CHAPTER # 1 INTRODUCTION OF STUDY 1.

1 Introduction

As part of the academic requirement for completing MBA (Marketing) Master of Business Administration. The students are required to under go for two (2) months of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. This report is about National Bank of Pakistan. NBP was established in 1949 and since then, it has expended its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers. Purpose of the Study The main purpose of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a useful manner. • • To work practically in an organization. To develop interpersonal communication.

Scope of Study As an internee in National Bank of Pakistan the main focus of my study research was on general banking procedures in one of the branches of NBP. These operations include remittances, deposits, advances and foreign exchange. Similarly different aspects of overall of NBP are also covered in this report.

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1.4  

Objectives of the Study Discuss thorough study of National Bank of Pakistan. To understand the various operations and to equip with practical knowledge of the National bank of Pakistan.

1.5

Limitation of The Study

Some thing is better than nothing. No matter how efficiently a study is conducted, it cannot be perfect in all respects. This study was conducted in accordance with the objectives of the study. The study may not include broad explanations of facts and figures due to the nature of the study. Secondly, the limitation, which affects the study, is the restriction on mentioning every fact of the bank due to the problem of secrecy of the bank. In addition, the availability of required data was a problem as all the documents and files are kept strictly under lock and key due to their strictly confidential nature. Thirdly, the problem of short time period also makes the analysis restricted as one cannot properly understand and thus analyze all the operations of a bank just a very short time of eight weeks. 1.6 Benefit of The Study

The study done will benefit the finance students in particular and banking students in general because the financial analysis section of this report comprehensively encompasses all respects of financial analysis. Furthermore, NBP Balakot Branch, Balakot may also benefit from the recommendations made at the end of the report. 1.7 Research Methodology The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal observation while working with staff and having discussion with them. Formally arranged interviews and discussions also helped me in this regards.

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Primary data:

Primary data include, Personal observation and Interviews of The Staff Members • Secondary data:

Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet 1.8 Scheme of Study SECTION 1 Chapter 1: An introductory chapter that discuss the introduction of study of report, its Background, Purpose, Scope, Methodology, limitations and Scheme of the report. SECTION 11 Chapter2: This chapter concludes brief history of banking in general, evolution of banking, Nationalization of banking in Pakistan, History of NBP, mission statement, and its objectives, functions of National Bank of Pakistan. Chapter3: In this chapter the services of NBP were discussed and the departmentation of NBP is explained as well as NBP Balakot Branch SECTION III Chapoter4: It tells about Strengths, Weaknesses, Opportunities and Threats of i.e. SWOT analysis of NBP

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and Personal Management Analysis.Chapter5: It consists of comprehensive performance of NBP through past several years. Chapter 7: In this chapter recommendation for improvement on all aspects of the Bank are given. Balakot branch Balakot 4 . Chapter 8: Two implementation plans are given in this chapter. Functional analysis.e. Administrative analysis. Internship Report on NBP. This chapter has been divided into four parts i. Problems at the Branch. Ratio analysis and those parties that are interested in financial performance of Bank. “Mare Gare Car Financing Scheme” and Need for Telephone Operator. SECTION IV Chapter 6: It covers the critical analysis of the bank.

loans were started being granted for interest. Perhaps it where the Babylonian who developed banking system as early as 2000 B. In Europe with the ‘revival of civilization’ (Renaissance) in the middle of twelve century. Soon Venice and Geneva became the most important money markets of the time and banking though different from its Internship Report on NBP. which means a bench. Later on when the German occupied major part of the Italy the word ‘Back’ was italicized into ‘Back’. which means ‘joint stock fund’. Balakot branch Balakot 5 . King Hamurabi drew up a code wherein he laid down standards rules for procedures for banking operations by temples and great landowners. where the people deposited their money and other valuables for safe custody and security.1 INTRODUCTION There are different opinions that how the word ‘Bank’ originated. the people destroyed the ‘bench’. At that time temples were used as banks because of their prevalent respect. The borrower has to provide guarantee or he had to pledge his goods or valuables. Also in Greece.CHAPTER # 2 EVOLUTION OF BANKS IN PAKISTAN 2. Seeing the great demand. 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. trade and commerce started expanding and this development compelled the business community to borrow the money from the Hebrew moneylenders on high rates of interest and usury. Some of the authors are of opinion that the word ‘Bank’ is derived from the German word back. the temples were used as banks. these moneylenders started organizing themselves and bank started up at the principle seaports of southern Europe. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians Empire. Some of the author’s opinion that this word is derived from the word ‘Bancus’ or Banque’. Incidentally the word ‘Bankrupt’s said to have evolved from this practice. In fact human left the need of bank when it begins to realize the importance of money as a medium of exchange.C. and when the business failed.

we mean the business of dealing in credits and by a ‘Bank’ we include every person.  Take current accounts. which deals with money and credit. 2. a dealer in money. can be a banker who does not  Take deposits accounts.  Issue and pay Cheques and  Collect Cheques crossed and uncrossed for his customers” The American defined the term banker in a very broad sense as under: “By banking. money is advanced or loaned on stocks. bill of exchange. Subjects to be paid or remitted on Cheques or order.present form. Balakot branch Balakot 6 . He is intermediate party between the borrower and the lender. bonds. firm or company having a place of business where credits are opened by deposits of collection of money or currency. flourished. What we know as ‘modern banking’ originated in the 14th century in Barcelona. J. makes loan at interest. Internship Report on NBP. firms and companies at a lower rate of Interest and gives at higher rate of interest to those who need them. He borrows of one and lends to another”. Sir John Paged defines banker in these terms: “That no person or body. bullion. corporate or otherwise.W Gilbert in his principles and practice banking defines a banker in these words: “A banker is dealer in capital or more properly. promissory notes are received for discount or sale”. It accepts Deposits from individuals. etc.” A financial establishment which uses money deposited by customers for investment. pays it out when required.2 Definitions of Bank "A financial institution. exchanges currency.

until 30th Sep. transferred them to 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. The area now constituting Pakistan was. Many specialists were of the opinion that in view of the acute shortage of trained staff. relatively speaking.4 Banking Growth during (1948-1970) In this tense situation. This resulted in a negative effect on baking service in Pakistan. The banks.1948.2. the country today possesses a full range of banking and financial institutions to cope with various needs of the economy. 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. any idea of establishing a central bank was I impractical and the best that could be attempted was the setting up of a currency board until such times as sufficient staff could be organize to operate a central bank. it was realized that the shortage of trained personal to run the Internship Report on NBP. a committee was immediately setup to formulate a scheme of central banking legislation for Pakistan.3 Evolution of Banking in Pakistan The first phase in evolution of banking in Pakistan sees very hard days for the whole banking sector. which stayed. 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. 2. The number of scheduled banks thus declined form 487 branches before independence to only 195 branches by 30th June1948. Through. The Reserve bank of India was the central banking authority in India. fairly well provided with banking facilities in undivided India. In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. which had their registered offices in Pakistan. Starting virtually from scratch in 1947. operated only in name pending the winding up of their business. The questions as to whether the institution should be only a currency board or a fullfledged central bank had exercised the mind of the Pakistan government since independence. Balakot branch Balakot 7 .

which the new central bank had to address itself. 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. Under the fostering care of the state bank and the support of the government. the National bank of India shortly. in November 1952. The first Pakistan notes were issued in October 1948 in the denominations of Rs. which led to this decision. which had continued to circulate in Pakistan during the transitional period. Among other factors. 10 & 100. was the creation of a national banking system. By using its special powers. the state bank made liberal advances to the new bank to help it expand credit facilities in the country. the new institution developed rapidly. In view of the special role assigned to the new institution. there was the fact the banking facilities in the country had been totally disrupted and there was an urgent need for their rehabilitation. Balakot branch Balakot 8 . while extending every help and encouragement to Habib Bank to expand its organization. By 1952. It started with six offices in the former East Pakistan. Internship Report on NBP. An equally urgent task. known as the state bank of Pakistan order. As there was hardly any time to pass as Act. 5. The state bank declared open on July 1 . which was promulgated by the government of Pakistan on 12th may 1948. One of the first tasks of the state bank was to arrange for the replacement of the Reserve bank of India notes. the government ultimately decided to take the bold step of setting up a full fledged central banking authority. Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in November 1949. To this end. the governor of the state bank ceased to function as the president of National bank of Pakistan. afterwards. contrary to traditional practices the Governor of the state bank was appointed to head its Board of Director in 1950. which a central bank alone could meet. by Pakistan currency. an order was drafted. 1948 by the father of the nation.central bank would present serious difficulty in view of the tangible advantages that a central bank enjoyed over currency board.

The bank extended its network by opening six new offices located at Chitagong. The demand of funds picked up and there was a substantial expansion of bank credit to the private sector. Balakot branch Balakot 9 . At the end of June 1958 their number had increased to 307. the National Commercial Bank was established and registered as a scheduled bank. The number of scheduled bank offices rose Internship Report on NBP. The year 1958 marked the completion of the first decade of the working of the State Bank of Pakistan. Pakistani banks held 60% of the total banks deposits. The pace of expansion in the institutional frameworks of the country’s banking system quickened and a new Pakistani. the credit structure in Pakistan made rapid progress. Layallpur and Rawalpindi. Banking companies (control) act was passed in December 1948 specifically empowering the state bank to control the operations of banking companies in Pakistan. Khulna. As the Commercial Banking facilities continued to expand. which was repeated after year and turned out a large number of bankers. of which Pakistani banks accounted for 232 against 25 in mid 1948. Peshawar. When it was established there were only 195 bank offices in existence. Quetta. Moreover at the end of June 1958. and the firming up of commodity markets. and were responsible for 65 of total bank credit. bank. In the filed of industrial finance a new institution known as the industrial credit and investment cooperation was set up. the state bank also sponsored the establishment of specialized credit institutions in the filed of agriculture and industry. Owning the five years 1960-65.With a view to broadening the institutional framework of the financial system. transfer of business in food grains to the private sector. When the Ayub Khan Government took over in 1958. a new Pakistani bank. namely the United Bank Limited was established. the banking and monetary scene was significantly affected by developments such as the liberalization of imports. 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.

from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to the list of scheduled banks. Two principal additions were the commerce bank, and the standard bank. The number of scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965. Under the impact of economic growth and dear scope of private enterprises, bank credit to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total expansion in bank credit to the private sector during this period amounted to Rs. 4300 million, which gave a annual expansion of Rs. 860 million compared to the annual average increase of Rs. 144 million over the preceding five years. Banks deposits increased from Rs. 2,493 million to Rs. 6883 million during the five years period ended June 1965 compared to Rs. 231 million in the proceeding five years. Time deposits during this period increased from Rs. 946 million to Rs. 3228 million, where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at 49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of banking development during this period was that since the rate of increase in bank deposits lagged behind the rate of expansion in bank credit, the banked has to depend increasingly on central bank finance. They borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen demand for bank credit, bank’s investments could not increase as rapidly as their advances. Their investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231 million in June 1960. Investments, which were almost equal to their advances in June 1960, were only about one third of the advances in June 1965.The third plane period witnessed a further expansion of banking facilities in the country the total number of scheduled banked offices increased from 1,591 at the end of June 1965 to 3133 at the close of June 1970. During the same bank credit to the private sector rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end of June 1970. A remarkable change occurred during this period related to the

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composition of deposits. Time deposit becomes greater than demand deposits forming about 54 percent age of the total deposits. As oppose to what happened in the previous period, banks were able to finance a mush higher level of credit expansion without having to increase their borrowings from the central bank. 2.5 Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms were introduced to make the banks more responsive to the requirements of economics growth with social justice. The reforms aimed at bringing about a more purposeful and equitable distribution of bank credit, improving the soundness and efficiency of the banks, and securing greater social accountability of the banking system as a whole. The role of the banking system had been truly spectacular in mobilizing savings of the community and meeting the credit needs of the economy. But at the same time, the banks had generally neglected their role in promoting social justice and had failed to play an effective role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In particular the inter locking of ownership with commercial and industrial interests had led to the misuse of bank resources. There was a heavy concentration of credit in big accounts and in urban area. Credit facilities for agriculture, small business, newly emerging exports and housing had remained obviously inadequate while the banks indulged in capital financing in few selected business sectors and issued guarantees on behalf of favored clients, term clients, term financing facilities for industry were wholly absent. Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider powers. It was authorized to remove directors or managerial personnel, if necessary and supersede the board of directors of a banking company and appoint administrators during the period of such super session. It was also empowered to nominate directors on the board of every bank. As regard bank directors, it was provided that anyone defaulting in meeting his obligations to bank would forfeit his directorship. Moreover, it was laid down that no person could serve as director of a bank for more than

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six years continuously. Each bank was required to have a paid up capital of not less than 5 percent age of its deposits to be progressively build up to 10 percent age over a period of time. The banks were also required to transfer 10 percentage of their profit their reserves every years after the reserve became equal to the paid up capital. With a view to diversity the ownership of the banks, the banks were required to raise new capital from the market. Unsecured loans to directors, their families or firms and companies, were totally prohibited. The bank reforms also brought about the establishment of new institutions to achieve new objectives.A national credit consultative was setup under the supervision of the state bank with representation form the government and the private sector. It was assigned the task of determining of economy’s annual credit needs within the safe limits of monetary and credit expansion with reference to the annual development plan. Such a credit plan was to cover the public and private sectors. Alongside the National credit council and Agricultural Advisory Committee was formed to allocate agriculture credit for various purposes, to coordinate the operation or the agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing committee on exports in general and the new emerging exports in particular, was also established. With a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme was introduced under which the state bank under took to share any bonfire losses incurred by the commercial banks in case of small loans of advances to agriculture. At the same time two financing institutions were established. The people’s Finance Corporation was designed to provide finance to people of small means while the National Development Finance Corporation was set up of finance public sector owned and managed industries and enterprises. 2.6 Nationalization of Banks (1974) In Pakistan

The banking reforms turned to be transitional and interim step and when they were hardly eighteen months old the government nationalized the banking systems, with the following main objectives.

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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. 1973 there were following 14 Pakistani commercial banks with 3323 offices allover Pakistan and 74 offices in foreign countries: National banks of Pakistan Habib bank limited Habib bank (overseas) limited United bank limited Muslim commercial bank limited Internship Report on NBP. The act passed for the nationalization of banks is known as the banks Nationalization Act 1974. Directors and Executives of various banks. To coordinate the banking policies in various area of feasible joint activity without eliminating healthy competition among banks.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. the Chairman. 1974. Under the Nationalization act. Balakot branch Balakot 13 . To distribute equitably credit too different classes sectors and regions. The ownership. At the time of Nationalization on December31. Thus under this act the state bank of Pakistan and all the commercial banks incorporated in Pakistan and carrying business in or outside the country were brought under government ownership with effect from Jan 1. management and control of all Pakistani banks stood transferred to and vested in the Federal government. Pakistan banking council was established to coordinate the activities of the Nationalized Commercial banks. The shareholders were provided compensation in the form of federal government bonds redeemable at par anytime within the period of fifteen years.

When the bank Bahawalpur was merged with the National Bank of Pakistan. Internship Report on NBP. 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. Balakot branch Balakot 14 .Commerce bank limited Standard bank limited Australia bank limited Bank of Bahawalpur limited Premium bank limited Pak Bank limited Sarhad bank limited Lahore commercial limited Punjab provincial co-operative bank limited The Pakistan banking council prepared a scheme for the recognition of banks. providing for the amalgamation of the smaller banks with bigger ones and following the five units in there phases: National bank limited Habib bank limited United bank limite Muslim commercial bank limited Allied bank of Pakistan limited The first phase was completed on 30th June. 1974. The bank (amalgamation) scheme 1974 was notified in April.

1974. 1981. 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. Separate interest free counters began to operate in all the nationalized commercial banks free counters began to operate in all the nationalized commercial banks. debtor. A new law Modaraba Companies Ordinance 1980 was promulgated. The third and the final phase were completed on 30 th June 1975 when the standard bank limited was merged with Habib Bank limited. which stood at Rs. which stood at 3397 on Dec31. This followed the effort to eliminated interest from the operation of Nation investment trust. The number of branches. mark about 323 corers. In order to cover interest free transactions certain banking definitions such as creditors. 1925 corers at the end 1973 reached the highest. The bank deposits.1 Islamization of Banking Another major development in the history of Pakistan Banking System was the introduced of interest free banking in selected Commercial Banks with effect form Jan1. Internship Report on NBP. reached on 7661 by end June 1992. Certain amendments were made in banking and other laws with the object of ushering in a new system of banking.The second phase was completed on 31st Dec.6. 2. 1973. Stipulations concerning form of business in which banking companies may engage may also have been modified schemes were introduced to provide interest free loans to formers and deserving students. when the commerce bank limited merged with the United Bank limited. The state bank provides finance against participation term certificate and also against promissory notes supported by Modaraba certificate. Balakot branch Balakot 15 . which would confirm of Sharia. and advances credits and deposits were revised. the House Building Finance Corporation of Pakistan. The nationalization was very smooth and gave very positive results.

Now only NBP is government bank other than SBP. ♦ Modaraba Financing. The performance of this bank will be analyzed and judged in the following chapters. Different financial schemes introduced in the Islamization process are: ♦ Musharika Financing. ♦ Hire Purchase Financing. 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. Balakot branch Balakot 16 . New products and their systematic consumption are making Pakistani banking comparable to their several modern counterparts anywhere in the developed world.63 Interest Free Banking A new concept of interest free banking was introduced in 1981 and by now it has been established on sound footing and new trends and techniques are being implemented to make this system result oriented. and profit and loss sharing accounts were introduced.A scheme to extend interest free productive loans to farmers and fisherman has also been introduced. ♦ Specific Purpose Modaraba. Internship Report on NBP. exchange rate differential. 2. 2.2 Dis-investments and Deregulation of Banking – 1991 When it was realized that the role of public sector in the economy is over extended and the banking sector has more earning potential in the private sector the process of privatization banking sector restarted in 1991 by the Muslim League Government. a system based on mark-up in price.6. Muslim Commercial Bank was Dis-invested in to two phases while ABL was sold to its employees. Instead of interest.

2.6.4

HISTORY OF NBP :

The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the former Bahawalpur State. NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at 57 of its offices where the turnover of the business under the head amounted to Rs.2460 million. i) Deposits held by NBP constituted about 3.1% of total deposits of all

Pakistani Banks in 1949, which rose to 38% in 1952. ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances.

NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and commerce. iii) NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule bank credit.

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MISSION STATEMEN “To make the Bank complete and competitive with all international And

Standard in performing, quality of, operations, staff, financial strength. the bank”. 2.6.4.2 GOALS AND OBJICTIVES

products and services To develop a culture of excellence in every spare of activity of

“An organizational objective is the intended goal that prescribes definite scope and suggests direction to the panning efforts of a organization.” 2.6.4.3 GOALS AND OBJICTIVES NBP “To be the pre-eminent financial institution in Pakistan and achieve market recognition both in the quality and delivery of service as well as the range of product offerings.” 2.6.4.4 BOARD OF DIRECTORS

NBP, Board of Directors list consist the following members and their designation. Table 1 NAME Ali Raza Dr Waqar Masood Ifthikhar Ali Malik Syed Shafqat Ali Shah Jamoti M Zubair Motiwala Sikandar Hayat Jamali M. Khalid Malik DISIGNATION Chairman & President Director Director Director Director Director Director

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S.M. Rafique (Source Annual report 2004) 2.6.4

SEVP & Sectorary to BD

BOARD OF DIRECTORS
Syed Ali Raza (President)

Dr. Waqar Masood khan (Director)

Iftikhar Ali Malik (Director)

M.Arshad Chaudry (Director)

Syed Shafaqat Ali Shah (Director)

M.Zubair Motiwala (Director)

Skindar Hayat Jamali (Director)

Mohd Khalid Malik (Secretary)

Source: Annual Report of NBP (2003)

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Decentralized disperses decision-making and authority throughout and further down the organizational hierarchy. actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources. Special Assets & Remedial Management Group SEVP & Group Chief. 2. 2.6. Table 2 SEVP & Group Chief.2.6. Corporate & Masood Karim Sheikh Investment Banking Group and Chief Financial Officer S.1 SENIOR MANAGEMENT OF NBP . organizing. 1.The management has two types. Compliance Internship Report on NBP. M. Decentralized. Balakot branch Balakot 20 . Centralized.5.5 MANAGEMENT Management is a distinct process consisting of activities of planning. Rafique Derick Cyprian Imam Bakhsh Baloch SEVP & Secretary Board of Directors SEVP & Group Chief. NBP have a centralized type of management because the top management takes all the decisions. Senior Management of NBP consists of following member and their respective designation. Centralized Management tends to concentrate decision making at the top of the Organization.

In Pakistan it has 29 regional offices.pk) 2.6. Audit & Nadeem A. 1189 Branches and 4 Subsidiaries. Dogar Muhammad Sardar Khawaja Dr. In overseas it has 16 overseas branches. Human Resources Management & Administration Group Group Chief. Operations Group EVP & Group Chief. Information Technology Group EVP & Group Chief.6 Net Work of Branches: Management Group EVP & PSO to the President Group Chief. Asif A.2.7 Objectives of NBP National bank of Pakistan is also a commercial organization and its main objective is profit maximization.com. Commercial & Retail Banking Group EVP & Group Chief. Risk Management Group EVP & Group Chief. This is achieved in two ways: Internship Report on NBP. Mirza Abrar Baig Uzma Bashir (Source www. Organization D&T Group NBP have wide range of branches inside the country and outside the country.6.Group Shahid Anwar Khan EVP & Group Chief. Balakot branch Balakot 21 . 6 other branches. Brohi Javed Mehmood Inspection Group EVP & Group Chief. Treasury Muhammad Nusrat Vohra Amim Akhtar Dr. .nbp.

Deposits are collected from the people and invested in different projects. By charging interest on loans provided to the private sector and business community.6. NBP prefers to give loans to financially sound and reliable parties. By increasing deposits. 2.7. iii. ii.2 Extension of loans: The profitability of a bank largely depends on the amount given to people as loan and the type of people to whom credit is given i. There are two main factors involved in increasing the deposits. Improve customer services. By increasing its deposits a bank can extend greater amount of loan and hence achieves higher profit. The staff is adequately trained.6. NBP is also improving its facilities and services to attract customers with higher volume of deposits. Quick disposal of credit cases.1 Increase in deposits: Competition in banking is intense and every bank whether it is Pakistani. Interest charged on the loans potentially contributes to higher profits. NBP has an extremely well organized section. foreign. the credit worthiness of the borrowers. private or nationalized tries to increase its deposits by providing better facilities to its customers. These are explained as: 2. Balakot branch Balakot 22 .1. These factors are improving the services and courtesy.e. after securing the collators. This strategy has worked quite well for NBP. Some of the other objectives of NBP are: i. NBP is continuously working on these two factors to increase its deposits. They carry out extensive financial analysis before deciding on the loan. and educated and competent. Internship Report on NBP. 2.7. Efficient operation of the branches.

8. NBP pays practically no interest on current deposits.6. advancing loans and discounting of exchange. Its other major functions include receiving deposits.1 Accepting Deposits This function is important because banks largely depend on the funds deposited with them by its customers. Operational and advisory services for foreign exchange accounts activities 2.6. Current deposits Current deposits are also called demand liability on current deposits. PLS account can be opened with a minimum amount of Rs. Balakot branch Balakot 23 . One can deposit and draw money easily. v.500/iii. Businessmen usually open current accounts. 2. The functions performed by NBP are: 2. it performs a variety of functions. NBP is engaged in financing international trade. PLS saving deposit Profit and loss sharing deposits (PLS) are also called checking accounts. In this case the rates of profit will be different depending upon the time period. Like other commercial banks. Deposits are of many types: i.iv. Profit on PLS is calculated every month but paid after six months. PLS term deposits Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they cannot be withdrawn unless giving due notice. In NBP current account can be opened with a minimum amount of Rs.8 Functions of NBP Since NBP is a commercial bank.9 Discounting bills of exchange Internship Report on NBP. Better Public Relations.6.500/-.

NBP provide the following agency services to the customers: i.10 Agency service NBP also provides best and unique service to its valued customers. Clearance of utility bills NBP provides the service of clearing the utility bills i.6. This is the common way used for keeping a part of assets of the bank in a liquid form. ii. Acting as an agent NBP also acts as an agent correspondent or representative for its customer at home or abroad. 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. electricity. Lockers facility Internship Report on NBP.e. gas and telephone bills of its customers. For this purpose it also provides evening banking services b. Collection of Cheques In the collection and payment of Cheques.e. therefore NBP also provide dividend or interest earned on share or bonds or invested money. 2. Collection of dividends As NBP deals with the purchase and sale of various types of securities. bills and promissory notes etc. iv. National bank of Pakistan acts as an agent for its customers. General utility services: Utilities provided by NBP are as follows: a. This bill has to be mature. iii. Balakot branch Balakot 24 .Discounting of bill is practically speaking lending for exchange at their market rate i.

11 Unmatched Banking Facilities  Deposit security.  Handling of salaries & pensions of federal/provincial/defense personnel.  Highest rates of return to attract the savings.National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in it.  Largest contribution towards Government and Semi-Government requirements.  Safe Deposit Lockers for customers. d. receipts of Taxes & other Revenues. The charges of different size of lockers are different.  Lowest rates on exports and other borrowings.  Sale and encashment of prize Bonds.  Hajj arrangements.  Agents of the SBP handling Treasury Functions. c. Balakot branch Balakot 25 . Internship Report on NBP. Guaranteed by Government of Pakistan.6.  Utility Bills collections. Supply of information NBP provides operational and advisory service for foreign exchange accounts/activities.  Sale and encashment of Defense Savings and Special Savings Certificates. Acts as a referee NBP provides useful services to its customers by acting as a referee to their credit worthiness. 2.

13 Summation We discussed in this chapter the evaluation of banking in Pakistan. Booth at Pak Afghan border (Chamman). The law of Banking. Booth at Pak Afghan border (Torkham) NWFP iii. Baluchistan. AAA+1 rating awarded JCR-VIS Credit Co. 2. Israr. Establishing branch at Kabul. The prestigious periodical “The Banker” UK recognized NBP as the best bank for 20012002 and NBP is the bank of the year for 2004-2004 of Pakistan. REFRENCES 1. The next and onward chapter we will discuss the general banking information and departmentalization of NBP. i. Siddiqi H. banking reforms 1972. Sir. Paged John.6. Balakot branch Balakot 26 . (1998). ii. The Law of Banking.12 NBP at the forefront of Pak-Afghan trade i. Rational Human Resource Management.6.Ltd and affiliated of Japan Credit Rating Agency for 2002 2. Page 15-17 2. McGraw Hill Publication: page 51-58 Internship Report on NBP. Mission Statement of NBP. AAA rating awarded JCR-VIS Credit co. iv. Nationalization of banks. History of NBP. Ltd and affiliated of Japan Credit Rating Agency for 2001. Karachi: Decent Print Enterprises. Practice and Law of banking in Pakistan. Booth at dry port Peshawar ii.

com.(2001).pk CHAPTER # 3 INFORMATION & DEPARTMENTALIZATION OF NBP 3. Kitab Markaz: Page. www.pk 5.com. Saeed H. Internship Report on NBP. www.google. Money and Banking. Pakistan. Nasir.3.105- 106 4. 6.nbp. Bank Nationalization act 1974.1 INTRODUCTION This chapter presents the services and departmentalization of NBP. Balakot branch Balakot 27 .

With competitive rates. Any person whether an account holder of the bank or not. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. 3. you can safely and speedily transfer money for our business and personal needs. NBP offers the following services to the people. 3.4 LETTERS OF CREDIT * NBP is committed to offering its business customers the widest range of options in the area of money transfer. Balakot branch Balakot 28 .2 DEMAND DRAFTS If you are looking for a safe.Services are outputs of the firm. Using the NBP network of branches. you can now purchase NBP’s Demand Drafts at very reasonable rates. and ease of transaction. and there is no restriction on the period of validity of the cheques. Internship Report on NBP. which eliminates the manual application of tests that often cause delay in the payment of home remittances. Which are the backbones of any organization to earn profit. The system has built-in features of computerized test keys. 3.3 SWIFT SYSTEM The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. speedy and reliable way to transfer money.5 TRAVELER'S CHEQUES Traveler’s cheques are negotiable instruments. 3. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. can purchase a Demand Draft from a bank branch. Rupee traveler’s cheque is available at all 700 branches of NBP. NBP Letters of Credit are the best way to do your business transactions. security. which are in intangible form.

3.exchange rate and RS 75/.7 AIL TRANSFERS Move your money safely and quickly using NBP Mail Transfer service.for non account holders.8 FOREIGN REMITTANCES: To facilitate its customers in the area of Home Remittances. And. NBP pay orders are a secure and easy way to move your money from one place to another.1 New Features: The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home Internship Report on NBP. And NBP also offers the most competitive rates in the market.for NBP account holders and Rs 150/. National Bank of Pakistan has taken a number of measures to: • • Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries 3.for NBP account holders on issuing one payment order.6 PAY ORDER NBP provides another reason to transfer your money using our facilities.postage charges on issuing mail transfer. The charges of NBP are very low all over the Pakistan. And charges Rs 100/. It charges Rs 25/.for NBP non-account holders on issuing one payment order.This can be encashed in all 400 branches of NBP. It charges Rs 50/. 3.for students on payment of fees of educational institutions. NBP charges for this service are extremely competitive. If some one want a duplicate of payment order they charges Rs 100/. They charges Rs 50/. Balakot branch Balakot 29 . as usual. 3. There is no limit on purchase of this cheque. It is one of the safest ways for carrying money.8.

10.4 to 1. Profit is paid on half yearly basis on monthly balances. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. Whether you are looking to invest for 3 months or 1 year.9 SHORT TERM INVESTMENTS NBP now offers excellent rates of profit on all its short-term investment accounts. 3. On Deposits of Rs.the rate is 1.75 • It is a checking account and there is no limit of withdrawals. 3.2 million to 2. • • • Zero Tariffs: NBP is providing home remittance services without any charges.remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd. Saudi Arabia.. along with the security and service only NBP can provide.million to Rs 50/.1 Salient Features: • • • Rs 2-million are required to open an account and there is no maximum limit. Internship Report on NBP. and Bank Al-Jazira.10. NBP’s rates of profit are extremely attractive.2 Rates on NIDA • From Rs 2/. 3.4%. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries. 3.000 million.10 National Income Daily Account (NIDA) The scheme was launched in December 1995 to attract corporate customers. the rate fluctuates from 1. The rates of profit vary according to the slabs of deposit. Balakot branch Balakot 30 . Strict monitoring of the system is done to ensure the highest possible security.

the rate is 1. agriculturists.11 From Rs50/.million but below Rs 1000/. They are the customer’s best resource in making NBP’s products and services work for them. large and small business and other segments of the economy.6%. 3. Internship Report on NBP.million but less than Rs 500/-million. Balakot branch Balakot 31 .13.5%. 3. which would result in better returns offered to account holders 3.11. EQUITY INVESTMENTS NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence.12 COMMERCIAL FINANCE NBP dedicated team of professionals truly understands the needs of professionals.13 TRADE FINANCE OTHER BUSINESS LOANS There are two types of trade finance.1 • • NBP is involved in the following: Investment into the capital market Introduction of capital market accounts (under process) NBP’s involvement in capital markets is expected to increase its earnings.and above the rate is 1. the rate is 1.• • • 3. From Rs 1000/.75%.1 AGRICULTURAL FINANCE NBP provides Agricultural Finance to solidify faith. From Rs 500/. commitment and pride of farmers who produce some of the best agricultural products in the World. 3. The bank is now regarded as the most active and dominant player in the development of the stock market.

3 • • • • • • • • Agricultural Credit (Medium Term): Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy Equipment for sprinklers Internship Report on NBP.1. is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input.2 Agricultural Credit: The agricultural financing strategy of NBP is aimed at three main objectives:• • Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production • Provide farmers an integrated package of credit with supplies of essential inputs.13. 3. thus helping farmers across Pakistan to increase production.13.1 Agricultural Finance Services: “I Feed the World” program. technical knowledge.1.1.13. Balakot branch Balakot 32 .3. a new product. and supervision of farming. 3. Select farms will be made role models for other farms and farmers to follow.

2 CORPORATE FINANCE 3. and feeding of livestock.2. 3.13.13. 3. Balakot branch Balakot 33 . sprayers.3.5 Production Loans: Production loans are meant for basic inputs of the farm and are short term in nature. • • • Operating loans Land improvement loans Equipment loans for purchase of tractors.13. fertilizers.13.13.1 Working Capital and Short Term Loans: NBP specializes in providing Project Finance – Export Refinance to exporters – Preshipment and Post-shipment financing to exporters – Running finance – Cash Finance – Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Preshipment / Post Shipment Agricultural Production Loans 3.1. farm implements or any other equipment Livestock loans for the purchase. NBP expedites clients’ attempt to upgrade and expand their operation thereby making possible Internship Report on NBP.1. If you require any further information.4 Farm Credit: NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis.2 Medium term loans and Capital Expenditure Financing: NBP provides financing for its clients’ capital expenditure and other long-term investment needs. care. By sharing the risk associated with such long-term investments. please do not hesitate to e-mail us. Seeds.2. etc are all covered under this scheme.

with NBP. Because we understand our syndicate partners’ asset criteria. Additionally.3 Loan Structuring and Syndication: National Bank’s leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. This type of long term financing proves the bank’s belief in its client's capabilities.14 INTERNATIONAL BANKING National Bank of Pakistan is at the forefront of international banking in Pakistan. geographic location and structure through syndicated debt offerings. In fact. and its commitment to the country. who bring specialized knowledge to the structure of a transaction. you’ll be provided everything. which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. They will also be able to take advantage of our outstanding range of payment.the fulfillment of our clients’ vision.2. 3. which takes to manage your cash flow more accurately 3.2. liquidity and investment services. which is placed under the Risk Management Group.4 Cash Management Services: With National Bank’s Cash Management Services (in process of being set up). ejection. we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry. This will enable the customer to manage their company’s total financial position right from your desktop computer.13.13. Our syndication capabilities are complemented by our own capital strength and by industry teams. 3. Balakot branch Balakot 34 . the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. The role of the Financial Institution Wing is: • To effectively manage NBP’s exposure to foreign and domestic correspondence Internship Report on NBP. NBP have recently set up the Financial Institution Wing.

The gold is 3.17 DEPARTMENTALIZATION 2 Dividing an organization into different parts according to the functions is called departmentation. 3. Cash and Gold finance means that loan is given against the gold.16 Advance salary loan: This loan is given to those people who are govt servants.17. Balakot branch Balakot 35 . treasury and other key business areas. And borrower can take loan for common use. 3. A) DEPARTMENTATION OF NBP 3.• Manage the monetary aspect of NBP’s relationship with the correspondents to support trade.1 CASH DEPARTMENT Internship Report on NBP. It is the area of consumer finance. They can get a loan up to the salary of fifteen months. So NBP can be divided into the following main departments.15 mortgaged with the bank and loan is taken. thereby contributing to the bank’s profitability • Generation of incremental trade-finance business and revenues NBP offers: The lowest rates on exports and other international banking products Access to different local commercial banks in international banking Cash and Gold Finance.14.1 • • 3.

1.1.1. Since a Cheque has been declared to be a bill of exchange. 3.2) Receipt The money. its record should be kept.17. Every customer has its own ledger account and has separate ledger cards.17. it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act. 1881. 3.Cash department performs the following functions 3.1. one can say that a Cheque can be defined as an: “An unconditional order in writing drawn on a specified banker. 1881 3 “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”.17.17. a specified person or to the bearer. or to the order of. Act. Balakot branch Balakot 36 .4) Cheques and their Payment The Negotiable Instruments. requiring the banker to pay on demand a sum certain in money to. Therefore.5) The Requisites of Cheque Internship Report on NBP. The deposits of all customers of the bank are controlled by means of ledger accounts. which either comes or goes out from the bank. 3.3) Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. Cash department performs this function. signed by the drawer. and which does not order any act to be done in addition to the payment of money”.

but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following. a drawee banker and a payee. or no payee but bearer.7) Bankers in Pakistan deal with three types of cheques a) Bearer Cheques Internship Report on NBP.1. Balakot branch Balakot 37 . a) b) c) d) e) f) g) It should be in writing The unconditional order Drawn on specific banker only Payment on Demand Sum Certain in money Payable to a specific person Signed by the drawer Parties to Cheque 3.6) The normal Cheque is one in which there is a drawer.There is no prescribed form of words or design of a Cheque.17.1.17. a) b) c) The Drawer The Drawee The Payee Types of Cheques 3.

The acid test of banking is the receipt of money etc. which receive money from the public. It can only be credited to the payee’s account. It is a contractual obligation of a banker to honor his customer’s cheques if the following essentials are fulfilled. It can also be collected through clearing. a) b) Cheques should be in a proper form: Cheque should not be crossed: Internship Report on NBP.1. This paying function is one. 3. However the bankers’ legal protection is only when payment is in ‘Due Course’. Balakot branch Balakot 38 .8) Payment of Cheques It is a banker’s primary contract to repay money received for his customer’s account usually by honouring his cheques. and repayment to them. 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. c) Crossed Cheque These cheques are not payable in cash at the counters of a banker. If there are two persons having accounts at the same bank. which is the distinguishing mark of a banker and differentiates him from other institutions. one of the account holder issues a cross-cheque in favour of the other account holder. in good faith and without negligence to any person in possession thereof under circumstances. Payment of money deposited by the customer is one of the root functions of banking. from the depositors.17.Bearer cheques are cashable at the counter of the bank. The payment in due course means payment in accordance with the apparent tenor of the instrument. 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. These can also be collected through clearing. which do not afford a reasonable ground of believing that he is not entitled to receive payment of the amount therein mentioned.

a rapid growth in banking institutions has taken place. He deposits the cheque with his bank other than of payer for the collection of the amount. In practice. The use of cheques in making payments has also widely increased. Now the bank in which the cheque has been deposited becomes a creditor of the drawer’s bank. At the same time. as a representative of SBP act as a clearinghouse. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions. the creditors’ banks receive large amounts of cheques drawn on other banks giving claims of payment by them. The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. After the World War II. the mutual obligation are settled by the internal bank administration and there arises no inter bank debits from the use of cheques. the clearing system is operated by the SBP. The total assets and total liabilities of the bank remain unchanged.17.2 CLEARANCE DEPARTMENT A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims.c) d) e) f) g) h) Cheque should be drawn on the particular bank: Cheque should not mutilated: Funds must be sufficient and available: The Cheque should not be post dated or stale: Cheque should be presented during banking hours: 3. In Pakistan. the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer. If SBP has no office at a place. then NBP. Balakot branch Balakot 39 . The banks on which the cheques are drawn become in debt to the bank in which the cheques are deposited. When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at the bank of the drawer. Internship Report on NBP. The function of clearinghouse is performed by the central bank of a country by tradition or by law.

The major portion of the profit is earned through this department. As we known bank is a profit seeking institution. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank. Totals are also made of all the cheques presented by or to each bank. 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.17. Balakot branch Balakot 40 .1) In-Word Clearing Books The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. 3.2. The Credit Management Division of Head Office directly controls all the advances. The difference between the total represents the amount to be paid by a particular bank and the amount to be received by it. All details of the cheques are recorded in this book. The meeting is held in the office of the bank that officially performs the duties of clearinghouse.2) Out-Word Clearing Book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the bank has delivered to other banks. Each bank then receives the net amount due to it or pays the net amount owed by it.The easy.18 ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. the total number of cheques delivered and received by them. 3. The representatives of the local commercial banks meet at a fixed time on all the business days of the week. This facility of net inter bank payment is provided by the clearinghouse. The job of this department is to make proposals about the loans.17. 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. Credit Internship Report on NBP. safe and most efficient way is to offset the reciprocal claims against the other and receive only the net amount owned by them.2. 3.

However. Safety Internship Report on NBP. 3. through this note borrower promise that he will be responsible to pay the certain amount of money with interest. Security against loan. it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. who wants loan from NBP.2) Principles of Advances There are five principles. d. Any individual or company.18. 3. Signing a promissory note is also a requirement of lending. which provides the following information to the banker. b.extensions are the most important activity of all financial institutions. a) b) c) d) e) Existing financial position of a borrower at a particular branch. at the same time. which must be duly observed while advancing money to the borrowers. Exiting financial position of the company. Balakot branch Balakot 41 . (Balance Sheet & Income Statement).1) Name and address of the borrower. because it is the main source of earning. Accounts details of other banks (if any). e. first of all has to undergo the filling of a prescribed form. c.18. Safety Liquidity Dispersal Remuneration Suitability a. a.

the banker must be very careful and ensure that his depositor’s money is advanced to safe hands where the risk of loss does not exist. Savings Bank Account. there are more chances of loss to the banker. A borrower’s character can indicate his intention to repay the advance since his honesty and integrity is of primary importance. Capacity This is the management ability factor. Therefore. Character It is the most important factor in determining the safety of advance. Special Notice Account and Fixed Deposit Account. especially when the securities offered by him are inadequate in covering the full amount of advance. b. Balakot branch Balakot 42 . Call Deposit Account. the banker should avoid him. for there is no substitute for character. It indicates that whatever money the banker holds is that of his customers who have entrusted the banker with it only because they have full confidence in the expert handling of money by their banker. d. The elements of character. including the insight into a specific business. capacity and capital can help a banker in arriving at a conclusion regarding the safety of advances allowed by him. he may make his business very profitable. which tells how successful a business has been in the past and what the future possibilities are. It is obligation on the banker to ensure that his borrower is a person of character and has capacity enough to repay the money borrowed including the interest thereon. Capital Internship Report on NBP. If the past record of the borrower shows that his integrity has been questionable. c. but with sound management abilities.Banker’s funds comprise mainly of money borrowed from numerous customers on various accounts such as Current Account. On the other hand if a person has no insight into the particular business for which he wants to borrow funds from the banker. A businessman may not have vast financial resources.

the baker must adhere to the consideration of the principles of liquidity very careful. because he would prefer to lend only for a short period in order to meet the shortfalls in the wording capital. and the funds thus released can be used to allow fresh loans to other borrowers. 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. Balakot branch Balakot 43 . industry. As such the banker must consider whether the amount requested for is reasonable to the borrowers own resources or investment. housing projects and various other financial concerns in order of priorities. 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. Nevertheless. This makes the banker a partner. He must see that from his available funds he advances them to a wide range of sector like commerce. yet some borrowers would insist that their bankers provide most of the capital required. heavy engineering or agriculture.This is the monetary base because the money invested by the proprietors represents their faith in the business and its future. small business. The banker must ensure that his funds are not invested in specific sectors like textile industry. it is very important for a banker to study his borrower’s assets to liquidity. agriculture. Hence. 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. Liquidity Liquidity means the possibilities of recovering the advances in emergency. The role of commercial banks is to provide short-term capital for commerce and industry. e. In such a situation. Generally the borrowers repay their loans steadily. f. because all the money borrowed by the customer is repayable in lump sum on demand. Internship Report on NBP. farming.

Balakot branch Balakot 44 . Overhead expense and depreciation and maintenance of the fixed assets of the bank. g. Internship Report on NBP.3 Forms of Loans In addition to purchase and discounting of bills. The banker needs sufficient earnings to meet the following: a) b) c) Interest payable to the money deposited with him. Provisions for a reserve fund to meet unforeseen contingencies. Salaries and fringe benefits payable to the staff members. bankers in Pakistan generally lend in the form of cash finance. NBP provides advances to different people in different ways as the case demand. 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.Dispersal of advances is very necessary from the point of security as well. Remuneration A major portion of the banker’s earnings comes form the interest charged on the money borrowed by the customers. An adequate sum to meet possible losses. Payment of dividends to the shareholders.18. Suitability The word “suitability’ is not to be taken in its usual literary sense but in the broader sense of purport. 3. because it reduces the risk of recovery when something goes wrong in one particular sector or in one field. 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. overdrafts and loans. d) e) f) h.

When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. b) Overdraft/Running Finance This is the most common form of bank lending. 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. 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. the accommodation is called a “Clean Overdraft”. If the borrower does not utilize the full limit. This accommodation is generally allowed against collateral securities. it is called a “loan”. while an overdraft is a temporary accommodation occasionally resorted to. because he has to pay service charges only on the balance outstanding against him. either at once or as and when required. the banker may provide for a suitable clause in the cash finance agreement. 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. In order to offset this loss. The borrowing customer is in an advantageous position in an overdraft. Balakot branch Balakot 45 . In cash finance a borrower is allowed to borrow money from the banker up to a certain limit.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. 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. When bankers Internship Report on NBP. the banker has to lose return on the unutilized amount. which the borrowing customer has in credit. and an overdraft thus occurs.

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.19. Balakot branch Balakot 46 . while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security 3. Application form includes the beneficiary name. Internship Report on NBP. The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed upon.19 REMITTANCE DEPARTMENT Remittance means a sum of money sent in payment for something. Thus the borrower gets a fixed amount of money for his use. The customer fills the application form. 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.1) Demand Draft Demand draft is a popular mode of transfer. account number and a sender’s name. The customer deposits the amount of DD in the branch.allow loans to their customers against collateral securities they are called “secured loans” and when no collateral security is taken they are called “clean loans”. 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. After the payment the DD is prepared and given to the customer. and the borrowing customer has to pay interest on the entire amount. a) b) c) d) Demand Draft Telegraphic Transfer Pay Order Mail Transfer 3. DD are of two types. NBP offers the following forms of remittances.

Pay order is the most convenient.1% 3. II.is 0. 50.is Rs 50/. In cable transfer the bank uses a secret system of private code.000/. the remittances can also be made by mail transfer (MT). 100 from a non-account holder. The TT charges are: Telegram/ Fax Charges on TT = Actual-minimum Rs.000/.4) Mail Transfer When the money is not required immediately.19. NBP CHARGES FOR DD I. which is known to the person concerned with this department and branch manager. 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. Where payment is made though account. Debiting to the buyer’s account at the selling office and crediting to the recipient’s account at the paying bank Internship Report on NBP. Vouchers are prepared and sent by ordinary mail to keep the record. No excise duty is charged on TT. TT charges are taken from the customer. Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the specified person. Balakot branch Balakot 47 . 3.3) Telegraphic Transfer Telegraphic transfer or cable transfer is the quickest method of making remittances.a) b) Open DD: Cross DD: Where direct payment is made. 3.19. NBP takes fixed commission of Rs.125. 50. simple and secure way of transfer of money. Up to Rs. Cable telegram transfer costs more as compared to other title of money.2) Pay Order Pay order is made for local transfer of money.only Over Rs. The customer for requesting TT fills an application form.19. 25 per pay order from the account holder and Rs.

Their attitude can win or loose the customer. most organizations give little importance to this very important asset. which can make the staff dedicated towards the organization and its objectives. they do not perform with their full potentials. 3.20 HUMAN RESOURCE MANAGEMENT Human Resource plays a vital role in the success of every service organization. Since there is no risk of early retirement or redundancy in rank.20.make the payment under this transfer.40/. NBP taxes mail charges from the applicant where no excise duty is charged. This is one redundancy in rank. This shows that candidates with some strong family background or political pressure are given preference in recruitment and qualified candidates are sometimes left behind. However.if sent by registered post inland on party’s request. they do not perform with their full potentials.20. 40/. and this is one of the reasons responsible for the low productivity of the employees of the Bank. They interact between man and machine. 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. the employees of NBP also enjoy their job for life. 3. Various aspects related to human resource of National Bank of Pakistan are critically examined in the following text: 3.2) Job for Life Like the employee of public sector organizations in Pakistan. Balakot branch Balakot 48 . Postage charges on mail transfer are actual minimum Rs.1) Selection & Recruitment Although the Bank believes in merit but in practice the selection of employees is not done on merit.if sent by registered post locally Rs. The positive attitude could only be created in a conducive environment. Most of the employees are low educated. Internship Report on NBP.

Employee’s participation is not ensured in the process of evaluation. Where a number of persons work together. But by their very nature. 3. event or personality hinder understanding. Objectives of employee’s are not quantified. interpersonal conflicts are generated. Internship Report on NBP. Most interpersonal conflicts in NBP can be traced back to the following major heads. cultural background and life-style is another reason responsible for inter personal conflicts in NBP. Lack of Communication Lack of communication is for the biggest reason for conflicts. Balakot branch Balakot 49 . 4. This has become an outdated method of performance appraisal and no longer used due to the following reasons: 1.20.5) Diversity in Values Diversity in values. interactions among them. When things come to such a pavement. human beings are also the most unpredictable. perceptions. 3. will lead to conflicts and NBP is no exception. 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.4) Inter Personal Relationship Modern management acknowledges human resources as one ‘of the most important assets of an organization. The performance of employees is evaluated after quite a long time.3) Performance Appraisal The performance of employees of the Bank are appraised though their annual confidential reports at the end of each year.20. Element of subjectivity is involved in this method. Different values and perceptions about the same issue. therefore. 3.20.3. of necessity. 2.

In NBP. some cases of frauds have happened in different branches.The dominant trend in all modern industrial societies of the world is merit and expertise.20. Line managers are not fully equipped with the authority with no vertical or horizontal interference. Hence.6) Corruption Our social acceptance of corruption gives rise to corruption at every level of social and organizational set up. Balakot branch Balakot 50 . The authority tables are not strictly maintained.7) Discipline & Authority Maintaining discipline and implementation of authority (tables) in letter and spirit is the key to success of any organization.20. Current a/c Saving a/c Cheque cancellation Internship Report on NBP. and other number of such practices.21) DEPOSIT DEPARTMENT: It controls the following activities: a) b) c) d) e) A/C opening. The reasons can be linked with the employee dissatisfaction of NBP. 3. 3. Corruption involves financial embezzlement. In the past few years. Issuance of chequebook. which helps promote cohesion and reduce conflicts. 3. nepotism. interpersonal conflicts are generated. But the feudalistic mindset is still very strong in our set up and there is no tradition of tolerance for differing viewpoints. All these cause resentment that keep building up and lead to conflict sooner or later. favoritism.

iii. • • • • • 1. the banker should determine the prospective customer’s integrity. iv. which are to be observed for opening an account with a bank. Preliminary investigation is necessary because of the following reasons.1 Account opening The opening of an account is the establishment of banker customer relationship. ii. Inquiries about clients. Negligence. There are certain formalities.f) Cash 3. occupation and the nature of business by the introductory references given at the time of account opening. Balakot branch Balakot 51 . i. respectability. Before a banker opens a new account.21. 3. 2. Avoiding frauds Safe guard against unintended over draft. Formal Application Introduction Specimen Signature Minimum Initial Deposit Operating the Account Pay-In-Slip Book Pass Book Issuing Cheque Book Internship Report on NBP.

he must have the following basic qualifications. He must be of sound mind. The agreement should be made for lawful object. b) Types of Accounts Following are the main types of accounts 1) 2) 3) Individual Account Joint Account Accounts of Special Types  Partnership account  Joint stock company account  Accounts of clubs. however. Balakot branch Balakot 52 . which create legal relationship Not expressly declared void. • • • • • • He must be of the age of majority. societies and associations  Agents account  Trust account  Executors and administrators accounts Internship Report on NBP.a) Qualification of Customer The relation of the banker and the customer is purely a contractual one. Law must not disqualify him.

This is because the depositors may withdraw Current Account at any time.4 Saving account Internship Report on NBP. e) 3. failing which incidental charges are deducted from such accounts.21. Until a few decades back. Now. When a banker accepts a demand deposit. the proportion of Current Deposits in relation to Fixed Deposits was very small. however. these deposits are treated as current liabilities by the banks.21. branch to branch.2 Issuing of chequebook: This deptt issue cheque books to account holders. In recent years. and customers are required to maintain a minimum balance. the position has changed remarkably. and from time to time. Pak rupee non-resident accounts  Foreign currency accounts 3. Because of their nature. Requirements for issuing chequebook a) The account holder must sign the requisition slip b) Entry should be made in the chequebook-issuing book d) Three rupees per cheque should be recovered from a/c holder if not then debit his/her account. the Current Deposits have become more important. he incurs the obligation of paying all cheques etc. and as such the bank is not entirely free to employ such deposits. Balakot branch Balakot 53 . but still the proportion of Current Deposits and Fixed Deposits varies from bank to bank. drawn against him to the extent of the balance in the account.3 Current account These are payable to the customer whenever they are demanded.21. 3. Bankers in Pakistan do not allow any profit on these deposits.

the initial deposit required for opening these accounts is very nominal. It discourages unnecessary withdrawals from the deposits. Internship Report on NBP. and the depositor is issued a chequebook for withdrawals. 3. As such.21.6 Cash This deptt also deals with cash.21. The purpose of these accounts is to inculcate the habit of savings in the constituents.5 Cheque cancellation: This deptt can cancel a cheque on the basis of.22 FOREIGN EXCHANGE/DEPARTMENT: This deptt mainly deals with the foreign business. Profit is paid at a flexible rate calculated on six-month basis under the Interest-Free Banking System. b) Foreign currency accounts dealing. deposits of cheques etc. There is no restriction on the withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder. Payment of cheques.Savings Deposits account can be opened with very small amount of money. a) Post dated cheque b) Stale cheque c) Warn out cheque d) Wrong sign etc 3. 3. Balakot branch Balakot 54 . 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 main functions of this deptt are: a) L/C dealing.

Cash Department: “To facilitate people in the payments of their bills and taxes and repayments of cash” There are two main functions of cash department. i. 2. Receipts mean collection of utilities bills. NBP Letters of Credit are the best way to do your business transactions.22. 1. Balakot branch Balakot 55 . This is very important function of this deptt.2 Foreign currency account dealing: This deptt deals with the foreign currency accounts which mainly include dollar account. i. 3. ii. With competitive rates.c) Foreign Remittance dealing.1 L/C dealing NBP is committed to offering its business customers the widest range of options in the area of money transfer. 3. 3. Payment ii. Internship Report on NBP.22. and ease of transaction. Dividing an organization into different parts according to the functions is called departmentation. BALAKOT NBP. euro account etc. taxes etc.3 Foreign Remittance dealing. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for.22. security. So NBP Balakot Branch.Balakot is divided into two main parts.17 Cash Department General Banking Department. B) DEPARTMENTATION OF BALAKOT BRANCH. Receipts Payments are the function that they pay their cheques and pay cash. 3.

Issuing of Mail transfer.  Computer Department. iii.  Clearing Department. Balakot branch Balakot 56 . Issuing of demand draft.18 General Banking In this section of the bank the general banking function is performed. iv.  Advances  Establishment Department Department. 3. Issuing of call deposit. Internship Report on NBP.3.. ii. Issuing of Telegraphic transfer. v. Issuing of payment order. It is divided into five departments  Marketing Department  Remittances Department.18.1 Remittances Department: The objective of this department is:“To transfer the money of people from one place to another place in safe and comparable way” The main functions of this department are: i.

vi. ii. 3. The objective of this department is to “To facilitate customers for payment their Cheques of other banks”. Closing and scrolling of government collections. In word clearing books: The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. Out word clearing book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the banks have delivered to other banks. All detail of the cheques are recorded in this book. Pension payments etc.18. 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 objective of Advances Department is “To facilitate people by giving short term and long term loans on easy terms and conditions”. 3. which advances money to borrowers. Internship Report on NBP. Two type of clearing books are maintained.3 Clearing Department: A clearinghouse is an association of commercial banks set in State Bank of Pakistan for the purpose of interchange and settlement of credit claims. vii.18. i.2 Advances department: Every bank has a department. Balakot branch Balakot 57 .

the departmentalization of NBP as well as the departmentalization of NBP Balakot Branch. Summation We discussed in this chapter.18. The main objective of this department is to “To regulate bank business”. Deduction from balance on clearing cheques. The next chapter is about the SWOT Analysis and Financial Analysis of NBP.3. Main functions of this department are: a) b) c) 3. The main functions performed by this department are: a) b) c) d) Checking balance. Employee’s bonuses etc. 3. Balakot branch Balakot 58 . the General Banking information about NBP i. Internship Report on NBP. Issuing bank statements. Employee’s salaries distribution.e the services.18.4 Computer Department: The objective of this Department is to facilitate customers in payment of their cheques”.19 Keeps the record of attendance of employees. Dealing Western Union.5 Establishment Department: This department mainly deals with the branch employees.

nbp. 2002. Department. Balakot branch Balakot 59 . July 20th. June 21. 2004. Circular No. http// www.REFRENCES 1.services 2. Head Office National Bank of Pakistan Karachi Internship Report on NBP. 13. President Office. 2004.pk . NBP Main Branch Peshawar 3.com.

Exploiting an organizations opportunities and strength. opportunities and threats is called SWOT analysis. Neutralizing it threats. Avoiding or correcting its weakness. Balakot branch Balakot 60 . weakness. “SWOT analysis is a situational which includes strengths. Internship Report on NBP. SWOT analysis is an acronym that stands for strengths. 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. weaknesses. opportunities.” “The overall evaluation of a company strengths.1 INTRODUCTION To carryout the SWOT and Financial Analysis of NBP through the help of calculating necessary ratios in this section. opportunities and threats that affect organizational performance. and threats SWOT analysis is careful evaluation of an organization’s internal strengths and weakness as well as its environment opportunities and threats. weaknesses.CHAPTER # 4 SWOT ANALYSIS 4. SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context.” In SWOT analysis the best strategies accomplish an organization’s mission by: 1. 3. 2.

2.e. The customers are provided services at their nearest possible place to confirm customer satisfied.4 EMPLOYEE BENEFITS The employers at NBP are offered reasonable monetary benefit.1 OLDEST INSTITUTION: NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is strength from this plus point as customers have more confidence in the bank. 4. lacking it. The additional value services as the privilege for the bank. 4. The bank being the privileged and oldest bank in banking sector of Pakistan enjoys this edge over all others. it has broad-basses network of branches throughout the country also more than one branch in high productive cities.2. 4.6 STRICTLY FOLLOWED RULES & REGULATION: Internship Report on NBP.3 MORE DEPOSITS THAN OTHER BANKS NBP has the relative competence in having more deposits than the other bank. This serves as an additional benefit and competency for the bank and a source of motivation for the employees. Normally two bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This is because of the confidence the customer have in the bank. Balakot branch Balakot 61 .2 ALTERNATE DUTIES IN SBP ABSENCE The NBP performs additional services for its customers as well as the other bank customer in the absence of SBP.2. 4.2.5 BROAD NETWORK The bank has another competency i.2 STRENGTH 4.2.2. 4.4.

7 PROFESSIONAL COMPETENCE The employees at NBP here have a good hold on their descriptions. 4.2. 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. between the employees.3. banking. and between the manager and employees. These professional competencies enable the employees to understand and perform the function and operation in better way. economics etc. 4.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. 4.4. The informal environment affects the performance of the employees in a positive way.1 LACK OF MARKETING EFFORT: The bank does not promote its corporate image.9 RELATION BETWEEN STAFF AND OTHER EMPLOYESS The bank enjoys a good plus point when it comes to the employee manager relationship the hearing as removing of discrepancies if any.8 HEALTHY ENVIROMNMENT The working condition in the NBP branch here is very conductive and favorable for better output.2.3 WEAKNESSES 4.3. which leads to uneven and adjusted feeling in the bank employees.3 Internship Report on NBP. services. They sometime have to provide loan under the pressure. etc on a competitive way. as they are highly skilled Professionals with background in business administration. 4. 4.2 NBP UNDER POLITICAL PRESSURE The strong political hold of some parties and government and their dominance is affecting the bank in a negative way.3. Balakot branch Balakot 62 .2.

4. Balakot branch Balakot 63 . which denominate the employees thus resulting in affecting their performance negatively. the employees have currently. the bank is founded out to be a total flop to handle the mob of people peaking from windows and doors.4 LACK OF FINACIAL PRODUCT The bank falls far behind when the innovative and new schemes are considered. 4. 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.7 LACK OF MODERN EQUIPMENT Internship Report on NBP.3. This would add to the strength if it were powered by network of computers. This adds to the negative factors.6 LACK OF COMPUTERIZED NETWORK The bank lack the strength of being powered by the network of computers. which have saved time. This stands out to be the major incompetence and weakness of the banks. It has not been involved in the tug of war between the competitors to the accounts and strengthens the existing customer base. 4.FAVORITISM AND NEPOTIS The promotions and bonuses etc in the bank are often powered by senior’s favoritism or dependupon their wills and decision. 4.5 INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS During the rush hours.3.3.3. energy and would have lessened the mental stress.

Even if there is any equipment they lack to fall in the criteria of being rearmed as update and upgraded 4. This would give a competitive edge over others. Balakot branch Balakot 64 .4. Internship Report on NBP. which server as a demotivation factor for employees performing above average work.1 EMERGENCE OF NEW COMPETITORS The bank is facing threats with the emergence of new competitors especially in terms of foreign banks. 4.2 MICRO FINANCING Because of the need for micro financing in the market. These foreign banks are equipped with heavy financial power with excellent and innovative ways of promoting and performing their services. 4. especially in communication sector.4. Other banks have already initiated. More emphasis is now given to avail the modern technologies to better the performances. NBP can utilize the electronic banking opportunity to ensure on line banking 24 hours a day.3.The bank lacks the modern Equipment that is note counting machine computers.4 OPPORTUNITIES 4. now the time has arrived when the NBP must realize it and take on step to cater an ongoing demand.8 UNEVEN WORK DISTIBUTION. The bank has to take initiative in this regard or will find itself far back in competition.5 THREATS 4. there are lot of opportunities in this regard. 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.5. 4.1 ELECTRONIC BANKING The world today has become a global village because of advancement in the technologies.

6 COMPETITIVE ANALYSIS Porter’s five forces model: This approach is widely used for competitive analysis. These competitive strategies may be lowering prices.2 POLITICAL PRESSURE BY ELECTED GOVERNMENT The ongoing shift in power in political arena in the country effects the performance of the bank has to forward loans to politically powerful persons which create a sense of insecurity and demoralization in the customer as well as employees.4 CUSTOMERS COMPLAINTS There exists no regular and specific system of the removal of customer complaints. The NBP offering very low charges an demand draft.4.6. 4.5. Balakot branch Balakot 65 .2 Potential entry of new competitors: Internship Report on NBP.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. 4. 4. hence affecting the over all performance of employees negatively. telegraphy transfer.5.5. It is because of the high intensity of competition among companies there five main competitive forces. mail transfer and give other additional services to the customers and to the Nation.6. 4.1 Rivalry among competitive firms: It is a very powerful force among the competitive forces the strategies pursued by one firm can be successful only to extent that they provide competitive advantages over the competitor. Now a day a need for total customer satisfaction is emerging and in their demanding consequences customer's complaints are ignored. Because NBP is a “Nation’s Bank”. best quality series. 4.

There may be some other product can be substitute the product of that industry.4 Bargaining Power of Suppliers: The bargaining power of supplier affects the intensity of competition.Whenever new firms ca easily enters a particular industry. The NBP is lacking in this field.6. In case of banks the suppliers are customers they supply the money to banks. 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. B/C at offers good quality services to customers. If they offer low rates than GPOs so people will go to deposit in GPOs. Now the number customers in Pakistan for banks are very high. 4.5 Bargaining Power of Consumers: When customers are concentrated or large. and safety. Balakot branch Balakot 66 . or buy in volume. especially when there are a large number of suppliers. They charge low charges on remittances. So that’s it is a competition to other banks. Internship Report on NBP. People concentration high rates so that’s why sawing PLS accounts are more then current accounts. In this field NBP is very good. 4. 4. Now they must offer good services. their bargaining power represents a major force affecting intensity of competition. Low charges etc to customers. 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. The next examples will ATM which substitute presenting cheques at counter and encash it.6. 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. quality. It must improve in this field to compete the competitors.6.3 Potential Development of substitute products: This is the third factor affecting the competitions. the competition increases. 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. tariffs. The gout restriction.

Balakot branch Balakot 67 . To know how NBP can compete well and how to maintain its position in the market as a best services organization.4.7 Summation The summary of is SWOT Analysis of NBP. Internship Report on NBP.

2 National Bank of Pakistan Ten Years Performance at glance 1 NBP is one of the leading bank in Pakistan. The fact that it is the best bank of Pakistan is obvious from the performance shows in the table below. 5.1 INTRODUCTION Financial analysis. always involves the use of various financial statements primarily the balance sheet and income statement. The balance sheet summarizes the assets. and thee income statement summarizes revenues and expenses of the over a particular period of time.CHAPTER# 5 FINANCIAL ANALYSIS 5. and owner’s equity of a business at a point in time. liabilities. A conceptual framework for financial analysis provides the analyst with an interlocking means for structuring the financing. though varying according to the particular interests of the analyst.s holder equity pre tax profit After tax profit 6 5 71759 72609 91486 6 18134 14279 11959 11378 10358 9987 9009 4198 6045 2253 3016 1149 1023 461 520 31 2135 0 9203 (1260 996 0 ) -------3081 -----2799 ------- Internship Report on NBP. Years Items Total assets Deposits Advance 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 27177 9 17047 6 62548 85094 7233 47186 43280 41508 37163 35040 41768 40089 36923 32018 0 3 9 6 6 0 0 6 0 39556 36286 34961 31649 29475 27339 25486 23503 20828 8 6 7 3 4 1 3 2 3 16099 14054 17031 14031 12255 10935 10559 85854 81528 8 9 6 8 10235 10948 10820 95649 5 6 7046 7842 s 0 7 9 Investme 16619 14352 nt S. Balakot branch Balakot 68 .

24 0. But this bank can compete and now NBP is the best bank of year.23 5. the financial analyst needs to perform "checkups" on various aspects of the business financial health. in order to make rational decision in keeping with the objective of the organization. The type of analysis varies Internship Report on NBP. If we draw a graph this will shows that the graph is upward trend. The business itself and outside providers of capital (creditors and investors) all undertake financial statement analysis.49 1. 2002. for that purpose the management use analytical tools.2005) 1213 1204 1245 1428 1431 1434 1468 2% 10. 5.21 0.20 % 0 0 0 ------- ----- ------- -------0. 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. NBP decrease the number of its branches and employees because of automation and large networks of other banks. 2000. 2004 .40 % 3. Profit is increasing from year to year. A tools frequently used during these checkups is a financial ratio analysis.08 0.3 RATIOS ANALYSIS 2 Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relation ship between the items of balance sheet and profit and loss account.30 % 0.00 % 1555 -- ------ ----- 1537 1463 23730 21549 20667 From the above table it is very much clear that the NBP performance is going higher and higher total assets are at the crest in 2004. Balakot branch Balakot 69 .Earning per share Return on assets No of Branche s No of Employe es 13272 12195 15163 15351 15541 15785 18096 (Source Annual reports 1998.80 % 1. To evaluate the financial condition and performance of the business entity.

Their analysis will. It is their overall responsibility to see that the resources of the firm are used most effectively and efficiently and that the firm's financial condition is sound.3.1.3 Investors Investors who have invested their money in the firms share are most concerned about the firm steady growth in earning. 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.3.4 Management.1 Trade creditors Trade creditors are interested in firm's ability to meet their claims over a very short period of time.3. An organization would be interested in every aspect of the financial analysis.1.1 Parties interested in ratio analysis 5.1.3. 5. they concentrate on the analysis of the firm's present and future profitability. 5. Internship Report on NBP.1. 5.3. 5. They are also interested in the firms financial structure of the extent it influence the firms earning ability and risk. They analysis the firms profitability over time. (Capital structure relationship). there fore confine to the evaluation of the firm's liquidity positions. The nature of analysis is depending at the purpose of analyst.2 Suppliers of long-term debt Suppliers of long-term debt on the other hand are concerned with firm's long-term solvency and survival.according to the specific interest party involved. 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. Balakot branch Balakot 70 . As such.

5. 5.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.4 Ratios analysis 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. It is calculated as cash Ratio=Cash/current liabilities Internship Report on NBP.1 Cash Ratio: “This ration is obtained by dividing cash by current liabilities / liabilities”. Balakot branch Balakot 71 .4.

15 ratio 0.4.2 0.22 0.134 1998 1999 2000 2001 2002 2003 2004 Cash Ratio 0.19 0. Because of high advances cash is less to cover its current liabilities.169 0. This is calculated as.Table 3 Year Cash Ratio Graph 1 0.25 0.05 0 1997 1999 2001 2003 years Cash Ratio It means that how much cash is available for payment its current liabilities. Balakot branch Balakot 72 .21 0. This ratio of NBP shows a downward trend.2 Gross Profit Margin Ratio: “This ratio shows the profit margin in sales/ revenue”.1 0.15 0.118 0. Gross profit/ interest earned Internship Report on NBP. 5.

4.9 1998 1999 2000 2001 2002 2003 2004 Gross profit margin% year 2004 2001 1999 1998 0 Gross profit margin% 20 ratio 40 60 G.8 27.9 29. This shows the profit of the firm relative to its revenue.6 51.7 28. Profit margin relates profit of the organization to its sales (interest earned in case of Bank). As it is clear that the ratio gong high this is the indication of good performance.Table 4 Year Gross margin% Graph2 profit 24.3 Net Profit Margin: 73 Internship Report on NBP. 5. It is a measure of the efficiency of the firm’s operations too. 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.59 39.67 46. Balakot branch Balakot .

This ratio measures the firm’s profitability of sales/ interest earned after taking account of all expenses and income taxes. It is because of high advances the NBP has given to the people.7 1.67 3.6 1.18 21.4.55 3. 5.2 1. It tells us a firm’s net income per rupee of revenue. And the trend is upward.6 1998 1999 2000 2001 2002 2003 2004 Net profit Margin % 30 20 10 0 19 99 20 01 20 04 ratio Net profit Margin % 19 98 year Explanation: from the calculation and graph it is very much clear that the performance of NBP is very good. Balakot branch Balakot 74 . As the trend is upward it shows the high profits in revenue per rupee in case of NBP.4 Return on Equity: Internship Report on NBP. This ratio can be calculated as: Net profit margin ration = Net Profit after taxes / interest earned Table5 Year Net Margin % Graph3 profit 0.

2 2. It is because of high net profit they have earned. This ratio is calculated as: ROE=Profit after taxes/Share holder’s Equity Table6 Year Return Equity Graph4 on 0.4 23. It is because of high investments by NBP and effective expense management. Balakot branch Balakot 20 75 .55 9. 5.Dividing profit after taxation by shareholder’s equity.4. It tells us the earning power on the shareholder’s investments.7 6.1 1998 1999 2000 2001 2002 2003 2004 Return on Equity 30 20 10 0 98 99 01 04 ratio Return on Equity 19 19 20 year Explanation: from the calculation it is clear that the ROE Ratio have an upward trend of NBP. ROE compares net profit after taxes to the Shareholder’s Equity.3 0.5 Return On Assets: Internship Report on NBP.67 5.

It shows that NBP using it’s assets very efficiently. Balakot branch Balakot 76 .5 ratio 1 Return on assets Graph5 From calculation it is clear that this ration of NBP is going high and high. This ratio relates profits to assets.008 0.6 Investment deposit Ratio: Internship Report on NBP.9 1997 1998 1999 2000 2001 2002 2004 Return on assets 2004 year 2001 1999 1998 0 0. That is why they are earning very high profits.225 0.124 0.16 0.4.This ratio shows the efficiency of organization that how efficiently utilizes their assets. It is calculated as: Profit after Tax/Total Assets Table7 Year Return assets on 0.01 0.52 0. 5. This shows that how efficiently they investing the assets that’s why they are earning high profits.

03 22. This is calculated as. Investment deposit Ratio=Investment/deposits Table8 Year Investment Deposit ratio 42.This ratio shows the comparison of investments and deposits. Balakot branch Balakot 77 .94 20.54 39. Internship Report on NBP.66 42. And earning high profits.7 31. This may reduce its profits. Now it is the retraction from top management to invest 30% of its deposits. But can be fruitful in long term. The ratio has an upward trend.01 1998 1999 2000 2001 2002 2003 2004 Graph6 Investment Deposit ratio 50 40 30 ratio 20 10 0 1998 2000 year 2004 Investment Deposit ratio Explanation: From above table and graph it is very much clear that NBP are using their deposit very efficiently. which shows the performance of NBP is very good.9 37.

This calculated as. Total debt/shareholder’s equity Internship Report on NBP.5. 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.4. Balakot branch Balakot 78 .7 Debit to Equity Ratio: This ration shows the amount contributed by creditors and shareholders.

8 Debt to assets ratio: This ratio shows that to which extent the organization assets are financed by debit.5 from 28.7 28.4. It is calculated as.4 30. Balakot branch Balakot 79 .6 24.6 which is a good sign. The lower the ratio the high the level of the fire’s financing that is being provided by the shareholders. 5. In 2002 it was high but in 2004 it decreases to 24.4 20.9 22.Table9 Year Debt to equity ratio Graph7 32.5 1998 1999 2000 2001 2002 2003 2004 Debt to equity ratio 2004 year 2001 1999 1997 0 Debt to equity ratio 20 ratio 40 From the table and graph it is clear that this ratio is decreasing which show the high efficiency of NBP. Total debt/total asset Internship Report on NBP.42 31. Here the creditors are interested in low ratio.

Balakot branch Balakot 80 .98 0.954 0.961 1998 1999 2000 2001 2002 2003 2004 Debt ratio 0. This ratio serves the similar purpose to the debt to equity ratio. It is calculated as.88 1998 1999 2001 2004 year Debt ratio This ration is directly related to risk high ratio means high risk and low ratio means low risk.9 0.4. Advances deposit ratio = Advances/ deposit Table11 Internship Report on NBP.96 0.92 0. From calculation it is clear that the ratio is decreasing which show low risk.954 0.957 0.92 0.94 ratio 0. This ratio is high because of more deposits in the bank. and deposits are the liability of customer on bank 5.9 Advances deposit Ratio: This ratio show that how much efficiently the bank advances the deposits of their customer to borrower.94 0.Table1 Yea r Debt to asset ratio Graph8 0.944 0.

1 0 1998 2000 year 2004 Advances Deposits ratio From above table and graph it is clear that the ratio is going high.487 0.443 0.Year Advances deposits ratio Graph9 1998 1999 2000 2001 2002 2003 2004 0.399 0.10 Assets Turnover Ratio: The relationship of net sales /revenue to total assets is known as the total asset turnover ratio. Which means the efficiency on NBP is good and they use their deposits efficiently in advancing to borrowers.387 0.3 ratio 0. Here high ratio is required.2 0.4. Total revenue / total assets Table12 Year 1997 1998 1999 2000 2001 2002 2004 Internship Report on NBP. Balakot branch Balakot 81 .5 0.406 Advances Deposits ratio 0. It is calculated as.4 0. 5.416 0. The next side of the picture is that the people will think that is risky to deposit the money in the bank.414 0.

079 1. This ratio is calculated as: Price to earning ratio= face price of share/earning per share Internship Report on NBP.11 Price to earning Ratio: This ratio show the relation ship b/w face price per share and earning per share.075 0. Balakot branch Balakot 82 . We can see that the ratio is going high and which is a good sign and shows that NBP is utilizing its assets efficiently.5 Assets turnover ratio Explanation: This ratio shows us the relative efficiency with which a firm utilizes its total assets to generate revenue.07 Graph10 Assets turnover ratio 2004 year 2001 1999 1998 0 0.097 0.5 ratio 1 1.079 0.Assets ratio turnover 0.099 0. 5.4.093 0.

Internship Report on NBP. Balakot branch Balakot 83 .7 47.17 3. It is b/c of increase in earning per share.Table13 Year Price earning Ratio 2.4.25 1. It is calculated as. From calculation it is clear that it have a downward slope.4 2. it is because of the reason that earning per share increased resulting in decreasing price to earning ratio. 5.97 to 1998 1999 2000 2001 2002 2003 2004 Graph11 Price to earning Ratio 2004 ratio 2001 1999 1998 0 20 year 40 60 Price to earning Ratio As from the above calculations it is clear that the ratio decreased tremendously in 2004.62 3.12 Dividend yield: Anticipated annual dividend divided by the market price of the stock.6 0.

63 2. Balakot branch Balakot 84 .4.45.13 Deposit growth Ratio: This ratio shows the growth rate of deposits. It is because of high market price and low dividend.45 0. From the above table it is clear that the dividend is increasing but in 2004 it is low.23 1997 1998 1999 2000 2001 2002 2004 Dividend Yield 4 3 2 ratio 1 0 1998 2000 year 2004 Dividend Yield Year 2000 was best as far as dividend yield is concerned.1 2.32 1. it was mainly due to the decreased amount of number of shares outstanding.3 3. but due to increase in total dividend in 2002 it has recovered to 2. 5. Internship Report on NBP. In year 2001 increase in outstanding shares decreased dividend yield.2 0.Dividend yield =Total dividend/ market price Table14 Year Dividend Yield Graph12 0.

This is calculated as Current year deposits.08 0.09 1998 1999 2000 2001 2002 2003 2004 Deposit growth ratio 0.1 0. It upward slope which shows that the people trust NBP and its management that our money is in safe hands.previous year deposits /previous year deposit Table15 Year Deposit growth ratio Graph13 0. This is calculated as Current year advances.14 Advances Growth Ratio: This ratio shows the growth rate of advances.1 0.02 0 1998 2000 year 2004 Deposit growth ratio Explanation: This ratio shows an excellent move from 1997 to 2004. 5.037 0. The reason for this good move is only govt support to this bank.08 0.08 0.previous year advances / previous year advances. Table16 Internship Report on NBP.07 0. Balakot branch Balakot 85 .06 ratio 0.04 0.4.07 0.

The over all performance of NBP is very good.12 0.15 Advances Growth ratio 0. 5.5 Predicting failure: Where one wants to lend money to a company that is about to fail.17 0. For this a tool is used which is Z=0.4 0. Balakot branch Balakot 86 .033C + 0.014B + 0. Only in 2002 it is negative b/c of high advances in 2001 and low advances in 2002.010E Where Internship Report on NBP. One a company will be successful and next year it will be fail.Year Advances Growth ratio Graph14 1998 1999 2000 2001 2002 2003 2004 0.012A+ 0.006D = 0.23 0. The collapse comes much unsaddled. That’s why it is declare the best bank of the year 2004. The ability to predict corporate failure before the event has been the holy grail of financial analysis for move than 50 years.2 0 19 99 20 01 ratio Advances Growth ratio 20 04 19 98 -0.04 0.14 0.2 year Explanation: from calculation and graph it is clear that NBP show a good growth rate in respect of advances. This shows that NBP is utilizing the deposits efficiently.21 -0.

8 and it is an indicator of failure 5.026) + 0.014) + 0.0129 This shows that the calculation is below 1. and a score of over 3 was seen as a clean bill of health the advantage of this approach is that using a combination of several financial ratios makes it less likely that the result will be affected by manipulation of financial statements. If the portion of current asset is greater compared with total assets the healthier is shortterm position.0008 + 0. In fourth ratio the investor’s view of the further potential of the company is set against total debt.0004 + 0. If the retained earning is greater the greater is the extent of the company’s self-financing.001 = 0.010 + 0.033(0. B = Retained earnings ÷ total assets. The last ratio shows the ability of the company to use its assets to generate revere. The profit before tax and interest in the third ratio indicates the contribution of a company’s profitability toward the end index score.010 (0.86) + 0.11) = 0.014(0. Z = 0. C = Profit before interest and tax ÷ total assets D = capitulation ÷ total debt E = Sales ÷ total assets Now Z score blow 1.1998. Balakot branch Balakot 87 . Predicting failure of NBP .006(0.012(.0005 + 0.13) +0.A = net current assets ÷ total assets.6 Summation Internship Report on NBP.8 was an indicator of probable failure.

Page 121-148 4. National Bank of Pakistan (2000. Stanley B and Hirt Geoffrey A (1994).We discussed in brief the financial analysis of NBP. REFERENCES 1. Prentice Hall Publication.ratio/. Balakot branch Balakot 88 . 2004) Annual Report.gov/docs/finance/fs. and different tools and techniques is used in order to arrive the conclusion. Financial management. Block. WEBSITE: www. Calculating various ratios. Foundations Of Financial Management.onlinewbc. Html Internship Report on NBP. (1998). interpretation of these ratios. Van Horne James C and JR Wachowicz John M. Page 126-150 3. 2.

2 Poor record management and filing system During my internship I observed that filing system of branch is not good.2. On one hand some employee have to work all day without relaxing while some others have nothing to do at all. 6. It’s quite hard for a new customer or potential customer to get the required information.1 Problems at the branch. 6.2 6. Function analysis. When certain record is needed the staff has to struggle to find it out and a lot of time is wasted. Which are as under.3 Unequal distribution of work Work is not equally distributed. Balakot branch Balakot 89 . • • • • 6.1 INTRODUCTION I have divided this section in four parts. PROBLEMS AT THE BRANCH Customer Satisfaction In NBP customer dealing is will.2. Personal management’s analysis. Administrative analysis. This not only creates confusion among employees but also hurting and disturbing for overall setup of the bank. These analysis are mainly based on my practical experience at the NBP. And above all it results in dissatisfaction among customers as well. but during rush hour the customer has to wait for a long time for their turn. Internship Report on NBP.CHAPTER # 6 FINDING AND OFFER CONCLUSION 6.2.

4 Marketing visits A useful mode of contact is through personal marketing visits.3 6.1 FUNCTIONAL ANALYSIS Formal Organization Formal organization includes the activities of two or more person. because first he has to talk to his immediate superior and follow a proper channel of communication. Bernard referred to an organization as a formal when the activities of two or more persons are coordinated towards a given objective. 6. we find a formal organization.3. when they have common purpose and they are willing to work.2. 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. Balakot branch Balakot 90 .3.3 Bank duty to maintain secrecy.6.2 Difference between theory and practice A vast difference exists between theory and practice and NBP has written procedure but practical work done by employees is a bit different from written procedures.3. which are cautiously determined groups and coordinated towards a given objective. Such visits are important in informing and perusing the existing and potential customers about the products and creating a sense of belongingness with them. They don’t care about maintaining secrecy. 6. 6. In NBP. In this formal organization of NBP the activities are carried out in a more formal way. It provides base when people are able to communicate with other. They speak loudly about the account position and while getting clearance of cheque the person can Internship Report on NBP. The formal organization comes into being when people are able to communicate with one another or willing to act and share a purpose. especially during the rush hours.

The main reason behind it is that bank does not provide personalize service to all the account holders and does not improve its quality and services 6. In case of advance he has to take the approval of general and regional manager.6 Delegation of authority Manager has very limited authority. One reason for lengthy procedure and excessive paper work in the bank is the lack of computerized technology.1 ADMINISTRATIVE ANALYSIS Job analysis is not effective Only on the basis of job analysis it can be decided how a right person can be hired. This creates Internship Report on NBP. They are unable to give proper attention to the clients and face difficulties in getting their job done. when the manager is not present in his office. he has to take the approval from his management authority i-e. the customer having to wait for hours. trained.3. compensated or promoted. It is very important for an organization that nature of the job is described and job specifications are mentioned. The deposit clerk must be careful while passing any cheque. 6. 6. Efficient banking is one. NBP is more interested in increasing its number of account irrespective to its deposit. which does not emphasize on number of accounts but on greater amount of deposits.4 Excessive paper work It is notified that due to the lengthy procedure of paper work the bank employee are over burdened.5 More accounts fewer deposits. The other problem is created.4. In this regard another shortfall is in giving the information about the balance on telephone.4 6.3.easily get the whole information from the ledge. Balakot branch Balakot 91 .3. Most of the employees are simple graduate and do not have proper background about their job. This discourages both customer and officers because they have to suffer a lot 6.

In the Balakot Branch. Balakot.4. 6. Balakot branch Balakot 92 . Internship Report on NBP. Balakot the newly recruited employee training was not imparted. In this case the bank will be in awkward position. It is important because in case of overdraft by mistake or anything which places his accounts in debit it will be difficult to trace him. In NBP salaries are given according to the seniority and grades. 6. There is absence of job rotation in NBP Balakot Branch. This creates dissatisfaction among employees. Bank should increase their profit rates to attract customers. As the worker finishes his training.problems both for organization and for the employees. the staff does not bother to check his/her place phone number and permanent address. he is inducted into a specific field without having great deal of knowledge about the field.3 Lack of specialized training NBP does not provide adequate facility of specialized training to their staff.2 Carelessness in opening of account When customer comes to open an account.4. 6. A person placed in one-department remains their forever. People with simple or complex responsibility are getting the same salary and facilities.4. Job rotation is very important for employee especially for those who are newly recruited.4.4 Low Profit Rates Most of the customers shifted their account to the National Saving Center because of the low rates of saving deposit discourages the customers. they all learned things on the job. Training is generalized rather than specialized. 6. On the other hand he may be involved in any fraudulent activities against the bank. 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. It reduces career opportunities as well boredom and in the end results in career plaguing.5 Poor job rotation.

4. recruiting. but also in people terms i.5.e. It becomes essential to train him adequately for the task. 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. 6. Training of the personnel is part of human resource management. It has been noticed that the training program of NBP is not adequate.2 Developing Managerial Leadership Leadership is a practical term of visible.7 Lack of appreciation Another very important thing which is ignored in the bank is appreciation if the employee on their good performance. Manager is not only responsible for their own units in business. clear on objective and communicating better control on financial and administrative matters. Balakot branch Balakot 93 . which results in customer dissatisfaction.1 PERSONAL MANAGEMENT ANALYSIS Need for better training program Need of training is greatly emphasized all around the world. If hard work and performance of employees is not recognized and appreciated they become dishearten which results in decline in performance. training.5 6.6. 6.5. They should learn new methods for motivating customers. Internship Report on NBP.6 Delays in Loan Advancement It has been observed that there is delays in sanctioning of cases form the head office. 6. Once the candidate is selected and placed on the respective job. grievance handling and taking immediate initiative in crisis situation to take major decision affection the future of the bank and banking community.4.

travelers cheques. The Bank employees are doing very little on their own to explore the possibilities of selling banking services to them as a marketing contributor. It is the policy of the Bank to transfer each employee 3 to 4 years. If the personnel are recruited carefully they can become asset to the organization in the case of carelessness a liability on the organization. depositing license fee and variety of other functions and variety of other people with whom the Bank has no account or regular business relationship. greater skills and increased rate of salary.5 Transfer Transfer means when a person is shifted from one place to another place. The entire Bank community should make a conscious effort in addition to their normal Internship Report on NBP. Bank is not following its recruitment policy properly due to favoritism. Thus a better and impartial policy of promotion needs to be followed.6 Marketing at desk Bank employee come in daily contact with many people who happen to deal with the casual remittance.5. 6. indulgence of political pressure add salt to the wounds. Balakot branch Balakot 94 . It is done either that person is needed more on the other branch or for improving his skill variety.6.5. Both the top authority and staff union tries their best recruit their favorites. The persons selected through these channels are infantile and do not work for the betterment for the bank. As the concept of promotion is attached with better in terms of greater responsibility.5. 6. safe custody. nepotism and political pressure. which gives a sense of deprivation to the deserving employee and their efficiency is affected. Top management and staff union put pressure for the promotion of their favorites.4 Promotions promotions 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. more prestige.5.3 Recruitment policy Human resources are the lifeblood of the organization. 6. pensioners.

6 Summation Discussed the review of NBP. The next chapter is about the recommendation and suggestion of NPB. and deficiency of the service. Balakot Branch.5. it is recommended that the bank should provide brochures etc containing information in details. rules and regulations at the branch. 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. Internship Report on NBP. 6. That is mainly concern with the problems. needs and requirements. Balakot.7 Lack of business communication There is no proper way to give information to their customer. Balakot branch Balakot 95 . 6.work to explore the possibilities of selling banking services to them. To avoid this minor dissatisfaction and tension in the mind of customer. 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.

1 INTRODUCTION NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. Internship Report on NBP.2 Professional training NBP staff lacks professionalism. The recommendations are as follows: 7. Banking council of Pakistan should also initiate some programs to equip the staff with much needed professional training. The main regulatory body is State Bank of Pakistan. Although staff colleges in all major cities but they are not performing well. 7. While the head office specifies the whole procedure of function and operations. which provides policy guidelines and ensures that the money market operates on sound professional basis. 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. They lack the necessary training to do the job efficiently and properly. 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. which in my view can add some input for efficiency and better performance of NBP as an organization in general and City branch in particular. Balakot branch Balakot 96 .3 Delegation of authority Employees of the bank should be given a task and authority and they should be asked for their responsibility. Here I am giving some suggestions.CHAPTER # 7 RECOMMENDATIONS & SUGGETIONS 7.

7. Which should only handle the treasury function. 7.4 Performance Appraisal The manager should strictly monitor the performance of every staff member.5 To Over Come Problem of Space and Furniture In the critical analysis this. Internship Report on NBP.8 Need of Qualified Staff Required. Therefore it is recommended that evenly rotation of every employee should take place after every three years in different braches of the bank. salaries and pensions of federal personnel or the bank should do these functions in the evening time. 7. Government should make long-term policies 7.6 Transfer Transfer is not properly carried out.7. problem is discussed. as this practice hurts the customer confidences in the bank. 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. qualified staff should be provided to branch in order to improve the functioning of the branch. To overcome this problem it is suggested that a special section should be made inside the branch. Especially a telephone operator should be appointed. Also management should purchase more furniture and arrange them in such a way which provides maximum space and convenient especially in deposit department and there should also be convenient sitting place for customers.7 Changes in Policies There should not be any abrupt policies change by the upper management. Balakot branch Balakot 97 . They are simply rotated at the same branch. Some of the employees are continually serving at the same post.

Internship Report on NBP. These charges should be increased to RS 10 per bill to enable the branch to cover their handling costs and make some profit. To make it mores secure and to eliminate the misuse of it.10 Link with the Head Quarter 100 major branches of NBP should established a direct link with the. This will make the functions and decision making of the management easier and convenient.9 Utility Bill Charges Bank gets Rs. 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.7.12 Installing Validator and ATM Validator machine is used to count the currency notes and its installation will help to eliminate to counting errors and will save time. These cards are very helpful for the ordinary customer in general and the business people in particular. Balakot branch Balakot 98 . and it is very tire.11 Credit Card National bank of Pakistan should start its operation in credit card. 2 to 3 to processes a utility bill. tough and hard job despite this working resulting in a loss to then Rs 3 to5 per transaction. head quarter In Karachi. 7. through Internet or Intranet. which is supported to be the hub of business activates. 7. which will help the bank to improve its revenue position. Only bank commission is charge small amount of mark-up on the overdraft. the management is required to keep proper security against the card. 7.13 Interest on Overdraft: Overdraft is a short-term credit facility provided by the bank to its trustworthy customers free of interest. 7. This branch is situated in the City.

Balakot branch Balakot 99 . These types of small term loans should not be extended to anybody.14 Clean Loans Clean loan or clean overdraft is the credit facility extended to the customers to the customers without any security. NBP is very conservative in advances and loans policy. That can be done by lying off the surplus pool of employee with golden handshakes scheme. 7. It reduces the investment opportunities. Every department should be provided a computer with adequate training (especially Advances. The branches that are not much used could also be closed.15 Cash Financing In this mode of financing the amount of credit not utilized by the borrower is remained tax-free. This was Rs 8 billion in the year 2000. because sometime these loans are provided to blue-eyed people of the management and they become a part of bad debts. Deposits and Foreign Exchange departments). 7. 7. Also loans should be given to the small businessmen and the agriculture sector at the low markup rate. (instead entering the overall daily transactions Internship Report on NBP.Daily records should be entered directly into these computers. Employee can also be how to control the bank expenses. 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. That will give positive results in the future. 7.17 Needs to be Flexible in credit Policy As mentioned earlier. It should adopt flexible credit policy while giving credit to the agriculture sector.16 Decreasing Administrative Expenses Bank should their administrative expenses.7.18 Technological Advancement I would like to suggest that at least all the main branches of NBP should be fully computerized in order to expedite the dealing process among bankers and their customers.

It will also help in reducing the use of excessive paper work. 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. 7. So for a smooth running of an organization proper distribution of work is the hint to be followed. So this created a lot of over work situation for while relaxation for other. nepotism and politics and their transfer and promotion should be made on merit and according to the rules and Internship Report on NBP. It will not only reduce transaction time. So I suggest that in the organization there should be no favoritism. Balakot branch Balakot 100 . 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.19 Staff Relationship Good relationship among staff member leads to the peak performances in any organization. I saw that some of the employee worked like ants other sat idle starting here and there. when they are unsatisfied at that place.20 Improper Distribution of Work Proper distribution work leads to success in every organization.21 Favoritism and nepotism In the City branch during my internship I saw that when some of the employees are transfer to other places. Proper distribution of work prevents the employee from over and under work situation.after the banking hours). due to their relation with influential people and with top management they can cancel their transfer in few weeks. Some of the officers used to say that if I am absent for a day the bank would stop working. 7. Another syndrome from which the staff suffered was that all of them considered themselves more important than others. will increase accuracy but will also be efficient as well. During my internship I observed that there was no proper distribution of work in the bank. 7. Not only it will be economical but will also reduce the extra burden of work of the bank.

7. Take the example of advances section. They should introduce various prizing schemes just like Allied Bank. and I have heard personal complaint about the unavailability of foreign currency account in banks. They should do more advertising through newspaper and media and through channel of personal contacts. Balakot branch Balakot 101 . In advance section if the employee is transfer after sixth month or seven month. Karamad Scheme. there is number of employee who have worked on one seat for many a year. 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. Bank Al-Falah (monthly income earning scheme) and various others. But on the whole organization level. It can have negative effects motivation of employee who is hard working and intelligent. 7.regulations of the bank and provided favorable environment to the employee to show their performances. Internship Report on NBP. 7. So I thick it is wonderful opportunity for the bank to open foreign currency account.23 Foreign currency Account For the internship the place I have selected was City branch.22 Inter Departmental Transfer I watched during my internship that.24 Marketing Policy The branch should adopt various marketing strategy and promotion strategy to promote the bank and its product. it is the most effective of all when you think in term of branch level. The most important in my opinion is personal marketing. they should arrange the seminar with in the bank and outside the bank. which is my forefather land and I know that from area many people have traveled to other country for different kind of jobs.

For this purpose professional training of the stuff member is required.27 Organizational Commitment It is suggested that employees working on daily wages basis should be given some benefits. therefore it is recommended that the assistants should he given special training to make them ready for the leadership. There is no complaint box available in the branch and not any person appointed to hear the complaints. performance and service.25 Complaints of Customer There should be an information desk to provide the information and to receive the complaints of the customer in the bank.28 Managerial Leadership In the analysis. which the other employees are getting. Their salaries must increase according to efficiency. Balakot branch Balakot 102 . and recruit a special person for that guidance of the customer when they are unable to manage some difficulties in banking matters. 7. 7. So I suggest management to install a compliant box in the branch. 7. Internship Report on NBP. we have discussed the difficulties of the assistant in taking any initiative.26 Analysis of the Business: Proper analysis of the business reports should be conducted before extending any type of loan.7. They should ensure the proper payment of installments and the mark-up by the borrower. 7.29 Credit Monitoring The credit department of the bank should carries out vigilant credit monitoring. Every person cannot go to the manager for the complaint because most of the people are hesitant.

Policies should be crafted in a way to ensure that no loan is extended on political pressure.33 Car Financing Scheme Another financing scheme with the name of “MARE GARE CAR FINANCING SCHEME” should be initiated This finance scheme will help the general public to buy the car of their choice in easy quarterly installments The bank monitors will do strict monitoring and the car will be hypothecated with the bank against the car loan. Loans should be awarded against reasonable securities. According to which the current ration of borrower’s business must be 1:1 and the debt to equity ratio should be 60:40. 7. Internship Report on NBP. where market value should be equal to the loan granted. means the liquidity position of business should be healthy. City Branch may extend the night banking to cater to demand of this business community. 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.The staff members who have done all the paper work of the loan extension should perform the monitoring.30 Extended Banking Hours The banking hours may be extended up to six. SBP regulation for loan approval should be strictly followed.31 Housing and House Hold Goods loans Bank should initiate these loans because most of bank’s customers are middle class and they cannot afford to buy house or household goods at once by their own 7. as being practiced by HBL opposite to it. 7.32 Avoiding Bad Debts Great care should be taking while extending the loan. Balakot branch Balakot 103 . Therefore. The branch could also be opened to cater the requirements of this business community Limited staff: 7. as he/she will be having more information about the borrower.

Balakot branch Balakot 104 . The next chapter is about the implementation plan in the view of recommendation and suggestion. Balakot Branch Balakot in particular. 7.Scheme’s implementation plan is give in the next chapter.34 Summation We discussed in this chapter about the recommendation and suggestion for NBP as an organization in general and NBP. Internship Report on NBP.

two recommendations are selected for implantation plan. This financing scheme will help bank to increase its revenue immensely 8. 1500000 Rs. 8.1 Rules and regulations Mare Gare Car Financing Rs.43 per Rs.CHAPTER # 8 IMPLMENTATION PLAN 8. 1000 3 or 5 years Quarterly (12 or 20 equal installments) Name of finance Minimum amount of finance Maximum amount of finance Rate of Mark up (on daily product basis) Period of finance Repayment to Bank 8. 0. 300000 Rs.2 IMPLEMENTATION PLAN FOR “MARE GARE CAR FINANCING SCHEME” Implementation of this financing scheme is initiated to provide long-term loans to the general public for buying their own car in easy installments.2 Documents required for extension for loan Documents required for the title of car.2.2.1 INTRODUCTION From the recommendation that were discussed in previous chapter. Bank monitoring team approval certificate. Internship Report on NBP. Balakot branch Balakot 105 .

The total of that will be divided by number of installments to get the amount for each installment The formula for extracting mark up is Mark up =F*R(1+N) 2M Where F = Total amount of financing R = Rate of mark up for one year N = Total number of installments M = Number of installments in one year Case study Amount of finance Rate of mark up Rs. Balakot branch Balakot . 200000 Rs. 0.2. Insurance.3 Securities Required for Extension of Loan To ensure the safe recovery of loan the car will be hypothecated. Guarantee of two 17th grade government or semi government officer.Car dealer certificate of authentication.2.4 Finding out Quarterly Installments Mark up will be calculated for the whole time period and will be added to the principle amount.43 per 1000 106 Internship Report on NBP. Personal liability of the borrower. 8. 8.

157 Mark up for the whole financing will be Mark up = 200000 * 0. The cost of the implementation plan. 14121/The borrower will pay Quarterly installment of Rs. Balakot Telephone Operator” The ingredients of the implementation plan are. Balakot branch Balakot .Total number of installments Number of installments in one year 20 (5 years) 4 Rate of mark up for one year ® = . Qualities of a telephone operator Benefits of a telephone operator. 14121/8.157*(1+20) 2*4 = Rs. • • • • • Need/problem at the branch.43 * 365/1000 =. 82425 Now the quarterly installments will be Quarterly installment = principal amount + total markup Total installments =200000 + 82425 / 20 = Rs. How the need created and bank’s staff decision. 107 Internship Report on NBP.3 Implementation plan for NBP Balakot Branch.

8. Creates good impression on the customer.8. NBP Balakot Branch. Balakot has the problem of telephone operator. It saves the time of the customers. On the other hand bank’s communication system was not doing well overall. Communication of Bank with outside enhances.3. 8. Therefore as an internee I felt that there should be a telephone operator who can easily handle this situation.3. 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.2 Benefits of the telephone operator • • • • • It saves precious time of the manager and staff members. Therefore they think it’s useful to have a spare person for this facility.4 ACTION/IMPLEMENTATION PLAN COST 1Cost of HRM department Advertisement in newspaper cost Internship Report on NBP.3. 8.3.1 Need/problem at the branch. Balakot branch Balakot 4000 108 .3 How the need was created The need for telephone operator was created because the staff members would have to leave their work and attend the telephone but some times it would be a wrong call. It can save the precious time of not only manager but other staff as well. Every organization has some problems. Communication within the bank improves.

Balakot branch Balakot 109 .Selection cost Training cost Total HRM cost 2Telephone networking Additional telephone sets Cable (Rs. 5/ foot.4 Summation 17500 10000 12000 26000 2500 4000 2000 2000 5000 2000 435000 We discussed in the chapter about the two-implementation plan. Internship Report on NBP. This twoimplementation plan will save the time and will bring speed in tackling the customers. 5*800) Telephone mechanic Labor Separate cell cost Other expenses Total networking Total action plan cost 8.

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