NATIONAL BANK OF PAKISTAN

(GOLBAG BRANCH GULGASHT MULTAN)

NAME:

ROLL NO:

SESSION:

UNIVERSITY OF EDUCATION MULTAN CAMPUS

DEDICATION

I dedicate this report to my Parents. Without their patience, understanding, support and most of all love, the completion of this work would not have been possible.

ACKNOWLEDGEMENT

All gratitude and thanks to almighty ALLAH the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am very thankful to my university, University of Education who provided me a chance to enhance my knowledge by sending me in National Bank of Pakistan for internship.I am very grateful to Madam Mehreen Tanveer Bhatti (Branch Manager), Amir Khalil (Operation Manager), Mr Shakeel Nawaz from Account opening branch and Sohail Rasheed & Sana Naseer from Credit Department for providing me guideline for the completion of this report. I feel great pride and pleasure on the accomplishment of this report. I would like to thank: Almighty Allah whose blessings are always with me. To my teachers at all my stages of study who always guided me in right direction and developed my personality as a useful citizen for the society. To the staff of the Bank who fully cooperated with me in the completion of my tasks. To all my friends from whom I learned much.

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EXECUTIVE SUMMARY

National Bank of Pakistan is the largest commercial bank operating in Pakistan . Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank. The Bank's services are available to individuals, corporate entities and government. 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, corporate investment banking, retail and consumer banking, agricultural financing, 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, as a corporate citizen. In today's competitive business environment, NBP needed to redefine its role and shed the public sector bank image, for a modern commercial bank. It has offloaded 23.2 percent share in the stock market, and while it has not been completely privatized like the other three public sector banks, partial privatization has taken place. It is now listed on the Karachi Stock Exchange. National Bank of Pakistan is today a progressive, efficient, and customer focused institution. It has developed a wide range of consumer products, to enhance business and cater to the different segments of society. Some schemes have been specifically designed for the low to middle income segments of the population. These include NBP Karobar, NBP Advance Salary, NBP Saiban, NBP Kisan Dost, NBP Cash n Gold. It has implemented special credit schemes like small finance for agriculture, business and industries, administrator to Qarz-e-Hasna loans to students, self employment scheme for unemployed persons, public transport scheme. The Bank has expanded its range of products and services to include Shariah Compliant Islamic Banking products. For the promotion of literature, NBP recently initiated the Annual Awards for Excellence in Literature. NBP will confer annual awards to the best books in Urdu and in all prominent regional languages published during the defined period. Patronage from NBP would

help creative work in the field of literature. The Bank is also the largest sponsor of sports in Pakistan . It has provided generously to philanthropic causes whenever the need arose. It has taken various measures to facilitate overseas Pakistanis to send their remittances in a convenient and efficient manner. In 2002 the Bank signed an agreement with Western Union for expanding the base for documented remittances. More recently it has started Electronic Home Remittances Project. This project introduces technology based system to handle inward remittances efficiently, by ensuring that the Bank's branches keep a track of the remittance received from abroad till its final receipt. This report is based on internship in National Bank of Pakistan Golbagh Branch Multan. It is a famous and reputed bank of Pakistan. National Bank of Pakistan maintains first position in banking sector in Pakistan. This report is based on the activities which are performed in this bank. This report contains functions of Bills and Clearing department, Account Opening, Government section, Credit Department, SWOT analysis, Human Resource activities, Financial analysis of bank, Critical analysis of branch bank tariffs and exchange rates of National Bank of Pakistan. There are also stated the activities which I performed during my internship in the branch. There are also mentioned the way of investment, rates of investment, all types of financing and loans facilities the National Bank of Pakistan provides. The problems, conclusion and recommendations for improvement in this branch are also discussed.

TABLE OF CONTENTS

CONTENTS
DEDICATION ...................................................................................................................................................................3 EXECUTIVE SUMMARY ...................................................................................................................................................5 TABLE OF CONTENTS .....................................................................................................................................................7 OVERVIEW OF THE ORGANIZATION ............................................................................................................................11 BRIEF HISTORY .........................................................................................................................................................11 NATURE OF THE ORGANIZATION .............................................................................................................................12 Definitions of Bank ..............................................................................................................................................12 Evolution of Banking in Pakistan..........................................................................................................................13 Banking Growth during (1948-1970) ...................................................................................................................13 Banking Reforms 1972 .........................................................................................................................................16 Nationalization of Banks (1974) In Pakistan ........................................................................................................18 Islamization of Banking ........................................................................................................................................20 Dis-investments and Deregulation of Banking 1991.........................................................................................21 Interest Free Banking ...........................................................................................................................................21 HISTORY OF NBP ......................................................................................................................................................21 MISSION STATEMEN ................................................................................................................................................22 GOALS AND OBJICTIVES ...........................................................................................................................................22 PRODUCT LINES AND SERVICES ...............................................................................................................................23 Demand Drafts .....................................................................................................................................................23 Swift System ........................................................................................................................................................23 LETTERS OF CREDIT ..............................................................................................................................................23 TRAVELER'S CHEQUES..........................................................................................................................................23 PAY ORDER...........................................................................................................................................................24 MAIL TRANSFERS .................................................................................................................................................24 SHORT TERM INVESTMENTS ................................................................................................................................25 EQUITY INVESTMENTS .........................................................................................................................................26 COMMERCIAL FINANCE .......................................................................................................................................26 RADE FINANCE OTHER BUSINESS LOANS ............................................................................................................26 INTERNATIONAL BANKING ..................................................................................................................................29

REFRENCES...........................................................................................................................................................30 ORGANIZATIONAL STRUCTURE....................................................................................................................................31 Organizational Hierarchy Chart ...............................................................................................................................31 Number of Employees .............................................................................................................................................32 INTRODUCTION WITH DEPARTMENTS ....................................................................................................................33 CASH DEPARTMENT .............................................................................................................................................33 CLEARANCE DEPARTMENT ..................................................................................................................................36 ADVANCES DEPARTMENT ....................................................................................................................................37 REMITTANCE DEPARTMENT ................................................................................................................................42 HUMAN RESOURCE MANAGEMENT ....................................................................................................................44 DEPOSIT DEPARTMENT ........................................................................................................................................47 FOREIGN EXCHANGE/DEPARTMENT ...................................................................................................................50 DEPARTMENTATION OF GOLBAGH BRANCH NBP ...................................................................................................51 REFRENCES...............................................................................................................................................................55 PLANNING OF INTERSHIP PROGRAM...........................................................................................................................56 TRAINING PROGRAM ...................................................................................................................................................57 Objectives of the Study ............................................................................................................................................57 Limitation of The Study............................................................................................................................................57 Benefit of The Study ................................................................................................................................................58 RESEARCH METHODOLOGY .........................................................................................................................................58 STRUCTURE OF HR DEPARTMENT ...............................................................................................................................59 Number of Employees in HR Department ...............................................................................................................59 FUNCTIONS OF HRM DEPARTMENT ............................................................................................................................60 HUMAN RESOURCE PLANNING & FORECASTING ....................................................................................................60 FORECASTING ..........................................................................................................................................................60 Zero-Base Forecasting .........................................................................................................................................60 Bottom-Up-Approach ..........................................................................................................................................60 Use of Mathematical Model ................................................................................................................................60 Simulation ............................................................................................................................................................60 EMPLOYEE RECRUITMENT & SELECTION .................................................................................................................60 TRAINING AND DEVELOPMENT ...............................................................................................................................65 PERFORMANCE MANAGEMENT ..............................................................................................................................67 Performance Appraisal ........................................................................................................................................67 Promotion ............................................................................................................................................................67

Demotion/Expulsion ............................................................................................................................................67 Resignation ..........................................................................................................................................................68 Retirement ...........................................................................................................................................................68 EMPLOYEE COMPENSATION AND BENEFITS ...........................................................................................................69 Compensations and Benefits ...............................................................................................................................69 LABOR MANAGEMENT RELATIONS .........................................................................................................................70 PROMOTION POLICY ................................................................................................................................................72 TRANSFER/JOB ROTATION POLICY ..........................................................................................................................73 ELIMINATION OF REDUNDANCIES ...........................................................................................................................76 FINANCIAL STATEMENTS ANALYSIS .............................................................................................................................77 Balance Sheet ..............................................................................................................................................................78 Income Statement (Rupees in Millions) ......................................................................................................................79 Ratio Analysis ...........................................................................................................................................................80 Profitability Ratios ...............................................................................................................................................80 Gross Profit Margin Ratio ....................................................................................................................................80 Net Profit Margin Ratio........................................................................................................................................81 Assets Turnover ...................................................................................................................................................82 Return on Capital Fund ........................................................................................................................................83 Return on Investment ..........................................................................................................................................83 Return on Deposits ..............................................................................................................................................84 Effective Tax Rate ................................................................................................................................................85 Liquidity Ratios ....................................................................................................................................................86 Current Ratio .......................................................................................................................................................86 Cash Ratio ............................................................................................................................................................87 Advances to Deposit Ratio ...................................................................................................................................87 Due from Banks to Total Assets ...........................................................................................................................88 Due from Banks to Due to Banks .........................................................................................................................89 Due to Banks to Total Deposits............................................................................................................................90 Debt Ratios ..........................................................................................................................................................90 The Debt to Equity Ratio ......................................................................................................................................91 Interest Coverage Ratio .......................................................................................................................................91 Loan Loss Coverage Ratio ....................................................................................................................................92 a) Capital Adequacy Ratios .............................................................................................................................93

Capital Funds to Total Assets ...............................................................................................................................93

Operating Performance Ratios ............................................................................................................................94 Fixed Assets Turnover ..........................................................................................................................................94 Sales or Revenue Per Employee ..........................................................................................................................95 Horizontal Analysis ..................................................................................................................................................96 Horizontal Analysis of Balance Sheet .......................................................................................................................98 Horizontal Analysis of Income Statement .............................................................................................................101 Vertical Analysis .....................................................................................................................................................108 Vertical Analysis of Balance Sheet .........................................................................................................................109 Vertical Analysis of Income Statement ..................................................................................................................113 CRITICAL ANALYSIS (THEORY VS PRACTICAL) ............................................................................................................117 Conclusion .............................................................................................................................................................117 Bank Analysis with refernce to commercial Banks listed on stock exchange ............................................................118 Critical Analysis (Theory vs Practical) ....................................................................................................................120 SWOT ANALYSIS .........................................................................................................................................................122 STRENGTH ..............................................................................................................................................................122 WEAKNESSES .........................................................................................................................................................124 OPPORTUNITIES .....................................................................................................................................................125 THREATS ................................................................................................................................................................126 COMPETITIVE ANALYSIS ............................................................................................................................................127 SHORT FALLS/ WEAKNESSES OF NATIONAL BANK OF PAKISTAN ..............................................................................129 CONCLUSIONS ...........................................................................................................................................................131 RECOMMENDATIONS ................................................................................................................................................132 REFRENCES.................................................................................................................................................................134

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OVERVIEW OF THE ORGANIZATION

BRIEF HISTORY
There are different opinions that how the word Bank originated. Some of the authors opinion that this word is derived from the word Bancus or Banque, which means a bench. The explanation of this origin is attributed to the fact that the Jews in Lombard transacted the business of money exchange on benches in the market place; and when the business failed, the people destroyed the bench. Incidentally the word Bankrupts said to have evolved from this practice. Some of the authors are of opinion that the word Bank is derived from the German word back, which means joint stock fund. Later on when the German occupied major part of the Italy the word Back was italicized into Back. In fact human left the need of bank when it begins to realize the importance of money as a medium of exchange. Perhaps it where the Babylonian who developed banking system as early as 2000 B.C. At that time temples were used as banks because of their prevalent respect. During the rule of king Hamurabi (1788 1686 BC) the founder of Babylonians Empire, loans were started being granted for interest. The borrower has to provide guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a code wherein he laid down standards rules for procedures for banking operations by temples and great landowners. Also in Greece, the temples were used as banks, where the people deposited their money and other valuables for safe custody and security. In Europe with the revival of civilization (Renaissance) in the middle of twelve century, trade and commerce started expanding and this development compelled the business community to borrow the money from the Hebrew moneylenders on high rates of interest and usury. Seeing the great demand, these moneylenders started organizing themselves and bank started up at the principle seaports of southern Europe. Soon Venice and Geneva became the most important money markets of the time and banking though different from its present form, flourished. What we know as modern banking originated in the 14th century in Barcelona.

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NATURE OF THE ORGANIZATION

As above discussed we are going to discuss the banking sector in our report and the bank is National bank of Pakistan. Following are some details about the nature of banking sector briefly from the beginnings. Definitions of Bank "A financial institution, which deals with money and credit. It accepts Deposits from individuals, firms and companies at a lower rate of Interest and gives at higher rate of interest to those who need them. A financial establishment which uses money deposited by customers for investment, pays it out when required, makes loan at interest, exchanges currency, etc. J.W Gilbert in his principles and practice banking defines a banker in these words: A banker is dealer in capital or more properly, a dealer in money. He is intermediate party between the borrower and the lender. He borrows of one and lends to another. Sir John Paged defines banker in these terms: That no person or body, corporate or otherwise, can be a banker who does not Take deposits accounts. Take current accounts, Issue and pay Cheques and Collect Cheques crossed and uncrossed for his customers The American defined the term banker in a very broad sense as under: By banking, we mean the business of dealing in credits and by a Bank we include every person, firm or company having a place of business where credits are opened by deposits of collection of money or currency. Subjects to be paid or remitted on Cheques or order, money
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is advanced or loaned on stocks, bonds, bullion, bill of exchange, promissory notes are received for discount or sale. Evolution of Banking in Pakistan The first phase in evolution of banking in Pakistan sees very hard days for the whole banking sector. Starting virtually from scratch in 1947, the country today possesses a full range of banking and financial institutions to cope with various needs of the economy. The area now constituting Pakistan was, relatively speaking, fairly well provided with banking facilities in undivided India, in March 1947 there were 3496 offices of Indian scheduled banks out of which as many as 487 were situated in territories now constituting Pakistan. The Reserve bank of India was the central banking authority in India. At the time of partition it was decided that in the interest of smooth transition it should continue to function in newly emerging state of Pakistan, until 30th Sep.1948. In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. This resulted in a negative effect on baking service in Pakistan. The banks, which had their registered offices in Pakistan, transferred them to India. In an effort to bring about the collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank offices closed quickly. Those banks, which stayed, operated only in name pending the winding up of their business. The number of scheduled banks thus declined form 487 branches before independence to only 195 branches by 30th June1948. Banking Growth during (1948-1970) In this tense situation, a committee was immediately setup to formulate a scheme of central banking legislation for Pakistan. Many specialists were of the opinion that in view of the acute shortage of trained staff, any idea of establishing a central bank was I impractical and the best that could be attempted was the setting up of a currency board until such times as sufficient staff could be organize to operate a central bank. The questions as to whether the institution should be only a currency board or a full-fledged central bank had exercised the mind of the Pakistan government since independence. Through, it was realized that the shortage of trained personal to run the central bank would present serious difficulty in view of the tangible advantages that a central bank enjoyed over currency board, the
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government ultimately decided to take the bold step of setting up a full fledged central banking authority. Among other factors, which led to this decision, there was the fact the banking facilities in the country had been totally disrupted and there was an urgent need for their rehabilitation, which a central bank alone could meet. As there was hardly any time to pass as Act, an order was drafted, known as the state bank of Pakistan order, which was promulgated by the government of Pakistan on 12th may 1948. The state bank declared open on July 1, 1948 by the father of the nation. One of the first tasks of the state bank was to arrange for the replacement of the Reserve bank of India notes, which had continued to circulate in Pakistan during the transitional period, by Pakistan currency. The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 & 100. An equally urgent task, which the new central bank had to address itself, was the creation of a national banking system. To this end, while extending every help and encouragement to Habib Bank to expand its organization, the state bank recommended the setting up of a new banking institution to serve both as an agent to the state bank recommended the setting up of a new banking institution to serve both as an agent of the state bank as well as the spearhead of its credit polices. Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in November 1949. It started with six offices in the former East Pakistan. In view of the special role assigned to the new institution, contrary to traditional practices the Governor of the state bank was appointed to head its Board of Director in 1950. Under the fostering care of the state bank and the support of the government, the new institution developed rapidly. By using its special powers, the state bank made liberal advances to the new bank to help it expand credit facilities in the country. By 1952, the National bank of India shortly, afterwards, in November 1952, the governor of the state bank ceased to function as the president of National bank of Pakistan. With a view to broadening the institutional framework of the financial system, the state bank also sponsored the establishment of specialized credit institutions in the filed of agriculture and industry. Banking companies (control) act was passed in December 1948 specifically empowering the state bank to control the operations of banking companies in Pakistan.
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Moreover realizing that the most serious limitation on the expansion of banking services in Pakistan was the lack of trained personal, the state bank sponsored a banking training scheme, which was repeated after year and turned out a large number of bankers. As the Commercial Banking facilities continued to expand, a new Pakistani bank, the National Commercial Bank was established and registered as a scheduled bank. In the filed of industrial finance a new institution known as the industrial credit and investment cooperation was set up. The year 1958 marked the completion of the first decade of the working of the State Bank of Pakistan. When it was established there were only 195 bank offices in existence. At the end of June 1958 their number had increased to 307, of which Pakistani banks accounted for 232 against 25 in mid 1948. Moreover at the end of June 1958, Pakistani banks held 60% of the total banks deposits, and were responsible for 65 of total bank credit. When the Ayub Khan Government took over in 1958, the banking and monetary scene was significantly affected by developments such as the liberalization of imports, transfer of business in food grains to the private sector, and the firming up of commodity markets. The demand of funds picked up and there was a substantial expansion of bank credit to the private sector. The pace of expansion in the institutional frameworks of the countrys banking system quickened and a new Pakistani, bank, namely the United Bank Limited was established. Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The bank extended its network by opening six new offices located at Chitagong, Peshawar, Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to the list of scheduled banks. Two principal additions were the commerce bank, and the standard bank. The number of scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965. Under the impact of economic growth and dear scope of private enterprises, bank credit to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total expansion in bank credit to the private sector during this period amounted to Rs. 4300 million, which gave a annual expansion of Rs. 860 million compared to the annual average increase of Rs. 144 million over the preceding five years. Banks deposits increased from Rs. 2,493 million to Rs. 6883 million

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during the five years period ended June 1965 compared to Rs. 231 million in the proceeding five years. Time deposits during this period increased from Rs. 946 million to Rs. 3228 million, where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in time deposits was particularly rapid. The ratio of time deposits to total deposits in June 1965 stood at 49.6 percentage as against 32.01 percentage five years earlier. Another salient feature of banking development during this period was that since the rate of increase in bank deposits lagged behind the rate of expansion in bank credit, the banked has to depend increasingly on central bank finance. They borrowing from the state bank rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen demand for bank credit, banks investments could not increase as rapidly as their advances. Their investments totaled to Rs. 1,874 million at the end of June 1965 compared to Rs. 1,231 million in June 1960. Investments, which were almost equal to their advances in June 1960, were only about one third of the advances in June 1965.The third plane period witnessed a further expansion of banking facilities in the country the total number of scheduled banked offices increased from 1,591 at the end of June 1965 to 3133 at the close of June 1970. During the same bank credit to the private sector rose from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at the end of June 1970. A remarkable change occurred during this period related to the composition of deposits. Time deposit becomes greater than demand deposits forming about 54 percent age of the total deposits. As oppose to what happened in the previous period, banks were able to finance a mush higher level of credit expansion without having to increase their borrowings from the central bank. Banking Reforms 1972 After the assumption of office by a new government in 1971, may 1972 different reforms were introduced to make the banks more responsive to the requirements of economics growth with social justice. The reforms aimed at bringing about a more purposeful and equitable distribution of bank credit, improving the soundness and efficiency of the banks, and securing greater social accountability of the banking system as a whole. The role of the banking system had been truly spectacular in mobilizing savings of the community and meeting the credit needs of the economy. But at the same time, the banks had
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generally neglected their role in promoting social justice and had failed to play an effective role in ensuring a wider and more equitable dispersal of the benefits of economic growth. In particular the inter locking of ownership with commercial and industrial interests had led to the misuse of bank resources. There was a heavy concentration of credit in big accounts and in urban area. Credit facilities for agriculture, small business, newly emerging exports and housing had remained obviously inadequate while the banks indulged in capital financing in few selected business sectors and issued guarantees on behalf of favored clients, term clients, term financing facilities for industry were wholly absent. Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider powers. It was authorized to remove directors or managerial personnel, if necessary and supersede the board of directors of a banking company and appoint administrators during the period of such super session. It was also empowered to nominate directors on the board of every bank. As regard bank directors, it was provided that anyone defaulting in meeting his obligations to bank would forfeit his directorship. Moreover, it was laid down that no person could serve as director of a bank for more than six years continuously. Each bank was required to have a paid up capital of not less than 5 percent age of its deposits to be progressively build up to 10 percent age over a period of time. The banks were also required to transfer 10 percentage of their profit their reserves every years after the reserve became equal to the paid up capital. With a view to diversity the ownership of the banks, the banks were required to raise new capital from the market. Unsecured loans to directors, their families or firms and companies, were totally prohibited. The bank reforms also brought about the establishment of new institutions to achieve new objectives. A national credit consultative was setup under the supervision of the state bank with representation form the government and the private sector. It was assigned the task of determining of economys annual credit needs within the safe limits of monetary and credit expansion with reference to the annual development plan. Such a credit plan was to cover the public and private sectors. Alongside the National credit council and Agricultural Advisory Committee was formed to allocate agriculture credit for various purposes, to coordinate the

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operation or the agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing committee on exports in general and the new emerging exports in particular, was also established. With a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme was introduced under which the state bank under took to share any bonfire losses incurred by the commercial banks in case of small loans of advances to agriculture. At the same time two financing institutions were established. The peoples Finance Corporation was designed to provide finance to people of small means while the National Development Finance Corporation was set up of finance public sector owned and managed industries and enterprises. Nationalization of Banks (1974) In Pakistan The banking reforms turned to be transitional and interim step and when they were hardly eighteen months old the government nationalized the banking systems, with the following main objectives. To enable the government to use the capital concentrated in the hands of a few rich bankers for the rapid economic development of the country and the more urgent social welfare objectives. To distribute equitably credit too different classes sectors and regions. To coordinate the banking policies in various area of feasible joint activity without eliminating healthy competition among banks. The act passed for the nationalization of banks is known as the banks Nationalization Act 1974. Thus under this act the state bank of Pakistan and all the commercial banks incorporated in Pakistan and carrying business in or outside the country were brought under government ownership with effect from Jan 1, 1974. The ownership, management and control of all Pakistani banks stood transferred to and vested in the Federal government. The shareholders were provided compensation in the form of federal government bonds redeemable at par anytime within the period of fifteen years. Under the Nationalization act, the Chairman, Directors and Executives of various banks, other than those appointed by federal government were removed from their offices and the central boards of the banks and all local bodies were dissolved. Pakistan banking council was established to coordinate the activities of the Nationalized Commercial banks. At the time of Nationalization on December31, 1973 there were following 14 Pakistani commercial banks with 3323 offices allover Pakistan and 74 offices in foreign countries:
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 National banks of Pakistan Habib bank limited Habib bank (overseas) limited United bank limited Muslim commercial bank limited Commerce bank limited Standard bank limited Australia bank limited Bank of Bahawalpur limited Premium bank limited Pak Bank limited Sarhad bank limited Lahore commercial limited Punjab provincial co-operative bank limited The Pakistan banking council prepared a scheme for the recognition of banks. The bank (amalgamation) scheme 1974 was notified in April, providing for the amalgamation of the smaller banks with bigger ones and following the five units in there phases: National bank limited Habib bank limited United bank limite Muslim commercial bank limited Allied bank of Pakistan limited

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The first phase was completed on 30th June. 1974. When the bank Bahawalpur was merged with the National Bank of Pakistan. The premier Bank Limited with Muslim Commercial Bank limited and Sarhad Bank Limited and Pak bank limited and renamed as Allied Bank of Pakistan limited. The second phase was completed on 31st Dec.1974, when the commerce bank limited merged with the United Bank limited. The third and the final phase were completed on 30th June 1975 when the standard bank limited was merged with Habib Bank limited. The nationalization was very smooth and gave very positive results. The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end June 1992. The bank deposits, which stood at Rs. 1925 corers at the end 1973 reached the highest, mark about 323 corers. Islamization of Banking Another major development in the history of Pakistan Banking System was the introduced of interest free banking in selected Commercial Banks with effect form Jan1, 1981. This followed the effort to eliminated interest from the operation of Nation investment trust, the House Building Finance Corporation of Pakistan. Certain amendments were made in banking and other laws with the object of ushering in a new system of banking, which would confirm of Sharia. A new law Modaraba Companies Ordinance 1980 was promulgated. Separate interest free counters began to operate in all the nationalized commercial banks free counters began to operate in all the nationalized commercial banks. The state bank provides finance against participation term certificate and also against promissory notes supported by Modaraba certificate. In order to cover interest free transactions certain banking definitions such as creditors, debtor, and advances credits and deposits were revised. Stipulations concerning form of business in which banking companies may engage may also have been modified schemes were introduced to provide interest free loans to formers and deserving students. A private Limited Company named as Bankers Equity limited was incorporated in 1979 to provide financial assistance to the industrial sector primarily on interest free basis. A scheme to extend interest free productive loans to farmers and fisherman has also been introduced. Instead of interest, a system based on mark-up in price, exchange rate differential, and profit and loss sharing accounts were introduced.
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Different financial schemes introduced in the Islamization process are: Musharika Financing. Hire Purchase Financing. Modaraba Financing. Specific Purpose Modaraba. Dis-investments and Deregulation of Banking 1991 When it was realized that the role of public sector in the economy is over extended and the banking sector has more earning potential in the private sector the process of privatization banking sector restarted in 1991 by the Muslim League Government. Muslim Commercial Bank was Dis-invested in to two phases while ABL was sold to its employees. Since then allot of investment is being made in the banking sector and several new banks were established and still the process is going on. Now only NBP is government bank other than SBP. The performance of this bank will be analyzed and judged in the following chapters. Interest Free Banking A new concept of interest free banking was introduced in 1981 and by now it has been established on sound footing and new trends and techniques are being implemented to make this system result oriented. New products and their systematic consumption are making Pakistani banking comparable to their several modern counterparts anywhere in the developed world.

HISTORY OF NBP
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements.

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It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The Bank in 1950 had one subsidiary The Bank of Bahawalpur on December4, 1947 by the former Bahawalpur State. NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at 57 of its offices where the turnover of the business under the head amounted to Rs.2460 million. i) Deposits held by NBP constituted about 3.1% of total deposits of all

Pakistani Banks in 1949, which rose to 38% in 1952. ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances. NBP

lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and commerce. iii) NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule bank credit.

MISSION STATEMEN T
To make the bank complete and competitive with all international standards with performing the quality of operations, staff, and financial strength. And products and services To develop a culture of excellence in every spare of activity of the bank.

GOALS AND OBJICTIVES

An organizational objective is the intended goal that prescribes definite scope and suggests direction to the panning efforts of a organization. Goals and objectives NBP To be the pre-eminent financial institution in Pakistan and achieve market recognition both in the quality and delivery of service as well as the range of product offerings.

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PRODUCT LINES AND SERVICES

NBP offers the following services to the people. Demand Drafts If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBPs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. Swift System The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. The system has built-in features of computerized test keys, which eliminates the manual application of tests that often cause delay in the payment of home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs. LETTERS OF CREDIT NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions. TRAVELER'S CHEQUES Travelers cheques are negotiable instruments, and there is no restriction on the period of validity of the cheques. Rupee travelers cheque is available at all 700 branches of NBP. This can be encashed in all 400 branches of NBP. There is no limit on purchase of this cheque. It is one of the safest ways for carrying money.

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PAY ORDER NBP provides another reason to transfer your money using our facilities. NBP pay orders are a secure and easy way to move your money from one place to another. And, as usual, NBP charges for this service are extremely competitive. The charges of NBP are very low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order. And charges Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs 25/- for students on payment of fees of educational institutions. MAIL TRANSFERS Move your money safely and quickly using NBP Mail Transfer service. And NBP also offer the most competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage charges on issuing mail transfer. FOREIGN REMITTANCES: To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to:

Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries

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New Features: The existing system of home remittances has been revised/significantly improved and welltrained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

Zero Tariffs: NBP is providing home remittance services without any charges. Strict monitoring of the system is done to ensure the highest possible security. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.

SHORT TERM INVESTMENTS NBP now offers excellent rates of profit on all its short term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBPs rates of profit are extremely attractive, along with the security and service only NBP can provide. National Income Daily Account (NIDA) The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. Salient Features: Rs 2-million is required to open an account and there is no maximum limit. Profit is paid on half yearly basis on monthly balances. The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2 million to 2,000 million, the rate fluctuates from 1.4 to 1.75 It is a checking account and there is no limit of withdrawal.
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Rates on NIDA From Rs 2/- million to Rs 50/- the rate is 1.4%. From Rs50/- million but less than Rs 500/-million, the rate is 1.5%. From Rs 500/- million but below Rs 1000/- the rate is 1.6%. From Rs 1000/- and above the rate is 1.75%.

EQUITY INVESTMENTS NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. NBP is involved in the following:

Investment into the capital market Introduction of capital market accounts (under process)

NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders COMMERCIAL FINANCE NBP dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customers best resource in making NBPs products and services work for them. TRADE FINANCE OTHER BUSINESS LOANS There are two types of trade finance.

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AGRICULTURAL FINANCE NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World. Agricultural Finance Services: I Feed the World program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production. Agricultural Credit: The agricultural financing strategy of NBP is aimed at three main objectives:

Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.

Agricultural Credit (Medium Term):

Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing

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Solar energy Equipment for sprinklers

Farm Credit: NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis.

Operating loans Land improvement loans Equipment loans for purchase of tractors, farm implements or any other equipment

Livestock loans for the purchase, care, and feeding of livestock. Production Loans: Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme. If you require any further information, please do not hesitate to e-mail us.

CORPORATE FINANCE Working Capital and Short Term Loans: NBP specializes in providing Project Finance Export Refinance to exporters Pre-shipment and Post-shipment financing to exporters Running finance Cash Finance Small Finance Discounting & Bills Purchased Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans

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Medium term loans and Capital Expenditure Financing: NBP provides financing for its clients capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients attempt to upgrade and expand their operation thereby making possible the fulfillment of our clients vision. This type of long term financing proves the banks belief in its client's capabilities, and its commitment to the country. Loan Structuring and Syndication: National Banks leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction. Cash Management Services: With National Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, youll be provided everything, which takes to manage your cash flow more accurately INTERNATIONAL BANKING National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is:-

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To effectively manage NBPs exposure to foreign and domestic correspondence Manage the monetary aspect of NBPs relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability.

Generation of incremental trade-finance business and revenues

NBP offers:

The lowest rates on exports and other international banking products Access to different local commercial banks in international banking

Cash and Gold Finance. Cash and Gold finance means that loan is given against the gold. The gold is mortgaged with the bank and loan is taken. It is the area of consumer finance. And borrower can take loan for common use. Advance salary loan: This loan is given to those people who are govt servants. They can get a loan up to the salary of fifteen months. REFRENCES 1. http/www.nbp.com.pk .services 2. Annual reports 2001, 2002, 2003.

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ORGANIZATIONAL STRUCTURE
Organizational Hierarchy Chart of National bank of Pakistan is under below:

Organizational Hierarchy Chart

Chairman & President

Board, Corp, Affairs, Private and Operational Committee

Credit / Risk Management Group

Operations Group

Audit and Inspection Group

Compliance Group

HR & Admin Group

Commercial & Retail Banking Group

Treasury Management Group

Special Asset Management Group

Information Technology Group

Corporate & Investment Banking Group

Cash management and trade finance group

Overseas Banking Group

Islamic Banking Group

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Number of Employees
Permanent Temporary/ On Contractual basis Bank's own staff strength at the end of the year Outsourced Total Staff Strength 13237 842 14079 2350 16429

An employee may be defined as: "A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed." iAn employee contributes labor and expertise to an endeavor. Employees perform the discrete activity of economic production. Of the three factors of production, employees usually provide the labour. Specifically, an employee is any person hired by an employer to do a specific "job". In most modern economies, the term employee refers to a specific defined relationship between an individual and a corporation, which differs from those of customer, or client. The relationship between National Bank of Pakistan and its employees is usually handled through the Human Resource Management & Administration Group & Employees benefit disbursement & trustee division. These groups handle the incorporation of new hires, and the disbursement of any benefits which the employee may be entitled, or any grievances that employee may have. There are differing classifications of workers within National Bank of Pakistan, these are: Permanent Temporary / On Contractual Outsourced The Employees of National Bank of Pakistan are organizing into trade unions, which represent most of the available work force in National Bank of Pakistan. These trade Unions utilize their representative power to collectively bargain with the management of bank in order to advance concerns and demands of their membership.

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INTRODUCTION WITH DEPARTMENTS

Dividing an organization into different parts according to the functions is called departmentalization. We are discussed here the Golbag Branch of National Bank of Pakistan Multan, its Branch Code is 0542. Branch Manager is Madam Mehreen Tanveer Bhatti and Amir Khalil is the operational manager of Golbag Branch Multan of National Bank of Pakistan. CASH DEPARTMENT Cash department performs the following functions Receipt The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards. Payments It is a bankers primary contract to repay money received for this customers account usually by honoring his cheques. Cheques and their Payment The Negotiable Instruments. Act, 1881, Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand2. Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say that a Cheque can be defined as an: An unconditional order in writing drawn on a specified banker, signed by the drawer, requiring the banker to pay on demand a sum certain in money to, or to the order of, a specified person or

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to the bearer, and which does not order any act to be done in addition to the payment of money3. (Law of Banking by Dr. Hart, p.327). The Requisites of Cheque There is no prescribed form of words or design of a Cheque, but in order to fulfill the requirements mentioned in Section 6 above the Cheque must have the following. a) b) c) d) e) f) g) It should be in writing The unconditional order Drawn on specific banker only Payment on Demand Sum Certain in money Payable to a specific person Signed by the drawer

Parties to Cheque The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no payee but bearer. a) b) c) The Drawer The Drawee The Payee

Types of Cheques Bankers in Pakistan deal with three types of cheques a) Bearer Cheques
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Bearer cheques are cashable at the counter of the bank. These can also be collected through clearing. b) Order cheque These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification. It can also be collected through clearing. c) Crossed Cheque These cheques are not payable in cash at the counters of a banker. It can only be credited to the payees account. If there are two persons having accounts at the same bank, one of the account holder issues a cross-cheque in favour of the other account holder. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque. 5.1.7) Payment of Cheques It is a bankers primary contract to repay money received for his customers account usually by honouring his cheques. Payment of money deposited by the customer is one of the root functions of banking. The acid test of banking is the receipt of money etc. from the depositors, and repayment to them. This paying function is one, which is the distinguishing mark of a banker and differentiates him from other institutions, which receive money from the public. However the bankers legal protection is only when payment is in Due Course. The payment in due course means payment in accordance with the apparent tenor of the instrument, in good faith and without negligence to any person in possession thereof under circumstances, which do not afford a reasonable ground of believing that he is not entitled to receive payment of the amount therein mentioned. It is a contractual obligation of a banker to honor his customers cheques if the following essentials are fulfilled. a) b) Cheques should be in a proper form: Cheque should not be crossed:

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c) d) e) f) g)

Cheque should be drawn on the particular bank: Cheque should not mutilated: Funds must be sufficient and available: The Cheque should not be post dated or stale: Cheque should be presented during banking hours:

CLEARANCE DEPARTMENT A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. The function of clearinghouse is performed by the central bank of a country by tradition or by law. In Pakistan, the clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as a clearinghouse. After the World War II, a rapid growth in banking institutions has taken place. The use of cheques in making payments has also widely increased. The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at the bank of the drawer, the mutual obligation are settled by the internal bank administration and there arises no inter bank debits from the use of cheques. The total assets and total liabilities of the bank remain unchanged. In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer. He deposits the cheque with his bank other than of payer for the collection of the amount. Now the bank in which the cheque has been deposited becomes a creditor of the drawers bank. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions. The banks on which the cheques are drawn become in debt to the bank in which the cheques are deposited. At the same time, the creditors banks receive large amounts of cheques drawn on other banks giving claims of payment by them.

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The easy, safe and most efficient way is to offset the reciprocal claims against the other and receive only the net amount owned by them. This facility of net inter bank payment is provided by the clearinghouse. The representatives of the local commercial banks meet at a fixed time on all the business days of the week. The meeting is held in the office of the bank that officially performs the duties of clearinghouse. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank. The cheques are then sorted according to the bank on which they are drawn. A summary sheet is prepared which shows the names of the banks, the total number of cheques delivered and received by them. Totals are also made of all the cheques presented by or to each bank. The difference between the total represents the amount to be paid by a particular bank and the amount to be received by it. Each bank then receives the net amount due to it or pays the net amount owed by it. In-Word Clearing Books The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. All details of the cheques are recorded in this book. Out-Word Clearing Book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the bank has delivered to other banks. ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans. The Credit Management Division of Head Office directly controls all the advances. As we known bank is a profit seeking institution. It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all financial institutions, because it is the main source of earning. However, at the same time, it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques.
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Any individual or company, who wants loan from NBP, first of all has to undergo the filling of a prescribed form, which provides the following information to the banker. Name and address of the borrower. a) b) c) d) e) Existing financial position of a borrower at a particular branch. Accounts details of other banks (if any). Security against loan. Exiting financial position of the company. (Balance Sheet & Income Statement). Signing a promissory note is also a requirement of lending, through this note borrower promise that he will be responsible to pay the certain amount of money with interest. Principles of Advances There are five principles, which must be duly observed while advancing money to the borrowers. Safety Liquidity Dispersal Remuneration Suitability a. Safety Bankers funds comprise mainly of money borrowed from numerous customers on various accounts such as Current Account, Savings Bank Account, Call Deposit Account, Special Notice Account and Fixed Deposit Account. It indicates that whatever money the banker holds is that of his customers who have entrusted the banker with it only because they have full confidence in the expert handling of money by their banker. Therefore, the banker must be very careful and

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ensure that his depositors money is advanced to safe hands where the risk of loss does not exist. The elements of character, capacity and capital can help a banker in arriving at a conclusion regarding the safety of advances allowed by him. b. Character

It is the most important factor in determining the safety of advance, for there is no substitute for character. A borrowers character can indicate his intention to repay the advance since his honesty and integrity is of primary importance. If the past record of the borrower shows that his integrity has been questionable, the banker should avoid him, especially when the securities offered by him are inadequate in covering the full amount of advance. It is obligation on the banker to ensure that his borrower is a person of character and has capacity enough to repay the money borrowed including the interest thereon. c. Capacity

This is the management ability factor, which tells how successful a business has been in the past and what the future possibilities are. A businessman may not have vast financial resources, but with sound management abilities, including the insight into a specific business, he may make his business very profitable. On the other hand if a person has no insight into the particular business for which he wants to borrow funds from the banker, there are more chances of loss to the banker. d. Capital

This is the monetary base because the money invested by the proprietors represents their faith in the business and its future. The role of commercial banks is to provide short-term capital for commerce and industry, yet some borrowers would insist that their bankers provide most of the capital required. This makes the banker a partner. As such the banker must consider whether the amount requested for is reasonable to the borrowers own resources or investment.

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e.

Liquidity

Liquidity means the possibilities of recovering the advances in emergency, because all the money borrowed by the customer is repayable in lump sum on demand. Generally the borrowers repay their loans steadily, and the funds thus released can be used to allow fresh loans to other borrowers. Nevertheless, the banker must ensure that the money he is lending is not blocked for an undue long time, and that the borrowers are in such a financial position as to pay back the entire amount outstanding against them on a short notice. In such a situation, it is very important for a banker to study his borrowers assets to liquidity, because he would prefer to lend only for a short period in order to meet the shortfalls in the wording capital. If the borrower asks for an advance for the purchase of fixed assets the banker should refuse because it shall not be possible for him to repay when the banker wants his customer to repay the amount. Hence, the baker must adhere to the consideration of the principles of liquidity very careful. f. Dispersal

The dispersal of the amount of advance should be broadly based so that large number of borrowing customer may benefit from the bankers funds. The banker must ensure that his funds are not invested in specific sectors like textile industry, heavy engineering or agriculture. He must see that from his available funds he advances them to a wide range of sector like commerce, industry, farming, agriculture, small business, housing projects and various other financial concerns in order of priorities. Dispersal of advances is very necessary from the point of security as well, because it reduces the risk of recovery when something goes wrong in one particular sector or in one field. g. Remuneration

A major portion of the bankers earnings comes form the interest charged on the money borrowed by the customers. The banker needs sufficient earnings to meet the following: a) b) Interest payable to the money deposited with him. Salaries and fringe benefits payable to the staff members.

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c) d) e) f) h.

Overhead expense and depreciation and maintenance of the fixed assets of the bank. An adequate sum to meet possible losses. Provisions for a reserve fund to meet unforeseen contingencies. Payment of dividends to the shareholders. Suitability

The word suitability is not to be taken in its usual literary sense but in the broader sense of purport. It means that advance should be allowed not only to the carefully selected and suitable borrowers but also in keeping with the overall national development plans chalked out by the authorities concerned. Before accommodating a borrower the banker should ensure that the lending is for a purpose in conformity with the current national credit policy laid down by the central bank of the country. Forms of Loans In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the form of cash finance, overdrafts and loans. NBP provides advances to different people in different ways as the case demand. Cash Finance This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods, produce or merchandise. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit, either at once or as and when required. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. If the borrower does not utilize the full limit, the banker has to lose return on the un-utilized amount. In order to offset this loss, the banker may provide for a suitable clause in the cash finance agreement, according to which the borrower has to pay markup/service charges on at

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least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount. Overdraft/Running Finance This is the most common form of bank lending. When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance which the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is generally allowed against collateral securities. When it is against collateral securities it is called Secured Overdraft and when the borrowing customer cannot offer any collateral security except his personal security, the accommodation is called a Clean Overdraft. The borrowing customer is in an advantageous position in an overdraft, because he has to pay service charges only on the balance outstanding against him. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis, while an overdraft is a temporary accommodation occasionally resorted to. Demand Financing/Loans When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time, it is called a loan. When bankers allow loans to their customers against collateral securities they are called secured loans and when no collateral security is taken they are called clean loans. The amount of loan is placed at the borrowers disposal in lump sum for the period agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security REMITTANCE DEPARTMENT Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. NBP offers the following forms of remittances.

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a) b) c) d)

Demand Draft Telegraphic Transfer Pay Order Mail Transfer

Demand Draft Demand draft is a popular mode of transfer. The customer fills the application form. Application form includes the beneficiary name, account number and a senders name. The customer deposits the amount of DD in the branch. After the payment the DD is prepared and given to the customer. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch. The account of the customer is credited when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. DD are of two types. a) b) Open DD: Cross DD: Where direct payment is made. Where payment is made though account.

NBP CHARGES FOR DD5 I. II. Up to Rs. 50,000/- is Rs 50/- only Over Rs. 50,000/- is 0.1%

Pay Order Pay order is made for local transfer of money. Pay order is the most convenient, simple and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay order from the account holder and Rs. 100 from a non-account holder.

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Telegraphic Transfer Telegraphic transfer or cable transfer is the quickest method of making remittances. Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the specified person. The customer for requesting TT fills an application form. Vouchers are prepared and sent by ordinary mail to keep the record. TT charges are taken from the customer. No excise duty is charged on TT. The TT charges are: Telegram/ Fax Charges on TT = Actual-minimum Rs.125. Cable telegram transfer costs more as compared to other title of money. In cable transfer the bank uses a secret system of private code, which is known to the person concerned with this department and branch manager. Mail Transfer When the money is not required immediately, the remittances can also be made by mail transfer (MT). Here the selling office of the bank sends instructions in writing by mail to the paying bank for the payment of a specified amount of money. Debiting to the buyers account at the selling office and crediting to the recipients account at the paying bank make the payment under this transfer. NBP taxes mail charges from the applicant where no excise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/- if sent by registered post locally Rs.40/- if sent by registered post inland on partys request. HUMAN RESOURCE MANAGEMENT Human Resource plays a vital role in the success of every service organization. They interact between man and machine. Their attitude can win or loose the customer. The positive attitude could only be created in a conductive environment, which can make the staff dedicated towards the organization and its objectives. In reality the man is more important than machine as it is the human which could get maximum out of machine to keep a happy customer. However, most organizations give little importance to this very important asset. Various aspects related to human resource of National Bank of Pakistan are critically examined in the following text:

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Selection & Recruitment Although the Bank believes in merit but in practice the selection of employees is not done on merit. Most of the employees are low educated. This shows that candidates with some strong family background or political pressure are given preference in recruitment and qualified candidates are sometimes left behind. Job for Life Like the employee of public sector organizations in Pakistan, the employees of NBP also enjoy their job for life. Since there is no risk of early retirement or redundancy in rank, they do not perform with their full potentials. This is one redundancy in rank, they do not perform with their full potentials, and this is one of the reasons responsible for the low productivity of the employees of the Bank. Performance Appraisal The performance of employees of the Bank are appraised though their annual confidential reports at the end of each year. This has become an outdated method of performance appraisal and no longer used due to the following reasons: 1. 2. 3. 4. The performance of employees is evaluated after quite a long time. Element of subjectivity is involved in this method. Employees participation is not ensured in the process of evaluation. Objectives of employees are not quantified.

Inter Personal Relationship Modern management acknowledges human resources as one of the most important assets of an organization. But by their very nature, human beings are also the most unpredictable. Where a number of persons work together, interactions among them, of necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in NBP can be traced back to the following major heads.
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Lack of Communication Lack of communication is for the biggest reason for conflicts. Not only it is due to the failure to send a massage but to an interpretation given to the massage by the receiver is different from that intended. Diversity in Values Diversity in values, perceptions, cultural background and life-style is another reason responsible for inter personal conflicts in NBP. Different values and perceptions about the same issue, event or personality hinder understanding. When things come to such a pavement, therefore, interpersonal conflicts are generated. The dominant trend in all modern industrial societies of the world is merit and expertise, which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still very strong in our set up and there is no tradition of tolerance for differing viewpoints. Hence, interpersonal conflicts are generated. Corruption Our social acceptance of corruption gives rise to corruption at every level of social and organizational set up. Corruption involves financial embezzlement, favoritism, nepotism, cronyism and other number of such practices. All these cause resentment that keep building up and lead to conflict sooner or later. In the past few years, some cases of frauds have happened in different branches. The reasons can be linked with the employee dissatisfaction of NBP. Discipline & Authority Maintaining discipline and implementation of authority (tables) in letter and spirit is the key to success of any organization. In NBP, The authority tables are not strictly maintained. Line managers are not fully equipped with the authority with no vertical or horizontal interference.

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DEPOSIT DEPARTMENT: It controls the following activities: a) b) c) d) e) f) A/C opening. Issuance of cheque book. Current a/c Saving a/c Cheque cancellation Cash

Account opening The opening of an account is the establishment of banker customer relationship. Before a banker opens a new account, the banker should determine the prospective customers integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening. Preliminary investigation is necessary because of the following reasons. i. ii. iii. iv. Avoiding frauds Safe guard against unintended over draft. Negligence. Inquiries about clients.

There are certain formalities, which are to be observed for opening an account with a bank. Formal Application Introduction Specimen Signature
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 1. 2. 3.

Minimum Initial Deposit Operating the Account Pay-In-Slip Book Pass Book Issuing Cheque Book

a) Qualification of Customer The relation of the banker and the customer is purely a contractual one, however, he must have the following basic qualifications. He must be of the age of majority. He must be of sound mind. Law must not disqualify him. The agreement should be made for lawful object, which create legal relationship Not expressly declared void.

b) Types of Accounts Following are the main types of accounts 1) 2) 3) Individual Account Joint Account Accounts of Special Types Partnership account Joint stock company account

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 Accounts of clubs, societies and associations Agents account Trust account Executors and administrators accounts Pak rupee non-resident accounts Foreign currency accounts1 Issuing of cheque book: This deptt issue cheque books to account holders. Requirements for issuing cheque book a) The account holder must sign the requisition slip b) Entry should be made in the cheque book issuing book c) three rupees per cheque should be recovered from a/c holder if not then debit his/her account. Current account These are payable to the customer whenever they are demanded. When a banker accepts a demand deposit, he incurs the obligation of paying all cheques etc. drawn against him to the extent of the balance in the account. Because of their nature, these deposits are treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on these deposits, and customers are required to maintain a minimum balance, failing which incidental charges are deducted from such accounts. This is because the depositors may withdraw Current Account at any time, and as such the bank is not entirely free to employ such deposits. Until a few decades back, the proportion of Current Deposits in relation to Fixed Deposits was very small. In recent years, however, the position has changed remarkably. Now, the Current

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Deposits have become more important; but still the proportion of Current Deposits and Fixed Deposits varies from bank to bank, branch to branch, and from time to time. Saving account Savings Deposits account can be opened with very small amount of money, and the depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate calculated on six-month basis under the Interest-Free Banking System. There is no restriction on the withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder. It discourages unnecessary withdrawals from the deposits. In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme for school and college students and industrial labor also. The purpose of these accounts is to inculcate the habit of savings in the constituents. As such, the initial deposit required for opening these accounts is very nominal. Cheque cancellation: This deptt can cancel a cheque on the basis of; a) Post dated cheque b) Stale cheque c) Warn out cheque d) Wrong sign etc Cash This deptt also deals with cash. Payment of cheques, deposits of cheques etc. FOREIGN EXCHANGE/DEPARTMENT: This deptt mainly deals with the foreign business. The main functions of this deptt are:

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a) L/C dealing. b) Foreign currency accounts dealing. c) Foreign Remittance dealing. L/C dealing NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions. Foreign currency account dealing: This deptt deals with the foreign currency accounts which mainly include dollar account, euro account etc. Foreign Remittance dealing. This is very important function of this deptt.

DEPARTMENTATION OF GOLBAGH BRANCH NBP

Dividing an organization into different parts according to the functions is called departmentation. So NBP Golbag branch is divided into two main parts. 1. 2. Cash Department General Banking Department.

Cash Department: Cash department mainly deals in cash. The Head of department is Shakil Nawaz and two cashier Sohail Rasheed and Sana Naseer the objective of cash department. To facilitate people in the payments of their bills and taxes and repayments of cash
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There are two main functions of cash department. i. i. ii. Payment ii. Receipts

Payments are the function that they pay their cheques and pay cash. Receipts mean collection of utilities bills, taxes etc.

General Banking In this section of the bank the general banking function is performed. It is divided into five departments. i. ii. iii. iv. v. Remittances Department. Computer Department. Advances Department. Clearing Department. Establishment Department.

Remittances Department: This department is header by Chaudry Zafar Moeen-u-din a very competent person. The objective of this department is:To transfer the money of people from one place to another place in safe and comparable way The main functions of this department are: i. ii. iii. Issuing of demand draft. Issuing of Mail transfer. Issuing of Telegraphic transfer.

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iv. v. vi. vii.

Issuing of payment order. Issuing of call deposit. Pension payments etc. Closing and scrolling of government collections.

Advances department: Every bank has a department which advances money to borrowers. In NBP Golbag Branch the advances department is head by the Business Manager Sir Asim and Operation Manager Sir Pervez. Both are very competent persons. The objective of Advances Department is To facilitate people by giving short term and long term loans on easy terms and conditions. The main function of this Department is to take surplus money from the people at low rates and lend this money to borrowers at high rates to earn profit. Clearing Department: 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. In NBP Golbag Branch this department is headed by Ameer Shehzad having experience of about thirty years. The objective of this department is to To facilitate customers for payment their Cheques of other banks. Two type of clearing books are maintained. i. In word clearing books:

The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. All detail of the cheques are recorded in this book.

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ii.

Out word clearing book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the banks have delivered to other banks.

Computer Department: This department headed by the accountant Tariq Afridi and two other persons Mr. Junaid and Mr. Shahid are performing the real function. The objective of this Department is to facilitate customers in payment of their cheques. The main functions performed by this department are: a) b) c) d) Checking balance. Deduction from balance on clearing cheques. Issuing bank statements. Dealing Western Union.

Establishment Department: NBP Golbag Branch having an Establishment Department. This Department consists of only one person Haji Misri Khan very competent and experienced person. This department mainly deals with the branch employees. The main objective of this department is to To regulate bank business. Main functions of this department are: a) b) c) Keeps the record of attendance of employees. Employees salaries distribution. Employees bonuses etc.

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REFRENCES
1 Sir Paged John The law of Banking 4th edition page 431. 2 The Negotiable Instruments. Act, 1881. 3 Dr Hart Law of Banking, p.327 4 5 Dr Hart Law of Banking, p.327 Circular bank charges June 2003.page 15.

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PLANNING OF INTERSHIP PROGRAM

As part of the university requirement for completing MBA (HRM) Master of Business Administration, the students are required to under go for six weeks of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. This report is about Golbag Branch Multan of National Bank of Pakistan. I start my internship in NBP Golbag Branch at 20th June 2011 to 05th August 2011 and worked in HR Department as an internee in all that duration but visits all other department also according to my free time in my specific department.

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TRAINING PROGRAM
The main purpose of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a useful manner. To work practically in an organization. To develop interpersonal communication. As an internee in Human Resource Department of National Bank of Pakistan the main focus of my study research was on Human Resource procedures in Goal Bagh branch of NBP. These operations include Human Resource Planning and forecasting, Employee Recruitment and Selection, Employees Training and Development, Performance management, Employees compensation and benefits, Organizational career management and Labor management relations that we will be discuss in the next portion of report briefly. Similarly different aspects of overall of NBP are also covered in this report.

Objectives of the Study

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

Limitation of The Study

Some thing is better than nothing. No matter how efficiently a study is conducted, it cannot be perfect in all respects. This study was conducted in accordance with the objectives of the study. The study may not include broad explanations of facts and figures due to the nature of the study. Secondly, the limitation, which affects the study, is the restriction on mentioning every fact of the bank due to the problem of secrecy of the bank. In addition, the availability of required data was a problem as all the documents and files are kept strictly under lock and key due to their strictly confidential nature. Thirdly, the problem of short time period also makes the analysis

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restricted as one cannot properly understand and thus analyze all the operations of a bank just a very short time of eight weeks.

Benefit of The Study

The study done will benefit the finance students in particular and banking students in general because the financial analysis section of this report comprehensively encompasses all respects of financial analysis. Furthermore, NBP Branch may also benefit from the recommendations made at the end of the report. RESEARCH METHODOLOGY 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. Formally arranged interviews and discussions also helped me in this regards. Primary data: Primary data include, Personal observation and Interviews of The Staff Members Secondary data: Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet.

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STRUCTURE OF HR DEPARTMENT

Head HR

Senior Manager HR

Manager HR

Assistant Manger HR

Senior HR Executive

HR Executive

HR Assistant

Number of Employees in HR Department

There are only 2 number of employees in the HR Department of Golbag Branch Of National Bank Of Pakistan in which one HR Manager, One Asst. HR Manager to control all the department.

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FUNCTIONS OF HRM DEPARTMENT

Various aspects related to human resource of National Bank of Pakistan are critically examined in the following text:

HUMAN RESOURCE PLANNING & FORECASTING

Steps of planning process in NBP Determining the objectives Defining required skills to meet objectives Determine additional Human Resource requirements Develop action to meet the anticipated Human Resources needs.

FORECASTING
Zero-Base Forecasting This method uses the NBPs current level of employment as the starting point for determining the future staff needs for the National Bank of Pakistan. Bottom-Up-Approach In this method each successive level of NBP start with lowest, and forecast its employee requirements in order to ultimately provide an aggregate forecast of employment needs. Use of Mathematical Model Mathematical models defines the relationship between the demand and number of employees needed. Simulation It is experimenting with real world situation through a mathematical model representing that situation.

EMPLOYEE RECRUITMENT & SELECTION

Although the Bank believes in merit but in practice the selection of employees is not done on merit. Most of the employees are low educated. This shows that candidates with some strong

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family background or political pressure are given preference in recruitment and qualified candidates are sometimes left behind. Employee Selection
CV screening and short listing Final Panel / Group interviews Written Entry Test

Recruitment

&

Initial HR interviews

Selection and offer

GPA Requirements:Minimum GPA.3.0 out of 4 or 3.7 out of 5.0 where GPA system is pplicable, where GPA system is not in practice candidates must have secured a minimum of 70% aggregate marks in the examination. Only those who have already received final results are eligible to apply (Executive MBAs are ineligible). Age Limit:- Maximum age limit 26 years as on 31.07.2009. Compensation:- Management Trainees will be appointed as Officer Grade-Il in regular cadre and will receive a gross compensation of around Rs.30,000I- per month plus bonuses, liberal perks and end service benefits. Training & Development:- They will receive comprehensive training in banking and management to groom them as professional bankers. Career Growth:- Management Trainees on completion of three years will be promoted as Officer Grade-I and in next three years as Assistant Vice President on the basis of their performance.

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Selection Process:- Candidate will be required to appear for written test on the pattern of GMAT/GRE. Successful applicants will participate in group discussion and final interview The National Bank of Pakistan (NBP) is all set to reverse all the appointments made during the period of the Task Force on Employment (TFE), leaving a big question mark on the authenticity of thousands of appointments made in other government departments, including the PWD and the Utility Stores Corporation. For the first time in NBPs history, about 360 positions in OG-III, OG-II and OG-I were advertised by the TFE through the Ministry of Finance. According to Fazal-ur-Rehman, HR consultant of the NBP, about 11,000 candidates appeared in the tests held across the country for these positions. According to credible NBP sources, the whole process of appointments was politically manoeuvred by the then DG of the task force, Ghulam Qadir Jamote. The appointment letters in different categories were issued even before the answer sheets were evaluated, the sources added. Sources in the NBP showed The News bundles of un-checked answer sheets stored at the office of the HR coordinator in the NBP Staff College, Melody, Islamabad. Fazal-ur-Rehman confirmed to The News that about 100 appointment letters had been issued in the categories of cash officers and customer facilitation officers. If the Task Force on Employment is abolished, we will reverse all the appointments made so far and will start the whole process again by following the NBP rules and procedure of appointments, he said. When told that some of the answer sheets in the categories he mentioned were un-checked as seen by The News, Fazal, who headed the whole process in collaboration with Ghulam Qadir Jamoot, said there might be some un-checked answer sheets but as we are going to reverse these appointments so there should be no problem now in this regard. Top officials in the NBP alleged gross irregularities in every appointment as even the answer sheets were not evaluated, but Fazal denied any collaboration with Jamote during the hiring process. Sources said that Faizan, son of Fazal, used to remain in contact with Jamote to ensure that appointments were made in accordance with the understanding between the two sides.
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Jamote, while talking to The News on Tuesday said though he knew Faizan very well but he had no role in the recent appointments in the bank. President NBP Ali Raza, when approached by The News for his comments, said he was not fully in the picture and referred this scribe to Fazalur-Rehman and Dr Ibrar Baig. Baig is the head of NBPs HRM. When Ali Raza was told that according to Fazal the appointments made during the time of the task force would be reversed, he said if he was saying it then it will be so. When asked what led to his dismissal by Prime Minister Syed Yousuf Raza Gilani who also abolished the TFE on Tuesday, he said these were decisions of a political government and claimed that the TFE was strictly following the merit. Asked about the new assignment he is likely to get soon, he said he would be in a position to say some thing only after meeting the prime minister. Senior NBP officials said that not only the appointments should be reversed but the bank management should also probe irregularities in appointments to ensure no such practice is repeated in future.

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64

Issues of human resource management and administration were of vital concern to staff and officers posted at the Bank during the time of its establishment. Although the transitional problems were successfully and smoothly overcame but issues relating to fresh recruitment, promotions and performance evaluation continue to be uphill challenges for the Bank. During the last two years, the Administration Department of the Bank has been restructuring and redesigning the overall structure of the organization. This includes staff rationalization, cutting down decision layers, improvement in staff training, hiring of professionals and qualified personnel at the entry level i.e. OG-1. Job for Life Like the employee of public sector organizations in Pakistan, the employees of NBP also enjoy their job for life. Since there is no risk of early retirement or redundancy in rank, they do not perform with their full potentials. This is one redundancy in rank, they do not perform with their full potentials, and this is one of the reasons responsible for the low productivity of the employees of the Bank.

TRAINING AND DEVELOPMENT

NBP has development group called organizational development and training group. Four staff colleges are operating under this group in Lahore, Karachi, Islamabad and Peshawar. The training is mostly carried through seminars workshops and mostly on the job training. At the time of induction of the employee he is given the initial training at institute of Banking Pakistan (IBP) after that they are posted in the field on their respective jobs. NBP follows two forms of Trainings: 1. First is related to the training and development of new and mid level employuees. 2. Second is the training and development for long term plan, regarding the career development of higher level employees. NBP applies on-job and off job strategies to train its employees.

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NBP training and development academy advises job rotation to ensure and facilitate the production of all-rounder employees. Training Plan start at least 2 months before the commencement of the new year, in order to make it easy for the socializing and orientation of the new employees. NBP believes in pre/post tests for the existing employees and post training tests for the new employees. In performance Management factor there are certain aspects about which NBP takes special care, these are: Professional Knowledge Improving corporate culture Decision Making Ability Ability to visualize and plan Ability to act on emergent situation Ability to implement decisions Ability to guide and create learn work Communication skills Customer Relationship Acquaintance with technological improvements

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PERFORMANCE MANAGEMENT
An employee do not has any right or access to the annual confidential Report (ACR), but he is informed, so that he can rectify improve his shortcomings if any. After ACR paper work, it is entered into database by HR. On the basis of the evaluation, benefits are offered in terms of promotions, rewards etc. Performance Appraisal The performance of employees of the Bank are appraised though their annual confidential reports at the end of each year. This has become an outdated method of performance appraisal and no longer used due to the following reasons: 5. 6. 7. 8. The performance of employees is evaluated after quite a long time. Element of subjectivity is involved in this method. Employees participation is not ensured in the process of evaluation. Objectives of employees are not quantified.

Promotion The criteria for promotion for specified job is usually the merit cum seniority base. Person is eligible for promotion if: Satisfactory Record of service Meets the criteria for promotion Clear recommendation for his promotion is ACR If there are any departmental proceedings against him or any penalty within last 3 years. Then he will not be promoted. Demotion/Expulsion On joining, employee is provided with the organizational rules. A person is demoted to lower rank if the performance required, remains same for 3 years without any improvement.

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 A person may be expelled on course of bad conduct in law, convicted by law or fraudulent activities. Resignation When employee wants to resign, he has to submit his resignation in HR department in 1 advance. If he fails to inform 1 months prior to resignation, then he has to pay1 months gross salary amount. After employee put his resign, HRD query all branches if this person has any transactions left with any branch or not? If not, head of HRD query all branches if this person has any transactions left with any branch or not? If not, head of HRD approves his resign and send that to employees branch manager. Retirement HR Department writes to employee, CC to line manager, advising retirement date. Line manager arrange informal meeting with employee to discuss plans and confirm with to request continued working. Line manager writes to employee confirming meeting, CC HR. Employee chooses to retire at 60 years. Normal retirement procedure applies.

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EMPLOYEE COMPENSATION AND BENEFITS

National Bank of Pakistan benefit program is designed to attract, energize, reward and retain talented people who will produce superior business results and enhance their leadership position. They recognize the importance of strong benefits programs. Compensations and Benefits For National Bank of Pakistan employees at corporate, division and region offices there are many benefits as: Medical & Hospital Facilities Free Furnishing on having new house ( Managerial Level) Provident Fund Company Vehicle are provided to employees Choice to get new car after 5 years Umrah Packages are Provided to employees Leasing facilities are provided to purchase an asset Picnics are arranged once at every quarter

Different types of compensations include: Medical insurance Sick leave Vacations Provident and pension funds Promotions Overtime pay Profit sharing Bonuses Travel/ Meal/Housing Allowances etc.

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LABOR MANAGEMENT RELATIONS

The society for labor welfare is formed within NBP, which functions with the help of Management, so form a good relationship and provides: Immediate relief ot any accidental causality. Some benefits to on job deceased. Arranges variety shows for the families of employees. Arrange Educational funds or benefits for the employees. Improve General banking facilities Change the mind of the old employees to adapt IT Unclear brand image of the bank. Peoples perception that its Government Bank with lack of facilities. Customers wants fast and innovative service. HR management is less existent. Motivational Tools are not followed. Promotion of employees is not done regularly. Inter Personal Relationship Modern management acknowledges human resources as one of the most important assets of an organization. But by their very nature, human beings are also the most unpredictable. Where a number of persons work together, interactions among them, of necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in NBP can be traced back to the following major heads. Lack of Communication Lack of communication is for the biggest reason for conflicts. Not only it is due to the failure to send a massage but to an interpretation given to the massage by the receiver is different from that intended.

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Diversity in Values Diversity in values, perceptions, cultural background and life-style is another reason responsible for inter personal conflicts in NBP. Different values and perceptions about the same issue, event or personality hinder understanding. When things come to such a pavement, therefore, interpersonal conflicts are generated. The dominant trend in all modern industrial societies of the world is merit and expertise, which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still very strong in our set up and there is no tradition of tolerance for differing viewpoints. Hence, interpersonal conflicts are generated. Discipline & Authority Maintaining discipline and implementation of authority (tables) in letter and spirit is the key to success of any organization. In NBP, The authority tables are not strictly maintained. Line managers are not fully equipped with the authority with no vertical or horizontal interference. Management Trainers for Human Resources Management Trainees for General Banking, Corporate & Investment Banking, Credit, Risk Management, Compliance, Commercial & Retail Banking and Treasury Management. MBA or equivalent degree (Finance/General Management/Marketing Banking). REDUCED REPORTING LINES At the time of establishment of the State Bank of Pakistan, Banking Services Corporation, it was observed that the inherited reporting structure was rigid. Therefore, it was decided that employees working under a unit in-charge would form the staff of that particular unit. As a result, the reporting line was reduced to a three-tier mechanism at the most. This has decreased the processing time of various cases, increasing the efficiency and utility of human resources as a consequence.

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MOTIVATING OUR EMPLOYEES We expect a lot from our employees. Their integrity should be beyond doubt. They should be part of a dedicated work force, committed to the uplift of the Bank. On the other hand we also try to motivate them adequately. They are offered handsome salaries and adequate perks. Various schemes of group insurance coverage have been introduced for the benefit of our employees and their dependents. We also take care of their health and that of their dependents. Comprehensive medical facilities are available to them. Employees in lower grades are allowed reimbursement for the educational expenses up to two children. Similarly, incentives for acquiring professional qualifications are available to employees so that they can elevate themselves to next grade. The day scholars are also granted study leave to relieve them from official responsibilities. The employees are also offered cash rewards for acquiring a Masters degree in a banking related subject and on becoming associate of professional institutes, like IBP, ICMA, ICAP etc. Those who qualify the Banking Diploma Examination of Institute of Bankers Pakistan are also granted monetary reward and appreciation.

PROMOTION POLICY
The promotion policy introduced in 1979 was based on three parameters i.e. (i) qualification, (ii) length of service and (iii) standard of service. Separate marks were prescribed for each of the three parameters and, after obtaining the minimum qualifying marks varying from cadre to cadre; one could be promoted to the next higher position. While formulating the merit based promotion policy introduced in 1999, the considered opinion was that separate points should not be prescribed for qualification and length of service. The simple reason for this thinking was that the minimum qualification stood, as prescribed at induction for different levels of hierarchy. The other consideration for such views was that in case the employee had increased his qualification for his better performance as compared to other colleagues, then the said qualification would be reflected on his performance and this would obviously have him rated better than others. Views regarding the seniority of an employee

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were similar. Thus under the merit based policy of 1999 the overall assessment of an employee was based on the combination of (a) average of points earned by the employee in his PERs during previous three years and (b) the points that he would earn in an evaluation by the Promotion Committee. (b) The awarding of points by the Promotion committees, however, again reduced the exercise to a mechanical process as 60% points were fixed for qualification, length of service & standard of service and only 40% points could be awarded on objective criteria. Further improvements in the policy are being planned. The appended table is detail of promotions and Recruitments occurred in all cadres/grades during the period of 2 1/2 years of SBP NBP.

TRANSFER/JOB ROTATION POLICY

Like promotion, a well-defined Transfer/Job Rotation Policy and its judicious implementation can provide an environment where employees may get greater satisfaction and contribute their best efforts to their work. Although Regulation 20 of SBP Staff Regulations (2001) provides that all employees (while they are in the Banks service) shall serve the Bank in its business in such capacity and at such place or Office as they may, from time to time, be directed; yet there was no well-defined transfer/job rotation policy in the Bank for this.

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Transfers on request, however used to take place only on compassionate and medical grounds while another reason was that these were initiated by the Bank for meeting its business or administrative requirements i.e. filling up the vacant positions. Maintenance of office-wise seniority lists up to OG-1 (on the General Side) and up to OG-2 (T.O) (on the Cash side) had also contributed to the lack of movement of employees from one office to another. Resultantly all the employees become permanently positioned in their place of work, whether the head office or the field offices of the Bank. At the same time, there was much movement within the unit/division of posting. Although instructions provided that an employee can remain posted in one unit for up to 3 years and in a division for up to 6 years, yet some offices used to frequently transfer their employees from one unit/division to another. On the other hand, transfers from one department to another at the Head Office were rare. This had further deteriorated the level of efficiency both at the head office and the field offices. With the objective of preparing staff to accept new challenges, acquire new skills and diversified experience, the following transfer/rotation policy has been framed for all categories/sides of employees (other than clerical & non-clerical staff of the Bank): Rotation of employees from one desk to another in a unit will be made by the concerned unit-in charge on a regular basis. This is being done so that no one is allowed to stay on one desk for more than 2 years at a stretch. Rotation of employees from one unit to another in a division will be made by the concerned Divisional Head on a regular basis so that no one is allowed to remain posted in one unit for more than 3 years at a stretch. The HOD/Office in-charge will make rotation of employees from one Division to another in a planned way so that no employee is allowed to remain posted in one Division for a period exceeding 4 years at a stretch. Rotation of employees from one department to another department at HOK shall be made by the Administration Department, HOK, in a planned way so that no employee is allowed to remain in one department for more than 4 years at a stretch.

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 Rotation of employees in the Cash department shall be made as per instructions contained in I.D. Manual and/or issued by the Accounts Department of State Bank of Pakistan from time to time. The seniority list of all OG-1 and above will be maintained on an all-Pakistan basis. However, all employees including those of Cash department shall remain transferable from one office to another as provided in the SBP Staff Regulations (2001). All transfers involving change in office up to OG-3 shall be made by the Director Administration, HOK and of OG-4 & above with the approval of the Managing Director. Employees on promotion as OG-4 and above shall invariably be transferred from the office/department where they were working before their promotion. An employee transferred from one office to another shall be allowed to seek his posting back to his parent office or to the office of his choice subject to administrative convenience immediately after completion of 3 years. Such period has been reduced at certain places i.e. this period will be 2 years for Sukkur, D.I.Khan, Muzaffarabad and Bahawalpur. The Chief Manager shall not remain posted at one office for a period of more than 3 years. The shortage of employees at an office because of review of staff position will be made good after calling options from the interested employees of the Bank. If no such employees are available, the vacant positions will be filled through transfers of employees from the offices where sufficient/surplus staff is available. Duration of such transfers would be for a period of two years to avoid inconvenience. Employees desirous of a transfer from one place to another would be required to inform the Bank about their preference(s) in the month of June each year. The Bank shall accommodate their requests as far as possible, keeping in view the interests of the Bank. This category of staff will not be entitled to any facility of Transfer Grant, TA/DA etc. admissible under the Rules. Clerical and non-clerical staff of the Bank shall continue to be governed by the policy applicable to them before establishment of the Bank.

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ELIMINATION OF REDUNDANCIES
While focusing on the agenda of improvement in business processes for the sake of increasing efficiency and productivity, redundancies in policies, procedures and reporting systems have been eliminated through the various steps detailed below: Review/revision of various instructions and streamlining of obsolete procedures. Reviewing of the organizational setup/structuring of field offices and developing a standardized organizational chart (organogram) to realign the same with new business activity. Empowering chief managers to accelerate the process of disposal of cases at their level without referring these to the HOK. Implementation of job rotation policy for OG-1 and above. Introduction of transfer policy of Assistant Treasury Officers from Cash Side to General Side. Introduction of the scheme for grant of study leave. Introducing policy for promotion of graduate and postgraduate clerical and non-clerical staff as OG-1 through competitive test.
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FINANCIAL STATEMENTS ANALYSIS

Financial analysis is a process which involves reclassification and summarization of information through the establishment of ratios and trends. Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. It is a valuable tool used by investors and creditors, financial analysts, and others in their decision-making processes related to stocks, bonds, and other financial instruments. The goal in analyzing financial statements is to assess past performance and current financial position and to make predictions about the future performance of a company. Investors who buy stock are primarily interested in a company's profitability and their prospects for earning a return on their investment by receiving dividends and/or increasing the market value of their stock holdings. Creditors and investors who buy debt securities, such as bonds, are more interested in liquidity and solvency: the company's short-and long-run ability to pay its debts. Financial analysts, who frequently specialize in following certain industries, routinely assess the profitability, liquidity, and solvency of companies in order to make recommendations about the purchase or sale of securities, such as stocks and bonds. The analysis of financial statement refers to the examination of the statements for the purpose of acquiring additional information regarding the activities of the business. The users of the financial information often find analysis desirable for the interpretation of the firms activities. The overall objective of financial statement analysis is the examination of a firms financial position and returns in relation to risk. This must be done with a view to forecasting the firms future prospective. Analysts can obtain useful information by comparing a company's most recent financial statements with its results in previous years and with the results of other companies in the same industry. Three primary types of financial statement analysis are commonly known as horizontal analysis, vertical analysis, and ratio analysis.

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Balance Sheet Rupees in Millions

ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets 2006 94,446,552 49,784,884 10,511,322 149,350,096 220,794,075 19,141,569 9,202,969 _ 553,231,467 LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities net 17,058 23,068,314 29,185 506,985,735 NET ASSETS 46,245,732 16,629 24,974,450 4,462,718 503,378,402 74,340,712 13,235 26,596,300 2,387,073 553,178,593 81,954,118 33,554 30,869,154 5,097,831 645,855,939 116,337,654 25,274 39,656,831 _ 715,299,108 102,459,218 7,214,671 11,084,790 465,571,717 _ 1,741,156 8,756,847 463,426,602 _ 10,605,663 11,704,079 501,872,243 _ 7,061,902 10,886,063 591,907,435 _ 10,219,061 40,458,926 624,939,016 _ 2007 71,196,956 31,019,330 16,282,942 156,985,686 268,838,779 23,941,056 9,454,365 _ 577,719,114 2008 78,625,227 40,641,679 23,012,732 139,946,995 316,110,406 27,113,698 9,681,974 _ 635,132,711 2009 94,873,249 37,472,832 21,464,600 210,787,868 340,677,100 30,994,965 25,922,979 _ 762,193,593 2010 106,503,756 38,344,608 17,128,032 170,822,491 412,986,865 44,550,347 24,217,655 3,204,572 817,758,326

REPRESENTED BY Share capital Reserves Unappropriated Profit 4,924,106 10,813,914 9,161,747 24,899,767 Surplus 21,345,965 46,245,732 5,908,927 13,536,041 16,713,506 36,158,474 38,182,238 74,340,712 7,090,712 13,879,260 32,074,677 53,044,649 28,909,469 81,954,118 8,154,319 15,772,124 45,344,188 69,270,631 47,067,023 116,337,654 8,969,751 19,941,047 52,456,204 81,367,002 21,092,216 102,459,218

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Income Statement (Rupees in Millions) 2006 Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations bad debts written off directly 185,707 14,297 32,807 1,748,165 Net markup/interest income after provisions NON MARKUP/ INTEREST INCOME Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) NON MARKUP/ INTERSET EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT TAXATION Taxation Current Prior years Deferred BEFORE 11,977,601 4,950,000 847,958 -15,729 5,782,229 PROFIT AFTER TAXATION Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation 45,496 12,133,770 43,221 21,914,412 41,060 36,435,929 39,007 51,147,457 130,456 60,933,234 6,195,372 5,892,902 19,056,028 7,154,002 -1,098,709 291,291 6,346,584 12,709,444 9,161,747 26,310,577 8,695,598 530,652 61,981 9,288,231 17,022,346 19,372,523 28,060,501 8,311,500 391,497 323,731 9,026,728 19,033,773 32,074,677 23,000,998 11,762,650 Nil -4,220,242 7,542,408 15,458,590 45,344,188 8,878,801 32,243 8,284 8,919,328 11,221,789 198,298 63,206 11,483,293 13,443,441 -17,283 208,327 13,634,485 14,205,911 168,027 17,141 14,391,079 18,171,198 747,521 583,361 19,502,080 5,099,195 1,273,863 1,008,988 47,557 Nil 875,113 8,304,716 20,944,486 4,926,604 1,718,478 1,205,638 1,365,771 -1,979 177,839 9,392,351 30,539,321 6,144,628 2,891,755 1,333,840 1,169,515 -4,464 627,618 12,162,892 39,945,062 6,781,683 3,263,246 1,042,827 2,341,690 -31,964 147,363 13,544,845 42,451,580 7,925,370 2,878,932 3,969,057 395,427 1,707 1,245,369 16,415,862 42,503,078 12,639,770 -245,881 Nil 23,069 2,223,927 21,146,970 -709,461 Nil 5,284 2,371,546 27,782,170 -40,248 Nil 39,899 4,722,735 28,906,735 373,249 4,000 Nil 10,970,814 26,087,216 20,947,333 6,559,398 14,387,935 1,515,354 2007 33,692,665 10,321,768 23,370,897 2,446,739 2008 44,100,934 13,947,218 30,153,716 3,075,723 2009 50,569,481 16,940,011 33,629,470 4,723,084 2010 60,942,798 23,884,768 37,058,030 10,593,565

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Ratio Analysis
Ratio analysis enables the analyst to compare items on a single financial statement or to examine the relationships between items on two financial statements. After calculating ratios for each year's financial data, the analyst can then examine trends for the company across years. Since ratios adjust for size, using this analytical tool facilitates intercompany as well as intercompany comparisons. Ratios are often classified using the following terms: profitability ratios (also known as operating ratios), liquidity ratios, and solvency ratios. Profitability ratios are gauges of the company's operating success for a given period of time. Liquidity ratios are measures of the short-term ability of the company to pay its debts when they come due and to meet unexpected needs for cash. Solvency ratios indicate the ability of the company to meet its long-term obligations on a continuing basis and thus to survive over a long period of time. Financial ratios allow for comparison: Between companies Between industries Between different time periods for one company Between a single company and its industry average Profitability Ratios The continued viability of any bank depends on its ability to earn an appropriate return on its assets and capital. Good earning performance enables a bank to fund its operations, remain competitive in the market and increase or decrease in market funds. Profitability ratios relate profit to sales and investments. These ratios indicate the firms overall effectiveness of operations and give us idea how well firm utilized its resources in generating profit and shareholder value. Gross Profit Margin Ratio Gross profit margin ratio is used to assess the profitability of a Bank's core activities. Gross profit margin indicates the relationship between gross profit and interest earned. A high gross profit margin indicates that a Bank can make a reasonable profit. Formula = Gross Profit / Interest earned (Revenue)

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Year

2006

2007

2008

2009

2010

Ratio % 57.17 56.55 59.65 55.48 37.74

Gross Profit Margin

80 60 40 20 0 2006 2007 2008 2009 2010

Analysis The Year 2006 has been an outstanding year with the bank recording the highest profit in its history i.e.., 59.65 %.The National Bank of Pakistans wide range of product offering, large branch network and committed workforce are some of fundamental strengths that enabled NBP to achieve exceptional in a very competitive market. The gross profit is 37.74% in 2010. The lowest percentage among all years. Net Profit Margin Ratio Net profit margin measures the percentage of revenue remaining after all cost and expenses, including interest and taxes have been deducted. Formula = Net Profit after Taxes / Interest earned Year 2006 2007 2008 2009 2010

Ratio % 29.57 37.72 38.59 37.63 25.36

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Net Profit Margin

50 40 30 20 10 0 2006 2007 2008 2009 2010

Analysis Net profit margin shows positive trend till 2010 and was the highest in the same year as it was 38.59%, the percentage is decreased in 2009 as it was 37.63%. The net profit margin is on its lowest level at the end of 2010 as it indicates a percentage of 25.63%. The primary reason of this decline is current global economic conditions and current political crisis in Pakistan. Assets Turnover This ratio is useful to determine the amount of revenue that is generated from each Rupee of assets. The Banks with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover. Formula = Revenue/ Total Assets Year 2006 2007 2008 2009 2010 0.05 0.06 0.05 0.05

Ratio 0.03

Assets Turnover
0.08 0.06 0.04 0.02 0 2006 2007 2008 2009 2010

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Analysis The year 2006 represents a ratio of 0.03, lowest among all years. The years 2007, 2009 and 2010 indicates almost same percentage of 0.05% on account of banks assets turnover. The National Bank of Pakistans assets turnover in 2006 is 0.06, peak ratio among all years. Return on Capital Fund This ratio relates the net profits to the amount of capital funds that have been employed in making that profit. Formula = Net markup received / Capital Funds Year Ratio 2006 2007 2008 2009 2.92 3.95 4.25 4.12 2010 4.13

Return on Capital Fund

5 4 3 2 1 0 2004 2005 2006 2007 2008

Analysis The above given ratios suggest that the profitability of the bank has a mixed trend during five years. The first three years 2006 (2.92), 2007 (3.95), 2008 (4.95) shows an increasing trend, indicating more profitable operations of the bank. It was decreased in the year 2009 (4.12) and has increased in 2010 as the ratio was 4.13. Return on Investment This ratio indicates the profit earned by the bank on the resources employed. Formula = Net income after taxes / Total Assets Year 2006 2007 2008
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2009

2010

Ratio 0.011 0.021 0.026 0.024 0.018

Return on Investment
0.03 0.02 0.01 0 2006 2007 2008 2009 2010

Analysis There was an increase in the utilization of the resources till 2010 i.e.., 0.011(2006), 0.021 (2007) and 0.026 (2008). The ratio was decreased to 0.024 (2009) and 0.018 (2010). Return on Deposits This ratio indicates to what extent deposits which represent funds mobilization on the part of the bank contribute towards income generation. Formula = Net income before taxes / Total Deposits Year 2006 2007 2008 2009 2010

Ratio 0.025 0.041 0.052 0.047 0.036

Return on Deposits
0.06 0.04 0.02 0 2006 2007 2008 2009 2010

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Analysis During all five years the return on deposits ratio of National Bank of Pakistan shows a mix trend. The year 2006 (0.052) was the best year for bank in terms of its funds mobilization. Although the ratio was decreasing in 2010 (0.036), indicating Bank is more keen to kept deposits and a change in policy of the Bank regarding its funds mobilization. Effective Tax Rate This ratio is a measurement of a company's tax rate, which is calculated by comparing its income tax expense to its pretax income. This amount will often differ from the company's stated jurisdictional rate due to many accounting factors, including foreign exchange provisions. This effective tax rate gives a good understanding of the tax rate the company faces. Formula = Income Tax expense/ Pretax Income Year 2006 2007 2008 2009 2010 0.33 0.35 0.32 0.32

Ratio % 0.48

Effective Tax rate

0.6 0.4 0.2 0 2006 2007 2008 2009 2010

Analysis The effective tax rate of National Bank of Pakistan was highest in the year 2006 (0.48%). However bank is able to reduce its tax burden because the Bank is able to adopt Tax management techniques to lessen the tax burden. A relatively stable effective tax rate percentage, and resulting net profit margin, would seem to indicate that the Bank's operational managers are more responsible for a company's profitability than the company's tax accountants.

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Liquidity Ratios The liquidity position of a bank is like a reservoir. It may be adequate, although nearly depleted, just before the start of the rainy season. Or it may be inadequate, although three quarters full just before the summer drought. Liquidity can be defined as: The banks ability not only to meet possible deposit withdrawals but also to provide for the legitimate needs of the economy as well Current Ratio Current ratio is a measure of the current adequacy of company's current assets to meet its current obligations. It must be greater than 1. If it is less than 1, liabilities exceed current assets. For every Rs.1 of liabilities, the company has a ratio amount of current assets available. The concept behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes). In theory, the higher the current ratio, the better. Formula = Current Assets / Current Liabilities Year Ratio 2006 2007 2008 2009 0.83 0.96 1.02 1.00 2010 1.12

Current Ratio
1.5 1 0.5 0 2006 2007 2008 2009 2010

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Analysis The year 2006 (0.83) and 2007 (0.96) were not satisfied for bank as current assets are less than current liabilities. However, in 2008 (1.02) the management of National Bank of Pakistan is able to overcome this problem. The year 2009 (1.00) is also good for bank as per standards of this ratio. Again in the year 2010 (1.12) the management of bank is able to increase its current ratio. Cash Ratio This ratio shows that the cash is enough for payment of current liabilities or not. This ratio is obtained by dividing cash by current liabilities. For a bank this is the cash held by the bank as a proportion of deposits in the bank. Formula = Cash / Current Liabilities Year Ratio 2006 2007 2008 2009 2010 4.09 2.85 2.96 3.07 2.69

Cash Ratio
5 4 3 2 1 0 2006 2007 2008 2009 2010

Analysis The cash ratio of National Bank of Pakistan shows a mixed trend during five years of operations. During all years, the ratio is satisfactory as per standards of this ratio. The year 2006 (4.09), representing highest and 2007 (2.85) & 2010 (2.69), representing lowest ratio in all five years. Advances to Deposit Ratio It demonstrate the degree to which bank has already used up its available resources to accommodate the credit needs of its customers. Formula = Advances / Total Deposits
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Year Ratio%

2006

2007

2008

2009

2010

47.42 58.01 62.99 57.56 66.08

Advances to Deposits
80 60 40 20 0 2006 2007 2008 2009 2010

Analysis This ratio, a comparison of funds generation and its funds mobilization, indicates the total loans sanctioned by the bank in relation to total amount of money deposited with the bank, stands highest in 2010 ( 66.08%) as compared with the previous year figures. This shows that the bank has greater potential to advance additional loans. During all other years the ratio is quiet satisfactory representing National Bank of Pakistans credit management decisions. Due from Banks to Total Assets It is an indication of Banks funds management policies. Formula = Due from banks / Total Assets Year Ratio 2006 2007 2008 2009 2010

0.019 0.028 0.036 0.028 0.021

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Due from Banks to Total Assets

0.04 0.03 0.02 0.01 0 2006 2007 2008 2009 2010

Analysis The National Bank of Pakistans due from banks to total assets ratio is fluctuating and indicates a mixed trend during all years. The ratio is 0.019 in 2006 and 0.028 in the year 2007. The year 2008 represents highest ratio of 0.036 among all years. There was a decrease in ratio at the end of financial year 2009 that is 0.028. The year 2010 represents a decrease in ratio (0.021) on account of due from banks to total assets. Due from Banks to Due to Banks It shows the relationship between what the bank owes from other banks and what is due to it. Formula = Due from banks / Due to banks Year 2006 2007 2008 2009 2010

Ratio% 94.83 185.95 196.62 197.18 42.33

Due from Banks to Due to Banks

250 200 150 100 50 0 2006 2007 2008 2009 2010

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Analysis The ratio indicates an increasing trend till 2009 that is 94.83 (2006), 185.95 (2007), 196.62 (2008) and 197.18 in 2009. The year 2010 represents the lowest percentage of 42.33 on account of due from banks to due to banks. Due to Banks to Total Deposits This ratio is an indicative of the proportion of the lending from the financial institutions in relation to the total funds raised by the bank in the form of deposits. Formula = Due to banks / Total Deposits Year 2006 2007 2008 2009 2010

Ratio 0.024 0.019 0.023 0.018 0.065

Due to Banks to Total Deposits

0.08 0.06 0.04 0.02 0 2006 2007 2008 2009 2010

Analysis The due to banks to total deposits ratio of National Bank of Pakistan is fluctuating and indicates a mixed trend during all years. The ratio is 0.024 in 2006 and decreased to 0.019 in 2007. The ratio is increased in 2008 as the ratio is 0.023. The year 2009 represents the lowest percentage of 0.018 and the year 2010 represents the peak percentage of 0.065. Debt Ratios These ratios give users a general idea of the company's overall debt load as well as its mix of equity and debt. Debt ratios can be used to determine the overall level of financial risk a company and its shareholders face. In general, the greater the amount of debt held by a company the greater the financial risk of bankruptcy.
90

The Debt to Equity Ratio The debt-equity ratio compares a company's total liabilities to its total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. To a large degree, the debt-equity ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. Similar to the debt ratio, a lower the percentage means that a company is using less leverage and has a stronger equity position. Formula = Total Liabilities/ Total Shareholders equity Year 2006 2007 2008 2009 2010

Ratio 112.35 97.77 89.57 93.47 91.17

Debt to Equity
150 100 50 0 2006 2007 2008 2009 2010

Analysis The debt to equity ratio of National Bank of Pakistan shows a ratio of 112.35 % in 2006. The ratio is decreased to 97.77% in the year 2007. The ratio is further decreased in 2008 as it shows a percentage of 89.57%. There was an increase in the ratio as it shows a percentage of 93.47%. The year 2010 represents the ratio of 91.17% . Interest Coverage Ratio It shows whether the bank is earning enough profit before mark up charges to be paid to the financiers and the taxation obligations due to the government in order to remain solvent. The interest coverage ratio is used to determine how easily a company can pay interest expenses on
91

outstanding debt. The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses for the same period. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable. Formula = Earnings before interest & Taxes / Interest expense Year Ratio 2006 1.83 times 2007 1.85 times 2008 1.89 times 2009 1.66 times 2010 0.97 times

Interest Coverage
2 1.5 1 0.5 0 2006 2007 2008 2009 2010

Analysis The amount of interest a Bank pays in relation to its revenue and earnings is tremendously important. The National Bank of Pakistans interest coverage ratio is 1.83 times in the year 2007. The ratio was increased in the years 2007 and 2006 as it was 1.85 times & 1.89 times respectively. There sudden decrease of 1.66 times is observed in 2009. The ratio is further decrease to 0.97 times in 2010, representing the lowest ratio among all years. Loan Loss Coverage Ratio Banks use the loan-loss coverage ratio to define the quality of its assets and how well it protects itself from losses caused by problematic loans. The higher this ratio is, the better the bank is handling itself in regards to loans. Formula = Provision against non-performance loans & advances/ Profit or loss before taxation

92

Year

2006 2007 2008 2009 2010 0.13 0.12 0.17 0.47

Ratio 0.13

Loan Loss Coverage

0.5 0.4 0.3 0.2 0.1 0 2006 2007 2008 2009 2010

Analysis The loan loss coverage ratio of National Bank of Pakistan is almost same in the years 2006 and 2007 as it was 0.13 in both years. There was a slight decrease in this ratio as it was 0.12 in 2008. The year 2008 shows an increase in loan loss coverage ratio as it was 0.17. The year 2010 represents highest ratio of 0.47 on account of loan loss coverage, as compare to all years. a) Capital Adequacy Ratios Capital Funds to Total Assets This ratio indicates the extent of the funds employed by the bank in the total resources as shown in the balance sheet. Formula = Capital Funds / Total Assets Year 2006 2007 2008 2009 1.02 1.10 1.07 2010 1.09

Ratio% 0.89

93

Capital funds to Total Assets

1.5 1 0.5 0 2006 2007 2008 2009 2010

Analysis The National Bank of Pakistans Capital funds to Total Assets ratio is increased during all years. The ratio is 0.89 in 2006, representing lowest ratio in all years. The ratio is increased in 2007, 2008 and 2009 as the graph shows ratios of 1.02, 1.10 & 1.07 respectively. The ratio is keeping its trend and also increases in the year 2010 as it was 1.09. Operating Performance Ratios Each of these ratios have differing inputs and measure different segments of a company's overall operational performance, but the ratios do give users insight into the company's performance and management during the period being measured. These ratios look at how well a company turns its assets into revenue as well as how efficiently a company converts its sales into cash. Basically, these ratios look at how efficiently and effectively a company is using its resources to generate sales and increase shareholder value. In general, the better these ratios are, the better it is for shareholders. In this section, we'll look at the fixed-asset turnover ratio and the sales/revenue per employee ratio, which look at how well the company uses its fixed assets and employees to generate sales. Fixed Assets Turnover This ratio is a rough measure of the productivity of a company's fixed assets (property, plant and equipment etc) with respect to generating revenue. For most companies, their investment in fixed assets represents the single largest component of their total assets. This annual turnover ratio is designed to reflect a company's efficiency in managing these significant assets. Formula = Revenue/ Operating Fixed Assets

94

Year

2006 2007 2008 2009 2010 3.23 4.13 1.64 1.76

Ratio % 2.28

Fixed Assets Turnover

5 4 3 2 1 0 2004 2005 2006 2007 2008

Analysis The fixed assets turnover ratio of National Bank of Pakistan has an increasing trend till 2008. The ratio increases 2.28 (2006) to 3.23 (2007). The year 2008 represents highest fixed assets turnover ratio for National Bank of Pakistan i.e.., 4.13. The banks efficiency to utilize these assets has been decreased to 1.64 in the year 2009 however it was increased in 2010 as the ratio is 1.76. Sales or Revenue Per Employee As a gauge of personnel productivity, this indicator simply measures the amount of Rupees sales or revenue, generated per employee. The higher the Rupee figures the better. Formula = Revenue/ Number of Employees Year 2006 2007 2008 2009 2010

Ratio 1274.85 1858.87 2431.38 2583.94 2587.08

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Revenue Per Employee

3000 2000 1000 0 2006 2007 2008 2009 2010

Analysis The ratio has been showing an increasing trend till 2009 i.e.., 1274.85 (2006), 1858.87 (2007), 2431.38 (2008) and 2583.94 (2009). There was a marginal increase in the year in the year 2010 i.e.., 2587.08, representing the peak percentage in all years.

Horizontal Analysis
This technique is also known as comparative analysis. It is conducted by setting consecutive balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in individual categories on a year-to-year or multiyear basis. The most important item revealed by comparative financial statement analysis is trend. A comparison of statements over several years reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is done by restating amount of each item or group of items as a percentage. Such percentages are calculated by selecting a base year and assign a weight of 100 to the amount of each item in the base year statement. Thereafter, the amounts of similar items or groups of items in prior or subsequent financial statements are expressed as a percentage of the base year amount. The resulting figures are called index numbers or trend ratios. Formula = Current Year amount / Base Year amount * 100 Horizontal analysis, whilst simple to execute and useful to a certain extent, has its limitations. These limitations include: Being highly dependent on the selection of base year and the period under examination in the financial model.

96

Horizontal analysis provides little insight into why the trend occurred in a financial model. Horizontal analysis does not provide insight into whether the trend in the financial model results was superior/inferior to some benchmark. Horizontal analysis does not address the challenge of negative numbers.

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Horizontal Analysis of Balance Sheet

Horizontal Analysis (%) ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total Assets LIABILITIES Share Capital Reserves Unappropriated profit Surplus On Reval. of assets Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total Liabilities 100 100 100 15291 108 104 8179 115 117 17467 134 138 Nil 172 133 100 2006 100 100 100 100 100 100 100 100 104 2007 120 125 182 179 24 79 100 97 117 2008 144 128 350 135 147 106 108 78 138 2009 166 146 495 221 98 98 127 197 148 2010 182 184 573 99 142 365 134 148 2006 100 100 100 100 100 100 100 2007 75 62 155 105 122 103 125 2008 83 82 219 94 143 105 194 2009 100 75 204 141 154 282 162 2010 113 77 163 114 187 263 233

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120 100 80 60 40 20 0

100 75 83

100

113

2006 Base Year

2007

2008

2009

2010

Cash Analysis The National Bank of Pakistans Cash & balance with treasury banks shows a mixed trend during all years. It was decreased by 25% in 2007 and 17% in 2008. There was a marginal increase in the year 2009. In 2010 the percentage is increased by 13% as compare to base year.
120 100 80 60 40 20 0 2006 Base Year 2007 2008 2009 2010 62 100 82 75 77

Balances with other banks Analysis The Balances of National Bank of Pakistan with other banks shows a decreasing trend as compare to base year. The year 2007 represents lower percentage (38%), while the year 2008 represents highest percentage of 18%.

99

250 200 150 100 50 0 2006 Base Year 2007 100 155

219

204 163

2008

2009

2010

Lending's to financial insitutions Analysis The lendings to financial institutions by National Bank of Pakistan fluctuates during all years. The lendings increased 55 % in 2007. The year 2008 represents highest percentage of 119 % among all years on account of lendings to financial institutions. The year 2009 also shows an increase of 104 % as compare to base year. The year 2010 indicates an increase of 63% as compare to base year but lendings decreased by 41 % in 2010 as compare to the year 2009.
160 140 120 100 80 60 40 20 0 141 100 105 114 94

2006 Base Year

2007

2008

2009

2010

Investments

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Horizontal Analysis of Income Statement

Rupees in Millions 2006 Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations bad debts written off directly 100 100 100 100 Net markup/interest income after provisions NON MARKUP/ INTEREST 100 -132 Nil 70 127 167 -382 Nil 16 136 220 -22 Nil 122 270 229 201 28 Nil 628 206 100 100 100 100 2007 161 157 162 161 2008 211 213 210 203 2009 241 258 234 312 2010 291 364 258 699

INCOME Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + nonInterest) NON MARKUP/ INTERSET 100 146 191 203 203 100 100 100 100 Nil 100 100 97 135 119 2,872 Nil 20 113 121 227 132 2,459 Nil 72 146 133 256 103 4,924 Nil 17 163 155 226 393 831 Nil 142 198

EXPENSES Administration expenses Other provisions written off Other charges 100 100 100 126 615 763 151 -54 2,515 160 521 207 205 2,318 7,042

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Total non markup/ Interest expenses PROFIT TAXATION Taxation Current Prior years Deferred BEFORE

100

129

153

161

219

100 100 100 100 100

159 145 -130 -1,852 110

220 176 63 -394 161

234 168 46 -2,058 156

192 238 Nil 26,831 130

PROFIT TAXATION

AFTER 100 100 205 155 275 329 307 544 250 769

Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation

100 100

95 181

90 300

86 422

287 502

350 300 250 200 150 100 50 0

291 211 161 100 241

2006 Base Year

2007

2008

2009

2010

Interest earned Analysis The interest earned by National Bank of Pakistan fluctuates during all years, as it was increased during all years as compare to base year. The interest earned is increased 61% in 2007 and 111% in 2008. The year 2009 represents second highest percentage on account of interest earned as it was increase 141 %. The year 2010 represents peak percentage of 191 % as compare to all years.

102

400 350 300 250 200 150 100 50 0

364 258 213 157 100

2006 Base Year

2007

2008

2009

2010

Interest expensed

Analysis The interest expense of National Bank of Pakistan shows an increasing trend in all years, as it was increased 57 % (2007) and 113 % (2008). The year 2009 represents second highest percentage on account of interest expensed as it was increases to 158% as compare to base year. The year 2010 shows an increase of 264 %, highest among all years.
500 400 300 200 100 0 2006 Base Year 2007 2008 2009 2010 100 119 132 103 393

Income from dealing in foreign securities Analysis The National Bank of Pakistans income from dealing in foreign securities fluctuates during all years as it shows an increasing trend. It was increased 19 % in 2007 and 32 % in 2008. The income has its lowest percentage in 2009 as it was increased 3 %. The year 2010 represents highest percentage on account of banks income from dealing in foreign securities as it was increased 293 % as compare to base year and 290% as compare to the year 2009.

103

160 140 120 100 80 60 40 20 0

142 100 72 20 17 2008 2009 2010

2006 Base Year

2007

Other income Analysis The other income of National Bank of Pakistan fluctuates during all years as it shows a mixed trend. It was decreased 80 % in 2007 and 28% in 2008 as compare to base year. The year 2009 represents the lowest decreasing trend of 83%. There was a sharp increase in National Bank of Pakistans other income as it was increased to 42% as compare to base year and increased 125% as compare to 2009. to 63%, comparing with base year. The percentage is increased 52 % in 2010 as compare to base year, but it was decreased 11% as compare to 2009.
250 200 150 100 50 0 2006 Base Year 2007 2008 2009 2010 146 100 113 198 163

Total non markup/ Interest income Analysis The Total non- markup/ Interest income of National Bank of Pakistan shows an increasing trend during all years. It was increased 13% in 2007 and 46% in 2008. The income is increased 63 % in 2009, second highest among all years. There was an increase of 98% in 2010, highest among all years.

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250 200 150 100 50 0 2006 Base Year 2007 2008 146 100 191

203

203

2009

2010

Total income ( Interest + non-Interest) Analysis The total income of National Bank of Pakistan shows an increasing trend. It was increased 46% in 2007 and 91% in 2008. The total income is increased 103% in 2009 and also increase very marginally in 2010.
250 200 150 100 50 0 2006 Base Year 2007 2008 2009 2010 126 100 151 160

205

Adminstration expenses Analysis The administration expense of National Bank of Pakistan is increased 26 % in 2007 and 51 % in 2008 as compare to base year. The year 2009 represents an increase of 60%. The percentage is increased 105 % in 2010, highest among all years.

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250 200 150 100 50 0 2006 Base Year 2007 2008 2009 129 100 153 161

219

2010

Total non markup/ Interest expenses Analysis The Total non markup/ Interest expenses of National Bank of Pakistan fluctuates and shows an increasing trend as compare to base year. It was increased 29%, 53% and 61% in the years 2007, 2008 and 2009 respectively. The year 2010 represents peak percentage of 119% in 2010.
250 200 150 100 50 0 2006 Base Year 2007 2008 2009 2010 100 159 220 234 192

Profit before Taxation Analysis The profit before taxation of National Bank of Pakistan fluctuates and shows a mixed trend during all years. It was increased 59% in 2007 and 120% in 2008. The year 2009 represents highest percentage on account of profit before taxation as it was increased to 134%. The year 2010 indicates an increase of 92% as compare with base year but it was decreased in 2010 by 42% as compare to 2009.

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250 200 150 100 50 0 2006 Base Year 2007 2008 2009 145 100 176 168

238

2010

Current Taxation Analysis The current taxation of National Bank of Pakistan fluctuates during all years as it was increased during all years as compare to base year. It was increased 45 % in 2007 and 76 % in 2008. The year 2009 and 2010 indicates an increase of 68 % & 138 % respectively.

350 300 250 200 150 100 50 0

275 205 100

307 250

2006 Base Year

2007

2008

2009

2010

Profit after Taxation Analysis The National Bank of Pakistans Profit after taxation fluctuates during all years as it was increased during all years as compare to base year. The profit after taxation is increased 105% in 2007 and 175 % in 2008 as compare to base year. The Year 2009 has been an outstanding year with the National Bank of Pakistan recording the highest profit after taxation in its history as the percentage increases to 207 % comparing with base year. The year 2010 indicates an increase of 150 % as compare to base year and a decrease of 57 % as compare to 2009.
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Vertical Analysis
When using vertical analysis, the analyst calculates each item on a single financial statement as a percentage of a total. The term vertical analysis applies because each year's figures are listed vertically on a financial statement. The total used by the analyst on the income statement is net sales revenue, while on the balance sheet it is total assets. This approach to financial statement analysis, also known as component percentages, produces common-size financial statements. Common-size balance sheets and income statements can be more easily compared, whether across the years for a single company or across different companies. Vertical analysis is a technique for identifying relationship between items in the same financial statement by expressing all amounts as the percentage of the total amount taken as 100. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an income statement, each expense is shown as a percentage of the sales revenue. In Vertical analysis, various components of the financial statements are standardized by expressing them as a percentage of some bases. Examples of common-sized statements include: Components of the balance sheet expressed as a percentage of total assets Components of the income statement expressed as a percentage of sales or revenue

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Vertical Analysis of Balance Sheet

Vertical Analysis (%) ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total LIABILITIES Share Capital Reserves Unappropriated profit Surplus On Reval. of assets Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total 0.01 4.17 100 0.77 4.32 100 0.37 4.12 100 0.67 4.05 100 Nil 4.85 100 2006 17.07 9.00 1.90 27.00 39.91 1.66 3.46 100 2006 0.89 1.95 1.66 3.86 1.30 2.00 84.15 0.0031 2007 12.32 5.37 2.82 27.17 46.53 1.64 4.14 100 2007 1.02 2.34 2.89 6.61 0.30 1.52 80.22 0.0029 2008 12.19 6.30 3.57 21.69 49.00 1.50 5.75 100 2008 1.10 2.15 4.97 4.48 1.64 1.81 77.79 0.0021 2009 12.45 4.92 2.82 27.66 44.70 3.40 4.07 100 2009 1.07 2.07 5.95 6.18 0.93 1.43 77.66 0.0044 2010 13.02 4.69 2.09 20.88 50.50 2.96 5.45 100 2010 1.09 2.43 6.41 2.57 1.25 4.94 76.42 0.0030

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20 15 10 5 0

17.07 12.32 12.19 12.45 13.02

2006

2007

2008

2009

2010

Cash
Analysis The cash balance of National Bank of Pakistan fluctuates during all years. The year 2008 representing highest percentage of cash balance among all years that is 17.07%. The cash balance percentage is decreasing in 2007 (12.32 %) and 2008 (12.19%). There was a slight increase in the year 2009 as compare to the years 2007 & 2008, of 12.45%. The year 2010 indicates second highest level of National bank of Pakistans cash balance as it was 13.02%.
10 8 6 4 2 0 2006 2007 2008 2009 2010 5.37 9 6.3 4.92 4.69

Balances with other Banks Analysis The National Bank of Pakistans balances with other banks has its peak percentage of 9% in the year 2008. The percentage is decreased to 5.37% in 2007 and has increased slightly in 2008, indicates 6.3%. The percentage is again decreased in 2009 with a percentage of 4.92 % and a percentage of 4.69% in 2010.
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4 3.5 3 2.5 2 1.5 1 0.5 0

3.57 2.82 1.9 2.82 2.09

2006

2007

2008

2009

2010

Lendings to Finanial Insitutions Analysis The lendings to financial institutions by National Bank of Pakistan shows a mixed trend. In the year 2008 percentage is 1.90%. The year 2007 along with the year 2009 indicates the same percentage of 2.82%. The year 2008 represents peak percentage of 3.57% for National Bank of Pakistan regarding its lendings to financial institutions. The percentage is decreased in 2010 indicating a percentage of 2.09%, second lowest among all years.
30 25 20 15 10 5 0 2006 2007 2008 2009 2010 27 27.17 21.69 27.66 20.88

Investments Analysis The investments made by National Bank of Pakistan are fluctuating and showing a mixed trend. The year 2008 shows a percentage of 27% and the year 2007 show 27.17%. The percentage is decreased to 21.69% in 2008; however it was increased in 2009 to 27.66 %, representing peak percentage among all years. The percentage is again decreased to 20.88% in the year 2010.

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60 50 40 30 20 10 0 2006 2007 2008 2009 46.53 39.91 49 44.7

50.5

2010

Advances Analysis The advances made by National Bank of Pakistan are fluctuating and indicates mixed trend in all years. The first three years of analysis shows an increasing trend that is 39.91% (2008), 46.53% (2007) and 49% in the year 2008. There was a decrease in banks advances to 44.7% in 2009; however in 2010 the percentage is increased to 50.5%, representing peak rate among all previous years.
4 3.5 3 2.5 2 1.5 1 0.5 0

3.4 2.96

1.66

1.64

1.5

2006

2007

2008

2009

2010

Operating fixed Assets Analysis The operating fixed assets of National Bank of Pakistan shows a percentage of 1.66% in the year 2008. There was a slight decrease of 1.64% in 2007 and 1.50% in 2008. The operating fixed assets are increased to 3.40% in 2009. The year 2010 indicates a decrease in banks operating fixed assets as it reduces to 2.96%.

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Vertical Analysis of Income Statement

2006 Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations bad debts written off directly 1 0 0 8 Net markup/interest income after provisions NON MARKUP/ INTEREST INCOME Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) NON MARKUP/ INTERSET EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT TAXATION Taxation Current Prior years Deferred BEFORE 57 24 4 0 28 PROFIT AFTER TAXATION Inappropriate Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation 0 0 0 0 0 30 28 62 23 -4 1 21 42 30 66 22 1 0 23 43 48 66 20 1 1 21 45 76 54 28 Nil -10 18 36 107 42 0 0 43 37 2 0 38 34 0 1 34 33 1 0 34 43 5 1 46 24 6 5 0 Nil 4 40 100 16 6 4 4 0 1 31 100 15 7 3 3 0 2 30 100 16 8 2 6 0 0 32 100 19 7 9 1 0 3 39 100 60 -1 Nil 0 7 69 -2 Nil 0 6 70 0 Nil 0 11 68 1 0 Nil 26 61 100 31 69 7 2007 110 34 77 8 2008 110 35 75 8 2009 119 40 79 11 2010 143 56 87 25

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Profit available for appropriation

58

72

91

120

143

160 140 120 100 80 60 40 20 0

143 100 110 110 119

2006

2007

2008

2009

2010

Interest earned Analysis The interest earned by National Bank of Pakistan fluctuates and shows an increasing trend during all years. The year 2010 is unique in terms of banks interest earned. The bank earned 143% interest in this year. All other years shows an increasing trend that is 100% in 2008, 110% in 2007, 110% in 2008 and 119% in 2009.
60 50 40 30 20 10 0 2006 2007 2008 2009 2010 31 34 35 40 56

Interest expensed

Analysis The interest expense of National Bank of Pakistan shows an increasing trend during all years. In the year 2008, the interest expensed is 31%. The interest expense is increase in 2007 as it shows a percentage of 34%. There was a marginal increase in 2008, as interest expanse shows a

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percentage of 35%. The year 2009 also shows an increase of 40%. The year 2010 represents a percentage of 56%, highest among all years.

100 80 60 40 20 0 2006 2007 2008 2009 69 77 75 79

87

2010

Net markup/ Interest income Analysis The net markup/ interest income of National Bank of Pakistan fluctuates and shows a mixed trend during all years. The percentage is 69% in 2008 and shows an increasing trend in 2007 as percentage is 77%. There was a slight decrease in net markup/ Interest income as the percentage is 75%. There was an increase in income in 2009, as the graph indicating a percentage of 79%. The year 2010 represents peak percentage of 87% of net markup/ Interest income.
72 70 68 66 64 62 60 58 56 54 70 68

69

60

61

2006

2007

2008

2009

2010

Net markup/ Interest income after provisions

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Analysis The net markup/ Interest income after provisions fluctuates and shows a mixed trend. The percentage is 60% in 2008, lowest among all years. The year 2007 represents an increasing trend as percentage is 69%. There was a marginal increase in 2008 as the percentage is 70%. The banks income is decreasing in 2009 & 2010 as the percentage is 68% and 61% respectively.
30 25 20 15 10 5 0 2006 2007 2008 2009 2010 24 19 16 15 16

Fee, Commission & brokerage income Analysis The Fee, Commission & brokerage income of National Bank of Pakistan fluctuate and show a mixed trend during all years. The year 2008 represents highest percentage of 24% on account of fee, commission & brokerage income. The percentage is decreased in 2007 & 2008 as percentage is 16% & 15% respectively. There was a slight increase in 2009 & 2010 as percentage is 16% & 19% respectively.
10 8 8 6 6 4 2 0 2006 2007 2008 2009 2010 6 7 7

Dividend income

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CRITICAL ANALYSIS (THEORY VS PRACTICAL)

During Internship it was my prime objective to furnish my knowledge (Theory) to various practical situations. The practical work presents an analytical problem while relating theory with practice. As a result, analysis of practical versus theory requires a distinct approach. This part of report is the essence of the internship, as this will help to better understand the working environment of the bank by finding the relationship between what is written in the books and what is actually going on in fields. The theory written in the books in cases is not implemented as it is. In some cases theory is implemented with a little modification but in other cases theory has nothing to do with practice. In accounting, banks dont prepare worksheet, but part of worksheet is prepared like trial balance. The securities for the loans are handled in the same way as theory says like mortgage, pledge, hypothecation, advances against insurance policies or liquidation procedure is the same. There is some difference lies in types of loans in bank that is theory talks about four or five types of loans that is cash finance, overdraft, loans etc., but in practice there are some more types used by bank like running finance, demand finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit are in accordance with theory almost. A bank's balance sheet is different from that of a typical company. You won't find inventory, accounts receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments, and on the liabilities side, you'll see deposits and borrowings.

Conclusion
To me, Theory gives the direction to understand the processes and the terminologies going across the World using best business practices in a broader view covering each and every aspect of possible business scenarios. On the contrary practical life is specific, enclosed in a jar.

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Bank Analysis with refernce to commercial Banks listed on stock exchange

Financial Position of Commercial Banks Registered in Pakistan Name of Commercial Paid up Reserves Assets (Rs. Bank Capital (Rs. Bn) Habib Bank NBP Allied Bank MCB United Bank First Women Bank of Punjab Soneri Bank Askari Bank Bank Al- Habib Bank of Khyber Bank Al- Falah Saudi Pak Faysal Bank KASB Bank Meezan Bank NIB Bank Mybank Atlas Bank Standard Chartered JS Bank Habib Metropolitan 6.02 6.7 192.45 128.97 118 101.22 1.57 2.6 100 AA+ 7.59 8.97 6.46 6.28 10.12 0.28 5.29 4.11 4.06 4.79 4 8 5 5.3 4.02 4.54 28.44 4.24 5.01 38.72 5.11 23.6 18.54 5.48 35.88 12.82 0.22 7.43 1.88 7.59 2.8 1.34 2.95 0.22 3.57 0.17 0.81 8.46 0.41 0.52 1.95 0.01 735.71 788.12 344.7 450.34 576.02 8.04 217.85 81.61 194.21 167.36 34.43 333.02 50.83 137.31 53.66 71.74 177.98 45.47 30.7 276.38 24.16 584.85 621.53 293.97 350.72 465.54 6.4 180.82 64.73 153.32 136.75 24.4 287.77 42.35 99.61 44.33 57.84 112.12 31.96 22.18 173.81 14.08 411.36 173.42 168.45 228.98 328.55 3.09 142.85 45.83 114.04 93.25 11.14 180.02 27.62 87.61 32.65 38.3 85.43 23.03 17.5 126.27 9.57 (Rs. Bn) 7.5 8.1 2.51 7.68 5.59 0.05 -2.63 0.47 0.05 1.25 0.11 1.69 -0.81 0.75 0.08 0.44 -0.73 0.43 -0.2 1.31 0.16 (Rs) 9.75 9.03 3.88 12.22 5.53 1.67 -4.97 1.13 1.01 2.61 0.27 2.12 -1.54 1.41 0.39 0.98 0.23 1.02 -0.39 0.34 -0.31 (Nos) 1400 1249 757 1038 1100 38 272 90 155 203 34 231 55 111 41 111 240 69 31 176 11 AA+ AAA AA AA+ AA+ BBB+ AAAAAA AA BBB+ AA AAA A A+ AAA AAA+ A(Rs. Bn) Bn) (Rs. Bn) (Rs. Bn) As of June 2010 Deposits Advances Profit After Tax Earnings Branch Per share Network Rating Credit

A stock exchange is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. In Pakistan securities are traded on three stock exchanges which are Karachi stock exchange, Lahore stock exchange and Islamabad stock exchange. The financial position of commercial banks registered on stock exchanges in Pakistan, are shown in preceding page in terms of their: Paid-up Capital Reserves Assets Deposits Advances Profit after tax Earnings per share Credit rating The best way to analyze these commercial banks is to analyze their credit ratings. The National Bank of Pakistan enjoys the highest credit rating amongst Pakistani banks; JCR- VIS Credit rating Co. Limited awarded highest standalone credit rating of AAA to NBP. The JCRVIS Credit rating Co. comments about NBP say a lot about the bank:ii The organization has been able to strategically manage and build on its competitive advantages which has translated into the strong and well managed improvement in profitability trend observed over the last few years, a substantial balance sheet of sound asset quality, and strong liquidity and capitalization levels NBPs key strength remains its extensive outreach and a low cost, stable deposit base. Deposits are also guaranteed by the Government of Pakistan under the Banking Nationalization Act, 1974. There have also been significant improvements in the management practices of the bank and a focus on enhancement of systems and controls. In this regard the management has entered into
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an agreement for the acquisition of a core banking software which is likely to be implemented over the next few years. JCR-VIS believes that the current economic situation puts certain leading industrial sectors and the general consumer under financial stress. Therefore, the second half of 2010 and 2009 are likely to be challenging for the banking sector as a whole, in terms of maintaining growth, asset quality and profitability.iii The JCR-VIS Rating Process include following steps:iv 1. Signs agreement for an initial rating 2. Submits preliminary information materials 3. Conducts a preliminary study 4. Submits a detailed questionnaire to the issuer/client 5. Provides detailed information in response to detailed questionnaire 6. Conducts pre due diligence meeting analysis 7. Conducts due diligence meetings 8. Conducts post due diligence analysis 9. Brief for internal rating committee meetings is prepared 10. Sub Committee recommends preliminary/initial rating 11. Rating Committee decides the preliminary/initial rating 12. Discusses the rating rationales and rating issues with client 13. Notifies issuer of the preliminary/initial rating, deliberates on appeals by client, if any 14. Consents to release of preliminary/initial rating to the public in case of non-mandatory ratings 15. Releases the preliminary/initial rating to the press

Critical Analysis (Theory vs Practical)

During Internship it was my prime objective to furnish my knowledge (Theory) to various practical situations. The practical work presents an analytical problem while relating theory with practice. As a result, analysis of practical versus theory requires a distinct approach. This part of report is the essence of the internship, as this will help to better understand the working environment of the bank by finding the relationship between what is written in the books and

120

what is actually going on in fields. The theory written in the books in cases is not implemented as it is. In some cases theory is implemented with a little modification but in other cases theory has nothing to do with practice. In accounting, banks dont prepare worksheet, but part of worksheet is prepared like trial balance. The securities for the loans are handled in the same way as theory says like mortgage, pledge, hypothecation, advances against insurance policies or liquidation procedure is the same. There is some difference lies in types of loans in bank that is theory talks about four or five types of loans that is cash finance, overdraft, loans etc., but in practice there are some more types used by bank like running finance, demand finance etc. All other concepts of remittances, bills, foreign exchange deposits, letters of credit are in accordance with theory almost. A bank's balance sheet is different from that of a typical company. You won't find inventory, accounts receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments, and on the liabilities side, you'll see deposits and borrowings.

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SWOT ANALYSIS
To carryout the SWOT and Financial Analysis of NBP through the help of calculating necessary ratios in this section. SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats SWOT analysis is careful evaluation of an organizations internal strengths and weakness as well as its environment opportunities and threats. SWOT analysis is a situational which includes strengths, weaknesses, opportunities and threats that affect organizational performance. The overall evaluation of a company strengths, weaknesses, opportunities and threats is called SWOT analysis. In SWOT analysis the best strategies accomplish an organizations mission by: 1. Exploiting an organizations opportunities and strength. 2. Neutralizing it threats. 3. Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context; managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses.

STRENGTH
OLDEST INSTITUTION: NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is strength from this plus point as customers have more confidence in the bank. The additional value services as the privilege for the bank. ALTERNATE DUTIES IN SBP ABSENCE
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The NBP performs additional services for its customers as well as the other bank customer in the absence of SBP. MORE DEPOSITS THAN OTHER BANKS NBP has the relative competence in having more deposits than the other bank. This is because of the confidence the customer have in the bank. The bank being the privileged and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it. EMPLOYEE BENEFITS The employers at NBP are offered reasonable monetary benefit. Normally two bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and competency for the bank and a source of motivation for the employees. BROAD NETWORK The bank has another competency i.e. it has broad-basses network of branches throughout the country also more than one branch in high productive cities. The customers are provided services at their nearest possible place to confirm customer satisfied. STRICTLY FOLLOWED RULES & REGULATION: The employees at NBP are strict followers of rule & regulation imposed by bank. The disciplined environment at NBP bolsters its image and also enhances the over all out put of the organization. PROFESSIONAL COMPETENCE The employees at NBP here have a good hold on their descriptions, as they are highly skilled Professionals with background in business administration, banking, economics etc. These professional competencies enable the employees to understand and perform the function and operation in better way.

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HEALTHY ENVIROMNMENT The working condition in the NBP branch here is very conductive and favorable for better output. The informal environment affects the performance of the employees in a positive way. RELATION BETWEEN STAFF AND OTHER EMPLOYESS The bank enjoys a good plus point when it comes to the employee manager relationship the hearing as removing of discrepancies if any, between the employees, and between the manager and employees.

WEAKNESSES
LACK OF MARKETING EFFORT: The bank does not promote its corporate image, services, etc on a competitive way. Hence lacks far behind in marketing effort .A need for aggressive marketing in there in the era marketing in now becoming a part of every organization. NBP UNDER POLITICAL PRESSURE The strong political hold of some parties and government and their dominance is affecting the bank in a negative way. They sometime have to provide loan under the pressure, which leads to uneven and adjusted feeling in the bank employees. FAVORITISM AND NEPOTIS The promotions and bonuses etc in the bank are often powered by seniors favoritism or dependupon their wills and decision. This adds to the negative factors, which denominate the employees thus resulting in affecting their performance negatively. LACK OF FINACIAL PRODUCT The bank falls far behind when the innovative and new schemes are considered. It has not been involved in the tug of war between the competitors to the accounts and strengthens the existing customer base. This stands out to be the major incompetence and weakness of the banks.
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INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS During the rush hours, the bank is founded out to be a total flop to handle the mob of people peaking from windows and doors. The bank has deficiency to operate in the stages of rush hours where the people find them services entangled in a situation of nowhere because they are not well served. LACK OF COMPUTERIZED NETWORK The bank lack the strength of being powered by the network of computers, which have saved time, energy and would have lessened the mental stress, the employees have currently. This would add to the strength if it were powered by network of computers. LACK OF MODERN EQUIPMENT The bank lacks the modern Equipment that is note counting machine computers. Even if there is any equipment they lack to fall in the criteria of being rearmed as update and upgraded UNEVEN WORK DISTIBUTION. The workload in NBP is not evenly distributed and the workload tends to be more on some employees while others aNBPond away from their responsibilities, which server as a demotivation factor for employees performing above average work.

OPPORTUNITIES
ELECTRONIC BANKING The world today has become a global village because of advancement in the technologies, especially in communication sector. More emphasis is now given to avail the modern technologies to better the performances. NBP can utilize the electronic banking opportunity to ensure on line banking 24 hours a day. This would give a competitive edge over others.

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MICRO FINANCING Because of the need for micro financing in the market, there are lot of opportunities in this regard. Other banks have already initiated, now the time has arrived when the NBP must realize it and take on step to cater an ongoing demand.

THREATS
EMERGENCE OF NEW COMPETITORS The bank is facing threats with the emergence of new competitors especially in terms of foreign banks. These foreign banks are equipped with heavy financial power with excellent and

innovative ways of promoting and performing their services. The bank has to take initiative in this regard or will find itself far back in competition. POLITICAL PRESSURE BY ELECTED GOVERNMENT The ongoing shift in power in political arena in the country effects the performance of the bank has to forward loans to politically powerful persons which create a sense of insecurity and demoralization in the customer as well as employees. DOWNSIZING The bank is currently acting upon the policy of downsizing which threaten the environment of the bank Employees feel insecurity in doing their jobs and work, hence affecting the over all performance of employees negatively. CUSTOMERS COMPLAINTS There exists no regular and specific system of the removal of customer complaints. Now a day a need for total customer satisfaction is emerging and in their demanding consequences customer's complaints are ignored.

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COMPETITIVE ANALYSIS
Porters five forces model: This approach is widely used for competitive analysis. It is because of the high intensity of competition among companies there five main competitive forces. Rivalry among competitive firms: It is a very powerful force among the competitive forces the strategies pursued by one firm can be successful only to extent that they provide competitive advantages over the competitor. These competitive strategies may be lowering prices, best quality series. The NBP offering very low charges an demand draft, telegraphy transfer, mail transfer and give other additional services to the customers and to the Nation. Because NBP is a Nations Bank. Potential entry of new competitors: Whenever new firms ca easily enters a particular industry, the competition increases. The gout restriction, tariffs, patents etc can stop new firm to enter into the business as per Banking industry is concerned this market is already very situated in Pakistan and there are banks with quality services and low charges. So there is no threat to NBP from potential entry and NBP is also a public sector bank because of that no other new bank not takes over it. Potential Development of substitute products: This is the third factor affecting the competitions. There may be some other product can be substitute the product of that industry. For example banks offering saving schemes in Pakistan and these schemes are also offered by GPOs in Pakistan so they must compete them in this field. If they offer low rates than GPOs so people will go to deposit in GPOs. People concentration high rates so thats why saving PLS accounts are more then current accounts. The next examples will ATM which substitute presenting cheques at counter and encash it. The NBP is lacking in this field. It must improve in this field to compete the competitors.

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Bargaining Power of Suppliers: The bargaining power of supplier affects the intensity of competition, especially when there are a large number of suppliers. In case of banks the suppliers are customers they supply the money to banks. Now they must offer good services, quality, and safety. Low charges etc to customers. In this field NBP is very good. They charge low charges on remittances. So thats it is a competition to other banks. Bargaining Power of Consumers: When customers are concentrated or large, or buy in volume, their bargaining power represents a major force affecting intensity of competition. Now the number customers in Pakistan for banks are very high. Banks offering variety of products and services to their customers. NBP have a large number of customs. Now it must offer good services and products to their customers to attract them to come to NBP. Summation The summary of is SWOT Analysis of NBP. To know how NBP can compete well and how to maintain its position in the market as a best services organization. REFERENCES
1. National Bank of Pakistan (2009, 2010) Annual Report. 2. Van Horne James C and JR Wachowicz John M. (1998). Financial management. Prentice

Hall Publication. Page 126-150

3. Block, Stanley B and Hirt Geoffrey A (1994). Foundations Of Financial Management.

Page 121-148
4. WEBSITE:

www.onlinewbc.gov/docs/finance/fs.ratio/. Html

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SHORT FALLS/ WEAKNESSES OF NATIONAL BANK OF PAKISTAN

The National Bank of Pakistans Advance salary, which has long been the flag-ship product for NBP, is replete with charges of corruption, default and inefficiency. The National Bank of Pakistans huge number of borrowers is untraceable or correct whereabouts are not known. The housing finance product of NBP lacks proper infrastructure including database support even after five years of post launch history. The similar products launched by other commercial banks are much smaller in size are running on well-articulated systems and are backed by proper policies and guidelines. The NBP product, despite boasting a sizeable portfolio built around some reckless selling, is mostly infected. The NBP Karobar scheme is designed around Presidents Rozgar scheme. The scheme which had all the potential to become a landmark was so badly mishandled by National Bank of Pakistan. The Quality of infrastructure added by National Bank of Pakistan during the last few years is quite substandard as compared to that of peer banks. In NBPs five year strategic plan 2009-2011 approved by board of directors does not address any serious thinking on Productivity improvement and benchmarking with the competition. Development required for serving major sectors of the economy. Infrastructure to support planned growth and vision. Inducting and leveraging specialized human capital. Bringing the institution on international banking landscape in the coming five years, not to speak of the seven years which the current management has already served. As for as public interest is concerned there were no service standards benchmarks and guidelines available in NBP. There were only old documents that were crafted at least a decade or more back. Due to poor planning the bank had book losses of over 1.2 billion rupees in the Karobar Scheme.
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The National Bank of Pakistans outsourced employees (2350) was obtained from a single source. Most of these are performing the core function of the bank outside their assigned duties without any training and supervision. The National Bank of Pakistan is incurred large expenses in running those branches, which are not producing any income. The up gradation of human resource is very slow in NBP. The branches of NBP have less number of employees as their requirements. The concept of One Man Show is adopted in many branches to save salary expenditure; even most of the branches use their security guards for various tasks. The one reason for this is that the senior management is able to decrease salary expenditure of the bank, which result an increase in the net profit. For their performance they received handsome amounts of bonus. But in long run it has a negative effect on banks productivity. The pensions distribution service or payments to EOBI beneficiaries, utility payments; workers remittances are occupied lowest priority level. In NBP Karobar scheme the product selected by the NBP is of inferior quality and develops faults in the first few months of delivery.

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CONCLUSIONS
The National Bank of Pakistan plays a key role in the strategic national development. The bank has historically been the financial arm of the government and has enjoyed the blessings of state support in the form of huge public sector funds and deposits. In contract to other banks populating the FSI sector, NBP is mandated to uphold public interest. It is critical too as all other banks and NBFIs in public sector have been closed down or merged with NBP. In contract to other banks populating the FSI sector, NBP is mandated to uphold public interest. It is critical too as all other banks and NBFIs in public sector have been closed down or merged with NBP. The current management of National Bank of Pakistan was hired purely for their international experience, business orientation to turn around a purely public institution into a sustainable and commercially viable bank serving public interest along the lines of a large modern commercial bank. The National Bank of Pakistan has effective budgeting system in place. Annual budget of the bank is approved by the Board and monthly comparisons of actual results with the budget are prepared and reviewed by the senior management. The National Bank of Pakistan has a comprehensive framework of written policies and procedures on all major areas of operations such as Credit, Treasury Operations, Finance, Internal audit and Compliance approved by the Board. The National Bank of Pakistan provides sustainable financing for growth of industries of critical national importance such as energy, education, healthcare, transport, shipping, Research & development.

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RECOMMENDATIONS
The National bank of Pakistan should be fully prepared in its management of financial crises and its business continuity planning, within the standing committee framework, and should work with others to strengthen national crises management preparations. The bank should improve the quality of training of its employees and the integrity, controls and efficiency of its systems, processes and financial reporting. The bank should improve its recruitment, retention and development and to reform the Banks pension scheme. The bank should renegotiate the Banks long term financial framework and to overhaul the Banks financial system. The Bank should improve IT capability in the analytical areas and to develop a medium term strategy for banking and market operations. The National bank of Pakistan should monitor the impact of its operations on the environment, which is mainly through the use of power and the generation of waste. NBP, being the only lending arm to the government for public sector development should design, develop and deliver product and services for economic growth. The bank should provide support to the Micro, Small and Medium enterprises thereby reducing unemployment and helping to create a more equitable distribution of wealth. The NBP should adopt modern banking tools and techniques. Quality leadership, clear vision, investment in IT infrastructure and human resource development. The bank should develop software for pension disbursement. As for as Islamic Banking environment is concerned the management and employees of NBP should work together for basic research for discovering their own laws, developing theories or concepts for the better direction of their own business environment according to Quran & Sunnah. The branches should reduce its large expenses in order to increase the value of the bank. The NBP should strengthen incentives and accelerate a results-oriented training and communications programs for management and staff. The National Bank of Pakistan should implement a financial inclusion program to meet the needs of underserved economic subsectors, including outreach programs to meet the requirements of the agriculture, housing, SME and microfinance sectors.
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The National Bank of Pakistan should introduce a framework for consolidated supervision and reorganize the regulatory architecture to allow better regulation and supervision of financial control division of bank.

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REFRENCES
The first important thing is the discussions with the staff of the bank especially with the manager of the branch. http://www.nbp.com.pk/EcomomicBulletin/FS-Complete-31-12-2009.pdf NBP Quarterly Report September 2010 http://www.nbp.com.pk/nbp/About_Us/About_US.jsp NBP Quarterly Report September 2010 http://www.nbp.com.pk/nbp/About_Us/About_US.jsp Black's Law Dictionary page 471 (5th ed) Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2008) Marketing, 7th Ed. Principles of marketing 8 ED by Kotler & Armstrong G7 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 87 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 91 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 88 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed http://www.nbp.com.pk/Aamdani/index.htm http://www.nbp.com.pk/Premium/index.htm http://www.nbp.com.pk/Saibaan/index.htm http://www.nbp.com.pk/advancesalary/index.htm http://www.nbp.com.pk/CashnGold/index.htm http://www.nbp.com.pk/StudentLoan/index.htm Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 221 Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 228 SBP Prudential Regulations http://www.nbp.com.pk/nbp/NBP_Treasury.jsp http://www.nbp.com.pk/nbp/Treasury_Products.jsp http://www.nbp.com.pk/nbp/About_Us/DReport3.jsp NBP Annual Report 2010 Terry and Franklin Principles of Management Management 7 Ed Robbins & coulter
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Human error by James Reason http://www.jcrvis.com.pk http://www.jcrvis.com.pk/ratingscale/rating_process.htm

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