CHAPTER NO-2

INTRODUCTION Of NBP
Bank's Profile

HISTORY OF NATIONAL BANK OF PAKISTAN BACKGROUND

At the time of partition the total number of Commercial Banks in Pakistan was 38 .Out of these Pakistan had 2 banks, India had 29 and there were 7 exchange banks. Before the partition of Sub Continent the entire banking business was almost controlled and managed by non-Muslims. The Muslims were deliberately kept cut of banking profession by the wealthy Hindu community. When Hindu capitalists became sure of the division of Sub Continent, they secretly began transferring their funds and the other valuables at an accelerated pace to India and there was a mass scale migration of non Muslims from West Pakistan to India which also caused the drain on the bank deposits. The Hindus closed down most of the head offices and the branches of scheduled and non-scheduled banks in Pakistan. The number of scheduled banks branches was reduced from 619 to 213 in both the wings of the country after independence. The non-scheduled banks also suffered a severe jolt and their number was reduced from 411 to 106 over the same period. West Pakistan from where there was greater exodus of nonMuslims to India suffered a great deal, as a number of branches fell down (from 487 to 69). The mass scale closure of branches and withdrawal of the deposits caused a dead lock in the banking business in Pakistan. The government of Pakistan was quite aware of the serious banking situation caused by the withdrawal of deposits and wholesale migration of banking staffs to India. It took up the challenge and started reorganizing the crippled banking immediately after partition. In 1949 September U.K. devalued its currency, India followed the suit but we did not. India said we had contravened the agreement. On October 3, 1949 the two central banks have to announce the new par value of both currencies but India denied the day earlier. India also froze our trade balance surplus that is still an unsettled dispute. India also draws the Marwari merchants who were employed annually for movement of jute crop by financing it. There being no jute industry, prices fell sharply, and an agrarian unrest was threatening. Two Ordinances were therefore issued. 1 Jute board Ordinance & 2 NBP ordinance dated 08.11.1949 In order to regulate both of the banking on sound footings, the following measures were taken to develop the banking system in Pakistan.

The State Bank of Pakistan, which is the central bank of the country, was established in July 1948.

The National Bank of Pakistan was established on 1949, to serve as an agent to the SBP.

The Industrial Development Bank of Pakistan was set up on August 1, 1961 with a Paid up Capital of Rs; five cror. The Agricultural Development Bank of Pakistan (ADBP) was set up in 1961. It provides short , medium and long term loans to the farmers. In Jan, 1974 the entire commercial banks were nationalized. The weaker commercial banks were merged with the stronger once and in all five major banking companies were formed. MCB and ABL have again been privatized.

ESTABLIHMENT
The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute Trade. 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. There were 14 Pakistani scheduled commercial banks operating in the country on December 1973, the name of these were:
1. 2. 3. 4. 5. 6. 7. National bank of Pakistan Habib Bank Limited Habib Bank(Overseas)Limited United Bank Limited Muslim Commercial Bank Limited Commerce Bank Limited Australia Bank Limited 8. Standard Bank Limited 9. Bank of Bahawalpur Limited 10. Premier Bank Limited 11. Pak Bank Limited 12. Lahore Commercial Bank Limited 13. Sarhad Bank Limited 14. Punjab Provisional Co-operative Bank Limited

The Pakistan Banking Council prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. These five banks are as under:

1. 2. 3. 4. 5.

National Bank of Pakistan Habib Bank Limited United Bank Limited Muslim Commercial Bank Limited Allied Bank Limited

So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan, all the commercial banks incorporated in Pakistan and carrying on business in or outside the country were brought under the government ownership with effect from Jan. 1, 1974. The ownership, management, and control of all banks in Pakistan stood transferred to and vested in the Federal Government. 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.

BANK PROFILE

THE NATION BANK

Established Headquarter Key People 1949 Principal Office, Karachi Pakistan Qamar Hussain, President & Chairman
(On Acting Charges Basis)

Industry Deposit (2010) Total Assets (2010) Number of Employees

(2010)

Banking, capital Market

832,152 (million) 1,035,025 (million) 16,457 1,289

www.nbp.com.pk

Number of Branches Home page

(2010)

INTRODUCTION
National Bank of Pakistan is the largest commercial bank operating in Pakistan National Bank of Pakistan was incorporated in Pakistan under the National Bank of Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. NBP headquarters in Karachi, Pakistan with over 1,289 branches country wide. 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 is now listed on the Karachi Stock Exchange.

Handling of treasury transactions for the Government of Pakistan as agent to

the State Bank of Pakistan. Accepting of deposits of money on current, fixed, saving, term deposit and

profit and loss sharing accounts. Borrowing money and arranging finance from other banks and advancing and Buying, selling, dealing, including entering into forward contracts of foreign Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc. Carrying on agency business of any description other than managing agent, on Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc. Transacting guarantee and indemnity business. Joint venturing with foreign dealers, agents and companies for its Participating in "World Bank" and "Asian Development Bank's" lines of

lending money to its clients. exchange.

behalf of clients including Government and local authorities.

representation abroad. credit.

OVERVIEW OF THE ORGANIZATION

VISION

"To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility."

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 Adopting the best international management practices. Maximizing stakeholders value. Discharging our responsibility as a good corporate citizen of Pakistan and in

services

countries where we operate.

CORE VALUES
Highest standards of Integrity. Institutionalizing teamwork and performance culture. Excellence in service. Advancement of skills for tomorrows challenges. Awareness of social and community responsibility. Value creation for all stakeholders.

GOALS
To enhance profitability and maximization of NBP share through increasing leverage of existing customer base and diversified range of products.

Direction Excellence in Growth Excellence in Performance Excellence in Management Excellence in Achievement

Excellence in