EVOLUTION OF BANKS IN PAKISTAN - · Web view2012/10/10 · 2.4 Nationalization of Banks (1974) In Pakistan The banking reforms turned to be transitional and interim step and when they

CHAPTER # 1

INTRODUCTION OF STUDY

1.1 Introduction

As a part of the academic requirement for completing BBA-IT (H) , each student is

required to under go for two (2) months internship with a business organization. The

basic purpose of the program is to enable the business students to learn how the business

organizations perform their routine transaction and serving the society as well as

government. As a matter of fact theory without practice is blind and the sole purpose is to

serve this pre-eminent objective.

This report is about National Bank of Pakistan Choowk Bazar Branch Bannu City.

National Bank of Pakistan was established in 1949 and since its inception it has expended

its network becoming the largest commercial Bank of the country and offers wide range

of services to the customers at large.

1.2 Purpose of the Study

The main purpose of the study in hand is together relevant information to compile

internship report on National Bank of Pakistan Chowk Bazar Branch Bannu City.

To observe, analyze and interpret the relevant data competently and in a useful manner.

To work practically in an organization.

To develop interpersonal communication.

1.3 Scope of Study

As an internee in NBP Chowk Bazar Branch Bannu City the main focus of my study was

on general banking procedures. These operations include remittances, deposits, advances.

Similarly different aspects of overall of NBP are also covered in this report.

Internship Report on NBP Chowk Bazar Branch Bannu City. 1

1.4 Objectives of the Study

Discuss thorough study of National Bank of Pakistan.

To understand the various operations and to equip with practical knowledge of the National bank of Pakistan.

1.5 Limitation of the Study

Some thing is better than nothing. No matter that how efficiently a study is conducted, it

cannot be perfect in all respects. This study was conducted in accordance with the

objectives of the study. The study may not include broad explanations of facts and figures

due to the nature of the study. Secondly, the limitation, which affects the study, is the

restriction on mentioning every fact of the bank due to the problem of secrecy of the

bank. In addition, the availability of required data was a problem as all the documents

and files are kept strictly under lock and key due to their strictly confidential nature.

Thirdly, the problem of short time period also makes the analysis restricted as one cannot

properly understand and thus analyze all the operations of a bank just a very short time of

eight weeks.

1.6 Benefit of the Study

The study done will benefit the finance students in particular the banking students in

general because the financial analysis section of this report comprehensively

encompasses all respects of financial analysis. Furthermore, NBP may also benefit from

the recommendations made at the end of the report.

1.7 Research Methodology

The report is based on my two months internship program in National Bank of Pakistan

Chowk Bazar Branch Bannu City. The methodology reported for collection of data is

primary as well as secondary data. The biggest source of information is my personal

observation while working with staff and having discussion with them.


Primary data:

Primary data include Personal observation and Interviews of the staff members.

Secondary data:

Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet.


Chapter#2

Introduction of National Bank of Pakistan

2.1 INTRODUCTION

There are different opinions that how the word ‘Bank’ originated. Some of the author’s

opinion that this word is derived from the word ‘Bancus’ or Banque, which means a

bench. The explanation of this origin is attributed to the fact that the Jews in Lombard

transacted the business of money exchange on benches in the market place; and when the

business failed, the people destroyed the ‘bench’. Incidentally the word ‘Bankrupt’s said

to have evolved from this practice.

Some of the authors are of opinion that the word ‘Bank’ is derived from the German

word back, which means ‘joint stock fund’. Later on when the German occupied major

part of the Italy the word ‘Back’ was italicized into ‘Bank’.

In fact human left the need of bank when it begins to realize the importance of money as

a medium of exchange. Perhaps it where the Babylonian who developed banking system

as early as 2000 B.C. At that time temples were used as banks because of their prevalent

respect. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians

Empire, loans were started being granted for interest. The borrower has to provide

guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a code

wherein he laid down standards rules for procedures for banking operations by temples

and great landowners. Also in Greece, the temples were used as banks, where the people

deposited their money and other valuables for safe custody and security. In Europe with

the ‘revival of civilization’ (Renaissance) in the middle of twelve century, trade and

commerce started expanding and this development compelled the business community to

borrow the money from the Hebrew moneylenders on high rates of interest and usury.

Seeing the great demand, these moneylenders started organizing themselves and bank

started up at the principle seaports of southern Europe. Soon Venice and Geneva became


the most important money markets of the time and banking though different from its

present form, flourished. What we know as ‘modern banking’ originated in the 14 th

century in Barcelona.

2.2 Definitions of Bank

"A financial institution, which deals with money and credit. It accepts

Deposits from individuals, firms and companies at a lower rate of

Interest and gives at higher rate of interest to those who need them.”

A financial establishment which uses money deposited by customers for investment, pays

it out when required, makes loan at interest, exchanges currency, etc.

J.W Gilbert in his principles and practice banking defines a banker in these words:

“A banker is dealer in capital or more properly, a dealer in money. He is intermediate

party between the borrower and the lender. He borrows of one and lends to another”.

Sir John Paged defines banker in these terms:

“That no person or body, corporate or otherwise, can be a banker who does not

Take deposits accounts.

Take current accounts,

Issue and pay Cheques and

Collect Cheques crossed and uncrossed for his customers” The American

defined the term banker in a very broad 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 of collection of money or currency. Subjects to be paid or remitted on

Cheques or order, money is advanced or loaned on stocks, bonds, bullion, bill of

exchange, promissory notes are received for discount or sale”.

2.3 Evolution of Banking in Pakistan

The first phase in evolution of banking in Pakistan sees very hard days for the whole

banking sector. Starting virtually from scratch in 1947, the country today possesses a full

range of banking and financial institutions to cope with various needs of the economy.

The area now constituting Pakistan was, relatively speaking, fairly well provided with

banking facilities in undivided India, in March 1947 there were 3496 offices of Indian

scheduled banks out of which as many as 487 were situated in territories now constituting

Pakistan.

The Reserve bank of India was the central banking authority in India. At the time of

partition it was decided that in the interest of smooth transition it should continue to

function in newly emerging state of Pakistan, until 30th Sep.1948.

In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses.

This resulted in a negative effect on baking service in Pakistan. The banks, which had

their registered offices in Pakistan, transferred them to India. In an effort to bring about

the collapse of the new state by pushing a deliberate policy of withdrawals the Indian

bank offices closed quickly. Those banks, which stayed, operated only in name pending

the winding up of their business. The number of scheduled banks thus declined form 487

branches before independence to only 195 branches by 30th June1948.

2.4 Nationalization of Banks (1974) In Pakistan

The banking reforms turned to be transitional and interim step and when they were hardly

eighteen months old the government nationalized the banking systems, with the following

main objectives. To enable the government to use the capital concentrated in the hands of


a few rich bankers for the rapid economic development of the country and the more

urgent social welfare objectives. To distribute equitably credit too different classes

sectors and regions. To coordinate the banking policies in various area of feasible joint

activity without eliminating healthy competition among banks. The act passed for the

nationalization of banks is known as the banks Nationalization Act 1974. Thus under this

act the state bank of Pakistan and all the commercial banks incorporated in Pakistan and

carrying business in or outside the country were brought under government ownership

with effect from Jan 1, 1974. The ownership, management and control of all Pakistani

banks stood transferred to and vested in the Federal government. The shareholders were

provided compensation in the form of federal government bonds redeemable at par

anytime within the period of fifteen years. Under the Nationalization act, the Chairman,

Directors and Executives of various banks, other than those appointed by federal

government were removed from their offices and the central boards of the banks and all

local bodies were dissolved. Pakistan banking council was established to coordinate the

activities of the Nationalized Commercial banks. At the time of Nationalization on

December31, 1973 there were following 14 Pakistani commercial banks with 3323

offices allover Pakistan and 74 offices in foreign countries:

National banks of Pakistan

Habib bank limited

Habib bank (overseas) limited

United bank limited

Muslim commercial bank limited

Commerce bank limited

Standard bank limited

Australia bank limited


Bank of Bahawalpur limited

Premium bank limited

Pak Bank limited

Sarhad bank limited

Lahore commercial limited

Punjab provincial co-operative bank limited

The Pakistan banking council prepared a scheme for the recognition of banks. The bank

(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of

the smaller banks with bigger ones and following the five units in there phases:

National bank limited

Habib bank limited

United bank limited

Muslim commercial bank limited

Allied bank of Pakistan limited

The first phase was completed on 30th June. 1974. When the bank Bahawalpur was

merged with the National Bank of Pakistan. The premier Bank Limited with Muslim

Commercial Bank limited and Sarhad Bank Limited and Pak bank limited and renamed

as Allied Bank of Pakistan limited.

The second phase was completed on 31st Dec.1974, when the commerce bank limited

merged with the United Bank limited.


The third and the final phase were completed on 30 th June 1975 when the standard bank

limited was merged with Habib Bank limited.

The nationalization was very smooth and gave very positive results.

The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end

June 1992. The bank deposits, which stood at Rs. 1925 corers at the end 1973, reached

the highest, mark about 323 corers.

2.4.1 Islamization of Banking

Another major development in the history of Pakistan Banking System was the

introduced of interest free banking in selected Commercial Banks with effect form Jan1,

1981. This followed the effort to eliminated interest from the operation of Nation

investment trust, the House Building Finance Corporation of Pakistan. Certain

amendments were made in banking and other laws with the object of ushering in a new

system of banking, which would confirm of Sharia. A new law Modaraba Companies

Ordinance 1980 was promulgated. Separate interest free counters began to operate in all

the nationalized commercial banks free counters began to operate in all the nationalized

commercial banks. The state bank provides finance against participation term certificate

and also against promissory notes supported by Modaraba certificate.

In order to cover interest free transactions certain banking definitions such as creditors,

debtor, and advances credits and deposits were revised. Stipulations concerning form of

business in which banking companies may engage may also have been modified schemes

were introduced to provide interest free loans to formers and deserving students. A

private Limited Company named as Bankers Equity limited was incorporated in 1979 to

provide financial assistance to the industrial sector primarily on interest free basis.

A scheme to extend interest free productive loans to farmers and fisherman has also been

introduced. Instead of interest, a system based on mark-up in price, exchange rate

differential, and profit and loss sharing accounts were introduced.


Different financial schemes introduced in the Islamization process are:

Musharika Financing.

Hire Purchase Financing.

Modaraba Financing.

Specific Purpose Modaraba.

2.4.2 Interest Free Banking

A new concept of interest free banking was introduced in 1981 and by now it has been

established on sound footing and new trends and techniques are being implemented to

make this system result oriented. New products and their systematic consumption are

making Pakistani banking comparable to their several modern counterparts anywhere in

the developed world.

2.4.3 History of NBP:

The NBP was established vide NBP Ordinance No. XIX of November 9. 1949.

British Govt. devalued its currency in September 1949, India devalued its rupees but

Pakistan did not. It led to a crisis in trading between the two countries and India refused

to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established

through an Ordinance of GOP. National Bank of Pakistan maintains its position as

Pakistan's premier bank determined to set higher standards of achievements. It is the

major business partner for the Government of Pakistan with special emphasis on fostering

Pakistan's economic growth through aggressive and balanced lending policies,

technologically oriented products and services offered through its large network of

branches locally, internationally and representative offices. The Bank in 1950 had one

subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the former Bahawalpur

State.


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

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

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

NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests

at 57 of its offices where the turnover of the business under the head amounted to

Rs.2460 million.

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

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

ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances.

NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of

agriculture and commerce.

iii) NBP advances reached Rs.554.4 million by December 1959, which was one third of

the total schedule bank credit.

2.4.4.1 HISTORY OF NBP CHOWK BAZAR BRANCH BANNU

NBP Chowk Bazar Branch Bannu was to fulfill the banking requirement of the District

Bannu and also the adjacent areas. This Branch is situated on Bank Street Bann City is

the most prominent business area of Bannu.

NBP Chowk Bazar Branch Bannu is a financial institution showing strong growth and

development over the last period of time

2.4.4.2 MISSI0ON STATEMEN

“To make the Bank complete and competitive with all international Standard in

performing, quality of operations, staff, financial strength. And products and services to

develop a culture of excellence in every spare of activity of the bank”.

2.4.4.3 GOALS AND OBJICTIVES

“An organizational objective is the intended goal that prescribes definite scope and

suggests direction to the panning efforts of a organization.”


2.4.4.4 GOALS AND OBJICTIVES NBP

“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.”

2.4.4.5 BOARD OF DIRECTORS

NBP, Board of Directors list consist the following members and their designation.

Table 1

NAME DISIGNATION

Syed Ali Raza Chairman & President

Mr. Sikandar Hayat Jamali Director

Mr. Azam Faruque Director

Mian Kausar Hameed Director

Mr. Ibrar A. Mumtaz Director

Mr. Tariq Kirmani Director

Mr. Muhammad Arshad Chaudhry Director

Mr. Mohammad Ayub Khan Tarin Director

Mr. Ekhlaq Ahmed SEVP & Sectorary to BD


2.4.4.6

2.4.4.7 REGIONAL HEADQUARTERS:

On May 13, 2002 a circular was issued in which zones were abolished and the whole

country and Azad Kashmir was divided into 29 regions. The changeover process started

from 1st August 2002 and was completed by 31st August 2002. The new setup was made

fully functional by 15th September.

2.4.4.8 Regional Management Committee:

A regional management committee controls all regions. Regional management consists of

Regional Business Chief

Regional Operations Chief

Risk management Chief


BOARD OF DIRECTORS

Syed Ali Raza

(President)

Mr. Sikandar Hayat Jamali

(Director)

Mian Kausar Hameed

(Director)

Mr. Azam Faruqui

(Director)

Mr. Ibrar A. Mumtaz

(Director)

Mr. Muhammad Arshad Chaudhry (Director)Mr. Tariq Kirmani

(Director)

(Director)

Mr. Ekhlaq Ahmad

(Secretary)

2.4.4.9 Provincial Level Region:

Regional Headquarters No of Regions

Balochistan 2

Sindh 6

NWFP 5

Punjab 14

Azad Kashmir 2

Total 29

2.4.10 Name of Regions:No Region No Region

1 Karachi (South) 16 Bahawalpur

2 Karachi (West) 17 Dera Ghazi Khan

3 Hyderabad 18 Sahiwaal

4 Larkana 19 Federal Capital-Islamabad

5 Sukkhar 20 Rawalpindi

6 Quetta 21 Jehlum

7 Gawadar 22 Gujrat

8 Lahore Central 23 Gilgit

9 Lahore East 24 Peshawar

10 Gujranwala 25 Mardan

11 Sialkot 26 Dera Ismail Khan

12 Faisalabad 27 Abbotabad

13 Jhang 28 Muzaffarabad (A.K)

14 Sargodha 29 Mirpur (A.K)

15 Multan **** ****


3.4.11 Overseas Operations:

National Bank of Pakistan has a strong international presence through 22 overseas

branches and 5 representative offices situated in USA (Chicago), Canada, China,

Azerbaijan, and Uzbekistan.

Internship Report on NBP Chowk Bazar Branch Bannu City.

CountryNumber of

Branches

Country Number of

Branches

USA 2 Bahrain 1

Germany 1 Republic of Korea

1

France 1 Bangladesh 4

Hong Kong 2 Kyrgyzstan 1

Japan 2 Turkmenistan 1

Pakistan EPZ 1 Afghanistan 4

Azerbaijan 1 ************* ********

15

The Regional Head Quarters consist of the following Group:-

1. Management Support Group

2. Marketing Development Group

3. Inspection Group

4. Credit Policy & Management Group

5. Special Assets Management Group

A Regional Chief Executive of the rank of Senior Executive Vice President or Executive

Vice President heads each RHQ. A General Manager heads each Division 2.6.5

2.5.1 MANAGEMENT

Management is a distinct process consisting of activities of planning, organizing,

actuating and controlling performed to determine and accomplish stated objectives with

the use of human being and other resources. The management has two types.

1. Centralized.

2. Decentralized.

Centralized Management tends to concentrate decision making at the top of the

Organization.

Decentralized disperses decision-making and authority throughout and further down the

organizational hierarchy. NBP have a centralized type of management because the top

management takes all the decisions.

2.5.2 SENIOR MANAGEMENT OF NBP.

Senior Management of NBP consists of following member and their respective

designation.


Table 2

Masood Karim SheikhSEVP & Group Chief, Corporate & Investment Banking Group and Chief Financial Officer

S. M. Rafique SEVP & Secretary Board of Directors

Derick Cyprian SEVP & Group Chief, Special Assets & Remedial Management Group

Imam Bakhsh Baloch SEVP & Group Chief, Compliance Group

Shahid Anwar Khan EVP & Group Chief, Commercial & Retail Banking Group

Nadeem A. Dogar EVP & Group Chief, Information Technology Group

Muhammad Sardar Khawaja EVP & Group Chief, Audit & Inspection Group

Dr. Asif A. Brohi EVP & Group Chief, Operations Group

Javed Mehmood EVP & Group Chief, Risk Management Group

Muhammad Nusrat Vohra EVP & Group Chief, Treasury Management Group

Amim Akhtar EVP & PSO to the President

Dr. Mirza Abrar Baig Group Chief, Human Resources Management & Administration Group

Uzma Bashir Group Chief, Organization D&T Group


Operational Manager

Cash SVP Remittance SVP Pension SVP Computer S.SVP

Branch Manager

Table 3

ORGANIZATION CHART OF NBP CHOWK BAZAR BRANCH BANNU

2.6. Net Work of Branches:

NBP have wide range of branches inside the country and outside the country.

In Pakistan it has 29 regional offices, 1189 Branches and 4 Subsidiaries.

In overseas it has 16 overseas branches, 6 other branches.

.2.6.1 Objectives of NBP

National bank of Pakistan is also a commercial organization and its main objective is

profit maximization. This is achieved in two ways:

1. by increasing deposits.

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


2.6.2 Increase in deposits:

Competition in banking is intense and every bank whether it is Pakistani, foreign, private

or nationalized tries to increase its deposits by providing better facilities to its customers.

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

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

higher volume of deposits. There are two main factors involved in increasing the

deposits. These factors are improving the services and courtesy. NBP is continuously

working on these two factors to increase its deposits.

2.6.3 Extension of loans:

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

type of people to whom credit is given i.e. the credit worthiness of the borrowers. This

strategy has worked quite well for NBP. Deposits are collected from the people and

invested in different projects. NBP prefers to give loans to financially sound and reliable

parties, after securing the collators. NBP has an extremely well organized section. The

staff is adequately trained, and educated and competent. They carry out extensive

Financial analysis before deciding on the loan. Interest charged on the loans potentially

contributes to higher profits.

2.6.4 Functions of NBP

Since NBP is a commercial bank, it performs a variety of functions.

Like other commercial banks, NBP is engaged in financing international trade. Its other

major functions include receiving deposits, advancing loans and discounting of exchange.

The functions performed by NBP are:


2.6.5 Accepting Deposits

This function is important because banks largely depend on the funds deposited with

them by its customers. Deposits are of many types:

I. Current deposits

Current deposits are also called demand liability on current deposits. NBP pays

practically no interest on current deposits. Businessmen usually open current accounts. In

NBP current account can be opened with a minimum amount of Rs.500/-.

ii. PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit

and draw money easily. Profit on PLS is calculated every month but paid after six

months. PLS account can be opened with a minimum amount of Rs.500/-

ii. PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the expiry

of which they cannot be withdrawn unless giving due notice. In this case the rates of

profit will be different depending upon the time period.

2.6.6 Summation

We discussed in this chapter the evaluation of banking in Pakistan, banking reforms

1972, Nationalization of banks, History of NBP, History of National Bank Chowk Bazar

Branch Bannu City, and Mission Statement of NBP. The next and onward chapter we

will discuss the general banking information and departmentalization of NBP.


CHAPTER # 3

INFORMATION & DEPARTMENTALIZATION OF NBP

3.1 INTRODUCTION

This chapter presents the services and departmentalization of NBP.Services is outputs of

the firm, which are in intangible form. Which are the backbones of any organization to

earn profit? NBP offers the following services to the people.

3.2 DEMAND DRAFTS

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

purchase NBP Demand Drafts at very reasonable rates. Any person whether an account

holder of the bank or not, can purchase a Demand Draft from a bank branch.

3.3 SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)

has been introduced for speedy services in the area of home remittances. The system has

built-in features of computerized test keys, which eliminates the manual application of

tests that often cause delay in the payment of home remittances. The SWIFT Center is

operational at National Bank of Pakistan with a universal access number NBP-APKKA.

All NBP overseas branches and overseas correspondents (over 450) are drawing

remittances through SWIFT. Using the NBP network of branches, you can safely and

speedily transfer money for our business and personal needs.

3.4 LETTERS OF CREDIT

NBP is committed to offering its business customers the widest range of options in the

area of money transfer. If you are a commercial enterprise then our Letter of Credit

service is just what you are looking for. With competitive rates, security, and ease of

transaction, NBP Letters of Credit are the best way to do your business transactions.


3.5 TRAVELER'S CHEQUES

Traveler’s cheques are negotiable instruments, and there is no restriction on the period of

validity of the cheques. Rupee traveler’s cheques are 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.

3.6 PAY ORDER

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

are a secure and easy way to move your money from one place to another. And, as usual,

NBP charges for this service are extremely competitive. The charges of NBP are very

low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one

payment order. And charges Rs 100/- for NBP non-account holders on issuing one

payment order. It charges Rs 25/- for students on payment of fees of educational

institutions. If some one want a duplicate of payment order they charges Rs 100/- for

NBP account holders and Rs 150/- for non account holders.

3.7 MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service. And NBP also

offers the most competitive rates in the market. They charges Rs 50/- exchange rate and

RS 75/- postage charges on issuing mail transfer.

3.8 FOREIGN REMITTANCES:

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

has taken a number of measures to:

Increase home remittances through the banking system

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

remittances to the beneficiaries


3.8.1 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.

Zero Tariffs: NBP is providing home remittance services without any charges.

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

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

the beneficiaries.

3.9 SHORT TERM INVESTMENTS

NBP now offers excellent rates of profit on all its short-term investment accounts.

Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are

extremely attractive, along with the security and service only NBP can provide.

3.10 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

customer’s best resource in making NBP products and services work for them.

3.11 TRADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.

3.11.1 AGRICULTURAL FINANCE

NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers

who produce some of the best agricultural products in the World.


3.11.1.1 Agricultural Finance Services:

“I Feed the World” program, a new product, is introduced by NBP with the aim to help

farmers maximize the per acre production with minimum of required input. Select farms

will be made role models for other farms and farmers to follow, thus helping farmers

across Pakistan to increase production.

3.11.1.2 Agricultural Credit:

The agricultural financing strategy of NBP is aimed at three main objectives:-

Providing reliable infrastructure for agricultural customers

Help farmers utilize funds efficiently to further develop and achieve better

production

Provide farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

3.11.1.3 Agricultural Credit (Medium Term):

Production and development

Watercourse improvement

Wells

Farm power

Development loans for tea plantation

Fencing

Solar energy

3.11.2 CORPORATE FINANCE


I. Working Capital and Short Term Loans:

NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-

shipment and Post-shipment financing to exporters – Running finance – Cash Finance –

Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-

shipment / Post Shipment Agricultural Production Loans

ii. Loan Structuring and Syndication:

National Bank’s leadership in loan syndicating stems from ability to forge strong

relationships not only with borrowers but also with bank investors. Because we

understand our syndicate partners’ asset criteria, we help borrowers meet substantial

financing needs by enabling them to reach the banks most interested in lending to their

particular industry, geographic location and structure through syndicated debt offerings.

Our syndication capabilities are complemented by our own capital strength and by

industry teams, who bring specialized knowledge to the structure of a transaction.

3.12 INTERNATIONAL BANKING

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

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

world. Additionally, NBP have recently set up the Financial Institution Wing, which is

placed under the Risk Management Group. The role of the Financial Institution Wing is:

To effectively manage NBP’s exposure to foreign and domestic correspondence

Manage the monetary aspect of NBP’s relationship with the correspondents to

support trade, treasury and other key business areas, thereby contributing to the

bank’s profitability

Generation of incremental trade-finance business and revenues

3.12.1 NBP offers:


The lowest rates on exports and other international banking products

Access to different local commercial banks in international banking

3.14.2 Cash and Gold Finance.

Cash and Gold finance means that loan is given against the gold. The gold is

mortgaged with the bank and loan is taken. It is the area of consumer finance. And

borrower can take loan for common use.

3.12.3 Advance salary loan:

This loan is given to those people who are government servants. They can get a loan up

to the salary of fifteen months.

3.13 DEPARTMENTALIZATION

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

departmentation. So NBP can be divided into the following main departments.

3.13.1 CASH DEPARTMENT

Cash department performs the following functions

3.13.2 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.

3.13.3 Payments


It is a banker’s primary contract to repay money received for this customer’s account

usually by honoring his cheques.

3.13.4 Cheque and their Payment

The Negotiable Instruments. Act, 1881

“Cheque is a bill of exchange drawn on a specified banker and not expressed to be

payable otherwise than on demand”.

Since a Cheque has been declared to be a bill of exchange, it must have all its

characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.

Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,

requiring the banker to pay on demand a sum certain in money to, or to the order of, a

specified person or to the bearer, and which does not order any act to be done in addition

to the payment of money”.

3.13.5 Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no

payee but bearer.

a) The Drawer b) The Drawee c) The Payee

3.13.6 Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheque


Bearer Cheque 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 payee’s account. If there are two persons having accounts at the same bank, one of

the account holder issues a cross-cheque in favor 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.

3.13.7 Payment of Cheques

It is a banker’s primary contract to repay money received for his customer’s account

usually by honoring his cheques. Payment of money deposited by the customer is one of

the root functions of banking. The acid test of banking is the receipt of money etc. from

the depositors, and repayment to them. This paying function is one, which is the

distinguishing mark of a banker and differentiates him from other institutions, which

receive money from the public. However the bankers’ legal protection is only when

payment is in ‘Due Course’. The payment in due course means payment in accordance

with the apparent tenor of the instrument, in good faith and without negligence to any

person in possession thereof under circumstances, which do not afford a reasonable

ground of believing that he is not entitled to receive payment of the amount therein

mentioned. It is a contractual obligation of a banker to honor his customer’s cheques if

the following essentials are fulfilled.


a) Cheques should be in a proper form:

b) Cheque should not be crossed:

c) Cheque should be drawn on the particular bank:

d) Cheque should not mutilated:

e) Funds must be sufficient and available:

f) The Cheque should not be post dated or stale:

g) Cheque should be presented during banking hours:

3.14 ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the 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.

3.14.1 Name and address of the borrower.

a) Existing financial position of a borrower at a particular branch.


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

c) Security against loan.

d) Exiting financial position of the company. (Balance Sheet & Income Statement).

e) 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.

3.14.2 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

a. Safety

a. Character

It is the most important factor in determining the safety of advance, for there is no

substitute for character. A borrower’s character can indicate his intention to repay the

advance since his honesty and integrity is of primary importance. If the past record of the

borrower shows that his integrity has been questionable, the banker should avoid him,

especially when the securities offered by him are inadequate in covering the full amount

of advance.

b. Capacity


This is the management ability factor, which tells how successful a business has been in

the past and what the future possibilities are. A businessman may not have vast financial

resources, but with sound management abilities, including the insight into a specific

business, he may make his business very profitable. On the other hand if a person has no

insight into the particular business for which he wants to borrow funds from the banker,

there are more chances of loss to the banker.

c. Capital

This is the monetary base because the money invested by the proprietors represents their

faith in the business and its future. The role of commercial banks is to provide short-term

capital for commerce and industry, yet some borrowers would insist that their bankers

provide most of the capital required. This makes the banker a partner. As such the banker

must consider whether the amount requested for is reasonable to the borrowers own

resources or investment.

3.15 REMITTANCE DEPARTMENT

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 the following forms of remittances.

a) Demand Draft

b) Telegraphic Transfer

c) Pay Order

d) Mail Transfer

3.15.1 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 sender’s 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 the customer 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

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

3.15.2 Pay Order

Pay 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.

3.15.3 Telegraphic Transfer

Telegraphic transfer or cable transfer is the quickest method of making remittances.

Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to

the specified person. The customer for requesting TT fills an application form. Vouchers

are prepared and sent by ordinary mail to keep the record. TT charges are taken from the

customer. No excise duty is charged on TT. The TT charges are:

Telegram/ Fax Charges on TT = Actual-minimum Rs.100.


Cable telegram transfer costs more as compared to other title of money. In cable transfer

the bank uses a secret system of private code, which is known to the person concerned

with this department and branch manager.

3.15.4 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 buyer’s

account at the selling office and crediting to the recipient’s 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 party’s request.

3.16 DEPOSIT DEPARTMENT: -

It controls the following activities:

a) A/C opening.

b) Issuance of cheque book.

c) Current A/C

d) Saving A/C

e) Cheque cancellation

f) Cash

3.16.1 Account opening


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 customer’s

integrity, respectability, occupation and the nature of business by the introductory

references given at the time of account opening. Preliminary investigation is necessary

because of the following reasons.

i. Avoiding frauds

ii. Safe guard against unintended over draft.

iii. Negligence.

iv. Inquiries about clients.

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.

b) Types of Accounts

Following are the main types of accounts

1) Individual Account

2) Joint Account

3) 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

3.16.2 Issuing of cheque book:

This deptt issue cheque books to account holders.

Requirements for issuing chequebook

a) The account holder must sign the requisition slip

b) Entry should be made in the chequebook-issuing book

c) Three rupees Per cheque should be recovered from a/c holder if not then debit his/her

account.

3.16.3 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 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 Fixed

Deposits 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.

3.16.4 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.

3.16.5 Cheque cancellation:

This deptt can cancel a cheque on the basis of;

a) Post dated cheque


b) Stale cheque

c) Wrong out cheque

d) Wrong sign etc

3.16.6 Cash

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

.B) DEPARTMENTATION OF CHOWK BAZAR BRANCH BANNU.

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

departmentation. So NBP Chowk Bazar Branch Bannu is divided into three main parts.

1. Cash Department

2. Operation Department

3. Government Department.

3.17 Cash Department:

Cash department mainly deals in cash...

“To facilitate people in the payments of their bills and taxes and repayments of cash”

There are two main functions of cash department.

i. Payment ii. Receipts

i. Payments are the function that they pay their cheques and pay cash.

ii. Receipts mean collection of utilities bills, taxes etc.

3.17.1 Operation Department.


NBP Chowk Bazar Branch Bannu having an Operation Department. This department

mainly deals with the branch employees. The main objective of this department is to

“To regulate bank business”.

Main functions of this department are:

a) Keeps the record of attendance of employees.

b) Employee’s salaries distribution.

c) Employee’s bonuses etc.

3.17.2 Government Department

NBP Chowk Bazar Branch Bannu having a Government Department. This department

mainly deals with the Government securities and deposits. The main objective of this

department is to “To regulate bank business”.

CHAPTER NO # 4

DEPOSIT DEPARTMENT


Deposit department play very important role in the banks because it is the main source of

obtaining the funds from the customers. The total number of customers having PLS and

current accounts at Chowk Bazar Branch Bannu are 2298 and total amount of deposits

are Rs.60 million.

Following are the main accounts, which are kept with a bank by customers. They are:

a.Current account

b. Saving account

c. PLS Account

d. Joint Account

e. Minor Account

f. Individual Account

4.1 Current Account:

National Bank of Pakistan maintains current accounts for its customers. A current

account is a running account and the bank does not pay any interest on these deposits as

they can be with drawn without notice. The bank has acts only as the custodian of money.

It cannot employ these funds due to fear of withdrawal. It has to keep a higher reserve

ratio to meet the demand liabilities.

The current accounts are becoming very popular with the commercial banks in recent

years. The current account is opened and operated by Traders, Institutions, Public service

bodies and Industrialists etc. the initial amount of current account is Rs. 5000.

4.2 Saving Deposit Account:

Saving deposit account is an ideal account for those who have money to save but cannot

profitability invest it anywhere else, as the account is too small. The School Children,


workers, employees, firm usually keep their saving by opening a saving account in the

bank.

4.3 Profit and Loss Sharing Saving Accounts (PLS):

In Pakistan Profit and loss sharing saving account (PLS) was introduced

in January 1982.

The main rules of the PLS saving accounts are as under: -

a. The PLS saving account can be opened with a sum of not less than Rs.500.

b. The bank has full right to make investment of credit balance/deposit in PLS saving

account.

c. Withdrawal from PLS accounts are allowed oftener then 8 times in a

calendar month and for a total amount not exceeding Rs. 25000 in a day. For

withdrawals a large amounts seven days notice in writing is required to be given.

d. Withdrawals can only be made by means of cheques issued by the bank.

4.4 National Income Daily ACCOUNTS (nida):

It is a form of current account in which customers can get daily profit. A customer also

gets a healthy rate of interest on their deposits under NIDA facility. The deposit starts

with a minimum of Rs. 2000000, while there is no upper limit. There is also an unlimited

withdrawal facility requiring no prior notice.

4.5 JOINT ACCOUNT:

A joint account is a special account, which is opened in the name of two or more persons.

For drawing of the amount all the persons in whose name the account stands should sign

the cheque. However by agreement any one of them is allowed to draw the joint account

without the consent or signature of the other on the death of the other party.

For opening of a joint account the following precautions should be taken by the bank.

4.6 Minor Account:


Minor is a person who is under the age of 18 years Minor is protected by law in case of a

partnership firm and can bind all the partners in the ordinary course of business.

The following point should be kept in mind.

(a) If the minor does not disown his position as partner either before or within a

reasonable time of his getting majority, he will be personally liable for the debt of the

partnership incurred after his majority.

(b) The minor may be permitted to draw cheques and overdraw the partnership

account as an agent of the partners

4.7 Individual Account:

Account of individual profit and loss saving account bank and current deposit are usually

opened at branches of the bank. Therefore bank do not open account of minor person.

However in order to create the habit of saving, the account is opened on certain

conditions.

a. At the time of opening of account he should not be minor and must have attained the

age of majority.

b. He must be a man of sound mind. According to the law any contract made with person

of unsound mind is void. He should not be declared bankrupt.

4.8 Procedure of Opening of Accounts:

There are many formalities, which are to be observed for opening of current or saving

account with a bank. These formalities are: -

4.8.1. Formal Application Form:

It is a formal request by a customer to the bank to allow him to open and operate the

current/saving account.

4.8.2. Obtaining Introduction:

Before opening an account banker obtains introductory reference of new customer from

an old customer.

4.8.3. Specimen Signature:


When the banker is satisfied about the integrity of the customer, he agrees to open the

account. The banker obtains the specimen signature of the customer on the application

form and card.

4.8.4. Minimum Initial Deposit:

In Pakistan the current account can be opened with a minimum of RS 5000 and the PLS

saving account with minimum of RS 500.

4.8.5. Next of Kin:

Letter of next of kin is signed by the customer, in which new customer allows his relative

to operate his account if he is not available at the moment.

4.8.6. Operating the Account:

When an account is opened with bank the banker gives to the customer.

Pay-in-slip book

1. Cheque book

2. Pass book with a view to operating it.

Chapter # 5


Swot Analysis

INTRODUCTION

SWOT Analysis is the most important part of the report, because it depends on my

personal observation. Only a good, keen and comprehensive analysis leads to good

recommendations for the improvement of the existing conditions. Therefore in NBP I

have observed many things and I have analyzed them to the best of my efforts &

knowledge.

5.1 STRENGTHS

Following are the main Strengths of NBP:

5.1.1 Serving as an Agent:

National Bank of Pakistan Chowk Bazar Branch Bannu serve as an agent of State Bank

of Pakistan. No other bank is allowed to do the Clearing task but NBP act on the behalf

of SBP the clearing task where NBP exist.

5.1.2. No. of Branches:

Strength of NBP is that there are 1254 branches in Pakistan and 22 branches in overseas

of NBP. So NBP staff members are scattered on the land of Pakistan and World to

provide benefits and serve the people.

5.1.3 Experience Employees:

The staff members of NBP Chowk Bazar Branch are an experience, though they are not

qualified people but yet they have enough experience to carry on the work of bank. It is

said, “Knowledge is power and experience is wisdom but experience cannot be defeated

by knowledge”.


5.2 WEAKNESSES:

Following are the main weaknesses of NBP:

5.2.1. Delegation of Authority:

National Bank of Pakistan to great extent is a centralized bank. The manager of the

Chowk Bazar Branch Bannu has very limited authority, especially in case of advances.

Lack of delegation of authority creates problems and when the manager is not present in

his office and customers have to wait for many hours. There is top to bottom flow of

authority and lower level of employees cannot participate in the decision making process.

The top level of the organization takes all the decision. This completely centralized

decision-making decreases the interest and also reduces efficiency of the bank.

5.2.2. Seniority Based Promotions:

Promotion in NBP is purely on seniority basis rather than on performance. This really de-

motivates the employees because they know that it doesn’t matter whether they perform

well or bad.

5.2.3 Job Rotation:

Most of the employees work in a particular department and they specialize only in one

department. In case of absence of one employee, any other employee cannot perform this

work. In this way bank not only loses the business but also results in dissatisfaction of the

customer.

5.2.4 Lack of Theoretical Knowledge of Employees:

There is a lack of theoretical knowledge of the employees of National Bank of Pakistan.

Although their work is mostly routine and practical but sometimes low background

education can disturb the routine work. They have to consult the Regional Manager

Office or General Manager Office. This factor affects their efficiency.


5.2.5 Discouragement of Small Depositors:

The staffs members give proper attention and respect to those customers who have

deposited huge amount of money while the small depositors mostly; the salaried people

are discouraged to open an account within the branch. In this way they discourage saving

habits in the general public.

5.2.6 Lack of Discipline:

During my training in National Bank of Pakistan, Chowk Bazar Branch Bannu I observed

lack of discipline in the way that some of the employees do not care about the office

timings. They usually come late in the morning. Similarly employees take long leaves

without any valid reasons.

5.2.7 Excessive Paper Work:

There is excessive paper work in NBP, which takes more time and reduces the effective

banking performance.

5.2.8 Lengthy Process of Loan:

To meet the immediate requirements of the business, customers require quick financing

but due to centralization of decision-making there are unnecessary delays in sanctioning

of loans, resulting in dissatisfaction of the customers.

5.2.9 Low Rate of Return:

Due to low rate of return, the depositors are drawing their money from the banks and

depositing in the saving centers, which are offering a good rate of return as compared to

the banks.

5.3 OPPORTUNITIES:

Following are the main opportunities of NBP:


5.3.1 Financing:

Now a day’s people have enough savings and they want some luxurious type’s products

such as Car, House and Business etc. So the opportunity for NBP is to start car-financing

scheme to be beneficial for the organization (Bank).

5.3.2 Modernization:

Another opportunity for NBP is to modernize itself because all other banks have best

methodologies to compete others and market their products. As I know that NBP have

not enough modernize system to be compatible with other banks.

5.4 THREATS:

Followings are the major threats for NBP:

5.4.1 Other Banks

The major threat for NBP is other banks that have started function in Bannu such as Bank

Alfalah, MCB, UBL, ABL, Khyber Bank etc. These are the banks that NBP face

competition with them. These banks provides a vide variety of services as compared to

NBP.

5.4.2 Political Interference:

Banks are not free from political influences. Due to political pressures on the

management for sanctioning the loans in favor of their political persons resulted in huge

amount of bad debts because in this way the bank is unable to recover the loan very

difficult, and these loans are not used for productive purposes.

5.4.3 Strong Competition:


As we know that today’s era is the era of competition. In Bannu all the banks are

involved in struck competition so; it is an opportunity for NBP to develop a strong

marketing policies and campaign to further develop itself.

5.5 SWOT MATRIX OF NBP

List the bank key external opportunities.

List the bank key external threats.

List the bank key internal strengths.

List the bank key internal weaknesses.

Match internal strengths with external opportunities, and record the resultant SO strategies in the appropriate cell.

Match internal weaknesses with external opportunities. And record the resultant WO strategies.

Match internal strengths with external threats, and record the resultant ST strategies.

Match internal weaknesses with external threats, and record the resultant WT strategies.

SWOT Matrix of NBPChowk Bazar Branch Bannu.


Strengths

1. NBP has a competitive

advantage over its rivals because

of Government support.

2. The employees of the bank are

more committed as compared to

other Banks.

3. NBP is the pioneer to start a

foreign exchange in order to

regularize the inflow of money

transfer.

4. NBP has not only qualified but

experience staff as well.

5 More training facilities to the

employees.

6. Strong Financial Position

Weaknesses

1. Centralized decision making.

2. No job rotation due to which

loss of customer and job

dissatisfaction exists.

3. Partial treatment of

customers.

4. People are in-forced to open

an account.

5. Due to Government

ownership the employees feel

safe and hence no motivation.

6. Lower chances of career

development.

7. Female population not served

Opportunities

1. Government favorable

policies because of nationalized

Bank.

2. Car financing, home

financing in the area of Bannu

can be competitive.

3. NBP has an opportunity to

SO Strategies

1.(Market Development, Market

penetration and Diversification

strategies can be applied )

(O6,O5-S1,S6)

2. Joint venture with UBL and

Bank Al-falah can be a fruitful

strategy for IT and Online

WO Strategies

1. (Market Development, Product Development, Integration Strategies can be applied) (O3,O4,W4,W7)

2. By adopting these

strategies the bank will

overcome the weaknesses

by availing the


modernize itself with the latest

technologies available.

4. Good reputation in the eye of

the customers because of

competitive services.

5. A part of population can be

accessed having no Bank

Accounts.

6. Untapped market exists for

female.

services. opportunities.

Threats

1. Cut throat competition in the

Banking Sector

2. Political influence due to

political pressures.

3. The competitors are utilizing

more and more updated

technologies as compare to

NBP.

4. People at Bannu are at

general avoiding Banks because

of complications involved.

dominated society at Bannu

ST Strategies

Due to Strong financial position

and skilled work force the bank

can overcome the threats of

competitors and by offering

different services to the

customers, potential customers

can be attracted from the area.

Market Development and

intensive Strategies can be good

for the Bank.(S4,S6-T1,T4)

WT Strategies

Female side of the population

can be attracted by providing

them more facilities and

support to encourage them for

availing more and more

banking facilities,

Diversification Strategies can

be effective.(T5-W7)

5.6 INTERPRETATION


The Banks in the area of bannu in general are using the same traditional approaches of

banking, National bank is using modern approaches but there are still opportunities for

advancements in this region. As mentioned above more customers can be attracted for

opening accounts, for the reason the Bank should launch various awareness programs to

attract more and more people towards the Bank. Advertisement is a basic way through

which a business can inform and hence educate more people to use various products.

Banks are both nationally and internationally using extensive advertisement at national

and international level with attractive packages, in case of Pakistan also, advertisement is

used as an effective tool, but in Bannu advertisement is ignored and more people are

unaware of the services provided by Banks.

If the national bank of Pakistan main branch bannu will appoint female workers, the

motivation process will be increased for female investors.

Secondly the bank will establish the IT and online systems for strengthen of financial

position to facilitate the customer requirements. The availing of the opportunities (female

services, IT and online etc.) so the bank will minimize those weaknesses. If the bank will

appoint the well experience, skilled and qualified work force, and opening of a new

branches in Bannu those area where the customers facing the various complications. In

this situation the bank will be eliminate those threats. If the national bank of Pakistan

main branch bannu implement those activities (encouraging female accounts) which are

implemented other banks of big cities in Pakistan so the threats will be also minimize.

The bank will motivate the customers to open an account in the bank so in this case the

financial position of the bank will be strong and provided more opportunities to

customers.


CHAPTER # 6

PROBLEMS AND SUGGETIONS

6.1 INTRODUCTION

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

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

of Pakistan, which provides policy guidelines and ensures that the money market operates

on sound professional basis. While the head office specifies the whole procedure of

function and operations. This procedure has been modernized with the passage of time

with a view to streamline the approach and underlying procedure for effective

overhauling of its own capabilities so as to bring them at par with international practices.

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

and better performance of NBP as an organization in general and Chowk Bazar branch in

particular.

The recommendations are as follows:

6.2 Professional training

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

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

For this purpose these staff colleges should be reorganized and their syllabus should be

made in such a way to help the employee understand the ever-changing global economic

scenario.

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

much needed professional training.


6.3 Delegation of authority

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

their responsibility.

6.4 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.

6.5 Transfer

Transfer is not properly carried out. Some of the employees are continually serving at the

same post. They are simply rotated at the same branch. Therefore it is recommended that

evenly rotation of every employee should take place after every three years in different

braches of the bank.

6.6 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.

6.7 Utility Bill Charges

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. These charges

should be increased to RS 10 per bill to enable the branch to cover their handling costs

and make some profit.

6.8 Link with the Head Quarter

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


In Karachi, through Internet. This will make the functions and decision making of the

management easier and convenient.

6.9 Clean Loans

Clean loan or clean overdraft is the credit facility extended to the customers without any

security. These types of small term loans should not be extended to anybody, because

sometime these loans are provided to blue-eyed people of the management and they

become a part of bad debts.

6.10 Staff Relationship

Good relationship among staff member leads to the peak performances in any

organization. I observed that the staff relationship was normal other wise but some time I

noticed that there existed a little conformity among the staff members. Another syndrome

from which the staff suffered was that all of them considered themselves more important

than others. Some of the officers used to say that if I am absent for a day the bank would

stop working. So this sort of attitude is not good because it mars bank image and juniors’

willingness learn and work hard and in the end will hurt the whole team.

6.11 Improper Distribution of Work

Proper distribution work leads to success in every organization. Proper distribution of

work prevents the employee from over and under work situation. So for a smooth running

of an organization proper distribution of work is the hint to be followed.

During my internship I observed that there was no proper distribution of work in the

bank. I saw that some of the employee worked like ants other sat idle starting here and

there. So this created a lot of over work situation for while relaxation for other.


6.12 Inter Departmental Transfer

I watched during my internship that, there is number of employee who have worked on

one seat for many a year. It can have negative effects motivation of employee who is hard

working and intelligent. Take the example of advances section. In advance section if the

employee is transfer after sixth month or seven month, how can he be able to show his

performances and how can he be able to know the bank customer in a short period of

time.

6.13 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.

6.14 Housing and House Hold Goods loans

Bank should initiate these loans because most of bank’s customers are middle class and

they cannot afford to buy house or household goods at once by their own

6.15 Summation

We discussed in this chapter about the recommendation and suggestion for NBP as an

organization in general and NBP Chowk Bazar Branch Bannu in particular. The next

chapter is about the implementation plan in the view of recommendation and suggestion.


CHAPTER # 7

IMPLMENTATION PLAN

IMPLEMENTATION

Every organization has its own strengths, weaknesses and opportunities and threats.

Nothing is impossible in this world, as someone has rightly said, “An impossible is often

untried”. Here are the implementation/action plans for the recommendations concluded in

the previous chapter.

7.1 BUSINESS DEVELOPMENT PLAN:

In order to develop the implementation procedure to reach business development

objectives, the following steps should be taken:

i. Campaigns to open More Accounts:

In order to increase the number of accounts, there should be a clear market plan. The

staff, branch managers and executives involved in business development should prepare

lists of different groups of prospective account holders and their neighbors, friends and

influential people and make efforts to open their volume of business and deposits by

fixing monthly target. This should be done by coordination among the various branches

of the Bank.

ii. Campaigns for Mobilization of Deposits:

Deposits are the main source of commercial banks and it is very important for an

individual bank to get funds, because its basic function is to put them to work safely and

profitably.

The act of attracting funds is important but there are so many other processes of obtaining

the funds, like the Bank can get funds by advertising, by direct contact or by contacts

through their officers, managers and executives. Thus, they can get the customers and

acquire them ultimately by furnishing banking services.


iii Campaigns To Increase Business Share:

The management of the Bank should prepare a business development plan by taking into

account the overall market position of the bank in the banking industry. In light of market

share, business development targets should be fixed on an annual basis by fixing monthly

targets for imports, exports, issuance of letters of guarantee, bills etc. The achievement of

targets should be reviewed every month by the respective circles at the Head Office and

necessary instructions and guidelines be provided to the respective area control and zones

where the business performance are not according to the set targets.

Iv.Training of Personnel:

We all know that the profitability, growth and survival of a bank depend upon business

development. Therefore, the Bank should take steps to impart training to the probationary

officers, senior officers, managers and executives in modern business development

techniques and public relations.

Business development training is the process of imparting knowledge creating skills and

shaping attitude, work habits, and consists of telling, showing and teaching the trainee

and then monitoring his/her results and making constructive corrections.

7.2 PLAN FOR MONITORING & EVALUATION

SYSTEMS

The systems and procedures of the Bank must be dynamic, flexible and subject to

continuous monitoring and evaluation. The pre-requisites of an effective monitoring and

evaluation process are as follows:

1 A good, open and unbiased feedback system should be established to identify the

problems and suggesting improvements.

2 The feedback system must include the customers and all the staff members from top

to bottom within the Bank.

3 The feedback system must allow both as needed and fixed interval information.


4 The problems and errors must be analyzed and removed. The suggestions should be

discussed at all levels and implemented if found useful.

1 Performance reporting and meetings could be effective tools.

2 The performance review must be aimed at improving employees’ skills and

productivity by identifying training needs.

7.3 INTERNSHIP PROGRAM PLAN:

One of the best and cost effective methods to select the right people and hire graduates

from business and management schools as internees. The internship programmed should

spread over a period of at least six months. During the internship programmed, a close

watch should be kept on the internees. At the end of the internship programmed, the

performance of the internees should be

7.4 Summation

We discussed in the chapter about the two-implementation plan. This two-

implementation plan will save the time and will bring speed in tackling the customers.


BIBLIOGRAPHY

1. M. Saeed Nasir, Money Banking and Finance.

2. National bank of Pakistan Chowk Bazar Branch Bannu Employees interview.

3 Meenai, S.A. (2001). Money and Banking in Pakistan. Karachi: Oxford University

Press.

4 C.H. James and J.M. Wachowicz.JR. 11th Edition, Foundation of Financial

Management. New Jersey: Prentice-Hall, Inc. p.150

5 National Bank of Pakistan, (2006). Annual Report, Karachi

6 National Bank of Pakistan, (2007). Annual Report, Karachi.

6 National Banking of Pakistan, (2008). Annual Report, Karachi.

7 National bank of Pakistan of Pakistan, Brochures of Products & Services.

8 National bank of Pakistan, (2009) Annual Report.

9 www.nbp.com.pk

10 Fred.R.David. Strategic Management. 10th Edition. Chapter No. 6.

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

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