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Student Name

ID Mc0604

Semester/ Session Fall 2008

Final Report Date

University Virtual University of Pakistan

Phone #

Mailing Address Jhelum

I dedicated my Report

To my respected instructor



I am also thankful to my respected instructor HRMI619 whose proper guidance &
suggestions encouraged me in writing this report.

I am also grateful to the persons who provided me information & give me time for
working on this report.

I am also thankful to my parents & friends who provided me the help & suggestions
when & where needed.

Executive summary

National Bank of Pakistan is a Govt. bank. It has its head office in Karachi. It has over
1,232 branches in Pakistan & 18 abroad.

National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner
for the Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally,
internationally and representative offices.

The National Bank of Pakistan offers a wide range of services to its customers &
recognizes the importance of efficient business delivery & providing timely solutions.
Their competitors are untied bank, Allied bank, Habib bank, First women bank, Bank
of Punjab etc.
The essence of business philosophy is to cater to the banking requirements of small &
medium sized entrepreneurs, providing them qualitative & competitive services with
emphasis on encouraging exports. Nearly forty percent of our credit portfolio is
related to export financing and credit decisions are taken within 48 hours that is why
we say: “We have more time for you”
Its products are Pay Order, Mail Transfer, Foreign Remittance, Foreign Currency
Account, Short Term Investment, NIDA * ( National Income Daily Accounts) Equity
Investment, Commercial Finance etc.
In Jhelum, Civil Lines Branch is a main branch of National Bank of Pakistan.
Branch code is 0344 & phone number is 0544-9270185, fax: 0544-9270188.



Table of Contents
Introduction of the organization..................................................................1

President's Message ................................................................................1

Overview of the organization.......................................................................3

Senior Management ................................................................................4

Brief history................................................................................. ................7

Nature of the organization......................................................................10

Business volume:...................................................................................13

FINANCIAL ANALYSIS FOR BANK..........................................................15

Directors’ Report.....................................................................................19

Auditors’ Review Report to the Members...................................................21


Scope of Review.....................................................................................22

Conclusion................................................................................. .............22

National Bank of Pakistan......................23

Interim Condensed Balance Sheet......................................................23

Product lines:................................................................................... .......30

Student Loan Scheme............................................................................36

Competitors..................................................................................... .......38

ORGANIZATION STRUCTURE......................................................................39

Organizational hierarchy chart:..............................................................39

Number of employees:...........................................................................40

Main offices:...........................................................................................40

Comments on the organization structure:..............................................40

PLAN OF INTERNSHIP REPORT...................................................................41

INTRODUCTION OF THE BRANCH:...........................................................41

STARTING & ENDING DATES OF INTERNSHIP..........................................41

TRAINING DEPARTMENTS........................................................................42

TRAINING PROGRAM..................................................................................43

INTRODUCTION OF ALL THE DEPARTMENTS...........................................43

Bills DEPARTMENT / BILLS DEPARTMENT:.............................................43

CLEARING DEPARTMENT:.....................................................................45

Clearing on futures exchanges...............................................................47

Clearing of securities..............................................................................47

FOREIGN EXCHANGE:..........................................................................51

FUNCTIONS...................................................................................... .......53

Market participants................................................................................61

Factors affecting currency trading.........................................................61

CREDIT SECTION/ ADVANCES DEPARTMENT:.......................................62

DEPOSIT SECTION: .............................................................................73

ACCOUNTS DEPARTMENT....................................................................77

REMITTANCE DEPARTMENT..................................................................79

MY AREA OF SPECIALIZATION....................................................................82

Structure of the HRM Department.............................................................83

Department hierarchy:...........................................................................84

Human resource management process in the organization:.................84

CRITICAL ANALYSIS..................................................................................102

SWOT ANALYSIS.......................................................................................103




THREATS....................................................................................... ........106

CONCLUSIONS & RECOMMENDAIONS......................................................106



Annexes........................................................................................ ...........109

Introduction of the organization

National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner
for the Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally,
internationally and representative offices.

National Bank of Pakistan intends to carry out a market study for consumer and small
business sectors including for:

(1) Auto Vendor Financing

(2) Fisheries Sector Financing

(3) Marble Industry Financing

(4) Cutlery Sector Financing

(5) Dairy Sector Financing

(6) Business Finance

(7) Auto Financing and other products.

President's Message

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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

Overview of the organization
National Bank of Pakistan is a Govt. bank. It has its head office in Karachi. It has over
1,232 branches in Pakistan & 18 abroad.

National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner
for the Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally,
internationally and representative offices.

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 peopling 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

Senior Management

Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking

Shahid Anwar Khan SEVP & Group Chief, Credit Management Group

Dr. Asif A. Brohi SEVP & Group Chief, Operations Group

Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection Group

Ziaullah Khan SEVP & Group Chief, Compliance Group

Dr. Mirza Abrar Baig SEVP & Group Chief, Human Resources Management &
Administration Group

Amer Siddiqui SEVP & Group Chief, Commercial & Retail Banking Group

Muhammad Nusrat Vohra SEVP & Group Chief, Treasury Management Group

Amim Akhtar EVP & PSO to the President

Ekhlaq AhmedEVP & Secretary Board of Directors

Tajammal Hussain Bokharee EVP/Divisional Head, Special Assets Management

Mrs. Khurshid Maqsood Ali EVP & Divisional Head Employee Benefits,
Disbursements & Trustee Division

Tahir Yaqoob EVP & Group Chief, Overseas Coordination & Management Group

Anwar Ahmed Meenai EVP & Divisional Head, Islamic Banking

Naeem Syed EVP & Head, Core Banking Application, PMO

Aamir Sattar Financial Controller & Divisional Head, Financial Control Division

Atif Hassan Khan Group Chief (A), Information Technology Group ds of the
internal and external environment.

ATM Finder:

Burewala, Faisalabad, Gujar Khan, Gujranwala, Gujrat, Hyderabad, Islamabad,
Karachi, Lahore, Mirpur, Multan, Muzaffarabad, Peshawar, Quetta, Rawalpindi,
Sheikhupura, Sialkot, Taxila, Wah Cantt.

Branch Network

With the geographical development of its branches, the Bank has been able to extend
its services to a much larger number of Pakistanis all over the country. Today it has
more than 8.5 million accounts. Bank maintains its presence in all the major financial
centers of the world through its 15 overseas branches and 5 representative offices. Of
these, three representative offices have recently been set up at Tashkent (Uzbekistan),
Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging
opportunities in CIS countries. Bank’s role globally is well assisted by its network of
correspondent banks located strategically in Asia, America, Europe and Africa.

Apart from having a vast branch network, Bank is at the forefront in the acquisition
and application of new technologies in every aspect of its banking facilities. It has
acquired leased telephone lines for on-line banking. The Bank has 12 Regional
Computer Centers to cover various on-line and batch system requirements of branches
and controlling

Oversea Branches

Domestic Branches

Branch Network: NBP has an extensive domestic branch network of over 1500
branches located all over Pakistan. The Bank also has a presence in 24 international
locations including the USA, United Kingdom, Europe and the Far East.


Brief history

The National Bank of Pakistan has its headquarters in Karachi, Pakistan. It has over
1,232 branches throughout Pakistan. The bank provides both commercial and public
sector banking services. It has assets worth USD 12.293 billion in 2007. Its
subsidiaries include NBP Capital, NBP Modaraba Management Company, NBP
Exchange Company, Taurus Securities, and NBP Almaty et al.

It also supports a first-class cricket side that competes for the ABN-AMRO Patron's
Trophy in Pakistan.

1949 National Bank of Pakistan (NBP) was established under the National Bank of
Pakistan Ordinance 1949 and was 100% govt.-owned. NBP acted as an agent of the
Central Bank wherever the State Bank did not have its own Branch. It also undertook

Government Treasury operations. Its first branches were in jute growing areas in East
Pakistan. Offices in Karachi and Lahore followed.

• 1950 NBP established a branch in Jeddah, Saudi Arabia.

• 1955 by this time NBP had branches in London and Calcutta.

• 1957 NBP established a branch in Baghdad, Iraq.

• 1962 NBP established a branch in Dar-es-Salaam, Tanganyika.

• 1964 The Iraqi government nationalized NBP's Baghdad branch.

• 1965 The Indian government seized the Calcutta branch on the outbreak of
hostilities between India and Pakistan.

• 1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.

• 1971 NBP acquired Bank of China's two branches, one in Karachi and one at
Chittagong. At separation of East Pakistan NBP lost its branches there. NBP merged
with Eastern Mercantile Bank and with Eastern Bank Corporation.

• 1974 The government of Pakistan nationalized NBP. As part of the
concomitant consolidation of the banking sector, NBP acquired Bank of Bahawalpur
(est. 1947).

• 1977 NBP opened an offshore brain Cairo.

• 1994 NBP amalgamated Mehran Bank (est. 1991).

• 1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.

• 2000 NBP opened a representative office in Almaty, Kazakhstan.

• 2001 State Bank of Pakistan and Bank of England agree to allow only 2

Pakistani banks to operate in the UK. NBP and United Bank agreed to merge their
operations to form Pakistan International Bank, of which NBP would own 45% and
United Bank 55%.

• 2002 Pakistan International Bank renamed itself United National Bank
Limited (UNB). The ownership structure of the UNB remained as before. The only
change to the shareholding structure is that UBL had recently been privatized in
Pakistan and was now owned 49% by the Government of Pakistan and 51% by a joint
foreign consortium of Abu Dhabi.

• 2003 NBP received permission to open a branch in Afghanistan.

• 2005 NBP closed its offshore branch in Cairo.

Nature of the organization

National Bank of Pakistan is at the forefront of international banking in Pakistan
which is proven by the fact that NBP has its branches in all of the major financial
capitals of the world. Additionally, we have recently set up the Financial Institution
Wing, which is placed under the Risk Management Group. The role of the Financial
Institution Wing is:-

• To effectively manage NBP’s exposure to foreign and domestic

• Manage the monetary aspect of NBP’s relationship with the correspondents to
support trade, treasury and other key business areas, thereby contributing to the bank’s

• Generation of incremental trade-finance business and revenues.

National Bank of Pakistan (the bank) was incorporated in Pakistan under the National
Bank of Pakistan Ordinance,
1949 and is listed on all the stock exchanges in Pakistan. It’s registered and head
office is situated at I.I. Chandigarh Road, Karachi. The bank is engaged in providing
commercial banking and related services in Pakistan and overseas.
The bank also handles treasury transactions for the Government of Pakistan (GoP) as
an agent to the State Bank of
Pakistan (SBP). The bank operates 1,232 (2006: 1,232) branches in Pakistan and 18
(2006: 18) overseas branches (including the Export Processing Zone branch, Karachi).
Under a Trust Deed, the bank also provides services as trustee to National Investment
Trust (NIT) including safe custody of securities on behalf of NIT.
1.2 During the period, the bank has increased its authorized share capital from Rs.7,
500 million (750,000,000 ordinary shares of Rs.10/- each) to Rs.10, 000 million
(1,000,000,000 ordinary shares of Rs.10/- each) as approved by shareholders in their
general meeting held on April 02, 2007.

Corporate Philosophy at National Bank

 We at NBP believe that our customers are our most important and 1st
responsibility, we must, therefore, serve our present customers and promise to
serve our potential customers to the best possible on-counter and behind-
counter services. We should try to provide a total and integrate package of
services to create satisfied clientele. Our braches, regional offices and head
office should regard the customer as their most priority, serving them with
maximum possible helpfulness and courtesy.

 Our second most important responsibility is the employees who work for our
great institution. They must have their security, stability and fair treatment in
their jobs in recruitments and assignment, in training and development, in
promotion and placement. Till separation. They should be treated with dignity
and should be made to rise to their highest potential working condition should
be attended. Supervisor should be tough minded but fair in the pursuit of bank

 Our third most important responsibility is our executives and officers. They
should have talent, education, experience and ability with a premium, place on
commitment, knowledge, leadership and orientation towards action,
implementation, improvement and achievement of goals.

 Our fourth responsibility is to the communities that r served by our great
institution. Our 1st community is the Pakistani nation whose service is the
reason for our existence.

 Our 5th responsibly is to our owners and stockholders. We must make a sound
profit and protect our business by creating financial services.

Objectives of National Bank:

Objectives are ends towards which an enterprise activity is aimed. The
purpose of business is production and marketing of economic goods and services but
to accomplish these objectives to a number of enterprise objectives may be necessary.

National bank of Pakistan has certain objectives. These objectives are

(1) Advancing loans

(2) Accept deposits

(3) Remitting of funds

(4) Sale of promissory notes

(5) Selling and realizing property of bank claims

(6) Investment or underwriting of stocks

a. Advancing loans: one of the main objective of NBP is advancing loans to
industrialists and traders against security of stock, debentures or other

b. Accept deposits: Bank provides deposit facility to its customers. The
types of deposits are profit and loss saving accounts, Fixed account,
Current account.

c. Remitting of funds: The bank provides the facility to its customers
remitting large amounts of money in the form of bank Drafts, Telegraphic
Transfer, Mail Transfer to where ever the customers want.

d. Sale of promissory notes: To sell and realize the proceeds of sale of
any promissory notes, debentures, stock receipts, bounds, shares etc.

e. Selling and realizing property of bank claims: To manage sell and
realize all property whether moveable or immoveable which may come
in any way of the bank in satisfaction of its claim.

f. Investment or underwriting of stocks: To invest the funds of the
bank in or the underwriting of any of stocks, funds, shares securities,
debentures, bonds or scripts or other securities for money issued by
any public limited companies and to convert them into money when

Business volume:

The National Bank of Pakistan is the foremost bank determined to set higher
standards of achievements. It is the key business partner for the Govt. of Pakistan with
special emphasis on nurturing Pakistan’s economic growth through aggressive &
impartial lending polices.
The main functions of National bank of Pakistan are to provide commercial banking
& related services in Pakistan & abroad. It also handles treasury transactions for the
Govt. of Pakistan as an agent to State Bank of Pakistan.
Under a trust deed, the Bank also provides services as trustee to NIT, including
supervision of securities on behalf of NIT.
It also provides internet banking & moreover, they have recently set up the financial
institution wing.
The role of this wing is to effectively manage NBP’s association with the
correspondents to support trade, treasury & other key business areas; thereby
contributing to the bank’s productivity.
Ownership: NBP is 100% owned by the Government of Pakistan (GoP).

Deposits: NBP holds 24.6% share of time and demand deposits in the country. Local
currency deposits comprise 67% of bank's total deposits while foreign currency
deposits account for the rest.

Assets: NBP's total assets stood at PKR350 billion on December 2001. This included
total earning assets of about PKR268 billion with gross loan portfolio of PKR140
billion. The bank also has an investment portfolio of PKR91 billion, which comprises
treasury securities, corporate bonds, shares and other securities.

Deposits: As of December 2001 NBP had a paid-up capital of PKR1.46 billion
divided into 146 million shares of 10 rupees each. Total shareholders' equity was
PKR10 billion, however, revaluation reserve has increased shareholders' funds to
PKR16 billion. NBP has, however, increased its paid up capital from PKR Rs. 1.46
billion to Rs. 3.73 billion through issuance of bonus shares (subject to corporate and
shareholder approvals).
Financial Highlights:

Amounts in Million

Year to 1998 1999 2000 2001

Total Deposits 235,932 254,863 273,391 294,754

Total Assets 274,117 310,599 325,320 349,932

Total Equity 9,035 12,232 15,411 15,962

Total Loans 85,854 105,597 109,524 122,294

108,207 106,449 102,969 91,277

Net Profit (795) 62 529 (178)


Financial year: The financial year of the Bank commences from the 1st day of
January and ends on the 31st day of December every year.

Non-performing loans: As on 31 December 2002, the Bank's non-performing loans
(NPLs) amounted to Rs. 30,323 million, which was 19.11% of total advances as
against 21.48% as on 31 December 1999, showing an improvement of 2.37%.
Provision against non-performing advances was Rs 18,296 million as on 31 December
2000, which is 60.34% of NPLs.

This high ratio reflects prudence of the Bank's management while determining
provisions. Remaining NPLs are covered by forced sales value of mortgaged property,
Federal Government Guarantee or are in category other than loss.

The Special Assets Group at Head Office with full co-ordination between field
functionaries and Head Office is monitoring NPLs and deals with the classified
portfolio of the Bank along with Remedial Management, Legal framework, Statistical
Analysis of classified accounts, Revival of Sick Industrial Units, Consortium
Financing and Ex-Mehran Bank Limited affairs etc.

Calculation Of Different Ratios

Earning assets to total assets

Earning assets to total assets = Earning assets / total assets

Year 2001

Earning assets to total assets = 286230528 / 17510437


Year 2002

Earning assets to total assets =319676497/23936263


Return on earning assets

Return on earning assets = profit after taxation / earning assets

Year 2001

Return on earning assets =1148529/286230528


Year 2002

Return on earning assets =2253385/319676497


Loan loss coverage ratio

Loan loss coverage ratio = provision against non-performance loans
&advances/ profit or loss before taxation

Year 2001

Loan loss coverage ratio =2926554/3015629


Year 2002

Loan loss coverage ratio =1822154/6044811


Equity to total assets

Equity to total assets = total equity / total assets

Year 2001

Equity to total assets =11958673/17510437


Year 2002

Equity to total assets =14279303/23936263


Deposits time capital

Deposits time capital = deposits/ capital

Year 2001

Deposits time capital =33123726/3730384


Year 2002

Deposits time capital =13248569/3730384


Loans to deposits

Loans to deposits= loans/ deposits

Year 2001

Loans to deposits =170319096/33123726


Year 2002

Loans to deposits =140547374/13248569


Current ratio

Current ratio=current assets / current liabilities

Year 2001

Current ratio =79155081/2245349


Year 2002

Current ratio =55531453/3365744


According to national bank of Pakistan report:

Directors’ Report

It gives me great pleasure to present on behalf of the Board of Directors the quarterly
accounts for the six months period ended June 30, 2007. The Profit for the six months
period ended June 30,2007 after carry over of accumulated profit of 2006 is proposed
to be appropriated as follows: -
Rs. in million
Net Profit before taxation for the six months period ended June 30, 2007 14,001.591

- Current year 4,650.891
- Prior year(s) + 124.734
- Deferred 213.409
After tax profit 9,012.556
Un-appropriated profit brought forward 32,074.677
Transfer from surplus on revaluation of fixed assets – incremental depreciation- net of
deferred tax 19.504

Profit available for appropriation 41,106.737
Transfer to Statutory Reserve (10% of after tax profit) 901.256
Pre tax profit increased to Rs. 14,002 million from Rs. 12,196 million in the
corresponding period of last year, an increase of 14.8%. Basic and diluted earning per
share jumped to Rs. 11.05 from Rs. 9.83 during the same period of last year. Pre tax
return on equity stood at 50%. Return on assets improved to 4.2% up from 3.9% of
comparative period last year. Cost to income ratio of the bank remained in the top tier
at 0.33 Net interest margin registered impressive growth of Rs. 1,893 million or
13.2%. Net advances increased by Rs. 37 billion and Rs. 16 billion as compared to
corresponding period of last year and year end 2006. Deposits show impressive
growth of Rs. 51 billion or 10% from the year end.
During the year the bank launched “Premium Saver Account” (PLS Saving Account)
and Premium Amdani Certificate
(Monthly Income Scheme Account) offering attractive rates to small depositors.
We are pleased to inform the shareholders that in June 2007 JCR-VIS Credit Rating
Co. Limited upgraded standalone
medium to long-term rating of National Bank of Pakistan to AAA from AA+, the
highest in the banking sector.
JCR-VIS had earlier assigned two ratings to NBP. The stand-alone rating of “AA+/A-
1+” (Double A Plus / A One
Plus) reflected the intrinsic strength of the bank while the credit ratings of “AAA/A-
1+” (Triple A / A-ONE Plus) were based on the sovereign guarantee on the bank’s
deposits extended under the Bank Nationalization Act, 1974.
During the current rating review, JCR-VIS Credit Rating Co Limited (JCR-VIS) has
given due consideration to the sustainability observed in various indicators over the
past few years which reflect the significance of National Bank of Pakistan (NBP) to
the local economy. It is the only public sector bank in the country and has been able to
leverage the advantage to profitably tap certain avenues in both local and foreign
markets inclusive of running the largest treasury operations locally. The organization
has been able to strategically manage and build on its competitive advantages which
have translated into a strong and well - managed improvement in profitability trends
observed over the last few years, a substantial balance sheet footing of sound asset
quality, and strong liquidity and capitalization levels. Globally also, the bank is

strengthening its reach and has been actively constructing a branch network in recent
years with focus on South Asia, Central Asia and the Middle East, as well as China.
In consideration of the factors mentioned above, JCR-VIS has upgraded medium to
long-term rating of AAA on a stand-alone basis as well, negating the need for dual
We extend our appreciation to the bank’s staff for their commitment, dedication and
hard work in achieving these excellent results. We would like to express our
appreciation to our stakeholders, regulators and our valued customers for their support
and continued confidence in NBP.

On behalf of Board of Directors
S. Ali Raza
Chairman & President
Date: August 25, 2007

Auditors’ Review Report to the Members

We have reviewed the accompanying interim condensed balance sheet of National
Bank of Pakistan as at June 30,2007 and the related interim condensed profit and loss
account and interim condensed statements of cash flows and changes in equity
together with the notes forming part thereof (here-in-after referred to as “interim
financial information”) for the half year then ended. Management is responsible for
the preparation and presentation of this interim financial information in accordance
with approved accounting standards as applicable in Pakistan. Our responsibility is to
express a conclusion on this interim financial information based on our review. The
figures of the interim condensed profit and loss account for the quarters ended June
30, 2007 and 2006 have not been reviewed, as we are required to review only the
cumulative figures for the half year ended June 30, 2007.

Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements 2410, “Review of Interim Financial Information Performed by the
Independent Auditor of the Entity”. A review of interim financial information consists
of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International
Standards on Auditing and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.


Based on our review, nothing has come to our attention that causes us to believe that
the accompanying interim financial information is not prepared, in all material
respects, in accordance with approved accounting standards as applicable in Pakistan.


Chartered Accountants Chartered Accountants

Karachi Karachi

Date: August 25, 2007

National Bank of Pakistan
Interim Condensed Balance Sheet
As at June 30, 2007
(Un-audited) (Audited)
June 30, 2007
December31, 2007

NOTE ---------- (Rupees in ‘000) ----------

Cash and balances with treasury banks 102,862,412 78,625,227
Balances with other banks 41,229,750 40,641,679
Lending’s to financial institutions 32,753,638 23,012,732
Investments 4 163,434,648 139,946,761
Advances 5 331,795,453 316,110,406
Operating fixed assets 9,669,057 9,681,974
Deferred tax assets - -
Other assets 27,809,559 27,113,932
709,554,517 635,132,711


Bills payable 13,552,759 10,605,663
Borrowings 22,558,696 11,704,079
Deposits and other accounts 6 553,289,982 501,872,243
Sub-ordinate loans - -
Liabilities against assets subject to finance lease 20,137 13,235
Deferred tax liabilities 1,687,882 2,387,073
Other liabilities 25,743,415 26,596,300
616,852,871 553,178,593
NET ASSETS 92,701,646 81,954,118

Share capital 8,154,319 7,090,712
Reserves 14,788,500 13,879,260
Unappropriated profit 36,305,589 32,074,677
59,248,408 53,044,649
Surplus on revaluation of assets 7 33,453,238 28,909,469
92,701,646 81,954,118

The annexed notes 1 to 14 form an integral part of these interim condensed financial

National Bank of Pakistan
Notes to the Interim Condensed Financial Statement - (Unaudited)
For The Half Year Ended June 30, 2007


1.1 National Bank of Pakistan (the bank) was incorporated in Pakistan under the
National Bank of Pakistan Ordinance,
1949 and is listed on all the stock exchanges in Pakistan. It’s registered and head
office is situated at I.I. Chandigarh Road, Karachi. The bank is engaged in providing
commercial banking and related services in Pakistan and overseas.
The bank also handles treasury transactions for the Government of Pakistan (Gop) as
an agent to the State Bank of
Pakistan (SBP). The bank operates 1,232 (2006: 1,232) branches in Pakistan and 18
(2006: 18) overseas branches (including the Export Processing Zone branch, Karachi).
Under a Trust Deed, the bank also provides services as trustee to National Investment
Trust (NIT) including safe custody of securities on behalf of NIT.
1.2 During the period, the bank has increased its authorized share capital from Rs.7,
500 million (750,000,000 ordinary shares of Rs.10/- each) to Rs.10, 000 million
(1,000,000,000 ordinary shares of Rs.10/- each) as approved by shareholders in their
general meeting held on April 02, 2007.


2.1 These interim condensed financial statements have been prepared in accordance
with approved accounting standards (please also see 2.2 and 2.3 below) as applicable
in Pakistan and the requirements of the Companies Ordinance,
1984 and the Banking Companies Ordinance, 1962 and the directives issued by the
Securities and Exchange Commission of Pakistan (SECP) and the SBP. Approved
accounting standards comprise of such International Financial Reporting
Standards as notified under the provisions of the Companies Ordinance, 1984.
Wherever the requirements of the Companies Ordinance, 1984, Banking Companies
Ordinance, 1962 or directives issued by the SECP and the SBP differ with the
requirements of these standards, the requirements of the Companies Ordinance, 1984,
Banking Companies Ordinance, 1962 or the requirements of the said directives take

2.2The SBP has deferred the applicability of International Accounting Standard
(IAS) 39, 'Financial Instruments: Recognition and Measurement' and
International Accounting Standard (IAS) 40, 'Investment Property' for
Banking Companies through BSD Circular No. 10 dated August 26, 2002.
Accordingly, the requirements of these standards have not been considered in
the preparation of these interim condensed financial statements. However,
investments have been classified and valued in accordance with the
requirements prescribed by the SBP through various circulars.

2.3 The disclosures made in these interim condensed financial statements have been
limited based on the format prescribed by the SBP vide BSD Circular No. 2, dated
May 12, 2004 and International Accounting Standard (IAS) 34, 'Interim
Financial Reporting' and do not include all the information required in the annual
financial statements. Accordingly, these interim condensed financial statements
should be read in conjunction with the annual financial statements of the bank for the
year ended December 31, 2006.


The accounting policies adopted in preparation of these interim condensed financial
statements are consistent with those followed in the preparation of the annual
financial statements of the bank for the year ended December 31, 2006.

National Bank of Pakistan and its Subsidiary Companies
Notes to the Interim Condensed Consolidated Financial Statement - (Unaudited)
For The Half Year Ended June 30, 2007


1.1 The "Group" Consist of:

Holding Company
- National Bank of Pakistan (the bank)

Subsidiary Companies
- NBP Capital Limited
- CJSC Subsidiary Bank of NBP in Kazakhstan
- NBP Exchange Company Limited
- NBP Modaraba Management Company Limited
- Taurus Securities Limited
- National Agriculture & Storage Company Limited
- Cast-N- Link Products Limited
The Group is engaged in commercial banking, modaraba management, brokerage,
leasing and discounting services.
The bank was incorporated in Pakistan under the National Bank of Pakistan
Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. Its registered and
head office is situated at I.I. Chundrigar Road, Karachi.
The bank is engaged in providing commercial banking and related services in
Pakistan and overseas. The bank also handles treasury transactions for the
Government of Pakistan (GoP) as an agent to the State Bank of
Pakistan (SBP). The bank operates 1,232 (2006: 1,232) branches in Pakistan and 18
(2006: 18) overseas branches (including the Export Processing Zone branch, Karachi).

Under a Trust Deed, the bank also provides services as trustee to National Investment
Trust (NIT) including safe custody of securities on behalf of NIT.
NBP Capital Limited, CJSC Subsidiary Bank of NBP in Kazakhistan, NBP Exchange
Company Limited, NBP
Modaraba Management Company Limited and National Agricultural & Storage
Company Limited are wholly owned subsidiaries of the bank while the controlling
interest in Taurus Securities Limited is 58.32% and cast-
N-Link Products Limited is 76.51%.

1.2 Basis of Consolidation

- The interim condensed consolidated financial statements include the interim
condensed financial statements of the bank (holding company) and its subsidiary
companies - "the Group".
- The assets and liabilities of subsidiary companies have been consolidated on a line
by line basis and the carrying value of investments held by the bank is eliminated
against the subsidiaries' shareholders' equity in the interim condensed consolidated
financial statements.
- Minority interest is that part of the net results of operations and of net assets of
subsidiary companies attributable to interests which are not owned by the bank.
- Material intra-group balances and transactions have been eliminated.
- National Agriculture & Storage Company Limited and Cast-N-Link Product Limited
have not been consolidated, as these investments are fully provided and financial
statements of these subsidiaries are not available.
1.3 During the period, the holding company has increased its authorized share capital
from Rs.7, 500 million (750,000,000 ordinary shares of Rs.10/- each) to Rs.10, 000
million (1,000,000,000 ordinary shares of Rs.10/- each) as approved by shareholders
of the bank in their general meeting held on April 02, 2007.


2.1 These interim condensed financial statements have been prepared in accordance
with approved accounting standards (please also see 2.2 and 2.3 below) as applicable
in Pakistan and the requirements of the Companies
Ordinance, 1984 and the Banking Companies Ordinance, 1962 and the directives
issued by the Securities and
Exchange Commission of Pakistan (SECP) and the SBP. Approved accounting
standards comprise of such
International Financial Reporting Standards as notified under the provisions of the
Companies Ordinance, 1984.
Wherever the requirements of the Companies Ordinance, 1984, Banking Companies
Ordinance, 1962 or directives issued by the SECP and the SBP differ with the
requirements of these standards, the requirements of the
Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or the
requirements of the said directives take precedence.
2.2 The SBP has deferred the applicability of International Accounting Standard (IAS)
39, 'Financial Instruments:
Recognition and Measurement' and International Accounting Standard (IAS) 40,
'Investment Property' for Banking
Companies through BSD Circular No. 10 dated August 26, 2002. Accordingly, the
requirements of these standards have not been considered in the preparation of these
interim condensed consolidated financial statements.
However, investments have been classified and valued in accordance with the
requirements prescribed by the SBP through various circulars.
2.3 The disclosures made in these interim condensed consolidated financial
statements have been limited based on the format prescribed by the SBP vide BSD
Circular No. 2, dated May 12, 2004 and International Accounting
Standard (IAS) 34, 'Interim Financial Reporting' and do not include all the
information required in the annual consolidated financial statements. Accordingly,
these interim condensed consolidated financial statements should be read in
conjunction with the annual consolidated financial statements of the bank for the year
ended December

31, 2006
2.4 These interim condensed consolidated financial statements are not subjected to
limited scope review by the auditors


The accounting policies adopted in preparation of these interim condensed
consolidated financial statements are consistent with as those followed in the
preparation of the annual consolidated financial statements of the bank for the year
ended December 31, 2006.

Product lines:
The National Bank of Pakistan offers a wide range of services to its customers &
recognizes the importance of efficient business delivery & providing timely solutions.
These are a list of services that NBP offers.
1. Demand Drafts
2. Swift System ( Society for worldwide Inter bank Financial
3. Letter of Credit
4. Pay Order
5. Mail Transfer
6. Foreign Remittance
7. Foreign Currency Account
8. Short Term Investment
9. NIDA * ( National Income Daily Accounts) Equity Investment

10. Commercial Finance
11. Trade Finance
12. International finance
13. Home Finance
14. Traveler’s Cheques
15. Personal Loans
16. Retail products
17. NBP Cash Card

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.

Move your money safely and quickly using NBP Mail Transfer service. And we also
offer the most competitive rates in the market.

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.

Negotiability: Pak Rupees Traveler’s Cheques are a negotiable instrument
Validity: There is no restriction on the period of validity
Availability: At 700 branches of NBP all over the country
Encashment: At all 400 branches of NBP
Limitation: No limit on purchase
Safety: NBP Traveler’s Cheques are the safest way to carry our money


NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.

Let us help make your dreams become a reality
Our dedicated team of professionals truly understands the needs of professionals,
agriculturists, large and small business and other segments of the economy. They are
the customer’s best resource in making NBP’s products and services work for them.

To facilitate its customers in the area of Home Remittances, National Bank of
Pakistan has taken a number of measures to:

• Increase home remittances through the banking system
• Meet the SBP directives/instructions for timely and prompt delivery of
remittances to the beneficiaries PakRemit™
Remit funds from USA to Pakistan

New Features:
The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at 15 overseas branches of the Bank
besides United National Bank (the joint venture between NBP and UBL in UK)., and
Bank Al-Jazira, Saudi Arabia.
• Zero Tariffs: NBP is providing home remittance services without any charges.
• Strict monitoring of the system is done to ensure the highest possible security.
• Special courier services are hired for expeditious delivery of home remittances
to the beneficiaries.

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system
has built-in features of computerized test keys, which eliminates the manual
application of tests that often cause delay in the payment of home remittances.

The SWIFT Center is operational at National Bank of Pakistan with a universal access
number NBP-PKKA. All NBP overseas branches and overseas correspondents (over
450) are drawing remittances through SWIFT.
Using the NBP network of branches, you can safely and speedily transfer money for
our business and personal needs.

NBP now offers excellent rates of profit on all its short term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are
extremely attractive, along with the security and service only NBP can provide.
National Income Daily Account The scheme was launched in December 1995 to
attract corporate customers. It is a current account scheme and is part of the profit
and loss system of accounts in operation throughout the country.


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
• 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.


NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers
who produce some of the best agricultural products in the World.
Agricultural Finance Services:
“I Feed the World” program, a new product, is introduced by NBP with the aim to
help farmers maximize the per acre production with minimum of required input.
Select farms will be made role models for other farms and farmers to follow, thus
helping farmers across Pakistan to increase production.
Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:-
• Providing reliable infrastructure for agricultural customers

• Help farmers utilize funds efficiently to further develop and achieve better
• Provide farmers an integrated package of credit with supplies of essential
inputs, technical knowledge, and supervision of farming.
Agricultural Credit (Medium Term):
• Production and development
• Watercourse improvement
• Wells
• Farm power
• Development loans for tea plantation
• Fencing
• Solar energy
• Equipment for sprinklers

Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis.
• Operating loans
• Land improvement loans
• Equipment loans for purchase of tractors, farm implements or any other
• Livestock loans for the purchase, care, and feeding of livestock

Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertilizers, sprayers, etc are all covered under this scheme.
If you require any further information, please do not hesitate to e-mail us.


Working Capital and Short Term Loans:
NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-
shipment and Post-shipment financing to exporters – Running finance – Cash Finance

– Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-
shipment / Post Shipment Agricultural Production Loans
Medium term loans and Capital Expenditure Financing:
NBP provides financing for its clients’ capital expenditure and other long-term
investment needs. By sharing the risk associated with such long-term investments,
NBP expedites clients’ attempt to upgrade and expand their operation thereby making
possible the fulfillment of our clients’ vision. This type of long term financing proves
the bank’s belief in its client's capabilities, and its commitment to the country

Loan Structuring and Syndication:

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

Cash Management Services:
With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s
total financial position right from your desktop computer. They will also be able to
take advantage of our outstanding range of payment, ejection, liquidity and
investment services. In fact, with NBP, you’ll be provided everything, which takes to
manage your cash flow more accurately.

Student Loan Scheme

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002
budget speech, a STUDENTS LOAN SCHEME (SLS) for Education was launched
by the Government of Pakistan in collaboration with major commercial banks of
Pakistan (NBP, HBL, UBL, MCB and ABL). Under the Scheme, financial assistance
is provided by way of Interest Free Loans to the meritorious students who have
financial constraints for pursuing their studies in Scientific, Technical and
Professional education within Pakistan.
The Scheme is being administered by a high powered committee comprising Deputy
Governor, State Bank of Pakistan, Presidents of the commercial banks and
representative of Ministry of Finance, Government of Pakistan.
ADMINISTRATOR OF THE SCHEME: National Bank of Pakistan
Under the scheme the students are eligible to apply for loans provided:
He/She has obtained admission on merit through normal course/procedure in the
approved Universities/Colleges of the public sector mentioned hereunder.
He/She falls at the time of admission within the age bracket of:-

For Graduation Not exceeding 21 Years
For Post-Graduation Not exceeding 31 Years
For Ph.D Not exceeding 36 Years
He/She has secured 70% marks in the last public examination.
He/She has undertaken the study of the subjects given below.
He/She is unable to pursue studies due to financial constraints.

The loan facility will be available for entire duration of the study for:-
Schedule Fee Paid directly to the
Boarding expenses excluding meal charges
Procurement of textbooks --- Disbursed directly to the student

The maximum period of repayment of loan is 10-Years from the date of disbursement
of first installment. The borrower shall repay the loan in monthly installment after six
months from the date of completion of studies.
i) Engineering ii) Electronics
iii) Oil Gas & Petro-Chemical Technology iv) Agriculture
v) Medicine vi) Physics
vii) Chemistry viii) Biology, Molecular Biology & Genetics
ix) Mathematics x) Other Natural Sciences
xi) DAWA and Islamic Jurisprudence (LL.B/LL.M Sharia) xii)Computer
Science/Information System and Technology including hardware.
xiii) Economics, Statistics and Econometricsxiv) Business Management Sciences
xv) Commerce


These are competitors of National bank of Pakistan.

1. United Bank Limited
7. Habib Bank Limited
8. Muslim Commercial Bank
9. Allied Bank Limited


Organizational hierarchy chart:







Number of employees:
In national bank of Pakistan Jhelum branch 23 employees
are working in different departments.

Main offices:
National Bank Building

I.I. Chundrigar Road Karachi. Address: NBP Building, I.I. Chundrigar Road, Karachi.

Comments on the organization structure:
The National Bank has great contribution towards building wide Banking structure
in Pakistan and serving all aspects of the National life and all classes of society. NBP
is fully aware of the developments taking place in the world as well as the changes
occur in the economic and social condition with in the country. The bank is
determined to meet new challenges by redefining its goals and strategy.



National Bank of Pakistan is a Govt. bank. It has its head office in Karachi. It has over
1,232 branches in Pakistan & 18 abroad.

In Jhelum, Civil Lines Branch is a main branch of National Bank of Pakistan.
Branch code is 0344 & phone number is 0544-9270185, fax: 0544-9270188.
Branch manager of civil lines Jhelum branch is Mr. Anwaar.
Operational Manager is Mr. Khushhal Anjum.
It has so many departments, Bills Department, Deposit section, Credit section,
Foreign exchange, clearing section etc.
23 employees are working in this branch. They are all hard working. There is also a
regional office of NBP in Jhelum.


I start internship at this branch. The duration of my internship program was 6 weeks.


There are so many departments of national bank of Pakistan in which I got training.
In Bills department I worked for two weeks.
In clearing department I worked for one week.
In foreign exchange I worked for one week.
In credit section I worked for one week.
In deposit section I worked for one week.


In order to be able to cope with the changing environment it is necessary to
have some practical experience. As the students of Business Administration
we have to pass through a series of various managerial techniques. During this
practical course we are provided with an opportunity to learn that how the
theoretical knowledge can be implemented in practical grounds.

I was selected to do my internship in National Bank of Pakistan chest Branch Jhelum.
I worked there for six months & it gave me a greater practical knowledge about the
operations of a bank. In this section I have narrated my experience, observations & all
the working activities which I observed during my six week internship at National
Bank of Pakistan chest Branch Jhelum.



Bills department is one main department in which I work for longtime. Sir Aziz is
head of the Bills department. Bills department is responsible for the passing of Govt.
bills, pensions, preparing their records, making fan forts, recording the transactions of
transfer also, balancing the cash record & transfer record with the cash section.

This section is responsible for making the records of P-Pensions, c-pensions, railways
pensions, EOBI, Distt. Bills, central bills, Punjab bills separately. After balancing
cash, recording amount in vouchers (debit & credit vouchers).

It performs following functions:

a. Inward bills for collection or IBC

b. Outwards bill for collection or OBC

Inward bills for collection:

These are bills or cheques etc which are collected
locally. They are received from outstation branches banks and parties.

Demand draft: it refers to the payments of money on demand of the holder of
draft. Demand draft includes DD issues and DD payable.

Outwards bill for collection (OBC):

Clean bills: these are negotiable instruments, drawn on outstation
branches; bills sent for collection on behalf of the customers for example
cheques, drafts or treasury bills etc.

Documentary bills: these are bills accompanied by documents such as
R.R.T.R bills of landing etc. having title to goods, collected by the bankers on
behalf of their customers.

Pay slip: pay slip is an instrument in receipt issued by the bank in the
following cases.

1. On account of expenditure incurred by the bank.

2. On account of refund of a payment to a person under certain

Pay order: pay order is issued to other banks for collection of make the
payment as said.

This department is performing following functions

a. Collection of utility bills
b. Collection of dues of education institution

c. Payment of salaries
d. Payment of zakat
e. Payment of pension


In clearing department I worked for one week.
a. Introduction
b. Clearing house
c. Advantage of clearing house
d. Function of clearing department
e. Procedure of depositing cheque
f. Types of cheques collected by clearing department
g. Scrutiny of pay in slip
h. Procedure after scrutinizing
i. Procedure of clearing in clearing house

Every bank acts in two ways.
a. Paying Bank
b. Collecting Bank
Here in theory no legal obligation on a banker to collect cheques, drawn up
to other bank for a customer. It is however an important function of
crossed cheques. A large part of this work is carried out through the
bankers clearing house whenever it is established.

Clearing House:
A clearing house is the place where representatives of
all the banks get together for the purpose of off setting the interbank
indebtedness arising from the transfer of deposits by a customer of a
particular bank to another bank.

Advantage of clearing house:
The advantages of clearing house are
manifold. It prevents the cost and waste involved in collection each and
every cheque and claim. Which a banker holds against another across the
counter with all the danger of loss in the transit incumbent upon it. Great
economy is also achieved in the employment of liquid cash by setting the
differences by simpler transfer of credit from one account to another, there
by minimizing the necessity of holding large cash balances, clearing house
works under the control of State Bank of Pakistan.
A banker has no legal obligation to collect cheques drawn upon other
banks for the customers, through modern banks have assumed this
important function of their own choice. Therefore it is very important that
since they have assumed this function, the banker should be very careful in
their performance. Otherwise they will face more difficulties. So if they
will provide this facility when the cheque is crossed.

Function of Clearing Department:

The following are main functions of clearing department.
1. To accept transfer deliveries and clearing cheques from the customer of the
branch and to arrange for their collection.
2. To arrange the payment of cheque drawn on the branch and given for
collection to any other branch of national bank of Pakistan or any other
members or sub members of the local clearing house.
3. To collect amounts of cheques drawn on members, sub members of the local
clearing house, sent by those branches which are not represented as the local
clearing house.

Clearing on options exchanges
The Options Clearing Corporation is an example of a clearing house that
functions for the purpose of clearing equity options and bond derivatives, in
order to ensure the proper implementation of these instruments.

Clearing on futures exchanges

The NBP Clearing House also acts as the clearing house.
It gives clearing on future exchanges.
Clearing of payments
NBP use the ACH to transfer funds either as debits or credits between
participating institutions. Typical uses of ACH transactions are for automatic
payroll programs, monthly mortgage or membership payments, or among non-
profit organizations, as a monthly donor/contribution program.

Clearing of securities
Clearing of securities is also the function of clearing house.
Procedures of Depositing Cheques in Clearing Department:

Whenever customers want to deposit cheques etc, he fills a pay in slip and it’s
over the counter along with the instruments he wants to deposit with bank. As
far as possible, the customer desire that on of the staff member fill in a slip
from him, he should be obliged promptly.
The smaller portion of the perforated pay in slip is handed over to the
depositor and the portion becomes the regular portion of a credit voucher.

Type of Cheques Collected by Clearing Department:
1. Cheques drawn on collecting bank branch. It is sorted A/C wise,
particulars, dates, and amount. Balance, check signatures, verified &
passed on counter for posting in relevant A/C.
2. Cheques drawn on collecting bank branches in the towns. As soon as
cheque received, these are crossed with bank crossing stamp, sorted out
branch wise & sent to concerned branch.

3. Cheques drawn on other banks. Crossed check by banks crossing stamps &
are sorted & dealt with through useful crossing process.
Clearing services offered:
a. Overnight clearing
b. Same day / high return clearing
c. Country wide local vs. Dollar clearing
Clearing Divided:
1. Outward clearing/ within city
2. Inward clearing/ within bank
3. Same day clearing
Mr. Javed is in charge of clearing section.
They enter in register A/c number, amount, and cheque number in
the column of particular bank separately & in one column number
wise, after that write total amount in the end.
After doing this they attach qamma with the cheques of different
bank & return them to the banks.
For clearing purpose following points must be verified.
a. The instruments should be neither stale nor post dated.
b. If the instrument is crossed not negotiable it can be for the third
c. The instrument should not bear any unauthorized alteration.
d. The amount in words and figures should be the same.
e. The instruments should be drawn on a member or any of local
f. If the cheque is crossed “Account payee’s” “Account payee
only” or “payee’s Account”, it should only be accepted for
collection for the payee’s account.
g. The cheques or drafts should not be crossed specially to any
other bank.
h. A cheque payable to a firm should not be accepted for credit to
a partner’s account.
i. A cheque payable to one of the joint account holder should not
be collected for the joint account without the payee’s
endorsement or consent.

A cheque drawn by a customer in the capacity of an agent,
attorney or manager of his company or firm, should not be
collected for credit to his personal account.
j. Pay orders although negotiable should not be collected for third
k. Do not collect an instrument in the accounts of an agent or of
the servant of the payee’s of endorsee of the instruments.
l. Mail transfer receipts pay ships and treasury receipt should not
be collected for persons other than the payee.
m. If an account is new or the balance or operation of the account
is not satisfactory, satisfy yourself about the titles of the
customer to the instruments before the title of the customer to
the instrument before accepting the deposit.
n. Branch agent’s permission should be obtained before accepting
a third party cheque or draft for credit of the account of the
staff member.
o. If the payee is a govt. department, govt. official, or a trust
account, the instrument cannot be collected but for the payee’s
p. Cheque pay able to a trust, account should not be collected for
credit to a trustee account.
q. If the payee of an instrument is National Bank of Pakistan, it
can be collected for credit of the drawer’s account or the
amount of the instrument may be utilized as desired by the
drawer in writing.
r. All the endorsement should be regular and on endorsement
should be missing. After the cashier scrutinizes the cheques he
must also scrutinize the pay in slip.

Scrutiny of pay-in-slip:
These are the steps of the scrutiny of pay in slip.
o On both the counterfoil and the pay in slip following
should be checked.
 Date of deposits

 Account number
 Title of account
 The cheque/number and the drawer bank/name
 Total amount in words and figure
o Customer should be used separate pay in slip for transfer,
transfer delivery and clearing cheques.
o The amount noted should be the same as the amount of the
instruments and the amount in words and figures should be

Procedures after scrutinizing:
After scrutinizing the cheques and other deposit instruments
and paying slip at the counter the following procedure is
under taken by cashier if he is satisfied.
 Fixing the stamp
 Scrutiny and receipt by the authorized officer
 Returning the counter foil to the depositor
 Certificates and confirmation by the officer in charge of
the department
 Separating the cheque into transfer delivery and
clearing cheque.

Procedures of clearing at clearing house:

The mechanism of setting inter bank indebtedness
operates as follows.
Clerks representing various banks meet at a common
place, the clearing house everyday. Every clerk then
delivers to the others the cheques and the other claims
which their respective banks hold against his banks hold
against his bank cheques and other documents
dishonored will be returned to the representative of the
respective bank. The various amounts of receipts and

deliveries are now added up and a balance is struck
there in and the final settlement is effected by the
supervisor of the clearing house by transferring balance
kept and the central bank by these various clearing


In foreign exchange I worked for one week. Sir Ansar majeed is in charge of
foreign exchange department.
Foreign Exchange, currency and money claims, such as bank balances and bank
drafts, expressed in the equivalent value in foreign money.
In the broader sense, the word foreign exchange is related to the exchange of methods
through which
o The currency of the one country is exchanged for that of another;
o The forms in which exchanges are conducted and
o The ratio at which they are affected.
National central banks play an important role in the foreign exchange markets. They
try to control the money supply, inflation, and/or interest rates and often have official
or unofficial target rates for their currencies. They can use their often substantial
foreign exchange reserves to stabilize the market.
The use of foreign exchange arises because different nations have different monetary
units, and the currency of one country cannot be used for making payments in another
country. Because of trade, travel, and other transactions between individuals and
business enterprises of different countries, it becomes necessary to convert money
into the currency of other countries in order to pay for goods or services in those

countries. The transfer of money values from one country to another and the
determination of the price at which the currency of one country will be surrendered
for that of another constitute the main problems of foreign exchange.
Foreign exchange plays an important role in the payments of international trade.
The foreign exchange market is unique because of
1. Its trading volumes,
2. The extreme liquidity of the market,
3. The large number of, and variety of, traders in the market,
4. Its geographical dispersion,
5. Its long trading hours: 24 hours a day except on weekends (from 5pm EST
on Sunday until 4pm EST Friday),
6. The variety of factors that affect exchange rates.
7. The low margins of profit compared with other markets of fixed income
(but profits can be high due to very large trading volumes)
8. The use of leverage

Foreign exchange transactions:
 Merchandise transaction:
These consist of visible imports and exports. Purchase of goods for abroad and
sale of goods to abroad.
 Service transaction:
These represent inward and outward payments in respect of shipping,
insurance, banking and travel services. It includes payments in respect of
interest, dividends, rents and profits etc.
 Unrequited transactions:
In indicates the payments and receipts from of reign countries in shape of such
items as home remittances by workers abroad, gifts, aids etc.
 Capital account transactions:
These are further divided into two classes.
a. Long term capital transfers:

Those transfers whereby residents of one
country acquire securities (stocks and bonds) and tangible assets (land) in
foreign countries with the purpose of earning profits in future.
b. Short term capital transfers:
Those transfers which move relatively
quick from country to country.
 Fore speculative purposes
 To take advantages of differences in interest rates
 As balancing items where a country has a debit or credit
balance on current accounts
For example:
• Money gold and
• Holdings of commercial credit, bills, cheques etc
• Transactions with I.M.F
In National Bank of Pakistan, four currency accounts are available:

1. US Dollar
2. Pound Sterling
3. Japanese Yen
4. Euro

The department performs the following functions:
1. Account opening
2. Account closing
3. Inward/outward remittance
4. Issuance of traveler cheques

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.

Procedure of Account Opening and Depositing Foreign Exchange:

First of all, the customer is required to fill an application form. Then he
attaches the photocopy of his identity card and fills the signatory cards. Then
he is allotted an account number by entering in the account opening register.
Now he fills the pay-in slip and deposits money on the counter.
Following things are needed for opening of account:
1. Account opening form
2. Signature card
3. Letter of kinship
4. Letter of thanks
5. Issuances of cheque book
Account opening form: Account opening form consist of
a. Category of account
b. Currency
c. Title of account
d. Account number
e. Customer information
f. Initial deposit
g. Authorized person in case of customer death
Signature card: The signature card included the name and specimen signature
of the customer
Letter of kinship: In the letter of kinship the customer authorized the bank to
pay the proceedings of his/her PLS/Current foreign currency account to the
related person by describing the relationship of the person with the customer
after the death of the customer.

Letter of thanks: Letter of thanks is the latter issued by the bank to the
customer for two purposes
1) 1st purpose is to say thanks to the customer for opening the account in
their bank
2) 2nd purpose is to confirm the address provided by the customer while
opening the account.
Issuance of cheque book: Cheque book is issued to the customer after
sending the letter of thanks when the customer comes with the letter of thanks
and requests for the issuance of the cheque book. A cheque book (usually
having 25 leaves) is issued to the customer.
Closing of Account: The customer can close the account. The customer is
required to submit an application for closing the account. The account is
closed out and his balance is paid to him after deducting the closing charges,
i.e. $ 20 and the application is filed in account closing file.
There are many reasons for closing of account
1. Account holder Owen request
2. Death of account holder
3. Closing of account due to the bad manners of account holder
Inward/Outward Remittances:
The remittances are of following types:
a. Foreign Telegraphic Transfer (FTT)
b. Foreign Demand Draft (FDD)
c. Foreign mail transfer(FMT)
e. Western union money transfer(WUMT)
f. Foreign Exchange Bearer Certificates (FEBC)
g. Special US Dollar Bond
Foreign Telegraphic Transfer: This is telegraphic transfer just like ordinary
local currency TT, but this is foreign currency. Its charges are fixed, i.e., if
payment is in cash, charges are Rs. 1500. If payment is through account, Rs.
1200; if deposit is above Rs. 50,000 charges are Rs. 600.
NBP has its correspondent bank in New York. NBP gives credit to main office
Karachi, which gives credit to NPB New York, which gives credit to NPB,
which ultimately gives credit to required destined bank and account number.

Mode of payment can be cash or by debiting the account. When FTT is
received from abroad, NBP debits Main Office Karachi account and gives
credit to the account of beneficiary.
Foreign Demand Draft: Foreign Demand draft is also known as FDD. A
person who wishes to remit money to someone in another place may if he does
not send his own cheque, obtain from his bank a draft on demand payable to
the person who is to be paid the money. It may be drawn upon one of the
banker’s own branches, or upon some other bank where exists for draft to be
drawn. Whenever a draft is drawn own advice is dispatches the same day.
Advising the bank or branch as the case may be, of the particular of the draft
of that banker on whom it is drawn may recognize the draft was it is presented.
When a person requires a draft, he should be asked to complete the prescribed
application form in which he should state the amount of the draft, the name of
the payee and the place of payment. The bank charges commission Rs. 500
flat, excise duty Rs. 4 for charges.
After receipt of money, the entry is passed in FDD register and a number is
allotted to FDD. Then FDD is prepared and given to the customer. After this,
they give credit to Main Office Karachi, and advice is also sent to Karachi.
Foreign Mail Transfer: These are also known as FMT. Transfer by mail of
an account of currency to another country. The Remitter sign auroras
requesting the banker to transfer the amount by mail, giving the name and
address of the payee.
Foreign Bills for Collection: Under this head, all foreign cheques are
included whose payments are to be received from abroad.
When a customer asks the bank for collection, the cheque is sent to the bank
on which is drawn. Then on the receipt of advice from abroad, the customer’s
account is credited in the bank and debit the Main Office Karachi account.
The bank charges $10 or the equivalent amount in rupees.
Foreign Exchange Bearer Certificates (FEBC): Foreign Exchange Bearer
Certificates can only be issued from Foreign Currency Account and not from
deposit of local currency. The maturity period of these certificates are 5 years,
7 years and 9 years. It can be issued and enchased only in rupees. The
customer account is debited and state bank of Pakistan (SBP) is credited.

Special US Dollar Bond: The bonds have the maturity period of 3 years, 5
years and 7 years. The bank gives the interest at the rate of 5% + LIBOR, i.e.
2%, 3% and 4% respectively.
Traveler Cheques

Issuance of Traveler Cheques: NBP issues the traveler cheques to those
people who want to travel abroad. These are not drawn on any specified bank
or banks, but payable at practically all banks throughout the world and
guaranteed by some well-known institution. National bank purchases the
traveler cheques from American Express Bank and makes the payment after
selling it to the client.
Procedure: A customer is required to submit the following things:
Valid passport with visa
Return ticket
Currency to be deposited in Pak Rupees. Ticket is endorsed. It is converted on
the selling rate of that day. Traveler cheques are issued. Their limit is $50 per
day for private visit and maximum limit for the year is $2100.
Limit for businessman is $200 per day and maximum limit is $6000. But
approval from Chamber of Commerce & Industry is required and certificate of
ticket issue for which the payment must be made through cheque. Pak rupee
currency account is necessary, and he has to present cheque for the amount to
the bank. Endorsement of the ticket is very essential. Issuing ticket authority
should endorse its stamp on the passport.
The SWIFT system (Society for Worldwide Inter bank Financial
Telecommunication) has been introduced for speedy services in the area of
home remittances. The system has built-in features of computerized test keys,
which eliminates the manual application of tests that often cause delay in the
payment of home remittances. The SWIFT Center is operational at National
Bank of Pakistan with a universal access number NBP-APKKA. All NBP
overseas branches and overseas correspondents (over 450) are drawing
remittances through SWIFT. In case of transfer of funds the introduction of
S.W.I.F.T., an acronym for Society for Worldwide Inter-bank Financial
Transactions, has made remittances faster and secure. The system works like

Internet communication processes. All the banks in the world are registered for
the service, which have the facility of online computers. Headquarter of
S.W.I.F.T. is in Belgium. The message sent through this way does not require
any code tests to confirm its authenticity. The sending process is more secure
where two officers make the transmission of the message, one types the
content with his code word and the other executes it with his password. There
are different types of codes that are used for the messages interchanged on the
basis of the type of the transaction. Using the NBP network of branches, you
can safely and speedily transfer money for our business and personal needs.
Swift is a soft wear .it is use for following purposes
Financial transactions
Non-financial transactions
Import export
Different codes are used in swift for different purposes
Latter of credit code is 700
Remittance code is 100
Bank to bank transaction code is 202.etc.
Procedure: When any massage comes through swift 1st its received by head
office then head office authority send that massages to different banks via mail
to main branches of relative banks.
Western Union Money Transfer: Western union money transfer is a fastest
way to receive money worldwide. It is working in almost 200 countries.
Different Govt. and private organization are dealing with WUMT
Govt. organization e.g. banks
Private organizations e.g. Zarco, Money changer, Dollar East, Master
Main office of WUMT is situated in Dubai, it is a procedure of counter
Time required in only one hour and deduction on it is $50.
Procedure of payment
WUMT just needed identification, no need of a/c, its an counter payment
Procedure of payment is that the customer came to specific person who is
dealing with WUMT tell him the

2) Receiver name
a. First name
b. Middle name
c. Last name
3) Sender name
a. First name
b. Middle name
c. Last name
4) Telephone no
5) Photo copy of ID card

6) Expected amount (10% margin is acceptable)
7) Test question
After if the that related officer feed MTC # (mail transfer control) , it is unique
number not less then 10 digits, receiver name , his/her 1st name and last name,
and sender name to check whether amount is come or not . When all these
things are correct then give a form to the receiver, he/she filled the specific
form, after that office done his signature and give one copy to customer, other
copy send to the cash counter for payment and the last copy for put in file for
the purpose of record. Payment is made only in Pak rupees.
WUMT form: It form is divided into three sections
a. 1st for receiver information, his name, address and telephone number
b. 2nd section for sender, his name, address telephone number
c. 3rd section is for expected amount, MTC number, test question,
There are three copies of form 1st for counter payment, 2nd for customer and
3rd for branch record.

A spot transaction is a two-day delivery transaction (except in the case of the
Canadian dollar, which settles the next day), as opposed to the futures
contracts, which are usually three months. This trade represents a “direct

exchange” between two currencies, has the shortest time frame, involves cash
rather than a contract; and interest is not included in the agreed-upon
transaction. The data for this study come from the spot market. Spot has the
largest share by volume in FX transactions among all instruments.

One way to deal with the Forex risk is to engage in a forward transaction. In
this transaction, money does not actually change hands until some agreed upon
future date. A buyer and seller agree on an exchange rate for any date in the
future, and the transaction occurs on that date, regardless of what the market
rates are then. The duration of the trade can be a few days, months or years.
Foreign currency futures are forward transactions with standard contract sizes
and maturity dates.
The most common type of forward transaction is the currency swap. In a
swap, two parties exchange currencies for a certain length of time and agree to
reverse the transaction at a later date. These are not standardized contracts and
are not traded through an exchange.

A foreign exchange option (commonly shortened to just FX option) is a
derivative where the owner has the right but not the obligation to exchange
money denominated in one currency into another currency at a pre-agreed
exchange rate on a specified date. The FX options market is the deepest,
largest and most liquid market for options of any kind in the world.
Exchange Traded Fund
Exchange-traded funds (or ETFs) are Open Ended investment companies that
can be traded at any time throughout the course of the day.
Controversy about currency speculators and their effect on currency
devaluations and national economies recurs regularly.

Market participants
Financial markets, Bond market, Fixed income, Corporate bond, Government
bond, Municipal bond, Bond valuation, High-yield debt, Stock market, Stock,
Preferred stock, Common stock, Registered share, Voting share, Stock
exchange, Foreign exchange market , Derivatives market, Credit derivative,
Hybrid security, Options, Futures, Forwards, Swaps, Other Markets,
Commodity market, Money market, OTC market, Real estate market, Spot
market, Finance series, Financial market, Financial market participants,
Corporate finance, Personal finance, Public finance, Banks and Banking,
Financial regulation.

Factors affecting currency trading

Although exchange rates are affected by many factors, in the end, currency
prices are a result of supply and demand forces. The world's currency markets
can be viewed as a huge melting pot: in a large and ever-changing mix of
current events, supply and demand factors are constantly shifting, and the
price of one currency in relation to another shifts accordingly. No other market
encompasses (and distills) as much of what is going on in the world at any
given time as foreign exchange.
Supply and demand for any given currency, and thus its value, are not
influenced by any single element, but rather by several. These elements
generally fall into three categories: economic factors, political conditions and
market psychology.

Economic factors
These include economic policy, disseminated by government agencies and
central banks, economic conditions, generally revealed through economic
reports, and other economic indicators.
Economic policy comprises government fiscal policy (budget/spending
practices) and monetary policy (the means by which a government's central
bank influences the supply and "cost" of money, which is reflected by the level
of interest rates).
Economic conditions include:

Government budget deficits or surpluses: The market usually reacts negatively
to widening government budget deficits, and positively to narrowing budget
deficits. The impact is reflected in the value of a country's currency.
Balance of trade levels and trends: The trade flow between countries illustrates
the demand for goods and services, which in turn indicates demand for a
country's currency to conduct trade. Surpluses and deficits in trade of goods
and services reflect the competitiveness of a nation's economy. For example,
trade deficits may have a negative impact on a nation's currency.
Inflation levels and trends: Typically, a currency will lose value if there is a
high level of inflation in the country or if inflation levels are perceived to be
rising. This is because inflation erodes purchasing power, thus demand, for
that particular currency. However, a currency may sometimes strengthen when
inflation rises because of expectations that the central bank will raise short-
term interest rates to combat rising inflation.
Economic growth and health: Reports such as gross domestic product (GDP),
employment levels, retail sales, capacity utilization and others, detail the
levels of a country's economic growth and health. Generally, the more healthy
and robust a country's economy, the better its currency will perform, and the
more demand for it there will be.
Political conditions
Internal, regional, and international political conditions and events can have a
profound effect on currency markets.
For instance, political upheaval and instability can have a negative impact on a
nation's economy. The rise of a political faction that is perceived to be fiscally
responsible can have the opposite effect. Also, events in one country in a
region may spur positive or negative interest in a neighboring country and, in
the process, affect its currency.


Credit has been defined as "A question of ability to pay coupled with an
intention to pay."

If it can be said that one department is more important in a commercial bank than
another, surely the credit department is that one. A great deal has been written of late
in regard to the systematic gathering of credit information.
Sir Shabbir Dar is incharge of credit department.
It may be defined as
“The sale of goods and services and money claims in the present in exchange
for a promise to pay in future. “
The most important activity of the bank is the granting of credit to the
customers. NBP provides short term long terms financing for domestic and
international trade. The policies made by central office of the cash can be
amended on the basis of the rules and regulation, economic risk of each
country board of directors and committee of the NBP made this type of
decisions and informed about these decisions to the branch managers.
Manager can grant the credit limit to each customer with in the declared limits
approved by the controlling offices i.e., co, GHQ, circle and zonal. Banks
grant credit to the customer for a certain period of time. The banks provided
credit to the customers so that they can purchase ahead of their liability. By
giving these facility to the customer’s large scale production of commodity
can be achieved and economic growth rate can be increased. The power to
sanctioned loans had been delegated for controlling different offices,
according to amount of loan. This department is also called as risk
management group.
The following elements are used for credit selection.
Character: It is based on the borrower willingness to repay the obligation.
The loan officer sees the family background mode of living, business nature,
habits, moral reputation and etc. before giving the loan.
Capacity: The ability of borrower to repay the loan when due. The borrower
ability to repay the loan is assessed by the office so that he will be able to
repay the loan in future.
Capital: The officer assesses the capital of the borrower. If assets held by the
borrower are liquid, they can be easily convertible in cash; but if non liquid is
used then it is risky to given loan.
Collateral: It is collateral security. It may consists of stocks bonds , bill of
exchange, bills of lading, etc. the bank has protect him self from any

discrepancy in the future. They increase the ability of the borrower to obtain
the funds from the bank.
Condition: The economic condition of the borrower is determined. The
economic conditions of the borrower in and out side the country effects the
repayment of loan. If condition is favorable then loan is given otherwise vice

Credit department has performed following functions.
Advances: Advances provided by the bank are of the following two types.
Funded: In fund based bank contributes a large amount of the fund based on
clarified as follows
Demand Finance: One time disbursement of the whole amount sanctioned, as
the limit for the credit allows. Any person, individual, group, company, firm
and all others can achieve this mode of financing. The mark-up or interest is
calculated on the total amount disbursed and requires to be paid before the
date of final adjustment. Regarding the amount, limit and period, it depends on
the nature of the case in review.
Cash Finance: In this mode of financing the borrower is allowed to make
withdrawals of funds as he requires, but the total amount outstanding cannot
exceed the limit sanctioned. The mark-up/interest is calculated on the amount
outstanding on his account. The calculation of mark-up/interest is based on the
number of days a specific amount is withdrawn. This finance if normally
borrowed by small traders or individuals for their petty matters involving cash
transactions up to rupees three hundred thousand maximum.
Running Finance: To assist a large-scale business operator to carry on his day
to day requirements of liquid funds, this account is opened is made operation
in his favor. Running finance is provided where the amount goes beyond
rupees three hundred thousand. The mark-up/interest is calculated the same
way as in case of cash finance.

Security against running finance is that which is easily convertible in to cash
and bank kept 25% margins with it.
Non-Fund: Bank provide non fund advance in the following form:
a. Guarantee
b. Imports
Guarantee: A guarantee is a promise between one person to another person or
party to answerable for the debt of a third party. Bank issues guarantee after
100%cash collaterals are provided by the person i.e.50% in the form of the
Imports: Bank provides non-funded credit facility to the following basis.
• Sight LC
• Usance or DA LC.
Sight LC: In this type of L.C when payment is made documents are released.
A cash margin of 30% is relational by the bank.
Usance or DA L.C: The bank retains the payment after a period of days,
which is given in the L.C a margin of 30%.
The credit department of NBP has providing the following types of loans
1. Short term loans
2. Long term loans
3. Working capital loan
4. Syndicate (project) loan
5. Monitoring
Documentation in short term financing
Demand promissory note
Mark up agreement
Letter of guarantee in personal capacity
Letter of authority
Letter of pledge
Memorandum of deposit of title deal
Status reports: A credit report is an assessment of borrower’s character and
capacity from a banker’s point of view. Credit reports on borrowers called
Status Reports, financial reports, banker’s opinion or confidential reports. All
these terms carry more or less the same meanings. The study of a borrower is a

study of his character, capacity and capital, and collateral often known as the
4Cs to consider his credit worthiness and eligibility for the bank advance.
The purpose of compilation of credit report of the borrower is to assess their
net worth. It must contain information about borrower’s means, character,
integrity, assets, liabilities, business and experience. Besides, borrowers own
investment, details of properties, must be obtained. The borrower may be
asked to give written clarification of their existing liabilities.
In the case of Limited Companies, their borrowing powers to be verified from
their Memorandum & Articles of Association. Their certification of
incorporation to be examined, exiting borrowings, prior charge on their fixed
assets, paid-up capital, reserves, profit and loss position, detailed particulars of
their directors and complete analysis of balance sheet must be incorporated in
the credit report. Independent inquiries about the borrowers and opinions form
their previous bankers must be made. As such a comprehensive credit report is
compiled which serves as a constant guide to the banker about his borrower.
This report is prepared by the bank of the intending borrower with a view to
considering his Credit Worthiness and Eligibility for the Bank Finance.
Besides other things it contains the net worth of the borrower.

Net worth of borrower
Individuals: Net of the individual’s worth is the total investment or equity of
the sponsors/borrowers in the company through which they are asking for
credit and in the other sister concerns.
Firms: Total investment in Business + Properties – liabilities
Paid-up-capital + Reserves + Profits (Losses)
The Investigation process
1. Knowing the market place
2. Risks inherent in lending
3. Management risk
4. Market risk
5. Earnings fluctuations risk
6. Default risk

7. Marketability risk
Criteria checked for loans
Major areas requiring focused attention of the analyst are:
1. Financial Condition
Which is reflected in the trends of:
Net sales
Gross sales
Operating profits
Net profits (at least for the last 3 years)
2. Structural Liquidity: It refers to the extent of liquidity usually available
in the business, or which is the routine requirement of the borrower based
on the nature of his periodically maturing liabilities.
3. Industry/Business Of Operation: The banker has to check that in which
industry or segment of market the loan is being given this is important
because if there were a recession in that industry for decades then it would
not be feasible to invest in such a business.
Certain traditionally stable industries are in Pakistan in which NBP feels
satisfied while investing. For example in they feel satisfied by investing in ICI.
4. Debt Equity Management: Excessive reliance on debt, rather than plough
back of profits or injection of fresh equity, to maintain a healthy
combination of debt and equity is thought with danger because ultimately
the debt servicing requirements place a heavy burden on its liquidity
thereby its survival.
5. Assets Management: Asset management involves the analysis of how
productively the assets of the company are being used. Sales and
profitability can be measured with this.
6. Borrower’s Credit Worthiness: In order to get a complete picture of the
borrower’s credit worthiness, inquiries will have to be made about:
a. His business.
b. Trade experience.
c. Assets and liabilities.
d. His account with bank or with other banks.
e. His financial statements and income tax returns.

f. An interview with him will be necessary to elucidate or supplement the
information that may have been collected.
7. Management: Before giving loan NBP also checks whether the
management have the depth, skill and experience. If the management is
aggressive and adoptive to the new changes then it is most likely that the
banker may receive the loan back on due date
8. Securities: In case the borrower is not in a position to meet his obligations,
there must be something else to call back upon. So bankers take securities to
have a resource to them to guard liquidity, that is, security is an insurance
against calamities. In case of cash finance the customer have to give the same
amount of money to the NBP as a security for which it takes loan.
Condition for security: The security must be liquid or radically convertible to
cash with more then adequate margin of safety fully under the banks control,
having high value, which can with stand volatile market condition.
Secured by acceptable immovable tangible collateral with necessary margin
and fair degree of marketability under the forced sale situation (should have
buyer). The types of securities may vary from a piece of land or building to
commercial papers or ornaments. Further, security has its own importance, not
only as constituting the ultimate source of recovery in the event of failure of
the borrower or his enterprise, but as providing a measure to the borrowers
own stake in the enterprise and also placing the limitation on his future
borrowings. However, though security serves as a cushion to fall bank upon in
case of need, but its adequacy alone should not form the sole consideration for
judging the suitability of the loan. So the choice of security is not made in
isolation, but keeping into consideration the customer and security offered
A grantee is defined as
“An undertaking by a person to responsible for the debt of another person.”
National bank of Pakistan issues guarantees to government agencies like
atomic energy, high way department, and customs arthritis. Sui northern gas
and others. It also issues guarantee to multinational organization like Siba
gigay, Sandoz, PBS, and etc. for the purchase of pesticide or insecticide from
any fertilizer company. Bank accepts only long other bank guarantee but in

some cases personnel guarantee is also accepted. The guarantee issued is
treated as contingent liability. According to local rules and regulation the
policy for issuance of guarantee can be changed. The expiry of the guarantee
can be set by both bank and guarantor. The minimum period is one year and
the guarantee can be reissue for extra period with paying charges. The two
officers whose signatures appears in the specimen signature book of bank and
also counter sign by the zonal chief must sign each guarantee. Both officers
must also sign any amendment. Am amendment in the guarantee can be made
after giving written application to issuing branch. If the value of the guarantee
is reduced by the amendment the liability amount will be reduced and if will
value is increased additional liability entries will be passed.
The bank provides following types of guarantees to the customers.
a. Bid bond
b. Mobilization bond
c. Performance bond
Bid bond: The facility provided at the time of bed opening is called bid bond.
Mobilization bond: When the bid is accepted, the bank provides this type of
facility to the customer.
Performance bond: When the project is completed, the contractor about the
performance of the project provides a performance certificate for one year.
During one year, if there is any mishap in the project the repair otherwise
authorities claim the performance charges from the bank. Bank charges
commission on issuance of guarantee as per their schedule of charges. If the
party did not pay the amount in the stipulated time period, bank puts this case
for recovery. If some amount is recovering then it is good otherwise bank
deduct the amount from its profit and starts the legal procedure against the
property pledged by the customer to bank. Bank assesses the demand of the
customer and then writes letters to other banks to provide them confidential
report of credibility about the customer this is one provided in the shape of
CIB (credit information bureau) report provided by the SBP. In this report the
credits of the customers with the bank operating in Pakistan are given. After
checking this report the bank issues the guarantee to the customer. In case of
death of his heir as given in the will be responsible for that guarantee.

Security: It is an interest or right in the property gives to the creditor to
convert it in cash in case of debtor fails to meet the principal and interest.
The bank provides the following securities to the customers.
Mortgage: Transfer of interest in movable property for securing the payment
of money lend on existing or future liability. The bank provides the following
two types of mortgage.
a. Registered mortgage
b. Equitable mortgage
Registered mortgage: Registered mortgage is provided on the residential
property, commercial industrial property, raw plot, etc. A party can get
registered mortgage if they provide the following documents to the bank.
a. Title deed
b. Non encumbrance (NEC)
c. pit form (in case a constructed hose)
d. Valuation certificate
e. Affidavit
f. Mortgage deed
g. Personnel guarantee of mortgagor
h. Power of attorney
i. Legal opinion.
Banks examine all these reports, and if they are correct then issue the
mortgage to the party. The bank examines these reports to see that the property
they want to mortgage is registered and is not already pledged. The bank also
calculates the value of the property and the legal opinion of the customer in
case of non-payment.
Equitable mortgage: Equitable mortgage is provided on the residential
property, commercial industrial property, raw plot, etc.
a. Title deed
b. Non encumbrance certificate (nec)
c. Pti form (in case a constructed house)
d. Valuation certificate
e. Affidavit
f. Memorandum of deposit of title deed
g. Personal guarantee of mortgagor

h. Power of attorney
i. Legal opinion
In this mortgage a charge form bound the customer for any legal action in case
of non-payment. In this type of mortgage hypothecation of stocks involves.
Pledge: A pledge is an “a class security given to customers for stocks ware
house, customs, and etc. it is defined as actual delivery of movable property to
lender as security for a loan. When the customer makes the payment of the
loan in full he can back his mortgage property from the bank i.e. when full
payment is made the stock is released.
Procedure of sanction of loan: In Credit department 1st step is to preparation
of credit line proposal for the preparation of credit report.
For this following information required by the bank from the party.
a. Purpose of loan
b. Details of all firms or companies associated with business
c. Name of proprietor/ partner/directors
d. Accurate and up-to-date balance sheet and profit and loss statement of two years of business
f. Market report of the borrower repute
g. Report from the bank if borrower has maintain his account with the
h. CIB report
i. Full details of existing limit and actual liability against the business
j. Particular about the foreign exchange deposits and bills given by the
borrower to the bank
k. Memorandum and article of association in case of limited company
l. Audited report of balance sheet and income statement of last two years

After checking all the securities, customer verification the manager done the
following tasks
1. Preparation of credit proposal
2. Prepare the about the customer
3. Sanction of loan
Preparation of credit proposal: After formal application for the
credit the party submits approval. For this purpose borrower can use coarse

paper or the form provided by the bank. Along with the application borrower
also submits the documents required by the bank. The bank manager evaluates
the documents provided by the borrower. He gets the party’s credibility report
confidentially from the other commercial banks. He checks the balance sheet
and income against the assets in the company. He also measures the
percentage of owner’s equity. Then he doses the ratios analysis of the
company. If the party is involved in the export and import business then the
data of the last three years of this business is considered. The manager of the
bank also examine the project violability, the securities provided by the debtor
to the bank are evaluated by measuring their worth. In the case of pledge is
assessed by the manager while in case of new party manger checks from
where the party is financing for their business
Prepare the Proposal about the customer: After preparing the proposal
manger prepare the report about the customer. Report contains the following
1. Name of the company
2. Date of establishment
3. Address
4. Nature of business
5. Branch office
6. Worth of business
7. Date
8. Banker’s opinion
9. Head cashier opinion
10. Branch manger opinion
In case of partnership business following information is included in the report
a. Partner, their share in capital, profit and loss
b. Deed of partnership
c. Partnership letter
d. Turn over
e. Net profit
f. Personal property of partners
g. Bank balance of partners
h. Advance payment of suppliers

i. Particular of machinery installed in the factory through financing
Incase of corporation/limited companies the following information are
1. Incorporation and commencement of company
2. Sales offices
3. Capital information
4. Directors and their contribution to capital
5. Balance sheet with explanation and evaluation
6. Net worth of the company
Sanction of loan: If the limit of the loan lies with in the power of manger then
he sanction the loan otherwise manger with the covering letter along with all
necessary documents sends it to the concerned sanctioning authority.


The Government Deposit Department handles the applications of the banks for
government deposits, the receipt and delivery of securities for collateral, the
calculation and receipt of interest on the deposits, the records of redeposit’s and
withdrawals, and the records of collateral and of coupons from the collateral.
Sir Tariq Mehmood is in charge of deposit section.

It accepts deposit from customers.
Following types of deposits are offered by National Bank:
1. Current Deposit
2. Saving Bank Deposit
3. Profit And Loss Saving Account
4. Fixed Deposit
5. Call Deposit
6. Short notice term deposit
7. Foreign Currency Deposit
8. Cumulative deposit certificate (other)

a. Current Deposit or Current A/C: in this type of account the client is
allowed to deposit or withdraw money as and when he likes. He may thus

deposit or withdraw several times in the day if he likes. Usually the bank
allows this and services charges are deducted by the bank and current
deposit account. It is for business men or person who needs deposit &
b. Saving bank deposits or saving A/C: This type of account is for those
persons who want to make small savings. This type of account is opened
with Rs. 100. In this case deposits can be made only up to a costing
amount and with drawls are allowed twice a week. If the depositors want
to withdraw more than Rs. 15000 a seven days notice is required before
the withdrawal. Bank pay facility without restrictions. Deposit treated as
liabilities. No profit or mark up.
c. Profit and loss saving accounts: These types of accounts are one step
towards the islamisation of banking system in the Pakistan. Under such
types of accounts the bank allows no interest to the customers. The
executive board of the bank declares the profit or loss every year. PLS
saving account having a running minimum credit balance of Rs. 100
would be eligible for sharing profit/loss of the bank. The rate of profit or
loss on PLS saving accounts shall be determined by the bank at the close
of each half year, in its sole discretion and the banks decisions shall be
final and binding on the PLS account holder.
d. Fixed deposits: in this type of account a certain amount is deposit for
certain, period such as six months, two years or longer. A fixed deposit
receipts is issued in the same of the depositor to withdraw his money or to
renew this deposit. The interest allowed on fixed varies with the period
for which the deposits are made.
e. Call Deposits: Call deposits are the sorts of deposits, which are deposited
with the bankers against any tender. This is without interest provided the
depositor has agreed to keep its amount with the banker for some fixed
f. Short Notice Term Deposit or S.N.T.D: This kind of deposit is for a
short period. The depositors may withdraw his deposit at any time by
giving seven days notice to the banker. In this type of deposit facility the
trader is allowed to withdraw his amount with interest of the deposited

g. Foreign Currency Accounts: Foreign currency account is opened by
depositing foreign currency. You can open foreign currency account in:

1. Pay-in-slip:
When money is to be deposited in the bank the pay in slip is to
be filled. The object of this book is to provide the customer with the bank’s
acknowledgement for receipt of money to be credited his account.
2. Cheque Book:
A cheque book contains a number of cheques, which is
given to a customer upon written request and after marking the payment
for the cheque book. It enables a customer to make withdrawal from his
account for make payment to various parties by issue of cheques.

3. Pass Book:
Pass book is a copy of the customer account as it appears
in the books of the bank. The clerk in this book records balance. But now a
day due to computerization the concept of pass book is not in practice.


The banker may close the account of the customer due to following
a. Notice by a customer
b. Death of a customer
c. Customer’s insolvency
d. Customer’s insanity
e. By order of court

f. Unsatisfactory operations

1. Notice by customer:
The banker closes the account of the
customer on the application of the customer for closing his
2. Death of a customer:
On death of his customer, the bank must
stop payment on cheques drawn on him by the deceased customer because the
death revokes his authority to pay such cheque. The heirs or executors of the
deceased customer or not authorized to operate on the account. It can act only
in accordance with provisions mentioned in the letter of probate issued by
competent courts.

3. Customer’s insolvency:
Insolvency in civil death therefore, the
insolvent adjusting loses his rights receiver or liquidator as the
bankers receives the notice of insolvency of the adjusting or
petition filed for adjusting a filled customer insolvency.

4. Customer’s insanity:
If the customers become insane or mental it

terminates the banker’s authority to act as his customer’s agent. Since the

banker customer’s relationship comes to end, in such as situation, it is usually

considered that the banker’s authority to pay his customers cheques is revoked

by notice of insanity. However the bankers treat their customers as it unless a

fairly inclusive evidence of the customer’s insanity is available to them.

5. By order of court:
A court of law may serve a banker with an order
in garnish proceeding in execution of a decree prohibiting him from honoring a
customer’s cheque.


Usually accounts are maintained in two ways.

a. Journal system

Journal system is adopted by some commercial industrial institutions. In
journal system entries are reported in journal Books and then posted to ledger.

b. Vouchers system

Voucher system is too used for every transaction. Voucher has to be prepared
either in cash or in transfer or in clearing, the Sheet upon which these
vouchers are summarized transactions wise and consolidated into a figure is
called supplementary.

Types of supplementary:

1. Debit supplementary

2. Credit supplementary

Debit supplementary is used for debit voucher and credit supplementary is used for
credit voucher books and registered maintained by bank are as follows.

o General ledger:

o Statement of daily affairs

o Cash book or cash cum day book

o Transfer book

o Income and expenditure ledger etc.

Income includes:

• Discount

• Service charges

• Rent (on building)

• Commission (from utility services)

• Brokerage (A bank sells and buys share, stock, debentures, other
securities and receives payment for these services.)

Expenditure includes:

 Salaries, allowances and provident fund

 Rent, taxes, insurance, lighting etc

 Profit paid on deposits and borrowing

 Stationary, printing and advertisement charges etc

 Auditor’s fee and legal charges.


Remittances can be made through:

Instrumental transfer

Electronic transfer

a. Instrumental Transfer

Instrumental transfers are following

Demand Draft: It is an instrument, which is payable on demand and it is only
presentable in the city/country. When any draft, i.e., an order to pay money, drawn by
an office of bank upon another office of the same bank for a sum of money payable to
order on demand, purports to be issued by or on behalf of the payee, the bank is
discharged by the payment in due course.

When a person requires a draft, he should be asked to complete the prescribed
application form in which he should state the amount of the draft, the name of the
payee, and the place of payment. The person to those persons, who have been duly
authorized to act on his behalf, should sign this application form. An advice is
prepared and two copies of this advice are sent to the Head Office. The bank charges
3% withholding tax and commission according to the rate list (minimum is Rs. 200).

Pay Order: It is an instrument, which is payable in demand and only presentable in
city. Pay order is also called the banker’s cheque drawn upon the issuing bank itself.
It is not negotiable and therefore, bankers tend to cross the instrument “Payee’s
account only” to avoid the possibility of dealing with instruments with forged
endorsement. The pay order is issued favoring individuals, commercial concerns, and
government departments. On the presentation of pay order, the bank is liable to pay

the amount to the customer. Bank charges excise duty of Rs. 4 and service charges of
Rs. 100.

Pay Slip: It is an instrument, which is issued by bank and used for expenditure
purposes, i.e., electricity bills, maintenance bills, security bills, fixture and fitting, etc.

Call Deposit: Call deposit is not actual deposits of bank. It is in fact the liability of
the bank. Call deposit are openly prepaid by the bank for contractors


Following steps are involved

1) Depositor fills the credit vouchers for call deposit. He writes the following

Name of company



2) He deposits the cash along with filled voucher in the cash department

Encashment of CD

For the encashment of call deposit needed

1. 5 rupee stamp

2. two signature of customer on the back side of CD

3. token issued

4. accountant make entry in the CD register show that it has returned

b. Electronic Transfer

Electronic transfer is of following types

Telegraphic Transfer / (T.T): It is the message, which is sent from one branch to
another on the order of payer to payee through wire. It is one of the quickest means to
transfer fund through the use of telex/fax/internet or cable. Payment to the
beneficiary is affected directly by the drawer office upon identification or through
credit into beneficiary’s bank account. As such remitting office is not required to
issue any instrument payment to the remitter for delivery to the beneficiary.

Issuance and Payment of Telegraphic Transfer Outgoing

Application form is filled by the client in whom the name and account number of the
beneficiary, which is to be credited and name of customer, is required. For
telegraphic transfer, the payment can be made in case or by cheque or by debiting the
customer’s account if he is the account holder. The amount of Telegraphic Transfer
should be written on the form. The amount is transferred to beneficiary’s account in
the other bank. An advice is given to the customer but application is filled in the
record of the bank.

If the beneficiary is not the account holder of DBL, bank credits a Telegraphic
Transfer payable account and when payment is made to the beneficiary, TT payable
account is debited.

Issuance and Payment of Telegraphic Transfer Incoming

When a TT is received then an entry is passed in TT incoming register after verifying
the test. When a person comes and wants to encash his TT, bank checks the
statements of that person. If the bank finds any account credited to the person’s
account against TT, bank prepares a voucher for this payment against that TT. The
customer then presents that certificate to the cash counter and collects money.

Mail Transfer / (M.T): It is the same like TT, but in this type, the message is sent
through mail rather than telex. The procedure is same as TT, but the advice is sent
through mail rather than wired.

Traveler’s cheques (TC): These are also called TC. Traveler’s cheques first came
into use century ago. Form of travel currency giving to the holder .the security of a
letter of credit and convenience of a local currency. In practice, they are acceptable in
payments of accounts on board ship, at hotels and in stories. They are in form of a

draft. They should be so signed immediately on issue and place is provided on the
cheque for the signature of the beneficiary on its

Lockers service

National bank of Pakistan also provides lockers facility in the country. The lockers
issued only to the depositors. No lockers are issued to any unknown person.

The dual control system is used for lockers. The officer has master key to apply on the
locker but he cannot open the locker of any person. The locker holder provides the
bank has specimen signature. Whenever the locker holders come to open the locker,
his signatures are verified by the officer and then will be able to open his locker. If the
key of the locker is lost company providing these lockers breaks the locker and new
lock is fitted in its locker and lock is destroyed in the presence of the locker holder
and bank charges RS 1200 for that. In case the locker holder dies, the court opens his
locker in the presence of his heir as mentioned in his will or and his belongings are
given to them and the locker is closed.


During the period of my internship I learn how to deal with different people’s in

different situations, how to do work well etc.

In HRM I study that without proper planning we cannot do anything right.

Bills department is one of the most important departments of NBP. It is responsible

for the Govt. related matters. Sir Aziz is the head of Govt. section.

Govt. department deal with the Govt. bills, Pensions etc. Making F-110 & F-15 is
the responsibility of this department. Sir Aziz passes every bill for payments.
Because Govt. department is responsible for the dealing with people therefore, I spend
2 weeks there. In the days of pensions, there was too much rush of pensioners. It was
difficult to handle them because they are all older & want that they get pension as

soon as possible. And also the dates of salaries in those days, so it was too hard to deal
with pensioners & govt. bills at a time.
As I had done MBA in HRM, & in this subject I study how to deal with people’s,
what type of planning needs to handle this type of situations, what type of behavior
need at this situations & how to remove conflict in this situation, so it is easy to me to
handle them effectively without any problem.
I made proper planning with cash department for doing work effectively before the
dates of pensions & because of proper planning I was able to complete this task.
I also work in deposit, credit, clearing section, foreign exchange there I also deal with
people effectively.
According to the bank staff, there is too much difficult in work govt. department
because there we meet all types of people & difficult to handle them in rush but
because of doing specialization in HRM, I run this department effectively.
And in this way my internship is related to the knowledge of my area of

Structure of the HRM Department

Department hierarchy:

Vice president

Human Resources

people &
Labor relations
compensation Organizational

Human resource management process in the organization:

A. Human resource planning and forecasting

HRP is a process in which HR department systematically reviewing human resource
requirements to ensure that the required number of employees with the required
skilled is available when they are needed. In forecasting HR department forecast the
demand and supply of workforce in the NBP.

1. HRP process:

a. Determine the organizational mission:

It states NBP’s overall purpose and basic business scope and operations it provides

b. Scan the organization environment:

This is known as SWOT analysis through this process NBP’s HR department identify
opportunity, threat, strength and weakness that can be faced by the NBP.

c. Set strategic goals:

Set specific long term and short term goals and objectives. These goals are specific,
challenging and measureable.

d. Formulate a strategic plan:

Course of action is designed to meet strategic goals and departmental goals are
selected at this step.

These are steps of HRP process.
 Determining the objectives.
 Defining skills required to meet objectives
 Determine additional human resources requirements in
light of current HR.
 Develop action to meet the anticipated HR needs.

2. Forecasting HR requirements:

A requirements forecast is an estimate of the numbers and kinds of employees the
national bank of Pakistan will need at future dates in order to realize its goals.

3. Methods to forecast HR needs:

Several methods are using to forecast HR needs.

• Zero- base forecasting:

This method uses the NBP’s current level of employment as the starting point for
determining future staff needs in NBP.

• Bottom- up approach:

It is a forecast method in which each successive level of the NBP, starting with the
lowest and forecast its employee requirements in order to ultimately provide an
aggregate forecast of employment needs.
• Use of mathematical models:

Mathematical model also use for forecasting HR requirements. It defines relationship
between demand and the number of employees needed.

• Simulation:
It is a technique for experimenting with a real world situation through a
mathematical model representing that situation.

B. Employees recruitment & selection

Recruitment can be defined as the process of discovering potential candidates for
actual or anticipated organizational vacancies. Every organization has its own
recruitment policy.
According to the recruitment policy of NBP, the requirements are:

Candidate must be a citizen of Pakistan.
She/he must be a business graduate, and
She/he should have attained the age of 18 years but not exceeded the age of 35 years.

1. Sources of candidates:
Basically two type of source of candidates, internal and external.
Internal are within the national bank and external that are out side the national bank.

a. Internal sources:

In this type of source vacancies in upper level management can be filled either by
hiring people from out side the national bank or by promoting lower level managers.
These are major forms of the internal recruiting in NBP.

o Promotion from within.
o Job posting.
o Contacts and referrals.

b. External sources:

There are some employee’s needs that a firm must fill through external recruitment.
Among them are, filling entry-level jobs, acquiring skills not possessed by current
employees and obtaining employees with different backgrounds to provide new ideas.
These are external source.

 High schools and vocational schools
 Community colleges
 Colleges and universities
 Competitors and other firms
 Unemployed
 Older individuals

 Military personnel
 Self-employed workers

2. Employment selection process:

Employment selection process or Procedure:

There are certain steps involved in the procedure in recruiting to NBP. They are:
Applications are invited from candidates on prescribed forms against the vacant posts
advertised in the newspapers. Application forms received are scrutinized and eligible
candidates are called for written test. Test is conducted in four subjects, i.e. English,
Computer, General Knowledge and Mathematics. Written test carries 250 marks.
Candidates who qualify the written test are called for interview. Interviews are held at
GM office.
After that the candidates have to undergo a medical check up by the prescribed doctor.
Appointment letters are sent to the selected candidates, who have to present
themselves before the Head Office for signing the following documents.
1. Bank Secrecy Bond
2. Security Bond
3. Service Agreement Bond

Appointed candidates are kept on probation for 9 months. They are sent for a 9-
months pre-service training to the Staff College.
NBP look these things 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.

C. Training & development

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

1. Training need assessment:

Following sources help HR department in training need assessment.

 Self assessments
 Company records
 Customer complains
 New technology
 Employee grievances
 Interview with managers
 Customer satisfaction survey
 Observation etc.

In 1949, the first year of operations the NBP has one hundred employees one its
payroll but with in two years this number had grown to 1505 by 1960 the figure has
risen to 5023 and now in 1996 it is the order or 20694.

During the first ten years the NBP trained its own staff through a series
of training programmed both for junior officers and clerical staff. By 1958 how ever it
was obvious that one thins more comprehensive was needed and the bank established
a staff college Karachi. Three mote colleges at Islamabad, Lahore and Peshawar, setup
later. These colleges provide course of instructions, supervisor personnel and clerks to
meet the Bank’s ever growing trained personnel. This needs springs not only from the
steady grown for the bank’s business but also to replace wastage due to retirement
resignation, ill health or death.

The staff college receives junior bank officers for further training in
banking the course lasting from six to nine weeks with about twenty five students in
each course.

The staff college course are designed not only to impart technical
instruction, but also develop qualities of judgments decisions, leadership and
management, since these student are likely to be those men who may expect to the
seniors most executive positions the bank has to offer.

The bank also deputes officers to attend banking seminar both in
Pakistan and abroad and it attaches great importance to the exchange of ideas
information and knowledge which can most use fully accrue from these gatherings.

In its position the National Bank has considerable responsibility in
ensuring that the country is well represented at meetings of bankers at domestic and
international level.

2. Employee development:

National Bank of Pakistan has an existing Human Resource development department,
which operates to increase the existing skills of the people existing or coming in the
organization, in order to achieve its objectives in a more efficient and effective
NBP has devoid two basic training techniques.
First is related to the training and development of mid term plan, regarding new
clients & middle level employees.
Secondly, the training & development for long term plan, regarding the career
development of higher level employees.

NBP applies on-job and off-job strategies to train its employees (middle & higher
NBP training & development academy advises Job rotation to ensure & facilitate the
producing of all rounder.

The source of this assignment confirms the availability of the training plan at least 2
months before the commencement of New Year, in order to make it easy for the
socializing and orientation of the new employees.

NBP believes in pre-post training test for existing employees & post training test for
new employees. The trainees will be required to submit back-home action plan, which
will be followed up by the JNMDC/Staff colleges. These plans will help in evaluation
and end use of training

D. Performance management

1. Setting performance standards & expectations:
Standards of performance provide the basis against which the individual can be
effectively appraised.

There are eight conditions to consider when setting standards of performance:
1. Standards of performance are based on the job and not on the person doing the job.
2. Standards of performance are achievable.
3. Standards of performance are understood by the employee performing the job.
4. Standards of performance are agreed upon by both the employee and supervisor.
5. Standards of performance are as specific and measurable as possible.
6. Standards of performance should be time-oriented.
7. Standards of performance are always in writing.
8. Standards of performance allow for revision and change.
The system by which organizations evaluate individual job performance. More over it
is about the employee performance and the accountability. As the world is now global
village and your competitor is watching you, so the organizations need high

So the output of the organization depends upon the feedback provided to the
employee timely. Especially the newcomer to the organization needs to understand
their jobs and their work setting. The longer-service employees also want positive

feedback on the good things they do. So the NBP is an organization where the
management feels about the employees.

The employees feel sense of belongingness in return. HRD section always takes this
opportunity to evaluate the performance of the employees. The appraisal system also
helps the management of the NBP to help the managers with placement, pay, and
other HR decisions. The HRD section of the NBP carries out the appraisal for the
following uses;
It allows the employee, the Manager to take necessary about the improvement of the

The system also helps in promotion and pays increase of the deserving employees
after their evaluation and also prepares the next person for the succession plan.

2. How performance reports are written

Employee: _______________
Date Hired: _______________
Job Title: _________________
Salary: __________
Date of Review: ___________

__________________________________ _________________________________
__________________________________ _________________________________

__________________________________ _________________________________

__________________________________ _________________________________

__________________________________ _________________________________
__________________________________ _________________________________

__________________________________ _________________________________

__________________________________ _________________________________

__________________________________ _________________________________

__________________________________ _________________________________

Date of Next Evaluation: _____________________________________________

Employee Interviewer

E. Employee compensation & benefits

1. Type of compensation & benefits:

Compensation means all rewards that individual receives as a result of their
Employees of national bank of Pakistan received compensation & benefits in the
following way.
Pay: money that an employee receives for performing a job.

Benefit: additional financial rewards rather then basic pay include paid vacations, sick
leaves, holidays, medical insurance.
Non financial rewards: non monitory rewards such as enjoyment of work performed
or a pleasant working environment.

Different types of compensation include:
 Base Pay
 Commissions
 Overtime Pay
 Bonuses, Profit Sharing, Merit Pay
 Stock Options
 Travel/Meal/Housing Allowance
 Benefits including: dental, insurance, medical,
vacation, leaves, retirement, taxes

Besides a competitive financial package, they offer excellent working conditions, job
satisfaction, superior leadership, and a conducive environment for growth.

F. Organizational career management

1. Employee job changes
Job changes in the classified service must be made in accordance with the civil
service rules and regulations. Any person appointed or promoted must be certified as
qualified in accordance with and subject to the civil service rules and regulations.
The state personnel director shall. The state personnel director shall administer the
certification of all appointments and promotions.
2. Job changes with the organization
Job also change with the organization because when employee achieved a chance of
promotion in any other organization he will leave the current organization but there
are some rule that he can follow.

Change Management Program: NBP has started an ambitious Change Management
Program to further train its employees to meet the challenges of present day

The promotion policy introduced in 1979 was based on three parameters i.e.
(i) Qualification,
(ii) length of service and
(iii) Standard of service.
Separate marks were prescribed for each of the three parameters and, after
obtaining the minimum qualifying marks varying from cadre to cadre; one could
be promoted to the next higher position. While formulating the merit based
promotion policy introduced in 1999, the considered opinion was that separate
points should not be prescribed for qualification and length of service. The simple
reason for this thinking was that the minimum qualification stood, as prescribed at
induction for different levels of hierarchy. The other consideration for such views
was that in case the employee had increased his qualification for his better
performance as compared to other colleagues, then the said qualification would be
reflected on his performance and this would obviously have him rated better than
others. Views regarding the seniority of an employee were similar. Thus under the
merit based policy of 1999 the overall assessment of an employee was based on
the combination of (a) average of points earned by the employee in his PERs
during previous three years and (b) the points that he would earn in an evaluation
by the Promotion Committee. The awarding of points by the Promotion
committees, however, again reduced the exercise to a mechanical process as 60%
points were fixed for qualification, length of service & standard of service and
only 40% points could be awarded on objective criteria. Further improvements in
the policy are being planned.


Transfers on request, however used to take place only on compassionate and medical
grounds while another reason was that these were initiated by the Bank for meeting its
business or administrative requirements i.e. filling up the vacant positions.

Maintenance of office-wise seniority lists up to OG-1 (on the General Side) and up to
OG-2 (T.O) (on the Cash side) had also contributed to the lack of movement of
employees from one office to another. Resultantly all the employees become
permanently positioned in their place of work, whether the head office or the field
offices of the Bank. At the same time, there was much movement within the
unit/division of posting. Although instructions provided that an employee can remain
posted in one unit for up to 3 years and in a division for up to 6 years, yet some
offices used to frequently transfer their employees from one unit/division to another.
On the other hand, transfers from one department to another at the Head Office were
rare. This had further deteriorated the level of efficiency both at the head office and
the field offices.
With the objective of preparing staff to accept new challenges, acquire new skills and
diversified experience, the following transfer policy has been framed for all
categories/sides of employees (other than clerical & non-clerical staff of the Bank):
1. The seniority list of all OG-1 and above will be maintained on an all-Pakistan
However, all employees including those of Cash department shall remain transferable
from one office to another.
2. All transfers involving change in office up to OG-3 shall be made by the
Director Administration, OG-4 & above with the approval of the Managing
3. Employees on promotion as OG-4 and above shall invariably be transferred
from the office/department where they were working before their promotion.
4. An employee transferred from one office to another shall be allowed to seek
his posting back to his parent office or to the office of his choice subject to
administrative convenience immediately after completion of 3 years.
5. The Chief Manager shall not remain posted at one office for a period of more
than 3 years.
6. The shortage of employees at an office because of review of staff position will
be made good after calling options from the interested employees of the Bank.
If no such employees are available, the vacant positions will be filled through
transfers of employees from the offices where sufficient/surplus staff is
available. Duration of such transfers would be for a period of two years to
avoid inconvenience.


1. Employees are considered as candidates for transfer in the following order or
a. Eligible employees in same department as the job opening
b. Eligible employees in other departments who have requested a transfer
c. Eligible employees being considered for lay-off due to a reduction in force

2. Employees desiring a transfer will submit a written request for transfer to his/her
department head. The employee should identify the specific vacancy in which they
are interested. The department head will forward the request to the Department of
Human Resources for recommended action.

3. The Department of Human Resources will determine whether the desired job or a
suitable job opening exists. If a suitable job is available, the Department of Human
Resources will arrange for the employee's application to be reviewed by the
department in which the opening exists.

4. Employees will be allowed time off with pay for job interviews related to transfers.

5. The decision to affect the transfer will be made by the head of the department in
which the job opening occurs.

7. An employee who is transferred to a comparable job (lateral transfer) will
continue to receive his/her existing rate of pay.


An employee of NBP may be demoted for violating the rules of the bank by a
behavior such as excessive lateness, misconduct, or negligence. In some cases,
though, an employee may be demoted as an alternative to being laid off, if the NBP is
facing a financial crisis.

Notice: If an appointing authority intends to involuntarily demote an employee, the
appointing authority shall give prior written notice of the specific reasons for the
demotion to the employee.
Conditions: An appointing authority may demote an employee under any of the
following circumstances:
(1) The employee is not performing satisfactorily.
(2) The employee's position is reclassified downward.
(3) The demotion is requested by the employee and approved by the appointing
(4) The position occupied by the employee is abolished.
(5) The employee is displaced by the return to duty of another employee entitled
to the position.
(6) The employee is displaced by another employee with more seniority during a
reduction in force.
(7) The employee does not receive a satisfactory probationary service rating

3. Separations
An employee’s separation occurs when an employee ceases to be a member of
National bank of Pakistan.
The rate of employee separation in NBP is a measure of the rate at which employee
leave the bank.

a. Layoff:

When there is surplus of employees in bank then layoff occurs.
Layoff is the temporary suspension or permanent termination of employment of an
employee or a group of employees for business reasons, such as the decision that
certain positions are no longer necessary or a business slow-down or interruption in
In NBP, all system are computerized therefore there are no need of staff in some
departments that’s why layoff occur there.

b. Termination

Reasons for Termination:
Employment with the Association may be terminated for a variety of reasons:
•Resignation by the employee
•Employee illness and inability to work
•The conclusion of the contract for which the employee was employed
•Dismissal of the employee
•Other reasons


1. Termination by the Employer

The Supervisor must:
a) Give the employee the required notice in writing.
b) Notify the General Manager of the termination of the employee and reason
for termination.
c) Ensure the termination shall not be harsh, unjust or unreasonable, and shall
proceed only after clause 2.8 Settlement of Disputes, Grievances,
Employee counseling and Disciplinary Action of the Certified Agreement has
been affected.
d) Complete the Termination Form and sign. The employee signature is not
e) Forward the completed form to the Assistant Finance Officer for processing.
f) Place of copy of the completed form on the employee’s personnel file.

2. Termination by the Employee

The Employee must:
a) Give the supervisor the required notice in writing.

The Supervisor must:
a) Accept and acknowledge the resignation.

b) Notify the General Manager of the impending termination of the employee
and reason for termination.
c) Complete the Termination Form and sign. The employee signature is
required to sign the form also.
d) Forward the completed form to the Assistant Finance Officer for
e) Place a copy of the completed form on the employee’s personnel file.

c. Resignation
Immediately on receipt of resignation from the staff, the concerned Branch
Manager should fill up all columns up to 13 in the prescribed format and
forward the same to the Zonal Manager through his Controller, along with the
Resignation letter. However, since the Competent Authority to accept
resignation of the award staff working in branches is the Respective Zonal
Manager, concerned Assistant General Manager should submit the format duly
completed to the Zonal Manager
The following actions must be undertaken when a member of staff resigns
from their post in order to ensure that final salary payments are correct.
The Member of Staff
• must inform their line manager of their intent to resign in writing
giving the appropriate contractual notice period.

• The Line Manager
• agrees notice arrangements, leaving date and confirms annual leave
that is owing/owed with the member of staff. Where possible, any outstanding
annual leave owing should be taken prior to leaving.

• receives and forwards written resignation to HR along with
confirmation of:
a. The agreed leaving date
b. The annual leave position

c. Notification of whether the member of staff is leaving the bank or
transferring to another department
• ensures that the member of staff returns their particulars on their last

HR Office
• checks that the agreed leaving date and outstanding holiday
entitlement is correct

• acknowledges resignation letter in writing to the member of staff., cc
to Head of Unit; Line Manager; Payroll; Pensions; Management Accts; File
within 3 working days. The payroll monthly deadline must be met.

• inputs leaving date and reason for leaving on Resource Link and ends
the record

Payroll Office
• Must receive notification from HR by the monthly payroll deadline.

• processes the final salary payment and issues P45.

d. Retirement

1. HR Department writes to employee CC line manager advising retirement date
2. Line manager arranges informal meeting with employee to discuss plans and
confirm right to request continued working.
3. Line manager writes to employee confirming meeting CC HR.
4. Employee chooses to retire at 65.
5. Normal retirement procedures apply.

G. Labor management relations

In NBP there is very good relation between labor and management. They cooperate
with each other. HR department take care of their unions opinion.


It is true that bank is trying to adopting computerized system but their most of staff is
unable to use computerized system or not familiar with computer.
There are no proper facilities in bank for customer. No proper facilities for old age
people, they face so many problems in bank.
There is no any shop for bank staff so that they can bring something for themselves or
their guests in break time.
Their all system is manual so much time waste in different process.
There is also an electricity problem in this bank.
There is reduction of staff in some departments, so they complete almost their work
from internees.
There is reduction of law & order, so sometimes branch faces so many problems
especially in the dates of pensions.
All types of pensioners are treated same day that’s why this creates problems.
The balance sheet shows the good position of the bank and income statement

provides us a brief look over it success during the year. Although income statement

showing profit during the year but still there are few thing that should be improved

SWOT analysis is an acronym that stands for strengths, weakness,
opportunities, and threats SWOT analysis is careful evaluation of an
organization’s internal strengths and weakness as well as its environment
opportunities and threats.
“SWOT analysis is a situational which includes strengths, weaknesses,
opportunities and threats that affect organizational performance.”1
“The overall evaluation of a company strengths, weaknesses, opportunities
and threats is called SWOT analysis.”2
In SWOT analysis the best strategies accomplish an organization’s mission by:
1. Exploiting an organizations opportunities and strength.
2. Neutralizing it threats.
3. Avoiding or correcting its weakness.
SWOT analysis is one of the most important steps in formulating strategy
using the organization mission as a context, managers assess internal strengths
distinctive competencies and weakness and external opportunities and threats.
The goal is to then develop good strategies and exploit opportunities and
strengths neutralize threats and avoid weaknesses.

These are strengths of national bank of Pakistan.

1. NBP one of the largest financial institutions of Pakistan with eight million
of customer base NBP holds 24.6% share of time and demand deposits in

the country. Local currency deposits comprise 67% of bank's total deposits
while foreign currency deposits account for the rest.

2. NBP has an extensive domestic branch network of 1232 (according to the
latest data) branches located all over Pakistan. The Bank also has a
presence in 18 international locations including the USA, United
Kingdom, Europe and the Far East.

3. NBP's total assets stood at Pak Rs.370 billion on December 2000. This
included total earning assets of about Pak Rs.268 billion with gross loan
portfolio of Pak Rs.140 billion. The bank also has an investment portfolio
of Pak Rs.91 billion, which comprises treasury securities, corporate bonds,
shares and other securities.

4. 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.

5. 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.


1. 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.

2. The general out look and interior layout of branches are not as required
according to modern banking

3. NBP bearing up large burden in running those branches, which are not
producing any income but keep on adding expenditure.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

1. The world today has become a global village because of advancement in
technologies, especially in communication sector. More emphasis is now
given to avail the modern technologies to better the performances. NBP can
utilize the electronic banking opportunity to ensure online banking 24 hours a
day. This would give the competitive edge over others.

2. Because of the need of micro financing in the market, there are lot of
opportunities in this regard. Others banks have already initiated, now the time
has arrived when the NBP must realize it and take on step to cater an ongoing

Following are the major threats which national bank of Pakistan is facing:

1. 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.

2. 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

3. 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.

4. 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.


National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner
for the Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally,
internationally and representative offices.

After the completion of my internship report I draw the following.

1. It appears a lengthy process of sanctioning advance.

2. It looks the staff member are not properly trained

3. It seems the promotion is not given in the due time.

4. It appears that large amounts paid on administration cost.

5. It shows that there is lack of recovery system

6. It seems that there is no net working.

7. It seems that there shall be a great the rush days for the customers as well as
for the staff members If the No of counter are limited or very few

8. It might not be possible for every borrower to repay the money in due time.


1. NBP major fault is that wasn’t keeping 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.

2. Latest reorganizing efforts are necessary to make it cost effective also making
its facility accordingly to modern banking. These must continue.

3. 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.

4. To attract the customer in the future NBP have to make extensive effort to give
facilities of retail and consumer banking. Plus the technology in the banking
which will be necessary for future banking is another week area need to be

5. The outlook and interior lay out of the branches is another thing which needs
to be improved.

6. The procedure of taking services from the bank must be made easier and
straight forward not involving long difficult procedure for simple task.

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.


I collect this information from,

1. National Bank, Annual Reports

2. State Bank of Pakistan Prudential Regulation for Corporate and Commercial

3. State Bank of Pakistan BPRD Circulars

4. Dawn Newspapers for updated information

5. Instruction Circulars of National Bank Limited

6. Economic Reviews for Banks and their activities.

7. State Bank of Pakistan, Website,

8. National Bank website,

I also visit & complete 6 weeks internship in national bank of Pakistan civil line
Jhelum branch for collecting data.


List of Annexes

Annex 1

Overview of the organization
1.1 Brief history
1.2 Nature of the organization
1.3 Business volume
1.4 Product lines
1.5 Competitors

Annex 2

Organizational structure
1.1 Organizational Hierarchy chart
1.2 Number of employees
1.3 Main offices
1.4 Comments on the organizational structure

Annex 3

Plan of your internship program
1.1 A brief introduction of the branch where you did your internship
1.2 Starting and ending dates of your internship
1.3The departments in which you got training and the duration of your training

Annex 4

Training program
1.1 Introduction of all the departments
1.2 Detailed description of the department you worked in OR Detailed description of
the project assigned.

Annex 5

Structure of the HRM Department
1.1Department hierarchy

Annex 6

Human resource management process in the organization:

1A. Human resource planning and forecasting
1.1HRP process
1.2 Forecasting HR requirements
1.3 Methods to forecast HR needs
2B. Employees recruitment & selection

2.1 Sources of candidates
2.1 Internal sources
2.2 External sources
2.3 Employment selection process
3C. Training & development
1.1Training need assessment
1.2Employee development
4D. Performance management
1.1 Setting performance standards & expectations

1.2 How performance reports are written

5E. Employee compensation & benefits
1.1 Type of compensation & benefits

6 F. Organizational career management
1.1Employee job changes
1.2 Job changes with the organization
a. Promotion
c. Demotion
a. Layoff
b. Termination
c. Resignation
d. Retirement
7G. labor management relations

Annex 7
1. Critical analysis
Annex 8
1. SWOT analysis of organization in the business sector
Annex 9

1. Conclusion & recommendations for improvement
Annex 10
1. References & sources used

I also visit these links for getting information of NBP,s annual reports.