8/8/2019 Sab Report

1/84

1

TABALE OF CONTENTS

Sr.# CONTENTS Page #1. EXECUTIVE SUMMERY 042. HISTORY OF NBP 063. VISION, MISSION & CORE VALUE 094. GOALS AND OBJECTIVES 10

5. IMPORTANCE OF NBP 116. BRANCHES 157. ORGANIZATIONAL STRUCTURE 168. MANAGEMENT HIERARCHY 179. DEPARTMENTALIZATION 1910. NBP PRODUCTS 25

11. FINANCIAL ANALYSIS 4112. RATIO ANALYSIS 2713. SWOT ANALYSIS 2914. PEST ANALYSIS 6915. PROBLEM WITH NBP 4616. GENERAL SUGGESTION 7617. LEARNING AS A STUDENT 8018. CONCLUSION 8219. BIBLOGRAPHY 84

8/8/2019 Sab Report

2/84

1

DEDICATION

I dedicate to my Dear Parents & my respectable teachers whose assistance is

always with me. And I personally do great respect by heart.

SYED SHABIH UL HASSAN

Acknowledgement

8/8/2019 Sab Report

3/84

1

Here very thanks to Almighty Allah whose guidance helped me to be trained in a

time.

My thanks also to young, dynamic, congenial, and qualified staff of NBP who

never let me alone in different situations related to my internship. Without

their humble help, it was not easy. I am thankful to the Bank Manager, all the

AVP who are the incharge of my concern . And their subordinates, they guide

me during my internship from 09 AUG to 22th SEP 2010.

After that my coworkers zahid ali, and EX hailian Mr. kashif (MTO trinee) always

helped me out whenever theres been misconception. It was comfortable working

with colleague who is also from my college. We helped each other at various

points in report.

SYED SHABIH UL HASSAN

EXECUTIVE SUMMARY

First of all by the grace of Allah, because by his grace I am able to complete this

report. This report is consisting of four portions as under:

National Bank (Introduction and History)

8/8/2019 Sab Report

4/84

1

Banking and its Related Information

Financial Analysis (Ratios and analysis)

SWOT Analysis

Interpretation and recommendation

Skills Acquired

In the first portion of this report the introduction of the National Bank of Pakistanis given. A brief history and introduction of the national bank of Pakistan is

starting point of the report. That consists of vision mission, core values and goals

and objectives. The second portion of the report is introduction to the sector that

consists of formal definition of bank and also types of bank. For example central

bank, commercial banks and investment banks. The third portion of the report

consists of financial analysis. This consists of analysis of ratios and horizontal

and vertical analysis. First portion is horizontal analysis and second is of vertical

analysis. After a comprehensive ratio analysis is given. This ratio analysis is

consisting of ratios like profit after tax ratios, return on equity, earning per share,

net profit margin etc. SWOT analysis is also a portion of analysis of the bank.

First of all the main strengths of the national Bank of Pakistan is given that are

followed by the important weaknesses of the Bank. Than opportunities for the

bank and threats that are likely to be faced by the bank are written down.

PEST analysis is also given and is important portion of the report. After the all

type of analysis problems of the National Bank of Pakistan are given in details.

And at the end the last one portion is of my skill acquired, in this portion a details

of skills and are given in which I worked during my tenure of internship program.

8/8/2019 Sab Report

5/84

1

This portion includes all the work which is according to the schedule given by the

bank for example:

Bills department

Deposit department

Foreign exchange department

Government receipt department

Accounts

Credit department

Administration department

History of National Bank of Pakistan

National bank of Pakistan was established on November 8,1949 through

passing of a special ordinance in the National Assembly. The need for the

establishment came due to the reason when at that time newly born country was

facing economic crises. To get rid the intervention form the Reserve Bank of

India, a self owned and operated Central Bank by the name of State Bank of

Pakistan was formed in July 1948 to carry on the responsibilities of issuing the

8/8/2019 Sab Report

6/84

1

currency and most importantly controlling the flow of money inside the

country.

State Bank of Pakistan after its formation demanded from the Indian ReserveBank the assets against the Indian currency retired from Pakistan territory.

Government of India refused to hand over the assets worth about five

hundred million rupees. This dispute is still unsettled and these assets are still

not delivered to Pakistan. When British decided to devalue its currency in

1949, India followed a suit against it, but Pakistan did not, a decision, which

attracted some criticism at that time, but was, certainly justified itself in the

way it facilitated the industrialization in of the country.

The arrangement have been made that the currencies of the countries were to be

at par with each other and neither could alter the par value of its currency without

consulting the other. India promptly challenged Pakistans decision as a

contravention of the agreement. After some correspondence between the

two Governments, India agreed to recognize the par value of the

Pakistani rupee and a date was decided on which both Central Banks would

announce the par value of their currencies. An attempt was made by thePakistan Government to persuade India to adhere to their previous agreement

and an officer of the Finance Ministry was sent on a one-man mission to

Delhi for this purpose.

The officer had discussion with the Indian Ministry of Finance at the

highest level but his mission could not fruitful.

As a result of the exchange rate controversy, regular trade and payments

between the two countries came to standstill. India froze the surplus earned by

Pakistan from a favorable balance of trade, and one more financial dispute,

which is still alive, was added to the unsettled list. One of the immediate

consequences of this situation was the withdrawal of Mrwari Merchants of the

Indian finance, which used to be employed annually for the movement of

8/8/2019 Sab Report

7/84

1

Pakistan's jute crop. A crisis of the first magnitude threatened because the jute

crop was already in the markets and, as there was no money to move so prices

began to fall precipitously. At that time, there was no jute industry in Pakistan, nota single jute loom or a spindle and no possibility, therefore, of utilizing any of the

crops with in the country. As jute prices collapsed, foreign merchants and

foreign banks stood aside to watch the process and the seriousness of the

situation threatened to promote agrarian unrest. It was now very evident that the

government of Pakistan could not afford to continue that the special mission to

Delhi had failed, Government of Pakistan moved quickly.

Two ordinances were passed immediately, one setting up the Jute Board

and other National Bank of Pakistan. The objective of the Jute Board was to re-

organize and rehabilitate the jute trade by helping parties to handle it and to

stabilize the market. National Bank of Pakistan was established to provide

finance to suitable parties.

Thus it came about that National Bank of Pakistan stood behind the jute trade

and State Bank of Pakistan behind the National Bank, and government stoodbehind the State Bank. It was all organized so rapidly (six branches came into

being at once) that any doubt that might have lurked in the minds of outsiders

about Pakistan's ability to tackle the situation were dispelled once and or all.

Until June 1950, the Bank was engaged exclusively on jute operation.

Thereafter, it was felt that it could expand its business to include other

commodities as well. Bank took a big stride in 1952, when it replaced the

Imperial Bank of India, as an agent of State Bank of Pakistan. Presently, there

are 24 overseas branches, and 11 regional offices, 1250 Domestic branches of

the National Bank of Pakistan.

8/8/2019 Sab Report

8/84

1

Vision of national bank of Pakistan

To be recognized as a leader and a brand synonymous with trust, highest

standards of service quality, international best practices and social

responsibility.

Mission of national bank of Pakistan

NBP will aspire to the values that make NBP truly the Nations Bank, by:

Institutionalizing a merit and performance culture.

8/8/2019 Sab Report

9/84

1

Creating a distinctive brand identity by providing the

highest standards of services.

Adopting the best international management practices. Maximizing stakeholders value.

Discharging our responsibility as a good corporate citizen of Pakistan and in

countries where we operate

Core values of national bank of Pakistan

Highest standards of Integrity.

Institutionalizing team work and performance culture.

Excellence in service.

Advancement of skills for tomorrows challenges.

Awareness of social and community responsibility

GOALS AND OBJICTIVES

To be the pre-eminent financial institution in Pakistan and achieve market

recognition both in the quality and delivery of service as well as the range of

product offerings.

National bank of Pakistan is also a commercial organization and its mainobjective is profit maximization. This is achieved in two ways:

1. By increasing deposits.

2. By charging interest on loans provided to the private sector and business

community.

8/8/2019 Sab Report

10/84

1

Increase in deposits

By increasing its deposits a bank can extend greater amount of loan and hence

achieves higher profit. NBP is also improving its facilities and services to attract

customers with higher volume of deposits. There are two main factors involved in

increasing the deposits. These factors are improving the services and courtesy.

NBP is continuously working on these two factors to increase its deposits.

Extension of loans

The profitability of a bank largely depends on the amount given to people as loan

and the type of people to whom credit is given i.e. the credit worthiness of theborrowers. This strategy has worked quite well for NBP. Deposits are collected

from the people and invested in different projects to higher profits.

Some of the other objectives of NBP are:

i. Improve customer services.

ii. Quick disposal of credit cases.

iii. Efficient operation of the branches.

IMPORTANCE OF NBP/NBP FUNCTIONS

FOREIGN REMITTANCES

To facilitate its customers in the area of Home Remittances, National Bank of

Pakistan has taken a number of measures to:

Increase home remittances through the banking system

8/8/2019 Sab Report

11/84

1

Meet the SBP directives/instructions for timely and prompt delivery of

remittances to the beneficiaries

DEMAND DRAFTS

If you are looking for a safe, speedy and reliable way to transfer money, you can

now purchase NBPs Demand Drafts at very reasonable rates. Any person

whether an account holder of the bank or not, can purchase a Demand Draft

from a bank branch. This demand draft facilitate the transfor of money out side

the city.

TRAVELER'S CHEQUES

Travelers cheques are negotiable instruments, and there is no restriction on the

period of validity of the cheques. Rupee travelers cheque is available at all 700

branches of NBP. This can be encashed in all 400 branches of NBP. There is no

limit on purchase of this cheque. It is one of the safest ways for carrying money.

PAY ORDER

NBP provides another reason to transfer your money using our facilities. NBP

pay orders are a secure and easy way to move your money from one place to

another within the city.

INTERNATIONAL BANKING

8/8/2019 Sab Report

12/84

1

National Bank of Pakistan is at the forefront of international banking in Pakistan,

which is proven by the fact that NBP has its branches in all of the major financial

capitals of the world. Additionally, NBP have recently set up the FinancialInstitution Wing, which is placed under the Risk Management Group. The role of

the Financial Institution Wing is: -

To effectively manage NBPs exposure to foreign and domestic

correspondence

Manage the monetary aspect of NBPs relationship with the

correspondents to support trade, treasury and other key business areas,

thereby contributing to the banks profitability

Generation of incremental trade-finance business and revenues

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,

Saudi Arabia.

8/8/2019 Sab Report

13/84

8/8/2019 Sab Report

14/84

1

The scheme was launched in December 1995 to attract corporate customers. It

is a current account scheme and is part of the profit and loss system of accounts

in operation throughout the country.

COMMERCIAL FINANCE

NBP dedicated team of professionals truly understands the needs of

professionals, agriculturists, large and small business and other segments of the

economy. They are the customers best resource in making NBPs products and

services work for them.

BRANCHES

The Bank had a network of 1531branches in the country and 28 branches

in foreign countries. These countries are as follows:

1) - United States of America

2) - United Kingdom

8/8/2019 Sab Report

15/84

1

3) - France

4) - Germany

5) - Africa, Middle East Region6) - Bahrain

7) - Asia Pacific Region

8) - Japan

9) - Republic of Korea

10) - Central Asian States

11) - Bangladesh

12)-Peoples Republic of China

13) -Pakistan

ORGANIZATIONAL STRUCTURE

BOARD OF DIRECTORS

NAME DISIGNATION

Ali Raza Chairman & President

8/8/2019 Sab Report

16/84

1

Mr. Tariq Kirmani Director

Mrs. Haniya Shahid Naseem Director

Ms. Nazrat Bashir Director

Mr. Ekhlaq Ahmed SecretaryBoard of Directors

(Source Web site nbp.com.pk)

MANAGEMENT HIERARCHY

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISSTANT VICE PRESIDENTOFFICER GRADE IOFFICER GRADE IIOFFICER GRADE IIICASHIERNON CLERICAL STAFF

8/8/2019 Sab Report

17/84

1

SENIOR MANAGEMENT OF NBP

Senior Management of NBP consists of following member and their respectivedesignation.

Qamar HussainChief Operating Officer , Head of

Credit & Risk Management Group

Dr. Asif A. BrohiSEVP & Group Chief, OperationsGroup

8/8/2019 Sab Report

18/84

1

Shahid Anwar KhanSEVP & Group Chief, OverseasBanking Group / Corporate &Investment Banking Group

Ziaullah KhanSEVP & Group Chief AgricultureFinance Group

Dr. Mirza Abrar BaigSEVP & Group Chief, HumanResources Management &Administration Group

Amer SiddiquiSEVP & Group Chief, Commercial &Retail Banking Group

Tariq Jamali

SEVP Group Chief, Assets Recovery

Group / Corporate & InvestmentBanking Group

Nadeem A. IlyasSEVP & Group Chief, TreasuryManagement Group

Muhammad Nusrat VohraSEVP & Group Chief, Global HomeRemittance Management Group

Khalid Bin ShaheenSEVP & Group Chief, Audit &Inspection Group

Imam Bakhsh Baloch SEVP , Special Assignments,President's Secretariats

N. B. SoomroEVP/Group Chief, Special AssetsManagement Group

(Source www.nbp.com.pk)

DEPARTMENTALIZATIONDividing an organization into different parts according to the functions is called

departmentalization. So NBP can be divided into the following main.

CASH DEPARTMENT

http://www.nbp.com.pk/http://www.nbp.com.pk/

8/8/2019 Sab Report

19/84

1

Cash department performs the following functions

Receipt

The money, which either comes or goes out from the bank, its record should be

kept. Cash department performs this function. The deposits of all customers of

the bank are controlled by means of ledger accounts. Every customer has its

own ledger account and has separate ledger cards

Payments

It is a bankers primary contract to repay money received for this customers

account usually by honoring his cheques.

The Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in

order to fulfill the requirements Cheque must have the following.

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

8/8/2019 Sab Report

20/84

1

Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be

collected through clearing.

b) 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. It can also be collected through clearing.

c) Crossed Cheque

These cheques are not payable in cash at the counters of a banker. It can only

be credited to the payees account. If there are two persons having accounts atthe same bank, one of the account holder issues a cross-cheque in favour of the

other account holder. 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.

CLEARANCE DEPARTMENT

8/8/2019 Sab Report

21/84

1

A clearinghouse is an association of commercial banks set up in given locality for

the purpose of interchange and settlement of credit claims. The function of

clearinghouse is performed by the central bank of a country by tradition or bylaw.In Pakistan, the clearing system is operated by the SBP. If SBP has no office at a

place, then NBP, as a representative of SBP act as a clearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The

use of cheques in making payments has also widely increased. The collection as

settlement of mutual obligations in the form of cheques is now a big task for all

the commercial bank. When Cheque is drawn on one bank and the holder

(payee) deposits the same in his account at the bank of the drawer, the mutual

obligation are settled by the internal bank administration and there arises no

interbank debits from the use of cheques. The total assets and total liabilities of

the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at

the same bank as the drawer. He deposits the cheque with his bank other than of

payer for the collection of the amount. Now the bank in which the cheque has

been deposited becomes a creditor of the drawers bank. The depositor bank will

pay his amount of the cheque by transferring it from cash reserves if there areno offsetting transactions. The banks on which the cheques are drawn become in

debt to the bank in which the cheques are deposited. At the same time, the

creditors banks receive large amounts of cheques drawn on other banks giving

claims of payment by them.

The easy, safe and most efficient way is to offset the reciprocal claims against

the other and receive only the net amount owned by them. This facility of net

interbank payment is provided by the clearinghouse.

The representatives of the local commercial banks meet at a fixed time on all the

business days of the week. The meeting is held in the office of the bank that

officially performs the duties of clearinghouse. The representatives of the

8/8/2019 Sab Report

22/84

1

commercial banks deliver the cheques payable at other local banks and receive

the cheques drawn on their bank. The cheques are then sorted according to the

bank on which they are drawn. A summary sheet is prepared which shows thenames of the banks, the total number of cheques delivered and received by

them. Totals are also made of all the cheques presented by or to each bank.

The difference between the total represents the amount to be paid by a particular

bank and the amount to be received by it. Each bank then receives the net

amount due to it or pays the net amount owed by it.

In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are

being received by the bank in the first clearing. All details of the cheques are

recorded in this book.

Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the

details of the cheques that the bank has delivered to other banks.

8/8/2019 Sab Report

23/84

1

CREDIT DEPARTMENT

Advances department is one of the most sensitive and important of this bank.

The major portion of the profit is earned through this department. The job of this

department is to make proposals about the loans. The Credit Management

Division of Head Office directly controls all the advances. As we

known bank is a profit seeking institution. 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. Credit extensions are the most important

activity of all financial institutions, because it is the main source of earning.

However, at the same time, it is a very risky task and the risk cannot be

completely eliminated but could be minimized largely with certain techniques.

Any individual or company, who wants loan from NBP, first of all has to undergo

the filling of a prescribed form, which provides the following information to the

banker.

Name and address of the borrower

a)borrower basic fact sheet (BBFS).

b) Accounts details of other banks (if any).

c) Security against loan.

d) Exiting financial position of the company. And Signing a promissory note is

also a requirement of lending, through this note borrower promise that he will be

responsible to pay the certain amount of money with interest.

e) Undertaken of the employer

f) CIB report by state bank

8/8/2019 Sab Report

24/84

1

Principles of Advances

There are five principles, which must be duly observed while advancing money to

the borrowers.a. Safety

b. Liquidity

c. Dispersal

d. Remuneration

e. Suitability

Forms of Loans

In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the

form of cash finance, overdrafts and loans. NBP provides advances to different people in

different ways as the case demand.

a) Cash Finance This is a very common form of borrowing by commercial and

industrial concerns and is made available either against pledge or hypothecation

of goods. If the borrower does not utilize the full limit, the banker has to lose

return on the un-utilized amount. In order to offset this loss, the banker may

provide for a suitable clause in the cash finance agreement.

b) Running Finance The national bank deal in running finance secured loan,

and take the lien of govt. certificate e.g. DSC (defense saving certificate) as a

collateral by taking the 10% margin it will advances the

c) Demand Financing/Loans This is also an important service of NBP. When a

customer borrows from a banker a fixed amount repayable either in periodic

installments or in lump sum at a fixed future time, it is called a loan. 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.

8/8/2019 Sab Report

25/84

1

Products of NBP:

NBP premium Amadani:

Monthly Income Scheme

Earn up to 11% p.a. +

Minimum deposit of Rs. 20,000/- and a maximum deposit of Rs.

5,000,000/- for 5 years

Free Demand Draft, Pay Order and Cheque Book*

Convenience of NBP online Aasan Banking (for online banking customers)

Free NBP Cash Card (ATM+Debit)

Running finance facility up to 90%

8/8/2019 Sab Report

26/84

1

NBP premium saver:

PLS Saving Account

Earn up to 7.25% p.a. +

Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs.

300,000/-*

Free NBP Cash Card (ATM + Debit) Convenience of NBP Online Aasan Banking (for online banking

customers)

Two debit withdrawals allowed in a month & no limit on number of deposit

transactions

Profit calculated on monthly and paid on half yearly basis

8/8/2019 Sab Report

27/84

1

NBP karobar Scheme:

Mera Apna Karobar

Minimum down payment, 10% of asset price (5% for PCO & Telecaster)

Tenure 1 to 5 years (for PCO 2 years)

Grace period 3 months

Maximum loan amount Rs. 200,000/-

Age 18-45 years

Mark-up (variable) 1 year KIBOR + 2.00% p.a.

The customer will pay markup @ 6% p.a., rest will be borne by GOP*

Life & disability insurance paid by GOP*

8/8/2019 Sab Report

28/84

1

NBP SAIBAN:

Home Financing

Home Purchase

Home Construction

Home Renovation

Purchase of Land + Construction

Balance Transfer Facility (BTF)

NBP Saibaan

(Open the Door to Your Dream Home)

Home Financing

8/8/2019 Sab Report

29/84

1

NBP Advance Salary:

Personal Loan

Easy installments of 1 to 60 months at your choice

No minimum income collateral & insurance charges required

Quick processing and fastest disbursement

The product is for permanent employees of Government, Semi

Government and Autonomous bodies receiving salaries through NBP

accounts

NBP cash card:

8/8/2019 Sab Report

30/84

1

ATM + Debit Card

Use it as an ATM in any of the ATMs in Pakistan

Use it as Debit Card in any of the outlets with ORIX POS machine

Cash withdrawal up to Rs. 20,000/- per day

Account Balance Enquiry

Mini Statement (Only at NBP ATM)

PIN Change facility (Only at NBP ATM)

NBP investor advantage:

Financing Facility for Stock Investors

Comfortable environment for trading No security requirement, except for the customers equity

Customers equity freely available for investment

Equity acceptable in cash or approved shares

8/8/2019 Sab Report

31/84

1

NBP cash and gold:

Ready Cash against Gold

Facility of Rs. 10, 000/-against each 10 gms of net weight of Gold

Ornaments

No maximum limit of cash

Repayment after one year

Roll over facility

No penalty for each repayment

NBP kisan taqat:

Benefits of borrowing from

NBP:

8/8/2019 Sab Report

32/84

1

Nearest bak branches

Easy paper work

No need to make monthly payments

Experienced staff

NBP kisan Dost:

Agriculture Farming Program

Competitive mark-up rate

Quick & easy processing

Delivery at the farmers doorstep

Technical guidance to farmers

Wide range of financing schemes for farmers

Finance facility up to Rs. 500,000/- for landless farmers against

personal guarantee

Financing available against pass book, residential/commercial

property, gold ornaments and paper security

Loan facility on revolving basis for three years (renewable on yearly basis

without documentation and approval)

NBP Kisan Dost

NBP Kisan Dost

( Agriculture Made Easy)

8/8/2019 Sab Report

33/84

1

NBP Pak Remit:

Pakremit is an internet based Home Remittance

Service. This service is available to U.S. residents

for sending money to their family and friends in

Pakistan. One must have a valid US Dollar account

with a U.S. bank or a US Dollar credit or debit card in order to remit funds

through this channel.

Remitters in USA can log on to our user friendly website, www.pakremit.com andeasily remit funds to Pakistan from the comfort of their homes, in a matter of

minutes.

The service is fully secure with advance encryption application and is available

for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at

competitive levels and the remitters have the ability to track delivery of funds as

well.

Process:

Remitters log on to www.pakremit.com and after completing the

registration process, are able to remit funds. The whole process takes a

few minutes.

Funds in Pak Rupees can be sent to beneficiaries, having an account with

any bank in Pakistan, including NBP. While funds are credited directly to

beneficiaries maintaining accounts with NBP, a pay order or demand draftis couriered to other banks for their customers. Pay order or demand draft

can also be couriered directly to the beneficiarys office or home, if

requested by the remitter.

8/8/2019 Sab Report

34/84

1

Funds in US Dollars can be sent only to a Beneficiary maintaining a US

Dollar account with one of NBPs Foreign Exchange Branches. Click here

for details of NBP Foreign Exchange Branches.

NBP protection shield:

Personal Accident Insurance

No documentation

No medical required

Premium Auto Debit facility & choice of deactivation

Coverage includes death due to

Natural Calamities e.g. Earthquake, Flood, Cyclone etc

Accident

Civil Commotion*

Strikes*

Acts of Terrorism*

NBP Protection Shield

(Life is Precious)

REMITTANCE/BILLS DEPARTMENT

8/8/2019 Sab Report

35/84

1

Remittance means a sum of money sent in payment for something. 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 thefollowing forms of remittances.

a) Demand Draft

b) Pay Order

c) Mail Transfer

Demand Draft

Demand draft is a popular mode of transfer. The customer fills the application

form. Application form includes the beneficiary name, account number and a

senders name. The customer deposits the amount of DD in the branch. After the

payment the DD is prepared and given to the customer. NBP officials note the

transaction in issuance register on the page of that branch of NBP on which DD

is drawn and will prepare the advice to send to that branch. The account of thecustomer is credited when the DD advice from originating branch comes to the

responding branch and the account is debited when DD comes for clearance. DD

are of two types.

a) Open DD: Where direct payment is made

b) Cross DD: Where payment is made though account.

NBP CHARGES FOR DD

I. Up to Rs. 50,000/- is Rs 50/- only

8/8/2019 Sab Report

36/84

1

II. Over Rs. 50,000/- is 0.1%

Pay OrderPay order is made for local transfer of money. Pay order is the most convenient,

simple and secure way of transfer of money. NBP takes fixed commission of Rs.

25 per pay order from the account holder and Rs. 100 from a non-account

holder.16% on PO commission as federal excise duty.

Mail Transfer

When the money is not required immediately, the remittances can also be made

by mail transfer (MT). Here the selling office of the bank sends instructions in

writing by mail to the paying bank for the payment of a specified amount of

money. Debiting to the buyers account at the selling office and crediting to the

recipients account at the paying bank make the payment under this transfer.

NBP taxes mail charges from the applicant where no excise duty is charged.

Postage charges on mail transfer are actual minimum Rs. 40/- if sent by

registered post locally Rs.40/- if sent by] registered post inland on partys

request.

DEPOSIT DEPARTMENT: -

It controls the following activities:

A/C opening.

Issuance of cheque book.

Current a/c

Saving a/c

Cheque cancellation

Cash

Account opening

8/8/2019 Sab Report

37/84

1

The opening of an account is the establishment of banker customer

relationship. Before a banker opens a new account, the banker should determine

the prospective customers integrity, respectability, occupation and the nature ofbusiness by the introductory references given at the time of account opening.

Preliminary investigation is necessary because of the following reasons.

Avoiding frauds

Safe guard against unintended over draft.

Negligence.

Inquiries about clients.

There are certain formalities, which are to be observed for opening an account

with a bank.

Formal Application

Introduction

Specimen Signature

Minimum Initial Deposit

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,

however, he must have the following basic qualifications.

He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.

The agreement should be made for lawful object, which create legal relationship

Not expressly declared void.

Types of Accounts

Following are the main types of accounts

8/8/2019 Sab Report

38/84

1

Individual Account

Joint Account

Accounts of Special Types

Partnership account

Joint stock company account

Accounts of clubs, societies and associations

Agents account

Trust account

Executors and administrators accounts

Pak rupee non-resident accounts

Foreign currency accounts

Issuing of cheque book:

This department issue cheque books to account holders.

Requirements for issuing cheque book The account holder must sign the requisition slip

Entry should be made in the cheque book issuing book

Three rupees per cheque should be recovered from a/c holder if not then

debit his/her account.

Current account

These are payable to the customer whenever they are demanded. When a

banker accepts a demand deposit, he incurs the obligation of paying all cheques

etc. drawn against him to the extent of the balance in the account. Because of

their nature, these deposits are treated as current liabilities by the banks.

Bankers in Pakistan do not allow any profit on these deposits, and customers are

required to maintain a minimum balance, failing which incidental charges are

deducted from such accounts. This is because the depositors may withdraw

8/8/2019 Sab Report

39/84

1

Current Account at any time, and as such the bank is not entirely free to employ

such deposits.

Until a few decades back, the proportion of Current Deposits in relation to FixedDeposits was very small. In recent years, however, the position has changed

remarkably. Now, the Current Deposits have become more important; but still the

proportion of Current Deposits and Fixed Deposits varies from bank to bank,

branch to branch, and from time to time.

Saving account

Savings Deposits account can be opened with very small amount of

money, and the depositor is issued a cheque book for withdrawals. Profit is paid

at a flexible rate calculated on six-month basis under the Interest-Free Banking

System. 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.

It discourages unnecessary withdrawals from the deposits.

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.The purpose of these accounts is to inculcate the habit of savings in the

constituents. As such, the initial deposit required for opening these accounts is

very nominal.

Cheque cancellation:

This department can cancel a cheque on the basis of;

Post dated cheque

Stale cheque

Warn out cheque

Wrong sign etc

Cash

8/8/2019 Sab Report

40/84

1

This department also deals with cash. Payment of cheques, deposits of

cheques etc.

FOREIGN EXCHANGE DEPARTMENT:

This department mainly deals with the foreign business. The main functions

of this department are:

International trading (import & export)

Foreign currency accounts dealing.

Foreign Remittance dealing.

International trading (import & export)

The bank deal in international trade. The bank is only concern with the document

provide by the concern parties in the foreign trading. The dealing of bank in

export and import on the bases of following documentation

1. Performa invoice

2. Commercial invoice

3. Import foam (I form)

4. Export form (E form)

5. Undertaken by the parties

6. Bill of exchange

7. Bill of lading

8. Letter of credit

9. Inco. Terms

8/8/2019 Sab Report

41/84

1

Foreign currency account dealing

This depts. deals with the foreign currency accounts which mainly include

dollar account, euro account etc. the process of account dealing is same ashome currency dealing but there is a change in the rate which is associated with

the foreign currency account.

Foreign Remittance dealing

This is very important function of this depts. It deals with different remittance

which is sent or received by the customer.

ACCOUNT DEPARTMENT

The account deals with following function,

1. Preparation the different type of debit and credit voucher.

2. Making the payroll of all his employees

3. Currency chest transaction which is done by the main branch. The

function of this department is to maintain the currency balances with

branches according to their specifying limit. And send the detail to SBP

within the specified period. This function is very strict as the SBP impose

large penalty in case of any delay or misrepresentation

ADMINISTRATION DEPARTMENT

THIS DEPARTMENT PERFORMS THE FOLLOWING FUNCTIONS:

RECONCILIATION OF DIFFERENT ACTIVITIES

STAFF LOAN

WALFARE

ADMINISTRATION

8/8/2019 Sab Report

42/84

1

FINANCIAL ANALYSIS

INTRODUCTION

Financial analysis, though varying according to the particular interests of the

analyst, always involves the use of various financial statements primarily the

balance sheet and income statement. The balance sheet summarizes the assets,

liabilities, and owners equity of a business at a point in time, and the income

statement summarizes revenues and expenses of the over a particular period oftime. A conceptual framework for financial analysis provides the analyst with an

interlocking means for structuring the financing.

Horizontal Analysis

National Bank of PakistanBalance Sheet2008-2009

Assets CHANGE % CHANGE(Rupees in 000)

Cash and balances with treasury banks 7,217,907 22.23Balances with other banks (2,769,498) (42.11)Lending to financial institutions (20,030,428) (95.01)

8/8/2019 Sab Report

43/84

1

Investments net 49,602,945 78.13Advances net 20,721,443 10.45Operating fixed assets 6,969,967 76.98

Deferred tax assets net (172373) (100)Other assets net 6,837,311 61.98____________________

Total Assets 68,377,274 19.99

LiabilitiesBills payable 3,389,379 47.81Borrowings 15,463,355 64.58Deposits and other accounts 34,636,228 13.45Sub-ordinate loan (1,118,208) (70)Liabilities against assets subject to finance lease ------ ----

Deferred tax liabilities net 1,180,162 100Other liabilities 550,997 4.93 __________ _____

Total Liabilities 54,101,913 17.96

Net assets 14,275,361 34.95Represented by:

Share capital 819,492 15Reserves 9,338,212 37.86Unappropriated profit (400,223) 07.24

Surplus on revaluation of assets - net of tax 4,517,880 87.09

________ _____14,275,361 34.95

Horizontal AnalysisNational Bank of PakistanProfit and Loss Account

2008-2009 CHANGE % CHANGE(Rupees in 000)

Mark-up / return / interest earned 6,008,534 23.31Mark-up / return / interest expensed 3,340,174 73.81Net mark-up / interest income 2,668,360 12.56

8/8/2019 Sab Report

44/84

1

Provision for diminution (15,928) 13.14Provision against loans and advances 1,945,043 191.72Bad debts written off directly (46,801) (99.58)Net mark-up / interest income after provisions 786,046 03.92

Non-mark-up / interest incomeFee, commission and brokerage income 323,375 13.99Dividend income (179,501) 22.11Income from dealing in foreign currencies 1,398 0.20Gain on sale of securities net 895,000 147.72Unrealized loss on revaluation of investmentsclassified as held for trading (13,105) (13105)Other income net (7,292) 01.28Total non-mark-up / interest income 1,019,875 20.43Total Income 1,805,921 07.21Non-mark-up / interest expenses

Administrative expenses (1,460,176) 22.52

(Reversal) / Other provision net (15,154) (132.80)Other charges 473,886 710.39Total non-mark-up / interest expenses (1,001,444) (15.26)Extra ordinary / unusual item --------------- ---------Profit before taxation 2,807,365 15.17

Taxation - Current year 740,913 13.00- Prior years (1,887,970) (31.82)- Deferred 831,258 1312.54Profit after taxation 3,123,164 25.72

Unappropriated profit brought forward 540,713 10.84Transfer from surplus on revaluation-of fixed assets - net of tax (20,311) 63.14

Profit available for appropriation 3,643,566 21.23

Basic and diluted earnings per share - after tax 04.97 25.71

National Bank of Pakistan

Categories of shareholders

As of December 31, 2009

Particulars Shareholding Percentage

8/8/2019 Sab Report

45/84

1

Directors, CEO and children 29,414,134 4.6817

Associated Companies 49,601,842 7.8949

NIT & ICP 7,305 0.0011

Banks, DFI & NBFI 3,941,990 0.6274

Insurance Companies 39,538,161 6.2931

Modarabas & Mutual Funds 2,153,414 0.3427

Public Sector Cos. & Corp. 115,204,125 18.3365

General Public (Local) 143,491,134 22.8388

General Public (Foreign) 2,127,329 0.3385

Others 83,306,246 13.2594

Foreign Companies 159,491,163 25.3854

Company Total 628,276,843 100.00

INTERPRETATION

Although the banks total assets have increased by 19.19% in 2009 butthe bank of NBP should take notice of its balance with other banks. NBPBanks balance with other banks has decreased by 42.11% which is not apositive sign for the bank of NBP.

8/8/2019 Sab Report

46/84

1

The investment made by NBP increased by 78.13% that is a good sign forthe bank of bank.

In order to meet the expansion plans, the fixed assets have beenincreasing but the borrowings form other banks that represent long termliabilities have increased without a corresponding increase in the fixedassets of the bank.

Bills Payable increased by 47.81% which is no the positive sign for thebank perspective. It increases the trend of short term liabilities.

NBP has been successful in maintaining a handsome amount in ReserveAccount to meet the emergency requirements. And the balance has beenincreasing for the past two years.

A heavy decrease has been analyzed in lending to financial institutions,which will decrease the efficiency of the bank.

Profit after taxation increased by 25.72% which is a positive sign for NBPBanks the bank.

Total interest expenses decreased by 15.26% which is good for banks the

bank.

VERTICAL ANALYSIS

8/8/2019 Sab Report

47/84

1

Vertical analysis is that analysis in which each item within the financial statement

is expressed in terms of a percentage of a base amount. For example, in

Balance Sheet individual asset is shown as percentage of total assets and inincome statement selling expenses are shown as percentage of total expenses.

For the purpose of analysis and comparison current year data shown in

percentage is compared with the data in percentage of the last year. One can

easily judge the favorable and unfavorable changes in two years financial

statements.

I have used the two years financial statement data years ending 2008 and

2009 and compared the each item of the financial statements and showed the

Banks trend from one year to another.

Vertical Analysis

NBP

8/8/2019 Sab Report

48/84

1

Balance Sheet

2008-2009

Assets 2009 2008 % %

Cash and balances with treasury banks 9.67 9.49

Balances with other banks 0.93 1.92

Lendings to financial institutions 0.23 6.16

Investments net 27.57 18.56

Advances net 53.35 57.95

Operating fixed assets 3.90 2.65

Deferred tax assets net --- 0.05Other assets net 4.35 26.20

100 100

Liabilities

Bills payable 2.55 2.07

Borrowings 9.60 7.00

Deposits and other accounts 71.16 75.26

Sub-ordinated loan 0.12 0.47

Liabilities against assets subject to lease --- ---

Deferred tax liabilities net 0.288 ---Other liabilities 2.86 3.27

Represented by:

Share capital 1.53 1.60

Reserves 8.28 7.21

Unappropriated profit 1.25 1.62

Surplus on revaluation of assets - net of tax 2.36 1.52

100 100

Vertical analysis

Profit & Loss Account

8/8/2019 Sab Report

49/84

1

NBP

2008- 2009

% change in 09 % change

Mark up /interest expensed/ return 25

Interest income 75.15 8

Provision for diminution In the value of investment 0.33

provision against loan and advances 9.31

bad debts written of directly 0.0006Net markup/interest income after provision 65.61 7

fee/commission/brakeage income 8.28

dividend income 1.98

income from dealings of forghn currencies 2.18

gain of sale of securities net 4.72unrealized loss on revaluatin of investment classifiedas -0.041

other income net 1.77

total non markup/interest income 84.52 9

admin exp. 15.8 2

reversal/other provision net -0.011 0

other charges 1.7

profit before tax 67.03 7

Taxation 19 2

profit after tax 48

8/8/2019 Sab Report

50/84

1

RATIO ANALYSIS

Ratio analysis includes method of interpreting financial ratios to access the

performance of any organization. The basic input to ratio analysis was

profit and loss account and balance sheet. Ratio analysis of any

organization was in interest of its creditors, employees, shareholders and

of its management as well. Both existing and prospective customer are

interested in the ratio analysis of organization.

Ratio analysis was a valuable aid to management in the discharge of its basic

functions such as planning, forecasting, control etc. these ratios describe the

relationship with the functioning of the business and helpful for controlling cost

of goods manufactured. The great advantage of ratio analysis is that it reduces

raw data of widely varying magnitude to a common comparative basis. Thus,

ratio analysis is the most meaningful to compare financial information regarding

a giving company.

8/8/2019 Sab Report

51/84

1

Return on Total Assets

This ratio shows the yield earned by the use of assets in financial year.

Formula:

Profit after tax /total assets * 100

Interpretation:

This ratio is increased from 3.5493% in the year 2008 to 3.7189%in year2009

due to increase in markup & interest earned during the year 2009 in spite of

increase in assets by the way of revaluation which is a sign of good performance

of the bank during a year from good performance we can say that the assets of

the bank has been increased.

2009 2008

Profit after tax 15,265,562 12,142,398

Total Assets 410,485,517 342,108,243

Return on total Assets 3.7189% 3.5493%

8/8/2019 Sab Report

52/84

8/8/2019 Sab Report

53/84

1

Earnings Per share

This is very important ratio for the shareholders and investors. The shareholders

and investors give the main emphasis to the earning per share while making the

decision to invest or to become a member of the company. This ratio is

calculated as follows:

Formula

Net profit after tax / total no. of shares

2009 2008

Profit after tax 15,265,562,000 12,142,398,000

No. of outstanding shares 628,276,843 628,276,843

Return on shareholders

fund

24.298 19.327

Interpretation

As discussed earlier the earning per share is of utmost importance to theshareholders and investors, here in this case the earning per share has

increased to Rs. 24.298 in the year2009 from Rs. 19.327 in the year2008, which is

better sign from shareholders and investors perspective. Because now customer

will get more money on one share. This will help to attract customer.

8/8/2019 Sab Report

54/84

1

NET PROFIT MARGIN

Formula:

Net Profit after tax/Interest and discount * 100

2009 2008

Profit after tax 15,265,562 12,142,398

Interest and discount 31,786,595 25,778,061

Net Profit Margin 48.0252 47.1036

Interpretation

There is a slight difference in net profit margin. Profit margin can be calculated

through subtracting Interest and discount from profit after tax. It increases from

47.1036 in year 2008 to 48.0252 in year 2009 which is a positive sign for the

organization. Now organization will earn more money.

8/8/2019 Sab Report

55/84

1

Loan to Total assets

Loan to total assets shows the empirical relation between loan and assets

acquired by the bank. Lower the ratio is the better it is for the institution. This

ratio is carried out by the following method:

Formula

Total Loan / total assets * 100

2009 2008

Total Loan 218,960,598 198,239,155

Total Assets 410,485,517 342,108,243

Loan to Asset Ratio 53.3419% 57.9463%

Interpretation

The loan to assets ratio of NBP Bank is decreasing from 57.9463% in the year

2008 to 53.3419% in the year 2009 that shows improvement in policies and

working of the bank. Because employees are working better than previous. Bank

has issued more loan due to trust of the customer in bank hence assets are

increased. Improvement in policies mean bank is now improving its marketing

strategy.

8/8/2019 Sab Report

56/84

1

Loan to Deposit Ratio

Formula

Total Loan/Total Deposits * 100

2009 2008

Total Loan 218,960,598 198,239,155

Total Deposits 292,098,066 257,461,838

Loan to Deposit Ratio 74.9613% 76.9975%

Interpretation

This ration shows a relationship between loans and advances and reveals how

much productively the deposits are used. Analysis shows a decrease in loan in

year 2009 as compare to year 2008. Due to attractive interest rates in year 2009

there are more lending in year 2009.

8/8/2019 Sab Report

57/84

1

Cash to Deposit Ratio

Formula

Cash/Deposits * 100

2009 2008

Cash 43,491,402 39,042,993

Total Deposits 292,098,066 257,461,838

Cash to Deposit Ratio 14.8893% 15.1646%

Interpretation

This Ratio shows that how much cash is available to meet the obligations of the

depositors. In 2008 the ratio was 15.1646% but in year 2009 this ratio decreases

to 14.8893%. This decrease shows that the increase in cash is les than the

increase in deposits due to which the ratio has declined.

8/8/2019 Sab Report

58/84

1

Fixed Asset to Long term Debt Ratio

Formula

Net Fixed Assets/Long term Debt * 100

2009 2008

Net Fixed Assets 16,024,123 9,054,156

Long Term Debt 331,984,129 283,002,754

F. Asset to L.T. Debt Ratio 4.8268% 3.1993%

Interpretation

This ratio shows the relationship between the total debts to be taken to generate

the fixed assets. Here the analysis shows that this situation is not favorable for

the band because there is more need to rely on external funds. Bank will have to

borrow more loans from others due to which he has to pay too much interest onloan profit will decrease. Thats why this is not good for bank.

8/8/2019 Sab Report

59/84

1

Return on Equity Capital

Formula

Net Profit after Tax/Equity Capital * 100

2009 2008

Net Profit after tax 15,265,562 12,142,398

Equity Capital 6,282,768 5,463,276

Return on Equity Capital 242.98% 222.25%

Interpretation

Calculation made on the base of data available shows that profit after taxes in

2009 has increased due to decreased financial cost of funds for which expected

investment avenues open up the situation. Here in this ratio we see that ratio is

disturbed by the single factor of increase in Equity Capital as therein further issue

of bonus shares.

8/8/2019 Sab Report

60/84

1

Operating Ratio:

Formulae:

Operating Costs/Interest earned * 100

2009 2008

Operating Cost 5,559,267 6,560,711

Interest Earned 31,786,595 25,778,061

Operating Ratio 17.4893% 25.4508%

Interpretation:

Although the ratio is favorable as ratio shows the operating costs are increasing

year by year. The increasing trend of the operating costs shows the inefficiency

of the bank to control the operating costs. But the Operating costs itself as a

percentage of the interest earned is decreasing. Although the bank is trying to

control these costs they have succeeded in past years. We can say that bank is

improving its position from past.

8/8/2019 Sab Report

61/84

8/8/2019 Sab Report

62/84

1

bank.

Alternate duties in SBP Absence

The NBP performs additional services for its customers as well as the

other bank customer in the absence of SBP.

More deposits than other Banks

NBP has the relative competence in having more deposits than the other bank.

This is because of the confidence the customer have in the bank. The bank being

the privileged and oldest bank in banking sector of Pakistan enjoys this edge

over all others, lacking it.

Broad Network

The bank has another competency i.e. it has broad-basses network of branches

throughout the country also more than one branch in high productive cities. The

customers are provided services at their nearest possible place to confirm

customer satisfied.

Strictly followed rules & regulations

The employees at NBP are strict followers of rule & regulation imposed by bank.

The disciplined environment at NBP bolsters its image and also enhances the

over all out put of the organization.

8/8/2019 Sab Report

63/84

1

Professional Competence

The employees at NBP here have a good hold on their descriptions, as they arehighly skilled Professionals with back ground in business administration, banking,

economics etc. These professional competencies enable the employees to

understand and perform the function and operation in better way.

Western union facility

National Bank of Pakistan is only one bank which has the facility of Western

union. In this particular scheme money is transfer in Pakistan from abroad. This

is the fastest way to money transfer. You can receive the money from bank to

see the name and password of particular client.

ATM finder

There is also strength of NBP that they are found the ATM. They now provide

this facility to the customers.

Customer satisfaction

Because of government's bank, it is enjoying the customer's satisfaction.

Customers feels secure their money in NBP.

Online banking

There is also strength of NBP that 130 branches are online. It helps the speedy

8/8/2019 Sab Report

64/84

8/8/2019 Sab Report

65/84

1

Inefficient Counter Services in the Rush Hours

During the rush hours, the bank is founded out to be a total flop to handle the

mob of people peaking from windows and doors. The bank has deficiency to

operate in the stages of rush hours where the people find them services

entangled in a situation of nowhere because they are not well served.

Lack of Computerized Network

The bank lack the strength of being powered by the network of computers, which

have saved time, energy and would have lessened the mental stress, the

employees have currently. This would add to the strength if it were powered by

network of computers.

Lack of Modern Equipment

The bank lacks the modern Equipment that is note counting machine computers.

Even if there is any equipment they lack to fall in the criteria of being rearmed as

update and upgraded

Uneven Work Distribution

The workload in NBP is not evenly distributed and the workload tends to be more

on some employees while others abscond away from their responsibilities, which

server as a de-motivation factor for employees performing above average work.

8/8/2019 Sab Report

66/84

1

Lack of communication between employees

During the internship in NBP I found the problem of lack of communicationbetween the employees and management. They have not very much

understanding with each other and not share the work of each other.

Public dealing is not very effective

Public respect is not very effective in NBP. Employees are not taking care

of the customers, especially in pension and bills department.

Staff shortage

There is also weak point for NBP that staff is very short and more staff

is required to meet the needs of the branch work.

OPPORTUNITIES

Electronic Banking:

The world today has become a global village because of

advancement in the technologies, especially in communication sector. More

emphasis is now given to avail the modern technologies to better the

performances. NBP can utilize the electronic banking opportunity to ensure

on line banking 24 hours a day. This would give a competitive edge over

others.

8/8/2019 Sab Report

67/84

1

Growing banking system:

Nowadays banking system is growing quickly so NBP have opportunities toimprove the standard and get the more share in the market.

Increase in economic activities:

The economic activities are increase nowadays, so banks are

contributes more in economic activities. Banks are played role in trade

and commerce. So the business of commercial banks is increase.

Install Of New ATM

It has opportunity to install new ATM machine which will help NBP to attract and

satisfy its customers.

THREATS

Emergence of New Competitors

The bank is facing threats with the emergence of new competitors especially in

terms of foreign banks. These foreign banks are equipped with heavy financial

power with excellent and innovative ways of promoting and performing their

services. The bank has to take initiative in this regard or will find itself far back in

competition.

8/8/2019 Sab Report

68/84

1

Political Pressure by Elected Govt.

The ongoing shift in power in political arena in the country effects theperformance of the bank has to forward loans to politically powerful persons

which create a sense of insecurity and demoralization in the customer as well as

employees.

Customer Complaints

There exists no regular and specific system of the removal of customer

complaints. Now a day a need for total customer satisfaction is emerging and in

their demanding consequences customer's complaints are ignored

Increase in no. of banks

Increase in no. of banks is a threat for National Bank of Pakistan. No. of

private banks (commercial and private) are operating their business and provide

the same facilities. So increase in no. of banks is a threat for NBP.

Modern type of banking

Modern and computerized banking is required to fulfill the customer's

need. So maximum branches of NBP are worked in old traditional ways.

The whole structure changes to online

NBP have wide network of branches. Only 130 branches are online, so it is very

difficult and time consumed to convert all branches to online system. So there is

also risk involves that if one commuter of one branch suffers in problem, all

8/8/2019 Sab Report

69/84

1

system and all commuters of all branches must be turnoff.

Downsizing

The bank is currently acting upon the policy of downsizing which threaten the

environment of the bank Employees feel insecurity in doing their jobs and work,

PEST Analysis

A broad view of market is important when management is interested in

introducing better services for customers. Rapid technological change, global

competition and the diversity of buyers preferences in many markets require the

constant attention of the market vouchers to identify promises business

opportunities, see the shifting requirements of the buyers, evaluate changes in

8/8/2019 Sab Report

70/84

1

competitors positioning and guide the choice of which buyers to target and

classify them according to respective segments.

Identification of external and macro factors that influence buyers and thus

change the size and composition of market overtime involves initially building

customer profiles. These influences include:

Political environment

Economic Indicators

Socio cultural environment

Technological factors

Political Environment

The events in the last couple of years; ever since the sacking of Chief JusticeIftikhar Choudhary, Pakistan has faced crisis after crisis, including the lawyers

movement, violence in Karachi, the Lal Masjid debacle, militancy in FATA and

NWFP and its impact on other parts of the country, the return of Benazir Bhutto

and her subsequent assassination, and current ongoing military operation in

Swat all the above events indubitably made a huge impact on the economy.

8/8/2019 Sab Report

71/84

1

Stability and law and order situation under the political regime is very important

for the economy as a whole. The present state of the government in Pakistan isdirectly affecting the policies of banks. Continuous political changes have

disrupted the policies and objectives as each regime brings with it its own

agenda. Organizations need time to adjust to one regime and then work with it

towards economic enhancement. Due the wrong policies of the government, the

talibanization also develop in Pakistan and become the international issue in

Pakistan and badly affected the Pakistan repute in the world and promote the

uncertain conditions for the business in the Pakistan. Due to this the investors

are not interested in the Pakistan.

Economic Indicators

The economy of any country directly influences any financial organization.

Economic indicators include Gross Domestic Product (GDP), inflation, balance of

payment, debt of the government.

Pakistans economy has witnessed the most challenging period after posting six

consecutive years of healthy economic growth. However, the strong

fundamentals were compromised to prevailing global crises thats shacked the

confidence of global investors and FDI flowing in the country. The steep rise in oil

prices to U$ 147 a barrel, soaring inflation hitting a 24% mark, huge fiscal deficits

and balance of payments issues coupled with plummeting forex reserves added

to the economys move to an unstable growth trajectory.

Also the load shading is another factor that affects the Pakistan economy badly.

This not the end of the story after this Pakistan economy face lot of problems like

bomb attacks in Pakistan no electricity and the unstable government, due to this

the investor are not invest in the Pakistan and the existing business men are

loosing their business unit due to the loss.

8/8/2019 Sab Report

72/84

1

Due to this poor economy, businesses are reaping low profits and stock market is

in great danger. Pakistans foreign debts are rising day by day so such a situation

is a big challenge for banking institution to survive. The financial crisis in Pakistanhas made the management of NBP tensed to work in such an environment.

Socio cultural environment

A low saving culture has offset the huge population advantage this is enjoyed by

Pakistan. Also culture is dedicated by the religion, and in Pakistan a significant

segment of the population is reluctant to accept interest for their deposits due to

the negative religious implications of such an act. About 70% of Pakistans

population is based on rural areas and literacy rate of the country is very much

low, thus making it harder for banks to mobilize their deposits within these

regions.

However, in today world, the customers are becoming more intelligent and

through media they keep themselves up to date. Thus, the lifestyle and

expectations of the customers from the service provider is inreasing day by day.

Technological Factors

Banks in the developed world have been turning to heavy IT investments, which

differentiate their products, provide response times, enhance accessibility and

improve customer satisfaction. Though investing in state-of-the-art host banking

solution, ATM and POS (point of sale) networks, visa, MasterCard, and, smart

cards, telebanking, internet banking and now mobile banking are common IT

investment in the developed world, it is now that these products and services are

gaining faster acceptance in Pakistan.

8/8/2019 Sab Report

73/84

8/8/2019 Sab Report

74/84

1

day without relaxing while some others have nothing to do at all. This not only

creates confusion among employees but also hurting and disturbing for overall

setup of the bank. And above all it results in dissatisfaction among customers aswell.

Bank duty to maintain secrecy

They don't care about maintaining secrecy, especially during the rush hours.

They speak loudly about the account position and while getting clearance of

cheque the person can easily get the whole information from the ledge. The

deposit clerk must be careful while passing any cheque. In this regard another

shortfall is in giving the information about the balance on telephone.

Excessive paper work

It is notified that due to the lengthy procedure of paper work the bank employee

are over burdened. They are unable to give proper attention to the clients and

face difficulties in getting their job done. One reason for lengthy procedure and

excessive paper work in the bank is the lack of computerized technology.

More accounts fewer deposits

Efficient banking is one which does not emphasize on number of accounts but on

greater amount of deposits. NBP is more interested in increasing its number of

account irrespective to its deposit. The main reason behind it is that bank does

not provide personalize service to all the account holders and does not improve

its quality and services.

Delegation of authority

8/8/2019 Sab Report

75/84

1

Manager has very limited authority; he has to take the approval from his

management authority i-e. In case of advance he has to take the approval ofgeneral and regional manager. The other problem is created, when the manager

is not present in his office, the customer have to wait for hours. This discourages

both customer and officers because they have to suffer a lot

Carelessness in opening of account

When customer comes to open an account, the staff does not bother to check

his/her place phone number and permanent address. It is important because in

case of overdraft by mistake or anything which places his account in debit it will

be difficult to trace him. On the other hand he may be involved in any fraudulent

activities against the bank. In this case the bank will be in awkward position

Lack of specialized training

NBP does not provide adequate facility of specialized training to their staff.

Training is generalized rather than specialized. As the worker finishes his

training, he is inducted into a specific field without having great deal of

knowledge about the field

Low Profit Rates

Most of the customers shifted their account to the National Saving Center

because of the low rates of saving deposit discourages the customers. Bank

should increase their profit rates to attract customers.

Delays in Loan Advancement

8/8/2019 Sab Report

76/84

1

It has been observed that there are delays in sanctioning of cases form the head

office, which results in customer dissatisfaction.

Lack of business communication

There is no proper way to give information to their customer. To avoid this minor

dissatisfaction and tension in the mind of customer, and deficiency of the service,

it is recommended that the bank should provide brochures etc containing

information in details.

GENERAL SUGGETIONS

NBP is an effectively operating and profit making organization and carrying out

its activities under a specified system of procedure. The main regulatory body is

State Bank of Pakistan, which provides policy guidelines and ensures that the

money market operates on sound professional basis. While the head office

specifies the whole procedure of function and operations. This procedure has

been modernized with the passage of time with a view to streamline the

approach and underlying procedure for effective overhauling of its own

capabilities so as to bring them at par with international practices.

Here I am giving some suggestions, which in my view can add some input for

efficiency and better performance of NBP.

The recommendations are as follows:

Professional training

8/8/2019 Sab Report

77/84

1

NBP staff lacks professionalism. They lack the necessary training to do the job

efficiently and properly. Although staff colleges in all major cities but they are not

performing well. For this purpose these staff colleges should be reorganized andtheir syllabus should be made in such a way to help the employee understand

the ever changing global economic scenario.

Banking council of Pakistan should also initiate some programs to equip the staff

with much needed professional training.

Delegation of authority

Employees of the bank should be given a task and authority and they should be

asked for their responsibility.

Performance Appraisal

The manager should strictly monitor the performance of every staff member. All

of them should be awarded according to their performance and result in the

shape of bonuses to motivated and incite them to work more efficiently.

Changes in Policies

There should not be any abrupt policies change by the upper management, as

this practice hurts the customer confidences in the bank. Government should

make long term policies.

Need of Qualified Staff

Required, qualified staff should be provided to branch in order to improve the

functioning of the branch. Especially a telephone operator should be appointed.

Utility Bill Charges

8/8/2019 Sab Report

78/84

1

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard

job despite this working resulting in a loss to then Rs 3 to5 per transaction. Thesecharges should be increased to RS 10 per bill to enable the branch to cover their

handling costs and make some profit.

Link with the Head Quarter

100 major branches of NBP should established a direct link with the, head

quarter. In Karachi, through Internet or Intranet. This will make the functions and

decision making of the management easier and convenient.

Credit Card

National bank of Pakistan should start its operation in credit card. These cards

are very helpful for the ordinary customer in general and the business people in

particular. To make it mores secure and to eliminate the misuse of it, the

management is required to keep proper security against the card.

Decreasing Administrative Expenses

Bank should their administrative expenses. This was Rs 8 billion in the year

2000. That can be done by lying off the surplus pool of employee with golden

handshakes scheme. The branches that are not much used could also be closed.

Employee can also be how to control the bank expenses. That will give positive

results in the future.

Needs to be Flexible in credit Policy

8/8/2019 Sab Report

79/84

1

As mentioned earlier, NBP is very conservative in advances and loans policy. It

reduces the investment opportunities. Also loans should be given to thesmall businessmen and the agriculture sector at the low markup rate. It should

adopt flexible credit policy while giving credit to the agriculture sector.

Technological Advancement

I would like to suggest that at least all the main branches of NBP should

be fully computerized in order to expedite the dealing process among

bankers and their customers. Every department should be provided a

computer with adequate training (especially Advances, Deposits and Foreign

Exchange ).

Daily records should be entered directly into these computers, (instead

entering the overall daily transactions after the banking hours). It will not

only reduce transaction time, will increase accuracy but will also be efficient as

well.

Not only it will be economical but will also reduce the extra burden of work of the

bank. It will also help in reducing the use of excessive paper work.

Marketing Policy

The branch should adopt various marketing strategy and promotion strategy to

promote the bank and its product.

The most important in my opinion is personal marketing; it is the most effective of

all when you think in term of branch level. But on the whole organization level,

they should arrange the seminar with in the bank and outside the bank. They

should introduce various prizing schemes just like Allied Bank. Karamad

8/8/2019 Sab Report

80/84

1

Scheme, Bank Al-Falah (monthly income earning scheme) and various others.

They should do more advertising through newspaper and media and through

channel of personal contacts.

Complaints of Customer

There should be an information desk to provide the information and to receive

the complaints of the customer in the bank. There is no complaint box available

in the branch and not any person appointed to hear the complaints. Every person

cannot go to the manager for the complaint because most of the people are

hesitant. So I suggest management to install a compliant box in the branch, and

recruit a special person for that guidance of the customer when they are unable

to manage some difficulties in banking matters.

LEARNING AS A STUDENT INTERNEE

I have a work schedule which is given by the national bank main branch,

according the that schedule my work was designed by the following activities

General Banking department

Enquiry: In this section I have learned how to open an account from Mr. Naeem

(OG-II) and issuance of cheque book from Mr. Asif Butt (OG-I)

bills: in this section i have learn about TDR (TERM DEPOSIT RECEIPT) from

MISS MEHREEN (OG-II) and demand draft, meal transfer, payment order and

government payment from MR. HASSAN BUTT (OG-II),MR. NAEEM KHAN(OG-

III), MR. NAFEES AHMED incharge bills dept. (OG-I),MR. HAMID RAZA(OG-II)

and MISS ZENAT ABBAS (AVP)

Deposit: In this section I have learn about process of payment of cheque.

8/8/2019 Sab Report

81/84

1

Govt. Receipt: in this section I have learn about the collection of income tax,

sale tax, property tax etc from MR. AYUB BHATTI (AVP) and collection of utility

bills of LESCO,WASA,PTCL,and SUI NORTHERN with the assistance ofAccounts: in this section I have learn about the preparation of different voucher

from Mr. M. Butta (cashier), preparation of payroll form Mr. Rizwan(OG-III) and

currency chest transaction from

FOREIGN EXCHANG DEPARTMENT

F.C ACCOUNT, IMPORT&EXPORT: In this section I have learn different

techniques from F.C Account, and documentation of import and export

transaction.

CREDIT DEPARTMENT

CREDIT PROCESSING: In this department I have learn about who to deal

with business finance, running finance (secured) and advance salary from MISS

IRAM (AVP), MR FEYAZ (OG-II) AND MR. MUHAMMAD ZIA (OG-II)

RESPECTIVELY.

CAD:In credit administration department I have learn about the SME financing

SIABAAN HOUSE FINANCE: In this section I have learn the house finance

from MR. SHAHID (OG-II) and from MR. QARIB MUNEER

ADMINISTRATION DEPARTMENT

RECONCILIATION/WELFARE/STAFF LOAN/ADMINISTRATION:

8/8/2019 Sab Report

82/84

1

This section I have discussed about the reconciliation of different activities and

welfare like medical reimbursement, worker overtimes and TA, DA

CONCLUSION

The report is all about National Bank of Pakistan, one of the leading Bank

of Pakistan banking industry with 1254 nationwide and almost 25 branches

operating in other countries including USA, China, France, Hong Kong,

Azerbaijan, Bangladesh, and Hong Kong. It was maximum coverage withfacilities of ATM and online banking throughout Pakistan. National Bank of

Pakistan (NBP) have established under the National Bank of Pakistan Ordinance

1949. The primary objective of NBP was to purchase jute from the growers in

the former East Pakistan and also to perform the commercial banking

functions in the country.

It was the part of State Bank of Pakistan and it is its major strength. It is

providing different facilities to its customers. Inside the bank, in branch banking it

was Clearing and Collection Department, Government Receipts Processing

Department, Account Opening Department, Remittance Department, Customer

Services Department Cash Department, Deposit Department, Advances and

Credit Department.

These have the most common exist in almost each branch. It is offering

different deposit choices, advances, credits and securities etc. for its

customers. Its Human Resource is its major strength that is leading this

bank in this way but there is much gap to cover yet. The other strengths this

bank has are that it is acting as Agent of State Bank of Pakistan, providing

Agency Arrangements for different government organizations include

8/8/2019 Sab Report

83/84

8/8/2019 Sab Report

84/84

Bibliography

REFRENCES

1. Nasir, Saeed H.(2001). Money and Banking. Pakistan, www.nbp.com.pk

2. www.google.com.pk

3. President Office Mays 13, Circular No. 11/2000. Head Office.

National Bank of Pakistan, Karachi.

4. www.nbp.com.pk

5. . www.janggroup.com

6. Managerial Finance By Lawrence.J.Gitman

7. Official site of State Bank Of Pakistan

http://www.google.com.pk/http://www.nbp.com.pk/http://www.google.com.pk/http://www.nbp.com.pk/