NATIONAL BANK OF PAKISTAN

TABLE OF CONTENTS
PREFACE
ACKNOWLEDGEMENT
EXECUTIVE SUMMARY
VISION
MISSION
CORE VALUES
BOARD OF DIRECTORS
SENIOR MANAGEMENT
INTRODUCTION OF SECTOR

3
4
5
6
7
8
9
10
11

COMMERCIAL BANKING INPAKISTAN

ROLE OF COMMERCIAL BANKS IN ECONOMY

11
12

HISTORY OF NBP
BRANCH NETWORK
ORGANIZATIONAL CHART OF NBP
DEPATMENTS
FOREIGN EXCHANGE DEPARTMENT

14
15
16
17
18

HIRARCY & FUNCTION OF FOREX

TRADE CYCLE
LEETER OF CREDIT
EXPORTS

19
20
21
23

E-FORM

24

IMPORTS
FOREIGN REMITTENCES

25
26

CREDIT DEPARTMENT

30

ADVANCES
CREDIT REPORT
SECURITY
PROCEDURE OF ADVANCE
SAIBAN
ADVANCE SALARY
KISAN DOST

31
34
35
36
37
38
38
39

REMITENCES DEPARTMENT
INSTRUMENTAL TRANSFER
ELECTRONIC TRANSFER

39
41

DEPOSIT DEPARTMENT

43

PROCEDURE OF OPENING & CLOSING OF ACCOUNT

45

GOVERNMENT DEPARTMENT
SWOT ANALYSIS
SUGGESTIONS
BIBLOGROPY

49
51
56
58

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NATIONAL BANK OF PAKISTAN

In

M.Sc

Accounting

&

Finance,

Internship Program is an important part

to give students an opportunity to have
experience of practical field. Unless and
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NATIONAL BANK OF PAKISTAN

until the students experience the novelty

of practical work. Their knowledge of
what they study in theoretical courses
remains incomplete. The most important
point in an Internship Program is that the
student should spend their time in a true
manner and with the spirit to learn
practical orientation of theoretical study
frame work.
This internship report is on my eight
weeks practical training at National Bank
of Pakistan Main Branch, Multan. In this
internship report I have tried to give
detail

about

the

National

Bank

of

Pakistan, working and the functions of

different departments of the bank.

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NATIONAL BANK OF PAKISTAN

I am grateful to almighty Allah for

enabling

me

to

complete

the

work

presented in this report. It is through his

unending mercy that this task moved
towards success.
After the Allah, I will like to admire the
personality who is the best gift by the
Allah

for me, are my parents their

prayers are always with me and I feel

that I am nothing without their prayers.
I am also grateful to my honorable
teachers for teaching me to see the
silver lining in every dark cloud. Last but
not the least this Internship cant be
completed without the supporting staff of
NBP.

MUSHARRAF SHAFIQ

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NATIONAL BANK OF PAKISTAN

EXECUTIVE SUMMARY
NBP is the bank of Nation which has the largest branch network in Pakistan.
Bank objective is to provide the customers financial services at very
affordable prices.
Designing the product portfolio of bank in response to the customers
preferences, the product like Saiban, cash card, Agriculture credit & Farm
credit are prime examples of quality providing timely banking opportunities
to the customers of bank.
Assessment of the needs and wants of the customers is an ongoing process at
NBP, which helps to continually develop new products and services like
Rozgar Scheme is the best solution of employment needs of customers of
Pakistan. To make their banking solutions become accessible to more and
more people, they have, provided a networking of branches (local &
Foreign) that makes the services available to any of their customers in all the
major rural and urban centers of Pakistan as well as abroad.
With their key indicators of progress already soaring to new heights, the
bank is committed to dedicate all its energies, resources and time to bring
higher value and satisfaction to their customers, employees and
shareholders. The graph of bank is going up and up every year. The ratio of
profit is increasing at good percentage. At Karachi Stock Exchange NBP
regularly maintained its position of Volume leader.

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NATIONAL BANK OF PAKISTAN

Vision
To be recognized as
a

leader

brand

and

synonymous

with trust, highest

standards of service
quality, international
best practices and
social responsibility.

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NATIONAL BANK OF PAKISTAN

Mission
NBP will aspire to the values that make NBP
truly the Nations
Bank, by:
Institutionalizing a
merit and performance
culture
Creating a distinctive
brand identity by
providing the highest
standards of services
Adopting the best international management
practices
Maximizing stakeholders value
Discharging our responsibility as a good
corporate citizen of Pakistan and in countries
where we operate

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NATIONAL BANK OF PAKISTAN

Core Values

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NATIONAL BANK OF PAKISTAN

Highest standards
of

Integrity

Institutionalizing

team

work

performance

and
culture

Excellence

in

service

Advancement

of

skills for tomorrows

challenges
Awareness of social
and

community

responsibility
Value creation for
all stakeholders
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NATIONAL BANK OF PAKISTAN

Board of Directors
Chairman Board:
Syed Ali Raza

President:
Qamar Hussain

Directors:
Mr. Tariq Kirmani
Mrs. Haniya Shahid Naseem
Ms. Nazrat Bashir

SVP, Secretary Board of Directors:

Syed Muhammad Ali Zamin

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NATIONAL BANK OF PAKISTAN

Senior Management
Qamar Hussain
President
Dr. Asif A. Brohi
SEVP & Group Chief, Commercial & Retail Banking Group
Shahid Anwar Khan
SEVP & Group Chief, Credit Management Group , Overseas Banking Group
Ziaullah Khan
SEVP & Group Chief Assets Recovery Group and Divisional Head, Islamic
Banking Division
Dr. Mirza Abrar Baig
SEVP & Group Chief, Human Resources Management & Administration
Group
Nausherwan Adil
SEVP & Group Chief, Operations Group
Tariq Jamali
SEVP & Group Chief, Compliance Group
Nadeem A. Ilyas
SEVP & Group Chief, Corporate & Investment Banking Group & PSO to
President
Muhammad Nusrat Vohra
SEVP & Group Chief, Treasury Management Group
Khalid Bin Shaheen
SEVP & Group Chief, Global Home Remittance Management Group
Imam Bakhsh Baloch
SEVP & Group Chief, Audit & Inspection Group
Asif Hassan
SEVP & Group Chief, Small and Medium Assets Recovery Group

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NATIONAL BANK OF PAKISTAN

INTRODUCTION ABOUT BANKING SECTOR

Bank is an organization that accepts deposits and repays to its customers on
demand. Bank borrows money at lesser rate of profit and lends it to the borrowers
at a higher rate of markup. It has to keep a certain ratio between liquidity and
profitability to run its business smoothly and efficiently.
A broader definition of a bank is any financial institution that receives,
collects, transfers, pays, exchanges, lends, invests, or safeguards money for its
customers.
This broader definition includes many other financial institutions that are not
usually thought of as banks but which nevertheless provide one or more of these
broadly defined banking services. These institutions include finance companies,
investment companies, investment banks, insurance companies, pension funds,
security brokers and dealers, mortgage companies, and real estate investment
trusts.

Commercial Banking in Pakistan

At the time of independence, the areas which now constitute Pakistan were
producing raw material in the form of food grains and different other agricultural
products. There was practically no industry setup in Pakistan. However, the
commercial banking facilities were well established. As a country without enough
resources it was very difficult for Pakistan to run its own banking system but the
father of the nation, Muhammad Ali Jinnah took the bold step to establish the State
Bank of Pakistan in July, 1948.
At the time of partition only 38 banks were operating in Pakistan. Out of 38 banks,
only 2 were Pakistani, 29 were Indian and 7 were exchange banks. State Bank of

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NATIONAL BANK OF PAKISTAN

Pakistan Act of1965 lays down the rules and regulations to organize banking
companies known as scheduled bank.

Functions of a Commercial Bank

In general terms the functions of a commercial bank can be classified under the
following main heads.
Accepting Deposits
Advancing Loans
Discounting of Bill
Cheap Medium Of Exchange
Transfer of Money
Custodian of Precious Articles
Agency Services
Providing Investment Facility
Creation of Credit
Facilitating Trade Activities
Purchase and Sale of Securities
Acting as an agent of government

Role of Commercial Bank in the Economy and Development

Banks play an important role in the economic development of country. The State
Bank of Pakistan is at the apex and all the commercial Banks have to follow the
rules set by the State Bank of Pakistan. Commercial Banks have constituted the
most important part of the intuitional credit in the economy of Pakistan. Being the
largest source of credits, banking industry is the pivot of whole the economic
activities in Pakistan.

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NATIONAL BANK OF PAKISTAN

Role of the banking sector can be judged by the following facts:

Saving Mobilization
The commercial banks like National Bank, United Bank, Habib Bank, Allied Bank
and other Banks have branches in urban & rural areas to mobilize savings of
people.

Financing of Development Projects

Banks and other financial institutions like ADBP, IDBP, and PICIC etc. advance
short and medium terms loans for financing of the development projects both in
the private & public sectors. So they are helping to accelerate the rate of progress
(Economic) in the country.

Creating Climate for Capital Formation:

A developed baking system stimulates the growth of economy by creating
favorable climate for capital formation in the Country.

Achievement of Monetary Discipline

Commercial Banks under the supervision & guidance of the SBP implement and
achieve the objective of monetary policy, which varies from time to time.

Assists the Planned Development

Commercial Banks are profit-seeking enterprises. In order to maximize profit they
have the incentive from SBP to maximize the limit of finance. An organized
banking system keeps balance between the liquidity and profitability, thus assists
in the planed development of the country.

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NATIONAL BANK OF PAKISTAN

HISTORY OF NATIONAL BANK OF PAKISTAN

The Bank commenced its operations from November 20, 1949 at six important
jute centers in the then East Pakistan and directed its resources in financing of jute
crop. The Banks Karachi and Lahore offices were subsequently opened in
December 1949.
State bank of Pakistan after its formation demanded from the Indian Reserve
Bank the assets against the Indian currency retired from Pakistan territory.
Government of India refused to hand over the assets worth about five hundred
million rupees. The dispute is still unsettled and these assets are still not delivered
to Pakistan. Until June 1950, the Bank was engaged exclusively on jute operation.
Thereafter, it was felt that it could expand its business to include other
commodities as well. Bank took a big stride in 1952, when it replaced the Imperial
Bank of India, as an agent of State Bank of Pakistan.
With the passage of time its functioning diversified as they take over the function
of different institution with the passage of time like in past they took over the
function of Imperial bank of India and now of NDFC (National Development
Finance Corporation). It is working as the agent of the state bank of Pakistan and
performs its functions wherever state bank of Pakistan is not present.

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NATIONAL BANK OF PAKISTAN

Branch Network
With the geographical development of its branches, the Bank has been able to
extend its services to a much larger number of Pakistanis all over the country.
Bank maintains its presence in all the major financial centers of the world through
its 18 overseas branches and 11 representative offices.
Apart from having a vast branch network, Bank is at the forefront in the
acquisition and application of new technologies in every aspect of its banking
facilities. It has acquired leased telephone lines for on-line banking. The Bank has
432 online branches.

Overseas Branches

Domestic Branches

18 Overseas Branches
11 Representative Offices
1 Subsidiary
1 Joint Venture

29 Regional Offices
1200 Branches
432 Online Branches
4 Subsidiaries

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NATIONAL BANK OF PAKISTAN

President
Senior Executive Vice-President
Executive Vice-President
Senior Vice-President

Vice-President
Assistant Vice-President

Branch Hierarchy

Officer Grade 1
Officer Grade 2
Officer Grade 3
Senior Assistant
Assistant
Driver
Peon

Organizational Chart

Page # 17

NATIONAL BANK OF PAKISTAN

Departments in National Bank Main Branch

Following departments are working in NBP main branch

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NATIONAL BANK OF PAKISTAN

Foreign Exchange
Credit and Advances
Remittances
Deposit & Accounts

Government
Administration

Department
s

Foreign
Credit
Exchange Deptt

Remittance Accounts
Deptt
Deptt.

Deposit
Deptt

Govt.
Deptt.

Admin
Deptt.

Foreign Exchange Department

Foreign exchange is an important department in bank system. In the foreign
exchange department all the operations of the bank are done in the same way as in
all other departments of the bank this department also involve in deposits,
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NATIONAL BANK OF PAKISTAN

remittances and advances but the difference with other department that the foreign
exchange department deals in foreign currency rather than in local currency.

Page # 20

In National Bank of Pakistan, four currency accounts are available:

1. US Dollar
2. Pound Sterling
3. Japanese Yen
4. Euro

Hierarchy & Functions

Manager of branch

FX Department In charge

Deposit Seat

Remittance

Entities Involved In the Foreign Trade

Exporter
Importer
Exporters Bank
Importers Bank
Shipping Company
Insurance Company
Custom Office

Import & Export

Main Documents Involved

Acceptance
Bill of Exchange (Draft)
Bill of Lading
The Certificate of Origin
The Insurance Certificate
Commercial Invoices

Trade Cycle
In the very beginning the basic thing is need that drives to foreign trade. So
importer feels the need to purchase some types of goods and contact to the
seller at the foreign country and need the quotations.
Then the exporters company sends the Pro-forma Invoice (quotation) to
the importers company.
Then importer takes this Pro-forma Invoice to his bank for the registration
of the contract.
Then this registered contract is returned to the importer by his bank.
The importer sends this registered contract to the exporter.
When the exporter receives the registered contract then he exports the
goods by any transportation way like by road (Forwarding Co.), by sea
(Shipping Co.), by Air (air co.)
Exporter receives the shipping documents from the shipping company.
o Bilty (by road)
o Bill of Lading (by sea)
o Railway Receipt (by train)
o Airway Bill (by air)

 Then the seller gives the three types of documents to his bank with Bill of
Ladding and they are:
o Bill of Exchange
o Shipping Document (that he receives from a shipping company)
o Other Commercial Documents (invoice, packing list, insurance
certificate, certificate of origin, etc.)
Exporters bank sends all these documents to the importers bank with Bill
of Ladding.
When these export documents arrives in the importers bank then these
same documents become the import documents. Then the importers bank
contact to the importer that he make the payment and & release all these
documents.
When the importer makes the payment to the bank then bank gives the Bill
of Ladding and all the import documents to the importer.
Now importer himself is the Consignee (who can release the goods from
port). So, he will go to the port and will release the goods from shipping
company. And that shipping company takes the receipt of receivables as
evidence.
Importer has to pay the custom duty and premium of insurance if premium
is not paid by the exporter.

LETTER OF CREDIT
In fact LC is a legal document on behalf of which the payment made by the
importers bank to the exporters bank.
As a credit instrument and as a mean of making security of the payment, the
documentary credit is essential these days for conducting safe and sound foreign
trade.

One mode of payment is Letter of Credit (LC). National Bank of Pakistan is

providing this service to its customers who have an account with the branch and
other businessmen too.

An LC document normally include following information:

The name of the local company, which is importing the goods
The name of foreign company, which is exporting the goods
The details of the goods to be transacted including the amount, quality,
mode of packing etc.
The total amount of the LC
The number of days for which the LC is valid
The name of the banks, who are regulating all these dealings
The name of the carrier which will be used for the shipment of the goods to
the importer

Parties involved in a letter of credit

There are normally five parties involved in a letter of credit:
1. Buyer (known as the importer, account party or consignee)
2. Buyers Bank (known as opening, or paying bank)
3. Seller (known as the exporter, shipper, or beneficiary)
4. Sellers bank (known as advising, confirming, negotiating bank)
5. Carrier (known as the shipping company)

EXPORTS
National Bank of Pakistan is an authorized dealer with respect to dealing in the
foreign currency affairs that are related with the export, import and foreign
currency accounts. For export L.C negotiations the bank has to follow prescribed
rules and regulations levied by SBP. For negotiation the Bank has to give in
writing that it shall bear the responsibility to honor all bills and cheques on behalf
of the importer that shall be presented for the payment by the foreign exporter.

Documents Involved
E Form (which describes the detail of the goods to be exported, the
importers particulars, the amount of foreign currency payment and the
details of the importer as well.
Original Invoices of the transaction for sale
Bills of Exchange drawn on the importer by the exporter
Bill of Lading from the shipping company along with the details
Insurance documents
After submission of all the related documents to the negotiating Bank, seller is
bound to receive payment. The Bank on its part is also bound to make payment
however it is only reasonable to allow the banks sufficient time to scrutinize the
documents that exporter has submitted.
After these documents have been verified and found correct the bank makes the
payment to the exporter, in addition confirming it from the issuing bank. All the
documents of the export transaction are received by the exporter and then
submitted to the Bank for negotiation. These documents are sent to the foreign
bank for authentication. When the confirmation is received then a security sheet is
prepared to check the amount of the LC as well as the amount of Bill of Exchange.

E-FORM
Every exporter is required to furnish a declaration to customs authorities for goods
exported. This deceleration is submitted on a prescribed Form-E in quadruplicate
which is certified by the authorized Dealers.

E-form has four copies:

One for custom officer
One for exporter
Triplicate copy for SBP
Duplicate copy for bank

Documents for Issuance of E Form

Before issue E-Form it is ensured that the exporter has tendered the attested
photocopies of required documents
N.I.C.
NTN
Credit report of the exporter is also obtained to ensure the credit worthiness of the
exporter.
The set of E-Form after completion of all formalities is then entered in the E-Form
issuance register and acknowledgement is obtained from the exporter or any
authorized person of the exporter.

Cancellation of form e
If goods are not exported and E form is not presented to the customs authorities,
the same is surrendered to the cancellation which is recorded in the separate file
duly marked canceled.

IMPORTS
For the control of foreign exchange SBP discourage import of the goods. Still most
of our daily needs are being fulfilled by imported products. The import procedure
is also complicated that involves many dimensions to be looked for. The Banks
role in this regard is again indispensable for the importer and the exporter.

Documents for import LC

Form-I (request for the opening of LC)
Certificate of Origin
Valid import License
National ID card of the importer
Invoice of Transaction
Bill of Exchange
Bill of Lading

Procedure of opening LC
After all the documents have been presented by the importer, the Bank verifies the
genuineness of these documents. At the time of opening of LC Bank charges
commission, postage and telegram charges and others from the importer.
Importers account is checked for the balance that has to be retained as margin
of safety, and if found below, he is informed to deposit the reducing balance his
account. It may happen that for customers of high credibility such pre-deposit is
not required at the time of opening of the LC. The accounting entries are made in
the two books of accounts namely,

LC opened register
Margin/Liability account register

Payment of the LC
Nature of payment can be of two types:
Sight

where the payment is made on the presentation of the documents

Usance

where payment is made after 30, 60, or 120 days of presentation of

the documents
The negotiating bank after receiving the documents from the exporter verifies
for the genuineness and confirms the conditions set in the LC makes payment to
the exporter (if it is a sight transaction). If the transaction is Usance then the bank
makes the payment after number of days mentioned in the LC document from the
date of presentation of the documents. These documents when checked are sent to
the issuing bank for reimbursement of the amount paid to the exporter. The issuing
bank once again checks and confirms the genuineness and sends the amount to the
negotiating bank through remittance instrument.

FOREIGN REMITTANCES
Remittance is transfer of funds from one place to the other by way of using an
intermediate dealer. These dealers are authorized agents who provide these
services on commission. Foreign remittances are the most significant type of
transaction that is carried on in case of a foreign currency accounts. The
remittance can primarily of two types.

(1) Inward Remittances

funds coming into the country on account

(2) Outward Remittances

funds going out of the country on account

Inward Remittances
The inward remittances are coming through either Telegraphic Transfer (T.T) or in
form of Demand Draft (D.D). Further these remittances are coming in either in

foreign currency or are in Pak Rupees. The remittances coming into NBP Main
Branch, Multan can be classified into the following types.

Case 1
Remittances where the beneficiary or the payee is an account holder in the Main
Branch,

Case 2
Remittances where the beneficiary or the payee is an account holder of any NBP
branch other than Main Br. Multan

Case 3
Remittances where the beneficiary or the payee is an account holder in a Bank
other than NBP,
All the above mentioned types of remittances are handled differently and the
reimbursement of the amount is done through separate recordings in the books.
The instruments of inward remittances carry instructions for the proper
reimbursement of the amount to be credited to the account holder on realization.
The reimbursement on TTs is available as follows:

For Pak Rupees

Reimbursement is made from Nadir House Br.

Karachi

For Foreign Currency

Reimbursement is made from NBP Head Off.

Karachi

Outward Remittances
Sending amount outside the country is an outward remittance. Again this
remittance can be made by T.T or demand draft. The condition for these

remittances requires the sender to be the account holder of the Branch. That
account holder has to submit a written cheque along with the payees particulars
and responding bank. This procedure has charges that are higher in case of T.T and
comparatively lesser for demand draft. These charges can be deposited in cash or
can be debited from the account of the sender as the case may be.

TYPES OF REMITTENCES
The remittances are of following types:
Foreign Telegraphic Transfer (FTT)
Foreign Demand Draft (FDD)
Foreign Mail Transfer(FMT)
SWIFT
Western Union Money Transfer(WUMT)

Foreign Telegraphic Transfer:

This is telegraphic transfer just like ordinary local currency TT, but this is foreign
currency.

Foreign Demand Draft:

Foreign Mail Transfer:

These are also known as FMT. Transfer by mail of an account of currency to
another country. The Remitter requests the banker to transfer the amount by mail,
giving the name and address of the payee.

SWIFT:
The

SWIFT

system

(Society

for

Worldwide

Inter

bank

Financial

Telecommunication) works like Internet communication processes. All the banks

in the world are registered for the service, which have the facility of online
computers. Headquarter of S.W.I.F.T. is in Belgium. The message sent through this
way does not require any code tests to confirm its authenticity. The sending
process is more secure where two officers make the transmission of the message,
one types the content with his code word and the other executes it with his
password. There are different types of codes that are used for the messages
interchanged on the basis of the type of the transaction.

Western Union Money Transfer:

Western union money transfer is a fastest way to receive money worldwide. NBP
only received payment through WUMT. After received it they paid to customer

Payment Procedure
Customer provide the following information
Receiver name

First name

Middle name

Last name

Sender name

First name

Middle name

Last name

Telephone no
Photo copy of ID card
Expected amount

CREDIT Department
The most important activity of the bank is the granting of credit to the
customers. NBP provides short term and long term financing for domestic and
international trade.
Manager can grant the credit limit to each customer with in the declared limits
approved by the controlling offices i.e., GHQ, circle and zonal. Banks grant credit
to the customer for a certain period of time. The banks provided credit to
the customers. By giving these facility to the customers large scale production of
commodity can be achieved and economic growth rate can be increased. The
power to sanctioned loans had been delegated for controlling different offices,
according to amount of loan. This department is also called as risk management
group.

ELEMENTS ARE USED FOR CREDIT SELECTION

Character
It is based on the borrower willingness to repay the obligation. The loan officer
sees the family background mode of living, business nature, habits, moral
reputation and etc. before giving the loan.

Capacity
Ability of borrower to repay the loan when will be due. Borrowers ability to repay
the loan is assessed by the officer that he will be able to repay the loan in future.

Capital

The officer assesses the capital of the borrower. If assets held by the borrower are
liquid, they can be easily convertible in cash; but if non liquid then it is risky to
given loan.

Collateral
The collateral security may consist of stocks and marketable bonds, bills of
exchange bill of lading, warehouse receipts, trust receipts, etc. The banker while
making decision to grant credit examines fully the available collateral to secure the
repayment of advance in case of default by the borrower

Condition
The economic condition of the borrower is determined. The economic conditions
of the borrower in and out side the country effects the repayment of loan. If
condition is favorable then loan is given otherwise vice versa

Advances
Advances provided by the bank are of the following two types.
Funded
Non-funded

Funded
In fund based bank contributes a large amount of the fund based on clarified as
follows

TYPES OF ADVANCES

Demand Finance
One time disbursement of the whole amount sanctioned, as the limit for the credit
allows. Any person, individual, group, company, firm and all others can achieve
this mode of financing. The mark-up or interest is calculated on the total amount
disbursed and requires to be paid before the date of final adjustment. Regarding
the amount, limit and period, it depends on the nature of the case in review.

Cash Finance
In this mode of financing the borrower is allowed to make withdrawals of funds as
he requires, but the total amount outstanding cannot exceed the limit sanctioned.
The mark-up/interest is calculated on the amount outstanding on his account. The
calculation of mark-up/interest is based on the number of days a specific amount is
withdrawn. This finance if normally borrowed by small traders or individuals for
their petty matters.

Running Finance
To assist a large-scale business operator to carry on his day to day requirements of
liquid funds, this account is opened is made operation in his favor. Running
finance is provided where the amount goes beyond rupees three hundred
thousand. The mark-up/interest is calculated the same way as in case of cash
finance.

Non-Fund
Bank provide non fund advance in the following form:
Guarantee
Imports

Guarantee

A guarantee is a promise between one person to another person or party to

answerable for the debt of a third party. Bank issues guarantee after 100%cash
collaterals are provided by the person.

Imports
Bank provides non-funded credit facility to the following basis.

Sight LC

Usance or DA (Documents against Acceptance) LC.

Sight LC
In this type of L.C payment is made when documents are released.

Usance L.C
Payment is made after specified time period of presentment of documents

TYPES OF LOANS
The credit department of NBP has providing the following types of loans
1. Short term loans
2. Long term loans
3. Working capital loan
4. Syndicate (project) loan
5. Monitoring

DOCUMENTATION FOR FINANCING

Demand promissory note

 Financing agreement
Letter of guarantee in personal capacity
Letter of authority
Letter of pledge
Memorandum of deposit of title dead

CREDIT REPORTS
A credit report is an assessment of borrowers 5Cs from a bankers point of view.
Credit reports on borrowers called Status Reports, bankers opinion or confidential
reports. All these terms carry more or less the same meanings. The study of a
borrower is a study of his character, capacity, capital, collateral and condition
often known as the 5Cs to consider his credit worthiness and eligibility for the
bank advance.
The purpose of compilation of credit report of the borrower is to assess their net
worth. It must contain information about borrowers means, character, integrity,
assets, liabilities, business and experience. Besides, borrowers own investment,
details of properties, must be obtained. The borrower may be asked to give written
clarification of their existing liabilities.
In the case of Limited Companies, their borrowing powers to be verified from
their Memorandum & Articles of Association. Their certification of incorporation
to be examined, exiting borrowings, prior charge on their fixed assets, paid-up
capital, reserves, profit and loss position, detailed particulars of their directors and
complete analysis of balance sheet must be incorporated in the credit report.

Independent inquiries about the borrowers and opinions form their previous
bankers must be made. As such a comprehensive credit report is compiled which
serves as a constant guide to the banker about his borrower.
Credit Report contains the net worth of the borrower.

How to Calculate the Net Worth of Firms

Total investment in Business + Properties liabilities

How to Calculate the Net Worth of Companies

Paid-up-capital + Reserves + Profits or -Losses

SECURITY
It is an interest or right in the property gives to the creditor to convert it in cash in
case of debtor fails to meet the principal and interest.

TYPES OF SECURITIES
Pledge of Stock
The goods and title of the goods are kept by the bank
Finished stock or raw material is accepted as security against pledge.
The borrower cannot sell the items without the permission of the bank.
Bank has appointed godown keepers
Borrower can buy this stock from the bank and then resell it to its
customers.

Hypothecation
Possession of goods remain with borrower
Borrower can use the goods but the bank has to take the report of daily
activities

Mortgage
Mortgage is of Immovable properties such as land, buildings.
Title documents remain with the bank.

Lien
Lien is right to retain the property belonging to another person until a debt or
obligation is not cleared by the later.

PROCEDURE FOR ADVANCES

The financing process starts from the borrower who comes with a request for
credit.
Interview with the applicant
Preparation of Credit Proposal
Sanction of the Advance
Advice can be sanctioned as following
Funded
Non Funded

Mark-up on Advances
Mark-up is the differential amount of purchase price and the sale price that is
offered by the bank to the borrower. It is the earning of the bank on the advance.

Every Month

Every month, at the end, the amount of mark-up payable by cash account is
calculated on the basis of the mark-up rate, which is stated as paisas per thousand
per day.
No entry is passed, only it is noted on the ledger folio or the account sheet and
shown in the statement of profit and loss account as accrued income on account of
mark-up.

National Bank of Pakistan (NBP) has launch of a housing scheme to cover all
sections of the society with monthly income starting from as low as Rs. 5000/- per
month.
Branded as 'NBP Saibaan' (Housing for all), the
Scheme offers a maximum loan of Rs 10 million in
accordance with the debt burden criterion.
Loans are available for Home Construction,
Home Purchase and Home Improvement.
For Home Improvement Loans the maximum amount
is Rs. 2.00 Million.
Home Construction and Home Purchase loans can be
repaid over a period of 20 years, whereas the repayment period for Home
Improvement loan is 15 years.

The scheme was launched at a function in Karachi presided over by Mr. Shaukat
Aziz, Pakistan's Finance Minister.

Personal Loan
You can avail up to 20 net take home salaries with easy repayment installments. Its
hassle free acquisition with no prior formalities and easy availability in a short
turnaround time is attributed as the most distinguishing features of the product.
Easy installments of 1 to 60 months at your choice
No minimum income, collateral & insurance charges required
Quick processing and fastest disbursement.
For permanent employees of Government, Semi Government and
Autonomous bodies receiving salaries through NBP.

AGRICULTURE FARMING PROGRAM

QUICK & EASY PROCESSING.

PROVISION OF TECHNICAL GUIDANCE TO
FARMERS AT THEIR DOORSTEP.
WIDE RANGE OF FINANCING SCHEMES
FOR FARMERS.
FINANCE FACILITY UP TO RS. 100,000/- FOR LANDLESS
FARMERS ON PERSONAL GUARANTEE.

 FINANCING AVAILABLE AGAINST PASS BOOK, RESIDENTIAL /

COMMERCIAL PROPERTY, GOLD ORNAMENTS AND PAPER
SECURITY.
LOAN FACILITY ON REVOLVING BASIS FOR THREE YEARS
(RENEWABLE ON YEARLY BASIS WITHOUT FRESH
DOCUMENTATION AND APPROVAL).

REMITTANCES DEPARTMENT
The need of remittances is commonly felt in todays business. The main function
of remittance department in a bank is the transfer of funds.
Remittances can be made through:
1. Instrumental transfer
2. Electronic transfer

1. Instrumental Transfer
Instrumental transfers are following
Pay order
Demand Draft
Pay Slip

Pay Order
A pay order is a written order issued by a bank, drawn upon & payable by itself, to
pay a specified sum of money to or to the order of a specified person.

Procedure for Pay Order

Application form (Voucher) is given to the customer to fill.

 Two signatures are taken on the form one for request and other for
receiving the instrument.
All the particulars of application form are checked and bank commission
charges and withholding tax is written on the top of the application form.
If the customer is maintaining his account with the branch, he can give
cheque for total amount of instrument plus bank charges. Cheque and
application from is then given to the officer Cash Department for the
payment of cheque.
After proper scrutiny, Officer Cash Department posts the cheque and signs
the application form in token of payment received. If the customer wants to
pay cash, then cash is deposited by the customer along with the bank
charges and withholding tax.
Application form is then given to the Remittances Incharge for issuance of
instrument. He will issue Pay order and same is given to the customer.

DEMAND DRAFT
A Demand Draft (DD) is an instrument, which is drawn by one bank upon another
bank for a specific sum of money payable on demand. It is made by the bank,
given to the purchaser against cash or cheque.

Parties Involved in DD:

Purchaser
Issuing Branch
Drawee Branch
Payee

Procedure for Issuing DD

Issuance procedure of Demand Draft is same as of pay Order.

Ex-advice registers:
This register is used to enter only those DD which has been paid by the bank
before receiving the advice from issuing branch.

Pay Slip
It is an instrument, which is issued by bank and used for expenditure purposes,
i.e., electricity bills, maintenance bills, security bills, fixture and fitting, etc.

2. Electronic Transfer
Electronic transfer is of following types

Telegraphic Transfer
Sometimes, when the remittance is urgently required by the remitter, Telegraphic
Transfer (TT) is issued .

Procedure for Issuing Telegraphic Transfer

Application form is given to the customer to fill. Two signatures are taken
on the form one for request and other for receiving the instrument.
All the particulars of application form are checked and bank commission
charges.
If the customer is maintaining his account with the branch, he can give
cheque and application form is then given to the officer for the payment of
cheque.
After proper scrutiny, Officer Cash Department posts the cheque and signs
the application form, to assure that payment is received.

 If the customer wants to pay cash, it is deposited by the customer on cash

counter. Cash Receiving Officer receives cash and the application form
along with the bank charges.
Application form is then given to the Remittances Incharge for issuance of
the instrument. He enters all the particulars of the application form in T.T.
issuance register
Telegraphic Transfer message is written in the telex containing name of
transferring branch, name of receiving branch, date, amount, currency,
payees name and account number or identification if any, payer name and
payment advice.
A test number is given to the T. T. message for receiving branch. This
message is then sent through telex to the receiving branch followed by a
T.T advice.
The customer is confirmed that T.T. has been sent.

Mail Transfer (MT)

Mail transfer is mode of remittance that is used for transfer of money in case the
responding branch is of the same bank, which is issuing the MT. All inter-branch
transfers are done through MT. An MT does not need an advice to be sent because
the amount of MT is directly credited to the account of the payee. So it is an easy
mean to transfer the amount from one account to the other account with in the
same bank but different branches. Its advantage is that applicant can get payment
at next day.

Procedure for Issuing MT

A voucher is filled with the information about the receiver, his account
number, responding branch of the bank and amount.
The amount to be sent is deposited in cash or a cheque is attached with the
voucher.

 Based on the information provided the MT leaf filled.

It is recorded in the concerned register.
Sent to the officer for signature and authentication.
A signature is taken on the counter folio of MT from the customer.
The MT drawn is sent to the concerned branch with a FANFOLD by the
bank itself.

DEPOSIT DEPARTMET
IMPORTANCE 0F DEPOSITS
Bank deals in money and they are merely mobilizing funds within the economy.
They borrow from one person and lend to another, the difference between the rates
borrowed and lend from their spread. Therefore, we can rightly state that deposits
are the blood of the banks which cause the body of an institution to get to work.
These deposits are liability of the bank so from the viewpoint of bank we can refer
to them as liabilities.

TYPES OF DEPOSITS
Bank has different kind of deposit schemes in order to induce deposits. National
Bank of Pakistan has large variety of deposit schemes and some of these are as
follows:
In National Bank there are following types of accounts:
Current Account
Foreign Currency Account
Profit & Loss Sharing Account (Saving Account)
Fixed deposit

CURRENT ACCOUNT

In this type of accounts, the client is allowed to deposit or withdraw money any
time, but there is requirement of maintaining the minimum balance of Rs.5000/other wise Rs.50/- will be deducted every month. Usually the businessmen open
this type of account and the bank pays no profit on it. The Bank neither pays
interest nor deducts the Zakat from the deposits of this account.

Foreign Currency Account

1. Foreign Currency Accounts are opened, on proper introduction and
submission of required documents along with an initial deposit prescribed
from time to time.
2. Rates of return on Foreign Currency Deposits are subject to fluctuation as
determined in accordance with State Bank of Pakistan Directives.
3. The bank shall have no responsibility for or liability to the accounts holders
for any diminution due to taxes/imposts or depreciation in the value of
funds credited to the account whether due to devaluation or fluctuation in
the exchange rate or otherwise.

Service Charges on Foreign Accounts

Service Charges on Foreign Accounts
including

dormant,

inoperative

and

unclaimed with monthly average balance

below US$1,000/- or equivalent amount
in other foreign currencies.

PLS SAVING BANK ACCOUNT

US$ 3/- per month

(Service

Charges

not

applicable

to

Foreign currency accounts of NBP

employees[in service or retired] or their
spouses)

This type of account is for those persons who want to make small savings. Service
Charges on PLS Saving Accounts including dormant, inoperative and unclaimed
with monthly average balance below Rs. 5,000/- is RS 50/- Per month.

Exemptions:
The following categories of account holders are exempted from levy of the Service
Charges:
A) Students
B) Mustahqeen of Zakat
C) Employees of Government institutions drawing salary/pension.
D) Ex-NBP employees or their spouses drawing pension/medical from the
bank

FIXED DEPOSITS
In this type of account a certain amount is deposited for a certain period such as
six months, one year, two year or longer. A fixed deposit receipt is issued in the
name of the depositor. The receipt is signed by the officer in charge and the bank
manager. A notice is given to the depositor on a prescribed from two weeks before
the Fixed Deposit Receipt (FDR) falls due, requesting the depositor to withdraw
his money or to renew his deposits. The interest is allowed on fixed deposit varies
with the period for which the deposit is made.

Procedure from Opening of Account to Closing of Account

The depositor can open the account with the Bank in the following ways:
Individually
Jointly

 Sole proprietorship
Partnership
Corporation

Individual Account
A person can open account with the Bank in Pak-rupee or in selected foreign
currencies in nominated Branches of the National Bank of Pakistan. First of all he
has to fill the account opening form provided by the Bank. Then the introduction
of the account holder is done before the Manager. For this purpose he has to
provide the existing account holder of the Bank of officer of Bank as introducer.
If the account holder is illiterate then he provides two photographs to the Bank
and thumbprint is used instead of signature. In order to stop the payment from the
account it is necessary for him to give the instruction to the Manager in the black
and white. He may get the statement of account from the Bank according to his
own will.

Documentation In case of Individual

Account Opening Form
Attested copy of CNIC
Nadra Verification
Know your Customer ( KYC) Form

Joint Account
A person can open joint account in Pak-rupee or in selected foreign currencies in
the nominated Branches of the Bank. A form is given to the person who wants to
open a joint account in which he provides complete information about the joint
account holder. If any one or both are illiterate then he or they give the photograph
to the Bank and thumbprint. Then the information of the person is done.

Sole Proprietorship
A person who is the sole owner of a business can open the account with the NBP
by providing the required documents to the Bank Officer.

Partnership Firms
The partnership firms can also open the account with the Bank. For this purpose a
form is provided to account holder in which they provide the following
information to the Bank and the person is also nominated who can draw the
amount from the Bank.
Name of firm
Name of partners
Identity card of partners.
Photograph of partners in case of illiterate thumbprint.

Documentation In case of Partnership Account

Application form
A copy of partnership deed
Signature cards of partners
Registration certificate copy
A copy of National Identity Card of each partner

Limited Company/Corporation
In order to open the account of the Company following documents are required by
the Bank, So that the Bank would take action in case of any fraud or discrepancy.

Documentation In case of limited company accounts:

Photocopy of National Identity Card of each director
Application form
Copy of companys memorandum and articles of association
List of directors
Copy of board resolution
Certificate of incorporation
Their signature cards
Certificate to commence business

Closing of Account
There are many reasons for closing of account. Some of the most common
reasons are as follows:
Account holders own request
Death of account holder
Bankruptcy of account holder
Closing of account due to bad of an account holder etc.
Account closing charges.
Rs.250/- for Local Currency or entire amount if balance in the account is
below Rs.250/- .
US$ 5/- for Foreign Currency or entire amount is below US$ 5/-

LEDGERS OF DEPOSIT DEPARTMENT

The following types of ledgers are concerned with deposit department:

1. Saving Ledgers
2. Current Ledgers
3. Profit and Loss Sharing Ledgers
4. Fixed Deposit Register
5. Cash Book
6. Daily Profit and Loss Summary Book

Government Department
GOVERNMENT COLLECTION AND PAYMENT TRANSFER STRUCTURE

All NBP Branches in Multan City are authorized to collect Govt. Revenues.
After Collection of Govt. Revenue and payment of pension they transfer these
amounts to Main Branch Multan through F-16. After receiving these amounts
Main Branch Multan transfer these amounts to SBP through cheques attached with
detailed statements.
All transfer entries both revenues and payments routed through NBP General
A/C.

ACCOUNTING ENTRIES FOR COLLECTION AND PAYMENTS

For Govt. Collection or Revenues:
Debit:
Credit:
At closing of day:
Debit:
Credit:

Cash
NBP General A/C
NBP General A/C
SBP A/C

For Govt. Payments:

Debit:
Credit:
At closing of day:

NBP General A/C

Cash

Debit:
Credit:

SBP A/C
NBP General A/C

Collection of Utility Bills

NBP-is providing this facility since long but recently it embark upon it with a new vigor
and vitality and extended the range of its utility collections. In this connection National
Bank nominated its 148 Branches all over the Pakistan to provide utility bill collection
facility up to 9:pm instead of normal working hours 5:pm. It also amended the previous
collection timings which were from 9: am- to 1: pm, now all branches collect the utility
bills up to 5: pm instead of 1: pm. This amounts to the un-matched and unique services
provided only by the NBP. Its utility collection ratio is more than 34% of market, which
is a clear proof of its exclusive services in this respect.

Pensions Payment
Both types of pensions that is provincial and federal are paid to the thousands of
pensioners, this is also a unique feature of NBP, which it performs being the agent of
SBP.

Payment of Salaries
This is one the distinct features of NBP, that it provides services to the Govt. departments
to distribute their salaries every

month. The prominent examples include ARMY,

RANGERS, POLICE, EDUCATION, and PUBLIC WORKS ETC.

Government Collections and other Collections

This is another unique feature of National Bank that it provides services for collection of
various instruments far and wide throughout the country without or on the nominal
charges and this facility is also provided to the general public on the nominal and fair
charges not only inland but across the borders. NBP collects multiple head collection on
behalf of Govt. some head are following.
Traffic Violation Tickets (TVT)
Property Tax

 Motor Tax (Token)

Agriculture Tax
Income Tax

SWOT ANALYSIS
SWOT is the abbreviation of strengths, weaknesses, opportunities and threats.
Strength of the organization can be measured from the activities and resources that
give it a competitive edge over competitors. Weaknesses reflect areas where the
organization lacks better performance. Threats are the environmental condition
that can affect the performance of the organization in order to be more
competitive.
In light of the SWOT analysis, management also reevaluates its current mission
and objectives. Are they realistic? Do they need modification? As we where we
want to be right now?

STRENGTHS
The following facts reflect the strength of the National Bank of Pakistan.

National Bank the Nations Bank

National Bank of Pakistan is government owned bank that is why Pakistani nation
has a trust on the bank that their deposits are secured. Due to this reason the
deposits of the banks are increasing with the passage of time .

Agent of SBP
National Bank of Pakistan is also authorize to act as an agent of the State Bank of
Pakistan and to operate as treasury where the SBP does not have its own branch

So, the NBP has competitive edge over the competitors that it is working as a
clearing house in those cities where the SBP does not have its own branches.

Public Confidence
National Bank of Pakistan has got the pubic confidence due to its very secure
transactions. Business people and other do their transaction through this bank
because they feel that their money is dealt with safe and sound.

Developing the Economy

National Bank of Pakistan is playing very important role in developing the
economy. If the economic system is not properly organized it creates hurdles for
development of country. NBP helps the country in the period of crises and give
loans to the government handling the situation. It simulates the growth economy
by creating favorable climate for capital formation in the country.

Profitable Position
National Bank of Pakistan has the highest profitable position that its competitors
due to vast operational network and public confidence. According to magazine
The Banker NBP is at No. one position in Asia & at 8 th position in the world on
the base of earning profits.

WEAKNESSES
Lack of Implementation of Rules and Regulations
There is a lack of implementation of rules and regulations.

Recruitment Policy

In NBP, employees are recruited on the basis politics or through other tools of
corruption.

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

Irregularities in Promotion
In NBP there is no smooth and continuous promotion system. Unfair means are
used in order to get the promotion especially the promotion of the managers.

Individual Difference
In NBP the individual difference have strong impact on the organizations
performance due to the wrong criteria of selection of the employees. So with the
passage of time individual differences are increasing which are undermining the
good will of the organization.

Lack of Latest System

National Bank of Pakistan is not using latest system and technology. All the work
is being done through manually. It is the edge of information technology but NBP
is using outdated system & procedure. Process is very slow due to old system
Online banking is not fully introduced in all the branches due to this it is facing
difficulty in transferring the funds from one place to another.

Workload
Mostly workload increases on the employees. They often remain in office till 97P.M. To decrease this load appropriate number of employees should be there in
each department.

Poor Quality Counter Services

The Bank has poor quality counter services in branches. It does not give equal
importance to all the customers. Customers have to wait more for encashment of
their cheques or any other transactions.

OPPRTUNITIES
Consumer Banking
The basis need of the consumer such as transportation and other durable goods are
not adequately financed by the banks. So by initiating these services, the bank can
enjoy with more funds.

Investing in the Foreign Capital Market

NBP can enjoy handsome return its funding base by investing in capital markets in
the foreign countries.

Foreign Branches
NBP by establishing new branches in foreign countries can expand its business
and can enjoy with more profit.

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

Night Banking
Despite of poor customer service of NBP, people still come to NBP because of its
Govt. ownership as they feel it secure therefore bank improve its deposit by giving
facility of night banking and also can compete its competitors with positive steps.

Advisory Services

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

the securities.

Introduce The New Product And Service

Due to changing environment and competition, National Bank of Pakistan is also
expecting to introduce new products and services in the organization for the
satisfaction of the customers.

THREATS
Competitors
The establishment of new private financial institution is a biggest threat to the
National Bank of Pakistan. These private banks capture some portion of profit by
offering innovation products and latest service to the customers and they think that
they are treated in a better way.

Inflation
In our country, the rate of inflation is increasing along with the unemployment. So
due to the increase in price of the products, the savings of the nation is decreasing
with the passage of time. So it is the threat for the banking sector. In the future, the
deposits of the bank will decrease.

Government Policy
On NBP Govt. policies have strong impact. A slight change in Govt. policies may
affect the performance of the bank. The bank has to work with in the regulation
frame work.

Political Pressure
Other threat for the National Bank of Pakistan is that there is political pressure for
implementing the decisions. The people that are having higher authority are
forcing to the NBP to make their work easier. They can force the bank to sanction
the loan in huge amount for their benefit.

Inability to Change
This is also threat for the NBP it is not capable of adapting itself to the changing
environment. Inability to change makes it less competitive in the environment and
as a result it is not providing best and quality services to their customers.

Suggestions and Recommendations

Based on the SWOT analysis of the National Bank of Pakistan, it is observed that
the Bank like the other public sector industries has not been showing up to mark
performance. There is a long list of weaknesses that is given on the previous page.
Most of them are going along since long time and that all efforts made to remove
them have not succeeded. On the basis of SWOT analysis of the Bank the
following suggestions and recommendations are given.
Redefining of rules, regulations and policies should be made implemented
at all costs
Efforts of great importance to be made for the over the counter services of
general banking making it more simple and faster to get a better response of
the customers
The behavior of the employees, especially
strictly monitored and checked

on the counter have to be

 The still existed bureaucratic approval system has to be demolished

All advances should be made by getting the maximum security and should
focus on productive work
Better and comprehensive long-term and short-term planning should be
made to forecast the future needs
There is a possibility of establishing a task force to ascertain the
effectiveness of the policies being implemented
The Bank should develop a comprehensive recruitment policy to make only
the competent ones to be on the job
There is a still a vast pool of incompetent employees that has to right sized
There is a lack of promotional element in the planning and budgetary
decisions of the Bank that has to thought seriously
All branches of the Bank should be computerized for increasing the
effectiveness and efficiency of its employees
Efforts should be continued to keep the powers of employees union to the
minimum, like the current situation
Promotions must not be delayed and should be made on time to further
increase the commitment and efficiency of the employees
These are many others that can make a good set of recommendations, which have
to be made possible to escape from the threats and weaknesses and the risks in
environment that surrounds the Bank. The management do considers the policy
matters that are not helping the Bank, but are still in practice due the absence of
prudentially regulated system to protect them and the Bank.

Bibliography
Annual Report of National Bank of Pakistan.
www.nbp.pk
Internship meetings.