Final Report Of N.B.P

Executive Summary

We are living in a time of extraordinary change. The ecological and economic threat is

looming large on the entire sphere of Pakistanis economy. Pakistani firms must design

and make better products and services and should find better ways to market them. What

was once regarded enough is no longer competitive. What were once limitless resources

are now to be used more efficiently. Today an organization is on the leading edge, or it is

on the bleeding edge.

I have learned the lessons perhaps the hardest way, that is, though my mistakes. I

have tried my best to peep into the generic as well as real cumulative problems faced by

the pioneer of banking industry in Pakistan but that degree of objective analysis proved to

be of little use since this bank is firmly entrenched in the claws of red tapism and royal

bureaucracy.

Several chapters have been inducted in the report but they seem to be very

conventional in nature giving supplementary justification to the fact that NBP is the most

conventional of the conventional bank.

This report is an upshot of my six weeks internship in National Bank of Pakistan, Main

Branch, Gujranwala. National Bank of Pakistan posses an imperative and historical

importance in the banking sector of Pakistan. It always remains the center of hustles in

business activities. It always endows with great covenant of rally round in terms of funds

and services at all epochs of its dynamism.

University Of The Punjab, Gujranwala Campus 1

Section

1

INTRODUCTION TO

BANKING SYSTEM

In this section two topics are discussed. They are as

under:

What is Commercial Bank?


WHAT IS AWHAT IS A

COMMERCIAL BANK?COMMERCIAL BANK?

A bank is 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 a

higher rate of interest to those who apply for loan. The difference between the terms at

which it borrows and those at which it lends from the source of its profit. A bank, thus, is

a profit earning institute. Any bank that performs this functioning is called the

commercial bank.

According to Crowther:

“A bank is a firm which collects money from those who have it spare. It lends

money to those who require it.”

According to Banking Ordinance 1962:

According to Section 5(b) of Banking Ordinance 1962, meaning of banking is

as under:

“Banking company is a company which transacts the business of banking in

Pakistan, mainly of accepting, for the purpose of lending and and investments of


deposits of money from the public, repayable on demand or otherwise and withdraw

able by cheque, draft, order, or otherwise”

Section 2

HISTORY OF

BANKING AND NBP

In this section three topics are discussed. The major topic of this

section is:

History of Banking in PakistanEfforts towards Islamic Banking in PakistanNational Bank of Pakistan


HISTORY OF BANKINGHISTORY OF BANKING

IN PAKISTANIN PAKISTAN

The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed

as the date on which independence was to take effect. It was decided that the Reserve

bank of India should continue to function in the dominion of Pakistan until September 30,

1948 due to administrative and technical difficulties involved in immediately establishing

and operating a Central Bank.

At the time of partition, total number of banks in Pakistan were 38 out of these the

commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia

Bank of India. The total deposits in Pakistani banks stood at Rs.880 million whereas the

advances were Rs.198 million. The Governor General of Pakistan, Muhammad Ali

Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of July

1948.

In 1949, National Bank of Pakistan was established. It started with six offices in

former East Pakistan. There were 14 Pakistani scheduled commercial banks operating in

the country on December 1973, the name of these were:

1. National Bank of Pakistan

2. Habib Bank Limited

3. Habib Bank (Overseas) Limited

4. United Bank Limited

5. Muslim Commercial Bank Limited

6. Commerce Bank Limited

7. Australia Bank Limited


8. Standard Bank Limited

9. Bank of Bahawalpur Limited

10. Premier Bank Limited

11. Pak Bank Limited

12. Lahore Commercial Bank Limited

13. Sarhad Bank Limited

14. Punjab Provincial Co-operative Bank Limited

The Pakistan Banking Council prepared banks amalgamation schemes in 1974 for

amalgamation of smaller banks with the five bigger banks of the country. These five

banks are as under:

1. National Bank of Pakistan

2. Habib Bank Limited

3. United Bank Limited

4. Muslim Commercial Bank Limited

5. Allied Bank Limited

So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan, all

the commercial banks incorporated in Pakistan and carrying on business in or outside the

country were brought under the government ownership with effect from Jan. 1, 1974. The

ownership, management, and control of all banks in Pakistan stood transferred to and

vested in the Federal Government. The Finance Minister announced plans to start Islamic

Banking system in Pakistan in the budget speech on June 26, 1980, but it could not be

possible till August, 2003.


EFFORTS TOWARDS ISLAMIC BANKING IN PAKISTANEFFORTS TOWARDS ISLAMIC BANKING IN PAKISTAN

Pakistan was created in the name of Islam on august 14, 1947. But since then, the

interest is paying the cardinal role in resource allocation of the economy. The banking

system in Pakistan based on interest divergences with Islamic ideology and is forbidden

by Almighty Allah and His Prophet Muhammad (PBUH).

Any government till now in the country except President Zia-ul-Haq did not dare to

change the well-digged system based on interest in banking in Pakistan.

The only step taken under this direction is starting of PLS Deposits from January 1,

1982. Only PLS saving account and PLS term deposits shall be accepted on profit and

loss sharing basis. The banks were allowed to meet the working capital requirements of

their clients on the basis of Musharika, and Leasing, and Hire Purchase. Beside it,

different efforts are made time by time in this respect but could not be acted upon at all.

Recently in June 2002, the Shariah Applet Bench of Pakistan issued an order to all the

banks in Pakistan to change the interest-based banking system to Islamic Modes but the

lawyer from the government of Pakistan challenged it by saying that if any affair is in the

favor of the public of the country and is also admired by the public then it cannot be

abandoned by the government. So this issue is still not resolved.


NATIONAL BANK OF NATIONAL BANK OF

PAKISTANPAKISTAN

National Bank of Pakistan,

…the Nation’s Bank

National Bank of Pakistan (NBP) was 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.

National Bank of Pakistan is now the biggest financial institution with assets

totaling over Rs.635 billion with 1250 local and 23 foreign branches. The bank is the

higher financer in agriculture and commodity operation sector.


VISIONVISION

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 offering.

MISSION STATEMENT MISSION STATEMENT


To be recognized in the market place by Institutionalizing a

Merit & performance culture, Creating a powerful &

Distinctive brand identity, achieving top-tier financial

Performance, and Adopting & living out our core values.

Present Situation


http://www.nbp.com.pk/About_Us/CoreValues.htm

Now the NBP has the second largest network of branches in the Pakistan and other countries. Currently

Total Branches 1250Foreign BranchesRegional Offices 29Foreign Branches 18

Foreign Representative Offices:

CanadaUSA (Chicago)ChinaUzbekistan

(In Rupees Millions)Total Deposits 501872Total Assets 635133 Pre Tax Profit 26311 After Tax Profit 17022


Section

3

ORGANIZATIONAL

STRUCTURE

In this section five topics are discussed. The major topics

of this section are:

Management and Organization of a

Commercial Bank

Board of Directors

Senior Management

Regional Structure

Branch Structure


MANAGEMENTMANAGEMENT

ANDAND

ORGANIZATIONORGANIZATION

OF A COMMERCIAL BANKOF A COMMERCIAL BANK

The ownership, management, and control of all the commercial banks were taken

over by the Government of Pakistan on January 1st, 1974.

A banking council was formed under the Nationalization Act 1974. The banking

council was set up for making policy recommendations to the Federal Government,

formulating policy guidelines for the banks and their reorganization.

The management and organizational structure of the nationalized banks have

uniformity. This management and organizational structure is briefly described as under:

1 ... ... Board of Directors

2 ... ... Executive Board

3 ... ... Chief Executive

4 ... ... Divisional Chiefs

5 ... ... Provisional Chiefs

6 ... ... Circle Executive

7 ... ... Zonal Heads

8 ... ... Branch Managers


1. Board of Directors

In the management of the banks, the board of directors is at the top of the

controlling body. Since there are no private share holders now, so there is no general

meeting of the share holders and no elected directors. The BOD consists of a nominated

President, a Secretary, and 9 other members. The board has limited administrative

powers because after the Nationalization Act 1974, most of powers are transferred to the

Banking Council and Executive Board

2. Executive Board

The general direction and supervision of the affairs of commercial banks lies in

their respective Executive Boards. An EB also consists of a President, a Secretary, and

9 other members, appointed by the Federal Government.

3. Chief Executive

The President of the Executive Board is the Chief Executive. He is the

administrative head of a bank and presides over the meetings of Executive Board.


4. Divisional Chiefs

In order to improve the management and operation of a bank, it has been split up

into a numbers of divisions. Each division of a bank is placed under the supervision and

control of Divisional Chief (also called the Senior Executive Vice President or Executive

Vice President)

5. Provisional Chiefs

In order to improve the performance of banking system, each bank has a

Provisional Chief. PC has the powers for sanctioning finance and other credit facilities.

Each headquarter is situated in each province e.g. in Lahore, Peshawar, Quetta, and

Karachi.

6. Circle Executive

Each commercial bank has a number of circles placed directly under the control

and supervision of Chief Executive.

7. Zonal Heads

Each circle is divided into a number of zones. These zones are administered by

Zonal Heads who hold the posts of Vice President or Assistant Vice President.


8. Branch Managers

Each zone of commercial bank is divided into several branches. The control and

supervision of each branch is mostly entrusted to Assistant Vice President or OG-II.

BOARD OF DIRECTORS


Syed Ali Raza (Chair &President)

Dr.Waqar Masood Khan Iftikhar Ail Malik Shafqat Ali Director Director Director

M.Zubair Motiwala Sikander Hayat Jamili Azam Faruque(Director) ( Director ) ( Director )

Ekhlaq Ahmed ( Secretary board of directors)

SENIOR MANAGEMENTSENIOR MANAGEMENT


Amer Siddiqui SEVP & Group Chief, Retail Banking Group

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

Imam Bakhsh Baloch

SEVP & Group Chief, Audit & Inspection Group

Masood Karim Shaikh

SEVP & Group Chief, Corporate & Investment Banking Group

Dr. Mirza Abrar Baig

SEVP & Group Chief, Human Resources Management & Administration Group

Muhammad Nusrat Vohra

SEVP & Group Chief, Treasury Management Group

Shahid Anwar Khan

SEVP & Group Chief, Commercial Banking Group

Ziaullah Khan SEVP & Group Chief, Compliance Group

Iu uiu

Amim Akhtar EVP & PSO to the President

Ekhlaq Ahmed EVP & Secretary Board of Directors

Mrs. Khurshid Maqsood Ali

EVP & Divisional Head Employee Benefits, Disbursements & Trustee Division

Nadeem Anwar Ilyas

EVP/Divisional Head, Special Assets Management Division

Syed Farhan Ahmed

EVP / CFO, Financial Control Divisional

Tahira Raza EVP & Group Chief, (A) Risk Management Group

Tahir YaqoobEVP & Group Chief, Overseas Coordination & Management Group

I U

Atif Hassan Khan SVP & Group Chief (A), Information Technology Group


HIERARCHY OF NATIONAL BANK OF PAKISTAN


PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

OFFICERS GRADE I II III

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

CASHIER

ASSISTANTS

PEONS

REGIONAL STRUCTURE

REGIONAL CHIEF EXECUTIVE

GENERAL GENERAL GENERAL MANAGER MANAGER MANAGER Advances, Legal Planning, Business Administrative and Recovery Wing Development Wing

Customer Services and Implementation of Audit

BRANCH STRUCTURE


MANAGER OG-I ADVANCE

OG-II ADMIN

OG-II OG-II OG-II OG-III SERVICES CASHIER ACCOUNTS

ASSISTANT ASSISTANT ASSISTANT ASSISTANT

GODOWN GODOWN GODOWN GODOWN KEEPER KEEPER KEEPER KEEPER


HEAD MESSANGER

MESSANGER

Section

4


DEPARTMENTS OF

THE ORGANIZATION

In this section we discuss the major departments

of the NBP:

DEPARTMENTS IN THE ORGANIZATION

(1) Cash Department

(2) Deposit Department

(3) Clearing Department

(4) Advances and Credit Department

(5) Remittance Department

(6) Foreign Exchange Department

(1) Cash Department


This is very important department because cash is the most liquid asset and mostly frauds

are made in this department, therefore, extra care is taken in this department and no body

is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is

under the supervision of head of that department. Officer checks the books maintained in

this department.

(2) Deposit Department

Bank deals in money and they are merely mobilizing funds within the economy. They

borrow from one person and lend to another, the difference between the rates borrowed

and lend from their spread or gross profit. Therefore, we can rightly state that deposits are

the blood of the banks which cause the body of an institution to get to work. These

deposits are liability of the bank so from the viewpoint of bank we can refer to them as

liabilities.

(3)Clearing Department

Every banker acts both as a paying as well as a collecting banker. It is however an

important function of crossed cheques. A large part of this work is carried out through the

bankers clearing house. A clearing house is a place where representatives of all the banks

of a city get together and settle the receipts and payments of cheques drawn on each other

bank. As the collecting banker runs the certain risks in receipt of their ownership, the law

has provided certain protections to the banks.

(4)Credit Department


The function of Advances and Credit Department is to lend money in the form of clean

advances, against the promissory note, as well as secured advances against tangible and

marketable securities. The bankers prefer such securities, which do not run the risk of

general depreciation due to market fluctuations.

Section

5


FIELDS OF

ACTIVITIES

The major topics of this section are:

All the function which NBP is performing

All the services and products of NBP



FUNCTIONS OF NATIONAL BANK OF PAKISTANFUNCTIONS OF NATIONAL BANK OF PAKISTAN

National Bank of Pakistan is a commercial bank, in modern time it plays a very vital

role and its functions are manifold. The main functions are as under:

(1) Accepting various types of deposits.

(2) Granting loans and advances.

(3) Undertaking of agency services and also general utility functions, few of these

are as under:-

a ... ... Collecting cheques and bills of exchange for the customers.

b ... ... Collecting interest due, dividend, pensions, and other sum due to

customers.

c ... ... Providing safe custody and facilities to keep jewellery, documents,

and securities etc.

d ... ... Transfer of money from place to place.

e ... ... Acting an executor, trustee or attorney for the customers.

f ... ... Issuing of travelers’ cheques and letters of credit to give credit

facilities to travel.

g ... ... Accepting bills of exchange on behalf of customers.

h ... ... Purchasing shares for the customers.

i ... ... Undertaking foreign exchange business.

j ... ... Furnishing trade information and tendering advice to customers.


For proper functioning of all these activities, the bank has divided its operations into

different departments that would be discussed next. These departments are as under:

Cash Department

Deposit Department

Clearing Department

Advances and Credit Department

Remittance Department

Foreign Exchange Department


CASH DEPARTMENTCASH DEPARTMENT

The following books are maintained in the cash department:-

1 ... ... Receiving Cashier Books

2 ... ... Token Book

3 ... ... Paying Cashier Book

4 ... ... Scroll Books

5 ... ... Cash Balance Book

When cash is received in counter, it is entered in the Scroll Book and Receiving

Cashier Book. At the close of the day, these are balanced with each other. When the

cheque or any negotiable instrument is presented at counter for payment, it is entered in

the Token Book and Token is issued to the customer. The Token and the cashier make

entry in the Payment Book and the payment is made to payee. At the close of the day, the

Token Book and paying Cashier Book is balanced. The consolidated figure of receipt and

payment of cash is entered in the Balance Book and drawn closing balance of cash.

OPENING BALANCE + RECEIPT – PAYMENT =

CLOSING BALANCE

This is very important department because cash is the most liquid asset and

mostly frauds are made in this department, therefore, extra care is taken in this

department and no body is allowed to enter or leave the area freely. Mostly, cash area is

grilled and its door is under the supervision of head of that department. Officer checks the

books maintained in this department.


DEPOSIT DEPARTMETDEPOSIT DEPARTMET

IMPORTANCE

Bank deals in money and they are merely mobilizing funds within the economy.

They borrow from one person and lend to another, the difference between the rates

borrowed and lend from their spread or gross profit. Therefore, we can rightly state that

deposits are the blood of the banks which cause the body of an institution to get to work.

These deposits are liability of the bank so from the viewpoint of bank we can refer to

them as liabilities.

TYPES OF DEPOSITSTYPES OF DEPOSITS

Deposits can be segregated on two bases, one is the duration in which these funds

are expected to be with the bank, and second is the cost of getting these funds. So we can

divide deposits into two classes according to duration:

1 ... ... Time Deposits

2 ... ... Demand Deposits

And on the basis of the cost of acquire these funds, a deposit can be classified as

any one of the following four:

a ... ... High Cost

b ... ... Medium Cost

c ... ... Low Cost

d ... ... No Cost


Bank has different kind of deposit schemes in order to induce deposits. These

schemes are a mixture of the above mentioned two types of deposits with and addition of

different services and requirements, mode of transactions, basis for calculation of profit,

deduction, additional benefits, and eligibility for different groups. In the similar fashion,

national Bank of Pakistan has large variety of deposit schemes and some of these are as

follows:

(1) CURRENT ACCOUNT

In this type of accounts, the client is allowed to deposit or withdraw money as and

when he likes, but there is requirement of maintaining the minimum balance of Rs.5000/-

other wise Rs.50/- will be deducted every month. Usually the businessmen open this type

of account and the bank pays no profit on it. These types of deposits are also exempt from

compulsory deduction of Zakat.

(2) PLS SAVING BANK ACCOUNT

This type of account is for those persons who want to make small savings. This type

of account is opened with a minimum deposit if Rs.200/- If the balance in the account

falls below the minimum requirement then a flat charge of Rs.150/- is made in the

account once in a half year. Zakat and other withholding taxes are deducted as per rules

of the government.


(3) FIXED DEPOSITS

In this type of account a certain amount is deposited for a certain period such as six

months, one year, two year or longer. A fixed deposit receipt is issued in the name of the

depositor. The receipt is signed by the officer in charge and the bank manager. A notice is

given to the depositor on a prescribed from two weeks before the Fixed Deposit Receipt

(FDR) falls due, requesting the depositor to withdraw his money or to renew his deposits.

The interest is allowed on fixed deposit varies with the period for which the deposit is

made.

(4) SHORT NOTICE TERM DEPOSIT

This kind of deposit is for a short period as the name indicates. The depositor may

withdraw his deposit at any time by giving seven days notice to the banker. This type of

deposit facilitates the trader to withdraw his amount with interest of the deposited period.

(5) CALL DEPOSIT

Call Deposits are the sorts of deposits, which are deposited with the banker against

any tender. This is with out interest deposit, this may be with interest provided with the

depositor has agreed to keep this amount with the banker for some fixed period.

(6) CUMULATIVE DEPOSIT CERTIFICATE

This is just like of fixed deposit. In this kind of deposit, the rate of interest is higher as

compared to other kind of deposits, which are mentioned previously. The rate of interest

rises gradually as the period extends. Its period ranges from three month to twenty years.


(7) MONTHLY INCOME SCHEME

National Bank of Pakistan has also introduced Monthly Income Scheme for the

benefits of its customers. An individual or institution, company, corporation etc. can take

the advantage of this scheme.

LEDGERS OF DEPOSIT DEPARTMENT

The following types of ledgers are concerned with deposit department:

1 ... ... Saving Ledgers

2 ... ... Current Ledgers

3 ... ... Profit and Loss Sharing Ledgers

4 ... ... Fixed Deposit Register

5 ... ... Cumulative Deposit Certificate Register

6 ... ... Cash Book

7 ... ... Daily Profit and Loss Summary Book

8 ... ... Voucher Register


CLEARING DEPARTMENTCLEARING DEPARTMENT

Every banker acts both as a paying as well as a collecting banker. It is however an

important function of crossed cheques. A large part of this work is carried out through the

bankers clearing house. A clearing house is a place where representatives of all the banks

of a city get together and settle the receipts and payments of cheques drawn on each other

bank. As the collecting banker runs the certain risks in receipt of their ownership, the law

has provided certain protections to the banks.

TYPES OF CHEQUES COLLECTEDTYPES OF CHEQUES COLLECTED

(1) TRANSFER CHEQUES

Transfer cheques are those cheques which are collected and paid by two different

branches of the same bank situated in the same city.

(2) CLEARING CHEQUES

Clearing Cheques are those cheques which are drawn on the branches of some

other bank of the same city or of the same area which covers a particular clearing house.

(3) COLLECTION CHEQUES

Collection Cheques are those cheques which are drawn on the branches of either

the same bank or of another bank, but branches are not in the same city or they are not the

members of clearing house.


* ADVANCES AND * ADVANCES AND

CREDIT DEPARTMENTCREDIT DEPARTMENT

The function of Advances and Credit Department is to lend money in the form of

clean advances, against the promissory note, as well as secured advances against tangible

and marketable securities. The bankers prefer such securities, which do not run the risk of

general depreciation due to market fluctuations. Common securities for the banker’s

advances are as under:

SECURITIESSECURITIES

(1) BANKERS’ LIEN

(Moveable property possessed to the lender cannot be sold in case of default)

Lien is the bankers’ right to hold the property until the claim on the property

is paid. The bankers look at their lien as a protection against loss on loan or overdraft

or any other credit facility. In ordinary lien, the borrower remains the owner if the

property, but the actual or constructive possession remains with the creditors, though

he has no right to sell it.


(2) GUARANTEES

When an application for an advance can offer any tangible security, the

banker may rely on personal guarantees to protect himself against loss on advances or

overdraft to the applicant.

(3) MORTGAGE

(Immoveable property possessed to the lender can be sold in case of default)

A mortgage is the transfer of an interest in specific immoveable property for

the purpose of securing the payment of money advanced or to be advanced by way of

loan, and existing of future debt, or the performance of an engagement, which may

rise to a particular liability. The person in whose interest the property is transfer is

called mortgagee.

(4) HYPOTHICATION

(Immoveable property possessed to the borrower can be sold in case of

default)

When property in the shape of goods is charged as security for a loan from the

bank, the ownership and possession is with the borrower, the goods are said to be

hypothecated. The essence of hypothecation is that neither the property in goods nor

the possession of them passes to the lender, but the security is granted by means of

letter of hypothecation which usually provides for a banker’s charge on the

hypothecated goods.


(5) PLEDGE

(Moveable property possessed to the lender can be sold in case of default)

In a pledge, the ownership remains with pledger (borrower), but the pledgee

has the possession of property until the advance is repaid in full. While in case of

defaulter, the pledge has the right of sale after giving due notice.

TYPES OF ADVANCESTYPES OF ADVANCES


1 ... ... Demand Finance(Ordinary Loans)

2 ... ... Running Finance(Overdraft)

3 ... ... Cash Finance

4 ... ... Small Finance

5 ... ... Finance against Bills

6 ... ... Agriculture Loans

(1) DEMAND FINANCE (ORDINARY LOANS)

These are those advances which are allowed in lump sum for a fixed period and are

repayable in lump sum or gradually in installments.

(2) RUNNING FINANCE

Running finance are advances, which are gradually given to meet temporary

requirements of the customers. A good customer uses the banks running finance limit, as

a mean of protecting his credit in the market and as a line of second defense to meet his

commitments. There are two types of running finance:

a) UN-SECURED

Under this type of overdraft, the bank relies upon the personal security of the

customer or customer’s account.

b) SECURED


Under this type of overdraft, the bank allows his customer to withdraw more than his

deposit after giving security against the amount overdrawn. The securities against which

they are given are as under:

a ... ... Share Certificates

b ... ... Savings Certificates

c ... ... Deposits

d ... ... Mortgage Property

e ... ... Guarantee of a person

(3) CASH FINANCE

These types of loans are given against the following:

1 ... ... Against locally manufactured goods

2 ... ... Cash finance against rice and paddy

3 ... ... Against pledge

4 ... ... Against commodities

5 ... ... Besides advances against the above commodities bank may be approached

by parties for advances against other commodities like tobacco, oil, etc.

6 ... ... Against Trust Receipts

(4) SMALL LOANS


Loans are allowed to contractors’ clearing and forwarding agents. These loans are

repayable within a year.

(5) FINANCE AGAINST BILLS

The advances are allowed both on local and foreign bills such as:

a ... ... Bill of Exchange and Invoices

b ... ... Bill of Landing

(6) AGRICULTURE LOANS

Agriculture loans are given to the farmers with holding up to 25 acres for meeting

their short medium and long term production requirements such as:

a ... ... Agriculture inputs

b ... ... Tractors instruments

c ... ... Tube wells

d ... ... Live stock farming

e ... ... Land Improvements

(7)(7) OTHER SERVICESOTHER SERVICES


* UTILITY BILLS COLLECTION

For the convenience of the customer, National Bank of Pakistan also collects

different kinds of utility bills such as:

Electricity Bills, Sui-Gas Bills, Telephone Bills etc.

* NBP PAK RUPEE TRAVELER CHEQUE

NBP Pak Rupee traveler Cheque is better than cash, because you get the power to

purchase as well as your money can be refunded in case you would loss your cheque.

It is a safe and convenient way of purchase.

* FOREIGN CURRENCY ACCOUNTS

Launched to attract deposits in foreign currencies like US Dollars, Pound Sterling,

Dutch Mark, and Japanese Yen. Whether you are a resident or a non-resident of

Pakistan, NBP invites all to operate in a foreign currency account.

DIFFERENT SCHEMES CONDUCTED BY NBPDIFFERENT SCHEMES CONDUCTED BY NBP


National Bank of Pakistan always makes efforts to improve its goodwill in the

general public. It introduces different kind of schemes time to time.

The most popular schemes conducted by NBP are as under:

1 ... ... Hajj Mubarak Scheme

2 ... ... NBP Advance Salary Scheme

3 ... ... Fund Management Scheme

4 ... ... LG TV Scheme

5 ... ... NBP Karobar

6 ... ... NBP Cash n Gold

7 ... ... NBP Kisaan Taqat

8 ... ... NBP Kisaan Dost

(1) HAJJ MUBARAK SCHEME

For the convenience of a person with a limited income who desire to perform Hajj,

Hajj Mubarak Scheme is introduced. Moreover, National Bank of Pakistan process the

Hajj applications of thousands of people successfully more than any other bank in

Pakistan.


(2) NBP ADVANCE

SALARY SCHEME

Do you need urgent funds? If yes then head to National Bank of Pakistan and avail

“NBP Advance Salary Scheme”, which allow you to draw three months salary in one go.

This facility is available to permanent employees of the:-

1 ... ... Federal and Provincial governments

2 ... ... Semi-governments, autonomous, semi-autonomous, local bodies,

and government corporations

3 ... ... Other corporations approved by NBP

No guarantee, collaterals, or insurance is required to avail this scheme. NBP gives the

facility to repay the excessive amount within 1 to 36 months. The procedure is very easy,

just fill the application form and choice between 1 to 36 months and take your NBP

Advance Salary within 3 days after submitting your form.

(3) FUND MANAGEMENT SCHEME

This scheme is offered to corporate under customer and is aimed at providing better

rate of return up to 15% per annum. One of the objectives of the scheme is to develop the

secondary market for government securities.


(4) LG TV SCHEME

It is the most popular of NBP schemes for the year 2003. NBP incorporates with LG

Appliances Corporation. If you want a TV set but has not enough money to purchase it

then head to NBP, fill an application form of LG TV Scheme. NBP gives you the facility

to pay for the TV set in smaller installments during a time period of 2 years.

Any one can avail this scheme. Two government employees are required to present

the witness to repay the loan if the applicant is unable to repay the loan or the applicant

should have the Fixed Term Deposit in NBP more worthily than the amount advanced to

the applicant and it should have the duration of more than two years.

(5)NBP Karobar:

President's Rozgar Scheme

If you are aged between 18 and 40years, you could be eligible for easy

financing for self employment inthe categories below.

Ghar AsanScheme

Open the door to your dream homewith NBP SAIBAAN


NBP Premium Amadani

Minimum saving balance of Rs. 20,001

and a maximum balance of Rs. 300,000*

Earn up to 7.25% p.a.††Profit rates are expected

NBP cash in Gold

With NBP's Cash n Gold, you can meet your need for ready

cash against your idle gold jewelry

NBP Kisan Taqat

Get amount with the help of the NBP

to increase the production of the milk

KisanDost

Get amount with the help of the NBP

to increase the production of the crops

NBP Online ASAAN Banking

You can avail the services from our Online Branches located in 30 cities.


Section

6

WORK DONE BY ME

In this section two topics are discussed. They are as

under:

All the work which I have learned in during my

internship in different departments of NBP


WORK DONE BY ME AT THE BRANCH

Major activities performed during my internship program are as follows:

First Week

ACCOUNT OPENNING DEPARTMENT:

In this department, I gain the practical knowledge about opening account. This

department deals with opening current and saving account for its customers and all

matters regarding thereof. The customers opening current and saving accounts can be

categorized as following.

-Individual

-Firm

-Company

-Trust

-Staff

-Others

OPENING AN ACCOUNT

In order to open an account, first of all the customers have to fill a form prescribed by the

bank. The person is required to bring some reference or introduction for opening the

account. Introducer may be the person who has any account with NBP.


Some important information regarding introducer e.g. the name and account number of

the introducer is written on the space provided on the specimen signature card. Then in

order to find out whether he is a true introducer or not, a letter is sent to him thanking him

for this introduction so that anything wrong may come into notice. There are different

requirements for different types of accounts and accountholders.

ISSUANCE OF CHEQUE BOOK:

The accountholders request for the new cheque book by presenting the requisition slips

along with the authority letter to the concerned office. His signatures are verified before

giving him a new chequebook. The presence of the accountholders is compulsory to get

a new chequebook. But if he sends a third person to get his chequebook then the

procedure is as follows;

An authority letter is given to the third party by the accountholders.

The accountholders verify the signature of the third person on that authority letter.

The bank officer gets the signature of that third person to confirm whether he is the

same to whom the accountholder has sent.

The bank issues the new cheques book and authority letter is kept buy the bank.


Second week:

Now I joined Credit Department. First of all here I came to know about different types

of credits and advances that NBP is offering. I provide the basic guide line to the

different customers who come for loan .then leaned to check the ID cards of customer

through NADRA verification.

Then I worked on scheme of Advance Salary Scheme, starting from filling up the forms

of different customers then check that all requirements are fulfilled .then the head of

department Mr. Amjad Baig verify it and then it forwarded to the manager operations for

approval. In this scheme NBP provide 20 salaries in advance and the maximum amount

limit is Rs 250,000

Arranged the day books of different scheme of credit department and posting in ledgers

for all transactions after checking the documentary evidence.


Third Week

Then I was told about the types of finance which are

1. Cash Finance

2. Agri Finance

3. Running Finance

4. Demand Finance

5. Packing Finance

Cash Finance

It is a short term loan that is provided for 1 year.

Agri Finance

It is the loan provided for agriculture purposes like installation of tube

wells, purchase of tractor etc

Demand Finance

It is long term loan that is provided for a period of more than 1 year.

Types of finance on the basis of amount

1. Corporate Finance (Above Rs 100 Millions)

2. Commercial Finance (Above Rs 50 Millions)

3. SME Finance (Below Rs 50 Millions)

For all kind of loans for manufacturing concerns Bank check the evaluation statement of

Shore bank, ICIL report and the CIB.these evaluation reports shows the worth and

credibility of the customer through with the help of cash flows statement ,balance sheet .


Lien Mark

When some documents are missing and the concerned person is out contact,

then his/her A/c is lien marked which means that no transaction can be done through this

account.

Fourth Week

I joined the foreign exchange department. On first day I learn what home remittances

(HR) are and foreign remittances (FC). How to make them and the recording of entries in

particular registers, transactions made may be in home currency as well in foreign

currency.

Sir Ahmad butter told us about different currencies which are usually transacted in

foreign exchange department i.e. Euro, Pound, Dollar and Yen. Different types of codes

are assigned to these currencies i.e. usd=1, UK=2, euro=4, yen=5etc.The rates are

determined by combine efforts of the bank like there are 8 major European countries that

fix the rate of currencies.

All these currencies are transacted by the agent named as intender.

Types of L.C was discussed there are two types of L.C,

Sight L.C

Usance L.C

Computer techniques used for L.C

Swift

Telex

Requirement to open foreign account:

Account holder CNIC card

Introduction(CNIC of introducer)

Next of kin


If the account holder has no link with bank for 3 years then this person will

provide information about account holder may be brother or sister cusin or friends

etc.

There are 7b list checking of account opening form

To identify old id holder and new id holder and also those who have no card

Counting of resident and non resident

Here we worked with Mr.Afzal who was also the head of foreign exchange department.


Fifth week

Inward remittances and outward remittances were discussed.

Inward remittances:

Money from foreign currency to home currency

Outward remittances:

Money from home currency to foreign currency.

Forms of inward remittance:

United States and London bank deal with NBP Pakistan when UBL want to send money

form London to MCB in Pakistan, in this case one branch of NBP receive a swift

message from UBL due to agency arrangements now for dealing of NBP and MCB. We

require f-15(for same bank and different branches)

But for different banks like NBP and MCB pay order is used for it, a certain limit is

fix for pay order.

Fixed with in city

Clearing have no charges


It’s a collection procedure and now a days NIFT clearing account is used with in clearing

limit drafts is used and for foreign remittances it have no charges otherwise graft have

charges. Now a day’s all clearings are made under NIFT.

Credit procedures:

Red voucher = with us

F15=NBP=same bank different branches

P.O=NBP other than NBP with in credit limit)

Draft =beyond clearing limit with other banks.


Sixth Week

Import and Export:

Chamber of commerce register registration is compulsory for export but optional for

imports. If we export rice then export association certificate is also required.

Letter of credit for import:

When required documents are joined with letter of credit then it becomes fund based

facility. Letter of credit is contract between import order and export order i.e.

between importer bank and exporter bank.

Bank takes some security as property or other material as a guarantee at the time of

opening of letter of credit. It is necessary to avoid any fraudulent from the part of

importer (Mortgage to avoid risk).

Payment 100%margin before receiving goods we take from importer.

Performa invoice:

When LC is opened

Import form:

Signed by importer

IB 8:

Stamp Paper agreement for irrevocable L.C when shipped.

IB 9:


Stamp Paper =when LC through mail or by air

IB 6

Stamped paper agreement between Bank and borrower

IB 23

Agreement of mortgage

IB 29

Document contains Guarantee (from borrower)

Request letter:

On letter pad to open L.C after filling these documents we can open L.C

Insurance cover note:

L.C value +10%of L.C amount.

Two types of registers are maintained by L.C dept:

l).LC registers:

All charges of LC opening are maintained here.

Pak Rs=L.C amount * selling price

=100000$ *61

=610000

2) Liability Register:

It is concerned with the commission charges, telex

charges, federal excise duty, service charges etc

Document necessary for Importer/Exporter

NIC Card


Current A/c of the firm (Necessary for importer)

NTN Number

Registration certificate of sales tax

Chamber of Commerce Certificate

Section

7

FINANCIAL ANALYSIS

In this section two topics are discussed. Two major topics of this section are:

Profit and Loss Account

Balance Sheet

Ratio Analysis


FINANCIAL ANALYSIS

Vertical and Horizontal Analysis of Balance

Sheet and Profit and

Loss Account


NBP (Vertical Analysis)

Balance Sheet As On 31-Dec-2006

ASSETS

31-Dec-06 31-Dec-05

Rupees in '000

% %

Cash and balances with treasury banks 78625227 12.38 71196956 12.32

Balances with other banks 40641679 6.39 31019330 5.39

Lending to financial institutions 23012732 3.62 16282942 2.82

Investments 139946995 22.03 156985378 27.17

Advances 316110406 49.77 268838779 46.53

Other assets 27113698 4.29 23941056 4.14

Operating fixed assets 9681974 1.52 9454365 1.64

Deferred tax assets-net _ _ _ _

635132711 100.00 577718806 100.00

LIABILITIES

Bills payable 10605663 1.92 1741156 0.35

Borrowing form financial institutions 11704079 2.12 8756847 1.75

Deposits and other accounts 501872243 90.72 463426602 92.33

Sub-ordinate loans _ _ _ _

Liabilities against assets subject to finance lease 13235 0.002 16629 3.31

Other liabilities 26596300 4.81 23496910 4.68

Deferred tax liabilities 2387073 0.43 4462718 0.89

553178593 100.00 501900862 100.00

NET ASSTS 81954118 75817944


REPRESENTED BY

Share capital 7090712 13.16 5908927 15.70

Share premium _ _ _ _

Reserves 13879260 26.16 12354256 32.83

Inappropriate profit/(Accumulated losses) 32074677 60.46 19372523 51.47

53044649 100.00 37635706 100.00

Surplus on revaluation of assets-net of tax 28909469 _ 38182238 _

81954118 75817944

NBP (Vertical Analysis)

Profit and Loss Account 31-Dec-06 31-Dec-05

For the year ended December 31,2006. Rupees in '000

Mark-up/Return/Interest earned 43788628 50.00 33692665 50.00

Mark-up/Return/Interest expensed 13634912 19.72 10321762 10.23

Net Mark-up/Interest income 30153716 30.27 23370897 39.766

34431014 100.00 19784102 100.00

Provision/against non-performing loans and

advances-net 3075723 82.753 2446739 68.888

Provision/(reversal of provision) for diminution in

the value of investments-net (709461) _2.0745 (245881) 3.5186

Bad debts written off directly 5284 19.32 23069 27.592

2371546 100.00 2223927 100.00

Net mark-up/interest income after provisions 27782170 21146970

NON MARK-UP/INTEREST INCOME

Fee, Commission and Brokerage income 6144628 55.28 4926604 62.9

Dividend income 2891755 7.890 1718478 2.379

Income from dealing in foreign currencies 1333840 11.526 1205638 12.900

Gain on sale of securities 1169515 15.385 1365771 6.4128

Unrealized gain on revaluation of investments

classified as held for trading (4464)

-

_1.2320 (1979) 1.325


Other income 627618 110148 177839 14.0629

Total non-Markup/Interest income 12162892 100.00 9392351 100.00

39945062 30539321

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 13443441 96.09 11221789 96.989

Provision/(reversal of provision) against off balance

sheet obligation- net (17283) 0.046 198298 1.8006

Other charges 208327 0.12 63206 4.325

Total non-markup/interest expenses 13634485 100.00 11483293 100.00

Extra ordinary items /unusual items _ _

PROFIT BEFORE TAXATION 26310577 19056028

Taxation-current 8695598 97.846 7154002 76.34

Taxation-prior years 530652 _ (1098709) 1.26

Taxation-deferred 61981 2.1535 291291 22.395

9288231 100.00 6346584 100.00

PROFIT AFTER TAXATION 17022346 12709444

(Accumulated losses) brought forward 19372523 99.29 10885184 _99.9

Profit available for appropriation 36394869 .706 23594628 .311

Basic earning per share(rupees) 24.01 100.00 17.92 100.00

Diluted earning per share(rupees) 24.01 17.92


NBP (Horizontal Analysis)

BALANCE SHEET AS ON 31-Dec-2006

ASSETS

31-Dec-06 31-Dec-05 Change %

Rupees in '000

Cash and balances with treasury banks 78625227 71196956 7428271 10.43

Balances with other banks 40641679 31019330 9622349 31.02

Lending to financial institutions 23012732 16282942 6729790 41.3

Investments 139946995 156985378 (17038383) -10.85

Advances 316110406 268838779 47271327 17.58

Other assets 27113698 23941056 3172642 13.25

Operating fixed assets 9681974 9454365 227609 2.41

Deferred tax assets-net

635132711 577718806 57413605 9.93

LIABILITIES

Bills payable 10605663 1741156 8864507 509.12

Borrowing form financial institutions 11704079 8756847 2947232 33.66

Deposits and other accounts 501872243 463426602 38445641 8.30

Subordinated loans _ _ _

Liabilities against assets subject to finance

lease 13235 16629 (3394) -20.41

Other liabilities 26596300 23496910 3099390 13.19

Deferred tax liabilities 2387073 4462718 (2075645) -46.51

553178593 501900862 51277731 10.22

NET ASSTS 81954118 75817944 6136174 8.09


REPRESENTED BY

Share capital 7090712 5908927 1181785 20

Share premium _ _ _ _

Reserves 13879260 12354256 1525004 12.34

Inappropriate profit/(Accumulated losses) 32074677 19372523 12702154 65.57

53044649 37635706 15408943 40.94

Surplus on revaluation of assets-net of tax 28909469 38182238 (9272769) -24.29

81954118 75817944 6136174 8.09

NBP (Horizontal Analysis)

Profit and Loss Account 31-Dec-06 31-Dec-05 Change %

For the year ended December 31, 2006. Rupees in '000

Mark-up/Return/Interest earned 43788628 33692665 10095963 29.96

Mark-up/Return/Interest expensed 13634912 10321762 3313150 32.09

Net Mark-up/Interest income 30153716 23370897 6782819 29.02

Provision/against non-performing loans and

advances-net 34431014 19784102 14646912 74.03

Provision/(reversal of provision) for diminution in

the value of investments-net 3075723 2446739 628984 25.71

Bad debts written off directly (709461) (245881) 463580 188.54

5284 23069 (17785) -77.09

Net mark-up/interest income after provisions 2371546 2223927 147619 6.64

NON MARK-UP/INTEREST INCOME 27782170 21146970 6635200 31.38

Fee, Commission and Brokerage income 6144628 4926604 1218024 24.72

Dividend income 2891755 1718478 1173277 68.27

Income from dealing in foreign currencies 1333840 1205638 128202 10.63

Gain on sale of securities 1169515 1365771 (196256) -14.36

Unrealized loss on revaluation of investments

classified as held for trading (4464) (1979) (2485) -125.57

Other income 627618 177839 449779 52.91

Total non-Markup/Interest income 12162892 9392351 2770541 29.5


39945062 30539321 9405741 30.80

NON MARK-UP/INTEREST EXPENSES

Administrative expenses 13443441 11221789 2221652 19.8

Provision/(reversal of provision) against off

balance sheet obligation- net (17283) 198298 (2615) -1.32

Other charges 208327 63206 145121 229.60

Total non-markup/interest expenses 13634485 11483293 2151192 18.73

Extra ordinary items /unusual items _ _

PROFIT BEFORE TAXATION 26310577 19056028 7254549 38.07

Taxation-current 8695598 7154002 1541596 21.55

Taxation-prior years 530652 (1098709) (568057) -51.70

Taxation-deferred 61981 291291 (229310) 78.72

9288231 6346584 29416 46.35

PROFIT AFTER TAXATION 17022346 12709444 4312902 339.3

(Accumulated losses) brought forward 19372523 10885184 8487339 77.97

Profit available for appropriation 36394869 23594628 12800241 54.25

Basic earning per share(rupees) 24.01 17.92 6.09 33.98

Diluted earning per share(rupees) 24.01 17.92 6.09 33.98


Ratio Analysis

Ratio means “one number expressed in term of another a ratio is statistical yardstick by

mean of which relationship between two or various figures can be compared or measured.

Here we are going to explain the ratio analysis of MCB (bank) which is little bit different

from other organizations.

Profitability analysis of a firm indicates the overall efficiently of the management.

Without profit a company can not attract the outside capital. Profitability analysis

includes:

Return on total assets

Return on-equity

Return on investment


1. Return on Assets

2.20% 2.68%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

2005 2006

Return On Assets

2. Return on Equity


16.76% 20.77%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2005 2006

Return On Equity

3. Return on Investment

2.51%3.10%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2005 2006

Return On investment

4. Return on Fixed Assets


134.00%175.80%

0.00%

50.00%

100.00%

150.00%

200.00%

2005 2006

Return On fixed Assets

…: Interpretation:

Profitability analysis shows the entire performance of a business and if we study the

profitability trend of bank then it will clear to us that it showing a positive trend. Net

profit after tax is increased as compare to previous year, due to it return on assets, equity

and investment is increasing.

Not only overall profit is increasing but also average profit of all the branches is

increasing. Bank interest income is also increasing due to more advances in this year.

This year bank total deposits are also increased and that’s why interest expenses are

showing up ward trend. While all the profitability ratios of NBP in 2006 shows a better

performance then 2005.


Investor analysis or market analysis are related to firm market valve, as measure by its

current share price to certain accounting values. Investor analysis includes:

Earning per share

P/E ratio


Dividend per share

Dividend yield ratio

Dividend payout ratio

Break up value/Book value per share

M/B ratio

1. Earning per Share

21.5

24.01

20

21

22

23

24

25

2005 2006

Eaerning per share

2. P/E Ratio


13.25

9.78

0

2

4

6

8

10

12

14

2005 2006

Price Earning Ratio

3. Dividend Yield Ratio

0.00526

0.0106

0

0.002

0.004

0.006

0.008

0.01

0.012

2005 2006

Dividend Yield Ratio

4. Dividend Payout Ratio


0.07 0.104

0

0.02

0.04

0.06

0.08

0.1

0.12

2005 2006

Dividend Pay out Ratio

5. Book Value per Share

128.31

115.58

105

110

115

120

125

130

2005 2006

Book Value per Share

6. M/B Ratio


2.221

2.03

1.9

1.95

2

2.05

2.1

2.15

2.2

2.25

2005 2006

M/B Ratio


NBP has also has good investment opportunities for the investors. This bank has more

attraction for investors as compare to previous year. Earning per share is increased due to

increase in profit. Book value and market valve of one share in also increased as compare

to 2005.

Only dividend payout ratio is decreased fewer dividends but it is also in favor of

investors because it will increase wealth of shareholders and ultimate benefit to investors.

But improvement in these ratios is still not sufficient.


Bank ratio analysis is little bit different from other organizations and if we want to see the

real picture of a bank we have to focus on given special ratios.

Earning assets to total assets

Return on earning assets


Net margin to earning assets

Loan loss coverage ratio

Equity to total assets

Deposit time equity

Loan to deposit ratio

1. Earning Asset to Total Assets

86.40%

86.10%

85.90%

86.00%

86.10%

86.20%

86.30%

86.40%

2005 2006

Earning Assets To Total Assets



The efficiency of the banking firm is measured by its ability to utilize its assets in a

manner that they could be profitable for the firm. Bank earning assets are increasing as

compare to last year but it is just a little bit increase. Advances of bank are increasing and

investment as compare to 2005 is also increased.

Lending to financial institutions is also very well. Balance with other banks is not

desirable this year but overall earning assets showing satisfactory position in 2006.

2. Return on earning Assets

3.83%

4.80%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2005 2006

Return on Earning Assets



Return on earning assets is increased as compare to previous year because there is

increased in net profit in 2005 as compare to 2004. The increasing trend in this ratio is

beneficial for business and investors because this ratio shows real profitability position of

business.

3. Net Margin to Earning Assets

4.70%

5.51%

4.20%

4.40%

4.60%

4.80%

5.00%

5.20%

5.40%

5.60%

2005 2006

Net Margin To Earning Assets


…: Interpretation:Spread is difference between interest income and interest expense. This ratio shows the

spread position of a bank. In this year bank net margin is increased due to increase in

advances and interest income as compare to 2004. Interest expenses are also increased

but their increasing trend is lesser as compare to interest income so that’s why spread

position of bank is increased in this year.

4. Loan Loss Coverage Ratio

1939.13

5561.37

0

1000

2000

3000

4000

5000

6000

2005 2006

Loan Loss Coverage Ratio



This ratio shows how much money is there against Rs. 1 loss. This ratio provides a

protection to customers who are going to deposit their money in bank. Higher the ratio is

beneficial for the bank and customers. In this year loan loss coverage ratio is increased

due to decrease in bad debts but in 2004 the ratio of bad debts is more as compare to this

year. This shows the efficiency of bank in this year instead of 2004.

5. Equity to Total Assets

0.131

0.129

0.128

0.1285

0.129

0.1295

0.13

0.1305

0.131

2005 2006

Equity To Total Assets



This ratio shows the position of equity in total assets of business. In both years this ratio

is better. The bank should increase its equity by increasing the wealth of shareholders. It

means that this year bank has more deposits.

6. Deposit Time Equity

6.11

6.12

6.105

6.11

6.115

6.12

2005 2006

Deposit Time Equity



This ratio is also known as debt to equity ratio. This shows how much outsiders share in

business total equity. Lesser ratio is better for a business; there is a little fluctuation in

this ratio.

7. Loan to Deposit

62.00%

68.00%

58.00%

60.00%

62.00%

64.00%

66.00%

68.00%

2005 2006

Loan To Deposit



Loans or advances are the major assets of a bank while deposits are major liabilities of a

bank. Higher ratio shows the better solvency of bank. This ratio is increased instead of

previous years because advances of the bank are increased as previous years although

deposits are also increased this year.

Section

8

SWOT ANALYSIS

In this section four topics are discussed. They are as

under:


Strengths

Weaknesses

Opportunities

Threats

SWOT ANALYSIS

STRENGTHS

National Bank the Nation’s Bank

State Bank of Pakistan is government owned bank that is why Pakistani nation

has a trust on the bank that their deposits are secured. Due to this reason the deposits of

the banks are increasing with the passage of time.

Agent of State Bank of Pakistan


National Bank of Pakistan also works as an agent of State bank of Pakistan in

those cities where SBP branches are not working.

Agency Arrangements

National Bank of Pakistan is enjoying with deposit of different Govt. organization

like Pakistan Railways, PIA, WAPDA, Sui-gas due to agency arrangements.

Deposits

National bank of Pakistan is the largest commercial bank of the country and has

Total Deposits of Rs. 501.87 billion and becomes the first bank to cross the deposit of

Rs. 350 billion.

Profitability

The pre-tax profits of NBP have gone up to Rs. 26.3 billion.

Corporate Branches

National Bank of Pakistan is now the biggest financial institution with assets

totaling over Rs.314 billion with 1250 local and 23 foreign branches. The bank is the

higher financer in agriculture and commodity operation sector.


Collection of Cash from Shrines

Cash collected from different shrines is also deposited in National Bank of

Pakistan.

Comprehensive Range of Financial Products

In order to facilitate the customers, NBP is offering the comprehensive range of

financial products which are as follows:

Credit Cards

Foreign Exchange Bearer Certificates

National Bank Daily Accounts

Travelers Cheques etc.

Investing in Capital Market

NBP has decided to diversify the fund base by investing in capital markets not only in

Pakistan but also in the foreign countries.


WEAKNESSES

Lack of Implementation of Rules and Regulations

Because NBP is a govt. owned organization so there is a lack of implementation

of rules and regulations.

Poor Working Conditions

Despite, cultural change program the working condition of the NBP is not up to

standard.

Recruitment Policy


In NBP, employees are recruited on the basis of favoritism or through other tools of

corruption.

Incompetent Staff

Due to wrong recruitment policy staff of NBP is not proficient in their work.

Irregularities in Promotion

In NBP there is no smooth and continuous promotion system. Unfair means are

used in order to get the promotion especially the promotion of the managers.

Individual Difference

In NBP the individual difference have strong impact on the organization’s

performance due to the wrong criteria of selection of the employee. So with the passage

of time individual differences are increasing which are undermining the good will of the

organization.

No Major Use of Computer


In NBP there is no major use of computer for maintaining the records of branches

as compared to other banks of the country.

Strong Union

Union has strong impact on performance of NBP. So the top management is

unable to punish the violators and shrieks.

Organizational Structure

In this organizational the organizational structure is bureaucratic which a barrier

in rapid and effective decision making is.


OPPERTUNITIES

Consumer Banking

The basis need of the consumer such as housing, transportation and other durable goods

are not adequately financed by the banks. So by initiating these services, the bank can

enjoy with more funds.

Investing in the Foreign Capital Market

NBP can enjoy handsome return its funding base by investing in capital markets

in the foreign countries.


Investment Banking

Until recently the bank perceived as purely commercial banking entity so in order

to expand its business the bank may start investment banking by investing in the portfolio

of handsome return.

New Branches

NBP by establishing new branches in foreign countries can expand its business

and can enjoy with the profit.

Issuance of Bonds

To enjoy with large amount, NBP can introduce a comprehensive range of bonds.

Night Banking

Despite of poor customer service of NBP, people still come to NBP because of its

Govt. ownership as they feel it secure therefore bank improve its deposit by giving

facility of night banking and also can compete its competitors with positive steps.

Advisory Services

It can establish advisory services in order to facilitate the customers in investing in the

securities.


THREATS

Competition

The no. of banks in Pakistan is increasing with the passage of time. So due to poor

working condition and poor customer service it may be possible NBP will lose its market

share in future.

Inflation

In our country, the rate of inflation is increasing along with the unemployment. So

due to the increase in price of the products, the savings of the nation is decreasing with


the passage of time. So it is the threat for the banking sector. In the future, the deposits of

the bank will decrease.

Government Policy

On NBP Govt. policies have strong impact. A slight change in Govt. policies may

affect the performance of the bank. The bank has to work with in the regulation frame

work.

Conclusion

As I have studied and analyzed NBP I found out that this a good bank as its working,

management is concerned.

First of all the reason of this is that there is no directive style in the management of

National Bank Of Pakistan and which shows that there is decentralization in the Bank and

every branch manager can take decision according to the situation.

NBP is providing their customers with wide range of services including online banking,

phone banking and some of their new products in the pipeline, include ATM network

Royal ………….etc shows that NBP is taking good care of their customers.


NBP made heavy investments, towards enhancing its capabilities in the area of

automation and technology. NBP is well positioned to meet client needs, with improved

competitive advantage.

And from the financial and when I conduct comparative analysis with other banks I found

that it is somewhat better than others, and from the analysis of previous year I concluded

that it is improving and in 2005 profits are more than the previous year. So I can say that

NBP is performing very well.

It was concluded that there is no proper planning in the NBP for performing any task.

Employees does not perform their work on time, there is always a lot work that is

pending from employee side especially in credit department. There is lot of misuse of

resources at every level in branch, either in form of talking with others on telephone or by

using computer for their personal use.

RECOMMENDATIONSRECOMMENDATIONS

PROPER PLANNING

Bank should make a plan to gear up its recovery efforts on war footing and

reorganize the recovery function of global bases. In addition, bank should tighten up

control on expenditure

USE OF COMPUTERS


To save the time of the customers and other clients, bank should adopt

computerized system for book keeping and other filling systems. It will increase the

efficiency of the bank. I know that there are some branches which are computerized but

most of the branches in various cities of the country are not computerized. So the bank

should mechanize all its branches in the country.

ADOPTION OF ADVERTISING

Bank should launch advertising campaigns through out the year to promote the

habits of savings in the people. Bank should open more branches in the remote areas of

the country to get deposits and idle resources. Bank should provide similar facilities to all

its branches in big cities. The standard of service and other facilities are far better as

compared to smaller cities.

PROPER GUIDANCE

Bank should adopt such an induction plan that when a customer opens his account

with the bank, he should be supplied with a booklet which enables him to know the

procedure of filling the cheques and pay-in-slip etc. It will save a lot of time of the bank

staff afterward during of the conduct of the account of that customer.

DIVISION OF WORK


The billing system of national bank of Pakistan must be improved to facilitate the

customers and workers. The work should be divided among the staff e.g. collection of

bills, countering of cash and then entry of these.

CHECK ON EXPENDITURES

Expenditures must be controlled which are very high and unnecessary.

BORROWING AT LOW COST

Deposits must be taken at a lower cost and given at higher interest

rate.

BIBLIOGRAPHY

Books Reference:

Stephen P.Robbins, “Management”, San Diego State: San Diego Press, 2005

G.W White, “Financial Statement Analysis”, New York: Oxford University Press,

2005

Websites Reference:


Date Visited Time Visited

http://www.google.com 06-11-2007 9pm to 2am

15-11-2007 10pm to 1am

18-11-2007 10pm to 3am

http://www.npb.com.pk. 06-11-2007 9pm to 2am

15-11-2007 10pm to 1am

18-11-2007 10pm to 3am

Organization Reference:

Mian Arshad Mehmood, Manager,NBP Amjad Baig, Head Credit Department, NBP Abid Tufail, CAD Officer NBP Afzal Khan, Head Foreign Exchange Department, NBP Ahmad Bhutter ,Foreign Trade Incharge ,NBP


http://www.npb.com.pk/

http://www.google.com/

Documents

Final Report Of N.B.P