Professional Documents
Culture Documents
CHAPTER 1
INTRODUCTION OF STUDY
As part of the academic requirement for completing MBA (Banking and Finance) Master
Business Administration of the students are required to under go six 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 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.
The main 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.
Scope of Studies
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.
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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.
• Primary data:
Personal observation
Interviews of staff
• Secondary data:
Manuals
Journals
Magazine
Annual reports
Internet
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.
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SECTION 2
Chapter2
This chapter concludes brief history of banking in general, evolution of banking, banking
in Pakistan..
Chapter3:
SECTION III
Chapoter5: In this chapter the in this section the departmentation of NBP is explained,
and also NBP Hayatabad township branch.
SECTION IV
Chapter6:
It tells about Strengths, Weaknesses, Opportunities and Threats of i.e. SWOT analysis of
NBP.
Chapter 7:
Chapter 8:
It covers the critical analysis of the bank. This chapter has been divided into four parts
i.e. Problems at the Branch, Functional analysis, Administrative analysis, and Personal
Management Analysis.
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SECTION V
Chapter 9:
In this chapter recommendation for improvement on all aspects of the Bank are given.
Chapter 10:
Two implementation plans are given in this chapter. “Mare Gare Car Financing Scheme”
and Need for Telephone Operator.
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CHAPTER # 2
There are different opinions that how the word ‘Bank’ originated. Some of the author’s
opinion that this word is derived from the word ‘Bancus’ or Banque’, which means a
bench. 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; and when the
business failed, the people destroyed the ‘bench’. Incidentally the word ‘Bankrupt’s said
to have evolved from this practice.
Some of the authors are of opinion that the word ‘Bank’ is derived from the German
word back, which means ‘joint stock fund’. Later on when the German occupied major
part of the Italy the word ‘Back’ was italicized into ‘Back’.
In fact human left the need of bank when it begins to realize the importance of money as
a medium of exchange. Perhaps it where the Babylonian who developed banking system
as early as 2000 BC. At that time temples were used as banks because of their prevalent
respect. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians
Empire, loans were started being granted for interest. The borrower has to provide
guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a code
wherein he laid down standards rules for procedures for banking operations by temples
and great landowners. Also in Greece, the temples were used as banks, where the people
deposited their money and other valuables for safe custody and security. In Europe with
the ‘revival of civilization’ (Renaissance) in the middle of twelve century, trade and
commerce started expanding and this development compelled the business community to
borrow the money from the Hebrew money lenders on high rates of interest and usury.
Seeing the great demand, these moneylenders started organizing themselves and bank
started up at the principle seaports of southern Europe. Soon Venice and Geneva became
the most important money markets of the time and banking though different from its
present form, flourished. What we know as ‘modern banking’ originated in the 14th
century in Barcelona.1
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“Bank”
"A financial institution, which deals with money and credit. It accepts
Interest and gives at higher rate of interest to those who need them.”2
A financial establishment which uses money deposited by customers for investment, pays
it out when required, makes loan at interest, exchanges currency, etc.
J.W Gilbert in his principles and practice banking defines a banker in these words:
“That no person or body, corporate or otherwise, can be a banker who does not
Collect Cheques crossed and uncrossed for his customers”4 (The law of
Banking by Sir John Paged, page 51).
The American defined the term banker in a very broad sense as under:
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The first phase in evolution of banking in Pakistan sees very hard days for the whole
banking sector. Starting virtually from scratch in 1947, the country today possesses a full
range of banking and financial institutions to cope with various needs of the economy.
The area now constituting Pakistan was, relatively speaking, fairly well provided with
banking facilities in undivided India, 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.
The Reserve bank of India was the central banking authority in India. 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, until 30th Sep.1948.
In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses.
This resulted in a negative effect on baking service in Pakistan. The banks, which had
their registered offices in Pakistan, transferred them to India. 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. Those banks, which stayed, operated only in name pending
the winding up of their business. The number of scheduled banks thus declined form 487
branches before independence to only 195 branches by 30th June1948.5
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The questions as to whether the institution should be only a currency board or a full-
fledged central bank had exercised the mind of the Pakistan government since
independence. Through, it was realized that the shortage of trained personal to run the
central bank would present serious difficulty in view of the tangible advantages that a
central bank enjoyed over currency board, the government ultimately decided to take the
bold step of setting up a full fledged central banking authority. Among other factors,
which led to this decision, there was the fact the banking facilities in the country had
been totally disrupted and there was an urgent need for their rehabilitation, which a
central ban alone could meet. As there was hardly any time to pass as Act, an order was
drafted, known as the state bank of Pakistan order, which was promulgated by the
government of Pakistan on 12th may 1948. The state bank declared open on July 1 , 1948
by the father of the nation.
One of the first tasks of the state bank was to arrange for the replacement of the Reserve
bank of India notes, which had continued to circulate in Pakistan during the transitional
period, by Pakistan currency.
The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 &
100.
An equally urgent task, which the new central bank had to address itself, was the creation
of a national banking system. To this end, while extending every help and encouragement
to Habib Bank to expand its organization, 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.
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bank to help it expand credit facilities in the country. By 1952, the National bank of
India. Shortly, afterwards, in November 1952, the governor of the state bank ceased to
function as the president of National bank of Pakistan.
With a view to broadening the institutional framework of the financial system, 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.
Moreover realizing that the most serious limitation on the expansion of banking services
in Pakistan was the lack of trained personal, the state bank sponsored a banking training
scheme, which was repeated after year and turned out a large number of bankers.
As the Commercial Banking facilities continued to expand, a new Pakistani bank, the
National Commercial Bank was established and registered as a scheduled bank. In the
filed of industrial finance a new institution known as the industrial credit and investment
cooperation was set up.
The year 1958 marked the completion of the first decade of the working of the State Bank
of Pakistan. When it was established there were only 195 bank offices in existence. At
the end of June 1958 their number had increased to 307, of which Pakistani banks
accounted for 232 against 25 in mid 1948. Moreover at the end of June 1958. Pakistani
banks held 60% of the total banks deposits, and were responsible for 65 of total bank
credit.
When the Ayub Government took over in 1958, the banking and monetary scene was
significantly affected by Developments such as the liberalization of imports, transfer of
business in food grains to the private sector, and the firming up of commodity markets.
The demand of funds picked up and there was a substantial expansion of bank credit to
the private sector. The pace of expansion in the institutional frame work of the country’s
banking system quickened and a new Pakistani, bank, namely the United Bank Limited
was established.
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Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The
bank extended its network by opening six new offices located at Chitagong, Peshawar,
Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose
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 percent age as against 32.01 percent age 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
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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
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.7
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
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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
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 supervise 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 setup of finance public sector owned and
managed industries and enterprises.8
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REFRENCES
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CAHAPTER # 3
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.
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.
To coordinate the banking policies in various area of feasible joint activity without
eliminating healthy competition among banks.
The act passed for the nationalization of banks is known as the banks Nationalization Act
1974.
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, 1974. The ownership, 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. Under the Nationalization
act, the Chairman, Directors and Executives of various banks, 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. At the time of
Nationalization on December31, 1973 there were following 14 Pakistani commercial
banks with 3323 offices allover Pakistan and 74 offices in foreign countries:
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The Pakistan banking council prepared a scheme for the recognition of banks. The bank
(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of
the smaller banks with bigger ones and following the five units in there phases:
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The first phase was completed on 30th June. 1974. 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 second phase was completed on 31st Dec.1974, when the commerce bank limited
merged with the United Bank limited.
The third and the final phase were completed on 30th June, 1975 when the standard bank
limited was merged with Habib Bank limited.
The nationalization was very smooth and gave very positive results.
The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end
June 1992. The bank deposits which stood at Rs. 1925 corers at the end 1973 reached the
highest mark about 323 corers.1
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,
1981. This followed the effort to eliminated interest from the operation of Nation
investment trust, the House Building Finance Corporation of Pakistan. Certain
amendments were made in banking and other laws with the object of ushering in a new
system of banking, which would confirm of Sharia. A new law Modaraba Companies
Ordinance 1980 was promulgated. Separate interest free counters began to operate in all
the nationalized commercial banks free counters began to operate in all the nationalized
commercial banks. The state bank provides finance against participation term certificate
and also against promissory notes supported by Modaraba certificate.
In order to cover interest free transactions certain banking definitions such as creditors,
debtor, and advances credits and deposits were revised. Stipulations concerning form of
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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.
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.
A scheme to extend interest free productive loans to farmers and fisherman has also been
introduced. Instead of interest, a system based on mark-up in price, exchange rate
differential, and profit and loss sharing accounts were introduced.
♦ Musharika Financing.
♦ Modaraba Financing.
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.
Muslim Commercial Bank was Dis-invested in to two phases while ABL was sold to its
employees. 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. Now only NBP is
government bank other than SBP. The performance of this bank will be analyzed and
judged in the following chapters.
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
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make this system result oriented. New products and their systematic consumption are
making Pakistani banking comparable to their several modern counterparts anywhere in
the developed world.
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.
iii) NBP advances reached Rs.554.4 million by December 1959, which was one third
of the total schedule bank credit.3
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“An organizational objective is the intended goal that prescribes definite scope and
suggests direction to the panning efforts of a organization.”6
“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.”7
Table 1
NAME DISIGNATION
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3.5 MANAGEMENT
1 Centralized.
2 Decentralized.
Organization .
Decentralized disperses decision making and authority throughout and further down the
organizational hierarchy.9
NBP have a centralized type of management because all the decisions are taken by the
top management.
Table 2
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Group
(Source www.nbp.com.pk)
NBP have wide range of branches inside the country and outside the country.
National bank of Pakistan is also a commercial organization and its main objective is
profit maximization. This is achieved in two ways:
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1. By increasing deposits.
Competition in banking is intense and every bank whether it is Pakistani, foreign, private
or nationalized tries to increase its deposits by providing better facilities to its customers.
By increasing its deposits a bank can extend greater amount of loan and hence achieves
higher profit. NBP is also improving its facilities and services to attract customers with
higher volume of deposits. There are two main factors involved in increasing the
deposits. These factors are improving the services and courtesy. NBP is continuously
working on these two factors to increase its deposits.
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.e. the credit worthiness of the borrowers. This
strategy has worked quite well for NBP. Deposits are collected from the people and
invested in different projects. NBP prefers to give loans to financially sound and reliable
parties, after securing the collators. NBP has an extremely well organized section. The
staff is adequately trained, and educated and competent. They carry out extensive
financial analysis before deciding on the loan. Interest charged on the loans potentially
contributes to higher profits.
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Like other commercial banks, NBP is engaged in financing international trade. Its other
major functions include receiving deposits, advancing loans and discounting of exchange.
The functions performed by NBP are:
This function is important because banks largely depend on the funds deposited with
them by its customers. Deposits are of many types:
i. Current deposits
Current deposits are also called demand liability on current deposits. NBP pays
practically no interest on current deposits. Businessmen usually open current accounts. In
NBP current account can be opened with a minimum amount of Rs.500/-.
Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit
and draw money easily. Profit on PLS is calculated every month but paid after six
months. PLS account can be opened with a minimum amount of Rs.500/-
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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. In this case the rates of
profit will be different depending upon the time period.
Discounting of bill is practically speaking lending for exchange at their market rate i.e. 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. This bill has to be mature. This is the common way
used for keeping a part of assets of the bank in a liquid form.
NBP also provides best and unique service to its valued customers. NBP provide the
following agency services to the customers:
i. Collection of dividends
As NBP deals with the purchase and sale of various types of securities, therefore NBP
also provide dividend or interest earned on share or bonds or invested money.
In the collection and payment of Cheques, bills and promissory notes etc. National bank
of Pakistan acts as an agent for its customers.
NBP also acts as an agent correspondent or representative for its customer at home or
abroad.
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NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone
bills of its customers. For this purpose it also provides evening banking services.
b. Lockers facility
National bank of Pakistan also provides locker facilities to its customers to keep their
valuable assets in it. The charges of different size of lockers are different.
c. Acts as a referee
NBP provides useful services to its customers by acting as a referee to their credit
worthiness.
d. Supply of information
NBP provides operational and advisory service for foreign exchange accounts/activities.
Agents of the SBP handling Treasury Functions, receipts of Taxes & other
Revenues.
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Hajj arrangements.
The prestigious periodical “The Banker” UK recognized NBP as the best bank for 2001-
2002 and NBP is the bank of the year for 2003-2004 of Pakistan.
i. AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating
Agency for 2001.
ii. AAA+1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan Credit
Rating Agency for 2002
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REFRENCES
2 Islamic Banking.
3 www.nbp.com.pk
5 www.nbp.com.pk
7 www.nbp.com.pk
11 www.nbp.com.pk
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CHAPTER # 4
SERVICES OF NBP
SERVICES
If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account
holder of the bank or not, can purchase a Demand Draft from a bank branch.
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system has
built-in features of computerized test keys, which eliminates the manual application of
tests that often cause delay in the payment of home remittances. The SWIFT Center is
operational at National Bank of Pakistan with a universal access number NBP-APKKA.
All NBP overseas branches and overseas correspondents (over 450) are drawing
remittances through SWIFT.
Using the NBP network of branches, you can safely and speedily transfer money for our
business and personal needs.
NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.
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Traveler’s cheques are negotiable instruments, and there is no restriction on the period of
validity of the cheques. Rupee traveler’s cheque is available at all 700 branches of NBP.
This can be encashed in all 400 branches of NBP. There is no limit on purchase of this
cheque. It is one of the safest ways for carrying money.
NBP provides another reason to transfer your money using our facilities. NBP pay orders
are a secure and easy way to move your money from one place to another. And, as usual,
NBP charges for this service are extremely competitive. The charges of NBP are very
low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one
payment order. And charges Rs 100/- for NBP non-account holders on issuing one
payment order. It charges Rs 25/- for students on payment of fees of educational
institutions. If some one want a duplicate of payment order they charges Rs 100/- for
NBP account holders and Rs 150/- for non account holders.
Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offer the most competitive rates in the market. They charges Rs 50/- exchange rate and
RS 75/- postage charges on issuing mail transfer.
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan
has taken a number of measures to:
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The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides
Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.
• Zero Tariffs: NBP is providing home remittance services without any charges.
• Strict monitoring of the system is done to ensure the highest possible security.
• Special courier services are hired for expeditious delivery of home remittances to
the beneficiaries.
NBP now offers excellent rates of profit on all its short term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are
extremely attractive, along with the security and service only NBP can provide.
• The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2
million to 2,000 million, the rate fluctuates from 1.4 to 1.75
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• From Rs50/- million but less than Rs 500/-million, the rate is 1.5%.
NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant
player in the development of the stock market.
NBP’s involvement in capital markets is expected to increase its earnings, which would
result in better returns offered to account holders
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NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers
who produce some of the best agricultural products in the World.
“I Feed the World” program, a new product, is introduced by NBP with the aim to help
farmers maximize the per acre production with minimum of required input. Select farms
will be made role models for other farms and farmers to follow, thus helping farmers
across Pakistan to increase production.
• Help farmers utilize funds efficiently to further develop and achieve better
production
• Watercourse improvement
• Wells
• Farm power
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• Fencing
• Solar energy
NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis.
• Operating loans
Production loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertilizers, sprayers, etc are all covered under this scheme.
If you require any further information, please do not hesitate to e-mail us.
4.12.2 CORPORATE FINANCE
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NBP provides financing for its clients’ capital expenditure and other long-term
investment needs. By sharing the risk associated with such long-term investments, NBP
expedites clients’ attempt to upgrade and expand their operation thereby making possible
the fulfillment of our clients’ vision. This type of long term financing proves the bank’s
belief in its client's capabilities, and its commitment to the country.
National Bank’s leadership in loan syndicating stems from ability to forge strong
relationships not only with borrowers but also with bank investors. Because we
understand our syndicate partners’ asset criteria, we help borrowers meet substantial
financing needs by enabling them to reach the banks most interested in lending to their
particular industry, geographic location and structure through syndicated debt offerings.
Our syndication capabilities are complemented by our own capital strength and by
industry teams, who bring specialized knowledge to the structure of a transaction.
With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s total
financial position right from your desktop computer. They will also be able to take
advantage of our outstanding range of payment, ejection, liquidity and investment
services. In fact, with NBP, you’ll be provided everything, which takes to manage your
cash flow more accurately
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Cash and Gold finance means that loan is given against the gold. The gold is
mortgaged with the bank and loan is taken. It is the area of consumer finance. And
borrower can take loan for common use.
This loan is given to those people who are govt servants. They can get a loan up to the
salary of fifteen months.
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REFRENCES
1. http/www.nbp.com.pk .services
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CHAPTER # 5
DEPARTMENTALIZATION
A) DEPARTMENTATION
5.1.1) Receipt
The money, which either comes or goes out from the bank, its record should be kept.
Cash department performs this function. The deposits of all customers of the bank are
controlled by means of ledger accounts. Every customer has its own ledger account and
has separate ledger cards.
5.1.2) Payments
It is a banker’s primary contract to repay money received for this customer’s account
usually by honoring his cheques.
Since a Cheque has been declared to be a bill of exchange, it must have all its
characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.
Therefore, one can say that a Cheque can be defined as an:
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“An unconditional order in writing drawn on a specified banker, signed by the drawer,
requiring the banker to pay on demand a sum certain in money to, or to the order of, a
specified person or to the bearer, and which does not order any act to be done in
addition to the payment of money”3. (Law of Banking by Dr. Hart, p.327).
There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements mentioned in Section 6 above the Cheque must have the following.
a) It should be in writing
d) Payment on Demand
The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no
payee but bearer.
a) The Drawer
b) The Drawee
c) The Payee
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a) Bearer Cheques
Bearer cheques are cashable at the counter of the bank. These can also be collected
through clearing.4
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. It can also be collected through clearing.
c) Crossed Cheque
These cheques are not payable in cash at the counters of a banker. It can only be credited
to the payee’s account. If there are two persons having accounts at the same bank, one of
the account holder issues a cross-cheque in favour of the other account holder. 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.
It is a banker’s primary contract to repay money received for his customer’s account
usually by honouring his cheques. Payment of money deposited by the customer is one of
the root functions of banking. The acid test of banking is the receipt of money etc. from
the depositors, and repayment to them. This paying function is one, which is the
distinguishing mark of a banker and differentiates him from other institutions, which
receive money from the public. However the bankers’ legal protection is only when
payment is in ‘Due Course’. The payment in due course means payment in accordance
with the apparent tenor of the instrument, in good faith and without negligence to any
person in possession thereof under circumstances, which do not afford a reasonable
ground of believing that he is not entitled to receive payment of the amount therein
mentioned. It is a contractual obligation of a banker to honor his customer’s cheques if
the following essentials are fulfilled.
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After the World War II, a rapid growth in banking institutions has taken place. The use of
cheques in making payments has also widely increased. 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, the mutual obligation are settled by the internal bank
administration and there arises no inter bank debits from the use of cheques. The total
assets and total liabilities of the bank remain unchanged.
In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same
bank as the drawer. He deposits the cheque with his bank other than of payer for the
collection of the amount. Now the bank in which the cheque has been deposited becomes
a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by
transferring it from cash reserves if there are no offsetting transactions. The banks on
which the cheques are drawn become in debt to the bank in which the cheques are
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deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn
on other banks giving claims of payment by them.
The easy, safe and most efficient way is to offset the reciprocal claims against the other
and receive only the net amount owned by them. This facility of net inter bank payment
is provided by the clearinghouse.
The representatives of the local commercial banks meet at a fixed time on all the business
days of the week. The meeting is held in the office of the bank that officially performs the
duties of clearinghouse. The representatives of the commercial banks deliver the cheques
payable at other local banks and receive the cheques drawn on their bank. The cheques
are then sorted according to the bank on which they are drawn. A summary sheet is
prepared which shows the names of the banks, the total number of cheques delivered and
received by them. Totals are also made of all the cheques presented by or to each bank.
The difference between the total represents the amount to be paid by a particular bank
and the amount to be received by it. Each bank then receives the net amount due to it or
pays the net amount owed by it.
The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing. All details of the cheques are recorded in this
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.
Advances department is one of the most sensitive and important departments of the bank.
The major portion of the profit is earned through this department. The job of this
department is to make proposals about the loans. The Credit Management Division of
Head Office directly controls all the advances. As we known bank is a profit seeking
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institution. It attracts surplus balances from the customers at low rate of interest and
makes advances at a higher rate of interest to the individuals and business firms. Credit
extensions are the most important activity of all financial institutions, because it is the
main source of earning. However, at the same time, it is a very risky task and the risk
cannot be completely eliminated but could be minimized largely with certain techniques.
Any individual or company, who wants loan from NBP, first of all has to undergo the
filling of a prescribed form, which provides the following information to the banker.
d) Exiting financial position of the company. (Balance Sheet & Income Statement).
There are five principles, which must be duly observed while advancing money to the
borrowers.
Safety
Liquidity
Dispersal
Remuneration
Suitability
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a. Safety
b. Character
It is the most important factor in determining the safety of advance, for there is no
substitute for character. A borrower’s character can indicate his intention to repay the
advance since his honesty and integrity is of primary importance. If the past record of the
borrower shows that his integrity has been questionable, the banker should avoid him,
especially when the securities offered by him are inadequate in covering the full amount
of advance.
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.
c. Capacity
This is the management ability factor, which tells how successful a business has been in
the past and what the future possibilities are. A businessman may not have vast financial
resources, but with sound management abilities, including the insight into a specific
business, he may make his business very profitable. On the other hand if a person has no
insight into the particular business for which he wants to borrow funds from the banker,
there are more chances of loss to the banker.
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d. Capital
This is the monetary base because the money invested by the proprietors represents their
faith in the business and its future. The role of commercial banks is to provide short-term
capital for commerce and industry, yet some borrowers would insist that their bankers
provide most of the capital required. This makes the banker a partner. As such the banker
must consider whether the amount requested for is reasonable to the borrowers own
resources or investment.
e. Liquidity
Liquidity means the possibilities of recovering the advances in emergency, because all
the money borrowed by the customer is repayable in lump sum on demand. Generally the
borrowers repay their loans steadily, and the funds thus released can be used to allow
fresh loans to other borrowers. Nevertheless, the banker must ensure that the money he is
lending is not blocked for an undue long time, and that the borrowers are in such a
financial position as to pay back the entire amount outstanding against them on a short
notice. In such a situation, it is very important for a banker to study his borrower’s assets
to liquidity, because he would prefer to lend only for a short period in order to meet the
shortfalls in the wording capital. 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. Hence, the baker must adhere
to the consideration of the principles of liquidity very careful.
f. 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. The banker must ensure that
his funds are not invested in specific sectors like textile industry, heavy engineering or
agriculture. He must see that from his available funds he advances them to a wide range
of sector like commerce, industry, farming, agriculture, small business, housing projects
and various other financial concerns in order of priorities.
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Dispersal of advances is very necessary from the point of security as well, because it
reduces the risk of recovery when something goes wrong in one particular sector or in
one field.
g. Remuneration
A major portion of the banker’s earnings comes form the interest charged on the money
borrowed by the customers. The banker needs sufficient earnings to meet the following:
c) Overhead expense and depreciation and maintenance of the fixed assets of the
bank.
h. Suitability
The word “suitability’ is not to be taken in its usual literary sense but in the broader sense
of purport. It means that advance should be allowed not only to the carefully selected and
suitable borrowers but also in keeping with the overall national development plans
chalked out by the authorities concerned. Before accommodating a borrower the banker
should ensure that the lending is for a purpose in conformity with the current national
credit policy laid down by the central bank of the country.
In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the
form of cash finance, overdrafts and loans. NBP provides advances to different people in
different ways as the case demand.
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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, produce or merchandise.
In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending
due to the facility of paying markup/services charges only on the amount he actually
utilizes.
If the borrower does not utilize the full limit, the banker has to lose return on the un-
utilized amount. In order to offset this loss, the banker may provide for a suitable clause
in the cash finance agreement, according to which the borrower has to pay
markup/service charges on at least on self or one quarter of the amount of cash finance
limit allowed to him even when he does not utilize that amount.
b) Overdraft/Running Finance
This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance
which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called “Secured Overdraft” and when the borrowing customer
cannot offer any collateral security except his personal security, the accommodation is
called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis, while an overdraft is a temporary accommodation occasionally resorted to.
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, it is called a “loan”. When bankers
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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”.
The amount of loan is placed at the borrower’s disposal in lump sum for the period
agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus
the borrower gets a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security
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. NBP offers the following forms of remittances.
a) Demand Draft
b) Telegraphic Transfer
c) Pay Order
d) Mail Transfer
Demand draft is a popular mode of transfer. The customer fills the application form.
Application form includes the beneficiary name, account number and a sender’s name.
The customer deposits the amount of DD in the branch. After the payment the DD is
prepared and given to the customer. 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. 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. DD are of two types.
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Pay order is made for local transfer of money. Pay order is the most convenient, simple
and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay
order from the account holder and Rs. 100 from a non-account holder.
Cable telegram transfer costs more as compared to other title of money. In cable transfer
the bank uses a secret system of private code, which is known to the person concerned
with this department and branch manager.
When the money is not required immediately, the remittances can also be made by mail
transfer (MT). 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. Debiting to the buyer’s
account at the selling office and crediting to the recipient’s account at the paying bank
make the payment under this transfer. NBP taxes mail charges from the applicant where
no excise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/-
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if sent by registered post locally Rs.40/- if sent by registered post inland on party’s
request.
Human Resource plays a vital role in the success of every service organization. They
interact between man and machine. Their attitude can win or loose the customer. The
positive attitude could only be created in a conducive environment, which can make the
staff dedicated towards the organization and its objectives. 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. However, 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:
Although the Bank believes in merit but in practice the selection of employees is not
done on merit. Most of the employees are low educated. This shows that candidates with
some strong family background or political pressure are given preference in recruitment
and qualified candidates are sometimes left behind.
Like the employee of public sector organizations in Pakistan, the employees of NBP also
enjoy their job for life. Since there is no risk of early retirement or redundancy in rank,
they do not perform with their full potentials. This is one redundancy in rank, they do not
perform with their full potentials, and this is one of the reasons responsible for the low
productivity of the employees of the Bank.
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The performance of employees of the Bank are appraised though their annual confidential
reports at the end of each year. This has become an outdated method of performance
appraisal and no longer used due to the following reasons:
Modern management acknowledges human resources as one ‘of the most important
assets of an organization. But by their very nature, human beings are also the most
unpredictable. Where a number of persons work together, interactions among them, of
necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in
NBP can be traced back to the following major heads.
Lack of Communication
Lack of communication is for the biggest reason for conflicts. 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.
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The dominant trend in all modern industrial societies of the world is merit and expertise,
which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still
very strong in our set up and there is no tradition of tolerance for differing viewpoints.
Hence, interpersonal conflicts are generated.
5.5.6) Corruption
Our social acceptance of corruption gives rise to corruption at every level of social and
organizational set up. Corruption involves financial embezzlement, favoritism, nepotism,
cronyism and other number of such practices. All these cause resentment that keep
building up and lead to conflict sooner or later.
In the past few years, some cases of frauds have happened in different branches. The
reasons can be linked with the employee dissatisfaction of NBP.
Maintaining discipline and implementation of authority (tables) in letter and spirit is the
key to success of any organization. In NBP, The authority tables are not strictly
maintained. Line managers are not fully equipped with the authority with no vertical or
horizontal interference.
a) A/C opening.
c) Current a/c
d) Saving a/c
e) Cheque cancellation
f) Cash
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i. Avoiding frauds
iii. Negligence.
There are certain formalities, which are to be observed for opening an account with a
bank.
• Formal Application
• Introduction
• Specimen Signature
1. Pay-In-Slip Book
2. Pass Book
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a) Qualification of Customer
The relation of the banker and the customer is purely a contractual one, however, he must
have the following basic qualifications.
• The agreement should be made for lawful object, which create legal relationship
b) Types of Accounts
1) Individual Account
2) Joint Account
Partnership account
Agents account
Trust account
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c) three rupees per cheque should be recovered from a/c holder if not then debit his/her
account.
These are payable to the customer whenever they are demanded. When a banker accepts
a demand deposit, he incurs the obligation of paying all cheques etc. drawn against him
to the extent of the balance in the account. Because of their nature, these deposits are
treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on
these deposits, and customers are required to maintain a minimum balance, failing which
incidental charges are deducted from such accounts. This is because the depositors may
withdraw Current Account at any time, and as such the bank is not entirely free to
employ such deposits.
Until a few decades back, the proportion of Current Deposits in relation to Fixed
Deposits was very small. In recent years, however, the position has changed remarkably.
Now, the Current Deposits have become more important; but still the proportion of
Current Deposits and Fixed Deposits varies from bank to bank, branch to branch, and
from time to time.
Savings Deposits account can be opened with very small amount of money, and the
depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate
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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. The purpose of these
accounts is to inculcate the habit of savings in the constituents. As such, the initial
deposit required for opening these accounts is very nominal.
b) Stale cheque
5.6.6 Cash
This deptt also deals with cash. Payment of cheques, deposits of cheques etc.
This deptt mainly deals with the foreign business. The main functions of this deptt are:
a) L/C dealing.
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NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.
This deptt deals with the foreign currency accounts which mainly include dollar account,
euro account etc.
1. Cash Department
Cash department mainly deals in cash. The Head of department is Mr. Imdad
Khan and two cashier Mehraban Shah and Faiq Shah the objective of cash department.
“To facilitate people in the payments of their bills and taxes and repayments of cash”
i. Payments are the function that they pay their cheques and pay cash.
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In this section of the bank the general banking function is performed. It is divided
into five departments.
i. Remittances Department.
v. Establishment Department.
“To transfer the money of people from one place to another place in safe and
comparable way”
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“To facilitate people by giving short term and long term loans on easy terms and
conditions”.
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.
The bank uses this book for the purpose of recording all the cheques that are
being received by the bank in the first clearing. All detail of the cheques are recorded in
this 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.
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This department headed by the accountant Tariq Afridi and two other persons Mr. Junaid
and Mr. Shahid are performing the real function.
a) Checking balance.
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REFRENCES
1 Sir Paged John The law of Banking 4th edition page 431.
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CHAPTER #6
SWOT ANALYSIS
SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and
threats SWOT analysis is careful evaluation of an organization’s internal strengths and
weakness as well as its environment opportunities and threats.
2. Neutralizing it threats.
SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context, managers assess internal strengths distinctive
competencies and weakness and external opportunities and threats. The goal is to then
develop good strategies and exploit opportunities and strengths neutralize threats and
avoid weaknesses.
6.1 STRENGTHS:
NBP in 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. The
additional value services as the privilege for the bank.
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The NBP performs additional services for its customers as well as the other bank
customer in the absence of SBP.
NBP has the relative competence in having more deposits than the other bank. This is
because of the confidence the customer have in the bank. The bank being the privileged
and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.
The employers at NBP are offered reasonable monetary benefit. Normally two bonuses
are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and
competency for the bank and a source of motivation for the employees.
The bank has another competency i.e. it has broad-basses network of branches throughout
the country also more than one branch in high productive cities. The customers are
provided services at their nearest possible place to confirm customer satisfied.
The employees at NBP are strict followers of rule & regulation imposed by bank. The
disciplined environment at NBP bolsters its image and also enhances the over all out put
of the organization.
The employees at NBP here have a good hold on their descriptions, as they are highly
skilled Professionals with back ground in business administration, banking, economics
etc. These professional competencies enable the employees to understand and perform
the function and operation in better way.
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The working condition in the NBP branch here is very conductive and favorable for
better output. The informal environment affects the performance of the employees in a
positive way.
The bank enjoys a good plus point when it comes to the employee manager relationship
the hearing as removing of discrepancies if any, between the employees, and between the
manager and employees.
6.2 WEAKNESSES
The bank does not promote its corporate image, services, etc on a competitive way.
Hence lacks far behind in marketing effort .A need for aggressive marketing in there in
the era marketing in now becoming a part of every organization.
The strong political hold of some parties and government and their dominance is
affecting the bank in a negative way. They sometime have to provide loan under the
pressure, which leads to uneven and adjusted feeling in the bank employees.
The promotions and bonuses etc in the bank are often powered by senior’s favoritism or
depends upon their wills and decision. This adds to the negative factors, which
denominate the employees thus resulting in affecting their performance negatively.
The bank falls far behind when the innovative and new schemes are considered. It has not
been involved in the tug of war between the competitors to the accounts and strengthens
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the existing customer base. This stands out to be the major incompetence and weakness
of the banks.
During the rush hours, the bank is founded out to be a total flop to handle the mob of
people peaking from windows and doors. 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.
The bank lack the strength of being powered by the network of computers, which have
saved time, energy and would have lessened the mental stress, the employees have
currently. This would add to the strength if it were powered by network of computers.
The bank lacks the modern Equipment that is note counting machine computers. Even if
there is any equipment they lack to fall in the criteria of being rearmed as update and
upgraded
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, which server as a
demotivation factor for employees performing above average work.
6.3 OPPORTUNITIES
The world today has become a global village because of advancement in the
technologies, especially in communication sector. More emphasis is now given to avail
the modern technologies to better the performances. NBP can utilize the electronic
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banking opportunity to ensure on line banking 24 hours a day. This would give a
competitive edge over others.
Because of the need for micro financing in the market, there are lot of opportunities in
this regard. Other banks have already initiated, now the time has arrived when the NBP
must realize it and take on step to cater an ongoing demand.
6.4 THREATS
The bank is facing threats with the emergence of new competitors especially in terms of
foreign banks. These foreign banks are equipped with heavy financial power with
excellent and innovative ways of promoting and performing their services. The bank
has to take initiative in this regard or will find itself far back in competition.
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.
6.4.3 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, hence
affecting the over all performance of employees negatively.
There exists no regular and specific system of the removal of customer complaints. Now
a day a need for total customer satisfaction is emerging and in their demanding
consequences customer's complaints are ignored
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This approach is widely used for competitive analysis. It is because of the high intensity
of competition among companies there five main competitive forces.
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. These competitive strategies may be lowering prices, best quality
series. The NBP offering very low charges an demand draft, telegraphy transfer, mail
transfer and give other additional services to the customers and to the Nation.
Because NBP is a “Nation’s Bank”.
Whenever new firms ca easily enters a particular industry, the competition increases.
The gout restriction, tariffs, 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. 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.
This is the third factor affecting the competitions. There may be some other product
can be substitute the product of that industry. 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. If they offer low rates than GPOs so people will go
to deposit in GPOs. People concentration high rates so that’s why sawing PLS
accounts are more then current accounts. The next examples will ATM which
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substitute presenting cheques at counter and encash it. The NBP is lacking in this
field. It must improve in this field to compete the competitors.
The bargaining power of supplier affects the intensity of competition, especially when
there are a large number of suppliers. In case of banks the suppliers are customers
they supply the money to banks. Now they must offer good services, quality, and
safety. Low charges etc to customers. In this field NBP is very good. B/C at offers
good quality services to customers. They charge low charges on remittances. So that’s
it is competitions other banks.
When customers are concentrated or large, or buy in volume, their bargaining power
represents a major force affecting intensity of competition. Now the number
customers in Pakistan for banks are very high. Banks offering variety of products and
services to their customers. NBP have a large number of customs. Now it must offer
good services and products to their customers to attract them to come to NBP.
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References
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CHAPTER# 7
FINANCIAL ANALYSIS
Financial analysis, though varying according to the particular interests of the analyst,
always involves the use of various financial statement primarily the balance sheet and
income statement. The balance sheet summarizes the assets, liabilities, and owner’s
equity of a business at a point in time, and thee income statement summarizes revenues
and expenses of the over a particular period f time. A conceptual framework for financial
analysis provides the analyst with an interlocking means for structuring the financing.
Years 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994
Items
Total
471860 432803 415089 371636 350406 417680 400890 369236 320180 271779
assets
Deposits 395568 362866 349617 316493 294754 273391 254863 235032 208283 170476
Advances 160990 140547 170319 140318 122559 109356 105598 85854 81528 62548
Investment 166196 143525 71759 72609 91486 102356 109485 108206 95649 85094
S,s holder 7046 7842 7233
equity 18134 14279 11959 11378 10358 9987 9203
pre tax (1260) 3081 2799
profit 9009 6045 3016 1023 520 2135 996
After tax -------- ------ -------
profit 4198 2253 1149 461 31 0 0
Earning ------- ----- -------
per share 10.23 5.49 3.08 1.24 0.21 0 0
Return on ---------- ------ -----
assets 2% 1.40% 0.80% 0.30% 0.20% 0 0.00%
No of 1555 1537 1463
Branches 1189 1204 1245 1428 1431 1434 1468
No of 23730 21549 20667
Employees 13272 12195 15163 15351 15541 15785 18096
(Source Annual reports 1998, 2000, 2002, 2003)
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 2003. If we draw a graph this will shows that the
graph is upward trend. Profit is increasing from year to year. NBP decrease the number of
its branches and employees because of automation and large networks of other banks. But
this bank can compete and now NBP is the best bank of year.
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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, in order to make rational decision in keeping with the objective of the
organization, for that purpose the management use analytical tools. To evaluate the
financial condition and performance of the business entity, the financial analyst needs to
perform "checkups" on various aspects of the business financial health.
A tools frequently used during these checkups is a financial ratio analysis, 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. The business itself and outside providers of capital (creditors and
investors) all undertake financial statement analysis. The type of analysis varies
according to the specific interest party involved. The nature of analysis is depending at
the purpose of analyst.
Trade creditors are interested in firm's ability to meet their claims over a very short
period of time. Their analysis will, there fore confine to the evaluation of the firm's
liquidity positions.
Suppliers of long-term debt on the other hand are concerned with firm's long-term
solvency and survival. They analysis the firms profitability over time, 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. (Capital structure relationship).
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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.
7.3.3 Investors
Investors who have invested their money in the firms share are most concerned about the
firm steady growth in earning. As such, they concentrate on the analysis of the firm's
present and future profitability. They are also interested in the firms financial structure of
the extent it influence the firms earning ability and risk.
7.3.4 Management.
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, management needs to take financial
analysis in order to plan and control effectively.
Ratio is the comparison between two figures of balance sheet and income statement.
This ratio shows that the cash is enough for payment of current liabilities or not.
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Table 3
Graph 1
Cash Ratio
0.25
0.2
0.15
ratio
0.1
0.05 Cash Ratio
0
1997 1999 2001 2003
years
It means that how much cash is available for payment its current liabilities. This ratio of
NBP shows a downward trend. Because of high advances cash is less to cover its current
liabilities.
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Table 4
Graph2
2003
2001
year
Gross profit
1999 margin%
1997
0 20 40 60
ratio
G. profit margin relates profit of the organization to its sales (interest earned in case of
Bank).
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. This show the
profit of the firm relative to its revenue. It is a measure of the efficiency of the firm’s
operations too. As it is clear that the ratio gong high this is the indication of good
performance.
This ratio measure the firm’s profitability of sales/ interest earned after taking account of
all expenses and income taxes.
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Net profit margin ration = Net Profit after taxes / interest earned
Table5
Graph3
30
20
ratio
Net profit
10 Margin %
0
97
99
01
03
19
19
20
20
year
Explanation: from the calculation and graph it is very much clear that the performance of
NBP is very good. And the trend is upward. It tells us a firm’s net income per rupee of
revenue. As the trend is upward it shows the high profits in revenue per rupee in case of
NBP. It is because of high advances the NBP has given to the people.
Dividing profit after taxation by share holder’s equity. ROE compares net profit after
taxes to the Share holder’s Equity.
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Table6
Graph4
Return on Equity
30
20
ratio
Return on Equity
10
0
7
03
9
20
19
19
20
year
Explanation: from the calculation it is clear that the ROE Ratio have an upward trend of
NBP. It is because of high net profit they have earned. It tells us the earning power on the
shareholder’s investments. It is because of high investments by NBP and effective
expense management.
This ratio shows the efficiency of organization that how efficiently utilizes their assets.
This ratio relates profits to assets.
It is calculated as:
Table7
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Return on assets
2003
2001
year
Return on
1999 assets
1997
0 0.5 1
ratio
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. That is why they are earning very high profits. This
shows that how efficiently they investing the assets that’s why they are earning high
profits.
This ratio shows the comparison of investments and deposits. This is calculated as.
Table8
Investment Deposit
ratio 42.9 37.7 31.03 22.94 20.54 39.66 42.01
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Graph6
50
40
30
ratio
20 Investment
10
Deposit ratio
0
1997 2000 2003
year
Explanation: From above table and graph it is very much clear that NBP are using their
deposit very efficiently. And earning high profits. The ratio has an upward trend, which
shows the performance of NBP is very good. Now it is the retraction from top
management to invest 30% of its deposits. This may reduce its profits. But can be fruitful
in long term.
This ration shows the amount contributed by creditors and shareholders. It shows to what
extent the firm is using borrowed money. It is computed simply dividing the total debt of
the fire by its shareholders equity.
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Table9
Debt to equity
ratio 32.42 31.4 30.4 20.9 22.7 28.6 24.5
Graph7
2003
2001 Debt to equity
year
1999 ratio
1997
0 20 40
ratio
From the table and graph it is clear that this ratio is decreasing which show the high
efficiency of NBP. In 2002 it was high but in 2003 it decreases to 24.5 from 28.6 which
is a good sign. Here the creditors are interested in low ratio. The lower the ratio the high
the level of the fire’s financing that is being provided by the shareholders.
This ratio shows that to which extent the organization assets are financed by debit. It is
calculated as.
Table1
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Debt to asset
ratio 0.94 0.944 0.957 0.954 0.92 0.954 0.961
Graph8
Debt ratio
0.98
0.96
0.94
ratio
0.92
0.9 Debt ratio
0.88
1997 1999 2001 2003
year
This ration is directly related to risk high ratio means high risk and low ratio means low
risk. From calculation it is clear that the ratio is decreasing which show low risk. This
ratio serves the similar purpose to the debt to equity ratio. This ratio is high because of
more deposits in the bank, and deposits are the liability of customer on bank
This ratio show that how much efficiently the bank advances the deposits of their
customer to borrower.
It is calculated as.
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Table11
Advances deposits
ratio 0.414 0.399 0.416 0.443 0.487 0.387 0.406
Graph9
0.5
0.4
0.3
ratio
0.2 Advances
0.1
Deposits ratio
0
1997 2000 2003
year
From above table and graph it is clear that the ratio is going high. Which means the
efficiency on NBP is good and they use their deposits efficiently in advancing to
borrowers. Here high ratio is required. The next side of the picture is that the people will
think that is risky to deposit the money in the bank.
The relationship of net sales /revenue to total assets is known as the total asset turnover
ratio. It is calculated as.
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Table12
Assets turnover ratio 0.099 0.097 0.093 0.079 0.075 0.079 1.07
Graph10
2003
year
2001
1999 Assets turnover
1997 ratio
0 0.5 1 1.5
ratio
Explanation: This ratio shows us the relative efficiency with which a firm utilizes its total
assets to generate revenue. We can see that the ratio is going high and which is a good
sign and shows that NBP is utilizing its assets efficiently.
This ratio show the relation ship b/w face price per share and earning per share. This ratio
is calculated as:
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Table13
Price to earning
Ratio 2.4 2.7 47.62 3.17 3.25 1.6 0.97
Graph11
2003
2001
ratio
year
As from the above calculations it is clear that the ratio decreased tremendously in 2003, it
is because of the reason that earning per share increased resulting in decreasing price to
earning ratio.
From calculation it is clear that it have a downward slope. It is b/c of increase in earning
per share.
It is calculated as.
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Table14
Dividend
Yield 0.2 0.1 2.3 3.32 1.63 2.45 0.23
Graph12
Dividend Yield
4
3
ratio 2
1 Dividend Yield
0
1997 2000 2003
year
Year 2000 was best as far as dividend yield is concerned; it was mainly due to the
decreased amount of number of shares outstanding. In year 2001 increase in outstanding
shares decreased dividend yield, but due to increase in total dividend in 2002 it has
recovered to 2.45.
From the above table it is clear that the dividend is increasing but in 2003 it is low. It is
because of high market price and low dividend.
This is calculated as
Table15
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Deposit
growth ratio 0.08 0.07 0.08 0.07 0.1 0.037 0.09
Graph13
0.1
0.08
0.06
ratio
0.04 Deposit growth
0.02
ratio
0
1997 2000 2003
year
Explanation: This ratio shows an excellent move from 1997 to 2003. It upward slope
which shows that the people trust NBP and its management that our money is in safe
hands. The reason for this good move is only govt support to this bank.
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Table16
Advances
Growth ratio 0.23 0.04 0.12 0.14 0.21 -0.17 0.15
Graph14
0.4
0.2
Advances
ratio
Growth ratio
0
97
99
01
03
-0.2
19
19
20
20
year
Explanation: from calculation and graph it is clear that NBP show a good growth rate in
respect of advances. Only in 2002 it is negative b/c of high advances in 2001 and low
advances in 2002. This shows that NBP is utilizing the deposits efficiently.
The over all performance of NBP is very good. That’s why it is declare the best bank of
the year 2003.
Where one wants to lend money to a company that is about to fail. The ability to predict
corporate failure before the event has been the holy grail of financial analysis for move
than 50 years. The collapse comes much unsaddled. One a company will be successful
and next year it will be fail. For this a tool is used which is
Where
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Now Z score blow 1.8 was an indicator of probable failure, 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.
If the portion of current asset is greater compared with total assets the healthier is short
term position.
If the retained earning is greater the greater is the extent of the company’s self financing.
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. The last ratio shows the
ability of the company to use its assets to generate revere.
This shows that the calculation is below 1.8 and it is an indicator of failure
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REFERENCES
11. Vause Bob “The Economist “Guide to analyzing companies”. 3rd edition.
WEBSITE:
www.onlinewbc.gov/docs/finance/fs.ratio/. Html
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CHAPTER # 8
GENERAL OBSERVATION
I have divided general observation in four parts. Which are as under. This analysis is
mainly based on my general observation.
• Function analysis.
• Administrative analysis.
In NBP customer dealing is will, but during rush hour the customer has to wait for a long
time for their turn. It’s quite hard for a new customer or potential customer to get the
required information.
During my internship I observed that filing system of branch is not good. When certain
record is needed the staff has to struggle to find it out and a lot of time is wasted.
Work is not equally distributed. On one hand some employee have to work all day
without relaxing while some others have nothing to do at all. This not only creates
confusion among employees but also hurting and disturbing for overall setup of the bank.
And above all it results in dissatisfaction among customers as well.
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A useful mode of contact is through personal marketing visits. Such visits are important
in informing and perusing the existing and potential customers about the products and
creating a sense of belongingness with them.
Formal organization includes the activities of two or more person, which are cautiously
determined groups and coordinated towards a given objective. It provides base when
people are able to communicate with other, when they have common purpose and they
are willing to work.
In this formal organization of NBP the activities are carried out in a more formal way. In
theoretical terms it provides basis for communication with one another but in practice it is
not exercised because an employee at high level cannot get straight away to manager or
SVP and ask him about of his problem faced by him, because first he has to talk to his
immediate superior and follow a proper channel of communication.
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.
They don’t care about maintaining secrecy, especially during the rush hours. They speak
loudly about the account position and while getting clearance of cheque the person can
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easily get the whole information from the ledge. The deposit clerk must be careful while
passing any cheque. In this regard another shortfall is in giving the information about the
balance on telephone.
It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology.
Efficient banking is one which does not emphasize on number of accounts but on greater
amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide
personalize service to all the account holders and does not improve its quality and
services
Manager has very limited authority; he has to take the approval from his management
authority i-e. In case of advance he has to take the approval of general and regional
manager. The other problem is created, when the manager is not present in his office, the
customer have to wait for hours. This discourages both customer and officers because
they have to suffer a lot
Only on the basis of job analysis it can be decided how a right person can be hired,
trained, compensated or promoted. It is very important for an organization that nature of
the job is described and job specifications are mentioned. Most of the employees are
simple graduate and do not have proper background about their job. This creates
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problems both for organization and for the employees. In NBP salaries are given
according to the seniority and grades. People with simple or complex responsibility are
getting the same salary and facilities. This creates dissatisfaction among employees.
When customer comes to open an account, the staff does not bother to check his/her place
phone number and permanent address. It is important because in case of overdraft by
mistake or anything which places his account in debit it will be difficult to trace him. On
the other hand he may be involved in any fraudulent activities against the bank. In this
case the bank will be in awkward position.
NBP does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted
into a specific field without having great deal of knowledge about the field.
In the Hayatabad branch the newly recruited employee training was not imparted, they all
learned things on the job.
Most of the customers shifted their account to the National Saving Center because of the
low rates of saving deposit discourages the customers. Bank should increase their profit
rates to attract customers.
There is absence of job rotation in NBP Hayatabad branch. A person placed in one
department remains their forever. It reduces career opportunities as well boredom and in
the end results in career platueing. Job rotation is very important for employee especially
for those who are newly recruited. 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.
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It has been observed that there are delays in sanctioning of cases form the head office,
which results in customer dissatisfaction.
Another very important thing which is ignored in the bank is appreciation if the employee
on their good performance. If hard work and performance of employees is not recognized
and appreciated they become dishearten which results in decline in performance.
Need of training is greatly emphasized all around the world. Training of the personnel is
part of human resource management. It has been noticed that the training program of
NBP is not adequate.
Once the candidate is selected and placed on the respective job. It becomes essential to
train him adequately for the task. They should learn new methods for motivating
customers. 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.
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Human resources are the lifeblood of the organization. If the personnel are recruited
carefully they can become asset to the organization in the case of carelessness a liability
on the organization. Bank is not following its recruitment policy properly due to
favoritism, nepotism and political pressure. Both the top authority and staff union tries
their best recruit their favorites, indulgence of political pressure add salt to the wounds.
The persons selected through these channels are infantile and do not work for the
betterment for the bank.
8.4.4 Promotions
Promotion in NBP is purely on the basis of seniority, so the new young person having
high qualification remains behind for quite a lot of time. Top management and staff union
put pressure for the promotion of their favorites, which gives a sense of deprivation to the
deserving employee and their efficiency is affected. As the concept of promotion is
attached with better in terms of greater responsibility, more prestige, greater skills and
increased rate of salary. Thus a better and impartial policy of promotion needs to be
followed.
8.4.5 Transfer
Transfer means when a person is shifted from one place to another place. It is done either
that person is needed more on the other branch or for improving his skill variety. It is the
policy of the Bank to transfer each employee 3 to 4 years.
Bank employee come in daily contact with many people who happen to deal with the
casual remittance, travelers cheques, safe custody, pensioners, depositing license fee and
variety of other functions and variety of other people with whom the Bank has no account
or regular business relationship. The Bank employees are doing very little on their own to
explore the possibilities of selling banking services to them as a marketing contributor.
The entire Bank community should make a conscious effort in addition to their normal
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work to explore the possibilities of selling banking services to them. The market
opportunities are hidden in every dealing a banker handles; the question is that if he has
the art and urge to seize such opportunities.
There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc containing information in
details.
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.
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Chapter # 9
GENERAL SUGGETIONS
NBP is an effectively operating and profit making organization and carrying out its
activities under a specified system of procedure. The main regulatory body is State Bank
of Pakistan, which provides policy guidelines and ensures that the money market operates
on sound professional basis. While the head office specifies the whole procedure of
function and operations. 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.
Here I am giving some suggestions, which in my view can add some input for efficiency
and better performance of NBP as an organization in genera and City branch in
particular.
NBP staff lacks professionalism. They lack the necessary training to do the job efficiently
and properly. Although staff colleges in all major cities but they are not performing well.
For this purpose these staff colleges should be reorganized and their syllabus should be
made in such a way to help the employee understand the ever changing global economic
scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with
much needed professional training.
Employees of the bank should be given a task and authority and they should be asked for
their responsibility.
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The manager should strictly monitor the performance of every staff member. All of them
should be awarded according to their performance and result in the shape of bonuses to
motivated and incite them to work more efficiently.
9.5 Transfer
Transfer is not properly carried out. Some of the employees are continually serving at the
same post. They are simply rotated at the same branch. Therefore it is recommended that
evenly rotation of every employee should take place after every three years in different
braches of the bank.
There should not be any abrupt policies change by the upper management, as this practice
hurts the customer confidences in the bank. Government should make long term policies
Required, qualified staff should be provided to branch in order to improve the functioning
of the branch. Especially a telephone operator should be appointed.
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Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job
despite this working resulting in a loss to then Rs 3 to5 per transaction. These charges
should be increased to RS 10 per bill to enable the branch to cover their handling costs
and make some profit.
100 major branches of NBP should established a direct link with the, head quarter
In Karachi, through Internet or Intranet. This will make the functions and decision
making of the management easier and convenient.
National bank of Pakistan should start its operation in credit card. These cards are very
helpful for the ordinary customer in general and the business people in particular. To
make it mores secure and to eliminate the misuse of it, the management is required to
keep proper security against the card.
Validator machine is used to count the currency notes and its installation will help to
eliminate to counting errors and will save time.
This branch is situated in the City, which is supported to be the hub of business activates.
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.
Overdraft is a short-term credit facility provided by the bank to its trustworthy customers
free of interest. Only bank commission is charge small amount of mark-up on the
overdraft, which will help the bank to improve its revenue position.
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Clean loan or clean overdraft is the credit facility extended to the customers to the
customers without any security. These types of small term loans should not be extended
to anybody, because sometime these loans are provided to blue-eyed people of the
management and they become a part of bad debts.
In this mode of financing the amount of credit not utilized by the borrower is remained
tax-free. It is recommended that a small amount of interest should be charge on this
amount as well because the bank gas kept-aside the amount for that borrower and can not
advance it anywhere.
Bank should their administrative expenses. This was Rs 8 billion in the year 2000. That
can be done by lying off the surplus pool of employee with golden handshakes scheme.
The branches that are not much used could also be closed. Employee can also be how to
control the bank expenses. That will give positive results in the future.
As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces
the investment opportunities. Also loans should be given to the small businessmen and
the agriculture sector at the low markup rate. It should adopt flexible credit policy while
giving credit to the agriculture sector.
I would like to suggest that at least all the main branches of NBP should be fully
computerized in order to expedite the dealing process among bankers and their
customers. Every department should be provided a computer with adequate training
(especially Advances, Deposits and Foreign Exchange departments).
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Daily records should be entered directly into these computers, (instead entering the
overall daily transactions after the banking hours). It will not only reduce transaction
time, will increase accuracy but will also be efficient as well.
Not only it will be economical but will also reduce the extra burden of work of the bank.
It will also help in reducing the use of excessive paper work.
Good relationship among staff member leads to the peak performances in any
organization. I observed that the staff relationship was normal other wise but some time I
noticed that there 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. Some of the officers used to say that if I am absent for a day the bank would
stop working. So this sort of attitude is not good because it mars bank image and juniors’
willingness learn and work hard and in the end will hurt the whole team.
During my internship I observed that there was no proper distribution of work in the
bank. I saw that some of the employee worked like ants other sat idle starting here and
there. So this created a lot of over work situation for while relaxation for other.
In the City branch during my internship I saw that when some of the employees are
transfer to other places, due to their relation with influential people and with top
management they can cancel their transfer in few weeks, when they are unsatisfied at that
place.
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So I suggest that in the organization there should be no favoritism, nepotism and politics
and their transfer and promotion should be made on merit and according to the rules and
regulations of the bank and provided favorable environment to the employee to show
their performances.
I watched during my internship that, there is number of employee who have worked on
one seat for many a year. It can have negative effects motivation of employee who is hard
working and intelligent. Take the example of advances section. In advance section if the
employee is transfer after sixth month or seven month, 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.
For the internship the place I have selected was City branch, which is my forefather land
and I know that from area many people have traveled to other country for different kind
of jobs, and I have heard personal complaint about the unavailability of foreign currency
account in banks. So I thick it is wonderful opportunity for the bank to open foreign
currency account.
The branch should adopt various marketing strategy and promotion strategy to promote
the bank and its product.
The most important in my opinion is personal marketing; it is the most effective of all
when you think in term of branch level. But on the whole organization level, they should
arrange the seminar with in the bank and outside the bank. They should introduce various
prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly
income earning scheme) and various others.
They should do more advertising through newspaper and media and through channel of
personal contacts.
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There should be an information desk to provide the information and to receive the
complaints of the customer in the bank.
There is no complaint box available in the branch and not any person appointed to hear
the complaints.
Every person cannot go to the manager for the complaint because most of the people are
hesitant. So I suggest management to install a compliant box in the branch, and recruit a
special person for that guidance of the customer when they are unable to manage some
difficulties in banking matters.
Proper analysis of the business reports should be conducted before extending any type of
loan. For this purpose professional training of the stuff member is required.
It is suggested that employees working on daily wages basis should be given some
benefits, which the other employees are getting. Their salaries must increase according to
efficiency, performance and service.
In the analysis, we have discussed the difficulties of the assistant in taking any initiative;
therefore it is recommended that the assistants should he given special training to make
them ready for the leadership.
The credit department of the bank should carries out vigilant credit monitoring. They
should ensure the proper payment of installments and the mark-up by the borrower.
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The staff members who have done all the paper work of the loan extension should
perform the monitoring, as he/she will be having more information about the borrower.
The banking hours may be extended up to six, as being practiced by HBL opposite to it.
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. Therefore, City Branch may
extend the night banking to cater to demand of this business community. The branch
could also be opened to cater the requirements of this business community
Limited staff:
Bank should initiate these loans because most of bank’s customers are middle class and
they cannot afford to buy house or house hold goods at once by their own
Great care should be taking while extending the loan. Loans should be awarded against
reasonable securities, where market value should be equal to the loan granted.
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.
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CHAPTER # 10
IMPLMENTATION PLAN
From the above recommendation, two recommendations are selected for implantation
plan.
Implementation of this financing scheme is initiated to provide long term loans to the
general public for buying their own car in easy installments. This financing scheme will
help bank to increase its revenue immensely
Rate of Mark up (on daily product basis) Rs. 0.43 per Rs. 1000
Insurance.
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Mark up will be calculated for the whole time period and will be added to the principle
amount. The total of that will be divided by number of installments to get the amount for
each installment
Mark up =F*R(1+N)
2M
Where
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Case study
=.157
2*4
= Rs. 82425
Total installments
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Every organization has some problems. NBP Hayatabad branch has the problem of
telephone operator. It can save the precious time of not only manager but other staff as
well. On the other hand bank’s communication system was not doing well overall.
Therefore as an internee I felt that there should be a telephone operator who can easily
handle this situation.
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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,
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 they think it’s useful to have a
spare person for this facility.
2- Telephone networking
Labor 2000
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