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Islamic Mode of Finanace Q. What is Financial Lease? A.

A lease wherein the user can acquire the use of the asset for most of its useful life and pay rentals to the lessor is called a financial lease. The user will be responsible for maintenance of the equipment and the payment of taxes and insurance Q. Is finance lease an Islamic instrument? A. Yes, leasing is an Islamic mode of financing and is approved by Islamic ideology council of Pakistan . Q. What is OLPs competitive edge over other leasing companies? A. OLP offers wide range of financial services with competitive pricing and flexible terms. OLP marketing team is customer friendly and the lease process moves at fast speed. OLP offers Finance Lease, Auto & Consumer Lease, Operating Lease, Working Capital, Factoring, Agriculture & Micro Loans. OLP has presence in over 26 cities of Pakistan which gives a much wider coverage and service to its customers. Q. What are the criteria for inducting customers in OLP portfolio? A. OLP niche market is Small Medium Enterprises (SME). Commercial entities are evaluated as per prescribed regulations of Security Exchange Commission of Pakistan (SECP) and internal guide lines of OLP. These regulations and guide lines are user friendly and compatible with the local practices and laws. ORIX normally deals only with organizations which have a successful track record of three years of operations. Q. What is the rental? A. Rent is an amount which is paid by the lessee for the leasing of equipment through out the entire lease term. The rent can be monthly or quarterly and can be paid at the beginning or end of month or quarter. Rent paid is allowed to be charged as a tax deductible expense in the profit and loss statement of the lessee. Q. What is the Security Deposit? A. The security deposit refers to equity contributed by lessee in lease transactions. The security deposit is adjusted towards Residual value at the end of lease term. Q. What is Residual value? A. Residual value is an approximate fair future market value of the equipment determined at the start of the lease term. Q. What are the terms and conditions offered by OLP? A. OLP offers highly competitive terms with a very rapid response and superior quality service to its customers. The lease period ranges from 3, 4 and 5 years. The payment mode is monthly and quarterly. Further details can be obtained from our staff on telephone or through personal visit.

Q. Can balloon payments be made during the lease to entail the seasonal affect? Similarly, can payments be lowered in the off-season? A. OLP offers a flexible repayment schedule and can incorporate balloon payments and off-season payments in the scheduled repayment plan. Q. Can second-hand assets also be leased? A. OLP leases brand new equipments as well as those which are reconditioned and imported for use in Pakistan for the first time. OLP would require independent survey for price verification. Q. Can a lessee cancel or terminate the lease contract early? A. A finance lease is non-cancelable but may be terminated early subject to a tax compensation payment to the lessor if the remaining lease term is less than 36 months. Q. What is the interest rate? A. The interest rate varies according to the leasing terms and conditions. The offered rate will be fix for the entire leasing term and will base on prevailing KIBOR (Karachi Inter Bank Offer Rate) Q. What is rate of insurance and through which company it is covered? A. Insurance is covered through the well-reputed companies of Pakistan . Insurance policy is fully comprehensive and non-deductible. The insurance rates vary between 4% to 5%. Instead of annual lump sum payment, the premium is payable in the shape of monthly rents. Q. Can ORIX lease recondition cars, if yes then till what model? A. ORIX does provide an option for leasing out reconditioned vehicles. The vehicle should just only be first owner and, if registered then, registration should not be older than five years. Q. What is the difference between leasing and financing via banks? A. In financing the vehicle is registered in the name of borrower and is hypothecated in the name of bank while incase of leasing the vehicle is solely registered in the name of leasing companies. Financing can be done for as low as for one year but leasing has to be of minimum for three years. Q. What are the benefits of availing the leasing facility through ORIX? A. ORIX Leasing Pakistan Limited offers an extensive array of benefits to the prospect clients. We provide lease with satellite tracking device option and monitoring charges for the entire leasing term. Lessee will also be benefited with the complementary life insurance coverage. The lease contract will be based on the fix rate, which will not be revised till the contrac t expiry.

Benefits of Islamic banking Islamic banking and the finance industry is growing at an annual rate of 20%. Many international as well as local institutions have stepped into this multi-billion dollar booming industry by establishing its Islamic wings and units. International giant banks such as HSBC (HSBC Amanah), Citi Bank (Citi Islamic) and Standard Chartered have already established their Islamic units and functioning in the Middle East region. In Sri Lanka , despite the Muslim population being just 8% of the total population, a considerable growth is reported in the past few years with the establishment of Amana, Ceylinco Profit Sharing, First Global and a new comer ABC Barakah. Recently it is reported that the largest state owned commercial bank, Bank of Ceylon intends to commence its Islamic banking unit in early 2008. All these new entries imply that this alternative banking system has drawn the attention of Muslims as well as non-Muslims due to its unique developmental characteristics. The underlying principle of Islamic banks is the principle of justice which is an essential requirement for all kinds of Islamic financing. In profit sharing of a financed project, the financier and the beneficiary share the actual or net profit/loss rather than throwing the risk burden only to the entrepreneur. The principle of fairness and justice requires that the actual output of such a project should be fairly distributed among the two parties. If a financier is expecting a claim on profits of a project, he should also carry a proportional share of the loss of that project. In contrast with conventional finance methods, Islamic financing is not centered only on credit worthiness and ability to repay the loans and interest; instead the worthiness and profitability of a project are the most important criteria of Islamic financing while the ability to repay the loan is sub-segmented under profitability. One of the unique and salient characteristics of Islamic banks is that the integration of ethical and moral values with its banking operation. The ethical and moral consideration of Islamic banks cannot be detached and their behavior should be consistent with the moral and ethical standards laid down by the Islamic Shariah. Unlike the conventional banks, the financing of Islamic banks are restricted to useful goods and services and refrain from financing alcoholic beverages and tobacco or morally unacceptable services such as casinos and pornography, irrespective of whether or not such goods and services are legal or not in a given country. In contrast with conventional banks, Islamic banks do not consider only the credit worthiness and interest rate as standards; instead they must apply Islamic moral/ethical criteria in their provision of financing. This adds another merit for Islamic banks since there is a benefiticial impact on the productivity in the economy as it reduces the social and economic cost of such harmful products and activities.

Another important characteristic which forms the basis for the development of Islamic banks is the relationship with depositors. They deal with their customers on investment grounds rather than a pre-determined fixed interest rate. They invest the money of their depositors on high profitable projects after going through a strategic analysis in order to give a substantial return to their depositors. Thus in Islamic banking industry, each bank will attempt to out-perform other banks if it wants to attract funds from investors. And the ultimate result is that a high return on investments for the investors, which is unlikely in a conventional bank where it deals with their depositors on a pre-determined fixed interest rate. Furthermore Islamic banks eliminate the barrier between those who save and those who invest, and bring them closer to the real market. The nature of the financial intermediation of Islamic banks significantly defers from conventional banks and it is in harmony with real market and developmental changes in it. It is important to highlight some of the challenges faced by the Sri Lankan Islamic banks. Although there are many, the most important challenges are the lack of Islamic banking professionals and the lack of Shariah scholars who have specialized in Islamic economics. Further the Shariah board should have a fair influence on the banks operational and strategic planning. For this process to be successful, the Shariah boards of our Islamic banks should absorb Islamic scholars based on their technical expertise rather than their popularity.

Can Banks Survive without Interest? Before discussing the hypothesis that banks can survive without the institution of interest it is pertinent to mention that the Shariah does not prohibit all gains on capital. It is only the increase stipulated or sought over the principal of a loan or debtthat is prohibited. Islamic principles simply require that performance of capital should also be considered while rewarding the capital. The prohibition of a risk free return and permission of trading, as enshrined in the Verse 2:275 of the Holy Quran, makesthe financial activities in an Islamic set-up real asset-backed with ability to cause value addition. The forms of businesses allowed by Islam at the time the Holy Quran was revealed included joint ventures based on sharing of risks & profits andprovision of services through trading, both cash and credit, and leasing activities. Allah the Almighty did not deny the apparent similarity between trade profit in credit sale and Riba in loaning, but resolutely informed that Allah has permitted trade and prohibited Riba.

Besides trading, Islam allows leasing of assets and thus taking rentals againstthe usufruct taken by the lessee. The contracts of loans are different from the lease contracts on the basis that ownership in leased assets remains with the lessor whoassumes risks and gets rewards of his ownership. In loans, on the other hand,ownership of loaned goods/assets is also transferred to the loanee/borrower who isobliged to repay its similar. All such things/assets corpus of which is not consumed with their use can be leased out against fixed rentals, while money cannot be leased out.Profit has been recognized as reward for (use of) capital and Islam permits gainful deployment of surplus resources for enhancement of their value. However, alongwith the entitlement of profit, the liability of risk of loss rests with the capitalitself. No other factor can be made to bear the burden of the risk of loss. Financialtransactions, in order to be permissible, should be associated with tangible real assets. At macro level, this feature of Islamic finance can be helpful in creating betterdiscipline in conduct of fiscal and monetary policies. Savers who have been avoiding the banking channel so far due to involvement of Riba would approach Islamic Banks only when they are assured that their funds would be invested in Shariah compliant activities. Therefore, credibility of Islamic banks is crucial and the key to success and development of this emerging discipline. Users of bank funds take the benefit of having access to the savings of millions of middle class depositors and as such they should give to the savers the due share in profit that they earn from the business activities. The most important pre-requisite in this regard is mass awareness about the concept of Islamic banking among the general public and the education of bankers and the business community. Islamic banks, while functioning on a basis other than interest, have to perform a crucial task of resource mobilization, their efficient allocation on the basis of both PLS (Musharaka and Mudaraba) and non-PLS (trading & leasing) based categories of modes and strengthening the payments systems to contribute

Conditions for investment in Shares: Dealing in equity shares can be acceptable in Shariah subject to the following conditions: 1. The main business of the company is not in violation of Shariah. Therefore, it is not permissible to acquire the shares of the companies providing financial services on interest, like conventional banks, insurance companies, or the companies involved in some other business not approved by the Shariah, such as the companies manufacturing, selling or offering liquors, pork, haram meat, or involved in gambling, night club activities, pornography etc.

2. If the main business of the companies is halal, like automobiles, textile, etc. but they deposit there surplus amounts in a interest-bearing account or borrow money on interest, the share holder must express his disapproval against such dealings, preferably by raising his voice against such activities in the annual general meeting of the company. 3. If some income from interest-bearing accounts is included in the income of the company, the proportion of such income in the dividend paid to the share-holder must be given charity, and must not be retained by him. For example, if 5% of the whole income of a company has come out of interest-bearing deposits, 5% of the dividend must be given in charity. 4. The shares of a company are negotiable only if the company owns some non-liquid assets. If all the assets of a company are in liquid form, i.e. in the form of money that cannot be purchased or sold, except on par value, because in this case the share represents money only and the money cannot be traded in except at par. What should be the exact proportion of non-liquid assets of a company for the negotiability of its shares? The contemporary scholars have different views about this question. Some scholars are of the view that the ratio of non-liquid assets must be 51% at the least. They argue that if such assets are less than 50%, the most of the assets are in liquid form, therefore, all its assets should be treated as liquid on the basis of the juristic principle: The majority deserves to be treated as the whole of a thing. Some other scholars have opined that even if the non-liquid asset of a company or 33%, its shares can be treated as negotiable. The third view is based on the Hanafi jurisprudence. The principle of the Hanafi school is that whenever an asset is a mixture of a liquid and non-liquid assets, it can be negotiable irrespective of the proportion of its liquid part. However, this principle is subject to two conditions: First, the non-liquid part of the mixture must not be in a negligible quantity. It means that it should be in a considerable proportion. Second, the price of the mixture should be more than the price of the liquid amount contained therein. For example, if a share of 100 dollars represents 75 dollars, plus some fixed assets the price of the share must be more than 75 dollars. In this case, if the price of the share is fixed as 105, it will mean that 75 dollars are in exchange of 75 dollars owned by the share and the rest of 30 dollars are in exchange of the fixed asset. Conversely, if the price of that share fixed as 70 dollars, it will not be allowed, because the 75 dollars owned by the share are in this case against an amount which is less than 75. This kind of exchange falls within the definition of "riba" and is not allowed. Similarly, if the price of the share, in the above example, is fixed as 75 dollars, it will not be permissible, because if we presume that 75 dollars owned by the share, no part of the price can be attributed to the fixed assets owned by the share. Therefore, some part of the price (75 dollars) must be presumed to be in exchange of the fixed assets of the share. In this case, the remaining amount will not be adequate for the price of 75 dollars. For this reason the transaction will not be valid.

EVOLUTION OF BANKING There are various views about the origin of the word banking. One view is that it is derived from the word, banquet which means a bench. The other view is that it has originated from the German word, bane which means a joint stock firm. BANKS HAVE THREE ANCESTORS * Merchants * Money lenders * Gold smiths . In old days merchants issued documents, which were used as money for the transaction of goods and services, moneylenders used to deal in credit. They took loan form the people on interest to give it to some other on higher rate of interest and in this way they used to make profit. Goldsmith used to keep gold and silver of the people as deposits and issued slips, which circulated as their depositors to transfer a part or whole of their deposits in the name of another depositor by issuing an order slip. This order slip gradually turned to be a cheque. With the passage of time gold smiths learned by experience that the depositors do not draw most part of the deposits and remain lying idle with them. Therefore, they used it to give loans to the people. This initiated the creation of credit money. DEFINITION OF BANK Bank is an institution, which deals in money. It receives savings of the people as deposits, which is a loan for a bank, and therefore it pays interest on it. It gives this amount of money to business enterprises as loans and receives interest on it. By keeping the rate of interest low on deposits and high on advance it makes profit. According to Prof. Crowther bank is an institution which gets loans to lend and in this way created credit money. DEFINITION OF BANKER * J.W Gilbert in his principles and practice of banking defines a banker in this word; A banker is a dealer in capital, or more properly, a dealer in money. He is an intermediate party between they borrowers and the lender. He borrows of one party and lends to another

* In law of banking Dr. Herbert L. Hart defines bankers or bank as: A person carrying on the business of receiving money, and collecting drafts for customers subjects to the obligation of honoring cheques drawn upon him for time to time by the customers to the extent of the amount available on their current accounts. The Americans defined the term banker in a very, board sense as under by banking we mean the business of dealing in credits, and by a bank we include every person, firm or company having a place of business where credits are opened by deposits or collection of money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory

notes or where stocks, bonds, bullion, bills of exchange, promissory notes are received for discount or sale. HISTORICAL BACKGROUND OF NATIONAL BANK OF PAKISTAN National Bank of Pakistan was established in November 20,1949 under the National Bank of Pakistan ordinance dated November 08,1949 it is a semipublic commercial bank. The primary objective of the setting of National Bank of Pakistan was the purchase jute from the growers in the former East Pakistan and also to perform the commercial banking function sin the country. The bank is also authorized to act as an agent and trustee of state bank where the State Bank of Pakistan has no own right and at the same time a trustee of public finance. It started functioning from November 20 the same year, the said ordinance begins with preamble, which say: whereas an emergency has arisen which renders it necessary to extend banking facilities generally and also to provide credit fro agriculture and agriculture produce. Because of the crisis situation that had developed with regards to financing of jute trade the normal procedure of through the promulgation of an ordinance. The bank commenced business at six important jute centers east Pakistan jute crop. Karachi and Lahore offices were opened in December. National Bank of Pakistan was different in more than one way from other banks in the country. Because of the crisis situation that developed in September 1949. The normal procedure of establishing a banking company under the companys law was set aside and National Bank of Pakistan was established through the promulgation of an ordinance right from its inception. The board of director of National Bank of Pakistan was duly represented by government interest. The new bank received liberal advances from financing jut and cotton trade in the initial years of existence. It is now the biggest financial institution with total assets lying over Rs. 270 billion. The bank is the highest financier of Rs. 35 billion in agriculture and commodity operation sector. National Bank of Pakistan has celebrated its 50 th anniversary on November 9,1999 which is a bench mark year in the history of this organization in the sense that a great deal has a changed in the bank since the passage of National Bank of Pakistan ordinance of November, 08,1949. DEVELOPMENT PHASE OF NATIONAL BANK OF PAKISTAN FORMATIVE STAGE 1950s National Bank of Pakistan was established with authorized capital of Rs. 50 million and issued capital of 15m of which government paid 25%, the balance was offered to the public. The shares offered to the pubic were floated in 1950.

In May 1952 the National Bank of Pakistan started taking over government treasury work from the imperial bank of India and successfully completed the process by end of September. By the end of December 1959 National Bank of Pakistan was undertaking treasury operation and managing currency chests at 57 of its offices, where the turnover of business under the head amounted to Rs. 2460 million. 1. PERIOD OF EXPANSION 1960s The bank undertook a programme of expansion branch was expanded and by 1959 it has 129 branches it carefully selected locations in both wings of the country as against only 17 branches in 1950. . By the end of December 1969 National Bank of Pakistan had 720 branches 713 at home and 7 in foreign countries. The end of 1960s made considerable overhead in the bank electronic according programmers. It completed the computerization of remittances received from abroad and studies were undertaken to computerize other areas. * PERIOD OF REORGANIZATION & DEVELOPMENT 1970s National Bank of Pakistan along with 14 scheduled Pakistani banks was nationalized by the promulgation of banks ordinance 1974. Shares not held by the government were acquired from the private holders after compensation them. Its present shareholding is 93.4% is held by the state bank of Pakistan 5.3% by government of Pakistan and 1.3% by shareholders. An executive board headed by the president and four members replaced the previous. Bank deposits rose from Rs. 3.3 billion in 1970 to Rs. 198.6 billion in 1979, more than four and half times increase. Advances catered to the requirements of both public and private sectors. Domestic advances / deposits ratio was 61.9% in 1979, due to efforts to keep the banks operations within the authorized credit expansion. 1. CHALLENGES AND NEW INITIATIVES THE 1990s The early nineties witnessed weakening of institutional setup through political interference. However, legal reforms were completed by May 1997 The bank has 12 regional computer centers to cover various online and batch system requirement of branches and controlling offices. National Bank of Pakistan has presence on the Internet. In may this year 1998 inter city ATM network and the swift center took place at the main branch of National Bank of Pakistan Lahore. This facility provides modern satellite based communication technology to its customer for prompt and convenient cash transaction, remittances round the clock. In 1996, National discounting services Ltd was launched as a wholly owned subsidiary of National Bank of Pakistan, with a capital base of Rs. 500 million to assist commerce,

industry and to financial sector in the discounting trade bills / letters of credit / accounts receivable. Government securities and shares of listed companies.

ORGANIZATIONAL CHART OBJECTIVE OF NATIONAL BANK OF PAKISTAN All the organization whether public or private which are involved in business carries the objective of profit earning and profit maximization. . National Bank of Pakistan is also a business organization and its main objectives are profit maximization. National Bank of Pakistan its profits in tow ways. * To increase its deposits. * To charge mark up on loans provided to the people FUNCTIONS OF NATIONAL BANK OF PAKISTAN In Pakistan every bank perform functions according to its memorandum and article of association, so according to it the functions performed by National Bank of Pakistan are as: ACCEPTING DEPOSITS The most important function is to receive surplus money from the public. They throw their nets as wide as possible to collect surplus balances of individuals, firms and public institutions. In order to attract funds they have introduced various types of deposit schemes that may suit the needs and tastes of a large body of depositors. The main deposits schemes of National Bank of Pakistan are: * Current account * Saving account * Fixed deposit account. ADVANCING LOANS Every bank has learnt by experience that depositors do not draw whole of their deposits at a time. They only draw a part of it for day to day transactions, therefore a bank keeps a part of the total deposits as cash reserve to meet the cash demand of depositors and advances the remaining part of deposits to businessmen on interest. They always maintain a reasonable ration between the tow parts to run its business. National Bank of Pakistan gives loans in following ways.

* By opening a loan account * By means of overdraft * By discounting bills of exchange By purchasing bond and securities CREATION OF THE MEDIUM OF EXCHANGE It is neither safe nor easy to make payment in the form of metallic coin or paper notes; therefore cheques make payments. Almost 90% of the financial transactions are made through cheques. National Bank of Pakistan collects and makes payment of cheques for its customers. TRANSFER MONEY National Bank of Pakistan provides facility to transfer from one place to another at very nominal charges. When a person wants to transfer his money from one place he handover money to the bank and gets a draft at the name of the particular branch were he needs the money and gets money at that place safely. AGENCY SERVICE National Bank of Pakistan performs many services as an agent of its clients or depositors. It makes payment on order cheques receives amount of money on crossed cheques issued in favor of its clients and deposits the amount tin their accounts. It receives salaries and dividends of joint stock companies on behalf of clients and deposits them in their accounts. It purchases bonds and shares of joint stock companies for its clients under their consent. GENERAL UTILITY SERVICES National Bank of Pakistan provides general utility services to its clients as well. It keeps their precious documents, gold ornaments, bonds, and shares etc in safe custody in its locker. National Bank of Pakistan provides the services of clearing the utility bills i.e. electricity, gas and telephone bills of its customer and provides evening banking service. It also advice its clients on investment direction, foreign trade and other business matters. Procedure of opening a account When a person comes to the bank he is given account opening form, containing complete information of the applicant, he fills it accordingly and then after completing all the formalities his account is opened. The procedure to open an account in the bank is as under: * Completion of account opening form and specimen signature card by prospective customer. * Clear cut operational instructions must be obtained in the handwriting of the prospective account holder.

* Deposit incharge must check the account opening form and verify the signature of introducer. * Photocopy of ID card must be obtained along with other documents. * Approval of manager is sought. * Progressive account number is alloted from account opened and closed register. * Admit specimen signature both account opening form and specimen signature card. * Entry in ledger, index and reference book. DEPARTMENTS IN NATIONAL BANK OF PAKISTAN DEPOSITS DEPARTMENT Deposit department is one of the most important and main department of the bank. It performs the vital function in the bank because it deals with the supply of money to the bank. Deposits are the inputs of a bank. Deposits department is just like a heat, as it function other department also run, otherwise the whole system paralysis. Each and every bank tries its best to increase their deposits. Deposits depict the financial strength of a bank. National Bank of Pakistan is a unique and crucial institution, which is able to increase credit in the country. * Current account. * Saving account * Fixed account REMITTANCES DEPARTMENT This department helps in the transfer of money from one place to another place and receives money of the people through these instruments and helps them in the clearance and verification and transfer of money from foreign or local banks. The bank charges a certain rate of commission on these instruments. * Demand draft. * Mail transfer. * Telephone transfer. CLEARING DEPARTMENT National Bank of Pakistan performs the function of paying and collection of cheques drawn on other bank by the customer of the bank without charging fees. They perform this clearance function for the customers or others bank in their area because National Bank of Pakistan acts on the behalf of the State Bank of Pakistan . Functions of the clearing dept in branch are: * To arrange the payment of cheque drawn on the branch and give cheque for collection to any other branch have NBP or any other commercial banks.

* To collect amounts of cheques drawn on member of local clearinghouse sent for collection by National Bank of Pakistan branches. ADVANCES DEPARTMENT The primary purpose of this department is to encourage small business to take loans and help them in their business. The bank earns from the advancement of loan to the people or organization and charges a certain percentage of interest on it and bank earns profits. FOREIGN EXCHANGE DEPARTMENT This department deals with foreign currency & accounts. This department does currency rats & exchange of money from foreign currency to local currency and vise versa. FOREIGN CURRENCY ACCOUNTS Foreign currency account in NBP can be open in 4 major currencies of the world i.e. US dollars $, Japanese yen, German mark DM & UK pound sterling. Only authorized branches of NBP can deal in foreign currency account. To open a foreign currency account of foreigners they have to submit a copy of their passport. When the customer will withdraw the money he will receive the profit in the same of foreign currency.


Bank deposits can be broadly classified as under

Current Deposits: Current account is opened in all commercial banks. It is also called running and active account. There is no restriction on deposits and withdrawals. This account is usually operated by business class, companies, firms, public or private organizations. No profit is paid and no zakkat is deducted from this account. The bank only recovers service charges. Bank provides the facility of overdraft to the account holder and charges interest. PLS Saving Account

PLS saving accounts are opened on proper introduction and submission of required documents along with an initial deposit prescribed from time to time for each category. Normally salaried persons operate saving accounts. The main aim of saving account is to encourage thrift among small means, which could deposit only a very small amount at a time. Zakkat is deducted from this account NIDA (National Income Daily Account) The NIDA is opened with a minimum opening balance prescribed by the bank from time to time. The NIDA will be eligible for sharing profit/loss with the bank at the rate to be determined by the bank at its sole discretion and the banks decision in this behalf will be final and binding on the depositor. Payment of profit will be on half yearly basis, with no limits on withdrawals and no notice period required. It is a checking account and cheque book will be issued as in case of other PLS Saving accounts. Minor Account Minor account is opened in the name of the minor on the request of the guardian, who signs both account opening form and specimen signature card. The title of account remains in the name of both the minor and guardian. such as X (minor) Y (guardian) the banker should, however, make it clear in writing in the account opening form itself that the account will continue to be operated by the guardian even after the minor attains the age of maturity. SERVICES PERFORMED BY NATIONAL BANK OF PAKISTAN The Bank is providing all banking services of mercantile and commercial banking permissible in the country, which include: * Handling of treasury transactions for the Government of Pakistan as agent to the State Bank of Pakistan. * Borrowing money and arranging finance from other banks. * Advancing and lending money to its clients. * Accepting of deposits of money on current, fixed, saving, term deposit and profit and loss sharing accounts. * Providing personalized Haj services to intending Hajis. * Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc. * Transfer of money from one branch to any other branch through Mail Transfer, Telegraphic transfer, Demand Drafts etc. * Providing Agricultural loans. * Receiving electricity bills. * Receiving telephone bills. Reference

* Siddiqi Asrar H. (2002). Practice and Law of banking in Pakistan. Karachi: Royal Book Company. REMITTANCES INTRODUCTION: Remittance means transfer of money from one place to another place. It may be Inland remittance or remittance. INLAND REMITTANCE: An inland remittance means a transfer of money payable at a certain place within the country. Inland remittances can be classified as under: a. within locality. b. out side locality. * Within Locality When a branch situated in D.I.Khan is required to send drafts to any other branch situated in the same city the process is know as within locality. For example N.B.P. Main Branch, D.I.Khan sends any draft to N.B.P. Cantt branch, D.I.Khan. i. Payment Order Payment order is used for payment within the cities; the main purpose of payment order is to make the payment in record this payment in the bank as evidence. Bank charge the commission for its services. The purchaser fill an application form, which includes the amount of payment or order, the name of the payee and complete address of purchaser and payee application form is also signed by the purchaser. * Outside locality Outside locality is an important type of inland remittances, which means the transfer of money payable outside the city. For example, N.B.P. Main Branch DIkhan sends any draft to a Branch situated at some other city. It is commonly done through the following three means:i. Telegraphic transfer (T.T) ii Mail Transfer (M.T)

iii Demand Draft (D. D) i. Telegraphic Transfer (T.T) In telegraphic transfer, the Bank takes commission and telegram charges from the sender. A receipt is issued to the sender for the value received.The Bank itself transfer the funds to the drawee branch though a coded message in telegram, confirmatory of which is also sent through routine dak mentioning all details. All bank Branches have been provided with their code books name Bank Keys Code Book where from the coded message is agreed by the drawee branch. T.T. can be sent open, which may be paid in cash in drawee branch, or may be direct, by creditable to relevant account. ii. Mail Transfer (M.T) The Money can be remitted through this means also. In this case the payable amount at the drawee branch can only be transferred to an account; amount cannot be paid in cash. Other procedure is same as T.T, deposit of money at sending branch. Difference is only of postage and telegram charges. The M.T. which in its self is an advice also is sent by registered post, while T.T. is sent through telegram . iii. Demand Draft (D.D) Demand draft is a written order by a branch of a specified Bank, drawn on another branch of the same Bank to pay a certain sum of money only to or to the order of the Payee. Demand drafts are purchased by the clients and after receipt of money Bank issues and delivers the D.D. to the purchaser, who himself sends it to the payee. In D.D. the banks do not recover postal charges as it is payable by the purchaser. The Bank, after deliver of D.D. to the purchaser also sends its own advice called IBCO (Inter Branch Credit Order) to the drawee branch mentioning therein all details of issued draft. iv. Travelers Cheque Travelers cheque means a cheque which a bank issues to its customers for the availability of money during their journey. The amount of the cheque has to be deposited at the time of its issuance. In these cheques the name of the traveler is written instead of the receiver. These cheques are drawn on different branches of the issuing bank in other countries. At the time of issuance, the bank officer takes the signature of the receiver himself. When the customer wants to en cash the cheque the bank officer again PROBLEM AT THE BRANCH LEVEL COMMUNICATION PROBLEM Bank staff uses peon and the clerical staff to communicate with each other. It automatically creates a lot of problem and disturbance in the branch. The flow of communication is very slow and creates gap between various counters and branch departments. And the peon does verification of any sign or balance, which is not a skilled person and time consuming.

LIMITED STAFF In the branch the staff is limited and the customers wait for a long time National Bank of Pakistan also deals with most of the government affairs, federal and provincial pensions salaries and taxes. Handling these people are very difficult and at the beginning of the month large no of customer wait for their turn. But the staff is low to handle such large no of customers. NON-AVAILABILITY OF COMPUTER EXPERT In the modern era of computer the usefulness of computer is ignored it increases the efficiency and all the work is done manually. There is lack of properly trained staff to operate the computer properly. NO LADIES SECTION There is no ladies section in the bank, as a banking facility for ladies, catering to hijab needs of the ladies customers. CUSTOMERS SATISFACTION In National Bank of Pakistan customer dealing is not so much good during the hours of rush the customers have to wait for their turn. The staff is not able to handle large no of customers. This creates a lot of tension and dissatisfaction in the mind of the customer and the staff and there is a chance of error, which might be very harmful. The bank should provide more satisfaction to its customer. PROPER RECORD MANAGEMENT The record which are kept for the future use of the bank is not properly managed the record of the bank is not kept properly in any kind of order chronological or serial etc. if any record is needed the staff has to struggle to find the record and waste a lot of time. UNEQUAL DISTRIBUTION OF WORKLOAD Distribution of workload is not properly managed. Some of the employees are setting ideal all the day without having work and on the other hand some dont find time to relax for a, moment. So this creates a lot of over work situation for some while relaxation for others.