PREFACE
An internship is a stepping-stone to one’s career. The purpose of an
internship is to prepare one for his chosen career and the
real World. An internship provides an opportunity to gain hand-on
experience from professional people in the Market. Those students
show willingness to learn and prove themselves in the Market, so
they succeed in getting a good job in the well-known Organization
in the future.
MBE is not only the bookish knowledge of Business and
Economics but also provides many opportunities of getting actual
practical experience and Internship is one of them.
I have completed my internship in National Bank of Pakistan
in Farid Gate Branch, Bahawalpur. During my internship I
had been rotated different departments as bills and remittances,
cash, deposit and credit etc in six weeks, this movement and
working provide a complete knowledge of Banking Environment.
They also explained me each and every concept to make clear. This
knowledge and practical experience is that thing, which will help
me in the future life.
Fawad Ashraf Bajwa.
Roll No. 32
M.Sc. Business Economics (MBE)
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ACKNOWLEDGEMENT
First of all I surrender my compliance, capitulation, submission
and docility to “Allah” for His entire blessings, to accomplish this
report. This ability, knowledge, strength and competence required
for this report are bestowed to me by the omnipotent “Allah” as
boons.
My heartfelt respect for my parents, who have supported me to
reach the point where I stand now and accomplishment of this
report and many more like this. This will be decided by my
respectable, experienced and able teachers that to what extent I
have successfully completed this task, but I feel highly indebted to
my esteemed teachers for providing this precious opportunity, to
have a practical experience in this giant industry of Pakistan.
I am especially thankful to Mr. Ehtisham-ul-Haq OG-I (Chief
Manager) of “NBP” Farid Gate Branch Bahawalpur and Mr.Rana
Jamshaid Noon OG-II (Manager Operations) who gave me
opportunity to work in his Branch.
I feel great pleasure and honor to gratitude from the citadel of my
heart to all others officers of “NBP” especially,
Mr.Aslam Saifi
Mr.Faiz ullah
Mr. Shabbir Sahoo
Madam Naheed
Mr. Sharafat Ali
Mr.Jawad Naqvi,
Mr.Tasleem Akhtar
Mr.Fazal Ahmed
Mr.Allah Baksh
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And All of them who gave me knowledge and helped me during my
training session in the accomplishment of my objectives. Their
sympathetic behavior has printed deep and everlasting effects on
my heart.
All these employees are very cooperative and highly coordinated
with each other.
My special thanks to Dr.Karamat Ali (Incharge of Internship
Program) who provided me good guidance and placed me in the
NBP that leads the Government and Private Banks in Pakistan.
Fawad Ashraf Bajwa
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EXECUTIVE SUMMARY
I have completed my six weeks internship in
National Bank of Pakistan.
National Bank of Pakistan was established under
the National Bank of Pakistan Ordinance, 1949 and
is listed on all the Stock Exchanges in Pakistan.
Its Head Office is situated at I.I Chundrigar Road
Karachi.
The bank is engaged in commercial banking and
related services in Pakistan and overseas. The bank also
handles treasury transactions for the government of Pakistan as
agent to the state bank of Pakistan.
In accordance with the directives of the Federal Govt. regarding
the shifting of banking system to Islamic modes, the SBP has
issued various circulars from time to time. Permissible form of
trade related modes of financing includes purchase of goods by the
bank from their customers and immediate resale to them at
appropriate markup in price on deferred payment basis. The bank
handles pension and benevolent schemes for eligible employees.
The bank handles the services like Evening Banking services,
Foreign Currency Account, Foreign Bills of Exchange, services
offered on behalf of Government, Locker Services for the security of
gold and other costly goods, services of letter of credit.
Report starts with the introduction of NBP, its history, NBP as a
financial
institution,
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its
services,
functions
and
various
4
departments and conclusion, suggestions are at the end of this
report.
The objects of bank changed through out its history, present
objectives of bank are to give services to Government of Pakistan
efficiently and effectively, to accept finance from the general
public and lend it to businessmen and general public, to facilitate
import/export business, to act as an agent of State bank of
Pakistan where there is no branch of State bank of Pakistan.
Advance department is providing the facility of short-term, mid
term and long term loan.
In the end financial analysis and ratio analysis are described. The
overall performance of bank is good. Moreover, it reflects the
performance of bank in achieving the goals.
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HISTORY OF NBP
National Bank of Pakistan was established on November 9, 1949
as a result of deadlock with India and the devaluation of the
Indian
rupee
where
Pakistan
much
to
India
and
British
consternation did not follow suit. The objective of establishing the
bank was to provide much needed financing to the agricultural
sector, particularly to facilitate the badly hit jute trade. The bank
then went on to become the sole agent of the State Bank of
Pakistan for handling provincial and federal government receipts
and-payments.
The paid up capital of National Bank is 4924.106 million rupees.
This is 14 percent of the combined paid up capital of the 18 listed
commercial banks amounting to Rs.3.528 billion. Such a large
paid up capital places National Bank at the number one slot in the
entire financial sector.
The bank maintained its position as the largest bank deposit
holder in Pakistan. The integration of corporate and investment
banking efforts in enabling the bank to offer wider products range
besides making it a major player in debt and equity market. The
Bank has one joint venture in U.K. and one wholly owned
subsidiary in Kazakhstan. The U.K. Operations of the Bank were
merged with that of United Bank Limited to form a Joint Venture
Bank namely Pakistan Investment Bank (PIB) incorporated in U.K.
NBP has 45% of share holding while the balance 55% is with UBL.
Today the bank has 1428 branches and 84 regional offices in
Pakistan and 24 overseas branches with 4 representative
offices are working out side the country.
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The general superintendent and direction of the affairs and
business of the bank shall be entrusted to the Central Board which
may exercise all powers and things as may be exercised or done by
the ordinance expressly directed or required to be done by the bank
in general meeting.
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VISION
“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 products
offering.”
MISSION STATEMENT
“Be a dynamic resource of economic development
and growth for stakeholders through service excellence
achieving high standards of professionalism, dedication
integrity and team work.”
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OBJECTIVES OF NBP
The main objectives of NBP includes to:
 Maximize the deposits.
 Give attractive return to its shareholders.
 Maximize the market share.
 Modernize the bank.
 Export/import promotion.
 Development of human resource.
 Improvement in the quality of customer service.
 Provide customers reliability and convenience.
The major objective of NBP is to handle the crises because when it
came into being there were jute crises in East Pakistan and it was
assigned to handle those crises. At present the main objective of
NBP is to support the economy with the help of its financial
policies rather to maximize profit.
The National bank provides different types of loans to the
industrial sector to increase their business activity. It provides the
different types of loans to assist the farmers on short-term basis.
Other objectives of the bank are to promote agriculture & business
activities in the country, to dominate the financial market by
excellence of services & product, to emerge one of the top ranking
bank of Pakistan, to promote trade related activities in the global
scenario, to strengthen relations with the financial market, to
position NBP as a bank of choice in the customer’s mind & to get
satisfaction of the customers by meeting their expectations
through market based solutions and products.
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MANAGERIAL FUNCTIONS IN NBP
1. Planning:
Planning is the major policy decision, selection of a
particular course of action and a particular technique for the
achievement of the objectives and the assessment of results of our
action. In public enterprises there are different types of plans
which are made for organization such as five year plan, three year
plan, one year plan and six months plans. In the National Bank of
Pakistan, for the planning purposes, three year plan is used.
Planning is made for every three year and after three years the
performance evaluation is made then the other three year plan is
made for the next three years. Every three year plan is made for
the organization.
Administrative Planning
In NBP this planning is the task of management. It is
concerned with the means by which ends can be brought to
fruition.
The administrative planning in the NBP is divided into the
following categories
 Policy making
 Program planning
 Operational planning
Policy Planning:
It
is
concerned
with
laying
down
broad
outlines
of
administrative action in socio-economic field. It also includes the
objectives of administrative action. In the policy planning in NBP,
these are responsible for training of staff within the country and
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abroad, dealing with the delegations, responsible for deputing
officials for seminars, workshop symposia, conferences, meetings.
Program Planning:
In
NBP
the
program
planning
is
the
task
of
middle
management. The main project of the NBP was approved in 1981
with an estimated cost of Rs.33.9 million from the Government,
whereas NBP had to contribute Rs.9.7 million in the form of
old/used equipment.
Operational Planning:
It means that implementation of the programs and policies. It
is concerned with the systematic analysis of a program and
determination of the detailed means carrying it out.
2. Organizing:
Organizing is the use of organizational resources to achieve
the strategic goals. The use of resources is reflected in the
organization's division of labor into specific department and jobs,
formal line of authority, and mechanism for coordinating diverse
organizational chart.
Internal Audit:
 Account department
 Hierarchical task analysis
Account Department:
NBP has established a separate department to deal
with account and this department is responsible for monitoring,
keeping the accounts book and records all the transactions taking
place in the bank. The department is not supposed to make any
payment unless it is authorized by operation mangers and signed
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by the chief manger of the branch. This procedure minimizes the
chances of fraud.
Hierarchical task analysis:
NBP has divided its tasks into departments and the
task of each department also divided into sub-tasks. By dividing of
task, NBP have formed a chain of command by which each
employee is held responsible for the work he/she does by his/her
supervisor. All decisions are centralized thus the top management
makes the decisions and all the others follow these decisions.
External Audit:
A.F. FERGUSON & CO. audits the financial
statements, which are prepared by the account department of NBP.
They examine the financial statements and upon their findings
they prepare a report which is presented to the board of directors.
This report will indicate whether the financial statements reflect
the true picture of NBP or not.
3. Leading:
Leading is the ability to influence the people toward
the organizational goal and the goal of the organization achieved
effectively and efficiently. For this purpose all the employees in the
organization should be motivated through different types of
incentives which are given to the employees. "Leadership is the
lifting of people's vision to higher sight, the rising of their
performance to higher standards, the building of their
personality beyond its normal limitation".
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Leadership Styles:
There are generally three types of leadership styles:
 Authoritarian (Autocratic)
 Participative (Democratic)
 Delegation (Free Region)
Employee Motivation:
"The force moves people to initiate, direct and sustain behavior
and action".
Motivation refers to the force that energizes, direct and sustains a
person's efforts. The motivation acts as a catalyst, which increases
the performance of the employees by working more effectively and
efficiently.
Motivation can be done in the following ways:
 Increase and regularly revised pay scale.
 Training to their employees.
 Promotion according to merits.
 Financial assistance to their employees.
 Fringe benefits.
 Branch ceiling deposits competition.
This package has motivated the employees to work hard and
already the result has been seen as its financial strength of the
bank has improved.
4. Controlling:
The systematic process through which managers
regulate organizational activities to make them consistent with
expectations established in plans, targets, and standards of
performance.
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Organizational Control
In NBP, the control of organization can be on events before,
after and during a process. There are three types of control which
are made in NBP. These controls are as following.
 Feed forward control
 Concurrent control
 Feed back control
Feed forward control:
In NBP, feed forward control is done that
focuses on human, material, and financial resources flowing in to
the organization.
Concurrent Control:
This control in the organization consists of
monitoring ongoing activities to ensure they are consistent with
standards. This includes rules and regulation of guiding employee
tasks and behavior.
Feed Back Control:
This is the control that focuses on the
organization's output. In this control the quality of an end product
or services. In the feed back control a simple process is used in the
NBP. This process is as follows:
 Establish standards of performance
 Measure of actual performance
 Compare performance to standards
 Take corrective actions
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 Feed back
 Establishing new strategic goals
HUMAN RESOURCE ADMINISTRATION
Human resource or personnel administration is the process
consisting of the inception, training, development, motivation and
maintenance of human resource. This process is very important in
any organization. NBP has created a separate department to take
care of all activities of inception, development, motivation, and
maintenances of its employees.
Recruitment:
The policy of NBP of recruitment is very simple, if at
any time there is a vacancy, due to retirement, resignation, if
employees opted for the golden handshake or the death of an
employee, the management of branch will inform the head office
about the vacancy. The head office will place an advertisement in
all major newspaper with the all necessary information required to
be furnished by the applicant.
Selection:
NBP head office will collect all applications received
from the applicants and forward them to the personnel
administration department for scrutinizing and short listing the
applications for the purpose of interviews and other tests
conducted by this department. The final list will be sent to the
head office, which informs the applicants to report for the
interview. The interview is conducted by the top management level
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and the successful candidates will be called to join the work force
of NBP.
Training and Development:
The NBP has, all along, given
special importance to the aspect of training and career planning of
its staff members. Towards this main objective, several training
courses have been organized, initiating a self development process,
in order to accelerate organizational growth and to farther
improve the Bank's level expertise and efficiency.
Promotion:
Promotion in NBP is based on merits and qualification.
The recommendations for promotion are given by the management
of different branches through their Annual Character Report,
which is prepared annually by the chief manger of the branch and
forwarded to the Head Office.
SERVICES OF NBP
The following are the services which are used by the Pakistani
customers
 Transfer of money
 The bank accepts deposits from public and payback on
demand
 Issuing the letter of credit
 Acquiring loans
 Use it as media of exchange
 ATM services in large cities

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 People receive pension, dividend, rent and interest through
the banking services.
 Buy and sell the securities through the services. The payment
of insurance and other expenses are also made through the
banking system.
 Banker’s services can also be rendered to work as executor
and trustee.
 The bank is also collecting Zakat.
 Dealing in foreign currency is another service that consumer
are enjoying.
 The security of the costly goods like Gold, other people
enjoying the facility of lockers.
 Evening banking system of billing
 Foreign currency account
 Lockers facilities
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HIERARCHY OF MANAGEMENT
GRADES OF BANK
SEVP
ESEVP
SVP
VP
AVP
GRADE-1
GRADE -2
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GRADE-3
GRADE-4
ASSISTANT
Clerical Staff
Cashier
Technical Staff
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Non-Clerical Staff
Messenger
Dispatch Rider
19
DEPARTMENTS of NBP
 Deposit department
 Bills and Remittance department
 Govt. receipt & payment department
 Establishment department
 Cash department
 Dispatch department
 Advance department
 Accounts department
 Foreign exchange department
All types of cash transactions are dealt under this section. Now
we see the types of accounts, which are opened in this section.
DEPOSIT DEPARTMENT
Types of Accounts:
Depositors can open the following types of accounts with the
National Bank of Pakistan:I. Current account
II. P.L.S. saving account.
III. P.L.S. Term Deposit Account.
IV. M.I.S.(Monthly Income Scheme)
V. Call Deposit
VI. N.I.D.A. (National Income Daily Account)
A brief introduction of these accounts is given below.
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Current Account:
Depositor can draw or demand amount at any
time by presenting the cheque in the bank. There is no
restriction of withdrawal. The bank neither pays any kind of
interest nor deducts the Zakat from the deposits of this
account. The minimum balance required to an account to be
opened is Rs.500/-. If balances in account reduce from Rs.5000/then the bank charges Rs.50/- as incident charges in every
month.
P.L.S. Saving Account:
In P.L.S. accounts the bank gives no
fixed rate of profit. These types of deposits are designed to
encourage the saving habits of the people. The minimum deposit
to open this account is Rs.500/-. After every six months a rate of
profit is announced by the bank and after calculating the
amount, it is credited to the depositor account. Customer can
withdraw their amount at no limit.
P.L.S. Term Deposit:
In this account the amount is deposited
for a specified period of time. This period varies from 7 days
minimum to maximum 5 years. The profit rate is also changes
with the short period to long period. There is higher rate of
profit on long term P.L.S.
Monthly Income Scheme (MIS):
This account could be opened with
minimum balance Rs.5000/-. Profit is announced after every six
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months but it is credited to the customer’s accounts on every
month. Mostly retired persons like to open this type of account.
Call Deposits:
This deposit is used for Govt. services e.g. Tender
Notice fees, advance payment for participating in Nilami
(Auction) of property. No profit is given on this account.
National Income Daily Account (NIDA):
Mostly big organizations
open this type of account. Minimum balance for this account is
Rs.250, 000 & profitable balance is Rs.2 million. Profit is given
on daily basis & profit rate is same as P.L.S account.
ACCOUNT OPENING PROCEDURE
Requirements for opening an account;
I. NADRA verification of CNIC of the customer.
II. A copy of ID card of both introducer & customer.
III. Original ID cards for verification.
IV. If customer use thumb impression then he must give his
recent 2 snaps & female customer also gives a written
statement on P.L.S form that “I do not observe Pardah”.
V. Next to kin. The customer must state who will be
responsible for the account in his absence.
VI. Customer must be appearing at the time of account
opening.
Modes of operation
 Individually
 Jointly
 Sole proprietorship
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 Partnership
Individual Account:
In National Bank of Pakistan a person
can open an account in Pakistani-rupee. First of all they have to
fill the account opening form provided by the bank. Then his
introduction is done before the branch manager. An existing
account holder of the bank or an officer of the bank who know
him very well can do this introduction. A copy of his identity
card is must attached with his account opening form. If the
account holder is illiterate then he/she provides his/her three
recent photographs to the branch.
Joint Account:
In opening a joint account an account opening
form is given where he wants to open his account. In that
account opening form he provides complete information about
the account holders. If any one or both of them are illiterate
then they ask to provide the photographs to the bank. Then the
introduction of the person is done. A copy of their identity card
is must attached with his account opening form. He or she also
states the mode of operation which is clearly written in their
account opening form. In jointly mode both the persons must
sign the cheque. And for any kind of transaction they must
dually sign the documents while the either any one of them can
sign the cheque and withdraw his money.
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Sole Proprietorship:
The person who is the owner of a business
can open an account in National Bank of Pakistan after
providing the following documents to the bank officer. Current
municipal license, commercial registration certificate and copy
of identity card.
In some special cases when the officer of branch is doubtful
about the authenticity of the documents he can get additional
documents for proper verification. The branch manager studies
all documents of the business. If he is satisfied then the account
of the party is opened with the bank. Normally these types of
accounts maintained under Current account system.
Partnership Firms:
The partnership firms can also open an
account with the bank. But for this purpose they have to provide
the certain type of information to the bank. For this purpose a
form is provided to the account holder in which they provide the
following information to the concerned branch, name of the
firm, name of parties, identity card of partners, registration
certificate of the firm.
Issuance of Cheque Book:
National Bank of Pakistan issue
cheque books. Size of cheque book varies. It contains 25 leaves to
100 leaves. The assistant writes the following information on the
title page of the cheque book and cheque book issuance register.
 Issuance date
 Name of account holder
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 Account number
 Type of account
After authentication by the authorized officer on the cheque
book register, the cheque book is handed over to the account
holder.
Depositing of the Amount:
Account holder can deposit the
amount in cash or draft etc. in his account through credit voucher.
In N.B.P. two types of vouchers are used for this purpose.
 Green and blue voucher which is used for Cash Receipts
 Pink voucher, which is used for all Non Cash Receipts
like drafts, cheques, payment orders etc.
Encashment of Cheques:
 Issuance of Token:
After apparent tenure of cheque a token is issued to
the account holder.
 Verification of Signature
After affixing the two stamps i.e. Pay Cash and Signature
Verified, a cheque is sent to the accountant for the verification of
signature from signature specimen card. After authentication of
signature and posting in his account the cheque is sent to the cash
department for the payment.
 Payment of Cash
Cashier pays the amount to the token holder after getting
back the token from customer.
Deduction of Zakat:
From the PLS Saving account Zakat is
deducted at the rate of 2.5% annually on the outstanding balance
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of account on the first day of every valuation date i.e. first day of
Ramadan. Minimum balance of the deduction of Zakat is fixed by
the Central Zakat Authority (CZA) before the valuation date.
Exemption from Zakat:
The accounts of foreigners (including
Muslims of other nations) and Pakistani non-Muslims are exempted
from the compulsory deduction of Zakat. The accounts of followers
of Fiqah-aI-Jafria are also exempted from the deduction of Zakat
after the submission of affidavit on a legal stamp paper.
Closing of Account:
There are many reasons for closing of an
account. It is not a good indication for the business of the bank.
Some of the more common reasons are as follows:
 Account holder’s own request
 Death of the account holder
 Closing of account due to bad conduct of account holder
etc.
At the request of account holder the account is closed or as a
result of improper conduct of the account holder or because of nil
balance of the account. But bank before closing the account first
sends a letter to the account holder that his account will be closed.
So after fulfilling the legal requirements, it is marked of the
accounts holders’ number that the account has been closed.
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REMITTANCE DEPARTMENT
Remittance is a major function of the bank. It is the transfer
of money from one place to another place. The need for remittance
is commonly felt in commercial life particularly and in everyday
life generally.
By proving this service to customers the National Bank earns
a lot of income in the form of service charges. There are two types
of bills remittance.
 Remittance inward
 Remittance outward
Remittance Inward:
Cheques & Drafts received for payment and
clearance or drawn on bank from customer or other banks on
behalf of their customers is called remittance inward.
Remittance Outward:
All instruments issued by us , which are
drawn on other branch of the same bank or instrument deposited
for collection for other bank locally or out of the city are called
remittance outward. Bills remittance & collections are mainly two
heads.
 Local short credit
 Short credit
Local Short Credit (LSC):
All
the
bills
for
remittance
&
collection from customer and bank within the city are recorded
under this LSC book. These bills are passed along with the
covering schedule & advice to maintain the branch of the bank,
from an agent of SBP received that all bills for clearance.
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Short Credit (SC):
All the bills for remittance & collection from
customer and bank outside the city/country are recorded under
this SC book. If bill is drawn on the book itself then it passed along
with covering schedule & advice directly by courier service to the
concerned branch on which it is drawn for realization.
National Bank of Pakistan deals with the following types of
remittances: Demand Draft (DD)
 Mail Transfer (MT)
 Telegraphic Transfer (TT)
 Pay Order (PO)
Now we discuss all these in detail:
Demand Draft (DD):
Demand draft is a written order given by the
one branch of a bank on behalf of customer to another branch of
the same bank to a certain amount to the certain person.
PROCEDURE:
1. A draft voucher is filled which contains the following
information
Name of the parties involved
Date
Amount to be sent
Account number (if DD is crossed)
Branch name and code number
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Name of the city
2. A credit voucher is filled in order to get the excise duty,
exchange commission.
3. The sender deposits the total amount of the two
vouchers i.e. the debit and credit vouchers.
4. Then the cashier sends the cash receipt voucher
to the accounts department and the account
records the amount paid in his cash scroll.
5. Accountant gives the DD leaf along with the DD
voucher to his assistant who records the sender’s
name, amount and receiver’s name. After writing
all the information in the DD register he gives it to
the officer along with the DD for authentication.
6. After authentication the DD is handed over to the
sender
and
bank
sends
the
advice
to
the
concerned branch. So when the party presents the
DD in the concerned branch its payment could be
made.
Mail Transfer (MT):
It is the transfer of money from one branch
to another branch of the same bank through mail service. In
mail transfer there is no need of advice as the amount is
directly credited to the receiver’s account.
PROCEDURE:
1. First a voucher is filled in which the sender writes the
amount to be sent, name, account number of the
receiving person with the branch name and date.
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2. A credit voucher is filled in order to deduct exchange,
postage charges and withholding tax according to the
amount of the mail transfer.
3. The sender deposits the total amount of the two
vouchers in the cash department.
4. The cashier gives the vouchers to the accountant after
affixing received stamp and writing the amount in red
ink.
5. Then the accountant writes the amount paid in the
cash scroll and gives the MT to his assistant.
6. MT leaf is filled according to the information provided
in credit voucher. He also writes the same information
in the MT register. Then he gives the MT leaf and MT
register to the officer for authentication.
7. He takes two signatures of the sender on the counterfoil
of the MT and counter foil is handed over to the sender,
at the end, MT along with the fan fold is sent to the
concerned branch through mail.
Telegraphic Transfer (TT):
This is the most urgent method of
remitting the money from one place to another place. This
method is used when the sender desires to send urgently, in
this case the sender requests the manager of the branch to
issue TT.
PROCEDURE:
For sending the TT, the manager applies a test. In
the test the manager uses a coding technique. He writes his
own code number, which is allotted to him as the bank
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branch
code.
After
making
all
the
confirmation,
the
concerned branch makes the payment to the receiver. If the
sender wants to convey the same message through telephone
then he has to pay the charges of telephone along with the
TT charges. Firstly the person deposits the TT amount along
with the charges through the credit voucher then his TT is
sent to the relevant branch.
Pay Order (PO):
Pay order is a written order issued by the bank
on its own branch, drawn upon and payable by itself to pay a
specified sum of money to the person. The purpose of a pay
order is to transfer the fund from one place to another. It is
usually not issued in favor of the parties of other cities.
Usually the pay order is issued for the local transfer of
money from one person to another.
It is used for different purposes. The purpose may be the
repairs of the branch or renovation of the branch.
PROCEDURE:
The procedure of a pay order varies with the nature
of the purpose. If the work is of huge amount then first the
manager writes a letter to the Zonal Chief in order to get
sanction of the work. Then the advertisement of the work is
given in the newspaper in order to invite the contractors. But
if
the
work
is
small
then
the
branch
manager
has
discretionary power to select the party whose rate is lowest.
After finishing the work the contractor submits the bill of
work on his stamp pad. Then the bank issues a pay order,
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against the pay order the contactor gets the amount from the
issuing branch.
GOVT. RECEIPT & PAYMENT DEPARTMENT
Govt. Receipt & payment includes different types of work.
Now we see one by one:
GOVT. RECEIPTS:
Utility Bills
National Bank accepts the following types of utility bills:
 Electricity Bills
 Telephone Bills
 Sui Gas Bills
PROCEDURE:
The cashier in cash section receives utility bills. The
cashier posts the amount of bills in respective scrolls and at
the end all the amount of collected bills is transferred to the
respective account. Then representative of the concerned
department collects the amount in shape of M.T. (Mail
Transfer). The bank takes the collection commission of Rs.
2.0 per bill from each type of bill.
Taxes & Receipts:
National Bank also accepts the following
types of taxes:
 Income Tax
 Central excise Tax
 Sales Tax
 Provincial Excise Duty
 Provincial Motor Duty
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 Professional Tax
 Provincial property Tax
 Domicile Fees
Traffic Violation Collection:
All
the
traffic
Violation
charges are also collected by NBP which are imposed in the
form of Fine by traffic wardens.
Collection of Dues of Educational Institutions:
NBP also
collects the dues of educational institutions like AIOU (
Allama Iqbal Open University).
GOVT. PAYMENTS:
Disbursement of Pension:
National bank is fully authorized
to disburse the pension to the Govt. and army retired
personnel.
PROCEDURE:
For
the
distribution
of
pension,
the
branch
maintains the pension register. In order to get the pension,
first the pensioner submits his pension voucher with his
pension book that voucher is sent to the cash department for
the payment to the pensioner after posting into his account.
ESTABLISHMENT DEPARTMENT
In National Bank, establishment department works for the
maintenance of different types of the expenses and for the
provision of funds for different activities in the branch. The
manager of this department has two types of registers.
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33
1. Charges account register
2. Suspense accounts register
Charges Account Register:
In
the
charges
account
register,
following accounts are maintained:
Basic salary:
This account deals with the salaries of the employees
within that branch when bank has to pay the salary of any
employee the amount of salary is debited to the charges
account.
Allowances:
Under this head different allowances are paid to
employees. But these are attached with salary and paid with
the salary.
Provident fund:
It is the deduction from the employee’s salaries,
which is paid out at his retirement.
Medical attendance:
When any employee suffers from any disease
the bank allocate fund for him and this amount is debited to
charges account of the patient.
Staff welfare:
To improve the efficiency, the bank provides some
special facilities and the fund is provided from the welfare
account. These funds are similar to honorarium fund.
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34
Bonus:
When the efficiency of employee increases and bank earns
profit more than expectation then bank gives extra bonus to the
employees. The provision of bonus is done through bonus account
by debiting to the charges account.
Suspense Account Register:
Some
employee
needs
some
advance amount for them. He can withdraw that amount from
suspense account, which is then adjusted from his salary account.
But the bank provides funds in advance within some limits under
this account.
Other Expenses of the Establishment Department:
Traveling Expenses:
In this account the transportation expenses
of employees are maintained for example, when a manager goes to
attend the meeting in any other city or country his expenses on
transportation
are
paid
from
this
account.
Similarly
when
someone goes for any official work to other branch or head office
the traveling expenses are paid from this account.
Auditor Fee:
When any team comes for the auditing of some
branch then all of their expenses are born by active branch.
Bank also pays them fix amount as fee. The funds for this
purpose are provided from this account.
Rent:
For paying the rent of building under the branch is running
is paid from rent account.
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General Insurance:
The property in the branch like cash, gold,
prize bonds are insured, the maximum limit of insured property is
5 millions. In case of any incident/mishap, insurance company will
pay the damages.
Taxes:
Tax on bank property like building and vehicles, this account
is debited.
Lighting and Power:
To furnish the branch with lights and
provides the branch air-conditioned environment. The funds are
paid from this account.
Telephone:
Bank provides the facility to his officers to pay their
telephone bills.
Pay of Security Guards:
In national bank, security is provided
by some private companies. So to pay their salaries, the bank uses
this account by debiting this account and crediting the security
company’s account.
Depreciation of Bank Property:
Under
this
account
the
depreciation of branch building, vehicles and other machinery are
treated. Annually 10% of any property is considered depreciated.
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Repairs and Renovation Expenses:
The expenses on repairing
the building, furniture, power generator and automobiles are paid
from this account.
Postage, Telegrams and Stamps:
The charges of dispatch section like expenses of dispatching
all the mail and expenses of telegram are paid through this
account. The charges of postage and stamp collected from
customers are credited to current account and at the end of month
this amount is transferred to the postage telegram and stamp
account to pay the expenses for the next month.
Law Charges:
The branch hires a legal authority when bank has to
defend any law suit against him or when bank has to place any
law suit against any one. Then this legal authority is hired. To pay
the fee of this person law charges account is used.
Stationery, Printing and Advertisement:
The expenses on the
vehicles used for branch and branch manager are paid through
this account. It includes the expense of stationery used in branch.
Entertainment:
The bank provides a facility to manager to
entertain some special clients in his chamber or outside the
chamber.
Miscellaneous Expenses:
Those expenses, which don’t have
their own account, are paid through this account for example;
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 Laundry
 Local conveyance
 Sundries
CASH DEPARTMENT
The cash department is that through which all the receipts
and payments of bank are made. Also the bank’s cash record
remains with this department. There are two types of books used
in this department.
 Cash Receipts Book
 Cash Payment Book
Cash Receipt Book:
In this books cashier records the entry
when someone comes to deposit some amount. The clients come
with pay-in slips and the cashier receives the amount according to
the pay-in slip, sorts out the currency notes, puts a signature,
stamp it and record it in his book. After stamping the slip the
cashier returns the pay in slip to the customer. Then customer goes
to the another bank officer, he again record this voucher into his
cash scroll and returns one part of the pay in slip to the customer
and keeps the other part for the record.
Cash Payment Book:
When some client comes to the branch to
withdraw some amount from the account, after getting the token
from deposit section he goes to the cashier, cashier checks his
token and cheque, which is referred to him from deposit section.
The cashier pays him required payment and receives the token
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from the customer. After recording all the cheques in this book, he
returns the cheque to the deposit section.
Books Maintained:
These are the common books which are
maintained in any branch of NBP.
Cash Book:
The sole purpose of the cashbook is to record the
total transactions done in each type of account daily. The closing
balance of cash is also included in the cashbook. It is maintained
with the help of various types of vouchers and daybooks. These
vouchers and day books of different heads are as follows: Cash finance day books.
 Running finance day books.
 Demand finance day books.
 Charges vouchers.
 Call deposit vouchers.
 Foreign exchange day books.
 Suspense vouchers.
 Payment order vouchers.
 Term deposit vouchers.
With the help of these vouchers, various types of registers are
maintained to record daily transactions done in various accounts.
These registers are:
 Daily transaction report of PLS/ Current account.
 Suspense register
 Charges register
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General Ledger:
In this ledger the posting is done from the
cashbook. With the help of this ledger any discrepancy in balance
of accounts can be easily found out.
General Ledger Abstract:
It is like trial balance. In this
ledger, debit or credit balance of each balance of each type of
account is posted from the cash book. If total debit and credit is
equal then it means the clean cash book and general ledger is
maintained correctly.
DISPATCHES DEPARTMENT
In this department posting of every mail into the dispatches
register is done. For this purpose bank hires the services of
different courier services to send the documents from one place to
another. Before the handing over the mail to the courier service
clerk, the dispatch section assistant notes the document in a
register and issues a number, which is used to maintain the proper
records. After handing over to the courier service, now it is the
responsibility
of
the
courier
service
company.
In
case
of
misplacement they have to pay for the damages. Assistant of this
department sorts out the receiving mail and then sends to the
different sections.
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ADVANCES DEPARTMENT
Advances are investments of bank to earn more profit. After
restructuring of National Bank of Pakistan, head office gives loans
targets to each branch that must be achieved for its survival. The
manager is responsible to achieve these targets in the given period.
Types of loans/finance:
There are three major types of loans
that are offered by NBP which are as follows:
1. Short term finance
2. Medium term finance
3. Long term finance
Short term finance:
Short
term
finance
is
sanctioned
to
increase working capital & production. These are given for the
period of one year to three year maximum. Short term finance
includes the following types:
1. Cash finance:
The bank gives this loan to the customer and
businessman against certain specified immovable. It is issued for
establishment and extension of industry.
2. Demand Finance:
This
loan
is
given
against
movable
property (called secure finance) or may be given against personal
graduate (called clean finance). Demand finance is further divided
into three types.
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i.
Staff finance:
This finance is given to the employees of
National Bank for improving their living standards e.g. for
purchasing a motorcycle, car, house building, computer etc. there
is no markup on this loan except on car and computer buying @
4%.
ii.
Gold finance:
It is sanctioned for the period of 11 months
by pledging gold ornaments.
iii.
Agricultural (seasonal finance):
It is given for supporting
seasonal crops like ‘Rabi’ and ‘Kharif’. It is sanctioned for six
months only at high markup rate.
3. Running finance:
This finance is only a secured finance
which is sanctioned against movable security that is easily
convertible into cash e.g. security bonds, Govt. certificates & bonds
etc.
Medium & long term finance:
These finances are issued for
production & development of industry & agriculture. e.g. for
buying inputs or building for industry.
These are issued for the period of 5 years or more. The main
types of this finance are:
 Project Finance
 Agriculture (Development)
 House building Finance.
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All the loans may be fund based or non-fund based. Fund
Based loans are those which are given in cash form to the
borrower.
Non-Fund Based loans are those which are given other than
cash e.g. Guarantee, L.C, Promissory Notes etc.
Banks run their business with the money of depositors, which
is repayable to them on demand. Banker is very conscious while
using these funds. They think thousand times before lending to the
borrower.
Banker must keep in mind the following factors before
advancing the loan to the borrower:
1) Character:
The first and most important factor considered
in the credit analysis is character. The credit character is based
on
the
borrower’s
willingness
to
pay
his
obligation.
The
willingness can be judged by the banker to see his family
background, stability of employment, personal habits, nature of
business, previous record, moral reputation, importance of values
to him etc.
2) Capital:
The asset of the consumer may be in form of horse,
motorcar, furniture etc. The businessman may own assets in the
form of new material, plant, machinery, building etc.
The bank
should extend the loan in the proportion to the asset held by them.
If the assets of borrower are liquid, he may be given large amount
of credit. If assets are not liquid, then less amount of credit may
be given against the value of assets. Before lending the loan, the
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banker should examine the value of his business and its prospects
in future.
The banker should keep in his mind the owner’s participation
in his business.
The banker should not provide loan more than
capital.
3) Capacity to Pay:
The bank should judge the financial
condition of the borrower. Whether he is able to repay that amount
of loan which he wants to get. Before advancing the loan, bank
must be satisfied with the repayment of fund by checking following
resources of borrower;
 Sale of Assets
 Income
 Location of Plant etc.
4) Collateral:
Collateral means an additional security given
against the loan.
Before advancing the loan the banker should
prefer to get the security of liquid assets because they can be
converted into cash easily.
The collateral security may be
consisting of stock, bill of exchange, bill of lading, warehouse
receipt,
bonds
etc.
Bank
must
be
carefully
examining
this
collateral security before advancing the loan for security purpose.
Banker should not extend loan on up to the full value of collateral
security.
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Main Requirements for Sanctioning Loan
 CNIC copy.
 Legal contract between bank & borrower on a security
bond.
 A written application.
 Promissory Note.
 Valuable security.
 References (at least two)
 Latest Financial statements.
 Financing Agreement on a prescribed form.
 Authority letter.
 Trust Receipt.
 Insurance of securities.
Securities:
Before giving a loan to borrower a bank requires a
valuable security in three ways:
 Hypothecation
 Pledge
 Mortgage
Hypothecation:
In this type of security, immovable property is
pledged by the bank & bank requires a real value of that property
for sanctioning a loan. Margin for this security is 50%. In
hypothecation bank does not interfere in the business of borrower.
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Pledge:
In Pledge the bank has a 90% share in business of the
borrower. The bank has a right to sell the production & interfere
in business transactions.
In this type of security, bank pledges the stock & raw
material. The stock must be insured. Stock is controlled &
managed by the bank; borrower cannot use raw material & cannot
sell its production without the presence & permission of the agent
of bank.
Mortgage:
All documents of ownership & registration of movable
property is submitted to the bank with an authority letter which
has an agreement to give authority of selling property in case
when borrower will not repay the loan after a fixed period.
ACCOUNT DEPARTMENT
Account’s Section:
This is the last section of the branch;
whole day’s work is officially ended in this section. Incharge of
this section sends information of whole day’s business in branch to
Main branch via computer networking.
Computer operator retains a copy of that information in
floppy for branch record daily. He also reconciles all transactions
with Head Office transactions received daily.
This section maintains its record in three books that are,
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1. Cash Scroll:
Daily transactions of cash are recorded in cash
scroll at the end of each day. Total cash received in the date is
added up in opening balance (closing balance of previous day) then
cash payments are subtracted from it. End balance is recorded in
computer & mails it directly through networking to Main Branch’s
IT section of NBP.
2. Transfer Scroll:
All transfers inward & outward of the branch
are recorded with all details of accounts in transfer scroll. It is
also mailed to Main Branch’s (IT) section of NBP daily at the end of
the day.
3. NBP General Account:
General account is an account of each
branch of the bank in its Head Office for transactions among
branches. All transactions among branches are through Head
Office by sending F-16 Frankfort that is reconciled at Head Office.
FOREIGN EXCHANGE DEPARTMENT
The main function of foreign exchange department is to deal
with customer in foreign currency. Only few branches of NBP are
allowed to deal in the currency other than Pak rupee.
Procedure to Open an Account in Foreign Currency
There are two types of foreign currency accounts:
 FOR RESIDENTS
In order to open the account of a Pakistani resident in
foreign currency the following documents are required.
a) Photo copy of ID card
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b) Foreign exchange
The remaining process is same as in the case of local
currency account.
 FOR NON RESIDENTS
For non-residents following documents are required.
a) Photo copy of Passport
b) Photo copy of Visa
The remaining process is same to open an account in local
currency.
Closing of a Foreign Currency Account
For closing the foreign currency account the same methods
are used as are used in local currency.
Advantages of Foreign Currency Account
 No wealth tax is charged.
 Credit card and loan facilities are available.
 The depositors can get 75% of their deposits as a loan
at lower rate.
 The foreign currency accounts save the amount from
devaluation. No withholding tax.
 No compulsory deduction of Zakat.
Foreign Remittances:
To transfer money abroad and to
bring the funds from the other countries foreign remittances are
used. There are normally three major types of foreign remittances.
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Foreign Currency Demand Draft:
The debtor can make the
foreign payment by purchasing a bank draft from the branch. The
draft is dispatched by the debtor to creditor. He can claim the
amount of the draft from the responding branch.
Requirements:
I. The debtor must be foreign account holder of NBP.
II. They must mention the name of the foreign bank.
III. The purpose of the remittance should be permitted by
the GOVT.
IV. The account number of the ultimate client should be
told to the bank.
Foreign Mail Transfer:
The debtor can make the payment to
the creditor in foreign currency by Foreign Mail Transfer. The
branches of NBP issue the order for the payment to the responding
branch by mail. After receiving the letter responding branch will
make the payment to the creditor.
Foreign Telegraphic Transfer:
The debtor makes the payment
in his branch and his branch manager sends a telegraphic
message to the responding branch to make the payment to the
ultimate client. This is the quickest method to transfer the funds
from one place to another place.
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Products and Service offered by the National Bank
of Pakistan.
Products of National Bank of Pakistan
NBP Saibaan:
 Finance
available
for
home
purchase,
home
construction, and home improvement.
 Period of repayment ranges between 3 to 10 years.
 Loans available up to maximum of Rs.10 million (home
purchase up to 7.5 million, home reconstruction up to
7.5 million and home improvement up to 2.0 million).
 Markup choices are available. Rate ranges between 9.0
to 12.85% rate subject to changes.
 Minimum approval and disbursement timing.
Limited to area where there are no documentation, fee and
resale and foreclosure relative issues, so to protect the bank's
interest.
NBP Advance Salary:
 20 months salary in advance (certain condition apply)
 Minimum documentation.
 Repayable in 5 years.
 No processing charges, no collateral, no guarantees, no
insurance.
 Markup charges at 15% per annum on reducing balance
method.
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NBP Cash and Gold:
 Facility of Rs.5000 against 10 Gram of gold.
 Markup is 9% per annum
 No maximum limit of cash
 Repayable after one year
 Roll over facility
 No penalty for early payment
NBP Kisan Dost:
 Loans
available
for
farmers
for
production,
development purposes, for purchase of tractors, for
installation of tube wells, for purchase of agricultural
implements, micro loans, for godown construction, for
construction of fish form, for live stock forming.
 Markup 9% per annum
 Loans available at farmer's doorsteps
 Agriculture experts to guide farmers
 Loans available against agriculture passbooks, gold
ornaments and paper security
Required Documents for Loan Sanctioning:
 Two attested passport size photograph.
 Two copies of CNIC
 Three cheques for processing charges

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 Photocopies of property documents --- Lease/Sale Deed,
Survey
Sheet,
Approved
construction/mutation
Plan,
Letter,
and
Permission
Agreement
to
sell
for
(if
applicable).
NBP Karobar:
(President's Rozgar Scheme)
Self employment opportunities for un-employed.
Financing Term & Conditions:
 Minimum down payment: 10% of asset price (5% for PCO
& Tele Center)
 Tenure: 1 to 5 years (for PCO 2 years)
 Grace period: 3 months
 Maximum loan amount: Rs.200,00
 Age: 18 – 45 years
 Mark-up (Variable): 1 year KIBOR + 2.00% p.a. (for first
year, mark-up will be 12%). The customer will pay
mark-up @ 6% p.a. as long as GOP provides the balance
mark-up to NBP on monthly basis.
 Life and disability insurance paid by GOP
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Services of National Bank of Pakistan
Lockers:
These are one of the services which NBP provides to its
customers for safe keeping of their valuables and documents at
cheaper rates. Theses are available in four sizes at the designated
branches. These are small, medium, large and extra large. These
are usually used for keeping gold, cash, documents etc.
ATM (Automated Teller Machine):
Fifteen Automated Teller Machines are installed at present at the
main business centers like Karachi, Lahore, Faisalabad, Islamabad
and Burewala etc. and 30 more to be installed shortly at other
places for which feasibility reports are prepared. These modern
banking tools which provide unique facility for the clients to
withdraw their cash at late in case of emergency.
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FINANCIAL ANALYSIS
Regulatory Ratios:
Cash to Deposit Ratio:
Formula
Cash / Deposits
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Ratio
2003
2004
2005
2006
2007
21.33%
17.78%
15.16%
17.80%
15%
Comments:
We see that the ratio is decreasing year by year from 2003 to
2005, only in 2006 it has increased. In 2007 it has minimum value
of 15%. It is because of the fact that the investments of the bank
are increasing and cash is decreasing. After 2005, it starts again
to increase and in 2006 it becomes 17.8%.but in 2007 it has been
decreased.
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Advances to Deposit Ratio:
Formula
Advances / Deposits
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Ratio
2003
2004
2005
2006
2007
46.63%
46.63%
39.80%
44.44%
58%
Comments:
Above table shows that ratio of advances to deposits is almost
same from 2003 to 2006. Trend in this ratio is not changing by
greater amount. But in 2005 it decreases by large amount that is
almost 7%. This is due to the fact that bank is investing in other
sectors more amount as compared to giving advances. But in 2007
it jumps again to 58% because investments in other sectors during
this year decreased as compared to last year due to which
advances increased by larger amount.
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Profitability Ratios:
1. Net Profit Margin
Formula
Net Profit / Total Income
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Ratio
2003
2004
2005
2006
2007
3.20%
6.90%
15.70%
21.30%
37.38%
Comments:
Net profit margin of the bank is showing positive trend. It is
increasing every year and in 2007 it jumps up to 37.8%. We see
that interest income is decreasing year by year and non interest
income is increasing by a larger amount. The biggest reason of this
increase is capital gain on sale of securities.
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2. Operating Profit Margin
Formula
Operating Profit / Total Income
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Ratio
2003
2004
2005
2006
2007
8.40%
18.60%
33.74%
41.10%
56.60%
Comments:
Operating profit margin of the bank is showing positive trend. It is
increasing every year and in 2007 it jumps up to 56.6%. We see
that interest income is decreasing year by year and non interest
income is increasing by a larger amount. The biggest reason of this
increase is capital gain on sale of securities.
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3. Return on Total Asset Ratio
Formula
Net Profit / Average Total Assets
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
Ratio
2003
2004
2005
2006
2007
0.20%
0.40%
0.72%
1%
1.48%
Comments:
We see that this ratio shows positive trend and increasing
gradually every year. There is not any fluctuation found in this
ratio in any of the five years.
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4. Return on Equity
Formula
Net Profit/ Equity
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Ratio
2003
2004
2005
2006
2007
4.66%
8.20%
12.52%
18.09%
35%
Comments
This ratio is also showing positive trend. But in 2007 ratio is
at a large amount. This is due to the fact that profit in this year
was at higher rates.
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5. Return on Advances
Formula
Net Profit / Advances
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
Ratio
2003
2004
2005
2006
2007
0.67%
1.60%
2.60%
2.60%
4%
Comments
We see from above table that the ratio is showing positive
trend. It is increasing every year. This shows that against its
advances bank’s earning is increasing every year.
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6. Earning Per Share
Formula
Net Profit / No. of Common Shares Outstanding
25
20
15
10
5
0
EPS
2003
2004
2005
2006
2007
3.08
5.49
10.23
12.68
21.51
Comments:
EPS is also showing the positive trend in these five years. It
is continuously increasing from 2003 to 2007. In 2007 EPS is the
highest. Because profits in this year increased by a larger amount
while No. of shares outstanding were same as in past year. This
shows that profits of the bank are increasing.
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7. Dividend Payout Ratio
Formula
Dividend per Share / Diluted Earning per Share
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Ratio
2003
2004
2005
2006
2007
0.41
0.21
0.15
0.12
0.116
Comments:
This ratio shows that dividend payout ratio is decreasing
year by year. The reason is that EPS is increasing every year while
dividend is not increasing. In 2002 it is zero because in this year
bank did not announce any dividend.
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8. Equity to Deposit Ratio
Formula
Equity / Deposit
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Raio
2003
2004
2005
2006
2007
5.18%
5.81%
6.79%
6.40%
7.80%
Comments
This ratio shows the stability trend. There is not big
fluctuation in any of the years. In five years it lies between the
ranges of 5.18% to 7.8% which shows that ratio is stable.
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11. Equity to Asset Ratio
Formula
Equity / Average total Assets
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Ratio
2003
2004
2005
2006
2007
4.38%
4.89%
5.71%
5.41%
4.20%
Comments:
There is stability in this ratio also. This shows that equity
and assets are increasing or decreasing by the same ratio. There is
not much fluctuation in any of the five years.
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Efficiency Ratios
12. Investment Ratio
Formula
Investment / Total liabilities
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Ratio
2003
2004
2005
2006
2007
19.19%
26.70%
36.43%
32.79%
31%
Comments
There is mixed trend in this ratio. Some times it is increasing
and some time decreasing. But in 2005 it increases by a larger
amount. It shows that investments increased in this year by a
greater amount. But in 2007 it has been decreased.
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13. Deposit to Total Liabilities
Formula
Deposits / Total Liabilities
92.00%
91.00%
90.00%
89.00%
88.00%
87.00%
86.00%
Ratio
2003
2004
2005
2006
2007
88.55%
88.34%
89.19%
90.81%
92%
Comments
There are not many fluctuations in this ratio in any of the
five years. It is showing mixed trend. The table shows that
contribution of deposits in total liabilities is maximum in the year
2007.
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Financial data of NBP (2007-08)
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SWOT ANALYSIS
STRENGTHS:
 The most important point of National bank of Pakistan
is that it is agent of State bank of Pakistan, where the
State bank branches are not working; National bank
controls its functions.
 It is the oldest bank established in having years of
experience.
 Only the NBP is authorized to advance loan against
Gold. This function makes the NBP able to earn profit
on the Gold. This function becomes the major source of
income of NBP.
 National bank of Pakistan is a government owned bank.
This is the reason that the Pakistani nation has
complete trust over the bank that its deposits are fully
secured.
 Government is providing facilities through National
Bank of Pakistan to get the knowledge of computer, for
this purpose IT Centers have been set up at different
places where short courses of computer are taught.
 It provides courteous services to its customers.
 There are more than six million clients of National
bank. Their customers are served all over the Pakistan
and abroad. Its branch network is one of the largest in
Pakistan.
 National bank of Pakistan is enjoying the deposits of
different government organization like P.I.A., Pakistan
Railway, WAPDA and Sui gas.
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 When Govt. starts some scheme of loan to assist the
public normally NBP is authorized to implement it. For
this it is provided with the funds from the Govt. But the
advances in the form of loan to public, it earns profit
which increases its overall income.
WEAKNESSES:
 The staff of National Bank of Pakistan is working
partially on the basis of manual record system and
computer record system. It should be computerized,
after all we have to adopt electronic media for IT
revolution in future.
 In National Bank of Pakistan the political involvement
in bank affairs resulted in lack of strategic decisions.
 There are less customer oriented schemes are started by
the Bank, i.e it acts like selling oriented Bank and no
promotions and incentives are offered to the general
public.
 The
human
resource
department
of
NBP
is
not
performing its duties as well, recruiting, training and
development.
 There are no bonuses and other cash prizes are given to
employees for motivational purposes against extra time
on job.
 The rate of the loans converted in to bad debts is high.
 In National Bank of Pakistan, lack of adequate modern
computerized techniques that are emerging in Pakistan
e.g. concept of online banking.
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 The whole management and staff of the bank has not
the relevant knowledge of banking business, education
and professional skills.
 The attitudes of the employees are not serious with
each other and have professional jealousy, which is not
healthy for the bank.
OPPORTUNITIES:
 As
the
Government
is
trying
to
increase
industrialization in Pakistan, NBP has opportunity to
attract
business
community
by
offering
different
products and services.
 NBP can attract customers by offering them high profit
rates and introduce new products and services.
 Golden handshake may decrease the establishment
expenses of the NBP.
 A gradual reduction in the corporate tax rate for
commercial banks will have a positive impact on their
earnings.
 As the Govt. policy of the industrialization is under
way, the Bank has a great chance for growth if it
manages to attract the business community.
 Most of government accounts are with NBP. This may
create the trust and goodwill among the customers.
 Bank has its own Networked Regional IT centers which
may be helpful to establish online banking.
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THREATS:
 Being a government bank president of The Bank is
appointed by government, so political influence is there.
 Foreign banks are increasing in Pakistan which are
offering new products and services. This is a threat for
NBP.
 Political uncertainty is also a threat for NBP. Because
of this foreign investors are afraid of investing in
Pakistan.
 Other commercial banks i.e. MCB, Askari commercial
Bank, UBL, Bank AlFalah etc are providing loans and
advances at lesser rate of interest.
 Downsizing is also a threat for NBP employee as they
feel insecure about their job.
 There may have some frauds, robbery or other mishaps
with the banks so all the time employees have to
remain careful.
 The number of banks in Pakistan is increasing day by
day and they are providing good customer services as
compared with the NBP, so it may lose its market share
in the future.
 The competent employees of NBP may move to other
banks, as the pay in NBP is less than the remuneration
offered by other banks.
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SUGGESTIONS & RECOMMENDATIONS
 More Foreign branches should be opened instead on
relying on local branches. NBP has only four foreign
branches their number should be increased.
 All the branches should be online so that customer can
get quick services.
 NBP should hire people whose education are related to
banking fields instead of hiring graduates, by doing
this standard of bank will increase.
 In NBP branches work load is high so it should be
divided equally.
 The equal employment opportunity especially in case of
men and women
 In NBP an effective recovery system should be adopted
in order to lower the increasing bad debt.
 NBP should increase its product line in order to compete
with foreign banks.
 The employees of NBP should have to change behavior
so that to attract customers.
 They should be investing in car financing and other
similar business.
 NBP should provide ATM at extensive level.
 To improve the productivity the payee of employees
should be increased to banking industry.
 NBP should improve loaning and finance structure
 The competent persons to enhance performance and
quality of work should run all these three segments
separately.
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CONCLUSION
National bank of Pakistan is the largest bank in Pakistan.
The bank is also authorized to act as an agent of State Bank of
Pakistan and operates treasury where State Bank does not have its
own branches.
National Bank has good number of branches in all over
Pakistan. Today NBP faces very difficulty in the business specially
in
the
areas
like
in
financing
department
and
marketing
department. NBP has introduced the ATM but today the ATM faces
problem and the management has not paid attention on ATM
because with the passage of
time its importance has increased
adequately. In a future NBP has chances to start the car financing
and also try to increase the interest rate on savings of people and
give the loan on productive purpose.
My experience in NBP as an internee was really helpful to see
the working environment of banking industry. I have also observed
that the employees of NBP are not satisfied due to lack of
promotions and over timing in banking.
The working speed is slow. So, if the management will not
pay attention on the employee matters then NBP will have to lose
the efficient staff and also think about the customers to give them
quick response.
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