FINI619 Internship Report On NBP 3

Chapter 10 Implementation Plan
CHAPTER 1
INTRODUCTION OF STUDY
1.1 Background of Studi!
As part of the academic requirement for completing MBA (Banking and Finance Master
Business Administration of the students are required to under go si! months of internship
"ith an organi#ation$ %he internship is to ser&e the purpose of acquainting the students
"ith the practice of kno"ledge of the discipline of 'anking administration$
%his report is a'out (ational Bank Pakistan$ (BP "as esta'lished in 1)*) and since
then+ it has e!pended its net"ork+ 'ecoming the largest commercial Bank of the countr,$
It offers different products of ser&ices to its customers$
1." Pur#o! of t$ Studi!
%he main of the stud, in hand is together rele&ant information to compile internship
report on (ational Bank of Pakistan$
%o o'ser&e+ anal,#e and interpret the rele&ant data competentl, and in a useful manner$
%o "ork practicall, in an organi#ation$
%o de&elop interpersonal communication$
1.% Sco# of Studi!
As an internee in (ational Bank of Pakistan the main focus of m, stud, research "as on
general 'anking procedures in one of the 'ranches of (BP$ %hese operations include
remittances+ deposits+ ad&ances and foreign e!change$
-imilarl, different aspects of o&erall of (BP are also co&ered in this report$
1
1.& R!arc$ 't$odo(og)
%he report is 'ased on m, t"o months internship program in (ational Bank of Pakistan$
%he methodolog, reported for collection of data is primar, as "ell as secondar, data$ %he
'iggest source of information is m, personal o'ser&ation "hile "orking "ith staff and
ha&ing discussion "ith them$ Formall, arranged inter&ie"s and discussions also helped
me in this regards$
Primar, data.
Personal o'ser&ation
Inter&ie"s of staff
-econdar, data.
Manuals
/ournals
Maga#ine
Annual reports
Internet
1.* Sc$+ of Stud)
SECTION 1
Chapter 1:
An introductor, chapter that discuss the introduction of stud, of report+ its Background+
Purpose+ -cope+ Methodolog,+ limitations and -cheme of the report$
0
SECTION "
Chapter2
%his chapter concludes 'rief histor, of 'anking in general+ e&olution of 'anking+ 'anking
in Pakistan$$
Chapter3:
%his chapter consist (ationali#ation of 'anking in Pakistan+ 1istor, of (BP+ mission
statement+ its o'2ecti&es and functions of (ational Bank of Pakistan$
Chapter4: In this chapter the ser&ices of (BP "ere discussed$
SECTION III
Chapoter5: In this chapter the in this section the departmentation of (BP is e!plained+
and also (BP 1a,ata'ad to"nship 'ranch$
SECTION I,
Chapter6:
It tells a'out -trengths+ 3eaknesses+ 4pportunities and %hreats of i$e$ -34% anal,sis of
(BP$
Chapter 7:
It consists of comprehensi&e performance of (BP through past se&eral ,ears$ 5atio
anal,sis and those parties+ "hich are interested in financial performance of Bank$
Chapter 8:
It co&ers the critical anal,sis of the 'ank$ %his chapter has 'een di&ided into four parts
i$e$ Pro'lems at the Branch+ Functional anal,sis+ Administrati&e anal,sis+ and Personal
Management Anal,sis$
6
SECTION ,
Chapter 9:
In this chapter recommendation for impro&ement on all aspects of the Bank are gi&en$
Chapter 10:
%"o implementation plans are gi&en in this chapter$ 7Mare 8are Car Financing -cheme9
and (eed for %elephone 4perator$
*
CHAPTER - "
E,O.UTION OF BAN/S IN PA/ISTAN
%here are different opinions that ho" the "ord :Bank; originated$ -ome of the author;s
opinion that this "ord is deri&ed from the "ord :Bancus; or Banque;+ "hich means a
'ench$ %he e!planation of this origin is attri'uted to the fact that the /e"s in <om'ard
transacted the 'usiness of mone, e!change on 'enches in the market place= and "hen the
'usiness failed+ the people destro,ed the :'ench;$ Incidentall, the "ord :Bankrupt;s said
to ha&e e&ol&ed from this practice$
-ome of the authors are of opinion that the "ord :Bank; is deri&ed from the 8erman "ord
'ack+ "hich means :2oint stock fund;$ <ater on "hen the 8erman occupied ma2or part of
the Ital, the "ord :Back; "as italici#ed into :Back;$
In fact human left the need of 'ank "hen it 'egins to reali#e the importance of mone, as
a medium of e!change$ Perhaps it "here the Ba',lonian "ho de&eloped 'anking s,stem
as earl, as 0000 BC$ At that time temples "ere used as 'anks 'ecause of their pre&alent
respect$ >uring the rule of king 1amura'i (1?@@ 1A@A BC the founder of Ba',lonians
Bmpire+ loans "ere started 'eing granted for interest$ %he 'orro"er has to pro&ide
guarantee or he had to pledge his goods or &alua'les$ Cing 1amura'i dre" up a code
"herein he laid do"n standards rules for procedures for 'anking operations ', temples
and great lando"ners$ Also in 8reece+ the temples "ere used as 'anks+ "here the people
deposited their mone, and other &alua'les for safe custod, and securit,$ In Burope "ith
the :re&i&al of ci&ili#ation; (5enaissance in the middle of t"el&e centur,+ trade and
commerce started e!panding and this de&elopment compelled the 'usiness communit, to
'orro" the mone, from the 1e're" mone, lenders on high rates of interest and usur,$
-eeing the great demand+ these mone,lenders started organi#ing themsel&es and 'ank
started up at the principle seaports of southern Burope$ -oon Denice and 8ene&a 'ecame
the most important mone, markets of the time and 'anking though different from its
present form+ flourished$ 3hat "e kno" as :modern 'anking; originated in the 1*
th
centur, in Barcelona$
1
E
".1 Dfinition! of Bank
7Bank9
FA financial institution, which deals with money and credit. It accepts
Deposits from individuals, firms and companies at a lower rate of
Interest and gives at higher rate of interest to those who need them$9
0
A financial esta'lishment "hich uses mone, deposited ', customers for in&estment+ pa,s
it out "hen required+ makes loan at interest+ e!changes currenc,+ etc$
/$3 8il'ert in his principles and practice 'anking defines a 'anker in these "ords.
7A banker is dealer in capital or more properly, a dealer in money. He is intermediate
party between the borrower and the lender. He borrows of one and lends to another.
3
-ir /ohn Paget defines 'anker in these terms.
7%hat no person or 'od,+ corporate or other"ise+ can 'e a 'anker "ho does not
%ake deposits accounts$
%ake current accounts+
Issue and pa, Cheques and
Collect Cheques crossed and uncrossed for his customers9

*
(%he la" of
Banking ', -ir /ohn Paged+ page E1$
%he American defined the term 'anker in a &er, 'road sense as under.
7y banking, we mean the business of dealing in credits and by a !ank" we
include every person, firm or company having a place of business where credits are
opened by deposits of collection of money or currency. #ub$ects to be paid or remitted on
A
%he&ues or order, money is advanced or loaned on stocks, bonds, bullion, bill of
e'change, promissory notes are received for discount or sale.
(
"." E0o(ution of Banking in Paki!tan
%he first phase in e&olution of 'anking in Pakistan sees &er, hard da,s for the "hole
'anking sector$ -tarting &irtuall, from scratch in 1)*?+ the countr, toda, possesses a full
range of 'anking and financial institutions to cope "ith &arious needs of the econom,$
%he area no" constituting Pakistan "as+ relati&el, speaking+ fairl, "ell pro&ided "ith
'anking facilities in undi&ided India+ in March 1)*? there "ere 6*)A offices of Indian
scheduled 'anks out of "hich as man, as *@? "ere situated in territories no" constituting
Pakistan$
%he 5eser&e 'ank of India "as the central 'anking authorit, in India$ At the time of
partition it "as decided that in the interest of smooth transition it should continue to
function in ne"l, emerging state of Pakistan+ until 60
th
-ep$1)*@$
In 1)*? due to uncertaint, and unsuita'ilit, the 'anking sector suffer hea&, losses$
%his resulted in a negati&e effect on 'aking ser&ice in Pakistan$ %he 'anks+ "hich had
their registered offices in Pakistan+ transferred them to India$ In an effort to 'ring a'out
the collapse of the ne" state ', pushing a deli'erate polic, of "ithdra"als the Indian
'ank offices closed quickl,$ %hose 'anks+ "hich sta,ed+ operated onl, in name pending
the "inding up of their 'usiness$ %he num'er of scheduled 'anks thus declined form *@?
'ranches 'efore independence to onl, 1)E 'ranches ', 60
th
/une1)*@$
E
".% Banking 1ro2t$ during 314&5614789
In this tense situation+ a committee "as immediatel, setup to formulate a scheme of
central 'anking legislation for Pakistan$ Man, specialists "ere of the opinion that in &ie"
of the acute shortage of trained staff+ an, idea of esta'lishing a central 'ank "as I
impractical and the 'est that could 'e attempted "as the setting up of a currenc, 'oard
until such times as sufficient staff could 'e organi#e to operate a central 'ank$
?
%he questions as to "hether the institution should 'e onl, a currenc, 'oard or a fullG
fledged central 'ank had e!ercised the mind of the Pakistan go&ernment since
independence$ %hrough+ it "as reali#ed that the shortage of trained personal to run the
central 'ank "ould present serious difficult, in &ie" of the tangi'le ad&antages that a
central 'ank en2o,ed o&er currenc, 'oard+ the go&ernment ultimatel, decided to take the
'old step of setting up a full fledged central 'anking authorit,$ Among other factors+
"hich led to this decision+ there "as the fact the 'anking facilities in the countr, had
'een totall, disrupted and there "as an urgent need for their reha'ilitation+ "hich a
central 'an alone could meet$ As there "as hardl, an, time to pass as Act+ an order "as
drafted+ kno"n as the state 'ank of Pakistan order+ "hich "as promulgated ', the
go&ernment of Pakistan on 10
th
ma, 1)*@$ %he state 'ank declared open on /ul, 1
+
1)*@
', the father of the nation$
4ne of the first tasks of the state 'ank "as to arrange for the replacement of the 5eser&e
'ank of India notes+ "hich had continued to circulate in Pakistan during the transitional
period+ ', Pakistan currenc,$
%he first Pakistan notes "ere issued in 4cto'er 1)*@ in the denominations of 5s$ E+ 10 H
100$
An equall, urgent task+ "hich the ne" central 'ank had to address itself+ "as the creation
of a national 'anking s,stem$ %o this end+ "hile e!tending e&er, help and encouragement
to 1a'i' Bank to e!pand its organi#ation+ the state 'ank recommended the setting up of a
ne" 'anking institution to ser&e 'oth as an agent to the state 'ank recommended the
setting up of a ne" 'anking institution to ser&e 'oth as an agent of the state 'ank as "ell
as the spearhead of its credit polices$
Accordingl, the (A%I4(A< BA(C 4F PACI%-( "as setup under an ordinance in
(o&em'er 1)*)$ It started "ith si! offices in the former Bast Pakistan$ In &ie" of the
special role assigned to the ne" institution+ contrar, to traditional practices the 8o&ernor
of the state 'ank "as appointed to head its 'oard of >irector in 1)E0$ Inder the fostering
care of the state 'ank and the support of the go&ernment+ the ne" institution de&eloped
rapidl,$ B, using its special po"ers+ the state 'ank made li'eral ad&ances to the ne" 'ank
@
to help it e!pand credit facilities in the countr,$ B, 1)E0+ the (ational 'ank of India$
-hortl,+ after"ards+ in (o&em'er 1)E0+ the go&ernor of the state 'ank ceased to function
as the president of (ational 'ank of Pakistan$
3ith a &ie" to 'roadening the institutional frame"ork of the financial s,stem+ the state
'ank also sponsored the esta'lishment of speciali#ed credit institutions in the filed of
agriculture and industr,$ Banking companies (control act "as passed in >ecem'er 1)*@
specificall, empo"ering the state 'ank to control the operations of 'anking companies in
Pakistan$
Moreo&er reali#ing that the most serious limitation on the e!pansion of 'anking ser&ices
in Pakistan "as the lack of trained personal+ the state 'ank sponsored a 'anking training
scheme+ "hich "as repeated after ,ear and turned out a large num'er of 'ankers$
As the Commercial Banking facilities continued to e!pand+ a ne" Pakistani 'ank+ the
(ational Commercial Bank "as esta'lished and registered as a scheduled 'ank$ In the
filed of industrial finance a ne" institution kno"n as the industrial credit and in&estment
cooperation "as set up$
%he ,ear 1)E@ marked the completion of the first decade of the "orking of the -tate Bank
of Pakistan$ 3hen it "as esta'lished there "ere onl, 1)E 'ank offices in e!istence$ At the
end of /une 1)E@ their num'er had increased to 60?+ of "hich Pakistani 'anks accounted
for 060 against 0E in mid 1)*@$ Moreo&er at the end of /une 1)E@$ Pakistani 'anks held
A0J of the total 'anks deposits+ and "ere responsi'le for AE of total 'ank credit$
3hen the A,u' 8o&ernment took o&er in 1)E@+ the 'anking and monetar, scene "as
significantl, affected ', >e&elopments such as the li'erali#ation of imports+ transfer of
'usiness in food grains to the pri&ate sector+ and the firming up of commodit, markets$
%he demand of funds picked up and there "as a su'stantial e!pansion of 'ank credit to
the pri&ate sector$ %he pace of e!pansion in the institutional frame "ork of the countr,;s
'anking s,stem quickened and a ne" Pakistani+ 'ank+ namel, the Inited Bank <imited
"as esta'lished$
)
4"ning the fi&e ,ears 1)A0GAE+ the credit structure in Pakistan made rapid progress$ %he
'ank e!tended its net"ork ', opening si! ne" offices located at Chitagong+ Pesha"ar+
Kuetta+ Chulna+ <a,allpur and 5a"alpindi$ %he num'er of scheduled 'ank offices rose
from *60 at the end of /une 1)A0 to 1E)1 in /une 1)AE$ -e&eral ne" 'anks "ere added to
the list of scheduled 'anks$
%"o principal additions "ere the commerce 'ank+ and the standard 'ank$ %he num'er of
scheduled 'anks+ "hich stood at 0) in /une 1)A0 rose to 6A ', /une 1)AE$
Inder the impact of economic gro"th and dear scope of pri&ate enterprises+ 'ank credit
to the pri&ate sector rose from 5s$ 1+*E@ millions to 5s$ E?E) million$ %hus the total
e!pansion in 'ank credit to the pri&ate sector during this period amounted to 5s$ *600
million+ "hich ga&e a annual e!pansion of 5s$ @A0 million compared to the annual
a&erage increase of 5s$ 1** million o&er the preceding fi&e ,ears$ Banks deposits
increased from 5s$ 0+*)6 million to 5s$ A@@6 million during the fi&e ,ears period ended
/une 1)AE compared to 5s$ 061 million in the proceeding fi&e ,ears$ %ime deposits
during this period increased from 5s$ )*A million to 5s$ 600@ million+ "here demand
deposits rose from 5s$ 1))? million to 5s 6AEE million$ %he increase in time deposits
"as particularl, rapid$ %he ratio of time deposits to total deposits in /une 1)AE stood at
*)$A percent age as against 60$01 percent age fi&e ,ears earlier$ Another salient feature of
'anking de&elopment during this period "as that since the rate of increase in 'ank
deposits lagged 'ehind the rate of e!pansion in 'ank credit+ the 'anked has to depend
increasingl, on central 'ank finance$ %he, 'orro"ing from the state 'ank rose from 5s$
11 million in /une 1)A0 to 5s$ 1A@@ million in /une 1)AE$ 4"ing keen demand for 'ank
credit+ 'ank;s in&estments could not increase as rapidl, as their ad&ances$ %heir
in&estments totaled to 5s$ 1+@?* million at the end of /une 1)AE compared to 5s$ 1+061
million in /une 1)A0$ In&estments "hich "ere almost equal to their ad&ances in /une
1)A0 "ere onl, a'out one third of the ad&ances in /une 1)AE$
%he third plane period "itnessed a further e!pansion of 'anking facilities in the countr,
the total num'er of scheduled 'anked offices increased from 1+E)1 at the end of /une
1)AE to 6166 at the close of /une 1)?0$ >uring the same 'ank credit to the pri&ate sector
10
rose from 5s$ E+?@) million to 5s$ )*)0 million$ %here "as also a su'stantial gro"th in
the 'ank deposits+ "hich increased from 5s$ A@@6 million /une 1)AE to 5s$ 161*? million
at the end of /une 1)?0$ A remarka'le change occurred during this period related to the
composition of deposits$ %ime deposit 'ecomes greater than demand deposits forming
a'out E* percent age of the total deposits$ As oppose to "hat happened in the pre&ious
period+ 'anks "ere a'le to finance a mush higher le&el of credit e!pansion "ithout
ha&ing to increase their 'orro"ings from the central 'ank$
?
".& Banking Rfor+! 147"
After the assumption of office ', a ne" go&ernment in 1)?1+ ma, 1)?0 different reforms
"ere introduced to make the 'anks more responsi&e to the requirements of economics
gro"th "ith social 2ustice$ %he reforms aimed at 'ringing a'out a more purposeful and
equita'le distri'ution of 'ank credit+ impro&ing the soundness and efficienc, of the
'anks+ and securing greater social accounta'ilit, of the 'anking s,stem as a "hole$
%he role of the 'anking s,stem had 'een trul, spectacular in mo'ili#ing sa&ings of the
communit, and meeting the credit needs of the econom,$ But at the same time+ the 'anks
had generall, neglected their role in promoting social 2ustice and had failed to pla, an
effecti&e role in ensuring a "ider and more equita'le dispersal of the 'enefits of
economic gro"th$ In particular the inter locking of o"nership "ith commercial and
industrial interests had led to the misuse of 'ank resources$ %here "as a hea&,
concentration of credit in 'ig accounts and in ur'an area$ Credit facilities for agriculture+
small 'usiness+ ne"l, emerging e!ports and housing had remained o'&iousl, inadequate
"hile the 'anks indulged in capital financing in fe" selected 'usiness sectors and issued
guarantees on 'ehalf of fa&ored clients+ term clients+ term financing facilities for industr,
"ere "holl, a'sent$
Inder the 'anking reforms introduced in Ma, 1)?0 the state 'ank of Pakistan "as
accorded "ider po"ers$ It "as authori#ed to remo&e directors or managerial personnel+ if
necessar, and supersede the 'oard of directors of a 'anking compan, and appoint
administrators during the period of such super session$ It "as also empo"ered to
nominate directors on the 'oard of e&er, 'ank$ As regard 'ank directors+ it "as pro&ided
11
that an,one defaulting in meeting his o'ligations to 'ank "ould forfeit his directorship$
Moreo&er+ it "as laid do"n that no person could ser&e as director of a 'ank for more than
si! ,ears continuousl,$ Bach 'ank "as required to ha&e a paid up capital of not less than
E percent age of its deposits to 'e progressi&el, 'uild up to 10 percent age o&er a period
of time$ %he 'anks "ere also required to transfer 10 percentage of their profit their
reser&es e&er, ,ears after the reser&e 'ecame equal to the paid up capital$ 3ith a &ie" to
di&ersit, the o"nership of the 'anks+ the 'anks "ere required to raise ne" capital from
the market$ Insecured loans to directors+ their families or firms and companies+ "ere
totall, prohi'ited$
%he 'ank reforms also 'rought a'out the esta'lishment of ne" institutions to achie&e ne"
o'2ecti&es$
A national credit consultati&e "as setup under the super&ise of the state 'ank "ith
representation form the go&ernment and the pri&ate sector$ It "as assigned the task of
determining of econom,;s annual credit needs "ithin the safe limits of monetar, and
credit e!pansion "ith reference to the annual de&elopment plan$ -uch a credit plan "as to
co&er the pu'lic and pri&ate sectors$ Alongside the (ational credit council and
Agricultural Ad&isor, Committee "as formed to allocate agriculture credit for &arious
purposes+ to coordinate the operation or the agriculture credit agencies and to o&ersee the
flo" of credit to the designated targets$ A standing committee on e!ports in general and
the ne" emerging e!ports in particular+ "as also esta'lished$ 3ith a &ie" to encourage
the 'anks to e!tend credit to small 'orro"ers+ a credit guarantee scheme "as introduced
under "hich the state 'ank under took to share an, 'onfire losses incurred ', the
commercial 'anks in case of small loans of ad&ances to agriculture$
At the same time t"o financing institutions "ere esta'lished$ %he people;s Finance
Corporation "as designed to pro&ide finance to people of small means "hile the (ational
>e&elopment Finance Corporation "as setup of finance pu'lic sector o"ned and
managed industries and enterprises$
@
10
REFRENCES
1 -iddiqi 1 Israr <a" and practice 'anking in Pakistan$
0 8il'ert /$3 principles and practice$
6 -ir Paged /ohn %he la" of Banking+ page E1$
* -ir Paged /ohn %he la" of Banking+ page E1$
16
CAHAPTER - %
NATIONA.I:ATION OF BAN/S 3147&9
%he 'anking reforms turned to 'e transitional and interim step and "hen the, "ere hardl,
eighteen months old the go&ernment nationali#ed the 'anking s,stems+ "ith the follo"ing
main o'2ecti&es$
%o ena'le the go&ernment to use the capital concentrated in the hands of a fe" rich
'ankers for the rapid economic de&elopment of the countr, and the more urgent social
"elfare o'2ecti&es$
%o distri'ute equita'l, credit too different classes sectors and regions$
%o coordinate the 'anking policies in &arious area of feasi'le 2oint acti&it, "ithout
eliminating health, competition among 'anks$
%he act passed for the nationali#ation of 'anks is kno"n as the 'anks (ationali#ation Act
1)?*$
%hus under this act the state 'ank of Pakistan and all the commercial 'anks incorporated
in Pakistan and carr,ing 'usiness in or outside the countr, "ere 'rought under
go&ernment o"nership "ith effect from /an 1+ 1)?*$ %he o"nership+ management and
control of all Pakistani 'anks stood transferred to and &ested in the Federal go&ernment$
%he shareholders "ere pro&ided compensation in the form of federal go&ernment 'onds
redeema'le at par an,time "ithin the period of fifteen ,ears$ Inder the (ationali#ation
act+ the Chairman+ >irectors and B!ecuti&es of &arious 'anks+ other than those appointed
', federal go&ernment "ere remo&ed from their offices and the central 'oards of the
'anks and all local 'odies "ere dissol&ed$ Pakistan 'anking council "as esta'lished to
coordinate the acti&ities of the (ationali#ed Commercial 'anks$ At the time of
(ationali#ation on >ecem'er61+ 1)?6 there "ere follo"ing 1* Pakistani commercial
'anks "ith 6606 offices allo&er Pakistan and ?* offices in foreign countries.
1*
(ational 'anks of Pakistan
1a'i' 'ank limited
1a'i' 'ank (o&erseas limited
Inited 'ank limited
Muslim commercial 'ank limited
Commerce 'ank limited
-tandard 'ank limited
Australia 'ank limited
Bank of Baha"alpur limited
Premium 'ank limited
Pak Bank limited
-arhad 'ank limited
<ahore commercial limited
Pun2a' pro&incial coGoperati&e 'ank limited
%he Pakistan 'anking council prepared a scheme for the recognition of 'anks$ %he 'ank
(amalgamation scheme 1)?* "as notified in April+ pro&iding for the amalgamation of
the smaller 'anks "ith 'igger ones and follo"ing the fi&e units in there phases.
(ational 'ank limited
1a'i' 'ank limited
Inited 'ank limited
Muslim commercial 'ank limited
1E
Allied 'ank of Pakistan limited
%he first phase "as completed on 60
th
/une$ 1)?*$ 3hen the 'ank Baha"alpur "as
merged "ith the (ational Bank of Pakistan$ %he premier Bank <imited "ith Muslim
Commercial Bank limited and -arhad Bank <imited and Pak 'ank limited and renamed
as Allied Bank of Pakistan limited$
%he second phase "as completed on 61
st
>ec$1)?*+ "hen the commerce 'ank limited
merged "ith the Inited Bank limited$
%he third and the final phase "ere completed on 60
th
/une+ 1)?E "hen the standard 'ank
limited "as merged "ith 1a'i' Bank limited$
%he nationali#ation "as &er, smooth and ga&e &er, positi&e results$
%he num'er of 'ranches+ "hich stood at 66)? on >ec61+ 1)?6+ reached on ?AA1 ', end
/une 1))0$ %he 'ank deposits "hich stood at 5s$ 1)0E corers at the end 1)?6 reached the
highest mark a'out 606 corers$
1
%.1 I!(a+i;ation of Banking
Another ma2or de&elopment in the histor, of Pakistan Banking -,stem "as the
introduced of interest free 'anking in selected Commercial Banks "ith effect form /an1+
1)@1$ %his follo"ed the effort to eliminated interest from the operation of (ation
in&estment trust+ the 1ouse Building Finance Corporation of Pakistan$ Certain
amendments "ere made in 'anking and other la"s "ith the o'2ect of ushering in a ne"
s,stem of 'anking+ "hich "ould confirm of -haria$ A ne" la" Modara'a Companies
4rdinance 1)@0 "as promulgated$ -eparate interest free counters 'egan to operate in all
the nationali#ed commercial 'anks free counters 'egan to operate in all the nationali#ed
commercial 'anks$ %he state 'ank pro&ides finance against participation term certificate
and also against promissor, notes supported ', Modara'a certificate$
In order to co&er interest free transactions certain 'anking definitions such as creditors+
de'tor+ and ad&ances credits and deposits "ere re&ised$ -tipulations concerning form of
1A
'usiness in "hich 'anking companies ma, engage ma, also ha&e 'een modified schemes
"ere introduced to pro&ide interest free loans to formers and deser&ing students$
A pri&ate <imited Compan, named as Bankers Bquit, limited "as incorporated in 1)?)
to pro&ide financial assistance to the industrial sector primaril, on interest free 'asis$
A scheme to e!tend interest free producti&e loans to farmers and fisherman has also 'een
introduced$ Instead of interest+ a s,stem 'ased on markGup in price+ e!change rate
differential+ and profit and loss sharing accounts "ere introduced$
>ifferent financial schemes introduced in the Islami#ation process are.
0
Musharika Financing$
1ire Purchase Financing$
Modara'a Financing$
-pecific Purpose Modara'a$
%." Di!6In0!t+nt and Drgu(ation of Banking < 1441
3hen it "as reali#ed that the role of pu'lic sector in the econom, is o&er e!tended and
the 'anking sector has more earning potential in the pri&ate sector the process of
pri&ati#ation 'anking sector restarted in 1))1 ', the Muslim <eague 8o&ernment$
Muslim Commercial Bank "as >isGin&ested in to t"o phases "hile AB< "as sold to its
emplo,ees$ -ince then allot of in&estment is 'eing made in the 'anking sector and se&eral
ne" 'anks "ere esta'lished and still the process is going on$ (o" onl, (BP is
go&ernment 'ank other than -BP$ %he performance of this 'ank "ill 'e anal,#ed and
2udged in the follo"ing chapters$
%.% INTEREST FREE BAN/IN1
A ne" concept of interest free 'anking "as introduced in 1)@1 and ', no" it has 'een
esta'lished on sound footing and ne" trends and techniques are 'eing implemented to
1?
make this s,stem result oriented$ (e" products and their s,stematic consumption are
making Pakistani 'anking compara'le to their se&eral modern counterparts an,"here in
the de&eloped "orld$
%.& HISTORY OF NBP=
%he (BP "as esta'lished &ide (BP 4rdinance (o$ LIL of (o&em'er )$ 1)*)$
British 8o&t$ de&alued its currenc, in -eptem'er 1)*)+ India de&alued its rupees 'ut
Pakistan did not$ It led to a crisis in trading 'et"een the t"o countries and India refused
to lift the Pakistan /ute$ %o sol&e this pro'lem i$e$ to e!port 2ute (BP "as esta'lished
through an 4rdinance of 84P$ (ational Bank of Pakistan maintains its position as
PakistanMs premier 'ank determined to set higher standards of achie&ements$ It is the
ma2or 'usiness partner for the 8o&ernment of Pakistan "ith special emphasis on fostering
PakistanMs economic gro"th through aggressi&e and 'alanced lending policies+
technologicall, oriented products and ser&ices offered through its large net"ork of
'ranches locall,+ internationall, and representati&e offices$
%he Bank in 1)E0 had one su'sidiar, :%he Bank of Baha"alpur; on >ecem'er*+ 1)*? ',
the former Baha"alpur -tate$
(BP "as undertaking %reasur, 4perations and Managing Currenc, Chests or -u' Chests
at E? of its offices "here the turno&er of the 'usiness under the head amounted to
5s$0*A0 million$
i >eposits held ', (BP constituted a'out 6$1J of total deposits of all
Pakistani Banks in 1)*)+ "hich rose to 6@J in 1)E0$
ii 8ro"th in >eposits "as accompanied ', increase in Bank portfolio in ad&ances$
(BP lent out to %e!tile+ Narn+ Iron and -teel and pla,ed a pioneer role in support of
agriculture and commerce$
iii
(BP ad&ances reached 5s$EE*$* million ', >ecem'er 1)E)+ "hich "as one third
of the total schedule 'ank credit
$6
1@
%.&.1 'ISSION STATE'ENT )*o
make the ank complete and competitive with all international
#tandard in performing, &uality of, operations, staff, financial strength. And
products and services *o develop a culture of e'cellence in every spare of activity of the
bank
+
.
%.&." 1OA.S AND OB>ICTI,ES
)An organi,ational ob$ective is the intended goal that prescribes definite scope and
suggests direction to the panning efforts of a organi,ation.
-
%.&.% 1OA.S AND OB>ICTI,ES NBP
)*o be the pre.eminent financial institution in /akistan and achieve market recognition
both in the &uality and delivery of service as well as the range of product offerings.
0
%.&.& BOARD OF DIRECTORS
*able 1
NA'E DISI1NATION
Ali 5a#a Chairman H President
>r 3aqar Masood >irector
Ifthikhar Ali Malik >irector
-,ed -hafqat Ali -hah /amoti >irector
M Ou'air Moti"ala >irector
-ikandar 1a,at /amali >irector
M$ Chalid Malik >irector
-$M$ 5afique -BDP H -ectorar, to B>
(-ource Annual report 0006
1)
%.* 'ANA1E'ENT
Management is a distinct process consisting of acti&ities of planning+ organi#ing+
actuating and controlling performed to determine and accomplish stated o'2ecti&es "ith
the use of human 'eing and other resources.
2
%he management has t"o t,pes$
1 Centrali#ed$
0 >ecentrali#ed$
%entrali,ed 3anagement tends to concentrate decision making at the top of the
4rgani,ation .
Decentrali,ed disperses decision making and authority throughout and further down the
organi,ational hierarchy.
5
(BP ha&e a centrali#ed t,pe of management 'ecause all the decisions are taken ', the
top management$
%.*.1 SENIOR 'ANA1E'ENT OF NBP.
*able 6
Masood Carim -heikh
-BDP H 8roup Chief+ Corporate H
In&estment Banking 8roup and Chief
Financial 4fficer
-$ M$ 5afique -BDP H -ecretar, Board of >irectors
>erick C,prian
-BDP H 8roup Chief+ -pecial Assets H
5emedial Management 8roup
Imam Bakhsh Baloch -BDP H 8roup Chief+ Compliance
00
8roup
-hahid An"ar Chan
BDP H 8roup Chief+ Commercial H
5etail Banking 8roup
(adeem A$ >ogar
BDP H 8roup Chief+ Information
%echnolog, 8roup
Muhammad -ardar Cha"a2a
BDP H 8roup Chief+ Audit H
Inspection 8roup
>r$ Asif A$ Brohi BDP H 8roup Chief+ 4perations 8roup
/a&ed Mehmood
BDP H 8roup Chief+ 5isk Management
8roup
Muhammad (usrat Dohra
BDP H 8roup Chief+ %reasur,
Management 8roup
Amim Akhtar BDP H P-4 to the President
>r$ Mir#a A'rar Baig
8roup Chief+ 1uman 5esources
Management H Administration 8roup
I#ma Bashir
8roup Chief+ 4rgani#ation >H%
8roup
(-ource """$n'p$com$pk
%.? Nt @ork of Branc$!=
(BP ha&e "ide range of 'ranches inside the countr, and outside the countr,$
In Pakistan it has 0) regional offices+ 11@) Branches and * -u'sidiaries$
In o&erseas it has 1A o&erseas 'ranches+ A other 'ranches$
10
$%.7 OABcti0! of NBP
(ational 'ank of Pakistan is also a commercial organi#ation and its main o'2ecti&e is
profit ma!imi#ation$ %his is achie&ed in t"o "a,s.
01
1$ B, increasing deposits$
0$ B, charging interest on loans pro&ided to the pri&ate sector and 'usiness
communit,$
%hese are e!plained as.
%.7.1 Incra! in d#o!it!=
Competition in 'anking is intense and e&er, 'ank "hether it is Pakistani+ foreign+ pri&ate
or nationali#ed tries to increase its deposits ', pro&iding 'etter facilities to its customers$
B, increasing its deposits a 'ank can e!tend greater amount of loan and hence achie&es
higher profit$ (BP is also impro&ing its facilities and ser&ices to attract customers "ith
higher &olume of deposits$ %here are t"o main factors in&ol&ed in increasing the
deposits$ %hese factors are impro&ing the ser&ices and courtes,$ (BP is continuousl,
"orking on these t"o factors to increase its deposits$
%.7." ECtn!ion of (oan!=
%he profita'ilit, of a 'ank largel, depends on the amount gi&en to people as loan and the
t,pe of people to "hom credit is gi&en i$e$ the credit "orthiness of the 'orro"ers$ %his
strateg, has "orked quite "ell for (BP$ >eposits are collected from the people and
in&ested in different pro2ects$ (BP prefers to gi&e loans to financiall, sound and relia'le
parties+ after securing the collators$ (BP has an e!tremel, "ell organi#ed section$ %he
staff is adequatel, trained+ and educated and competent$ %he, carr, out e!tensi&e
financial anal,sis 'efore deciding on the loan$ Interest charged on the loans potentiall,
contri'utes to higher profits$
-ome of the other o'2ecti&es of (BP are.
i$ Impro&e customer ser&ices$
ii$ Kuick disposal of credit cases$
iii$ Bfficient operation of the 'ranches$
00
i&$ Better Pu'lic 5elations$
&$ 4perational and ad&isor, ser&ices for foreign e!change accounts acti&ities
%.5 Function! of NBP
-ince (BP is a commercial 'ank+ it performs a &ariet, of functions$
<ike other commercial 'anks+ (BP is engaged in financing international trade$ Its other
ma2or functions include recei&ing deposits+ ad&ancing loans and discounting of e!change$
%he functions performed ', (BP are.
%.5.1 Acc#ting D#o!it!
%his function is important 'ecause 'anks largel, depend on the funds deposited "ith
them ', its customers$ >eposits are of man, t,pes.
i. Currnt d#o!it!
Current deposits are also called demand lia'ilit, on current deposits$ (BP pa,s
practicall, no interest on current deposits$ Businessmen usuall, open current accounts$ In
(BP current account can 'e opened "ith a minimum amount of 5s$E00PG$
ii. P.S !a0ing d#o!it
Profit and loss sharing deposits (P<- are also called checking accounts$ 4ne can deposit
and dra" mone, easil,$ Profit on P<- is calculated e&er, month 'ut paid after si!
months$ P<- account can 'e opened "ith a minimum amount of 5s$E00PG
06
iii P.S tr+ d#o!it!
Fi!ed term deposits are deposits "ith the 'ank for certain fi!ed period 'efore the e!pir,
of "hich the, cannot 'e "ithdra"n unless gi&ing due notice$ In this case the rates of
profit "ill 'e different depending upon the time period$
%.5.". Di!counting Ai((! of Cc$ang
>iscounting of 'ill is practicall, speaking lending for e!change at their market rate i$e$ it
pa,s to holder of the 'ill an amount equal to the face &alue after deducting interest at the
current market rate for the period$ %his 'ill has to 'e mature$ %his is the common "a,
used for keeping a part of assets of the 'ank in a liquid form$
%.5.%. Agnc) !r0ic
(BP also pro&ides 'est and unique ser&ice to its &alued customers$ (BP pro&ide the
follo"ing agenc, ser&ices to the customers.
i. Co((ction of di0idnd!
As (BP deals "ith the purchase and sale of &arious t,pes of securities+ therefore (BP
also pro&ide di&idend or interest earned on share or 'onds or in&ested mone,$
ii. Co((ction of C$Du!
In the collection and pa,ment of Cheques+ 'ills and promissor, notes etc$ (ational 'ank
of Pakistan acts as an agent for its customers$
iii. Acting a! an agnt
(BP also acts as an agent correspondent or representati&e for its customer at home or
a'road$
i0. 1nra( uti(it) !r0ic!=
Itilities pro&ided ', (BP are as follo"s.
0*
a. C(aranc of uti(it) Ai((!
(BP pro&ides the ser&ice of clearing the utilit, 'ills i$e$ electricit,+ gas and telephone
'ills of its customers$ For this purpose it also pro&ides e&ening 'anking ser&ices$
A. .ockr! faci(it)
(ational 'ank of Pakistan also pro&ides locker facilities to its customers to keep their
&alua'le assets in it$ %he charges of different si#e of lockers are different$
c. Act! a! a rfr
(BP pro&ides useful ser&ices to its customers ', acting as a referee to their credit
"orthiness$
d. Su##() of infor+ation
(BP pro&ides operational and ad&isor, ser&ice for foreign e!change accountsPacti&ities$
%.4 Un+atc$d Banking Faci(iti!
>eposit securit,+ 8uaranteed ', 8o&ernment of Pakistan$
1ighest rates of return to attract the sa&ings$
<o"est rates on e!ports and other 'orro"ings$
<argest contri'ution to"ards 8o&ernment and -emiG8o&ernment
requirements$
Agents of the -BP handling %reasur, Functions+ receipts of %a!es H other
5e&enues$
1andling of salaries H pensions of federalPpro&incialPdefense personnel$
Itilit, Bills collections$
0E
1a22 arrangements$
-ale and encashment of pri#e Bonds$
-ale and encashment of >efense -a&ings and -pecial -a&ings Certificates$
-afe >eposit <ockers for customers$
5ational 1uman 5esource Management$
%he prestigious periodical 7%he Banker9 IC recogni#ed (BP as the 'est 'ank for 0001G
0000 and (BP is the 'ank of the ,ear for 0006G000* of Pakistan$
i$ AAA rating a"arded /C5GDI- Credit co$ <td and affiliated of /apan Credit 5ating
Agenc, for 0001$
ii$ AAAQ1 rating a"arded /C5GDI- Credit Co$<td and affiliated of /apan Credit
5ating Agenc, for 0000
%.18 NBP at t$ forfront of Pak6Afg$an trad
i$ Booth at dr, port Pesha"ar
ii$ Booth at Pak Afghan 'order (%orkham (3FP
iii$ Booth at Pak Afghan 'order (Chamman$Baluchistan$
i&$ Bsta'lishing 'ranch at Ca'ul in near Future$
11
0A

REFRENCES
1 Bank (ationali#ation act 1)?*$
0 Islamic Banking$
6 """$n'p$com$pk
* Annual report 1))@$
E """$n'p$com$pk
A %err, and Franklin Principles of Management$
? """$n'p$com$pk
@ %err, and Franklin Principles of Management$
) %err, and Franklin Principles of Management$
10 Annual report 0006$
11 """$n'p$com$pk
0?
CHAPTER - &
SER,ICES OF NBP
SER,ICES
-er&ices are he outputs of the firm "hich are in intangi'le form$
(BP offers the follo"ing ser&ices to the people$
&.1 DE'AND DRAFTS
If ,ou are looking for a safe+ speed, and relia'le "a, to transfer mone,+ ,ou can no"
purchase (BP;s >emand >rafts at &er, reasona'le rates$ An, person "hether an account
holder of the 'ank or not+ can purchase a >emand >raft from a 'ank 'ranch$
&." S@IFT SYSTE'
%he -3IF% s,stem (-ociet, for 3orld"ide Inter 'ank Financial %elecommunication has
'een introduced for speed, ser&ices in the area of home remittances$ %he s,stem has
'uiltGin features of computeri#ed test ke,s+ "hich eliminates the manual application of
tests that often cause dela, in the pa,ment of home remittances$ %he -3IF% Center is
operational at (ational Bank of Pakistan "ith a uni&ersal access num'er NBP6AP//A$
All (BP o&erseas 'ranches and o&erseas correspondents (o&er *E0 are dra"ing
remittances through -3IF%$
Ising the (BP net"ork of 'ranches+ ,ou can safel, and speedil, transfer mone, for our
'usiness and personal needs$
&.% .ETTERS OF CREDIT E
(BP is committed to offering its 'usiness customers the "idest range of options in the
area of mone, transfer$ If ,ou are a commercial enterprise then our <etter of Credit
ser&ice is 2ust "hat ,ou are looking for$ 3ith competiti&e rates+ securit,+ and ease of
transaction+ (BP <etters of Credit are the 'est "a, to do ,our 'usiness transactions$
0@
&.& TRA,E.ERFS CHEGUES
Tra&eler;s cheques are negotia'le instruments+ and there is no restriction on the period of
&alidit, of the cheques$ 5upee tra&eler;s cheque is a&aila'le at all ?00 'ranches of (BP$
%his can 'e encashed in all *00 'ranches of (BP$ %here is no limit on purchase of this
cheque$ It is one of the safest "a,s for carr,ing mone,$
&.* PAY ORDER
(BP pro&ides another reason to transfer ,our mone, using our facilities$ (BP pa, orders
are a secure and eas, "a, to mo&e ,our mone, from one place to another$ And+ as usual+
(BP charges for this ser&ice are e!tremel, competiti&e$ %he charges of (BP are &er, lo"
all o&er the Pakistan$ It charges 5s E0PG for (BP account holders on issuing one pa,ment
order$ And charges 5s 100PG for (BP nonGaccount holders on issuing one pa,ment order$
It charges 5s 0EPG for students on pa,ment of fees of educational institutions$ If some one
"ant a duplicate of pa,ment order the, charges 5s 100PG for (BP account holders and 5s
1E0PG for non account holders$
&.? 'AI. TRANSFERS
Mo&e ,our mone, safel, and quickl, using (BP Mail %ransfer ser&ice$ And (BP also
offer the most competiti&e rates in the market$ %he, charges 5s E0PG e!change rate and
5- ?EPG postage charges on issuing mail transfer$
&.7 FOREI1N RE'ITTANCES=
%o facilitate its customers in the area of 1ome 5emittances+ (ational Bank of Pakistan
has taken a num'er of measures to.
Increase home remittances through the 'anking s,stem
Meet the -BP directi&esPinstructions for timel, and prompt deli&er, of
remittances to the 'eneficiaries
0)
&.7.1 N2 Fatur!=
%he e!isting s,stem of home remittances has 'een re&isedPsignificantl, impro&ed and
"ellGtrained field functionaries are posted to pro&ide efficient and relia'le home
remittance ser&ices to nonresident Pakistanis at 1E o&erseas 'ranches of the Bank 'esides
Pakistan International Bank (IC <td$+ and Bank AlG/a#ira+ -audi Ara'ia$
Oero %ariffs. (BP is pro&iding home remittance ser&ices "ithout an, charges$
-trict monitoring of the s,stem is done to ensure the highest possi'le securit,$
-pecial courier ser&ices are hired for e!peditious deli&er, of home remittances to
the 'eneficiaries$
&.5 SHORT TER' IN,EST'ENTS
(BP no" offers e!cellent rates of profit on all its short term in&estment accounts$
3hether ,ou are looking to in&est for 6 months or 1 ,ear+ (BP;s rates of profit are
e!tremel, attracti&e+ along "ith the securit, and ser&ice onl, (BP can pro&ide$
&.4 Nationa( Inco+ Dai() Account 3NIDA9
%he scheme "as launched in >ecem'er 1))E to attract corporate customers$ It is a
current account scheme and is part of the profit and loss s,stem of accounts in operation
throughout the countr,$
&.4.1 Sa(int Fatur!=
5s 0Gmillion is required to open an account and there is no ma!imum limit$
Profit is paid on half ,earl, 'asis on monthl, 'alances$
%he rates of profit &ar, according to the sla's of deposit$ 4n >eposits of 5s$0
million to 0+000 million+ the rate fluctuates from 1$* to 1$?E
It is a checking account and there is no limit of "ithdra"als$
60
&.4." Rat! on NIDA
From 5s 0PG million to 5s E0PG the rate is 1$*J$
From 5sE0PG million 'ut less than 5s E00PGmillion+ the rate is 1$EJ$
From 5s E00PG million 'ut 'elo" 5s 1000PG the rate is 1$AJ$
From 5s 1000PG and a'o&e the rate is 1$?EJ$
&.18 GUITY IN,EST'ENTS
(BP has accelerated its acti&ities in the stock market to impro&e its economic 'ase and
restore in&estor confidence$ %he 'ank is no" regarded as the most acti&e and dominant
pla,er in the de&elopment of the stock market$
&.18.1 NBP i! in0o(0d in t$ fo((o2ing=
In&estment into the capital market
Introduction of capital market accounts (under process
(BP;s in&ol&ement in capital markets is e!pected to increase its earnings+ "hich "ould
result in 'etter returns offered to account holders
&.11 CO''ERCIA. FINANCE
(BP dedicated team of professionals trul, understands the needs of professionals+
agriculturists+ large and small 'usiness and other segments of the econom,$ %he, are the
customer;s 'est resource in making (BP;s products and ser&ices "ork for them$
&.1" RADE FINANCE OTHER BUSINESS .OANS
%here are t"o t,pes of trade finance$
61
&.1".1 A1RICU.TURA. FINANCE
(BP pro&ides Agricultural Finance to solidif, faith+ commitment and pride of farmers
"ho produce some of the 'est agricultural products in the 3orld$
&.1".1.1 Agricu(tura( Financ Sr0ic!=
HI Fd t$ @or(dI program+ a ne" product+ is introduced ', (BP "ith the aim to help
farmers ma!imi#e the per acre production "ith minimum of required input$ -elect farms
"ill 'e made role models for other farms and farmers to follo"+ thus helping farmers
across Pakistan to increase production$
&.1".1." Agricu(tura( Crdit=
%he agricultural financing strateg, of (BP is aimed at three main o'2ecti&es.G
Pro&iding relia'le infrastructure for agricultural customers
1elp farmers utili#e funds efficientl, to further de&elop and achie&e 'etter
production
Pro&ide farmers an integrated package of credit "ith supplies of essential inputs+
technical kno"ledge+ and super&ision of farming$
&.1".1.% Agricu(tura( Crdit 3'diu+ Tr+9=
Production and de&elopment
3atercourse impro&ement
3ells
Farm po"er
>e&elopment loans for tea plantation
Fencing
-olar energ,
60
Bquipment for sprinklers
&.1".1.& Far+ Crdit:
(BP also pro&ides the follo"ing su'sidi#ed "ith ranges of 6 months to 1 ,ear on a
rene"al 'asis$
4perating loans
<and impro&ement loans
Bquipment loans for purchase of tractors+ farm implements or an, other
equipment
<i&estock loans for the purchase+ care+ and feeding of li&estock$
&.1".1.* Production .oan!=
Production loans are meant for 'asic inputs of the farm and are short term in nature$
-eeds+ fertili#ers+ spra,ers+ etc are all co&ered under this scheme$
If ,ou require an, further information+ please do not hesitate to eGmail us$
&.1"." CORPORATE FINANCE
&.1".".1 @orking Ca#ita( and S$ort Tr+ .oan!=
(BP speciali#es in pro&iding Pro2ect Finance B!port 5efinance to e!porters PreG
shipment and PostGshipment financing to e!porters 5unning finance Cash Finance
-mall Finance >iscounting H Bills Purchased B!port Bills Purchased P PreG
shipment P Post -hipment Agricultural Production <oans
66
&.1"."." 'diu+ tr+ (oan! and Ca#ita( EC#nditur Financing=
(BP pro&ides financing for its clients; capital e!penditure and other longGterm
in&estment needs$ B, sharing the risk associated "ith such longGterm in&estments+ (BP
e!pedites clients; attempt to upgrade and e!pand their operation there', making possi'le
the fulfillment of our clients; &ision$ %his t,pe of long term financing pro&es the 'ank;s
'elief in its clientMs capa'ilities+ and its commitment to the countr,$
&.1".".% .oan Structuring and S)ndication:
(ational Bank;s leadership in loan s,ndicating stems from a'ilit, to forge strong
relationships not onl, "ith 'orro"ers 'ut also "ith 'ank in&estors$ Because "e
understand our s,ndicate partners; asset criteria+ "e help 'orro"ers meet su'stantial
financing needs ', ena'ling them to reach the 'anks most interested in lending to their
particular industr,+ geographic location and structure through s,ndicated de't offerings$
4ur s,ndication capa'ilities are complemented ', our o"n capital strength and ',
industr, teams+ "ho 'ring speciali#ed kno"ledge to the structure of a transaction$
&.1".%.& Ca!$ 'anag+nt Sr0ic!=
3ith (ational Bank;s Cash Management -er&ices (in process of 'eing set up+ the
customer;s sales collection "ill 'e channeled through &ast net"ork of (BP 'ranched
spread across the countr,$ %his "ill ena'le the customer to manage their compan,;s total
financial position right from ,our desktop computer$ %he, "ill also 'e a'le to take
ad&antage of our outstanding range of pa,ment+ e2ection+ liquidit, and in&estment
ser&ices$ In fact+ "ith (BP+ ,ou;ll 'e pro&ided e&er,thing+ "hich takes to manage ,our
cash flo" more accuratel,
&.1% INTERNATIONA. BAN/IN1
6*
(ational Bank of Pakistan is at the forefront of international 'anking in Pakistan "hich is
pro&en ', the fact that (BP has its 'ranches in all of the ma2or financial capitals of the
"orld$ Additionall,+ "e ha&e recentl, set up the Financial Institution 3ing+ "hich is
placed under the 5isk Management 8roup$ %he role of the Financial Institution 3ing is.G
%o effecti&el, manage (BP;s e!posure to foreign and domestic correspondence
Manage the monetar, aspect of (BP;s relationship "ith the correspondents to
support trade+ treasur, and other ke, 'usiness areas+ there', contri'uting to the
'ank;s profita'ilit,
8eneration of incremental tradeGfinance 'usiness and re&enues
&.1%.1 NBP offr!=
%he lo"est rates on e!ports and other international 'anking products
Access to different local commercial 'anks in international 'anking
&.1& Ca!$ and 1o(d Financ.
Cash and 8old finance means that loan is gi&en against the gold$ %he gold is
mortgaged "ith the 'ank and loan is taken$ It is the area of consumer finance$ And
'orro"er can take loan for common use$
&.1* Ad0anc !a(ar) (oan=
%his loan is gi&en to those people "ho are go&t ser&ants$ %he, can get a loan up to the
salar, of fifteen months$
6E
REFRENCES
1$ httpP"""$n'p$com$pk $ser&ices
0$ Annual reports 0001+ 0000+ 0006$

6A
CHAPTER - *
DEPART'ENTA.I:ATION
>i&iding an organi#ation into different parts according to the functions is called
departmentation$ -o (BP 1a,ata'ad to"nship 'ranch is di&ided into t"o main parts$
A9 DEPART'ENTATION
*.1 CASH DEPART'ENT
Cash department performs the follo"ing functions
*.1.19 Rci#t
%he mone,+ "hich either comes or goes out from the 'ank+ its record should 'e kept$
Cash department performs this function$ %he deposits of all customers of the 'ank are
controlled ', means of ledger accounts$ B&er, customer has its o"n ledger account and
has separate ledger cards$
*.1."9 Pa)+nt!
It is a 'anker;s primar, contract to repa, mone, recei&ed for this customer;s account
usuall, ', honoring his cheques$
*.1.%9 C$Du! and t$ir Pa)+nt
%he (egotia'le Instruments$ Act+ 1@@1+
)%he&ue is a bill of e'change drawn on a specified banker and not e'pressed to be
payable otherwise than on demand
6
.
-ince a Cheque has 'een declared to 'e a 'ill of e!change+ it must ha&e all its
characteristics as mentioned in -ection E of the (egotia'le Instruments Act+ 1@@1$
%herefore+ one can sa, that a Cheque can 'e defined as an.
6?
)An unconditional order in writing drawn on a specified banker, signed by the drawer,
re&uiring the banker to pay on demand a sum certain in money to, or to the order of, a
specified person or to the bearer, and which does not order any act to be done in addition
to the payment of money
3
. (<a" of Banking ', >r$ 1art+ p$60?$
*.1.&9 t$ RDui!it! of C$Du
%here is no prescri'ed form of "ords or design of a Cheque+ 'ut in order to fulfill the
requirements mentioned in -ection A a'o&e the Cheque must ha&e the follo"ing$
a It should 'e in "riting
' %he unconditional order
c >ra"n on specific 'anker onl,
d Pa,ment on >emand
e -um Certain in mone,
f Pa,a'le to a specific person
g -igned ', the dra"er
*.1.*9 Parti! to C$Du
%he normal Cheque is one in "hich there is a dra"er+ a dra"ee 'anker and a pa,ee+ or no
pa,ee 'ut 'earer$
a %he >ra"er
' %he >ra"ee
c %he Pa,ee
*.1.?9 T)#! of C$Du!
Bankers in Pakistan deal "ith three t,pes of cheques
6@
a9 Barr C$Du!
Bearer cheques are casha'le at the counter of the 'ank$ %hese can also 'e collected
through clearing$
*
' 4rder cheque
%hese t,pes of cheques are also casha'le on the counter 'ut its holder must satisf, the
'anker that he is the proper man to collect the pa,ment of the cheque and he has to sho"
his identification$ It can also 'e collected through clearing$
c Crossed Cheque
%hese cheques are not pa,a'le in cash at the counters of a 'anker$ It can onl, 'e credited
to the pa,ee;s account$ If there are t"o persons ha&ing accounts at the same 'ank+ one of
the account holder issues a crossGcheque in fa&our of the other account holder$ %hen the
cheque "ill 'e credited to the account of the person to "hom the cheque "as issued and
de'ited from the account of the person "ho has actuall, issued the cheque$
E$1$? Pa,ment of Cheques
It is a 'anker;s primar, contract to repa, mone, recei&ed for his customer;s account
usuall, ', honouring his cheques$ Pa,ment of mone, deposited ', the customer is one of
the root functions of 'anking$ %he acid test of 'anking is the receipt of mone, etc$ from
the depositors+ and repa,ment to them$ %his pa,ing function is one+ "hich is the
distinguishing mark of a 'anker and differentiates him from other institutions+ "hich
recei&e mone, from the pu'lic$ 1o"e&er the 'ankers; legal protection is onl, "hen
pa,ment is in :>ue Course;$ %he pa,ment in due course means pa,ment in accordance
"ith the apparent tenor of the instrument+ in good faith and "ithout negligence to an,
person in possession thereof under circumstances+ "hich do not afford a reasona'le
ground of 'elie&ing that he is not entitled to recei&e pa,ment of the amount therein
mentioned$ It is a contractual o'ligation of a 'anker to honor his customer;s cheques if
the follo"ing essentials are fulfilled$
a Cheques should 'e in a proper form.
6)
' Cheque should not 'e crossed.
c Cheque should 'e dra"n on the particular 'ank.
d Cheque should not mutilated.
e Funds must 'e sufficient and a&aila'le.
f %he Cheque should not 'e post dated or stale.
g Cheque should 'e presented during 'anking hours.
*." C.EARANCE DEPART'ENT
A clearinghouse is an association of commercial 'anks set up in gi&en localit, for the
purpose of interchange and settlement of credit claims$ %he function of clearinghouse is
performed ', the central 'ank of a countr, ', tradition or ', la"$ In Pakistan+ the
clearing s,stem is operated ', the -BP$ If -BP has no office at a place+ then (BP+ as a
representati&e of -BP act as a clearinghouse$
After the 3orld 3ar II+ a rapid gro"th in 'anking institutions has taken place$ %he use of
cheques in making pa,ments has also "idel, increased$ %he collection as settlement of
mutual o'ligations in the form of cheques is no" a 'ig task for all the commercial 'ank$
3hen Cheque is dra"n on one 'ank and the holder (pa,ee deposits the same in his
account at the 'ank of the dra"er+ the mutual o'ligation are settled ', the internal 'ank
administration and there arises no inter 'ank de'its from the use of cheques$ %he total
assets and total lia'ilities of the 'ank remain unchanged$
In practice+ the person recei&ing a Cheque as rarel, a depositor of the cheque at the same
'ank as the dra"er$ 1e deposits the cheque "ith his 'ank other than of pa,er for the
collection of the amount$ (o" the 'ank in "hich the cheque has 'een deposited 'ecomes
a creditor of the dra"er;s 'ank$ %he depositor 'ank "ill pa, his amount of the cheque ',
transferring it from cash reser&es if there are no offsetting transactions$ %he 'anks on
"hich the cheques are dra"n 'ecome in de't to the 'ank in "hich the cheques are
*0
deposited$ At the same time+ the creditors; 'anks recei&e large amounts of cheques dra"n
on other 'anks gi&ing claims of pa,ment ', them$
%he eas,+ safe and most efficient "a, is to offset the reciprocal claims against the other
and recei&e onl, the net amount o"ned ', them$ %his facilit, of net inter 'ank pa,ment is
pro&ided ', the clearinghouse$
%he representati&es of the local commercial 'anks meet at a fi!ed time on all the 'usiness
da,s of the "eek$ %he meeting is held in the office of the 'ank that officiall, performs the
duties of clearinghouse$ %he representati&es of the commercial 'anks deli&er the cheques
pa,a'le at other local 'anks and recei&e the cheques dra"n on their 'ank$ %he cheques
are then sorted according to the 'ank on "hich the, are dra"n$ A summar, sheet is
prepared "hich sho"s the names of the 'anks+ the total num'er of cheques deli&ered and
recei&ed ', them$ %otals are also made of all the cheques presented ', or to each 'ank$
%he difference 'et"een the total represents the amount to 'e paid ', a particular 'ank
and the amount to 'e recei&ed ', it$ Bach 'ank then recei&es the net amount due to it or
pa,s the net amount o"ed ', it$
*.".19 In6@ord C(aring Book!
%he 'ank uses this 'ook for the purpose of recording all the cheques that are 'eing
recei&ed ', the 'ank in the first clearing$ All details of the cheques are recorded in this
'ook$
*."."9 Out6@ord C(aring Book=
%he 'ank uses out"ard clearing register for the purpose of recording all the details of the
cheques that the 'ank has deli&ered to other 'anks$
*.% AD,ANCES DEPART'ENT
Ad&ances department is one of the most sensiti&e and important departments of the 'ank$
%he ma2or portion of the profit is earned through this department$ %he 2o' of this
department is to make proposals a'out the loans$ %he Credit Management >i&ision of
1ead 4ffice directl, controls all the ad&ances$ As "e kno"n 'ank is a profit seeking
*1
institution$ It attracts surplus 'alances from the customers at lo" rate of interest and
makes ad&ances at a higher rate of interest to the indi&iduals and 'usiness firms$ Credit
e!tensions are the most important acti&it, of all financial institutions+ 'ecause it is the
main source of earning$ 1o"e&er+ at the same time+ it is a &er, risk, task and the risk
cannot 'e completel, eliminated 'ut could 'e minimi#ed largel, "ith certain techniques$
An, indi&idual or compan,+ "ho "ants loan from (BP+ first of all has to undergo the
filling of a prescri'ed form+ "hich pro&ides the follo"ing information to the 'anker$
*.%.19 Na+ and addr!! of t$ Aorro2r.
a9 B!isting financial position of a 'orro"er at a particular 'ranch$
A9 Accounts details of other 'anks (if an,$
c9 -ecurit, against loan$
d9 B!iting financial position of the compan,$ (Balance -heet H Income -tatement$
9 -igning a promissor, note is also a requirement of lending+ through this note
'orro"er promise that he "ill 'e responsi'le to pa, the certain amount of mone,
"ith interest$
*.%."9 Princi#(! of Ad0anc!
%here are fi&e principles+ "hich must 'e dul, o'ser&ed "hile ad&ancing mone, to the
'orro"ers$
-afet,
<iquidit,
>ispersal
5emuneration
-uita'ilit,
*0
a. Saft)
Banker;s funds comprise mainl, of mone, 'orro"ed from numerous customers on
&arious accounts such as Current Account+ -a&ings Bank Account+ Call >eposit Account+
-pecial (otice Account and Fi!ed >eposit Account$ It indicates that "hate&er mone, the
'anker holds is that of his customers "ho ha&e entrusted the 'anker "ith it onl, 'ecause
the, ha&e full confidence in the e!pert handling of mone, ', their 'anker$ %herefore+ the
'anker must 'e &er, careful and ensure that his depositor;s mone, is ad&anced to safe
hands "here the risk of loss does not e!ist$ %he elements of character+ capacit, and
capital can help a 'anker in arri&ing at a conclusion regarding the safet, of ad&ances
allo"ed ', him$
A. C$aractr
It is the most important factor in determining the safet, of ad&ance+ for there is no
su'stitute for character$ A 'orro"er;s character can indicate his intention to repa, the
ad&ance since his honest, and integrit, is of primar, importance$ If the past record of the
'orro"er sho"s that his integrit, has 'een questiona'le+ the 'anker should a&oid him+
especiall, "hen the securities offered ', him are inadequate in co&ering the full amount
of ad&ance$
It is o'ligation on the 'anker to ensure that his 'orro"er is a person of character and has
capacit, enough to repa, the mone, 'orro"ed including the interest thereon$
c. Ca#acit)
%his is the management a'ilit, factor+ "hich tells ho" successful a 'usiness has 'een in
the past and "hat the future possi'ilities are$ A 'usinessman ma, not ha&e &ast financial
resources+ 'ut "ith sound management a'ilities+ including the insight into a specific
'usiness+ he ma, make his 'usiness &er, profita'le$ 4n the other hand if a person has no
insight into the particular 'usiness for "hich he "ants to 'orro" funds from the 'anker+
there are more chances of loss to the 'anker$
*6
d. Ca#ita(
%his is the monetar, 'ase 'ecause the mone, in&ested ', the proprietors represents their
faith in the 'usiness and its future$ %he role of commercial 'anks is to pro&ide shortGterm
capital for commerce and industr,+ ,et some 'orro"ers "ould insist that their 'ankers
pro&ide most of the capital required$ %his makes the 'anker a partner$ As such the 'anker
must consider "hether the amount requested for is reasona'le to the 'orro"ers o"n
resources or in&estment$
. .iDuidit)
<iquidit, means the possi'ilities of reco&ering the ad&ances in emergenc,+ 'ecause all the
mone, 'orro"ed ', the customer is repa,a'le in lump sum on demand$ 8enerall, the
'orro"ers repa, their loans steadil,+ and the funds thus released can 'e used to allo"
fresh loans to other 'orro"ers$ (e&ertheless+ the 'anker must ensure that the mone, he is
lending is not 'locked for an undue long time+ and that the 'orro"ers are in such a
financial position as to pa, 'ack the entire amount outstanding against them on a short
notice$ In such a situation+ it is &er, important for a 'anker to stud, his 'orro"er;s assets
to liquidit,+ 'ecause he "ould prefer to lend onl, for a short period in order to meet the
shortfalls in the "ording capital$ If the 'orro"er asks for an ad&ance for the purchase of
fi!ed assets the 'anker should refuse 'ecause it shall not 'e possi'le for him to repa,
"hen the 'anker "ants his customer to repa, the amount$ 1ence+ the 'aker must adhere
to the consideration of the principles of liquidit, &er, careful$
f. Di!#r!a(
%he dispersal of the amount of ad&ance should 'e 'roadl, 'ased so that large num'er of
'orro"ing customer ma, 'enefit from the 'anker;s funds$ %he 'anker must ensure that
his funds are not in&ested in specific sectors like te!tile industr,+ hea&, engineering or
agriculture$ 1e must see that from his a&aila'le funds he ad&ances them to a "ide range
of sector like commerce+ industr,+ farming+ agriculture+ small 'usiness+ housing pro2ects
and &arious other financial concerns in order of priorities$
**
>ispersal of ad&ances is &er, necessar, from the point of securit, as "ell+ 'ecause it
reduces the risk of reco&er, "hen something goes "rong in one particular sector or in
one field$
g. R+unration
A ma2or portion of the 'anker;s earnings comes form the interest charged on the mone,
'orro"ed ', the customers$ %he 'anker needs sufficient earnings to meet the follo"ing.
a Interest pa,a'le to the mone, deposited "ith him$
' -alaries and fringe 'enefits pa,a'le to the staff mem'ers$
c 4&erhead e!pense and depreciation and maintenance of the fi!ed assets of the
'ank$
d An adequate sum to meet possi'le losses$
e Pro&isions for a reser&e fund to meet unforeseen contingencies$
f Pa,ment of di&idends to the shareholders$
$. SuitaAi(it)
%he "ord 7suita'ilit,; is not to 'e taken in its usual literar, sense 'ut in the 'roader sense
of purport$ It means that ad&ance should 'e allo"ed not onl, to the carefull, selected and
suita'le 'orro"ers 'ut also in keeping "ith the o&erall national de&elopment plans
chalked out ', the authorities concerned$ Before accommodating a 'orro"er the 'anker
should ensure that the lending is for a purpose in conformit, "ith the current national
credit polic, laid do"n ', the central 'ank of the countr,$
*.%.% For+! of .oan!
In addition to purchase and discounting of 'ills+ 'ankers in Pakistan generall, lend in the
form of cash finance+ o&erdrafts and loans$ (BP pro&ides ad&ances to different people in
different "a,s as the case demand$
*E
a9 Ca!$ Financ
%his is a &er, common form of 'orro"ing ', commercial and industrial concerns and is
made a&aila'le either against pledge or h,pothecation of goods+ produce or merchandise$
In cash finance a 'orro"er is allo"ed to 'orro" mone, from the 'anker up to a certain
limit+ either at once or as and "hen required$ %he 'orro"er prefers this form of lending
due to the facilit, of pa,ing markupPser&ices charges onl, on the amount he actuall,
utili#es$
If the 'orro"er does not utili#e the full limit+ the 'anker has to lose return on the unG
utili#ed amount$ In order to offset this loss+ the 'anker ma, pro&ide for a suita'le clause
in the cash finance agreement+ according to "hich the 'orro"er has to pa,
markupPser&ice charges on at least on self or one quarter of the amount of cash finance
limit allo"ed to him e&en "hen he does not utili#e that amount$
A9 O0rdraftJRunning Financ
%his is the most common form of 'ank lending$ 3hen a 'orro"er requires temporar,
accommodation his 'anker allo"s "ithdra"als on his account in e!cess of the 'alance
"hich the 'orro"ing customer has in credit+ and an o&erdraft thus occurs$ %his
accommodation is generall, allo"ed against collateral securities$ 3hen it is against
collateral securities it is called 7-ecured 4&erdraft9 and "hen the 'orro"ing customer
cannot offer an, collateral securit, e!cept his personal securit,+ the accommodation is
called a 7Clean 4&erdraft9$ %he 'orro"ing customer is in an ad&antageous position in an
o&erdraft+ 'ecause he has to pa, ser&ice charges onl, on the 'alance outstanding against
him$ %he main difference 'et"een a cash finance and o&erdraft lies in the fact that cash
finance is a 'ank finance used for long term ', commercial and industrial concern on
regular 'asis+ "hile an o&erdraft is a temporar, accommodation occasionall, resorted to$
c9 D+and FinancingJ.oan!
3hen a customer 'orro"s from a 'anker a fi!ed amount repa,a'le either in periodic
installments or in lump sum at a fi!ed future time+ it is called a 7loan9$ 3hen 'ankers
*A
allo" loans to their customers against collateral securities the, are called 7secured loans9
and "hen no collateral securit, is taken the, are called 7clean loans9$
%he amount of loan is placed at the 'orro"er;s disposal in lump sum for the period
agreed upon+ and the 'orro"ing customer has to pa, interest on the entire amount$ %hus
the 'orro"er gets a fi!ed amount of mone, for his use+ "hile the 'anker feels satisfied in
lending mone, in fi!ed amounts for definite short periods against a satisfactor, securit,
*.& RE'ITTANCE DEPART'ENT
5emittance means a sum of mone, sent in pa,ment for something$ %his department deals
"ith either the transfer of mone, from one 'ank to other 'ank or from one 'ranch to
another 'ranch for their customers$ (BP offers the follo"ing forms of remittances$
a >emand >raft
' %elegraphic %ransfer
c Pa, 4rder
d Mail %ransfer
*.&.19 D+and Draft
>emand draft is a popular mode of transfer$ %he customer fills the application form$
Application form includes the 'eneficiar, name+ account num'er and a sender;s name$
%he customer deposits the amount of >> in the 'ranch$ After the pa,ment the >> is
prepared and gi&en to the customer$ (BP officials note the transaction in issuance register
on the page of that 'ranch of (BP on "hich >> is dra"n and "ill prepare the ad&ice to
send to that 'ranch$ %he account of the customer is credited "hen the >> ad&ice from
originating 'ranch comes to the responding 'ranch and the account is de'ited "hen >>
comes for clearance$ >> are of t"o t,pes$
a O#n DD= 3here direct pa,ment is made$
' Cro!! DD= 3here pa,ment is made though account$
*?
(BP C1A58B- F45 >>
E
I$ Ip to 5s$ E0+000PG is 5s E0PG onl,
II$ 4&er 5s$ E0+000PG is 0$1J
*.&."9 Pa) Ordr
Pa, order is made for local transfer of mone,$ Pa, order is the most con&enient+ simple
and secure "a, of transfer of mone,$ (BP takes fi!ed commission of 5s$ 0E per pa,
order from the account holder and 5s$ 100 from a nonGaccount holder$
*.&.%9 T(gra#$ic Tran!fr
%elegraphic transfer or ca'le transfer is the quickest method of making remittances$
%elegraphic transfer is an order ', telegram to a 'ank to pa, a specified sum of mone, to
the specified person$ %he customer for requesting %% fills an application form$ Douchers
are prepared and sent ', ordinar, mail to keep the record$ %% charges are taken from the
customer$ (o e!cise dut, is charged on %%$ %he %% charges are.
%elegramP Fa! Charges on %% R ActualGminimum 5s$10E$
Ca'le telegram transfer costs more as compared to other title of mone,$ In ca'le transfer
the 'ank uses a secret s,stem of pri&ate code+ "hich is kno"n to the person concerned
"ith this department and 'ranch manager$
*.&.&9 'ai( Tran!fr
3hen the mone, is not required immediatel,+ the remittances can also 'e made ', mail
transfer (M%$ 1ere the selling office of the 'ank sends instructions in "riting ', mail to
the pa,ing 'ank for the pa,ment of a specified amount of mone,$ >e'iting to the 'u,er;s
account at the selling office and crediting to the recipient;s account at the pa,ing 'ank
make the pa,ment under this transfer$ (BP ta!es mail charges from the applicant "here
no e!cise dut, is charged$ Postage charges on mail transfer are actual minimum 5s$ *0PG
*@
if sent ', registered post locall, 5s$*0PG if sent ', registered post inland on part,;s
request$
*.* HU'AN RESOURCE 'ANA1E'ENT
1uman 5esource pla,s a &ital role in the success of e&er, ser&ice organi#ation$ %he,
interact 'et"een man and machine$ %heir attitude can "in or loose the customer$ %he
positi&e attitude could onl, 'e created in a conduci&e en&ironment+ "hich can make the
staff dedicated to"ards the organi#ation and its o'2ecti&es$ In realit, the man is more
important than machine as it is the human "hich could get ma!imum out of machine to
keep a happ, customer$ 1o"e&er+ most organi#ations gi&e little importance to this &er,
important asset$
Darious aspects related to human resource of (ational Bank of Pakistan are criticall,
e!amined in the follo"ing te!t.
*.*.19 S(ction K Rcruit+nt
Although the Bank 'elie&es in merit 'ut in practice the selection of emplo,ees is not
done on merit$ Most of the emplo,ees are lo" educated$ %his sho"s that candidates "ith
some strong famil, 'ackground or political pressure are gi&en preference in recruitment
and qualified candidates are sometimes left 'ehind$
*.*."9 >oA for .if
<ike the emplo,ee of pu'lic sector organi#ations in Pakistan+ the emplo,ees of (BP also
en2o, their 2o' for life$ -ince there is no risk of earl, retirement or redundanc, in rank+
the, do not perform "ith their full potentials$ %his is one redundanc, in rank+ the, do not
perform "ith their full potentials+ and this is one of the reasons responsi'le for the lo"
producti&it, of the emplo,ees of the Bank$
*)
*.*.%9 Prfor+anc A##rai!a(
%he performance of emplo,ees of the Bank are appraised though their annual confidential
reports at the end of each ,ear$ %his has 'ecome an outdated method of performance
appraisal and no longer used due to the follo"ing reasons.
1$ %he performance of emplo,ees is e&aluated after quite a long time$
0$ Blement of su'2ecti&it, is in&ol&ed in this method$
6$ Bmplo,ee;s participation is not ensured in the process of e&aluation$
*$ 4'2ecti&es of emplo,ee;s are not quantified$
*.*.&9 Intr Pr!ona( R(ation!$i#
Modern management ackno"ledges human resources as one :of the most important
assets of an organi#ation$ But ', their &er, nature+ human 'eings are also the most
unpredicta'le$ 3here a num'er of persons "ork together+ interactions among them+ of
necessit,+ "ill lead to conflicts and (BP is no e!ception$ Most interpersonal conflicts in
(BP can 'e traced 'ack to the follo"ing ma2or heads$
<ack of Communication
<ack of communication is for the 'iggest reason for conflicts$ (ot onl, it is due to the
failure to send a massage 'ut to an interpretation gi&en to the massage ', the recei&er is
different from that intended$
*.*.*9 Di0r!it) in ,a(u!
>i&ersit, in &alues+ perceptions+ cultural 'ackground and lifeGst,le is another reason
responsi'le for inter personal conflicts in (BP$ >ifferent &alues and perceptions a'out the
same issue+ e&ent or personalit, hinder understanding$ 3hen things come to such a
pa&ement+ therefore+ interpersonal conflicts are generated$
E0
%he dominant trend in all modern industrial societies of the "orld is merit and e!pertise+
"hich helps promote cohesion and reduce conflicts$ But the feudalistic mindset is still
&er, strong in our set up and there is no tradition of tolerance for differing &ie"points$
1ence+ interpersonal conflicts are generated$
*.*.?9 Corru#tion
4ur social acceptance of corruption gi&es rise to corruption at e&er, le&el of social and
organi#ational set up$ Corruption in&ol&es financial em'e##lement+ fa&oritism+ nepotism+
cron,ism and other num'er of such practices$ All these cause resentment that keep
'uilding up and lead to conflict sooner or later$
In the past fe" ,ears+ some cases of frauds ha&e happened in different 'ranches$ %he
reasons can 'e linked "ith the emplo,ee dissatisfaction of (BP$
*.*.79 Di!ci#(in K Aut$orit)
Maintaining discipline and implementation of authorit, (ta'les in letter and spirit is the
ke, to success of an, organi#ation$ In (BP+ %he authorit, ta'les are not strictl,
maintained$ <ine managers are not full, equipped "ith the authorit, "ith no &ertical or
hori#ontal interference$
*.?9 DEPOSIT DEPART'ENT= 6
It controls the follo"ing acti&ities.
a APC opening$
' Issuance of cheque 'ook$
c Current aPc
d -a&ing aPc
e Cheque cancellation
f Cash
E1
*.?.1 Account o#ning
%he opening of an account is the esta'lishment of 'anker customer relationship$ Before a
'anker opens a ne" account+ the 'anker should determine the prospecti&e customer;s
integrit,+ respecta'ilit,+ occupation and the nature of 'usiness ', the introductor,
references gi&en at the time of account opening$ Preliminar, in&estigation is necessar,
'ecause of the follo"ing reasons$
i$ A&oiding frauds
ii$ -afe guard against unintended o&er draft$
iii$ (egligence$
i&$ Inquiries a'out clients$
%here are certain formalities+ "hich are to 'e o'ser&ed for opening an account "ith a
'ank$
Formal Application
Introduction
-pecimen -ignature
Minimum Initial >eposit
4perating the Account
1$ Pa,GInG-lip Book
0$ Pass Book
6$ Issuing Cheque Book
E0
a9 Gua(ification of Cu!to+r
%he relation of the 'anker and the customer is purel, a contractual one+ ho"e&er+ he must
ha&e the follo"ing 'asic qualifications$
1e must 'e of the age of ma2orit,$
1e must 'e of sound mind$
<a" must not disqualif, him$
%he agreement should 'e made for la"ful o'2ect+ "hich create legal relationship
(ot e!pressl, declared &oid$
A9 T)#! of Account!
Follo"ing are the main t,pes of accounts
1 Indi&idual Account
0 /oint Account
6 Accounts of -pecial %,pes
Partnership account
/oint stock compan, account
Accounts of clu's+ societies and associations
Agents account
%rust account
B!ecutors and administrators accounts
Pak rupee nonGresident accounts

E6
Foreign currenc, accounts

1
*.?." I!!uing of c$Du Aook=
%his deptt issue cheque 'ooks to account holders$
5equirements for issuing cheque 'ook
a %he account holder must sign the requisition slip
' Bntr, should 'e made in the cheque 'ook issuing 'ook
c three rupees per cheque should 'e reco&ered from aPc holder if not then de'it hisPher
account$
*.?.% Currnt account
%hese are pa,a'le to the customer "hene&er the, are demanded$ 3hen a 'anker accepts a
demand deposit+ he incurs the o'ligation of pa,ing all cheques etc$ dra"n against him to
the e!tent of the 'alance in the account$ Because of their nature+ these deposits are treated
as current lia'ilities ', the 'anks$ Bankers in Pakistan do not allo" an, profit on these
deposits+ and customers are required to maintain a minimum 'alance+ failing "hich
incidental charges are deducted from such accounts$ %his is 'ecause the depositors ma,
"ithdra" Current Account at an, time+ and as such the 'ank is not entirel, free to emplo,
such deposits$
Intil a fe" decades 'ack+ the proportion of Current >eposits in relation to Fi!ed
>eposits "as &er, small$ In recent ,ears+ ho"e&er+ the position has changed remarka'l,$
(o"+ the Current >eposits ha&e 'ecome more important= 'ut still the proportion of
Current >eposits and Fi!ed >eposits &aries from 'ank to 'ank+ 'ranch to 'ranch+ and
from time to time$
*.?.& Sa0ing account
-a&ings >eposits account can 'e opened "ith &er, small amount of mone,+ and the
depositor is issued a cheque 'ook for "ithdra"als$ Profit is paid at a fle!i'le rate
E*
calculated on si!Gmonth 'asis under the InterestGFree Banking -,stem$ %here is no
restriction on the "ithdra"als from the deposit accounts 'ut the amount of mone,
"ithdra"n is deleted from the amount to 'e taken for calculation of products for
assessment of profit to 'e paid to the account holder$ It discourages unnecessar,
"ithdra"als from the deposits$
In order to populari#e this scheme the -tate Bank of Pakistan has allo"ed the -a&ings
-cheme for school and college students and industrial la'or also$ %he purpose of these
accounts is to inculcate the ha'it of sa&ings in the constituents$ As such+ the initial deposit
required for opening these accounts is &er, nominal.
*.?.* C$Du canc((ation=
%his deptt can cancel a cheque on the 'asis of=
a Post dated cheque
' -tale cheque
c 3arn out cheque
d 3rong sign etc
*.?.? Ca!$
%his deptt also deals "ith cash$ Pa,ment of cheques+ deposits of cheques etc$
*.7 FOREI1N ELCHAN1EJDEPART'ENT=
%his deptt mainl, deals "ith the foreign 'usiness$ %he main functions of this deptt are.
a <PC dealing$
' Foreign currenc, accounts dealing$
c Foreign 5emittance dealing$
EE
*.7.1 .JC da(ing
(BP is committed to offering its 'usiness customers the "idest range of options in the
area of mone, transfer$ If ,ou are a commercial enterprise then our <etter of Credit
ser&ice is 2ust "hat ,ou are looking for$ 3ith competiti&e rates+ securit,+ and ease of
transaction+ (BP <etters of Credit are the 'est "a, to do ,our 'usiness transactions$
*.7." Forign currnc) account da(ing=
%his deptt deals "ith the foreign currenc, accounts "hich mainl, include dollar account+
euro account etc$
*.7.% Forign R+ittanc da(ing.
%his is &er, important function of this deptt$
B9 DEPART'ENTATION OF HAYAT ABAD TO@NSHIP BRANCH NBP.
>i&iding an organi#ation into different parts according to the functions is called
departmentation$ -o (BP 1a,ata'ad to"nship 'ranch is di&ided into t"o main parts$
1$ Cash >epartment
0$ 8eneral Banking >epartment$
*.1 Ca!$ D#art+nt=
Cash department mainl, deals in cash$ %he 1ead of department is Mr$ Imdad
Chan and t"o cashier Mehra'an -hah and Faiq -hah the o'2ecti&e of cash department$
7%o facilitate people in the pa,ments of their 'ills and ta!es and repa,ments of cash9
%here are t"o main functions of cash department$
i$ Pa,ment ii$ 5eceipts
i$ Pa,ments are the function that the, pa, their cheques and pa, cash$
EA
ii$ 5eceipts mean collection of utilities 'ills+ ta!es etc$
*." 1nra( Banking
In this section of the 'ank the general 'anking function is performed$ It is di&ided
into fi&e departments$
i$ 5emittances >epartment$
ii$ Computer >epartment$
iii$ Ad&ances >epartment$
i&$ Clearing >epartment$
&$ Bsta'lishment >epartment$
*.".1 R+ittanc! D#art+nt=
%his department is header ', Oahoor Ahmad a &er, competent person$ %he
o'2ecti&e of this department is.G
7%o transfer the mone, of people from one place to another place in safe and
compara'le "a,9
%he main functions of this department are.
i$ Issuing of demand draft$
ii$ Issuing of Mail transfer$
iii$ Issuing of %elegraphic transfer$
i&$ Issuing of pa,ment order$
&$ Issuing of call deposit$
&i$ Pension pa,ments etc$
&ii$ Closing and scrolling of go&ernment collections$
E?
*."." Ad0anc! d#art+nt=
B&er, 'ank has a department "hich ad&ances mone, to 'orro"ers$ In (BP
1a,ata'ad to"nship 'ranch the ad&ances department is head ', the Business Manager
-ir Asim and 4peration Manager -ir Per&e#$ Both are &er, competent persons$ %he
o'2ecti&e of Ad&ances >epartment is
7%o facilitate people ', gi&ing short term and long term loans on eas, terms and
conditions9$
%he main function of this >epartment is to take surplus mone, from the people at
lo" rates and lend this mone, to 'orro"ers at high rates to earn profit$
*.".% C(aring D#art+nt=
A clearing house is an association of commercial 'anks set in -tate Bank of
Pakistan for the purpose of interchange and settlement of credit claims$
In (BP 1a,ata'ad Branch this department is headed ', Ameer -heh#ad ha&ing
e!perience of a'out thirt, ,ears$ %he o'2ecti&e of this department is to
7%o facilitate customers for pa,ment their Cheques of other 'anks9$
%"o t,pe of clearing 'ooks are maintained$
i. In 2ord c(aring Aook!=
%he 'ank uses this 'ook for the purpose of recording all the cheques that are
'eing recei&ed ', the 'ank in the first clearing$ All detail of the cheques are recorded in
this 'ook$
ii. Out 2ord c(aring Aook=
%he 'ank uses out"ard clearing register for the purpose of recording all the details of
the cheques that the 'anks ha&e deli&ered to other 'anks$
E@
*.".& Co+#utr D#art+nt=
%his department headed ', the accountant %ariq Afridi and t"o other persons Mr$ /unaid
and Mr$ -hahid are performing the real function$
%he o'2ecti&e of this >epartment is to facilitate customers in pa,ment of their cheques9$
%he main functions performed ', this department are.
a Checking 'alance$
' >eduction from 'alance on clearing cheques$
c Issuing 'ank statements$
d >ealing 3estern Inion$
*.".* E!taA(i!$+nt D#art+nt=
(BP 1a,ata'ad Branch ha&ing an Bsta'lishment >epartment$ %his >epartment
consists of onl, one person 1a2i Misri Cha &er, competent and e!perienced person$ %his
department mainl, deals "ith the 'ranch emplo,ees$ %he main o'2ecti&e of this
department is to
7%o regulate 'ank 'usiness9$
Main functions of this department are.
a Ceeps the record of attendance of emplo,ees$
' Bmplo,ee;s salaries distri'ution$
c Bmplo,ee;s 'onuses etc$
E)
REFRENCES
1 -ir Paged /ohn %he la" of Banking *th edition page *61$
0 %he (egotia'le Instruments$ Act+ 1@@1$
6 >r 1art <a" of Banking+ p$60?
* >r 1art <a" of Banking+ p$60?
E Circular 'ank charges /une 0006$page 1E$

A0
CHAPTER -?
S@OT ANA.YSIS
-34% anal,sis is an acron,m that stands for strengths+ "eakness+ opportunities+ and
threats -34% anal,sis is careful e&aluation of an organi#ation;s internal strengths and
"eakness as "ell as its en&ironment opportunities and threats$
)#74* analysis is a situational which includes strengths, weaknesses, opportunities and
threats that affect organi,ational performance.
1
)*he overall evaluation of a company strengths, weaknesses, opportunities and threats is
called #74* analysis.
6

In -34% anal,sis the 'est strategies accomplish an organi#ation;s mission ',.
1$ B!ploiting an organi#ations opportunities and strength$
0$ (eutrali#ing it threats$
6$ A&oiding or correcting its "eakness$
-34% anal,sis is one of the most important steps in formulating strateg, using the
organi#ation mission as a conte!t+ managers assess internal strengths distincti&e
competencies and "eakness and e!ternal opportunities and threats$ %he goal is to then
de&elop good strategies and e!ploit opportunities and strengths neutrali#e threats and
a&oid "eaknesses$
?.1 STREN1THS.
?.1.1 O.DEST INSTITUTION=
(BP in one of the oldest 'ank of Pakistan and first nationali#ed 'ank 1ence its customer
'ase is strength from this plus point as customers ha&e more confidence in the 'ank$ %he
additional &alue ser&ices as the pri&ilege for the 'ank$
A1
?.1." A.TERNATE DUTIES IN SBP ABSENCE
%he (BP performs additional ser&ices for its customers as "ell as the other 'ank
customer in the a'sence of -BP$
?.1.% 'ORE DEPOSITS THAN OTHER BAN/
(BP has the relati&e competence in ha&ing more deposits than the other 'ank$ %his is
'ecause of the confidence the customer ha&e in the 'ank$ %he 'ank 'eing the pri&ileged
and oldest 'ank in 'anking sector of Pakistan en2o,s this edge o&er all others+ lacking it$
?.1.& E'P.OYEE BENEFITS
%he emplo,ers at (BP are offered reasona'le monetar, 'enefit$ (ormall, t"o 'onuses
are gi&en BidGIlGFitar H BidGIlGA#ha$ %his ser&es as an additional 'enefit and
competenc, for the 'ank and a source of moti&ation for the emplo,ees$
?.1.* BROAD NET@OR/
%he 'ank has another competenc, i$e$ it has 'roadG'asses net"ork of 'ranches throughout
the countr, also more than one 'ranch in high producti&e cities$ %he customers are
pro&ided ser&ices at their nearest possi'le place to confirm customer satisfied$
?.1.? STRICT.Y FO..O@ED RU.ES KRE1U.ATION.
%he emplo,ees at (BP are strict follo"ers of rule H regulation imposed ', 'ank$ %he
disciplined en&ironment at (BP 'olsters its image and also enhances the o&er all out put
of the organi#ation$
?.1.7 PROFESSIONA. CO'PETENCE
%he emplo,ees at (BP here ha&e a good hold on their descriptions+ as the, are highl,
skilled Professionals "ith 'ack ground in 'usiness administration+ 'anking+ economics
etc$ %hese professional competencies ena'le the emplo,ees to understand and perform
the function and operation in 'etter "a,$
A0
?.1.5 HEA.THY EN,IRO'N'ENT
%he "orking condition in the (BP 'ranch here is &er, conducti&e and fa&ora'le for
'etter output$ %he informal en&ironment affects the performance of the emplo,ees in a
positi&e "a,$
?.1.4 RE.ATION BET@EEN STAFF AND OTHER E'P.OYESS
%he 'ank en2o,s a good plus point "hen it comes to the emplo,ee manager relationship
the hearing as remo&ing of discrepancies if an,+ 'et"een the emplo,ees+ and 'et"een the
manager and emplo,ees$
?." @EA/NESSES
?.".1 .AC/ OF 'AR/ETIN1 EFFORT=
%he 'ank does not promote its corporate image+ ser&ices+ etc on a competiti&e "a,$
1ence lacks far 'ehind in marketing effort $A need for aggressi&e marketing in there in
the era marketing in no" 'ecoming a part of e&er, organi#ation$
?."." NBP UNDER PO.ITICA. PRESSURE
%he strong political hold of some parties and go&ernment and their dominance is
affecting the 'ank in a negati&e "a,$ %he, sometime ha&e to pro&ide loan under the
pressure+ "hich leads to une&en and ad2usted feeling in the 'ank emplo,ees$
?.".% FA,ORITIS' AND NEPOTIS'
%he promotions and 'onuses etc in the 'ank are often po"ered ', senior;s fa&oritism or
depends upon their "ills and decision$ %his adds to the negati&e factors+ "hich
denominate the emplo,ees thus resulting in affecting their performance negati&el,$
?.".& .AC/ OF FINACIA. PRODUCT
%he 'ank falls far 'ehind "hen the inno&ati&e and ne" schemes are considered$ It has not
'een in&ol&ed in the tug of "ar 'et"een the competitors to the accounts and strengthens
A6
the e!isting customer 'ase$ %his stands out to 'e the ma2or incompetence and "eakness
of the 'anks$
?.".* INEFFICIENT COUNTER SER,ICES IN THE RUSH HOURS
>uring the rush hours+ the 'ank is founded out to 'e a total flop to handle the mo' of
people peaking from "indo"s and doors$ %he 'ank has deficienc, to operate in the stages
of rush hours "here the people find them ser&ices entangled in a situation of no"here
'ecause the, are not "ell ser&ed$
?.".? .AC/ OF CO'PUTERI:ED NET@OR/
%he 'ank lack the strength of 'eing po"ered ', the net"ork of computers+ "hich ha&e
sa&ed time+ energ, and "ould ha&e lessened the mental stress+ the emplo,ees ha&e
currentl,$ %his "ould add to the strength if it "ere po"ered ', net"ork of computers$
?.".7 .AC/ OF 'ODERN EGUIP'ENT
%he 'ank lacks the modern Bquipment that is note counting machine computers$ B&en if
there is an, equipment the, lack to fall in the criteria of 'eing rearmed as update and
upgraded
?.".5 UNE,EN @OR/ DISTIBUTION.
%he "orkload in (BP is not e&enl, distri'uted and the "orkload tends to 'e more on
some emplo,ees "hile others a'scond a"a, from their responsi'ilities+ "hich ser&er as a
demoti&ation factor for emplo,ees performing a'o&e a&erage "ork$
?.% OPPORTUNITIES
?.%.1 E.ECTRONIC BAN/IN1
%he "orld toda, has 'ecome a glo'al &illage 'ecause of ad&ancement in the
technologies+ especiall, in communication sector$ More emphasis is no" gi&en to a&ail
the modern technologies to 'etter the performances$ (BP can utili#e the electronic
A*
'anking opportunit, to ensure on line 'anking 0* hours a da,$ %his "ould gi&e a
competiti&e edge o&er others$
?.%." 'ICRO FINANCIN1
Because of the need for micro financing in the market+ there are lot of opportunities in
this regard$ 4ther 'anks ha&e alread, initiated+ no" the time has arri&ed "hen the (BP
must reali#e it and take on step to cater an ongoing demand$
?.& THREATS
?.&.1 E'ER1ENCE OF NE@ CO'PETITORS
%he 'ank is facing threats "ith the emergence of ne" competitors especiall, in terms of
foreign 'anks$ %hese foreign 'anks are equipped "ith hea&, financial po"er "ith
e!cellent and inno&ati&e "a,s of promoting and performing their ser&ices$ %he 'ank
has to take initiati&e in this regard or "ill find itself far 'ack in competition$
?.&." PO.ITICA. PRESSURE BY E.ECTED 1O,ERN'ENT
%he ongoing shift in po"er in political arena in the countr, effects the performance of the
'ank has to for"ard loans to politicall, po"erful persons "hich create a sense of
insecurit, and demorali#ation in the customer as "ell as emplo,ees$
?.&.% DO@NSI:IN1
%he 'ank is currentl, acting upon the polic, of do"nsi#ing "hich threaten the
en&ironment of the 'ank Bmplo,ees feel insecurit, in doing their 2o's and "ork+ hence
affecting the o&er all performance of emplo,ees negati&el,$
?.&.& CUSTO'ERS CO'P.AINTS
%here e!ists no regular and specific s,stem of the remo&al of customer complaints$ (o"
a da, a need for total customer satisfaction is emerging and in their demanding
consequences customerMs complaints are ignored
AE
?.* CO'PETITI,E ANA.YSIS
PortrM! fi0 forc! +od(=
%

%his approach is "idel, used for competiti&e anal,sis$ It is 'ecause of the high intensit,
of competition among companies there fi&e main competiti&e forces$
?.*.1 Ri0a(r) a+ong co+#titi0 fir+!=
It is a &er, po"erful force among the competiti&e forces the strategies pursued ',
one firm can 'e successful onl, to e!tent that the, pro&ide competiti&e ad&antages
o&er the competitor$ %hese competiti&e strategies ma, 'e lo"ering prices+ 'est qualit,
series$ %he (BP offering &er, lo" charges an demand draft+ telegraph, transfer+ mail
transfer and gi&e other additional ser&ices to the customers and to the (ation$
Because (BP is a 7(ation;s Bank9$
?.*." Potntia( ntr) of n2 co+#titor!=
3hene&er ne" firms ca easil, enters a particular industr,+ the competition increases$
%he gout restriction+ tariffs+ patents etc can stop ne" firm to enter into the 'usiness as
per Banking industr, is concerned this market is alread, &er, situated in Pakistan and
there are 'anks "ith qualit, ser&ices and lo" charges$ -o there is no threat to (BP
from potential entr, and (BP is also a pu'lic sector 'ank 'ecause of that no other
ne" 'ank not takes o&er it$
?.*.% Potntia( D0(o#+nt of !uA!titut #roduct!=
%his is the third factor affecting the competitions$ %here ma, 'e some other product
can 'e su'stitute the product of that industr,$ For e!ample 'anks offering sa"ing
schemes in Pakistan and these schemes are also offered ', 8P4s in Pakistan so the,
must compete them in this field$ If the, offer lo" rates than 8P4s so people "ill go
to deposit in 8P4s$ People concentration high rates so that;s "h, sa"ing P<-
accounts are more then current accounts$ %he ne!t e!amples "ill A%M "hich
AA
su'stitute presenting cheques at counter and encash it$ %he (BP is lacking in this
field$ It must impro&e in this field to compete the competitors$
?.*.& Bargaining Po2r of Su##(ir!=
%he 'argaining po"er of supplier affects the intensit, of competition+ especiall, "hen
there are a large num'er of suppliers$ In case of 'anks the suppliers are customers
the, suppl, the mone, to 'anks$ (o" the, must offer good ser&ices+ qualit,+ and
safet,$ <o" charges etc to customers$ In this field (BP is &er, good$ BPC at offers
good qualit, ser&ices to customers$ %he, charge lo" charges on remittances$ -o that;s
it is competitions other 'anks$
?.*.* Bargaining Po2r of Con!u+r!=
3hen customers are concentrated or large+ or 'u, in &olume+ their 'argaining po"er
represents a ma2or force affecting intensit, of competition$ (o" the num'er
customers in Pakistan for 'anks are &er, high$ Banks offering &ariet, of products and
ser&ices to their customers$ (BP ha&e a large num'er of customs$ (o" it must offer
good ser&ices and products to their customers to attract them to come to (BP$
A?
Rfrnc!
1$ >aft l 5icherd 7Management9 *
th
Bdition Pages 0E*+ 0EA+ 0A)$
0$ Cottler Philip 7Marketing Management9 Millennium Bdition Page ?A$
6$ Fred 5$ >a&id 7-trategic Management Concepts Cases9 ?
th
edition$
A@
CHAPTER- 7
FINANCIA. ANA.YSIS
Financial anal,sis+ though &ar,ing according to the particular interests of the anal,st+
al"a,s in&ol&es the use of &arious financial statement primaril, the 'alance sheet and
income statement$ %he 'alance sheet summari#es the assets+ lia'ilities+ and o"ner;s
equit, of a 'usiness at a point in time+ and thee income statement summari#es re&enues
and e!penses of the o&er a particular period f time$ A conceptual frame"ork for financial
anal,sis pro&ides the anal,st "ith an interlocking means for structuring the financing$
7.1 Nationa( Bank of Paki!tan Tn Yar! Prfor+anc at g(anc
Years 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994
Items
Total
assets
471860 432803 415089 371636 350406 417680 400890 369236 320180 271779
Deposits 395568 362866 349617 316493 294754 273391 254863 235032 208283 170476
Advances 160990 140547 170319 140318 122559 109356 105598 85854 81528 62548
Investment 166196 143525 71759 72609 91486 102356 109485 108206 95649 85094
Ss !older
e"#it$ 18134 14279 11959 11378 10358 9987 9203
7046 7842 7233
pre ta%
pro&it 9009 6045 3016 1023 520 2135 996
'1260( 3081 2799
A&ter ta%
pro&it 4198 2253 1149 461 31 0 0
)))))))) )))))) )))))))
*arnin+
per s!are 10,23 5,49 3,08 1,24 0,21 0 0
))))))) ))))) )))))))
-et#rn on
assets 2. 1,40. 0,80. 0,30. 0,20. 0 0,00.
)))))))))) )))))) )))))
/o o&
0ranc!es 1189 1204 1245 1428 1431 1434 1468
1555 1537 1463
/o o&
*mplo$ees 13272 12195 15163 15351 15541 15785 18096
23730 21549 20667
(-ource Annual reports 1))@+ 0000+ 0000+ 0006
From the a'o&e ta'le it is &er, much clear that the (BP performance is going higher and
higher total assets are at the crest in 0006$ If "e dra" a graph this "ill sho"s that the
graph is up"ard trend$ Profit is increasing from ,ear to ,ear$ (BP decrease the num'er of
its 'ranches and emplo,ees 'ecause of automation and large net"orks of other 'anks$ But
this 'ank can compete and no" (BP is the 'est 'ank of ,ear$
A)
7." RATIO ANA.YSIS
Financial anal,sis is the process of identif,ing the financial strengths and "eakness of the
firm ', properl, esta'lishing relation ship 'et"een the items of 'alance sheet and profit
and loss account+ in order to make rational decision in keeping "ith the o'2ecti&e of the
organi#ation+ for that purpose the management use anal,tical tools$ %o e&aluate the
financial condition and performance of the 'usiness entit,+ the financial anal,st needs to
perform FcheckupsF on &arious aspects of the 'usiness financial health$
A tools frequentl, used during these checkups is a financial ratio anal,sis+ "hich relates
t"o piece of financial data ', di&iding one quantit, ', the other "e calculate ratios
'ecause in this "a, "e get a comparison that ma, pro&e more useful than the ra"
num'er ', themsel&es$ %he 'usiness itself and outside pro&iders of capital (creditors and
in&estors all undertake financial statement anal,sis$ %he t,pe of anal,sis &aries
according to the specific interest part, in&ol&ed$ %he nature of anal,sis is depending at
the purpose of anal,st$
7.% Parti! intr!td in ratio ana()!i!
7.%.1 Trad crditor!
%rade creditors are interested in firmMs a'ilit, to meet their claims o&er a &er, short period
of time$ %heir anal,sis "ill+ there fore confine to the e&aluation of the firmMs liquidit,
positions$
$7.%." Su##(ir! of (ong6tr+ dAt
-uppliers of longGterm de't on the other hand are concerned "ith firmMs longGterm
sol&enc, and sur&i&al$ %he, anal,sis the firms profita'ilit, o&er time+ its a'ilit, to
generate cash to 'e a'le to pa, interest and repa, interest and repa, principal and the
relationship 'et"een &arious source of funds$ (Capital structure relationship$
?0
<ongGterm creditors do anal,ses the historical financial statements 'ut the, place more
emphasis on the firmMs pro2ected financial statement to make anal,sis a'out its future
sol&enc, and profita'ilit,$
7.%.% In0!tor!
In&estors "ho ha&e in&ested their mone, in the firms share are most concerned a'out the
firm stead, gro"th in earning$ As such+ the, concentrate on the anal,sis of the firmMs
present and future profita'ilit,$ %he, are also interested in the firms financial structure of
the e!tent it influence the firms earning a'ilit, and risk$
7.%.& 'anag+nt$
An organi#ation "ould 'e interested in e&er, aspect of the financial anal,sis$ It is their
o&erall responsi'ilit, to see that the resources of the firm are used most effecti&el, and
efficientl, and that the firmMs financial condition is sound$
-o thus management emplo,ee financial anal,sis for the purpose of internal control and
to 'etter pro&ide "hat capital supplier seeks in financial condition and performance from
the 'usiness and from an internal control standpoint+ management needs to take financial
anal,sis in order to plan and control effecti&el,$
7.& Ratio ana()!i!
5atio is the comparison 'et"een t"o figures of 'alance sheet and income statement$
7.&.1 Ca!$ Ratio=
7%his ration is o'tained ', di&iding cash ', current lia'ilities P lia'ilities9$
%his ratio sho"s that the cash is enough for pa,ment of current lia'ilities or not$
It is calculated as cash 5atioRCashPcurrent lia'ilities
?1
*able 3
Year 1997 1998 1999 2000 2001 2002 2003
1as! -atio 0,118 0,169 0,19 0,21 0,22 0,15 0,134
8raph 1
It means that ho" much cash is a&aila'le for pa,ment its current lia'ilities$ %his ratio of
(BP sho"s a do"n"ard trend$ Because of high ad&ances cash is less to co&er its current
lia'ilities$
7.&." 1ro!! Profit 'argin Ratio.
7%his ratio sho"s the profit margin in salesP re&enue9$
%his is calculated as$
8ross profitP interest earned
?0
*able +
Year 1997 1998 1999 2000 2001 2002 2003
2ross pro&it mar+in
. 24,8 27,7 28,9 29,59 39,67 46,6 51,9
8raph6
8$ profit margin relates profit of the organi#ation to its sales (interest earned in case of
Bank$
From calculation it is &er, much clear that the gross profit margin ration ha&e up"ard
trend "hich sho"s that ho" much the, using their deposits to earn interest$ %his sho" the
profit of the firm relati&e to its re&enue$ It is a measure of the efficienc, of the firm;s
operations too$ As it is clear that the ratio gong high this is the indication of good
performance$
7.&.% Nt Profit 'argin=
%his ratio measure the firm;s profita'ilit, of salesP interest earned after taking account of
all e!penses and income ta!es$
%his ratio can 'e calculated as.
?6
(et profit margin ration R (et Profit after ta!es P interest earned
*able(
Year 1997 1998 1999 2000 2001 2002 2003
/et pro&it 3ar+in
. 0,2 1,6 1,7 1,55 3,67 3,18 21,6
8raph3
B!planation. from the calculation and graph it is &er, much clear that the performance of
(BP is &er, good$ And the trend is up"ard$ It tells us a firm;s net income per rupee of
re&enue$ As the trend is up"ard it sho"s the high profits in re&enue per rupee in case of
(BP$ It is 'ecause of high ad&ances the (BP has gi&en to the people$
7.&.& Rturn on EDuit)=
>i&iding profit after ta!ation ', share holder;s equit,$ 54B compares net profit after
ta!es to the -hare holder;s Bquit,$
%his ratio is calculated as.
54BRProfit after ta!esP-hare holder;s Bquit,
?*
*able-
Year 1997 1998 1999 2000 2001 2002 2003
-et#rn on *"#it$ 0,67 5,3 0,2 2,7 6,55 9,4 23,1
8raph+
B!planation. from the calculation it is clear that the 54B 5atio ha&e an up"ard trend of
(BP$ It is 'ecause of high net profit the, ha&e earned$ It tells us the earning po"er on the
shareholder;s in&estments$ It is 'ecause of high in&estments ', (BP and effecti&e
e!pense management$
7.&.* Rturn On A!!t!=
%his ratio sho"s the efficienc, of organi#ation that ho" efficientl, utili#es their assets$
%his ratio relates profits to assets$
It is calculated as.
Profit after %a!P%otal Assets
*able0
?E
Year 1997 1998 1999 2000 2001 2002 2003
-et#rn on assets 0,01 0,16 0,008 0,124 0,225 0,52 0,9
8raph(
From calculation it is clear that this ration of (BP is going high and high$ It sho"s that
(BP using it;s assets &er, efficientl,$ %hat is "h, the, are earning &er, high profits$ %his
sho"s that ho" efficientl, the, in&esting the assets that;s "h, the, are earning high
profits$
7.&.? In0!t+nt d#o!it Ratio=
%his ratio sho"s the comparison of in&estments and deposits$ %his is calculated as$
In&estment deposit 5atioNIn&estmentPdeposits
*able2
Year 1997 1998 1999 2000 2001 2002 2003
Investment Deposit
ratio 42,9 37,7 31,03 22,94 20,54 39,66 42,01
?A
8raph-
B!planation. From a'o&e ta'le and graph it is &er, much clear that (BP are using their
deposit &er, efficientl,$ And earning high profits$ %he ratio has an up"ard trend+ "hich
sho"s the performance of (BP is &er, good$ (o" it is the retraction from top
management to in&est 60J of its deposits$ %his ma, reduce its profits$ But can 'e fruitful
in long term$
7.&.7 DAit to EDuit) Ratio=
%his ration sho"s the amount contri'uted ', creditors and shareholders$ It sho"s to "hat
e!tent the firm is using 'orro"ed mone,$ It is computed simpl, di&iding the total de't of
the fire ', its shareholders equit,$
%his calculated as$
%otal de'tPshareholder;s equit,
??
*able5
Year 1997 1998 1999 2000 2001 2002 2003
De4t to e"#it$
ratio 32,42 31,4 30,4 20,9 22,7 28,6 24,5
8raph0
From the ta'le and graph it is clear that this ratio is decreasing "hich sho" the high
efficienc, of (BP$ In 0000 it "as high 'ut in 0006 it decreases to 0*$E from 0@$A "hich is
a good sign$ 1ere the creditors are interested in lo" ratio$ %he lo"er the ratio the high the
le&el of the fire;s financing that is 'eing pro&ided ', the shareholders$
7.&.5 DAt to a!!t! ratio.
%his ratio sho"s that to "hich e!tent the organi#ation assets are financed ', de'it$ It is
calculated as$
%otal de'tPtotal asset
*able1
Year 1997 1998 1999 2000 2001 2002 2003
?@
De4t to asset
ratio 0,94 0,944 0,957 0,954 0,92 0,954 0,961
8raph2
%his ration is directl, related to risk high ratio means high risk and lo" ratio means lo"
risk$ From calculation it is clear that the ratio is decreasing "hich sho" lo" risk$ %his
ratio ser&es the similar purpose to the de't to equit, ratio$ %his ratio is high 'ecause of
more deposits in the 'ank+ and deposits are the lia'ilit, of customer on 'ank
7.&.4 Ad0anc! d#o!it Ratio=
%his ratio sho" that ho" much efficientl, the 'ank ad&ances the deposits of their
customer to 'orro"er$
It is calculated as$
Ad&ances deposit ratio R Ad&ancesP deposit
?)
*able11
Year 1997 1998 1999 2000 2001 2002 2003
Advances deposits
ratio 0,414 0,399 0,416 0,443 0,487 0,387 0,406
8raph5
From a'o&e ta'le and graph it is clear that the ratio is going high$ 3hich means the
efficienc, on (BP is good and the, use their deposits efficientl, in ad&ancing to
'orro"ers$ 1ere high ratio is required$ %he ne!t side of the picture is that the people "ill
think that is risk, to deposit the mone, in the 'ank$
7.&.18 A!!t! Turno0r Ratio=
%he relationship of net sales Pre&enue to total assets is kno"n as the total asset turno&er
ratio$ It is calculated as$
%otal re&enue P total assets
@0
*able16
Year 1997 1998 1999 2000 2001 2002 2003
Assets t#rnover ratio 0,099 0,097 0,093 0,079 0,075 0,079 1,07
8raph19
B!planation. %his ratio sho"s us the relati&e efficienc, "ith "hich a firm utili#es its total
assets to generate re&enue$ 3e can see that the ratio is going high and "hich is a good
sign and sho"s that (BP is utili#ing its assets efficientl,$
7.&.11 Pric to arning Ratio=
%his ratio sho" the relation ship 'P" face price per share and earning per share$ %his ratio
is calculated as.
Price to earning ratioR face price of sharePearning per share
@1
*able13
Year 1997 1998 1999 2000 2001 2002 2003
5rice to earnin+
-atio 2,4 2,7 47,62 3,17 3,25 1,6 0,97
8raph11
As from the a'o&e calculations it is clear that the ratio decreased tremendousl, in 0006+ it
is 'ecause of the reason that earning per share increased resulting in decreasing price to
earning ratio$
From calculation it is clear that it ha&e a do"n"ard slope$ It is 'Pc of increase in earning
per share$
7.&.1" Di0idnd )i(d=
Anticipated annual di&idend di&ided ', the market price of the stock$
It is calculated as$
>i&idend ,ield R%otal di&idendP market price
@0
*able1+
Year 1997 1998 1999 2000 2001 2002 2003
Dividend
Yield 0,2 0,1 2,3 3,32 1,63 2,45 0,23
8raph16
Near 0000 "as 'est as far as di&idend ,ield is concerned= it "as mainl, due to the
decreased amount of num'er of shares outstanding$ In ,ear 0001 increase in outstanding
shares decreased di&idend ,ield+ 'ut due to increase in total di&idend in 0000 it has
reco&ered to 0$*E$
From the a'o&e ta'le it is clear that the di&idend is increasing 'ut in 0006 it is lo"$ It is
'ecause of high market price and lo" di&idend$
7.&.1% D#o!it gro2t$ Ratio=
%his ratio sho"s the gro"th rate of deposits$
%his is calculated as
Current ,ear depositsG pre&ious ,ear deposits Ppre&ious ,ear deposit
*able1(
@6
Year 1997 1998 1999 2000 2001 2002 2003
Deposit
+ro6t! ratio 0,08 0,07 0,08 0,07 0,1 0,037 0,09
8raph13
B!planation. %his ratio sho"s an e!cellent mo&e from 1))? to 0006$ It up"ard slope
"hich sho"s that the people trust (BP and its management that our mone, is in safe
hands$ %he reason for this good mo&e is onl, go&t support to this 'ank$
7.&.1& Ad0anc! 1ro2t$ Ratio=
%his ratio sho"s the gro"th rate of ad&ances$ %his is calculated as
Current ,ear ad&ancesG pre&ious ,ear ad&ances P pre&ious ,ear ad&ances$
@*
*able1-
Year 1997 1998 1999 2000 2001 2002 2003
Advances
2ro6t! ratio 0,23 0,04 0,12 0,14 0,21 )0,17 0,15
8raph1+
B!planation. from calculation and graph it is clear that (BP sho" a good gro"th rate in
respect of ad&ances$ 4nl, in 0000 it is negati&e 'Pc of high ad&ances in 0001 and lo"
ad&ances in 0000$ %his sho"s that (BP is utili#ing the deposits efficientl,$
%he o&er all performance of (BP is &er, good$ %hat;s "h, it is declare the 'est 'ank of
the ,ear 0006$
7.* Prdicting fai(ur=
3here one "ants to lend mone, to a compan, that is a'out to fail$ %he a'ilit, to predict
corporate failure 'efore the e&ent has 'een the hol, grail of financial anal,sis for mo&e
than E0 ,ears$ %he collapse comes much unsaddled$ 4ne a compan, "ill 'e successful
and ne!t ,ear it "ill 'e fail$ For this a tool is used "hich is
OR0$010AQ 0$01*B Q 0$066C Q 0$00A> R 0$010B
3here
@E
A R net current assets total assets$
B R 5etained earnings total assets$
C R Profit 'efore interest and ta! total assets
> R capitulation total de't
B R -ales total assets
(o" O score 'lo" 1$@ "as an indicator of pro'a'le failure+ and a score of o&er 6 "as
seen as a clean 'ill of health the ad&antage of this approach is that using a com'ination of
se&eral financial ratios makes it less likel, that the result "ill 'e affected ', manipulation
of financial statements$
If the portion of current asset is greater compared "ith total assets the healthier is short
term position$
If the retained earning is greater the greater is the e!tent of the compan,;s self financing$
%he profit 'efore ta! and interest in the third ratio indicates the contri'ution of a
compan,;s profita'ilit, to"ard the end inde! score$ In fourth ratio the in&estor;s &ie" of
the further potential of the compan, is set against total de't$ %he last ratio sho"s the
a'ilit, of the compan, to use its assets to generate re&ere$
Predicting failure of (BP G 1))@$
O R 0$010($@A Q 0$01*(0$00A Q 0$066(0$01* Q 0$00A(0$16 Q0$010 (0$11
R 0$010 Q 0$000* Q 0$000E Q 0$000@ Q 0$001 R 0$010)
%his sho"s that the calculation is 'elo" 1$@ and it is an indicator of failure
@A
REFERENCES
1 (ational Bank of Pakistan (0000+ 0006 Annual 5eport$
0 Block+ -tanle, B and 1irt 8eoffre, A (1))*$ 7Foundations 4f Financial
Management9 ?
th
edition I-A. Michael 3 /unior+ p101G1*@
6$ Dan 1orne /ames C and /5 3acho"ic# M$ /hon9 Financial management9 11
editions
*$ Meigs 7Financial Accounting9 11
th
edition$
E$ 5$B 1isrich and Peter P Michael 7Bntrepreneurship9 E
th
edition$
A$ -imons 1arr, and -mith /$M 7Intermediate Accounting9 E
th
edition$
?$ 3atson /ames 7Fundamentals of Accounting9 ?th edition$
@$ -o'er P Pare, 7Ad&ance accounting9 0
nd
edition $
)$ %arr, Franklin 7Principles of Management9 @
th
edition
11$ Dause Bo' 7%he Bconomist 78uide to anal,#ing companies9$ 6
rd
edition$
3BB-I%B.
"""$online"'c$go&PdocsPfinancePfs$ratioP$ 1tml

@?
CHAPTER - 5
1ENERA. OBSER,ATION
I ha&e di&ided general o'ser&ation in four parts$ 3hich are as under$ %his anal,sis is
mainl, 'ased on m, general o'ser&ation$
Pro'lems at the 'ranch$
Function anal,sis$
Administrati&e anal,sis$
Personal management;s anal,sis$
5.1 PROB.E'S AT THE BRANCH
5.1.1 Cu!to+r Sati!faction
In (BP customer dealing is "ill+ 'ut during rush hour the customer has to "ait for a long
time for their turn$ It;s quite hard for a ne" customer or potential customer to get the
required information$
8.1.2 Poor record management and filing system
>uring m, internship I o'ser&ed that filing s,stem of 'ranch is not good$ 3hen certain
record is needed the staff has to struggle to find it out and a lot of time is "asted$
5.1.% UnDua( di!triAution of 2ork
3ork is not equall, distri'uted$ 4n one hand some emplo,ee ha&e to "ork all da,
"ithout rela!ing "hile some others ha&e nothing to do at all$ %his not onl, creates
confusion among emplo,ees 'ut also hurting and distur'ing for o&erall setup of the 'ank$
And a'o&e all it results in dissatisfaction among customers as "ell$
@@
5.1.& 'arkting 0i!it!
A useful mode of contact is through personal marketing &isits$ -uch &isits are important
in informing and perusing the e!isting and potential customers a'out the products and
creating a sense of 'elongingness "ith them$
5." FUNCTIONA. ANA.YSIS
5.".1 For+a( Organi;ation
Formal organi#ation includes the acti&ities of t"o or more person+ "hich are cautiousl,
determined groups and coordinated to"ards a gi&en o'2ecti&e$ It pro&ides 'ase "hen
people are a'le to communicate "ith other+ "hen the, ha&e common purpose and the,
are "illing to "ork$
In (BP+ "e find a formal organi#ation$ Bernard referred to an organi#ation as a formal
"hen the acti&ities of t"o or more persons are coordinated to"ards a gi&en o'2ecti&e$ %he
formal organi#ation comes into 'eing "hen people are a'le to communicate "ith one
another or "illing to act and share a purpose$
In this formal organi#ation of (BP the acti&ities are carried out in a more formal "a,$ In
theoretical terms it pro&ides 'asis for communication "ith one another 'ut in practice it is
not e!ercised 'ecause an emplo,ee at high le&el cannot get straight a"a, to manager or
-DP and ask him a'out of his pro'lem faced ', him+ 'ecause first he has to talk to his
immediate superior and follo" a proper channel of communication$
5."." Diffrnc At2n t$or) and #ractic
A &ast difference e!ists 'et"een theor, and practice and (BP has "ritten procedure 'ut
practical "ork done ', emplo,ees is a 'it different from "ritten procedures$
5.".% Bank dut) to +aintain !crc).
%he, don;t care a'out maintaining secrec,+ especiall, during the rush hours$ %he, speak
loudl, a'out the account position and "hile getting clearance of cheque the person can
@)
easil, get the "hole information from the ledge$ %he deposit clerk must 'e careful "hile
passing an, cheque$ In this regard another shortfall is in gi&ing the information a'out the
'alance on telephone$
5.".& ECc!!i0 #a#r 2ork
It is notified that due to the length, procedure of paper "ork the 'ank emplo,ee are o&er
'urdened$ %he, are una'le to gi&e proper attention to the clients and face difficulties in
getting their 2o' done$ 4ne reason for length, procedure and e!cessi&e paper "ork in the
'ank is the lack of computeri#ed technolog,$
5.".* 'or account! f2r d#o!it!.
Bfficient 'anking is one "hich does not emphasi#e on num'er of accounts 'ut on greater
amount of deposits$ (BP is more interested in increasing its num'er of account
irrespecti&e to its deposit$ %he main reason 'ehind it is that 'ank does not pro&ide
personali#e ser&ice to all the account holders and does not impro&e its qualit, and
ser&ices
5.".? D(gation of aut$orit)
Manager has &er, limited authorit,= he has to take the appro&al from his management
authorit, iGe$ In case of ad&ance he has to take the appro&al of general and regional
manager$ %he other pro'lem is created+ "hen the manager is not present in his office+ the
customer ha&e to "ait for hours$ %his discourages 'oth customer and officers 'ecause
the, ha&e to suffer a lot
5.% AD'INISTRATI,E ANA.YSIS
5.%.1 >oA ana()!i! i! not ffcti0
4nl, on the 'asis of 2o' anal,sis it can 'e decided ho" a right person can 'e hired+
trained+ compensated or promoted$ It is &er, important for an organi#ation that nature of
the 2o' is descri'ed and 2o' specifications are mentioned$ Most of the emplo,ees are
simple graduate and do not ha&e proper 'ackground a'out their 2o'$ %his creates
)0
pro'lems 'oth for organi#ation and for the emplo,ees$ In (BP salaries are gi&en
according to the seniorit, and grades$ People "ith simple or comple! responsi'ilit, are
getting the same salar, and facilities$ %his creates dissatisfaction among emplo,ees$
5.%." Car(!!n!! in o#ning of account
3hen customer comes to open an account+ the staff does not 'other to check hisPher place
phone num'er and permanent address$ It is important 'ecause in case of o&erdraft ',
mistake or an,thing "hich places his account in de'it it "ill 'e difficult to trace him$ 4n
the other hand he ma, 'e in&ol&ed in an, fraudulent acti&ities against the 'ank$ In this
case the 'ank "ill 'e in a"k"ard position$
5.%.% .ack of !#cia(i;d training
(BP does not pro&ide adequate facilit, of speciali#ed training to their staff$ %raining is
generali#ed rather than speciali#ed$ As the "orker finishes his training+ he is inducted into
a specific field "ithout ha&ing great deal of kno"ledge a'out the field$
In the 1a,ata'ad 'ranch the ne"l, recruited emplo,ee training "as not imparted+ the, all
learned things on the 2o'$
5.%.& .o2 Profit Rat!
Most of the customers shifted their account to the (ational -a&ing Center 'ecause of the
lo" rates of sa&ing deposit discourages the customers$ Bank should increase their profit
rates to attract customers$
5.%.* Poor BoA rotation.
%here is a'sence of 2o' rotation in (BP 1a,ata'ad 'ranch$ A person placed in one
department remains their fore&er$ It reduces career opportunities as "ell 'oredom and in
the end results in career platueing$ /o' rotation is &er, important for emplo,ee especiall,
for those "ho are ne"l, recruited$ %he ne"l, recruit should 'e rated in all department of
the 'anking in order to get familiar "ith "orking of different departments so that "hen
the, get a responsi'le position the, ha&e kno" ho" of the "hole s,stem$
)1
5.%.? D(a)! in .oan Ad0anc+nt
It has 'een o'ser&ed that there are dela,s in sanctioning of cases form the head office+
"hich results in customer dissatisfaction$
5.%.7 .ack of a##rciation
Another &er, important thing "hich is ignored in the 'ank is appreciation if the emplo,ee
on their good performance$ If hard "ork and performance of emplo,ees is not recogni#ed
and appreciated the, 'ecome dishearten "hich results in decline in performance$
5.& PERSONA. 'ANA1E'ENT ANA.YSIS
5.&.1 Nd for Attr training #rogra+
(eed of training is greatl, emphasi#ed all around the "orld$ %raining of the personnel is
part of human resource management$ It has 'een noticed that the training program of
(BP is not adequate$
4nce the candidate is selected and placed on the respecti&e 2o'$ It 'ecomes essential to
train him adequatel, for the task$ %he, should learn ne" methods for moti&ating
customers$ %he training programmed of the 'ank should include scientific techniques to
impro&e the decision making and interpersonal as "ill indi&idual needs of the emplo,ee
'oth speciali#ed to fresh as "ell as on 2o' to maintain the high standards of ser&ice$
5.&." D0(o#ing 'anagria( .adr!$i#
<eadership is a practical term of &isi'le+ clear on o'2ecti&e and communicating 'etter
control on financial and administrati&e matters$ Manager is not onl, responsi'le for their
o"n units in 'usiness+ 'ut also in people terms i$e$ training+ recruiting+ grie&ance handling
and taking immediate initiati&e in crisis situation to take ma2or decision affection the
future of the 'ank and 'anking communit,$
)0
5.&.% Rcruit+nt #o(ic)
1uman resources are the life'lood of the organi#ation$ If the personnel are recruited
carefull, the, can 'ecome asset to the organi#ation in the case of carelessness a lia'ilit,
on the organi#ation$ Bank is not follo"ing its recruitment polic, properl, due to
fa&oritism+ nepotism and political pressure$ Both the top authorit, and staff union tries
their 'est recruit their fa&orites+ indulgence of political pressure add salt to the "ounds$
%he persons selected through these channels are infantile and do not "ork for the
'etterment for the 'ank$
5.&.& Pro+otion!
Promotion in (BP is purel, on the 'asis of seniorit,+ so the ne" ,oung person ha&ing
high qualification remains 'ehind for quite a lot of time$ %op management and staff union
put pressure for the promotion of their fa&orites+ "hich gi&es a sense of depri&ation to the
deser&ing emplo,ee and their efficienc, is affected$ As the concept of promotion is
attached "ith 'etter in terms of greater responsi'ilit,+ more prestige+ greater skills and
increased rate of salar,$ %hus a 'etter and impartial polic, of promotion needs to 'e
follo"ed$
5.&.* Tran!fr
%ransfer means "hen a person is shifted from one place to another place$ It is done either
that person is needed more on the other 'ranch or for impro&ing his skill &ariet,$ It is the
polic, of the Bank to transfer each emplo,ee 6 to * ,ears$
5.&.? 'arkting at d!k
Bank emplo,ee come in dail, contact "ith man, people "ho happen to deal "ith the
casual remittance+ tra&elers cheques+ safe custod,+ pensioners+ depositing license fee and
&ariet, of other functions and &ariet, of other people "ith "hom the Bank has no account
or regular 'usiness relationship$ %he Bank emplo,ees are doing &er, little on their o"n to
e!plore the possi'ilities of selling 'anking ser&ices to them as a marketing contri'utor$
%he entire Bank communit, should make a conscious effort in addition to their normal
)6
"ork to e!plore the possi'ilities of selling 'anking ser&ices to them$ %he market
opportunities are hidden in e&er, dealing a 'anker handles= the question is that if he has
the art and urge to sei#e such opportunities$
5.&.7 .ack of Au!in!! co++unication
%here is no proper "a, to gi&e information to their customer$ %o a&oid this minor
dissatisfaction and tension in the mind of customer+ and deficienc, of the ser&ice+ it is
recommended that the 'ank should pro&ide 'rochures etc containing information in
details$
-ome general information should 'e placed in information notice 'oard on the entrance
"here customer can see it easil, or it should 'e selfGattracti&e$
)*
C$a#tr - 4
1ENERA. SU11ETIONS
(BP is an effecti&el, operating and profit making organi#ation and carr,ing out its
acti&ities under a specified s,stem of procedure$ %he main regulator, 'od, is -tate Bank
of Pakistan+ "hich pro&ides polic, guidelines and ensures that the mone, market operates
on sound professional 'asis$ 3hile the head office specifies the "hole procedure of
function and operations$ %his procedure has 'een moderni#ed "ith the passage of time
"ith a &ie" to streamline the approach and underl,ing procedure for effecti&e
o&erhauling of its o"n capa'ilities so as to 'ring them at par "ith international practices$
1ere I am gi&ing some suggestions+ "hich in m, &ie" can add some input for efficienc,
and 'etter performance of (BP as an organi#ation in genera and Cit, 'ranch in particular$
%he recommendations are as follo"s.
4.1 Prof!!iona( training
(BP staff lacks professionalism$ %he, lack the necessar, training to do the 2o' efficientl,
and properl,$ Although staff colleges in all ma2or cities 'ut the, are not performing "ell$
For this purpose these staff colleges should 'e reorgani#ed and their s,lla'us should 'e
made in such a "a, to help the emplo,ee understand the e&er changing glo'al economic
scenario$
Banking council of Pakistan should also initiate some programs to equip the staff "ith
much needed professional training$
4." D(gation of aut$orit)
Bmplo,ees of the 'ank should 'e gi&en a task and authorit, and the, should 'e asked for
their responsi'ilit,$
)E
4.% Prfor+anc A##rai!a(
%he manager should strictl, monitor the performance of e&er, staff mem'er$ All of them
should 'e a"arded according to their performance and result in the shape of 'onuses to
moti&ated and incite them to "ork more efficientl,$
4.& To O0r Co+ ProA(+ of S#ac and Furnitur
In the critical anal,sis this+ pro'lem is discussed$ %o o&ercome this pro'lem it is
suggested that a special section should 'e made inside the 'ranch$ 3hich should onl,
handle the treasur, function+ salaries and pensions of federal personnel or the 'ank
should do these functions in the e&ening time$ Also management should purchase more
furniture and arrange them in such a "a, "hich pro&ides ma!imum space and con&enient
speciall, in deposit department and there should also 'e con&enient sitting place for
customers$
4.* Tran!fr
%ransfer is not properl, carried out$ -ome of the emplo,ees are continuall, ser&ing at the
same post$ %he, are simpl, rotated at the same 'ranch$ %herefore it is recommended that
e&enl, rotation of e&er, emplo,ee should take place after e&er, three ,ears in different
'raches of the 'ank$
4.? C$ang! in Po(ici!
%here should not 'e an, a'rupt policies change ', the upper management+ as this practice
hurts the customer confidences in the 'ank$ 8o&ernment should make long term policies
4.7 Nd of Gua(ifid Staff
5equired+ qualified staff should 'e pro&ided to 'ranch in order to impro&e the functioning
of the 'ranch$ Bspeciall, a telephone operator should 'e appointed$
4.5 Uti(it) Bi(( C$arg!
)A
Bank gets 5s$ 0 to 6 to processes a utilit, 'ill+ and it is &er, tire+ tough and hard 2o'
despite this "orking resulting in a loss to then 5s 6 toE per transaction$ %hese charges
should 'e increased to 5- 10 per 'ill to ena'le the 'ranch to co&er their handling costs
and make some profit$
4.4 .ink 2it$ t$ Had Guartr
100 ma2or 'ranches of (BP should esta'lished a direct link "ith the+ head quarter
In Carachi+ through Internet or Intranet$ %his "ill make the functions and decision
making of the management easier and con&enient$
4.18 Crdit Card
(ational 'ank of Pakistan should start its operation in credit card$ %hese cards are &er,
helpful for the ordinar, customer in general and the 'usiness people in particular$ %o
make it mores secure and to eliminate the misuse of it+ the management is required to
keep proper securit, against the card$
4.11 In!ta((ing ,a(idator and AT'
Dalidator machine is used to count the currenc, notes and its installation "ill help to
eliminate to counting errors and "ill sa&e time$
%his 'ranch is situated in the Cit,+ "hich is supported to 'e the hu' of 'usiness acti&ates$
In this area an auto teller machine (A%M is the need of the hour 'usinessmen can easil,
check their 'alance in the 'ank and also "ith dra" their mone, con&enientl,$
4.1" Intr!t on O0rdraft=
4&erdraft is a shortGterm credit facilit, pro&ided ', the 'ank to its trust"orth, customers
free of interest$ 4nl, 'ank commission is charge small amount of markGup on the
o&erdraft+ "hich "ill help the 'ank to impro&e its re&enue position$
)?
4.1% C(an .oan!
Clean loan or clean o&erdraft is the credit facilit, e!tended to the customers to the
customers "ithout an, securit,$ %hese t,pes of small term loans should not 'e e!tended
to an,'od,+ 'ecause sometime these loans are pro&ided to 'lueGe,ed people of the
management and the, 'ecome a part of 'ad de'ts$
4.1& Ca!$ Financing
In this mode of financing the amount of credit not utili#ed ', the 'orro"er is remained
ta!Gfree$ It is recommended that a small amount of interest should 'e charge on this
amount as "ell 'ecause the 'ank gas keptGaside the amount for that 'orro"er and can not
ad&ance it an,"here$
4.1* Dcra!ing Ad+ini!trati0 EC#n!!
Bank should their administrati&e e!penses$ %his "as 5s @ 'illion in the ,ear 0000$ %hat
can 'e done ', l,ing off the surplus pool of emplo,ee "ith golden handshakes scheme$
%he 'ranches that are not much used could also 'e closed$ Bmplo,ee can also 'e ho" to
control the 'ank e!penses$ %hat "ill gi&e positi&e results in the future$
4.1? Nd! to A F(CiA( in crdit Po(ic)
As mentioned earlier+ (BP is &er, conser&ati&e in ad&ances and loans polic,$ It reduces
the in&estment opportunities$ Also loans should 'e gi&en to the small 'usinessmen and
the agriculture sector at the lo" markup rate$ It should adopt fle!i'le credit polic, "hile
gi&ing credit to the agriculture sector$
4.17 Tc$no(ogica( Ad0anc+nt
I "ould like to suggest that at least all the main 'ranches of (BP should 'e full,
computeri#ed in order to e!pedite the dealing process among 'ankers and their
customers$ B&er, department should 'e pro&ided a computer "ith adequate training
(especiall, Ad&ances+ >eposits and Foreign B!change departments$
)@
>ail, records should 'e entered directl, into these computers+ (instead entering the
o&erall dail, transactions after the 'anking hours$ It "ill not onl, reduce transaction
time+ "ill increase accurac, 'ut "ill also 'e efficient as "ell$
(ot onl, it "ill 'e economical 'ut "ill also reduce the e!tra 'urden of "ork of the 'ank$
It "ill also help in reducing the use of e!cessi&e paper "ork$
4.15 Staff R(ation!$i#
8ood relationship among staff mem'er leads to the peak performances in an,
organi#ation$ I o'ser&ed that the staff relationship "as normal other "ise 'ut some time I
noticed that there e!isted a little conformit, among the staff mem'ers$ Another s,ndrome
from "hich the staff suffered "as that all of them considered themsel&es more important
than others$ -ome of the officers used to sa, that if I am a'sent for a da, the 'ank "ould
stop "orking$ -o this sort of attitude is not good 'ecause it mars 'ank image and 2uniors;
"illingness learn and "ork hard and in the end "ill hurt the "hole team$
4.14 I+#ro#r Di!triAution of @ork
Proper distri'ution "ork leads to success in e&er, organi#ation$ Proper distri'ution of
"ork pre&ents the emplo,ee from o&er and under "ork situation$ -o for a smooth running
of an organi#ation proper distri'ution of "ork is the hint to 'e follo"ed$
>uring m, internship I o'ser&ed that there "as no proper distri'ution of "ork in the
'ank$ I sa" that some of the emplo,ee "orked like ants other sat idle starting here and
there$ -o this created a lot of o&er "ork situation for "hile rela!ation for other$
4."8 Fa0oriti!+ and n#oti!+
In the Cit, 'ranch during m, internship I sa" that "hen some of the emplo,ees are
transfer to other places+ due to their relation "ith influential people and "ith top
management the, can cancel their transfer in fe" "eeks+ "hen the, are unsatisfied at that
place$
))
-o I suggest that in the organi#ation there should 'e no fa&oritism+ nepotism and politics
and their transfer and promotion should 'e made on merit and according to the rules and
regulations of the 'ank and pro&ided fa&ora'le en&ironment to the emplo,ee to sho"
their performances$
4."1 Intr D#art+nta( Tran!fr
I "atched during m, internship that+ there is num'er of emplo,ee "ho ha&e "orked on
one seat for man, a ,ear$ It can ha&e negati&e effects moti&ation of emplo,ee "ho is hard
"orking and intelligent$ %ake the e!ample of ad&ances section$ In ad&ance section if the
emplo,ee is transfer after si!th month or se&en month+ ho" can he 'e a'le to sho" his
performances and ho" can he 'e a'le to kno" the 'ank customer in a short period of
time$
4."" Forign currnc) Account
For the internship the place I ha&e selected "as Cit, 'ranch+ "hich is m, forefather land
and I kno" that from area man, people ha&e tra&eled to other countr, for different kind
of 2o's+ and I ha&e heard personal complaint a'out the una&aila'ilit, of foreign currenc,
account in 'anks$ -o I thick it is "onderful opportunit, for the 'ank to open foreign
currenc, account$
4."% 'arkting Po(ic)
%he 'ranch should adopt &arious marketing strateg, and promotion strateg, to promote
the 'ank and its product$
%he most important in m, opinion is personal marketing= it is the most effecti&e of all
"hen ,ou think in term of 'ranch le&el$ But on the "hole organi#ation le&el+ the, should
arrange the seminar "ith in the 'ank and outside the 'ank$ %he, should introduce &arious
pri#ing schemes 2ust like Allied Bank$ Caramad -cheme+ Bank AlGFalah (monthl,
income earning scheme and &arious others$
%he, should do more ad&ertising through ne"spaper and media and through channel of
personal contacts$
100
4."& Co+#(aint! of Cu!to+r
%here should 'e an information desk to pro&ide the information and to recei&e the
complaints of the customer in the 'ank$
%here is no complaint 'o! a&aila'le in the 'ranch and not an, person appointed to hear
the complaints$
B&er, person cannot go to the manager for the complaint 'ecause most of the people are
hesitant$ -o I suggest management to install a compliant 'o! in the 'ranch+ and recruit a
special person for that guidance of the customer "hen the, are una'le to manage some
difficulties in 'anking matters$
4."* Ana()!i! of t$ Bu!in!!=
Proper anal,sis of the 'usiness reports should 'e conducted 'efore e!tending an, t,pe of
loan$ For this purpose professional training of the stuff mem'er is required$
4."? Organi;ationa( Co++it+nt
It is suggested that emplo,ees "orking on dail, "ages 'asis should 'e gi&en some
'enefits+ "hich the other emplo,ees are getting$ %heir salaries must increase according to
efficienc,+ performance and ser&ice$
4."7 'anagria( .adr!$i#
In the anal,sis+ "e ha&e discussed the difficulties of the assistant in taking an, initiati&e=
therefore it is recommended that the assistants should he gi&en special training to make
them read, for the leadership$
4."5 Crdit 'onitoring
%he credit department of the 'ank should carries out &igilant credit monitoring$ %he,
should ensure the proper pa,ment of installments and the markGup ', the 'orro"er$
101
%he staff mem'ers "ho ha&e done all the paper "ork of the loan e!tension should
perform the monitoring+ as hePshe "ill 'e ha&ing more information a'out the 'orro"er$
4."4 ECtndd Banking Hour!
%he 'anking hours ma, 'e e!tended up to si!+ as 'eing practiced ', 1B< opposite to it$
-ome of the 'usiness communit, due to la" and order situation are no" reluctant to keep
the fund in their premises and "ould "ant to depart "ith it$ %herefore+ Cit, Branch ma,
e!tend the night 'anking to cater to demand of this 'usiness communit,$ %he 'ranch
could also 'e opened to cater the requirements of this 'usiness communit,
<imited staff.
4.%8 Hou!ing and Hou! Ho(d 1ood! (oan!
Bank should initiate these loans 'ecause most of 'ank;s customers are middle class and
the, cannot afford to 'u, house or house hold goods at once ', their o"n
4.%1 A0oiding Bad DAt!
8reat care should 'e taking "hile e!tending the loan$ <oans should 'e a"arded against
reasona'le securities+ "here market &alue should 'e equal to the loan granted$
Policies should 'e crafted in a "a, to ensure that no loan is e!tended on political
pressure$ -BP regulation for loan appro&al should 'e strictl, follo"ed$ According to
"hich the current ration of 'orro"er;s 'usiness must 'e 1.1 and the de't to equit, ratio
should 'e A0.*0+ means the liquidit, position of 'usiness should 'e health,$
4.%" Car Financing Sc$+
Another financing scheme "ith the name of 7MA5B 8A5B CA5 FI(A(CI(8
-C1BMB9 should 'e initiated %his finance scheme "ill help the general pu'lic to 'u,
the car of their choice in eas, quarterl, installments %he 'ank monitors "ill do strict
monitoring and the car "ill 'e h,pothecated "ith the 'ank against the car loan$
-cheme;s implementation plan is gi&e in the ne!t chapter$
100
CHAPTER - 18
I'P.'ENTATION P.AN
From the a'o&e recommendation+ t"o recommendations are selected for implantation
plan$
18.1 I'P.E'ENTATION P.AN FOR H'ARE 1ARE CAR FINANCIN1
SCHE'EI
Implementation of this financing scheme is initiated to pro&ide long term loans to the
general pu'lic for 'u,ing their o"n car in eas, installments$ %his financing scheme "ill
help 'ank to increase its re&enue immensel,
18.1.1 Ru(! and rgu(ation!
(ame of finance Mare 8are Car Financing
Minimum amount of finance 5s$ 600000
Ma!imum amount of finance 5s$ 1E00000
5ate of Mark up (on dail, product 'asis 5s$ 0$*6 per 5s$ 1000
Period of finance 6 or E ,ears
5epa,ment to Bank Kuarterl, (10 or 00 equal installments
18.1." Docu+nt! rDuird for Ctn!ion for (oan
>ocuments of title to car$
Bank monitoring team appro&al certificate$
Car dealer certificate of authentication$
Insurance$
106
18.1.% Scuriti! RDuird for ECtn!ion of .oan
%o ensure the safe reco&er, of loan the car "ill 'e h,pothecated$
8uarantee of t"o 1?
th
grade go&ernment or semi go&ernment officer$
Personal lia'ilit, of the 'orro"er$
18.1.& Finding out Guartr() In!ta((+nt!
Mark up "ill 'e calculated for the "hole time period and "ill 'e added to the principle
amount$ %he total of that "ill 'e di&ided ', num'er of installments to get the amount for
each installment
%he formula for e!tracting mark up is
Mark up RFS5(1Q(
0M
@$r
F R %otal amount of financing
5 R 5ate of mark up for one ,ear
( R %otal num'er of installments
M R (um'er of installments in one ,ear
10*
Case study
Amount of finance 5s$ 000000
5ate of mark up 5s$ 0$*6 per 1000
%otal num'er of installments 00 (E ,ears
(um'er of installments in one ,ear *
5ate of mark up for one ,ear T R $*6 S 6AEP1000
R$1E?
Mark up for the "hole financing "ill 'e
Mark up R 000000 S 0$1E?S(1Q00
0 S *
R 5s$ @0*0E
(o" the quarterl, installments "ill 'e
Kuarterl, installment R principal amount Q total markup
%otal installments
R000000 Q @0*0E P 00 R 5s$ 1*101PG
%he 'orro"er "ill pa, Kuarterl, installment of 5s$ 1*101PG
10E
18." I+#(+ntation #(an for NBP Ha)ataAad Aranc$ HT(#$on
O#ratorI
%he ingredients of the implementation plan are$
(eedPpro'lem at the 'ranch$
Kualities of a telephone operator
Benefits of a telephone operator$
1o" the need created and 'ank;s staff decision$
%he implementation plan cost$
18.".1 Nd #roA(+ at t$ Aranc$.
B&er, organi#ation has some pro'lems$ (BP 1a,ata'ad 'ranch has the pro'lem of
telephone operator$ It can sa&e the precious time of not onl, manager 'ut other staff as
"ell$ 4n the other hand 'ank;s communication s,stem "as not doing "ell o&erall$
%herefore as an internee I felt that there should 'e a telephone operator "ho can easil,
handle this situation$
18."." Bnfit! of t$ t(#$on o#rator
It sa&es precious time of the manager and staff mem'ers$
It sa&es the time of the customers$
Creates good impression on the customer$
Communication "ithin the 'ank impro&es$
Communication of Bank "ith outside enhances$
10A
18.".% Ho2 t$ nd 2a! cratd
%he need for telephone operator "as created 'ecause the staff mem'ers "ould ha&e to
lea&e their "ork and attend the telephone 'ut some times it "ould 'e a "rong call+ other;s
call or the calls "hich the, "anted to a&oid this "ould not onl, "aste their time 'ut also
affect their performance a great deal$ %herefore the, think it;s useful to ha&e a spare
person for this facilit,$
18.".& ACTIONJI'P.E'ENTATION P.AN COST
1G Cost of 15M department
Ad&ertisement in ne"spaper cost *000
-election cost 10000
%raining cost 10000
%otal 15M cost 0A000
0G %elephone net"orking
Additional telephone sets 0E00
Ca'le (5s$ EP foot+ ES@00 *000
%elephone mechanic 0000
<a'or 0000
-eparate cell cost E000
4ther e!penses 0000
%otal net"orking 1?E00
Tota( action #(an co!t &%*888
10?

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Chapter 10 Implementation Plan

%ake deposits accounts$

%ake current accounts+

Issue and pa, Cheques and

Collect Cheques crossed and uncrossed for his customers9

/oint stock compan, account

Accounts of clu's+ societies and associations

B!ecutors and administrators accounts

Pak rupee nonGresident accounts

Foreign currenc, accounts

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