Internship Report on NBP, Civil line Branch, Sargodha, (2010

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INTRODUCTION TO STUDY
1.1 INTRODUCTION

As a part of requirement by University, the students of BS-Economics are required to under go 3 to 4 months of internship in a well recognized organization where they can learn to survive in an organizational environment and can practice their previous knowledge as well. This internship is related to National Bank of Pakistan (NBP), Civil Line Branch Sargodha. Since the inception, NBP is improving continuously and has become now the largest commercial bank in Pakistan. PURPOSE OF INTERNSHIP The main purpose of the exercise is to develop following skills in students: • • • To develop professional attitude in students. To develop interpersonal communication. Practice of knowledge.

These skills are helpful for a student in presenting himself in market in a dynamic and efficient manner. SCOPE OF INTERNSHIP As an internee the basic emphasis of my efforts was to understand the basic procedure of banking. These procedures were concerning to Cheque collection Department, Clearing Department, Government section of NBP, Utility Bills Collection Department, Tax Collection Department (FBR), Remittance Department, Advance Salary Department, SME and Agriculture loaning Department, Foreign Exchange Department, Account opening Department and other general procedures.
Internship Report on NBP, Civil line Branch, Sargodha, (2010), 2

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LIMITATIONS IN WORKING AND REPORTING

The study may not reveal all the edges of banking system because being an internee some restrictions were present in working in the branch as well as in reporting the work in internship report. The first restriction was that an internee is not allowed to use the Electronic banking System (EBS, latest software that contains the details of all finance of the bank). Secondly, the internees are required to fill secrecy bond before joining that bounds the internee to express all the knowledge he/she gained from the bank due to Bank secrecy. 1.5 BENEFIT OF THE STUDY

The study is very useful for the students of Economics, Accounting and Finance and Marketing, They utilize the study to understand the basic procedure of organizations specifically of Banks. The students who are interested to choose banking as career will be benefited a lot because the study will help them in understanding the Basic Banking System. 1.6

DATA COLLECTION

The major part of data used in the study is primary data, that I gained from my own observation and from interviews of staff members. Secondary data is also used in the study. 1.6.1 PRIMARY DATA:

Primary data includes; Personal observation and Interviews of The Staff Members of the branch.

Internship Report on NBP, Civil line Branch, Sargodha, (2010),

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Internship Report on NBP.6.2 SECONDARY DATA: Secondary data is depicted from Manuals. (2010).1. Sargodha. Civil line Branch. Journals. magazines. Annual Reports from the web site of NBP. 4 .

which means ‘joint stock fund’. It accepts deposits from individuals. IN SIMPLE WORDS: A bank is a financial institution. Civil line Branch. 5 . Some of the author’s opinion that this word is derived from the word ‘Bancus’ or Banque’. Some of the authors are of opinion that the word ‘Bank’ is derived from the German word back. (2010). and when the business failed. Incidentally the word ‘Bankrupt’s said to have evolved from this practice. firms. and companies at a lower rate of interest and gives at a higher rate of interest to those who apply for loan. 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. which means a bench.1 INTRODUCTION TO BANK There are different opinions that how the word ‘Bank’ originated.INTRODUCTION TO BANK 2. Sargodha. Later on when the German occupied major part of the Italy the word ‘Back’ was italicized into ‘Bank’. the people destroyed the ‘bench’. which deals with money and credit. The difference between the terms at which it borrows and those at which it lends from the source of its profit Internship Report on NBP.

1 INDUSTRIAL SECTOR Pakistan had practically no industries except a few textile mills and only produced food grains and agricultural raw materials. they transferred their fund to India in safe places. which now constitute India. receipts and payments work closed down most of its branches thus blocking the funds needed most by the government.2 LACK OF BANKING FACILITIES A number of banks closed their branches with the result that only 81 branches remained open on 30th June 1948 out of 487 in 1947.2. Civil line Branch.2. 2. When Hindu capitalists become sure of the division of the sub continent.2. which were prevailing at that time 2. Sargodha. At the time of independence in 1947 Pakistan’s Commercial banking facilities were almost jammed according to a plan. which was conducting government. Imperial Bank of India. the entire banking system was almost in the hands of Non-Muslims. The following lines will give us a fair view of the situations. (2010). most of the industries were situated in the areas. 6 . As their head offices were in India and most of their Hindu staff fled to India.2 NEED AND EVALUTION OF BANKING SYTEM IN PAKISTAN Before partition of the subcontinent. Internship Report on NBP. which also caused a reduction in the bank deposits. There was also a mass scale migration of Non-Muslims from Pakistan to India.

Accordingly National Bank of Pakistan was formed in 1949.3 HABIB BANK LIMITED The country being in infancy.2.B.125 crore from general circulation and sent these for recovery to Reserve Bank of India.It was asked to open more branches at new places. to Karachi on 7th August 1947.2. Imperial Bank of India. 7 . As the Habib Bank was also new in the newly born country .5 WITH DRAWL OF THE INDIAN CURRENCY It withdrew Indian currency notes of Rs. which opened numerous branches. Accordingly State Bank of Pakistan was inaugurated by Quaid-e-Azam Muhammad Ali Jinnah on 1st July 1948. needed most of the general commercial banking and credit facilities. Sargodha. And this need was a little bit satisfied with the transferring of the head office of the H.2. Civil line Branch. (2010).This bank lost no time in meeting the national requirement of banking currency and took following remedial measures:Requested Government to start a new bank for nation wide service. on the recommendations of an expert committee it was decided to establish as early as possible a Central Bank to control the banking and currency in Pakistan. 2.this bank played a great role in the next many years of the economic development of Pakistan.2. receipts and payments work closed down most of its branches thus blocking the funds needed most by the government.4 FORMATION OF THE STATE BANK OF PAKISTAN: In view of the above-mentioned circumstances and in order to rehabilitate the banking in Pakistan without further delay. It also took over government agency work from Imperial Bank of India in 1952. Internship Report on NBP.L. 2. which was conducting government.

8 . Muslim Commercial Bank Limited 4. Sargodha. 2.7 PICIC: Pakistan Industrial Credit and Investment Corporation (PICIC).6 AGRICULTURE DEVELOPMENT BANK: Agricultural Development Bank was set up to finance agriculture production in order to overcome food shortage.2. was acted to finance industrial projects.2. The following banks and other financial institutions were also formed with the passage of time. Standard Bank Limited 3. (2010).2.In order to help the growth of foreign trade foreign exchange department was setup in State Bank of Pakistan. 1. The following banks were also opened: 2. 2. Banking Companies (control) Act 1949 empowering State Bank of Pakistan was passed. Australia Bank Limited Internship Report on NBP. Commerce Bank Limited 2.8 UBL: United Bank Limited was established to meet the increasing demand for funds consequent upon the commodity market having become firm. Civil line Branch.

” MISSION STATEMENT OF NBP: NBP will aspire to the values that make NBP truly the nation’s Bank. 9 . Sargodha. (2010).1. technologically oriented products and services offered through its nation wide branches.2 ESTABLISHMENT: National Bank of Pakistan was established under the National Bank of Pakistan ordinance 1949 and it came into existence on November 20. 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. determined to set higher standards of achievements. VISION STATEMENT OF NBP: “To be recognized as a leader and a brand synonymous with trust.Its main aim was to provide all types of banking services to the government and private sector. 3. international best practices and social responsibility.3. Civil line Branch. by:     Institutionalizing a merit performance culture Creating a distinctive brand identity by providing the highest standard of services Adopting the best international management practices Maximizing stakeholders value Internship Report on NBP. The bank also handles treasury transactions for the Govt.1 INTRODUCTION TO NATIONAL BANK OF PAKISTAN LIMITED: National Bank of Pakistan maintains its position as Pakistan's premier bank. highest standard of services quality. of Pakistan as agent to State Bank of Pakistan. 1949.

(2010). Sargodha. Discharging our responsibilities as a good corporate citizen of Pakistan and in country where we operate GOALS: To enhance the profitability and maximization of NBO share through increasing leverages of existing customer base and diversified range of products. Internship Report on NBP. Civil line Branch. 10 .

Civil line Branch. 11 .3. Sargodha.1.1 BOARD OF DIRECTORS Internship Report on NBP.4. (2010).

Sargodha. Civil line Branch. 12 . (2010).(Source Annual report 2009) Internship Report on NBP.

Civil line Branch.5 SENIOR MANAGEMENT Internship Report on NBP. Sargodha. 13 . (2010).3.1.

NBP have a centralized type of management because the top management takes all the decisions. actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources.Management is a distinct process consisting of activities of planning. (2010).com. The management has two types. Internship Report on NBP. Centralized Management tends to concentrate decision making at the top of the Organization.pk) NET WORK OF BRANCHES: NBP has a vast network of 1265 branches across the country. Decentralized. Decentralized disperses decision-making and authority throughout and further down the organizational hierarchy. (Source www. Civil line Branch. Sargodha. organizing.nbp. 2. Centralized. 14 . 1.

15 .3.1. (2010).7 Branches Network • • • • • NBP Domestic Branches Online Branches SWIFT Branches NBP Overseas Branches Network ATM Finder Internship Report on NBP. Civil line Branch.1. Sargodha.6 In Pakistan it has 29 regional offices: 3.

16 .2. Civil line Branch.1 ISLAMIC BANKING NETWORK: Internship Report on NBP. 3.2 NBP ISLAMIC BANKING: NBP is proud to expand its range of products and services to include Shariah Compliant Islamic Banking products. the best combination of returns and future growth” ISLAMIC BANKING VISION To set standards of best practices and performance through efficient asset allocation. ISLAMIC BANKING MISSION “To become a leading player in the growing field of Islamic Finance in Pakistan and abroad. (2010). Sargodha. now available at our dedicated Islamic Banking Branches at Karachi. and offer / develop products based on the true spirit of Islamic finance. Lahore and Peshawar.3. providing depositors and shareholders in a truly SHARIAH COMPLIANT way.

17 . Civil line Branch. Sargodha.The branch I chose: I chose National Bank Civil line Branch Sargodha for my internship because is main branch of the region and there was a lot of things to learn there. (2010). Internship Report on NBP.

Civil line Branch. 18 . (2010). Sargodha.Legal identity of the branch: Internship Report on NBP.

19 . Sargodha. Civil line Branch. (2010).Internship Report on NBP.

Sargodha. Internship Report on NBP.Sargodha. (2010). Civil line Branch. 20 .HIERARCHY OF NBP CIVIL LINE BRANCH SARGODHA.

21 . (2010). Civil line Branch. it performs a variety of functions. Internship Report on NBP. Sargodha.1 FUNCTIONS OF NBP Since NBP is a commercial bank.4.

(2010). NBP pays practically no interest on current deposits. it pays to holder of the bill an amount equal to the face value after deducting interest at the Internship Report on NBP. Sargodha. One can deposit and draw money easily. DISCOUNTING BILLS OF EXCHANGE Discounting of bill is practically speaking lending for exchange at their market rate i. The functions performed by NBP are: ACCEPTING DEPOSITS This function is important because banks largely depend on the funds deposited with them by its customers. Civil line Branch.1000/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.5000/-. In this case the rates of profit will be different depending upon the time period. advancing loans and discounting of exchange. Its other major functions include receiving deposits. PLS SAVING DEPOSIT Profit and loss sharing deposits (PLS) are also called checking accounts. 22 . NBP is engaged in financing international trade. In NBP current account can be opened with a minimum amount of Rs.Like other commercial banks. Businessmen usually open current accounts. Deposits are of many types: CURRENT DEPOSITS Current deposits are also called demand liability on current deposits. PLS account can be opened with a minimum amount of Rs.e. Profit on PLS is calculated every month but paid after six months.

AGENCY SERVICE NBP also provides best and unique service to its valued customers. bills and promissory notes etc. 23 . Sargodha. Civil line Branch. This bill has to be mature. (2010). This is the common way used for keeping a part of assets of the bank in a liquid form. NBP provide the following agency services to the customers: COLLECTION OF DIVIDENDS As NBP deals with the purchase and sale of various types of securities. National bank of Pakistan acts as an agent for its customers.e. therefore NBP also provide dividend or interest earned on share or bonds or invested money. electricity.current market rate for the period. For this purpose it also provides evening banking services LOCKERS FACILITY Internship Report on NBP. COLLECTION OF CHEQUES In the collection and payment of Cheques. GENERAL UTILITY SERVICES: Utilities provided by NBP are as follows: CLEARANCE OF UTILITY BILLS NBP provides the service of clearing the utility bills i. gas and telephone bills of its customers. ACTING AS AN AGENT NBP also acts as an agent correspondent or representative for its customer at home or abroad.

SUPPLY OF INFORMATION NBP provides operational and advisory service for foreign exchange accounts/activities. The charges of different size of lockers are different. ACTS AS A REFEREE NBP provides useful services to its customers by acting as a referee to their credit worthiness.  Agents of the SBP handling Treasury Functions.  Largest contribution towards Government and Semi-Government requirements.  Highest rates of return to attract the savings. UNMATCHED BANKING FACILITIES  Deposit security. (2010). receipts of Taxes & other Revenues.National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in it. Guaranteed by Government of Pakistan. Sargodha.  Hajj arrangements.  Sale and encashment of prize Bonds.  Lowest rates on exports and other borrowings. Internship Report on NBP.  Utility Bills collections. Civil line Branch. 24 .  Sale and encashment of Defense Savings and Special Savings Certificates.  Handling of salaries & pensions of federal/provincial/defense personnel.

25 . Safe Deposit Lockers for customers. Sargodha. Civil line Branch. (2010). Internship Report on NBP.

000/. Sargodha. Civil line Branch. Pay Order and NBP Online Aasan Banking* Free Cheque Book / NBP Cash Card (ATM + Debit) Profit paid every month as follows: Period Profit Rates** 1st year 7.001 and a maximum balance of Rs.to Rs. 20.000 Investment period is 5 years Free Demand Draft. 5.50% 4th year 10.50% 2nd year 8.4.000* Internship Report on NBP. 300.000. (2010).50% 5th year 11% Financing facility available upto 90% of the deposit value Premature encashment will attract penalties Zakat and withholding tax will be deducted as per rules Minimum saving balance of Rs.50% 3rd year 9. 20.2 RETAIL PRODUCTS OF NBP Amount of investement required from Rs. 26 .

visit NBP branches nationwide or call 080080080 from 8:30 am to 10:00 pm or log on to www. 27 . if you are aged between 18 and 45 years. President's Rozgar Scheme.Free NBP Cash Card (ATM + Debit) Two debit withdrawals allowed in a month and no limit on number of deposit transactions Profit calculated monthly and paid on half yearly basis †Profit *Certain **Premature encashment rates conditions will result in are lower rates of expected apply return ***Expected rates are for the given year For further details and application forms.pk.nbp. (2010). Sargodha. Added convenience of NBP Online Aasan Banking available in 30 cities. Civil line Branch.com. you could be eligible for easy financing for self employment in the categories below: NBP Karobar Utility Store Internship Report on NBP.

(2010).NBP Karobar Mobile Utility Store NBP Karobar Mobile General Store NBP Karobar Transport NBP Karobar PCO NBP Karobar Tele-Centre Home Purchase Home Construction Home Renovation Purchase of Land + Construction Balance Transfer Facility (BTF) Financing Amount Upto 35 Million Internship Report on NBP. Civil line Branch. Sargodha. 28 .

Sargodha. This was only possible due to its swift growth and remarkable loan disbursement of over 138 billion. The product is offered countrywide Internship Report on NBP. (2010). Its hassle free acquisition with no prior formalities and easy availability in a short turn around time are attributed as the most distinguishing features of the product. or related organization employees National Bank of Pakistan (NBP) NBP Advance Salary .Financing Period Debt to Equity 3 to 20 Years 85:15 (Maximum) Financing Amount Financing Period Debt to Equity Upto 35 Million 3 to 20 Years 85:15 (Maximum) Financing Amount Financing Period Debt to Equity Upto 35 Million 3 to 20 Years 85:15 (Maximum) Take 20 advance salaries (currently for NBP account holders of govt. is maintaining its inimitability ever since it was launched. the leading personal loan product of the country. You can avail up to 20 net take home salaries with easy repayment installments. 29 . Civil line Branch.

Advantages • • • • • You won't need to carry a lot of cash with you every time you go out.) Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs. 30 . Account Information on tips (like: Mini Statement. which lets you pay directly from your account as an alternative payment method to cash. The NBP CashCard holders are able to transact at any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP. Utility Bill Payment etc. No Card Issuance Fee for first 12 Months • Internship Report on NBP. Sargodha. (2010). Balance Inquiry. Secure and Safe transaction. Enable To Make Purchases From Around 4000 POS (Merchants) Countrywide including 2500+ POS in Karachi. Civil line Branch. 1-Link & M-NET ATM’s across the country. The transaction is authorized and processed by entering PIN.CashCard is an 24-hour direct access ATM/Debit card to your bank account.

31 . Sargodha. Facility of Rs.a. 10. you can meet your need for ready cash against your idle gold jewelry Rate of mark-up 13% p.000 against each 10 gms of net contents of gold No maximum limits of cash Repayment after one year Roll over facility Only gold ornaments acceptable Internship Report on NBP. Civil line Branch. (2010).Features: • • • • Comfortable and secure environment for trading NBP financing at very easy terms requiring minimum documentation Minimum turn around time No security requirement from the customer except for the customer's equity With NBP's Cash n Gold.

Under this program dairy farmer are given loans on reasonable interest rate and loans are sanctioned in less paper work.Weight and quality of gold to be determined by NBP's appointed schroffs No penalty for early repayment This program is related to dairy farmers. (2010). This program is related to farmers. Sargodha. Civil line Branch. 32 . Under this program farmer are given loans on reasonable interest rate and loans are sanctioned in less paper work. Internship Report on NBP.

(2010).per month Definitions: *provided the insured is not directly involved in these activities 5. Cyclones etc).000/. *Strikes. *Acts of Terrorism and Natural Calamities like Flood. Services are outputs of the firm.1 INFORMATION & DEPARTMENTALIZATION OF NBP INTRODUCTION This chapter presents the services and departmentalization of NBP. NBP offers the following services to the people. 5. 33 . Coverage of Rs. Sargodha. which are in intangible form. Which are the backbones of any organization to earn profit. 20/. Civil line Branch. 200. *Civil commotion.1.Product Information: Insurance Coverage In case of Accidental Death (Including death due to *Riots. Earth Quake.for Rs.2 DEMAND DRAFTS Internship Report on NBP.

NBP Letters of Credit are the best way to do your business transactions. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. There is no limit on purchase of this cheque. Using the NBP network of branches.4 LETTERS OF CREDIT NBP is committed to offering its business customers the widest range of options in the area of money transfer. With competitive rates.5 TRAVELER'S CHEQUES Traveler’s cheques are negotiable instruments. can purchase a Demand Draft from a bank branch. you can safely and speedily transfer money for our business and personal needs.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. It is one of the safest ways for carrying money.1.1. Any person whether an account holder of the bank or not. you can now purchase NBP’s Demand Drafts at very reasonable rates. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. 5. Rupee traveler’s cheque is available at all 700 branches of NBP. Sargodha. Civil line Branch. (2010). security. 5. This can be encashed in all 400 branches of NBP. which eliminates the manual application of tests that often cause delay in the payment of home remittances. Internship Report on NBP. and there is no restriction on the period of validity of the cheques. 34 . 5.1. speedy and reliable way to transfer money.If you are looking for a safe. and ease of transaction. The system has built-in features of computerized test keys.

Sargodha.1. 2.for NBP account holders on issuing one payment order. NBP charges for this service are extremely competitive. 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 5. Civil line Branch. as usual. They charges Rs 50/.7 AIL TRANSFERS Move your money safely and quickly using NBP Mail Transfer service.8 FOREIGN REMITTANCES: To facilitate its customers in the area of Home Remittances. 5.1. And charges Rs 100/. (2010).for non account holders.6 PAY ORDER NBP provides another reason to transfer your money using our facilities.for NBP non-account holders on issuing one payment order. And. It charges Rs 25/. NBP pay orders are a secure and easy way to move your money from one place to another. 35 .postage charges on issuing mail transfer. And NBP also offers the most competitive rates in the market.1.9 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 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd. and Bank Al-Jazira.5.for NBP account holders and Rs 150/. Internship Report on NBP. If some one want a duplicate of payment order they charges Rs 100/.exchange rate and RS 75/.for students on payment of fees of educational institutions.1.. It charges Rs 50/. The charges of NBP are very low all over the Pakistan. Saudi Arabia.

5. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries. Civil line Branch. • The rates of profit vary according to the slabs of deposit. 36 . (2010).12 It is a checking account and there is no limit of withdrawals. the rate fluctuates from 1. EQUITY INVESTMENTS Internship Report on NBP.75 • 5. Strict monitoring of the system is done to ensure the highest possible security. 5.11 NATIONAL INCOME DAILY ACCOUNT (NIDA) The scheme was launched in December 1995 to attract corporate customers.10 SHORT TERM INVESTMENTS NBP now offers excellent rates of profit on all its short-term investment accounts.4 to 1. On Deposits of Rs. NBP’s rates of profit are extremely attractive.1.1. Sargodha.2 million to 2.1.000 million.• • • Zero Tariffs: NBP is providing home remittance services without any charges. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. SALIENT FEATURES: • • Rs 2-million are required to open an account and there is no maximum limit. along with the security and service only NBP can provide. Whether you are looking to invest for 3 months or 1 year. Profit is paid on half yearly basis on monthly balances.

a new product.17 AGRICULTURAL FINANCE SERVICES: “I Feed the World” program. 5.16 AGRICULTURAL FINANCE NBP provides Agricultural Finance to solidify faith. 37 .1. They are the customer’s best resource in making NBP’s products and services work for them.15 TRADE FINANCE OTHER BUSINESS LOANS There are two types of trade finance.1. 5. commitment and pride of farmers who produce some of the best agricultural products in the World.1. The bank is now regarded as the most active and dominant player in the development of the stock market.13 • • 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.1. 5.1. 5. Sargodha. (2010). which would result in better returns offered to account holders 5. Civil line Branch. Select farms Internship Report on NBP. agriculturists. large and small business and other segments of the economy. is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input.NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence.14 COMMERCIAL FINANCE NBP dedicated team of professionals truly understands the needs of professionals.

Civil line Branch. 38 . thus helping farmers across Pakistan to increase production.1. and supervision of farming.1. technical knowledge.20 FARM CREDIT: Internship Report on NBP.will be made role models for other farms and farmers to follow.18 AGRICULTURAL CREDIT: The agricultural financing strategy of NBP is aimed at three main objectives:• • Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production • Provide farmers an integrated package of credit with supplies of essential inputs. 5. Sargodha. (2010).1. 5.19 AGRICULTURAL CREDIT (MEDIUM TERM): • • • • • • Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing • • Solar energy Equipment for sprinklers 5.

5. (2010). fertilizers. which either comes or goes out from the bank. Seeds.1. • • • Operating loans Land improvement loans Equipment loans for purchase of tractors.2 CASH DEPARTMENT Cash department performs the following functions RECEIPT The money.1. Sargodha. A) DEPARTMENTATION OF NBP 6. farm implements or any other equipment Livestock loans for the purchase. 6.1 DEPARTMENTALIZATION 2 Dividing an organization into different parts according to the functions is called departmentation. please do not hesitate to e-mail us. The deposits of all customers of the bank are Internship Report on NBP. and feeding of livestock. Civil line Branch. sprayers. care. its record should be kept. If you require any further information. So NBP can be divided into the following main departments. 39 . Cash department performs this function.21 PRODUCTION LOANS: Production loans are meant for basic inputs of the farm and are short term in nature. etc are all covered under this scheme.NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis.

Every customer has its own ledger account and has separate ledger cards. THE REQUISITES OF CHEQUE Internship Report on NBP. one can say that a Cheque can be defined as an: “An unconditional order in writing drawn on a specified banker. Sargodha. PAYMENTS It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. CHEQUES AND THEIR PAYMENT The Negotiable Instruments. (2010). it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act. 1881. a specified person or to the bearer. 1881 3 “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”. Civil line Branch. Act. and which does not order any act to be done in addition to the payment of money”. 40 . signed by the drawer.controlled by means of ledger accounts. Since a Cheque has been declared to be a bill of exchange. or to the order of. Therefore. requiring the banker to pay on demand a sum certain in money to.

Sargodha. a) b) c) d) e) f) g) It should be in writing The unconditional order Drawn on specific banker only Payment on Demand Sum Certain in money Payable to a specific person Signed by the drawer PARTIES TO CHEQUE The normal Cheque is one in which there is a drawer. Civil line Branch. a drawee banker and a payee.There is no prescribed form of words or design of a Cheque. but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following. or no payee but bearer. 41 . a) b) c) The Drawer The Drawee The Payee TYPES OF CHEQUES Bankers in Pakistan deal with three types of cheques BEARER CHEQUES Internship Report on NBP. (2010).

ORDER CHEQUE These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification. which do not afford a reasonable ground of believing that he is not entitled to receive payment of the amount therein mentioned. If there are two persons having accounts at the same bank. Civil line Branch. in good faith and without negligence to any person in possession thereof under circumstances. a) b) Cheques should be in a proper form: Cheque should not be crossed: Internship Report on NBP. It is a contractual obligation of a banker to honor his customer’s cheques if the following essentials are fulfilled. 42 .Bearer cheques are cashable at the counter of the bank. However the bankers’ legal protection is only when payment is in ‘Due Course’. Sargodha. and repayment to them. from the depositors. which receive money from the public. PAYMENT OF CHEQUES It is a banker’s primary contract to repay money received for his customer’s account usually by honouring his cheques. It can also be collected through clearing. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque. These can also be collected through clearing. CROSSED CHEQUE These cheques are not payable in cash at the counters of a banker. Payment of money deposited by the customer is one of the root functions of banking. one of the account holder issues a cross-cheque in favour of the other account holder. The payment in due course means payment in accordance with the apparent tenor of the instrument. It can only be credited to the payee’s account. The acid test of banking is the receipt of money etc. which is the distinguishing mark of a banker and differentiates him from other institutions. This paying function is one. (2010).

3. 43 .    6.then signature of the officer +signature of the head of the deposit department. (2010).c) d) e) f) g) Cheque should be drawn on the particular bank: Cheque should not mutilated: Funds must be sufficient and available: The Cheque should not be post dated or stale: Cheque should be presented during banking hours: 6.1. Important Things in Clearing. The customer can get the money in his account at NBP from the cheques drawn on another bank.3 CLEARING DEPARTMENT: 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.1 Cross Stamp Clearing Stamp Endorsement Stamp TYPES OF CLEARING:  Inward Clearing  Outward Clearing INWARD CLEARANCE: Internship Report on NBP.1. CLEARING BY BANK: These days the clearing work is over held by the NIFT(National Institutional Facilitation Technology) instead by the state bank .When the bank is going to make the payment then the bank officer will sign the cheque if the amount of the cheque is greater then Rs50000/. Civil line Branch. Sargodha.

Cheque drawn on NBP and presented to other Banks. which provides the following information to the banker. Any individual or company. The job of this department is to make proposals about the loans. So inward clearing results in outflow of funds for NBP by reducing the balance in the clearing account . because it is the main source of earning. Sargodha. As we known bank is a profit seeking institution. (2010). The major portion of the profit is earned through this department.4 ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. However. Civil line Branch.1. Internship Report on NBP. a) b) c) d) e) Existing financial position of a borrower at a particular branch. So outward clearing results in inflow of funds for NBP. Credit extensions are the most important activity of all financial institutions. Accounts details of other banks (if any). It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. The Credit Management Division of Head Office directly controls all the advances. (Balance Sheet & Income Statement). it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. NAME AND ADDRESS OF THE BORROWER. 6. Signing a promissory note is also a requirement of lending. Exiting financial position of the company. who wants loan from NBP. at the same time. first of all has to undergo the filling of a prescribed form. Security against loan. through this note borrower promise that he will be responsible to pay the certain amount of money with interest. OUTWARD CLEARANCE: Similarly cheque. That is inward clearance for NBP. which is drawn on other bank and presented to NBP are known as outward clearance for NBP. 44 .

NBP provides advances to different people in different ways as the case demand.1 NBP ADVANCE SALARY: This product is for fixed-income permanent employees of Federal & Provincial Government.PRINCIPLES OF ADVANCES There are five principles. 45 . Sargodha. 6. bankers in Pakistan generally lend in the form of cash finance. The product is purely cash flow based and offers its holder to avail 20 (twenty) net salaries in one go to be repaid in up to 60 (sixty) months. d.A reducing balance and processing fees is 1%. which must be duly observed while advancing money to the borrowers. Safety Liquidity Dispersal Remuneration Suitability FORMS OF LOANS In addition to purchase and discounting of bills. Semi-Government. local bodies and other Government organizations. Other things about Advance Salary are: A maximum of 20 take home salaries up to 490000/ are given to the employees  The mark up rate is 15% P. insurance or requirements. Autonomous. b.1. overdrafts and loans. e. (2010).  Internship Report on NBP. c. With no collateral.4. Semiautonomous. Civil line Branch. a.

Sargodha. Internship Report on NBP. Maximum repayment period is 60 months.D. 46 .  FED is 5% of the processing fees. Civil line Branch. (2010).  Partial payment is not allowed only through monthly installment or balance in lump sum and no charges on before adjustment.O (Drawing & Disbursement Officer) that the salary of the employee will continue to come in NBP and also intact his end service benefits.  Undertaking signed by D.

(2010). Sargodha. Civil line Branch. 47 .Internship Report on NBP.

Internship Report on NBP. Sargodha. (2010). Civil line Branch. 48 .

1.D Card Copy  Original Instrument  Lean from issuing Branch (so that no one could issue the duplicate certificate.  DEMAND FINANCING/LOANS When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time. Civil line Branch. (2010). LIQUID SECURITIES.2 RUNNING FINANCE AGAINST LIQUID SECURITY: It is for the period of 1 year and is issued against liquid securities. When bankers allow loans to their customers against collateral securities they are called “secured loans” and when no collateral security is taken they are called “clean loans”.        Defense Saving Certificates Special Saving Certificates Regular Income Certificates Prize Bonds Foreign Currency Deposits Local Currency Deposits PROCESS OF RUNNING FINANCE: A running finance account is opened by the customer. and the borrowing customer has to pay interest on the entire amount.4. An application is submitted by the customer with B. it is called a “loan”.S and 2 references and the following documents: I.6.F. This certificate is signed by the customer). 49 . Thus Internship Report on NBP. Up to 20M is allowed to the NBP. The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed upon. Sargodha.

while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security 6.D  Customer  Non Account Holder  Account Holder  Staff a) b) Open DD: Cross DD: FED 8 5 5 Exchange 50 50 - Where direct payment is made. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. NBP offers the following forms of remittances. (2010).the borrower gets a fixed amount of money for his use. . Where payment is made though account. 50 Internship Report on NBP. Civil line Branch. CHARGES OF D.1. a) b) c) d) e) Demand Draft Telegraphic Transfer Pay Order Mail Transfer Inter Branch Transaction DEMAND DRAFT A bill drawn either on demand or otherwise by one bank on another in favor of third party or by one branch of the same bank or buy the Head Office on a branch or vice versa. Sargodha.5 REMITTANCE DEPARTMENT Remittance means a sum of money sent in payment for something. It is from city to city. It is the best way of making payment from city to city.

Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the specified person. Sargodha. Up to Rs. The customer for requesting TT fills an application form. No excise duty is charged on TT Cable telegram transfer costs more as compared to other title of money. It is the best way of making payment with in the city. TT charges are taken from the customer.is 0. (2010). 50.000/. Charges of Pay Order  Customer  Non Account Holder  Account Holder  Staff TELEGRAPHIC TRANSFER Telegraphic transfer or cable transfer is the quickest method of making remittances.000/. FED 8 5 5 Commission 100 50 - Internship Report on NBP.only Over Rs. II.is Rs 50/. It is within the city. Such orders are normally acknowledged by the bank which provides a guarantee that the payment will be made.NBP CHARGES FOR DD I. Vouchers are prepared and sent by ordinary mail to keep the record. which is known to the person concerned with this department and branch manager. 51 . Civil line Branch. 50. In cable transfer the bank uses a secret system of private code.1% PAY ORDER The document which instructs a bank to pay a certain sum to a third party.

6 DEPOSIT DEPARTMENT: It controls the following activities: a) A/C opening. In this service NBP to NBP branch transactions are made.1. Internship Report on NBP. (2010). Sargodha. If the customer is the account holder of this bank.  FED voucher is attached. 52 .  Commission voucher is attache 6. the bank will debit his account and the concerned officer will fill the six different forms to make the mail transfer complete. outside the city of outside the country the first thing he has to do is to fill an application form. In which he states that I want to transfer the money from this bank to that bank by mail.MAIL TRANSFER Customer requests the bank to transfer his money from this bank to any other bank of the branch of same bank in the city. Civil line Branch. The six forms used for this purpose are listed below:  Branch Mail Transfer Mail  Receiving branch registered copy  Issuing Branch Register Copy  Debt Voucher  Beneficiary's Advice  Advice to Customer INTER BRANCH TRANSACTION: It is freshly introduced online service.

the banker should determine the prospective customer’s integrity. 53 . iv. occupation and the nature of business by the introductory references given at the time of account opening. respectability. Before a banker opens a new account. i. Sargodha. ii. Negligence. Civil line Branch. Preliminary investigation is necessary because of the following reasons. which are to be observed for opening an account with a bank.b) c) d) e) f) Issuance of chequebook. iii. Avoiding frauds Safe guard against unintended over draft. (2010). • • • • Formal Application Introduction Specimen Signature Minimum Initial Deposit Internship Report on NBP. There are certain formalities. Current a/c Saving a/c Cheque cancellation Cash ACCOUNT OPENING The opening of an account is the establishment of banker customer relationship. Inquiries about clients.

• • • • • He must be of the age of majority. Operating the Account Pay-In-Slip Book Pass Book Issuing Cheque Book QUALIFICATION OF CUSTOMER The relation of the banker and the customer is purely a contractual one. Civil line Branch. which create legal relationship Not expressly declared void. however.• 1. (2010). • TYPES OF ACCOUNTS Following are the main types of accounts 1) 2) 3) Individual Account Joint Account Accounts of Special Types  Partnership account  Joint stock company account  Accounts of clubs. 2. Law must not disqualify him. societies and associations Internship Report on NBP. The agreement should be made for lawful object. He must be of sound mind. 3. 54 . he must have the following basic qualifications. Sargodha.

failing which incidental charges are deducted from such accounts. issue cheque books to account holders. and customers are required to maintain a minimum balance. In recent years. 55 . Bankers in Pakistan do not allow any profit on these deposits. the proportion of Current Deposits in relation to Fixed Deposits was very small. CURRENT ACCOUNT These are payable to the customer whenever they are demanded. Sargodha. drawn against him to the extent of the balance in the account. Internship Report on NBP. these deposits are treated as current liabilities by the banks. Agents account  Trust account  Executors and administrators accounts  Pak rupee non-resident accounts  Foreign currency accounts ISSUING OF CHEQUEBOOK: This dept. Requirements for issuing chequebook a) The account holder must sign the requisition slip b) Entry should be made in the chequebook-issuing book d) Three rupees per cheque should be recovered from a/c holder if not then debit his/her account. This is because the depositors may withdraw Current Account at any time. When a banker accepts a demand deposit. Until a few decades back. however. Because of their nature. he incurs the obligation of paying all cheques etc. and as such the bank is not entirely free to employ such deposits. the position has changed remarkably. (2010). Civil line Branch.

56 . CHEQUE CANCELLATION: This dept. and from time to time. branch to branch. SAVING ACCOUNT Savings Deposits account can be opened with very small amount of money. the initial deposit required for opening these accounts is very nominal. and the depositor is issued a chequebook for withdrawals. As such. can cancel a cheque on the basis of. The purpose of these accounts is to inculcate the habit of savings in the constituents. Profit is paid at a flexible rate calculated on six-month basis under the Interest-Free Banking System.Now. the Current Deposits have become more important. Civil line Branch. In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme for school and college students and industrial labor also. It discourages unnecessary withdrawals from the deposits. There is no restriction on the withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder. Sargodha. (2010). a) Post dated cheque b) Stale cheque c) Warn out cheque d) Wrong sign etc CASH Internship Report on NBP. but still the proportion of Current Deposits and Fixed Deposits varies from bank to bank.

The main functions of this deptt are: a) L/C dealing. FOREIGN REMITTANCE DEALING. and ease of transaction. Dividing an organization into different parts according to the functions is called departmentation.This deptt also deals with cash. So NBP Balakot Branch. Civil line Branch. Sargodha. Internship Report on NBP. With competitive rates. c) Foreign Remittance dealing. 57 . euro account etc. FOREIGN EXCHANGE/DEPARTMENT: This deptt mainly deals with the foreign business. B) DEPARTMENTATION OF BALAKOT BRANCH. security. FOREIGN CURRENCY ACCOUNT DEALING: This deptt deals with the foreign currency accounts which mainly include dollar account. deposits of cheques etc. NBP Letters of Credit are the best way to do your business transactions. L/C DEALING NBP is committed to offering its business customers the widest range of options in the area of money transfer.Balakot is divided into two main parts. BALAKOT NBP. Payment of cheques. This is very important function of this deptt. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. (2010). b) Foreign currency accounts dealing.

1. 2.

Cash Department General Banking Department.

CASH DEPARTMENT: “To facilitate people in the payments of their bills and taxes and repayments of cash” There are two main functions of cash department. i. i. ii. Payment ii. Receipts

Payments are the function that they pay their cheques and pay cash. Receipts mean collection of utilities bills, taxes etc.

GENERAL BANKING In this section of the bank the general banking function is performed. It is divided into five departments  Marketing Department  Remittances Department.  Computer Department.  Advances  Establishment Department Department.  Clearing Department..

Internship Report on NBP, Civil line Branch, Sargodha, (2010),

58

REMITTANCES DEPARTMENT: The objective of this department is:-

“To transfer the money of people from one place to another place in safe and comparable way” The main functions of this department are: i. ii. iii. iv. v. vi. vii. Issuing of demand draft. Issuing of Mail transfer. Issuing of Telegraphic transfer. Issuing of payment order. Issuing of call deposit. Pension payments etc. Closing and scrolling of government collections.

ADVANCES DEPARTMENT: Every bank has a department, which advances money to borrowers. The objective of Advances Department is “To facilitate people by giving short term and long term loans on easy terms and conditions”. The main function of this Department is to take surplus money from the people at low rates and lend this money to borrowers at high rates to earn profit.

Clearing by Bank:

Internship Report on NBP, Civil line Branch, Sargodha, (2010),

59

These days the clearing work is over held by the NIFT(National Institutional Facilitation Technology) instead by the state bank .When the bank is going to make the payment then the bank officer will sign the cheque if the amount of the cheque is greater then

Rs.50000/- then signature of the officer +signature of the head of the deposit department. Important Things in Clearing;

  

Cross Stamp Clearing Stamp Endorsement Stamp

TYPES OF CLEARING:

 Inward Clearing  Outward Clearing INWARD CLEARANCE:
Cheque drawn on NBP and presented to other Banks. That is inward clearance for NBP. So inward clearing results in outflow of funds for NBP by reducing the balance in the clearing account

.

OUTWARD CLEARANCE:
Similarly cheque, which is drawn on other bank and presented to NBP are known as outward clearance for NBP. So outward clearing results in inflow of funds for NBP. . 3.18.4 COMPUTER DEPARTMENT: The objective of this Department is to facilitate customers in payment of their cheques”. The main functions performed by this department are:
Internship Report on NBP, Civil line Branch, Sargodha, (2010), 60

Employee’s bonuses etc. Sargodha. The main objective of this department is to “To regulate bank business”. c) d) Issuing bank statements. Employee’s salaries distribution. ESTABLISHMENT DEPARTMENT: This department mainly deals with the branch employees. Dealing Western Union. Deduction from balance on clearing cheques. 61 . Internship Report on NBP.a) b) Checking balance. Main functions of this department are: a) b) c) Keeps the record of attendance of employees. (2010). Civil line Branch.

And I observed following SWOT analysis: STRENGTH o o o o o o o o o OLDEST INSTITUTION ALTERNATE DUTIES IN SBP ABSENCE MORE DEPOSITS THAN OTHER BANKS EMPLOYEE BENEFITS BROAD NETWORK STRICTLY FOLLOWED RULES & REGULATION: PROFESSIONAL COMPETENCE HEALTHY ENVIROMNMENT RELATION BETWEEN STAFF AND OTHER EMPLOYESS Internship Report on NBP. Sargodha. Civil line Branch. WEAKNESS.SWOT ANALYSIS INTRODUCTION SWOT analysis stands for STRENGHT. My observation was very keen during internship to observe SWOT aspects of NBP. and OPPERTUNITIES AND THREATS. 62 . (2010).

Sargodha.WEAKNESSES o o o o o o o o LACK OF MARKETING EFFORT NBP UNDER POLITICAL PRESSURE FAVORITISM AND NEPOTIS LACK OF FINACIAL PRODUCT INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS LACK OF COMPUTERIZED NETWORK. Civil line Branch. 63 . (2010). OPPORTUNITIES o o ELECTRONIC BANKING MICRO FINANCING THREATS EMERGENCE OF NEW COMPETITORS o o o POLITICAL PRESSURE BY ELECTED GOVERNMENT DOWNSIZING CUSTOMERS COMPLAINTS Internship Report on NBP. LACK OF MODERN EQUIPMENT UNEVEN WORK DISTIBUTION.

Sargodha. (2010). Civil line Branch. 64 .o COMPETITIVE ANALYSIS Internship Report on NBP.

Then I moved in Government section of NBP for further learning. (2010).WORK DONE BY ME IN INTERNSHIP AT NATIONAL BANK OF PAKISTAN I started working as a proper internee in NBP from Deposit seat under the supervision of MR. Sargodha. WHAT I LEARNED IN CLEARING DEPARTMENT:  About the process. Formalities and endorsements of outward clearing. WHAT I LEARNED THERE:     Collection of Cheques. Akram khan (Grade-1 Officer). Sharik Saleem. 65 . Civil line Branch. I worked in clearing department for two weeks under the supervision of M. Internship Report on NBP. and then I precede my internship training in Clearing Department. rules and regulation of National Institutional facilitation technologies (NIFT). I worked on this seat with full devotion for three weeks. Passing (authentication) of Cheques. Account opening procedure and formalities.   Formalities and endorsements of inward clearing. Reporting of Cheques in day books.

Internship Report on NBP. to Govt.  About seat of incharge of Govt. related to: Pension passing Government contractors’ payments Government to bank and Govt. (2010). section for four weeks.WHAT I LEARNED IN GOVERNMENT SECTION:  About receipts of Government related to: Central receipts Provincial Receipts District Receipts  About Payment seat of Government. 66 . WHAT I LEARNED ON BILLS COLLECTION SEAT:  To collect and report all type of utility bills and passport fees. Sargodha. and then I go in utility bill collection department. Transfer. Civil line Branch. I worked on Utility bill collection seat for half a week. Government seat: How to check advices of different heads of Government? How to check necessary formalities on documents? How to manage work under pressure? I worked in Govt.

Abid Ali (GRADE. Inter branch Transaction. posting compiling an advanced salary case. I worked in remittance department for two weeks and then I went to Advanced salary Department for further training under supervision of Mr. I worked in advanced salary department for one week and then I went in running finance department.WESTERN UNION SEAT: I worked on western union seat for half a week and learned there:  To receive foreign remittances from different services like SAMBA and WESTERN UNION. Aisf (GRADE-1 Officer. Telephonic Transaction. WHAT I LEARNED IN REMITTANCE DEPARTMENT:  To make Mail transfer. Internship Report on NBP. (2010). Civil line Branch. Demand drafts.2 Officer) in Remittance Department. Sargodha.  To close advances salary account. 67 .  To pass benevolent funds. Then I was given under the kind supervision of Mr.) WHAT I LEARNED IN ADVANCED SALARY DEPARTMENT:  Documentation formalities in receiving.

Civil line Branch. Sargodha. About the sanction the loans to farmers. 68 . WHAT I LEARNED IN FOREIGN EXCHANGE DEPARTMENT:  Reporting and handling of foreign remittances. I worked theare for one week and then I moved to Foreign Exchange Department. Internship Report on NBP. (2010).WHAT I LEARNED IN RUNNING FINANCE DEPARTMENT:   About the sanction the loans to small and medium scale enterprises.

Paged John. 13. Saeed H.pk Personal observations Interviews of Satff. (1998). NBP Main Branch Sargodha 3. President Office. Kitab Markaz: 1. Head Office National Bank of Pakistan Israr.march 20th.google.(2001). Money and Banking. 2009. Pakistan. www. 2009 Circular No.com. The Law of Banking. Sir.services Department. Internship Report on NBP.REFRENCES Annual report of National Bank of Pakistan.pk . The law of Banking. Civil line Branch. 3. 2002.nbp. Siddiqi H. Practice and Law of banking in Pakistan. 69 . Karachi: Decent Print Enterprises. www.pk 2.nbp. (2010).com. McGraw Hill Publication: Nasir. Bank Nationalization act 1974. June 21.com. Sargodha. 2009 http// www.

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