SBP act as a clearinghouse. In 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 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.

3.2.1

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.

3.2.2

Out-Word Clearing Book:


The bank uses outward clearing register for the purpose of recording all the details of the

cheques that the bank has delivered to other banks.

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3.3 ADVANCES DEPARTMENT:


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

3.4 REMITTANCE DEPARTMENT:


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

3.4.1 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)

Open DD:

Where direct payment is made.

b)

Cross DD:

Where payment is made though account.

3.4.2 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.

3.4.3 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.

3.4.4 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
Page 37 of 62

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.

3.5 HUMAN RESOURCE DEPARTMENT:


Human Resource plays a vital role in the success of every service organization.
They interact between man and machine. Their attitude can win or lose the customer. The
positive attitude could only be created in a conductive environment, which can make the staff
dedicated towards the organizational objectives.

3.5.1 Functions of HR Department:


MAJOR FUNCTIONS
Following are the functions of HR Management and Administration department, National
Bank of Pakistan.

3.5.1.1. Human Resource Planning:


Human Resource Planning is conducted by the HR department. They assess the existing
number and nature of staff and then place / post them at needy branches according to the
requirement of that branch. For example, if the load on cash counter is increasing, one new
cashier will be posted at the Branch.

3.5.1.2. Recruitment of Staff:


Another important function of HR department is recruitment of staff as per availability of
vacancies. At NBP, recruitment of permanent staff is centralized and all recruitments are made by
their Head Officer Karachi.
However, in near past limited authority has been given to regional offices to hire the
services of outsourced staff i.e staff provided by the employment companies. This type of
recruitment is being made in following areas:
Security Guards
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Janitorial Services
Sale & Marketing staff for retail products.

3.5.1.3Transfer of Employee:
The regional office controls fifty five (55) branches. All transfer and posting of
employees among these branches is made by HR department keeping in view the staff
requirement at different branches.

3.5.1.4Job Rotation:
Function of Job rotation is also performed by regional office. Normally when an
employee completes three years at a particular seat, he rotates to another seat. This rotation is
very important for internal control, to prevent fraud and forgery and to enhance the employees
skills for different duties.

3.5.1.5Human Resource Development & Training:


H.R Department analyzes the day to day requirement of SBP regulation for different
Banking activities, and plans for training and development of staff .This training may also be
based upon introduction of new Banking produces and competition with rival Banks.

3.5.1.6Performance Appraisal:
H.R Department also performs the function of performance appraisal of

employees

on

yearly basis .At the close of every year annual confidential report (ACR) of each and every
employee is written by HR department.
This ACR contains subjective and objective evaluation as well as personal traits of an employee.

3.5.1.7Promotion of employees: NBP HR department performs the function of


promotion. Normally NBP promotes its employees after every three yours on the basis of their
past performance, availability of vacancies in each grade/cadre and quota approved by the
Ministry of Finance, for each grade/cadre.

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3.5.1.8. Lay Off:


Lay off function is also performed by HR department. NBP is a govt. owned organization
and its employees retire at the attainment of age of 60 years. However, in 1998 and 2002 the
NBP
announcedtheGoldenHandShakeschemes and almost 5000 and 3500 employees separated from B
ank services in these respective years.

3.5.1.9Health & Safety:


H R department arranges for medical facilities to its employees. There are several
hospitals on Banks panel and employees can avail medical facilities from these hospitals.
Hospitals bills are being paid by HR department after proper verification. NBP extend medical
facility to employees, their spouse (wife) and children as well as parents of the employee.
Brother or sister or any other relation is not entitled for this medical facility.

3.5.1.10Disciplinary Cases:
HR department deals with all disciplinary cases of employees. These disciplinary cases
include: Afraid & Forgery
Unauthorized leaves
Insubordination
Misconduct of finances
Violation of procedure & policy

3.5.1.11Retirement Benefits:
HR department also manages pensions and group life insurance. Pension is allowed to all
employees after retirement and when the employee dies and his widow can avail this facility till
death. Even if the widow dies, the and daughter/son of employee can avail pension till she/he
attain the age of majority i.e. 18years or she/he married, whichever is happened earlier.

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3.5.1.12. Personnel Information System:


HR department is responsible to keep and maintain complete data ofEach
and every employees this data includes his personal data as well as professional data and being
used to place right person for the right job.

3.5.1.13 Equal Employment Chance:


NBP provides equal employment chance to men & women. HR department is responsible
to implement this policy, too.

3.5.1.14 Salary & Loan Administration:


HR department performs the function of disbursement of Salary and

administration

of

Staff Loans. Salary is being disbursed in last week of the month. NBP allows house building
loan, Motor car loan and computer loan toits employees. Period of house building loan is 20
years, Car loan is 10 years and computer loan is 5 years. Mark up on HBL is 3% and
car/computerloanis4%.

HR department pays salaries to employees after deduction of

monthly

installments of loans, already availed by them.

3.6. DEPOSIT DEPARTMENT


It controls the following activities:

3.6.1

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, occupation and the nature of business by the introductory references given at the
time of account opening. Preliminary investigation is necessary because of the following reasons.
Avoiding frauds
Safe guard against unintended over draft.
Negligence.
Inquiries about clients.
There are certain formalities, which are to be observed for opening an account with a
bank.
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Formal Application
Introduction
Specimen Signature
Minimum Initial Deposit
Operating the Account

3.6.2 Types of Accounts:


Following are the main types of accounts
Individual Account
Joint Account
Basic Banking Accounts
Profit support Accounts
Pensioner Accounts
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

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3.6.3

Issuing of cheque book:


This department issue cheque books to account holders.
Requirements for issuing cheque book
The account holder must sign the requisition slip
Entry should be made in the cheque book-issuing book
Three rupees per cheque should be recovered from a/c holder if not
then debit his/her account.

3.6.4 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.

3.6.5 Saving account:


Savings Deposits account can be opened with very small amount of money, and the
depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate calculated on
six-month basis under the Interest-Free Banking System. There is no restriction on the
withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the
amount to be taken for calculation of products for assessment of., profit to be paid to the account
holder.

3.6.6 Cheque cancellation:


This department can cancel a cheque on the basis of;
Post-dated cheque
Stale cheque
Warn out cheque
Wrong sign etc.

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CHAPTER 4
COMPANY ANALYSIS

Page 44 of 62

4.1 SWOT ANALYSIS:


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:

Exploiting an organizations opportunities and strength.

Neutralizing it threats.

Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context; managers assess internal strengths distinctive competencies
and weakness and external opportunities and threats. The goal is to then develop good strategies
and exploit opportunities and strengths neutralize threats and avoid weaknesses.

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4.1.1 STRENGTH
4.1.1.1

OLDEST INSTITUTION:

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

4.1.1.2 ALTERNATE DUTIES IN SBP ABSENCE


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

4.1.1.3

MORE DEPOSITS THAN OTHER BANKS

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

4.1.1.4 EMPLOYEE BENEFITS


The employers at NBP are offered reasonable monetary benefit. Normally two bonuses
are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and competency for
the bank and a source of motivation for the employees.

4.1.1.5 BROAD NETWORK


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

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4.1.1.6 STRICTLY FOLLOWED RULES & REGULATION :


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

4.1.1.7 PROFESSIONAL COMPETENCE


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

4.1.1.8 HEALTHY ENVIROMNMENT


The working condition in the NBP branch here is very conductive and favorable for better
output. The informal environment affects the performance of the employees in a positive way.

4.1.1.9 RELATION BETWEEN STAFF AND OTHER EMPLOYEES


The bank enjoys a good plus point when it comes to the employee manager relationship the
hearing as removing of discrepancies if any, between the employees, and between the manager
and employees.

4.1.1.10 NBP ADVANCE SALARY


The product of the year 2008,2009. the product was developed by NBP Credit Group, their basic
target is salaried Govt Employees. This has increased NBPs Credit portfolio with a major boost.
With minimum default ratio, its been the success story of NBP. Still its a good product than their
competitors personal loans. The interest rate charged to this loan is SBP Discount Rate + 5%.

4.1.1.11 NO panelty on Late Payment or Early Settlement of Loans


NBP is one of those banks, who donot impose any panelty to their customers regarding late
payment of installments or markup and early settlement of laons or balloon payments in case of
credits.
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In case a customer wants to make balloon payments will not b charged to any panelty in any
advances case of NBP. Its a strength of NBP against its competitors.

4.1.1.12 NBP Premium Aamdani


This is the only product of any commercial bank in the country which is competing with the
NATIONAL SAVINGS CENTERs products. NBP is offering rates to the customers who
deposits money in multiples of Rs 50,000/- with them till five years.

At first year 7.5%

At second year 8.5%

At third year 9.5%

At fourth year 10.5%

At fifth year 11.5%

4.2 WEAKNESSES
4.2.1 LACK OF MARKETING EFFORT:

The bank does not promote its corporate image, services etc on a competitive way. Hence
lacks far behind in marketing effort .A need for aggressive marketing in there in the era
marketing in now becoming a part of every organization.
4.2.2 NBP UNDER POLITICAL PRESSURE:
The strong political hold of some parties and government and their dominance is affecting
the bank in a negative way. They sometime have to provide loan under the pressure, which leads
to uneven and adjusted feeling in the bank employees.
4.2.3 FAVORITISM AND NEPOTISM:
The promotions and bonuses etc in the bank are often powered by seniors favoritism or
depend upon their wills and decision. This adds to the negative factors, which denominate the
employees thus resulting in affecting their performance negatively.
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4.2.4 LACK OF FINACIAL PRODUCT:


The bank falls far behind when the innovative and new schemes are consider. It has not been
involved in the tug of war between the competitors to the accounts and strengthens the existing
customer base. This stands out to be the major incompetence and weakness of the banks.
4.2.5 INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS:
During the rush hours, the bank is founded out to be a total flop to handle the mob of people
peaking from windows and doors. The bank has deficiency to operate in the stages of rush hours
where the people find them services entangled in a situation of nowhere because they are not
well served.
4.2.6 LACK OF COMPUTERI ZED NETWORK:

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

The bank lacks the modern Equipment that is note counting machine computers. Even if there is
any equipment they lack to fall in the criteria of being rearmed as update and upgraded.
4.2.8 UNEVEN WORK DISTIBUTION:
The workload in NBP is not evenly distributed and the workload tends to be more on some
employees while others abscond away from their responsibilities, which server as a
demonization factor for employees performing above average work.
4.2.9 OLD Employee Awareness:
Computer awareness to old Staff of NBP is a weakness. They should develop employee
development & training programme to effectively update their employees regarding computer
applications & upcoming CORE BANKING SOFTWARE of bank.

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4.3 OPPORTUNITIES
4.3.1 ELECTRONIC BANKING:
The world today has become a global village because of advancement in the technologies,
especially in communication sector. More emphasis is now given to avail the modern
technologies to better the performances. NBP can utilize the electronic banking opportunity to
ensure on line banking 24 hours a day. This would give a competitive edge over others.
4.3.2 MICRO FINANCING:
Because of the need for micro financing in the market, there are lot of opportunities in this
regard. Other banks have already initiated, now the time has arrived when the NBP must realize
it and take on step to cater an ongoing demand.
4.3.3 CAR FINANCING:
This is the major area where NBP has not competed with private banks. As per repute of NBP
they must enter in personal & car financing products.
4.3.4 CORE BANKING SYSTEM:
Implementation of the CORE BANKING SYSTEM is still an opportunity, as till now none
of the banks operating in Pakistan is using this most updated & famous banking application. It
will lead NBP to smooth sailing environment as a leading bank in technology as well as
competing between other banks. This will upgrade NBP from paper & ledger era to the smooth
& sophisticated computer application.

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4.4 THREATS
4.1EMERGENCE OF NEW COMPETITORS:
The bank is facing threats with the emergence of new competitor especially in terms of
foreign banks. These foreign banks are equipped with heavy financial power with excellent and
innovative ways of promoting and performing their services. The bank has to take initiative in
this regard or will find itself far back in competition.

4.2 POLITICAL PRESSURE BY ELECTED GOVERNMENT:


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

4.3

DOWNSIZI NG

The bank is currently acting upon the policy of downsizing which threaten the environment
of the bank Employees feel insecurity in doing their jobs and work, hence affecting the over all
performance of employees negatively.

4.4

CUSTOMERS COMPLAINTS

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

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CHAPTER 5
ANALYSIS

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After proper analysis of the organization I divided it into in four parts. This analysis is
mainly based on practical experience of NBP Staff, analysis is as under: Problems at the branch.
Function analysis.
Administrative analysis.
Personal managements analysis.
5.1 PROBLEMS AT THE BRANCH

Customer Satisfaction
Poor record management and filing system
Unequal distribution of work
Marketing visits
5.2 FUNCTIONAL ANALYSIS

Formal Organization
Difference between theory and practice
Bank duty to maintain secrecy.
Excessive paper work
Delegation of authority
5.3 ADMINISTRATIVE ANALYSIS

Job analysis is not effective


Carelessness in opening of account
Lack of specialized training
L O W P R O F I T R ATE S
Poor job rotation.
D E L AYS

IN

L O A N A DVANCE M E NT

Lack of appreciation

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5.4 PERSONAL MANAGEMENT ANALYSIS

Need for better training program


Developing Managerial Leadership
Recruitment policy
Promotions
Transfer
Marketing at desk

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CHAPTER 6
CONCLUSION

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INTRODUCTION
NBP is an effectively operating and profit making organization and carrying out its
activities under a specified system of procedure. The main regulatory body is State Bank of
Pakistan, which provides policy guidelines and ensures that the money market operates on sound
professional basis while the head office specifies the whole procedure of function and operations.
Here I am giving some suggestions, which in my view can add some input for efficiency
and better performance of NBP as an organization in general and Taramri branch in particular.
The recommendations are as follows:
6.1 Professional training

NBP staff lacks professionalism. They lack the necessary training to do the job efficiently
and properly. Although staff colleges in all major cities but they are not performing well.
Banking council of Pakistan should also initiate some programs to equip the staff with much
needed professional training.
6.2 Delegation of Authority

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

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

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

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6.5 Utility Bill Charges

Bank gets Rs. 8 to processes a utility bill, and it is very tire, tough and hard job despite
this working resulting in a loss to then Rs 8 per transaction. These charges should be increased to
RS 10 per bill to enable the branch to cover their handling costs and make some profit.
6.6 Link with the Head Quarter

160 major branches of NBP should established a direct link with the, head quarter in
Karachi, through Internet or Intranet. This will make the functions and decision making of the
management easier and convenient.
6.7 Credit Card

National bank of Pakistan should start its operation in credit card. These cards were very
helpful for the ordinary customer in general and the business people in particular. To make it
mores secure and to eliminate the misuse of it, the management is required to keep proper
security against the card. But as NBP is a GOVT bank so most of the customer gets defaulted
and do not want to repay the CREDIT CARDS amounts. Effective involvement of Collection
officers for the repayment of credited amount rather than treating and provisioning them as NPL.

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6.8 Cash Financing

In this mode of financing the amount of credit not utilized by the borrower is remained
tax-free. It is recommended that a small amount of interest should be charge on this amount as
well because the bank gas kept-aside the amount for that borrower and can not advance it
anywhere.
6.9 Decreasing Administrative Expenses

Bank should their administrative expenses. This was Rs 12 billion in the year 2011-12.
That can be done by lying off the surplus pool of employee with golden handshakes scheme. The
branches that are not much used could also be closed. Employee can also be how to control the
bank expenses. That will give positive results in the future.
6.10 Needs to be Flexible in credit Policy
As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces
the investment opportunities. Also loans should be given to the small businessmen and the
agriculture sector at the low markup rate. It should adopt flexible credit policy while giving
credit to the agriculture sector.Not only it will be economical but will also reduce the extra
burden of work of the bank. It will also help in reducing the use of excessive paper work.
6.11 I mproper Distribution of Wor k

Proper distribution work leads to success in every organization. Proper distribution of


work prevents the employee from over and under work situation. So for a smooth running of an
organization proper distribution of work is the hint to be followed.
During my internship I observed that there was no proper distribution of work in the
bank. I saw that some of the employee worked like ants other sat idle starting here and there. So
this created a lot of over work situation for while relaxation for other.

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6.12 Inter Depart mental Transfer

I watched during my internship that, there is number of employee who have worked on
one seat for many a year. It can have negative effects motivation of employee who is hard
working and intelligent. Take the example of advances section. In advance section if the
employee is transfer after sixth month or seven month, how can he be able to show his
performances and how can he be able to know the bank customer in a short period of time.
6.13 Complaints of Customer

There should be an information desk to provide the information and to receive the
complaints of the customer in the bank.There is no complaint box available in the branch and not
any person appointed to hear the complaints.Every person cannot go to the manager for the
complaint because most of the people are hesitant. So I suggest management to install a
compliant box in the branch, and recruit a special person for that guidance of the customer when
they are unable to manage some difficulties in banking matters.
6.14 Organizational Commitment
It is suggested that employees working on daily wages basis should be given some
benefits, which the other employees are getting. Their salaries must increase according to
efficiency, performance and service.
6.15 Managerial Leadership
In the analysis, we have discussed the difficulties of the assistant in taking any initiative;
therefore it is recommended that the assistants should he given special training to make them
ready for the leadership.
6.16 Housing and House Hold Goods loans

Bank should initiate these loans because most of banks customers are middle class and
they cannot afford to buy house or household goods at once by their own.

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6.17 SOME MORE Solutions / I mprove ments suggested

After the completion of my internship in the NBP I am able to give some suggestions for
the betterment of the organization. During the internship we had discussions with different
persons like manager, operational manager different officers employees and customers. In the
light of these discussions we are able to give some suggestions which are given below.
Use of modern technology.
Training and Development of Employees
Frequent Communication
Promotion on the basis of Ability

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Chapter

Chapter 7
REFERENCES
ONLINE RESOURCES

www.dawn.com.pk
www.sbp.org.pk
www.nbp.com.pk

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