Professional Documents
Culture Documents
INTERNSHIP REPORT
Name of Organization:
NATIONAL BANK OF PAKISTAN
Submitted By:
Humayoun Ahmad Farooqi
MC080203376 (Student ID)
Session 2008-2010
Submitted To:
Instructor FIN619
Date of Submission:
04-02-2010
VIRTUAL UNIVERSITY OF PAKISTAN
An I n t e r n s h i p R e p o r t
Dedications
I dedicate this Internship Report to
My family and friends
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UNDERTAKING
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INTERNSHIP REPORT
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Acknowledgement
Thanks to almighty Allah, the most merciful, beneficent, and the source of all
knowledge and wisdom. All reverence to the Holy Prophet Mohammad (S.A.W.), who is
forever guidance and knowledge for all human beings on this earth.
Special thanks to Mr. Muhammad Ali Khan campus manager Virtual University
Campus (Faisal Town), Lahore - 939, Block-C, Moulana Shaukat Ali Road, Lahore
(VLHR01) - for providing information, support and guidance at every level of my
studies. Without his co-operation it would not be possible for me to complete my MBA
degree.
I am very thankful to my family specially my mothers whose kind prayers and
cooperation helped me at every step of my work.
I am really very grateful to Anwaar Ali Assistant vice President and Nauman
Dilawar Operations Manager (Internship supervisor), National Bank of Pakistan, Model
Town Branch Lahore for their accommodating attitude during the completion of my
internship. They helped and supported me during gathering and analyzing information.
And at the end, I am really very thankful to Mr. Mohsin Ali, a friend of mine, for
his help in every step during the completion of my internship report.
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Executive summary
In this report, I have discussed about every major aspect of the bank, which I
observed during my internship. Along with it, the processes, policies and procedures of
the bank have also been discussed in detail.
The main purpose of internship is to learn, by working in practical environment
and to apply the knowledge acquired, during the studies, in a real world scenario in order
to tackle the problems. My intentions were to know how to work in financial institutions,
to know about the office environment and to know how to deal with different kind of
people.
In this report the analysis of the organization has been done and the financial
aspects have been evaluated to analyze the current position of the organization. Along
with it, the background analysis, the business process analysis, and the internal
environment and external environment of the organization have been discussed and the
recommendations for the improvement have been made.
During my internship program, I mainly worked with the departments GENERAL
BANKING and ADVANCES. These departments have been discussed in along with the
policies and procedures therein.
I have concluded my report with my experience at the National Bank of the
Pakistan along with my overall insight of the organization
The recommendation section contains my perception of the ways of improving
this organization.
In the end I have listed the references used during the preparation of my
internship report
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Table of Contents
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Compliance Department.......................................................................................................................25
Agriculture Department........................................................................................................................25
Human Resources Management Depatrment........................................................................................25
Information Technology Department....................................................................................................25
Online Banking Department.................................................................................................................26
Islamic Banking Department................................................................................................................26
Comments on Organizational Structure...............................................................................26
Plan of your internship program.....................................................................................27
Introduction of Branch...........................................................................................................27
Name of Branch ....................................................................................................................................27
Branch Code ..........................................................................................................................................27
Region ...................................................................................................................................................28
Address .................................................................................................................................................28
Phone Nos..............................................................................................................................................28
Fax No....................................................................................................................................................28
Name of Manager .................................................................................................................................28
Name of My Operation Manager (Supervisor) .....................................................................................28
Number of employees............................................................................................................................28
Starting and ending dates of internship................................................................................29
Departments of Training........................................................................................................29
The General Banking Department.........................................................................................................29
Advances Department............................................................................................................................29
Training program.............................................................................................................29
Introduction of the departments I worked in.......................................................................29
General Banking....................................................................................................................................30
2. Advances (Credit department)...........................................................................................................31
Detailed description of tasks Assigned to me........................................................................32
a. Qualification of Customer.............................................................................................................33
b. Types of Accounts.........................................................................................................................33
c. Issuing of cheque book:.................................................................................................................33
2. Accepting deposits............................................................................................................................34
Making payment....................................................................................................................................35
Current account.................................................................................................................................35
b. Saving account...............................................................................................................................35
c. Cheque Payments...........................................................................................................................35
d. Cheque cancellation:.....................................................................................................................36
4. Government receipt and Payment.....................................................................................................36
Advances Department............................................................................................................................37
Principles of Advances......................................................................................................................38
Structure of Finance Department....................................................................................43
Departmental Hierarchy........................................................................................................43
Numbers of Employee.............................................................................................................44
Finance and Accounting Operations.....................................................................................44
Functions of the Finance Department....................................................................................................44
Functions of Finance Department...................................................................................44
Accounting system of the organization..................................................................................44
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Finance system of the organization........................................................................................45
Use of electronic data in decision making.............................................................................45
Sources of funds......................................................................................................................45
Allocation of funds..................................................................................................................46
Critical Analysis................................................................................................................47
Financial Analysis...................................................................................................................47
Ratio Analysis........................................................................................................................................47
Liquidity Ratios.................................................................................................................................47
Leverage Ratios................................................................................................................................48
Profitability Ratios.............................................................................................................................50
Activity Ratios...................................................................................................................................52
Market Ratios....................................................................................................................................54
a.Statement of Cash Flow..................................................................................................................55
Other Ratios.......................................................................................................................................56
HORIZONTAL ANALYSIS.................................................................................................................57
VERTICAL ANALYSIS.......................................................................................................................60
INDUSTRY ANALYSIS......................................................................................................................61
FUTURE PROSPECTS OF THE ORGANIZATION.........................................................62
SWOT Analysis of the organization.................................................................................63
Strength...................................................................................................................................63
Weakness.................................................................................................................................64
Opportunities..........................................................................................................................65
Threats.....................................................................................................................................65
Conclusion........................................................................................................................66
Customer Satisfaction.............................................................................................................66
Poor record management and filing system..........................................................................66
Unequal distribution of work.................................................................................................67
Marketing visits.......................................................................................................................67
Formal Organization..............................................................................................................67
Difference between theory and practice................................................................................67
More accounts fewer deposits................................................................................................68
Delegation of authority...........................................................................................................68
Lack of specialized training....................................................................................................68
Poor job rotation.....................................................................................................................68
Lack of appreciation...............................................................................................................68
Promotions...............................................................................................................................69
Marketing at desk...................................................................................................................69
Lack of business communication...........................................................................................69
Recommendations for Improvements..............................................................................70
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Professional training...............................................................................................................70
Delegation of authority...........................................................................................................70
Performance Appraisal...........................................................................................................71
To Over Come Problem of Space and Furniture..................................................................71
Job Rotation............................................................................................................................71
Changes in Policies..................................................................................................................71
Link with the Head Quarter...................................................................................................71
Credit Card.............................................................................................................................71
Installing Validator ................................................................................................................72
Interest on Overdraft:............................................................................................................72
Cash Financing........................................................................................................................72
Decreasing Administrative Expenses.....................................................................................72
Needs to be Flexible in credit Policy......................................................................................72
Technological Advancement..................................................................................................72
Staff Relationship....................................................................................................................73
Improper Distribution of Work.............................................................................................73
Favoritism and nepotism........................................................................................................73
Marketing Policy.....................................................................................................................74
Complaints of Customer.........................................................................................................74
Organizational Commitment.................................................................................................74
Credit Monitoring...................................................................................................................74
Avoiding Bad Debts................................................................................................................75
References.........................................................................................................................75
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Introduction of Organization Business Sector
In Pakistan, the total banking sector serves around 6 million borrowers and 25
million depositors, implying a penetration rate of 3.6 percent and 15 percent respectively.
In terms of access to microfinance, which means the availability of small loans, micro
deposits and micro-insurance services to low income households, the current penetration
rate is only 10 percent. In other words, 85 percent of Pakistan's population does not have
access to any financial services at all, which inherently creates an uneven and an
inequitable economic world, where the majority of people are financially marginalized.
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by State Bank of Pakistan. The commercial banks comprise of 3 nationalized banks, 3
privatized banks, 15 private sector banks, 14 foreign banks, 2 provincial scheduled banks,
and 4 specialized banks.
Under the Banking Companies Ordinance, 1962 the State Bank of Pakistan is
fully authorized to regulate and supervise banks and development finance institutions.
State Bank of Pakistan can prohibit the bank from giving loans, advances & credits. It
can prohibit the bank from accepting deposits, Can cancel license of a bank, Can give
directions to the bank as it deem fit ,Can remove chairman, directors, chief executive or
other managerial persons from the office and appoint a person as chairman, director or
chief executive.
In general, there are primarily two types of banks in Pakistan: Commercial Banks
and Investment Banks. Both types of banks provide financial services essential for
Pakistan's economy to function and grow.
Investment banks provide four primary types of services: raising capital (private
equity or public offerings of shares), advising in mergers and acquisitions, executing
securities sales and trading, and performing general advisory services. Most of the major
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Wall Street firms are active in each of these categories. Smaller investment banks may
specialize in two or three of these categories.
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Overview of the organization
Vision
To be recognized as a leader and a brand synonymous with trust, highest
standards of service quality, international best practices and social responsibility.
Mission
NBP will aspire to the values that make NBP truly the Nation’s Bank, by:
• Institutionalizing a merit and performance culture
• Creating a distinctive brand identity by providing the highest standards of services
• Adopting the best international management practices
• Maximizing stake-holders value
• Discharging our responsibility as a good corporate citizen of Pakistan and in
countries where we operate
National Bank of Pakistan was established vide NBP Ordinance No. XIX of
November 9. 1949. Initially the Bank’s objective was to extend credit to the agriculture
sector.
The Bank commenced its operations from November 20, 1949 at six important
jute centers in the then East Pakistan and directed its resources in financing of jute crop.
The Bank’s Karachi and Lahore offices were subsequently opened in December 1949.
The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ established on
December4, 1947 by the former Bahawalpur State.
NBP was undertaking Treasury Operations and Managing Currency Chests or Sub
Chests at 57 of its offices where the turnover of the business under the head amounted to
Rs.2460 million.
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Deposits held by NBP constituted about 3.1% of total deposits of all Pakistani
Banks in 1949, which rose to 38% in 1952.
NBP advances reached Rs.554.4 million by December 1959, which was one third
of the total schedule bank credit.
In 2002 the Bank signed an agreement with Western Union for expanding the
base for documented remittances. In November 2002 NBP launched its advance salary
scheme
The Best in the Emerging Markets: World’s leading financial journal, “Global
Finance” after a worldwide survey declared NBP in its issue of May 2003 as one of the
Best in the Emerging Markets.
The “Bankers Magazine” in July 2003 recognized NBP as the bank with the
highest return on capital in Asia and No.8 in the world.
NBP in the only Pakistani bank which has been ranked among the Top 100 banks
of Asia for it performance in the fiscal year 2003 and then among the Top 1000 banks of
the world by the prestigious “Banker magazine” in its issue of July 2005.
In January 2004 NBP launched its NBP Saibaan scheme. In May 2004, NBP’s
standard long-term rating was upgraded by M/S JCR-VIS Credit Rating Agency to AA
(double A) from AA- (double A minus) with “stable outlook” while standalone short-
term rating was maintained at A-1+ (A one plus). This is now the best rating for a local
commercial bank in Pakistan.
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World’s leading financial journal, “Global Finance” in an exclusive survey has
named NBP as the Best Emerging Market Bank from Pakistan for the year 2005.
On an all Pakistan basis NBP was awarded the “Kisan Times Award” for the year
2005 by the Prime Minister of Pakistan Mr. Shaukat Aziz, for its services in the
Agriculture Sector.
The “Banker Magazine” in July 2005 recognized NBP as the 10th Best Bank in
terms of “Profit on Capital” in the world.
“Best Bank-Pakistan” award for the year 2005 by world’s leading financial
journal “Global Finance”. NBP launched its ATM + Debit Card in 2005
World’s leading financial journal, “Global Finance” has named NBP as the Best
Emerging Market Bank from Pakistan for the year 2006. NBP launched the schemes of
NBP helpline, NBP Islamic banking and NBP protection shield.
Best return on Capital for 2006 amongst all banks in Asia “Banker magazine” in
July 2007. NBP enjoys the highest rating of ‘AAA’ in the industry assigned by M/s
JCR-VIS Credit Rating Company (July 2007) limited on a standalone basis. NBP
launched premium Aamdani and Premium saver schemes in 2007
National of Pakistan was awarded The Bank of The Year for the year 2001,
2002, 2004, 2005 and 2008 by “The Banker magazine” owned by the Financial Times
Group, London.
National Bank of Pakistan was awarded “The Best Foreign Exchange Bank in
Pakistan” for the year 2004, 2005, 2006 and 2008 by the world’s leading financial
journal “Global Finance”
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Year 2008 has been a historic year for NBP’s I.T infrastructure point as the bank
started its implementation program of ‘Core Banking Application (CBA) Software’. At
the end of 2008 the Bank has a branch network of 1276 branches with 1254 domestic and
22 overseas branches.
The Bank has expanded its range of products and services to include Shariah
Compliant Islamic Banking products.
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It deals all Government Revenue, collection and payments of salaries, pensions
and Govt. Treasury. It is a complete commercial, retail and corporate bank as well.
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Business Volume of the organization
The business volume of National Bank of Pakistan is growing day by day. The
key features of financial statements of the National Bank of Pakistan for the last three
years and half year ending June 2009 have been discussed in the table given below
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Product Lines
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 138 billion.
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You can avail up to 20 net take home salaries with easy repayment installments. Hassle
free acquisition without any prior formalities along with easy availability in a short turn is
attributed as the most distinguishing feature of the product. The product is offered
countrywide.
With NBP's Cash n Gold, you can meet your need for ready cash against your idle gold
jewelry.
Rate of mark-up 13% p.a.
Facility of Rs. 10,000 against each 10 grams of net contents of gold
No maximum limits of cash
Repayment after one year
Roll over facility
Only gold ornaments acceptable
Weight and quality of gold to be determined by NBP's appointed schroffs
No penalty for early repayment
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National Bank Premium Aamdani Certificate Scheme
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International Baking
NBP offers the lowest rates on exports and other international banking products.
The Bank also provides access to different local commercial banks in international
banking.
DEMAND DRAFTS:
If you are looking for a safe, speedy and reliable way to transfer money, you can
now purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an
account holder of the bank or not, can purchase a Demand Draft from a bank branch.
MAIL TRANSFERS:
Move your money safely and quickly using NBP Mail Transfer service. And we
also offer the most competitive rates in the market.
PAY ORDER:
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NBP provides another reason to transfer your money using our facilities. Our pay
orders are a secure and easy way to move your money from one place to another. And, as
usual, our charges for this service are extremely competitive.
TRAVELER'S CHEQUES:
LETTER OF CREDIT:
NBP is committed to offering its business customers the widest range of options
in the area of money transfer. With competitive rates, security, and ease of transaction,
NBP Letters of Credit are the best way to do your business transactions.
COMMERCIAL FINANCE:
FOREIGN REMITTANCES:
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banking system and to meet the SBP directives/instructions for timely and prompt
delivery of remittances to the beneficiaries
The existing system of home remittances has been revised/significantly improved
and well-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at 22 overseas branches of the Bank.
NBP is providing home remittance services without any charges. Strict
monitoring of the system is done to ensure the highest possible security.
Special courier services are hired for expeditious delivery of home remittances to
the beneficiaries.
SWIFT SYSTEM:
AGRICULTURAL FINANCE:
NBP provides Agricultural Finance to solidify faith, commitment and pride of
farmers who produce some of the best agricultural products in the World.
Agricultural Finance Services:
“I Feed the World” program, a new product, is introduced by NBP with the aim to
help farmers maximize the per acre production with minimum of required input. Select
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farms will be made role models for other farms and farmers to follow, thus helping
farmers across Pakistan to increase production.
Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:-
1. Providing reliable infrastructure for agricultural customers
2. 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.
3. Agricultural Credit (Medium Term):
Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on
a renewal basis.
• Operating loans
• Land improvement loans
• Equipment loans for purchase of tractors, farm implements or any other
equipment
• Livestock loans for the purchase, care, and feeding of livestock
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Production Loans:
Production loans are meant for basic inputs of the farm and are short term in
nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme.
CORPORATE FINANCE:
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 bank’s belief in its client's capabilities, and its commitment to the country.
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financial position right from your desktop computer. They will also be able to take
advantage of our outstanding range of payment, ejection, liquidity and investment
services. In fact, with NBP, you’ll be provided everything, which takes to manage your
cash flow more accurately.
EQUITY INVESTMENTS:
NBP has accelerated its activities in the stock market to improve its economic
base and restore investor confidence. The bank is now regarded as the most active and
dominant player in the development of the stock market. NBP is involved in the
following:
• Investment into the capital market
• Introduction of capital market accounts (under process)
• NBP’s involvement in capital markets is expected to increase its earnings, which
would result in better returns offered to account holders.
Competitors
Competitors of National Bank of Pakistan are all scheduled banks, which are
listed/trading under Banking Companies Ordinance 1962.
Competitive Banks are as under:
• Habib Bank Limited
• United Bank Limited
• Muslim Commercial Bank Limited
• Allied Bank Limited
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• Askari Commercial Bank Limited
• Soneri Bank Limited
• Bank Al-Habib Limited
• Bank Al-Falah Limited.
• Standard Chartered Bank Limited & The Bank of Punjab
Organizational structure
PRESIDENT
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Provisional Chiefs / Executive Vice President
Voice President
Officer Grade I
Office Grade II
Syed Ali Raza is currently the President and Chairman of National Bank of Pakistan
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Number of employees
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Main Offices
Website
www.nbp.com.pk
Audit Committee
Chairman Ibrar A. Mumtaz
Auditor Tariq Kirmani
Auditor Mian Kausar Hameed
Auditor Muhammad Arshad Chaudhry
Auditors
Chartered Accountants Ford Rhodes Sidat Hyder & Co.
Chartered Accountants M. Yousaf Adil Saleem & Co.
Legal Advisors
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Advocates & Legal Consultants Mandviwala & Zafar
Branch Network
National Level
Year 2003 2004 2005 2006 2007 2008
International Level
22 Branches
Deposit Department
There are two major types of accounts i.e Saving Account and Current Account.
Customers keep their savings in PLS Saving Accounts and businessmen save their money
in bank Current Accounts. NBP gives profit on saving accounts and special saving
accounts i.e. Premium Saving Accounts and NBP Premium Amadni Certificates for one
to five year’s period.
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Advances Department
NBP provides loans to different types of borrowers for different purposes. These
loans are given for various sectors for different periods. Small Finance, Cash Finance,
Agriculture Finance, Cash & Gold Loan, Personal Loans, Demand Finance, Running
Finance, Corporate Finance, Export Import Financing, House Building Finance (Saiban)
and NBP Karobar Scheme etc.
Remittances Department
Another important department in the bank is remittances. People send and receive
their money to the other persons and organizations through various way i.e. Bank draft,
Telegraphic Transfer, Mail Transfer, Coupons, Govt. Draft and Western Union Money
Transfer etc. The money is transferred to both inland and abroad.
Bills Department
Customers collect their money/amount through bills. They present their cheques,
drafts and other bills for collection within the city and out of the city through mail. Now a
days Online Banking is becoming more popular for this purpose but the branch where I
got training is still not have this facility.
Cash Department
National bank deals Government treasury on behalf of State Bank of Pakistan.
There are Chest, Sub-chest and Non-chest branches in the bank. SBP supplies currency
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notes to the bank and monitors its cash flow. Cash In charge and other cashiers deal with
cash receipt and payment in the bank.
Compliance Department
Role of branch compliance department is to reconcile the prescribed frequencies,
investigate long pending reconciliation item, and ensure correct treatment every half-year
and clearing system service branch-in major cities. Internal control is the integration of
the activities, plans, attitudes, policies and efforts of the people of the bank working
together to provide reasonable assurance that the organization will achieve its objectives
and mission.
Agriculture Department
Agriculture Credit Department is playing a vital role in development the economy
of Pakistan. Commercial banks being the greatest mobilizer of savings in the country
with their large network of branches play important role in financing agriculture. The
National Bank of Pakistan has also been trying to ensure that loans are disbursed to
genuine agriculturists within a reasonable time and that the bank turns down no viable
loan request.
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Online Banking Department
This department is functioning only in online branches in the bank. This is a fast
track banking system in modern banking. NBP is also trying to enhance this facility for
their customers.
.
The National Bank of Pakistan is one of the oldest banks of Pakistan. The bank
has seen a lot of changed during last 60 years. However the organizational structure is not
so professionally developed and implemented. Organizational structure has not been
changed so much since many years. Although the departmentalization exists but in
branches there is no rigid concept of departmentalization present. Sometimes the chain of
command is surpassed and no care is taken on authority and responsibility fixation.
However, overall situation is not so disappointing. System needs improvements
but currently serving its purposes in a very suitable way.
You were required to comment or give your opinion on the structure of the
organization as a whole that whether the adopted structure and practices
fulfill the requirements of the organization or not like span of control,
centralization/decentralization, etc.
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Plan of your internship program
Introduction of Branch
Name of Branch
National Bank of Pakistan,
Model Town Branch Model Town Lahore
Branch Code
0372
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Region
Lahore
Address
Bank Square C-Block Model Town
Lahore.
Phone Nos.
042-99230237
042-99230935
042-99230895
Fax No.
042-99230928
Name of Manager
Qadir Hussain
Number of employees
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The branch has been performing on-line business since 2003. It is using EBS
(Electronic Banking System), banking software for its banking function. This bank has
following four departments in it.
1. Foreign Exchange Department
2. General Banking Department
3. Compliance Department
4. Advanced Department
First three departments work under the supervision of Operations Manager and
Advances department works under direct supervision of branch Manager.
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There were total 3 staff members working in advance department, 2 in Foreign
Exchange Department, 1 in compliance Department and 16 in the General Banking
Department.
Departments of Training
During the internship period of 6 weeks that I spent at the National Bank of
Pakistan Model Town Lahore I got practical exposure to the following departments.
Advances Department
Where I worked for 2 Weeks i.e from 01-01-2010 to 16-12-2009
Training program
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General Banking
General Banking is the core of all departments; Deposits from customers are
accepted and cheques are cashed for customers. This department works under direct
supervision of Operation Manager. Two basic kinds of accounts are dealt here i.e.
Current Account and Saving Account.
Current Accounts are payable to the customer whenever they are demanded.
When a banker accepts a demand deposit, he incurs the obligation of paying all cheques
etc. drawn against him to the extent of the balance in the account. Because of their nature,
these deposits are treated as current liabilities by the banks. Bankers in Pakistan do not
allow any profit on these deposits, and customers are required to maintain a minimum
balance, failing which incidental charges are deducted from such accounts. This is
because the depositors may withdraw Current Account at any time, and as such the bank
is not entirely free to employ such deposits.
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. It discourages unnecessary
withdrawals from the deposits.
The Account opening is the first step in making a customer with bank. In account
opening the formalities are fulfilled in very easy steps and it takes no time for a person to
have an account at the Bank.
Another important function here is remittances and Bills for Collection. People
send their money to the other persons and organizations through various way i.e. Bank
draft, Telegraphic Transfer, Mail Transfer, Coupons, Govt. Draft and Western Union
Money Transfer etc. It works both inward and outward.
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Customers collect their money/amount through bills. They present their cheques,
drafts and other bills for collection within the city and out of the city through mail. NIFT
is the organization responsible for collecting and delivering these instruments for
clearance form State Bank of Pakistan.
Similarly most of the government receipts i.e. Taxes, Revenues receipts, Taxes,
Traffic Challans, Abyana, Agriculture Tax, Public service commission Fees and Utility
Bills are deposited. The NBP is doing a great job in revenue collection of both
Government of Pakistan and Government of Punjab. Utility Bills collection is one of the
heaviest workload around the due dates of these bills
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Cash & Gold Loan, Personal Loans, Demand Finance, Running Finance, Corporate
Finance, Export Import Financing, House Building Finance (Saiban) and NBP Karobar
Scheme etc.
1. Account Opening:
Account opening is very vital now a day in banking system due to KYC (Know
your customer), AML (Anti Money Laundering) and ATF (Anti terrorist financing)
I got training in this department for one week and after understanding the basic
concepts I practically opened account of some walk-in-customers.
Detail description of how you opened the account was required.
The opening of an account is the establishment of banker customer relationship.
Before opening a new account, the banker should determine the prospective customer’s
integrity, credibility, 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.
• To avoid frauds
• To safe guard against unintended over draft
• To avoid Negligence
• To make Inquiries about clients
There are certain formalities, which are to be observed for opening an account
with a bank. The accounting opening application should be received on the prescribed
account opening form. Copy of CNIC along with the original CNIC is collected and
checked at the time of account opening. The Necessary details in the form should be
filled in and all the detail should be in legible and clear writing. Specimen signatures of
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applicant must be carefully tested and collected. The minimum initial deposit is ensured
before handing over the Cheque book to the customer.
a. Qualification of Customer
The relation of the banker and the customer is purely a contractual person;
however, he must have the following basic qualifications.
• He must be of the age of majority.
• He must be of sound mind.
• Law must not disqualify him.
• The agreement should be made for lawful object, which create legal relationship
• Not expressly declared void.
b. Types of Accounts
Following are the main types of accounts according to nature of customer
• Individual Account
• Joint Account
• Accounts of Special Types
Partnership account
Joint stock company account
Accounts of clubs, societies and associations
Agents account
Trust account
Executors and administrators accounts
Pak rupee non-resident accounts
Foreign currency accounts
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After the application processing and the initial minimum deposit were made, I
told customer to approach the account opening officer, who after checking the form and
deposit slip issued cheque book to account holders. I practically issued some cheque
books also under the supervision of my officer.
2. Accepting deposits
The money, which comes in 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. I worked and observed the procedure for accepting deposits. I practically accepted
the deposits of some customers also. The process is as follows
Deposits are accepted along with the deposit slips. Different colored deposit slips
are used for general deposit and clearing. Deposit slips are filled and are handed over to
cashier along with cash. I after checking the particulars of the deposit slip verified that
the amount is in accordance with the written amount. Then I made a credit entry in the
ledger account of customer. I stamped the deposit slip, Keeps one portion with me and
other was given to the customer for future ready reference.
The deposit slip for clearance is used for the purpose of the cheques that not going
to paid on counter but the amount is to be transferred to the ledger account of the
customer. The cheques pertain to other banks or other branches of NBP. Or it might even
be from another customer of the same bank (this kind of cheque is not sent for clearance
at SBP). All other cheques are sent to State Bank of Pakistan for clearance at their
34
clearance house. Although the amount is credited to the customer account as soon as the
cheque is presented but this amount contains a control in system that restrict withdrawal
of this amount. When cheque is cleared from SBP and advice of SBP is received in the
branch about payment, the control is uplifted and the amount can be withdrawn now. This
process usually takes place about two to three working days.
Making payment.
Current account
These are payable to the customer whenever they are demanded. When a banker
accepts a demand deposit, he incurs the obligation of paying all cheques etc. drawn
against him to the extent of the balance in the account. Because of their nature, these
deposits are treated as current liabilities by the banks. Bankers in Pakistan do not allow
any profit on these deposits, and customers are required to maintain a minimum balance,
failing which incidental charges are deducted from such accounts. This is because the
depositors may withdraw Current Account at any time, and as such the bank is not
entirely free to employ such deposits.
b. 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. It discourages unnecessary
withdrawals from the deposits.
c. Cheque Payments
The customer gives check at the counter and check is carefully examined. I was
told by the junior officer there that the first thing to observe name of the bank and the
branch name of the bank. Only cheques which are of National Bank of Pakistan Model
35
Town branch are considered for payment at counter. If cheque is drawn on another bank,
it can be deposited along with deposit slip only if customer has an account with NBP
Model Town Branch. This cheque is sent to SBP through NIFT for clearance. After
verifying the bank and branch name Date is observed. The cheque should not be a post
dated cheque neither it should be more than six months old. Then I was told to check the
amount written in words and in figures. Both should be in accordance with each other.
Any cutting or overwriting must be singed in full by the customer. Then through
computer information system the account number is checked and balance is observed.
Then I was told to check the Payee’s Account Stamp (if stamped) bearer and non-bearer
crossings etc. after that balance of amount is checked if amount is present then check will
be sent to CD in charge who is on the duty of verifying the checks’ signatures with given
cards’ signatures and then pass it to the cash section where I was told to watch the
verification sign of in charge and then I was to pay the amount written in the Cheques.
Then I have to write the denomination of currency notes paid along with their respective
quantity at the back of cheque. In this way Cheques clears and payment is made to
customer.
d. Cheque cancellation:
Almost all types of Government receipts i.e. Taxes, Traffic Challans, Revenue
receipts, Abyana, Agriculture Tax, public service commission fees, EOBI Funds and
36
Utility Bills are deposited. The amounts received along with the name of depositor are
written on a scroll. In utility bills the customer number is written. Every scroll is carbon
copied. I worked there for about a week. Different scrolls are maintained for different
categories of receipts. Some of these categories are Central government receipts.
Provincial government receipts, Traffic challans, Property tax, electricity bills, gas bills,
phone bills etc. Every scroll page is totaled at the end and this total is carried forward to
the next page. Then at the end of the day all the scrolls are totaled and tallied with the
cash. The challans and slips along with the original scroll are sent to National Bank of
Pakistan Main Brach Lahore.
National Bank of Pakistan is earning 0.015% of the amount received as
commission from the government so it is not only helping in revenue earning of
government but also earning a handsome amount of commission on amounts deposited.
Similarly many kinds of government payments are also made through National
Bank of Pakistan. Most significant payment is pension payment. Other payments includes
salary payments to government servants, zakat payment, grants, Treasury pay orders in
favor of bank’s account holder, treasury refunds and tax refunds etc.
Pension payment is made at appearance of original pensioner. In order to get
payment the pensioner has to fill pension payment form. His/her Original pension book
and original CNIC should be presented before the officer who will check the pension
record registered. He will verify that the pensioner is original and will tally his/her signs
with record after verification the officer will sign on the filled form that will act as
cheque and cash payment is made to the pensioner. I assisted in verification process of
pensioner for a few days.
Advances Department
37
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.
I worked there as assistant for two weeks. It is a very vast field and a lot is there
to learn. As it is a very sensitive issue so I was mostly assisting others in the work. Most
of the work done was under strict observation of my superiors. I was assigned different
tasks like checking form and documents for their accuracy and completion, verifying the
CNIC of the borrower, maintaining records and corresponding with the borrowers. My
observations at this department are given in the following paragraphs.
The advances department at NBP Model town branch consists of two main sub-
departments i.e. Retail and Commercial. Any individual or company, who wants loan
from NBP, first of all has to undergo the filling of a prescribed form, which provides the
following information to the banker.
• Name and address of the borrower
• Existing financial position of a borrower at a particular branch
• Accounts details of other banks (if any)
• Security against loan
• Exiting financial position of the company (Balance Sheet & Income Statement)
Signing a promissory note is also a requirement of lending, through this note borrower
promise that he will be responsible to pay the certain amount of money with interest.
Principles of Advances
There are five principles, which must be duly observed while advancing money to the
borrowers.
a. Safety
38
b. Character
c. Capacity
d. Capital
e. Liquidity
f. Dispersal
g. Remuneration
h. Suitability
a. Safety
b. Character
It is the most important factor in determining the safety of advance, for there is no
substitute for character. A borrower’s character can indicate his intention to repay the
advance since his honesty and integrity is of primary importance. If the past record of the
borrower shows that his integrity has been questionable, the banker should avoid him,
especially when the securities offered by him are inadequate in covering the full amount
of advance.
c. Capacity
39
This is the management ability factor, which tells how successful a business has
been in the past and what the future possibilities are. A businessman may not have vast
financial resources, but with sound management abilities, including the insight into a
specific business, he may make his business very profitable. On the other hand if a person
has no insight into the particular business for which he wants to borrow funds from the
banker, there are more chances of loss to the banker.
d. Capital
This is the monetary base because the money invested by the proprietors
represents their faith in the business and its future. The role of commercial banks is to
provide short-term capital for commerce and industry, yet some borrowers would insist
that their bankers provide most of the capital required. This makes the banker a partner.
As such the banker must consider whether the amount requested for is reasonable to the
borrowers own resources or investment.
e. Liquidity
f. Dispersal
40
The dispersal of the amount of advance should be broadly based so that large
number of borrowing customer may benefit from the banker’s funds. The banker must
ensure that his funds are not invested in specific sectors like textile industry, heavy
engineering or agriculture. He must see that from his available funds he advances them to
a wide range of sector like commerce, industry, farming, agriculture, small business,
housing projects and various other financial concerns in order of priorities.
g. Remuneration
A major portion of the banker’s earning come form the interest charged on the
money borrowed by the customers. The banker needs sufficient earnings to meet the
following:
Interest payable to the money deposited with him.
• Salaries and fringe benefits payable to the staff members
• Overhead expense and depreciation and maintenance of the fixed assets of the
bank
• An adequate sum to meet possible losses
• Provisions for a reserve fund to meet unforeseen contingencies
• Payment of dividends to the shareholders
h. Suitability
The word “suitability’ is not to be taken in its usual literary sense but in the
broader sense of purport. It means that advance should be allowed not only to the
carefully selected and suitable borrowers but also in keeping with the overall national
development plans chalked out by the authorities concerned. Before accommodating a
borrower the banker should ensure that the lending is for a purpose in conformity with
the current national credit policy laid down by the central bank of the country.
41
Forms of Loans
a) Cash Finance
If the borrower does not utilize the full limit, the banker has to lose return on the
un-utilized amount. In order to offset this loss, the banker may provide for a suitable
clause in the cash finance agreement, according to which the borrower has to pay
markup/service charges on at least on self or one quarter of the amount of cash finance
limit allowed to him even when he does not utilize that amount.
b) Overdraft/Running Finance
This is the most common form of bank lending. When a borrower requires
temporary accommodation his banker allows withdrawals on his account in excess of the
balance which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called “Secured Overdraft” and when the borrowing customer
cannot offer any collateral security except his personal security, the accommodation is
called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis, while an overdraft is a temporary accommodation occasionally resorted to.
42
c) Demand Financing/Loans
The amount of loan is placed at the borrower’s disposal in lump sum for the
period agreed upon, and the borrowing customer has to pay interest on the entire amount.
Thus 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
Departmental Hierarchy
Branch Manager
43
Retail Officer Credit
Officer
Numbers of Employee
Finance and Accounting operations are operated with the help of subordinate
staff. Bank is financing in multiple sectors.
Accounting system of the bank through specialized banking software was well
equipped with Information Technology. The staff was sufficiently trained to perform
functions on their own using the computers. The staff was very happy to have this system
44
as they told that it has made the things lot easier than the before manual accounting
system. Thus through this integrated software the finance department was able to carry
out their operations in a very smooth way.
Cash or accrual system of accounting?
Single entry or double entry?
The branch where I have got training was using very good Information
Technology environment. With all data integration the management was in a position to
sit and generate reports of various kinds. The decisions were made based on these reports
and the electronic data was analytically used to see the progress of employees and also
the overall branch.
Which software was used by this organization?
Use of IT along with proper training can help the management a great deal in their
decision making process. In this branch although the management was not trained enough
to use the computers and the software but they were getting benefits from electronic data
and were using them in decision making process.
Sources of funds
45
Fund generation of the branch is depositing, receiving interest on lending money
to various sectors, advances from other financial institutions.
What about internal and external sources?
Allocation of funds
In which proportion?
46
Critical Analysis
Financial Analysis
Ratio Analysis
Liquidity Ratios
Current Ratio
Where Current assets= Cash and balance with treasury banks + Balances with
other banks + Lending to financial institutions
And Current Liabilities = Bills payable + Borrowing + Deposits and other accounts
47
2006 2007 2008
(43788628/
=Sales/ Working (50569481/ (60942798/
38190234700) *
Capital 4559783200) * 100 9440939300) *100
100
0.11% 1.10 % 0.64 %
Working Capital
Leverage Ratios
Debt Ratio
Debt/Equity Ratio
48
= (Total debt/ 2006 2007 2008
Total 553178593/ (645855939/ (715299108/
shareholder’s
equity) *100 79090712 8154319) * 100 8969751) * 100
78.01% 79.20 % 79.74%
49
2006 2007 2008
=(Fixed Asset/ (492853073/ (608382912/ (655781930/
equity) * 100
53044649) *100 69270631) * 100 81367002) * 100
929.12% 878.26% 805.95%
Profitability Ratios
2006
Profit available for
2007 2008
= (Net profit after appropriation
taxation/ interest
earned) * 100 should be taken
(170223346 / (19033773/ (15458590/
43788628) *100 50569481) *100 60942798) * 100
88.88% 37.63% 25.36%
Return on Assets
50
2006 2007 2008
= (net income/
sale) * (sale / total (0.3887 * 0.0689) * (0.3763*.0663) * (0.2536 * 0.0745) *
assets) 100 100 100
2.67% 2.49% 1.88%
51
2006 2007 2008
=(Sales/ Fixed (43788628/ (50569481/ (60942798/
Assets) * 100
492853073) *100 608382912) * 100 655781930) *100
8.88% 8.31% 9.29%
Activity Ratios
52
= (Annual credit 2006 2007 2008
sales/average (43788628/ (50569481/ (60942798/
Account
receivable) * 100 23012732) * 100 21464600) * 100 17128032) * 100
190.28% 235.59% 355%
53
2006 2007 2008
= (Interest
earned/ total (43788628/ (50569481/ (60942798/
assets) * 100 635132711) * 100 762193593) * 100 817758326) * 100
6.89% 6.63% 7.45%
Market Ratios
Dividend Payout
54
= (Dividend per 2006 2007 2008
share/ earning
(2.5/ 24.01) * 100 (4/ 21.22) * 100 (7.5/17.23) * 100
per share) * 100
10.41% 18.85% 43.53%
Dividend Yield
Operating Case Flow/Current Maturities of Long Term Debt and Current Noted
Payable
55
= Operating Cash 2006 2007 2008
Flow/ No. of
10176913/708970 78804419/896975 2532681/896975
equity Shares
14.35 87.86 2.82
Other Ratios
Growth of Income
56
=(Change in 2006 2007 2008
Income/ Income (3575143/ (2011427/ (2532681/
for last year) *
100 19033773) * 100 17022346) * 100 28789320) * 100
33.93% 11.81% 18.78%
HORIZONTAL ANALYSIS
Horizontal analysis is done by subtracting the current year amount from
previous year amount and then. The resulting amount is then divided by
previous year amount and then multiplying the result with 100. This is used
to compare whether a particular item has increased or decreased.
57
• During 2008 NBP’s top line (operating revenue) increased by 13% from Rs. 47.2
billion in 2007 to Rs. 53.5 billion in 2008.
• Pre-tax profit has reduced to Rs. 23.0 billion, a decrease of 18.9% over last year
mainly on account of higher provision charge which increased due to the bank’s
policy of prudently providing for against non-performing loans.
• Earnings per share reduced by 18.9% to Rs. 17.23 in 2008
• Pre-tax return on equity stood at 30.5%, whereas pre-tax return on assets stands at
3.0% while cost to income ratio at 0.35 remained one of the highest amongst the
Pakistani banks.
• Net interest income increased by 10.2 % to Rs. 37.1 billion from the
corresponding period last year owing mainly to volume growth
• The increase in lending and assets yield was partially offset by increase in deposit
rates mainly on account of a 4% mandatory increase in the rate on saving deposits
and an overall increase in bank’s funding cost.
• Non-interest income shows growth of 21.2 % mainly due to increase in fee,
commission, exchange and other income. This growth is impressive since the
contribution of capital gains on sale of securities declined from Rs. 2.3 billion in
2007 to Rs. 0.4 billion in 2008.
• Fee income increased by 17%
• Income from dealing in foreign currencies increased mainly on account of
revaluation gains due to volatility of Pak Rupee.
• During the year the bank succeeded in getting compensation on delayed refunds
for various years from the taxation authorities to the tune of Rs. 988 million
which increased other income by Rs. 1.1 billion.
• Administrative expenses increased due to increase in staff cost and other
administrative expenses by 20.0 %. Staff cost increased on account of inflation
linked increase in salaries and promotions announced in 2008. Record inflation
also increased our other administrative expenses.
• Provision charge against advances & other assets increased by Rs. 6.8 billion
from Rs. 4.9 billion in 2007 to Rs.11.7 billion in 2008 reflecting the greater stress
on some sectors in our portfolio.
58
• Record inflation, high interest rates, power shortages coupled with political
environment were the factors for increase in NPLs which occurred across the
banking system as evident from the increase in NPLs in the system by 47 %. Net
NPL’s were at 3.3 % and provision coverage stood at 76%, one of the highest in
the banking system.
• The bank’s revaluation surplus on securities including Bank Al- Jazira and mutual
funds was hit by this abnormal decline in equity prices and showed reduction of
Rs. 22.7 billion or 86 %. This decline was mainly led by Bank Al-Jazira and NIT
units; however the market value of these shares still exceeds the bank’s cost. As
of the balance sheet date, the impairment loss on listed equity securities and
mutual fund investments held under 'Available-for-sale' category amounted to Rs.
2.4 billion. SBP has allowed banks that the impairment loss resulting from the
valuation of listed equity securities / mutual funds held under ‘Available-for-sale’
category of investments as of December 31, 2008 may be held under ‘surplus on
revaluation of asset’ account as shown on the balance sheet. The impairment loss
is required to be taken to the profit and loss account in the year 2009 on quarterly
basis. The bank on a prudent basis decided to recognize Rs. 0.4 billion in P & L in
the current year representing 25% of impairment loss on the shares portfolio.
• During the year, the bank, on a prudent basis carried out a desktop revaluation of
major properties to ascertain the current market value and to adjust revaluation
surplus accordingly. This resulted in reduction of Rs.2.7 billion from previously
assessed values of 2007.
• Despite the difficult environment, NBP managed to pose an appreciable growth in
deposits and advances. Advances increased by Rs. 72.7 billion or 21.3% mainly in
corporate sector on account of financing related to energy and power.
• 2008 was a very difficult year in terms of liquidity and deposit mobilization. By
year end, the deposits increased by 6% or Rs.33 billion. Bank’s current and saving
accounts ratio stands at 58% and remains one of the highest in the banking sector.
• Our corporate banking has strong relationships with the country’s top business
houses. Corporate loans showed an impressive increase of more then 28% in
2008.
59
• During 2008 due to higher commodity support prices, financing under
government operations increased by 118%. These loans are fully backed by GoP
guarantees.
• NBP’s Islamic banking operations have gathered momentum and have registered
impressive growth in Deposits (75%), Advances (237%) and total Assets (84%)
• We expanded our operations in 2008 and 11 more branches across Pakistan were
opened in 2008 taking the branch network to 1254. In 2008 NBP increased its
number of overseas branches from 18 to 22.
VERTICAL ANALYSIS
60
Assets Amount (Rs. ‘000’ Percentage
Cash and Balances with treasury 106503756 13.02%
Balances with other banks 38344608 4.69%
Lending to financial institutions – net 17128032 2.09%
Investments – net 170822491 20.89%
Advances – net 412986865 50.50%
Operating Fixed Assets 24217655 2.96%
Deferred tax assets – net 3204572 0.39%
Other Assets 44550347 5.44%
Total 817758326 100%
Liabilities
Bills payable 10219061 1.25%
Borrowings 40458926 4.95%
Deposits and other accounts 624939016 76.42%
Liabilities against assets subject to lease 25274 .003%
Other liabilities 39656831 4.85%
Capital
Share Capital 8969751 1.7%
Reserves 19941047 2.44%
Un-appropriated profit 52456204 6.04%
Surplus on revaluation of assets – net 21092216 2.5%
Total 817758326 100%
INDUSTRY ANALYSIS
Comparison between National Bank of Pakistan, Bank al- Alfalah, Allied Bank of
Pakistan and United Bank of Pakistan for the year ended 2008.
Ca;
61
Assets (After
tax)
Total Assets to 7.98 20.47 16.40 13.79
shareholders
fund
Earning per 25.64 2.24 9.47 10.8
share (pre-tax)
Earning per 17.23 1.63 6.43 8.24
share (after-
tax)
Payout Ratio 49.33 76.69 54.43 56.9
Book Value 90.71 18.27 32.19 35
Net Interest 9.75% 5.68% 1.98% .83%
Income Growth
NBP remains committed to the interest of all stake holders including its
employees, owners, regulators and Pakistani nation. We have well defined strategy on
where and how we want to proceed in the years to come.
With the implementation of the new ‘Core Banking Package’, NBP will
completely automate its functions which in turn will appreciably enhance work
efficiency. The Bank will continue to diversify its customer segments thereby increasing
our product offering. Its commitment towards the employee’s empowerment /
62
development will continue as The Bank believes that a motivated and well trained work
force is necessary to ensure sustenance and growth. On the business side it main focus
would be to reduce non-performing loans and increase deposits.
The Bank remain committed to our Vision, Mission & core values and our
strategy for the future includes recovery efforts and revival of non-performing loans,
deposit mobilization, consolidation of loans, expense management and tapping into
untapped markets by increasing our network both domestically and internationally.
Customer service will remain its main focus of Operations management.
Strength
• NBP in one of the oldest bank of Pakistan and first nationalized bank
• Declared World’s best Foreign Exchange bank in 2008
• Stable AAA/A-1+ (Tipple A/a-One Plus) rated bank
• Best Return on Capital Bank for 2006 amongst all the banks in Asia
• Highest Profit making bank of Pakistan
• Having Highest Assets and Capital compared to any bank in Pakistan
• Functioning as an agent of State Bank of Pakistan
• Dealing Government Treasury where SBP has not its own branch
• Having unshakable trust of the public and its stakeholders
63
• Giving Loans alone in the market against Gold Ornaments
• Performing social responsibilities and claiming “The Nation’s Bank”
• Disbursing Salaries and Pensions to the Government employees and earning high
profit on NBP-Advance Salary Loan Scheme
• Earning commission from SBP on Government transaction
• Facing no problem of cash/currency being its Chest and Sub-chest
• Branches all over the country
• NBP have presence in the countries having sizeable trade volumes with Pakistan
by its overseas operations
• Holds largest deposit base in the market share in terms of number of accounts
• Leading bank in agriculture financing amongst commercial banks with the market
share of 15%
• Helping in earning of foreign exchange, remittances and leading agent of
• Western Union Money Transfer
Weakness
• The bank falls far behind as far as the innovative schemes are concerned
• The strong political hold of some parties and government and their dominance is
affecting the bank in a negative way
• Lowest Internal Control and Compliance System, SBP rated “Marginal” which is
alarming for the Bank
• Unsatisfactory corporate culture of the Bank
• Physical environment and atmosphere compare to other banks does not meet the
standard
• Less number of Online Branches
• Ineffective use of technologies i.e. Information technology
• Shortage of staff (employee per customer is very low as compared to its
competitors)
• Inefficient training and technical education of staff.
64
Opportunities
Threats
65
Conclusion
Customer Satisfaction
In NBP customer dealing is well, but during rush hour the customer has to wait for a long
time for their turn. It’s quite hard for a new customer or potential customer to get the
required information.
66
Unequal distribution of work
Work is not equally distributed. On one hand some employee have to work all day
without relaxing while some others have nothing to do at all. This not only creates
confusion among employees but also hurting and disturbing for overall setup of the bank.
And above all it results in dissatisfaction among customers as well.
Marketing visits
A useful mode of contact is through personal marketing visits. Such visits are
important in informing and perusing the existing and potential customers about the
products and creating a sense of belongingness with them.
Formal Organization
Formal organization includes the activities of two or more person, which are
cautiously determined groups and coordinated towards a given objective. It provides base
when people are able to communicate with other, when they have common purpose and
they are willing to work.
In NBP, we find a formal organization. Bernard referred to an organization as a
formal when the activities of two or more persons are coordinated towards a given
objective. The formal organization comes into being when people are able to
communicate with one another or willing to act and share a purpose.
In this formal organization of NBP the activities are carried out in a more formal
way. In theoretical terms it provides basis for communication with one another but in
practice it is not exercised because an employee at high level cannot get straight away to
manager or SVP and ask him about of his problem faced by him, because first he has to
talk to his immediate superior and follow a proper channel of communication.
67
More accounts fewer deposits.
Efficient banking is one, which does not emphasize on number of accounts but on
greater amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide
personalize service to all the account holders and does not improve its quality and
services
Delegation of authority
Manager has very limited authority; he has to take the approval from his
management authority i-e. In case of advance he has to take the approval of general and
regional manager. The other problem is created, when the manager is not present in his
office, the customer having to wait for hours. This discourages both customer and
officers because they have to suffer a lot
Lack of appreciation
Another very important thing which is ignored in the bank is appreciation if the
employee on their good performance. If hard work and performance of employees is not
recognized and appreciated they become dishearten which results in decline in
performance.
68
Promotions
Promotions in NBP are purely on the basis of seniority, so the new young person
having high qualification remains behind for quite a lot of time. Top management and
staff union put pressure for the promotion of their favorites, which gives a sense of
deprivation to the deserving employee and their efficiency is affected.
Marketing at desk
Bank employee come in daily contact with many people who happen to deal with
the casual remittance, travelers cheques, safe custody, pensioners, depositing license fee
and variety of other functions and variety of other people with whom the Bank has no
account or regular business relationship. The Bank employees are doing very little on
their own to explore the possibilities of selling banking services to them as a marketing
contributor. The entire Bank community should make a conscious effort in addition to
their normal work to explore the possibilities of selling banking services to them. The
market opportunities are hidden in every dealing a banker handles; the question is that if
he has the art and urge to seize such opportunities.
69
Recommendations for Improvements
Professional training
NBP staff lacks professionalism. They lack the necessary training to do the job
efficiently and properly. Although staff colleges in all major cities but they are not
performing well. For this purpose these staff colleges should be reorganized and their
syllabus should be made in such a way to help the employee understand the ever-
changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the staff
with much needed professional training.
Delegation of authority
Employees of the bank should be given a task and authority and they should be
asked for their responsibility.
70
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.
Job Rotation
Job Rotation is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch. Therefore it is
recommended that evenly rotation of every employee should take place after every three
years in different braches of the bank.
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
Credit Card
National bank of Pakistan should start its operation in credit card. These cards are
very helpful for the ordinary customer in general and the business people in particular. To
71
make it mores secure and to eliminate the misuse of it, the management is required to
keep proper security against the card.
Installing Validator
Validator machine is used to count the currency notes and its installation will help
to eliminate to counting errors and will save time.
Interest on Overdraft:
Overdraft is a short-term credit facility provided by the bank to its trustworthy
customers free of interest. Only bank commission is charge small amount of mark-up on
the overdraft, which will help the bank to improve its revenue position.
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.
Technological Advancement
I would like to suggest that at least all the main branches of NBP should be fully
computerized in order to expedite the dealing process among bankers and their
customers. Every department should be provided a computer with adequate training
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(especially Advances, Deposits and Foreign Exchange departments).Daily records should
be entered directly into these computers, (instead entering the overall daily transactions
after the banking hours). It will not only reduce transaction time, will increase accuracy
but will also be efficient as well.
Not only it will be economical but will also reduce the extra burden of work of the
bank. It will also help in reducing the use of excessive paper work.
Staff Relationship
Good relationship among staff member leads to the peak performances in any
organization. I observed that the staff relationship was normal other wise but some time I
noticed that there exists a little conformity among the staff members. Another syndrome
from which the staff suffered was that all of them considered themselves more important
than others. Some of the officers used to say that if I am absent for a day the bank would
stop working. So this sort of attitude is not good because it mars bank image and juniors’
willingness learn and work hard and in the end will hurt the whole team.
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Marketing Policy
The branch should adopt various marketing strategy and promotion strategy to
promote the bank and its product.
The most important in my opinion is personal marketing; it is the most effective
of all when you think in term of branch level. But on the whole organization level, they
should arrange the seminar with in the bank and outside the bank. They should introduce
various prizing schemes.
They should do more advertising through newspaper and media and through
channel of personal contacts.
Complaints of Customer
There should be an information desk to provide the information and to receive the
complaints of the customer in the bank. There is no complaint box available in the branch
and not any person appointed to hear the complaints.
Every person cannot go to the manager for the complaint because most of the
people are hesitant. So I suggest management to install a compliant box in the branch,
and recruit a special person for that guidance of the customer when they are unable to
manage some difficulties in banking matters.
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 which would enhance organizational
commitment of the employees working in the organization.
Credit Monitoring
The credit department of the bank should carries out vigilant credit monitoring.
They should ensure the proper payment of installments and the mark-up by the borrower.
The staff members who have done all the paper work of the loan extension should
perform the monitoring, as he/she will be having more information about the borrower.
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Avoiding Bad Debts
Policies should be crafted in a way to ensure that no loan is extended on political
pressure. SBP regulation for loan approval should be strictly followed. According to
which the current ration of borrower’s business must be 1:1 and the debt to equity ratio
should be 60:40, means the liquidity position of business should be healthy.
References
Website of the National Bank of Pakistan http://www.nbp.com.pk
http://www.nbp.com.pk/publications/AnReport2008.aspx
http://www.nbp.com.pk/publications/AnReport2007.aspx
http://www.nbp.com.pk/publications/AnnualReport2006.pdf
www.abl.com/thebank/pdf/annual_report08/abl-annual-report-2008.pdf
www.ubl.com.pk/aboutus/financial_report/report_2008/annual_doc08/
http://bankalfalah.com/about/download/Annualreport2008.pdf
http://www.kse.com.pk/listing-companies/analysisreport.php?id=38idsid=3.07
Economic Bulletin September-October 2009
Internship Supervisor
Staff members at NBP Model Town Lahore
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