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In order to be able to cope with the changing environment it is necessary to have some practical experience. As the students of Business Administration we have to pass through a series of various managerial techniques. During this practical course we are provided with an opportunity to learn that how the theoretical knowledge can be implemented in practical grounds. I was selected to do my internship in National Bank of Pakistan MAIN Branch Multan. I worked there for six months & it gave me a greater practical knowledge about the operations of a bank. In the following pages I have narrated my experience, observations & all the working activities which I observed during my six week internship at NATIONAL BANK OF PAKISTAN MAIN BRANCH MULTAN.
National bank of Pakistan
I am highly grateful to almighty Allah who gave me the power to complete this report. I am also highly thankful to my honorable teachers for theirs guidance. I am indebted to all the employees of National Bank of Pakistan MAIN Branch Multan Special thanks to “MR.Sajjad hussan sahu” V.P of National Bank of Pakistan main Branch) MR. Khurram Khan. And all other employees of the branch for their cooperation.
National bank of Pakistan
Table of contents
Topics Introduction Evolution of banking Definition of banks Types of banks National bank of Pakistan Banking history History of NBP Branch network Mission statement Corporate philosophy Objectives Organizational structure Organgram of NBP Departments Departments in NBP Foreign exchange department Import and export department Credit and advances department General banking Account section Remittance section Locker service Govt receipt and payments Clearing department Computer section Consumer & retailing Financial analysis Ratio analysis SWOT analysis Suggestion and recommendation Different forms and voucher page # 4 5 6 6 9 10 13 14 18 18 19 21 22 24 25 25 34 43 57 57 64 67 67 68 69 71 75 76 79 84 85
National bank of Pakistan
1855. nad hewn the business failed. The king Edward –III established the Office of Royal Exchanger for changing foreign money at a profit for the benefit of the Crown In 1854 the joint Stock Companies Act opened an era of corporations. for no record is available to ascertain the validity of any of the opinions. then how is it that the Italians money changer were never called ‘Banchierei’ in the middle ages? Other authorities hold the opinion that the word ‘bank’ in derived from the German word ‘back’ which means ‘joint stock fund’ latter on when the Germans occupied major part of italy the word ‘back’ was Italianized into ‘bank’. restricted the liability of the share holder of the limited company to 5 . Modern banking Banking in its modern form and structure stared in Britain when many of the Lombardy merchants came to England in the fourteenth century and settled in the parts of the city of the London now called Lombard Street. and the Limited Liability Act. Some authors opine that this word is derived from the word ‘bancues’ or ‘banque’ which mean a bench. It is therefore not possible to decide as to which of the opinions is correct. The explanation of this origin is attributed to the fact that the Jews in Lombardy transacted the business of money exchange on benches in the market-place.National bank of Pakistan EVOLUTION OF BANKING It has not so far been decided as to how the word ‘bank’ originated. the ‘banco’ was destroyed by the people incidentally the word ‘bankrupt’ is said to have been evolved from this practice th opponents oh this opinion argue that if it was so.
profits and dividends etc. however. such as Commercial bank Savings bank Merchant banks Mortgage banks Consumer bank Investment bank Central bank Commercial bank: 6 .National bank of Pakistan DEFINITIONS OF BANK (1) “Banks do business of money.” (2) “Banks are guardian distributor of cash money”. Rather banks do business of lending and borrowing loans. due to the verity of resources of money and the diversity in lending and investment operations. (3) “Banker or a bank or a person or company carrying on the business receiving moneys and collecting drafts for customers subject to the obligation of honoring cheques drawn upon them from time to time by the customer to the extent of the amount available on their current accounts”. TYPES OF BANKS Primarily all banks gather temporarily idle money for the purpose of lending to other and investment gain in the form of return. banks have been place in various categories.
National bank of Pakistan The commercial banks received deposits from the general public. Central banks: 7 . Consumer banks : These banks providing finance for purchasing consumption goods for the use of Brewers Investment banks: These banks assists business houses and governmental bodies to raise money through the sale of stocks and bond for usually long term purposes these banks perform the usual functions of raising deposits of idle money from the public and finance the business houses other bodies. commerce and industry to enable these sectors to expand their productive activities Merchant banks: Merchant banks are those. As their most distinctive feature the commercial banks maintain the checking accounts for the constitutions. which are repayable on demand upon written orders of the depositors. Post office savings banks and savings accounts at national saving organizations are well known national saving banks in Pakistan. Mortgage banks: These banks mainly deal in loans for acquisition or construction of real estate against the securities of mortgage. During the late 18th and early 19th centuries the trade between countries was financed by bill of exchange by well-reputed merchant’s houses for which they would charges a commission for their services Savings banks: The basic purpose of these banks is to inculcate the habit of saving in the people the savings banks deposits are not repayable upon only the written order of depositor but the depositor of his agent has to appear personally at the saving banks to make withdrawal and for this purpose he must present a pass book a certificate of deposit or some similar documents to prove his right to receive his payments. which have been mainly financing the domestic and international trade. Te commercial banks are also distinguished for providing short-term finance to trade.
security brokers and dealers. lends. insurance companies. These institutions include finance companies. mortgage companies. investment banks.National bank of Pakistan Central banks occupy the unique position in banking structure of a country because they have been interested with the responsibility of controlling the money supply. exchanges. invests. loans that consumers and businesses can use to purchase goods and services. which can be used like money to make payments and purchase goods and services. The basic services a bank provides are checking accounts. Four types of banks specialize in offering these basic banking services: commercial banks. and basic cash management services such as check cashing and foreign currency exchange. investment companies. and real estate investment trusts. savings banks. A broader definition of a bank is any financial institution that receives. pension funds. savings accounts and time deposits that can be used to save money for future use. This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. savings and loan associations. collects. and financial market of a country for the purpose of economic development. pays. 8 . INTRODUCTION ABOUT BANKING SECTOR Banking is the business of providing financial services to consumers and businesses. transfers. and credit unions. interest rate. or safeguards money for its customers.
National bank of Pakistan 9 .
The Hindus in order to ruin the economy of the newly born State closed down most of the head offices and the branches of scheduled and non-scheduled banks in Pakistan. 880. In the east Pakistan though the number of branches were not closed in such a great number as in west Pakistan. The number of scheduled bank’s branches was reduced from 619 to 213 in both the wings of the country after independence. as a number of branches fell down (from 487 to 69). Before the partition of Sub Continent the entire banking business was almost controlled and managed by non-Muslims. The funds and the other valuables were transferred at an accelerated pace to India and there was a mass scale migration of non Muslims from West Pakistan to India which also caused the drain on the bank deposits. India had 29 and there were 7 exchange banks. The non-scheduled banks also suffered a severe jolt and their number was reduced from 411 to 106 over the same period.0 million.National bank of Pakistan BANKING HISTORY IN PAKISTAN At the time of partition the total number of Commercial Banks in Pakistan were 38 . The total deposits of Pakistan banks stood at Rs. large portion of the deposits were with drawn from the 10 . The Muslims were deliberately kept cut of banking profession by the wealthy Hindu community. they secretly began transferring their capital to the safe places in India. West Pakistan from where there was greater exodus of non-Muslims to India suffered a great deal.Out of these Pakistan had 2 banks. When Hindu capitalists became sure of the division of Sub Continent.0 millions where the advances were Rs 198.
A moratorium of free months was also allowed to banks that had financial difficulty due to sudden withdrawal of deposits. and if satisfied of their bonafide. It took up the challenge and started reorganizing the crippled banking immediately after partition. the payments should be realized. which empowered it to investigate all such complaints. the government should realize the assets of the banks. 11 . the following arrangements were made for facilitating • Settlement of claims by the governments. The government of Pakistan was quite aware of the serious banking situation caused by the withdrawal of deposits and wholesale migration of banking staffs to India. The government took some effective measures for providing banking training facilities to Muslims.National bank of Pakistan banks and transferred to India by the non Muslims. which were sufficient to discharge such liabilities. The government of Pakistan also allowed the removal of valuables kept in save deposits vaults and lockers by submitting an application and getting necessary approval from the custodian of evacuee property. In case the bank insisted on non-payments. The mass scale closure of branches and withdrawal of the deposits caused a dead lock in the banking business in Pakistan. Each bank was to declare on to its offices both in India and Pakistan as • Clearing house for transfer of accounts. The government issued an ordinance. In addition to above. There were some complaints that Hindu banks were not honoring the cheques of Pakistani national and were also refusing to give securities kept in their custody. Each bank was open at least one central office in Pakistan where it could consolidate work of all its branches and start paying out to depositors.
to serve as an agent to the SBP. which is the central bank of the country. 1961 with a Paid up Capital of Rs. The banking council formulates the policies and guidelines for the banks. An inter dominion agreement was reached between India and Pakistan in April 1949. some banks went into liquidation and the payments could not be made to the depositors. India delayed the transfer of Muslim deposits to Pakistan. was established in July 1948. The Agricultural Development Bank of Pakistan (ADBP) was set up in 1961. 12 . The National Bank of Pakistan was established on 1949. The State Bank of Pakistan. five crore. The main provisions of the agreement was as under: The inter dominion agreement could not be fully imported. 1974 the entire commercial banks were Nationalized. medium and long term loans to the farmers. In Jan. it provides short . The non-devaluations decision of Pakistan government further led to the suspension of remittance facilities through normal banking channels. Due to panicky withdrawal of deposits. MCB and ABL have again been privatized. In order to regulate both of the banking on sound footings. Pakistan banking council was set up for coordinating the activities of the nationalized commercial banks. The weaker commercial banks were merged with the stronger once and in all Five major banking companies were formed. The Industrial Development Bank of Pakistan was set up on August 1. the following measures were taken to develop the banking system in Pakistan.National bank of Pakistan The government of Pakistan tried to provide all kinds of facilities with sincerity to the known Muslim bankers for restoring normal banking facilities in the country but the response was discouraging.
Government of India refused to hand over the assets worth about five hundred million rupees. Permission to open ten banks in the private sector has also been given. 1985. MCB was privatized in April 1991. are being gradually denationalized. State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assets against the Indian currency retired from Pakistan territory. HISTORY OF NATIONAL BANK OF PAKISTAN The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute Trade. The government of Pakistan has also liberalized the exchange and payment procedure.National bank of Pakistan Interest has been eliminated from the banking transaction from July 1. raising bad debts. The dispute is still unsettled and these assets are still not delivered to Pakistan. deterioration in customer services. The permission to open an Investment bank has also been given. The Pakistani firms and companies can now maintain Foreign Currency accounts in Pakistan on the same bases as known Pakistanis. The banks nationalized. It will go a long way is providing capital for the industrial projects. The banks are now accepting saving deposits on Profit and Loss Sharing bases. Until June 13 . The shares of ABL have also been sold to its 7500 workers. The Bank commenced its operations from November 20. due to weaknesses such as over staffing. 1949 at six important jute centers in the then east Pakistan and directed its resources in financing of jute crop. Modaraba and Leasing Companies are also operating in Pakistan. The Bank’s Karachi and Lahore offices were subsequently opened in December 1949. loan on political bases etc.
three representative offices have recently been set up at Tashkent (Uzbekistan). the Bank has been able to extend its services to a much larger number of Pakistanis all over the country. In 1999 its market share was around 22% and it remains the largest financial institution in Pakistan. Europe and Africa. Bank took a big stride in 1952.5 million accounts.National bank of Pakistan 1950. In 1999 national bank celebrated its golden jubilee during the last fifty years bank has made substantial strides in the financial services industry in Pakistan. as an agent of State Bank of Pakistan. Today it has more than 8. it was felt that it could expand its business to include other commodities as well. America. when it replaced the Imperial Bank of India. Bank’s role globally is well assisted by its network of correspondent banks located strategically in Asia. Thereafter. Of these. Bank maintains its presence in all the major financial centers of the world through its 15 overseas branches and 5 representative offices. Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS countries. With the passage of time its functioning diversified as they take over the function of different institution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation) It is working as the agent of the state bank of Pakistan and performs its functions wherever state bank of Pakistan is not present. the Bank was engaged exclusively on jute operation. 14 . The government floated its 10 % of the shares in the open market in past and the ratio became 60: 40 and in future they trying to make it 55: 45. Branch Network With the geographical development of its branches.
National bank of Pakistan Apart from having a vast branch network. The Bank also has a presence in 24 international locations including the USA.189 Branches 4 Subsidairies Branch Network: NBP has an extensive domestic branch network of over 1500 branches located all over Pakistan. Bank is at the forefront in the acquisition and application of new technologies in every aspect of its banking facilities. United Kingdom. 15 . The Bank has 12 Regional Computer Centers to cover various on-line and batch system requirements of branches and controlling Oversea Branches Domestic Branches 15 Overseas Branches 4 Represative Offices 1 Subsidiary 1 Joint Venture 29 Regional Offices 1. It has acquired leased telephone lines for on-line banking. Europe and the Far East.
National bank of Pakistan BRANCHES ALL OVER THE COUNTRY 16 .
revaluation reserve has increased shareholders' funds to PKR16 billion.411 109.962 122.6% share of time and demand deposits in the country.117 9. 1. which comprises treasury securities.232 105.46 billion divided into 146 million shares of 10 rupees each. Deposits: As of December 2001 NBP had a paid-up capital of PKR1. corporate bonds. shares and other securities. Deposits: NBP holds 24.294 91. Assets: NBP's total assets stood at PKR350 billion on December 2001. This included total earning assets of about PKR268 billion with gross loan portfolio of PKR140 billion.National bank of Pakistan Ownership: NBP is 100% owned by the Government of Pakistan (GoP).932 15. however.449 62 2000 273.46 billion to Rs. NBP has.754 349.035 85. however. increased its paid up capital from PKR Rs.277 (178) 17 . The bank also has an investment portfolio of PKR91 billion.854 108.597 106.320 15.73 billion through issuance of bonus shares (subject to corporate and shareholder approvals).599 12. Total shareholders' equity was PKR10 billion.207 (795) 1999 254.391 325.863 310.524 102. Local currency deposits comprise 67% of bank's total deposits while foreign currency deposits account for the rest.969 529 2001 294. 3.932 274. Financial Highlights: Amounts in Million Year to December Total Deposits Total Assets Total Equity Total Loans Total Investments Net Profit 1998 235.
serving them with maximum possible helpfulness and courtesy. serve our present customers and promise to serve our potential customers to the best possible on-counter and behind-counter services. education. improvement and achievement of goals. We must make a sound profit and protect our business by creating financial services. therefore. we must. Achieving top-tier financial performance. till separation. Our braches. 18 . They should have talent. Creating a powerful & distinctive brand identity. Supervisor should be tough minded but fair in the pursuit of bank objectives. experience and ability with a premium. leadership and orientation towards action. knowledge. They should be treated with dignity and should be made to rise to their highest potential working condition should be attended. Our second most important responsibility is the employees who work for our great institution.National bank of Pakistan Mission statement of national bank of Pakistan “To be recognized in the market place by Institutionalizing a merit & performance culture. Our 1st community is the Pakistani nation whose service is the reason for our existence. and Adopting & living out our values” Corporate Philosophy At National Bank We at NBP believe that our customers are our most important and 1st responsibility. place on commitment. in training and development. Our fourth responsibility is to the communities that r served by our great institution. regional offices and head office should regard the customer as their most priority. Our 5th responsibly is to our owners and stockholders. stability and fair treatment in their jobs in recruitments and assignment. implementation. Our third most important responsibility is our executives and officers. in promotion and placement . They must have their security . We should try to provide a total and integrate package of services to create satisfied clientele.
Mail Transfer to where ever the customers want. National bank of Pakistan has certain objectives.National bank of Pakistan Objectives of National Bank Objectives are ends towards which an enterprise activity is aimed. (4) Sale of promissory notes: To sell and realize the proceeds of sale of any promissory notes. shares etc. debentures. debentures or other securities (2) Accept deposits: Bank provides deposit facility to its customers. stock receipts. (5) Selling and realizing property of bank claims: 19 . The types of deposits are Profit and loss saving accounts Fixed account Current account (3) Remitting of funds: The bank provides the facility to its customers remitting large amounts of money in the form of bank Drafts. Telegraphic Transfer. bounds. These objectives are (1) (2) (3) (4) (5) (6) Advancing loans Accept deposits Remitting of funds Sale of promissory notes Selling and realizing property of bank claims Investment or underwriting of stocks (1) Advancing loans: one of the main objective of NBP is advancing loans to industrialists and traders against security of stock. The purpose of business is production and marketing of economic goods and services but to accomplish these objectives to a number of enterprise objectives may be necessary.
(6)Investment or underwriting of stocks: To invest the funds of the bank in or the underwriting of any of stocks. shares securities. debentures. 20 . bonds or scripts or other securities for money issued by any public limited companies and to convert them into money when required.National bank of Pakistan To manage sell and realize all property whether moveable or immoveable which may come in any way of the bank in satisfaction of its claim. funds.
National bank of Pakistan ORGANOGRAM OF NATIONAL BANK OF PKAISTAN 21 .
National bank of Pakistan PRESIDENT & CHAIRMAN CHIEF REPRESENTATIVE BOARD OF DIRECTOR PSO & SECRETARIAT SECRETARY OPERATION COMMITTEE CREDIT COMMITT EE ASSET & LIABILITY COM FINANCE GROUP OPERATIONS GROUP REGIONA L OPERATI ON OFFICERS OPERATI ON DEPARTM IT OPERATIONS & SERVICES REGIONAL COMPUTER CENTERS SWIFT CENTERS LOGISTICS SUPPORT ENGINEERI NG GENERAL SERVICES SECURITY STAFF WELFARE FINANCE & ACCOUNTS DEPT EMPLOYE E INSURANC E PENSION RETIREME NT BENEFIT PROVIDEN CORPORAT E INVESTME NT BANKING GROUP FOUR OVERSEAS REGIONAL FAR EAST EUROPE & USA CENTRAL ASIA MIDDLE EAST 22 .
National bank of Pakistan AUDIT GROUP RISK MANAGEME NT GROUP REGIONAL AUDIT OFFICE REGIONAL CREDIT CHIEF CREDIT DEPT HEAD HEAD OFFICE AUDIT SPECIA L ASSET MANAG EMENT GROUP IT PLANNING DEVELOPME NT GROUP STRATEGIC PLANNING AND ECONOMIC RESEARCH GROUP HR MANAGEME NT DEPT RETAIL BANKING IT SYSTEM DEVELOPMENT NETWORKING SOFTWARE DEVELOPMENT HR MANAGEMEN T RECRUITMEN T /PLACEMENT COMPENSATI ON BENEFIT PERSONAL DATA DISCIPLINE ORGANIZA TIONAL DEVELOPM ENT & TRAINING PROMOTION PERFORMANCE APPRAISAL GOAL SETTING TRAINING UNION AFFAIRS ALL REGIONAL CHIEF OFFICER ALL RETAIL BANKING ELECTRONIC PRODUCT AND SERVICES DELIVERY TO OPERATIONS GROUP 23 .
National bank of Pakistan 24 .
This department is just like Cash Department in local currency. the dealing is made in foreign currency. In National Bank of Pakistan.National bank of Pakistan Departments in National Bank Main Branch Following departments are working in NBP main branch • • • • • • • • Foreign Exchange Import and Export Credit and Advances Remittances and Deposits Accounts Computer Government Consumer retailing FOREIGN EXCHANGE DEPARTMENT Foreign exchange is an important department in bank system. In the foreign exchange department all the operations of the bank are done in the same way as in all other departments of the bank this department also involve in deposits. four currency accounts are available: US Dollar Pound Sterling Japanese Yen Euro 25 . In this department. For opening of account in foreign exchange the minimum balance required is $100. remittances and advances but the difference with other department that the foreign exchange department deals in foreign currency rather then in local currency.
If the introducer is not proper than state bank charges RS 5000/.per head from that employee of the bank who has opened the account of the customer on the request of the introducer.National bank of Pakistan FUNCTIONS The department performs the following functions: Account opening Account closing Inward/outward remittance Issuance of traveler cheques ACCOUNT OPENING Terms and conditions: Account opening requires two things 1) National id card of the customer and introducer 2) Introducer CUSTOMER: Customer is the person who comes with the purpose of opening the account INTRODUCER: Introducer is a person having the account in same branch and gives guarantee about the customer. 26 .
Following things are needed for opening of account: Account opening form Signature card Letter of kinship Letter of thanks Issuances of cheque book Account opening form: Account opening form consist of Category of account Currency Title of account Account number Customer information Initial deposit Authorized person in case of customer death Signature card: The signature card included the name and specimen signature of the customer Letter of kinship: In the latter of kinship the customer authorized the bank to pay the proceedings of his/her PLS/Current foreign currency account to the related person by describing the relationship of the person with the customer after the death of the customer. Then he attaches the photocopy of his identity card and fills the signatory cards. Then he is allotted an account number by entering in the account opening register. the customer is required to fill an application form. Now he fills the pay-in slip and deposits money on the counter.National bank of Pakistan Procedure of Account Opening and Depositing Foreign Exchange: First of all. Letter of thanks: Letter of thanks is the latter issued by the bank to the customer for two purposes 1) 1st purpose is to say thanks to the customer for opening the account in their bank 27 .
The account is closed out and his balance is paid to him after deducting the closing charges. $ 20 and the application is filed in account closing file.e. The customer is required to submit an application for closing the account.National bank of Pakistan 2) 2nd purpose is to confirm the address provided by the customer while opening the account. Issuance of cheque book: Cheque book is issued to the customer after sending the letter of thanks when the customer comes with the latter of thanks and requests for the issuance of the cheque book. A cheque book (usually having 25 leaves) is issued to the customer. i. Closing of Account: The customer can close the account. There are many reasons for closing of account Account holder Owen request Death of account holder Closing of account due to the bad manners of account holder Inward/Outward Remittances The remittances are of following types: Foreign Telegraphic Transfer (FTT) Foreign Demand Draft (FDD) Foreign mail transfer(FMT) SWIFT Western union money transfer(WUMT) Foreign Exchange Bearer Certificates (FEBC) Special US Dollar Bond 28 .
Foreign Mail Transfer: These are also known as FMT. 500 flat. but this is foreign currency. It may be drawn upon one of the banker’s own branches. Whenever a draft is drawn own advice is dispatches the same day. When a person requires a draft. and advice is also sent to Karachi. NBP has its correspondent bank in New York . NBP debits Main Office Karachi account and gives credit to the account of beneficiary. they give credit to Main Office Karachi. After receipt of money. if deposit is above Rs. 1200. NBP gives credit to main office Karachi. obtain from his bank a draft on demand payable to the person who is to be paid the money. the entry is passed in FDD register and a number is allotted to FDD. A person who wishes to remit money to someone in another place may if he does not send his own cheque. Transfer by mail of an account of currency to another country. giving the name and address of the payee. if payment is in cash. which gives credit to NPB. If payment is through account. or upon some other bank where exists for draft to be drawn. which gives credit to NPB New York. When FTT is received from abroad. Its charges are fixed. Advising the bank or branch as the case may be. of the particular of the draft of that banker on whom it is drawn may recognize the draft was it is presented. 1500. i. which ultimately gives credit to required destined bank and account number. The bank charges commission Rs.National bank of Pakistan Foreign Telegraphic Transfer: This is telegraphic transfer just like ordinary local currency TT. After this. 4. he should be asked to complete the prescribed application form in which he should state the amount of the draft. Foreign Demand Draft: Foreign Demand draft is also known as FDD. Then FDD is prepared and given to the customer. charges are Rs. Mode of payment can be cash or by debiting the account. 50. the name of the payee and the place of payment. excise duty Rs.. 29 . Rs. 600.000 charges are Rs. for charges.e. The Remitter sign auroras requesting the banker to transfer the amount by mail.
These are not drawn on any specified bank or banks. i. Traveler Cheques Issuance of Traveler Cheques NBP issues the traveler cheques to those people who want to travel abroad. the customer’s account is credited in the bank and debit the Main Office Karachi account. It can be issued and enchased only in rupees. Then on the receipt of advice from abroad. the cheque is sent to the bank on which is drawn. 3% and 4% respectively. Ticket is endorsed. Traveler cheques are issued. Special US Dollar Bond: The bonds have the maturity period of 3 years. The maturity period of these certificates are 5 years. all foreign cheques are included whose payments are to be received from abroad.e. but payable at practically all banks throughout the world and guaranteed by some well-known institution. The bank charges $10 or the equivalent amount in rupees. 7 years and 9 years. It is converted on the selling rate of that day. 30 . Procedure A customer is required to submit the following things: Valid passport with visa Return ticket Currency to be deposited in Pak Rupees. 2%. 5 years and 7 years. The customer account is debited and state bank of Pakistan (SBP) is credited. Foreign Exchange Bearer Certificates (FEBC): Foreign Exchange Bearer Certificates can only be issued from Foreign Currency Account and not from deposit of local currency. National bank purchases the traveler cheques from American Express Bank and makes the payment after selling it to the client. The bank gives the interest at the rate of 5% + LIBOR. Their limit is $50 per day for private visit and maximum limit for the year is $2100.National bank of Pakistan Foreign Bills for Collection: Under this head. When a customer asks the bank for collection.
F. All the banks in the world are registered for the service. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. which have the facility of online computers. Pak rupee currency account is necessary.. Issuing ticket authority should endorse its stamp on the passport. one types the content with his code word and the other executes it with his password. which eliminates the manual application of tests that often cause delay in the payment of home remittances. In case of transfer of funds the introduction of S. Endorsement of the ticket is very essential. you can safely and speedily transfer money for our business and personal needs. has made remittances faster and secure. SWIFT: The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances.I. There are different types of codes that are used for the messages interchanged on the basis of the type of the transaction. But approval from Chamber of Commerce & Industry is required and certificate of ticket issue for which the payment must be made through cheque.National bank of Pakistan Limit for businessman is $200 per day and maximum limit is $6000. Headquarter of S.F. The message sent through this way does not require any code tests to confirm its authenticity. is in Belgium. 31 .Using the NBP network of branches. The system works like Internet communication processes. an acronym for Society for Worldwide Inter-bank Financial Transactions.T. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. and he has to present cheque for the amount to the bank.T.W.W.I. The sending process is more secure where two officers make the transmission of the message. The system has built-in features of computerized test keys.
it is a procedure of counter payment Time required in only one hour and deduction on it is $50.National bank of Pakistan Swift is a soft wear .g banks Private organizations e. Procedure of payment WUMT just needed identification. Different Govt and private organization are dealing with WUMT Govt organization e. Master Currency Main office of WUMT is situated in Dubai. Dollar East. Money changer.g Zarco. It is working in almost 200 countries.it is use for following purposes Financial transactions Non-financial transactions Linking Import export Different codes are used in swift for different purposes Latter of credit code is 700 Remittance code is 100 Bank to bank transaction code is 202. its an counter payment Procedure of payment is that the customer came to specific person who is dealing with WUMT tell him the 1) MTC NO 2) Receiver name 32 .etc. no need of a/c. Western Union Money Transfer: Western union money transfer is a fastest way to receive money worldwide. Procedure When any massage comes through swift 1st its received by head office then head office authority send that massages to different banks via mail to main branches of relative banks.
address and telephone number 2nd section for sender.National bank of Pakistan First name Middle name Last name 3) Sender name First name Middle name Last name 4) Telephone no 5) Photo copy of ID card 6) Expected amount (10% margin is acceptable) 7) Test question After if the that related officer feed MTC # (mail transfer control) . 2nd for customer and 3rd for branch record. other copy send to the cash counter for payment and the last copy for put in file for the purpose of record. WUMT form It form is divided into three sections 1st for receiver information. his name. his name. Payment is made only in Pak rupees. test question. it is unique number not less then 10 digits. MTC number. after that office done his signature and give one copy to customer. he/she filled the specific form. 33 . and sender name to check whether amount is come or not . receiver name . his/her 1st name and last name. When all these things are correct then give a form to the receiver. signature There are three copies of form 1st for counter payment. address telephone number 3rd section is for expected amount.
180. ADVANCE PAYMENT: In this type of export the importer is making the payment in advance. 90. 60. If neither the payment is made nor the goods are returned the importer (auction house) are treated as criminal under section 420 of criminal act in Pakistan. These modes are ADVANCE PAYMENT DOCUMENT AGAINST ACCEPTANCE (D/A) COLLECTION UNDER L. This payment is made after a specific period of time on which both the parties had agreed i. 120. days.National bank of Pakistan IMPORT AND EXPORT DEPARTMENAT Export Section A term used for goods and articles commodities sent from the country to another.C. DOCUMENT AGAINST ACCEPTANCE (D/A): Consignment is given to the auction house with out any order. Amount is given to the exporter when the goods are being sold or if the auction houses are not able to give the exporter the required money then gave to return the goods in full to the exporter. Exports in Pakistan are done by the following four modes. COLLECTION: 34 . This shows the height of confidence between importers after the shipment is completed then the bank sends and E-form to SBP stating the export being made. A trust receipt is being made issued.e. 30.
when the bank received the documents through other bank the payment is made.C: Bank receives an L.C from the importer for exporter of goods. Only documents are rooted through the bank and also payment is received through the bank. 35 . Exporters provide the following documents to the bank. The exporter produces the following documents with the bank at the time of export.CS The LC in which payment is made at sight basis after documents are delivered USANCE OR DA L.CS: In this class of LC the exporter with that listed in the l. UNDER L. bank has no liability. After receiving the LC and checking all the documents the officer is issuing an approval sheet. It is done with the prior arrangement between the buyer and seller firm order.c makes the payment after a specific period of time bank checks all the documents provided. partly payment may be made when both the parties agrees.National bank of Pakistan Under this type of exports.CS 2) USANCE OR D/A LCS SIGHT L. Export license Covering schedule Covering letter (document are received) Airway bill or bill of lading Invoice Packing list Certificate of chamber of commerce Insurance of goods E form In this type of export payment can be made in parts. The bank provides the bill of exchange. if no error then payment is being made else vice verse. buyer and seller sets the rules for this type of export. These export LC used in Pakistan are following two types. The payment in this type of export is made in full else specified. Payment is made by the draft. 1) SIGHT L.
the amount of foreign currency payment and the details of the importer as well . insurance and freight) FOB (freight on board) CFR (cost and freight) DOCUMENT OF EXPORT Following documents are required for export Financial documents Shipping documents Miscellaneous documents Commercial document Original Invoices of the transaction for sale.National bank of Pakistan Bill of lading or air way bill Invoice Packing list Certificate of chamber of commerce Insurance E form The bank informs SBP about current export uses the E form. After receiving their copy SBP compares the two forms. When full payment is being made the SBP’s copy is returned to SBP. Bills of Exchange drawn on the importer by the exporter 36 . The custom authorities retain first spy of E-form and returned SBP. It is issued in quadruplicate.2nd copy is for SBP 3rd for exporter and 4th for the banks record. the importer’s particulars. . FORM E It describes the detail of the goods to be exported. TERMS OF SALE CIF (cost.
National bank of Pakistan Bills of Lading from the shipping company along with the details Insurance documents Along with these documents the Bank certifies that: Exporter is known to the Bank and is a bonafide businessman and customer in Pakistan. He has made arrangements with realization of the export proceeds, which Must be made within 120 days from the date of the shipment of the goods; The Bank shall receive export proceeds against shipment on firm contract within the prescribed period by the State Bank. Failure to make the receipts, the Bank shall inform the State Bank the circumstances and reasons shall comply with it; In case of nonrealization of export proceed within the prescribed period Bank obtain from the exporter the circumstances and the reasons.
Banks certifies those firms for which:
Arrangements have been made for realizations of export proceeds Bonafide of importer/consignee abroad and credentials have been checked and verified Arrangements have been made for the receipt of export proceeds Genuineness of the charter party where shipment is to be made against charter party bill of lading has verified. After submission of all the related documents to the negotiating Bank, seller is bound to receive payment. The Bank on its part is also bound to make payment however it is only reasonable to allow the banks sufficient time to scrutinize the documents that exporter has submitted. After these documents have been verified and found correct the bank makes the payment to the exporter, in addition confirming it from the issuing bank. All the
National bank of Pakistan documents of the export transaction are received by the exporter and then submitted to the Bank for negotiation. These documents are sent to the foreign bank for authentication. When the confirmation is received then a security sheet is prepared to check the amount of the LC as well as the amount of Bill of Exchange. The advising bank certifies form-E after checking the invoice, LC and the contract attached with the Form-E. After certification from the banks the exporter then goes to the custom authorities and makes the shipment to the importer.
Letter of Credit
A letter of credit is defined as under “Undertaking by the importer’s bank to exporter that the draw in accordance with terms and conditions of the credit, will be honored if presented with in the validity of the credit.” It is a conditional undertaking by the Bank to make payment to the exporter if he fulfills the terms of credit by presenting the required documents to the bank in his country. In fact LC is a legal document on behalf on which the payment made by the importer’s bank to the exporter’s bank. National Bank of Pakistan is providing this service to its customers who have an account with the branch and other businessmen too. This facility has been recognized as a modern banking activity of all commercial banks that are included in the list of 6000 Banks internationally.
Information in LC document
The name of the local company, which is importing the goods The name of foreign company, which is exporting the goods
National bank of Pakistan The details of the goods to be transacted including the amount, quality, mode of packing etc. The total amount of the LC The number of days for which the LC is valid The name of the banks, who are regulating all these dealings The name of the carrier which will be used for the shipment of the goods to the importer The bill of shipment number
Parties involved in a letter of credit
There are normally six parties involved in a letter of credit: Buyer (known as the importer or consignee) Buyer’s Bank (known as opening, or paying bank) Seller (known as the exporter, or beneficiary) Seller’s bank (known as advising, confirming, negotiating bank) Carrier (known as the shipping company) Insurance Company
Types of LC
There are two types of LCs 1-Irrevocable LC An irrevocable LC is one that is a definite undertaking by the issuing Bank that it cannot be cancelled or amended without the consent of all the parties to the credit. The exporter feels himself safe and assured that his payment will be met in time without delay.
National bank of Pakistan
This type of credit is one that can be cancelled at any time by the issuing bank giving any reason to the negotiating bank, meaning that the importer’s bank shall not honor any cheques/drafts presented for payment. The importers do not so commonly use this type of LC, as most of the time there are instructions by the exporters to open and irrevocable LCs in their favor.
Opening of LC
For opening of LC the following documents are required by the bank. Application or bond Order or invoice or indent Insurance (mist according to Pakistan rules) Liability endorsement of customer Irrevocable documentary credit (LC) Serenity form An L.C is issued after opening of the letter of credit it is sent to the negotiating bank.
LC Opening Charges
When an LC is opened, the bank collects certain charges from importer these are: Commission Postage charges Telex charges
which are provided by the exporter with that are described in the L. Covering letter to advising bank 1 copy Bill of exchange 2 copies Invoices 8 copies Bill of lading or air way bill 3 copies Packing list 3 copies Shipping advice to insurance company 1 copy Shipping certificate from vessel 1 copy The advising bank chicks all the documents which they received from the negotiating bank finds any information which is not given in the L. The negotiating bank sends these documents by two mails so that if one mail is not received then the set from second mail can be used for further transactions. The negotiating bank sends following documents to the advising bank.C.C.National bank of Pakistan Bills Under LC After receiving the L. if there is not discrepancy in that documents then the negotiating bank gives the payment to the exporter otherwise vice verse. Remittances Under LC The advising bank gives the authority to the negotiating bank to get money from their account from of their branches. the negotiation bank checks the documents. The negotiating bank sends the document provided by the exporter to the LC issuing bank with their covering letter known as bills under L.C. If the bank has no account with the negotiating bank or the currency of the amount in the LC is different from that of the official country currency. 41 . Then the advising bank issues a debit authority letter to the negotiating bank to get the money from that bank and authorize the bank make payment to the negotiating bank.C in this bill if the bank finds no thing then transaction is made and if there is any discrepancy then the advising bank may claim the return of amount from the negotiating bank.
One of its copies is sent to the SBP. Other copies are for bill of entry 2 national bank of Pakistan copies. 6.e. Insurance Certificate 7. description of goods their quantity amount of LC shipment date port of shipment vessel and etc. Valid import license (not necessary) 5. 4. Annexure – A (request for opening LC) 2. This I form is issued in quadruplicate. NID Card of the importer. Limit sanction certificate. Invoice Performa ( by beneficiary) 3.C i.National bank of Pakistan Reporting To The SBP After an import transaction is completed then the officer uses an I form to report to the SBP for that import. Bill of Lading Vouchers Made By NBP Liability voucher Commission voucher 42 . Bill of Exchange 8. This form contains the information about the import against an L. Requirement For Imports 1.
This department is also called as risk management group. “ The most important activity of the bank is the granting of credit to the customers. circle and zonal. economic risk of each country board of directors and committee of the NBP made this type of decisions and informed about these decisions to the branch managers. The power to sanctioned loans had been delegated for controlling different offices. The following elements are used for credit selection. GHQ. The policies made by central office of the cash can be amended on the basis of the rules and regulation. NBP provides short term long terms financing for domestic and international trade.e. habits. The loan officer sees the family background mode of living. Manager can grant the credit limit to each customer with in the declared limits approved by the controlling offices i. By giving these facility to the customer’s large scale production of commodity can be achieved and economic growth rate can be increased. before giving the loan.. co. Capacity 43 . The banks provided credit to the customers so that they can purchase ahead of their liability. according to amount of loan. Character It is based on the borrower willingness to repay the obligation. business nature. moral reputation and etc.National bank of Pakistan CREDIT AND ADVACNECS DEPARTMENT Credit It may be defined as “ The sale of goods and services and money claims in the present in exchange for a promise to pay in future. Banks grant credit to the customer for a certain period of time.
It may consists of stocks bonds .National bank of Pakistan The ability of borrower to repay the loan when due. Functions Credit department has performed following functions. The borrower ability to repay the loan is assessed by the office so that he will be able to repay the loan in future. Capital The officer assesses the capital of the borrower. etc. but if non liquid is used then it is risky to given loan. The economic conditions of the borrower in and out side the country effects the repayment of loan. bill of exchange. Collateral It is collateral security. If condition is favorable then loan is given otherwise vice versa. They increase the ability of the borrower to obtain the funds from the bank. Funded Non-funded Funded In fund based bank contributes a large amount of the fund based on clarified as follows TYPES OF ADVANCES 44 . Condition The economic condition of the borrower is determined. Advances Advances provided by the bank are of the following two types. the bank has protect him self from any discrepancy in the future. they can be easily convertible in cash. bills of lading. If assets held by the borrower are liquid.
but the total amount outstanding cannot exceed the limit sanctioned.50% in the form of the property. firm and all others can achieve this mode of financing. company. 45 . Non-Fund Bank provide non fund advance in the following form: Guarantee Imports Guarantee A guarantee is a promise between one person to another person or party to answerable for the debt of a third party. individual. group. This finance if normally borrowed by small traders or individuals for their petty matters involving cash transactions up to rupees three hundred thousand maximum. The mark-up/interest is calculated on the amount outstanding on his account. Regarding the amount. The mark-up or interest is calculated on the total amount disbursed and requires to be paid before the date of final adjustment. limit and period. Imports Bank provides non-funded credit facility to the following basis. The markup/interest is calculated the same way as in case of cash finance. Running Finance To assist a large-scale business operator to carry on his day to day requirements of liquid funds. Security against running finance is that which is easily convertible in to cash and bank kept 25% margins with it. this account is opened is made operation in his favor.National bank of Pakistan Demand Finance One time disbursement of the whole amount sanctioned. it depends on the nature of the case in review. Bank issues guarantee after 100%cash collaterals are provided by the person i. Cash Finance In this mode of financing the borrower is allowed to make withdrawals of funds as he requires. as the limit for the credit allows.e. Any person. Running finance is provided where the amount goes beyond rupees three hundred thousand. The calculation of mark-up/interest is based on the number of days a specific amount is withdrawn.
Long term loans 3.C The bank retains the payment after a period of days. types of loans TYPES OF LOANS The credit department of NBP has providing the following types of loans 1. A cash margin of 30% is relational by the bank. Monitoring Documentation in short term financing Demand promissory note Mark up agreement Letter of guarantee in personal capacity Letter of authority Letter of pledge Memorandum of deposit of title deal 46 . Usance or DA L.C a margin of 30%. Short term loans 2.National bank of Pakistan • • Sight LC Usance or DA LC. Sight LC In this type of L. which is given in the L. Syndicate (project) loan 5.C when payment is made documents are released. Working capital loan 4.
prior charge on their fixed assets. detailed particulars of their directors and complete analysis of balance sheet must be incorporated in the credit report. Their certification of incorporation to be examined. assets. This report is prepared by the bank of the intending borrower with a view to considering his Credit Worthiness and Eligibility for the Bank Finance. paid-up capital. details of properties. character. In the case of Limited Companies. It must contain information about borrower’s means. The study of a borrower is a study of his character. Firms Total investment in Business + Properties – liabilities Paid-up-capital + Reserves + Profits (Losses) 47 . Besides. Besides other things it contains the net worth of the borrower. integrity. All these terms carry more or less the same meanings. capacity and capital. financial reports. The purpose of compilation of credit report of the borrower is to assess their net worth. The borrower may be asked to give written clarification of their existing liabilities. borrowers own investment. profit and loss position. reserves. Credit reports on borrowers called Status Reports. Independent inquiries about the borrowers and opinions form their previous bankers must be made. and collateral often known as the 4Cs to consider his credit worthiness and eligibility for the bank advance. liabilities. their borrowing powers to be verified from their Memorandum & Articles of Association. banker’s opinion or confidential reports. As such a comprehensive credit report is compiled which serves as a constant guide to the banker about his borrower. business and experience. exiting borrowings. must be obtained. Net worth of borrower Individuals Net of the individual’s worth is the total investment or equity of the sponsors/borrowers in the company through which they are asking for credit and in the other sister concerns.National bank of Pakistan Status reports A credit report is an assessment of borrower’s character and capacity from a banker’s point of view.
Risks inherent in lending Management risk Market risk Earnings fluctuations risk Default risk Marketability risk Criteria checked for loans Major areas requiring focused attention of the analyst are: 1.Financial Condition Which is reflected in the trends of: Net sales Gross sales Operating profits Net profits (at least for the last 3 years) 2.National bank of Pakistan The Investigation process 1.Structural Liquidity It refers to the extent of liquidity usually available in the business. or which is the routine requirement of the borrower based on the nature of his periodically maturing liabilities. 48 . Knowing the market place 2.
4.National bank of Pakistan 3. inquiries will have to be made about: His business. Sales and profitability can be measured with this.Debt Equity Management Excessive reliance on debt. 5.Industry/Business Of Operation The banker has to check that in which industry or segment of market the loan is being given this is important because if there were a recession in that industry for decades then it would not be feasible to invest in such a business. to maintain a healthy combination of debt and equity is thought with danger because ultimately the debt servicing requirements place a heavy burden on its liquidity thereby its survival.Asesst Management Asset management involves the analysis of how productively the assets of the company are being used. His account with bank or with other banks. For example in they feel satisfied by investing in ICI. His financial statements and income tax returns. Trade experience.Borrower’s Credit Worthiness In order to get a complete picture of the borrower’s credit worthiness. 6. Certain traditionally stable industries are in Pakistan in which NBP feels satisfied while investing. Assets and liabilities. 49 . rather than plough back of profits or injection of fresh equity.
Condition for security The security must be liquid or radically convertible to cash with more then adequate margin of safety fully under the banks control.National bank of Pakistan An interview with him will be necessary to elucidate or supplement the information that may have been collected. So bankers take securities to have a resource to them to guard liquidity. skill and experience. which can with stand volatile market condition. Secured by acceptable immovable tangible collateral with necessary margin and fair degree of marketability under the forced sale situation (should have buyer). security is an insurance against calamities.Securities In case the borrower is not in a position to meet his obligations. The types of securities may vary from a piece of land or building to commercial papers or ornaments. that is. 7. If the management is aggressive and adoptive to the new changes then it is most likely that the banker may receive the loan back on due date 8. there must be something else to call back upon. Further.Management Before giving loan NBP also checks whether the management have the depth. not only as constituting the ultimate source of recovery in the event of failure of the borrower or 50 . In case of cash finance the customer have to give the same amount of money to the NBP as a security for which it takes loan. security has its own importance. having high value.
high way department. Sandoz. Guarantees A grantee is defined as “An undertaking by a person to responsible for the debt of another person. The minimum period is one year and the guarantee can be reissue for extra period with paying charges. Sui northern gas and others. but keeping into consideration the customer and security offered together. The two officers whose signatures appears in the specimen signature book of bank and also counter sign by the zonal chief must sign each guarantee. and customs arthritis. PBS. for the purchase of pesticide or insecticide from any fertilizer company. The expiry of the guarantee can be set by both bank and guarantor. though security serves as a cushion to fall bank upon in case of need.” National bank of Pakistan issues guarantees to government agencies like atomic energy. According to local rules and regulation the policy for issuance of guarantee can be changed. The guarantee issued is treated as contingent liability. So the choice of security is not made in isolation. and etc. but as providing a measure to the borrowers own stake in the enterprise and also placing the limitation on his future borrowings. but its adequacy alone should not form the sole consideration for judging the suitability of the loan. Am amendment in the guarantee can be made after giving written application to issuing branch. Both officers must also sign any amendment. Bid bond Mobilization bond Performance bond 51 . However. If the value of the guarantee is reduced by the amendment the liability amount will be reduced and if will value is increased additional liability entries will be passed.National bank of Pakistan his enterprise. Bank accepts only long other bank guarantee but in some cases personnel guarantee is also accepted. The bank provides following types of guarantees to the customers. It also issues guarantee to multinational organization like Siba gigay.
bank puts this case for recovery. If some amount is recovering then it is good otherwise bank deduct the amount from its profit and starts the legal procedure against the property pledged by the customer to bank. If the party did not pay the amount in the stipulated time period. Security It is an interest or right in the property gives to the creditor to convert it in cash in case of debtor fails to meet the principal and interest. Bank charges commission on issuance of guarantee as per their schedule of charges. Mobilization bond When the bid is accepted.National bank of Pakistan Bid bond The facility provided at the time of bed opening is called bid bond. the bank provides this type of facility to the customer. Performance bond When the project is completed. In this report the credits of the customers with the bank operating in Pakistan are given. Registered mortgage 52 . In case of death of his heir as given in the will be responsible for that guarantee. if there is any mishap in the project the repair otherwise authorities claim the performance charges from the bank. Bank assesses the demand of the customer and then writes letters to other banks to provide them confidential report of credibility about the customer this is one provided in the shape of CIB (credit information bureau) report provided by the SBP. The bank provides the following two types of mortgage. the contractor about the performance of the project provides a performance certificate for one year. After checking this report the bank issues the guarantee to the customer. During one year. Mortgage Transfer of interest in movable property for securing the payment of money lend on existing or future liability. The bank provides the following securities to the customers.
Banks examine all these reports. commercial industrial property. raw plot. etc. A party can get registered mortgage if they provide the following documents to the bank. Title deed Non encumbrance (NEC) pit form (in case a constructed hose) Valuation certificate Affidavit Mortgage deed Personnel guarantee of mortgagor Power of attorney Legal opinion. The bank examines these reports to see that the property they want to mortgage is registered and is not already pledged.National bank of Pakistan Equitable mortgage Registered mortgage Registered mortgage is provided on the residential property. and if they are correct then issue the mortgage to the party. etc. commercial industrial property. The bank also calculates the value of the property and the legal opinion of the customer in case of non-payment. Title deed Non encumbrance certificate (nec) Pti form (in case a constructed house) Valuation certificate Affidavit Memorandum of deposit of title deed Personal guarantee of mortgagor Power of attorney Legal opinion 53 . Equitable mortgage Equitable mortgage is provided on the residential property. raw plot.
National bank of Pakistan In this mortgage a charge form bound the customer for any legal action in case of non-payment. customs. customer verification the manager done the following tasks 1. when full payment is made the stock is released. Sanction of loan 54 . In this type of mortgage hypothecation of stocks involves. it is defined as actual delivery of movable property to lender as security for a loan.e. For this following information required by the bank from the party Purpose of loan Details of all firms or companies associated with business Name of proprietor/ partner/directors Accurate and up-to-date balance sheet and profit and loss statement of last two years of business Market report of the borrower repute Report from the bank if borrower has maintain his account with the bank CIB report Full details of existing limit and actual liability against the business Particular about the foreign exchange deposits and bills given by the borrower to the bank Memorandum and article of association in case of limited company Audited report of balance sheet and income statement of last two years After checking all the securities. Pledge A pledge is an “a class security given to customers for stocks ware house. Prepare the about the customer 3. When the customer makes the payment of the loan in full he can back his mortgage property from the bank i. and etc. Preparation of credit proposal 2. Procedure of sanction of loan In Credit department 1st step is to preparation of credit line proposal for the preparation of credit report.
their share in capital. Then he doses the ratios analysis of the company. He also measures the percentage of owner’s equity. If the party is involved in the export and import business then the data of the last three years of this business is considered. The manager of the bank also examine the project violability. He checks the balance sheet and income against the assets in the company. In the case of pledge is assessed by the manager while in case of new party manger checks from where the party is financing for their business 2) Prepare the Proposal about the customer After preparing the proposal manger prepare the report about the customer.National bank of Pakistan 1) Preparation of credit proposal After formal application for the credit the party submits approval. The bank manager evaluates the documents provided by the borrower. Report contains the following information Name of the company Date of establishment Address Nature of business Branch office Worth of business Date Banker’s opinion Head cashier opinion Branch manger opinion In case of partnership business following information are included in the report Partner. He gets the party’s credibility report confidentially from the other commercial banks. the securities provided by the debtor to the bank are evaluated by measuring their worth. For this purpose borrower can use coarse paper or the form provided by the bank. Along with the application borrower also submits the documents required by the bank. profit and loss Deed of partnership Partnership letter 55 .
National bank of Pakistan Turn over Net profit Personal property of partners Bank balance of partners Advance payment of suppliers Particular of machinery installed in the factory through financing Incase of corporation/limited companies the following information are included Incorporation and commencement of company Sales offices Capital information Directors and their contribution to capital Balance sheet with explanation and evaluation Net worth of the company 3) Sanction of loan If the limit of the loan lies with in the power of manger then he sanction the loan otherwise manger with the covering letter along with all necessary documents sends it to the concerned sanctioning authority. 56 .
This is the stage.National bank of Pakistan GENERAL BANKING General banking area is also call the operations group. where Accounts Department starts performing its function. When these vouchers are prepared. 57 . a batch list is printed out by Computer Department and duly checked by the respective departments. Actually the process of this activity starts from the preparation of all the required vouchers by different related departments. summarizing and reporting data resulting from the whole day transactions of all the departments. Before merging. It consist on following section ACCOUNTS SECTION REMITTANCES CLEARING SYSTEM GOVERNMENT RECEIPTS CONSUMER AND RETAIL BANKING LOCKERS Accounts section Accounts Department of the bank can be considered the most important department. after which a proof list is printed out. sorting. After this. Proof list is checked by the Accounts Department. these are posted into respective computer terminals by the relevant departments. This department is basically concerned with processes and activities of recovering. merging stage comes.
Saving accounts with the banking sector represent a very small proportion of total deposits. The minimum balance for this account is Rs.National bank of Pakistan This section performs the following functions: Opening of Accounts Issuance of checque books Closing of accounts Payment of Cheques Types of accounts Following types of accounts are open in NBP Saving account Current or demand account Fixed account Saving account (PLS) This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship. The cash reserve ratio is typically low them the current account because the withdrawals against this account is very low.100 and interest rate is Current or demand account 58 . Customer can make any withdrawals from type of account. Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. by a small margin. Rates of interest are typically ahead.
National bank of Pakistan These are those deposits. The rates on this type of deposits are higher than the saving bank accounts. People deposit their money in this account they gave a ready command on their account in developed and under developed countries of the world. Procedure for Opening an Account First of all. which requires all information necessary for opening account and also the documents required.e. An account can be opened as: 1) An individual account 2) Joint account 3) Proprietorship account 59 . The operating cost for the handling of this type of account is very high because withdrawals are very regular. The rate of interest given to depositor varies with the length of deposit. it is higher for longer period and lowers for shorter period. The cash reserve ratio for this account is very high. Those people who have surplus funds and want to have save investments deposit the amount in the fixed account. No paying books or passes book or cheque book is issued to the customers against this deposit to the depositors. The authorities of national bank of Pakistan have the right to revise all these rates of interest with out any notice to customers generally rates of interest are revised after six months. Fixed account Fixed accounts are those. On this type of account of interest transfer of cash or by cheque takes place at sight. the customer gets an application from the bank. The cash reserves against this deposit are very low because there is no fear of withdrawal of a month before the stipulated of time. which can be drawn by the depositor at my time by presenting a cheque to the bank. which are deposited for a fixed period of time and are repayable after the expiry of stipulated time to the customers. i. a very significant part of money is kept under current or demand account. The amount deposited for 7 and 30 days short term notice and accumulated for the period exceeding the limit and the customers can get the interest of the extra days of deposit but in the case of months and years the customer did not get any additional interest for the exceeding period of deposit.
association and trust Information Required by the Bank Name Address Telephone No. Currency of Account Nature of Business Country of Residency Special instructions regarding the account Signatures Documentation In case of limited company accounts: Photocopy of National Identity Card of each director Application form Copy of company’s memorandum and articles of association List of directors Copy of board resolution Certificate of incorporation Their signature cards Certificate to commence business Documentation In case of Partnership Account Application form 60 .National bank of Pakistan 4) Limited company account 5) Partnership 6) Club. society.
cheque books issue are recorded. the this cheque is called the loose cheque. 4.National bank of Pakistan A copy of partnership deed Signature cards of partners Registration certificate copy A copy of National Identity Card of each partner Documentation In case of Club.50 per leaf as excise duty is charged to the customer. Issuance of Cheque Book After opening the account. which is far away from the bank or whatever the case may be. a cheque book is given to the customer to sign upon which the number of cheque book issued and the name of the customer is written. Bank has the right not to open an account without assigning any reason or to close the account if it is not operated in a satisfactory manner by the instructions of the head office. the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money is urgently required. In this register. Society. Loose Cheques If any customer forgets or leaves his cheque book at his home. Rs. Association or Trust Application form Copy of rules Certified copy of resolution Signature cards When the concerned officer is satisfied then he opens the account and gives an account number that will be used in all communications with the bank in regard to the account and when making deposits and withdrawals. Bank issues a cheque book against requisition. the cheque book inventory. A cheque book may be of 20 (PLS). A cheque book register is maintained by the office. 61 . 50 or 100 leaves (current A/C). 25.
50 as excise duty. 50 as charges for the issuance of the loose cheque plus Rs. The activities of Accounts Department can further be divided as: Routing of expenses vouchers Preparation of daily activity reports Preparation of weekly and monthly statements Preparation of statements for tax purpose. 62 . Payment of Cheques It is bank’s primary function to repay the money required for its customer’s account usually by honoring his cheques. It is a contractual obligation of a banker to honor its customer’s cheque if the following essential are fulfilled : Cheque should be in a proper form Cheque should not be mutilated Cheque should be drawn in this particular branch Cheque should not be damaged No unauthorized material alterations Funds must be sufficiently available Cheque should not be post date or stale Cheque should be presenting during the banking hours Procedure for Closing an Account The customer can close the account. Rs.National bank of Pakistan Bank issues a loose cheque for Rs. 4. 200 and the application is filed in Account Closing File. i. Then the account is closed out and his balance is paid to him after deducting the closing charges. Remaining leaves of cheques will also be collected from the customer.. Customer is required to submit an application for closing the account.e.
which are reimbursed. Preparation of Daily. As far as the expenses are concerned. Weekly Statements 63 . electricity. Weekly Monthly and Annual Statements Daily Statements These statements are sent daily to Main Office Karachi. water and gas bills. which includes the details of income generated and expenses incurred by the bank. These are: Daily Affair Statement. these include the following heads: Voucher collecting of Loan transactions General ledger transactions Foreign currency related transactions Fixed deposit related transactions The checking is on daily basis. Preparation of Daily Activity Reports As far as the daily activity reports of this department are concerned. rent of the building. which consists of courier.National bank of Pakistan Routing of Expenses Vouchers of all expenses and material purchases are routed out through this department. which is same as Balance Sheet Statement of Income and Expenditure. lease installment and insurance premium paid to insurance company for the insurance of vehicles and cash in safe and counter. medical expenses. they include the heads of salaries paid to confirmed employees of bank. Expenses also include the utility bill. wages paid to employees that are on contractual basis.
These statements are generated for the purpose of submitting to Central Board of Revenue. The rate of withholding tax is as follows: Suppliers For other parties 2. suppliers and other parties providing various services. This statement adjusted for accruals and pre-payments.National bank of Pakistan These statements are generated on weekly basis for the purpose of sending it to Head Office. Monthly Balance Sheet and Income Statement Comparative Statement Statements for Tax Purpose The department also prepares two statements for the purpose of paying tax on monthly and annual basis. These are: Statement of deduction of income chargeable under the head salary under Section 53 (Tax deducted at source) Withholding Tax from the payments made to vendors. These include: Provisional statement of income and expenses. These also include: Statement of affair Deposit and advances position of the bank Monthly Statements These statements are prepared on monthly basis and also sent to Head Office (Qatar).5% 5% 64 .
The pay order is issued favoring individuals. fixture and fitting. Pay Slip It is an instrument. etc. maintenance bills. Call Deposit 65 . he should be asked to complete the prescribed application form in which he should state the amount of the draft. the bank is liable to pay the amount to the customer. i. electricity bills. the bank is discharged by the payment in due course. drawn by an office of bank upon another office of the same bank for a sum of money payable to order on demand. an order to pay money. When a person requires a draft. 200). It is not negotiable and therefore. Bank charges excise duty of Rs. The bank charges 3% withholding tax and commission according to the rate list (minimum is Rs. When any draft. Pay order is also called the banker’s cheque drawn upon the issuing bank itself. security bills.. i. should sign this application form. which is payable in demand and only presentable in city. 100. Pay Order It is an instrument.e. and the place of payment. which is issued by bank and used for expenditure purposes. The person to those persons. An advice is prepared and two copies of this advice are sent to the Head Office. commercial concerns. bankers tend to cross the instrument “Payee’s account only” to avoid the possibility of dealing with instruments with forged endorsement.National bank of Pakistan Remittances Section Remittances can be made through: Instrumental transfer Electronic transfer Instrumental Transfer Instrumental transfers are following Demand Draft It is an instrument. 4 and service charges of Rs. purports to be issued by or on behalf of the payee. which is payable on demand and it is only presentable in the city/country. On the presentation of pay order. the name of the payee.. government departments. who have been duly authorized to act on his behalf.e.
National bank of Pakistan Call deposit are not actual deposits of bank. Payment to the beneficiary is affected directly by the drawee office upon identification or through credit into beneficiary’s bank account. Issuance and Payment of Telegraphic Transfer Outgoing Application form is filled by the client in which the name and account number of the beneficiary. For telegraphic transfer. As such remitting office is not required to issue any instrument payment to the remitter for delivery to the beneficiary. It is in fact the liability of the bank. which is to be credited and name of customer is required. which is sent from one branch to another on the order of payer to payee through wire. the payment can be made in case or by cheque or by debiting the customer’s account if he is the account holder. Call deposit are ofently prepaid by the bank for contractors PROCEDRE :** Following steps are involved 1) Depositor fill the credit vouchers for call deposit. It is one of the quickest means to transfer fund through the use of telex/fax/internet or cable. The amount of Telegraphic Transfer should be 66 . He writes the following information Name of company Amount Date 2) He deposits the cash along with filled voucher in the cash department Encashment of CD For the encashment of call deposit needed 5 rupee stamp two signature of customer on the back side of CD token issued accountant make entry in the CD register show that it has returned Electronic Transfer Electronic transfer is of following types Telegraphic Transfer It is the message.
bank prepares a voucher for this payment against that TT. If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. bank credits a Telegraphic Transfer payable account and when payment is made to the beneficiary. Travelers cheques (TC) These are also called TC. The lockers issued only to the depositors. The procedure is same as TT.National bank of Pakistan written on the form. In case the locker holder dies. The officer has master key to apply on the locker but he cannot open the locker of any person. An advice is given to the customer but application is filled in the record of the bank. TT payable account is debited. When a person comes and wants to encash his TT. In practice. The customer then presents that certificate to the cash counter and collects money. The locker holder provides the bank has specimen signature. They should be so signed immediately on issue and place is provided on the cheque for the signature of the beneficiary on its Lockers service National bank of Pakistan also provides lockers facility in the country. Whenever the locker holders come to open the locker. Form of travel currency giving to the holder . The amount is transferred to beneficiary’s account in the other bank. The dual control system is used for lockers. Traveler’s cheques first came into use century ago. bank checks the statements of that person. at hotels and in stories. his signatures are verified by the officer and then will be able to open his locker. If the bank finds any account credited to the person’s account against TT. the court opens his locker in the presence of his heir as mentioned in his will or and his belongings are given to them and the locker is closed. the message is sent through mail rather than telex. Issuance and Payment of Telegraphic Transfer Incoming When a TT is received then an entry is passed in TT incoming register after verifying the test. They are in form of a draft. If the beneficiary is not the account holder of DBL. 67 . but the advice is sent through mail rather than wired. No lockers are issued to any unknown person. but in this type. they are acceptable in payments of accounts on board ship.the security of a letter of credit and convenience of a local currency. Mail Transfer It is the same like TT.
The cheque number. Procedure for Clearing the Cheques Pay-in Slip The customer fills pay-in slip. Stamping and Scrutinizing The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque received” and give a portion of slip to customer and the remaining portion is attached with the original cheque. 68 . from the cheques drawn on another bank. date. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House.National bank of Pakistan Billing And Government Receipt/Payment This department is performing following functions Collection of utility bills Collection of dues of education institution Payment of salaries Payment of zakat Payment of pension Clearing Department The major function of Clearing Department is to receive the cheques. amount and account number must be written on this slip. This slip is just like deposit slip. Bank charges some commission for this function. which are drawn on some other bank. The original cheque will be marked with two stamps. The customer can get the money in his account at NBP.
These branches have dumb terminal directly linked with central computer. seventeen are located in Karachi. This department is playing a very important role in making the banking procedures faster and helping the bank for providing new services to its customers. 2. Computer Section Through this department bank has make its way to enter in twenty first century. Types of Branches There are three types of Branches in all over Pakistan of NBP 1. two in Islamabad and two in Multan and two each in other regional head offices. This division provided the bank with online branches. which are directly. BAS was establish in the beginning while BBO is currently implemented now efforts are under way to convert all branches into Electronic Banking System (EBS) which is used by online branches as this system does not require a person to remain sitting till the branch 69 . Yet only forty-four branches all over Pakistan are online. all cheques are counted and then scrutinized in bank-wise and sent to the Clearing House. seven in Lahore. Branch Automated System based (BAS) on UNIX. link with central computer AS-400. Online branches: The branches. systems to make the whole procedure foolproof. Batch Branches: The branches where all transactions are carried out with the computer base system but these branches are not connected to the central computer with wide area net working. through wide area networking through fiber optics. Of these forty-four.National bank of Pakistan National bank of Pakistan Clearing Stamp At the end of day. Batch branches are using three type of system. Branch Back Office (BBO) based on FoxPro. Branch Integrated System (BIS) based on FoxPro in Karachi mostly branches are facing this problem.
Clerk in charge register all diskettes and manual in registers called “job booking register” one for each of two type of data.National bank of Pakistan closed its daily operation but the system automatically close it self when the branch timing is over. activities of all branches are recorded in a central computer. As day-to-day. This program is designed in away that it demand “Hash Value” value before opening the floppy for further action this value serve the purpose of password or pin code send by the branch on entering that value the data enter in to the computer. All branches in Pakistan report to there regional head office regarding there daily transaction. Except for branches those are On Line as they transfer there daily data directly through there own terminal. terminal data goes to head office central computer. 3. Manual Branches: The branches where all transactions are carried out manually and records are maintained on registers usually stored in big wardrobes. 70 . current account. Sometime retrieving data from the system (BAS. advances etc termed as “Daily Transaction Report”. no master (when opening of new account is not mentioned). these and other such error are see by the person in charge. These floppies and manual are bring in by riders. In the RHO through On Line. The floppy disk is directly inserted in the computer. Evening Data Receiving Center Data form batch branches reach the main branch in floppy diskettes while form manual branches it is in form of hard copy. Data comprises of transactions in profit loss account. duplicate cheques (this error occur when the last objection is not removed). Other errors include Unmatched (This error occurs when document no matched with the previous one exists). The database in head office is also based on this system. There are fourteen riders in total who bring information form all branches located in Karachi region. BBO. The operator of that terminal takes the data from the computer and converted it in to a text file through that terminal the data finally goes to the central computer. and BIS). This computer is attached with the terminal of central computer. Defects and Error Handling Errors of different origin occur when the data goes to central computer. Data Entry Department The next task after receiving the data is to enter that data in to a computer. Date in Valid. The program in used is based on “COBOL” language. other than used in HO (EBS) also caused errors.
NBP advance salary offers you Take up to three months advance salary take home Fastest processing and immediate disbursement Easiest facility for 1 to 36 months Minimum documentation Eligibility This facility will be available to permanent employee of Federal and provincial Govt. More over material is used to make a WST which is sent to State Bank of Pakistan. Consumer and retail banking section Consumer and retail banking department is offering two facilities to their customers 1) NBP Advance Salary 2) NBP Ghar Ghar Television NBP Advance salary NBP advance salary facility allows you to draw three months salary in one go. local bodies and Govt corporations Other corporations and organizations approved by NBP Those who qualify for thius scheme should have: Three years of service age remaining 71 . Semi Govt.National bank of Pakistan In the end of day print out of the data enter in central computer is taken. Any Incomplete information for any branch and any information require by that particular branch is sent to that branch. semi autonomous. autonomous.
Open the account that is calls separate loan account. Requirements Requirements are Three months salary certificate NIC photocopy Auto roll over form Application form IB-12 Three undated cheques Annexure C Annexure D Account opening form Procedure After filling the application customer signed it with his salarydisbursing officer then under taking is officer approving it. which is once Debit and many time credit. NBP Ghar Ghar Television 72 .National bank of Pakistan Salary account at NBP Limit of Finance Three net take home salary Customer must have account with national bank which show last three months salary in his/her account Calculation of limit Average of three months and minimum salary which ever is less taken it as base and multiply it by three Maximum duration of loan Three years is max duration.
The procedure is same his or her account is marked as lean Duration of scheme 73 .National bank of Pakistan NBP offering the customer to get the television on lease base Eligibility Four categories are there 1) 2) 3) 4) Lean of account Lean of guarantor account National saving certificates Guarantor of NBP lean of account Here the amount of customer account is pledge and customer can’t DR it until the expiry of limit Lean of guarantor account The person who is taken the guarantee of that customer his account is marked as lean and pledges it until the expiry of installments National saving certificates Three types of certificates a) Defense saving certificates b) Special saving certificaties c) Regular saving certificates Every certificate having their face value. The 75% of that valve is marked as lean. Guarantor of NBP The employee of national bank can give the guarantee of that customer.
G electronic at the customer address Products Different products are offered by L.National bank of Pakistan Two types of duration For one year For two year Product supply Product is supply by L.G such as Television Monitors Air conditioner DVD VCD Documents Documents required by the banks are a) b) c) d) e) f) g) h) Application form IB-12 NIC photocopy Delivery order Agreement Letter of hypothecation Adamantly bound Letter of acceptation and satisfaction FOR NBP employees: a) Authorization certificate b) Guarantee c) Salary certificate 74 .
75 .National bank of Pakistan This scheme is only for residential of Multan.
Non-performing loans As on 31 December 2002. The Special Assets Group at Head Office with full co-ordination between field functionaries and Head Office is monitoring NPLs and deals with the classified portfolio of the Bank along with Remedial Management.296 million as on 31 December 2000. which is 60. 30. the Bank's non-performing loans (NPLs) amounted to Rs.48% as on 31 December 1999.34% of NPLs.11% of total advances as against 21. Remaining NPLs are covered by forced sales value of mortgaged property. Statistical Analysis of 76 .National bank of Pakistan FINANCIAL ANALYSIS FOR BANK Financial year The financial year of the Bank commences from the 1st day of January and ends on the 31st day of December every year. This high ratio reflects prudence of the Bank's management while determining provisions. which was 19. showing an improvement of 2. Federal Government Guarantee or are in category other than loss. Legal framework. Provision against non-performing advances was Rs 18.323 million.37%.
34 2002 Earning assets to total assets =319676497/23936263 =13.30 Equity to total assets 77 . Revival of Sick Industrial Units.004 2002 Return on earning assets =2253385/319676497 =0.97 2002 Loan loss coverage ratio =1822154/6044811 =0.National bank of Pakistan classified accounts.007 Loan loss coverage ratio Loan loss coverage ratio = provision against non-performance loans &advances/ profit or loss before taxation YEAR 2001 Loan loss coverage ratio =2926554/3015629 =0. Calculation Of Different Ratios Earning assets to total assets Earning assets to total assets = Earning assets / total assets YEAR 2001 Earning assets to total assets = 286230528 / 17510437 =16. Consortium Financing and ExMehran Bank Limited affairs etc.35 Return on earning assets Return on earning assets = profit after taxation / earning assets YEAR 2001 Return on earning assets =1148529/286230528 =0.
National bank of Pakistan Equity to total assets = total equity / total assets YEAR 2001 Equity to total assets =11958673/17510437 =0.14 2002 Loans to deposits =140547374/13248569 =10.25 2002 Current ratio =55531453/3365744 =16.68 2002 Equity to total assets =14279303/23936263 =0.55 Loans to deposits Loans to deposits= loans/ deposits YEAR 2001 Loans to deposits =170319096/33123726 =5.50 78 .60 Deposits time capital Deposits time capital = deposits/ capital YEAR 2001 Deposits time capital =33123726/3730384 =8.88 2002 Deposits time capital =13248569/3730384 =3.61 Current ratio Current ratio=current assets / current liabilities YEAR 2001 Current ratio =79155081/2245349 =35.
National bank of Pakistan 79 .
Europe and the Far East. NBP has an extensive domestic branch network of 1200 (according to the latest data) branches located all over Pakistan.6% share of time and demand deposits in the country.National bank of Pakistan STRENGTHS WEAKNESSES OPPORTUNITIES THREATS (SWOT) ANALYSIS STRENGTHS NBP one of the largest financial institutions of Pakistan with eight million of customer base NBP holds 24. United Kingdom. The bank also has an investment portfolio of Pak Rs. NBP's total assets stood at Pak Rs. corporate bonds. This included total earning assets of about Pak Rs. shares and other securities. 80 . The Bank also has a presence in 19 international locations including the USA.370 billion on December 2000. which comprises treasury securities.268 billion with gross loan portfolio of Pak Rs. Local currency deposits comprise 67% of bank's total deposits while foreign currency deposits account for the rest.140 billion.91 billion.
The general out look and interior layout of branches are not as required according to modern banking NBP bearing up large burden in running those branches. They usually waste time in other task a part in performing their duty. WEAKNESSES NBP staff especially at lower considers their work as burden. more don’t even continue its credit card due mismanagement and lack of control. It acts as an agent of the Central Bank wherever the State Bank does not have its own Branch.National bank of Pakistan NBP cash provision as percentage of non performing loans equal to 60% this coverage factor for the non performing loans is the highest amongst the nationalized commercial bank. NBP is relying on its traditional sources of income it has not taken benefit from innovation in banking like introducing retail banking or consumer banking and using any type of scheme to generate more deposits and producing more advances. All depositor of NBP are in relief that their money security is guaranteed by government of Pakistan. and not fool proof. NBP is far behind in offering modern banking facility like automated teller machines then other commercial bank in Pakistan as only eighteen branches in all over country have this facility. NBP is working as right arm government of Pakistan as it is responsible for all claims of government for recovery as well as payment. NBP has only forty-four on line branches. which are not producing any income but keep on adding expenditure. While from remaining branches data gathering is time consuming. They are reluctant to accept change brought by latest restructuring efforts. Using government property for there own need. Quantum of settlement within 81 . Further.
Setting of target for of making at least 300 branches country wide on line. Which discourage most of the people to invest in NBP. 82 . Customers have to fallow long lengthy procedure for opening of account as well applying for debt. Closing of all those branches. OPPORTUNITIES Reorganizing efforts going on in the NBP has open many opportunities for NBP to grow. Comprehensive training programs has been develop to up grade the core banking skills of the existing staff as well as integrate high quality hiring. Through overhauling the manpower recruitment preservation and performance appraisal system. Management to offer specialized services to major corporate including advisory and debt syndication introduces the concept of relationship manager. To improve the motivation of staff a merit-based culture is being promoted. In NBP. most of the time merit not has importance in hiring of employees. Such practices are black spot on the face of bank and resulted big losses and fraudulent acts by NBP own employees.National bank of Pakistan different branches is pending because of this updating daily record is becoming very difficult. NBP current management has boarder vision. which are burden on NBP. They have taken steps to improve customer services. To achieve above mention objective they have created operation group Starting of the retail banking initial working. streamline internal procedure and creating a delectating climate for technology initiative.
THREATS Following are the major threats which national bank of Pakistan is facing: Major threats NBP facing is from its competitor especially from denationalized commercial bank. through lucky draws. In which MCB is on the top of the list. like gift checque scheme by MCB. housing. housing finance and automobile finance lending to small individual consumers. if not counter will result in significance loss of customers Recently banks and other financial institutions have introduced innovative schemes to attract deposits. electronic funds transfer. These are causing another threat. through a satellite based. on-line real-time banking system and by offering telephone banking. Retail banking and consumer banking resulting in the products such as credit cards. and consumer goods are generally made on a cash basis. E-Banking and other modern facilities. These schemes offer prizes on short and long term fixed deposits.National bank of Pakistan These actions taken by current management provide a great opportunity for NBP for making it future prosper and can make NBP not less than any modern commercialize bank in Pakistan. 83 . Now banks are using technology which covers the distance no matter how far away any one. The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan covering 15 cities with over 100 ATM locations. and purchases of automobiles.
These must continue.National bank of Pakistan SUGGESTIONS NBP major fault is that wasn’t keep its pace with on going changing in banking industry unlike other bank. Latest reorganizing efforts are necessary to make it cost effective also making its facility accordingly to modern banking. 84 . In which employees give important to the bank and its customer. Now this bank combining all it power and trying to approach other banks. Bank management has to put its all effort to change the prevailing culture of the bank and to put the foundation stone of business oriented culture.
so that people aware about he services of the banking and any addition which the bank as made in the portfolio of its services. 85 . Plus the technology in the banking which will be necessary for future banking is another week area need to be stressed. One way is through promotion efforts. The procedure of taking services from the bank must be made easier and straight forward not involving long difficult procedure for simple task.National bank of Pakistan To attract the customer in the future NBP have to make extensive effort to give facilities of retail and consumer banking. The outlook and interior lay out of the branches is another thing which needs to be improved. To remain in the market bank need to be vigilant in the eyes of customer.
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