Report Jodat

CHAPTER # 1
INTRODUCTION
1.1 INTRODUCTION
Beginning with the name of Allah, I am going to write my internship report as part of the
academic requirement according to the H.E.C plan for the completion of 16 year’s study in
MBA Finance which is equal to Master of Business Administration. Therefore we the
students of Mgt Sciences are required to under go for an internship program for the period of
two months as an internee in an organization. This internship will help us to gain the
practical knowledge of working environment of the banking administration.
This report is about National Bank of Pakistan. This was established in 1949 and since
still working, it has expanded its network, becoming the largest commercial Bank of the
country. It offers different products of services to its customers.
Purpose of the Study
The main purposes of the study in hand are
• Together relevant information to compile internship report on National Bank of

Pakistan.
• To observe, analyze and interpret the relevant data competently and in a useful
manner.
• To work practically in an organization.
• To develop interpersonal communication.
1.2 Scope of Study
As an internee in National Bank of Pakistan the main focus of my study research was on
general banking procedures in one of the branches of NBP. These operations include
Internship Report on NBP, Mair pur village branch ATD 1470 1

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remittances, deposits, advances and foreign exchange. Similarly different aspects of overall
of NBP are also covered in this report.
1.3 Objectives of the Study
 Discuss thorough study of National Bank of Pakistan.

 To understand the various operations and to equip with practical knowledge of the
National bank of Pakistan.
1.4 Limitation of the Study
Some thing is better than nothing. No matter how efficiently a study is conducted, it cannot
be perfect in all respects. This study was conducted in accordance with the objectives of the
study. The study may not include broad explanations of facts and figures due to the nature of
the study. Secondly, the limitation, which affects the study, is the restriction on mentioning
every fact of the bank due to the problem of secrecy of the bank. In addition, the availability
of required data was a problem as all the documents and files are kept strictly under lock and
key due to their strictly confidential nature. Thirdly, the problem of short time period also
makes the analysis restricted as one cannot properly understand and thus analyze all the
operations of a bank just a very short time of eight weeks.
1.5 Research Methodology
The report is based on my two months internship program in National Bank of Pakistan. The
methodology reported for collection of data is primary as well as secondary data. The biggest
source of information is my personal observation while working with staff and having
discussion with them. Formally arranged interviews and discussions also helped me in this
regards.
• Primary data:
Primary data include, Personal observation and Interviews of The Staff Members
• Secondary data:
Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet

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CHAPTER # 2
EVOLUTION OF BANKS IN PAKISTAN
2.1 INTRODUCTION
There are different opinions that how the word ‘Bank’ originated. Some of the author’s opinion that
this word is derived from the word ‘Bancus’ or Banque’, which means a bench. The explanation of
this origin is attributed to the fact that the Jews in Lombard transacted the business of money
exchange on benches in the market place; and when the business failed, the people destroyed the
‘bench’. Incidentally the word ‘Bankrupt’s said to have evolved from this practice. Some of the
authors are of opinion that the word ‘Bank’ is derived from the German word back, which means
‘joint stock fund’. Later on when the German occupied major part of the Italy the word ‘Back’ was
italicized into ‘Back’.
In fact human left the need of bank when it begins to realize the importance of money as a
medium of exchange. Perhaps it where the Babylonian who developed banking system as
early as 2000 B.C. At that time temples were used as banks because of their prevalent
respect. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians
Empire, loans were started being granted for interest. The borrower has to provide guarantee
or he had to pledge his goods or valuables. King Hamurabi drew up a code wherein he laid
down standards rules for procedures for banking operations by temples and great landowners.
Also in Greece, the temples were used as banks, where the people deposited their money and
other valuables for safe custody and security. In Europe with the ‘revival of civilization’
(Renaissance) in the middle of twelve century, trade and commerce started expanding and
this development compelled the business community to borrow the money from the Hebrew
moneylenders on high rates of interest and usury. Seeing the great demand, these
moneylenders started organizing themselves and bank started up at the principle seaports of
southern Europe. Soon Venice and Geneva became the most important money markets of the
time and banking though different from its present form, flourished. What we know as
‘modern banking’ originated in the 14th century in Barcelona.
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2.2) History of Banking in Sub continent
The Reserve bank of India was the central banking authority in India. At the time of partition
it was decided that in the interest of smooth transition it should continue to function in newly
emerging state of Pakistan, until 30th Sep.1948. In 1947 due to uncertainty and unsuitability
the banking sector suffer heavy losses.
This resulted in a negative effect on baking service in Pakistan. The banks, which had their
registered offices in Pakistan, transferred them to India. In an effort to bring about the
collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank
offices closed quickly. Those banks, which stayed, operated only in name pending the
winding up of their business. The number of scheduled banks thus declined form 487
branches before independence to only 195 branches by 30th June1948.
2.3 Banking Growth in Pakistan
In this tense situation, a committee was immediately setup to formulate a scheme of central
banking legislation for Pakistan. Many specialists were of the opinion that in view of the
acute shortage of trained staff, any idea of establishing a central bank was I impractical and
the best that could be attempted was the setting up of a currency board until such times as
sufficient staff could be organize to operate a central bank.
The questions as to whether the institution should be only a currency board or a full-fledged
central bank had exercised the mind of the Pakistan government since independence.
Through, it was realized that the shortage of trained personal to run the central bank would
present serious difficulty in view of the tangible advantages that a central bank enjoyed over
currency board, the government ultimately decided to take the bold step of setting up a full
fledged central banking authority. Among other factors, which led to this decision, there was
the fact the banking facilities in the country had been totally disrupted and there was an
urgent need for their rehabilitation, which a central bank alone could meet. As there was
hardly any time to pass as Act, an order was drafted, known as the state bank of Pakistan

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order, which was promulgated by the government of Pakistan on 12 th may 1948. The state
bank declared open on July 1, 1948 by the father of the nation.
One of the first tasks of the state bank was to arrange for the replacement of the Reserve bank
of India notes, which had continued to circulate in Pakistan during the transitional period, by
Pakistan currency. The first Pakistan notes were issued in October 1948 in the denominations
of Rs. 5, 10 & 100.
An equally urgent task, which the new central bank had to address itself, was the creation of
a national banking system. To this end, while extending every help and encouragement to
Habib Bank to expand its organization, the state bank recommended the setting up of a new
banking institution to serve both as an agent to the state bank recommended the setting up of
a new banking institution to serve both as an agent of the state bank as well as the spearhead
of its credit polices.
Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in

November 1949. It started with six offices in the former East Pakistan. In view of the special
role assigned to the new institution, contrary to traditional practices the Governor of the state
bank was appointed to head its Board of Director in 1950. Under the fostering care of the
state bank and the support of the government, the new institution developed rapidly. By using
its special powers, the state bank made liberal advances to the new bank to help it expand
credit facilities in the country. By 1952, the National bank of India shortly, afterwards, in
November 1952, the governor of the state bank ceased to function as the president of
National bank of Pakistan.
With a view to broadening the institutional framework of the financial system, the state bank
also sponsored the establishment of specialized credit institutions in the filed of agriculture
and industry. Banking companies (control) act was passed in December 1948 specifically
empowering the state bank to control the operations of banking companies in Pakistan.
Moreover realizing that the most serious limitation on the expansion of banking services in
Pakistan was the lack of trained personal, the state bank sponsored a banking training
scheme, which was repeated after year and turned out a large number of bankers. As the

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Commercial Banking facilities continued to expand, a new Pakistani bank, the National
Commercial Bank was established and registered as a scheduled bank. In the filed of
industrial finance a new institution known as the industrial credit and investment cooperation
was set up.
The year 1958 marked the completion of the first decade of the working of the State Bank of
Pakistan. When it was established there were only 195 bank offices in existence. At the end
of June 1958 their number had increased to 307, of which Pakistani banks accounted for 232
against 25 in mid 1948. Moreover at the end of June 1958, Pakistani banks held 60% of the
total banks deposits, and were responsible for 65 of total bank credit. When the Ayub Khan
Government took over in 1958, the banking and monetary scene was significantly affected by
developments such as the liberalization of imports, transfer of business in food grains to the
private sector, and the firming up of commodity markets. The demand of funds picked up
and there was a substantial expansion of bank credit to the private sector. The pace of
expansion in the institutional frameworks of the country’s banking system quickened and a
new Pakistani, bank, namely the United Bank Limited was established.
Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The
bank extended its network by opening six new offices located at Chitagong, Peshawar,
Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose from
430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to
the list of scheduled banks. Two principal additions were the commerce bank, and the
standard bank. The number of scheduled banks, which stood at 29 in June 1960 rose to 36 by
June 1965.
Under the impact of economic growth and dear scope of private enterprises, bank credit to
the private sector rose from Rs. 1,458 millions to Rs.5759 million. Thus the total expansion
in bank credit to the private sector during this period amounted to Rs. 4300 million, which
gave a annual expansion of Rs. 860 million compared to the annual average increase of Rs.
144 million over the preceding five years. Banks deposits increased from Rs. 2,493 million to
Rs. 6883 million during the five years period ended June 1965 compared to Rs. 231 million
in the proceeding five years.
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Time deposits during this period increased from Rs. 946 million to Rs. 3,228 million, where
demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time
deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood
at 49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of
banking development during this period was that since the rate of increase in bank deposits
lagged behind the rate of expansion in bank credit, the banked has to depend increasingly on
central bank finance. They borrowing from the state bank rose from Rs. 11 million in June
1960 to Rs. 1688 million in June 1965. Owing keen demand for bank credit, bank’s
investments could not increase as rapidly as their advances. Their investments totaled to Rs.
1,874 million at the end of June 1965 compared to Rs. 1,231 million in June 1960.
Investments, which were almost equal to their advances in June 1960, were only about one
third of the advances in June 1965.The third plane period witnessed a further expansion of
banking facilities in the country the total number of scheduled banked offices increased from
1,591 at the end of June 1965 to 3,133 at the close of June 1970. During the same bank credit
to the private sector rose from Rs. 5,789 million to Rs. 9,492 million. There was also a
substantial growth in the bank deposits, which increased from Rs. 6,883 million June 1965 to
Rs. 13,147 million at the end of June 1970. A remarkable change occurred during this period
related to the
composition of deposits. Time deposit becomes greater than demand deposits forming about
54 percent age of the total deposits. As oppose to what happened in the previous period,
banks were able to finance a mush higher level of credit expansion without having to
increase their borrowings from the central bank.
2.4 Banking Reforms 1972
After the assumption of office by a new government in 1971, may 1972 different reforms
were introduced to make the banks more responsive to the requirements of economics growth
with social justice. The reforms aimed at bringing about a more purposeful and equitable
distribution of bank credit, improving the soundness and efficiency of the banks, and
securing greater social accountability of the banking system as a whole.

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The role of the banking system had been truly spectacular in mobilizing savings of the
community and meeting the credit needs of the economy. But at the same time, the banks had
generally neglected their role in promoting social justice and had failed to play an effective
role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In
particular
The inter locking of ownership with commercial and industrial interests had led to the misuse
of bank resources. There was a heavy concentration of credit in big accounts and in urban
area. Credit facilities for agriculture, small business, newly emerging exports and housing
had remained obviously inadequate while the banks indulged in capital financing in few
selected business sectors and issued guarantees on behalf of favored clients, term clients,
term financing facilities for industry were wholly absent.
Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded
wider powers. It was authorized to remove directors or managerial personnel, if necessary
and supersede the board of directors of a banking company and appoint administrators during
the period of such super session. It was also empowered to nominate directors on the board
of every bank. As regard bank directors, it was provided that anyone defaulting in meeting
his obligations to bank would forfeit his directorship.
Moreover, it was laid down that no person could serve as director of a bank for more than six
years continuously. Each bank was required to have a paid up capital of not less than 5
percent age of its deposits to be progressively build up to 10 percent age over a period of
time. The banks were also required to transfer 10 percentage of their profit their reserves
every years after the reserve became equal to the paid up capital. With a view to diversity the
ownership of the banks, the banks were required to raise new capital from the market.
Unsecured loans to directors, their families or firms and companies, were totally prohibited.
The bank reforms also brought about the establishment of new institutions to achieve new
objectives. A national credit consultative was setup under the supervision of the state bank
with representation form the government and the private sector. It was assigned the task of
determining of economy’s annual credit needs within the safe limits of monetary and credit
expansion with reference to the annual development plan. Such a credit plan was to cover the
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public and private sectors. Alongside the National credit council and Agricultural Advisory
Committee was formed to allocate agriculture credit for various purposes, to coordinate the
operation or the agriculture credit agencies and to oversee the flow of credit to the designated
targets. A standing committee on exports in general and the new emerging exports in
particular, was also established. With a view to encourage the banks to extend credit to small
borrowers, a credit guarantee scheme was introduced under which the state bank under took
to share any bonfire losses incurred by the commercial banks in case of small loans of
advances to agriculture
2.5 Nationalization of Banks (1974) In Pakistan
The banking reforms turned to be transitional and interim step and when they were hardly
eighteen months old the government nationalized the banking systems, with the following
main objectives.
To enable the government to use the capital concentrated in the hands of a few rich bankers
for the rapid economic development of the country and the more urgent social welfare
objectives.
To coordinate the banking policies in various area of feasible joint activity without
eliminating healthy competition among banks. The act passed for the nationalization of banks
is known as the banks Nationalization Act 1974.
Thus under this act the state bank of Pakistan and all the commercial banks incorporated in
Pakistan and carrying business in or outside the country were brought under government
ownership with effect from Jan 1, 1974. The ownership, management and control of all
Pakistani banks stood transferred to and vested in the Federal government. The shareholders
were provided compensation in the form of federal government bonds redeemable at par
anytime within the period of fifteen years. Under the Nationalization act, the Chairman,
Directors and Executives of various banks, other than those appointed by federal government
were removed from their offices and the central boards of the banks and all local bodies were
dissolved. Pakistan banking council was established to coordinate the activities of the
Nationalized Commercial banks. At the time of Nationalization on December31, 1973 there

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were following 14 Pakistani commercial banks with 3323 offices allover Pakistan and 74
offices in foreign countries:
National banks of Pakistan
Habib bank limited
Habib bank (overseas) limited
United bank limited
Muslim commercial bank limited
Commerce bank limited
Standard bank limited
Australia bank limited
Bank of Bahawalpur limited
Premium bank limited
Pak Bank limited
Sarhad bank limited
Lahore commercial limited
Punjab provincial co-operative bank limited
The Pakistan banking council prepared a scheme for the recognition of banks. The bank
(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of the
smaller banks with bigger ones and following the five units in there phases:
National bank limited
Habib bank limited

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United bank limited
Muslim commercial bank limited
Allied bank of Pakistan limited
The first phase was completed on 30th June, 1974. When the bank Bahawalpur was merged
with the National Bank of Pakistan. The premier Bank Limited with Muslim Commercial
Bank limited and Sarhad Bank Limited and Pak bank limited and renamed as Allied Bank of
Pakistan limited.
The second phase was completed on 31st Dec, 1974, when the commerce bank limited
merged with the United Bank limited.
The third and the final phase were completed on 30 th June 1975 when the standard bank
limited was merged with Habib Bank limited.
The nationalization was very smooth and gave very positive results.
The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end June
1992. The bank deposits, which stood at Rs. 1925 corers at the end 1973, reached the highest,
mark about 323 corers.
A: Islamization of Banking
Another major development in the history of Pakistan Banking System was the introduced of
interest free banking in selected Commercial Banks with effect form Jan1, 1981. This
followed the effort to eliminated interest from the operation of Nation investment trust, the
House Building Finance Corporation of Pakistan. Certain amendments were made in banking
and other laws with the object of ushering in a new system of banking, which would confirm
of Sharia. A new law Modaraba Companies Ordinance 1980 was promulgated. Separate
interest free counters began to operate in all the nationalized commercial banks free counters
began to operate in all the nationalized commercial banks. The state bank provides finance
against participation term certificate and also against promissory notes supported by
Modaraba certificate.

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In order to cover interest free transactions certain banking definitions such as creditors,
debtor, and advances credits and deposits were revised. Stipulations concerning form of
business in which banking companies may engage may also have been modified schemes
were introduced to provide interest free loans to formers and deserving students. A private
Limited Company named as Bankers Equity limited was incorporated in 1979 to provide
financial assistance to the industrial sector primarily on interest free basis. A scheme to
extend interest free productive loans to farmers and fisherman has also been introduced.
Instead of interest, a system based on mark-up in price, exchange rate differential, and profit
and loss sharing accounts were introduced.
Different financial schemes introduced in the Islamization process are:
♦ Musharika Financing.
♦ Hire Purchase Financing.
♦ Modaraba Financing.
♦ Specific Purpose Modaraba.
B: Dis-investments and Deregulation of Banking – 1991
When it was realized that the role of public sector in the economy is over extended and the
banking sector has more earning potential in the private sector the process of privatization
banking sector restarted in 1991 by the Muslim League Government. Muslim Commercial
Bank was Dis-invested in to two phases while ABL was sold to its employees. Since then
allot of investment is being made in the banking sector and several new banks were
established and still the process is going on. Now only NBP is government bank other than
SBP. The performance of this bank will be analyzed and judged in the following chapters.

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C: Interest Free Banking
A new concept of interest free banking was introduced in 1981 and by now it has been
established on sound footing and new trends and techniques are being implemented to make
this system result oriented. New products and their systematic consumption are
making Pakistani banking comparable to their several modern counterparts anywhere in the
developed world.
2.6 HISTORY OF NBP:
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt.
devalued its currency in September 1949, India devalued its rupees but Pakistan did not.
It led to a crisis in trading between the two countries and India refused to lift the Pakistan
Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance
of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner for
the Government of Pakistan with special emphasis on fostering Pakistan's economic
growth through aggressive and balanced lending policies, technologically oriented
products and services offered through its large network of branches locally,
internationally and representative offices.
The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the
former Bahawalpur State.
NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at
57 of its offices where the turnover of the business under the head amounted to Rs.2460
million.
i) Deposits held by NBP constituted about 3.1% of total deposits of all
Pakistani Banks in 1949, which rose to 38% in 1952.

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

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ORGANIZATION CHART
Organizational Hierarchy
President
Board of Directors
Chief Executive Officer
Senior Executive Vice President
Executive Vice President
Senior Vice President
Vice President
Assistant Vice President
Officer Group I Officer Group II Officer Group III

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ORGANIZATIONAL CHART OF NBP MIRPUR VILLAGE BRANCH
Coordination
1.1.10 Mana 1.1.1.1 Operation

s Manager
1.1.2 Account
Opening
1.1.4 Cash
1.1.1 Credit &
Marketing
Department
1.1.6 Remittance
s
2.7 MISSION STATEMENT

1.1.9 Clearing
“To make theDepartment
Bank complete and competitive with all1.1.7 Bills Standard in performing,
international
quality of, operations, staff, financial strength. And products and services, to develop a
culture of excellence in every spare of activity of the bank”.
2.8 GOALS AND OBJICTIVES
“An organizational objective is the intended goal that prescribes definite scope and suggests
direction to the panning efforts of an organization.”
GOALS AND OBJICTIVES OF NBP

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“To be the pre-eminent financial institution in Pakistan and achieve market recognition both
in the quality and delivery of service as well as the range of product offerings.
Objectives of NBP:
National bank of Pakistan is also a commercial organization and its main objective is profit
maximization. This is achieved in two ways:
1. By increasing deposits.
2. By charging interest on loans provided to the private sector and business community.
These are explained as:
1. Increase in deposits:
Competition in banking is intense and every bank whether it is Pakistani, foreign, private or
nationalized tries to increase its deposits by providing better facilities to its customers. By
increasing its deposits a bank can extend greater amount of loan and hence achieves higher
profit. NBP is also improving its facilities and services to attract customers with higher
volume of deposits. There are two main factors involved in increasing the deposits. These
factors are improving the services and courtesy. NBP is continuously working on these two
factors to increase its deposits.
2. Extension of loans:
The profitability of a bank largely depends on the amount given to people as loan and the
type of people to whom credit is given i.e. the credit worthiness of the borrowers. This
strategy has worked quite well for NBP. Deposits are collected from the people and invested
in different projects. NBP prefers to give loans to financially sound and reliable parties, after

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securing the collators. NBP has an extremely well organized section. The staff is adequately
trained, and educated and competent. They carry out extensive financial analysis before
deciding on the loan. Interest charged on the loans potentially contributes to higher profits.
Some of the other objectives of NBP are:
i. Improve customer services.
ii. Quick disposal of credit cases.
iii. Efficient operation of the branches.
iv. Better Public Relations.
v. Operational and advisory services for foreign exchange accounts activities
Functions of NBP:
Since NBP is a commercial bank, it performs a variety of functions. Like other commercial
banks, NBP is engaged in financing international trade. Its other major functions include
receiving deposits, advancing loans and discounting of exchange. The functions performed
by NBP are:
a) Accepting Deposits
This function is important because banks largely depend on the funds deposited with them by
its customers. Deposits are of many types:
i. Current deposits
Current deposits are also called demand liability on current deposits. NBP pays practically no
interest on current deposits. Businessmen usually open current accounts. In NBP current
account can be opened with a minimum amount of Rs.500/-.

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ii. PLS saving deposit
Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit and
draw money easily. Profit on PLS is calculated every month but paid after six months. PLS
account can be opened with a minimum amount of Rs.500/-
iii. PLS term deposits
Fixed term deposits are deposits with the bank for certain fixed period before the expiry of
which they cannot be withdrawn unless giving due notice. In this case the rates of profit will
be different depending upon the time period.
b) Discounting bills of exchange
Discounting of bill is practically speaking lending for exchange at their market rate i.e. it
pays to holder of the bill an amount equal to the face value after deducting interest at the
current market rate for the period. This bill has to be mature. This is the common way used
for keeping a part of assets of the bank in a liquid form.
c) Agency service
NBP also provides best and unique service to its valued customers. NBP provide the
following agency services to the customers:
i. Collection of dividends
As NBP deals with the purchase and sale of various types of securities, therefore NBP also
provide dividend or interest earned on share or bonds or invested money.
ii. Collection of Cheques
In the collection and payment of Cheques, bills and promissory notes etc. National bank of
Pakistan acts as an agent for its customers.
iii. Acting as an agent
NBP also acts as an agent correspondent or representative for its customer at home or abroad.
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iv. General utility services:
Utilities provided by NBP are as follows:
a. Clearance of utility bills
NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone bills of
its customers. For this purpose it also provides evening banking services
b. Lockers facility
National bank of Pakistan also provides locker facilities to its customers to keep their
valuable assets in it. The charges of different size of lockers are different.
c. Acts as a referee
NBP provides useful services to its customers by acting as a referee to their credit
worthiness.
d. Supply of information
NBP provides operational and advisory service for foreign exchange accounts/activities.
d) Unmatched Banking Facilities
 Deposit security, Guaranteed by Government of Pakistan.
 Highest rates of return to attract the savings.
 Lowest rates on exports and other borrowings.
 Largest contribution towards Government and Semi-Government requirements.
 Agents of the SBP handling Treasury Functions, receipts of Taxes & other
Revenues.
 Handling of salaries & pensions of federal/provincial/defense personnel.

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 Utility Bills collections.
 Hajj arrangements.
 Sale and encashment of prize Bonds.
 Sale and encashment of Defense Savings and Special Savings Certificates.
 Safe Deposit Lockers for customers.
 Rational Human Resource Management.
2.10) Net Work of Branches:
NBP have wide range of branches inside the country and outside the country. In Pakistan it
has 29 regional offices, 1432 Branches and 4 Subsidiaries. In overseas it has 16 overseas
branches, 6 other branches.
Summation: We
discussed in this chapter the evaluation of banking in Pakistan, banking reforms 1972,
Nationalization of banks, History of NBP, Mission Statement of NBP. The next and
onward chapter we will discuss the general banking information and departmentalization
of NBP.
CHAPTER # 3
INFORMATION & DEPARTMENTALIZATION OF NBP
3.1. INTRODUCTION:

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This chapter presents the services and departmentalization of NBP.
Services are outputs of the firm, which are in intangible form, and which are the backbones
of any organization to earn profit. NBP offers the following services to the people.
3.2 DEMAND DRAFTS
If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account
holder of the bank or not, can purchase a Demand Draft from a bank branch.
3.3 SWIFT SYSTEM
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has
been introduced for speedy services in the area of home remittances. The system has built-in
features of computerized test keys, which eliminates the manual application of tests that often
cause delay in the payment of home remittances. The SWIFT Center is operational at
National Bank of Pakistan with a universal access number NBP-APKKA. All NBP overseas
branches and overseas correspondents (over 450) are drawing remittances through SWIFT.
Using the NBP network of branches, you can safely and speedily transfer money for our
business and personal needs.
3.4 LETTERS OF CREDIT
NBP is committed to offering its business customers the widest range of options in the area
of money transfer. If you are a commercial enterprise then our Letter of Credit service is just
what you are looking for. With competitive rates, security, and ease of transaction, NBP
Letters of Credit are the best way to do your business transactions.
3.5 TRAVELER'S CHEQUES
Traveler’s cheques are negotiable instruments, and there is no restriction on the period of
validity of the cheques. Rupee traveler’s cheque is available at all 700 branches of NBP. This
can be enhanced in all 400 branches of NBP. There is no limit on purchase of this cheque. It
is one of the safest ways for carrying money.

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3.6 PAY ORDER
NBP provides another reason to transfer your money using our facilities. NBP pay orders are
a secure and easy way to move your money from one place to another. And, as usual, NBP
charges for this service are extremely competitive. The charges of NBP are very low all over
the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order. And
charges Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs
25/- for students on payment of fees of educational institutions. If some one want a duplicate
of payment order they charges Rs 100/- for NBP account holders and Rs 150/- for non
account holders.
3.7 MAIL TRANSFERS
Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offers the most competitive rates in the market. They charges Rs 50/- exchange rate and RS
75/- postage charges on issuing mail transfer.
3.8 FOREIGN REMITTANCES:
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has
taken a number of measures to:
• Increase home remittances through the banking system.
• Meet the SBP directives/instructions for timely and prompt delivery of remittances to
the beneficiaries.
3.9 EQUITY INVESTMENTS

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NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant
player in the development of the stock market.
NBP is involved in the following:
• Investment into the capital market
• Introduction of capital market accounts (under process)
NBP’s involvement in capital markets is expected to increase its earnings, which would
result in better returns offered to account holders
3.10 TRADE FINANCE OTHER BUSINESS LOANS
There are two types of trade finance.
AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who
produce some of the best agricultural products in the World.
i) Agricultural Finance Services:
“I Feed the World” program, a new product, is introduced by NBP with the aim to help
farmers maximize the per acre production with minimum of required input. Select farms will
be made role models for other farms and farmers to follow, thus helping farmers across
Pakistan to increase production.
ii) Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:-
• Providing reliable infrastructure for agricultural customers
• Help farmers utilize funds efficiently to further develop and achieve better production

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• Provide farmers an integrated package of credit with supplies of essential inputs,
technical knowledge, and supervision of farming.
iii) Agricultural Credit (Medium Term):
• Production and development
• Watercourse improvement
• Wells
• Farm power
• Development loans for tea plantation
• Fencing
• Solar energy
• Equipment for sprinklers
iv) Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal
basis.
• Operating loans
• Land improvement loans
• Equipment loans for purchase of tractors, farm implements or any other equipment
Livestock loans for the purchase, care, and feeding of livestock.
v) Production Loans:

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Production loans are meant for basic inputs of the farm and are short term in nature. Seeds,
fertilizers, sprayers, etc are all covered under this scheme. If you require any further
information, please do not hesitate to e-mail us.
3.11 INTERNATIONAL BANKING
National Bank of Pakistan is at the forefront of international banking in Pakistan, which is

proven by the fact that NBP has its branches in all of the major financial capitals of the
world. Additionally, NBP have recently set up the Financial Institution Wing, which is
placed under the Risk Management Group. The role of the Financial Institution Wing is:
• To effectively manage NBP’s exposure to foreign and domestic correspondence
• Manage the monetary aspect of NBP’s relationship with the correspondents to

support trade, treasury and other key business areas, thereby contributing to the
bank’s profitability
• Generation of incremental trade-finance business and revenues
3.12 NBP offers:
• The lowest rates on exports and other international banking products
• Access to different local commercial banks in international banking
1. Cash and Gold Finance.
Cash and Gold finance means that loan is given against the gold. The gold is mortgaged with
the bank and loan is taken. It is the area of consumer finance. And borrower can take loan for
common use.
2. Advance salary loan:

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This loan is given to those people who are govt servants. They can get a loan up to the salary
of fifteen months.
CHAPTER-4

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DEPARTMENTATION IN NBP
The NBP Mir Pur Village Branch Abbottabad constitute of the following sections.
1) Deposits section
2) Cash section
3) Remittances section
4) Clearing section
5) Computer section (SWIFT)
6) Advances section
7) Foreign exchange section
8) Human resource department
4.1) DEPOSITS SECTION:
In modern times very few business enterprises are carried out solely with the capital of the
owners. Borrowing funds from different sources has become an essential feature of today’s
business enterprise. But in the case of a bank, borrowing funds from outside parties is all the
more vital because the entire banking system is based on it.
The borrowed capital of bank is much greater than their own. Equity bank’s borrowing is
mostly in the form of deposits. These deposits are lent out to different parties. The larger the
difference between the rate at which these deposits are borrowed and the rate at which they
are lent out, the greater will be the profit margin of the bank. Furthermore the larger the
deposits will be the funds available for employment, larger the funds lent out the greater will
be the return earned on them; and greater the amount of return the greater will be the profits
of the bank. It is because of this interrelated relationship that deposits are referred to as the
“life-blood” of a bank.
To receive deposits is a basic function of all commercial banks. Commercial banks do not
receive these deposits for safekeeping purpose only, but they accept deposits as debts. When
a bank receives a deposit from a customer, the relationship of a debtor and a creditor is
established whereby the customer becomes the creditor and the bank a debtor. When the
bank receives the amount of deposit as a debtor, it becomes the owner of it. It

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may therefore use it, as it seems appropriate. But there is an implicit agreement that the
amount owned would be paid back by the bank to the depositor on demand or after a
specified time.
NBP offers the following major categories of bank accounts.
Classification of Deposits:
Bank deposits can broadly classified as: 1
• Current deposits
• PLS saving deposits
• Fixed Deposits or Term Deposits
• National income daily account (NIDA)
1. Current deposit:
These are payable to the customer whenever they are demanded. When a bank accepts a
demand deposit, it incurs the obligation of paying all cheques etc, drawn against it to the
extent of the balance in the account because of their nature; these deposits are treated as
current liabilities by the bank. Banker in Pakistan does not allow any profit on these deposits,
and customers are required to maintain a minimum balance failing which “incident charges”
are deducted from such accounts. This is because the depositors may withdraw current
deposits at any time, and, as such the bank is not entirely free to employ such deposits.
The current account can be opened by sole-proprietors, partnership business, companies,
clubs, societies, educational institutes etc.
For this, they have to fill an account opening from that includes all the information about that
specific organization plus specimen signature card, National Identity Card (NIC) copy,
certificate of incorporation (if it is a company) and other undertakings in case of individual;
their minimum opening balance must not be less than Rs-500.
2. PLS Saving Deposits:
Profit and loss sharing saving deposits account can be opened with very small amount of
money and the depositor is issued a chequebook for withdrawals. Profit is paid at flexible
rate calculated on half yearly earning of the bank.

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Min of Rs 100 is required to open a PLS saving account but to be eligible for sharing
profit/loss of the bank one has to keep a min of Rs 5000 in the account. The rate of the profit
or loss on PLS saving account shall be determined by the bank at the close of each half-year
in its sole discretion and the bank’s decision would be final and binding on the PLS account
holders.
For opening an account, account-opening form has to be filled with introduction reference.
Copy of NIC, specimen signature card and two photographs are also to be attached with the
form.
Zakat is deducted yearly on 1st Ramazan at 2.5% on principal amount incidental charges of
Rs 150 are deducted on keeping balance less than Rs 5000. If the person wants to close the
account, he/she has to pay “closing charges of Rs 100”.
The bank would be within its rights to make investment of credit balance/deposits in the PLS
saving account in any manner at its sole discretion and to make use of the funds to the best of
its judgment in the banking business.
There is no restriction on the withdrawals from the deposit account but the amount of money
withdrawals is deleted from amount to be taken for calculation of products for assessment of
profit to be paid to the account holder. It discourages unnecessary withdrawals from the
deposits.
3. Fixed or Term Deposits:
The deposits that can be withdrawals after a specified period of time are referred to as fixed
or term deposits. The period for which the bank keeps these deposits ordinarily
Varies from three months to five year in accordance with the agreement made between the
customer and the banker. Interest/return is paid to the depositors on all fixed or term deposits
and the rate of interest/return varies with the duration for which the amount is kept with the
bank.
Many depositors keep their money in fixed deposits with banks as an investment because of
the interest/return paid on them. Since fixed or term deposits remain with the bank for a
specified period, they can be profitably employed in the best interest of the bank. By lending
out or investing these funds, the bank earns more than the interest/return that it has to pay on
them to the depositors.

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Minimum balance of Rs 10000 is required to open a fixed account Zakat is deducted on
yearly basis on 1st Ramazan at 2.5%.
Fixed/term deposits may be in the joint names of two or more persons. The payment to either
of them will not discharge the banker, unless authorized by all the joint depositors. In the
other words where money is paid into a bank on the joint account of persons not partners in
trade, the bank is not discharged by payment to one of those persons, without the authority of
the others.
4. National income daily Account (NIDA):
It is a form of current account in which customer can get daily profit. NIDA is perfect for
people who want the earning on the saving account. There is no limit to how much you can
earn with NIDA. The deposit starts with a minimum of Rs 250000, while there is no upper
limit. There is also an unlimited withdrawal facility requiring no prior notice.
A customer also gets a healthy rate of interest on their deposits under NIDA facility.
4.2) CASH SECTION:

This is a very important department in a bank. There are two basic functions performed by
the cash section are: 2
I. Receipts
II. Payments
I. Receipts:
An individual who has account in the bank can deposit cash in his account for deposit of the
money the individual has to fill the deposit slip in which the account holder writes his name,
account number, amount of the money to be deposited both in figures and in words.
After filling the deposit slip the cash amount along the deposit slip is submitted with the
cashier. The cashier collects the cash amount and counts it and after his verification the
cashier stamps the deposit slip, one part of the deposit slip is given back to the customer and
the other part of the deposit slip remains with the bank for the record purposes.
The cashier also records the deposits made by the customer in credit sheets daily. The
deposits of all customers of the bank are controlled by mean of ledger account. Every

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Customer has its own ledger account and has separate ledger cards in which his/her total
record is kept.
II. Payments:
The payment made by cash department follows the specified procedure. Normally the cash
department constitutes of the token counter and the cash counter. The procedure of clearance
of a cheques or payments is as following.
First of all the customer present his cheques at the token counter. The clerk at the token
counter collects the cheques and records the cheques number, the account number and the
amount, which is to be drawn. Then he/she stamps the cheques at the token counter. Then a
token is given to the customer and he is asked to wait for his turn. Then the cheques is
transferred to the passing officer, who verifies the kind and details of the cheques and checks
whether the customer holds sufficient balance in his account and have a valid cheques or not.
Types of cheques:
A cheque can be of three types.
1) Bearer Cheque:
Bearer cheque is one on which the phrase or bearer is written after the name of the payee. It
is payable to the bearer, holder or possessor i.e. any one who present it at the bank. The bank
is under no liability to ascertain that the payment is made to the right person. This cheque is
valid up to 6 months.
2) Order Cheque:
Order cheque is a cheque made payable to the certain person or order. It is a cheque on
which the phrase “or order” is written after the name of the payee. Such a cheque is made
payable to a certain person with out the addition of the word ‘bearer’ or ‘order’ thereto; it is
regulated as an order cheque. It can only be transferred by endorsement and delivery.
3) Crossed Cheque:
When two parallel lines are drawn across the face of the cheque, it is said to be the crossed
cheque. A crossed cheque is not encashed at the counter but collected only by a bank from
the drawee bank.

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Now if the customer’s account has the required credit balance and his cheque is also a valid
cheque then the passing officer signs the cheque and sends it to the cash section. The cashier
calls for the token number that is written on the cheque by the clerk sitting on the token
counter. The customer whose token number is called approaches counter to collect his
money. The cashier reconciles and verifies the token number and the token number written
on the cheque and the amount is paid to the customer. After making the payment the cashier
records the amount paid in the debit sheets.
If the customer do not have sufficient amount in his account balance then his cheque is
dishonored with the reasons of dishonoring mentioned on a slip attached with the cheque.
4.3) REMITANCES DEPARTMENT:

The other important department in NBP Main Branch Abbottabad of Remittances
Department. The Remittances Department transfers the funds from one place to another
place. They are classified as:
• Inwards remittances-Money coming into the bank.
• Outward remittances-Money going outside the bank.
Major Kinds Of Remittances:
NBP transfer money from one place to another by the following means. 4
1. Demand draft
2. Mail transfer
3. Telegraphic transfer
1) Demand Draft (DD):
Demand draft is one way of transfer money from one branch to another branch or bank.
A draft is an order drawn by a bank on its branch or on another bank in a different place
requiring the later to pay on demand the sum of money specified in the draft. A draft is
required to be filled with necessary particulars about the beneficiary (person who will get the
money) and sender (person who is sending the money) is given.
The sender deposits the amount of DD. Withholding Tax, Excise duty and other commission
at the bank counter, from where he is given a receipt and in accordance with this receipt he is
issued a demand draft. After issuing the DD, the remittances department sends credit advice
to the branch where the DD is sent. When the responsible branch
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receives the DD from the originating branch. They credit it, and when the DD comes for
clearing they debit the account.
2) Mail Transfer (MT):
When a customer requests the bank to transfer his money from this bank to any other bank or
the branch of some other bank within or outside the country, the first thing he has to do is to
fill an application form. In the application form he states that I want to transfer the money
from this bank to the other bank by mail (courier service).
The MT form has to be filled with all the required information and payment has to be made
at the bank counter including Rs. 30 mail charges, 0.3% withholding Tax and other bank
charges. Person receiving the MT must hold an account with the collecting bank in order to
collect his money.
3) Telegraphic Transfers (TF):In this mode of faster money transfer the sender is
required to fill the TT from in which he will give all the necessary details about the sender
and beneficiary.
The sender deposits the money to be transferred including Rs 100 fax charges, 0.3%
withholding Tax and other bank charges at the bank counter. The remittances officials send a
telegraph to the concerned branch with specified code words and the receiving branch make
payment to the customer. After wards vouchers are sent by ordinary mail to keep in record.
4.4) CLEARING SECTION:

A clearinghouse is an association of commercial bank set up in a given locality for the
purpose of in charge and settlement of credit claims. The function of clearinghouse is
performed by the central bank of a country by tradition or by law. In Pakistan, the clearing
system is operated by state bank of Pakistan. If the state bank of Pakistan has no office at a
place, then National bank of Pakistan as a representative of the state bank acts as a
clearinghouse. 5
The mechanism where by cheques are exchanged in bulk and the cross obligations of the
bank are offsets in now explained in brief.
Cheque, as we know, is an effective method of making payment. When cheques are drawn on
one bank and the holder (payee) deposits the same in his account at the bank of drawer, the
mutual obligations are settled by the internal. Bank administrative and thus there arises no
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inter bank debits from the use of cheques.The total assets and the total liabilities of the bank
remain unchanged.In practice the person receiving a cheque is rarely a depositor of the
cheque at the same bank as a drawer. He deposits the cheque with his bank (other than that of
the payer) for the collection of the amount.
Now the bank in which the cheque has been deposited becomes a creditor or the drawer’s
bank. The debtor bank will pay his amount of the cheque by transferring it from cash reserve.
In the courses of every day life, there are large numbers of cheque drawn on a bank deposited
in other banks. The bank on which the cheque are deposited. At the same time, the creditor
bank received large number of cheque drawn upon other banks giving claim of payment by
them. It will thus be most uneconomical and confusing if bank had to transfer cash for
meeting each other’s liability. The easiest, safe and the most economical way is to offset the
reciprocal claims against one another and receive only the net amount owned by them. This
facilities of net inter bank payment is provided by the clearinghouse.
The representative of the local commercial bank meets at a fixed time on all the business
days of the week in the office of the bank performing the duties of a clearinghouse. The
representative of the commercial banks delivers the cheque payable at other local banks and
receives the cheque drawn on their bank. The cheques are then sorted. A summary sheet is
prepared which shows the names of the banks, the total number of cheque delivered and
received by them. Total are also made of all the cheque presented by or to bank.
The difference between the totals represents the amount due to it or pays the net amount
owned by it. The net payments are made by issuing a credit or debit vouchers on the bank
account maintained at the central bank.
In the bank two types of clearing books/registers are maintained.6
• Inward clearing book.
• Outward clearing book.

Inward Clearing Book:
This book is used by the banks for the purpose of recording all the cheque, which are being
received by the bank. For this purpose NBP General account (Debit voucher) is made.
Out Ward Clearing Book:

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The bank uses outward clearing register for the purpose of recording all the details of the
cheques that the bank has delivered to other banks. For this purpose NBP General Account
(credit voucher) is made.
4.5) COMUTER SECTION:

The management of the NBP is aware of the fact that this is the age of science and
technology and for rapid development adoption of computer technology is very necessary for
NBP, for this purpose one computer is install in NBP branch which started keeping certain
important categories of record in computer.
Special computer software is developed to ensure full security and safety of the bank data.
There is a SWIFT center in the branch. With the help of this SWIFT center branch deals with
the other braches and exchange companies located out side the country. In NBP Chattar
Domel branch the computer section after the end of working hours performs several duties,
which are as under.
• To record all the transactions made in case of deposits and by the people and also to
record all the withdrawals made by the customer throughout the day.
• To record all the vouchers made by the deposit and remittance section.
• To close the daily record by reconciling the debit and credit vouchers.
For this purpose specific computer programs are designed which help the bank to store the
record safely.
Although these works are done on the computer but not most of people is computer literate
only one or two employees know how to use it.
4.6) ADVANCES SECTION:

Credit extension is the most important activity for all financial institution, because it is the
main source of earning. However, at the same time, it is a very dangerous task because of the
risks involved. Now it is quite clear that risks cannot be eliminated but can certainly be
minimized largely with certain techniques.
In order to reap the full advantages of credit and to make good decisions, the following
aspects must be given due consideration.

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1. Financial character of the creditor
2. Financial capacity of the creditor
3. Capital needed by the creditor
4. Economic conditions of the country
5. Collateral offered by the creditor
4.7) FOREIGN EXCHANGE DEPARTMENT
Foreign exchange department is one of the most important departments of the national bank
of Pakistan main branch Islamabad. This department deals in foreign currency. It provides
the safe custody to the customers having foreign currency.
It collects the money from all over the world on the behalf of the customer.
This department also pays interest to its account holders in shape of foreign currency.
While dealing in the foreign currency it’s a lot for the national bank of Pakistan.
4.8) HUMAN RESOURCE DEPARTMENT
• Recruitment
There was no set rule for recruitment. Although a procedure has been given in the staff
(service rule), yet the same was only followed to the extent of the procedure and was nor
done in the true spirit. The main point in recruitment, i.e. merit was seldom adhered to.
Political involvement that is rampant in our culture also played havoc with NBP, resultantly
every change in government saw a large number of new industries.
There have been no select criteria for selection of employees to lower or officer executive
grades. These was done at times thorough simple interviews, however there have been
instances, when regular tests have been conducted for recruitment to the post of the officers.
• Selection Process
Selection is divided into following steps.
Short listing of the application
Candidates were scrutinized were sent the test calls. In the first step thousands of candidates
apply for limited posts available. The head office sent the calls to only those candidates who
fulfill the requirement of the job advertised.
1. Tests
The Pakistan bank council under the supervision of the Pakistan banking and finance
commission conducts test. In the test the applicants are further short listed.

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2. Interviews
For the interview only those candidates are called which qualify the written test. Different
types of questions are asked from the candidate by the interviewing board, which include.
I. Question about the personal background extraordinary activities during education
and about personal contacts.
II. About the role of banking in current situation of the economy.
III. Role of foreign enterprise in public economy etc.
A part from these questions the candidate personnel interests are also discussed and an effort
is made to have the understanding of the individuals personality and after these questions an
evaluation is made weather the candidate will prove an asset to the organization or not.
3. Merit list
Aster the final result, the successful candidates are sent the appointment letters and they are
asked to sign the agreement with the bank person.
4. Training
The staff college receives junior bank officers for further training in banking course lasting
from six to nine weeks with about 25 students in search course. The college is residential one
and provides a measure of colligate atmosphere, which help to import a sense of camaraderie,
which in itself is of great value. It is also of interest to record that
the staff college receives trainee from abroad as well as worth while reference domestic which
helps to create to banking business.
The staff college courses are designed not only to impart, technical instructions, but also to
develop qualities of judgment decision. The college is one of the most important institution
set up by the bank because its students are likely to be drawn those men who may except to
rise the senior most executive positions which the bank offers. It is business of the staff
college to keep in touch with all that is going on the world of banking and finance and so
revise its instructions as to keep pace with development in Pakistan and wish changes in
outside.
The training institution is intended to train supervisory and clerical personnel and to provide
basis training in banking procedure and practice exercise in the routine work of the bank. At
the end of the course training are required to go through a written test and positions with
respect to staff seniority are determined by the results achieved. The bank motivates the

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officers to attend banking seminars both in Pakistan and abroad and it attaches great
importance to exchange of ideas, information and knowledge.
National bank of Pakistan realize its position as the premier of the bank in Pakistan this
consider it responsibility to ensure dignified position while say representing it’s in the
meeting of the bankers mostly when finance is the question at hand.

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CHAPTER # 5
SWOT ANALYSIS
5.1. INTRODUCTION
To carryout the SWOT and Financial Analysis of NBP through the help of calculating
necessary ratios in this section.
SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats
SWOT analysis is careful evaluation of an organization’s internal strengths and weaknesses
as well as its environment opportunities and threats.
“SWOT analysis is a situational which includes strengths, weaknesses, opportunities and

threats that affect organizational performance.”
“The overall evaluation of a company strengths, weaknesses, opportunities and threats is

called SWOT analysis.”
In SWOT analysis the best strategies accomplish an organization’s mission by:
1. Exploiting an organizations opportunities and strength.
2. Neutralizing it threats.
3. Avoiding or correcting its weakness.
SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context; managers assess internal strengths distinctive
competencies and weakness and external opportunities and threats. The goal is to then
develop good strategies and exploit opportunities and strengths neutralize threats and avoid
weaknesses.

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

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7. PROFESSIONAL COMPETENCE
The employees at NBP here have a good hold on their descriptions, as they are highly skilled
Professionals with background in business administration, banking, economics etc. These
professional competencies enable the employees to understand and perform the function and
operation in better way.
8. HEALTHY ENVIROMNMENT
The working condition in the NBP Main Branch here is very conductive and favorable for
better output. The informal environment affects the performance of the employees in a
positive way.
9. RELATION BETWEEN STAFF AND OTHER EMPLOYESS
The bank enjoys a good plus point when it comes to the employee manager relationship the
hearing as removing of discrepancies if any, between the employees, and between the
manager and employees.
5.3. WEAKNESSES
1. LACK OF MARKETING EFFORT:
The bank does not promote its corporate image, services, etc on a competitive way. Hence
lacks far behind in marketing effort .A need for aggressive marketing in there in the era
marketing in now becoming a part of every organization.
2 NBP UNDER POLITICAL PRESSURE
The strong political hold of some parties and government and their dominance is affecting
the bank in a negative way. They sometime have to provide loan under the pressure, which
leads to uneven and adjusted feeling in the bank employees.

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3. FAVORITISM AND NEPOTISISM
The promotions and bonuses etc in the bank are often powered by senior’s favoritism or
depend upon their wills and decision. This adds to the negative factors, which denominate the
employees thus resulting in affecting their performance negatively.
4. INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS
During the rush hours, the bank is founded out to be a total flop to handle the mob of people
peaking from windows and doors. The bank has deficiency to operate in the stages of rush
hours where the people find them services entangled in a situation of nowhere because they
are not well served.
5. LACK OF COMPUTERIZED NETWORK
The bank lack the strength of being powered by the network of computers, which have saved
time, energy and would have lessened the mental stress, the employees have currently. This
would add to the strength if it were powered by network of computers.
6. LACK OF MODEREN EQUIPMENT
The bank lacks the modern equipment that is note counting machine computer. Even if there
is any equipment they lack to fall in the criteria of being rearmed as update and upgrade.
5.4. OPPORTUNITIES
1. ELECTRONIC BANKING
The world today has become a global village because of advancement in the technologies,
especially in communication sector. More emphasis is now given to avail the modern
technologies to better the performances. NBP can utilize the electronic banking opportunity
to ensure on line banking 24 hours a day. This would give a competitive edge over others.

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2. MICRO FINANCING
Because of the need for micro financing in the market, there are lot of opportunities in this
regard. Other banks have already initiated, now the time has arrived when the NBP must
realize it and take on step to cater an ongoing demand.
5.5. THREATS
1. EMERGENCE OF NEW COMPETITORS
The bank is facing threats with the emergence of new competitors especially in terms of
foreign banks. These foreign banks are equipped with heavy financial power with excellent
and innovative ways of promoting and performing their services. The bank has to take
initiative in this regard or will find itself far back in competition.
2. POLITICAL PRESSURE BY ELECTED GOVERNMENT
The ongoing shift in power in political arena in the country effects the performance of the
bank has to forward loans to politically powerful persons which create a sense of insecurity
and demoralization in the customer as well as employees.
3. CUSTOMERS COMPLAINTS
There exists no regular and specific system of the removal of customer complaints. Now a
day a need for total customer satisfaction is emerging and in their demanding consequences
customer's complaints are ignored.
4. COMPETITIVE ANALYSIS
Porter’s five forces model:
This approach is widely used for competitive analysis. It is because of the high intensity of
competition among companies there three main competitive forces.
1. Rivalry among competitive firms:

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It is a very powerful force among the competitive forces the strategies pursued by one firm
can be successful only to extent that they provide competitive advantages over the
competitor. These competitive strategies may be lowering prices, best quality series. The
NBP offering very low charges an demand draft, telegraphy transfer, mail transfer and give
other additional services to the customers and to the Nation. Because NBP is a “Nation’s
Bank”.
2. Potential entry of new competitors:
Whenever new firms ca easily enters a particular industry, the competition increases. The
gout restriction, tariffs, patents etc can stop new firm to enter into the business as per
Banking industry is concerned this market is already very situated in Pakistan and there are
banks with quality services and low charges. So there is no threat to NBP from potential
entry and NBP is also a public sector bank because of that no other new bank not takes over
it.
3. Bargaining Power of Consumers:
When customers are concentrated or large, or buy in volume, their bargaining power
represents a major force affecting intensity of competition. Now the number customers in
Pakistan for banks are very high. Banks offering variety of products and services to their
customers. NBP have a large number of customs. Now it must offer good services and
products to their customers to attract them to come to NBP.
Summation:
The summary of is SWOT Analysis of NBP. To know how NBP can compete well and how
to maintain its position in the market as a best services organization.

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CHAPTER# 6
FINANCIAL ANALYSIS
6.1. INTRODUCTION
Financial analysis, though varying according to the particular interests of the analyst, always involves
the use of various financial statements primarily the balance sheet and income statement. The balance
sheet summarizes the assets, liabilities, and owner’s equity of a business at a point in time, and thee
income statement summarizes revenues and expenses of the over a particular period of time. NBP is
one of the leading banks in Pakistan.
6.2. FANINCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weakness of the
firm by properly establishing relation ship between the items of balance sheet and profit and
loss account, in order to make rational decision in keeping with the objective of the
organization, for that purpose the management use analytical tools. To evaluate the financial
condition and performance of the business entity, the financial analyst needs to perform
"checkups" on various aspects of the business financial health. A tools frequently used during
these checkups is a financial ratio analysis, which relates two piece of financial data by
dividing one quantity by the other we calculate ratios because in this way we get a
comparison that may prove more useful than the raw number by themselves. The business
itself and outside providers of capital (creditors and investors) all undertake financial
statement analysis. The type of analysis varies according to the specific interest party
involved. The nature of analysis is depending at the purpose of analyst.
6.3. Parties interested in financial analysis:
1. Trade creditors
Trade creditors are interested in firm's ability to meet their claims over a very short period of
time. Their analysis will, there fore confine to the evaluation of the firm's liquidity positions.

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2. Suppliers of long-term debt
Suppliers of long-term debt on the other hand are concerned with firm's long-term solvency
and survival. They analysis the firms profitability over time, its ability to generate cash to be
able to pay interest and repay interest and repay principal and the relationship between
various source of funds. (Capital structure relationship). Long-term creditors do analyses the
historical financial statements but they place more emphasis on the firm's projected financial
statement to make analysis about its future solvency and profitability.
3. Investors
Investors who have invested their money in the firms share are most concerned about the
firm steady growth in earning. As such, they concentrate on the analysis of the firm's present
and future profitability. They are also interested in the firms financial structure of the extent
it influence the firms earning ability and risk.
4. Management.
An organization would be interested in every aspect of the financial analysis. It is their

overall responsibility to see that the resources of the firm are used most effectively and
efficiently and that the firm's financial condition is sound. So thus management employee
financial analysis for the purpose of internal control and to better provide what capital
supplier seeks in financial condition and performance from the business and from an internal
control standpoint, management needs to take financial analysis in order to plan and control
effectively.

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CHAPTER # 7
FINDING AND OFFER CONCLUSION
7.1. INTRODUCTION
I have divided this section in four parts. Which are as under. These analysis are mainly based
on my practical experience at the NBP.
• Problems at the branch.
• Function analysis.
• Administrative analysis.
• Personal management’s analysis.
7.2. PROBLEMS AT THE BRANCH
1. Customer Satisfaction
In NBP Mirpur village Branch Abbottabad customer dealing is well, but during rush hour the
customer has to wait for a long time for their turn. It’s quite hard for a new customer or
potential customer to get the required information.
2. Poor record management and filing system
During my internship I observed that filing system of branch is not good. When certain
record is needed the staff has to struggle to find it out and a lot of time is wasted.
3. Unequal distribution of work
Work is not equally distributed. On one hand some employee have to work all day without
relaxing while some others have nothing to do at all. This not only creates confusion among
employees but also hurting and disturbing for overall setup of the bank. And above all it
results in dissatisfaction among customers as well.

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7.3. FUNCTIONAL ANALYSIS
1. Formal Organization
Formal organization includes the activities of two or more person, which are cautiously
determined groups and coordinated towards a given objective. It provides base when people
are able to communicate with other, when they have common purpose and they are willing to
work.
In NBP, we find a formal organization. Bernard referred to an organization as a formal when

the activities of two or more persons are coordinated towards a given objective. The formal
organization comes into being when people are able to communicate with one another or
willing to act and share a purpose. In this formal organization of NBP the activities are
carried out in a more formal way. In theoretical terms it provides basis for communication
with one another but in practice it is not exercised because an employee at high level cannot
get straight away to manager or SVP and ask him about of his problem faced by him, because
first he has to talk to his immediate superior and follow a proper channel of communication.
2. Difference between theory and practice
A vast difference exists between theory and practice and NBP has written procedure but
practical work done by employees is a bit different from written procedures.
3. Bank duty to maintain secrecy.
They don’t care about maintaining secrecy, especially during the rush hours. They speak
loudly about the account position and while getting clearance of cheque the person can easily
get the whole information from the ledge. The deposit clerk must be careful while passing
any cheque. In this regard another shortfall is in giving the information about the balance on
telephone.

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4. Excessive paper work
It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology.
5. More accounts fewer deposits.
Efficient banking is one, which does not emphasize on number of accounts but on greater
amount of deposits. NBP is more interested in increasing its number of account irrespective
to its deposit. The main reason behind it is that bank does not provide personalize service to
all the account holders and does not improve its quality and services
7.4. ADMINISTRATIVE ANALYSIS
1. Job analysis is not effective
Only on the basis of job analysis it can be decided how a right person can be hired, trained,
compensated or promoted. It is very important for an organization that nature of the job is
described and job specifications are mentioned. Most of the employees are simple graduate
and do not have proper background about their job. This creates problems both for
organization and for the employees. In NBP salaries are given according to the seniority and
grades. People with simple or complex responsibility are getting the same salary and
facilities. This creates dissatisfaction among employees.
NBP does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted into a
specific field without having great deal of knowledge about the field.
In the Mirpur village Branch, Abbottabad the newly recruited employee training was not
imparted, they all learned things on the job.

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3. Delays in Loan Advancement
It has been observed that there is a delay in sanctioning of cases from the head office, which
results in customer dissatisfaction.
4. Lack of appreciation
Another very important thing which is ignored in the bank is appreciation if the employee on
their good performance. If hard work and performance of employees is not recognized and
appreciated they become dishearten which results in decline in performance.
5. Lack of specialized training
NBP does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted into a
specific field without having great deal of knowledge about field.
In the Main Branch, Abbottabad the newly recruited employee training was not imparted,
they all learned things on job.
6. Low Profit rates
Most of the customer shifted their account to the National Saving Centre because of the low
rates of saving deposit discourage the customer. Bank should increase their profit rates to
attract customer.
7.5. PERSONAL MANAGEMENT ANALYSIS
1. Need for better training program
Need of training is greatly emphasized all around the world. Training of the personnel is part
of human resource management. It has been noticed that the training program of NBP is not
adequate.
Once the candidate is selected and placed on the respective job. It becomes essential to train
him adequately for the task. They should learn new methods for motivating customers. The

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training programmed of the bank should include scientific techniques to improve the
decision-making and interpersonal as will individual needs of the employee both specialized
to fresh as well as on job to maintain the high standards of service.
2. Recruitment policy
Human resources are the lifeblood of the organization. If the personnel are recruited carefully
they can become asset to the organization in the case of carelessness a liability on the
organization. Bank is not following its recruitment policy properly due to
favoritism, nepotism and political pressure. Both the top authority and staff union tries their
best recruit their favorites. Indulgence of political pressure adds salt to the wounds. The
persons selected through these channels are infantile and do not work for the betterment for
the bank.
3. Promotions
Promotions in NBP are purely on the basis of seniority, so the new young person having high
qualification remains behind for quite a lot of time. Top management and staff union put
pressure for the promotion of their favorites, which gives a sense of deprivation to the
deserving employee and their efficiency is affected. As the concept of promotion is attached
with better in terms of greater responsibility, more prestige, greater skills and increased rate
of salary. Thus a better and impartial policy of promotion needs to be followed.
4. Transfer
Transfer means when a person is shifted from one place to another place. It is done either that
person is needed more on the other branch or for improving his skill variety. It is the policy
of the Bank to transfer each employee 3 to 4 years.

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5. Lack of business communication
There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc containing information in details.
Some general information should be placed in information notice board on the entrance
where customer can see it easily or it should be self-attractive.
Summation:
Discussed the review of NBP, Mirpur village Branch Abbottabad. That is mainly concern
with the problems, needs and requirements, rules and regulations at the branch. The next
chapter is about the recommendation and suggestion of NPB.

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CHAPTER # 8
RECOMMENDATIONS & SUGGESTIONS
8.1. INTRODUCTION
NBP is an effectively operating and profit making organization and carrying out its activities
under a specified system of procedure. The main regulatory body is State Bank of Pakistan,
which provides policy guidelines and ensures that the money market operates on sound
professional basis. While the head office specifies the whole procedure of function and
operations. This procedure has been modernized with the passage of time with a view to
streamline the approach and underlying procedure for effective overhauling of its own
capabilities so as to bring them at par with international practices.
Here I am giving some suggestions, which in my view can add some input for efficiency and
better performance of NBP as an organization in general and Mirpur village branch
Abbottabad in particular.
The recommendations are as follows:
1. Professional training
NBP staff lacks professionalism. They lack the necessary training to do the job efficiently
and properly. Although staff colleges in all major cities but they are not performing well. For
this purpose these staff colleges should be reorganized and their syllabus should be made in
such a way to help the employee understand the ever-changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with much
needed professional training.
2. Performance Appraisal The

manager should strictly monitor the performance of every staff member. All of them should
be awarded according to their performance and result in the shape of bonuses to motivated
and incite them to work more efficiently.

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3. Transfer
Transfer is not properly carried out. Some of the employees are continually serving at the
same post. They are simply rotated at the same branch. Therefore it is recommended that
evenly rotation of every employee should take place after every three years in different
braches of the bank.
4. Link with the Head Quarter
100 major branches of NBP should established a direct link with the, head quarter in Karachi,
through Internet or Intranet. This will make the functions and decision making of the
management easier and convenient.
5. Interest on Overdraft:
Overdraft is a short-term credit facility provided by the bank to its trustworthy customers free
of interest. Only bank commission is charge small amount of mark-up on the overdraft,
which will help the bank to improve its revenue position.
6. Needs to be Flexible in credit Policy
As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces the
investment opportunities. Also loans should be given to the small businessmen and the
agriculture sector at the low markup rate. It should adopt flexible credit policy while giving
credit to the agriculture sector.
7. Technological Advancement
I would like to suggest that at least all the Main branches of NBP should be fully
computerized in order to expedite the dealing process among bankers and their customers.
Every department should be provided a computer with adequate training (especially
Advances, Deposits and Foreign Exchange departments).Daily records should be entered
directly into these computers, (instead entering the overall daily transactions

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after the banking hours). It will not only reduce transaction time, will increase accuracy but
will also be efficient as well. Not only it will be economical but will also reduce the extra
burden of work of the bank. It will also help in reducing the use of excessive paper work.
8. Managerial Leadership
In the analysis, we have discussed the difficulties of the assistant in taking any initiative;
therefore it is recommended that the assistants should be given special training to make them
ready for the leadership.
9. Avoiding Bad Debts
Great care should be taken, while extending the loan. Loans should be awarded against
reasonable securities, where market value should be equal to the loan granted. Policies
should be crafted in a way to ensure that no loan is extended on political pressure. SBP
regulation for loan approval should be strictly followed. According to which the current
ration of borrower’s business must be 1:1 and the debt to equity ratio should be 60:40, means
the liquidity position of business should be healthy.
10. Delegation of authority
Employee of the bank should be given a task and authority and they should be asked for their
responsibility.
11. Changes in policies
There should not be any abrupt policies change by the upper management, as this practice
hurts the customer confidences in the bank. Government should make long-term policies.
12. Need for Qualified Staff
Required qualified staff should be provided to branch in order to improve the functioning of
the branch. Especially a telephone operator should be appointed.

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Bibliography

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Avashti, Shariran, (1983), Public Administration; sixth Ed, New York: MC Graw Hill Book
Company.
Asrar, H. siddique, (1983), Practice and law of banking in Pakistan; 3rd Ed, Royal Book Co.
Karachi.
Chhabra, T.N (1985), Principles and practice of management; Delhi, D.R printing services.
Chruder Sherman, (1983) managing human resources; 7th Ed, South Western pub. Co. Dallas,
n.d.
Dewitt, K.K (1984), modern economic theory; 3rd Ed, Bombary: move publishing company.
Daryl R. Conner, (1986), managing organizational change dangers and opportunities report,
Principles of personnel management; McGraw Hill Co. Tokyo.
Fred Luthens, (1985), organizational behavior; Ed, N. r McGraw Hill Co.
Grant smith, “personnel administration and industrial relations,” 3rd edition, Lung King t tong
co.ltd Hong Kong, 1984,
Greenly, Gorden, E. (1989), strategic management; UK McGraw Hill Book Company.
Kennedy, Ralph dale, (1973) and financial statement analysis amnd Interpretation; 6th edition,
Homewood; Richard D. Irwin.
King, David, (1987), Banking and Money; London; Edward Arnold press.
Lusk, Edward J. (1979), financial and management control, A Health care perspective; USA,
Aspen System Corporation.

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CHAPTER # 1

Purpose of the Study

The main purposes of the study in hand are

• Together relevant information to compile internship report on National Bank of

• To work practically in an organization.

• To develop interpersonal communication.

1.2 Scope of Study

Internship Report on NBP, Mair pur village branch ATD 1470 1

1.3 Objectives of the Study

 Discuss thorough study of National Bank of Pakistan.

1.4 Limitation of the Study

Internship Report on NBP, Mair pur village branch ATD 1470 2

EVOLUTION OF BANKS IN PAKISTAN

2.3 Banking Growth in Pakistan

Internship Report on NBP, Mair pur village branch ATD 1470 4

Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in

Internship Report on NBP, Mair pur village branch ATD 1470 5

2.4 Banking Reforms 1972

Internship Report on NBP, Mair pur village branch ATD 1470 7

2.5 Nationalization of Banks (1974) In Pakistan

Internship Report on NBP, Mair pur village branch ATD 1470 9

National banks of Pakistan

Habib bank limited

Habib bank (overseas) limited

United bank limited

Muslim commercial bank limited

Commerce bank limited

Standard bank limited

Australia bank limited

Bank of Bahawalpur limited

Premium bank limited

Pak Bank limited

Sarhad bank limited

Lahore commercial limited

Punjab provincial co-operative bank limited

National bank limited

Habib bank limited

Internship Report on NBP, Mair pur village branch ATD 1470 10

Muslim commercial bank limited

Allied bank of Pakistan limited

Internship Report on NBP, Mair pur village branch ATD 1470 11

Different financial schemes introduced in the Islamization process are:

♦ Hire Purchase Financing.

♦ Specific Purpose Modaraba.

B: Dis-investments and Deregulation of Banking – 1991

Internship Report on NBP, Mair pur village branch ATD 1470 12

2.6 HISTORY OF NBP:

i) Deposits held by NBP constituted about 3.1% of total deposits of all

Pakistani Banks in 1949, which rose to 38% in 1952.

Internship Report on NBP, Mair pur village branch ATD 1470 13

Internship Report on NBP, Mair pur village branch ATD 1470 14

Chief Executive Officer

Senior Executive Vice President

Executive Vice President

Senior Vice President

Assistant Vice President

Officer Group I Officer Group II Officer Group III

Internship Report on NBP, Mair pur village branch ATD 1470 15

1.1.10 Mana 1.1.1.1 Operation

2.7 MISSION STATEMENT

2.8 GOALS AND OBJICTIVES

GOALS AND OBJICTIVES OF NBP

Internship Report on NBP, Mair pur village branch ATD 1470 16