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As part of the academic requirement for completing MBA (Marketing) Master of Business Administration. The students are required to under go for two (2) months of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. This report is about National Bank of Pakistan. NBP was established in 1949 and since then, it has expended its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers. Purpose of the Study The main purpose of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a useful manner. • • To work practically in an organization. To develop interpersonal communication.
Scope of Study As an internee in National Bank of Pakistan the main focus of my study research was on general banking procedures in one of the branches of NBP. These operations include remittances, deposits, advances and foreign exchange. Similarly different aspects of overall of NBP are also covered in this report.
Internship Report on NBP, Balakot branch Balakot
Objectives of the Study Discuss thorough study of National Bank of Pakistan. To understand the various operations and to equip with practical knowledge of the National bank of Pakistan.
Limitation of The Study
Some thing is better than nothing. No matter how efficiently a study is conducted, it cannot be perfect in all respects. This study was conducted in accordance with the objectives of the study. The study may not include broad explanations of facts and figures due to the nature of the study. Secondly, the limitation, which affects the study, is the restriction on mentioning every fact of the bank due to the problem of secrecy of the bank. In addition, the availability of required data was a problem as all the documents and files are kept strictly under lock and key due to their strictly confidential nature. Thirdly, the problem of short time period also makes the analysis restricted as one cannot properly understand and thus analyze all the operations of a bank just a very short time of eight weeks. 1.6 Benefit of The Study
The study done will benefit the finance students in particular and banking students in general because the financial analysis section of this report comprehensively encompasses all respects of financial analysis. Furthermore, NBP Balakot Branch, Balakot may also benefit from the recommendations made at the end of the report. 1.7 Research Methodology The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal observation while working with staff and having discussion with them. Formally arranged interviews and discussions also helped me in this regards.
Internship Report on NBP, Balakot branch Balakot
Primary data include, Personal observation and Interviews of The Staff Members • Secondary data:
Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet 1.8 Scheme of Study SECTION 1 Chapter 1: An introductory chapter that discuss the introduction of study of report, its Background, Purpose, Scope, Methodology, limitations and Scheme of the report. SECTION 11 Chapter2: This chapter concludes brief history of banking in general, evolution of banking, Nationalization of banking in Pakistan, History of NBP, mission statement, and its objectives, functions of National Bank of Pakistan. Chapter3: In this chapter the services of NBP were discussed and the departmentation of NBP is explained as well as NBP Balakot Branch SECTION III Chapoter4: It tells about Strengths, Weaknesses, Opportunities and Threats of i.e. SWOT analysis of NBP
Internship Report on NBP, Balakot branch Balakot
Administrative analysis. “Mare Gare Car Financing Scheme” and Need for Telephone Operator.Chapter5: It consists of comprehensive performance of NBP through past several years. This chapter has been divided into four parts i. and Personal Management Analysis. SECTION IV Chapter 6: It covers the critical analysis of the bank. Chapter 8: Two implementation plans are given in this chapter. Problems at the Branch. Chapter 7: In this chapter recommendation for improvement on all aspects of the Bank are given. Ratio analysis and those parties that are interested in financial performance of Bank.e. Balakot branch Balakot 4 . Internship Report on NBP. Functional analysis.
The borrower has to provide guarantee or he had to pledge his goods or valuables. In Europe with the ‘revival of civilization’ (Renaissance) in the middle of twelve century. Soon Venice and Geneva became the most important money markets of the time and banking though different from its Internship Report on NBP. trade and commerce started expanding and this development compelled the business community to borrow the money from the Hebrew moneylenders on high rates of interest and usury.C. Incidentally the word ‘Bankrupt’s said to have evolved from this practice. At that time temples were used as banks because of their prevalent respect. which means ‘joint stock fund’. Some of the authors are of opinion that the word ‘Bank’ is derived from the German word back.CHAPTER # 2 EVOLUTION OF BANKS IN PAKISTAN 2. King Hamurabi drew up a code wherein he laid down standards rules for procedures for banking operations by temples and great landowners. In fact human left the need of bank when it begins to realize the importance of money as a medium of exchange. where the people deposited their money and other valuables for safe custody and security. Some of the author’s opinion that this word is derived from the word ‘Bancus’ or Banque’. Also in Greece. loans were started being granted for interest. Later on when the German occupied major part of the Italy the word ‘Back’ was italicized into ‘Back’. The explanation of this origin is attributed to the fact that the Jews in Lombard transacted the business of money exchange on benches in the market place. these moneylenders started organizing themselves and bank started up at the principle seaports of southern Europe. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians Empire. Perhaps it where the Babylonian who developed banking system as early as 2000 B. the people destroyed the ‘bench’. which means a bench. the temples were used as banks.1 INTRODUCTION There are different opinions that how the word ‘Bank’ originated. Balakot branch Balakot 5 . and when the business failed. Seeing the great demand.
we mean the business of dealing in credits and by a ‘Bank’ we include every person.” A financial establishment which uses money deposited by customers for investment. a dealer in money. firms and companies at a lower rate of Interest and gives at higher rate of interest to those who need them. which deals with money and credit. can be a banker who does not Take deposits accounts. Sir John Paged defines banker in these terms: “That no person or body. etc. It accepts Deposits from individuals. Take current accounts.present form. He is intermediate party between the borrower and the lender.2 Definitions of Bank "A financial institution. bill of exchange. What we know as ‘modern banking’ originated in the 14th century in Barcelona. bonds. pays it out when required. 2. Issue and pay Cheques and Collect Cheques crossed and uncrossed for his customers” The American defined the term banker in a very broad sense as under: “By banking. Balakot branch Balakot 6 . Subjects to be paid or remitted on Cheques or order. J. firm or company having a place of business where credits are opened by deposits of collection of money or currency. Internship Report on NBP. corporate or otherwise. makes loan at interest. promissory notes are received for discount or sale”. money is advanced or loaned on stocks. bullion. He borrows of one and lends to another”. exchanges currency. flourished.W Gilbert in his principles and practice banking defines a banker in these words: “A banker is dealer in capital or more properly.
Through. the country today possesses a full range of banking and financial institutions to cope with various needs of the economy. The banks. Starting virtually from scratch in 1947.3 Evolution of Banking in Pakistan The first phase in evolution of banking in Pakistan sees very hard days for the whole banking sector. 2. any idea of establishing a central bank was I impractical and the best that could be attempted was the setting up of a currency board until such times as sufficient staff could be organize to operate a central bank. The questions as to whether the institution should be only a currency board or a fullfledged central bank had exercised the mind of the Pakistan government since independence. The Reserve bank of India was the central banking authority in India.2. which stayed. The number of scheduled banks thus declined form 487 branches before independence to only 195 branches by 30th June1948. In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. Those banks. which had their registered offices in Pakistan. The area now constituting Pakistan was. Many specialists were of the opinion that in view of the acute shortage of trained staff. in March 1947 there were 3496 offices of Indian scheduled banks out of which as many as 487 were situated in territories now constituting Pakistan. transferred them to India. relatively speaking.4 Banking Growth during (1948-1970) In this tense situation.1948. This resulted in a negative effect on baking service in Pakistan. fairly well provided with banking facilities in undivided India. it was realized that the shortage of trained personal to run the Internship Report on NBP. In an effort to bring about the collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank offices closed quickly. At the time of partition it was decided that in the interest of smooth transition it should continue to function in newly emerging state of Pakistan. a committee was immediately setup to formulate a scheme of central banking legislation for Pakistan. operated only in name pending the winding up of their business. until 30th Sep. Balakot branch Balakot 7 .
central bank would present serious difficulty in view of the tangible advantages that a central bank enjoyed over currency board. there was the fact the banking facilities in the country had been totally disrupted and there was an urgent need for their rehabilitation. 1948 by the father of the nation. the National bank of India shortly. An equally urgent task. Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in November 1949. Internship Report on NBP. by Pakistan currency. Under the fostering care of the state bank and the support of the government. By using its special powers. 10 & 100. It started with six offices in the former East Pakistan. which the new central bank had to address itself. the governor of the state bank ceased to function as the president of National bank of Pakistan. while extending every help and encouragement to Habib Bank to expand its organization. known as the state bank of Pakistan order. the state bank made liberal advances to the new bank to help it expand credit facilities in the country. To this end. Among other factors. The first Pakistan notes were issued in October 1948 in the denominations of Rs. which led to this decision. which had continued to circulate in Pakistan during the transitional period. As there was hardly any time to pass as Act. the new institution developed rapidly. 5. an order was drafted. Balakot branch Balakot 8 . which a central bank alone could meet. In view of the special role assigned to the new institution. One of the first tasks of the state bank was to arrange for the replacement of the Reserve bank of India notes. The state bank declared open on July 1 . afterwards. the state bank recommended the setting up of a new banking institution to serve both as an agent to the state bank recommended the setting up of a new banking institution to serve both as an agent of the state bank as well as the spearhead of its credit polices. contrary to traditional practices the Governor of the state bank was appointed to head its Board of Director in 1950. the government ultimately decided to take the bold step of setting up a full fledged central banking authority. was the creation of a national banking system. in November 1952. which was promulgated by the government of Pakistan on 12th may 1948. By 1952.
Moreover at the end of June 1958.With a view to broadening the institutional framework of the financial system. transfer of business in food grains to the private sector. Khulna. Quetta. bank. the state bank sponsored a banking training scheme. the credit structure in Pakistan made rapid progress. In the filed of industrial finance a new institution known as the industrial credit and investment cooperation was set up. a new Pakistani bank. The demand of funds picked up and there was a substantial expansion of bank credit to the private sector. of which Pakistani banks accounted for 232 against 25 in mid 1948. Pakistani banks held 60% of the total banks deposits. Owning the five years 1960-65. As the Commercial Banking facilities continued to expand. When it was established there were only 195 bank offices in existence. and were responsible for 65 of total bank credit. Peshawar. At the end of June 1958 their number had increased to 307. The number of scheduled bank offices rose Internship Report on NBP. Layallpur and Rawalpindi. the state bank also sponsored the establishment of specialized credit institutions in the filed of agriculture and industry. Banking companies (control) act was passed in December 1948 specifically empowering the state bank to control the operations of banking companies in Pakistan. The year 1958 marked the completion of the first decade of the working of the State Bank of Pakistan. the National Commercial Bank was established and registered as a scheduled bank. Moreover realizing that the most serious limitation on the expansion of banking services in Pakistan was the lack of trained personal. When the Ayub Khan Government took over in 1958. the banking and monetary scene was significantly affected by developments such as the liberalization of imports. The bank extended its network by opening six new offices located at Chitagong. Balakot branch Balakot 9 . namely the United Bank Limited was established. and the firming up of commodity markets. The pace of expansion in the institutional frameworks of the country’s banking system quickened and a new Pakistani. which was repeated after year and turned out a large number of bankers.
from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to the list of scheduled banks. Two principal additions were the commerce bank, and the standard bank. The number of scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965. Under the impact of economic growth and dear scope of private enterprises, bank credit to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total expansion in bank credit to the private sector during this period amounted to Rs. 4300 million, which gave a annual expansion of Rs. 860 million compared to the annual average increase of Rs. 144 million over the preceding five years. Banks deposits increased from Rs. 2,493 million to Rs. 6883 million during the five years period ended June 1965 compared to Rs. 231 million in the proceeding five years. Time deposits during this period increased from Rs. 946 million to Rs. 3228 million, where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at 49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of banking development during this period was that since the rate of increase in bank deposits lagged behind the rate of expansion in bank credit, the banked has to depend increasingly on central bank finance. They borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen demand for bank credit, bank’s investments could not increase as rapidly as their advances. Their investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231 million in June 1960. Investments, which were almost equal to their advances in June 1960, were only about one third of the advances in June 1965.The third plane period witnessed a further expansion of banking facilities in the country the total number of scheduled banked offices increased from 1,591 at the end of June 1965 to 3133 at the close of June 1970. During the same bank credit to the private sector rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end of June 1970. A remarkable change occurred during this period related to the
Internship Report on NBP, Balakot branch Balakot
composition of deposits. Time deposit becomes greater than demand deposits forming about 54 percent age of the total deposits. As oppose to what happened in the previous period, banks were able to finance a mush higher level of credit expansion without having to increase their borrowings from the central bank. 2.5 Banking Reforms 1972
After the assumption of office by a new government in 1971, may 1972 different reforms were introduced to make the banks more responsive to the requirements of economics growth with social justice. The reforms aimed at bringing about a more purposeful and equitable distribution of bank credit, improving the soundness and efficiency of the banks, and securing greater social accountability of the banking system as a whole. The role of the banking system had been truly spectacular in mobilizing savings of the community and meeting the credit needs of the economy. But at the same time, the banks had generally neglected their role in promoting social justice and had failed to play an effective role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In particular the inter locking of ownership with commercial and industrial interests had led to the misuse of bank resources. There was a heavy concentration of credit in big accounts and in urban area. Credit facilities for agriculture, small business, newly emerging exports and housing had remained obviously inadequate while the banks indulged in capital financing in few selected business sectors and issued guarantees on behalf of favored clients, term clients, term financing facilities for industry were wholly absent. Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider powers. It was authorized to remove directors or managerial personnel, if necessary and supersede the board of directors of a banking company and appoint administrators during the period of such super session. It was also empowered to nominate directors on the board of every bank. As regard bank directors, it was provided that anyone defaulting in meeting his obligations to bank would forfeit his directorship. Moreover, it was laid down that no person could serve as director of a bank for more than
Internship Report on NBP, Balakot branch Balakot
six years continuously. Each bank was required to have a paid up capital of not less than 5 percent age of its deposits to be progressively build up to 10 percent age over a period of time. The banks were also required to transfer 10 percentage of their profit their reserves every years after the reserve became equal to the paid up capital. With a view to diversity the ownership of the banks, the banks were required to raise new capital from the market. Unsecured loans to directors, their families or firms and companies, were totally prohibited. The bank reforms also brought about the establishment of new institutions to achieve new objectives.A national credit consultative was setup under the supervision of the state bank with representation form the government and the private sector. It was assigned the task of determining of economy’s annual credit needs within the safe limits of monetary and credit expansion with reference to the annual development plan. Such a credit plan was to cover the public and private sectors. Alongside the National credit council and Agricultural Advisory Committee was formed to allocate agriculture credit for various purposes, to coordinate the operation or the agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing committee on exports in general and the new emerging exports in particular, was also established. With a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme was introduced under which the state bank under took to share any bonfire losses incurred by the commercial banks in case of small loans of advances to agriculture. At the same time two financing institutions were established. The people’s Finance Corporation was designed to provide finance to people of small means while the National Development Finance Corporation was set up of finance public sector owned and managed industries and enterprises. 2.6 Nationalization of Banks (1974) In Pakistan
The banking reforms turned to be transitional and interim step and when they were hardly eighteen months old the government nationalized the banking systems, with the following main objectives.
Internship Report on NBP, Balakot branch Balakot
1974. To coordinate the banking policies in various area of feasible joint activity without eliminating healthy competition among banks. 1973 there were following 14 Pakistani commercial banks with 3323 offices allover Pakistan and 74 offices in foreign countries: National banks of Pakistan Habib bank limited Habib bank (overseas) limited United bank limited Muslim commercial bank limited Internship Report on NBP. Under the Nationalization act.To enable the government to use the capital concentrated in the hands of a few rich bankers for the rapid economic development of the country and the more urgent social welfare objectives. other than those appointed by federal government were removed from their offices and the central boards of the banks and all local bodies were dissolved. Pakistan banking council was established to coordinate the activities of the Nationalized Commercial banks. management and control of all Pakistani banks stood transferred to and vested in the Federal government. The shareholders were provided compensation in the form of federal government bonds redeemable at par anytime within the period of fifteen years. Directors and Executives of various banks. the Chairman. Balakot branch Balakot 13 . The act passed for the nationalization of banks is known as the banks Nationalization Act 1974. At the time of Nationalization on December31. Thus under this act the state bank of Pakistan and all the commercial banks incorporated in Pakistan and carrying business in or outside the country were brought under government ownership with effect from Jan 1. To distribute equitably credit too different classes sectors and regions. The ownership.
Balakot branch Balakot 14 . Internship Report on NBP. providing for the amalgamation of the smaller banks with bigger ones and following the five units in there phases: National bank limited Habib bank limited United bank limite Muslim commercial bank limited Allied bank of Pakistan limited The first phase was completed on 30th June. When the bank Bahawalpur was merged with the National Bank of Pakistan. The premier Bank Limited with Muslim Commercial Bank limited and Sarhad Bank Limited and Pak bank limited and renamed as Allied Bank of Pakistan limited. The bank (amalgamation) scheme 1974 was notified in April.Commerce bank limited Standard bank limited Australia bank limited Bank of Bahawalpur limited Premium bank limited Pak Bank limited Sarhad bank limited Lahore commercial limited Punjab provincial co-operative bank limited The Pakistan banking council prepared a scheme for the recognition of banks. 1974.
The state bank provides finance against participation term certificate and also against promissory notes supported by Modaraba certificate. Stipulations concerning form of business in which banking companies may engage may also have been modified schemes were introduced to provide interest free loans to formers and deserving students. The number of branches. The third and the final phase were completed on 30 th June 1975 when the standard bank limited was merged with Habib Bank limited. The nationalization was very smooth and gave very positive results. 1973.6. In order to cover interest free transactions certain banking definitions such as creditors. This followed the effort to eliminated interest from the operation of Nation investment trust. Certain amendments were made in banking and other laws with the object of ushering in a new system of banking. when the commerce bank limited merged with the United Bank limited. Balakot branch Balakot 15 . A private Limited Company named as Bankers Equity limited was incorporated in 1979 to provide financial assistance to the industrial sector primarily on interest free basis. Internship Report on NBP. 1925 corers at the end 1973 reached the highest. A new law Modaraba Companies Ordinance 1980 was promulgated. reached on 7661 by end June 1992. and advances credits and deposits were revised. mark about 323 corers.1974. which would confirm of Sharia.The second phase was completed on 31st Dec. 1981. the House Building Finance Corporation of Pakistan. The bank deposits. which stood at 3397 on Dec31. 2.1 Islamization of Banking Another major development in the history of Pakistan Banking System was the introduced of interest free banking in selected Commercial Banks with effect form Jan1. Separate interest free counters began to operate in all the nationalized commercial banks free counters began to operate in all the nationalized commercial banks. which stood at Rs. debtor.
The performance of this bank will be analyzed and judged in the following chapters.6. Since then allot of investment is being made in the banking sector and several new banks were established and still the process is going on. ♦ Specific Purpose Modaraba.2 Dis-investments and Deregulation of Banking – 1991 When it was realized that the role of public sector in the economy is over extended and the banking sector has more earning potential in the private sector the process of privatization banking sector restarted in 1991 by the Muslim League Government. New products and their systematic consumption are making Pakistani banking comparable to their several modern counterparts anywhere in the developed world. ♦ Modaraba Financing. 2. Instead of interest. a system based on mark-up in price. Muslim Commercial Bank was Dis-invested in to two phases while ABL was sold to its employees. 2. Different financial schemes introduced in the Islamization process are: ♦ Musharika Financing. Internship Report on NBP.63 Interest Free Banking A new concept of interest free banking was introduced in 1981 and by now it has been established on sound footing and new trends and techniques are being implemented to make this system result oriented. exchange rate differential.A scheme to extend interest free productive loans to farmers and fisherman has also been introduced. and profit and loss sharing accounts were introduced. Now only NBP is government bank other than SBP. Balakot branch Balakot 16 . ♦ Hire Purchase Financing.
HISTORY OF NBP :
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the former Bahawalpur State. NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at 57 of its offices where the turnover of the business under the head amounted to Rs.2460 million. i) Deposits held by NBP constituted about 3.1% of total deposits of all
Pakistani Banks in 1949, which rose to 38% in 1952. ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances.
NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and commerce. iii) NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule bank credit.
Internship Report on NBP, Balakot branch Balakot
MISSION STATEMEN “To make the Bank complete and competitive with all international And
Standard in performing, quality of, operations, staff, financial strength. the bank”. 126.96.36.199 GOALS AND OBJICTIVES
products and services To develop a culture of excellence in every spare of activity of
“An organizational objective is the intended goal that prescribes definite scope and suggests direction to the panning efforts of a organization.” 188.8.131.52 GOALS AND OBJICTIVES NBP “To be the pre-eminent financial institution in Pakistan and achieve market recognition both in the quality and delivery of service as well as the range of product offerings.” 184.108.40.206 BOARD OF DIRECTORS
NBP, Board of Directors list consist the following members and their designation. Table 1 NAME Ali Raza Dr Waqar Masood Ifthikhar Ali Malik Syed Shafqat Ali Shah Jamoti M Zubair Motiwala Sikandar Hayat Jamali M. Khalid Malik DISIGNATION Chairman & President Director Director Director Director Director Director
Internship Report on NBP, Balakot branch Balakot
S.M. Rafique (Source Annual report 2004) 2.6.4
SEVP & Sectorary to BD
BOARD OF DIRECTORS
Syed Ali Raza (President)
Dr. Waqar Masood khan (Director)
Iftikhar Ali Malik (Director)
M.Arshad Chaudry (Director)
Syed Shafaqat Ali Shah (Director)
M.Zubair Motiwala (Director)
Skindar Hayat Jamali (Director)
Mohd Khalid Malik (Secretary)
Source: Annual Report of NBP (2003)
Internship Report on NBP, Balakot branch Balakot
Centralized. Balakot branch Balakot 20 .5 MANAGEMENT Management is a distinct process consisting of activities of planning. 1. Decentralized disperses decision-making and authority throughout and further down the organizational hierarchy. organizing. Compliance Internship Report on NBP. M. Table 2 SEVP & Group Chief. 2.1 SENIOR MANAGEMENT OF NBP . Corporate & Masood Karim Sheikh Investment Banking Group and Chief Financial Officer S. 2. Centralized Management tends to concentrate decision making at the top of the Organization.The management has two types. Senior Management of NBP consists of following member and their respective designation.2. Decentralized. NBP have a centralized type of management because the top management takes all the decisions.6. actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources. Special Assets & Remedial Management Group SEVP & Group Chief. Rafique Derick Cyprian Imam Bakhsh Baloch SEVP & Secretary Board of Directors SEVP & Group Chief.6.5.
In overseas it has 16 overseas branches.6.com. Operations Group EVP & Group Chief. This is achieved in two ways: Internship Report on NBP. 6 other branches. Information Technology Group EVP & Group Chief. Audit & Nadeem A. . Brohi Javed Mehmood Inspection Group EVP & Group Chief.6 Net Work of Branches: Management Group EVP & PSO to the President Group Chief. Balakot branch Balakot 21 . Mirza Abrar Baig Uzma Bashir (Source www. Asif A. Human Resources Management & Administration Group Group Chief. 1189 Branches and 4 Subsidiaries. Risk Management Group EVP & Group Chief. Organization D&T Group NBP have wide range of branches inside the country and outside the country. Treasury Muhammad Nusrat Vohra Amim Akhtar Dr.6.Group Shahid Anwar Khan EVP & Group Chief.2. Dogar Muhammad Sardar Khawaja Dr.7 Objectives of NBP National bank of Pakistan is also a commercial organization and its main objective is profit maximization. Commercial & Retail Banking Group EVP & Group Chief. In Pakistan it has 29 regional offices.nbp.pk) 2.
These are explained as: 2.e. iii. They carry out extensive financial analysis before deciding on the loan. foreign. NBP has an extremely well organized section. 2. and educated and competent. By increasing deposits.7. Internship Report on NBP.6. Interest charged on the loans potentially contributes to higher profits. Improve customer services. Balakot branch Balakot 22 . the credit worthiness of the borrowers. There are two main factors involved in increasing the deposits. NBP prefers to give loans to financially sound and reliable parties. after securing the collators. Efficient operation of the branches. This strategy has worked quite well for NBP.1.1 Increase in deposits: Competition in banking is intense and every bank whether it is Pakistani. Quick disposal of credit cases.6. private or nationalized tries to increase its deposits by providing better facilities to its customers. 2. By increasing its deposits a bank can extend greater amount of loan and hence achieves higher profit. Deposits are collected from the people and invested in different projects. Some of the other objectives of NBP are: i. ii. NBP is also improving its facilities and services to attract customers with higher volume of deposits. By charging interest on loans provided to the private sector and business community.7.2 Extension of loans: The profitability of a bank largely depends on the amount given to people as loan and the type of people to whom credit is given i. The staff is adequately trained. NBP is continuously working on these two factors to increase its deposits. These factors are improving the services and courtesy.
8 Functions of NBP Since NBP is a commercial bank. In this case the rates of profit will be different depending upon the time period. NBP pays practically no interest on current deposits.500/iii. PLS saving deposit Profit and loss sharing deposits (PLS) are also called checking accounts.9 Discounting bills of exchange Internship Report on NBP. One can deposit and draw money easily.6. it performs a variety of functions. 2. The functions performed by NBP are: 2. Operational and advisory services for foreign exchange accounts activities 2. Like other commercial banks. v. NBP is engaged in financing international trade. Businessmen usually open current accounts.6.iv. PLS term deposits Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they cannot be withdrawn unless giving due notice. PLS account can be opened with a minimum amount of Rs. advancing loans and discounting of exchange. Better Public Relations.8.6.1 Accepting Deposits This function is important because banks largely depend on the funds deposited with them by its customers. Its other major functions include receiving deposits.500/-. In NBP current account can be opened with a minimum amount of Rs. Current deposits Current deposits are also called demand liability on current deposits. Balakot branch Balakot 23 . Deposits are of many types: i. Profit on PLS is calculated every month but paid after six months.
For this purpose it also provides evening banking services b. National bank of Pakistan acts as an agent for its customers. This bill has to be mature. Lockers facility Internship Report on NBP. ii. bills and promissory notes etc. it pays to holder of the bill an amount equal to the face value after deducting interest at the current market rate for the period. iv. Balakot branch Balakot 24 . 2.e. This is the common way used for keeping a part of assets of the bank in a liquid form. Collection of dividends As NBP deals with the purchase and sale of various types of securities. NBP provide the following agency services to the customers: i. gas and telephone bills of its customers. therefore NBP also provide dividend or interest earned on share or bonds or invested money. electricity.10 Agency service NBP also provides best and unique service to its valued customers.Discounting of bill is practically speaking lending for exchange at their market rate i. Acting as an agent NBP also acts as an agent correspondent or representative for its customer at home or abroad. iii. Clearance of utility bills NBP provides the service of clearing the utility bills i. Collection of Cheques In the collection and payment of Cheques.6. General utility services: Utilities provided by NBP are as follows: a.e.
Safe Deposit Lockers for customers.6. The charges of different size of lockers are different. Sale and encashment of Defense Savings and Special Savings Certificates. Handling of salaries & pensions of federal/provincial/defense personnel. 2. Utility Bills collections. Hajj arrangements. Balakot branch Balakot 25 . Supply of information NBP provides operational and advisory service for foreign exchange accounts/activities. Largest contribution towards Government and Semi-Government requirements. receipts of Taxes & other Revenues. Internship Report on NBP. Highest rates of return to attract the savings.National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in it. Acts as a referee NBP provides useful services to its customers by acting as a referee to their credit worthiness.11 Unmatched Banking Facilities Deposit security. d. c. Sale and encashment of prize Bonds. Lowest rates on exports and other borrowings. Guaranteed by Government of Pakistan. Agents of the SBP handling Treasury Functions.
Paged John. The next and onward chapter we will discuss the general banking information and departmentalization of NBP. Balakot branch Balakot 26 .6. Israr. The law of Banking. Booth at Pak Afghan border (Torkham) NWFP iii. Practice and Law of banking in Pakistan. (1998). AAA+1 rating awarded JCR-VIS Credit Co. Mission Statement of NBP.13 Summation We discussed in this chapter the evaluation of banking in Pakistan. Booth at Pak Afghan border (Chamman). Rational Human Resource Management.6.Ltd and affiliated of Japan Credit Rating Agency for 2002 2. i. REFRENCES 1. McGraw Hill Publication: page 51-58 Internship Report on NBP. AAA rating awarded JCR-VIS Credit co. History of NBP. 2.12 NBP at the forefront of Pak-Afghan trade i. Ltd and affiliated of Japan Credit Rating Agency for 2001. The prestigious periodical “The Banker” UK recognized NBP as the best bank for 20012002 and NBP is the bank of the year for 2004-2004 of Pakistan. Karachi: Decent Print Enterprises. Siddiqi H. Booth at dry port Peshawar ii. Baluchistan. ii. Establishing branch at Kabul. Page 15-17 2. banking reforms 1972. The Law of Banking. Nationalization of banks. Sir. iv.
Bank Nationalization act 1974. 6.pk 5. Kitab Markaz: Page. Balakot branch Balakot 27 .pk CHAPTER # 3 INFORMATION & DEPARTMENTALIZATION OF NBP 3.com.1 INTRODUCTION This chapter presents the services and departmentalization of NBP. www.com. www. Saeed H.3. Pakistan. Money and Banking. Internship Report on NBP.nbp.(2001).google.105- 106 4. Nasir.
can purchase a Demand Draft from a bank branch. 3. Using the NBP network of branches. Any person whether an account holder of the bank or not. which eliminates the manual application of tests that often cause delay in the payment of home remittances. Internship Report on NBP. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. speedy and reliable way to transfer money. Balakot branch Balakot 28 .4 LETTERS OF CREDIT * NBP is committed to offering its business customers the widest range of options in the area of money transfer. 3. security. NBP offers the following services to the people. 3. you can now purchase NBP’s Demand Drafts at very reasonable rates. NBP Letters of Credit are the best way to do your business transactions. The system has built-in features of computerized test keys.2 DEMAND DRAFTS If you are looking for a safe. you can safely and speedily transfer money for our business and personal needs. Which are the backbones of any organization to earn profit. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. 3. Rupee traveler’s cheque is available at all 700 branches of NBP.Services are outputs of the firm.3 SWIFT SYSTEM The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. and there is no restriction on the period of validity of the cheques. which are in intangible form. With competitive rates.5 TRAVELER'S CHEQUES Traveler’s cheques are negotiable instruments. and ease of transaction.
And NBP also offers the most competitive rates in the market.for NBP non-account holders on issuing one payment order. NBP charges for this service are extremely competitive.8 FOREIGN REMITTANCES: To facilitate its customers in the area of Home Remittances. And charges Rs 100/. 3.for NBP account holders on issuing one payment order.exchange rate and RS 75/. If some one want a duplicate of payment order they charges Rs 100/.for non account holders. It charges Rs 50/. It is one of the safest ways for carrying money. Balakot branch Balakot 29 . There is no limit on purchase of this cheque. It charges Rs 25/. as usual.6 PAY ORDER NBP provides another reason to transfer your money using our facilities.for NBP account holders and Rs 150/. 3. And. NBP pay orders are a secure and easy way to move your money from one place to another. The charges of NBP are very low all over the Pakistan.7 AIL TRANSFERS Move your money safely and quickly using NBP Mail Transfer service.1 New Features: The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home Internship Report on NBP.8.This can be encashed in all 400 branches of NBP.postage charges on issuing mail transfer. They charges Rs 50/. 3. National Bank of Pakistan has taken a number of measures to: • • Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries 3.for students on payment of fees of educational institutions.
the rate is 1.1 Salient Features: • • • Rs 2-million are required to open an account and there is no maximum limit. Whether you are looking to invest for 3 months or 1 year. Strict monitoring of the system is done to ensure the highest possible security. the rate fluctuates from 1. 3. Profit is paid on half yearly basis on monthly balances. • • • Zero Tariffs: NBP is providing home remittance services without any charges.. along with the security and service only NBP can provide.4 to 1. 3. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.million to Rs 50/.75 • It is a checking account and there is no limit of withdrawals.2 million to 2. On Deposits of Rs. Internship Report on NBP. and Bank Al-Jazira. The rates of profit vary according to the slabs of deposit.000 million. Saudi Arabia. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. NBP’s rates of profit are extremely attractive.10.2 Rates on NIDA • From Rs 2/. Balakot branch Balakot 30 .9 SHORT TERM INVESTMENTS NBP now offers excellent rates of profit on all its short-term investment accounts. 3.remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd. 3.4%.10.10 National Income Daily Account (NIDA) The scheme was launched in December 1995 to attract corporate customers.
13. The bank is now regarded as the most active and dominant player in the development of the stock market.the rate is 1. From Rs 1000/.million but below Rs 1000/.75%. From Rs 500/.11 From Rs50/. large and small business and other segments of the economy.12 COMMERCIAL FINANCE NBP dedicated team of professionals truly understands the needs of professionals.million but less than Rs 500/-million.• • • 3.6%. 3. agriculturists. which would result in better returns offered to account holders 3. EQUITY INVESTMENTS NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. 3.11. commitment and pride of farmers who produce some of the best agricultural products in the World. 3. Internship Report on NBP.1 • • NBP is involved in the following: Investment into the capital market Introduction of capital market accounts (under process) NBP’s involvement in capital markets is expected to increase its earnings.and above the rate is 1. They are the customer’s best resource in making NBP’s products and services work for them.5%. Balakot branch Balakot 31 .13 TRADE FINANCE OTHER BUSINESS LOANS There are two types of trade finance. the rate is 1.1 AGRICULTURAL FINANCE NBP provides Agricultural Finance to solidify faith.
3.1.3. Select farms will be made role models for other farms and farmers to follow.2 Agricultural Credit: The agricultural financing strategy of NBP is aimed at three main objectives:• • Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production • Provide farmers an integrated package of credit with supplies of essential inputs.13.13. technical knowledge. Balakot branch Balakot 32 .1 Agricultural Finance Services: “I Feed the World” program. is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input.1. a new product.3 • • • • • • • • Agricultural Credit (Medium Term): Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy Equipment for sprinklers Internship Report on NBP.1.13. 3. and supervision of farming. thus helping farmers across Pakistan to increase production.
13.13.2 Medium term loans and Capital Expenditure Financing: NBP provides financing for its clients’ capital expenditure and other long-term investment needs.4 Farm Credit: NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis. 3.1.13. 3.13. Balakot branch Balakot 33 .1.13. Seeds. NBP expedites clients’ attempt to upgrade and expand their operation thereby making possible Internship Report on NBP.2. • • • Operating loans Land improvement loans Equipment loans for purchase of tractors.2 CORPORATE FINANCE 3. etc are all covered under this scheme. please do not hesitate to e-mail us.2.1 Working Capital and Short Term Loans: NBP specializes in providing Project Finance – Export Refinance to exporters – Preshipment and Post-shipment financing to exporters – Running finance – Cash Finance – Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Preshipment / Post Shipment Agricultural Production Loans 3. fertilizers.3. sprayers. care. farm implements or any other equipment Livestock loans for the purchase. By sharing the risk associated with such long-term investments. If you require any further information. and feeding of livestock.5 Production Loans: Production loans are meant for basic inputs of the farm and are short term in nature.
which is placed under the Risk Management Group. geographic location and structure through syndicated debt offerings. you’ll be provided everything. which is proven by the fact that NBP has its branches in all of the major financial capitals of the world.2.14 INTERNATIONAL BANKING National Bank of Pakistan is at the forefront of international banking in Pakistan. 3. The role of the Financial Institution Wing is: • To effectively manage NBP’s exposure to foreign and domestic correspondence Internship Report on NBP.13. liquidity and investment services. which takes to manage your cash flow more accurately 3. Balakot branch Balakot 34 .4 Cash Management Services: With National Bank’s Cash Management Services (in process of being set up). Additionally.13. we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry. This type of long term financing proves the bank’s belief in its client's capabilities. In fact. NBP have recently set up the Financial Institution Wing.the fulfillment of our clients’ vision. with NBP. They will also be able to take advantage of our outstanding range of payment.3 Loan Structuring and Syndication: National Bank’s leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. This will enable the customer to manage their company’s total financial position right from your desktop computer. 3. Because we understand our syndicate partners’ asset criteria. who bring specialized knowledge to the structure of a transaction. the customer’s sales collection will be channeled through vast network of NBP branched spread across the country.2. and its commitment to the country. Our syndication capabilities are complemented by our own capital strength and by industry teams. ejection.
3. thereby contributing to the bank’s profitability • Generation of incremental trade-finance business and revenues NBP offers: The lowest rates on exports and other international banking products Access to different local commercial banks in international banking Cash and Gold Finance. It is the area of consumer finance.14. Balakot branch Balakot 35 .• Manage the monetary aspect of NBP’s relationship with the correspondents to support trade.1 CASH DEPARTMENT Internship Report on NBP. A) DEPARTMENTATION OF NBP 3. They can get a loan up to the salary of fifteen months. treasury and other key business areas.16 Advance salary loan: This loan is given to those people who are govt servants.15 mortgaged with the bank and loan is taken. The gold is 3. And borrower can take loan for common use.17 DEPARTMENTALIZATION 2 Dividing an organization into different parts according to the functions is called departmentation.17. 3. So NBP can be divided into the following main departments. Cash and Gold finance means that loan is given against the gold.1 • • 3.
1881 3 “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”. Every customer has its own ledger account and has separate ledger cards. it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act. its record should be kept. Act.17. 3.1.3) Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. and which does not order any act to be done in addition to the payment of money”.17. signed by the drawer. The deposits of all customers of the bank are controlled by means of ledger accounts.17.1. Cash department performs this function. 1881.1. 3.Cash department performs the following functions 3. 3. Since a Cheque has been declared to be a bill of exchange.4) Cheques and their Payment The Negotiable Instruments. Balakot branch Balakot 36 .1.2) Receipt The money.5) The Requisites of Cheque Internship Report on NBP.17. or to the order of. which either comes or goes out from the bank. Therefore. requiring the banker to pay on demand a sum certain in money to. a specified person or to the bearer. one can say that a Cheque can be defined as an: “An unconditional order in writing drawn on a specified banker.
7) Bankers in Pakistan deal with three types of cheques a) Bearer Cheques Internship Report on NBP. a) b) c) The Drawer The Drawee The Payee Types of Cheques 3. a) b) c) d) e) f) g) It should be in writing The unconditional order Drawn on specific banker only Payment on Demand Sum Certain in money Payable to a specific person Signed by the drawer Parties to Cheque 3. or no payee but bearer.17. Balakot branch Balakot 37 .6) The normal Cheque is one in which there is a drawer.17.1. a drawee banker and a payee.1. but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following.There is no prescribed form of words or design of a Cheque.
c) Crossed Cheque These cheques are not payable in cash at the counters of a banker. The acid test of banking is the receipt of money etc. However the bankers’ legal protection is only when payment is in ‘Due Course’. It is a contractual obligation of a banker to honor his customer’s cheques if the following essentials are fulfilled. It can also be collected through clearing.Bearer cheques are cashable at the counter of the bank. Balakot branch Balakot 38 . Payment of money deposited by the customer is one of the root functions of banking. This paying function is one. in good faith and without negligence to any person in possession thereof under circumstances. If there are two persons having accounts at the same bank. b) Order cheque These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification.8) Payment of Cheques It is a banker’s primary contract to repay money received for his customer’s account usually by honouring his cheques. from the depositors. which is the distinguishing mark of a banker and differentiates him from other institutions. and repayment to them. which receive money from the public. It can only be credited to the payee’s account. 3. The payment in due course means payment in accordance with the apparent tenor of the instrument.1.17. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque. which do not afford a reasonable ground of believing that he is not entitled to receive payment of the amount therein mentioned. These can also be collected through clearing. one of the account holder issues a cross-cheque in favour of the other account holder. a) b) Cheques should be in a proper form: Cheque should not be crossed: Internship Report on NBP.
After the World War II. a rapid growth in banking institutions has taken place. In practice. Balakot branch Balakot 39 . The use of cheques in making payments has also widely increased. At the same time. the mutual obligation are settled by the internal bank administration and there arises no inter bank debits from the use of cheques. Internship Report on NBP.2 CLEARANCE DEPARTMENT A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. the clearing system is operated by the SBP. He deposits the cheque with his bank other than of payer for the collection of the amount. the creditors’ banks receive large amounts of cheques drawn on other banks giving claims of payment by them. The total assets and total liabilities of the bank remain unchanged. The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at the bank of the drawer. then NBP. Now the bank in which the cheque has been deposited becomes a creditor of the drawer’s bank. the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer. The banks on which the cheques are drawn become in debt to the bank in which the cheques are deposited. as a representative of SBP act as a clearinghouse.c) d) e) f) g) h) Cheque should be drawn on the particular bank: Cheque should not mutilated: Funds must be sufficient and available: The Cheque should not be post dated or stale: Cheque should be presented during banking hours: 3. The function of clearinghouse is performed by the central bank of a country by tradition or by law. In Pakistan. If SBP has no office at a place. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions.17.
3.2. Totals are also made of all the cheques presented by or to each bank. A summary sheet is prepared which shows the names of the banks. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank. All details of the cheques are recorded in this book. The cheques are then sorted according to the bank on which they are drawn. The Credit Management Division of Head Office directly controls all the advances.The easy.17.18 ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. As we known bank is a profit seeking institution. Balakot branch Balakot 40 . safe and most efficient way is to offset the reciprocal claims against the other and receive only the net amount owned by them.1) In-Word Clearing Books The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. The difference between the total represents the amount to be paid by a particular bank and the amount to be received by it.17.2) Out-Word Clearing Book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the bank has delivered to other banks.2. This facility of net inter bank payment is provided by the clearinghouse. The major portion of the profit is earned through this department. Each bank then receives the net amount due to it or pays the net amount owed by it. The job of this department is to make proposals about the loans. 3. the total number of cheques delivered and received by them. The representatives of the local commercial banks meet at a fixed time on all the business days of the week. 3. The meeting is held in the office of the bank that officially performs the duties of clearinghouse. Credit Internship Report on NBP.
3.18.extensions are the most important activity of all financial institutions. because it is the main source of earning.18. Accounts details of other banks (if any). Exiting financial position of the company. However. Signing a promissory note is also a requirement of lending. which must be duly observed while advancing money to the borrowers. Security against loan. a) b) c) d) e) Existing financial position of a borrower at a particular branch. Safety Internship Report on NBP. c. (Balance Sheet & Income Statement). Any individual or company. at the same time. b. 3. through this note borrower promise that he will be responsible to pay the certain amount of money with interest. d. who wants loan from NBP. Balakot branch Balakot 41 . first of all has to undergo the filling of a prescribed form.1) Name and address of the borrower. a. it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. Safety Liquidity Dispersal Remuneration Suitability a.2) Principles of Advances There are five principles. which provides the following information to the banker. e.
he may make his business very profitable. d. If the past record of the borrower shows that his integrity has been questionable. A businessman may not have vast financial resources. Therefore. Special Notice Account and Fixed Deposit Account. for there is no substitute for character. Call Deposit Account. Balakot branch Balakot 42 . Savings Bank Account. especially when the securities offered by him are inadequate in covering the full amount of advance. capacity and capital can help a banker in arriving at a conclusion regarding the safety of advances allowed by him. the banker must be very careful and ensure that his depositor’s money is advanced to safe hands where the risk of loss does not exist. b.Banker’s funds comprise mainly of money borrowed from numerous customers on various accounts such as Current Account. It indicates that whatever money the banker holds is that of his customers who have entrusted the banker with it only because they have full confidence in the expert handling of money by their banker. including the insight into a specific business. but with sound management abilities. Capacity This is the management ability factor. It is obligation on the banker to ensure that his borrower is a person of character and has capacity enough to repay the money borrowed including the interest thereon. Capital Internship Report on NBP. On the other hand if a person has no insight into the particular business for which he wants to borrow funds from the banker. c. Character It is the most important factor in determining the safety of advance. A borrower’s character can indicate his intention to repay the advance since his honesty and integrity is of primary importance. there are more chances of loss to the banker. the banker should avoid him. The elements of character. which tells how successful a business has been in the past and what the future possibilities are.
and the funds thus released can be used to allow fresh loans to other borrowers. The role of commercial banks is to provide short-term capital for commerce and industry. Hence.This is the monetary base because the money invested by the proprietors represents their faith in the business and its future. and that the borrowers are in such a financial position as to pay back the entire amount outstanding against them on a short notice. industry. If the borrower asks for an advance for the purchase of fixed assets the banker should refuse because it shall not be possible for him to repay when the banker wants his customer to repay the amount. Nevertheless. it is very important for a banker to study his borrower’s assets to liquidity. farming. Generally the borrowers repay their loans steadily. The banker must ensure that his funds are not invested in specific sectors like textile industry. Balakot branch Balakot 43 . In such a situation. because he would prefer to lend only for a short period in order to meet the shortfalls in the wording capital. housing projects and various other financial concerns in order of priorities. small business. This makes the banker a partner. heavy engineering or agriculture. Internship Report on NBP. because all the money borrowed by the customer is repayable in lump sum on demand. He must see that from his available funds he advances them to a wide range of sector like commerce. yet some borrowers would insist that their bankers provide most of the capital required. the baker must adhere to the consideration of the principles of liquidity very careful. Liquidity Liquidity means the possibilities of recovering the advances in emergency. the banker must ensure that the money he is lending is not blocked for an undue long time. Dispersal The dispersal of the amount of advance should be broadly based so that large number of borrowing customer may benefit from the banker’s funds. e. f. As such the banker must consider whether the amount requested for is reasonable to the borrowers own resources or investment. agriculture.
overdrafts and loans. Remuneration A major portion of the banker’s earnings comes form the interest charged on the money borrowed by the customers. d) e) f) h. 3. bankers in Pakistan generally lend in the form of cash finance. It means that advance should be allowed not only to the carefully selected and suitable borrowers but also in keeping with the overall national development plans chalked out by the authorities concerned. Before accommodating a borrower the banker should ensure that the lending is for a purpose in conformity with the current national credit policy laid down by the central bank of the country.18. Balakot branch Balakot 44 .Dispersal of advances is very necessary from the point of security as well. Provisions for a reserve fund to meet unforeseen contingencies. because it reduces the risk of recovery when something goes wrong in one particular sector or in one field.3 Forms of Loans In addition to purchase and discounting of bills. Suitability The word “suitability’ is not to be taken in its usual literary sense but in the broader sense of purport. The banker needs sufficient earnings to meet the following: a) b) c) Interest payable to the money deposited with him. Payment of dividends to the shareholders. Overhead expense and depreciation and maintenance of the fixed assets of the bank. Internship Report on NBP. g. An adequate sum to meet possible losses. NBP provides advances to different people in different ways as the case demand. Salaries and fringe benefits payable to the staff members.
produce or merchandise. When it is against collateral securities it is called “Secured Overdraft” and when the borrowing customer cannot offer any collateral security except his personal security. while an overdraft is a temporary accommodation occasionally resorted to. In order to offset this loss. either at once or as and when required. When bankers Internship Report on NBP. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis. it is called a “loan”. When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance. b) Overdraft/Running Finance This is the most common form of bank lending. Balakot branch Balakot 45 . This accommodation is generally allowed against collateral securities. The borrowing customer is in an advantageous position in an overdraft. according to which the borrower has to pay markup/service charges on at least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. the accommodation is called a “Clean Overdraft”. and an overdraft thus occurs. which the borrowing customer has in credit. c) Demand Financing/Loans When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time. because he has to pay service charges only on the balance outstanding against him. the banker has to lose return on the unutilized amount.a) Cash Finance This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods. the banker may provide for a suitable clause in the cash finance agreement. If the borrower does not utilize the full limit. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit.
DD are of two types. NBP offers the following forms of remittances. After the payment the DD is prepared and given to the customer. Application form includes the beneficiary name. The customer fills the application form. Internship Report on NBP.1) Demand Draft Demand draft is a popular mode of transfer. The account of the customer is credited when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch.allow loans to their customers against collateral securities they are called “secured loans” and when no collateral security is taken they are called “clean loans”.19.19 REMITTANCE DEPARTMENT Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed upon. a) b) c) d) Demand Draft Telegraphic Transfer Pay Order Mail Transfer 3. while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security 3. and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixed amount of money for his use. The customer deposits the amount of DD in the branch. Balakot branch Balakot 46 . account number and a sender’s name.
The TT charges are: Telegram/ Fax Charges on TT = Actual-minimum Rs.1% 3. Balakot branch Balakot 47 . Cable telegram transfer costs more as compared to other title of money. which is known to the person concerned with this department and branch manager. Where payment is made though account. the remittances can also be made by mail transfer (MT). TT charges are taken from the customer. NBP takes fixed commission of Rs. NBP CHARGES FOR DD I.3) Telegraphic Transfer Telegraphic transfer or cable transfer is the quickest method of making remittances. Here the selling office of the bank sends instructions in writing by mail to the paying bank for the payment of a specified amount of money.19.19. In cable transfer the bank uses a secret system of private code. 25 per pay order from the account holder and Rs.125. No excise duty is charged on TT. II. The customer for requesting TT fills an application form.4) Mail Transfer When the money is not required immediately. Vouchers are prepared and sent by ordinary mail to keep the record. 3.is Rs 50/. Debiting to the buyer’s account at the selling office and crediting to the recipient’s account at the paying bank Internship Report on NBP. 3. 100 from a non-account holder.2) Pay Order Pay order is made for local transfer of money. Pay order is the most convenient.000/.19.only Over Rs. 50. Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the specified person. Up to Rs.is 0. 50.a) b) Open DD: Cross DD: Where direct payment is made.000/. simple and secure way of transfer of money.
They interact between man and machine. Postage charges on mail transfer are actual minimum Rs.20.1) Selection & Recruitment Although the Bank believes in merit but in practice the selection of employees is not done on merit. 40/. Since there is no risk of early retirement or redundancy in rank. the employees of NBP also enjoy their job for life. 3. This shows that candidates with some strong family background or political pressure are given preference in recruitment and qualified candidates are sometimes left behind. Most of the employees are low educated. and this is one of the reasons responsible for the low productivity of the employees of the Bank. The positive attitude could only be created in a conducive environment. In reality the man is more important than machine as it is the human which could get maximum out of machine to keep a happy customer. Balakot branch Balakot 48 . most organizations give little importance to this very important asset. Various aspects related to human resource of National Bank of Pakistan are critically examined in the following text: 3.make the payment under this transfer.20.20 HUMAN RESOURCE MANAGEMENT Human Resource plays a vital role in the success of every service organization.2) Job for Life Like the employee of public sector organizations in Pakistan. 3. Internship Report on NBP.40/. they do not perform with their full potentials. This is one redundancy in rank.if sent by registered post inland on party’s request. which can make the staff dedicated towards the organization and its objectives. they do not perform with their full potentials. However. Their attitude can win or loose the customer.if sent by registered post locally Rs. NBP taxes mail charges from the applicant where no excise duty is charged.
2. Objectives of employee’s are not quantified. cultural background and life-style is another reason responsible for inter personal conflicts in NBP. Element of subjectivity is involved in this method. human beings are also the most unpredictable.20. Where a number of persons work together. Most interpersonal conflicts in NBP can be traced back to the following major heads. of necessity. This has become an outdated method of performance appraisal and no longer used due to the following reasons: 1.3.4) Inter Personal Relationship Modern management acknowledges human resources as one ‘of the most important assets of an organization. event or personality hinder understanding. 3. perceptions. Lack of Communication Lack of communication is for the biggest reason for conflicts. When things come to such a pavement. Employee’s participation is not ensured in the process of evaluation. interpersonal conflicts are generated. therefore. Balakot branch Balakot 49 . 4. Different values and perceptions about the same issue.20. 3. Not only it is due to the failure to send a massage but to an interpretation given to the massage by the receiver is different from that intended. will lead to conflicts and NBP is no exception.3) Performance Appraisal The performance of employees of the Bank are appraised though their annual confidential reports at the end of each year.5) Diversity in Values Diversity in values. But by their very nature.20. interactions among them. 3. The performance of employees is evaluated after quite a long time. Internship Report on NBP.
In the past few years. Line managers are not fully equipped with the authority with no vertical or horizontal interference. some cases of frauds have happened in different branches.20. Current a/c Saving a/c Cheque cancellation Internship Report on NBP. Hence. favoritism. 3.6) Corruption Our social acceptance of corruption gives rise to corruption at every level of social and organizational set up.The dominant trend in all modern industrial societies of the world is merit and expertise. and other number of such practices.7) Discipline & Authority Maintaining discipline and implementation of authority (tables) in letter and spirit is the key to success of any organization. All these cause resentment that keep building up and lead to conflict sooner or later. Balakot branch Balakot 50 . The reasons can be linked with the employee dissatisfaction of NBP. nepotism.21) DEPOSIT DEPARTMENT: It controls the following activities: a) b) c) d) e) A/C opening. Corruption involves financial embezzlement.20. 3. The authority tables are not strictly maintained. interpersonal conflicts are generated. 3. In NBP. But the feudalistic mindset is still very strong in our set up and there is no tradition of tolerance for differing viewpoints. Issuance of chequebook. which helps promote cohesion and reduce conflicts.
Formal Application Introduction Specimen Signature Minimum Initial Deposit Operating the Account Pay-In-Slip Book Pass Book Issuing Cheque Book Internship Report on NBP. respectability. 2. • • • • • 1.f) Cash 3. the banker should determine the prospective customer’s integrity. ii. iii. 3. Before a banker opens a new account. Preliminary investigation is necessary because of the following reasons. Inquiries about clients. There are certain formalities. Balakot branch Balakot 51 . i. iv. which are to be observed for opening an account with a bank.1 Account opening The opening of an account is the establishment of banker customer relationship. occupation and the nature of business by the introductory references given at the time of account opening.21. Avoiding frauds Safe guard against unintended over draft. Negligence.
however. he must have the following basic qualifications. which create legal relationship Not expressly declared void.a) Qualification of Customer The relation of the banker and the customer is purely a contractual one. Balakot branch Balakot 52 . • • • • • • He must be of the age of majority. He must be of sound mind. societies and associations Agents account Trust account Executors and administrators accounts Internship Report on NBP. Law must not disqualify him. The agreement should be made for lawful object. b) Types of Accounts Following are the main types of accounts 1) 2) 3) Individual Account Joint Account Accounts of Special Types Partnership account Joint stock company account Accounts of clubs.
3. however.2 Issuing of chequebook: This deptt issue cheque books to account holders. failing which incidental charges are deducted from such accounts. Bankers in Pakistan do not allow any profit on these deposits.21. Now. Pak rupee non-resident accounts Foreign currency accounts 3. but still the proportion of Current Deposits and Fixed Deposits varies from bank to bank. Balakot branch Balakot 53 . When a banker accepts a demand deposit. drawn against him to the extent of the balance in the account. the Current Deposits have become more important. In recent years.3 Current account These are payable to the customer whenever they are demanded. and as such the bank is not entirely free to employ such deposits.21. the proportion of Current Deposits in relation to Fixed Deposits was very small. and customers are required to maintain a minimum balance.4 Saving account Internship Report on NBP. and from time to time.21. e) 3. Because of their nature. This is because the depositors may withdraw Current Account at any time. Requirements for issuing chequebook a) The account holder must sign the requisition slip b) Entry should be made in the chequebook-issuing book d) Three rupees per cheque should be recovered from a/c holder if not then debit his/her account. the position has changed remarkably. branch to branch. these deposits are treated as current liabilities by the banks. Until a few decades back. he incurs the obligation of paying all cheques etc.
Balakot branch Balakot 54 . a) Post dated cheque b) Stale cheque c) Warn out cheque d) Wrong sign etc 3. b) Foreign currency accounts dealing.22 FOREIGN EXCHANGE/DEPARTMENT: This deptt mainly deals with the foreign business.21. As such. and the depositor is issued a chequebook for withdrawals. Payment of cheques.5 Cheque cancellation: This deptt can cancel a cheque on the basis of.Savings Deposits account can be opened with very small amount of money. 3. the initial deposit required for opening these accounts is very nominal. In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme for school and college students and industrial labor also. deposits of cheques etc. Profit is paid at a flexible rate calculated on six-month basis under the Interest-Free Banking System. The purpose of these accounts is to inculcate the habit of savings in the constituents.21. The main functions of this deptt are: a) L/C dealing. Internship Report on NBP. There is no restriction on the withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder.6 Cash This deptt also deals with cash. It discourages unnecessary withdrawals from the deposits. 3.
3 Foreign Remittance dealing. taxes etc. security.22. Balakot branch Balakot 55 . Internship Report on NBP. Cash Department: “To facilitate people in the payments of their bills and taxes and repayments of cash” There are two main functions of cash department. Payment ii. 2. Dividing an organization into different parts according to the functions is called departmentation.1 L/C dealing NBP is committed to offering its business customers the widest range of options in the area of money transfer. So NBP Balakot Branch. This is very important function of this deptt. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for.22. BALAKOT NBP. Receipts Payments are the function that they pay their cheques and pay cash. 3.17 Cash Department General Banking Department. i. euro account etc. With competitive rates. and ease of transaction. Receipts mean collection of utilities bills.22.2 Foreign currency account dealing: This deptt deals with the foreign currency accounts which mainly include dollar account. 3. i. 3. B) DEPARTMENTATION OF BALAKOT BRANCH. NBP Letters of Credit are the best way to do your business transactions. 1.Balakot is divided into two main parts. ii. 3.c) Foreign Remittance dealing.
v. Computer Department. iv. Issuing of payment order. Issuing of demand draft.18 General Banking In this section of the bank the general banking function is performed. ii. Issuing of call deposit. 3.3. Internship Report on NBP. It is divided into five departments Marketing Department Remittances Department.. Issuing of Telegraphic transfer. Advances Establishment Department Department.1 Remittances Department: The objective of this department is:“To transfer the money of people from one place to another place in safe and comparable way” The main functions of this department are: i. iii. Clearing Department. Issuing of Mail transfer.18. Balakot branch Balakot 56 .
Pension payments etc. Closing and scrolling of government collections. Two type of clearing books are maintained. vii.18. 3. The objective of Advances Department is “To facilitate people by giving short term and long term loans on easy terms and conditions”. which advances money to borrowers.18. In word clearing books: The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. The main function of this Department is to take surplus money from the people at low rates and lend this money to borrowers at high rates to earn profit. 3. Internship Report on NBP.3 Clearing Department: A clearinghouse is an association of commercial banks set in State Bank of Pakistan for the purpose of interchange and settlement of credit claims. ii. The objective of this department is to “To facilitate customers for payment their Cheques of other banks”.2 Advances department: Every bank has a department. All detail of the cheques are recorded in this book.vi. Balakot branch Balakot 57 . i. Out word clearing book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the banks have delivered to other banks.
the General Banking information about NBP i. the departmentalization of NBP as well as the departmentalization of NBP Balakot Branch.18. Dealing Western Union. Main functions of this department are: a) b) c) 3.4 Computer Department: The objective of this Department is to facilitate customers in payment of their cheques”. Internship Report on NBP. Issuing bank statements. Balakot branch Balakot 58 . Employee’s bonuses etc. 3.18.e the services.19 Keeps the record of attendance of employees. The main objective of this department is to “To regulate bank business”.3.5 Establishment Department: This department mainly deals with the branch employees. Summation We discussed in this chapter. The next chapter is about the SWOT Analysis and Financial Analysis of NBP. The main functions performed by this department are: a) b) c) d) Checking balance. Deduction from balance on clearing cheques. Employee’s salaries distribution.
com. 2004.services 2. July 20th. 13. Balakot branch Balakot 59 . President Office.nbp. June 21.pk .REFRENCES 1. Head Office National Bank of Pakistan Karachi Internship Report on NBP. 2004. http// www. Department. Circular No. NBP Main Branch Peshawar 3. 2002.
Internship Report on NBP.CHAPTER # 4 SWOT ANALYSIS 4. Neutralizing it threats. 3. managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. Balakot branch Balakot 60 .” “The overall evaluation of a company strengths. Exploiting an organizations opportunities and strength. opportunities and threats is called SWOT analysis. opportunities. and threats SWOT analysis is careful evaluation of an organization’s internal strengths and weakness as well as its environment opportunities and threats. SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context. weakness.” In SWOT analysis the best strategies accomplish an organization’s mission by: 1. weaknesses.1 INTRODUCTION To carryout the SWOT and Financial Analysis of NBP through the help of calculating necessary ratios in this section. Avoiding or correcting its weakness. “SWOT analysis is a situational which includes strengths. 2. opportunities and threats that affect organizational performance. weaknesses. SWOT analysis is an acronym that stands for strengths. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses.
2. 4.6 STRICTLY FOLLOWED RULES & REGULATION: Internship Report on NBP. 4.2.2 ALTERNATE DUTIES IN SBP ABSENCE The NBP performs additional services for its customers as well as the other bank customer in the absence of SBP.3 MORE DEPOSITS THAN OTHER BANKS NBP has the relative competence in having more deposits than the other bank. it has broad-basses network of branches throughout the country also more than one branch in high productive cities.5 BROAD NETWORK The bank has another competency i.e.4 EMPLOYEE BENEFITS The employers at NBP are offered reasonable monetary benefit. lacking it.2.2.4. 4. This is because of the confidence the customer have in the bank. The customers are provided services at their nearest possible place to confirm customer satisfied. This serves as an additional benefit and competency for the bank and a source of motivation for the employees. Normally two bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha.2 STRENGTH 4. Balakot branch Balakot 61 .2. 4. The additional value services as the privilege for the bank. 4.1 OLDEST INSTITUTION: NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is strength from this plus point as customers have more confidence in the bank.2. The bank being the privileged and oldest bank in banking sector of Pakistan enjoys this edge over all others.
and between the manager and employees. etc on a competitive way. as they are highly skilled Professionals with background in business administration. economics etc.2 NBP UNDER POLITICAL PRESSURE The strong political hold of some parties and government and their dominance is affecting the bank in a negative way.3 Internship Report on NBP. 4. These professional competencies enable the employees to understand and perform the function and operation in better way. 4. 4.3. services. which leads to uneven and adjusted feeling in the bank employees. Hence lacks far behind in marketing effort .2.2.3. 4.2. banking.A need for aggressive marketing in there in the era marketing in now becoming a part of every organization.8 HEALTHY ENVIROMNMENT The working condition in the NBP branch here is very conductive and favorable for better output.9 RELATION BETWEEN STAFF AND OTHER EMPLOYESS The bank enjoys a good plus point when it comes to the employee manager relationship the hearing as removing of discrepancies if any. The disciplined environment at NBP bolsters its image and also enhances the over all out put of the organization.3.7 PROFESSIONAL COMPETENCE The employees at NBP here have a good hold on their descriptions.3 WEAKNESSES 4.1 LACK OF MARKETING EFFORT: The bank does not promote its corporate image.The employees at NBP are strict followers of rule & regulation imposed by bank. Balakot branch Balakot 62 . 4. They sometime have to provide loan under the pressure. The informal environment affects the performance of the employees in a positive way.4. between the employees.
3.4 LACK OF FINACIAL PRODUCT The bank falls far behind when the innovative and new schemes are considered. 4.6 LACK OF COMPUTERIZED NETWORK The bank lack the strength of being powered by the network of computers. 4.3. Balakot branch Balakot 63 . The bank has deficiency to operate in the stages of rush hours where the people find them services entangled in a situation of nowhere because they are not well served. It has not been involved in the tug of war between the competitors to the accounts and strengthens the existing customer base. 4. 4.7 LACK OF MODERN EQUIPMENT Internship Report on NBP. This adds to the negative factors. which have saved time. the employees have currently. This would add to the strength if it were powered by network of computers.FAVORITISM AND NEPOTIS The promotions and bonuses etc in the bank are often powered by senior’s favoritism or dependupon their wills and decision. which denominate the employees thus resulting in affecting their performance negatively. the bank is founded out to be a total flop to handle the mob of people peaking from windows and doors.3. This stands out to be the major incompetence and weakness of the banks. energy and would have lessened the mental stress.3.5 INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS During the rush hours.
Other banks have already initiated.3. Balakot branch Balakot 64 . Even if there is any equipment they lack to fall in the criteria of being rearmed as update and upgraded 4. 4.8 UNEVEN WORK DISTIBUTION. The bank has to take initiative in this regard or will find itself far back in competition. NBP can utilize the electronic banking opportunity to ensure on line banking 24 hours a day. Internship Report on NBP. 4. now the time has arrived when the NBP must realize it and take on step to cater an ongoing demand. there are lot of opportunities in this regard.4.4 OPPORTUNITIES 4.2 MICRO FINANCING Because of the need for micro financing in the market.5 THREATS 4. More emphasis is now given to avail the modern technologies to better the performances. which server as a demotivation factor for employees performing above average work.1 ELECTRONIC BANKING The world today has become a global village because of advancement in the technologies. 4.The bank lacks the modern Equipment that is note counting machine computers. These foreign banks are equipped with heavy financial power with excellent and innovative ways of promoting and performing their services. This would give a competitive edge over others. The workload in NBP is not evenly distributed and the workload tends to be more on some employees while others abscond away from their responsibilities.4.5. especially in communication sector.1 EMERGENCE OF NEW COMPETITORS The bank is facing threats with the emergence of new competitors especially in terms of foreign banks.
6. hence affecting the over all performance of employees negatively. 4.4 CUSTOMERS COMPLAINTS There exists no regular and specific system of the removal of customer complaints.4. The NBP offering very low charges an demand draft.2 Potential entry of new competitors: Internship Report on NBP. Now a day a need for total customer satisfaction is emerging and in their demanding consequences customer's complaints are ignored.2 POLITICAL PRESSURE BY ELECTED GOVERNMENT The ongoing shift in power in political arena in the country effects the performance of the bank has to forward loans to politically powerful persons which create a sense of insecurity and demoralization in the customer as well as employees. Balakot branch Balakot 65 .3 DOWNSIZING The bank is currently acting upon the policy of downsizing which threaten the environment of the bank Employees feel insecurity in doing their jobs and work. These competitive strategies may be lowering prices.5. mail transfer and give other additional services to the customers and to the Nation.6 COMPETITIVE ANALYSIS Porter’s five forces model: This approach is widely used for competitive analysis. 4. 4.1 Rivalry among competitive firms: It is a very powerful force among the competitive forces the strategies pursued by one firm can be successful only to extent that they provide competitive advantages over the competitor. It is because of the high intensity of competition among companies there five main competitive forces.5. 4.5. best quality series. Because NBP is a “Nation’s Bank”. 4. telegraphy transfer.6.
Whenever new firms ca easily enters a particular industry. They charge low charges on remittances. or buy in volume. Balakot branch Balakot 66 . their bargaining power represents a major force affecting intensity of competition. Internship Report on NBP.6. B/C at offers good quality services to customers. quality. the competition increases. patents etc can stop new firm to enter into the business as per Banking industry is concerned this market is already very situated in Pakistan and there are banks with quality services and low charges. People concentration high rates so that’s why sawing PLS accounts are more then current accounts.6. The next examples will ATM which substitute presenting cheques at counter and encash it. It must improve in this field to compete the competitors. So there is no threat to NBP from potential entry and NBP is also a public sector bank because of that no other new bank not takes over it. Now the number customers in Pakistan for banks are very high. 4. There may be some other product can be substitute the product of that industry. especially when there are a large number of suppliers. 4. In this field NBP is very good.3 Potential Development of substitute products: This is the third factor affecting the competitions. So that’s it is a competition to other banks.4 Bargaining Power of Suppliers: The bargaining power of supplier affects the intensity of competition.5 Bargaining Power of Consumers: When customers are concentrated or large. In case of banks the suppliers are customers they supply the money to banks. and safety. tariffs. Now it must offer good services and products to their customers to attract them to come to NBP. 4. NBP have a large number of customs. If they offer low rates than GPOs so people will go to deposit in GPOs. Banks offering variety of products and services to their customers.6. Now they must offer good services. The NBP is lacking in this field. The gout restriction. For example banks offering sawing schemes in Pakistan and these schemes are also offered by GPOs in Pakistan so they must compete them in this field. Low charges etc to customers.
Internship Report on NBP. To know how NBP can compete well and how to maintain its position in the market as a best services organization.4.7 Summation The summary of is SWOT Analysis of NBP. Balakot branch Balakot 67 .
always involves the use of various financial statements primarily the balance sheet and income statement. Balakot branch Balakot 68 .s holder equity pre tax profit After tax profit 6 5 71759 72609 91486 6 18134 14279 11959 11378 10358 9987 9009 4198 6045 2253 3016 1149 1023 461 520 31 2135 0 9203 (1260 996 0 ) -------3081 -----2799 ------- Internship Report on NBP. The balance sheet summarizes the assets. though varying according to the particular interests of the analyst. 5.CHAPTER# 5 FINANCIAL ANALYSIS 5. and thee income statement summarizes revenues and expenses of the over a particular period of time. A conceptual framework for financial analysis provides the analyst with an interlocking means for structuring the financing.1 INTRODUCTION Financial analysis. Years Items Total assets Deposits Advance 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 27177 9 17047 6 62548 85094 7233 47186 43280 41508 37163 35040 41768 40089 36923 32018 0 3 9 6 6 0 0 6 0 39556 36286 34961 31649 29475 27339 25486 23503 20828 8 6 7 3 4 1 3 2 3 16099 14054 17031 14031 12255 10935 10559 85854 81528 8 9 6 8 10235 10948 10820 95649 5 6 7046 7842 s 0 7 9 Investme 16619 14352 nt S. The fact that it is the best bank of Pakistan is obvious from the performance shows in the table below.2 National Bank of Pakistan Ten Years Performance at glance 1 NBP is one of the leading bank in Pakistan. and owner’s equity of a business at a point in time. liabilities.
in order to make rational decision in keeping with the objective of the organization. which relates two piece of financial data by dividing one quantity by the other we calculate ratios because in this way we get a comparison that may prove more useful than the raw number by themselves. If we draw a graph this will shows that the graph is upward trend.20 % 0 0 0 ------- ----- ------- -------0. The type of analysis varies Internship Report on NBP. for that purpose the management use analytical tools.00 % 1555 -- ------ ----- 1537 1463 23730 21549 20667 From the above table it is very much clear that the NBP performance is going higher and higher total assets are at the crest in 2004.Earning per share Return on assets No of Branche s No of Employe es 13272 12195 15163 15351 15541 15785 18096 (Source Annual reports 1998. Balakot branch Balakot 69 . Profit is increasing from year to year.3 RATIOS ANALYSIS 2 Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relation ship between the items of balance sheet and profit and loss account.08 0. But this bank can compete and now NBP is the best bank of year.2005) 1213 1204 1245 1428 1431 1434 1468 2% 10.24 0. 2000. 2004 .21 0.30 % 0. The business itself and outside providers of capital (creditors and investors) all undertake financial statement analysis.49 1.80 % 1.40 % 3. 5. 2002. the financial analyst needs to perform "checkups" on various aspects of the business financial health. To evaluate the financial condition and performance of the business entity. NBP decrease the number of its branches and employees because of automation and large networks of other banks.23 5. A tools frequently used during these checkups is a financial ratio analysis.
5. there fore confine to the evaluation of the firm's liquidity positions. 5. (Capital structure relationship). Their analysis will.3 Investors Investors who have invested their money in the firms share are most concerned about the firm steady growth in earning.1 Parties interested in ratio analysis 5.1. Long-term creditors do analyses the historical financial statements but they place more emphasis on the firm's projected financial statement to make analysis about its future solvency and profitability.3.3.1. 5.3. its ability to generate cash to be able to pay interest and repay interest and repay principal and the relationship between various source of funds. they concentrate on the analysis of the firm's present and future profitability.3.according to the specific interest party involved.1. They analysis the firms profitability over time.1. 5. Balakot branch Balakot 70 .4 Management. The nature of analysis is depending at the purpose of analyst. An organization would be interested in every aspect of the financial analysis. As such.3. Internship Report on NBP.2 Suppliers of long-term debt Suppliers of long-term debt on the other hand are concerned with firm's long-term solvency and survival.1 Trade creditors Trade creditors are interested in firm's ability to meet their claims over a very short period of time. They are also interested in the firms financial structure of the extent it influence the firms earning ability and risk. It is their overall responsibility to see that the resources of the firm are used most effectively and efficiently and that the firm's financial condition is sound.
Balakot branch Balakot 71 . management needs to take financial analysis in order to plan and control effectively. It is calculated as cash Ratio=Cash/current liabilities Internship Report on NBP.So thus management employee financial analysis for the purpose of internal control and to better provide what capital supplier seeks in financial condition and performance from the business and from an internal control standpoint.4. 5.4 Ratios analysis Ratio is the comparison between two figures of balance sheet and income statement. 5.1 Cash Ratio: “This ration is obtained by dividing cash by current liabilities / liabilities”. This ratio shows that the cash is enough for payment of current liabilities or not.
Because of high advances cash is less to cover its current liabilities.118 0.19 0. 5.Table 3 Year Cash Ratio Graph 1 0.134 1998 1999 2000 2001 2002 2003 2004 Cash Ratio 0. This is calculated as.05 0 1997 1999 2001 2003 years Cash Ratio It means that how much cash is available for payment its current liabilities.2 Gross Profit Margin Ratio: “This ratio shows the profit margin in sales/ revenue”.4.15 0.169 0. Balakot branch Balakot 72 . This ratio of NBP shows a downward trend.2 0.25 0.22 0.15 ratio 0.21 0. Gross profit/ interest earned Internship Report on NBP.1 0.
3 Net Profit Margin: 73 Internship Report on NBP.6 51. Balakot branch Balakot . Profit margin relates profit of the organization to its sales (interest earned in case of Bank).4. From calculation it is very much clear that the gross profit margin ration have upward trend which shows that how much they using their deposits to earn interest.67 46. This shows the profit of the firm relative to its revenue.59 39. As it is clear that the ratio gong high this is the indication of good performance.9 1998 1999 2000 2001 2002 2003 2004 Gross profit margin% year 2004 2001 1999 1998 0 Gross profit margin% 20 ratio 40 60 G.Table 4 Year Gross margin% Graph2 profit 24.7 28. It is a measure of the efficiency of the firm’s operations too.9 29. 5.8 27.
And the trend is upward.4.18 21. It is because of high advances the NBP has given to the people. 5. Balakot branch Balakot 74 .This ratio measures the firm’s profitability of sales/ interest earned after taking account of all expenses and income taxes. This ratio can be calculated as: Net profit margin ration = Net Profit after taxes / interest earned Table5 Year Net Margin % Graph3 profit 0.67 3. It tells us a firm’s net income per rupee of revenue.4 Return on Equity: Internship Report on NBP.2 1.55 3. As the trend is upward it shows the high profits in revenue per rupee in case of NBP.6 1.6 1998 1999 2000 2001 2002 2003 2004 Net profit Margin % 30 20 10 0 19 99 20 01 20 04 ratio Net profit Margin % 19 98 year Explanation: from the calculation and graph it is very much clear that the performance of NBP is very good.7 1.
This ratio is calculated as: ROE=Profit after taxes/Share holder’s Equity Table6 Year Return Equity Graph4 on 0. It tells us the earning power on the shareholder’s investments. It is because of high investments by NBP and effective expense management.7 6.1 1998 1999 2000 2001 2002 2003 2004 Return on Equity 30 20 10 0 98 99 01 04 ratio Return on Equity 19 19 20 year Explanation: from the calculation it is clear that the ROE Ratio have an upward trend of NBP.3 0.55 9.67 5.2 2. ROE compares net profit after taxes to the Shareholder’s Equity.4 23. It is because of high net profit they have earned.5 Return On Assets: Internship Report on NBP.4. Balakot branch Balakot 20 75 . 5.Dividing profit after taxation by shareholder’s equity.
That is why they are earning very high profits.6 Investment deposit Ratio: Internship Report on NBP. It is calculated as: Profit after Tax/Total Assets Table7 Year Return assets on 0.01 0.008 0.16 0. 5.This ratio shows the efficiency of organization that how efficiently utilizes their assets. Balakot branch Balakot 76 .124 0. This shows that how efficiently they investing the assets that’s why they are earning high profits.5 ratio 1 Return on assets Graph5 From calculation it is clear that this ration of NBP is going high and high. It shows that NBP using it’s assets very efficiently.225 0.9 1997 1998 1999 2000 2001 2002 2004 Return on assets 2004 year 2001 1999 1998 0 0. This ratio relates profits to assets.52 0.4.
Internship Report on NBP.94 20. This may reduce its profits.This ratio shows the comparison of investments and deposits.9 37.66 42.01 1998 1999 2000 2001 2002 2003 2004 Graph6 Investment Deposit ratio 50 40 30 ratio 20 10 0 1998 2000 year 2004 Investment Deposit ratio Explanation: From above table and graph it is very much clear that NBP are using their deposit very efficiently. But can be fruitful in long term. The ratio has an upward trend. This is calculated as. Investment deposit Ratio=Investment/deposits Table8 Year Investment Deposit ratio 42. Now it is the retraction from top management to invest 30% of its deposits. Balakot branch Balakot 77 .7 31.54 39. which shows the performance of NBP is very good. And earning high profits.03 22.
This calculated as. Total debt/shareholder’s equity Internship Report on NBP.5.4.7 Debit to Equity Ratio: This ration shows the amount contributed by creditors and shareholders. It is computed simply dividing the total debt of the fire by its shareholders equity. Balakot branch Balakot 78 . It shows to what extent the firm is using borrowed money.
5.7 28. The lower the ratio the high the level of the fire’s financing that is being provided by the shareholders.Table9 Year Debt to equity ratio Graph7 32.9 22.5 1998 1999 2000 2001 2002 2003 2004 Debt to equity ratio 2004 year 2001 1999 1997 0 Debt to equity ratio 20 ratio 40 From the table and graph it is clear that this ratio is decreasing which show the high efficiency of NBP.8 Debt to assets ratio: This ratio shows that to which extent the organization assets are financed by debit.6 24.4 30.42 31. It is calculated as. Balakot branch Balakot 79 .4 20.4. In 2002 it was high but in 2004 it decreases to 24. Here the creditors are interested in low ratio.6 which is a good sign.5 from 28. Total debt/total asset Internship Report on NBP.
and deposits are the liability of customer on bank 5.9 Advances deposit Ratio: This ratio show that how much efficiently the bank advances the deposits of their customer to borrower.92 0.94 ratio 0.94 0.96 0.92 0.954 0. Advances deposit ratio = Advances/ deposit Table11 Internship Report on NBP. This ratio serves the similar purpose to the debt to equity ratio.Table1 Yea r Debt to asset ratio Graph8 0.944 0. From calculation it is clear that the ratio is decreasing which show low risk. This ratio is high because of more deposits in the bank. Balakot branch Balakot 80 .98 0.9 0.4.88 1998 1999 2001 2004 year Debt ratio This ration is directly related to risk high ratio means high risk and low ratio means low risk.957 0. It is calculated as.954 0.961 1998 1999 2000 2001 2002 2003 2004 Debt ratio 0.
Balakot branch Balakot 81 .2 0. It is calculated as.443 0. The next side of the picture is that the people will think that is risky to deposit the money in the bank.487 0.414 0. Here high ratio is required.Year Advances deposits ratio Graph9 1998 1999 2000 2001 2002 2003 2004 0.5 0. Which means the efficiency on NBP is good and they use their deposits efficiently in advancing to borrowers.3 ratio 0.1 0 1998 2000 year 2004 Advances Deposits ratio From above table and graph it is clear that the ratio is going high.416 0.399 0. 5.406 Advances Deposits ratio 0.4 0.387 0.10 Assets Turnover Ratio: The relationship of net sales /revenue to total assets is known as the total asset turnover ratio. Total revenue / total assets Table12 Year 1997 1998 1999 2000 2001 2002 2004 Internship Report on NBP.4.
11 Price to earning Ratio: This ratio show the relation ship b/w face price per share and earning per share.099 0.Assets ratio turnover 0.075 0.093 0.079 0. This ratio is calculated as: Price to earning ratio= face price of share/earning per share Internship Report on NBP.4. Balakot branch Balakot 82 . We can see that the ratio is going high and which is a good sign and shows that NBP is utilizing its assets efficiently. 5.079 1.5 ratio 1 1.097 0.07 Graph10 Assets turnover ratio 2004 year 2001 1999 1998 0 0.5 Assets turnover ratio Explanation: This ratio shows us the relative efficiency with which a firm utilizes its total assets to generate revenue.
97 to 1998 1999 2000 2001 2002 2003 2004 Graph11 Price to earning Ratio 2004 ratio 2001 1999 1998 0 20 year 40 60 Price to earning Ratio As from the above calculations it is clear that the ratio decreased tremendously in 2004. 5. It is b/c of increase in earning per share. Internship Report on NBP. From calculation it is clear that it have a downward slope.4 2. It is calculated as.12 Dividend yield: Anticipated annual dividend divided by the market price of the stock.6 0.4.7 47. Balakot branch Balakot 83 .25 1.Table13 Year Price earning Ratio 2.62 3. it is because of the reason that earning per share increased resulting in decreasing price to earning ratio.17 3.
Dividend yield =Total dividend/ market price Table14 Year Dividend Yield Graph12 0.2 0.45 0. It is because of high market price and low dividend.23 1997 1998 1999 2000 2001 2002 2004 Dividend Yield 4 3 2 ratio 1 0 1998 2000 year 2004 Dividend Yield Year 2000 was best as far as dividend yield is concerned.3 3. From the above table it is clear that the dividend is increasing but in 2004 it is low.4.1 2. Internship Report on NBP. In year 2001 increase in outstanding shares decreased dividend yield.13 Deposit growth Ratio: This ratio shows the growth rate of deposits. but due to increase in total dividend in 2002 it has recovered to 2.45.63 2. it was mainly due to the decreased amount of number of shares outstanding.32 1. 5. Balakot branch Balakot 84 .
This is calculated as Current year deposits. Table16 Internship Report on NBP.4.14 Advances Growth Ratio: This ratio shows the growth rate of advances.08 0.08 0.07 0. 5.037 0.08 0.previous year advances / previous year advances.1 0.06 ratio 0. It upward slope which shows that the people trust NBP and its management that our money is in safe hands. Balakot branch Balakot 85 .04 0. The reason for this good move is only govt support to this bank.02 0 1998 2000 year 2004 Deposit growth ratio Explanation: This ratio shows an excellent move from 1997 to 2004.07 0.09 1998 1999 2000 2001 2002 2003 2004 Deposit growth ratio 0. This is calculated as Current year advances.1 0.previous year deposits /previous year deposit Table15 Year Deposit growth ratio Graph13 0.
15 Advances Growth ratio 0.Year Advances Growth ratio Graph14 1998 1999 2000 2001 2002 2003 2004 0. 5. For this a tool is used which is Z=0.2 0 19 99 20 01 ratio Advances Growth ratio 20 04 19 98 -0.006D = 0. Balakot branch Balakot 86 . One a company will be successful and next year it will be fail. Only in 2002 it is negative b/c of high advances in 2001 and low advances in 2002. The ability to predict corporate failure before the event has been the holy grail of financial analysis for move than 50 years.014B + 0. That’s why it is declare the best bank of the year 2004.2 year Explanation: from calculation and graph it is clear that NBP show a good growth rate in respect of advances.23 0.14 0.04 0.21 -0.5 Predicting failure: Where one wants to lend money to a company that is about to fail. The over all performance of NBP is very good.4 0. This shows that NBP is utilizing the deposits efficiently.033C + 0.010E Where Internship Report on NBP.17 0.012A+ 0. The collapse comes much unsaddled.12 0.
6 Summation Internship Report on NBP.001 = 0.010 + 0.014) + 0.026) + 0.010 (0.11) = 0.006(0.014(0.86) + 0.033(0.0008 + 0. The profit before tax and interest in the third ratio indicates the contribution of a company’s profitability toward the end index score. In fourth ratio the investor’s view of the further potential of the company is set against total debt. If the retained earning is greater the greater is the extent of the company’s self-financing. C = Profit before interest and tax ÷ total assets D = capitulation ÷ total debt E = Sales ÷ total assets Now Z score blow 1. and a score of over 3 was seen as a clean bill of health the advantage of this approach is that using a combination of several financial ratios makes it less likely that the result will be affected by manipulation of financial statements.8 and it is an indicator of failure 5.A = net current assets ÷ total assets. Predicting failure of NBP .012(.1998.13) +0. If the portion of current asset is greater compared with total assets the healthier is shortterm position. B = Retained earnings ÷ total assets.0005 + 0.8 was an indicator of probable failure. Balakot branch Balakot 87 .0129 This shows that the calculation is below 1.0004 + 0. Z = 0. The last ratio shows the ability of the company to use its assets to generate revere.
We discussed in brief the financial analysis of NBP. Calculating various ratios. 2004) Annual Report. (1998). National Bank of Pakistan (2000. Balakot branch Balakot 88 .ratio/. Financial management. 2. REFERENCES 1. interpretation of these ratios. Foundations Of Financial Management. Html Internship Report on NBP. Page 126-150 3. WEBSITE: www.onlinewbc. Stanley B and Hirt Geoffrey A (1994). Van Horne James C and JR Wachowicz John M. Prentice Hall Publication. and different tools and techniques is used in order to arrive the conclusion. Page 121-148 4. Block.gov/docs/finance/fs.
Administrative analysis.2 Poor record management and filing system During my internship I observed that filing system of branch is not good. On one hand some employee have to work all day without relaxing while some others have nothing to do at all. PROBLEMS AT THE BRANCH Customer Satisfaction In NBP customer dealing is will.CHAPTER # 6 FINDING AND OFFER CONCLUSION 6. These analysis are mainly based on my practical experience at the NBP. This not only creates confusion among employees but also hurting and disturbing for overall setup of the bank. Internship Report on NBP.2. Personal management’s analysis. Which are as under.2 6.3 Unequal distribution of work Work is not equally distributed.1 INTRODUCTION I have divided this section in four parts.1 Problems at the branch. And above all it results in dissatisfaction among customers as well. Balakot branch Balakot 89 . 6.2.2. 6. Function analysis. When certain record is needed the staff has to struggle to find it out and a lot of time is wasted. It’s quite hard for a new customer or potential customer to get the required information. • • • • 6. but during rush hour the customer has to wait for a long time for their turn.
They speak loudly about the account position and while getting clearance of cheque the person can Internship Report on NBP.2. 6. 6. In theoretical terms it provides basis for communication with one another but in practice it is not exercised because an employee at high level cannot get straight away to manager or SVP and ask him about of his problem faced by him. Such visits are important in informing and perusing the existing and potential customers about the products and creating a sense of belongingness with them.1 FUNCTIONAL ANALYSIS Formal Organization Formal organization includes the activities of two or more person. In NBP. especially during the rush hours. It provides base when people are able to communicate with other. 6.3.3. In this formal organization of NBP the activities are carried out in a more formal way.3 Bank duty to maintain secrecy.3.3 6. Bernard referred to an organization as a formal when the activities of two or more persons are coordinated towards a given objective. we find a formal organization. which are cautiously determined groups and coordinated towards a given objective.2 Difference between theory and practice A vast difference exists between theory and practice and NBP has written procedure but practical work done by employees is a bit different from written procedures. when they have common purpose and they are willing to work. because first he has to talk to his immediate superior and follow a proper channel of communication. They don’t care about maintaining secrecy. Balakot branch Balakot 90 .4 Marketing visits A useful mode of contact is through personal marketing visits.6. The formal organization comes into being when people are able to communicate with one another or willing to act and share a purpose.
4 6.4 Excessive paper work It is notified that due to the lengthy procedure of paper work the bank employee are over burdened.3.easily get the whole information from the ledge. compensated or promoted. The deposit clerk must be careful while passing any cheque. NBP is more interested in increasing its number of account irrespective to its deposit. It is very important for an organization that nature of the job is described and job specifications are mentioned. They are unable to give proper attention to the clients and face difficulties in getting their job done.6 Delegation of authority Manager has very limited authority. One reason for lengthy procedure and excessive paper work in the bank is the lack of computerized technology. 6.1 ADMINISTRATIVE ANALYSIS Job analysis is not effective Only on the basis of job analysis it can be decided how a right person can be hired.4. The main reason behind it is that bank does not provide personalize service to all the account holders and does not improve its quality and services 6. when the manager is not present in his office. In case of advance he has to take the approval of general and regional manager. trained. he has to take the approval from his management authority i-e. In this regard another shortfall is in giving the information about the balance on telephone. This creates Internship Report on NBP. which does not emphasize on number of accounts but on greater amount of deposits. This discourages both customer and officers because they have to suffer a lot 6.3. the customer having to wait for hours. 6.5 More accounts fewer deposits. Efficient banking is one. The other problem is created.3. Balakot branch Balakot 91 . Most of the employees are simple graduate and do not have proper background about their job.
2 Carelessness in opening of account When customer comes to open an account. 6. It is important because in case of overdraft by mistake or anything which places his accounts in debit it will be difficult to trace him.4. People with simple or complex responsibility are getting the same salary and facilities. they all learned things on the job. As the worker finishes his training.4 Low Profit Rates Most of the customers shifted their account to the National Saving Center because of the low rates of saving deposit discourages the customers. 6. In NBP salaries are given according to the seniority and grades.5 Poor job rotation.4.4. In this case the bank will be in awkward position.problems both for organization and for the employees. 6. Balakot branch Balakot 92 . A person placed in one-department remains their forever. Balakot. Bank should increase their profit rates to attract customers. the staff does not bother to check his/her place phone number and permanent address. Internship Report on NBP. The newly recruit should be rated in all department of the banking in order to get familiar with working of different departments so that when they get a responsible position they have know how of the whole system.4. There is absence of job rotation in NBP Balakot Branch. Training is generalized rather than specialized. On the other hand he may be involved in any fraudulent activities against the bank. Job rotation is very important for employee especially for those who are newly recruited. This creates dissatisfaction among employees. 6. In the Balakot Branch. he is inducted into a specific field without having great deal of knowledge about the field.3 Lack of specialized training NBP does not provide adequate facility of specialized training to their staff. It reduces career opportunities as well boredom and in the end results in career plaguing. Balakot the newly recruited employee training was not imparted.
It has been noticed that the training program of NBP is not adequate.4.e. Once the candidate is selected and placed on the respective job. It becomes essential to train him adequately for the task. grievance handling and taking immediate initiative in crisis situation to take major decision affection the future of the bank and banking community. 6.6. 6. 6.2 Developing Managerial Leadership Leadership is a practical term of visible.1 PERSONAL MANAGEMENT ANALYSIS Need for better training program Need of training is greatly emphasized all around the world. Internship Report on NBP.5. They should learn new methods for motivating customers. If hard work and performance of employees is not recognized and appreciated they become dishearten which results in decline in performance. but also in people terms i. recruiting. The training programmed of the bank should include scientific techniques to improve the decision-making and interpersonal as will individual needs of the employee both specialized to fresh as well as on job to maintain the high standards of service.5. Training of the personnel is part of human resource management. Manager is not only responsible for their own units in business.4.5 6.7 Lack of appreciation Another very important thing which is ignored in the bank is appreciation if the employee on their good performance.6 Delays in Loan Advancement It has been observed that there is delays in sanctioning of cases form the head office. which results in customer dissatisfaction. clear on objective and communicating better control on financial and administrative matters. training. Balakot branch Balakot 93 .
safe custody.3 Recruitment policy Human resources are the lifeblood of the organization. It is done either that person is needed more on the other branch or for improving his skill variety.5. The Bank employees are doing very little on their own to explore the possibilities of selling banking services to them as a marketing contributor. 6. travelers cheques. It is the policy of the Bank to transfer each employee 3 to 4 years.5. The persons selected through these channels are infantile and do not work for the betterment for the bank. Bank is not following its recruitment policy properly due to favoritism. indulgence of political pressure add salt to the wounds. so the new young person having high qualification remains behind for quite a lot of time. 6. As the concept of promotion is attached with better in terms of greater responsibility. The entire Bank community should make a conscious effort in addition to their normal Internship Report on NBP. which gives a sense of deprivation to the deserving employee and their efficiency is affected. Both the top authority and staff union tries their best recruit their favorites. Thus a better and impartial policy of promotion needs to be followed. nepotism and political pressure. 6.5 Transfer Transfer means when a person is shifted from one place to another place.6.5.4 Promotions promotions in NBP is purely on the basis of seniority. depositing license fee and variety of other functions and variety of other people with whom the Bank has no account or regular business relationship.6 Marketing at desk Bank employee come in daily contact with many people who happen to deal with the casual remittance. Balakot branch Balakot 94 . pensioners. If the personnel are recruited carefully they can become asset to the organization in the case of carelessness a liability on the organization. greater skills and increased rate of salary. Top management and staff union put pressure for the promotion of their favorites. more prestige.5.
That is mainly concern with the problems. The next chapter is about the recommendation and suggestion of NPB. To avoid this minor dissatisfaction and tension in the mind of customer. Balakot Branch. The market opportunities are hidden in every dealing a banker handles. needs and requirements. Balakot.6 Summation Discussed the review of NBP. it is recommended that the bank should provide brochures etc containing information in details. Balakot branch Balakot 95 . rules and regulations at the branch.work to explore the possibilities of selling banking services to them. and deficiency of the service. 6. Some general information should be placed in information notice board on the entrance where customer can see it easily or it should be self-attractive.7 Lack of business communication There is no proper way to give information to their customer.5. the question is that if he has the art and urge to seize such opportunities. Internship Report on NBP. 6.
For this purpose these staff colleges should be reorganized and their syllabus should be made in such a way to help the employee understand the ever-changing global economic scenario. which provides policy guidelines and ensures that the money market operates on sound professional basis. They lack the necessary training to do the job efficiently and properly.2 Professional training NBP staff lacks professionalism.1 INTRODUCTION NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. which in my view can add some input for efficiency and better performance of NBP as an organization in general and City branch in particular. Banking council of Pakistan should also initiate some programs to equip the staff with much needed professional training. This procedure has been modernized with the passage of time with a view to streamline the approach and underlying procedure for effective overhauling of its own capabilities so as to bring them at par with international practices. The main regulatory body is State Bank of Pakistan. While the head office specifies the whole procedure of function and operations. The recommendations are as follows: 7. 7. Although staff colleges in all major cities but they are not performing well. Balakot branch Balakot 96 .CHAPTER # 7 RECOMMENDATIONS & SUGGETIONS 7. Here I am giving some suggestions. Internship Report on NBP.3 Delegation of authority Employees of the bank should be given a task and authority and they should be asked for their responsibility.
7. salaries and pensions of federal personnel or the bank should do these functions in the evening time. Especially a telephone operator should be appointed. 7. Some of the employees are continually serving at the same post. To overcome this problem it is suggested that a special section should be made inside the branch.5 To Over Come Problem of Space and Furniture In the critical analysis this. They are simply rotated at the same branch. problem is discussed. Which should only handle the treasury function. Balakot branch Balakot 97 .7.8 Need of Qualified Staff Required.4 Performance Appraisal The manager should strictly monitor the performance of every staff member. Government should make long-term policies 7.7 Changes in Policies There should not be any abrupt policies change by the upper management. qualified staff should be provided to branch in order to improve the functioning of the branch. Therefore it is recommended that evenly rotation of every employee should take place after every three years in different braches of the bank. Also management should purchase more furniture and arrange them in such a way which provides maximum space and convenient especially in deposit department and there should also be convenient sitting place for customers. All of them should be awarded according to their performance and result in the shape of bonuses to motivated and incite them to work more efficiently. as this practice hurts the customer confidences in the bank.6 Transfer Transfer is not properly carried out. 7. Internship Report on NBP.
12 Installing Validator and ATM Validator machine is used to count the currency notes and its installation will help to eliminate to counting errors and will save time. which will help the bank to improve its revenue position. These charges should be increased to RS 10 per bill to enable the branch to cover their handling costs and make some profit. tough and hard job despite this working resulting in a loss to then Rs 3 to5 per transaction. Only bank commission is charge small amount of mark-up on the overdraft. and it is very tire. the management is required to keep proper security against the card. This branch is situated in the City. 2 to 3 to processes a utility bill. In this area an auto teller machine (ATM) is the need of the hour businessmen can easily check their balance in the bank and also with draw their money conveniently.13 Interest on Overdraft: Overdraft is a short-term credit facility provided by the bank to its trustworthy customers free of interest. which is supported to be the hub of business activates.11 Credit Card National bank of Pakistan should start its operation in credit card. 7. These cards are very helpful for the ordinary customer in general and the business people in particular. 7.7. 7. 7.10 Link with the Head Quarter 100 major branches of NBP should established a direct link with the. This will make the functions and decision making of the management easier and convenient. Balakot branch Balakot 98 .9 Utility Bill Charges Bank gets Rs. through Internet or Intranet. Internship Report on NBP. To make it mores secure and to eliminate the misuse of it. head quarter In Karachi.
Balakot branch Balakot 99 . That can be done by lying off the surplus pool of employee with golden handshakes scheme. because sometime these loans are provided to blue-eyed people of the management and they become a part of bad debts. This was Rs 8 billion in the year 2000. 7.17 Needs to be Flexible in credit Policy As mentioned earlier. Also loans should be given to the small businessmen and the agriculture sector at the low markup rate. It reduces the investment opportunities. The branches that are not much used could also be closed. NBP is very conservative in advances and loans policy.14 Clean Loans Clean loan or clean overdraft is the credit facility extended to the customers to the customers without any security.7. Deposits and Foreign Exchange departments). Every department should be provided a computer with adequate training (especially Advances. That will give positive results in the future.16 Decreasing Administrative Expenses Bank should their administrative expenses. It should adopt flexible credit policy while giving credit to the agriculture sector. These types of small term loans should not be extended to anybody. 7. It is recommended that a small amount of interest should be charge on this amount as well because the bank gas kept-aside the amount for that borrower and can not advance it anywhere. (instead entering the overall daily transactions Internship Report on NBP. 7. 7.18 Technological Advancement I would like to suggest that at least all the main branches of NBP should be fully computerized in order to expedite the dealing process among bankers and their customers. Employee can also be how to control the bank expenses.15 Cash Financing In this mode of financing the amount of credit not utilized by the borrower is remained tax-free.Daily records should be entered directly into these computers.
21 Favoritism and nepotism In the City branch during my internship I saw that when some of the employees are transfer to other places. So this created a lot of over work situation for while relaxation for other. So for a smooth running of an organization proper distribution of work is the hint to be followed. due to their relation with influential people and with top management they can cancel their transfer in few weeks. I observed that the staff relationship was normal other wise but some time I noticed that there existed a little conformity among the staff members. Another syndrome from which the staff suffered was that all of them considered themselves more important than others. 7. I saw that some of the employee worked like ants other sat idle starting here and there. when they are unsatisfied at that place. It will also help in reducing the use of excessive paper work. Balakot branch Balakot 100 . So this sort of attitude is not good because it mars bank image and juniors’ willingness learn and work hard and in the end will hurt the whole team. Not only it will be economical but will also reduce the extra burden of work of the bank. So I suggest that in the organization there should be no favoritism. Some of the officers used to say that if I am absent for a day the bank would stop working. Proper distribution of work prevents the employee from over and under work situation.20 Improper Distribution of Work Proper distribution work leads to success in every organization. It will not only reduce transaction time. 7. nepotism and politics and their transfer and promotion should be made on merit and according to the rules and Internship Report on NBP.after the banking hours). will increase accuracy but will also be efficient as well. During my internship I observed that there was no proper distribution of work in the bank.19 Staff Relationship Good relationship among staff member leads to the peak performances in any organization. 7.
7.regulations of the bank and provided favorable environment to the employee to show their performances. they should arrange the seminar with in the bank and outside the bank. Bank Al-Falah (monthly income earning scheme) and various others.24 Marketing Policy The branch should adopt various marketing strategy and promotion strategy to promote the bank and its product. there is number of employee who have worked on one seat for many a year. Take the example of advances section. how can he be able to show his performances and how can he be able to know the bank customer in a short period of time. Internship Report on NBP.22 Inter Departmental Transfer I watched during my internship that. They should do more advertising through newspaper and media and through channel of personal contacts.23 Foreign currency Account For the internship the place I have selected was City branch. The most important in my opinion is personal marketing. They should introduce various prizing schemes just like Allied Bank. Karamad Scheme. So I thick it is wonderful opportunity for the bank to open foreign currency account. it is the most effective of all when you think in term of branch level. 7. which is my forefather land and I know that from area many people have traveled to other country for different kind of jobs. In advance section if the employee is transfer after sixth month or seven month. 7. Balakot branch Balakot 101 . It can have negative effects motivation of employee who is hard working and intelligent. But on the whole organization level. and I have heard personal complaint about the unavailability of foreign currency account in banks.
7. So I suggest management to install a compliant box in the branch.7.25 Complaints of Customer There should be an information desk to provide the information and to receive the complaints of the customer in the bank. 7.27 Organizational Commitment It is suggested that employees working on daily wages basis should be given some benefits. There is no complaint box available in the branch and not any person appointed to hear the complaints.29 Credit Monitoring The credit department of the bank should carries out vigilant credit monitoring. 7.28 Managerial Leadership In the analysis. and recruit a special person for that guidance of the customer when they are unable to manage some difficulties in banking matters. Balakot branch Balakot 102 . we have discussed the difficulties of the assistant in taking any initiative. They should ensure the proper payment of installments and the mark-up by the borrower. Their salaries must increase according to efficiency. 7. performance and service. therefore it is recommended that the assistants should he given special training to make them ready for the leadership.26 Analysis of the Business: Proper analysis of the business reports should be conducted before extending any type of loan. Every person cannot go to the manager for the complaint because most of the people are hesitant. For this purpose professional training of the stuff member is required. which the other employees are getting. Internship Report on NBP.
33 Car Financing Scheme Another financing scheme with the name of “MARE GARE CAR FINANCING SCHEME” should be initiated This finance scheme will help the general public to buy the car of their choice in easy quarterly installments The bank monitors will do strict monitoring and the car will be hypothecated with the bank against the car loan. SBP regulation for loan approval should be strictly followed. Some of the business community due to law and order situation are now reluctant to keep the fund in their premises and would want to depart with it. Balakot branch Balakot 103 .30 Extended Banking Hours The banking hours may be extended up to six. 7. 7. as he/she will be having more information about the borrower. Internship Report on NBP.31 Housing and House Hold Goods loans Bank should initiate these loans because most of bank’s customers are middle class and they cannot afford to buy house or household goods at once by their own 7. According to which the current ration of borrower’s business must be 1:1 and the debt to equity ratio should be 60:40. where market value should be equal to the loan granted. Therefore. as being practiced by HBL opposite to it. City Branch may extend the night banking to cater to demand of this business community.32 Avoiding Bad Debts Great care should be taking while extending the loan.The staff members who have done all the paper work of the loan extension should perform the monitoring. Loans should be awarded against reasonable securities. Policies should be crafted in a way to ensure that no loan is extended on political pressure. means the liquidity position of business should be healthy. The branch could also be opened to cater the requirements of this business community Limited staff: 7.
Internship Report on NBP. 7. Balakot branch Balakot 104 . Balakot Branch Balakot in particular.34 Summation We discussed in this chapter about the recommendation and suggestion for NBP as an organization in general and NBP. The next chapter is about the implementation plan in the view of recommendation and suggestion.Scheme’s implementation plan is give in the next chapter.
Balakot branch Balakot 105 .2 Documents required for extension for loan Documents required for the title of car. 1500000 Rs.1 INTRODUCTION From the recommendation that were discussed in previous chapter. 0. 300000 Rs. This financing scheme will help bank to increase its revenue immensely 8.43 per Rs. Internship Report on NBP.1 Rules and regulations Mare Gare Car Financing Rs.2.2 IMPLEMENTATION PLAN FOR “MARE GARE CAR FINANCING SCHEME” Implementation of this financing scheme is initiated to provide long-term loans to the general public for buying their own car in easy installments. two recommendations are selected for implantation plan. 8.2. 1000 3 or 5 years Quarterly (12 or 20 equal installments) Name of finance Minimum amount of finance Maximum amount of finance Rate of Mark up (on daily product basis) Period of finance Repayment to Bank 8. Bank monitoring team approval certificate.CHAPTER # 8 IMPLMENTATION PLAN 8.
Personal liability of the borrower. Guarantee of two 17th grade government or semi government officer.2.4 Finding out Quarterly Installments Mark up will be calculated for the whole time period and will be added to the principle amount.43 per 1000 106 Internship Report on NBP. Insurance.Car dealer certificate of authentication. 0. The total of that will be divided by number of installments to get the amount for each installment The formula for extracting mark up is Mark up =F*R(1+N) 2M Where F = Total amount of financing R = Rate of mark up for one year N = Total number of installments M = Number of installments in one year Case study Amount of finance Rate of mark up Rs. 8. Balakot branch Balakot . 200000 Rs. 8.2.3 Securities Required for Extension of Loan To ensure the safe recovery of loan the car will be hypothecated.
Total number of installments Number of installments in one year 20 (5 years) 4 Rate of mark up for one year ® = .43 * 365/1000 =. The cost of the implementation plan. 107 Internship Report on NBP.3 Implementation plan for NBP Balakot Branch. How the need created and bank’s staff decision. Balakot Telephone Operator” The ingredients of the implementation plan are. 14121/The borrower will pay Quarterly installment of Rs. • • • • • Need/problem at the branch.157*(1+20) 2*4 = Rs. 14121/8. Balakot branch Balakot . 157 Mark up for the whole financing will be Mark up = 200000 * 0. Qualities of a telephone operator Benefits of a telephone operator. 82425 Now the quarterly installments will be Quarterly installment = principal amount + total markup Total installments =200000 + 82425 / 20 = Rs.
3. Communication within the bank improves. NBP Balakot Branch. Every organization has some problems.2 Benefits of the telephone operator • • • • • It saves precious time of the manager and staff members. Therefore they think it’s useful to have a spare person for this facility.3. Creates good impression on the customer. 8. 8. It saves the time of the customers. On the other hand bank’s communication system was not doing well overall. Balakot branch Balakot 4000 108 .3.3 How the need was created The need for telephone operator was created because the staff members would have to leave their work and attend the telephone but some times it would be a wrong call.4 ACTION/IMPLEMENTATION PLAN COST 1Cost of HRM department Advertisement in newspaper cost Internship Report on NBP. Balakot has the problem of telephone operator. other’s call or the calls which they wanted to avoid this would not only waste their time but also affect their performance a great deal. Therefore as an internee I felt that there should be a telephone operator who can easily handle this situation. It can save the precious time of not only manager but other staff as well.3.1 Need/problem at the branch. 8.8. Communication of Bank with outside enhances.
5*800) Telephone mechanic Labor Separate cell cost Other expenses Total networking Total action plan cost 8.Selection cost Training cost Total HRM cost 2Telephone networking Additional telephone sets Cable (Rs. Internship Report on NBP. This twoimplementation plan will save the time and will bring speed in tackling the customers. 5/ foot. Balakot branch Balakot 109 .4 Summation 17500 10000 12000 26000 2500 4000 2000 2000 5000 2000 435000 We discussed in the chapter about the two-implementation plan.