INTERNSHIP REPORTNational Bank of Pakistan An internship report submitted in partial satisfaction Of the requirements for the degree of MBA In Finance By MUHMMAD IMRAN (M-9038) National University of Modern Languages Lahore Campus ACKNOWLEDGEMENT C K N O W L E D G E M E N T All praise to Allah, the most merciful, kind and beneficent, and the source of all knowledge, wisdom within and beyond my comprehension. He is the only God, who can help us in every field of life. All respect and possible tributes goes to my Holy Prophet Mohammad (SAW), who is forever guidance and knowledge for all human beings on this earth. I am proud to say that I am very grateful to my family whose kind prayers and cooperation helped me at every step of my work. Special thanks go to my parents for their cooperation for the sake of my knowledge. I am greatly indebted to my learned teachers, Sir.Khalil, Miss. Hina Shaukat who have great influence on me during my formative years. This report reflects the knowledge which I have gained from my valuable teachers. I acknowledge with deep gratitude the invaluable help extended to me by Mr. Khalid Jamshed (AVP/ Operation Manager) of the National Bank of Pakistan LDA Plaza Branch, without his co-operation it was not possible for me to complete my Internship Report. He guided and helped me and specially the sympathetic attitude, which always inspired me for hard work. I am really very thankful to Muhammad Ayyub Manager of National Bank LDA Plaza Branch, Lahore and all the bank staff for their cooperative attitude during my internship. In the end thanks are due to one of my friend Mr. Imran his cooperative attitude during the completion of my project work. He helped and supported me during gathering and analyzing information. Muhammad Imran MBA (Finance) EXECUTIVE S UMMARY X E C U T I V E U M M A R Y To interpret my skills and educational knowledge of Finance I done my internship in National Bank of Pakistan LDA Plaza Branch, Lahore and to know how I will work in financial institutions and among various types of people have different attitude. The objective of this Internship was to explore the issues relating to Finance and to find out problems regarding the theoretical concepts with practical experience working in an organization during the internship and study the system of National Bank of Pakistan. There are many possible improvements, which we can make positive changes in the system. The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal observation while working with staff and having discussion with them. The report summarizes the National bank of Pakistan with its working divided into three parts first part deals with the description of the NBP the second part covers the theory and practices adopted by NBP and third part discuss the financial position of NBP, its analysis and at the end concluding remarks and suggestions are given for improvements. It was too much difficult for me to describe the functioning of such a vast organization within the limits. In spite of this I tried my best to describe. Finally, for any all too fallible errors, omissions and shortcomings in the writing of the report only I am responsible for which I hope that all concerning regards of this report will forgive us. Muhammad Imran MBA (Finance) Banking sector owes a pivotal importance in the economy of any country through its vibrant functions. All the staffs do not know about computer. Account Opening Department. No doubt. in branch banking it has Clearing and Collection Department. It also undertook Government Treasury operations. Advances and Credit Department. Especially. This is the deep seated motivator that geared up me to join any bank for internship. Once implemented its testing takes more time. Inside the bank. These are the most common departments exist in almost each branch.PREFACE R E F A C E During this eight weeks long practical glimpse the theories and ideas which we received from the books have been women in the texture of our actual life. It is not easy for it to implement a new system immediately it takes a lot of time to replace systems. the cash department is not familiar with computer and information system. National Bank of Pakistan (NBP) was established in 1949 under the National Bank of Pakistan Ordinance 1949 and was 100% government owned. Customer Services Department Cash Department. It is offering different deposit choices. So it is important for the Bank to develop a research department for redesigning the operations of the Bank Muhammad Imran . advances. Deposit Department. There is shortage of employees in the organization. NBP acted as an agent of the Central Bank wherever the State Bank did not have its own Branch. There is almost one or two employees are trained to operate the system in every branch. Remittance Department. which we can be made and that can bring positive changes in the system. Yet there are many possible improvements. initiatives and capacity to turn our knowledge to practical purpose. hope. it has helped us in cultivating the qualities of courage. With development of online banking system the load of work can be decreased. Government Receipts Processing Department. credits and securities etc for its customers through its corporate branches. b r i e f c o n t e n t s BRIEF CONTENTS Introduction and National Bank of Pakistan 1-4 Bank's Profile Introduction Overview of Organization 2 3 4 5-8 6 7 Historical Background Background Establishment Organizational Structure 9-15 Organizational Network 20 Registered and Head office Share Registration Office Share Capital Branch Network 1617 17 17 17 Management of NBP 21-26 Management System Management Structure Corporate Information Senior Management Oversea Management 22 22 24 25 26 27- Departments 72 Departmentalization in NBP 28 . General Banking Department Deposit Section Account opening Section Locker Service Section Cash Dealing Department Clearing Section Remittance Section Advances Department Accounts department Billing and Government Receipt/ Payment Department 70 29 29 33 42 43 47 53 58 6 Commercial and Retail Banking 73-84 Premium Aamadni Scheme 74 Premium Saver Scheme Karobar Scheme Saiban scheme Advance Salary Scheme Cash card Scheme Cash n Gold Scheme Kisan Dost Kisan Taqat Pak Remit NBP Protection Shield NBP Student Loan Scheme 80 81 81 82 82 84 85 86 90 93 101 75 75 76 77 79 Financial Analysis Horizontal Analysis Vertical Analysis Ratio Analysis SWOT Analysis . Work Performed 114 Learning and Personal Experience 105 Branch Profile Branch Hierarchy Departments of training Issues Faced by Branch 106 104- 107 107 113 115116 119 121 Findings and Conclusion 121 Dilemmas faced by organization Recommendation Conclusion Annexure and Documents 122 . INTRODUCTION N T R O D U C T I O N & NATIONAL BANK OF PAKISTAN A T I O N A L A N K O F A K I S T A N In this section three topics are discussed: • Bank's Profile • NBP Introduction • Overview of Organization • Vision • Mission • Core values • Goals . Consumer Banking etc 624.pk Established Headquarter Key People Industry Products Deposit Net income Total Assets Number of Employees Number of Branches Home page .com.459 Million 817.758 Million 15.Bank's Profile THE NATIONS'S BANK Type Government KSE: LSE 1949 Principal Office.938 Million 15.nbp. Ali Raza (President & Chairman) Banking.276 www.204 1. Savings. Credit Card. Karachi Pakistan S. capital Market Loans. bonds. NBP needed to redefine its role and shed the public sector bank image. agricultural financing. promoting. Carrying on agency business of any description other than managing agent. and while it has not been completely privatized like the other three public sector banks. fixed. In today's competitive business environment. NBP headquarters in Karachi. corporate investment banking. Buying. etc. etc. undertaking. • • • • Generating. rice. While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major lead player in the debt equity market. • • Financing of seasonal crops like cotton. tobacco. 1949) National Bank of Pakistan is the largest commercial bank operating in Pakistan National Bank of Pakistan was incorporated in Pakistan under the National Bank of Pakistan Ordinance. agents and companies for its representation abroad. wheat.2 percent share in the stock market. It's registered and head office is situated in Karachi. Joint venturing with foreign dealers. treasury services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities. The Bank's services are available to individuals. dealing. term deposit and profit and loss sharing accounts.Internship Report Pakistan National Bank of (Incorporated under the National Bank of Pakistan Ordinance. retail and consumer banking. selling. etc. Transacting guarantee and indemnity business. including entering into forward contracts of foreign exchange. Borrowing money and arranging finance from other banks and advancing and lending money to its clients. corporate entities and government. saving. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. of issue of shares and. 3 . Pakistan with over 1. partial privatization has taken place. 1949 and is listed on all the stock exchanges in Pakistan. Undertaking and executing trusts. It is now listed on the Karachi Stock Exchange. sugar cane. Accepting of deposits of money on current.200 branches country wide. INTRODUCTION • • • • Handling of treasury transactions for the Government of Pakistan as agent to the State Bank of Pakistan. • Participating in "World Bank" and "Asian Development Bank's" lines of credit. for a modern commercial bank. It has offloaded 23. on behalf of clients including Government and local authorities. highest standards of service quality. Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate. Institutionalizing teamwork and performance culture. Direction Excellence in Growth Excellence in 4 . Excellence in service. Value creation for all stakeholders. Advancement of skills for tomorrow’s challenges. Maximizing stakeholder’s value.Internship Report Pakistan National Bank of OVERVIEW OF THE ORGANIZATION VISION "To be recognized as a leader and a brand synonymous with trust. by : Institutionalizing a merit and performance culture Creating a distinctive brand identity by providing the highest standards of services Adopting the best international management practices. international best practices and social responsibility. CORE VALUES Highest standards of Integrity." MISSION NBP will aspire to the values that make NBP truly the Nation’s Bank. GOALS To enhance profitability and maximization of NBP share through increasing leverage of existing customer base and diversified range of products. Awareness of social and community responsibility. Internship Report Pakistan Excellence National Bank of in Performance Excellence in Excellence in Management Achievement 5 . HISTORICAL BACKGROUND I S T O R I C A L A C K G R O U N D In this section two topics are discussed: • Background of Foundation • Establishment . The non-scheduled banks also suffered a severe jolt and their number was reduced from 411 to 106 over the same period. 1 2 Jute board Ordinance & NBP ordinance dated 08.K. West Pakistan from where there was greater exodus of nonMuslims to India suffered a great deal. 6 . The Muslims were deliberately kept cut of banking profession by the wealthy Hindu community. The government of Pakistan was quite aware of the serious banking situation caused by the withdrawal of deposits and wholesale migration of banking staffs to India. The Hindus closed down most of the head offices and the branches of scheduled and non-scheduled banks in Pakistan. 1949 the two central banks have to announce the new par value of both currencies but India denied the day earlier. On October 3. India also froze our trade balance surplus that is still an unsettled dispute. India had 29 and there were 7 exchange banks. • • The State Bank of Pakistan. which is the central bank of the country. The number of scheduled bank’s branches was reduced from 619 to 213 in both the wings of the country after independence.Internship Report Pakistan National Bank of HISTORY OF NATIONAL BANK OF PAKISTAN BACKGROUND At the time of partition the total number of Commercial Banks in Pakistan was 38 .to serve as an agent to the SBP. prices fell sharply. the following measures were taken to develop the banking system in Pakistan. devalued its currency.1949 In order to regulate both of the banking on sound footings. they secretly began transferring their funds and the other valuables at an accelerated pace to India and there was a mass scale migration of non Muslims from West Pakistan to India which also caused the drain on the bank deposits. as a number of branches fell down (from 487 to 69). There being no jute industry. India also draws the Marwari merchants who were employed annually for movement of jute crop by financing it. India followed the suit but we did not.11. Two Ordinances were therefore issued. and an agrarian unrest was threatening. The mass scale closure of branches and withdrawal of the deposits caused a dead lock in the banking business in Pakistan. It took up the challenge and started reorganizing the crippled banking immediately after partition. In 1949 September U. India said we had contravened the agreement. The National Bank of Pakistan was established on 1949. When Hindu capitalists became sure of the division of Sub Continent. was established in July 1948. Before the partition of Sub Continent the entire banking business was almost controlled and managed by non-Muslims.Out of these Pakistan had 2 banks. Bank took a big stride in 1952. Punjab Provincial Co-operative Bank Limited 7 . Lahore Commercial Bank Limited 13. Muslim Commercial Bank Limited 6. Sarhad Bank Limited 14. Thereafter. Commerce Bank Limited 7. The Agricultural Development Bank of Pakistan (ADBP) was set up in 1961. 1974 the entire commercial banks were Nationalized. State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assets against the Indian currency retired from Pakistan territory. Habib Bank Limited 3. it provides short . Australia Bank Limited 8. In Jan. MCB and ABL have again been privatized. the name of these were: 1. The Bank’s Karachi and Lahore offices were subsequently opened in December 1949. five crore. ESTABLIHMENT The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute Trade. medium and long term loans to the farmers. United Bank Limited 5. when it replaced the Imperial Bank of India. as an agent of State Bank of Pakistan. the Bank was engaged exclusively on jute operation. The dispute is still unsettled and these assets are still not delivered to Pakistan. it was felt that it could expand its business to include other commodities as well. Government of India refused to hand over the assets worth about five hundred million rupees. 1949 at six important jute centers in the then East Pakistan and directed its resources in financing of jute crop. 1961 with a Paid up Capital of Rs. Standard Bank Limited 9. Pak Bank Limited 12. National Bank of Pakistan 2. Habib Bank (Overseas) Limited 4. Until June 1950. There were 14 Pakistani scheduled commercial banks operating in the country on December 1973.Internship Report Pakistan National Bank of • The Industrial Development Bank of Pakistan was set up on August 1. The weaker commercial banks were merged with the stronger once and in all Five major banking companies were formed. The Bank commenced its operations from November 20. Bank of Bahawalpur Limited 10. Premier Bank Limited 11. 4. management. 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. The ownership. 2. 1974. 3. It is working as the agent of the state bank of Pakistan and performs its functions wherever state bank of Pakistan is not present. and control of all banks in Pakistan stood transferred to and vested in the Federal Government. National Bank of Pakistan Habib Bank Limited United Bank Limited Muslim Commercial Bank Limited Allied Bank Limited So. the State Bank of Pakistan. 1. 8 . through the Nationalization of Bank Act 1974. 5. With the passage of time its functioning diversified as they take over the function of different institution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation). These five banks are as under: 1.Internship Report Pakistan National Bank of The Pakistan Banking Council prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. ORGANIZATIONL STRUCTURE R G A N I Z A T I O N L T R U C T U R E In this section topic is: • Overall Organizational Structure of NBP and it's hierarchical View . Wing. Department. And after President there is Five Broad of Directors. Section and Regional of the national bank of Pakistan. National Bank of Pakistan has eleven Groups which control the working of the Divisions. “Department” is called “Wings”.T. In NBP.Internship Report National Bank of Pakistan ORGANIZATIONAL STRUCTURE In National Bank of Pakistan. Chairman & President Board of Directors Secretary Board of Directors President’s Secretariat Corporate & Investment Banking Group Credit Management Group Audit & Inspection Group Compliance Group HRM & Administration Group Operation Group Commercial & Retail Banking Group Treasury Management Group Special Assets Management Group Overseas Management Group I. the head is called “Chairman” or “President” of the Bank. Group 10 . T Group are performing different working in the Organization. as their task assign. Credit Management Group (Functional Deptt) Administrati on Wing Credit Monitoring Wing Industrial Research Wing Credit Policy & SME Wing 11 . Commercial & Retail Banking.Internship Report National Bank of Pakistan National bank of Pakistan divided their task in to separate jobs. And NBP hire their employees also through work specialization. Wings. HRM & Administration. Operation. Group National Bank of Pakistan is structurally divided into Groups and groups are also subdivided into Departments.T. and each group perform different task specialization in their department. and I. and Divisions. HRM & Administratio n Group Operation Group Commercial & Retail Banking Group I. The following Chart shows the Work Specialization in the bank. Basically national Bank of Pakistan having different groups. Department also subdivided into working bases. National Bank of Pakistan has different Department in the Group and each department performing work. National Bank of Pakistan Categories their departments through their work specialization. Internship Report National Bank of Pakistan GEOGRAPHIC DEPARTMENT Special Assets Management Group (Geographic Deptt) SAMG North (Lahore) SAMG – South (Karachi) SAMG – Head Office PROCESS DEPARTMENT Compliance Group (Process Deptt) Administrati on Wing SBP Inspection Market & Liquidity Risk Credit Risk CUSTOMER DEPARTMENT Operation Group (Customer Deptt) Customer Facilitation & Admn. Business Financial Institutional & Cash Manag. 12 . Customer Services & Govt. More skillful Group Chief Managers can control a greater number of employees. 13 .Internship Report National Bank of Pakistan National Bank of Pakistan (NBP) provides Services through more than 1200 branches in Pakistan and 22 branches in overseas. All Branches of National Bank of Pakistan report to five Head of RMT Members. so the message reaches more employees faster. National Bank of Pakistan assess that the internal Control environment is showing signs of improvement as compared to previous year in all areas of the Bank. All the data were proceed to the President of the bank. And the Group Chief of each Group Report to the President of the National Bank of Pakistan. And these five members reported to regional Offices. Chairman & President Operation Group Chief HRM Group Chief Audit & Inspection Group Chief Compliance Group Chief South Region North Region West Region East Region Overseas Reg Head 1 Head 2 Head 3 Head 4 Head 5 Branch 1 Branch 2 Branch 3 Branch 4 Branch 5 National Bank of Pakistan is relatively Wide span of control and Flat Structure. National Bank of Pakistan are less layers of management to pass a message through. And there are 29 Regions. All the process is working very quickly and it not consume more time. Regional Offices report to the Group Chief of the Groups. M Wing Admn.Functional teams. there are Cross. National Bank of Pakistan provides facility of making decision to their Senior Vice President as well as Vice President of the every Group. In NBP. There are free flow of 14 . And give the authority of Decision Making to their Group Chief of every Group. Employees are follow the rules and regulation in the bank is very little formalized. to take decision. which is benefit for the Organization. Employees’ behavior is little bit guided by rules and regulation. National Bank of Pakistan follow the Organic Model Organization. And Employees are free to take action or decision in their work specialization.Internship Report National Bank of Pakistan Chairman & President HRM Group Operation Group CMG TMG OD Wing IRD Wing T & S Wing Tech Wing C. Wing C. M Wing Admn. Wing National Bank of Pakistan is having Decentralization in the Bank. President (NBP) Group Chief (Group) SVP or VP (Group) AVP (Group) Grade Officers (Group) National Bank of Pakistan has low Formalization in the bank. as well as Cross-hierarchical teams. 15 . Basically National Bank of Pakistan is high Diagonal Differentiation and every employee of any department can easily communicate to other department of the Bank.Internship Report National Bank of Pakistan Information and Wide span of Control. NBP is Decentralization in nature and very low formalization in the bank. ORGANIZATIONAL NETWORK R G A N I Z A T I O N A L E T W O R K In this section topics are: • Registered & Headoffice • Share Registration Office • Share Capital • Branch Network • Global Network • Domestic Network • Present Status of Bank . three representative offices 17 .5 million. I.1. State Life Building #3.) Ltd.Internship Report National Bank of Pakistan ORGANIZATIONAL NETWORK REGISTERED & HEAD OFFICE Head office of NBP in NBP Building. It carried out its successful journey to make it an “Asian Tiger”. Pakistan which is “the city of lighting” in Urdu “Uroos-ul-Bilad” which was also the first capital and ancient place of Pakistan.25 Billion. Authorized Capital Authorized capital of National Bank of Pakistan in 2000 was Rs. Ziauddin Ahmed Road. subscribed and paid-up capital in year 2008 was 10763702260 BRANCH NETWORK Presently the Bank is divided into 10 Groups headed by SEVPs/EVPs. Pakistan. Karachi. 9 Regions reporting to as many Regional Chiefs and 15 Single Branch Zones headed by Zonal Chiefs.254 domestic branches headed by Branch Managers control its field operations. Karachi. Ground Floor. Issued. Chundrigar Road. Dr. Of these. Bank maintains its presence in all the major financial centers of the world through its 21overseas branches and 4 representative offices. SHARE REGISTERATION OFFICE THK Associates (Pvt. Shares Department. With the geographical development of its branches. and Paid-up Capital Issued. the Bank has been able to extend its services to a much larger number of Pakistanis all over the country. Today it has more than 8. Subscribed.I. SHARE CAPITAL Issued Capital The bank was setup with an issued capital of Rs. 12 corporate branches and 1.5 million accounts. C. Bank is at the forefront in the acquisition and application of new technologies in every aspect of its banking facilities. 18 . GLOBAL NETWORK 18 Overseas Branches 5 Representative Offices 1 overseas Subsidiaries Joint Venture. Overseas Branch Network: Paris Baku Seoul Kabul Tokyo Osaka Dhaka Bahrain Bishkek Kowloon Ashgabat Jalalabad Frankfurt Chittagong New York Hong Kong Washington D. Bank has also a presence on the Internet.Internship Report National Bank of Pakistan have recently been set up at Tashkent (Uzbekistan). It has modernized its services by installing Automated Teller Machines (ATMs) called "CASH LINK" at selected branches and presently 17 ATMs are operational in major cities. Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS countries. Apart from having a vast branch network. The Bank has 12 Regional Computer Centers to cover various on-line and batch system requirements of branches and controlling offices. It has acquired leased telephone lines for on-line banking. UK (Economic Indicators Pakistan. Being the country's largest 19 . Taurus Securities Ltd. National Agricultural and Storage company Ltd. Head Office Karachi) PRESENT STATUS OF BANK The new management team having extensive experience of management of large financial institutions both within and outside the country is expected to further enhance the profitability and operational efficiency of the Bank. Cairo Oversea Representative Offices Beijing Toronto Chicago Tashkent Oversea Subsidary CJSC Almaty.Internship Report National Bank of Pakistan Baku KEPZ Offshore Banking Unit. Prospects The Bank's principal strategic going forward objective is to make the transition from a public service institution to a modern commercial bank.Link Products Ltd Joint Venture United National Bank Ltd. Cast – N. NBP Exchange Company Ltd National Bank Modaraba Management Co.. Published by Economic research Wing NBP. Kazakhstan DOMESTIC NETWORK 1254 Domestic Branches 6 domestic Subsidiaries 29 domestic regional offices Domestic Subsidiaries NBP Capital Ltd. to stem the growth in non-performing loans.Internship Report National Bank of Pakistan financial institution. Furthermore. Towards this objective. For this purpose. Treasury / International Banking The deregulation of foreign exchange treasury business has ensured that a growing Volume of business now flows through the inter-bank market where rates are determined by the market forces. Operating procedures are being re-defined and internal controls strengthened utilizing a revamped IT architecture. home remittance and foreign investment related forex-denominated flows. 20 . In investment banking team has also been formed to offer specialized services to major relationships including advisory and debt syndications (TFCs).5 million-customer base to consolidate its core businesses as well as develop new revenue generating opportunities. the Bank is uniquely positioned to leverage its large branch network and its 8. new RMs as well as team leaders have been inducted to expedite this process. This can prove to be an immense profitable proposition for the Bank. the existing risk / credit management practices at the Bank are being revamped. the Bank is shifting focusing on expanding its market share in trade finance. Area Managers will be appointed to manage relationships and to better service the needs of multinationals and large local corporates. The Bank has initiated a structured approach to corporate banking by introducing a single point of contact through Relationship Managers (RMs). A brief on the progress on some critical areas is as follows: Corporate & Investment Banking A new approach to corporate banking is underway. The new management team is in place combining the Bank's existing personnel with professionals recruited from outside. Internship Report National Bank of Pakistan MANAGEMENT OF NBP A N A G E M E N T O F In this section topics are: • Management System • Management Structure • Central Board • Local Board • New Management Structure • Corporate Information • Board of Directors • Audit committee • Auditors • Legal Advisor • Senior Management • Oversea Management . • • Centralized Decentralized Centralized Management tends to concentrate decision making at the top of the organization Decentralized disperses decision making and authority throughout and further down the organizational hierarchy. shall elect from amongst themselves. MANAGEMENT STRUCTURE Central board 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 or done by the bank and or not by this ordinance expressly directed or required to be done by the bank in general meeting.Internship Report Pakistan National Bank of MANAGEMENT OF ORGANIZATION Management is a distinct process consisting of activities of planning. organizing. such number of directors for that area as may be decided before election by the central government having regard to the proportion which that share capital subscribed by the share holders of that area bears to the whole. nine directors is directed in local or special meeting by the share holder in the following manners. actuating and controlling performed to determine and accomplish stated objectives with the use of human being and other resources. Three directors appointed by the central government. The share holder registered in a branch. MANGEMENT SYSTEM The management has two types. The Central bank consist of the following directors namely: • • Managing Director The Managing director appointed by the central government under section 16. NBP have a centralized type of management because all the decisions are taken by the top management. Provided that shareholders registered in branch register maintain at Dacca shall elect from among themselves at least two directors. provided that total number of elected directors representing the area for which the decca register is maintained shall not be less than three. register maintained for an area mentioned in sub section (5) of section 8. 22 Managing director President . one each at Karachi . Management Committee: Also there is a Management Committee consisting of nine senior executives of the bank. have power . New Management Structure The previous management was removed by the bank nationalization ordinance 1974. An executive board composed of six senior executives of the bank and the president who is also the chief executive supervises the affairs and business of the bank.Dacca and the Lahore . the general direction and superintendent of the affairs and business of the banks vests in the Executive board consisting of President (Chief executive) and five senior executives of the bank . Local Board The local board shall be established for the area mentioned in sub section (5) of section B . The Managing director shall be appointed by the central government for a period not exceeding five years and on such salary and terms and condition of the service as the central government may determined. banking council of Pakistan is removed. TRAINIG and MANAGEMENT DEVELOPMENT WING 23 . The federal government in 1980 constituted a board of directors comprising the president and the members of executive board of the bank and two additional members one representing the ministry of finance and the other Pakistani banking council.within the prescribed limits generally to transact all usual business of the bank. Three members elected in local or special board meeting from among themselves by the shareholder register in the branch register of the area.Internship Report Pakistan National Bank of President The president of a Central board shall be appointed by the central government from among the directors. The Managing director One member appointed by the central board from amongst the directors elected by the share holder register in the branch register of the area. A local board should consist of following members namely. Board of Directors. The federal ministry is responsible for bank operations in the ministry of finance.and shall without prejudice to the powers conferred by the sections 12. all nationalized commercial banks are controlled by the Pakistani banking council being subject to State bank of Pakistan regulation as well. Two members appointed by the central government from the area in which the local board is situated. called the Board of Directors. Thus therefore. Recently by the order of president of Pakistan. called the members and the president who is also the chairman of the committee. Arshad Chaudhry Mian Kausar Hameed Chairman Chairman Chairman Chairman Chairman Auditors 24 . Mumtaz Chairman & President. managers. and to potential managers. the banking training is provided to the officers. Mumtaz Tariq Kimrani M. Ayuub Khan Tarin Ibrar A. Arshad Chaudhry Sikandar Hayat Jamali Mian Kausar Hameed Audit Committee M. Each year almost 1500 persons receive training over there. Human Resources Management & Administration Group Director Director Director Director Tariq Kimrani M.Internship Report Pakistan National Bank of National bank of Pakistan has its national and development centers and 4 staff collages at: • • • • Karachi Lahore Peshawar Islamabad In these centers and staff colleges. CORPORATE INFORMATION Board of Directors Syed Ali Raza M. Chief executive officer Director Director and SEVP and Group Chief. It arranges courses and seminars for middle and higher management in all. Ayuub Khan Tarin Ibrar A. Commercial & Retail Banking Group Nusrat SEVP & Group Chief. Mirza Abrar Baig SEVP & Group Chief. Operations Group SEVP & Group Chief. Yousuf Adil Saleem & Co. Corporate & Investment Banking Group SEVP & Group Chief. Asif A. Brohi Amer Siddiqui Muhammed Chief Operating Officer & Head of Credit & Risk Management SEVP & Group Chief. Legal Advisors Mandviwala & Zafar Charterd Accountant SENIOR MANAGEMENT Qamar Hussain Masood Karim Shaikh Shahid Anwar Khan Dr. PSO to the President & Group Chief. Financial Control Division Naeem Syed Aamir Sattar 25 . Islamic Banking Group EVP & Secretary Board of Directors EVP & Group Chief. Overseas Banking Group SEVP & Group Chief. Human Resources Management & Administration Group Imam Bakhsh Baloch Ziaullah Khan Nabi Bakhsh Soomro Ekhlaq Ahmed Tajammal Hussain Bokharee Nadeem Anwar Ilyas SEVP & Group Chief. Compliance Group (A) EVP & Divisional Head-Project Management Office & Core Banking Applications SVP & Financial Controller/ Divisional Head.Internship Report Pakistan National Bank of Ford Rhodes Siddat Hyder Charterd Accountant Charterd Accountant &Co. Treasury Management Group Vohra Dr. Special Assets Management Group EVP. Audit & Inspection Group Senior Executive Vice President SEVP & Group Chief. M. Financial Control Division 26 . Mirza Abrar Baig SEVP & Group Chief. Canada Office SEVP & Regional Chief Executive. Brohi Amer Siddiqui SEVP & Chief Representative. Americas Region SEVP & Group Chief. Treasury Management Vohra Group Dr. Commercial & Retail Banking Group Muhammed Nusrat SEVP & Group Chief. Audit & Inspection Group Senior Executive Vice President SEVP & Group Chief. Rafiq Bengali Shahid Anwar Khan Dr. Compliance Group (A) EVP & Divisional Head-Project Management Office & Core Banking Applications SVP & Financial Controller/ Divisional Head. PSO to the President & Group Chief. Kaleemi M. Human Resources Management & Administration Group Imam Bakhsh Baloch Ziaullah Khan Nabi Bakhsh Soomro Ekhlaq Ahmed Tajammal Hussain Bokharee Nadeem Anwar Ilyas Naeem Syed Aamir Sattar SEVP & Group Chief. Special Assets Management Group EVP. Operations Group SEVP & Group Chief. Asif A.Internship Report Pakistan National Bank of Atif Hassan Khan SVP & Group Chief (A) Information Technology Groups OVERSEA MANAGEMENT R.A. Islamic Banking Group EVP & Secretary Board of Directors EVP & Group Chief. Overseas Banking Group SEVP & Group Chief. DEPARTMENTLIZATION E P A R T M E N T L I Z A T I O N In this section topics are: • General Banking Department • Deposit Section • Accounts Opening Section • Lockers Services • Cash Dealing Section • Clearing Section • Remittance Section • Advances Department • Accounts Department • Government Receipt & Payment Department . The National Bank of Pakistan has various departments. Brief description of all these departments are given here one by one under separate heads for better understanding. • General Banking Department Account opening Section Deposit Section Cash Dealing Clearing Section Remittance • Credit and Advances Department • Accounts Department • Government Department • Consumer & Retailing Department • Foreign Exchange Department • Import and Export Department • 28 .individual and others .Lahore offer a wide range of banking services to public and private sector corporation . NBP Main branch .Internship Report National Bank of Pakistan DEPERTMENTALIZATION Dividing an organization into different parts according to the functions is called departmentalization.partnership . When a bank receives a deposit from a customer becomes a creditor and the bank a debtor.but they accept deposits as debts. it becomes the owner of it but there is an implicit agreement that the amount owned would be paid back by the bank to depositor on demand or often at specified time. The classification is based on duration and purpose for which the deposits are to be kept at the bank before the depositor can withdraw them. Clearance Section 5. The main function of a commercial bank is to mobilize deposits of money from the savers and lend into for most profitable purposes. The process of collection deposits is Deposits Mobilization. Deposit Section 2.Internship Report National Bank of Pakistan GENERAL BANKING DEPARTMENT General banking involves the following sections 1. Deposits Checking Accounts PLS Saving Account Current Deposit Accounts Foreign Currency Accounts Non-Checking Accounts PLS TDR’s Special Notice Deposit Accounts NIDA 29 . Lockers Handling Section Deposit Section Deposits are the lifeblood of commercial banks. Remittance Section 6. Accounts Opening Section 3. Commercial banks donor receive these deposits for safe keeping purpose only . Deposits can be divided into two categories. When the bank receives the amount of deposits as a debtor. Cash dealing Section 4. Form number F-53 is provided to the person to open the account. Fixed account 4. Foreign Currency Accounts 1. These are not payable of maturity but on demand No profit is given on demand deposits They include current accounts and call deposits etc. Simply we can say “A bank account which may be used to lodge payments or to withdraw money on demand. These are • • Time deposits Demand deposits Time Deposits • • • • • • Demand Deposits These are payable on maturity Receive profit with respect to time period All TDRs. Current This account is also known as running balance account. It is a statutory requirement to maintain current account. TYPES OF ACCOUNT/ DEPOSIT Following types of accounts are open in NBP 1.500 Any person can open the account with the bank According to inter banks agreement interest is not paid on current account. Saving account 3.Internship Report National Bank of Pakistan Categories of Deposits There are two broad categories of deposits. Its main features are: Minimum amount for opening this account is Rs. Call Deposit Accounts 5. saving accounts and other profit bearing accounts are included.”Its main purpose is to serve the businessman. Bank act as custodian of money Over draft facility is provided to the customers Customer can withdraw money through cheque supplied by bank No limitation to the number of withdrawal 30 . Current or demand account 2. Saving account This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship. this type of account was introduced in January 1982 after the islamization of banking. One can open the account by depositing minimum Rs. Profit and Loss Sharing/Saving Account (PLS Acc) b. BBA’s are opened for individuals single or joint only. Zakat at the rate 2.Internship Report National Bank of Pakistan No zakat is deducted on current account. Profit and Loss Sharing/Saving Account (PLS Acc) In general it is also called saving account . by a small margin. Nill accounts are closed after 3 months 2. Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Free ATM issuance Minimum balance is 1000/-.50% is deducted from the PLS Saving Accounts. NBP offered the three types of saving accounts a. No limit of withdrawals 31 . Rates of interest are typically ahead.To provide interest free banking facilities in Pakistan. In BBA’s maximum two deposits transactions and two chequing withdrawals are allowed free of charge through cash/clearing in a month.100 The bank is authorized to deduct service charges on half yearly basis. National Income Daily Account (NIDA account) a. The main features of this account are: Instead of having fixed return in the form of interest the deposited money will be shared in profit and loss of the bank. Basic Bank Account (BBA) BBA’s are opened on proper introduction and submission of required documents. Profit on PLS Saving Account is calculated on minimum monthly basis and is paid half yearly basis announced by the Head Office after June 30 and December 31. 00 %p. A receipt is used for the amount deposited called fixed deposit receipt.and if it is at maximum that is 5. 3. Profit may be paid in cash. In this account the daily balance of account is taken. associations. 000/= with no upper limit.0 million. When the above condition is fulfilled. firms etc. 4.a. If the balance on any day comes below the lower limit. Call Deposits Call deposits are the sorts of deposits. The money is deposited for a fixed period of time. Minimum deposit is accepted is Rs. This scheme did not gain popularity so NBP close this scheme. and the maximum limit is 5. Amount of profit can be obtained after each six months. 32 .25. This account is best for people who have surplus money and don’t need such funds in nearer future. products are calculated and the interest is calculated on that balance.a. autonomous bodies. which is that if the deposit is minimum of 2 million than the mark up rate is 5. then the bank will pay interest on daily basis. pay order.2%p. Period of deposit can vary from 3 months to 5 years depending upon the nature of scheme offered by bank. Charitable institutions.Internship Report National Bank of Pakistan b. Terms deposits are accepted for a period of one month to five years. This is without interest deposit and may be with interest provided. National Income Daily Account (NIDA account) The scheme of NIDA was launched in December 1995 at attract at corporate customers. Higher will be the time period. Main features of this account are: Fixed amount is deposited for fixed period. Provident funds. which are deposited in the bank against any tender. educational institutions. The depositor has agreed to keep this amount with the bank for some fixed period. Fixed Deposit Account This account is the major source of funds for the banks. demand draft or any other form. which is Rs 2 million then interest will not be given. The amount can be withdrawn before maturity after surrendering interest. and vice versa. The rates on this type of deposits are higher than the saving bank accounts. higher will be the rate of profit. companies. the features of this account are same to the features of the saving or PLS account except the following ones: In this account the minimum balance required to acquire the benefits of this account is Rs 2 million. PLS Term The bank accepts these deposits with minimum sums as prescribed by the bank for a fixed period of time.0 million than the rate is 7. NIDA are opened for individuals single or joint. trusts. respectability. of different account holders and either saving or current accounts. Account Opening Section Account opening section of the bank can be considered the most important department because banking starts with the account opening. individuals. 33 . Every customer of the bank either he is of credit section or foreign section or any other department must have his account in order to get benefit and transaction with the bank. Profit is paid on maturity. Preliminary investigation is necessary because of the following reasons. Fixation Schemes of NBP NBP offered following types of fixation and saving schemes • • • • PLS Special Notice Term Deposit Reciept. the banker should determine the prospective customer’s integrity. Foreign Currency Accounts These are the accounts in US $. The transactions in these accounts are translated into Pak. corporation. yen etc. Euro.Internship Report National Bank of Pakistan Available to all types of investors i. partnership firms. Account opening officer take special consideration for the proper recognition of the customers. Pound. Profit is fluctuating as determined by the State Bank of Pakistan on six monthly bases whereas return on Term deposits/SNTD will paid on maturity.PLS SNTDR PLS Monthly income Scheme – PLS MIS Premium Saver Scheme. Before a banker opens a new account. This section performs the following functions: • • • Opening of Accounts Issuance of cheque books Closing of accounts OPENING OF ACCOUNTS The opening of an account is the establishment of banker customer relationship.PLS Saving Account Premium Amdani Scheme 5.e. Therefore it is considered the most important section of the bank. occupation and the nature of business by the introductory references given at the time of account opening. Rupees at the exchange rate prevailing on the date of transaction. and government bodies. public and private limited companies. Inquiries about clients. The agreement should be made for lawful object. which are to be observed for opening an account with a bank. 2. now it is ready to open the account formally.Internship Report Avoiding frauds National Bank of Pakistan Safe guard against unintended over draft. ii. Manager has every right not to accept this contract if he is not satisfied by the details provided by the customer. Steps for Opening of Account After entering into bank premises the person goes through the following steps for opening an account in the bank and for becoming a bank customer. Law must not disqualify him. who wants to become bank’s customer. NADRA send the verification report to the bank with the concluding remarks called VERISIS. Qualification of Customer The relation of the banker and the customer is purely a contractual one. Negligence. Account Opening Form and Specimen Signature Card: 34 . he must have the following basic qualifications. Formal Application Verification of customer's CNIC through the NADRA Copy of NIC of the customer Specimen Signature Minimum Initial Deposit To open an account the customer has to meet the general banking manager with an introducer with the ID card. He must be of the age of majority. This verification is made through the NADRA. iii. After the identification of the customer along with the form a card for specimen signature is also supplied to customer. A Verfication: The first important step to take place in bank is to get satisfactory verification of the person. 1. Terms and conditions There are certain formalities. If the customer's id card is fake then bank has right not to accept the contract and if the contract is acceptable to both. however. which create legal relationship Not expressly declared void. He must be of sound mind. Manager verifies the customer's ID card through the connection of NADRA. i. Accounts of general customers (Individual accounts) Minor account Illiterate person account Joint account Accounts of special customers Proprietorship account Partnership account (Registered/ Unregistered) Limited company’s account (Public/ Private) Accounts of clubs. societies and associations Corporate Body (Incorporated/ Unincorporated ) Trust account Govt Institutions (Federal/ Provincial) iii.Internship Report National Bank of Pakistan Now the person is provided with an application form known as Account Opening Form (AOF). US $ UK EURO JY 35 . Initial Deposit Amount Deposit can be accepted in the form of: Pak Rs. Nature of Account NBP has the offered services to following types of individuals. Type of account Current Account PLS SNTDR PLS Term BBA PLS Saving Premium Saver Premium Amdani Call Deposit NIDA ii. This form contains: i. viii.Internship Report National Bank of Pakistan iv. Title of Account Adress CNIC Number NTN Number (if available) Profession Telephone number may be of office.g. Government employee Pensioner 36 . Service charges deduction In this category customer authorize the bank to deduct service charges as per bank's rariff. If customer wants no zakat deduction then he have to submit affidavit/declaration as per zakat rules. mobile or residential v. Service charges are exempted for. Operating Instructions The account can be operated by Singly Jointly Either/ survivor vii.e. Next of Kin (all above mentioned particulars of introducing him) In this customer mention the name and address of person to be contacted for ascertaining his whereabouts after the expiry of three years from the date of last operation in his account or last communication from him to the branch to inform him the existence of account when the customer is not available at the given address.g. Name of person CNIC Number Address Telephone number etc. Signatures of the applicant ix. Zakat Deduction Zakat is deducted on each type of account accept current account in the 1st day of the Ramzan at the rate of 2.Customer provide in this all the personal details of the next of kin. This is simply the refrence of the 2nd person if the bank fails to communicate with the customer then bank can contact with the next of kin / the mentioned person to know about its customer. vi. Particulars of customers e.5%. 3. A specially designed card is used for this purpose. To reduce the risk of frauds and misuse of the cheques of an illiterate person the specimen signature card and account opening form both are stamped by the Personal Visit stamp. A Cheque book consists of PLS 25 leaves or pages per order CD 50 leaves or pages per order 100 leaves or pages per order CD 50 leaves or pages per bearer 100 leaves or pages per bearer 37 .Internship Report Student Widows National Bank of Pakistan State Bank of Pakistan now authorize all the banks to deduct service charges on all types of accounts when the balance of the customer become less from 5000/-. Person who use thumb impression as a mean of signature can operate their account only by Personal Visit. the card must be countersigned by an official of the bank not below the rank of an officer. of the customer will be written on (top most corners) account opening form and on specimen signature card. Letter of thanks Letter of thanks is the latter issued by the bank to the customer for two purposes 1st purpose is to say thanks to the customer for opening the account in their bank 2nd purpose is to confirm the address provided by the customer while opening the account. Rs. Account Opening Register Now the name of the customer is recorded in account opening register. First Cheque book is issued to the customer after sending the letter of thanks when the customer comes with the latter of thanks and requests for the issuance of the cheque book.is the minimum amount which should be kept by the customer in his account. and from here the account no. 5. 4. Issuance Of Cheque Book And Pass Book The cheque book will ordinarily be issued to all customers desiring to have chequing facility. For illiterate person a recent picture of the newly account holder is taken and attached with SS Card. 5000/. Specimen Signature Card (SS card) Specimen of signatures will be obtained from depositor at the time of opening his account. 55/per month is deducted from the customer's account. Recording into General Ledger: The concerned officer records the name and amount deposited with the bank in to general ledger. Current Account Ledger Saving Account Ledger Fixed Deposit Account Ledger Call Deposit Account Ledger As and when customer will deposit the money. 7.if a person appears himself for new cheque book or who is the holder of account Bearer. Pass Book Pass book is another important type of book handed over to the customer as he opens the account with the bank. The withdrawal and deposit of money is recorded date wise in this book.if the person other than account holder appears then he is bearer Rs. A special cheque book register is kept to enter the name of the person having cheque book. Zakat exemption Declarartion Evidence for exe. iv. 6. Documentation In case of Individuals Account ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Copy of CNIC/NICOP/POC Copy of Driving license in case CNIC is without photograph Applicant photograph and VNIC copy Copy of service card/ evidence of employment in case of salaried person Photographs in case of illetrate person Copy of CNIC of Next of Kin.Internship Report National Bank of Pakistan ∗ ∗ Order.ption of account from levy of service charges Proof of age in case opening of account with minor Documentation In case of Private/ Public limited company accounts: ∗ Photocopy of National Identity Card of each director 38 . Separate ledgers are maintained for different types of accounts e. Documents Enclosed by Customer Documents required to be attached by the customer are different for different categories. amount will be credited in general ledger and the withdrawal will be followed by a debit entry in the ledger. Customer can withdraw money by signing a cheque and writing the amount he wants to withdraw from his account. 3 per leaf as postage charges is charged to the customer.g. He affixed three types of stamps on the form and two types of documents.Internship Report National Bank of Pakistan ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Application form Copy of company’s memorandum and articles of association List of directors Copy of board resolution Certificate of incorporation Their signature cards Certificate to commence business Power of Attorney Documentation In case of Partnership Account Application form A copy of partnership deed Signature cards of partners Registration certificate copy A copy of National Identity Card of each partner Authority letter favoring persons authorized to operate the account Application form Copy of rules Certified copy of resolution Signature cards Documentation In case of Club. Stamping and Scrutinizing After the fulfillment of all the necessary terms and conditions and checking of the form the relevant officer of Account Opening then affixed stamps on the AOF for the sake of completion of all the formal rules and regulations. Affixed stamps: National Bank of Pakistan Stamp Authorized Stamp 39 . Association or Trust Documentation in case of agents Account ∗ Copy of power of attorney ∗ Id card of each agent Documentation in case of trust Account ∗ Certificate of registration ∗ CNIC of all trustees ∗ Copy of instrument of Trust v. Society. The authorized officer filled the cheque book requisition card for the customer and sends them to Head office which is present in Karachi through the NIFT (National Institutional of Facilitation Technology) (PVT) Ltd. the this cheque is called the loose cheque. which is far away from the bank or whatever the case may be.Internship Report National Bank of Pakistan Personal Visit Stamp---in case of illiterate person or the person not having specific sign Affixed Documents: Know Your Customer Form (KYC) Summarizing the context of AOF briefly Signature Card For identification and verification of signatures vi. In some cases when cheque book is issued by the person duly authorized by the account holder for obtaining cheque book. 40 . Cheque books issued in the running serial order with the name of the customer printed on the book. a letter of issuance of cheque book is sent to the account holder for his acknowledgement. At the end of the day all the cheque books should be checked and balanced with the help of requisition slips. Rs. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of cheques are duly entered in the book of the bank. In case of cheque book is issued without the requisition cheque of previous cheque book care must be taken to establish the genuineness of the customers and Form should be obtained.150 as charges for the issuance of the loose cheque. Enter detail in the system. 3 per page of book is charged for the postage services through NIFT Enter particulars in the cheque book issue register. The customer can obtain the cheque book after at least two days of submission of requisition slip. This slip is duly filled and signed by the customer. which should be signed by the authorized officer after checking cheque book series input number. These records should be daily checked by the Daily Cheque Book Report. NEW CHEQUE BOOK ISSUANCE All subsequent cheque books to be issued against the requisition cheque extracted from the previous cheque book. the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money is urgently required. the person should also write his full name and address. Along with the signature. Loose Cheques If any customer forgets or leaves his cheque book at his home. NBP issues a loose cheque for Rs. i. Upon expiry of such period NBP then surrender the deposit to the SBP. Operations in accounts classified as dormant or inoperative will remained suspended unless request in writing for activation or restoration is received from the Account Holder. Rs. ii. These are simply a debt owned by bank when a customer has not been operating his account during a period of 10 year. 41 . CLOSING OF ACCOUNTS Account Closing by Customer The customer can close the account. 200 and the application is filed in Account Closing File. iii. If the account holder fails to reactive the account despite of bank's notice. Inoperative Account All the current accounts which have not been operated upon for 2 years or all saving accounts which have not been operated since 3 years are classified under inoperative accounts. Remaining leaves of cheques will also be collected from the customer. requisition slip with demand letter is sent to the NIFT (National Institutional of Facilitation Technology) (PVT) Ltd. Treatment of Deposit declared Unclaimed Unclaimed Deposit A debt payable owing by bank due to the reason of deposit in respect of which no transaction has taken place and no statement of account has been requested by the creditor during a period of ten years are classified under unclaimed deposit..Internship Report National Bank of Pakistan In rare cases when customer demand printed cheque book. Account Closing by Bank i. the bank will have the right of exercising option of closing of account and in such case will refund the balance to the customer after deducting all applicable charges.e. Customer is required to submit an application for closing the account. Then the account is closed out and his balance is paid to him after deducting the closing charges. Dormant Account All current accounts which have not been operated for six months or all saving accounts which have not been operated upon for one year classify as dormant account. The bank serves a 3 month Final Notice in writing to the account holder at his latest known address for his reciving balnce lying in account. 000 1000. Non-account holder not able to operate it.000 500. Customers paid the rent of lockers on annual basis. Annual Rent of Lockers SIZE OF LOCKERS Small Medium Large Extra-Large RENT 4000 5000 6000 6000 SECURITY 25000 30. Lien is placed on the account of a locker holder on drawing of amount. their security charges and insurance is shown in table.000 INSURANCE 500. Entries are made on “Locker Register” as well as on the system. The annual rent of different lockers.Internship Report National Bank of Pakistan Locker Services Section National bank of Pakistan also provides lockers facility in the country. The officer has Master Key to apply on the locker but he cannot open the locker of any person.000 700. Locker operation account is allowed for a account holder. The locker holder provides the bank his specimen signature.000 200. the court opens his locker in the presence of his as mentioned in his will or and his belongings are given to them and the locker is closed. Whenever the locker holders come to open the locker. In case the locker holder dies. • • • • Small size locker Medium size locker Large size locker Extra large size locker An application form is necessary for customer with desire documents and approval made by the head of department. his signatures are verified by the officer and then will be able to open his locker.000 42 . If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. It means a box operate by a customer of holder on permanent basis. Locker No and Key No is allotted to the locker holder for further operation.000 200. The dual control system is used for lockers. There are four types of locker depending upon the size of lockers operate in banks. Cash department of NBP is separate close part.e. (when they are issued against cash). The deposits of all customers of the bank are controlled by means of ledger accounts. Cash department performs the following functions. counter foil and adjacent foil of the slip properly writing the amount in figures as well as in words. Cashier of cash receipt accept the deposit slip with cash and then signed the both parts of deposit slip. Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques.Internship Report National Bank of Pakistan Cash Dealing Department Cash department of NBP is given the complete responsibility of handling all receipts & disbursements of cash as a result of transaction in both local and foreign currencies & near cash items such as traveler's cheque etc. This slip is used for transfer of funds from one customer's account to another. no one other than cash departments' employees is allowed to enter into that area. There are two types of pay-in-slip. Cash receipts for receive deposits. i. For this he have to fill the both parts i. Cash Pay-in-Slip It is used whenever the account holder deposit cash in his account. Receipt The money. Cash department performs this function. affixed cash received stamps on it and returned the counterfoil to the customer.As a consequence it is also responsible for the book keeping of these transactions & the safe custody of cash and near cash securities of NBP. Every customer has its own ledger account and has separate ledger cards. ii. The amount is credited to the customer's account by the computer terminals. ii. The processing 43 . its record should be kept. CASH RECEIPTS The depositor uses pay-in-slip for depositing the amount in their account. Both are in different colors for clear identification. Cash payment for encashment of cheques. Cash Pay-in-Slip Cheque Pay-in-Slip There are two parts of deposit slips: • • Counter foil Adjacent credit voucher i. Cheque Pay-in-Slip It is used whenever the account holder deposit amount in his account by the cross cheques. which either comes or goes out from the bank. Order cheque These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification. These can also be collected through clearing. It can also be collected through clearing. It is the contractual obligation of a banker to honor his customer’s cheque. 44 .Internship Report National Bank of Pakistan of the cross cheques held in the clearing department. Crossed Cheque These cheques are not payable in cash at the counters of a banker. Types of collected Cheques Bearer Cheques Bearer cheques are cashable at the counter of the bank. The following is looked into: The cheque is drawn on the same branch of the bank. The Requisites of Cheques There is no prescribed form of words or design of cheques but in order to fulfill the requirements the cheques must have the following: It must be in writing It must contain an order to pay and addressed a specified bank. It can only be credited to the payee’s account. The cashier just check the cross cheques to confirm whether it is acceptable or not. the officer examines the cheque before issuing a token. If there are two persons having accounts at the same bank. Bankers in Pakistan deal with three types of cheques. one of the account holder issues a cross-cheque in favor of the other account holder. The order must be unconditional The order must direct to pay on demand The sum ordered to be paid must be certain The payment should be ordered to be paid to a certain or to his order or the bearer Payment of Cash Cheques at Counter Acceptance of Cheques Whenever a cheque is presented at counter for payment. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque. CASH PAYMENT It is the primary function of bank to repay the money received from his customer’s account usually by honoring the cheques. Computer Terminal Process The cheque is received in computer terminal . Payment of Cash The cashier calls the presenter and takes his token and compares the token number with the number written at backside of the cheque. the signature of the drawer compared with his signature on the Specimen Signature Card. When it is found similar to specimen signature. near the drawer signature in the cheque and sign it. the cheque is posted. The presenter has signed at the back of the cheque.Internship Report National Bank of Pakistan The cheque is not crossed that it is open cheque. Stopping the Payment of Cash on Presentation of Cheques The payment of cheques is stopped dishonored on the following grounds: Effects not yet cleared then request to present again Irregularity endorsed Drawer’s signature differ Payee’s endorsement requires bank’s guarantee Alteration requires full signatures Cheques is not post dated 45 . he gets signature of the presenter at the back of the cheque and hands over cash to him and affixes Cash Paid stamp on cheque. The amount written in words and figure is same. Thereafter. When cheque is found acceptable in all aspect.The cheque is cancelled after posting & is returned to cashier . where the computer operator cheques the balance of the account holder . The token is given to the presenter. He takes out the cash to be handed over to the presenter and writes its denomination at the back of cheque. The drawer has signed the cheque. It is not stale or post dated. The cheque is then handed over to the cashier after the allotment of the token number to the cheque. The drawer of the cheque duly signs all alteration or cancellation. he affixes SIGNATURE VERIFIED stamp. If the account has the sufficient balance. the operator also sees whether the stop payment instructions are received from the account holder or not. Cheque should not be damaged Funds must be sufficiently available No legal bar prohibiting payment Affirmation of Signatures The accountant/authorized officer examine the cheque for the above mention things. After considering these two points he checks the balance in the account through a software of Bank Back Office (BBO). firm etc is not going into the account of any person. The cheque is neither post dated nor stale. The word and figure of the amount tally with each other. Withdrawal limit depends upon the type of customer. Transfer of funds between PLS saving account and current account of the same customer through the same ATM card Account balance inquiry. Instant mini statements of accounts listing the last 15 transactions in account. The correct pay in slip (current/saving) is attached with the cheque.which might be collected by the customer from the branch. The cheque with Payee Account Only crossing is not being deposited into the account of any other person other than the person mention on the cheque. The account number of depositor is written on both the sides of the slip. The drawer signature is present on the cheque. The officer accepts it after looking into the following: The person depositing the instrument for collection is the customer of branch. Request for a new cheque book . The local cheques are cleared through local clearing and outstation cheques are cleared through intercity or short credit clearing. 46 . The cheque in name of the company. The depositor signature is presented on the slip. The drawer signs the alteration on the cheque. How much cash can be withdrawn There is a 24 hours cycle cash withdrawal limit imposed on all ATM cards. for the payment to the credited into his account. All the cross cheques are processed through Clearing Houses. CASH LINK NBP ATM SERVICES FOR CONVENIENCE Cash withdrawal according to your cycle limit. attached with pay in slip.Internship Report National Bank of Pakistan Cheques is without date Amount in figures and words differs Crossed cheques must be presented through the bank Payment stopped by the drawer Payment of Cheques in Transfer The customer of the branch deposits the cheque drawn on the same branch. Processing of Transfer Cheques The cross cheques are then transferred to the Clearing Department. At such places where the area is not covered by NIFT the clearing and settlement services are provided by National Bank of Pakistan. 47 . Card holder is required to keep the PIN number in a safe place as all the operation are carried out on the ATM are carried out through the same. then NBP. Limited is performing the function of clearing and charges commission against it.Internship Report National Bank of Pakistan Personal identification number (PIN) A pin mailer issued to the ATM card holder carries the pin number in a sealed envelope. as a representative of SBP acted as a clearinghouse. It means the presenting bank and the bank on which the cheques is drawn are situated in the same city. without involving cash through “State bank’s clearing house " We can say that cheques which cannot be cashed at the cash counter of the bank or cross cheques go through the clearing process. Clearing Section Clearing "The transfer of funds from one branch of bank to the other branch of the same bank or the other bank on which the instrument is drawn . from the cheques drawn on another bank. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House. Clearing Department The major function of Clearing Department is to receive the cheques. If SBP had no office at a place. Bank charges some commission for this function. Before the NIFT. The customer can get the money in his account at NBP. TYPES OF THE CROSS CHEQUES Some specific types of cheques are being entertained in the clearing department of NBP are: i. The clearing operations were commenced by the establishment of first centre at Karachi and now it has been extended to all major cities of Pakistan. which are drawn on some other bank. Local Cheques By local cheques we mean collection of cheques from the banks which are located within the city. NIFT is a joint venture between a six major banks and private sector. Clearing House A clearing house is an association of commercial banks set in State Bank of Pakistan for the purpose of interchange and settlement of credit claims National Institutional Facilitation Technology (NIFT) Pvt. the State Bank of Pakistan (SBP) with efficient controlling staff performed the process of clearing. In House Cheques In house cheques are drawn on one branch of NBP and presented to another branch of NBP such cheques are marked with the transfer stamp. Both can be of different branches of the bank but must be located within the city. which are situated outside the city. It means the presenting bank and the bank on which the cheques is drawn are not situated in the same city. Local Short Credit (LSC) This arrangement has been set up if the customer wants amount in his account on urgent basis. Time Frame for Collection of SC Cheques/ Instruments The customers account are credited in respect of outstation cheques on 4th 0r 5th day from the date of acceptance of the cheques. iii. Local Clearing All cheques and other Negotiable Instruments payable locally is presented through the local clearing system. Time Frame for Collection of LSC Cheques/ Instruments 48 Local Clearing Short Credit Service Local Short Credit Inter City . No charges levied for local collection of cheques or instruments which are collected through local clearing. No Bank charges are recovered from customers for these services. ii.Internship Report ii. iii. Outstation Cheques National Bank of Pakistan By outstation cheques we mean collection of cheques from the bank. Time Frame for Collection of Local Cheques/ Instruments The customer's account credited in respect of local cheques on the next day from the date of acceptance of the cheque. NIFT provides the local and intercity services. iii. iv. Bank then provide service to its customer for those in house cheques when presented and draw on NBP. Bank give credit to the customer's account on the day when clearing settlement takes place. i. Cheques deposited at branch counters presented for clearing on the same day. Short Credit Services (SC) For small cities where there are no NIFT services then branch bank clears the cheque either through mail/ TCS or bank can own provide service and charge commission for providing services. Bank give credit to the customer's account on the day when clearing settlement takes place. TYPES OF CLEARING i. ii. Internship Report National Bank of Pakistan The customer's account credited in respect of local cheques on the same day from the date of acceptance of the cheque. NIFT network is present in: ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Islamabad Karachi Quetta Sukhar Hyderabad Peshawar Gujranwala Sialkot Daera ismael khan Bhawalpur Muzafarabad Faisalabad Rawalpindi Multan Time Frame for Collection of Inter City Cheques/ Instruments The customer's account credited in respect of local cheques on the 2nd day from the date of acceptance of the cheque. The cheque without sufficient balance. limited is responsible for the clearance of the outstation cheques. Its offices are present in all the large cities of Pakistan. Cheques drawn on bank's own branches at outstation centers or outstation other banks both are collected using the inter city arrangements maintain by NIFT network. Inward clearing Outward clearing i. documents numbers is noted. Inward Clearing Cheque received of other parties after clearing are lodged in the system by vouching date. CLEARING PROCESS The process of clearing is carried in two categories. Inter City NIFT pvt. iv. signature. ii. i. signature and verifying other formalities returned to the customer by attaching return memo explaining the cause of cheque return. changing in amount. Return cheques also enter into the return 49 . Crossing cheque stamp if not place it. After posting summary of cheques is prepared and cheques return to third parties through NIFT. Place all the cheque in a bag with special closing and sent to NIFT. Excess of outward clearing over inward clearing produces a net increase in clearing account balance. Entry is done in daily register. In case of outside city clearing Inter-Branch Clearing Stamp is affixed. CHARGES ON SC & INTERCITY CLEARANCE IN NBP On clearance of instruments through SC and inter City three types of charges are deducted from the depositor's account i. Outward Clearing These are the cross cheques deposited by the customers for credit the same amount to its account. The deposits slip is handed over to the customers by branch stamping. causes of return. iii. Commission Federal excise Postage Commission rates are NBP to NBP -------------------------. i. Title of account and account number from deposit slip is checked. Postage rates are -----------------------------------------. and if it is less than minimum amount then Rs. Excess of inward clearing over outward clearing produces a net decrease in clearing account balance. PROCEDURE FOR CLEARING THE CHEQUES Procedure for Outward Clearance 50 . Federal excise rates are ------------------------------------------.0. Add list is being prepared.Internship Report National Bank of Pakistan register by writing dates. ii. and amount. The first case is reffered to as favorable clearing & the second case is unfavorable clearing. 50 and in case if it is greater then greater amount is considered.0.15% NBP to Other Banks----------------.20% ii.75 Rs.16% of Commission On clearing of cheques the minimum amount of commission is 50 Rs. iii. The payee’s amount will credit stamp is affixed on back of the cheque. ii. Before posting following is being performed. Special crossing clearing stamp of next day is affixed. Endorsement stamp of NBP Clearing Stamp The original cheque will be marked with three stamps which are called OBC stamps (over branch clearing stamp) in case of intercity clearing. Entry is done in daily register. Endorsement stamp of NBP Crossing Stamp Next Date stamp At the end of day. ii. commission and postage for the intercity and SC payments. Charge Deduction On receiving the amount through fanfold bank deduct service charges of clearance which are excise duty. date.total amount charged for sevice Credit voucher for--------------.Cheque The customer fills pay-in slip. Vouchering is done on four types of fanfold. This slip is just like deposit slip. Stamping and Scrutinizing The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque received” and give a portion of slip to customer and the remaining portion is attached with the original cheque.commission Pay –in-slip of cheques for----. amount and account number must be written on this slip. NBP receive these amount in form of remittance. Procedure for Inward Clearance All the remittance which are received from other banks then go through the inward clearance which include all the steps for lodging of amount into customer's account.Internship Report National Bank of Pakistan i. Fanfold The drawer bank then verify the payer's account for clearance of the cheque and send back the amount to the presented bank or NBP through the fanfold. Debit voucher for---------------. Pay-in Slip. i. The cheque number. The original cheque will be marked with two stamps in case of local clearing.Federal excise 51 . In case if the customer account is short of balance then the original cheque is returned back to the presented or collected bank with the reason of returning the cheque on the clearing return form. all cheques are counted and then scrutinized in bank-wise and sent to the NIFT for local as well as intercity clearing. 52 Duplicate PO . Main modes of remittance are: • • • • Pay Order Mail Transfer Demand Draft Telegraphic Transfer PAY ORDER Pay order issued from one branch is only payable from the same branch. Recovers charges as per schedule. NBP offers the following forms of remittances. Checks the record that payment has never been made. Gets application for issuing of duplicate PO. Customer's account is credited on the next day of clearance. Signature verified by the officer. It is issued for payment in the same city. Credit of the customers account After deduction of charges the amount is transferred and credited to the customer's account. Issuance of pay order Gets application form from the customer. Remittance Section Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. Cancellation of PO Application for cancellation with original pay order. Gets recovering charges and withholding tax in case of cheque deposit for PO. All pay order must be crossed “payee’s account only”. Makes entry in PO issue register. iii. Recovers cancellation charges. Issues pay order after vouchering all necessary formalities.Internship Report National Bank of Pakistan Pay-in-slip of cheques for-----.postage No any charge levy for local clearing so no vouchering is required for this. It must be noted that Inter-Branch Clearing Advice is not involved because it is payable at the same branch and same city only. Secret test apply on MT. Also the credit balance of customer is transferred from one branch to another branch with the help of this instrument in case the Customer so desire. If the amount is less than 5000 rs then test will not apply. In MT funds are transfer through system within seconds if 2nd branch is online. This type of remittance facility is provided only when the beneficiary happens to be customer of the bank. 53 . cash is debited). If the customer is not he account holder of this bank. cash is debited). which is Rs. Account Holder draws a cheque (it can be in cash as well) of the amount of which Payment Order is to be issued and the amount of commission to be paid by him. MAIL TRANSFER The same application form is used for draft and mail transfers generally in NBP. The amount is directly credited to the beneficiary’s account and as such loss of mail transfer has no concern with the applicant.The mail transfer is not delivered to purchaser but instead the issuing office to beneficiary’s branch on its own risk and responsibility sends it.50 for Account Holder. which is general credit voucher and tells the name of person in whom favour it is to be drawn. Non-Account Holder deposits the amount of Payment Order. It is the quick and safe mode of transfer of funds. A general credit voucher is filled by Bank for commission charges and Account Number is debited (in case of cash. A general credit voucher is filled by Bank for commission charges and Account Number is debited (in case of cash. then firstly he has to deposit the money and then rest of the procedure will be adopted to transfer his money. The applicant desiring to remit the funds by way of mail transfer can either deposit cash or he may ask the bank to debit his account with the cost of mail transfer including bank charges. The participants of mail transfer are recorded in mail transfer register just like drafts while at the paying branch instrument is treated as branch voucher for credit into beneficiary’s account. Issuance Procedure to an Account Holder Applicant fills an application form. Application form submission is same as DD. which is Rs. which is general credit voucher and tells the name of person in whom favour it is to be drawn. to be issued on cash counter along with the amount of commission to be paid by him. An exchange memo is issued to the applicant in case he desires to have some sort of receipt from the bank for his office record.100 for Non-Account Holder. Issuance to a Non-Account Holder Applicant fills an application form.Internship Report National Bank of Pakistan Issues duplicate PO by writing “ink red” pen “Duplicate PO”. The issuer checks the information. get the voucher from cash department. Types Junior draft Senior draft Junior Draft For 1 to 1000/. It is made for both account holders and non account holders. then test will not apply. Inter-Branch Clearing Advice is involved.Rs. Demand drafts are marketed as a relatively secure method for cashing checks. account number of a drawer. place where the DD is drawn. senior draft is made. Particulars of DD Date Name of the office on which it is drawn Name of beneficiary Amount in words and figures Bank exchange rates Signature and address of the applicant Issuance of Demand Draft The customer on standard DD application form makes request. If the amount is less than 5000/. The DD of required amount is prepared. amount mode of payment.Rs. All information such as name of beneficiary.Internship Report National Bank of Pakistan Funds transfer only same branch of the banks. junior draft is made. It is necessary that the customer must have the Branch Code of the host branch. Federal excise duty is charged. Secret test apply on DD. Senior Draft For 1000 to 10 million Rs. 54 . etc. cash/cheque/debit authority. DEMAND DRAFT A method used by individuals to make transfer payments from one bank account to another. Commission as per schedule of charges is charged. After the customer has made payment by cash/cheque. name of place. signature with name and address is filled. Recovers cancellation charges. bank obtains application in writing along with original DD. through their account for settling inter branch transactions. 55 . Informs the drawee branch of the loss of DD and advise them to mark caution against payment if presented. Inform the drawee branch regarding cancellation and ask for Inter-Branch Credit Advice (IBCA). On the receipt of IBCA adjustment is made. Cancellation of DD If any customer wants to cancel DD. its duplicate can be issued at the request of purchaser after obtaining indemnity bond on stamped paper of appropriate value. Verifies the signature of applicant. Application form received from purchaser and verifies the signature. Checks the DD account into system of payment made or not. Payment is made from Suspense Account DD cancelled after recovery of cancellation cheque is per schedule charges. This signature should tally with the signature of DD application form. Entry of DD Entry is made in DD issued register as well as on the system on which following entry is passed. Issuance of Duplicate DD In case draft is lost or destroyed by mistake. this account will be debited with the amount of draft paid.NBP does not pay before the receipt of relative advice. After necessary checking. In case the draft receipt is not received the draft will be paid “ex-advice” duly entered in the ex-advice register and entry in said register will be marked off on receipt of relative advice. Dr: Cash/Customer’s A/C Cr: DD issued Cr: DD issuance charges Drawing branch of bank will give credit to the drawee branch on same date the draft is issued. Marks cancellation in DD issued register. the drawee branch will inform the branch about the status of DD whether it has been paid or still outstanding. On the receipt of relative advice the drawee branch will credit the amount into their draft payable account and each time draft is paid.Internship Report National Bank of Pakistan The DD in NBP is manually prepared. This is done to cover the risk of double payment by mistake. is required. If the bank finds any account credited to the person’s account against TT. bank prepares a voucher for this payment against that TT. The amount of Telegraphic Transfer should be written on the form. An advice is given to the customer but application is filled in the record of the bank. bank checks the statements of that person. Issuance and Payment of Telegraphic Transfer Incoming When a TT is received then an entry is passed in TT incoming register after verifying the test. and other charges as per applicable rate. Procedure of application and vouchering is same as a DD. 56 . For telegraphic transfer. Recovers commission. TELEGRAPHIC TRANSFER It is the message. fax/telex. which is to be credited and name of customer. the payment can be made in case or by cheque or by debiting the customer’s account if he is the account holder. When a person comes and wants to encash his TT. If the amount is less than 5000 rs then test will not apply. The signing officer must check all the particulars before signing. It is mostly cleared through main branch of the same area. Apply test on the TT message and appropriate codes and instructions such as advice & credit or advice & debit. which is sent from one branch to another on the order of payer to payee through wire. The customer then presents that certificate to the cash counter and collects money. Secret test apply on TT. The entries at issuing office are recorded in telegraphic transfer issued issued register while at the other end it is entered in the tt payable register.Internship Report National Bank of Pakistan Writes on the face of duplicate DD in red ink Duplicate in lien of original DD No--dated ---reported lost. It is one of the quickest means to transfer fund through the use of Telex/fax/internet or cable. The amount is transferred to beneficiary’s account in the other bank. Issuance and Payment of Telegraphic Transfer Outgoing Application form is filled by the client in whom the name and account number of the beneficiary. It is quickest way of transfer funds from one branch to another of the same bank through telephone. 150/. Credit extensions are the most important activity of all financial institutions. 100/. However.400/- ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank.100/0.MT. 250/16% of commission Rs. it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. 100/. at the same time. 57 .50/0. It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms.10% minimumRs.05% minimumRs. The Credit Management Division of Head Office directly controls all the advances. 75/0.(flat) Rs. PO Postage charges on MT & DD only Pay order For A/C Holder For Non-A/C Holder Issuance of Duplicate PO For A/C Holder For Non-A/C Holder Rs.(flat) Rs.4 % minimumRs. 50/. 200/Rs. because it is the main source of earning.000/From Rs. As we known bank is a profit seeking institution. The major portion of the profit is earned through this department.000 to 500000 From 500000 to 10000000 Issuance of Duplicate Draft For A/C Holder For Non-A/C Holder FED on DD.Internship Report National Bank of Pakistan Remittance charges Exchange on DD/MT/TT From 1 to Rs.100.(flat) Rs.(flat) Rs.100. The mark-up or interest is calculated on the total amount disbursed and requires to be paid before the date of final adjustment. iv. it depends on the nature of the case in review. individual. iii. limit and period. Capacity The ability of borrower to repay the loan when due. before giving the loan. Any person. but if non liquid is used then it is risky to given loan. bill of exchange. Cash Finance In this mode of financing the borrower is allowed to make withdrawals of funds as he requires. iii. Condition The economic condition of the borrower is determined. ii. they can be easily convertible in cash. Demand Finance One time disbursement of the whole amount sanctioned. It may consists of stocks bonds . The economic conditions of the borrower in and outside the country effects the repayment of loan. Running Finance 58 . moral reputation and etc. Character It is based on the borrower willingness to repay the obligation. as the limit for the credit allows. If condition is favorable then loan is given otherwise vice versa. bills of lading. ii. habits. TYPES OF ADVANCES i. company. The borrower ability to repay the loan is assessed by the office so that he will be able to repay the loan in future. If assets held by the borrower are liquid. business nature. Capital The officer assesses the capital of the borrower. This finance if normally borrowed by small traders or individuals for their petty matters involving cash transactions up to rupees three hundred thousand maximum. but the total amount outstanding cannot exceed the limit sanctioned. the bank has protect himself from any discrepancy in the future. The calculation of mark-up/interest is based on the number of days a specific amount is withdrawn. Regarding the amount. group. firm and all others can achieve this Mode of financing. The loan officer sees the family background mode of living. They increase the ability of the borrower to obtain the funds from the bank.Internship Report National Bank of Pakistan PRINCIPLES OF LENDING i. The markup/interest is calculated on the amount outstanding on his account. etc. Collateral It is collateral security. v. Short term loans b. to 59 . Syndicate (project) loan e. Debt Equity Management Excessive reliance on debt. Working capital loan d. Monitoring CRITERIA CHECKED FOR LOANS Major areas requiring focused attention of the analyst are: Financial Condition Which is reflected in the trends of: ∗ ∗ ∗ ∗ Net sales Gross sales Operating profits Net profits (at least for the last 3 years) Structural Liquidity It refers to the extent of liquidity usually available in the business. Running finance is provided where the amount goes beyond rupees three hundred thousand. rather than plough back of profits or injection of fresh equity. or which is the routine requirement of the borrower based on the nature of his periodically maturing liabilities. Industry/Business Of Operation The banker has to check that in which industry or segment of market the loan is being given this is important because if there were a recession in that industry for decades then it would not be feasible to invest in such a business. Security against running finance is that which is easily convertible in to cash and bank kept 25% margins with it. Long term loans c. it is called a "loan". security is taken it is called "clean loans" Types Of Loans The credit department of NBP has providing the following types of loans a. Loans When a customer borrows a fixed amount from a banker repayable either in periodic installments or in lump sum at a fixed future time. For example if they feel satisfied by investing in ICI. this account is opened is made operation in his favor. iv. The mark-up/interest is calculated the same way as in case of cash finance. Certain traditionally stable industries are in Pakistan in which NBP feels satisfied while investing.Internship Report National Bank of Pakistan To assist a large-scale business operator to carry on his day to day requirements of liquid funds. When bankers allow loan to their customers against collateral securities they are called secured loan and when no collateral. The bank provides the following two types of mortgage. His account with bank or with other banks. there must be something else to call back upon. Mortgage Transfer of interest in movable property for securing the payment of money lend on existing or future liability. skill and experience. Asesst Management Asset management involves the analysis of how productively the assets of the company are being used. Assets and liabilities. that is. Sales and profitability can be measured with this. If the management is aggressive and adoptive to the new changes then it is most likely that the banker may receive the loan back on due date Securities In case the borrower is not in a position to meet his obligations. security is an insurance against calamities. Trade experience. Management Before giving loan NBP also checks whether the management have the depth. An interview with him will be necessary to elucidate or supplement the information that may have been collected. His financial statements and income tax returns. The bank provides the following securities to the customers. In case of cash finance the customer have to give the same amount of money to the NBP as a security for which it takes loan.Internship Report National Bank of Pakistan maintain a healthy combination of debt and equity is thought with danger because ultimately the debt servicing requirements place a heavy burden on its liquidity thereby its survival. Registered mortgage Equitable mortgage Registered mortgage 60 . inquiries will have to be made about: ∗ ∗ ∗ ∗ ∗ ∗ His business. So bankers take securities to have a resource to them to guard liquidity. Borrower’s Credit Worthiness In order to get a complete picture of the borrower’s credit worthiness. and etc. ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Title deed Non encumbrance (NEC) pit form (in case a constructed hose) Valuation certificate Affidavit Mortgage deed Personnel guarantee of mortgagor Power of attorney Legal opinion.Internship Report National Bank of Pakistan Registered mortgage is provided on the residential property. raw plot. When the 61 . it is defined as actual delivery of movable property to lender as security for a loan. raw plot. Banks examine all these reports. etc. customs. etc. Equitable mortgage Equitable mortgage is provided on the residential property. commercial industrial property. In this type of mortgage hypothecation of stocks involves. ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Title deed Non encumbrance certificate (nec) Pti form (in case a constructed house) Valuation certificate Affidavit Memorandum of deposit of title deed Personal guarantee of mortgagor Power of attorney Legal opinion In this mortgage a charge form bound the customer for any legal action in case of nonpayment. and if they are correct then issue the mortgage to the party. commercial industrial property. Pledge A pledge is an “a class security given to customers for stocks ware house. The bank examines these reports to see that the property they want to mortgage is registered and is not already pledged. A party can get registered mortgage if they provide the following documents to the bank. The bank also calculates the value of the property and the legal opinion of the customer in case of non-payment. Sanction of loan Preparation of credit proposal After formal application for the credit the party submits approval. He gets the party’s credibility report confidentially from the other commercial banks. customer verification the manager done the following tasks 1. In the case of pledge is assessed by the manager while in case of new party manger checks from where the party is financing for their business Prepare the Proposal about the customer 62 . the securities provided by the debtor to the bank are evaluated by measuring their worth. He checks the balance sheet and income against the assets in the company. when full payment is made the stock is released. which provides the following information to the banker. The bank manager evaluates the documents provided by the borrower.e. first of all has to undergo the filling of a prescribed form. The manager of the bank also examine the project violability. Prepare the about the customer 3. Then he doses the ratios analysis of the company. Purpose of loan Details of all firms or companies associated with business Name of proprietor/ partner/directors Accurate and up-to-date balance sheet and profit and loss statement of last two years of business Market report of the borrower repute Report from the bank if borrower has maintain his account with the bank CIB report Full details of existing limit and actual liability against the business Particular about the foreign exchange deposits and bills given by the borrower to the bank Memorandum and article of association in case of limited company Audited report of balance sheet and income statement of last two years After checking all the securities.Internship Report National Bank of Pakistan customer makes the payment of the loan in full he can back his mortgage property from the bank i. PROCEDURE OF SANCTION OF LOAN Any individual or company. who wants loan from NBP. Along with the application borrower also submits the documents required by the bank. If the party is involved in the export and import business then the data of the last three years of this business is considered. He also measures the percentage of owner’s equity. For this purpose borrower can use coarse paper or the form provided by the bank. Preparation of credit proposal 2. Internship Report National Bank of Pakistan After preparing the proposal manger prepare the report about the customer. 63 . Report contains the following information ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Name of the company Date of establishment Address Nature of business Branch office Worth of business Date Banker’s opinion Head cashier opinion Branch manger opinion Partner. profit and loss Deed of partnership Partnership letter Turn over Net profit Personal property of partners Bank balance of partners Advance payment of suppliers Particular of machinery installed in the factory through financing In case of partnership business following information are included in the report Incase of corporation/limited companies the following information are included Incorporation and commencement of company Sales offices Capital information Directors and their contribution to capital Balance sheet with explanation and evaluation Net worth of the company Sanction of Loan If the limit of the loan lies within the power of manger then he sanction the loan otherwise manger with the covering letter along with all necessary documents sends it to the concerned sanctioning authority. their share in capital. ii. One debit and one credit voucher is prepared At the end of the day these vouchers are collected and recorded. Debit Voucher Credit Voucher Debit Voucher 64 . Utility bill. As far as the expenses are concerned. Voucher is a system. water and gas bills Medical expenses (reimbursed) Voucher System Voucher is written authorization sued in approving a transaction for recording and payment. they include the Heads of salaries paid to confirmed employees of bank Wages paid to employees that are on contractual basis Rent of the building Lease installment Insurance premium paid to insurance company for the insurance of vehicles and cash in safe and counter. electricity.Internship Report National Bank of Pakistan ACCOUNTS DEPARTMENT The main function of account department of NBP is to maintain general ledger accounts and after the business hours the function of the account officer is to close books. It is prepared whenever A transaction takes place in any department of the bank. which takes place during the business hours. There are many other important functions performed by accounts department of NBP so broadly they can be categorized in three heads • • • • Routing of expenses vouchers Preparation of daily activity reports Preparation of weekly and monthly statements Preparation of statements for tax purpose ROUTING of EXPENSES Vouchers of all expenses and material purchases are routed out through this department. which consists of courier. which is generally designed to provide strong internal control over the transaction. In bank two vouchers are used i. Account No. When a depositor deposits any amount in his account because it is the liability of the bank therefore credit voucher is prepared. Any income received by the bank e. When Account holder transfer money in his account then bank deduct charges on intercity and SC clearing. MT.g .e. The format of the debit voucher includes: Name of the branch Date Branch No. Debit vouchers are used in three cases: Whenever any expense is incurred For the preparation of two negotiable instruments i. There are three types transaction in which credit vouchers are used. ii. For identification they are differentiated by using different colors. iii. For the preparation of PO Salary Structure Salary included i.transport allowance and medial allowance. June and December .e. Accounts department used debit voucher mainly for expenses while the other two purposes of debit voucher is used by the remittance department. Bonuses These bonuses are credited after every six months i. Transaction code Amount and other details (Narration) Credit Vouchers Different types of credit vouchers having different colors and format are used by the bank. The account of the customer is debited with the amount deducted for services and debit voucher is prepared. Provident fund 65 . bank draft. DD. Allowances Allowances included house allowance . These are first and second profit bonuses and are equal to one month’s basic salary.Internship Report National Bank of Pakistan Different types of debit vouchers are used by the bank as an evidence of the transaction. title and number of vouchers is written on voucher must be cover authorized signature. advices both manual as well as computerized obtained for posting in the system of each department. It includes the details of the following: Loan transactions. All the credit. Fixed deposits transactions. general ledger transactions Foreign currency related transactions. All vouchers and statements signed and 66 . document number and amount appearing in words and figures are agreed with the information appearing in the computerized record.3%. These statements are generated on weekly basis for the purpose of sending it to Head Office. Following procedure is followed in checking daily activities carried out in different departments of the branch. All the above vouchers assist in case of any enquiry and audit. transfer of payments. date of vouchering. It is checked whether or not the account number. DAILY ACTIVITIES REPORT The main function of this department is to check daily transactions whether cash.Internship Report National Bank of Pakistan Provident fund is provided to each employee on his retirement. All the vouchers and advices are further sorted in ascending and descending order for the sake of convenience in checking and tally information. PREPARATION OF STATEMENTS Second major function of accounts department is the preparation of various statements. debit and billing voucher bunched separately. In case of changing or discrepancy informed to the concerned department. billing. contribution by employer and employee is 8. These statements are: Weekly statements: These weekly statements are sent first to NBP head office Karachi. These also include: Statement of affair Deposit and advances position of the bank Monthly statements: These monthly statements are sent first to NBP head office Karachi and then these statements are sent to head office in consolidated form. and clearing of all the departments. The name of the branch. instrument number. All the vouchers. These include: Provisional statement of income and expenses. years Excise duty balancing Customers internal account statements Computer complete back up Quaterly statement size wise FCY interest reporting 67 .5. These statements are prepared on monthly basis and also sent to Head Office (Qatar). This statement adjusted for accruals and pre-payments.2.4. Monthly Balance Sheet and Income Statement Comparative Statement In third and last step the following functions of accounts department of NBP are described as follows: Approval of daily expenses voucher SBP balance Tax returns Budgeting Forward cover fee Debit balance calculation.3. All vouchers prepared by different relative departments on computer. Pay order /telegraphic commission transfer Deposit entry Depreciation Result/budget Head office report Trail balance /fax position Commitment return Source and uses Activity report Monthly assets and liability Liquidity 1.Internship Report National Bank of Pakistan approved by manager accounts or who has authority to sign on behalf of the bank and whose signature appears in one of the bank’s book of specimen signature of a person who has authority to sign internal vouchers and record extents of its authority will be made by the counter manager. Verify correction of total of all into departmental entries in departmental journal. These statements are generated for the purpose of submitting to Central Board of Revenue. ACCOUNTING PROCEDURE IN NBP: 1. Accounting department receives the departmental journal from the departments together with all vouchers.5% For other parties------------5% Data Entry The next task after receiving the data is to enter that data in to a computer. 4. The floppy disk is directly inserted in the computer. suppliers and other parties providing various services. This program is designed in away that it demand “Hash Value” value before opening the floppy for further action this value serve the purpose of password or pin code send by the branch on entering that value the data enter in to the computer.Internship Report FCY interest checking Services charges A/c to be dormant Letters to customer National Bank of Pakistan Classification of deposits Lists of deposits A/c opening and closing Staff loans A/c blocked and unblocked Monthly resident and non resident Zakat calculation TAX PURPOSE STATEMENT The department also prepares two statements for the purpose of paying tax on monthly and annual basis. The rate of withholding tax is as follows: Suppliers-----------------------.3. The program in used is based on “COBOL” language. Various departments use debit and credit vouchers for regarding the transactions. The operator of that terminal takes the data from the computer and converted it in to a text file through that terminal the data finally goes to the central computer. 3. Sort vouchers into general ledger a/c order debit separately from debit for each 68 . 2. These are: Statement of deduction of income chargeable under the head salary under Section 53 (Tax deducted at source) Withholding Tax from the payments made to vendors. This computer is attached with the terminal of central computer. Government provident fund: fund maintained by government institutions Recognized provident fund: fund maintained by private organizations fulfils the conditions maintained by law. There are three types of provident fund granted by the organizations. EOBI Funds and Utility Bills are deposited. Agriculture Tax. Place general ledger includes leaf binder in chronological order.Internship Report account. Unrecognized Provident Fund: fund maintained by private organization which has not been granted recognition by law BENEOVALENT FUND 69 . Date and sign general ledger and obtain signature of an officer . Write total obtained from machines list for each contingent accident in general ledger and up data balances. National Bank of Pakistan 5. BILLING & GOVERNMENT RECEIPT/ PAYMENT DEPARTMENT In this department all types of Government receipts i. Government Fees. Taxes. This department is performing following functions • • • • • • • • Payment of Provident Fund Payment of Benevolent Fund Payment of pension Collection of utility bills Collection of property taxes and Challans Collection of dues of education institution Payment of salaries Payment of zakat The investment by the NBP in the provident fund for the benefit of their employees in 2008 is Rs. 6. 7. Prove debit and credit totals to department journal total. 17738992/- PAYMENT OF PROVIDENT FUND Provident fund are maintained by many organizations for the benefit of their employees. 8507300/.and in pension schemes reached to Rs.e. This way NBP is serving great job of revenue collection and charges commission for providing services. Revenues. From departmental journals add all debits and all credits for each general ledger account and write total for each accounting relative account and extend new balances. 8. The commission on each type of bill is Rs. Death . The GOP has been introduced two types of pension are given to the employees on retirement on the basis of the services which they have rendered.Internship Report National Bank of Pakistan The Funds are utilized for the relief of Government servants and their families by giving financial assistance to the families of deceased Government servants. Remarriage Types of Pension i. The date up to which pension is payable may vary depending upon the employee services. COLLECTION OF UTILITY BILLS NBP as an agent of the SBP collects bills from the general public and charge commission for the services rendered. 8/. GOP has been introduced pension for their employees who are working in the State owned Institutions. PIA etc Provincial Pension : granted to the employees who work under the government of Punjab. made regularly to a person who has fulfilled certain conditions of service. It can be payable for Life. e. Recently GOP increased the pension of central employees by giving them an arial of 20% and 15%: • • 20% increase: For employees who have retired before 1999 15% increase: For employees who have retired after 1999 70 . reached a certain age. It is a payment. PAYMENT OF PENSION Pension is the Post-retirement benefits that an employee might receive from some employers. Employment based Pension State Pension Employees Old Age Benefits Employment-based pensions A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. not wages. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. iii.g WAPDA. The branches collect the utility bills and the proceeds are then send to head office through MT. WASA. Retirement Pension: refers to pension granted upon 25 year of services Superannuation Pension: refers to pension granted upon 30 years of services State pensions Many countries have created funds for their citizens and residents to provide income when they retire.per bill. Central Pension: granted to the employees who are employed under the federal government. to Government servants invalided out of service. ii. Internship Report National Bank of Pakistan Defensive Pension: It is given to the employees who work in forces e. PIA employees. Police Railway Pension: It is given to the employees who work in railway under the three head: • • LHR: Lahore Railway Head WS: Work Shop Head • RHQ: Railway Head Quarter Employees Old Age Benifit Non government employees having 5 or more than 5 employees grant EOBI funds to their employees. 71 .g. Navy. The contribution towards the fund by the employee is 5% of the basic pay scale of employee and by the employer is 1% of the basic pay scale. Army. COMMERCIAL & RETAIL BANKING O M M E R C I A L E T A I L A N K I N G In this section products offered by NBP are discussed: • Premium Aamadni Scheme • Premium Saver Scheme • Accounts Department • President Karobar Scheme • Saiban Scheme • Advance Salary Scheme • Cash Card Scheme • Cash n Gold Scheme • Kisan Dost Scheme • Kisan Taqat Scheme • Pak Remit Internship Report National Bank of Pakistan COMMERCIAL & RETAIL BANKING National Bank of Pakistan serving following product lines: Premium Aamdani Scheme Unprecedented Safety - Unprecedented Return Monthly Income Scheme A monthly income scheme introduced by National Bank of Pakistan for investors as well as for general public. Incentives are available for investors providing finance facility against these certificates and also allowed to customers to convert existing deposits into National Bank Premium Aamdani Certificates. • • • • • • • • • Earn up to 11% p.a. Minimum deposit of Rs. 20,000/Maximum deposit of Rs. 5,000,000/Investment period is 5 years Free Demand Draft, Pay Order and Cheque Book Convenience of NBP online Aasan Banking (for online banking customers) Free NBP Cash Card (ATM+Debit) Running finance facility up to 90% Profits paid on monthly basis Period 1st year 2nd year 3rd year 4th year 5th year Profit Rates 7.50% 8.50% 9.50% 10.50% 11% Premium Saver Scheme your's saving reward 74 Internship Report (PLS Saving Account) National Bank of Pakistan • Earn up to 7.25% p.a. • Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 300,000/-* • Free NBP Cash Card (ATM + Debit) • Convenience of NBP Online Aasan Banking (for online banking customers) • Two debit withdrawals allowed in a month & no limit on number of deposit transactions • Profit calculated on monthly and paid on half yearly basis President's Karobar Scheme Mera Apna Karobar National Bank of Pakistan is providing financing under President Karobar Scheme with the cooperation of government of Pakistan. The purpose of this scheme is to reduce unemployment from the country. Main features are as under • • • • • • • • • Minimum down payment, 10% of asset price (5% for PCO & Telecaster) Tenure of loans 1 to 5 years (for PCO 2 years) Grace period 3 months Maximum loan amount Rs. 200,000/Age 18-45 years Mark-up (variable) 1 year KIBOR + 2.00% p.a. The customer will pay markup @ 6% p.a., rest will be borne by GOP* Life & disability insurance paid by GOP NBP’S loan available for: Utility Store, Transport PCO/Tele-centers Procedure to Apply 75 The application form and all the relevant papers of the customer will be checked by the Branch staff and if found complete. In case of photocopy or downloaded form. Each form will cost Rs. Purchase Order in favor of vendor will be issued and a copy of the same will be given to the customer Delivery of the financed asset will be made directly to the customer by the NBP selected vender • • • • • • Saibaan Scheme Open the Door to Your Dream Home (Home Financing) National Bank of Pakistan lending for construction of home to general public as well as employees of government and non-government institutions. application processing will commence If the case is approved then the customer will be informed accordingly and will be advised to deposit the Down payment and fulfill all the other product specific formalities Upon fulfillment of all the details and approval of the loan by the competent authority. resale and foreclosure related issues. Main features of this scheme are as under. Photo copy of the form will also be accepted. Application form could also be downloaded from the NBP web site. fee. Variable Discount Rate. NBP provide markup choices to its consumer i. Fixed Rate. 5. Mark Up Rates Variable Rate Option: SBP Discount Rate with (+2%) with12 months re-pricing 76 . Loan available up to a maximum of Rs. Limited to areas where there are no documentations. so to protect the bank’s interest. • Finance is available for: Home Purchase Home Construction Home Renovation Purchase of Land + Construction • • • • • Period of repayment ranges between 30-20 years. form fees will be charged at the time of application submission Branch to provide details of the scheme along with the required documents to be submitted with the application form Customer to submit the application form along with all the required documents as well as the verification and the processing fees.e.Internship Report National Bank of Pakistan • Customer to visit any NBP branch to obtain loan application form and scheme details. 15-20 million. Minimum approval and disbursement timing. It's salient features are. Local & other bodies who are maintaining their Salary A/Cs at NBP. It's hassle free acquisition with no prior formalities and easy availability in a short turn round time are attributed as the most distinguishing features of the product. This was only possible due to its swift growth and remarkable loan disbursement of over 138 billion. 1 Million Financing between Rs. 4 Million Rs. Autonomous. the leading personal loan product of the country. Employees can avail up to 20 net take home salaries with easy repayment installments. 6000 Eligibility • • • • • • Balance Transfer Facility (BTF) Must be Pakistani Resident (National) Aged between 21 and 65 years at the time of application/disbursement of loan Salaried Person. Service duration: Two years for salaried class Three years for self-employed/business class. Semi Government and Autonomous bodies receiving salaries through NBP accounts Eligibility Permanent Employees of Govt. For Others : Financing below Rs. 1000 Rs.irrespective of financing amount. is maintaining its inimitability ever since it was launched..Internship Report National Bank of Pakistan Processing Fee Government Employees: Rs. Advance Salary Scheme Personal Loan Take up to 20 times of Your Take Home Salary NBP Advance Salary . • • • • Easy installments of 1 to 60 months at your choice Take upto 20 advance salaries Quick processing and fastest disbursement The product is for permanent employees of Government. 500/. 3000 Rs. Self-employed professionals and businessmen Property located in NBP approved localities. 1 to 4 Million Financing above Rs. 77 . Semi Autonomous.. The product is offered countrywide. Semi-Govt. Repayment 5 years (60 months) Period Advance in terms of # of net take home Up to 20 net take home salaries salaries Markup Rate Processing Fee SBP Discount Rate + 5% 1% of Loan Amount Verification Charges Rs 500/Life Insurance Documentation Charges Contact Remaining Service Age Debt Burden Minimum net take home salary No Insurance of any kind. 490.000/Employer will provide undertaking that borrower’s Salary and end of service benefits will route through his/her Salary A/C maintained at NBP during the tenure of the loan and his/her end of service benefits are at least equal to the amount of Advance Salary required. at actual Your Salary disbursing NBP Branch. At the time of approval and disbursement the applicant’s remaining service age should be 6 months after maturity of the loan 50% no minimum take home requirement Cash Card Scheme one card does it all ATM + Debit Card NBP Cash Card is a 24-hour direct access ATM/ Debit card to bank account. Hypothecation of Consumer durables owned by the borrower. Three (3) Undated Cheques Security Max.Internship Report Repayment Maximum Loan Amount National Bank of Pakistan Direct deduction from Salary A/C Rs. which lets pay directly from the account as an alternative payment method to cash. The transaction is 78 . profitable trading Financing Facility for Stock / Retail Investors • • • • • • Comfortable and secure environment for trading NBP financing at very easy terms requiring minimum documentation Minimum turn around time No security requirement from the customer except for the customer's equity Customer's equity freely available for investment. Utility Bill Payment etc. Enable to make purchases round 4000 POS (Merchants) Countrywide including 2500+ POS in Karachi.Internship Report National Bank of Pakistan authorized and processed by entering PIN. No Card Issuance Fee for first 12 Months Investor Advantage Scheme easier financing . Balance Inquiry.per day Account Balance Enquiry Mini Statement (Only at NBP ATM) PIN Change facility (Only at NBP ATM) Advantages • • • • • • Customers don’t need to carry a lot of cash with you every time you go out. • • • • • • Use it as an ATM in any of the ATM’s in Pakistan Use it as Debit Card in any of the outlets with ORIX POS machine Cash withdrawal up to Rs. Account Information on tips (like: Mini Statement.000/. 1-Link & M-NET ATM’s across the count. Eligibility 79 .) Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs. Secure and Safe transaction. The NBP Cash Card holders are able to transact at any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP. Equity acceptable in cash or approved share. 20. Weight and quality of gold to be determined by NBP's appointed schroffs Kisan Dost Scheme Agriculture Made Easy Agriculture Farming Program 80 . The main features are: • • • • • • • Facility of Rs. 10. 2345) Start trading through comfortable & friendly trading centers establishment for you (In collaboratino with Taurus Security Limited a subsidiary of NBP) Trading limit available for the amount of equity + bank financing. Application Procedure • • • • • Cash n Gold Scheme encash and meet your needs Ready Cash Against Gold With NBP's Cash n Gold. 000/-against each 10 gms of net weight of Gold Ornaments No maximum limit of cash Repayment after one year Roll over facility No penalty for each repayment Rate of mark-up 13% p. deposit equity as cash in the margin financing account at the bank.Internship Report • • • • • National Bank of Pakistan Pakisani National with vaid computerized national ID Card Over 21 years of age An account with NBP designated Branch Equity in the form of cash or NBP approved shares No default with any financial institution Obtain facilty application form the NBP Marginal Desk at designated branches Fill in the application form and submit it to the branch On application approval.a. Alternatively NBP approved shares can also be deposited in the NBP CDC Account (CDC A/c No. provide facility for ready cash against idle gold jewelry with no minimum limit and provide extra benifit. for landless farmers against personal guarantee Financing available against pass book. for cold storage. National Bank of Pakistan is lending farmers for development of agriculture sector of the country under certain terms and conditions. • • • • • • • • interest @ 14. micro loan. 500. for construction of fish pond. gold ornaments and paper security Loan facility on revolving basis for three years (renewable on yearly basis without documentation and approval) Kisan Taqat Scheme promise of prosperity Dairy Farm Scheme National Bank of Pakistan is providing loans for the dairy farms and for the development of the livestock and dairy farms.5 percent per annum Quick & easy processing Delivery at the farmer’s doorstep Technical guidance to farmers Wide range of financing schemes for farmers Finance facility up to Rs. development purposes. NBP provide loan to farmers for production. for purchase of agricultural instruments. for development of livestock and farming. • • • • NBP facilitates with livestock experts Less documentation and easy to repay Available at the next door step Scheme is available in more than 50 branches of NBP PakRemit Scheme NBP's Internet Based Home Remittence Service Product Information 81 . for purchase of tractors. for construction of godwon. for mil processing. for installation of tube wells. bio-gas plants.Internship Report National Bank of Pakistan National Bank of Pakistan is lending in agricultural field. residential/commercial property.000/. pakremit. Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar account with one of NBP’s Foreign Exchange Branches. While funds are credited directly to beneficiaries maintaining accounts with NBP. www.S. The whole process takes a few minutes. Remitters in USA can log on to our user friendly website. if requested by the remitter.for Rs. Civil commotion.S.com and after completing the registration process. Pay order or demand draft can also be couriered directly to the beneficiary’s office or home. Click here for details of NBP Foreign Exchange Branches. The service is fully secure with advance encryption application and is available for use 24 hours a day. Strikes. are able to remit funds. 20/. bank or a US Dollar credit or debit card in order to remit funds through this channel. Process: • • Remitters log on to www.pakremit. One must have a valid US Dollar account with a U.000/. Cyclones etc) provided that the insured is not directly involved in these activities Coverage of Rs.com and easily remit funds to Pakistan from the comfort of their homes. a pay order or demand draft is couriered to other banks for their customers. Earth Quake. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well.In case of Accidental Death (Including death due to Riots. residents for sending money to their family and friends in Pakistan. having an account with any bank in Pakistan.Internship Report National Bank of Pakistan Pakremit is an internet based Home Remittance Service. including NBP. 7 days a week. • USPs ( Unique Selling Propositions) Convenient and Fast Reliable and Secure Available 24 x 7 NBP Protection Shield Scheme Life is Precious Personal Accident Insurance Insurance Coverage. This service is available to U. Acts of Terrorism and Natural Calamities like Flood. 200.per month 82 . Funds in Pak Rupees can be sent to beneficiaries. in a matter of minutes. Cyclone etc. Flood. and whose premium is deducted & details are reported to the selected insurance company by NBP. unfortunate or a harmful event by chance or apparent cause. aged between 18 years and above.Internship Report National Bank of Pakistan Accident means unintentional. Insured Person means a National Bank of Pakistan PLS account holder. Accident Riots Civil Commotion Strikes Acts of Terrorism NBP PLS account holders 18 years and above Eligibility NBP Student Loan Scheme Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget speech. Accidental Death means death due to accidental injuries. 83 . Features • • • • • • • • • • • • No documentation No medical required Premium Auto Debit facility & choice of deactivation Coverage includes death due to: Natural Calamities e.g. Earthquake. but not illness. Principal Sum means the amount stated in the Policy’s Schedule of Benefits as respects each Insured Person. a STUDENTS LOAN SCHEME (SLS) for Education was launched by the Government of Pakistan in collaboration with major commercial banks of Pakistan (NBP. Policy means Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer. The Scheme is being administered by a high powered committee comprising Deputy Governor. Technical and Professional education within Pakistan. Eligibility Under the scheme the students are eligible to apply for loans provided: He/She has obtained admission on merit through normal course/procedure in the approved Universities/Colleges of the public sector mentioned hereunder. Presidents of the commercial banks and representative of Ministry of Finance. UBL. 84 . which ever is earlier. Repayment The maximum period of repayment of loan is 10-Years from the date of disbursement of first installment. The borrower shall repay the loan in monthly installment after six months from the date of first employment or one year from the date of completion of studies. He/She is unable to pursue studies due to financial constraints.D Not exceeding 21 Years Not exceeding 31 Years Not exceeding 36 Years He/She has secured 70% marks in the last public examination. Government of Pakistan. MCB and ABL). He/She falls at the time of admission within the age bracket of:For Graduation For Post-Graduation For Ph. State Bank of Pakistan. Under the Scheme. financial assistance is provided by way of Interest Free Loans to the meritorious students who have financial constraints for pursuing their studies in Scientific.Internship Report National Bank of Pakistan HBL. FINANCIAL ANALYSIS I N A N C I A L N A L Y S I S In this section topics are: • Horizontal Analysis • Vertical Analysis • SWOT Analysis • Strength • Weaknesses • Opportunity • Threats . It is a process which involves reclassification and summarization of information through the establishment of ratios and trends. The overall objective of financial statement analysis is the examination of a firm’s financial position.6%) 43. Vertical analysis In vertical analysis of balance sheet the percentage of each item of statement is calculated to total and then the change in the percentages is checked with in years.2% (6.3% 86 .Internship Report National Bank of Pakistan FINANCIAL ANALYSIS The financial statement of any organization shows the results of its operation and its position in business.33% (20.73% 7. Horizontal Analysis of Balance Sheet 2008 ASSETS Cash balances with other treasury banks Balances with other banks Lending to financial institutions Investments Advances Operating fix assets Deferred tax assets Other assets Total assets LIABILITIES Bills payable 38344608 17128032 170822491 412986865 24217655 3204572 44550347 817758326 2008 10219061 37472832 21464600 210787868 340677100 25922979 30994965 762193593 2007 7061902 2. Horizontal analysis Through this analysis we can check that what are changes with in years in the items of balance sheet and profit and loss account.92%) (19%) 21. Last year become base for next year.3% Percentage 44. And change can be easily analyzed.7% 106503756 94873249 2007 Percentage change 12. 5% (55.2%) (11.5% 41% 87 .75% (11.5% 10.Internship Report National Bank of Pakistan 40458926 10886063 272% Borrowing from financial institutions Deposits & other accounts Subordinated loans Liabilities against assets of leasing Deferred tax liabilities-net Other liabilities Total liabilities Net assets 624939016 25274 591907435 33554 5.93%) REPRESENTED BY Share capital Reserves Unappropriated profit 2008 8969751 19941047 52456204 81367002 2007 8154319 15772124 45344188 69270631 47067023 Percenta ge 10% 26.6% (24.43% 15.7% 17.93 %) Surplus on revaluation of assets 21092216 102459218 11633765 4 Horizontal Analysis of Profit And Loss Account PARTICULARS Mark-up/return/interest earned Mark-up/return/interest expenses 2008 60942798 23884768 2007 50569481 16940011 Percentage 20.7%) 39656831 715299108 102459218 5097831 30869154 645855939 116337654 28. Internship Report National Bank of Pakistan 37058030 10593565 373249 33629470 4723084 (40248) 10.11%) 105% 1245369 16415862 42503078 147363 13544845 42451580 745% 21.75%) Net Mark-up/interest Income after provisions Non-Mark-up/interest Income Fee.8% 281% (83.commision and brokerage income dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities-net Unrealized/(loss) on revaluation of investments classified as held-for-trading Other income Total Non-Mark-up/interest Income Non-Mark-up/interest expenses Administrative expenses 26087216 7925370 2878932 3969057 395427 1707 6781683 3263246 1042827 2341690 (31964) 17% 11.3% (9.2% 0.4% Net mark-up/ interest income Provisions against non performing advances Provision for/(reversal of) diminution in the value of investment Provision against off balance sheet obligations Bad debt written off directly 4000 10970814 39899 4722735 28906735 132.12% 18171198 14205911 28% 88 .3% 1027.2% 124. 8% 41.82% Percentage 13.4%) 18.02% 2007 94873249 Percentage 12.5% (18%) (18%) Other provisions/write offs Other charges Total Non-Mark-up/interest expenses Extraordinary/unusual items Profit Before Taxation Taxation-current -prior years -deferred Profit After Taxation Un-appropriated profit brought forward Transfer from surplus on revaluation of fix assets Profit available for appropriation 23000998 11762650 (4220242) 7542408 15458590 45344188 130456 60933234 8311500 391497 323731 9026728 19033773 32074677 39007 51147457 41.13% Vertical Analysis of Balance Sheet ASSETS Cash balances with other treasury banks Balances with other banks Lending to financial institutions Investments 17082249 1 21% 21078786 8 27.1% 37472832 21464600 4.45% 89 .4% 234% 19.7% 2.92% 2.5% 1403% (16.Internship Report National Bank of Pakistan 747521 583361 19502080 23000998 168027 17141 14391079 28060501 28060501 345% 3303% 35.7% 2008 10650375 6 38344608 17128032 4. 78% REPRESENTED BY Share capital Reserves Unappropriated profit 2008 8969751 19941047 52456204 Percentage 11.0035% 33554 .5% 2007 8154319 15772124 45344188 Percentage 11.4% 5.43% 5.0052% 39656831 5.1% 1.4% 59190743 5 91.5% 5097831 30869154 0.46% Vertical Analysis of Profit And Loss Account 90 .5% 64.7% 44.7% 25922979 30994965 2007 7061902 10886063 3.45% Percentage 1.5% 34067710 0 3% 0.4% 4.07% Percentage 1.02% 24.79% 4.7% Operating fix assets Deferred tax assets Other assets LIABILITIES Bills payable Borrowing from financial institutions Deposits & other accounts 24217655 3204572 44550347 2008 10219061 40458926 62493901 6 87.77% 22.65% Subordinated loans Liabilities against assets of leasing Deferred tax liabilities-net Other liabilities 25274 .Internship Report Advances National Bank of Pakistan 41298686 5 50.77% 65. Internship Report National Bank of Pakistan 91 PARTICULARS Internship Report Mark-up/return/interest expenses Net mark-up/ interest income Provisions against non performing advances Provision for/(reversal of) diminution in the value of investment Provision against off balance sheet obligations Bad debt written off directly Net Mark-up/interest Income after provisions Non-Mark-up/interest Income Fee,commision and brokerage income dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities-net Unrealized/(loss) on revaluation of investments classified as held-for-trading Other income Total Non-Markup/interest Income Percentage 2008 2007 National Bank of Pakistan 23884768 39.2% 1694001 1 37058030 10593565 60.81% 17.4% 3362947 0 4723084 Percentage 33.5% 66.5 9.34% 373249 4000 0.61% 0.007% (40248) - (0.08%) - 10970814 26087216 18% 43% 39899 4722735 2890673 5 0.08% 9.34% 57.16% 7925370 2878932 3969057 395427 1707 13% 4.72% 6.51% 0.65% 0.003% 6781683 3263246 1042827 2341690 (31964) 13.41% 6.5% 2.1% 4.63% (0.063) % 1245369 16415862 42503078 2.04% 27% 70% 147363 1354484 5 4245158 0 0.29% 26.8% 83.95% Non-Mark-up/interest expenses Administrative expenses Other provisions/write offs Other charges Total Non-Mark- 18171198 747521 583361 19502080 92 30% 1.23% 0.96% 32% 1420591 1 168027 17141 1439107 28.1% 0.33% 0.034% 28.5% Internship Report National Bank of Pakistan RATIO ANALYSIS Ratio analysis includes method of interpreting financial ratios to access the performance of any organization. The basic input to ratio analysis is profit and loss account and balance sheet. Ration analysis of any organization is in interest of its creditors, employees, shareholders and of its management as well. Both existing and prospective customer are interested in the ratio analysis of organization Ratio analysis is a valuable aid to management in the discharge of its basic functions such as planning, forecasting, control etc. these ratios describe the relationship with the functioning of the business and helpful for controlling cost of goods manufactured. The great advantage of ratio analysis is that it reduces raw data of widely varying magnitude to a common comparative basis. Thus, ratio analysis is the most meaningful to compare financial information regarding a giving company. Current Ratio Formula: Current ratio= Current assets Current liabilities Year 2007 Current assets Current liabilities Current ratio 153810681 481381235 .3195 Year 2008 161976396 53667962 .3035 93 Current ratio in 2008 is decreasing as compared with 2007.Internship Report National Bank of Pakistan Interpretation An increase in the current ratio represents improvement in the liquidity position of bank while a decrease in the current ratio indicates that there has been deterioration in the liquidity position of the bank. it should be improved. Working Capital Formula: Working Capital=current assets-current liabilities Year 2007 Current assets Current liabilities Working Capital 153810681 6 481381235 (327570554) Year 2008 16197639 533667962 (371691566) Interpretation Working capital should increase which will show that there is increase in current assets. But here working capital is decreasing in 2008 as compared with 2007. Total asset turnover Formula: Total asset turnover= sales Total assets 94 . It should be improved. because it indicates whether the efficient operations have been financially efficient. Debt Ratio Formula: Debt Ratio=Total liabilities Total assets 95 .0745 Interpretation Higher the total asset turnover the more efficiently its assets have been used. Total asset turnover is increasing in 2008 as compared with 2007 which is a good sign.0663 Year 2008 60942798 81775832 0.Internship Report National Bank of Pakistan Year 2007 Sales Total assets Total asset turnover 50569481 762193593 6 0. This measure is probably of greatest interest to management. Time interest earned ratio Formula Time interest earned ratio=Earning before interest and taxes Interest 96 . The greater this ratio the greater the amount of other people’s money being used to generate profits. The higher this ratio greater the degree of indebtedness an more financial leverage.74% Year 2008 715299108 81775832 87. NBP’s debt ratio is increasing in 2008 as compared with 2007 which is not favorable.47% Interpretation The debt ratio measures the proportion of total assets by the creditors.Internship Report National Bank of Pakistan Year 2007 Total liabilities Total assets Debt ratio 645855939 762193593 6 84. measure the ability to make contractual interest payments.95 Year 2008 42503078 19502080 2.Internship Report National Bank of Pakistan Year 2007 Earning before interest and taxes Interest Time interest earned ratio 42451580 14391079 2. Time interest earned ratio is decreasing in 2008 as compared with 2007. Gross profit margin Formula Gross profit margin= Sales-cost of goods sold Sales = Gross profit Sales 97 .18 Interpretation Time interest earned ratio sometimes called interest coverage ratio. It should be improved. The higher its value the better able the organization is to fulfill its interest obligations. The higher the gross profit margin.95% Year 2008 42503708 60942798 69. It should be improved. Operating profit margin Formula Operating profit margin= Operating profit Sales Year 2007 Operating profit Sales Operating profit margin 42451580 50569481 83.74 % 98 .5% Year 2008 37058030 60942798 61% Interpretation Gross profit margin measures the percentage of each sales rupee remaining after the organization has paid for its goods. the better (that is the lower the relative cost of merchandise sold).Internship Report National Bank of Pakistan Year 2007 Gross profit Sales Gross profit margin 33629470 50569481 66. Gross profit margin is decreased in 2008 as compared with 2007. taxes and preferred stock dividend. It should be improved.4% Earning per share Formula 99 . Operating profit margin is decreased in 2008 as compared with 2007. Net profit margin Formula Net profit margin= Earning available for common stock holder Sales Year 2007 Earning available for common stock holder Sales Net profit margin 19033773 50569481 37.Internship Report National Bank of Pakistan Interpretation Operating profits are pure because they measure only the profits earned on operations and ignore interest. A higher operating profit margin is preferred.64% Year 2008 15458590 60942798 25. 34 Year 2008 15458590 897190 17. of shares of common stock outstanding Year 2007 Earning available for common stock holder No. Higher eps is good but here EPS is decreased in 2008 as compared with 2007 which is not good.23 Interpretation Earnings per share (EPS) are the earnings returned on the each share. of shares of common stock outstanding EPS 19033773 815500 23. Return on total assets Formula: Return on assets= Earning available to common stock holder Total assets 100 .Internship Report National Bank of Pakistan Earning per share= Earning available for common stock holder No. ROE is decreased in 2008 as compared with 101 .9% Return on assets often called the return on investment. The higher the firm’s return on total assets. The better the ROE.5% Year 2008 15458590 81367002 19% Interpretation ROE measures the return earned on common stockholders investment. ROA in 2008 is decreased as compared with 2007. the better. the better.Internship Report National Bank of Pakistan Year 2007 Earning available for common stock holder Total assets EPS Interpretation 19033773 762193593 2. It measures the overall effectiveness of management in generating profit with its available assets. Return on common equity Formula Return on common equity= Earning available to common stock holder Common stock equity Year 2007 Earning available for common stock holder Common stock equity ROE 19033773 69270631 27. It should be improved.5% Year 2008 15458590 817758326 1. of shares of common stock Year 2007 Common stock equity No.Internship Report National Bank of Pakistan 2007. It should be improved. Book value per share of common stock Formula BV per share of common stock= outstanding common stock equity No. which is a good sign. of shares of common stock outstanding BV per share of common stock 69270631 815500 85 Year 2008 81367002 897190 91 Interpretation Book value per share of common stock is increased as in 2008 as compare with 2007. 102 . NBP cash provision as percentage of non performing loans equal to 60% this coverage factor for the non performing loans is the highest amongst the nationalized commercial bank. The informal environment affects the performance of the employees in a positive way. The working condition in the NBP branch here is very conductive and favorable for better output.370 billion on December 2008. It acts as an agent of the Central Bank wherever the State Bank does not have its own Branch. The bank also has an investment portfolio of Pak Rs. In SWOT analysis the best strategies accomplish an organization’s mission by: Exploiting an organizations opportunities and strength Neutralizing it threats Avoiding or correcting its weakness SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context. Performing social responsibilities and claiming “The Nation’s Bank” Disbursing Salaries and Pensions to the Government employees and earning high profit on NBP-Advance Salary Loan Scheme· 101 . managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. All depositor of NBP are in relief that their money security is guaranteed by government of Pakistan. and threats SWOT analysis is careful evaluation of an organization’s internal strengths and weakness as well as its environment opportunities and threats. Europe and the Far East.Internship Report National Bank of Pakistan SOWT ANALYSIS SWOT analysis is an acronym that stands for strengths. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses. The Bank also has a presence in 23 international locations including the USA. Local currency deposits comprise 67% of bank's total deposits while foreign currency deposits account for the rest. STRENGHTS NBP one of the largest financial institutions of Pakistan with eight million of customer base NBP holds 24. opportunities.268 billion with gross loan portfolio of Pak Rs.140 billion. corporate bonds.91 billion. weakness.6% share of time and demand deposits in the country. NBP is working as right arm government of Pakistan as it is responsible for all claims of government for recovery as well as payment. which comprises treasury securities. This included total earning assets of about Pak Rs. United Kingdom. NBP's total assets stood at Pak Rs. NBP has an extensive domestic branch network of 1254 branches located all over Pakistan. shares and other securities. which server as a demotivation factor for employees performing above average work. Unsatisfactory corporate culture of the Bank Physical environment and atmosphere compare to other banks is not meet the standard Less number of Online Branches Ineffectively use of technologies i. remittances and leading agent of Western Union Money Transfer NBP has decided to diversify the fund base by investing in capital markets not only in Pakistan but also in the foreign countries. WEEKNESSES Lowest Internal Control and Compliance System. Earning commission/exchange on Government transactions. Its vast network of domestic and overseas branches can help to expand business. Trust and reliability creates chances to enhance deposit and profitability.Internship Report National Bank of Pakistan Earning commission from SBP on Government transaction Facing never problem of cash/currency being its Chest and Sub-chest Holds largest deposit base in the market share in terms of number of accounts Leading bank in agriculture financing amongst commercial banks with the market share of 15% Helping in earning of foreign exchange.per employee customer is very high side Technical education and training of staff is insufficien The workload in NBP is not evenly distributed and the workload tends to be more on some employees while others abscond away from their responsibilities. Uncertainly among the employees due to threat of downsizing OPPORTUNITIES Being a Government Bank NBP having wide scope in economic market. Information technology Shortage of staff. Being an agent of State Bank of Pakistan it can play vital role in local economy. Bank’s deposit is increasing rapidly so there is a great opportunity to enhance its investment and financing. SBP rated “Marginal” which is alarming for the Bank.e. 102 . 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. NBP continue struggle to achieve this target. Government.Internship Report National Bank of Pakistan Amongst highest bank is Asia. Its staff switching over to other private banks due to more facilities. I. Other bank’s charming atmosphere and relaxation in documentation. The bank is reshaping its portfolios by investing into higher area of growth developing core competing as a result to get maximum return. SBP and Prudential Rules and Regulations.T and HR are important factors for development in any organization. NBP staff code of ethics and practices. High number of complaints regarding staff behavior. Government. SBP rated just “Marginal” in respect of System & Control which is alarming for the Bank to survive its license. Schedule banks and Multinational/International bank’s profit rates. 103 . Government Revenue Collection. THREATS SBP penalties due to low internal control and compliance. Payments and FBR Collections create heavy workload. NBP further expand its services proudest and earn more profit. Government Schemes. WORK PERFOMED O R K E R F O M E D In this section topics are: • Lesson learned and Personal experience • Branch Profile • Introduction of branch & Establishmemt • Branch Hierarchy • Training Departments • Remittance and Account opening • Deposit Section • Pension Section • Cash Section • Use of Information Technology • Issues Faced by the Branch . I learn major function. For last many years this branch is achieving his targets of deposit and advance. 105 . The mechanism is not too simple to understand easily but still lots of complexities have been solved. Mostly work of the bank done by manual book so in this way I learn that how the record is maintained. During the session of my internship I worked in different department. This branch founded in September 1966. After joining the bank for internship I got the practical exposure of all the banking activities. During the work in different department I learn as an internee which proves to me very beneficial and me able to get basic concept of the banking operation. object and future planning. Mostly customer come in clearing and cash department so there are very work in these departments. I had done my internship in national bank of Pakistan LDA Plaza branch Lahore.Internship Report National Bank of Pakistan LEARNING AND PERSONAL INTERNSHIP EXPERIENCE In national university of Modern languages Lahore campus the student required for six weeks internship to complete the MBA degree. According to the financial report this branch was earning more than 22% of his total profit of the region. The staff of the bank helps me and provides me all required information. All the staff of the branch provided me their time and information which helped me to enhance my knowledge and they also shared their experiences with me which I believe that it would be helpful in my practical life. I learn very much in the bank. I learn that how the bank staff deals with customers. P Compliance Khuram Yousaf Non Clerical Fazal Hussain Shahid Ali Guard Driver OG II Starting and ending dates of internship Starting Date-----.V.P (Manager) / A.13-08-2010 INTRODUCTION OF BRANCH AND ESTABLISHMENT 106 .V.15-06-2010 Ending Date-----.Internship Report National Bank of Pakistan BRANCH PROFILE Branch staff Executive Khalid Jamshed Muhammad Ayyub Officers Shan Muhammad Javed Akhtar Tariq Waheed Muhammad Iqbal Muhammad Iqbal Kawja Fayyaz Malik Ayesha Zahid Sarfraz Ahmad Booth Staff Muhammad Arif Syed Ahmad Hussain Cash Staff Syed Najeeb Ahmad Muhammad Yasin Naeem Shahzad OG I OG II OG II OG I OG I OG I OG I OG I OG I OG II OG II OG II OG II (Operation Manager) / A. I OFFICER GRADE .Internship Report National Bank of Pakistan The branch has established in 30-09-1966 in order to cope the financial needs of the people.III MESSENGER PEON SWEEPER DEPARTMENTS OF TRAINIG 107 .II OFFICER GRADE . BRANCH HIERARCHY MANAGER MANAGER OPERATION ESTABLISHMENT OFFICER GRADE . From last many years this branch is not only achieving its targets of deposits and advances rather it remains above the targets. As it is an agent of the State Bank of Pakistan so its main objective is to provide credit in order to fostering growth in all the sectors so with the view of this LDA Plaza Model Branch of National Bank of Pakistan came into existence. Bank draft. Sir. A brief introduction of the departments in which I performed my work is as under: 1. Remittance and Accouts Opening Section Deposit department Pension Establishment But I did my internship in deposit. iv. Draft. Coupons. Operations Manager Department 3.Internship Report National Bank of Pakistan During the internship period of 4 weeks I got training in various departments in the branch. Genearal Banking Department i. MT. Mr. ii. The Manger only does TT because it is a secret way of transfer funds. I 108 . Cash Department 2. Govt. DD. Mail Transfer. This branch do not deals with foreign exchange and online bank but foreign remittance is carried out. Rana Ahsaan-ul-Haq is the controller of section who is a very competent person. I made all the four categories of funds transfer. Telegraphic Transfer. i. and T.T. pension and cash sections. Duties performed by him are. remittance. General Banking Department General banking is divided into following sections. The computer system was not allowed to me due to the secrecy and rules of the management. I only made vouchers of PO. The branch is divided into two parts: 1. Issuing of demand draft Issuing of Mail transfer Issuing of Telegraphic transfer Issuing of payment order Issuing of call deposit Closing of government collections Intercity and Short Credit Clearing Accounts opening Issuance of cheque books Handling of lockers Maintenance of outward Mail Register Issuance of Benevolent fund In this section I learnt about issuance of PO. CDR and DD. It was my first department. Remittance and Accounts Opening Section It is transfer of money payable at a certain place within or outside the country through various way i. Rana helped me a lot to achieve this target. iii.e. It works both inward and outward. Internship Report National Bank of Pakistan sorted all the daily remittances. cheque number and amount to be debit or credit should be matched. Then make payment. account number. D.T is transferred in account of payee.no fanfold is made.T & T. issuance of demand draft is handed over to the applicant . In the cheque book posting something which are necessary.D & P. Its advice containing the particulars of the draft is sent to the drawer branch with its necessary information and payment of draft is make on its presentation. Nothing is sent to next branch . Pay order for clearing again come to National bank of Pakistan. All the details must be clearly written in ink. Sir Rana helped me a lot in general understanding of the bank functioning. Demand draft: Procedure First on the request of the customer all the details for issuance are demanded from customer The customer can be account holder or non.O is used locally and to transfer amount within the city whereas D. After deduction of charges.D is used for outside the city.account holder. I also learnt to cheque posting on system. Procedure Filling of application form. While issuing the bank draft the care is taken that draft should be free from alternations. I prepared several cheque books and enter the detail into the cheque books issuance register. 109 . Application form is attached with cheques .O: P. Then the payment order is made. Then payment order is given to the customer. Mail transfer is time consuming while telegraphic transfer is fast. Payment order Procedure Two applications forms called credit vouchers for payment and for bank commission are made. Amount of M. Mail transfer This is the facility just for account holders. debit authority or make payment in cash. handed them to the respective officers. Internship Report National Bank of Pakistan Preparation of M.T advice. Then fanfold is made on F15. M.T advice plus fanfold ( red copy ) is sent to responding branch. M.T code is 22. Telegraphic Transfer: Procedure Filling of application/ request form. Then payment is made. Then make massage voucher (telephone number is written at top of it ). Then telegram transfer confirmation is made (F-15). Massage is sent immediately by fax and T.T confirmation is sent by telegram. F15 blue is filled and original red is sent to responding branch. T.T code is 21. Accounts Opening In this department, I also gain the practical knowledge about account opening also, as this department also deals in opening account and saving account for its customers and all matters regarding thereof. The customers mainly opens current and saving account and these can be opened by Individual , firms , Company , Trust , staff etc. I got training in this department for one week and after understand the basic concept I practically opened account of walk-incustomers. Procedure Customer fills A/C opening form prescribed by the bank. Then he submit the I.D card copy and other related documents Specimen signature card is filled 2 officers attested the form. The form is entered into computer and account opening register. The amount in Rupees is submitted in new account. Then letter of thanks is send to customer. When letter is send back to bank by customer then bank issue cheque book to customer. Deposit Section All banks depend on deposits. It is a very important department where customers deposit and withdrawal their money. Banks use this money for loaning on higher rate to earn profit.Mr. 110 Internship Report National Bank of Pakistan Shahid with his colleague Miss. Shazia has been performing the activities of this section. The main function of this department are Maintaining records of saving, current, call deposit, and NIDA account holders Record of signatures of account holders Record of balances of customers Scrutiny of cheques issued Withdrawal through order/berarer cheques Local clearing Preparation of accounts holder activity report Procedure of Withdrawals There is a complete process in case of cash withdrawal. Customer deposited cheque in deposit department for withdrawals or transfer of amount through cross cheques. The deposit department verifies the signature of the account holder through SS and other requisites of the cheque. In case of any discrepancy the cheque is returned to the customer. The deposit department checks the balance in the account of the customer through computer in BBO. If the a/c of the account holder has balance equal to the cheque amount they passes the cheque to cash department and post a Cash Paid stamp on it. Deposit department debit A/C holder in computer and cash scroll register. The cash department pays the amount to the customer on counter and cancels the original cheque. SS cards verification is one of the most difficult works of this department; I also go through only specific activities in which the heads of verified informed me. Procedure of Cross cheques Whenever customer deposit amount in his account through cross cheques or security decouments by transferring he has to fill the cheque pay-in-slip and is deposited into the deposit department. The deposit department after verification and scrutiny of cheque passed the cheque to remittance department. Pension Section Ms. Sarwat Jabeen is the head of pension department. The following activities are performed by her; Maintenance of Pension Register Scrolling of Pensions Paid 111 Internship Report National Bank of Pakistan Arials in case of any increase announced by government Maintenance of the Inward Mail Register During my internship, I learnt how to handle with new pensioner’s cases, entries made into the “pension register”, recommend payments of pension on monthly basis, transfer of payments into the accounts of the customer. The most obligatory thing for payment of pension is to check pension slip in form of cash payment P.P.O.No., name of the pensioner, signature, and payment period. In case of pension holder does not come to receive, it is legally recommended that the pensioner holder issue authority letter to the desire person otherwise pension will never be paid in cash. 2. Cash Department Cash department mainly deals in cash. In this department all types of Government receipts i.e. Revenues, Taxes, Abyana, Agriculture Tax, Government Fees and Utility Bills are deposited. This way NBP is serving great job of revenue collection. The Head Cashier is Mr. Abdul Aslam and two cashier Mr. Wajid and Mr. Akram Cheema all are fulfilling the objective of cash department by facilitating people in the payments of their bills and taxes and repayments of cash. This section deals with; i. Cash Payment Payments are the function that they pay their cheques and pay cash. ii. Cash Receipts Receipts mean collection of utilities bills, taxes etc. Cash Payment Procedure In this branch of NBP, this section deals with the Procedure For deposit: Whenever account holder deposit amount in their accounts they fill cash-payin-slip. withdrawals of the cheques deposit of amount pension receipt Then handed over cash and slip to the cahier Cashier after counting amount sign the slip and stamped it with cash received after entering it to the cash scroll register The counterfoil is given to the customer after signing while the adjacent credit voucher is held by the bank For withdrawals: 112 It is the use of information technology that can improve the customer’s services and reduce the cost at the same time. • • BBO (Bank Branch Office) EBS (Electronic Banking System) Electronic Banking System EBS is used for any kind of transaction within the bank .Internship Report National Bank of Pakistan After the clearance of the cheque from deposit department the customer recived cash from the cahier by giving him token. Bills Collection. The use of IBM Software is one of the main purposes of collection electronic data for the bank that further helpful in future in decision making. The bank prepares financial statements.i.e. system of the bank not only increases distribution capabilities but also simplify internal procedures thereby reducing the cost and lead-time for services.T. Bank Branch Office BBO is use for remittances. The I. The cashier entered the amount into the scrolls. services and enhancing regulatory compliance requirements.T. Receipts and payments. 113 . the “IBM Software” categories into two sections. Now the Samanabad Branch of NBP is trying to computerized its all of activities for this purpose various aspects of extension and development have been taking into consideration. For pension receipt After the approval of the pension officer the pensioner comes in this section for reciving cash amount of pension. NBP adopted “IBM Software” for service providing motives. agricultural reports. Use of Information Technology in Decision making Today banking is becoming more and more complex with the introduction of new products. architecture by implementing a core Banking Solutions. A portion of receipt is handed over to customer. Now a day. Cash Receipts Procedure Customer deposited their bills and taxes to cashier Cashier after counting the amount signs the receipts of bill and taxes and affixed stamp of NBP and cash received stamp. etc. the bank plans for transformation of the entire I. Tax receipts. risk management and other reports for decision-making purposes. customer’s management. The original cheque is then crossed by the cashier. At the end of day all the total and balances of receipts is transferred to the remittance section. Departmentalization: An employee deals various nature of work. Also management should purchase more furniture and arrange them in such a way which provides maximum 114 v. x. Shortage of Staff: There is shortage of staff in the Bank. Business administration qualities and education is at low side. This situation creates difficulty for handling new challenge. I present here some critical analysis: i. Work Environment: Work environment was not ideal due to heavy customers visit in a single day. Pensioner's sitting Arrangement: Bank should take step for the sitting arrangement of the old age employees and pensioners for.com(hons. vii. Number of customer per employee is very high. Cash department is suffering very badly and facing great deal of over workload. Unjustified Appraisal Criteria: No justified appraisal criteria are implemented for annual increase in salary and promotion of staff. Communication Gap: I feel that there is communication gap between top management and workers. They have fewer chances to communicate effectively. light and sitting arrangement was not good for customers and bank employees. iii.Internship Report National Bank of Pakistan ISSUES FACED BY THE BRANCH During the internship I got practical experience that does not meet the theoretical concepts in B. Furniture. ix. Professional Approach: Work specialization and job specification are found very low in bank’s employees. It creates un-satisfaction among the employees of the Bank. vi. .) Program. Even old employees are not able to operate PCs. viii. ii. Less use of Technologies: Staff hesitate to use new technologies especially the cash department. xi. iv. Manager himself takes decision and orders to make changes. Undemocratic Decision Making: I observed that some times employees are not involved in decision-making process. Staff Attitude: Due to heavy load of work staff attitude does not ideal for an organization where public dealing is at large scale. Training: NBP has no great facility for their employees for training of new technologies. Internship Report National Bank of Pakistan space and convenient specially in deposit department and there should also be convenient sitting place for customers. xii. Need of Telephone Operator: Branch has the problem of telephone operator which can save the time of not only manager but other staff as well. 115 . Therefore as an internee I felt that there should be a telephone operator who can easily handle this situation. On the other hand bank’s communication system was not doing well. FINDINGS & CONCLUSION I N D I N G S O N C L U S I O N In this section topics are: • Dilemmas Faced by Organization • Problems at branch • Functional Problems • Administrative Problems • Personal Management Problems • Recommendations for improvement • Conclusion . In theoretical terms it provides basis for communication with one another but in practice it is not exercised because an employee at high level cannot get straight away 116 . And above all it results in dissatisfaction among customers as well. ∗ Unequal distribution of work Work is not equally distributed. ∗ FUNNCTIONAL PROBLEMS ∗ Formal Organization Formal organization includes the activities of two or more person. Personal management’s Problems PROBLEMS AT THE BRANCH ∗ Customer Satisfaction In NBP customer dealing is will. It provides base when people are able to communicate with other. but during rush hour the customer has to wait for a long time for their turn.Internship Report National Bank of Pakistan DILEMMA FACED BY ORGANIZATION Rather NBP is a nation's bank but like any other organization NBP also is not free from problems and crisis. which are cautiously determined groups and coordinated towards a given objective. In NBP. On one hand some employee have to work all day without relaxing while some others have nothing to do at all. • • • • Problems at the branch. Such visits are important in informing and perusing the existing and potential customers about the products and creating a sense of belongingness with them. In SWOT analysis I have already discussed the major internal weeknesses and flaws of the system. When certain record is needed the staff has to struggle to find it out and a lot of time is wasted. we find a formal organization. when they have common purpose and they are willing to work. Functional Problems Administrative Problems. It’s quite hard for a new customer or potential customer to get the required information. Poor record management and filing system During my internship I observed that filing system of branch is not good. In this topic the most important problems are included which are widely present at the branch level. This not only creates confusion among employees but also hurting and disturbing for overall setup of the bank. Marketing visits A useful mode of contact is through personal marketing visits. For this purpose the topic is divided into the four parts which are as under. In this formal organization of NBP the activities are carried out in a more formal way. There is absence of job rotation in NBP Samanabad branch. A person placed in one department remains their forever. They are unable to give proper attention to the clients and face difficulties in getting their job done.Internship Report National Bank of Pakistan to manager or SVP and ask him about of his problem faced by him. Training is generalized rather than specialized. If hard work and performance of employees is not recognized and appreciated they become dishearten which results in decline in performance. because first he has to talk to his immediate superior and follow a proper channel of communication. he is inducted into a specific field without having great deal of knowledge about the field. It reduces career opportunities as well boredom and in the end results in career plaguing. ∗ Excessive paper work It is notified that due to the lengthy procedure of paper work the bank employee are over burdened. Training of the personnel is part of human resource management. It has been noticed that the training program of NBP is not adequate. NBP is more interested in increasing its number of account irrespective to its deposit. As the worker finishes his training. ∗ ADMINISTRATIVE PROBLEMS ∗ Job analysis is not effective Only on the basis of job analysis it can be decided how a right person can be hired. 117 . Lack of specialized training NBP does not provide adequate facility of specialized training to their staff. Most of the employees are simple graduate and do not have proper background about their job. compensated or promoted. Lack of appreciation Another very important thing which is ignored in the bank is appreciation if the employee on their good performance. It is very important for an organization that nature of the job is described and job specifications are mentioned. Efficient banking is one which does not emphasize on number of accounts but on greater amount of deposits. One reason for lengthy procedure and excessive paper work in the bank is the lack of computerized technology. trained. ∗ ∗ ∗ PERSONAL MANAGEMENT PROBLEMS ∗ Need for better training program Need of training is greatly emphasized all around the world. More accounts fewer deposits. This creates problems both for organization and for the employees. Poor job rotation. The newly recruit should be rated in all department of the banking in order to get familiar with working of different departments so that when they get a responsible position they have know how of the whole system. The training programmed of the bank should include scientific techniques to improve the decision making and interpersonal as will individual needs of the employee both specialized to fresh as well as on job. Transfer Transfer means when a person is shifted from one place to another place. If the personnel are recruited carefully they can become asset to the organization in the case of carelessness a liability on the organization. It is done either that person is needed more on the other branch or for improving his skill variety. recruiting. They should learn new methods for motivating customers. ∗ Developing Managerial Leadership Leadership is a practical term of visible. The market opportunities are hidden in every dealing a banker handles. training. the question is that if he has the art and urge to seize such opportunities. but also in people terms i. depositing license fee and variety of other functions and variety of other people with whom the Bank has no account or regular business relationship. To avoid this minor dissatisfaction and tension in the mind of customer. Promotions Promotion in NBP is purely on the basis of seniority. grievance handling and taking immediate initiative in crisis situation to take major decision affection the future of the bank and banking community. RECOMMENDATIONS 118 . and deficiency of the service. It becomes essential to train him adequately for the task. nepotism and political pressure. pensioners. safe custody. It is the policy of the Bank to transfer each employee 3 to 4 years. Bank is not following its recruitment policy properly due to favoritism. The Bank employees are doing very little on their own to explore the possibilities of selling banking services to them as a marketing contributor. Manager is not only responsible for their own units in business. clear on objective and communicating better control on financial and administrative matters. it is recommended that the bank should provide brochures etc containing information in details. Recruitment policy Human resources are the lifeblood of the organization.e. travelers cheques. Top management and staff union put pressure for the promotion of their favorites. so the new young person having high qualification remains behind for quite a lot of time. Marketing at desk Bank employee come in daily contact with many people who happen to deal with the casual remittance. Some general information should be placed in information notice board on the entrance where customer can see it easily or it should be self-attractive. ∗ ∗ ∗ ∗ Lack of business communication There is no proper way to give information to their customer.Internship Report National Bank of Pakistan Once the candidate is selected and placed on the respective job. by knowing customer’s requirements. All Branches of the Bank must be online. The Bank should locate new market for its operational activities in the country as well as abroad. to making social responsibility and looking towards stakeholder’s values.Internship Report National Bank of Pakistan As analysis shows that NBP is a most growing organization with highest return on capital. modern technology. The bank should spend more on renovation of the branches to improve environment and atmosphere to attract the customers. For improvement of internal control and system the compliance wing and surprise inspection system should work more effectively. following recommendations are made: ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ ∗ Staff strength should be enhanced and professional qualified persons should be recruited. Customer services must be better to improve the efficiency of branch. The Bank should increase profit rate on deposits and saving schemes especially for pensioners and old age citizens. It is recommended that proper training be provided to the staff members that will ultimately increase the performance of Bank over all. There should be a proper desk for customer’s information in every branch. To overcome weaknesses and to maintain its position as an “Asian Tiger” in banking field. But there is further need for improvement. The bank has been able to strategically manage and build on its competitive advantage. understanding employee’s need. which results in quality work and causes the customer attraction that will create lucraturable activities. air conditioning and new furniture should be facilitated The Bank should introduce the computers software to cope the heavy load of work and better control. Sitting arrangement. which have to be made possible to escape from the threats and weaknesses and the risks in environment that surrounds the Bank. Extra counters should be established in order to facilitate during the rush days the difficulties faced by the bank staff as well as the customers. The management do considers the policy matter that is not helping the 119 . It is suggested that promotion be given to the staff in due time and on the basis of performance to provide job satisfaction. All the departments should be established separately in every branch. The bank should use broad casting media for promotion of its products and services and to further expand its area through more aggressive marketing. These and many other that can make a good set of recommendations. Efforts have been made with serious concern to give NBP a status that it has to maintain by having practices of: ∗ ∗ ∗ ∗ Right sizing of the employees. Hong Kong. Hong Kong. one of the leading bank of Pakistan banking industry with 1254 nationwide and almost 25 branches operating in other countries including USA. Azerbaijan. CONCLUSION The report is all about National Bank of Pakistan. It has maximum coverage with facilities of ATM and online banking throughout Pakistan. but are still in practice due the absence of prudentially regulated system to protect them and the Bank. France. Promotions made conditional with qualifications. Bangladesh.Internship Report National Bank of Pakistan Bank. China. National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance 120 . By closing unprofitable branches. By introducing a merit based selection criteria. Remittance Department. And also it has comprehensive range of products it is offering in market. Account Opening Department. 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. Government Receipts Processing Department. in branch banking it has Clearing and Collection Department. It is providing different facilities to its customers. The other strengths this bank has are that it is acting as Agent of State Bank of Pakistan. Deposit Department. providing Agency Arrangements for different government organizations include WAPDA and PIA. advances. old organizational culture. credits and securities etc for its customers. Advances and Credit Department. Inside the bank. It is a part of State Bank of Pakistan and it is its major strength. As analysis shows that NBP is a most growing organization with highest return on capital. These are the most common departments exist in almost each branch. Its Human Resource is its major strength that is leading this bank in this way but there is much gap to cover yet. Customer Services Department Cash Department. But there is further need for improvement to overcome weaknesses and to maintain its position as an “Asian Tiger” in banking field. The challenge it is facing are currently the lack of implementation of rules and regulations that may lead to weak organizational culture. It is offering different deposit choices.Internship Report National Bank of Pakistan 1949. 121 . Profitability and a vide coverage throughout Pakistan through its Corporate Branches. There are many workers and employees’ unions exist in National Bank of Pakistan that use to play organizational politics instead of doing productive work that leads to wastage of time. no regular promotions practices and not much use of IT technology in bank as other are using. largest market share amongst all Pakistani banks and cost to income ratio is the highest in banking sector.