NBP Markiting Internship-Report

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN
INTRODUCTION TO BANKING I N T R O D U C T I O N
There are many definitions of the word Bank even the standard encyclopedia and law books find it difficult to state exactly what a Bank is. There have been many attempts by different writers to explain the exact significance of the term Bank. Here some of the definitions are quoted as follows. According to the Banking Companies Ordinance 1962 Section 5 (b) defines Banker means a person transacting the business of accepting, for the purpose of lending or investment, of deposits from the public, and withdrawal by cheques, drafts, order of otherwise, and include any post office saving banks According to Crowther Bank is a dealer of debt, his own and of other people. According to Gilbert A bank is a dealer in capital or dealer in money. He is an intermediary party between the borrowers and lenders. According to Samulelson Commercial banks provide certain services for customers and in return receive payments from them. According to Holder The modern banker is primarily a dealer in credit.
IMPORTANCE OF BANKING
We can take bank just like a heart in the economic structure and capital provided by it is like blood in it Banks play very important role in the economic life of a nation. The growth of the economy is dependent upon the soundness of its banking system. Although banks do not create new wealth but borrow, exchange and consume. These make generation of wealth. In this way they become most effective partners in the development of that country. To encourage the habit of saving and to mobilize these savings is its basic purpose. Banks deposit surplus from the public and then advances these surpluses in the form of loans to the industrialists, agriculturists, businessmen and unemployed people under different schemes so that they set up their own business. Thus banks help in capital formation. If there are no banks, then there would be concentration of wealth in few hands and great portion of wealth of a country would be idle. In the fewer developing countries rate of saving is very low and due to this, rate of investment and rate of growth is also very low. We can take bank just like a heart in the economic structure and capital provided by it is like blood in it. As long as the blood is in circulation, the organs will remain sound and healthy. If the blood is not provided is not provided to any organ then the organ would become useless. So if the finance is not provided to agriculture sector or to industrial sector, it will be destroyed. Loan facility provided by bank works as an incentive to the producer to increase production. Banks provide transfer of payment facility, which is cheaper, quicker and safe. Many difficulties in the international payment have been overcome and volume of transactions has been increased. These facilities are very much helpful for the development of trade and commerce.
COMMERCIAL BANKING IN PAKISTAN

It was very difficult for Pakistan to build up its own Banking system immediately after independence without sufficient resources. Following the announcement of the partition plan in June 1947 there was a haste movement on the parts of banks to transfer their funds and accounts across the borders. The banks having their registered offices in Pakistan were transferred to India. In an effort to bring about the collapse of the new state by the persecuting an international policy of withdrawal, the Indian bank offices closed quickly. Those banks, which stayed, were considering the winding up of their business. By 30th June 1948 the number of schedule banks in Pakistan declined from mere scratch. Today there are more than 7000 branches of commercial banks along with an established network of supplementary financial institutions. All this development in the banking sect is the result of untiring efforts of four decades.
PHASES OF BANKING IN PAKISTAN

Broadly speaking we can divide the development of commercial banking into four phases PHASE-1 1947-1974 Establishment of commercial banking system PHASE-2 1974-1979 Nationalization of banks PHASE-3 1979-1991 Islamisation process PHASE-4 1991-2000 Privatization process
FIRST PHASE (1947-74)

SET UP OF COMMERCIAL BANKING SYSTEM This was the first phase of development of Pakistans commercial banking system, which consist of the circumstances under which the development of banking was started in the country. INITIAL POSITION OF BANKING IN PAKISTAN There were 19 non-Indian foreign banks in Pakistan at the time of independence with the status of small branch network, whose policies and operations were controlled by their head offices abroad. These banks were engaged solely in export of corps from Pakistan. There were only two Pakistani banks, the Habib bank, which had transferred its head office from Bombay to Karachi after the announcement of the partition plan, and Australian bank which has been working in Pakistani territories prior to June 1947. The government of Pakistan tried hard to eliminate the banking crises. Banking Companies Ordinance 1947 was promulgated to safe guard the interest of both the bankers and the companys customers. The situation however showed no significant improvements. The imperial bank of India closed down most of its offices in Pakistan, which had been working as the agent of the reserve bank of India was not willing to purchase even token amounts of the government of Pakistan. Securities on the plea that these securities were not marketable. The reserve bank of India was hardly of any help. It refused to help government of Pakistan with advance argument adhoc securities to enable them to make essential disbursements such as salaries and other obligations to add to the difficulties. The Indian government withheld Pakistans share of Rs. 75 crore in cash balances held by her at the time of independence. The foregoing developments clearly brought home the urgency of assuming control and currency in Pakistan and brought to the fore the need to setup a central banking institution to take the place of reserve bank of India.
Therefore it was agreed between the government of India and Pakistan to authority of Pakistan from 30th September 1947 to 30th June 1948 In order to make necessary arrangements of the establishment of the central bank of Pakistan a committee was appointed to recommend the necessary steps. Consequently the Governor General of Pakistan and father of the nation Quaid-e-Azam Muhammad Ali Jinnah Inaugurated the State Bank of Pakistan on 1st July 1948. After the State Bank order was promulgated on 12th May 1948. When it assumed full control of banking and currency in Pakistan the first important task before the SBP was to issue of currency notes and withdrawal of reserve bank of India, which had been in circulating in Pakistan so far.
SECOND PHASE (1974-1979)

NATIONALIZATION OF BANKS The banking reforms turned out to be a transitional and temporary step and hardly after 18 months had the government nationalized the banking system. Thus through the Nationalization Bank Act 1974, SBP and all commercial banks incorporated in Pakistan and carrying on business in or outside the country were brought under the government ownership with effect from January 1974. The ownership and management of all Pakistan banks stood transferred and rested in the federal government. The shareholders were provided compensation in the form of federal government bonds redeemable at par any time within a period of fifteen years. The amount of compensation was equal to the break up value of the shares in case of commercial banks. For the State Bank shares the amount of compensation was estimated on the basis of average of the clearing quotations during the six working days preceding nationalization. The chairman, director and chief executives of various banks were remove from their offices other than those appointed by the federal government and the state bank. The central board of banks, managing committees and similar other bodies were dissolved. A Pakistani banking counsel was established for nationalized commercial banks to co-ordinate their activities. As a result of merger of banks the following five major banking companies were formed:
1. 2. 3. 4. 5.
National Bank of Pakistan Habib Bank Limited United Bank Limited Muslim commercial Bank Limited Allied Bank of Pakistan
THIRD PHASE (1979-91)

INTRODUCTION OF ISLAMIC BANKING In 1977 the Bhutto government was toppled. The martial law government planned to reform the banking sector in a novel way. The overall policy was to Islamize the economy and the banking system, being based on interest was an important target of the new policy. The most preferred form of Islamic bank financing profit and loss sharing would require banks to receive deposit without guaranteeing any return. The Islamic bank has to acquire a high degree of confidence of the saver to make him deposit his money with them. Not even the return of the principle amount if guaranteed. The Islamic bank cannot finance the project of an investor merely on the furnishing of collateral. The bank will have to be a partner in the project. This will require to careful security of the project and the assessment of risk involved because profits are the function of the amount of risk in the project. Honesty and trust form both sides of the market are more important to the system of Islamic Banking.
FOURTH PHASE (1991-2000)

PRIVATIZATION AND DE-REGULATION The government headed by Prime Minister Nawaz Sharif was not fully satisfied with the performance of nationalized. The areas, which were severely criticized, were the falling standard of banking services and common red-tapism. There were complaints about the services as delay in home remittances, dispatch of cheques, drafts, inefficient counter services, bad debts of the banks etc. were on the rise. The government decided to privatize these banks. In order to implement privatization policy a privatization commission was established on 22nd January 1991. The commission has transferred two banks MCB and ABL to the private sector. Application for privatization of other banks namely UBL and HBL were also invited but the bidding response was quite poor. The privatization of these banks is under consideration. Legislation was enacted to permit the establishment of new banks and the government approved 10 application from the private sector for the grant of commercial bank licenses by SBP, out of these 9 new banks have since been incorporated. Till March 1994 there were 20 domestic scheduled banks with 9825 branches and 21 foreign banks with 66 branches in operation in the country. Overall investment of the scheduled banks in the current year rose to 76.7%. at present there are 24 domestic scheduled with 8137 branches and 19 foreign banks with 71 branches are in operation in the country. Total assets of domestic scheduled banks amounting to Rs. 1563.73 billion on 30th March 1996. Overall investment of the domestic scheduled banks in the current year declined by 80% over the same period last year. 1. 2. 3. 4. 5. 6. 7. 8. Bank of Commerce Al Habib Ltd. Soneri Bank Ltd Union Bank Ltd. Indus Banks Ltd. Mehran Bank Ltd. Prime Commercial Bank Ltd. Askari Commercial Bank Ltd. Bolan Bank Ltd.
Now Mehran bank has been absorbed by National Bank Ltd, due to its poor performance and ultimate failure. Now the ABN Amro Bank has also been included in the list of foreign scheduled banks
BRIEF HISTORY OF NATIONAL BANK OF PAKISTAN
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.
H I S T O R Y O F N B P
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.
The government floated its 10 % of the shares in the open market in past and the ratio became 60: 40 and in future they trying to make it 55: 45. In 1999 national bank celebrated its golden jubilee during the last fifty years bank has made substantial strides in the financial services industry in Pakistan. In 1999 its market share was around 22% and it remains the largest financial institution in Pakistan.
We aim to be an organization that is founded on

Growth through creation of sustainable relationships with our customers. Prudence to guide our business conduct. A national presence with a history of contribution to our communities
We shall work to

Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders
We aim to be people who

Care about relationships. Lead through the strength of our commitment and willingness to excel. Practice integrity, honesty and hard work. We believe that these are measures of true success
We have confidence that tomorrow we will be

Leaders in our industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment
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Vision and Guide

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 offering
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Mission Statement
To be recognized in the market place by Institutionalizing a merit & performance culture, Creating a powerful & distinctive brand identity, Achieving toptier financial performance, and Adopting & living out our core values
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We aim to be an organization that is founded on

Growth through creation of sustainable relationships with our customers. Prudence to guide our business conduct. A national presence with a history of contribution to our communities.
We shall work to

Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders
We aim to be people who

Care about relationships. Lead through the strength of our commitment and willingness to excel.
Practice integrity, honesty and hard work. We believe that these are measures of true success
We have confidence that tomorrow we will be
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Leaders in our industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment
M A N A G E M E N T
MANAGEMENT OF NATIONAL BANK OF PAKISTAN
An Executive Board composed of six Senior Executives of the Bank and the President who is also the Chief Executive supervises the affairs and business of the Bank.
O F N B P
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Syed Ali Raza Masood Chairman & President Director
Dr. Waqar
Iftikhar Ali Malik Shafqat Ali Director Director
Syed
M A N A G E M E N T O F N B P
M. Zubair Motiwala Azam Faruque
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Director Director
Sikandar Hayat Jamali

Director of directors
H I E ikhlaq Ahmad Security boardR A R C H Y O F N B P

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HIERARCHY OF NATIONAL BANK OF PAKISTAN
PRESIDENT
SENIOR EXECUTIVE VICE PRESIDENT
EXECUTIVE VICE PRESIDENT OFFICERS GRADE ASSISTANT VICE SENIOR VICE VICE CASHIER ASSISTANTS PRESIDENT I PEONS II III PRESIDENT
Branch Manger
Manager Operation
H I E R A R C H Y O F N B P
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Managers
BRANCH HIERARCHY OF NATIONAL BANK GONDLAWALA ROAD, GUJRANWALA Assistant Manager

Officers
Deputy Officers
Assistant officers
Clerks
Peons and Guards
M The branch manager is the head of the branch is assisted by the A manger operations in carrying out the main functions of the branch. Remaining organizational structure is divided according to the R requirements of different departments. There are currently three managers, two deputy managers, seven offices, 4 deputy officers and K 2 assistant officers working in the branch. The total number of employees working in the branch is 18. E T MARKETING MIX OF NATIONAL BANK OFI PAKISTAN N G
Marketing is the task of creating, promoting and delivering goods and
M profile distinct group of buyers who might prefer or require varying I products and marketing mixes. The customer seeks for value and X satisfaction. The organizations can increase the value of the customer
4 Ps Product/ Service Price Place Promotion
services to consumers and businesses. Organizations identify and
4 Cs Customer Solution Customer Cost 18 Convenience Communication
offering in several ways e.g. raising benefits, reducing costs etc. marketing mix is a set of marketing tools that the firm uses to pursue its marketing objectives in the target market. These marketing tools are known as 4 ps of marketing. These four marketing tools are viewed as 4cs by the consumers. To identify the customer needs and fulfilling hem is the basic objective of an organization. Marketing is not just satisfying your customers, you
P Under Promise and Over Deliver R National Bank provides a winning combination of products and services O to its prime customers. It is one of the countrys leading commercial banks, which ensures complete security, and reliability in all-financial D transactions. U C PRODUCTS T S
have to delight them and this can be done by acting upon this phrase. intangible and does not result in the ownership of anything. What on the market requirement and also the organizations profits. The
A product is anything that can be offered to a market to satisfy a want or need and a service is an act or performance that is essentially
O F products or services have to be offered to the target market depends

organization will offer those products and services, which result in
N B A bank is an organization rather a financial institution that provides products such as different types of deposits and services like foddering P
maximum profits and minimum costs. financing facilities to its customers.
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National Bank offers a diversified line of products and services to its customers. The unique products and services offered by National Bank are as follow:
P R O D U CORPORATE BANKING C These are branches which have an exposure of over Rs. 100 million. T Usually includes multinational & public sector companies. S
COMMERCIAL BANKING
Consumer banking Corporate banking Commercial banking NBP advance salary NBP cash card NBP cash & gold NBP Karobar NBP Kisan Dost NBP online banking NBP Saibaan SWIFT
O F but having a credit portfolio of more than Rs. 20 million (excluding

staff loans)
The branches which has a credit exposure of less than Rs. 100 million
Usually branches in large markets and commercial areas come under this category.
CONSUMER BANKING
N B P
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These are the branches which have exposure up to Rs. 20 million and these include all the branches which are neither corporate nor commercial branches.
NBP ADVANCE SALARY

Affordable installments from 1 to 60 Months, Take up to 15 advance salaries. Currently for NBP account holders of government or related organization employees.
NBP CASH CARD ATM plus debit card in one -------- One Card does it all NBP CASH & GOLD Meet your need for ready cash against your idle gold jewelry with no minimum limits GET EXTRA BENEBIT FROM YOUR GOLD NBP KAROBAR This is a Rozgar scheme introduced by President of Pakistan recently, this includes
P R O D U C T S O F N B P
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NBP NBP NBP NBP
Sasti Savari Chalti Pharti Dukan Rabata Duniya Se Maal atao Pasey Kamao
NBP KISAN DOST NBP affordable agriculture program offers you a wide range of financing
Recently National Bank of Pakistan has introduces home finance scheme with name of Saibaan.
Affordable

P R O D U C T S O F N B P
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Easy installment No surprises
Flexible

Mark-up choices Grace period option
Convenient
Structured and programmed
Minimum approval and disbursement timing
PRICE
P R I C E S
O a major role in determining the customers choice. Also it is F

offer advances to their clients by charging ascertain rate of
It is second important tool of marketing mix because it plays the only marketing tool that results into revenue. The banks
N B price. The customer makes a comparison between the prices offered by other financial institutions and National Bank P and
mark up or interest. This mark up or interest charged is the then selects the most suited offer.
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The charges are stated in a schedule of charges for every facility. Some of them are given:
NBP Products Cash & Gold NBP Karobar Kisan Dost NBP Saibaan
Rate 12% 7.5% 6.5% 7.5%
of charges per annum per annum per annum per annum
PLACE
Punjab Sindh NWFP Blochistan Azad Kashmir Regional Offices Domestic Overseas Total 732 290 110 32 31 29 1224 18 1242
P L A C E S O F
N B The location of the bank plays a vital role in making its P operations profitable. If the bank is located in some business
center then it will be very easy for it to attract business
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people as its customers. Therefore NBP has most of its branches at places where it can reach its targets customer easily. The branch network of National Bank is given as follows:
P L A C E S O F Here is a list of the banks locations in Pakistan accordance

to each province or territory;
Sindh:
Dadu,
Sanghar,
Hyderabad, Jacobabad, Shikarpur,
N B P
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Karachi,
Larkana,
Mirpurkhas,
Badin,
Nawabshah,
Sukkur, Khairpur, Tharparkar.
Punjab: Bahawalpur, D.G. Khan, RYKhan, Faisalabad, Gujranwala, Sialkot, Narowal, Jhang, Jhelum, Gujrat, Chakwal, Darya Khan , Bhakkar, Lahore, Multan, Murree, Attock, Gilgit, Rawalpindi, Sahiwal, Sargodha, Sheikhupura. NWFP: Abbottabad, Mansehra, Bannu, D.I. Khan, Kohat, Mingora, Mardan, Peshawar. Baluchistan: Quetta, Azad Kashmir: Muzaffarabad, Mirpur.
P L A C E S O F N B P
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29 1,195 143 4
Regional Offices Branches Online Branches Subsidiaries
INTERNATIONAL NETWORK
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P NBP also has branches in USA, Canada, Germany, France, L Bahrain, Egypt, Bangladesh, Hong Kong, Japan, South A Korea, The Peoples Republic of China, Afghanistan, C Turkmenistan, Kyrgyz Republic, Kazakhstan, Uzbekistan and E Azerbaijan S O F N B P
18 4 1 1 Overseas Branches Representative Offices Subsidiary Joint Venture
PROMOTION
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P R O National Bank is actively participating in promotion of its M products and services through advertisement and other O promotional schemes. Initially, the bank focused on the upper class customers T only and offered products for a limited class of people. But D I now the strategy has been changed and the bank is now targeting the middle market also. The products offered are EO of diverse nature to cater the needs of maximum number of people. PN A Customer Oriented Attitude RO National Bank values its customers. Customers complaints are encouraged because it gives an opportunity to know the TF needs of the customer and build more confidence in them. Most of the promotional efforts are done through M EN Direct marketing Public relations N B National bank sometimes gets suggestions TP and recommendations from its good customers. S
Branch layout is being designed in such a way that more and more customers are attracted. Some of the branches of National Bank have a very good entrance and outlook but many still need to be improved.
O F
N FIELD OF ACTIVITIES OF B NBP P

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This is the practical portion of my report and here I will explain different departments of NBP and how these departments work. Following are the main department of National Bank of Pakistan.
DEPOSIT DEPARTMENT ADVANCES DEPARTMENT CLEARING DEPARTMENT BILLS DEPARTMENT REMMITTANCE DEPARTMENT ACCOUNT DEPARTMENT TECHNOLOGY DEPARTMENT
D E P O S I T
D E P A R DEPOSIT DEPARTMENT T M E N T
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The function of deposit department is to collect deposits from customers. Following type of deposits are offered by National Bank.
1. Current deposit 2. Saving bank deposit 3. Profit and loss saving account 4. Fixed deposit 5. Short notice term deposit 6. Foreign currency deposit 7. Cumulative deposit certificate (other)
D E CURRENT DEPOSIT P In this type of account the client is allowed to deposit or O withdraw money as and when he likes. He may, thus, deposit or with draw several times in the dayS he likes. if Usually the bank allows this and service chargers are I deducted by the bank. T SAVING BANK DEPOSIT
This type of account is for those persons who want to make small savings. This type of account is opened with Rs. 500. In this case deposits can be made only up to a costing amount and with drawls are allowed twice a week. If the depositors wants to withdraw more than Rs. 15000 a seven days notices is required before the withdrawal.
D E P A R PROFIT & LOSS SAVING A/C T These types of accounts are one step towards the M Islamisation of Banking system in the Pakistan. Under such E N 31 T
types of accounts the bank allows no interest to the customers. The executive board of the bank declares profit or loss every year. PLS saving account having a running minimum credit balance of Rs. 100 would be eligible for sharing profit/loss of the bank. The rate of profit or loss on PLS saving accounts shall be determined by the bank at the close of each half year, in its sole discretion and the banks decisions shall be final and binding on the PLS account holder Fixed Deposit
In this type of account a certain amount is deposited for a certain, period such as six-month, two years or longer. A fix deposit receipts is issued in the same of the depositor. The officer incharge and the bank manager sign the receipt. A notice is given to the depositor requesting the depositor to withdraw his money or to renew this deposit. The interest allowed on fixed varies with the period for which the deposits are made. SHORT NOTICE TERM DEPOSIT
D E P O S I T
This kind of deposit is for a short period. The depositor may withdraw his deposit at any time by giving seven days notice to the banker. In this type of deposit facility the trader is allowed to withdraw his amount with interest of the deposited period.
D E P A FOREIGN CURRENCY DEPOSIT R T Foreign currency account is opened by depositing foreign M currency. In NBP, you can open foreign currency account in: E N 32 T
1. Us Dollar ($) 2. Pound Sterling () 3. Japanese Yen () 4. Deutsche Mark (DM)
C L E A R I N G D E P A CLEARING DEPARTMENT R Every bank acts in two way i.e. T 1. Paying Bank M 2. Collection Bank E N T
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Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. It is, however, an important function of crossed cheques. A large part of this work is carried out though the bankers clearing house wherever it is established. CLEARING HOUSE
C L E A ADVANTAGES OF CLEARING HOUSE R The advantages are manifold. It prevents the cost and waste involved in collection each and every chequeIand claim. Which a banker holds against another, across the counter N with all the danger of loss in the transit incumbent upon it. Great economy is also achieved in the employment of liquid G
A clearing house is the place where representatives, of all the banks get together for the purpose of off setting the inter bank indebtedness arising from the transfer of deposits by a customer of a particular bank to another bank.
cash by setting the difference by simpler transfer of credit from one account to another, there by minimizing the necessity of holding large wash balances, clearing house works under the control of State Bank of Pakistan.
D E P A banker has no legal obligation to collect cheque drawn A upon other banks for the customers, though modern banks have assumed this important function of their own choice. R Therefore, it is very important that since they have assumed this function, the banker should be very careful in their T performance, otherwise they will face more difficulties. So, if M they provide this facility when the cheques are crossed. E N 34 T
FUNCTIONS OF CLEARING DEPARTMENT The following are the main functions of clearing department. 1. To accept transfer deliveries and clearing cheques from the customer of the branch and to arrange for their collection.
2.
3.
C To arrange the payment of cheque drawn on the branch and given for collection to any other branchL National of Bank of Pakistan or any other members, or sub-members E of the local clearing house. A R To collect amounts of cheques drawn on members, submembers of the local clearing house, sent for collection I by those National Bank Limited branches which are not represented the local clearing house. N G
D E PROCEDURE OF DEPOSITING CHEQUES IN CLEARING P HOUSE A Whenever a customer wants to deposit cheque, etc, he fills a R pay in slip and hands it over the counter along with the instruments he wants to deposit with bank.TAs far as possible, the customer desire that on of the staff member fill in a slip for him, he should be obliged promptly. M E N 35 T
The smaller portion of the perforated pay in slip is handed over to the depositor and the portion becomes the regular portion of a credit voucher.
1. Transfer Cheques Transfer cheques are those cheques, which are collected and paid by the same branch of bank.
C 2. Transfer Delivery Cheques L Transfer Delivery cheques are those cheques, which are collected and paid by two different branches E a bank, of situated in the same city. A R 3. Clearing Cheques Clearing cheques are those cheques in which the payee I (Person who deposit cheques for collection) and the drawer of a cheque maintain the account with different banks. N G D E SCRUTINY OF CHEQUE P When the cashier receives the cheques, which are to be deposited for clearing purpose the following points must be A verified. R The instrument should be neither stale nor post dated. If the instruments is crossed, not negotiable, T can be for it the third party (can be endorsee of an order cheque, or a M holder of bearer cheque) E N 36 T
The instrument should not bear any unauthorized alteration. The amount in words and figures should be the same. The instruments should be drawn on a member, or any of local branches. If the cheque is crossed Account payees Account payee only or Payees Account, it should be accepted for collection for the payees account. The cheques or drafts should not be crossed specially to any other bank. A cheque payable to one of the joint account holder should not be collected for the joint account without the payees endorsement, or consent. A cheque payable to a firm should not be accepted for credit to a partners account. A cheque drawn by a customer in the capacity of an agent. Attorney, or Manager of his company or firm, should not be collected for credit to his personal account. Pay orders, although negotiable, should not be collected for third parties. Do not collect an instrument in the account of an agent, or of the servant of the payees of endorsee of the instruments.
C L E A R I N G
D Mail transfer Receipts pay ships and treasury receipt E should not be collected for persons other than the payee. P If an account is new, or the balance or operation of the account is not satisfactory, satisfy yourself about the A titles of the customer to the instruments before the titles of the customer to the instrument before accepting the R deposit. T Brach agents permission should be obtained before accepting a third party cheque or draft for creditor the M account of the staff member. E N 37 T
C L E SCRUTINY OF PAY-IN-SLIP A R Following steps are involved in the scrutiny of pay in slip. I 1. On both the counterfoil and the pay in slip following should be checked. N I. Date of Deposits G II. Account number
III. Title of the account IV. The cheque/number and the drawer bank/name. V. Total amount in words and figures
2.
If the payee is a government department, government official, or a trust account, the instrument cannot be collected, but of the payees account. If the payee of an instrument is NBP, it can collected for credit of the drawers account, or the amount of the instrument may be utilized as desired be the drawer in writing. Cheque payable to a trust, account should not be collected for credit to at trustee account. All the endorsement should be regular, and on endorsement should be missing. After the cashier scrutinizes the cheques he must also scrutinize the pay in slip.
3.
D Customer should use separate pay in slip for transfer, E transfer delivery, and clearing cheques. P The amount noted should be the same as the amount of the instruments, and the amount in words A figures and should be same R T PROCEDURES AFTER SCRUTINIZING M E N 38 T
After scrutinizing the cheques and other deposit instruments and paying slip at the counter the following procedure is under taken by cashier if he is satisfied. 1. Fixing the stamp. 2. Scrutiny, and receipt by the authorized officer
C L 4. Certificates and confirmation by the officer-incharge of the E department. A 5. Separating the cheque into transfer delivery, and clearing cheque R I N G
3. Returning the counter foil to the depositor.
D E PROCEDURE OF CLEARING AT CLEARING HOUSE P A The mechanism of setting inters bank indebtedness operates as follows: R T Clerks representing various banks meet at a common place, The Clearinghouse, everyday. Every clerk then delivers to M the others the cheques and the other claims which their E N 39 T
respective banks hold against his banks hold against his bank cheques and other documents dishonored will be returned to the representative of the respective bank. The various amounts of receipts and deliveries are now added up and a balance is struck there in and the final settlement is effected by the supervisor of the clearing house by transferring balance kept and the central bank by these various clearing banks.
A D V A N C E S D E ADVANCES DEPARTMENT P A INTRODUCTION R The function of advances department is to lend in the form of clean advances, against promissory notes, as well as T secured advances against tangible and marketable securities. According to the Prudential Regulations of the M E N 40 T
State Bank of Pakistan, No bank can issue a clean advance of more than Rs. 100,000/-. The bankers prefer such securities that do not run the risk of general depreciation due to market fluctuations. Common Securities for the bankers advances are as under: SECURITIES
A When an application for advance cannot offer any tangible D security, the banker may rely on personal guarantees to protect himself against loss on advances or V overdraft to the applicant. A MORTGAGE N A mortgage is the transfer of an interest in specific C immovable property for the purpose of security the payment of money advanced or to be advanced by; way E of loan, and existing or future debt, or the performance of an engagement which may rise to a pecuniary liability. S
GUARANTEES The transfer is called a mortgagor, the transferee a mortgage.
D HYPOTHECATION E P When property in the shape of goods is charged as security for a loan form the bank the ownership and possession is left A with the borrower, the goods are said to be hypothecated. The essence of hypothecation is that neither the property in R the goods not the possession of them are possessed by the lender, but the security is granted by means T letter of of hypothecation, which usually provides for a bankers charge M on the hypothecation goods. E N 41 T
PLEDGE In a pledge the ownership remains with pledge, but the pledgee has the exclusive possession of property until the advance in repaid in full. While in case of the default the pledgee has the power of sale after giving due notice.
A Sometimes promissory note is also accepted as a security, D A promissory note is an instruments in writing containing an unconditional undertaking signed by the maker, to pay V ;on demand or at a fixed or determinable future time a A certain sum of money only, to or to the order of certain persons, or to the bearer or the instrument. A promissory N note is incomplete until has been delivered to payee or the bearer. Moreover, the sum promised in a promissory note C may be made by two or more makers who may be liable E there on jointly and severally. S
PROMISSORY NOTE
D E The advances which are given by National Bank are as P under: A RUNNING FINANCE (Overdraft) R Running finance (old name overdrafts) is a short term loan T allowed by the bank for a period of one year. The running M finance account can be operated and daily sale proceeds can E N 42 T
KINDS OF ADVANCES
be deposited into the account. The mark-up is recovered on the products of daily outstanding balance. The running finance is suitable for meeting day to day financial needs of the business. CLASSIFICATION OF RUNNING FINANCE 1. Unsecured Under such type of overdraft the bank pay upon the personal security of the customers mentioned on the customers account.
A 2. Secured D Under this type of overdraft the bank allows his customer to V withdraw more than his deposits after giving security against the amount overdrawn. A The Securities against which they given are: N Share certificate, Saving Certificate Deposits C Mortgage of property E Guarantee of person S
D DEMAND FINANCE (DF) E Demand Finances are those advances which are allowed in P lump sum for fixed period and are repayable lump sum or gradually in installments which could be monthly, quarterly, A biannually or annually. R CLASSIFICATION OF (DF) T M E N 43 T
1. Demand Finance (Packing Credit) Scheme introduced by SBP for exporter of carpet, surgical instruments, at zero percent rate of interest. While banks provides at concessional rate of interest. 2. Ordinary Loan Qarz-e-Hasana Scheme Loans are allowed to the students, teachers without any interest or mark up with the recommendation of the MPA or MNA.
A D 3. Loan for Staff V Loans are offered to the staff of the following categories. A House Building Loans against mortgage of property. Loan for purchasing vehicles. N Loan equivalent to months salary. C E S D CASH FINANCE (COMMERCIAL LOANS INWARD) E P These type of loans are given against following: A Against locally manufactured goods. Against pledge R Against commodities T Against Trust Receipts M FINANCE AGAINST FOREIGN BILLS (FAFB) E N T
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This facility is available to both local and foreign bills 1. FAFB (local) advance against Railway receipts and truck receipt, a company with bills of exchange and invoices, are given under this head. 2. FAFB (foreign) advances against foreign bill covering bills of exchange, bills of lading airway bills of exchange etc.
A D AGRICULTURE LOANS V Loans to the farmers with holding up to 25 acresA meeting for their short term, medium and long term agricultural N production requirements, such as: Agricultural inputs C Tube Wells E Live Stock Framing Land improvements S D E Besides the short-term loans which play an important part in working capital requirements, medium and long-term loans P are also given to industrial sector for purchases of machinery and other capital nature goods. A R IMPORT EXPORT BUSINESS/TRADE FINANCE T NBP Provides highly efficient trade finance services for M import/export business for our clients/customers through E N 45 T
INDUSTRIAL LOANS
large number of authorized branches where trained and motivated staff is available to handle the business on behalf of customer
B I L L S D E BILLS DEPARTMENT P A Bills department the following functions: R 1. Inward Bills for Collection (IBC) 2. Outward Bills for collection (OBC) T INWARD BILLS FOR COLLECTION (IBC) M E N T
46
These are bills or cheques etc. which is collected locally. These are received from outstation branches banks and parties. Demand Draft It refers to the payment of money on demand of the holder of draft. Demand draft includes DD issues and DD payable. OUTWARD BILLS FOR COLLECTION (OBC) Clean Bills
B I L Documentary Bills L These are bills accompanied by documents such as R.R.T.R. S Bills of lading etc. having title to goods, collected by the
bankers on behalf of their customers.
These are negotiable instruments, drawn on outstation branches, bills sent for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.
D PAY SLIP E P Pay slip is an instrument in receipt, issued by the bank A the following cases: 1. On account of expenditure incurred by the R bank. 2. On account of refund of a payment to a persons under T certain circumstances. M PAY ORDER E N T
in
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Pay order is issued to other banks for collection of payments as said.
A C C O U N T S D ACCOUNTS DEPARTMENT E P Usually accounts are maintained in two ways: A 1. Journal System 2. Voucher System R T In journal system entries are posted in Journal Books and M then posted to ledger. It is adopted by industrial institutions. E N 48 T
Voucher system is use for every transaction. Voucher has to be prepared either in cash or in transfer or in clearing. The sheet upon which these vouchers are summarized transactions-wise and consolidated into a figure is called supplementary. Types of Supplementary
A Supplementary are of two types: C C 1. Debit Supplementary O 2. Credit Supplementary U Debit Supplementary is used for debit voucher supplementary is used for credit voucher books. N T S D Books and registers used by bank are as follows: E General ledger P Ledger of A/Cs A Balance Book (for a/c ledger) R Token Book Cashier Long Book T Cash Order Register (SND, DAC & Pay M recorded) E N T
BOOKS AND REGISTERS
and credit
order is
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Daily Transaction Long Book Day Book Transfer Book Open/Close Register Pak A/C Book Suspense A/C Book Weekly Telegram Book (Cost is written) T.T. Issued Register T.T. or Telegraphic Transfer Payable Register D.D. Issued Register D.D. or Demand Draft Payable Register Law Charges Recoverable A/C Book (under suit account) Office Order Book P/L Income and Expenditure Accounts Book P/L Balance Book for Income and Expenditure A/C (weekly balances of expenditure A/C are recorded) Cheque Book Issue Register Stock Register Cheque Books in hand PLS (TDR) Term Deposit Register Stationery in Hand Register OBC (Outward Bills for Collection) Register Dak Inward Register Dak Outward Register Stationery in Hand Register Cash in Transit Register Clearing Register Inward/Outward Running Finance Register Office Attendance Register
A C C O U N T S
INCOMES
D E P A R T M E N T
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Income Includes 1. Brokerage (A bank sells and buys shares, stocks, debentures, other securities and receives payments for these services)
R E 2. Discount 3. Service Charges M 4. Rent (On Building) M 5. Commission (from utility services) I EXPENDITURES T Expenditures Includes T 1. Salaries, allowances and provident fund A 2. Rent, taxes, insurance, lighting etc. 3. Profit paid on deposits and borrowings N 4. Postage, telegram, and stamps C 5. Stationary, printing and advertisement charges etc. E 6. Auditors fee and legal charges S
REMMITTANCES DEPARTMENT D E Remittance department performs following functions: P 1. Mail Transfer (MT) 2. Telegraphic Transfer (TT) A 3. Demand Drafts (DD) R MAIL TRANSFER (MT) T When a customer requests the bank to transfer his money M from one branch of bank to another branch of the same E 51 N T
bank or from one city to another city to the same bank or any other bank. Customer fills the form given by bank. If the customer has an account with that amount as mentioned in the application form then concerned officer will undertake the following procedure to make the mail transfer complete.
R E 1. Branch Mail transfer form M 2. Receiving Branch Register copy 3. Issuing branch register Copy M 4. beneficiary advice I 5. advice to customer T In case where the customer is not account holder of the T bank then the customer will have to deposit the amount which he wants to transfer under Mail. Then the above said A procedure will be done. N TELEGRAPHIC TRANSFER (TT) C This type of transfer is simple. After filling the application E form the concerning officer shall fill the telegraphic transfer form. Then it is sent to the required bank which on receiving S it immediately makes the payment to the customer and
afterwards the voucher are sent to that bank by ordinary mail.
D DEMAND DRAFT (DD) E Demand draft is just like cheques and issued when the customer wants to take cash with him personally. The idea P behind is to avoid the risk and burden of currency notes in A huge quantity. Demand draft can easily be handled whatever amount it has and the money can easily be taken R from the bank when it is presented. In fact, the bank persuades the customer to transfer money by drafts and T avoid the risk of frauds involves in MT and T.T. Draft is only M E 52 N T
issued when the bank knows customer and bank has the confidence in him
T In case of transfer of money by drafts, the customer has to E fill an application form. Then the concerned officer fills the following forms: C 1. Customers advice H 2. Customers debit form N 3. Register copy 4. Cover Advice O A foreign bank uses the cover advice L draft is issued to if National Bank of Pakistan. O FOREIGN DEMAND DRAFT G Foreign Demand Draft is just like demand draft. The only I difference is that a bank issues FDD to the bank of another country. It requires foreign exchange and it involves seven C forms, which are to be filled. A L
TECHNOLOGICAL DEPARTMENT D E Technological advancements are also affecting the banking P industry. The foreign banks have a competitive edge over all local banks in their technologies' A advancements and automated systems. Local banks have also realized the gravity oil this situation and are striving R add computerized to systems to their branches T NBP is now fully concentrated on it. There are more than 1242 branches of NBP all over Pakistan and out of these M E 53 N T
more than 143 branches are fully computerized Almost all .the branches of big cities are computerized; therefore, the need for a technology department at each branch is growing. Now a day, a computer division is working in each city to provide service to ad the branches of that area. ATM system is also introduced in many branches in major cities. Following is the brief description of these ATM machines.
1. 2. 3. 4. 5. 6.
T E C H N O NBP ATM NETWORK L CITIES NUMBER OF ATMS O G 01 Burewala Faisalabad I 06 Gujar Khan 01 C 04 Gujranwala A 01 Gujrat Hyderabad L 06 D E P A R T M E N T
16 21 13 02 04 03 04 04 05 01
7. Islamabad 8. Karachi 9. Lahore 10. Mirpur 11. Multan 12. Muzaffarabad 13. Peshawar 14. Quetta 15. Rawalpindi 16. Sheikhupura
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17. Sialkot 18. Taxila 19. Wah Cantt
03 01 01
W O R K D WORK DONE BY O ME N E my internship in the National Bank of

20th
During
Pakistan
Limited, I really enjoyed to work with the staff of
Branch, Gondlawala Road, Gujranwala from to be employee of National Bank of Pakistan Limited. It was almost impossible to work in all the
B July to 2nd September, 2006Y and have a wish M E
55
departments within that limited time. But on my request, the staff of the branch provided me the opportunity to work in the different departments for the sake of practical knowledge. I am really very thankful to branch manager Sir Ashraf Meher sb that provides me a learning environment in the branch. During my internship training in the National Bank of Pakistan as I early mentioned that I have worked in different departments & seats and learnt the followings.
F OPENING OF NEW ACCOUNT I R S Account opening and closing is the function of accounts departments. Banks customers may be individuals T (Single or Joint), firms
(partnership/proprietorship), Autonomous corporations, Limited Companies, Charitable Institutions, Associations Educational Institutions or Local Bodies. NBP normally opens following types of accounts.
W E E K
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Current account Saving account
BASICS TO OPEN AN ACCOUNT During the span of mine internship in National Bank, I learned and observed a lot of about the opening of an account. Basically I think that the opening of an account is the establishment of a contractual relationship between the banker and the customer. By opening an account at a bank a person becomes a customer of a bank. Further I am going to express the basic requirements and steps involved in the opening of an account.
INTRODUCTION AND PRELIMINARY INVESTIGATION Before opening an account National Bank of Pakistan as like the other banks in Pakistan ascertain whether or not the person who is going to open the account is a desirable customer or not. Then National Bank of Pakistan determine the prospective customers integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening. Negligence in this informal preliminary investigation may result in serious consequences not only for the banker concerned
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directly but also for other bankers and the general public who may be affected indirectly. In order to further strengthen and streamline this process, the Federal Ombudsman of Pakistan, vide his ruling on complaint No. II/31/5186, has directed the banks to retain with the account opening form a Photostat copy each of the National Identity Cards of the person desiring to open an account as well as that of the introducer. As per these directions, the concerned Branch Managers are required to obtain the original National Identity Cards along with their Photostat copies and then return the original after attesting the authenticity of the retained copy. Preliminary investigation is necessary because of the following reasons: Avoid Frauds: In this regard I learned that if a banker does not make the necessary inquiries mentioned above he may enable dishonest persons to possess cheque books for fraudulent purposes. If any such person happens to be an undercharged bankrupt, the banker might be placed in an awkward position for having allowed such a person to open and open a bank account.
Safeguard against unintended overdrafts: Sometimes due to a mistake an account may be given an overdraft, For instance, the ledger keeper, misreading the balance of an account honors a cheque for an amount larger than the balance. Similarly a credit entry belonging to a customer may be made by mistake in another customers account. In such situations the excess amount withdrawn by the customer can only be realized if the customer is a respectable person.
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Inquiries about clients: Being a banker I think National Bank of Pakistan has a business obligation to respond to inquiries from other banks etc. about his customers financial position. Though the banker gives only a general ideal about the financial standing of his customer, it should nevertheless have the necessary information available with him.
SPECIMEN SIGNATURE When an account is opened with National Bank of Pakistan customer provides to the bank a specimen of the form of signature which would appear on all his cheques to express his authority for the payment of cheques drawn on his banker. This specimen is taken generally on a card specially designed for this purpose, and rule for the customers, full name, and account number are entered on it. If the bank has reasons to doubt the genuineness of a signature, he should either get it confirmed for his satisfaction or return the cheque with the remark Signature differs. If the signature of the customer is forged the banker cannot escape his liability because he has actually acted on his customers mandate.
SIGNATURE OTHER THAN IN ENGLISH If a customer signs in a language other than English or Urdu, he is requested to fill a Vernacular Form. This is a type of indemnity whereby the customer relieves the bank of any responsibility in case there is any mis-verification of signatures by the bank and the cheque is paid. The vernacular Form is obtained because the bank officers are not used to verification of signatures other than in English or Urdu; hence there is likelihood of misverification.
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HOW TO OPEN AN ACCOUNT (GENERAL) Before opening an account in National Bank of Pakistan I observed that the following points must be considered in this regard. Another account holder of the bank should properly introduce the new customer. The account holder should sign the account opening form in the presence of bank officer and the signature is duly verified. A copy of identity Card is required by Bank. Against submission of the Banks prescribed application form, duly introduced in the manner provided and on supplying such document, as may be required and account may be opened. The Bank reserves to itself the right to refuse to open and account without assigning any reason. Each account shall be allotted a distinct number that is to be quoted in all correspondence with the bank relation to the account. Minimum amount for opening and continued maintenance of various types of accounts is as follows: Rs. Saving Current 500 500
Term Deposit 1000
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The bank reserves the right to change the above mentioned minimum balance requirement at any time without any notice.
PROCEDURE TO OPEN AN ACCOUNT According to my practice in National Bank of Pakistan, When a customer wants to open an account, the bank officer gives him an application form. All information, which is necessary to be known by the bank, are requirements of the application form. Form also requires the essential documents to be attached by the customer.
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Basically following information is required to open an account with National Bank of Pakistan. Title of Account Full Name of Applicant Occupation Address Telephone No. Currency of account Nature of Business Introducers Name, Address & Signatures Special instruction regarding the account Initial Amount of the Deposit Signature of the applicant
DOCUMENTS TO BE ATTACHED Further I learned that if you wanted to open an account with National Bank of Pakistan then you should attach the following documents with your application form which are different for different categories. SOLE PROPRIETORS ACCOUNT
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In order to open an account with National Bank of Pakistan Limited Sole Proprietors have to submit their business registration certificate number. PRIVATE / JOINT ACCOUTS For individual or private or joint accounts National Identity Card is required. JOINT STOCK COMPANY Before an account of a Public Limited Company is opened National Bank of Pakistan Limited must ask the person authorized to do so to submit the certified copies or the following documents: Certified true copy of the Memorandum and Articles of Association of the company. Certified true copy of the resolution of the board of directors / managing committee / governing body regarding conduct of the account. Certified list containing names and signatures of the directors / office bearers. Certified true copy of the certificate of incorporation or registration. Certified true copy of the certificate of commencement of business (in case of public limited companies).
Balance Sheet I.D. Card copy of each director Original is also enclosed for inspection and return List of persons authorized to operate the account.
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Power of Attorney in favor of the person opening account.
PARTNERSHIP FIRM ACCOUNT Information which is required to be submitted to National Bank of Pakistan Limited by a partnership firm in this case is as follows: Full Names Address Specimen of signatures of the partners Certified true copy of partnership deed Registration No. if the Partnership is registered SOCIETIES / CLUBS AND ASSOCIATIONS ACCOUNT National Bank of Pakistan Limited is authorized to open the accounts of the societies/clubs and associations, These are non-trading organizations, formed for the promotion of culture, science, education, recreational activities and charitable purposes etc. some of these institution are registered under the Societies Registration Act, 1866, and are issued a certificate of registration after they have been found fit for registration.
ISSUANCE OF CHEQUE BOOK When a customer opens an account with the bank, he is provided with cheque book for withdrawals from account. However, the first cheque book is given to the customer only when all the required documents are checked. A cheque book contains ten, twenty five, fifty or hundred leaves. The
64
cheque book also carries a requisition slip for the issuance of the new cheque book. This slip is duly filled and singed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Along with the signature, person should also write his full name & address. Usually only one cheque book is issued at a time, however big concerns who need a number of cheque books at a time, may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books. Bank debits the clients account for excise duty of Rs.2.50/per cheque and keeps the cheque book ready for the customer, as on his advice. The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register. The account number for which the cheque book is issued and the number of leaves are also recorded in this register when the cheque book issued an entry is passed in the cheque book issue register. In case of loss of cheque book or requisition slip on cheque book the customer has to fill the Form No. 216-B to obtain a new cheque book.
S E C O PAYMENT OF CHEQUES N D W E E K
In the National Bank of Pakistan Limited I learnt how to make payment of a cheque. In fact I done the duty of token clerk mostly but I also worked and participated the
65
procedure followed for the payment of cheques. Actually the customer is required to withdraw its deposits through the cheques out of cheque book issued to him drawn on the branch where he is maintaining the account. The cheques are paid in one of the following ways: By cash payment over the counter By transfer (from one account to an other) By collection/clearing TOKENS / HANDLING / ISSUANCE Before commencement of business, the cashier incharge shall hand over the stock of tokens (supplied by C. O. K) to the token issuing official against acknowledgement in the token issue (hand over) Register R-84, indicating therein the number of tokens received. Token issuing official shall count the tokens received, arrange them in serial order in a poker ready for issuance. At the close of the business, all un-issued tokens shall be received back by the cahier incharge, against his initials in the register from the token issuing official. He shall tally the total with the number of tokens issued in the morning by adding the number of tokens received back by him (from customers) and number of tokens pending with the customer (if any). When the quantity of tokens physically held by him agrees with the number of tokens issued in the morning, these shall be placed in the cash safe along with the closing cash of the day. The loss of any token need not to be circulated amount the branches and be treated as local issue to be dealt by branch at its own. The paying cashier will keep a list of numbers of the tokens which have been lost.
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On presentation of cheque instrument for cash payment a token shall be issued by the token issuing official after scrutinizing its following aspects:1. The cheque/instrument presented relates to the branch and is not crossed. 2. The cheque/instrument is bearer or order, in case it is an order one the payee is known to the branch. 3. The date on the cheque/instrument is in order. The instrument is not undated or post-dated or stale. A cheque is stale or out of date, which is more than six months old on the date of presentation. 4. Amount in words and figures agrees and is absolutely certain. 5. It has been duly signed by drawer i. e. the account holder/issuing branch and is also signed by the payee/bearer. 6. There is no alteration/cutting/over-writing. 7. The cheque/instrument is not mutilated, torn or cancelled. 8. All cancellations and alterations on the cheque instruments have been authenticated by the drawer under his full signature. 9. Crossed cheques/instrument presented by a bank for payment at the counter is accompanied by its memo dully signed by authorized person (s) of the presenting bank. 10. In case of telegraphic transfers the payee has signed revenue stamps of adequate value affixed on the receipt, and his signatures have been verified. 11. Cash Payment voucher has been signed: a) By manager and accountant/authorized officer of the branch. b) By the payee on the reverse.
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12. In case of demand draft/pay order payee has been identified and has signed on the back of the instrument.
National BANK OF PAKISTAN LTD. .....Branch Token No..... Date .... Time Token Issued...... Initial ...... Time of Payment .... Cashiers Initial ......
After verifying the above points and satisfying that cheque/instrument is apparently in order the token issuing official will affix the rubber stamp on the reverse of the cheque/instrument as per specimen given below. He shall give token No. of the token being issued by him against the cheque, record the date and time of issuance and shall put his initials at the relevant column. At the time of payment, cashier making the payment shall note down the time of payment under his initial:After recording token No., date and time on the back of the cheque, token issuing official shall state in the relevant column. Token No. and Nature of Account, Name of Account through bearer or self and amount on the payment side of the cash book. In case of telegraphic transfer demand draft, pay order and cash payment vouchers relevant head of account, amount and other particulars shall be noted by him. The token made of brass, engraved with bank and branch name and serial number shall be delivered to the bearer of cheque and other instruments ensuring that it is being delivered to the presenter only and in case of any doubt fresh signature of the presenter shall be taken before delivering the taken.
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SCRUTINY OF THE CHEQUE BY LEDGER KEEPER BEFORE ITS POSTING IN THE LEDGER OR ACCOUNT CARD
On completion of formalities referred above the cheque is handed over to the ledger keeper and other instruments to the concerned departments. Ledger keeper will again scrutinize check and verify the points as given below: The account on which cheque is drawn is neither closed nor dormant or inoperative. It bears token stamp on the reverse. The cheque is of our bank and the branch. The cheque is out of the cheque book(s) issued. The signature of drawer is there. The account number, title of account is there. Is not un-dated, post-dated, stale or out of date. Payment of the cheque has not been stopped by the drawer. There is no legal bar for the payment of cheque account is not attached, under lien or the account holder is deceased. The funds are available/sufficient to honor the cheque i.e. the amount does not exceed the credit balance of the account (or the un-drawn portion of the sanctioned drawing power in case of cash finance account or current account) having approved running finance facility. Amount in words and figures tallies. No. previous entry in the ledger is un-authenticated.
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In case it is drawn on account marked as similar account, it should be ensured that the cheque is being posted to the correct account. Endorsement made thereon is prima facie in order. Alternations/mutilations/cuttings/over-writings, (if any) is confirmed by the drawer under his full signatures. In case cheque is presented in transfer delivery, Transfer Delivery stamp is affixed. The collecting banks discharge is in order. Crossings of other bank (if any) are properly cancelled. Where the cheque has been presented through clearing, it bears crossing and clearing stamps of the same bank with date.
POSTING OF CHEQUES/OTHER INSTRUMENTS AND FIXATION OF STAMP AS PER NATURE OF PAYMENT
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After proper scrutiny the cheque is posted in the ledger/card folio number/sheet number of the account is entered on the top left corner of the cheque and Pay Cash or TRANSFER stamp as the case may be is affixed on the face of the cheque. The ledger keeper shall sign on the cheque with the narration Entered to signify that it has been posted after proper checking and is in order. In case transfer cheques another stamp as per specimen given, is affixed:
P A S S E D Manager Accountant
Debits to an account against unlearned cheque are not allowed without the authority of the branch manager. The credit slips on local banks shall be retained till receipt of proceeds from them. The credits to the accounts in respect of cheque in clearing shall be posted in the evening on receipt of advices from the main branch (clearing) and withdrawal against such credits will be allowed on the next morning. If payment of a cheque creates an authorized or unauthorized finance or a debit balance is within or excess of the authorized drawing power, then all such cheques be entered in the payment Authority Register (R-No. 65) with full particulars of the cheque, the balance of the account against which they are drawn and the amount of the authorized drawing power and /or unlearned cheques (if any) be presented in register to the manager, who shall write Pay or Return in the register under his initials. In case of Return he shall add the objection under which it is to be dishonored. The officer incharge Deposits must see by reference to this register that no such cheque is paid without the sanction of the manager.
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WHEN CHEQUES ARE RETUNED FOR INSUFFICIENT FUNDS THE RELATIVE MEMOS MUST BE INITIALED BY THE MANAGER / ACCOUNTANT The Officer Incharge Deposits/Accountants/Manager shall again scrutinize the cheque and after satisfying himself that the cheque is in order in all respects he will pass it in the ledger or in the account card for payment under his full signatures. The cheques shall be cancelled in red ink in such a way that signatures of authorized officer cross out the signatures of the drawer. Cheques shall be passed by authorized officers singly or jointly in accordance with the signing/passing powers delegated. The Cheque cancelled/passed for cash payment shall be forwarded to the paying cashier for payment. HOW TO CLOSE AN ACCOUNT The account can be closed by the customer at any point in time. The customer is required to submit and application for closing the account. Then the account is closed out and his balance is paid to him. Cheque book is returned back to bank and the officer cancel and the remaining cheques in cheque book.
UTILITY BILLS COLLECTION

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I worked in the utility bills collection department as the National Bank of Pakistan collects utility bills on behalf of WAPDA, Sui Gas Companies, and Pakistan
T by putting the H stamp on the utility bills Paid, Date of payment, Signature I of the officer receiving the utility bills. After receiving utility bills a list is made on the form which is called Bills scroll R form. One copy of the scroll is with the bank for evidence D
Telecommunication Corporation Limited whereas the original copy with the receipt of the bills is sent to the billing department of the respective corporation. The bank charge commission on the bills.
W E E K
CASH MANAGEMENT
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The most important department of National Bank of Pakistan limited which deals in money (receiving deposits at lower rates and lend them out at higher rates of interest). This department also called as Chest Department and manager of it is called Cash Manager or Chest Manager. In those branches where this department is not separately existed, the branch manager performs the duties of the Chest Manager.
F O U The excess cash (More than its insured limit by the insurance company) of the branches of the region is collected by the main branch. The R main branch is also bound to send its excess cash (more than its insured limit) to the T State Bank of Pakistan. No branch can have cash its safe more than its insurance at any time at the time of closing H W E E K
cash, if it is so the manager will be responsible (not the insurance company) whether or not he informed to the regional office (exception to the limit which is insured for the day). New Notes and Prize Bonds are also part and parcel of the Cash Management. Keys of the Safe lockers are with the three authorized persons each one of them is responsible for cash as at the time of closing the cash the officers including Cash officer presented and lock the safe after counting and scrutinize the cash. The cash officer maintain its daily cash book with specification of notes (Bonds are also recorded in the books in relation with cash) and other vouchers, after being satisfied the manager authenticates the books and vouchers regarding cash with stamp and signature. at the end I would like to conclude that the cash management is being done in the National Bank of Pakistan Limited very effectively.
PROCEDURE FOR ADVANCING LOAN

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I also worked in the credit department, where I learnt about credit applications. In this regard the bank adopts the following procedure in order to grant a loan. A customer applies for a loan to the manager, who says him to give details of his property. The details of the proposal and the photocopies of the document to the title of property are sent to the legal advisor of bank. The legal advisor gives his legal opinion upon the documents. The branch manager, in the light of the opinion received from the legal advisor, discusses the proposal with the advancing manager whether to give or not the loan to the applicant. If manager allows granting the loan all the documents along with request letter are sent to regional office for approval. In the regional office the proposal is analyzed and if the office is satisfied a consent letter prepared which is signed by the regional controller credit. This letter is sent to the branch manager. After receiving it the manager finance reviews the consent letter, and prepares a DAC (Disbursement Authorization Certificate). DAC can be made only for people who have a bank account.
F I F T H
W E E K
The following documentation is made for loan. An application or request letter for loan by the customer Legal opinion of the legal advisor of the bank (for the title deeds) Consent letter from the regional office Vetting Certificate (includes consent No., Facility whether fund based or no-fund based, addresses etc.) Valuation of property any consultant or any panel of consultants approved by State Bank of Pakistan Original title deed or sale deed
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Affidavit General power of attorney (made by advocate for the person/owner taking loan for the company) Mortgage deed Mutation document made Verification of the property by the bank from the competent authority Hypothecation of stock certificate (Running is to be given against 75% margin of stock) IB-25R Letter of hypothecation (duly signed by the party) IB-12 , DP Note/Promissory Note (Bank prepared itself, duly signed by the party, revenue stamps of Rs. 100 put on it) IB-6R Agreement of finance mark up (Contract with party for taking mark up on quarterly basis) IB-24 (used for title deed) IB-29 (used for guarantee from party) IB-26 (used for pledge of stock, margin is different for different goods) No. IB-28 (used for lien) etc. After that Loan is sanctioned to the party fulfilling all the terms and conditions for the purpose. The procedure given above is for both short and long term loans. The thing which is most important here is that the banks first keeps in mind and analyzes according to the rules prudential regulations of the State Bank of Pakistan.
ASSIGNMENT GIVEN BY MY BRANCH MANAGER

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Saibaan is the home finance scheme of National bank of Pakistan which is recently introduced by Prime Minister of Pakistan. During last week my Branch manager gave me assignment on Saibaan in order to completely study it and compare it with other banks home finance scheme. The results of my assignment are as follow:
L A S T
W E E K
Open the door to your dream home the NBP
What is NBP Saibaan?

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NBP Saibaan is the most affordable House Financing Scheme. You can avail now and repay over a 3 to 20 years period

Home purchase loans up to 10 million Home reconstruction loans up to 10 million Home improvement loans up to 2.0 million (3 to 15 years)
Introduction
National Bank of Pakistan (NBP) has announced the 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
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How can apply
You are a Resident Pakistani national
You are aged between 21 and 62 years at the time of application/ disbursement of loan
You are a Salaried person, self-employed professional or business person
You have a Net Take Home income not less than Rs. 5,000 per month (Govt. and related organization employees) and Rs. 10,000 per month (for other salaried class) Rs. 15,000 per month (for business persons and self employed)
Your property is located in NBP approved localities
Your duration of service is: Two years for salaried and Three years for Self-Employed/ Business Persons.
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Required Documentation With Application
With Applications Form Two attested passport size photographs Two attested copies of your National Identity Card Cheque for the processing charges Property Documents Any title document available (other documents may be required)
AND
FOR SALARIED PERSONS, WHOSE SALARIES ARE DISBURSED THROUGH NBP BRANCH Employer Undertaking for remittance of salary at relevant NBP branch for credit to customers account (to be provided at a later stage, format available at relevant branch) Employee ID Copy attested by NBP Branch (where applicable)
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Attested copies of last three (3) months salary slips
Attested copies of last three (3) months bank statements 2) FOR SALARIED PERSONS OF MNCs AND NBP APPROVED COMPANIES
Employer Undertaking duly attested by relevant NBP Branch, where applicable (to be provided at a later stage, format available at relevant branch) copies of last three (3) months Salary Slips
Attested
Letter of Verification of Employment on Company Letterhead mentioning the date of joining
Attested copies of last three (3) months bank statements 3) FOR OTHER SALARIED PERSONS
Letter of Verification of Employment on Company Letterhead mentioning the date of joining Attested copies of last three (3) months Salary Slips
Attested copies of last twelve (12) months bank statements

Attested copies of last three (3) months paid bills for electricity and telephone OR copies of last (12) twelve months credit card bills (which ever is available)
4) FOR BUSINESS PERSONS
Bank Certificate stating applicant maintaining Business Account and the date of account opening.
Attested copy of latest Form 29 in case of Private or Public Limited Company
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Attested copy of Partnership Deed (where applicable)
5) FOR SELF-EMLPLOYED PERSONS Attested copy of current professional association membership/practicing certificate. Adequate proof of professional engagement like bank certificates Attested copy of Partnership Deed (where applicable)
Instructions for completing the Application Form:

Fill-in the form completely Print the "completely filled" form Get it signed by Referees Sign it yourself Attach the Required Documents and submit "In PERSON" to NBP Saibaan Team
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Mark Up Rates
Fixed Rate Option
Priced at 10 years PIB rates plus 3.5 % with re-pricing after 10 years (subject to a minimum floor)
Variable Rate Option
SBP Discount Rate with 12 months re-pricing (subject to a minimum floor)
Processing Fee

For government employees including NBP employees irrespective of the finance amount Rs. 500/= For Others: Financing below Rs. 1 million: Rs. 1,000 Financing between Rs. 1 to 4 million: Rs. 3,000 Financing above Rs. 4 million: Rs. 6,000
Other Charges
Income Estimation, Legal and valuation Fee will be charged as per actual
Prepayment (Complete/ Partial) Charges
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2% of the amount being prepaid if pre-payment occurs during the first (5) years of loan period. No penalty will be charged after five (5) years
Mark Up Rates
Home Finance Mark-up Rates of other Banks As on 29-08-2006
BANK MARK-UP RATE For Salaried Class Prime NBP UBL ABN Amro HBL Askari Citibank Union Meezan MCB Standard Chartered Faisal Bank Soneri 7.00% 7.50% 7.80% 8.25% 8.25% 8.50% 8.50% 8.50% 8.50% 8.75% 9.00% 9.00% 9.00% For Business Class 7.00% 7.50% 7.80% 9.75% 8.25% 8.50% 9.50% 9.50% 9.50% 9.25% 10.0% 9.00% 9.00% Max. Loan limit upto 5M (Less 0.6% if age is less then 40 years) 8% if loan is above of 4M & free Pl Minimum salary req. Rs. 12000/(7-8 % for Army Officials) If govt. employee then 6.5% Free Property Insurance REMARKS
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PICIC Bank AlHabib HBFC
9.50% 9.50%
9.50% 9.50% Variable rate from 7 to 16%
FINANCIAL ANALYSIS F "Financial statement analysis is the process of identifying of I financial strengths and weaknesses of the firm by properly establishing relationship between the N items of the balance sheet and the profit &loss account," and it is done through A ratio analysis. N RATIO ANALYSIS: C Ratio means one number expressed in term of another a ratio is statistical yardstick by mean I which relationship of between two or various figures can be compared or A measured. Here we are going to explain the ratio analysis of NBP. L A N A L Y S I S
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Financial ratios can be divided into the following six parts. A. B. C. D. E. F. Liquidity ratios Activity ratios Leverage ratios Profitability ratios Investor ratios Bank special ratios
A. Liquidity ratios Current ratios Quick ratios Absolute Liquid ratio B. Activity ratios Inventory turnover ratio Average collection period Average payment period Total assets turnover ratio C. Leverage ratios Proprietary ratio Debt ratio Debt to Equity ratio Debt to Tangible net worth ratio Debt to Funds ratio External-Internal Equity ratio
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D. Profitability ratio Return on total assets Return on-equity Return on investment Return on fixed assets Average profit per branch Net profit Margin Interest income to total income Interest expense to total expense Return on advances E. Investor Ratios Earning per share P/E ratio Dividend per share Dividend yield ratio Dividend payout ratio Break up value/Book value per share M/B ratio F. Bank special Ratios Earning assets to total assets Return on earning assets Net margin to earning assets Loan loss coverage ratio Equity to total assets Deposit time equity Loan to deposit ratio
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Because here we are discussing ratio analysis of bank, therefore we will not discuss A & B category of ratios.
2005 (Rupees in thousands) ASSETS Cash Balance with other banks Lending to financial institutions Investments_ net Advances net Operating fixed assets Other assets_net Deferred tax assets_net LIABILITIES Deposits and other accounts Borrowings from financial inst. Bills payable Other liabilities Deferred tax liabilities Sub ordinated loans Liabilities against assets NET ASSETS REPRESENTED BY Share capital Reserve Unappropriated profit 71196956 31019330 16282942 156985686 268838779 21941056 23941056 -----------577719114 463426602 8756847 1741156 24974450 4462718 ----------16629 503378402 74340712
2004 94446552 49784884 10511322 149350096 220794075 19141569 9202969 ----------553231467 465571717 11084790 7214671 23068314 29185 ----------17058 506985735 46245732 4924106 10812914 9161747 24899767 21345965 46245732
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5908927 13526041 16713506 36158474 Surplus on revaluation of assets 38182238 74340712
2005 (Rupees in 000) Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written off directly Provision of balance sheet obligations Net mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee commission and brokerage income Dividend income Income from dealing in foreign currencies Other income Total non-mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses (Reversal) / Other provisions Other charges Total non-mark-up/interest expenses Compensation on delayed tax refund PROFIT BEFORE TAXATION Taxation current year Prior years 33633735 10321768 23311967 2446739 (245881) 23069 --------2223927 21088040 4926604 1718478 1205638 1573905 9424625 30512665 11195133 198298 63206 11456637 ---------19056028 7154002 (1098709)
2004 20947333 6559398 14387925 1515354 185707 14297 32807 1748165 12639770 2099195 1273563 1008988 875113 8257159 20896926 887801 32243 8284 8919328 ----------6195372 4950000 847958
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Deferred PROFIT AFTER TAXATION Unappropriated profit brought forward Transferred from surplus on revaluation of fixed Assets Profit available for appropriation APPROPRIATIONS Transfer to Statutory reserve General reserve Capital reserve Reserve for issue of bonus shares Proposed cash dividend Unappropriated profit carried forward Basic and diluted earning per share after tax
291291 12709444 9161747 43221 9204968 21914412 (2541889) -------------------(1181785) (1477232) (5200906) 16713506 21.51
(15729) 6195372 5892902 45496 5938398 12133770 (1248586) --------------------(984821) (738616) (2972023) 9161747 10.48
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2005 CASH FLOW FROM OPERATING ACTIVITIES Profit/(Loss) before taxation Less: Dividend income Adjustments for non-cash charges Depreciation Amortization intangible assets Provision against non-performing advances Provision for diminution in the value of investment Provision for diminution in the value of other assets Bad debts written off directly Gain on sale of non banking assets Loss on sale of fixed assets Provision for potential lease losses (Increase)/Decrease in operating assets Lendings to financial institutions Advances Others assets (Increase)/Decrease in operating assets Bills Payable Borrowings from financial institutions Deposits Other liabilities
2004 (Rupee in 000) 11977601 1273863 10703738 598928 ---------442595 (172876) 149593 8771 ------(39324) 1200 988887 4667695 (534847) (40570180) 26142 (41422187) (829636) (25037087) 9557765 26142 (16282816) (53037308)
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19056028 1718478 17337550 567458 2446739 (245881) ----------23069 (28635) (17922) 2216 198298 2945322 20283872 (5473515) 279072 (50514512) (8176486) (5473515) (1724818) (2145115) 1166962 (7994564) (54928862)
Income tax paid Income tax refund Net cash flow operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in available-for-sale securities Net investments in held-to-maturity securities Net investments in held-for trading securities Dividend received Investments in operating fixed assets Investment in subsidiary and associated companies Net cash flow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issue of right shares Dividend paid Net cash flow from financing activities Ex. difference in cash transactions in foreign branches Increase/(Decrease) in cash and cash equivalents Cash and cash equivalent at beginning of the year Cash and cash equivalents at end of the year
8019454 27106 (54928562) 6189586 7193074 1718478 (804423) (29705) 23861 14290871 (736529) (20779) (575308) (16726) (41412025) 142995560 101583535
(683995) 370208 30892555 105292873 (45878054) --------------181258 (1265675) -------------30040288 (640) (818306) (536208) (56354) 60540128 82455432 142995560
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SOLVENCY ANALYSIS
Solvency analysis of a firm indicates the amount of the other peoples money being used to generate profit. In general, these analyses are more concerned with long term debts, because these commit the firm to a stream of payments over the long run. Solvency analysis includes: Proprietary ratio Debt ratio Debt to Equity ratio
1. PROPRIETARY RATIO
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Total equity Total Assets
Year Total Equity Total Assets ratio
2005 (000) 74340712 577719114 0.13
2004 (000) 46245732 553231467 0.08
2. DEBT RATIO/ SOLVENCY RATIO

Total equity
Total Assets 2005 (000) 503378402 577719114 0.87 2004 (000) 506985735 553231467 0.92
Year Total Debts Total Assets ratio
L E V E R A G E A N A L Y S I S
3. DEBT
TO
EQUITY RATIO
Long term Debt
1)
Equity
Year Long term Debts Equity ratio
2005 (000) 85781848 74340712 1.15
2004 (000) 83122476 46245732 1.80
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DEBT
TO
EQUITY RATIO
Total Debt
2)
Equity
Year Total Debts Equity ratio
2005 (000) 503378402 74340712 6.77
2004 (000) 506985735 46245732 10.96
INTERPRETATION
The overall leverage position is showing better trend as compare to previous year. The contribution of equity in total assets is increasing, while the debt contribution is decreasing which is better for business. Equity ratio is increased which shows the better condition of the bank. Solvency Ratio is in good condition. So we can say that overall Solvency condition of the NBP is better with the comparison to the previous year.
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PROFITABILITY ANALYSIS
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Profitability analysis of a firm indicates the overall efficiently of the management. Without profit a company can not attract the outside capital. Profitability analysis includes: Return on total assets Return on-equity Return on investment Return on fixed assets Average profit per branch Interest income to total income Interest expense to total expense
1. RETURN =
ON
ASSETS 100
Net Profit after Tax Total Assets
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Year Net Profit after Tax Total Assets return
2005 (000) 12709444 577719114 2.20%
2004 (000) 6195372 553231467 1.12%
2. RETURN =
ON
EQUITY
Net Profit after Tax Equity
100
Year Net Profit after Tax Equity return
2005 (000) 12709444 74340712 17.09%
2004 (000) 6195372 6295372 13.40%
3. RETURN =
ON
INVESTMENT
Net Profit after Tax Investment
100
Year Net Profit after Tax Investment return 4. RETURN =

ON
2005 (000) 12709444 156985686 8.10%
2004 (000) 6195372 149350096 4.15%
FIXED ASSETS
Net Profit after Tax Fixed Assets
100
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Year Net Profit after Tax Fixed Assets return
2005 (000) 12709444 9454365 134%
2004 (000) 6195372 9202969 67%
5. AVERAGE PROFIT PER BRANCH

Net Profit after Tax
No. of branches
Year Net Profit after Tax No. of branches Average Profit
2005 12709444000 1242 10233047
2004 6195372000 1226 5053321
6. INTEREST INCOME =
TO
TOTAL INCOME 100
Interest Income Total Income
Year Total Income Interest Income return
2005 (000) 43058360 33633735 54.89%
2004 (000) 29204492 20947333 71.72%
7. INTEREST EXPENSE =
TO
TOTAL EXPENSE 100
Interest Expense Total Expense
100
Year Total Expense Interest Expense return
2005 (000) 21778405 10321768 29.76%
2004 (000) 15478726 6559398 21.67%
INTERPRETATION
Profitability analysis shows the entire performance of a business and if we study the profitability trend of bank then it will clear to us that it showing a positive trend. Net profit after tax is increased as compare to previous year, due to it return on assets, equity and investment is increasing. Not only overall profit is increasing but also average profit of all the branches is increasing. Bank interest income is also increasing due to more advances in this year. This year bank total deposits are also increased and thats why interest expenses are showing up ward trend.
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INVESTOR ANALYSIS
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Investor analysis or market analysis are related to firm market valve, as measure by its current share price to certain accounting values. Investor analysis includes: Earning per share P/E ratio Dividend per share Dividend yield ratio Dividend payout ratio Break up value/Book value per share M/B ratio
1. EARNING PER SHARE =

Net Profit after Tax No. of Shares
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Year Net Profit after Tax No. of Shares Earning
2005 12709444000 590892700 21.51
2004 6195372000 492410600 10.48
2. P/E RATIO =
MP Per Share EPS
Market price per share is Rs.284.90 on 3rd Feb.2007
Year MP Per Share EPS ratio
2005 284.90 21.51 13.25
2004 284.90 10.48 27.19
3. DIVIDEND PER SHARE =

Total Dividend No, of Shares
Year Total Dividend No. of Shares DPS 4. DIVIDEND YIELD RATIO =

DPS MV Per Share
2005 1477232000 590892700 2.5
2004 738616000 492410600 1.5
Year
2005
2004
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DPS MV Per Share ratio
2.5 284.90 0.008
1.5 284.90 0.005
5. DIVIDEND PAYOUT RATIO =

DPS EPS
100
Year DPS EPS ratio
2005 2.5 21.51 12%
2004 1.5 10.48 14%
6. BOOK VALUE PER SHARE =

Equity No. of Shares
Year Equity No. of Shares ratio
2005 74340712000 590892700 125.8
2004 46245732000S 492410600 93.9
7. M/B RATIO =
MV Per Share BV Per Share
Year BV Per Share MV Per Share
2005 125.8 284.90
2004 93.9 284.90
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ratio
2.26
3.03
INTERPRETATION
NBP has also has good investment opportunities for the investors. This bank has more attraction for investors as compare to previous year. Earning per share is increased due to increase in profit. Book value and market valve of one share in also increased as compare to 2004. Only dividend payout ratio is decreased fewer dividends but it is also in favor of investors because it will increase wealth of shareholders and ultimate benefit to investors.
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BANK SPECIAL ANALYSIS

Bank ratio analysis is little bit different from other
organizations and if we want to see the real picture of a bank we have to focus on given special ratios.
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Earning assets to total assets Return on earning assets Net margin to earning assets Loan loss coverage ratio Equity to total assets Deposit time equity Loan to deposit ratio
1. EARNING ASSETS =
TO
TOTAL ASSETS
Earning Assets Total Assets
Year Earning Assets Total Assets
2005 (000) 473126737 577719114
2004 (000) 430440377 553231467
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ratio
0.81
0.77
INTERPRETATION
The efficiency of the banking firm is measured by its ability to utilize its assets in a manner that they could be profitable for the firm. Bank earning assets are increasing as compare to last year but it is just a little bit increase. Advances of bank are increasing and investment as compare to 2004 is also increased. Lending to financial institutions is also very well. Balance with other banks is not desirable this year but overall earning assets showing satisfactory position in 2005.
2. RETURN =
ON
EARNING ASSETS
NP before Tax Earning Assets
100
Year Earning Assets Net Profit before tax return
2005 (000) 473126737 12709444 2.6%
2004 (000) 430440377 6195372 0.14%
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INTERPRETATION
Return on earning assets is increased as compare to previous year because there is increased in net profit in 2005 as compare to 2004. The increasing trend in this ratio is beneficial for business and investors because this ratio shows real profitability position of business.
3. NET MARGIN TO EARNING ASSETS =

Net Margin Earning Assets
100
Year Earning Assets
2005 (000) 473126737
2004 (000) 430440377
110
Net Margin ratio
23311967 4.9%
14387935 3.34%
INTERPRETATION
Spread is difference between interest income and interest expense. This ratio shows the spread position of a bank. In this year bank net margin is increased due to increase in advances and interest income as compare to 2004. Interest expenses are also increased but their increasing trend is lesser as compare to interest income so thats why spread position of bank is increased in this year.
4. LOAN LOSS COVERAGE RATIO =

Pre tax Income + Provision for loan loss Net Charges off + Provision for loan loss
Year Pre tax Income
2005 (000) 19056028
2004 (000) 11977601
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Provision for loan loss Net Charges Off ratio
2446739 23069 8.8 times
1515354 32807 8.7 times
INTERPRETATION
This ratio shows how much money is there against Rs 1 loss. This ratio provides a protection to customers who are going to deposit their money in bank. Higher the ratio is beneficial for the bank and customers. In this year loan loss coverage ratio is increased due to decrease in bad debts but in 2004 the ratio of bad debts is more as compare to this year. This shows the efficiency of bank in this year instead of 2004.
5. EQUITY =
TO
TOTAL ASSETS
Equity Total Assets
Year Total Equity
2005 (000) 74340712
2004 (000) 46245732
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Total Assets ratio
577719114 0.13
553231467 0.08
INTERPRETATION
This ratio shows the position of equity in total assets of business. In both years this ratio is better. The bank should increase its equity by increasing the wealth of shareholders.
6. DEPOSIT TIME EQUITY =

Debt Equity
Year Total Debts
2005 (000) 503378402
2004 (000) 506985735
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Equity ratio
74340712 6.77
46245732 10.96
INTERPRETATION
This ratio is also known as debt to equity ratio. This shows how much outsiders share in business total equity. Lesser ratio is better for a business and this year bank ratio is decreasing which showing better trend as compare to previous years.
7. LOAN TO DEPOSIT =
Loan Deposit
100
Year Loan Deposit
2005 (000) 268838779 463426602
2004 (000) 220794075 465571717
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ratio
58.01%
47.42%
INTERPRETATION
Loans or advances are the major assets of a bank while deposits are major liabilities of a bank. Higher ratio shows the better solvency of bank. This ratio is increased instead of previous years because advances of the bank are increased as previous years although deposits are also increased this years but its ratio is less.
115
TREND ANALYSIS
In trend analysis we done two types of analysis, these are
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Horizontal 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. 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. Vertical Analysis Like horizontal analysis this can also done for balance sheet and income statement. Here we assign 100% value to any key item of balance sheet or income statement and then see portion of other items in this percentage.
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118
Particulars ASSETS Cash Balance with other banks Lending to financial institutions Investments_ net Advances net Operating fixed assets Other assets_net Deferred tax assets_net LIABILITIES Bills payable Borrowings from financial inst. Deposits and other accounts Sub ordinated loans Liabilities against assets Other liabilities Deferred tax liabilities NET ASSETS REPRESENTED BY Share capital Reserve Unappropriated profit Surplus on revaluation of assets
2001
2002
2003
2004
2005
Avg. Change 88.5% 118.2% 114.2% 273% 99.25% 59.25% 102.2% 0% 122% 248.2% 122.2% 248% ---100.25% 85.25% 0% 141.2% 240.5% 113% 173.5% 759.25% 124% 231% 240%
Comments
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
70% 120% 116% 200% 83% 74% 112% 0% 104% 150% 87% 104% --160% 87% 0% 103% 136% 100% 96% 452% 119% 174% 136%
75% 81% 160% 222% 95% 52% 124% 0% 112% 244% 126% 118% --81% 82% 0% 111% 157% 1 104% 108% 787% 121% 189% 157%
119% 169% 87% 312% 107% 54% 132% 0% 132% 289% 131% 121% --78% 87% 0% 171% 245% 112% 206% 814% 125% 202% 245%
90% 103% 94% 358% 112% 57% 141% 0% 138% 310% 145% 131% --82% 85% 0% 181% 424% 136% 284% 984% 132% 360% 424%
Favorable Favorable Favorable Favorable Favorable Favorable Favorable Favorable Favorable Unfavorable Unfavorable Favorable
Unfavorable Unfavorable Unfavorable Favorable Favorable Favorable Favorable Favorable Favorable F Favorable
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450 400 350 300 250 200 150 100 50 0 Total Assets Total Liabilities Total Equity
2001 2002 2003 2004 2005
The horizontal analysis of the balance sheet of the bank over all give the positive trend .The result of the balance sheet depict that there is a constant increasing trend in cash, total assets, total liability and equity. There is extraordinary high trend in 2005 in all factors of balance sheet as compare to 2001. The trend of cash is increasing to upward with 88.5%. The trend of Total asset is also increasing to upward with 22%, and the trend of total liabilities is also increasing with 41.2% to upward. Equity is increased by 140%.
120
121
Particulars Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written off directly Provision for potential lease losses Net mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee commission and brokerage income Dividend income Income from dealing in foreign currencies Other income Gain on Investments Gain / Loss on trading in government securities Total non-mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses (Reversal) / Other provisions Other charges Total non-mark-up/interest expenses Compensation on delayed tax refund PROFIT BEFORE TAXATION Taxation current year Prior years Deferred PROFIT AFTER TAXATION
2001 100% 100% 100% 100% 100% 100% 100% 100% 100%
2002 60% 47% 81% 685684% -146522% 22% 145% 104% 68%
2003 67% 48% 80% 705787% -150000% 31% 168% 108% 77%
2004 59% 34% 75% 442575% -172876% 1.2% 234% 39% 79%
2005 115% 46% 161% 1242153% -98982% 0.16% 0% 159% 161%
100% 100% 100% 100% 100% 100% 100% 100%
112% 106% 57% 130% 435% 0% 145% 55%
115% 125% 66% 149% 532% 0% 175% 100%
220% 127% 193% 116% 209% -11440% 163% 92%
270% 161% 106% 217% 226% -851% 209% 172%
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
75V 43000% 4261% 93% 0% 114% 75% 0% 215% 120%
87% 50000% 4496% 94% 0% 117% 79% 0% -101% 128%
96% 149593% 3189% 92% 513852% 130% 102% 0% -42% 140%
87% -72740% 13468% 81% 340596% 420% 301% -149763% 216% 513%
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Unappropriated profit brought forward Transferred from surplus on revaluation of fixed Assets Profit available for appropriation APPROPRIATIONS Transfer to Statutory reserve General reserve Capital reserve Reserve for issue of bonus shares Interim cash dividend Rs 1.75 per share Interim cash dividend Rs 1.50 per share Unappropriated profit carried forward
100% 100% 100%
201% 33% 122%
219% 41% 126%
69% 42% 116%
58% 137% 402%
100% 100% 100% 100% 100% 100% 100% 100%
127% 5000000% 0% 63% 69% 54624% 145% 24%
128% 1000000% 0% 77% 69% 383159% 157% 45%
146% 800000% 0% 84% 51% 50577% 156% 26%
256% 5500000% 0% 213% 97% 639799% 541% 34%
According to horizontal analysis of profit and loss account there is increasing trend. In 2005 there is increase in all factors such as interest income interest income interest income after provision and profit before and after tax because the trust of people on banks is increasing day by day. The increase in profit in 2005 is almost 5 times as compare to 2001.
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124
Particulars ASSETS Cash Balance with other banks Lending to financial institutions Investments_ net Advances net Operating fixed assets Other assets_net Deferred tax assets_net LIABILITIES Deposits and other accounts Borrowings from financial inst. Bills payable Other liabilities Deferred tax liabilities Sub ordinated loans Liabilities against assets NET ASSETS REPRESENTED BY Share capital Reserve Unappropriated profit
2001 100% 19 7 5 17 41 8 2 1 100% 88 3 1 7.5 0 0 0.5 100% 100%
2002 100% 12 8 5 39 30 6 2 0 100% 88 2 1 6 2.5 0 0.5 100% 100% 16 30 14 60 40 100%
2003 100% 13 5 6 35 34 4 3 0 100% 92 2 1 4.6 0.5 0 0.5 100% 100% 15 29 21 65 35 100%
2004 100% 17 9 2 27 39 4 2 0 100% 92 2 1 3 1.5 0 0.5 100% 100% 11 23 20 54 46 100%
2005 100% 12 5 3 27 47 4 2 0 100% 89 4 1 5 0.5 0 0.5 100% 100% 15 29 21 65 35 100%
21 43 4 68 Surplus on revaluation of assets 32 100%
125
INTERPRETATION
In balance sheet of bank the most important item is earning assets. There are four earning assets. Bank has strong earning assets like advances investments and lending to financial institutions has major percentage in of assets of bank. In liability and equity analysis the Borrowings from financial institutions and deposits have major portion and reserve and share capital has major portion in equity
126
127
Particulars Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written off directly Provision for potential lease losses Net mark-up/interest income after provisions Particulars NON MARK-UP/INTEREST INCOME Fee commission and brokerage income Dividend income Income from dealing in foreign currencies Other income Total non-mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses (Reversal) / Other provisions Other charges Total non-mark-up/interest expenses
2001 100% 60 40 9 -3 1.5 0.5 8 32%
2002 100% 54 46 6 0.3 0.7 1 8 38%
2003 100% 35 65 9 2 2 0 13 52%
2004 100% 31 69 7 1 0.3 0.7 9 60%
2005 100% 31 69 7 -1 1 0 7 62%
2001 100 64 13 19 4 100 100 59 9 32 100
2002 100% 65 19 14 2 100 100 50 17 33 100
2003 100% 45 16 10 29 100 100 99 0.6 0.4 100
2004 100% 64 15 12 12 100 100 99 0.9 0.3 100
2005 100% 52 18 13 17 100 100 97 2 1 100
128
INTERPRETATION
In vertical analysis of profit and loss account the interest expense has decreasing trend from 2001 to 2005 but in 2005 there little bit increase in net interest income but almost have same trend. According to this analysis fee, commission and brokerage income has some worth in our income statement its almost one fourth or one fifth of our interest income and it has increasing trend. The administrative expenses are also increasing from 2001 to 2005 but overall management is able to reduce expenses, so due to which there is continuous increase in profit before and after tax.
129
130
COMPARATIVE ANALYSIS
In comparative study of financial statements, we compare the given year statements with different years or compare with competitors in industry. For this we conduct two types of analysis.
Liquidity ratios Time Series Analysis Cross Sectional Analysis
131
132
Ratios Proprietary Ratio Debt Ratio Debt to Equity Return on Assets Return on Equity Return on Investment Return on fixed Assets Average profit Per Branch EPS P/E Ratio Dividend Yield Ratio Dividend Payout Ratio Book valve per Share
2004
2005
Comments Good Good Good Good Good Good Good Good Good Bad Good Bad Good Good Good Good Good Good Good Good
Leverage Ratios 0.13 0.08 0.87 0.92 6.77 11.82 Profitability Ratios 2.20% 1.12% 17.09% 13.4% 8.10% 4.15% 134% 67% 10233047 5053321 Investors Ratios 21.51 10.48 13.25 27.19 0.008 0.005 12% 14% 125.8 93.9 Bank Special Ratios 0.81 2.6% 4.9% 8.8 times 0.13 6.77 58.01% 0.77 0.14% 3.34% 8.7 times 0.08 10.96 47.42%
Earning assets to Total assets Return on earning assets Net margin to Earning assets Loan loss coverage Ratio Equity to Total assets Deposit time Equity Loan to Deposit
133
INTERPRETATIPN
Solvency Ratios Proprietary Ratio, Solvency Ratio, Debt to Equity are all in good position but only debt to fund ratio showing poor condition in this year. Profitability Ratios All the ratios involved in profitability showing better trend as compare to 2004 and this shows the efficient management of bank. Investor Ratios Price Earning Ratio, Market/Book Ratio are both in good condition the difference as per previous year is very large. Only dividend yield and payout is decreasing due to lesser declaration of dividend in this year. Bank Special Ratios These ratios shows real picture of a bank. All these ratios showing better position as compare to 2004 so overall bank showing better position.
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135
Ratios Proprietary Ratio Debt Ratio Debt to Equity Return on Assets Return on Equity Return on Investment Return on fixed Assets EPS P/E Ratio Dividend Yield Ratio Dividend Payout Ratio Book valve per Share
NBP
MCB
Comments Good poor Good poor poor poor Good Good Good Poor Poor Good Poor Poor Poor Poor Good Good Poor
Leverage Ratios 0.13 0.08 0.87 0.92 6.77 11.82 Profitability Ratios 2.20% 3.0% 17.09% 38.28% 8.10% 12.84% 134% 109% Investors Ratios 21.51 21 13.25 11.80 0.008 0.012 12% 14.38% 125.8 54.64 Bank Special Ratios 0.81 2.6% 4.9% 8.8 times 0.13 6.77 58.01% 0.87 4.98% 5.73% 11.47 times 0.08 11.82 78.62%
Earning assets to Total assets Return on earning assets Net margin to Earning assets Loan loss coverage Ratio Equity to Total assets Deposit time Equity Loan to Deposit
136
INTERPRETATIPN
NBP Limited is not only showing better trend in this year but also showing better position in industry. The major competitor of NBP is MCB and it is necessary to depict the real scenario of NBP financial ratios, we compare these with MCB ratios, so for this purpose we have done cross sectional analysis of NBP with MCB. In this analysis, overall leverage position of NBP is good as compare to MCB. Profitability analysis is not better as compare to MCB. In investor analysis, Dividend payout ratio is bad but overall market value of NBP is good as compare to MCB. Bank special ratios of NBP are also not very good as compare to MCB.
137
SUGGESTIONS & RECOMMENDATIONS
Although NBP is included in ten top most banks of the world equity as well as assets wise, and it is only bank that got AAA from Pacra. But for the further improvement in various sectors my recommendations to the bank would be as follows: NBP should become very specific about its competitors, so that it can understand who its competitor is in the first degree and who is in the second degree. Then the first-degree competitors should be watched closely A research cell should continuously try to gather information about the present action so its competitors and expected future actions. So in this way more effective strategies can be formulated.
The performance reward linkage should be making strong as it is said, "A happy employee delivers more than he receives from the organization." The NBP should also try to make its employees happier.
138
There is immediate need, to reconstruct the personnel policies. Selection should be through newspaper advertisements. In this way more intelligent, efficient
and qualified staff can be formulated.
It is strongly recommended that NBP should go for computerization rather than manual work, which is very slow and time, consuming process. In this age NBP even does not have a partially computerized system where as other new competitor banks are now going towards on-line banking services.
Govt. should take keen interest to recover its bad debts, which can improve its financial position. In case of giving the loans, it is necessary to check the repute of customer towards loan repayment. Bank shouldnt advance the money to those people who are addict of rescheduling of loans due to their political influences. Instead providing loans to these persons, loans must be advanced to the well-reputed businesses and industries having good record of loan repayment.
139
Along with the officers, the training must also be given to the clerical staff. Because of NBP are running on manual system and the training of its staff directly improving their efficiency of work.
Present training program for its officers is need to be improved, as this program instead of improving the efficiency of officers is merely a burden for the bank in the form of heavy T.A. , D.A. and cost. Working conditions must be improved for the
employees. Bank will definitely get more benefits after some expenditure on the working conditions as it improves efficiency and productivity of the employees.
NBP should flourish certain marketing plans to attract the customers by giving them certain incentives and beneficial schemes to the customers as other competitor banks are doing so.
There is also a need of proper recruitment and selection program. New young talent should be introduced to inject the new ideas.
140
Deterioration in efficiency is mostly due to promotion without merit. So promotions must be awarded on merit and also when due. Special attention should be given to the behavior of the employees towards the customers, as customer is the most important person for any bank. There are many employees who are working on ad-hoc basis creating dissatisfaction. The deserved should be made permanent employees. Political influences in the bank should be eliminated. To motivate the employees of the bank, regular bonuses and incentives should be given to them. There must be a friendly environment among all the employees as it enhances the trust and sincerity. NBP should be focusing its attention towards the share of traveler cheque. Branch manager should be trained in the field of selling to serve better according to the expectation of customers.
141
The recruitment policy should be fair and transparent.
Management
should
increase
the
branch
limit
of
expenditure to fulfill the necessary expenditure of personnel.relation.
142

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INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

COMMERCIAL BANKING IN PAKISTAN

PHASES OF BANKING IN PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

FIRST PHASE (1947-74)

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

SECOND PHASE (1974-1979)

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

THIRD PHASE (1979-91)

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

FOURTH PHASE (1991-2000)

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

BRIEF HISTORY OF NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

We aim to be an organization that is founded on

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

We aim to be people who

We have confidence that tomorrow we will be

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Vision and Guide

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

We aim to be an organization that is founded on

We aim to be people who

We have confidence that tomorrow we will be

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Syed Ali Raza Masood Chairman & President Director

Iftikhar Ali Malik Shafqat Ali Director Director

M. Zubair Motiwala Azam Faruque

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Sikandar Hayat Jamali

H I E ikhlaq Ahmad Security boardR A R C H Y O F N B P

HIERARCHY OF NATIONAL BANK OF PAKISTAN

SENIOR EXECUTIVE VICE PRESIDENT

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

BRANCH HIERARCHY OF NATIONAL BANK GONDLAWALA ROAD, GUJRANWALA Assistant Manager

Peons and Guards

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

services to consumers and businesses. Organizations identify and

4 Cs Customer Solution Customer Cost 18 Convenience Communication

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

O F products or services have to be offered to the target market depends

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

O F but having a credit portfolio of more than Rs. 20 million (excluding

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

NBP ADVANCE SALARY

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

NBP NBP NBP NBP

Easy installment No surprises

Mark-up choices Grace period option

Structured and programmed

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Minimum approval and disbursement timing

O a major role in determining the customers choice. Also it is F

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Rate 12% 7.5% 6.5% 7.5%

of charges per annum per annum per annum per annum

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

P L A C E S O F Here is a list of the banks locations in Pakistan accordance

Hyderabad, Jacobabad, Shikarpur,