INTODUCTION TO BANKING SECTOR

Evolution of Banking System in Pakistan

At the time of independence, there were 487 offices of scheduled banks in the territories,
now constituting in Pakistan. As a new country without resources, it was very difficult for
Pakistan to run its own banking system immediately. Therefore, in accordance with
Indian independence act of 1947, an expert committee was appointed to study the issues.
The committee recommended that the Reserve Bank of India should continue its business
in Pakistan until 30th September, 1948, so that the problem of time and demand liability,
coinage currencies, exchange etc is stalled between India and Pakistan. In the mean time
the banks including those having their registered offices in Pakistan, transfer them to
India in order to bring collapse for new state. By June 1948, the numbers of offices of
scheduled banks in Pakistan declined from 487 to 195. there were 19 non-Indian foreign
banks with status of small branch office, which were emerged solely in export of crops
from Pakistan. At that time, there were only two Muslim institutions, which are National
Bank and Australasia Bank.
Quaid-e-Azam Muhammad Ali Jinnah, inaugurated the State Bank of Pakistan on July1,
1948. When the State Bank of Pakistan was ordered was promulgated on May12, 1948,
then National Bank of Pakistan came into existence in 1949.
The separation of East Pakistan and its repercussion in form of economic, depression
have caused a lot of difficulties to the banking system in Pakistan. The network of bank
branches now covers a very large segment of the National economy. The number of
branches increased appreciated and there is now one branch for about 3000 heads of
population approximately. There are responsible growth deposits from the establishment
of Pakistan beside this growth, specialized credit and financial institutions have
developed over the years. In June1948, Pakistan had only 81 offices of scheduled banks,
but June1993, they have risen to more than 7200. In June1948, the total bank deposit was

1
only Rs.880 millions credit accounted to Rs.200 millions, but by the June1993, they have
risen to more than 2.1 billions respectively.
The government of Pakistan in late 90’s introducing the need for the privatization of state
owned banks and companies. The private sector has accepted the challenge and most of
the banks are being privatized today. Banks employees and other common people can
also purchase these stocks and earn profits. Through the period of banking history, in
Pakistan now banks have been expanding rapidly and are achieving the desired goal of
organization.

DEFINITION OF BANK
The term bank is being used for a long time, yet it has no precise definition. The basic
reason is that the bank perform not just one but many types of functions. Originally the
banks were supported to make shot term loans to the traders only. The banks not only
extend short-term loans to the farmers, traders, industrialists etc. but also invest in a vide
variety of long term earning assets.

However some different definitions of bank, according to some expert economists are
mentioned below.

G.W. Gilbert:

“A banker is a dealer in capital or more properly a dealer in money. He is an intermediate

party between the borrower and lender. He borrows one party and lends to the another”

Dr. H.R. Hudson:

"Banks are institution that enjoys the public money doing nothing for the public".

Berton:

“Banks are guardian and distributor of cash money.”

2
Dr. Hart:

“Banker or a bank or a person or company carrying on the business receiving moneys and
collecting drafts for customers subject to the obligation of honoring cheques drawn upon
them from time to time by the customer to the extent of the amount available on their
current accounts.”

Professor Renolds:

“Banks do business of money. Rather banks do business of lending and borrowing

loans.”

Bank: Banking Ordinance 1962:

According to the Banking Ordinance 1962, Bank is defined as below:

"Banks mean the acceptance of deposit for the purpose the lending or the investment of
deposit of money from the public repayable on demand or otherwise withdraw able by
cheques, drafts, orders, and otherwise"

TYPES OF BANKS

Most commonly the banks are of the following types:

 Central Bank or State Bank.

 Commercial Bank.

 Exchange Bank.

 Industrial Bank.

 Agriculture Bank.

 Investment Bank.

 Co-operative Bank

 Saving Bank.

3
STATE BANK OR CENTRAL BANK

The first central bank was Riksbank of Sweden established in 1668. this
bank is leader of all other banks. It does not compete for the profit. It issue
the notes. It acts as bank of banks and government. It controls the operations
of all other banks for economic and monetary stability in the country.

COMMERCIAL BANK

The first commercial bank was the Bank of Venus which was established in
1771 in Italy. The bank accepts the deposits form the general public and
loans are provided to the businessmen.The transfer the money from one
place to another. It helps in foreign trade by opening letter of credit. The
bank deals in foreign exchange. Habib Bank Ltd. United Bank Ltd. National
Bank Ltd. Muslim Commercial Bank Ltd and Allied Bank of Pakistan are
the examples of commercial banks.

AGRICULTURAL BANK

The bank is responsible for the development of agriculture sector in the country. The bank
provide short term loans for the pupose of seeds, fertilizers, and water charges. The bank
provide medium term loans for the purpose of tools, fencing and tubewell. The bank also
provide the long-term loans for the purpose of tractors and improvement of land.

INDUSTRIAL BANK

The bank meets the financial needs of industrial sector. Loans are granted to setup new
companies. The purpose of machinery and construction of building requires long-term
loans at the reasonable rate of interest. The growth of industrial sector depends upon such
banks.

4
CO-OPERATIVE BANK

The persons living same area open such bank. It can provide banking facilities to
members for meeting their financial requirements. The members may be farmers or small
producers. Such bank is registered under Co-operative Societies Act 1925. It may be
scheduled or unscheduled bank.

SAVING BANK

The receive idle money from people having low income. The people save the money for
future needs. The saving banks offer reasonable profit rate on saving accounts. The
students, government employees, and household women can open such account.

EXCHANGE BANK

The exchange banks have their head offices in foreign countries. They deal in foreign
exchange due to foreign trade. Exchange banks handle letter of credit, bank draft and bills
of exchange in foreign trade.

INVESTMENT BANK

The bank is setup to deal in shares and other securities. The shares and debentures of
other companies are purchased and sold. The bank can provide loans to the person who
wants to buy shares and debentures.

5
IMPORTANCE OF BANKS
The book keeping details of banks and loans are rarely exciting and often confusing but
they of demonstrate convincingly that banks can create money. This implies that banks
must have some direct influence on economic activity because all of our market
transactions involve the use of money. Now, the question arises how can the bank help in
creating money. This can be easily explained with the help of the core concept of basic
money supply. Money supply is equal to the cash prevailing in the economy and the sum
of checking accounts and traveler cheque etc. We know that banks have a required
reservation applicable in their advancing of money. By the concept of advancing money
up till the level of required reserves, banks can more advances than their deposits. In this
way they increase the money supply.
Banks also have the economy in the sense that they can regulate the circular flow of
income when depositors deposit their excessive money in the banks, the banks again put
this money into the flow of economy by giving advances. According to economists, the
primary function of banks is not to store money but to transfer money from savers to
spenders. The banks do so by lending money to businesses for new plants and
equipments, the customers for new homes or cars at government entities that desire
greater purchasing powers.
The importance of banks also becomes more clear when they are used as a medium of low
risk transactions of money. With the help of banking system, you can transfer your
money by sitting in Multan to a person in New York. All the commercial banks functions
that have been discussed previously add to the reporters of the banks in general and
commercial banks in specific.

6
 INTRODUCTION OF ORGANIZATION

VISION STATEMET

“To be the pre-eminent financial institution in Pakistan

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

MISSION STATEMENT

“To be recognized in the market place by Institutionalizing a

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

7
CORE VALUES

We aim to be an organization that is founded on…

• Growth through creation of sustainable relationships with our customers.

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

We shall work to…

• Meet expectations through Market-based solutions and products.

• Reward entrepreneurial efforts.
• Create value for all stakeholders.

We aim to be people who…

• Care about relationships.

• Lead through the strength of our commitment and willingness to excel.
• Practice integrity, honesty and hard work. We believe that these are measures of
true success.

We have confidence that tomorrow we will be…

• Leaders in our industry.

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

8
PRESIDENT MESSAGE

It gives me great pleasure to announce that National Bank of Pakistan is gearing up to the
challenges faced by the domestic banking industry due to innovations and advances in the
international banking world, which is the consequence of globalization.

The bank wishes to effectively utilize the financial assistance being extended by the
Government of Pakistan for banking sector reforms aimed at reducing operating costs and
improving profitability.

National Bank of Pakistan is distinct from other banks in that it has a nonprofit and
service oriented motive, which has manifested itself in the area of salary deposits of
government employees and payment of utility bills. The bank renders both of these
services across the country reaching as far as the remotest regions; from our northern
borders to the Arabian Sea. These services do not contribute towards the earnings of the
bank; rather they put pressure on our resources. Nevertheless, we are committed to
serving small savers and the general public of the country. National Bank is everyone’s
and does not only serve corporate customers. By extending and targeting our research to
improve bank earnings, through customer focus of our commercial and corporate
branches, and by enhanced efforts towards the development of human capital, we shall
very soon transform the bank from a bureaucratic organization to a fast paced, modern,
and competitive bank.

In conclusion, I firmly believe that we have the vision, which will enable us to achieve
even better results, safeguard the interest of our customers and to assist us in our march
towards progress and prosperity in future.

S. Ali Raza
Chairman & President

9
10
CORPORATE INFORMATION

BOARD OF DIRECTORS
Syed Ali Raza, chairman & president
Dr. Waqar Masood Khan
Syed Shafqat Ali Shah Jamote
M. Zubair Motiwala
Sikandar Hayat Jamali
Azam Faruque.

AUDIT COMMITTEE
Syed Shafqat Ali Shah Jamote Chairman
Iftikhar Ali Malik
M. Zubair Motiwala

AUDITORS
Ford Rhodes Sidat Hyder & Co.
Chartered Accountants
M. Yousuf Adil Saleem & Co.
Chartered Accountants

LEGAL ADVISORS
Mandviwala & Zafar
Advocates and Legal Consultants

REGISTERED & HEAD OFFICE

NBP Building

11
I.I.Chundrigar Road,
Karachi, Pakistan
Registrar’s &
Share Registration Office
THK Associates (Pvt.) Ltd.
Shares Department, Ground Floor
State Life Building # 3
Dr. Ziauddin Ahmed Road, Karachi, Pakistan

BOARD OF DIRECTORS
Syed Ali Raza, chairman & president
Dr. Waqar Masood Khan
Syed Shafqat Ali Shah Jamote
M. Zubair Motiwala
Sikandar Hayat Jamali
Azam Faruque.

AUDIT COMMITTEE
Syed Shafqat Ali Shah Jamote Chairman
Iftikhar Ali Malik

12
M. Zubair Motiwala

AUDITORS
Ford Rhodes Sidat Hyder & Co.
Chartered Accountants
M. Yousuf Adil Saleem & Co.
Chartered Accountants

LEGAL ADVISORS
Mandviwala & Zafar
Advocates and Legal Consultants

REGISTERED & HEAD OFFICE

NBP Building
I.I.Chundrigar Road,
Karachi, Pakistan
Registrar’s &
Share Registration Office
THK Associates (Pvt.) Ltd.
Shares Department, Ground Floor
State Life Building # 3
Dr. Ziauddin Ahmed Road, Karachi, Pakistan

13
14
OVERSEAS AND DOMESTIC BRAN

15
 OVERSEAS AND DOMESTIC BRANCHES OF NBP

Overseas Branches Domestic Branches

16 Overseas Branches 29 Regional Offices

4 Representative Offices 1,189 Branches
1 Subsidiary 130 Online Branches
1 Joint Venture 4 Subsidiaries
OVERSEAS BRANCHES
America and Far East Region
Europe Region Hong Kong
USA Japan
Canada South Korea
Germany China
France

Middle East, Africa Central Asian

& South Asia Republics
Region Afghanistan
Bahrain Turkmenistan
Egypt Kyrgyz Republic
Bengladesh Kazakhstan
EPZ Uzbekistan
Azerbaijan

16
NATIONAL BRANCHES

S
Branch Location
No.
Main Branch (HeadMain Branch, Talpur Road NBP
1
Office) Head Office
Ground Floor Chapal Plaza, Hasrat
2 Corporate Branch
Mohani Road
PIDC House Dr.Ziauddin Ahmed
3 PIDC Branch
Road
Model Branch
4 Corporate Model Branch, Clifton
Clifton
124 - S. Block No 2 PECHS Main
5 PECHS Branch
Tariq Road
1st Chorangi Nazimabad near Sir
6 Nazimabad Branch
Syed College
7 SITE Branch Near SITE Shopping Center, SITE
Korangi Industrial ST - 2/4 Sector 23, Korangi
8
Area Industrial Area
SM Road, Sindhi Muslim Co-
9 SMCH Branch
operative Housing Society
F.T.C Building, Shahrah-e-Faisal,
10 FTC Branch
Karachi
Gulshan-e-Iqbal, Rashid Minhas
11 Gulshan Branch
Road
Custom House
12 Custom House, Dinshaw Road
Branch
Defence Housing Society,Phase 1,
13 DHA Branch
Korangi Road
14 Denso Hall Branch Denso Hall, M.A. Jinnah Road
Aimai House Aimai House, Abdullah Haroon
15
Branch Road (2 ATMs)

17
 Pakistan Coast Guard, Sarwar
16 Saddar Branch
Shaheed Road, Saddar
Nadir House
17 Nadir House, I.I Chundrigar Road
Branch
18 KMC Branch K.M.C Building, M.A. Jinnah Road
Hoor Market
19 Hoor Market, Masjid Road, Kemari
Branch
20 Airport Branch Terminal I, Old Airport
M.A. Jinnah Road, Kandawala
21 MA Jinnah Road
Building
Main Branch, Shahrahe- Quiad-e-
1 Main Branch
Azam Road
Lahore Cantt.
2 Cantt. Branch, Lahore Cantt.
Branch
WAPDA House Wapda House, Shahrahe Quiad e
3
Branch Azam Road
ACP Corporate ACP Corporate Branch Shadman
4
Branch Jail Road
5 Civil Secretariat Civil Secretariat
6 Jinnah Hall Jinnah Hall
7 Queens Road Shahrae Fatima Jinnah Road
8 Davis Road 16- Davis Road Lahore
Defence Housing
9 Circular Road DHA Y Block
Society
10 Model Town Bank Square, Model Town Lahore
Baghbanpura, Opposite Shalamar
11 Baghbanpura
Garden
12 Model Branch Liberty Market Gulberg, Lahore
Allama Iqbal
13 Moon Market, Allama Iqbal Town
Town
Card Civil Lines Corporate Branch, Civil Lines,
1 Branch Faisalabad
2 Peoples Colony People Colony, Faisalabad

18
 Branch
3 Jinnah Colony Jinnad Colony, Faisalabad
Ayub Agricultural Research
4 AARI Branch
Institute
5 Abdullahpur Abdullahpur, Faisalabad
University Of University of Agriculture,
6
Agriculture Faisalabad
1 Corporate Branch Saddar Bazar, Peshawar
Air Headquarters
2 Air Headquarters, Peshawer Cantt
Branch
Peshawar Cantt.
3 Fakhr-e-Alam Road, Peshawer Cantt
Branch
Peshawar CityPeshawar City Branch, Abrasham
4
Branch Gran
1 Corporate Branch Corporate Branch Jinnah Road
2 Civil Secretariat Civil Secretariat, Quetta
3 City Branch --
4 Quetta Cantt Quetta Cantt.
Corporate
1 Sector C-1, Opposite Police Lines
Branch
2 Main Branch Sector B-1, Nangi
Margalla Br. Opposite 'K' Block - Pak.
1 Margalla Branch
Secretariat
Civic Center
2 Civic Center Br. G-6
Branch
G-8 Markaz -
3 P.I.M.S Branch - G8 Markaz
Offsite
G-9 Markaz
4 G-9 Markaz Branch
Branch
Central Sectt. 'S' Block Branch - Pak.
5 S Block Branch
Secretariat Complex
Pak Sectt. 'D' Block Branch - Pak.
6 D Block Branch
Secretariat Complex

19
 Foreign Office Foreign Office Branch. Constitution
7
Branch Avenue
Pak Sect 'B' Block Branch - Pak.
8 B Block Branch
Secretariat Complex
PSO Pump -
9 Industrial Area Br. H-9 - PSO Pump
Offsite
PM Secretariat
10 Prime Minister's Secretariat Branch
Branch
Super Market
11 Super Market Branch. F-6 Markaz
Branch
12 Aabpara Branch Aabpara Market Branch G-6
Islamabad Airport
13 Islamabad International Airport
Branch
Allama Iqbal Allama Iqbal Open University Branch,
14
University H-8
15 F-8 Branch F-8, Ayub Market
1 Cantt. Branch (2) Regional Office Building, Bank Road
2 GHQ Branch GHQ Branch, Rawalpindi
3 Corporate Branch Bank Road Rawalpindi Cantt.
Satellite Town Satellite Town, Rehmanabad Murree
4
Branch Road
H-128, Opposite Talia Road,
5 City Branch
Rawalpindi Cantt.
1 City Branch Gujranwala City
2 Civil Lines Branch Civil Lines, Gujranwala
3 Trust Plaza Branch Trust Plaza, model Town
Satellite Town
4 Satellite Town, Gujranwala
Branch
NBP Building Fatima Jinnah Road
1 Fatima Jinnah Road
Hyderabad
2 Market Area Branch Market Area, Hyderabad
3 Latifabad Branch Latifabad Unit 8, Hyderabad
4 Shahbaz Building Shahbaz Building, Hyderabad

20
 Wapda Colony
5 Wapda Colony, Hussainabad
Branch
6 Site Branch Site Area, Hyderabad
Bhimber Road
1 Bhimber Road, Gujrat
Branch
1 Qasim Road Branch Qasim Road, Multan Cantt.
2 Main Branch Main Branch, Chowk Hussain Agahi
Gulgasht Colony
3 Gulgasht Colony Multan
Branch
Chowk Nawan
4 Chowk Nawan Shaher, Multan
Shaher
1 Main Branch D" Block Burewala. Distt Vehari
Main Branch, Bank Road,
1 Main Branch
Muzaffarabad (AK)
Chattar Domel Chattar Domel New Sectt.
2
Branch Muzaffarabad (AK)
Civil Secretariat
3 Civil Secretariat (Old Sectt.
Branch
1 Urdu Nazar Branch City Branch, Urdu Bazar Sialkot
District Courts
2 District Courts, Kutchery Road
Branch
Opposite Eat More Resturant, Sialkot
3 Sialkot Cantt. Branch
Cantt
Gulshan Colony Gulshan, Taxila Distt Rawalpindi
1
Branch (Murree Rd)
1 GT Road Branch GT Road Gujar Khan
Aslam Market
1 Aslam Market, The Mall, Wah Cantt
Branch

21
 REGIONAL STRUCTURE

REGIONAL CHIEF
EXECUTIVE

GENERAL GENERAL GENERAL

MANAGER MANAGER
MANAGER
Administrative
Adavances, Planning, Business Wing
legal and Development
recovery wing & implementain
of Audit

22
DEPARTMENTS OF NATIONAL BANK OF PAKISTAN

Following departments are working in NBP are as follows;

• Cash Department
• Customer Service Department
• Foreign Exchange Department
• Advances and Credit Department
• Remittances Deportment
• Accounts Department
• Computer Department
• Government Department

CASH DEPARTMENT
This department consisted of three sections namely.
1. Cash Receipts
2. Token Department
3. Cash Payments

Cash Receipt Sections

In this section the cashier was receiving cash. He recorded the cash received with a pay in
slip and other documents (it necessary) and recorded it in the cash receipt register. There
were two separate types of pay-in-slips, which were used for depositing cash, checks, and
drafts. There were prescribed forms in which the information was fed. After filling the
pay-in-slip with the amount, the cash and slip both were received by the cashier who

23
entered those in the cash register and fixed a stamp on the pay-in-slip. A part of this slip
is given to the customer for his record and other was maintained with the bank.
Token Section
As the checks holders were used to go to the section. They presented the checks to the
person at the section. He checked that whether the check belonged to the same bank, the
amount in words and figures were same, check was not outdated and the signature was
there etc. Then he handled a number to the check and a token was given to the
customer/check holder.
Cash Payments
The check allotted with a number by the token department is sent to the clearing
officer/passing officer. After the proper verification of the signature of account holder’s,
cash balances and posting of that particular check to the account, the check was passed to
the cashier who ultimately called on the number fixed on the check. The customer
bearing that token number arrived at the counter. The cashier checked out the number and
paid the amount as per checks and entered number and amount in the cashbook
maintained with him.

CUSTOMER SERVICE DEPARTMENT

Customer Service Department is one of the important departments of the National Bank
of Pakistan Limited.
This department performs a variety of functions. Every customer is first being receive by
this department and is being assisted here. Functions, which are performed by Customer
Service Department include:
• Account Opening
• Account Closure
• Balance Confirmation
• Statement of Accounts
• DD/TT/PO application

24
 • Stop Payment Request
• Information about Deposit Scheme
• Cheque Books Requests, etc.
FOREIGN EXCHANGE DEPARTMENT
Foreign exchange is an important department in bank system. In the foreign exchange
department all the operations of the bank are done in the same way as in all other
departments of the bank this department also involve in deposits, remittances and
advances but the difference with other department that the foreign exchange
department deals in foreign currency rather then in local currency. For opening of
account in foreign exchange the minimum balance required is $100.This department
is just like Cash Department in local currency. In this department, the dealing is
made in foreign currency.
In National Bank of Pakistan, four currency accounts are available:
• US Dollar
• Pound Sterling
• Japanese Yen
• Euro
ADVANCES AND CREDIT DEPARTMENT
This is too much important department of National Bank of Pakistan. This department is
responsible for granting the loans to the people of different types.
Advances are of different types’
There are the following types of advances, which are given by National Bank Limited.
 Cash Finance
 Demand Finance
 Running Finance
 Agriculture Finance
 Machinery Loans
 Home Finance

25
  Other finances
Cash Finance
Cash Finance is the biggest loan given to the business loan, industrialists; its limit is in
corors and bank does require security for tins purpose. After the proper investigation and
documentation these finances are granted and genuine property is pledged as a matter of
security. These loans are taken for the purchase of stocks etc. The bank appoints its staff
of 2 to 3 persons at the place where that stock is lying.

Demand Finance
It is very wide term. It is also called long term financing. In this type of finance, a
particular limit of credit is sanctioned and credited to the account of the borrower.
Interest is charged on the total amount of credit sanctioned and for the period specified.
Advance can be granted against pledge of movable property, mortgage of immovable
property and hypothecation of stock. Total sale price of an asset consists of purchase
price of the asset. The party can obtain rebate if it makes payment before date.

Running Finance
To fulfill the day-to-day requirements of the business, Running Finance is granted to the
party. A particular limit of the credit is sanctioned to the party for a specific period. Bank
can take any security for sanctioning the limit of running finance. It is compulsory for the
party to return the amount on or before the expiry date. The main advantage of this
finance is that the party can withdraw or deposit any amount of money in it.
The rate of interest charged on running finance is equal to 12% p.a.

Agriculture Finance
The agriculture finance is granted for the purpose of agriculture development in Pakistan.
This agriculture loans are proving beneficial for the production and development of
agriculture sector.

26
The agriculture loans are granted for basically two purposes.
• Production
• Development

Production
This type of agriculture loans is granted to enhance the production of agriculture
products. The rate of interest on such loans is 12%per annum. This type of loans is
granted for purchase of seed, fertilizers and the chemicals etc.
Development
This type of agriculture loans is granted for the purpose of agriculture development.
These are given for purchase of tractors or other machinery etc. the interest rate on it
is also 12% per annum. This may be repaid in equal installments.

Machinery Loans
Certain loans are given for the purchase of the Machinery. These loans are called local
machinery manufacturing loan. The hank finances for the machinery, which is
manufactured in the Pakistan like other loans after the proper verification and
documentation and with the prior approval from the Zonal Office, these loans are given.
The bank pledges some genuine property as a security. Personal security is also required
for getting of such loans. The loan is to repay in certain installments, which includes the
mark-up also.
Normally these loans are for the period of five years and first six or three months are
exempted from the installment as the ease or as the terms and conditions may be.

Advance Salary
National Bank of Pakistan of the benefit of the employees starts the advance salary.
Under this scheme the government employee can get his fifteen months salaries in

27
advance after fulfilling the bank requirements. This is one type of loan which is given to
employees either less than fifteen salaries.
The rate of interest on advance salary is 13% per annum. This loan must necessarily be
repaid within sixty salaries in installments on monthly basis.

NBP Home Finance

National Bank of Pakistan (NBP) has announced the launch of a housing scheme to cover
all sections of the society with monthly income starting from as low as Rs. 5000/- per
month*. *(Conditions apply)

Branded as 'NBP Saibaan' (Housing for all), the scheme offers a maximum loan of Rs 10
million in accordance with the debt burden criterion. Loans are available for Home
Construction, Home Purchase and Home Improvement. For Home Improvement Loans
the maximum amount is Rs. 2.00 Million.

Home Construction and Home Purchase loans can be repaid over a period of 20 years,
whereas the repayment period for Home Improvement loan is 15 years.

The scheme was launched at a function in Karachi presided over by Mr. Shaukat Aziz,
Pakistan's Finance Minister.

What is NBP Saibaan?

NBP Saibaan is the most affordable House Financing Scheme.

You can avail now and repay over a 3 to 20 years period.

28
 • Home purchase loans up to 10 million
• Home reconstruction loans up to 10 million
• Home improvement loans up to 2.0 million (3 to 15 years)

Why NBP Saibaan?

Affordable

• Easy installment
• No surprises

Flexible

• Mark-up choices
• Grace period option

Convenient

• Structured and programmed

• Minimum approval and disbursement timing

Other finances
The other finances include the following;
 President Rozgar Scheme
 Students loans

29
The NBP President’s Rozgar Scheme

The solution of Pakistan’s 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 President’s Rozgar Scheme with a brand name of “NBP
KAROBAR”.

Initially, under the President’s Rozgar scheme, NBP will offer following products:

i) NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation)
ii) NBP Karobar Mobile General Store (without USC Franchise)
iii) NBP Karobar Transport
iv) NBP Karobar PCO
v) NBP Karobar Tele-center

i) NBP Karobar Utility Store (Under USC Franchise): The product has been designed in
collaboration with “UTILITY STORES CORPORATION OF PAKISTAN (USC)” to
provide financing facility of an average amount of Rs.100,000/- for a maximum period of
five years with grace period of three months. This is available to all eligible citizens of
Pakistan for setting-up small-scale Retail Outlet or Mobile Utility Store. The USC will
give its franchise to qualifying Pakistani citizens.

Following two financing options are available under this product:

• NBP KAROBAR Utility Store (Shop): Financing facility available to set-up a small
scale Retail Outlet (Utility Store in a shop) for purchase of furniture & fixtures. This is
also applicable on payment of security deposit / advance rent under franchise from the
USC. However, stocks will be purchased by the customer.

30
• NBP KAROBAR Mobile Utility Store: Financing facility available to purchase a 2/3
wheeler, 4 stroke Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) with
attached Loader body (Thehla type) under franchise from the USC to carry utility goods
for retail sale ideally in areas where accessibility to conventional utility stores is difficult.

ii) NBP Karobar Mobile General Store (without USC Franchise): This financing program
has been designed on the similar pattern of Mobile Utility Store. The only difference is
that the borrower will have the liberty of procuring stock/supplies/grocery items from
open market. Under this product the average loan size of Rs.100,000/- will be given for a
maximum period of five years with a grace period of three months.

iii) NBP Karobar Transport: The NBP Karobar Transport is designed to finance 2/3
wheeler, 4 stroke Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) to the
eligible citizens of Pakistan for providing less expensive environment friendly transport
facility. Under this product average loan size of Rs.100,000/- will be provided for a
maximum period of five years with a grace period of three months.

iv) NBP Karobar PCO: This product is designed to finance setting-up a PCO. NBP will
be providing financing for the purchase of Mobile/Wireless Telephone Set with
connection, Credit Balance. The average amount of financing under this product will be
Rs.5,000/- for a maximum period of two years with a grace period of three months.

v) NBP Karobar Tele-center: This product is specially designed to finance setting-up a

Tele-center. NBP will be providing financing for the purchase of Mobile/Wireless
Telephone Set with connection, Computer, Printer and Fax machine cum Photocopier etc.
to establish tele-center on a rented shop or owned premises. The average amount of
financing under this product will be Rs.50,000/- for a maximum period of two years with
a grace period of three months.

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

31
(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 year’s 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.

The scheme is being launched from designated branches of NBP, however, the
application forms will be available in all NBP branches. This scheme is expected to
provide direct and indirect jobs to the tune of approximately 5.4 million Pakistanis. The
launch date of this scheme is 06-09-2006, wherein application form will be available at
all NBP branches throughout Pakistan. The duly filled-in form will be taken back by
NBP starting 13th September, 2006.

NBP is the largest bank of Pakistan with the customer base of over 10 million account
holders. It has the largest borrower base exceeding one million customers and growing.
Compared to the average of its peers, for 2003, NBP was bigger by 53% in asset size,
100% in pre-tax profit, 25% in Return to Assets, 23% on Return on Equity & 114% in
Earning Per Share. The pre-tax profit which was Rs. 520 million in 1999 has now
increased to such levels that the ‘Banker’s Magazine’ has declared NBP as the bank with
the highest Return on Capital in Asia and No. 8 in the world. This is not just one
recognition by the independent international agencies, the bank was awarded bank of the
Year award for 2001, 2002, 2004 & 2005 by the world renowned ‘The Banker
Magazine’. NBP is the ‘Nation’s Bank’ with an international recognition and acclaim in
which both the state and nation can invest their trust and pride

32
Student’s Loans
The national bank of Pakistan is also offering loans to the students for their study
purpose. The terms and conditions are flexible for the students.

REMITTANCES DEPARMENT

DD/TT/PO’s
Customers Service Staff of the National Bank Limited assists its client who wants to have
Demand Draft, Telegraphic Transfer, or Pay Order prepared for them.
Customer Service Officers fill the application on their behalf and writes on the
application the bank charges for the insurance of DD’s, TT’s, or Pay Orders.

These applications are then handed over to the Customer Service Operations Department
who prepared the required documents of funds transfer. After the preparation

of DD/TT/PO’s, they are handed over to the Customer Service Officer who delivers them
to the customers.

ACCOUNT DEPARTMENT

This department is responsible for accounts of customers. Different types of accounts are
opened by National Bank of Pakistan. Following are the main accounts open end by the
bank.

• Current Account
• PLS Sharing
• Saving Account
• Term Deposits Accounts

33
Current Account
A current account was a running account, which is continuously in operation. The
customers to transfer money or to withdraw deposits on demand were using these
accounts. The current account of the customer was being maintained in a current account
ledger by the branch. The customers could withdraw the current deposits without prior
notice to the branch. The branch had to honor the cheque provided by the current account
holder, provided that the amount of the Cheque should be in limit of the account. The
customer who needed a liquid balance had to maintained a current deposit in the branch.
The bank did not usually pay any interest on these deposits, as they can be withdrawn
without notice.
PLS Sharing Accounts
The National Bank of Pakistan also opens the PLS Sharing accounts. The purpose of this
account is to share the customers with the profit and loss of the amount deposited. This
type of account is suitable in Islamic point of view.
Saving Account
The saving account are important sources of funds for the banks, it was opened to
encourage thrift among the persons of small means. The school children, workers,
employees of firms usually kept their savings by opening savings accounts in the bank.
The bank pays interest on the minimum monthly balance of the depositors and of June
and December every year. The depositors were normally allowed to withdraw a limited
amount of money only twice a week. Customer wanted to withdraw a large sum of
money from his account, he than had to give a prior notice of 7 to 5 days in writing to the
branch.
Some important characteristics of the PLS saving account;
 A credit balance of Rs.100 was eligible for sharing profit and loss of the
bank.
 Withdrawal could only be made by means of Cheque issued by the bank.
 Statement of account was supplied to the account holder at periodical
intervals.

34
  The profit and loss earned or incurred on the PLS Saving account was
credit/debited as determined by the head office on the basis of its
networking result at the end of each half/full year.

Fixed or Time Deposits

Fixed or time deposits are considered as the major sources of funds for the commercial
bank. Fixed or term deposits as the name implies are deposits kept with the bank for
certain period of time. They are not payable on demand like the current deposits. The
depositor can only withdraw them after the specified time period, which ordinally varies,
from three months to five years. The persons with huge and extra amount deposit their
money with bank in such accounts to earn for specified period. The rate of interest on the
fixed deposit is higher than the saving deposits and varies with the time of deposits. The
longer the duration, for which the amount is kept, the higher is the rate of interest and
vice versa.
Term Deposit Receipts or Fixed Receipts is in the denomination of months. Profits
given by National Bank on these deposits are higher than Short Notice Deposits (SND).
These are available in the following maturity periods.

Period Expected Profit

Three months 1.50%
Six months 1.80%
One year 2.00%
Two years 2.30%
Three years 2.60%
Five years 3.25%
Over five years 6.00%

35
Categories of Accounts
Following are the main categories of accounts.
i). Individual Account
ii). Joint Account
iii). Company Account
iv). Club, Society, Association or Trust A/C
v). Partnership Account
vi). Foreign Currency Account
vii). PLS Saving Account

i). Individual Account:

Any account or proprietor of a business can open an individual account in National Bank
Limited.
PLS (Profit & Loss Sharing) Saving account can be opened without any minimum
requirement.
The client has to the following documents to the bank in order to open an individual
account with the bank.
o One copy of National Identity Card
o Zakat Exemption Certificate (if Zakat deduction column in the applicant
form is marked, “No”)
The customer has to fill the account opening form and have to put his signature at the
signature specimen cards and also have to fill the Cheque Book Application form. After
the approval from the branch manager, the bank opens a new individual account.

II). Joint Account

When more than one person opens a single account, it is called joint account. The names
of both persons are written on the title of the account at the signature specimen cards.

36
One person cannot operate joint account. Both persons have to put their signatures on the
Cheque in order to encash the Cheque. Both the persons involved in joint account have to
submit the copies of their National Identity Cards to the bank.

iii). Company Account

Public as well as Private Limited companies can open a bank account at the name of the
company. They have to submit the following documents to the bank in order to open an
account at their company’s name.
 One copy of Certificate of Incorporation
 Memorandum of Association and Article of Association
 List of Directors of the Company
 Copy of Board Resolution
 The Company’s certificate of Commencement of Business (In case of Public
Limited Company)
 Signature Specimen Cards.

iv). Club, Society, Association or Trust

any club, association or Trust can open an bank account at their own name. The
requirements of the bank regarding this type of account are:
 Copy of the rules of the club/ society
 Copy of office Bearers
 Certificate Copy of Resolution
 Copy of NIC
 Name of person authorized to sign, their office, position and
specimen signature.

37
v). Partnership account
Partnership account can also be opened with the National Bank Limited. Account title
will be name of the partnership firm.
Partners who are willing to become the authorized signature will have to sign the account
opening form of the bank. Other requirements are:
 Copy of partnership deed
 Copy of Registration Certificate
 Specimen Signature Cards.

vi). Foreign Currency Account

Foreign currency account can also be opened with the National Bank Limited. But now a
day there are some restrictions imposed by the state bank of Pakistan (SBP) on the
Foreign Currency Account.
Now, only new foreign currency current account can be opened at National Bank
Limited.

vii). PLS Saving

PLS Saving account can be opened. National Bank Limited is offering ROZANA
MUNAFA Account (National Saving a/c), which can be opened with the minimum
balance of Rs. 25,000.
FUNCTIONS
The department performs the following functions:
• Account opening
• Account closing
• Inward/outward remittance
• Issuance of traveler cheques
• Other Functions
ACCOUNT OPENING

38
Account opening procedure at National Bank Limited is quiet simple and quick.
A person who wants to open an account at National Bank Limited has to fill an account
opening application form provided by the Bank.
• Personal Service Officer (PSO) is also available in the customer service
department assists the customer in filling the account opening form.
• Following requirement are to be fulfilled to open an account.
Terms and conditions:
• Account opening requires two things
• 1) National id card of the customer and introducer
• 2) Introducer

Customer:
Customer is the person who comes with the purpose of opening the account.

Introducer:
Introducer is a person having the account in same branch, and gives guarantee about
the customer. If the introducer is not proper than state bank charges RS 5000/- per
head from that employee of the bank who has opened the account of the customer on
the request of the introducer.
A prospective Account Holder of National Bank Limited needs an introducer who
should also be and existing account holder of the same Bank.
Name, Account Number and Signature of the introducer is required on the
application form which are to filled by the prospective Account Holder e.g. Cheque
Book, application form, Signature specimen card etc.
Account opening form contains the columns requiring the personal information of the
customer.

39
Closing of Account
There are number of reasons that an account is closed by the bank. Some of the more
common reasons are:
 At the client’s own request
 Death of an account holder
 Bankruptcy of an account holder
 Liquidation of a company, etc.

Inward /outward Remittances

The National Bank of Pakistan also providing the facility of the inward or outward
remittances. This facility is more convenient for the customers.

Traveler Cheques
NBP Pak Rupee traveler Cheque is better than cash, because you get the power to
purchase as well as your money can be refunded in case you would loss your cheque. It is
a safe and convenient way of purchase.

Other Functions
Other functions include;
 Utility functions
 SWIF Centers
 ATM
 Hajj Scheme

Utility Function
For the convenience of the customer, National Bank of Pakistan also collects different
kinds of utility bills such as:
• Electricity Bills,Sui-Gas Bills,Telephone Bills etc.

40
SWIFT of NBP
SWIFT stands for Society For Worldwide Interbank Financial Telecommunication. It has
been introducing to speed up the remittances in the home country. The system is
composed of computer test keys, for the purpose to eliminate the manual application of
tests which often cause the delay in the payments. Over 450 branches are drawing
remittances through SWIFT.

41
NBP CASH CARD

Guidelines for Account Holders Using Credit / Debit / Smart Cards

The user of ATM must follow these guidelines for your safety as you enjoy the
convenience of technology. However these guidelines are general; therefore, specific
precautions may be taken as warranted by the situation and technology.

Choosing PIN
1) Do not use a number or numbers that can obviously be associated with you -for
instance your telephone number, birthday, your street number, driving license
number or popular number sequences (such as 786 or 2005 or 1111).
2) Ideally choose a random combination of numbers – this is the hardest for a
criminal to guess. If this is difficult for you to remember then perhaps use a
combination of double numbers e.g.99 along with two thers that have some meaning
for you.
3) Change PIN number at frequent intervals.
Keeping Your PIN a Secret
1) Do not allow anyone else to use your card, PIN or other security information.
2) Always memorize your PIN and other security information. If the PIN you are
provided with is difficult to remember, change it to something more memorable at a
cash machine as soon as possible.
3) Always take reasonable steps to keep your card safe and your PIN secret at all
times. Neither your bank nor any agency is authorized to ask you to disclose your
PIN.
4) Never write down or record your PIN or other security information on card or at a
place easily accessible by others.
Precautions While Using ATMs (Automated Teller Machines)
Automated Teller Machines (ATMs) provide a fast and convenient banking
alternative for account holders. You can bank when you want and where ever you
want because locations are so convenient. In order to mitigate risks of theft & frauds
we're providing these ATM safety tips to help protect you and your account.
Remember, ATM theft can occur in two ways;
a) Unauthorized withdrawals from an account or

42
b) The physical theft of cash as a person completes a transaction.
The following advice for cardholders using cash machines will help minimize the
chances of becoming a victim of such incidences.
Choosing an ATM
1) Always observe your surroundings before conducting an ATM transaction. If you
see anyone or anything that appears to be suspicious, cancel your transaction and
leave the area at once. If there is anything unusual about the cash machine, or there
are signs of tampering, do not use the machine and report it to the bank immediately.
2) After dark, only use ATMs that are well-lighted.
3) If possible, choose a machine in a busy area. A heavily trafficked location means
additional security.
4) If you are followed after using an ATM, seek a place where people, activity and
security can be found.
Using an ATM
1) Use your body to block the view of your transaction. Especially as you enter your
PIN and take your cash. If necessary, ask a person to leave, even if that person is just
curious. If the ATM is in use, give the person using the machine the same privacy
you expect. Allow them to move away from the ATM before you approach the
machine.
2) Do not accept help from strangers and never allow yourself to be distracted.
3) A number of banks have established call centers to provide customer support.
Inform them in case you have any problem and obtain a complaint number.
4) While paying the utility bills on ATM check the transactions details with the billed
amount, customer ID on original bill. Keep the transaction slip safe so that it can be
referred to if the paid amount appears as arrears in next billing cycle.
5) Focus your attention on ATM screen and take due care in the selection of buttons
(touch the parallel area in case the screen is sensor one) to ensure the execution of
desired transaction / funds transfer. Before pressing / touching the keyboard button
enter the required information cautiously. If you pressed / touched wrong button then
transaction reversal is not possible.
Leaving an ATM
1) After completing transaction, remember to take your card back.
2) Once you have completed a transaction, discreetly put your money and card in
your pocket before leaving the cash machine. Do not count cash at ATM machine.

43
 3) If the cash machine does not return your card, report its loss immediately to your
bank.
4) Don't discard your receipts and mini-statements or balance inquiry slips which
contain important information. You get a receipt every time you make an ATM
transaction.

HAJJ SCHEME
The National Bank of Pakistan has introduces Hajj Scheme. This is done every year for
the purpose to provide the people the facility. Under this scheme the people from all over
the country submit their applications in National Bank of Pakistan. The successful
candidates are informed, while the applications of unsuccessful persons are refunded
back to them.

44
SECURITIES AGAINST LOANS
There are following important methods to charge loans;
Pledge
Mortgage
Guarantee
Hypothecation

PLEDGE
Pledge is very important method to charge the Scan. Pledge is an actual delivery of the
chattels (movable properties) as security for the loan to the bank,. Transferring the goods
from the owner’s godown to banker’s godowns may make the delivery of goods or
handing over the keys of the godown or posting a hank. Chowkidar or delivering the
documents of title relating goods to the bank. A pledge as a bailment of goods as security
for the payment of debt or performance of promise. Ownership of the property remains
with the pledger (borrower). The main advantages claimed by the bank for advancing
against goods are as under;

Tangible Security
The banks can safely lend against goods to the customers as they have some thing
tangible in their possession to dispose of, in cause of debtor refuse to pay or
unnecessarily delay the payments.

Less Fluctuation in Price

If the produced goods pledged with banks are necessaries of life, their price is not likely
to wide fluctuation in normal time, as such; they offer convenient security for advances.

45
Seasonal Advances
Another important advantage claimed for advancing against produced goods is that the
loan is normally seasonal and therefore for a short period. The banker is not to lock up its
funds for along period of time as is in case of advances against immovable property.

MORTGAGE
The mortgage is a kind of written contract between the borrower called mortgager and
lender called mortgagee. The mortgager gives an assurance to the creditor for the legal or
equitable interest in property as security for the discharge of debt, subject to the provision
that on repayment of the debt, the property shall be reverted to the borrower.

Kinds of Mortgage
There are many types of mortgages

Simple mortgage;
In simple mortgage, the mortgager (borrower) keeps the possession of the property
offered as security. The mortgager is personally responsible for the discharge of debt. In
case the mortgager defaults to repay the money, the mortgagee (creditor) has the right to
obtain decree for the sale of mortgaged property to recover the Scan.

Mortgage by Conditional Sale

It is that mortgage where the mortgager sells the property to the mortgagee on the
condition that on repayment of the loan, the property will be restored to him by the
mortgagee (creditor).
In case the mortgager fails to pay off the loan, the mortgagee obtains the absolute
proprietorship of the property. Mortgage by conditional sale is not a favourite security
with the bankers as it is a risky and cumbersome.
Mortgage by Deposit of Title Deeds;

46
MDTD is also called an equitable mortgage. In this mortgage, the mortgager deposits the
title deeds of the property with the mortgagee as security. Equitable mortgage is
considered a weaker mortgage from the point of view of banker (mortgage).

GUARANTEE
A guarantee is an undertaking given by a person to be answerable for the debt, default or
miscarriage of another person. Contract to perform the promise are discharge the liability
of a third person in case of default. Guarantee as security for the banker’s advances arises
only when the borrower is not able to satisfy the banker of his creditworthiness. The
banker will not ask for guarantee if acceptable collateral securities are provided to him.

Characteristics
The main characteristics of the guarantee are as under;
a). Three Parties
There must be three parties in the guarantee
Principal Debtors
Principal Creditors
Guarantor
b). Principal Debtor
The primary liability to pay the debts falls on the original debtor. The guarantor will pay
only when the principal fails to whole or pan of the agreed debt.
c). No Interest Of the Guarantor in Contract
The guarantor is answerable for the loan if the debtor defaults and has no interest in
contract between the Principal creditor and the principal debtor.
Card B
Cash

47
HYPOTHECATION

Legal transactions whereby goods may be made available as security for a debt without
transferring property or the possession to the lender. The advance of loans against goods
without taking their possessions is very risky on two main grounds. One, as the goods are
in the possession of the owner, the borrower may take out the goods without informing
the bank. Secondly, the bank does not has a legal claim as it does not have a valid charge
over the goods

A) Rights of the Bank.

In case of hypothecated goods, the bank has the right to inspect the
goodown. It can also demand periodic report of the stock.

The hypothecated goods are to be insured by the borrower, in case these are not
insured, the bank has the right to get them insured and recover the insurance charges from
borrower.

The bank has the right to ask the borrower to maintain a balance of goods, which in
value is not less than the amount advanced to it.

48
FINANCIAL HIGHLIGHTS (2004)

Authorized Capital 5,000

Paid-up Capital 4,924

Sharholders' Equity and Reserves 42,936

Deposits 465,572

Advances-net 221,444

Investments-net 144,736

Total Assets 549,741

Pre-Tax Profit 12025

After-Tax Profit 6,243

No. of Branches 1226

No. of Employees
13,745

49
The National Bank of Pakistan Branch is a main branch of the area. The bank also
performing very well. This branch is providing a major contribution like other branches.
This is located in. The branch is serving the general public by providing advances in
different field.

Some information about this branch is given as I did my internship in this branch.

BRANCH INFORMATION (

Staff Strength

Total strength 13

Officers 11

Others 02

Bank Employees
Officer Grade I
Officer Grade II
Officer Grade III
Assistants
Guard
Drivers

Officer Staff
Mr. Muhammad Asghar (Branch Manager)
Mr.Riaz Hussaion (Manager Operations)
Mr. M Shafique

50
Mr.Hashmatullah
Mr. Lateef Hussain
Mr. Abdul Majeed
Mr Hasnain
Mr Faiz Muhammad
Mr Abdul Karim
Mr.Kareem Bakhsh
Mr Fiaz Muhammad
N JUNE30,2006.
Rs. (millions)
Total Deposits 309.979
Advances:
Running Finance 2.599
Demand Finance 11.783
Agri-finance 32.995
Advance Salary 83.076
Total Advances 130.453
Total Asset 329.582
Profit 7.117

Information system
Mechanism is not just a cliché in modern times; it is indeed the most powerful medium to
enter in to the 21st century with honor and dignity. To meet he challenges of the time, the
National Bank developed a comprehensive plan to mechanize all the operations of the
bank may it be the head office level or at branch level.
The National Bank of is also using modern high speed processors computers for
information.

51
Four high speed pentium4 computers are used for following purpose;
 Accounts Records
• PLS Saving
• Current Account
• NIDA
• Advance Salary Account.
 Deposits Records
 Advance Records
 Performa
 Branch other information

52
CAREERS AT NBP

Why work in NBP?

1) NBP maintains its position as Pakistan’s Premier Bank with a network of over 1100
branches locally, 15 overseas branches, one Subsidiary at Almaty (Kazakhstan) and four
Representative Offices at Tashkent (Uzbekistan), Baku (Azerbaijan), Beijing (China) and
Chicago (USA).

2) NBP also have a Joint Venture with UBL at U.K., with the name of Pakistan
International Bank (UK) Ltd., with seven branches at Main Branch, London, Manchester
Branch, Glasgow Branch, Bradford Branch, Sheffield Branch, Birmingham Branch and
Knightsbridge Branch (London)

3) The Bank currently has an employee has of over 15,000 employees world wide. The
various departments include:

Consumer Banking – Corporate Finance – Investment Banking – Agricultural Banking –

Transactional Banking – Operations – Software Development and Automation –
Financial Control – Treasury – Internal Audit – Risk Management & Credit – Economic
& Business research – Training & Development – Strategic Planning – Human Resources

1) Change Management Program: NBP has started an ambitious Change Management

Program to further train its employees to meet the challenges of present day requirements

2) Training of new staff: Training and development are the core issues of HR, which will
ultimately improve our customer service and help us attain the standard of a progressive
bank

3) Benefits: Besides a competitive financial package, we offer excellent working

conditions, job satisfaction, superior leadership, and a conducive environment for growth

53
What we look for when recruiting personnel:

• Team players with excellent interpersonal skills

• Knowledge and use of information technology
• Strong analytical and problem solving skills
• Excellent written and verbal communication skills in English

54
ANALYSIS OF FINANCIAL STATEMENTS

 VERTICAL

 HORIZONTAL

55
 National Bank of Pakistan
Balance Sheet
As on December 31, 2004
Rupees in ‘000’

ASSETS 2004 2003

Cash and balances with treasury banks 94,446,552 59,420,502
Balances with other banks 49,784,884 24,154,070
Lending to financial institutions 10,511,322 29,937,857
Investments 144,735,672 166,195,619
Advances 221,443,963 161,265,760
other assets 18,339,514 19,059,031
Operating fixed assets 9,202,969 8,939,483
Deferred assets 1,275,949
Total Assets 549,740,825 468,972,322

LIABILITIES
Bills payable 7,214,671 5,496,738
Borrowings from financial institutions 11,084,790 16,559,673
Deposits and other accounts 465,571,717 395,492,331
Sub-ordinate loans
Liabilities against assets subject to
financial lease 17,058 41,117
Other liabilities 22,916,147 23,192,585
Deferred tax Liabilities 595,864
Total Liabilities 506,804,383 441,378,308

CAPITAL
Share capital 4,924,106 4,103,422
Reserves 11,119,613 8,133,312
Unappreciated profit 9,213,565 5,897,163
Surplus on revaluation of assets 17,679,158 9,450,117
Total Capital 42,936,442 27,584,014
Total Liabilities And Capital 549,740,825 468,962,322

56
 National Bank of Pakistan
Balance Sheet
As on December 31, 2004
Vertical Analysis
ASSETS 2004 2003
Cash and balances with treasury banks 17.180% 12.670%
Balances with other banks 9.056% 5.150%
Lending to financial institutions 1.912% 6.384%
Investments 26.328% 35.438%
Advances 40.281% 34.387%
Other assets 3.336% 4.0640%
Operating fixed assets 1.674% 1.906%
Deferred assets 0.232%
TOTAL ASSETS 100% 100%

LIABILITIES
Bills payable 1.312% 1.172%
Borrowings from financial institutions 2.016% 3.531%
Deposits and other accounts 84.689% 84.332%
Sub-ordinate loans
Liabilities against assets subject to
financial lease 0.0031% 0.00877%
Other liabilities 4.168% 4.945%
Deferred tax Liabilities 0.127%
TOTAL LIABILITIES 92.189% 94.116%

CAPITAL
Share capital 0.896% 0.8750%
Reserves 2.023% 1.734%
Unappreciated profit 1.676% 1.257%
Surplus on revaluation of assets 3.216% 2.015%
TOTAL CAPITAL 7.810% 5.882%
TOTAL LIABILITIES AND
CAPITAL 100% 100%

57
 National Bank of Pakistan
Balance Sheet
As on December 31, 2004
Horizontal Analysis

ASSETS 2004 2003 Change%

cash and balances with treasury banks 158.94% 100% 58.94
balances with other banks 206.11% 100% 106.11
lending to financial institutions 35.11% 100% (64.89)
investments 87.08% 100% (12.92)
Advances 137.31% 100% 37.31
other assets 96.22% 100% (3.78)
operating fixed assets 102.94% 100% 2.94
deferred assets
TOTAL ASSETS 117.22% 100% 17.22

LIABILITIES
bills payable 131.25% 100% 31.25
borrowings from financial institutions 66.93% 100% (33.07)
deposits and other accounts 117.72% 100% 17.72
sub-ordinate loans
liabilities against assets subject to financial
lease 41.48% 100% (58.52)
other liabilities 98.80% 100% (1.20)
deferred tax Liabilities
TOTAL LIABILITIES 114.82% 100% 14.82

CAPITAL
Share capital 119.98% 100% 19.98
Reserves 136.71% 100% 36.71
unappropriated profit 156.23% 100% 56.23
Surplus on revaluation of assets 187.07% 100% 87.07
TOTAL CAPITAL 155.65% 100% 55.65
TOTAL LIABILITIES AND CAPITAL 117.22% 100% 17.22

58
National Bank Of Pakistan
Profit And Loss Account

59
 For The Year Ended December 31, 2004

Profit Available for Appropriation 12,185,588 7,650,586

Appropriation
Transfer to:
Statutory reserves -1,248,586 -419,811
Capital reserves
MARK-UP/RETURN/INTEREST EARNED 2004 2003
Revenue reserves
Mark-up/return/interest earned 20,947,333 19,452,317
Reserves for Issue of bonus
Mark-up/return/interest shares@20%
expense -984,821
6,559,398 -820,684
6,735,579
(2003; 20%)
Net mark-up/interest income 14,387,935 12,716,738
Proposed cash dividend Rs.1.50 per
Provision against non-performing share
advances -738,616
1,515,354 -512,928
1,684,777
(2003: Rs.1.25
Provision per share)in the value of investment
for diminution 185,707 459,523
Provision against off balance sheet obligation -2,972,023
14,297 -1,753,423
474,743
Unappropriated profit
Bad debts written carried forward
off directly 9,213,565
32,807 5,897,163
1,748,165 2,619,043
Basic/diluted EPS (Rupees)
Net mark-up/interest income after provision 12.68
12,639,770 8.53
10,097,695

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 5,099,195 3,260,863
Dividend income 1,273,863 1,126,742
Income from dealing in foreign currencies 1,008,988 710,726
Share of profit from a joint venture 47,557 108
Other income 875,113 2,159,800
Total non mark-up/interest income 8,304,716 7,248,239
20,944,486 17,345,934

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 8,878,801 8,280,878
Other provision/write offs 32,243 33,454
Other charges 8,284 22,894
Total non mark-up/interest expenses 8,919,328 8,337,226
Extraordinary Items

Profit before Tax 12,025,158 9,008,708

Taxation -Current 4,950,000 4,650,000
-Prior year(s) 847,958 1,439,444
-Deferred -15,729 -1,278,839
5,782,229 4,810,605
Profit after Tax 6,242,929 4,198,103
Unappropiated profit brought forward 5,897,163 3,404,593
Transfer from surplus on revaluation of fixed assets 45,496 47,890
5,942,659 3,452,483

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National Bank Of Pakistan
Profit And Loss Account

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 For The Year Ended December 31, 2004
Horizontal Analysis

MARK-UP/RETURN/INTEREST EARNED 2004 2003 Change

Mark-up/return/interest earned 108% 100% 8%
Mark-up/return/interest expense 97% 100% -3%
Net mark-up/interest income 113% 100% 13%
Provision against non-performing advances 90% 100% -10%
Provision for diminution in the value of investment 40% 100% -60%
Provision against off balance sheet obligation 3% 100% -97%
Bad debts written off directly
67% 100% -33%
Net mark-up/interest income after provision 125% 100% 25%

NON MARK-UP/INTEREST INCOME

Fee, commission and brokerage income 156% 100% 56%
Dividend income 113% 100% 13%
Income from dealing in foreign currencies 142% 100% 42%
Share of profit from a joint venture 440% 100% 340%
Other income 41% 100% -59%
Total non mark-up/interest income 115% 100% 15%
121% 100% 21%

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 107% 100% 7%
Other provision/write offs 96% 100% -4%
Other charges 36% 100% -64%
Total non mark-up/interest expenses 107% 100% 7%
Extraordinary Items

Profit before Tax 133% 100% 33%

Taxation -Current 106% 100% 6%
-Prior year(s) 59% 100% -41%
-Deferred 1% 100% -99%
120% 100% 20%
Profit after Tax 149% 100% 49%
Unappropiated profit brought forward 173% 100% 73%
Transfer from surplus on revaluation of fixed assets 95% 100% -5%
172% 100% 72%

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Profit Available for Appropriation 159% 100% 59%
Appropriation
Transfer to:
Statutory reserves 297% 100% 197%
Capital reserves
Revenue reserves
Reserves for Issue of bonus shares@20%
(2003; 20%) 120% 100% 20%
Proposed cash dividend Rs.1.50 per share
(2003: Rs.1.25 per share) 144% 100% 44%
169% 100% 69%
Unappropriated profit carried forward 156% 100% 56%

Basic/diluted EPS (Rupees) 149% 100% 49%

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 INTERPRETATION OF ALALYSIS
(Horizontal, vertical)

Interpretation of Vertical Analysis of Balance Sheet

 Cash balances increased from 2003 to 2004, this increase is with respect to total
assets. So the increase in cash balance means more amount is deposited into bank.
The more deposits is the direction of better performance and people are attracting.
 The lending decreased from 6% of the total assets of 2003 to approximately 2% of
the total assets of 2004.
 The earning assets increased by the investment decreased in 2004, with their
respective assets.
 Borrowing from other financial institutions decreased. And the deposits showed
slight increase.
 Share capital increased from 87% to 89% in 2004, and the reserves increased
from 1.7 to 2% with their respective total assets. And other liabilities showed
slight decrease.

Interpretation of Horizontal Analysis Balance Sheet

 The cash balances increased from with a high level in 2004. The previous year
cash balances were less than the 2004. The cash balances increased by 58%.
 The investment and the lending assets decreased but the advances increased in
2004.
 The total assets were increased by 17.22% in 2004, which is showing better
performance.
 The liabilities against assets subject to financial lease decreased by 58%.

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  Borrowings from other financial institutions decreased by 33% and other
liabilities decreased with a slight change.
 The share capital increased by 19.98% in 2004, while the reserves increased by
36.71% in 2004.

Interpretation of Horizontal analysis of Profit and Loss Account

 The net mark-up/ interest income increased from 2003 to 2004, it has increased by
13% in 2004, which is a positive sign for the bank. It means that the bank income
increased.
 The net mark-up/ interest income after provision increased by25% in 2004.
 The
 The non mark-up/interest income increased by 15 %.
 The Administrative expenses increased by 7%, which should reduce.
 The after tax profit of the bank has increased. It has increased with 73%. So, it is
also beneficial and showing good results.
 The diluted Earning per Share increased by 49% which is showing better result.
The EPS increased means the profit increased.

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OTHER RATIOS

Some other ratios are also given to show the financial position of the bank.

 Earning Assets to total Assets

=555,390,575/784,226,986
=0.7082

 Return to Earning Assets

=6,242,929/555,390,575
=0.0112406

 Interest Margin to Average Earning Assets

=14,387,935/555,390,575
=0.025906

 Earning Capital to Average Total Assets

=22,162,086/784,226,986

=0.08226

 Deposits To Capital
=19,364,627/22,162,086
=0.8738

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  Loans to Deposits
=25,480,251/19,364,627
=1.31582

INTERPRETATION OF FINANCIAL RATIOS

 Earning Assets to total Assets

From the above calculated values it is found that the earning assets over total assets
are approximately 70.82 or 71%. This is showing the better results. It means that the
71% assets are earning.

 Return to Earning Assets

The return to earning assets showing the profit on earning assets only . It is showing
that the profit on total earning assets is 1.12%.

 Interest Margin to Average Earning Assets

The interest margin the difference between the expense and interest income , here the
interest income is greater than expense. In this case the interest margin to average
earning assets is 2.59, which is better.

 Earning Capital to Average Total Assets

The earning capital to average total assets is 2.226, which is better because it is
contributing to earning.

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  Deposits To Capital
The deposit to capital is 87.38%. it is a better result as 87.38% are the deposits as
compared to capital.

 Loans to Deposits
The loans are greater than deposits. As loans are greater 31% from the deposits. It is
the sign of better performance.

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SWOT ANALYSIS

STRENGTHS
 NBP one of the largest financial institutions of Pakistan with approximately ten
million of customer base NBP holds high share of time and demand deposits in the
country. Local currency deposits comprise about 70% of bank's total deposits while
foreign currency deposits account for the rest.
 NBP has an extensive domestic branch network of 1226 (according to the latest data)
branches located all over Pakistan. The Bank also has a presence in 16 international
locations including the USA, United Kingdom, Europe and the Far East.
 NBP cash provision as percentage of non performing loans equal to 60% this
coverage factor for the non performing loans is the highest amongst the nationalized
commercial bank.
 NBP is working as right arm government of Pakistan as it is responsible for all claims
of government for recovery as well as payment. All depositor of NBP are in relief that
their money security is guaranteed by government of Pakistan. So, being a
government bank it is more reliable for the customers.
 It acts as an agent of the Central Bank wherever the State Bank does not have its own
Branch.

WEAKNESSES
 The National Bank of Pakistan has not competent staff at branch level, so this
drawback leads to serious consequences.
 NBP staff especially at lower considers their work as burden. They usually waste time
in other task a part in performing their duty. Using government property for there
own need. They are reluctant to accept change brought by latest restructuring efforts.

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 The general out look and interior layout of branches are not as required according to
modern banking
 NBP bearing up large burden in running those branches, which are not producing any
income but keep on adding expenditure.
 NBP is relying on its traditional sources of income it has not taken benefit from
innovation in banking like introducing retail banking or consumer banking and using
any type of scheme to generate more deposits and producing more advances. Further,
more don’t even continue its credit card due mismanagement and lack of control.
 NBP is far behind in offering modern banking facility like automated teller machines
then other commercial bank in Pakistan as only eighteen branches in all over country
have this facility.
 NBP has only forty-four on line branches. While from remaining branches data
gathering is time consuming, and not fool proof. Quantum of settlement within
different branches is pending because of this updating daily record is becoming very
difficult.
 Customers have to fallow long lengthy procedure for opening of account as well
applying for debt. Which discourage most of the people to invest in NBP.
 In NBP, most of the time merit not has importance in hiring of employees. Such
practices are black spot on the face of bank and resulted big losses and fraudulent acts
by NBP own employees.
 As National Bank of Pakistan is the government bank, more people are attracted but
the staff becomes unable to satisfy each and every person. In this way customers feel
inconvenient.
 The environment of the bank is not so good, the employees of the bank feel boredom
and it will not be easy for them to work in better way.

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OPPORTUNITIES
Reorganizing efforts going on in the NBP has open many opportunities for NBP to grow.
NBP current management has boarder vision. They have taken steps to improve customer
services, streamline internal procedure and creating a delectating climate for technology
initiative.
To achieve above mention objective they have created operation group
 New highly qualified and skilled personals are to be hired through proper recruitment
channel.
 Management Information system can be improved by using high quality and high-
speed processors for this purpose.
 Starting of the retail banking initial working.
 Setting of target for of making at least 300 branches country wide on line.
 Closing of all those branches, which are burden on NBP.
 Management to offer specialized services to major corporate including advisory and
debt syndication introduces the concept of relationship manager.
 Comprehensive training programs has been develop to up grade the core banking
skills of the existing staff as well as integrate high quality hiring.
 To improve the motivation of staff a merit-based culture is being promoted. Through
overhauling the manpower recruitment preservation and performance appraisal
system.
These actions taken by current management provide a great opportunity for NBP for
making it future prosper and can make NBP not less than any modern commercialize
bank in Pakistan.

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THREATS
Following are the major threats which national bank of Pakistan is facing:
 Major threats NBP facing is from its competitor especially from denationalized
commercial bank. In which MCB is on the top of the list, The Bank provides 24 hour
banking convenience with the largest ATM network in Pakistan covering 15 cities
with over 100 ATM locations.
 Retail banking and consumer banking resulting in the products such as credit cards,
housing finance and automobile finance lending to small individual consumers, and
purchases of automobiles, housing, and consumer goods are generally made on a cash
basis. These are causing another threat, if not counter will result in significance loss
of customers
 Recently banks and other financial institutions have introduced innovative schemes to
attract deposits, like gift cheque scheme by MCB. These schemes offer prizes on
short and long term fixed deposits, through lucky draws.
 Now banks are using technology which covers the distance no matter how far away
any one, through a satellite based, on-line real-time banking system and by offering
telephone banking, electronic funds transfer, E-Banking and other modern facilities.

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SUGGESTIONS

 Customers are main things to be considered, the bank should be aware about its
customers needs and should give much more attention on their problems to satisfy
them.
 NBP major fault is that wasn’t keep its pace with on going changing in banking
industry unlike other bank. Now this bank combining all it power and trying to
approach other banks.
 Latest reorganizing efforts are necessary to make it cost effective also making its
facility accordingly to modern banking. These must continue.
 Bank management has to put its all effort to change the prevailing culture of the bank
and to put the foundation stone of business oriented culture. In which employees give
important to the bank and its customer.
 To save the time of the customers and other clients, bank should adopt computerized
system for book keeping and other filling systems. It will increase the efficiency of
the bank. I know that there are some branches, which are computerized, but most of
the branches in various cities of the country are not computerized. So the bank should
mechanize all its branches in the country.
 To attract the customer in the future NBP have to make extensive effort to give
facilities of retail and consumer banking. Plus the technologies in the banking, which
will be necessary for future banking is another week area, need to be stressed.
 The outlook and interior lay out of the branches is another thing, which needs to be
improved.
 The procedure of taking services from the bank must be made easier and straight
forward not involving long difficult procedure for simple task.

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 The billing system of national bank of Pakistan must be improved to facilitate the
customers and workers. The work should be divided among the staff e.g. collection of
bills, countering of cash and then entry of these.
 Bank should adopt such an induction plan that when a customer opens his account
with the bank, he should be supplied with a booklet which enables him to know the
procedure of filling the cheques and pay-in-slip etc. It will save a lot of time of the
bank staff afterward during of the conduct of the account of that customer.
 Bank should launch advertising campaigns through out the year to promote the habits
of savings in the people. Bank should open more branches in the remote areas of the
country to get deposits and idle resources. Bank should provide similar facilities to all
its branches in big cities. The standard of service and other facilities are far better as
compared to smaller cities.
To remain in the market bank need to be vigilant in the eyes of customer. One way is
through promotion efforts, so that people aware about he services of the banking and any
addition which the bank as made in the portfolio of its services.

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 REFERENCES

WEB REFERENCES
 www.nbp.com.pk
 www.google.com.pk
 Ventureline.com

BOOK REFERENCES
 Irshad, Muhammad. Money Banking and Finance
 Gibson, Charles H. Financial Statement Analysis

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