CHAPTER NO: 1

INTRODUCTION

1.1 HISTORICAL BACKGROUND OF BANKING IN PAKISTAN.

According to money and banking by Prof. Muzzafar Hussain Mathalvi book, the work
“Bank” is derived from the Italian word “Bancherii”, the pay table used in the Italian
Business Houses. Other attaches it to German word “Bank”, a heap or a mound, which
Italian took over as “Banco” to describe accumulation of money or stock. The fact is
that origin of banking which occurred in the 12th century after the long period of
dormancy following the fall of Tome. The bank of Venice established in the year of
1157 and is perhaps the first public banking institution of medieval times. The bank of
Barcelona followed this in 1401; the bank of Genoa in 1407 and as centers of
commerce shifted to the north bank of Amsterdam was formed eventually in 1609.

World renowned the Banker magazine has rated National Bank of Pakistan as one of
the top 10 banks in the world in terms of best profit on capital. On the basis of overall
financial performance NBP has been included in the top 1000 banks of the world s

In England development of bank took place in the period of Elizabeth in the year of
1640 and The Bank of England was established in 1694 under special act of the
parliament.

The reserve Bank of India was setup in 1935; this was the first bank in South Asia sub-
continent. At the time of partition, the Pakistan Monetary System and Reserve Bank
decided it. Order promulgated by the governor general of undivided India on the 4th
August 1947, that the Reserve Bank of India would look after the monetary
management of the both dominions up to 30th September 1948, Eventually an
agreement between the countries was made to the effect that Pakistan would setup her
own currency authority as possible, an amendment order was issued and Pakistan soon
established her own management for issue and control the currency of the country.
The first Governor General of Pakistan Quaid-i-Azam Muhammad Ali Jinnah
performed the opening ceremony of the State Bank of Pakistan on 1st July 1948

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 The State Bank of Pakistan has a paid up capital of Rs.30 million divided into 300,000
shares of Rs.100/= each, out of this the government has contributed 51% of the total
paid up capital and the rest 49% has been subscribed by the general public
subscription and nobody can have more than 500 shares

State Bank of Pakistan is the Central Bank of Pakistan, which see or control the whole
banking system of Pakistan and making the rules and regulations of Banking in
Pakistan

In this time the banking industry is on very progressive root because of Privatization
and issuing licenses to private sector to open new banks in the country, which plays
vital role for the economy of the country, they also complete foreign banks in the
country and outside the country.

1.2 AN OVERVIEW OF NATIONAL BANK OF PAKISTAN

The National Bank of Pakistan came into existence on 20th November 1949 under the
National Bank of Pakistan Ordinance No. XIX of 1949. It is a semi public bank and
function like other commercial banks. The National Bank was nationalized, long with
other banks in January 1974. The Bank of Bahawalpur was also merged into this bank.
National Bank of Pakistan plays the role of State Bank of Pakistan in case of place
where no branch of the State Bank in the existence. The bank provides all types of
banking services to government and private sectors, the bank also handle treasury
transactions for the government of Pakistan as agent to the State Bank of Pakistan.

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

1.3 OBJECTIVES OF NATIONAL BANK OF PAKISTAN

 Growth through creation of sustainable relationships with customers.

 Prudence to guide business conduct.
 A national presence with a history of contribution to communities.
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1.3.1 NBP SHALL WORK

 Meet expectations through Market-based solutions and products.

 Reward entrepreneurial efforts.
 Create value for all stakeholders

1.3.2 NBP AIM TO BE PEOPLE WHO

 Care about relationships.

 Lead through the strength of our commitment and willingness to excel.
 Practice integrity, honesty and hard work. We believe that these are measures of true

1.3.3 NBP HAVE CONFIDENCE THAT TOMORROW WE WILL BE

 Leaders in our industry.

 An organization maintaining the trust of stakeholders.
 An innovative, creative and dynamic institution responding to the changing needs of
the internal and external environment

1.4 PURPOSE OF THE STUDY

Before going to start any project or thesis or research it is very important to know
purposes or define the objectives of the project because the objectives of the project
are pillars of the research. The objectives of the research are:

 To fulfill the partial requirement of the bachelor’s degree.

 The Research Monograph is an intensive study of the organization and to seek job
opportunity through this training.

 To get practical knowledge about the various departments of bank.

 To study the workings of different departments of the bank.

 To study the administrative and personnel policies of the management of bank.

 To see the facilities provided to customers.

1.5 RESEARCH METHODOLOGY

While concludes the research study of National Bank of Pakistan

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1.5.1 PRIMARY DATA

“Primary data are those which are collected for the first time and are always given in the
form of raw materials and are original in character”.

1. Observation

2. Visiting various departments

3. Lectures / Orientation

1.5.2 SECONDARY DATA

“Secondary data are those which have already been collected by someone and have gone
through the statistical machines”.

1. Academic Books

2. Annual Reports

3. Prospectus

4. Magazines

1.6 LIMITATIONS

In order to meet challenges the internee experienced the following problem that were faced
during the Research are as under:

 Due to secrecy of data the internee tried to collect possible information but all the relevant
information could not get.

 Time duration not sufficient.

 Staff members were unable to give extra time to internee due to their own heavy
engagements.

CHAPTER NO: 2

ORGANIZAITON STRUCTURE

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2.1 CONCEPT OF ORGANIZATION

According to management by W.A. Razzaqi, the term “Organization is treated as a dynamic

process and managerial activity which is essential for planning the utilization of company’s
resources plant and equipment, material, money and people to accomplish the various
objectives. In other sense organization is supposed to be a structure, which has certain
principles and perform certain functions. In this sense we determine what activities the
enterprise needs and what degree of specialization it can offer.

Various organizations have defined organization in different several ways; a few of their
definitions have been selected which hopefully would contribute towards a clear
understanding of the subject.

Morris E. Hurley 1964 defines an organization in two different ways; firstly he believe that
whenever two or more persons are associated in an endeavor, administrative organization
comes into play as a tool for the efficient accomplishment of the tasks that these persons
jointly undertake. If each person in a group were to try to do every thing by himself, the
possible collective action would be lost. Some understanding must be reached among the
individuals as to the rights and responsibilities of each. Secondly an organization is the
administrative process of determining what activities are necessary for the achievement of an
objective or plan of dividing and grouping the work into individuals’ job and of defining
established relationships among persons performing these tasks.

2.2 CONCEPT OF MANAGEMENT

According to management by W.A. Razzaqi, management is an activity, process, composed

of some basic functions for getting the objectives of any enterprise accomplished through the
efforts of its personal. Whenever and wherever objectives are to be achieved essential for
directing and unifying the group efforts towards a common purposed. Management is required
not only for business organizations but also for educational, religious, charitable, social
security, welfare health case and other non-business institutions, further the greater and the
most comprehensive of our social organization, viz. the government of all types need
management as much as other require, perhaps more than all other social organizations.

According to James Stone, 1982, “Management is the art of getting work done through the
people and is science of administration”.

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2.3 ORGANIZATIONAL STRUCTURE OF NBP
The scheme or by which the various divisions, departments, sections, operating units and
individual jobs of a bank co-ordinate and sub-ordinate, authority defined functions described
and responsibilities located for each officer and employee, to the end that banking business
may be properly controlled and made to operate smoothly. Its stockholders own a bank, but
this body is too large and unwisely activity to manage its affairs. Control of the police and
management of the bank is therefore vested in the board of directors, elected by the
stockholders for usually. This body is responsible to the stockholders for successful
management and to the government banking laws. The actual administration of the bank’s
operation, however, depends upon the officers who are appointed by the directors.

The officers usually consist of a president who in small bank may be merely a figurehead,
who is primarily interested in another line of business.

One or more vice presidents, a cashier, who is usually equivalent to the general manager and
whose duties are never delegated.

2.4 COMPETITORS OF NBP

 The competitors of the National Bank of Pakistan are as follows:

 Askari Bank
 Habib Bank Limited
 United Bank Limited
 First Woman Bank
 Muslim Commercial Bank
 Bank of Punjab
 Dubai Islamic Bank
 Meezan Bank Limited
 Al-Barka Bank Limited
 Silk Bank
 Bank Al –Falah
 Standard Chartered Ban

2.5 ORGANIZATIONAL CHART OF NBP

(Branch Office)

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 Manager

Manager of Banking

Advance Incharge

Incharge of F.E

CD Incharge

Vice President

Incharge of Computer Section

Officer

Cashier

Messenger

Guard

CHAPTER NO 03

DEPARTMENET OF NATONAL BANK OF PAKISTAN

3.1 DEPARTMENTS
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The NBP Fatima Jinnah Branch is counted in good branches throughout the Pakistan and
provides good facilities and services to the old and new customers because all employees of
the bank have faith to that “The customer is a King” (a customer is not an interruption to our
work he is purpose of it).

The branch is doing a good business in banking industry and achieves all targets of the
organization, and in future provides more facilities and services to the customers

The NBP Fatima Jinnah Branch has the following departments:

1. Deposit Department
2. Account Opening Department
3. Bills Remittance Department
4. Cash Department
5. Clearing Department
6. Credit Department
7. Government Department
8. Foreign exchange

All above mentioned departments are dependent on customers we must say that without
customer there is no business

3.2 DEPARTMENTS AND THEIR FUNCTIONS

According to encyclopedia America, define operation as “The quantitative study of an
organization in action carried out to find ways in which it’s functioning could be improved”.

(Google search)

3.2.1 Deposit Department

The following types of ledgers are concerned with deposit department:

 Saving Ledgers

 Current Ledgers

 Profit and Loss Sharing Ledgers

 Fixed Deposit Register

 Cash Book

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 Daily Profit and Loss Summary Book

 Voucher Register

 CATEGORIES OF DEPOSIT:-

There are two broad categories of deposits. These are

TIME DEPOSIT DEMAND DEPOSIT

 These are payable on maturity  These are not payable of maturity

 Receive profit with respect to time but on demand
period  No profit is given on demand
 All TDRs, saving accounts and deposits
other profit bearing accounts are  They include current accounts and
included. call deposits etc.

3.2.2 Account Opening Department

This department is related to open new accounts of the customers and infect opening of an
account is the establishment of the relationship between the bank and customer. Branches
Following are the types of accounts open in the NBP;

3.3 TYPES OF ACCOUNTS

3.3.1 CURRENT ACCOUNT

Here are some features of the current account offered at NBP

 This account can be opened in foreign currencies also.

 Minimum amount for opening this account is Rs.500

 Any person can open the account with the bank

 According to inter banks agreement interest is not paid on current account.

 Bank act as custodian of money

 Over draft facility is provided to the customers

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 Customer can withdraw money through cheque supplied by bank

 No limitation to the number of withdrawal

 No zakat is deducted on current account.

3.3.2 SAVING ACCOUNT:

This type of account is designed to encourage the saving habit of the customer and lead to a
long-term banking or investment relationship.

NBP offered the two types of saving accounts

a. Profit and Loss Sharing/Saving Account (PLS Acc)

b. National Income Daily Account (NIDA account)

3.3.3 PROFIT AND LOSS SHARING ACCOUNT:

This account helps the customer to earn a handsome amount on their saving. Any one or more
individuals or partners can open a PLS saving account with the Bank.

 Profit & Loss Sharing Saving Bank Account.

 Minimum account opening requirement of Rs.5, 000 only.

 No restriction on number of withdrawals and number of deposits.

 Profit on PLS saving account is calculated on minimum monthly balance basis.

 Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.

 Profit on PLS Saving Account is calculated on minimum monthly basis and is paid
half yearly basis announced by the Head Office after June 30 and December 31.

B. National Income Daily Account (NIDA account)

 This scheme did not gain popularity so NBP close this scheme.

3.3.4 FOREIGN CURRENCY ACCOUNT

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These are the accounts in US $, Pound, Euro, yen etc. of different account holders and
either saving or current accounts. The transactions in these accounts are translated into
Pak. Rupees at the exchange rate prevailing on the date of transaction.

3.4 BILLS AND REMITANCE:

Remittance means transfer money from one place to another place. NBP provides

The following are the main functions of this department. Remittance can take place in three
different ways

   Demand Draft

   Mail Transf

 Telegraphic Transfer

3.5 Cash Department

The most important section in the bank is Cash Department..

The following books are maintained in the cash department:-

 Receiving Cashier Books

 Paying Cashier Book

 Scroll Books

 Cash Balance Book

3.6 Clearing Department

Following are types of cheques collected for clearing:

   Clearing cheques

   Transfer cheques

   Collection cheques

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 The basic function of clearing department is to provide services to customers in collection of
their cheques of other banks, whether they are in city or outside the city.

3.7 TYPES OF CHEQUES COLLECTED BY THE CLEARING

DEPARTMENT;

a) TRANSFER CHEQUES :

Transfer cheques are those cheques, which are collected and paid by the same branch of bank.

TYPES OF CLEARING:

i. LOCAL CLEARING:

All cheques and other Negotiable Instruments payable locally is presented through the local
clearing system. NIFT provides the local and intercity services. Cheques deposited at branch
1counters presented for clearing on the same day.

ii. SHORT CREDIT SERVICES(SC):

For small cities where there are no NIFT services then branch bank clears the cheque either
through mail/ TCS or bank can own provide service and charge commission for providing
services. Bank give credit to the customer's account on the day when clearing settlement takes
place.

iii. LOCAL SHORT CREDIT (LSC):

This arrangement has been set up if the customer wants amount in his account on urgent basis.
Bank then provide service to its customer for those in house cheques when presented and
draw on NBP. Both can be of different branches of the bank but must be located within the
city.

iv. INTER CITY:

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NIFT is responsible for the clearance of the outstation cheques. Cheques drawn on bank's
own branches at outstation centers or outstation other banks both are collected using the inter
city arrangements maintain by NIFT network. Its offices are present in all the large cities of
Pakistan.

3.8 PROCESS OF CLEARING

Clearing department deals with the two type of the clearance;

These are stated below:

1) - Outward clearance

2) - Inward clearance

NEXT DAY PROCESS

FOLLOWING REQUIREMENT FULFILL

     Check all the stamp required

     Check balance of particular account

     Check the Drawer ‘signature

     Check the cheque post dated or out dated

     Check amount in words and figures

     Advice received from issuing Branch

 Payment stopped by the drawer

3.9 Credit Department;

Credit Department is associated with other three departments related to financing i.e.

 Trade Finance

 Corporate Banking

Receives all the provincial and central receipts. NBP makes payments to following:

 Retired officers of Armed forces

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 Civilian

 Defense civilian pensioners

Documents required for the pension payments:

 Pension payment order

 No and date of NIC

 Pension book

 Photographs of the pensioner

 Two specimen signature, thumb and finger impression

3.10 GOVERNMENT RECEIPTS

Government receipts means collection of the following

   Income tax

   Property tax

   Sales tax

   Traffic challans

   Court fine

   Old age receipts

CHAPTER NO. 04

SERVICES AND FACILITIES PROVIDED BY

NATIONAL BANK OF PAKISTAN

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4.1 INTRODUCTION
The National Bank is a complete service based bank in Pakistan forward looking
professionally managed bank providing comprehensive packages of service to its corporate,
commercial and individual clients. Including mentioned below:-

a. MIS (MONTHLY INCOME SCHEME)

Monthly Income Schemes was by far the best investment in terms of security and
professionally, not only for individual investors wanting regular monthly income but also for
institutions, companies and other corporate sector organizations looking for basic free
revenues for investment guaranteed by the Government of Pakistan. Monthly Income Scheme
provided the highest return on investment.

b. FOREIGN CURRENCY ACCOUNT

Foreign currency accounts give favorable rates of interest with the facility of worldwide
transfer.

Salient Features

NBP offers opening of foreign currency accounts for all Pakistani’s and foreign nationals with
the highest profit rates in Pakistan. All branches of bank in Pakistan are authorized to open the
foreign currency accounts for services, foreign currency accounts can be opened in US dollar,
Pound Sterling, German Mark and Japanese Yen.

4.2 NO ZAKAT, NO TAX DEDUCTION

No restrictions on transfers and withdrawals to anywhere in the world. Deposits in the form of
remittance in foreign currencies, travelers Cheques, FCBCs and even foreign currency notes
on Bank’s counters

4.3 NBP ATM SERVICES FOR CONVENIENCE

 Cash withdrawal according to your cycle limit.

 Transfer of funds between PLS saving account and current account of the same
customer through the same ATM card

 Account balance inquiry.

 Instant mini statements of accounts listing the last 15 transactions in account. Request
for a new cheque book, which might be collected by the customer from the branch.
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4.4 NEW SERVICES OF NATIONAL BANK OF PAKISTAN
The National Bank of Pakistan is the first Pakistani Bank to access the world capital Market,
opening the doors of cost effective, short–term foreign currency funding to selective clients;
NBP has obtained world recognition as the dependable and trusted Bank of Region.

4.5 TRAVELERS CHEQUES FEATURES

 Acceptance through the company

 As good as cash at all Branches of NBP.

 No validity restrictions or services charges.

 Available in denominations of Rs.5,000, Rs.10,000 and Rs.50,000.

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 CHAPTER NO. 05

SCHEMES OF NATIONAL BANK OF PAKISTAN

5.1 VARIOUS ATTRACTIVE SCHEMES OF NBP

Services are in use to provide benefits to the customers and to satisfy the customer needs and
demands are as follows.

 SWIFT SYSTEM
 DEMAND DRAFTSGJ
 LETTERS OF CREDIT
 TRAVELER'S CHEQUES
 PAY ORDER
 MAIL TRANSFERS
 FOREIGN REMITTANCES
 COMMERCIAL FINANCE
 TRADE FINANCE OTHER BUSINESS LOANS
 AGRICULTURAL FINANCE
 CORPORATE FINANCE
 INTERNATIONAL BANKING

5.1.1 SWIFT SYSTEM (SOCIETY FOR WORLDWIDE INTER BANK

FINANCIAL TELECOMMUNICATION)

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.  All NBP overseas branches and overseas
correspondents are drawing remittances through SWIFT.   

Using the NBP network of branches, you can safely and speedily transfer money for our
business and personal needs.

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5.1.2 DEMAND DRAFTS

If 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.

5.1.3 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 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.

5.1.4 TRAVELER'S CHEQUES

Negotiability: Pak Rupees Traveler’s Cheques are a negotiable instrument

Validity:  There is no restriction on the period of validity 

Availability: At branches of NBP all over the country 

Encashment:    At all branches of NBP 

Limitation:  No limit on purchase 

Safety:   NBP Traveler’s Cheques are the safest way to carry our money 

5.1.5 PAY ORDER

NBP provides another reason to transfer your money using our facilities. pay orders are a
secure and easy way to move your money from one place to another.  And, as usual, our
charges for this service are extremely competitive.

5.1.6 MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service.  And we also offer
the most competitive rates in the market.

5.1.7 FOREIGN REMITTANCES

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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

New Features:

 The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at overseas branches of the Bank. 

 NBP is providing home remittance services without any charges.

 Strict monitoring of the system is done to ensure the highest possible security.

 Special courier services are hired for expeditious delivery of home remittances to the
beneficiaries

5.2 CURRENT ACCOUNT SCHEMES

Current account is usually maintained by the larger organizations, corporations, private and
public concerns.

Objectives

 On current account bank do not pay any profit.

 The depositor may withdraw current deposit at any date.

 People can deposit their every day’s sharpens cash including Cheques from others in
current account.

5.3 PLS SAVING SCHEME

PLS Saving account receive massy from depositors without any benefit to the trustee. This
account is suitable for small depositors.

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Objectives

 Depositor is not allowed to withdraw money more than one or twice a week.

 It is opened with minimum cash of Rs.1000.

5.4 CALL DEPOSIT SCHEME

This scheme is zero cost deposit mobilization scheme and comes in the range of deposit
scheme.

Objectives

 Call Deposit is mostly issued for the purpose of security for acquiring the contracts.

5.5 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, we 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

NBP offers:

 The lowest rates on exports and other international banking products

 Access to different local commercial banks in international banking

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 CHAPTER NO. 07

CONCLUSIONS & SUGGESTIONS

6. 1 CONCLUSIONS
 It seems NBP is advertising and introducing its new schemes & policies in English
Language.

 The profit on investment in PLS accounts and fixed deposits accounts seem to be less
in comparison with other financial institutions.

 It seems to appear that traditional method still in practice in NBP.

 An over burden of employees observed during Research Monograph.

 Branch network is very slow it takes time to process the transaction.

6.2 SUGGESTIONS
On the basis of conclusions the internee draws as the suggestions as follows: -

 It is suggested that NBP needs to advertise their new services and policies in other
local languages.

 The profit on investment in PLS accounts and fixed deposits accounts needs to be
increase as compare to market.

 It may be suggested that it may be remarkable training for staff members.

 Every body may be given its job description according to their job so that the burden
of work may be decreased.

 Branch network should be made efficient by using latest technologies.

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7.3 BIBLIOGRAPHY
1. Asrar II. Siddiqui

“Practice and Law of Banking in Pakistan”

1st Edition 1975

2. Professor Muzzafar Hussain Malathvi

“Money and Banking”

3. W. A. Razzaqi

“New Management”

6th Edition 1988

4. Annual Report

5. Khwaja Amjad Saeed

“Pakistan Economy”

Edition 2000

6. NBP Circular

7. NBP Monthly Magazine

8. Google Search

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