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CHAPTER ONE: Introduction of internship As part of the academic requirement for completing M. COM Master of Commerce. The students are required to under go for two (2) months of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. This report is about National Bank of Pakistan. NBP was established in 1949 and since then, it has expended its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers. 1.1. Background of the Study In order to complete the requirement of M.COM I had to make internship in any organization, I was interested in banking sector so this internship report is about NBP, This bank was incorporated under companies’ act 1913 on 9 th July, 1949 (just before partition) at Calcutta. As well-developed banking setup plays very significant role in the economic development of a country. Banking sector is precondition for the development of any country. The banking sector helps in proper utilization of resources of the country by financing the less developed sector. It also helps to keep cumulative Page 1

Transcript of bilal bashir

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CHAPTER ONE: Introduction of internship

As part of the academic requirement for completing M. COM Master of Commerce. The

students are required to under go for two (2) months of internship with an organization.

The internship is to serve the purpose of acquainting the students with the practice of

knowledge of the discipline of banking administration.

This report is about National Bank of Pakistan. NBP was established in 1949 and since

then, it has expended its network, becoming the largest commercial Bank of the country.

It offers different products of services to its customers.

1.1. Background of the Study

In order to complete the requirement of M.COM I had to make internship in any

organization, I was interested in banking sector so this internship report is about NBP,

This bank was incorporated under companies’ act 1913 on 9th July, 1949 (just before

partition) at Calcutta. As well-developed banking setup plays very significant role in the

economic development of a country. Banking sector is precondition for the development

of any country. The banking sector helps in proper utilization of resources of the country

by financing the less developed sector. It also helps to keep cumulative demand in proper

balance with the supply of those resources, which are responsive to monetary demand.

1.2. Purpose of studies

The main purpose of the study in hand is together relevant information to compile

internship report on National Bank of Pakistan.

To observe, analyze and interpret the relevant data competently and in a useful manner.

To work practically in an organization.

To develop interpersonal communication.

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1.1. Scope of The study

As an internee in National Bank of Pakistan the main focus of my study research was on

general banking procedures in one of the branches of NBP. These operations include

remittances, deposits, advances and foreign exchange.

Similarly different aspects of overall of NBP are also covered in this report.

1.3. Objective of the Study

Discuss thorough study of National Bank of Pakistan.

To understand the various operations and to equip with practical knowledge of the

National bank of Pakistan.

The study done will benefit the finance students in particular and banking students in

general because the financial analysis section of this report comprehensively

encompasses all respects of financial analysis. Furthermore, Rahwali Branch,

Gujranwala may also benefit from the recommendations made at the end of the


1.2. Limitation of The Study

Some thing is better than nothing. No matter how efficiently a study is conducted, it

cannot be perfect in all respects. This study was conducted in accordance with the

objectives of the study. The study may not include broad explanations of facts and figures

due to the nature of the study. Secondly, the limitation, which affects the study, is the

restriction on mentioning every fact of the bank due to the problem of secrecy of the

bank. In addition, the availability of required data was a problem as all the documents

and files are kept strictly under lock and key due to their strictly confidential nature.

Thirdly, the problem of short time period also makes the analysis restricted as one cannot

properly understand and thus analyze all the operations of a bank just a very short time of

eight weeks.

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1.4. Methodology

The report is based on my two months internship program in National Bank of Pakistan.

The methodology reported for collection of data is primary as well as secondary data.

The biggest source of information is my personal observation while working with staff

and having discussion with them. Formally arranged interviews and discussions also

helped me in this regards.

Primary data:

Primary data include, Personal observation and Interviews of The Staff Members

Secondary data:

Secondary data consist of Manuals, Journals, magazines, Annual Reports and


1.5. Organization

I have chosen the banking sector to accomplish my internship and the

organization in which I have spent 8 weeks to complete my internship is National Bank

of Pakistan. It was established on 28th February 1978.As Rahwali is rural area so it was a

good step for the development of the area and it has played a vital role in the removing

regional disparity in the economy of Pakistan.

This branch has provide the advanced and new services to the people of local area as well

as people from different regions and also playing its role in international dealings by

enabling the people in foreign countries. This bank also trades in foreign currencies to

facilitate the people having foreign currencies and wants these in Pak rupees. This form

of transactions also helps to strengthen the economic conditions of the country.

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1.6. Summary

To summarize this chapter it can be said that to prepare internship report is

helpful for practical learning of knowledge which we gain in educational institutions. As

I have mentioned in this chapter that I have chosen NBP bank for the completion of my

internship because of my interest in the banking sector, and it has proven helpful for me

to understand how general banking is done. This internship also made me disciplined

person. I have learned there through observations, NBP manuals, and also by asking

questions from the staff of the bank.

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CHAPTER TWO: Organization

This chapter provides information about the Organization in which internship has been

done. It also states history of the organization. it elaborates the working of overall

respective sector in Pakistan. It also explains the role of the Organization in Pakistan.

What services are being offered by this organization and how much this organization is

contributing to the development of the country through its variety of products? What

facilities the organization is providing in increasing employment of the country.

Mission Statement

“To be recognized in the market place by Institutionalizing a merit & performance

culture, Creating a powerful & distinctive brand identity, Achieving top-tier financial

performance, and Adopting & living out our core values.”

Vision Statement

“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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Syed Ali Raza


Dr. Waqar Masood khan


M.Arshad Chaudry


Iftikhar Ali Malik


Syed Shafaqat Ali Shah


Skindar Hayat Jamali


M.Zubair Motiwala


Mohd Khalid Malik


Source: Annual Report of NBP (2003)

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Management is a distinct process consisting of activities of planning, organizing,

actuating and controlling performed to determine and accomplish stated objectives with

the use of human being and other resources.The management has two types.

1. Centralized.

2. Decentralized.

Centralized Management tends to concentrate decision making at the top of the


Decentralized disperses decision-making and authority throughout and further down the

organizational hierarchy.

NBP have a centralized type of management because the top management takes all the



Senior Management of NBP consists of following member and their respective



Masood Karim Sheikh SEVP & Group Chief, Corporate &

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Investment Banking Group and Chief Financial Officer

S. M. Rafique SEVP & Secretary Board of Directors

Derick CyprianSEVP & Group Chief, Special Assets & Remedial Management Group

Imam Bakhsh BalochSEVP & Group Chief, Compliance Group

Shahid Anwar KhanEVP & Group Chief, Commercial & Retail Banking Group

Nadeem A. DogarEVP & Group Chief, Information Technology Group

Muhammad Sardar KhawajaEVP & Group Chief, Audit & Inspection Group

Dr. Asif A. Brohi EVP & Group Chief, Operations Group

Javed MehmoodEVP & Group Chief, Risk Management Group

Muhammad Nusrat VohraEVP & Group Chief, Treasury Management Group

Amim Akhtar EVP & PSO to the President

Dr. Mirza Abrar BaigGroup Chief, Human Resources Management & Administration Group

Uzma Bashir Group Chief, Organization D&T Group

Net Work of Branches

NBP have wide range of branches inside the country and outside the country.

In Pakistan it has 29 regional offices, 1189 Branches and 4 Subsidiaries.

In overseas it has 16 overseas branches, 6 other branches.

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Products of NBP

Monthly Income Scheme

• Earn up to 11% p.a. +

• Minimum deposit of Rs. 20,000/- and a maximum deposit of Rs. 5,000,000/- for 5 years

• Free Demand Draft, Pay Order and Cheque Book*

• Convenience of NBP online Aasan Banking (for online banking customers)

• Free NBP Cash Card (ATM+Debit)

• Running finance facility up to 90%

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PLS Saving Account

• Earn up to 7.25% p.a. +

• Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 300,000/-*

• Free NBP Cash Card (ATM + Debit)

• Convenience of NBP Online Aasan Banking (for online banking customers)

• Two debit withdrawals allowed in a month & no limit on number of deposit transactions

• Profit calculated on monthly and paid on half yearly basis

Mera Apna Karobar

• Minimum down payment, 10% of asset price (5% for PCO & Telecaster)

• Tenure 1 to 5 years (for PCO 2 years)

• Grace period 3 months

• Maximum loan amount Rs. 200,000/-

• Age 18-45 years

• Mark-up (variable) 1 year KIBOR + 2.00% p.a.

• The customer will pay markup @ 6% p.a., rest will be borne by GOP*

• Life & disability insurance paid by GOP*

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Home Financing

• Home Purchase

• Home Construction

• Home Renovation

• Purchase of Land + Construction

• Balance Transfer Facility (BTF)

NBP Saibaan

NBP Saibaan

(Open the Door to Your Dream Home)

Home Financing

Personal Loan

• Easy installments of 1 to 60 months at your choice

• No minimum income collateral & insurance charges required

• Quick processing and fastest disbursement

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• The product is for permanent employees of Government, Semi Government

and Autonomous bodies receiving salaries through NBP accounts

ATM + Debit Card

• Use it as an ATM in any of the ATM’s in Pakistan

• Use it as Debit Card in any of the outlets with ORIX POS machine

• Cash withdrawal up to Rs. 20,000/- per day

• Account Balance Enquiry

• Mini Statement (Only at NBP ATM)

• PIN Change facility (Only at NBP ATM)

Financing Facility for Stock Investors

• Comfortable environment for trading

• No security requirement, except for the customer’s equity

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• Customer’s equity freely available for investment

• Equity acceptable in cash or approved shares

Ready Cash Against Gold

Facility of Rs. 14, 000/-against each 10 gms of net weight of Gold Ornaments

No maximum limit of cash

Repayment after one year

Roll over facility

No penalty for each repayment

Agriculture Farming Program

• Competitive mark-up rate

• Quick & easy processing

• Delivery at the farmer’s doorstep

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• Technical guidance to farmers

• Wide range of financing schemes for farmers

• Finance facility up to Rs. 500,000/- for landless farmers against

personal guarantee

• Financing available against pass book, residential/commercial

property, gold ornaments and paper security

• Loan facility on revolving basis for three years (renewable on yearly basis

without documentation and approval)

NBP Kisan Dost

NBP Kisan Dost

( Agriculture Made Easy)

Pakremit is an internet based Home Remittance Service. This service is available to

U.S. residents for sending money to their family and friends in Pakistan. One must have a

valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to

remit funds through this channel.

Remitters in USA can log on to our user friendly website, and easily

remit funds to Pakistan from the comfort of their homes, in a matter of minutes.

The service is fully secure with advance encryption application and is available for use 24

hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels

and the remitters have the ability to track delivery of funds as well.

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Personal Accident Insurance

• No documentation

• No medical required

• Premium Auto Debit facility & choice of deactivation

• Coverage includes death due to:

• Natural Calamities e.g. Earthquake, Flood, Cyclone etc.

• Accident

• Riots*

• Civil Commotion*

• Strikes*

• Acts of Terrorism*

NBP Protection Shield

NBP Protection Shield

(Life is Precious)

2.1. Overall Respective Sector in Pakistan

A financial system is a structure that channels funds from savers/investors to those who

require funds for building infrastructure, starting and running businesses, building or

improving houses, consumer financing of big-ticket items like automobiles, etc. Financial

systems are crucial for the allocation of resources in a modern economy. Currently,

Pakistanis save about 15% of the GDP to provide a pool for domestic investments from

private savings, which amount to nearly $ 25 billion a year. In addition, Pakistani

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expatriates remit nearly $ 8 billion a year that flow into Pakistan's economy through the

banking sector.

There are different opinions that how the word ‘Bank’ originated. Some of the author’s

opinion that this word is derived from the word ‘Bancus’ or Banque’, which means a

bench. The explanation of this origin is attributed to the fact that the Jews in Lombard

transacted the business of money exchange on benches in the market place; and when the

business failed, the people destroyed the ‘bench’. Incidentally the word ‘Bankrupt’s said

to have evolved from this practice.

Some of the authors are of opinion that the word ‘Bank’ is derived from the German

word back, which means ‘joint stock fund’. Later on when the German occupied major

part of the Italy the word ‘Back’ was italicized into ‘Back’.

In fact human left the need of bank when it begins to realize the importance of money as

a medium of exchange. Perhaps it where the Babylonian who developed banking system

as early as 2000 B.C. At that time temples were used as banks because of their prevalent

respect. During the rule of king Hamurabi (1788 – 1686 BC) the founder of Babylonians

Empire, loans were started being granted for interest. The borrower has to provide

guarantee or he had to pledge his goods or valuables. King Hamurabi drew up a code

wherein he laid down standards rules for procedures for banking operations by temples

and great landowners. Also in Greece, the temples were used as banks, where the people

deposited their money and other valuables for safe custody and security. In Europe with

the ‘revival of civilization’ (Renaissance) in the middle of twelve century, trade and

commerce started expanding and this development compelled the business community to

borrow the money from the Hebrew moneylenders on high rates of interest and usury.

Seeing the great demand, these moneylenders started organizing themselves and bank

started up at the principle seaports of southern Europe. Soon Venice and Geneva became

the most important money markets of the time and banking though different from its

present form, flourished. What we know as ‘modern banking’ originated in the 14th

century in Barcelona.

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Definitions of Bank

"A financial institution, which deals with money and credit. It accepts

Deposits from individuals, firms and companies at a lower rate of

Interest and gives at higher rate of interest to those who need them.”

A financial establishment which uses money deposited by customers for investment, pays

it out when required, makes loan at interest, exchanges currency, etc.

J.W Gilbert in his principles and practice banking defines a banker in these words:

“A banker is dealer in capital or more properly, a dealer in money. He is intermediate

party between the borrower and the lender. He borrows of one and lends to another”.

Sir John Paged defines banker in these terms:

“That no person or body, corporate or otherwise, can be a banker who does not

Take deposits accounts.

Take current accounts,

Issue and pay Cheques and

Collect Cheques crossed and uncrossed for his customers” The American

defined the term banker in a very broad sense as under:

“By banking, we mean the business of dealing in credits and by a ‘Bank’ we

include every person, firm or company having a place of business where credits are

opened by deposits of collection of money or currency. Subjects to be paid or remitted on

Cheques or order, money is advanced or loaned on stocks, bonds, bullion, bill of

exchange, promissory notes are received for discount or sale”.

Evolution of Banking in Pakistan

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The first phase in evolution of banking in Pakistan sees very hard days for the whole

banking sector. Starting virtually from scratch in 1947, the country today possesses a full

range of banking and financial institutions to cope with various needs of the economy.

The area now constituting Pakistan was, relatively speaking, fairly well provided with

banking facilities in undivided India, in March 1947 there were 3496 offices of Indian

scheduled banks out of which as many as 487 were situated in territories now constituting


The Reserve bank of India was the central banking authority in India. At the time of

partition it was decided that in the interest of smooth transition it should continue to

function in newly emerging state of Pakistan, until 30th Sep.1948.

In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses.

This resulted in a negative effect on baking service in Pakistan. The banks, which had

their registered offices in Pakistan, transferred them to India. In an effort to bring about

the collapse of the new state by pushing a deliberate policy of withdrawals the Indian

bank offices closed quickly. Those banks, which stayed, operated only in name pending

the winding up of their business. The number of scheduled banks thus declined form 487

branches before independence to only 195 branches by 30th June1948.

Banking Growth during (1948-1970)

In this tense situation, a committee was immediately setup to formulate a scheme of

central banking legislation for Pakistan. Many specialists were of the opinion that in view

of the acute shortage of trained staff, any idea of establishing a central bank was I

impractical and the best that could be attempted was the setting up of a currency board

until such times as sufficient staff could be organize to operate a central bank.

The questions as to whether the institution should be only a currency board or a full-

fledged central bank had exercised the mind of the Pakistan government since

independence. Through, it was realized that the shortage of trained personal to run the

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central bank would present serious difficulty in view of the tangible advantages that a

central bank enjoyed over currency board, the government ultimately decided to take the

bold step of setting up a full fledged central banking authority. Among other factors,

which led to this decision, there was the fact the banking facilities in the country had

been totally disrupted and there was an urgent need for their rehabilitation, which a

central bank alone could meet. As there was hardly any time to pass as Act, an order was

drafted, known as the state bank of Pakistan order, which was promulgated by the

government of Pakistan on 12th may 1948. The state bank declared open on July 1, 1948

by the father of the nation.

One of the first tasks of the state bank was to arrange for the replacement of the Reserve

bank of India notes, which had continued to circulate in Pakistan during the transitional

period, by Pakistan currency.

The first Pakistan notes were issued in October 1948 in the denominations of Rs. 5, 10 &


An equally urgent task, which the new central bank had to address itself, was the creation

of a national banking system. To this end, while extending every help and encouragement

to Habib Bank to expand its organization, the state bank recommended the setting up of a

new banking institution to serve both as an agent to the state bank recommended the

setting up of a new banking institution to serve both as an agent of the state bank as well

as the spearhead of its credit polices.

Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in

November 1949. It started with six offices in the former East Pakistan. In view of the

special role assigned to the new institution, contrary to traditional practices the Governor

of the state bank was appointed to head its Board of Director in 1950. Under the fostering

care of the state bank and the support of the government, the new institution developed

rapidly. By using its special powers, the state bank made liberal advances to the new

bank to help it expand credit facilities in the country. By 1952, the National bank of India

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shortly, afterwards, in November 1952, the governor of the state bank ceased to function

as the president of National bank of Pakistan.

With a view to broadening the institutional framework of the financial system, the state

bank also sponsored the establishment of specialized credit institutions in the filed of

agriculture and industry. Banking companies (control) act was passed in December 1948

specifically empowering the state bank to control the operations of banking companies in


Moreover realizing that the most serious limitation on the expansion of banking services

in Pakistan was the lack of trained personal, the state bank sponsored a banking training

scheme, which was repeated after year and turned out a large number of bankers.

As the Commercial Banking facilities continued to expand, a new Pakistani bank, the

National Commercial Bank was established and registered as a scheduled bank. In the

filed of industrial finance a new institution known as the industrial credit and investment

cooperation was set up.

The year 1958 marked the completion of the first decade of the working of the State Bank

of Pakistan. When it was established there were only 195 bank offices in existence. At

the end of June 1958 their number had increased to 307, of which Pakistani banks

accounted for 232 against 25 in mid 1948. Moreover at the end of June 1958, Pakistani

banks held 60% of the total banks deposits, and were responsible for 65 of total bank


When the Ayub Khan Government took over in 1958, the banking and monetary scene

was significantly affected by developments such as the liberalization of imports, transfer

of business in food grains to the private sector, and the firming up of commodity markets.

The demand of funds picked up and there was a substantial expansion of bank credit to

the private sector. The pace of expansion in the institutional frameworks of the country’s

banking system quickened and a new Pakistani, bank, namely the United Bank Limited

was established.

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Owning the five years 1960-65, the credit structure in Pakistan made rapid progress. The

bank extended its network by opening six new offices located at Chitagong, Peshawar,

Quetta, Khulna, Layallpur and Rawalpindi. The number of scheduled bank offices rose

from 430 at the end of June 1960 to 1591 in June 1965. Several new banks were added to

the list of scheduled banks.

Two principal additions were the commerce bank, and the standard bank. The number of

scheduled banks, which stood at 29 in June 1960 rose to 36 by June 1965.

Under the impact of economic growth and dear scope of private enterprises, bank credit

to the private sector rose from Rs. 1,458 millions to Rs. 5759 million. Thus the total

expansion in bank credit to the private sector during this period amounted to Rs. 4300

million, which gave a annual expansion of Rs. 860 million compared to the annual

average increase of Rs. 144 million over the preceding five years. Banks deposits

increased from Rs. 2,493 million to Rs. 6883 million during the five years period ended

June 1965 compared to Rs. 231 million in the proceeding five years.

Time deposits during this period increased from Rs. 946 million to Rs. 3228 million,

where demand deposits rose from Rs. 1997 million to Rs 3655 million. The increase in

time deposits was particularly rapid. The ratio of time deposits to total deposits in June

1965 stood at 49.6 percentage as against 32.01 percentage five years earlier. Another

salient feature of banking development during this period was that since the rate of

increase in bank deposits lagged behind the rate of expansion in bank credit, the banked

has to depend increasingly on central bank finance. They borrowing from the state bank

rose from Rs. 11 million in June 1960 to Rs. 1688 million in June 1965. Owing keen

demand for bank credit, bank’s investments could not increase as rapidly as their

advances. Their investments totaled to Rs. 1,874 million at the end of June 1965

compared to Rs. 1,231 million in June 1960. Investments, which were almost equal to

their advances in June 1960, were only about one third of the advances in June 1965.The

third plane period witnessed a further expansion of banking facilities in the country the

total number of scheduled banked offices increased from 1,591 at the end of June 1965 to

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3133 at the close of June 1970. During the same bank credit to the private sector rose

from Rs. 5,789 million to Rs. 9492 million. There was also a substantial growth in the

bank deposits, which increased from Rs. 6883 million June 1965 to Rs. 13147 million at

the end of June 1970. A remarkable change occurred during this period related to the

composition of deposits. Time deposit becomes greater than demand deposits forming

about 54 percent age of the total deposits. As oppose to what happened in the previous

period, banks were able to finance a mush higher level of credit expansion without

having to increase their borrowings from the central bank.

Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms

were introduced to make the banks more responsive to the requirements of economics

growth with social justice. The reforms aimed at bringing about a more purposeful and

equitable distribution of bank credit, improving the soundness and efficiency of the

banks, and securing greater social accountability of the banking system as a whole.

The role of the banking system had been truly spectacular in mobilizing savings of the

community and meeting the credit needs of the economy. But at the same time, the banks

had generally neglected their role in promoting social justice and had failed to play an

effective role in ensuring a wider and more equitable dispersal of the benefits of

economic growth. In particular the inter locking of ownership with commercial and

industrial interests had led to the misuse of bank resources. There was a heavy

concentration of credit in big accounts and in urban area. Credit facilities for agriculture,

small business, newly emerging exports and housing had remained obviously inadequate

while the banks indulged in capital financing in few selected business sectors and issued

guarantees on behalf of favored clients, term clients, term financing facilities for industry

were wholly absent.

Under the banking reforms introduced in May 1972 the state bank of Pakistan was

accorded wider powers. It was authorized to remove directors or managerial personnel, if

necessary and supersede the board of directors of a banking company and appoint

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administrators during the period of such super session. It was also empowered to

nominate directors on the board of every bank. As regard bank directors, it was provided

that anyone defaulting in meeting his obligations to bank would forfeit his directorship.

Moreover, it was laid down that no person could serve as director of a bank for more than

six years continuously. Each bank was required to have a paid up capital of not less than

5 percent age of its deposits to be progressively build up to 10 percent age over a period

of time. The banks were also required to transfer 10 percentage of their profit their

reserves every years after the reserve became equal to the paid up capital. With a view to

diversity the ownership of the banks, the banks were required to raise new capital from

the market. Unsecured loans to directors, their families or firms and companies, were

totally prohibited.

The bank reforms also brought about the establishment of new institutions to achieve new objectives.A national credit consultative was setup under the supervision of the state bank with representation form the government and the private sector. It was assigned the task of determining of economy’s annual credit needs within the safe limits of monetary and credit expansion with reference to the annual development plan. Such a credit plan was to cover the public and private sectors. Alongside the National credit council and Agricultural Advisory Committee was formed to allocate agriculture credit for various purposes, to coordinate the operation or the agriculture credit agencies and to oversee the flow of credit to the designated targets. A standing committee on exports in general and the new emerging exports in particular, was also established. With a view to encourage the banks to extend credit to small borrowers, a credit guarantee scheme was introduced under which the state bank under took to share any bonfire losses incurred by the commercial banks in case of small loans of advances to agriculture.

At the same time two financing institutions were established. The people’s Finance

Corporation was designed to provide finance to people of small means while the National

Development Finance Corporation was set up of finance public sector owned and

managed industries and enterprises.

Nationalization of Banks (1974) In Pakistan

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The banking reforms turned to be transitional and interim step and when they were hardly

eighteen months old the government nationalized the banking systems, with the following

main objectives.

To enable the government to use the capital concentrated in the hands of a few rich

bankers for the rapid economic development of the country and the more urgent social

welfare objectives.

To distribute equitably credit too different classes sectors and regions.

To coordinate the banking policies in various area of feasible joint activity without

eliminating healthy competition among banks.

The act passed for the nationalization of banks is known as the banks Nationalization Act


Thus under this act the state bank of Pakistan and all the commercial banks incorporated

in Pakistan and carrying business in or outside the country were brought under

government ownership with effect from Jan 1, 1974. The ownership, management and

control of all Pakistani banks stood transferred to and vested in the Federal government.

The shareholders were provided compensation in the form of federal government bonds

redeemable at par anytime within the period of fifteen years. Under the Nationalization

act, the Chairman, Directors and Executives of various banks, other than those appointed

by federal government were removed from their offices and the central boards of the

banks and all local bodies were dissolved. Pakistan banking council was established to

coordinate the activities of the Nationalized Commercial banks. At the time of

Nationalization on December31, 1973 there were following 14 Pakistani commercial

banks with 3323 offices allover Pakistan and 74 offices in foreign countries:

National banks of Pakistan

Habib bank limited

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Habib bank (overseas) limited

United bank limited

Muslim commercial bank limited

Commerce bank limited

Standard bank limited

Australia bank limited

Bank of Bahawalpur limited

Premium bank limited

Pak Bank limited

Sarhad bank limited

Lahore commercial limited

Punjab provincial co-operative bank limited

The Pakistan banking council prepared a scheme for the recognition of banks. The bank

(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of

the smaller banks with bigger ones and following the five units in there phases:

National bank limited

Habib bank limited

United bank limite

Muslim commercial bank limited

Allied bank of Pakistan limited

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The first phase was completed on 30th June. 1974. When the bank Bahawalpur was

merged with the National Bank of Pakistan. The premier Bank Limited with Muslim

Commercial Bank limited and Sarhad Bank Limited and Pak bank limited and renamed

as Allied Bank of Pakistan limited.

The second phase was completed on 31st Dec.1974, when the commerce bank limited

merged with the United Bank limited.

The third and the final phase were completed on 30th June 1975 when the standard bank

limited was merged with Habib Bank limited.

The nationalization was very smooth and gave very positive results.

The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end

June 1992. The bank deposits, which stood at Rs. 1925 corers at the end 1973 reached the

highest, mark about 323 corers.

2.2. Role of NBP Bank LTD in Pakistan

Islamization of Banking

Another major development in the history of Pakistan Banking System was the

introduced of interest free banking in selected Commercial Banks with effect form Jan1,

1981. This followed the effort to eliminated interest from the operation of Nation

investment trust, the House Building Finance Corporation of Pakistan. Certain

amendments were made in banking and other laws with the object of ushering in a new

system of banking, which would confirm of Sharia. A new law Modaraba Companies

Ordinance 1980 was promulgated. Separate interest free counters began to operate in all

the nationalized commercial banks free counters began to operate in all the nationalized

commercial banks. The state bank provides finance against participation term certificate

and also against promissory notes supported by Modaraba certificate.

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In order to cover interest free transactions certain banking definitions such as creditors,

debtor, and advances credits and deposits were revised. Stipulations concerning form of

business in which banking companies may engage may also have been modified schemes

were introduced to provide interest free loans to formers and deserving students.

A private Limited Company named as Bankers Equity limited was incorporated in 1979

to provide financial assistance to the industrial sector primarily on interest free basis.

A scheme to extend interest free productive loans to farmers and fisherman has also been

introduced. Instead of interest, a system based on mark-up in price, exchange rate

differential, and profit and loss sharing accounts were introduced.

Different financial schemes introduced in the Islamization process are:

Musharika Financing.

Hire Purchase Financing.

Modaraba Financing.

Specific Purpose Modaraba.

Dis-investments and Deregulation of Banking – 1991

When it was realized that the role of public sector in the economy is over extended and

the banking sector has more earning potential in the private sector the process of

privatization banking sector restarted in 1991 by the Muslim League Government.

Muslim Commercial Bank was Dis-invested in to two phases while ABL was sold to its

employees. Since then allot of investment is being made in the banking sector and several

new banks were established and still the process is going on. Now only NBP is

government bank other than SBP. The performance of this bank will be analyzed and

judged in the following chapters.

Interest Free Banking

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A new concept of interest free banking was introduced in 1981 and by now it has been

established on sound footing and new trends and techniques are being implemented to

make this system result oriented. New products and their systematic consumption are

making Pakistani banking comparable to their several modern counterparts anywhere in

the developed world.



We are the trustees of public funds and serve our community with integrity. We believe in

being the best at always doing the right thing. We deliver on our responsibilities and

commitments to our customers as well as our colleagues.


We respect our customer’s values, beliefs, culture and history. We value the equality of

gender and diversity of experience and education that our employees bring with them. We

create an environment where each individual is enabled to succeed.


We take personal responsibility for our role as leaders in the pursuit of excellence. We are a

performance driven, result oriented organization where merit is the only criterion for reward.


Our customers are at the heart of everything we do. We thrive on the challenge of

understanding their needs and aspirations, both realized and unrealized. We make every

effort to exceed customer expectations through superior services and solutions.


We encourage and reward people who challenge the status quo and think beyond the

boundaries of the conventional. Our teams work together for the smooth and efficient

implementation of ideas and initiatives

Objectives of NBP

National bank of Pakistan is also a commercial organization and its main objective is

profit maximization. This is achieved in two ways:

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1. By increasing deposits.

2. By charging interest on loans provided to the private sector and business


These are explained as:

Increase in deposits:

Competition in banking is intense and every bank whether it is Pakistani, foreign, private

or nationalized tries to increase its deposits by providing better facilities to its customers.

By increasing its deposits a bank can extend greater amount of loan and hence achieves

higher profit. NBP is also improving its facilities and services to attract customers with

higher volume of deposits. There are two main factors involved in increasing the

deposits. These factors are improving the services and courtesy. NBP is continuously

working on these two factors to increase its deposits.

Extension of loans:

The profitability of a bank largely depends on the amount given to people as loan and the

type of people to whom credit is given i.e. the credit worthiness of the borrowers. This

strategy has worked quite well for NBP. Deposits are collected from the people and

invested in different projects. NBP prefers to give loans to financially sound and reliable

parties, after securing the collators. NBP has an extremely well organized section. The

staff is adequately trained, and educated and competent. They carry out extensive

financial analysis before deciding on the loan. Interest charged on the loans potentially

contributes to higher profits.

Some of the other objectives of NBP are:

i. Improve customer services.

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ii. Quick disposal of credit cases.

iii. Efficient operation of the branches.

iv. Better Public Relations.

v. Operational and advisory services for foreign exchange accounts activities

Unmatched Banking Facilities

Deposit security, Guaranteed by Government of Pakistan.

Highest rates of return to attract the savings.

Lowest rates on exports and other borrowings.

Largest contribution towards Government and Semi-Government requirements.

Agents of the SBP handling Treasury Functions, receipts of Taxes & other Revenues.

Handling of salaries & pensions of federal/provincial/defense personnel.

Utility Bills collections.

Hajj arrangements.

Sale and encashment of prize Bonds.

Sale and encashment of Defense Savings and Special Savings Certificates.

Safe Deposit Lockers for customers.

Rational Human Resource Management.

The prestigious periodical “The Banker” UK recognized NBP as the best bank for 2001-

2002 and NBP is the bank of the year for 2004-2004 of Pakistan.

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i. AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating

Agency for 2001.

ii. AAA+1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan Credit

Rating Agency for 2002

NBP at the forefront of Pak-Afghan trade

i. Booth at dry port Peshawar

ii. Booth at Pak Afghan border (Torkham) NWFP

iii. Booth at Pak Afghan border (Chamman). Baluchistan.

iv. Establishing branch at Kabul.

2.3. Role of NBP IN Terms OF Number of Branches

16 Overseas Branches

4 Representative Offices

1 Subsidiary

1 Joint Venture

29 Regional Offices

1,189 Branches

130 Online Branches

4 Subsidiaries

Overseas Branches

2.6.1. America and Europe Region



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Sargodha/ Sheikhupura


Abbottabad/ Mansehra

Bannu/ D.I. Khan

Kohat / Mingora




All Branches

Azad Kashmir



This shows that how much wide range of country is using NBP’s facilities.NBP has a large

branch network in Pakistan.

2.4. Organization Office in which I have done internship:

I did my internship in NBP Rahwali Branch. It was established on 28 th February 1978.It

has played an important role in the development of rahwali as well as the surrounding

areas of rahwali.

Some important information about my branch is as follows:

Management of the branch

Branch ManagerMr. Zeeshan

Operational Manager Mr. Muhammad Qasim

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KPO(key punch


Mr. Bilal Ahmad

Cash Officer(cash operations) Miss. Shumaila Rana

Cash officer(cash operation) Mr. Muhammad Nazim

CSO(customer service officer)Miss. Arifa Haroon

Other General Information of the Branch


The total deposits of NBP Rahwali branch are about to 602 million. In deposit there is

increasing trend.NBP rahwali branch has largest deposits than any other bank in Pakistan.

Number and types of accounts

PLS Account 2258

Current account 335

Foreign Currency Account 635

Khushkhali Bachat Account 855

Total number of accounts 4083


Cash Department:

General Banking

Remittances Department:

Advances department:

Clearing Department:

Computer Department:

Establishment Department:


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By summarizing this chapter it can be said that banking sector in Pakistan is playing an

important role in the development of the country. It has made the life of people so

convenient that was much difficult before some years; it has become easy to transfer

money not only within the country but also at international level. Now as a part of

banking sector NBP bank is playing a vital role in the development of Pakistan by

offering products, NBP Trainee program, and also with the help of NBP career.


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This chapter is an imperative part of the internship report as it contains detailed

information about the branch in which internship has been completed. This also tells

about the history of the branch, its different departments, its role in that area as well its

surroundings, about the working of the branch, its relationship with the HEAD OFFICE,

its number of departments, its staff and their qualifications. It also contains information

about promotion system of the organization. Critical analysis of the branch and its

working is also done in this chapter. This chapter completely revolves around the

organization in which internship has been done. Different functions within the branch and

duties and responsibilities of the staff have discussed in this chapter. This chapter also

provides details about the morale of the staff and how much the branch is contributing in

the satisfaction of customers.

3.1. Brief History of the Organization

The NBP was established vide NBP Ordinance No. XIX of November 9. 1949.

British Govt. devalued its currency in September 1949, India devalued its rupees but

Pakistan did not. It led to a crisis in trading between the two countries and India refused

to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established

through an Ordinance of GOP. National Bank of Pakistan maintains its position as

Pakistan's premier bank determined to set higher standards of achievements. It is the

major business partner for the Government of Pakistan with special emphasis on fostering

Pakistan's economic growth through aggressive and balanced lending policies,

technologically oriented products and services offered through its large network of

branches locally, internationally and representative offices.

The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by

the former Bahawalpur State.

NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests

at 57 of its offices where the turnover of the business under the head amounted to

Rs.2460 million.

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i) Deposits held by NBP constituted about 3.1% of total deposits of all Pakistani

Banks in 1949, which rose to 38% in 1952.

ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances.

NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of

agriculture and commerce.

iii) NBP advances reached Rs.554.4 million by December 1959, which was one third of

the total schedule bank credit.

iv) 3.1.2. Relationship of Head office to the branch offices

This is based on how policies are communicated to regional offices and branches

at the right time. At NBP I have observed the communication methods such as

mail, telephonic and fax. Circulars related to Cash and RTC’s are sent by HO

(head office) twice in a week. Communication is made through CIRCULARS

when amendment is made in policies of the Bank or in the operations.

3.1.3. Number of Departments

Cash Department:

General Banking

Remittances Department:

Advances department:

Clearing Department:

Computer Department:

Establishment Department:



Cash department performs the following functions:

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The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards.


It is a banker’s primary contract to repay money received for this customer’s account

usually by honoring his cheques.

Cheques and their Payment

The Negotiable Instruments. Act, 1881 3

“Cheque is a bill of exchange drawn on a specified banker and not expressed to be

payable otherwise than on demand”.

Since a Cheque has been declared to be a bill of exchange, it must have all its

characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.

Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,

requiring the banker to pay on demand a sum certain in money to, or to the order of, a

specified person or to the bearer, and which does not order any act to be done in addition

to the payment of money”.

The Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in order to fulfill the

requirements mentioned in Section 6 above the Cheque must have the following.

a) It should be in writing

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b) The unconditional order

c) Drawn on specific banker only

d) Payment on Demand

e) Sum Certain in money

f) Payable to a specific person

g) Signed by the drawer

Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no

payee but bearer.

a) The Drawer

b) The Drawee

c) The Payee

Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be collected

through clearing.

b) Order cheque

These types of cheques are also cashable on the counter but its holder must satisfy the

banker that he is the proper man to collect the payment of the cheque and he has to show

his identification. It can also be collected through clearing.

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c) Crossed Cheque

These cheques are not payable in cash at the counters of a banker. It can only be credited

to the payee’s account. If there are two persons having accounts at the same bank, one of

the account holder issues a cross-cheque in favour of the other account holder. Then the

cheque will be credited to the account of the person to whom the cheque was issued and

debited from the account of the person who has actually issued the cheque.

Payment of Cheques

It is a banker’s primary contract to repay money received for his customer’s account

usually by honouring his cheques. Payment of money deposited by the customer is one of

the root functions of banking. The acid test of banking is the receipt of money etc. from

the depositors, and repayment to them. This paying function is one, which is the

distinguishing mark of a banker and differentiates him from other institutions, which

receive money from the public. However the bankers’ legal protection is only when

payment is in ‘Due Course’. The payment in due course means payment in accordance

with the apparent tenor of the instrument, in good faith and without negligence to any

person in possession thereof under circumstances, which do not afford a reasonable

ground of believing that he is not entitled to receive payment of the amount therein

mentioned. It is a contractual obligation of a banker to honor his customer’s cheques if

the following essentials are fulfilled.

a) Cheques should be in a proper form:

b) Cheque should not be crossed:

c) Cheque should be drawn on the particular bank:

d) Cheque should not mutilated:

e) Funds must be sufficient and available:

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f) The Cheque should not be post dated or stale:

g) Cheque should be presented during banking hours:


A clearinghouse is an association of commercial banks set up in given locality for the

purpose of interchange and settlement of credit claims. The function of clearinghouse is

performed by the central bank of a country by tradition or by law. In Pakistan, the

clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a

representative of SBP act as a clearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The use of

cheques in making payments has also widely increased. The collection as settlement of

mutual obligations in the form of cheques is now a big task for all the commercial bank.

When Cheque is drawn on one bank and the holder (payee) deposits the same in his

account at the bank of the drawer, the mutual obligation are settled by the internal bank

administration and there arises no inter bank debits from the use of cheques. The total

assets and total liabilities of the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same

bank as the drawer. He deposits the cheque with his bank other than of payer for the

collection of the amount. Now the bank in which the cheque has been deposited becomes

a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by

transferring it from cash reserves if there are no offsetting transactions. The banks on

which the cheques are drawn become in debt to the bank in which the cheques are

deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn

on other banks giving claims of payment by them.

The easy, safe and most efficient way is to offset the reciprocal claims against the other

and receive only the net amount owned by them. This facility of net inter bank payment

is provided by the clearinghouse.

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The representatives of the local commercial banks meet at a fixed time on all the business

days of the week. The meeting is held in the office of the bank that officially performs the

duties of clearinghouse. The representatives of the commercial banks deliver the cheques

payable at other local banks and receive the cheques drawn on their bank. The cheques

are then sorted according to the bank on which they are drawn. A summary sheet is

prepared which shows the names of the banks, the total number of cheques delivered and

received by them. Totals are also made of all the cheques presented by or to each bank.

The difference between the total represents the amount to be paid by a particular bank

and the amount to be received by it. Each bank then receives the net amount due to it or

pays the net amount owed by it.

In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are being

received by the bank in the first clearing. All details of the cheques are recorded in this


Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the details of the

cheques that the bank has delivered to other banks.


Advances department is one of the most sensitive and important departments of the bank.

The major portion of the profit is earned through this department. The job of this

department is to make proposals about the loans. The Credit Management Division of

Head Office directly controls all the advances. As we known bank is a profit seeking

institution. It attracts surplus balances from the customers at low rate of interest and

makes advances at a higher rate of interest to the individuals and business firms. Credit

extensions are the most important activity of all financial institutions, because it is the

main source of earning. However, at the same time, it is a very risky task and the risk

cannot be completely eliminated but could be minimized largely with certain techniques.

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Any individual or company, who wants loan from NBP, first of all has to undergo the

filling of a prescribed form, which provides the following information to the banker.

3.18.1) Name and address of the borrower.

a) Existing financial position of a borrower at a particular branch.

b) Accounts details of other banks (if any).

c) Security against loan.

d) Exiting financial position of the company. (Balance Sheet & Income Statement).

e) Signing a promissory note is also a requirement of lending, through this note

borrower promise that he will be responsible to pay the certain amount of money

with interest.

Principles of Advances

There are five principles, which must be duly observed while advancing money to the


a. Safety

b. Liquidity

c. Dispersal

d. Remuneration

e. Suitability

a. Safety

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Banker’s funds comprise mainly of money borrowed from numerous customers on

various accounts such as Current Account, Savings Bank Account, Call Deposit

Account, Special Notice Account and Fixed Deposit Account. It indicates that

whatever money the banker holds is that of his customers who have entrusted the

banker with it only because they have full confidence in the expert handling of money

by their banker. Therefore, the banker must be very careful and ensure that his

depositor’s money is advanced to safe hands where the risk of loss does not exist. The

elements of character, capacity and capital can help a banker in arriving at a

conclusion regarding the safety of advances allowed by him.

b. Character

It is the most important factor in determining the safety of advance, for there is no

substitute for character. A borrower’s character can indicate his intention to repay the

advance since his honesty and integrity is of primary importance. If the past record of the

borrower shows that his integrity has been questionable, the banker should avoid him,

especially when the securities offered by him are inadequate in covering the full amount of


It is obligation on the banker to ensure that his borrower is a person of character and has

capacity enough to repay the money borrowed including the interest thereon.

c. Capacity

This is the management ability factor, which tells how successful a business has been in

the past and what the future possibilities are. A businessman may not have vast financial

resources, but with sound management abilities, including the insight into a specific

business, he may make his business very profitable. On the other hand if a person has no

insight into the particular business for which he wants to borrow funds from the banker,

there are more chances of loss to the banker.

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d. Capital

This is the monetary base because the money invested by the proprietors represents their

faith in the business and its future. The role of commercial banks is to provide short-term

capital for commerce and industry, yet some borrowers would insist that their bankers

provide most of the capital required. This makes the banker a partner. As such the banker

must consider whether the amount requested for is reasonable to the borrowers own

resources or investment.

e. Liquidity

Liquidity means the possibilities of recovering the advances in emergency, because all

the money borrowed by the customer is repayable in lump sum on demand. Generally the

borrowers repay their loans steadily, and the funds thus released can be used to allow

fresh loans to other borrowers. Nevertheless, the banker must ensure that the money he is

lending is not blocked for an undue long time, and that the borrowers are in such a

financial position as to pay back the entire amount outstanding against them on a short

notice. In such a situation, it is very important for a banker to study his borrower’s assets

to liquidity, because he would prefer to lend only for a short period in order to meet the

shortfalls in the wording capital. If the borrower asks for an advance for the purchase of

fixed assets the banker should refuse because it shall not be possible for him to repay

when the banker wants his customer to repay the amount. Hence, the baker must adhere

to the consideration of the principles of liquidity very careful.

f. Dispersal

The dispersal of the amount of advance should be broadly based so that large number of

borrowing customer may benefit from the banker’s funds. The banker must ensure that

his funds are not invested in specific sectors like textile industry, heavy engineering or

agriculture. He must see that from his available funds he advances them to a wide range

of sector like commerce, industry, farming, agriculture, small business, housing projects

and various other financial concerns in order of priorities.

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Dispersal of advances is very necessary from the point of security as well, because it

reduces the risk of recovery when something goes wrong in one particular sector or in

one field.

g. Remuneration

A major portion of the banker’s earnings comes form the interest charged on the money

borrowed by the customers. The banker needs sufficient earnings to meet the following:

a) Interest payable to the money deposited with him.

b) Salaries and fringe benefits payable to the staff members.

c) Overhead expense and depreciation and maintenance of the fixed assets of the


d) An adequate sum to meet possible losses.

e) Provisions for a reserve fund to meet unforeseen contingencies.

f) Payment of dividends to the shareholders.

h. Suitability

The word “suitability’ is not to be taken in its usual literary sense but in the broader sense

of purport. It means that advance should be allowed not only to the carefully selected and

suitable borrowers but also in keeping with the overall national development plans

chalked out by the authorities concerned. Before accommodating a borrower the banker

should ensure that the lending is for a purpose in conformity with the current national

credit policy laid down by the central bank of the country.

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3.18.3 Forms of Loans

In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the

form of cash finance, overdrafts and loans. NBP provides advances to different people in

different ways as the case demand.

a) Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is

made available either against pledge or hypothecation of goods, produce or merchandise.

In cash finance a borrower is allowed to borrow money from the banker up to a certain

limit, either at once or as and when required. The borrower prefers this form of lending

due to the facility of paying markup/services charges only on the amount he actually


If the borrower does not utilize the full limit, the banker has to lose return on the un-

utilized amount. In order to offset this loss, the banker may provide for a suitable clause

in the cash finance agreement, according to which the borrower has to pay markup/service

charges on at least on self or one quarter of the amount of cash finance limit allowed to him

even when he does not utilize that amount.

b) Overdraft/Running Finance

This is the most common form of bank lending. When a borrower requires temporary

accommodation his banker allows withdrawals on his account in excess of the balance, which

the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is

generally allowed against collateral securities. When it is against collateral securities it is

called “Secured Overdraft” and when the borrowing customer cannot offer any collateral

security except his personal security, the accommodation is called a “Clean Overdraft”. The

borrowing customer is in an advantageous position in an overdraft, because he has to pay

service charges only on the balance outstanding against him. The main difference between a

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cash finance and overdraft lies in the fact that cash finance is a bank finance used for long

term by commercial and industrial concern on regular basis, while an overdraft is a

temporary accommodation occasionally resorted to.

c) Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodic

installments or in lump sum at a fixed future time, it is called a “loan”. When bankers allow

loans to their customers against collateral securities they are called “secured loans” and when

no collateral security is taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed

upon, and the borrowing customer has to pay interest on the entire amount. Thus the

borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending

money in fixed amounts for definite short periods against a satisfactory security


Remittance means a sum of money sent in payment for something. This department deals

with either the transfer of money from one bank to other bank or from one branch to

another branch for their customers. NBP offers the following forms of remittances.

a) Demand Draft

b) Telegraphic Transfer

c) Pay Order

d) Mail Transfer

Demand Draft

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Demand draft is a popular mode of transfer. The customer fills the application form.

Application form includes the beneficiary name, account number and a sender’s name.

The customer deposits the amount of DD in the branch. After the payment the DD is

prepared and given to the customer. NBP officials note the transaction in issuance

register on the page of that branch of NBP on which DD is drawn and will prepare the

advice to send to that branch. The account of the customer is credited when the DD

advice from originating branch comes to the responding branch and the account is

debited when DD comes for clearance. DD are of two types.

a) Open DD: Where direct payment is made.

b) Cross DD: Where payment is made though account.


I. Up to Rs. 50,000/- is Rs 50/- only

II. Over Rs. 50,000/- is 0.1%

Pay Order

Pay order is made for local transfer of money. Pay order is the most convenient, simple

and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay

order from the account holder and Rs. 100 from a non-account holder.

Telegraphic Transfer

Telegraphic transfer or cable transfer is the quickest method of making remittances.

Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to

the specified person. The customer for requesting TT fills an application form. Vouchers

are prepared and sent by ordinary mail to keep the record. TT charges are taken from the

customer. No excise duty is charged on TT. The TT charges are:

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Telegram/ Fax Charges on TT = Actual-minimum Rs.125.

Cable telegram transfer costs more as compared to other title of money. In cable transfer

the bank uses a secret system of private code, which is known to the person concerned

with this department and branch manager.

Mail Transfer

When the money is not required immediately, the remittances can also be made by mail

transfer (MT). Here the selling office of the bank sends instructions in writing by mail to

the paying bank for the payment of a specified amount of money. Debiting to the buyer’s

account at the selling office and crediting to the recipient’s account at the paying bank

make the payment under this transfer. NBP taxes mail charges from the applicant where

no excise duty is charged. Postage

charges on mail transfer are actual minimum Rs. 40/- if sent by registered post locally

Rs.40/- if sent by registered post inland on party’s request.


Human Resource plays a vital role in the success of every service organization. They

interact between man and machine. Their attitude can win or loose the customer. The

positive attitude could only be created in a conducive environment, which can make the

staff dedicated towards the organization and its objectives. In reality the man is more

important than machine as it is the human which could get maximum out of machine to

keep a happy customer. However, most organizations give little importance to this very

important asset.

Various aspects related to human resource of National Bank of Pakistan are critically

examined in the following text:

Selection & Recruitment

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Although the Bank believes in merit but in practice the selection of employees is not

done on merit. Most of the employees are low educated. This shows that candidates with

some strong family background or political pressure are given preference in recruitment

and qualified candidates are sometimes left behind.

Job for Life

Like the employee of public sector organizations in Pakistan, the employees of NBP also

enjoy their job for life. Since there is no risk of early retirement or redundancy in rank,

they do not perform with their full potentials. This is one redundancy in rank, they do not

perform with their full potentials, and this is one of the reasons responsible for the low

productivity of the employees of the Bank.

Performance Appraisal

The performance of employees of the Bank are appraised though their annual confidential

reports at the end of each year. This has become an outdated method of performance

appraisal and no longer used due to the following reasons:

1. The performance of employees is evaluated after quite a long time.

2. Element of subjectivity is involved in this method.

3. Employee’s participation is not ensured in the process of evaluation.

4. Objectives of employee’s are not quantified.

Inter Personal Relationship

Modern management acknowledges human resources as one ‘of the most important

assets of an organization. But by their very nature, human beings are also the most

unpredictable. Where a number of persons work together, interactions among them, of

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necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in

NBP can be traced back to the following major heads.

Lack of Communication

Lack of communication is for the biggest reason for conflicts. Not only it is due to the

failure to send a massage but to an interpretation given to the massage by the receiver is

different from that intended.

Diversity in Values

Diversity in values, perceptions, cultural background and life-style is another reason

responsible for inter personal conflicts in NBP. Different values and perceptions about

the same issue, event or personality hinder understanding. When things come to such a

pavement, therefore, interpersonal conflicts are generated.

The dominant trend in all modern industrial societies of the world is merit and expertise,

which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still

very strong in our set up and there is no tradition of tolerance for differing viewpoints.

Hence, interpersonal conflicts are generated.


Our social acceptance of corruption gives rise to corruption at every level of social and

organizational set up. Corruption involves financial embezzlement, favoritism, nepotism,

and other number of such practices. All these cause resentment that keep building up and

lead to conflict sooner or later.

In the past few years, some cases of frauds have happened in different branches. The

reasons can be linked with the employee dissatisfaction of NBP.

3.20.7) Discipline & Authority

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Maintaining discipline and implementation of authority (tables) in letter and spirit is the

key to success of any organization. In NBP, The authority tables are not strictly

maintained. Line managers are not fully equipped with the authority with no vertical or

horizontal interference.


It controls the following activities:

a) A/C opening.

b) Issuance of chequebook.

c) Current a/c

d) Saving a/c

e) Cheque cancellation

f) Cash

Account opening

The opening of an account is the establishment of banker customer relationship. Before a

banker opens a new account, the banker should determine the prospective customer’s

integrity, respectability, occupation and the nature of business by the introductory references

given at the time of account opening. Preliminary investigation is necessary because of the

following reasons.

i. Avoiding frauds

ii. Safe guard against unintended over draft.

iii. Negligence.

iv. Inquiries about clients.

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There are certain formalities, which are to be observed for opening an account with a bank.

Formal Application


Specimen Signature

Minimum Initial Deposit

Operating the Account

1. Pay-In-Slip Book

2. Pass Book

3. Issuing Cheque Book

a) Qualification of Customer

The relation of the banker and the customer is purely a contractual one, however, he must

have the following basic qualifications.

He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.

The agreement should be made for lawful object, which create legal relationship

Not expressly declared void.

b) Types of Accounts

Following are the main types of accounts

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1) Individual Account

2) Joint Account

3) Accounts of Special Types

Partnership account

Joint stock company account

Accounts of clubs, societies and associations

Agents account

Trust account

Executors and administrators accounts

Pak rupee non-resident accounts

Foreign currency accounts

Issuing of chequebook:

This deptt issue cheque books to account holders.

Requirements for issuing chequebook

a) The account holder must sign the requisition slip

b) Entry should be made in the chequebook-issuing book

d) Three rupees per cheque should be recovered from a/c holder if not then debit

his/her account.

e) Current account

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These are payable to the customer whenever they are demanded. When a banker accepts

a demand deposit, he incurs the obligation of paying all cheques etc. drawn against him

to the extent of the balance in the account. Because of their nature, these deposits are

treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on

these deposits, and customers are required to maintain a minimum balance, failing which

incidental charges are deducted from such accounts. This is because the depositors may

withdraw Current Account at any time, and as such the bank is not entirely free to

employ such deposits.

Until a few decades back, the proportion of Current Deposits in relation to Fixed

Deposits was very small. In recent years, however, the position has changed remarkably.

Now, the Current Deposits have become more important; but still the proportion of

Current Deposits and Fixed Deposits varies from bank to bank, branch to branch, and

from time to time.

Saving account

Savings Deposits account can be opened with very small amount of money, and the

depositor is issued a chequebook for withdrawals. Profit is paid at a flexible rate

calculated on six-month basis under the Interest-Free Banking System. There is no

restriction on the withdrawals from the deposit accounts but the amount of money

withdrawn is deleted from the amount to be taken for calculation of products for

assessment of profit to be paid to the account holder. It discourages unnecessary

withdrawals from the deposits.

In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme for school and college students and industrial labor also. The purpose of these accounts is to inculcate the habit of savings in the constituents. As such, the initial deposit required for opening these accounts is very nominal.

Cheque cancellation:

This deptt can cancel a cheque on the basis of;

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a) Post dated cheque

b) Stale cheque

c) Warn out cheque

d) Wrong sign etc


This deptt also deals with cash. Payment of cheques, deposits of cheques etc.


This deptt mainly deals with the foreign business. The main functions of this deptt are:

a) L/C dealing.

b) Foreign currency accounts dealing.

c) Foreign Remittance dealing.

L/C dealing

NBP is committed to offering its business customers the widest range of options in the area

of money transfer.  If you are a commercial enterprise then our Letter of Credit service is just

what you are looking for. With competitive rates, security, and ease of transaction, NBP

Letters of Credit are the best way to do your business transactions.

Foreign currency account dealing:

This deptt deals with the foreign currency accounts which mainly include dollar account,

euro account etc.

Foreign Remittance dealing.

This is very important function of this deptt.

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B) DEPARTMENTATION OF Rahwali Branch Gujranwala NBP.

Dividing an organization into different parts according to the functions is called

departmentation. So NBP Balakot Branch,Balakot is divided into two main parts.

1. Cash Department

2. General Banking Department.

Cash Department:

“To facilitate people in the payments of their bills and taxes and repayments of cash”

There are two main functions of cash department.

i. Payment ii. Receipts

i. Payments are the function that they pay their cheques and pay cash.

ii. Receipts mean collection of utilities bills, taxes etc.

General Banking

In this section of the bank the general banking function is performed. It is divided into

five departments

Marketing Department

Remittances Department.

Computer Department.


Establishment Department Department.

Clearing Department..

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Remittances Department:

The objective of this department is:-

“To transfer the money of people from one place to another place in safe and comparable


The main functions of this department are:

i. Issuing of demand draft.

ii. Issuing of Mail transfer.

iii. Issuing of Telegraphic transfer.

iv. Issuing of payment order.

v. Issuing of call deposit.

vi. Pension payments etc.

vii. Closing and scrolling of government collections.

Advances department:

Every bank has a department, which advances money to borrowers. The objective of Advances Department is

“To facilitate people by giving short term and long term loans on easy terms and


The main function of this Department is to take surplus money from the people at low

rates and lend this money to borrowers at high rates to earn profit.

Clearing Department:

A clearinghouse is an association of commercial banks set in State Bank of

Pakistan for the purpose of interchange and settlement of credit claims.

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The objective of this department is to

“To facilitate customers for payment their Cheques of other banks”.

Two type of clearing books are maintained.

i. In word clearing books:

The bank uses this book for the purpose of recording all the cheques that are

being received by the bank in the first clearing. All detail of the cheques are recorded in

this book.

ii. Out word clearing book:

The bank uses outward clearing register for the purpose of recording all the details of

the cheques that the banks have delivered to other banks.

Computer Department:

The objective of this Department is to facilitate customers in payment of their cheques”.

The main functions performed by this department are:

a) Checking balance.

b) Deduction from balance on clearing cheques.

c) Issuing bank statements.

d) Dealing Western Union.

Establishment Department:

This department mainly deals with the branch employees. The main objective of this

department is to

“To regulate bank business”.

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Main functions of this department are:

a) Keeps the record of attendance of employees.

b) Employee’s salaries distribution.

c) Employee’s bonuses etc.

3.2. Current Staff:

3.2.1) Current Staff of the branch according to Qualification and :

Names Designation Qualification

Mr. ZeeshanBranch Manager


Mr. Muhammad

Qasim Operational


Mr. Bilal Ahmad KPO(kep Punch


Miss. Shumaila

RanaCash Officer B.COM

Mr. Muhammad

Nazim Cash Officer B.COM

Miss. Arifa Haroon CSO(Customer

Service Officer)B.COM

2 guards

1 sweeper

1 night guard

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1 tea boy

3.2.2. Training received by no. of employees?

NBP has different training programmes which are offered in Lahore, Gujranwala and

Gujrat. In Lahore training is provided at Staff College and in Gujranwala at circle office

and in Gujrat at zonal office. According to the schedule mails are sent to the branches and

training is provided to branch manager, operations manager and cash officer etc. For

example when NBP started operations with SYMBOL software for its operations in all

branches then staff of Rahwali Branch branch was also given training.NBP provides

training to its employees when it wants to make aware its employees with new projects

and also wants to introduce with different operations relating to Remittances, Demand

Draft, KYC (know your customer) and Anti-Money Laundering etc.

3.2.3. Work load (it is based on number of hours worked)

Almost in all banking sectors timings of working is 9am to MCB being a bank

also performs its operations from 9am to 5pm.

3.2.4. Salary Structure?

Branch Manager Rs.55000

Operational Manager Rs.20,000

KPO(key punch operator) Assistant Rs.28,000

Cash Officer(cash operations) Rs.12,000

Cash officer(cash operation) Rs.12,000

CSO(customer service officer) Rs.10,000

3.2.5. Promotion system

As promotion is concerned at NBP it is given on the basis of performance.

3.2.6. Incentives and Motivation

In NBP employees are motivated by offering bonuses, as well as annual increments also

motivate employees. Medical allowances also motivate employees. Hajj and Umrah facilities are

provide on the basis of lucky draw.

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3.2.7. Responsibilities and Duties performed

In NBP Rahwali branch working is divided into employees for efficient completion of the

operations by the employees having relevant knowledge and abilities as well as experience

Problems faced by branch:

During my internship at this particular branch of national bank of Pakistan, there are

following problems I have found which are directly affect on efficiency and performance

of the bank. There problems are also called as an internal problems. So these are

discussing below.

1. Lack of communication among the employees:

During the period of my internship I found this problem as a biggest problem that, they

are not very effective in communication between themselves. They do not share the

experience with each other and do not care the other employee. If one employee has a

problem, then he asked to other, but he does not give clear solution to that problems.

They are shows the facial expressions against each other. Pension manager and other

employees are always tried to gain cash/performance award and use the references to get

it. They are talk against each other in front of me. So finally it is very needy for a public

services organization to keep atmosphere friendly among the management and

employees. National bank of Pakistan (Tech Society Branch) is lack in communication

skills among the employees.

2. Ineffective public dealing:

There is also a big issue that they think its government’s bank so it does not care

customers. It is a wrong perception. There must be a good public dealing in public

service organization. If one customer asked a question twice. They angry on him and stop

working. I personally experienced in pension department. The manager pension (Mr.

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Iqbal) have no respect to the old pensioner and he used wrong wording against them

same is also happened in bills executive in bills (Mr. Shafique) is also angry on

Customers, when they asked question twice, so there should be solve this problem to

create a good environment of the NBP.

3. Lack of commitment:

Lack of commitment is also a bib problem faced by the national bank of Pakistan (wahdat

road branch). Employees are not committed to the work and their duties. This is very

common problem.

For example, Rao Ikhlaq not received the letters from last two months. ATM machine is

under Rao Ikhlaq but it is run by operation manager. Mr. Kamran not attached the scroll

at time. Mr. Qamar Zaman going on leave of 3 days but he does not come back even after

3 weeks. So internees are performed duties on his seat. So employees are not very

committed to their jobs and duties. Top management is also not very committed to this

branch. They are not provided employee after transfer of the Rao Ikhlaq. One executive

on leave while other transferred. But not a single executive provide to the branch finally

it is conclude that there is a lack of commitment from employees and top management

also from employees and Top management also.

4. Low Efficiency of employees:

Efficiency of employees is also low at this branch. For example Mr. Qamar Zaman Aulik

has 10 years experience at national bank of Pakistan but he is not professional even at

single seat in the bank. Where he assign the result is zero. During my internship firstly he

works in advances. He does not sent returns to head office at last dates. 95% of returns

are not sent to the regional head quarter. So he was not too much professional. After this

he assign in passing the cheques but results are same (zero). So for this efficiency is very

low at this branch.

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5. Not very regular and punctual:

Regularity and punctuality shows the character of a big and good executive. But this

problem is also faced by the NBP (Wahdat road) many executive not come at time.

For example Mr. Saeed compliance officer came 10 A.M. While bank is started at 9AM.

So some other executives are also not coming at time. So there must be solved that

problem by the Top management.

In regional head quarter Mr. Munawir Shah is HRM assistant manager is also come at 10


6. lack of computing skills:

Computing skills are also low, some executive are very efficient in computing skills but

some are not totally aware from this system. For example ATM machine at this branch is

only handled to Mr. Imran operation manager. When operation manager is on leave due

to heart patient, ATM machine is off not worked because no body knows to run this

machine. Western Union is not worked effectively. The person who handled western

Union is careless and other employees are not taken interest in tat field. So there is

western Union for just name actually it does not worked.

7. Misuse of resources:

Resource are very needy, so there must be avoid to misuse the resources but in this

branch it is reverse case, there is very wrong use of the resources, employees does not

take care of resources and not used them in right direction. For example wrong printing,

extra printing, after service time Mr. Hasnain at token used telephone almost one to two

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hours to take personally outside the bank. So these are the real problems which are faced

by the bank.

Finally it is suggested that if these problems are solved there are much more chances for

increase the performance of NBP. Particularly this branch.

3.3. Functions of NBP

Since NBP is a commercial bank, it performs a variety of functions.

Like other commercial banks, NBP is engaged in financing international trade. Its other

major functions include receiving deposits, advancing loans and discounting of exchange.

The functions performed by NBP are:

Accepting Deposits

This function is important because banks largely depend on the funds deposited with

them by its customers. Deposits are of many types:

i. Current deposits

Current deposits are also called demand liability on current deposits. NBP pays

practically no interest on current deposits. Businessmen usually open current accounts. In

NBP current account can be opened with a minimum amount of Rs.500/-.

PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit

and draw money easily. Profit on PLS is calculated every month but paid after six

months. PLS account can be opened with a minimum amount of Rs.500/-

iii. PLS term deposits

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Fixed term deposits are deposits with the bank for certain fixed period before the expiry of

which they cannot be withdrawn unless giving due notice. In this case the rates of profit

will be different depending upon the time period.

Discounting bills of exchange

Discounting of bill is practically speaking lending for exchange at their market rate i.e. it

pays to holder of the bill an amount equal to the face value after deducting interest at the

current market rate for the period. This bill has to be mature. This is the common way

used for keeping a part of assets of the bank in a liquid form.

Agency service

NBP also provides best and unique service to its valued customers. NBP provide the

following agency services to the customers:

i. Collection of dividends

As NBP deals with the purchase and sale of various types of securities, therefore NBP

also provide dividend or interest earned on share or bonds or invested money.

ii. Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National bank

of Pakistan acts as an agent for its customers.

iii. Acting as an agent

NBP also acts as an agent correspondent or representative for its customer at home or


iv. General utility services:

Utilities provided by NBP are as follows:

a. Clearance of utility bills

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NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone

bills of its customers. For this purpose it also provides evening banking services

b. Lockers facility

National bank of Pakistan also provides locker facilities to its customers to keep their

valuable assets in it. The charges of different size of lockers are different.

c. Acts as a referee

NBP provides useful services to its customers by acting as a referee to their credit


d. Supply of information

NBP provides operational and advisory service for foreign exchange accounts/activities.

Unmatched Banking Facilities

Deposit security, Guaranteed by Government of Pakistan.

Highest rates of return to attract the savings.

Lowest rates on exports and other borrowings.

Largest contribution towards Government and Semi-Government


Agents of the SBP handling Treasury Functions, receipts of Taxes & other


Handling of salaries & pensions of federal/provincial/defense personnel.

Utility Bills collections.

Hajj arrangements.

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Sale and encashment of prize Bonds.

Sale and encashment of Defense Savings and Special Savings Certificates.

Safe Deposit Lockers for customers.

Rational Human Resource Management.

The prestigious periodical “The Banker” UK recognized NBP as the best bank for 2001-2002

and NBP is the bank of the year for 2004-2004 of Pakistan.

i. AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating

Agency for 2001.

ii. AAA+1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan Credit Rating

Agency for 2002

3.3.3. Morale Of staff

As I have observed and experienced the staff of the branch where I have spent 6 weeks

for internship the behavior of the staff towards customers is much cooperative and

lenient. The staff has high morale. They work with devotion. As Rahwali is not as

developed as a city and most of the customers are from villages and they are illiterate

people so proper guidance for banking transactions is needed. These people are less

familiar with bank dealings so the staff of NBP is very accommodating. The staff is not

only supportive to the customers but also it follows the rules and regulations that are

directed by the HEAD OFFIC.As for as I am concerned that how they had dealt with me

during my internship, I would like to say that they are much accommodating people but

within the limits of their duties and authorities.

3.3.4. Physical facilities

As for as physical facilities are concerned NBP has excellent buildings especially in cities

as for as Rahwali branch is concerned I would like to say that it is only best branch with

respect to working as well as environment. Required furniture is available and room’s

size is small. The branch has only 2 rooms and 1 hall,1 room is for lockers and the 2 nd

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room is for bank’s old documents and also for cash deposits of bank which is kept

according to the limits stated by SBP (state bank of Pakistan).And staff of the bank

perform their duties by sitting in the hall. Proper ventilation system is there and hall and

rooms are air conditioned.

3.4. Performances

(In terms of quality through customer satisfaction)

NBP is providing quality services to its customers. it have also introduced online banking

that has made transfer of money and funds much easy and comfortable. Customers are

satisfied with its services. Rupees travelers Cheques are also performing important role

by satisfying customer’s needs. Quick services performed by staff also satisfy

customers.NBP has huge networking throughout the Pakistan. SYMBOL software is vey

speedy for online services.


To summarize this chapter it can be said that this chapter is all about the organization

office in which internship has been done. What functions are being performed within that

branch? History of the branch mentioned in this chapter. How the changes in policies are

communicated to the different branches. Qualification of the staff and also their

experience has also been mentioned. It is also mentioned that how much quality the

branch has in terms of performance, number of accounts, and also in terms of customer

satisfaction. Morale of the staff has also been elaborated in this chapter. Branch location

and physical facilities within the branch has also been discussed.

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CHAPTER FOUR: Specialization Areas

This chapter is about the policies of the organization. Different policies are formed by the

organizations for performing well and also for smooth working of the organization. These

policies are transmitted by the HEAD OFFICE through Fax, E-mails, and also through

Circulars. A competitive strategy of the bank has also been elaborated in this

chapter.NBP awards have also been described here. More of the policies are related to

daily operations of the organization. Principles of performance have also been mentioned

such as customer focus, employee respect and also team based approach. Specific

functions of the branch and also routine working and dealings of the branch have been


4.1. Policies:

Privacy Policy

These terms apply to your access and use of NBP's website (the "Site") accessible

through NBP home page located at

We (NBP) understand the importance of providing you with information concerning the

collection and use of data collected from you during your visit to our website. Our

privacy policy is set forth below. This policy may be updated from time to time and we

encourage you to check this page periodically for any updates.

Definitions. Some helpful definitions of terms used in this privacy policy are:

Personal information is information that can be used to uniquely identify you personally.

Examples of personal information include your name, mailing address, telephone

number, email address and credit card number where applicable.

Links to other sites. The Site may contain links to websites and services that are operated

by persons or companies other than NBP. NBP is not responsible for the content of any

linked site or any link contained in a linked site. NBP reserves the right to terminate any

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link at any time. NBP linking to a third party's site does not represent NBP endorsement

of such website, or the person(s) or company associated with such website or any

products or services accessible through such website. If you decide to access any such

third party website, you do so at your own risk and NBP encourages you to review the

terms of use, if any, applicable to such websites.

Anonymous information is information that can not be used to uniquely identify you

personally. Examples of anonymous information include your IP address, the type of

browser software you use when visiting our site, the date and time you visit our site and

what pages you viewed when visiting our site.

Collection and Use of Anonymous Information.

You can visit our website without telling us who you are or revealing any personal

information to us. During your visit, we may collect certain anonymous information. For

example, we may track the number of visitors to our website by logging Internet Protocol

(IP) addresses. We may keep track of what pages are visited on our website so we can

monitor the performance and usage of our website. Also, we may pay attention to what

visitors do and do not use on our website in order to assess the effectiveness of our

website and modify our content or design appropriately. Anonymous information may be

used individually or aggregated with other anonymous information. We may use

anonymous information for our own benefit and we may share anonymous information

with other companies.

Collection and Use of Personal Information.

We collect personal information about you only when you elect to provide such

information to us, such as when you register to receive products or services, request

additional information from us, submit your resume, or submit an email to us. The

information collected might include your name, company name, e-mail address, mailing

address, phone numbers, etc. Any personal information collected will be used solely for

the purpose(s) for which it was collected (for example, to send you additional information

about our products or services that you requested) unless you indicate otherwise. The

personal information you provide to us may be shared with other companies with which

we have relationships in order to complete your request or provide you with the products

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or services which you have requested. We may also enlist a third party to collect, store,

process and manage on our behalf any personal information you elect provide to us.

When we use other companies to perform services on our behalf, we will require that

such companies protect your personal information consistent with this policy.

In addition, from time to time, we may offer you the opportunity to receive information,

products or services directly from a third party. If you elect to receive such items, we may

share with such third party any of your personal information that was collected when you

elected to receive such items.

We may process or store your personal information in our databases located in the

Canada or any other country in which we do business.

We may disclose personal information when we have reason to believe that disclosing

this information is necessary to identify, contact or bring legal action against someone

who may be violating the terms and conditions of our website or may be causing injury to

or interference with (either intentionally or unintentionally) our rights or property or

anyone else that is being harmed by such activities. We may disclose personal

information when we believe in good faith that the law requires it and for other

governmental administrative, regulatory or law enforcement.

Principles of Performance

Performance Appraisal of National Bank of Pakistan

The system

by which organizations evaluate individual job performance. More over it is about the

employee performance and the accountability. As the world is now global village and

your competitor is watching you, so the organizations need high performance. At the

same time the employees need back on their performance guide for their future behavior.

So the output of the organization depends upon the feedback provided to the employee

timely. Especially the newcomer to the organization needs to understand their jobs and

their work setting. The longer-service employees also want positive feedback on the good

things they do. So the NBP is a organization where the management feels about the

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The employees feel sense of belongingness in return. HRD section always takes this

opportunity to evaluate the performance of the employees. The appraisal system also

helps the management of the NBP to help the managers with placement, pay, and other

HR decisions. The HRD section of the NBP carries out the appraisal for the following


It allows the employee, the Manager to take necessary about the improvement of the


The system also helps in promotion and pays increase of the deserving employees after

their evaluation and also prepares the next person for the succession plan.

4.2. Strategies of NBP


Banking industry in Pakistan is progressing in leaps and bounds and with this drastic

increase in number is raising the bar of competition amongst the banking sector. Last

year the better half of the foreign direct investment was in the banking sector. To stay in

this incredible amount of pressure of competition and delivering the goods on the

deadlines to obtain customer satisfaction and loyalty is the need of the hour and National

bank has always proved itself in distant times by providing the cheapest interest rates on

loans given to the corporate world, employees of government institutions in terms of

Advance Salaries and to farmers made the bank to stand tall in the competition and

contributed a lot to the competitive strategy of the bank. They are mainly using the

Market Penetration Strategy to attract customers.


After working in that environment of National Bank of Pakistan I found following

points in analyzing Business Process of the Organization.

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Well-defined tasks and duties

The tasks and duties are defined in such a way that it becomes very easier for the

employees to perform their assigned tasks. Due to the implementation of modern

techniques the efficiency and accuracy of the work force has been greatly increased.

Proper supervision

There is a proper supervision system to check and evaluate the performance of each

employee. It is the duty of Operations Manager to make sure that every employee is

giving the desired performance.

Caring environment for the customer

The environment of the bank is caring for the customers and every customer is dealt with

proper care and attention. All the employees have very professional attitude and know the

worth of the customer for the business.

Cooperative and Supportive Staff

The behavior of the staff with the customers is very cooperative and supportive and every

employee is ready to facilitate the customer on his best in order to increase the

customers’ satisfaction level.

Lack of customer relationship desk

It was observed that there was no customer relationship officer in the branch to guide the

customer to solve their problems and to tell them that what should they do and where

should they go for the solution of their problems. As a result the customers keep on

disturbing all the employees in order to get their problem solved. This results in the

decrease in the employees’ concentration on their jobs.

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4.3. Successes:

Employee dedication core factor behind Success: President NBP

Karachi, President NBP, S. Ali Raza, while highlighting the progress made by NBP over

the last few years, stated that it would not have been possible had NBP employees not

stood up to the challenges and performed with dedication and hard work.

The National Bank’s President Ali Raza addressing the bank employees at a ceremony to

mark the completion of 60 years said that the Bank has also not ignored the contribution

of its employees towards turning around the Bank into a viable commercial organization.

In this regard the Bank has taken unprecedented steps for the welfare of its employees in

the recent past. Some of these initiatives include induction of 3000 temporary and

foundation employees in the regular cadre of the Bank, liberal promotions in all cadres,

rise in pay by over 200% since 2002, payment of record bonuses to employees, enhance

benefits in medical and staff loans, employment to children of deceased and retired

employees and regular increase in the pension of retired employees. President Ali Raza

emphasized the need of dedication and devotion to all employees of the Bank so that its

number One position in the country is maintained.


By summarizing this chapter it is important to mention here that NBP has policies that

are implemented in all its branches. These policies are like to meet the basic requirements

of opening an account, to fill the KYC (know your customer) form, requirements for

Online transactions etc. In CB successes different types of awards have been described

that have been received by NBP bank from last few years. Competitive strategies of NBP

have also been mentioned such as, to make online transactions fastest etc. And also the

placing strategies of NBP bank that are to enlarge the branch network within Pakistan as

well as outside the Pakistan. At present NBP have branches out of the country.

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This chapter is about the major analysis of the MCB. For the accomplishment of the

requirement of the internship report I describe major analysis on the organization, is

SOWT analysis. The SWOT analysis shows that the companies has many strengths like

strong financial position of the owner of the company, the successful history and

experience of the NBP, well furnished and well located office and the skilled and

qualified employees. The weak points are decreasing rate of EPS, lack of international

reorganization etc. Its main opportunity is the increasing trend of big businesses that

require more cash from the banks and its main threat is the increasing No of new banks

and entrance of foreign banks in Pakistan.

5.1. SWOT Analysis:

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To carryout the SWOT and Financial Analysis of NBP through the help of calculating

necessary ratios in this section.

SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and

threats SWOT analysis is careful evaluation of an organization’s internal strengths and

weakness as well as its environment opportunities and threats.

“SWOT analysis is a situational which includes strengths, weaknesses, opportunities and

threats that affect organizational performance.”

“The overall evaluation of a company strengths, weaknesses, opportunities and threats is

called SWOT analysis.”

In SWOT analysis the best strategies accomplish an organization’s mission by:

1. Exploiting an organizations opportunities and strength.

2. Neutralizing it threats.

3. Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the

organization mission as a context; managers assess internal strengths distinctive

competencies and weakness and external opportunities and threats. The goal is to then

develop good strategies and exploit opportunities and strengths neutralize threats and

avoid weaknesses.



NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its customer

base is strength from this plus point as customers have more confidence in the bank. The

additional value services as the privilege for the bank.

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The NBP performs additional services for its customers as well as the other bank

customer in the absence of SBP.


NBP has the relative competence in having more deposits than the other bank. This is

because of the confidence the customer have in the bank. The bank being the privileged

and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.


The employers at NBP are offered reasonable monetary benefit. Normally two bonuses

are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and

competency for the bank and a source of motivation for the employees.


The bank has another competency i.e. it has broad-basses network of branches throughout

the country also more than one branch in high productive cities. The customers are

provided services at their nearest possible place to confirm customer satisfied.


The employees at NBP are strict followers of rule & regulation imposed by bank. The

disciplined environment at NBP bolsters its image and also enhances the over all out put

of the organization.


The employees at NBP here have a good hold on their descriptions, as they are highly

skilled Professionals with background in business administration, banking, economics

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etc. These professional competencies enable the employees to understand and perform

the function and operation in better way.


The working condition in the NBP branch here is very conductive and favorable for

better output. The informal environment affects the performance of the employees in a

positive way.


The bank enjoys a good plus point when it comes to the employee manager relationship

the hearing as removing of discrepancies if any, between the employees, and between the

manager and employees.



The bank does not promote its corporate image, services, etc on a competitive way.

Hence lacks far behind in marketing effort .A need for aggressive marketing in there in

the era marketing in now becoming a part of every organization.


The strong political hold of some parties and government and their dominance is

affecting the bank in a negative way. They sometime have to provide loan under the

pressure, which leads to uneven and adjusted feeling in the bank employees.4.3.3


The promotions and bonuses etc in the bank are often

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powered by senior’s favoritism or dependupon their wills and decision. This adds to the

negative factors, which denominate the employees thus resulting in affecting their

performance negatively.


The bank falls far behind when the innovative and new schemes are considered. It has not

been involved in the tug of war between the competitors to the accounts and strengthens

the existing customer base. This stands out to be the major incompetence and weakness

of the banks.


During the rush hours, the bank is founded out to be a total flop to handle the mob of

people peaking from windows and doors. The bank has deficiency to operate in the stages

of rush hours where the people find them services entangled in a situation of nowhere

because they are not well served.


The bank lack the strength of being powered by the network of computers, which have

saved time, energy and would have lessened the mental stress, the employees have

currently. This would add to the strength if it were powered by network of computers.


The bank lacks the modern Equipment that is note counting machine computers. Even if

there is any equipment they lack to fall in the criteria of being rearmed as update and


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The workload in NBP is not evenly distributed and the workload tends to be more on

some employees while others abscond away from their responsibilities, which server as a

demotivation factor for employees performing above average work.



The world today has become a global village because of advancement in the

technologies, especially in communication sector. More emphasis is now given to avail

the modern technologies to better the performances. NBP can utilize the electronic banking

opportunity to ensure on line banking 24 hours a day. This would give a competitive edge over



Because of the need for micro financing in the market, there are lot of opportunities in

this regard. Other banks have already initiated, now the time has arrived when the NBP

must realize it and take on step to cater an ongoing demand.



The bank is facing threats with the emergence of new competitors especially in terms of

foreign banks. These foreign banks are equipped with heavy financial power with

excellent and innovative ways of promoting and performing their services. The bank

has to take initiative in this regard or will find itself far back in competition.


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The ongoing shift in power in political arena in the country effects the performance of the

bank has to forward loans to politically powerful persons which create a sense of

insecurity and demoralization in the customer as well as employees.


The bank is currently acting upon the policy of downsizing which threaten the

environment of the bank Employees feel insecurity in doing their jobs and work, hence

affecting the over all performance of employees negatively.


There exists no regular and specific system of the removal of customer complaints. Now

a day a need for total customer satisfaction is emerging and in their demanding

consequences customer's complaints are ignored.


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Porter’s five forces model:

This approach is widely used for competitive analysis. It is because of the high intensity

of competition among companies there five main competitive forces.

Rivalry among competitive firms:

It is a very powerful force among the competitive forces the strategies pursued by

one firm can be successful only to extent that they provide competitive advantages

over the competitor. These competitive strategies may be lowering prices, best quality

series. The NBP offering very low charges an demand draft, telegraphy transfer, mail

transfer and give other additional services to the customers and to the Nation.

Because NBP is a “Nation’s Bank”.

Potential entry of new competitors:

Whenever new firms ca easily enters a particular industry, the competition increases.

The gout restriction, tariffs, patents etc can stop new firm to enter into the business as

per Banking industry is concerned this market is already very situated in Pakistan and

there are banks with quality services and low charges. So there is no threat to NBP

from potential entry and NBP is also a public sector bank because of that no other

new bank not takes over it.

Potential Development of substitute products:

This is the third factor affecting the competitions. There may be some other product

can be substitute the product of that industry. For example banks offering sawing

schemes in Pakistan and these schemes are also offered by GPOs in Pakistan so they

must compete them in this field. If they offer low rates than GPOs so people will go

to deposit in GPOs. People concentration high rates so that’s why sawing PLS

accounts are more then current accounts. The next examples will ATM which

substitute presenting cheques at counter and encash it. The NBP is lacking in this

field. It must improve in this field to compete the competitors.

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Bargaining Power of Suppliers:

The bargaining power of supplier affects the intensity of competition, especially when

there are a large number of suppliers. In case of banks the suppliers are customers

they supply the money to banks. Now they must offer good services, quality, and

safety. Low charges etc to customers. In this field NBP is very good. B/C at offers

good quality services to customers. They charge low charges on remittances. So that’s

it is a competition to other banks.

Bargaining Power of Consumers:

When customers are concentrated or large, or buy in volume, their bargaining power

represents a major force affecting intensity of competition. Now the number

customers in Pakistan for banks are very high. Banks offering variety of products and

services to their customers. NBP have a large number of customs. Now it must offer

good services and products to their customers to attract them to come to NBP.

5.3. Ratio Analysis

National Bank of Pakistan Ten Years Performance at glance 1

NBP is one of the leading bank in Pakistan. The fact that it is the best bank of Pakistan is obvious from the performance shows in the

table below.

Years2009 2008 2007 2006 2005 2004 2003 2002 2001 2001







































208283 17047


Advances 16099 14054 17031 14031 12255 10935 10559 85854 81528 62548

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0 7 9 8 9 6 8






5 71759 72609 91486







95649 85094

S,s holder

equity 18134 14279 11959 11378 10358 9987 9203

7046 7842 7233

pre tax

profit 9009 6045 3016 1023 520 2135 996

(1260) 3081 2799

After tax

profit 4198 2253 1149 461 31 0 0

-------- ------ -------


per share 10.23 5.49 3.08 1.24 0.21 0 0

------- ----- -------

Return on

assets 2% 1.40% 0.80% 0.30% 0.20% 0 0.00%



------ -----

No of

Branches 1213 1204 1245 1428 1431 1434 1468

1555 1537 1463

No of


s 13272 12195 15163 15351 15541 15785 18096

23730 21549 20667


Financial analysis is the process of identifying the financial strengths and weakness of the

firm by properly establishing relation ship between the items of balance sheet and profit

and loss account, in order to make rational decision in keeping with the objective of the

organization, for that purpose the management use analytical tools. To evaluate the

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financial condition and performance of the business entity, the financial analyst needs to

perform "checkups" on various aspects of the business financial health.

A tools frequently used during these checkups is a financial ratio analysis, which relates

two piece of financial data by dividing one quantity by the other we calculate ratios

because in this way we get a comparison that may prove more useful than the raw

number by themselves. The business itself and outside providers of capital (creditors and

investors) all undertake financial statement analysis. The type of analysis varies

according to the specific interest party involved. The nature of analysis is depending at

the purpose of analyst.

Parties interested in ratio analysis

Trade creditors

Trade creditors are interested in firm's ability to meet their claims over a very short

period of time. Their analysis will, there fore confine to the evaluation of the firm's

liquidity positions.

Suppliers of long-term debt

Suppliers of long-term debt on the other hand are concerned with firm's long-term

solvency and survival. They analysis the firms profitability over time, its ability to

generate cash to be able to pay interest and repay interest and repay principal and the

relationship between various source of funds. (Capital structure relationship).

Long-term creditors do analyses the historical financial statements but they place more

emphasis on the firm's projected financial statement to make analysis about its future

solvency and profitability.


Investors who have invested their money in the firms share are most concerned about the

firm steady growth in earning. As such, they concentrate on the analysis of the firm's

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present and future profitability. They are also interested in the firms financial structure of

the extent it influence the firms earning ability and risk.


An organization would be interested in every aspect of the financial analysis. It is their

overall responsibility to see that the resources of the firm are used most effectively and

efficiently and that the firm's financial condition is sound.

So thus management employee financial analysis for the purpose of internal control and

to better provide what capital supplier seeks in financial condition and performance from

the business and from an internal control standpoint, management needs to take financial

analysis in order to plan and control effectively.

Ratios analysis

Ratio is the comparison between two figures of balance sheet and income statement.

Cash Ratio:

“This ration is obtained by dividing cash by current liabilities / liabilities”.

This ratio shows that the cash is enough for payment of current liabilities or not. It is

calculated as cash Ratio=Cash/current liabilities

Year 2003 2004 2005 2006 2007 2008 2009

Cash Ratio 0.118 0.169 0.19 0.21 0.22 0.15 0.134

It means that how much cash is available for payment its current liabilities. This ratio of

NBP shows a downward trend. Because of high advances cash is less to cover its current


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Gross Profit Margin Ratio:

“This ratio shows the profit margin in sales/ revenue”.

This is calculated as.

Gross profit/ interest earned

Year 2003 2004 2005 2006 2007 2008 2009

Gross profit margin% 24.8 27.7 28.9 29.59 39.67 46.6 51.9

G. Profit margin relates profit of the organization to its sales (interest earned in case of


From calculation it is very much clear that the gross profit margin ration have upward

trend which shows that how much they using their deposits to earn interest. This shows

the profit of the firm relative to its revenue. It is a measure of the efficiency of the firm’s

operations too. As it is clear that the ratio gong high this is the indication of good


Net Profit Margin:

This ratio measures the firm’s profitability of sales/ interest earned after taking account of

all expenses and income taxes.

This ratio can be calculated as:

Net profit margin ration = Net Profit after taxes / interest earned

Year 2003 2004 2005 2006 2007 2008 2009

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Net profit

Margin % 0.2 1.6 1.7 1.55 3.67 3.18 21.6

Explanation: from the calculation and graph it is very much clear that the performance of

NBP is very good. And the trend is upward. It tells us a firm’s net income per rupee of

revenue. As the trend is upward it shows the high profits in revenue per rupee in case of

NBP. It is because of high advances the NBP has given to the people.

Return on Equity:

Dividing profit after taxation by shareholder’s equity. ROE compares net profit after

taxes to the Shareholder’s Equity.

This ratio is calculated as:

ROE=Profit after taxes/Share holder’s Equity


Year 2003 2004 2005 2006 2007 2008 2009

Return on

Equity 0.67 5.3 0.2 2.7 6.55 9.4 23.1

Explanation: from the calculation it is clear that the ROE Ratio have an upward trend of

NBP. It is because of high net profit they have earned. It tells us the earning power on the

shareholder’s investments. It is because of high investments by NBP and effective

expense management.

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Return On Assets:

This ratio shows the efficiency of organization that how efficiently utilizes their assets.

This ratio relates profits to assets.

It is calculated as:

Profit after Tax/Total Assets

Year 2003 2004 2005 2006 2007 2008 2009

Return on assets 0.01 0.16 0.008 0.124 0.225 0.52 0.9

From calculation it is clear that this ration of NBP is going high and high. It shows that

NBP using it’s assets very efficiently. That is why they are earning very high profits. This

shows that how efficiently they investing the assets that’s why they are earning high


Investment deposit Ratio:

This ratio shows the comparison of investments and deposits. This is calculated as.

Investment deposit Ratio=Investment/deposits

Year 2003 2004 2005 2006 2007 2008 2009

Investment Deposit

ratio 42.9 37.7 31.03 22.94 20.54 39.66 42.01

Explanation: From above table and graph it is very much clear that NBP are using their

deposit very efficiently. And earning high profits. The ratio has an upward trend, which

shows the performance of NBP is very good. Now it is the retraction from top

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management to invest 30% of its deposits. This may reduce its profits. But can be fruitful

in long term.

Debit to Equity Ratio:

This ration shows the amount contributed by creditors and shareholders. It shows to what

extent the firm is using borrowed money. It is computed simply dividing the total debt of

the fire by its shareholders equity.

This calculated as.

Total debt/shareholder’s equity

Year 2003 2004 2005 2006 2007 2008 2009

Debt to equity

ratio 32.42 31.4 30.4 20.9 22.7 28.6 24.5

From the table and graph it is clear that this ratio is decreasing which show the high

efficiency of NBP. In 2002 it was high but in 2004 it decreases to 24.5 from 28.6 which

is a good sign. Here the creditors are interested in low ratio. The lower the ratio the high

the level of the fire’s financing that is being provided by the shareholders.

Debt to assets ratio:

This ratio shows that to which extent the organization assets are financed by debit. It is

calculated as.

Total debt/total asset

Year 2003 2004 2005 2006 2007 2008 2009

Debt to asset 0.94 0.944 0.957 0.954 0.92 0.954 0.961

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This ration is directly related to risk high ratio means high risk and low ratio means low

risk. From calculation it is clear that the ratio is decreasing which show low risk. This

ratio serves the similar purpose to the debt to equity ratio. This ratio is high because of

more deposits in the bank, and deposits are the liability of customer on bank.

Advances deposit Ratio:

This ratio show that how much efficiently the bank advances the deposits of their

customer to borrower.

It is calculated as.

Advances deposit ratio = Advances/ deposit

Year 2003 2004 2005 2006 2007 2008 2009


deposits ratio 0.414 0.399 0.416 0.443 0.487 0.387 0.406

From above table and graph it is clear that the ratio is going high. Which means the

efficiency on NBP is good and they use their deposits efficiently in advancing to

borrowers. Here high ratio is required. The next side of the picture is that the people will

think that is risky to deposit the money in the bank.

Assets Turnover Ratio:

The relationship of net sales /revenue to total assets is known as the total asset turnover

ratio. It is calculated as.

Total revenue / total assets

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Year 2003 2004 2005 2006 2007 2008 2009

Assets turnover ratio 0.099 0.097 0.093 0.079 0.075 0.079 1.07

Explanation: This ratio shows us the relative efficiency with which a firm utilizes its total

assets to generate revenue. We can see that the ratio is going high and which is a good

sign and shows that NBP is utilizing its assets efficiently.

Price to earning Ratio:

This ratio show the relation ship b/w face price per share and earning per share. This ratio

is calculated as:

Price to earning ratio= face price of share/earning per share

Year 2003 2004 2005 2006 2007 2008 2009

Price to

earning Ratio 2.4 2.7 47.62 3.17 3.25 1.6 0.97

As from the above calculations it is clear that the ratio decreased tremendously in 2004, it

is because of the reason that earning per share increased resulting in decreasing price to

earning ratio.

From calculation it is clear that it have a downward slope. It is b/c of increase in earning

per share.

Dividend yield:

Anticipated annual dividend divided by the market price of the stock.

It is calculated as.

Dividend yield =Total dividend/ market price

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Year 2003 2004 2005 2006 2007 2008 2009


Yield 0.2 0.1 2.3 3.32 1.63 2.45 0.23

Deposit growth Ratio:

This ratio shows the growth rate of deposits.

This is calculated as

Current year deposits- previous year deposits /previous year deposit

Year 2003 2004 2005 2006 2007 2008 2009


growth ratio 0.08 0.07 0.08 0.07 0.1 0.037 0.09

Advances Growth Ratio:

This ratio shows the growth rate of advances. This is calculated as

Current year advances- previous year advances / previous year advances.

Year 2003 2004 2005 2006 2007 2008 2009



ratio 0.23 0.04 0.12 0.14 0.21 -0.17 0.15

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By summarizing the above two analysis we can say that the NBP’ main strength is better

performance as compared to its competitors and main weak points are political issues in

its managements and the lack of international recognition, make investment at globally

and consumer financing are the major opportunities and the increasing competition and

unstable economy of Pakistan is the major threat for the NBP.

CHAPTER SIX: Recommendations

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NBP is an effectively operating and profit making organization and carrying out its

activities under a specified system of procedure. The main regulatory body is State Bank

of Pakistan, which provides policy guidelines and ensures that the money market operates

on sound professional basis. While the head office specifies the whole procedure of

function and operations. This procedure has been modernized with the passage of time

with a view to streamline the approach and underlying procedure for effective

overhauling of its own capabilities so as to bring them at par with international practices.

Here I am giving some suggestions, which in my view can add some input for efficiency

and better performance of NBP as an organization in general and City branch in


The recommendations are as follows:

Professional training

NBP staff lacks professionalism. They lack the necessary training to do the job efficiently

and properly. Although staff colleges in all major cities but they are not performing well.

For this purpose these staff colleges should be reorganized and their syllabus should be

made in such a way to help the employee understand the ever-changing global economic


Banking council of Pakistan should also initiate some programs to equip the staff with

much needed professional training.

Delegation of authority

Employees of the bank should be given a task and authority and they should be asked for

their responsibility.

Performance Appraisal

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The manager should strictly monitor the performance of every staff member. All of them

should be awarded according to their performance and result in the shape of bonuses to

motivated and incite them to work more efficiently.

To Over Come Problem of Space and Furniture

In the critical analysis this, problem is discussed. To overcome this problem it is

suggested that a special section should be made inside the branch. Which should only

handle the treasury function, salaries and pensions of federal personnel or the bank

should do these functions in the evening time. Also management should purchase more

furniture and arrange them in such a way which provides maximum space and convenient

especially in deposit department and there should also be convenient sitting place for



Transfer is not properly carried out. Some of the employees are continually serving at the

same post. They are simply rotated at the same branch. Therefore it is recommended that

evenly rotation of every employee should take place after every three years in different

braches of the bank.

Changes in Policies

There should not be any abrupt policies change by the upper management, as this practice

hurts the customer confidences in the bank. Government should make long-term policies

Need of Qualified Staff

Required, qualified staff should be provided to branch in order to improve the functioning

of the branch. Especially a telephone operator should be appointed.

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Utility Bill Charges

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job

despite this working resulting in a loss to then Rs 3 to5 per transaction. These charges

should be increased to RS 10 per bill to enable the branch to cover their handling costs

and make some profit.

7Link with the Head Quarter

100 major branches of NBP should established a direct link with the, head quarter

In Karachi, through Internet or Intranet. This will make the functions and decision

making of the management easier and convenient.

Credit Card

National bank of Pakistan should start its operation in credit card. These cards are very

helpful for the ordinary customer in general and the business people in particular. To

make it mores secure and to eliminate the misuse of it, the management is required to

keep proper security against the card.

Installing Validator and ATM

Validator machine is used to count the currency notes and its installation will help to

eliminate to counting errors and will save time.

This branch is situated in the City, which is supported to be the hub of business activates.

In this area an auto teller machine (ATM) is the need of the hour businessmen can easily

check their balance in the bank and also with draw their money conveniently.

Interest on Overdraft:

Overdraft is a short-term credit facility provided by the bank to its trustworthy customers

free of interest. Only bank commission is charge small amount of mark-up on the

overdraft, which will help the bank to improve its revenue position.

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Clean Loans

Clean loan or clean overdraft is the credit facility extended to the customers to the

customers without any security. These types of small term loans should not be extended

to anybody, because sometime these loans are provided to blue-eyed people of the

management and they become a part of bad debts.

Cash Financing

In this mode of financing the amount of credit not utilized by the borrower is remained

tax-free. It is recommended that a small amount of interest should be charge on this

amount as well because the bank gas kept-aside the amount for that borrower and can not

advance it anywhere.

Decreasing Administrative Expenses

Bank should their administrative expenses. This was Rs 8 billion in the year 2000. That

can be done by lying off the surplus pool of employee with golden handshakes scheme.

The branches that are not much used could also be closed. Employee can also be how to

control the bank expenses. That will give positive results in the future.

Needs to be Flexible in credit Policy

As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces

the investment opportunities. Also loans should be given to the small businessmen and

the agriculture sector at the low markup rate. It should adopt flexible credit policy while

giving credit to the agriculture sector.

Technological Advancement

I would like to suggest that at least all the main branches of NBP should be fully

computerized in order to expedite the dealing process among bankers and their

customers. Every department should be provided a computer with adequate training

(especially Advances, Deposits and Foreign Exchange departments).Daily records should

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be entered directly into these computers, (instead entering the overall daily transactions

after the banking hours). It will not only reduce transaction time, will increase accuracy

but will also be efficient as well.

Not only it will be economical but will also reduce the extra burden of work of the bank.

It will also help in reducing the use of excessive paper work.

Staff Relationship

Good relationship among staff member leads to the peak performances in any

organization. I observed that the staff relationship was normal other wise but some time I

noticed that there existed a little conformity among the staff members. Another syndrome

from which the staff suffered was that all of them considered themselves more important

than others. Some of the officers used to say that if I am absent for a day the bank would

stop working. So this sort of attitude is not good because it mars bank image and juniors’

willingness learn and work hard and in the end will hurt the whole team.

Improper Distribution of Work

Proper distribution work leads to success in every organization. Proper distribution of

work prevents the employee from over and under work situation. So for a smooth running

of an organization proper distribution of work is the hint to be followed.

During my internship I observed that there was no proper distribution of work in the

bank. I saw that some of the employee worked like ants other sat idle starting here and

there. So this created a lot of over work situation for while relaxation for other.

Favoritism and nepotism

In the City branch during my internship I saw that when some of the employees are

transfer to other places, due to their relation with influential people and with top

management they can cancel their transfer in few weeks, when they are unsatisfied at that


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So I suggest that in the organization there should be no favoritism, nepotism and politics

and their transfer and promotion should be made on merit and according to the rules and

regulations of the bank and provided favorable environment to the employee to show

their performances.

Inter Departmental Transfer

I watched during my internship that, there is number of employee who have worked on

one seat for many a year. It can have negative effects motivation of employee who is hard

working and intelligent. Take the example of advances section. In advance section if the

employee is transfer after sixth month or seven month, how can he be able to show his

performances and how can he be able to know the bank customer in a short period of


Foreign currency Account

For the internship the place I have selected was City branch, which is my forefather land

and I know that from area many people have traveled to other country for different kind

of jobs, and I have heard personal complaint about the unavailability of foreign currency

account in banks. So I thick it is wonderful opportunity for the bank to open foreign

currency account.

Marketing Policy

The branch should adopt various marketing strategy and promotion strategy to promote

the bank and its product.

The most important in my opinion is personal marketing; it is the most effective of all

when you think in term of branch level. But on the whole organization level, they should

arrange the seminar with in the bank and outside the bank. They should introduce various

prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly

income earning scheme) and various others.

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They should do more advertising through newspaper and media and through channel of

personal contacts.

Complaints of Customer

There should be an information desk to provide the information and to receive the

complaints of the customer in the bank.

There is no complaint box available in the branch and not any person appointed to hear

the complaints.

Every person cannot go to the manager for the complaint because most of the people are

hesitant. So I suggest management to install a compliant box in the branch, and recruit a

special person for that guidance of the customer when they are unable to manage some

difficulties in banking matters.

Analysis of the Business:

Proper analysis of the business reports should be conducted before extending any type of

loan. For this purpose professional training of the stuff member is required.

Organizational Commitment

It is suggested that employees working on daily wages basis should be given some

benefits, which the other employees are getting. Their salaries must increase according to

efficiency, performance and service.

Managerial Leadership

In the analysis, we have discussed the difficulties of the assistant in taking any initiative;

therefore it is recommended that the assistants should he given special training to make

them ready for the leadership.

Credit Monitoring

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The credit department of the bank should carries out vigilant credit monitoring. They

should ensure the proper payment of installments and the mark-up by the borrower.

The staff members who have done all the paper work of the loan extension should

perform the monitoring, as he/she will be having more information about the borrower.

Extended Banking Hours

The banking hours may be extended up to six, as being practiced by HBL opposite to it.

Some of the business community due to law and order situation are now reluctant to keep

the fund in their premises and would want to depart with it. Therefore, City Branch may

extend the night banking to cater to demand of this business community. The branch could

also be opened to cater the requirements of this business community

Limited staff:

Housing and House Hold Goods loans

Bank should initiate these loans because most of bank’s customers are middle class and

they cannot afford to buy house or household goods at once by their own

Avoiding Bad Debts

Great care should be taking while extending the loan. Loans should be awarded against

reasonable securities, where market value should be equal to the loan granted.

Policies should be crafted in a way to ensure that no loan is extended on political

pressure. SBP regulation for loan approval should be strictly followed. According to

which the current ration of borrower’s business must be 1:1 and the debt to equity ratio

should be 60:40, means the liquidity position of business should be healthy.

Car Financing Scheme

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Another financing scheme with the name of “MARE GARE CAR FINANCING

SCHEME” should be initiated This finance scheme will help the general public to buy

the car of their choice in easy quarterly installments The bank monitors will do strict

monitoring and the car will be hypothecated with the bank against the car loan.


The National Bank of Pakistan plays a key role in the strategic national development. The

bank has historically been the financial arm of the government and has enjoyed the

blessings of state support in the form of huge public sector funds and deposits.

In contract to other banks populating the FSI sector, NBP is mandated to uphold public

interest. It is critical too as all other banks and NBFIs in public sector have been closed

down or merged with NBP.

In contract to other banks populating the FSI sector, NBP is mandated to uphold public

interest. It is critical too as all other banks and NBFIs in public sector have been closed

down or merged with NBP.

The current management of National Bank of Pakistan was hired purely for their

international experience, business orientation to turn around a purely public institution

into a sustainable and commercially viable bank serving public interest along the lines of

a large modern commercial bank.

The National Bank of Pakistan has effective budgeting system in place. Annual budget of

the bank is approved by the Board and monthly comparisons of actual results with the

budget are prepared and reviewed by the senior management.

The National Bank of Pakistan has a comprehensive framework of written policies and

procedures on all major areas of operations such as Credit, Treasury Operations, Finance,

Internal audit and Compliance approved by the Board.

The National Bank of Pakistan provides sustainable financing for growth of industries of

critical national importance such as energy, education, healthcare, transport, shipping,

Research & development.

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List of Abbreviations

HO Head Office

RHQ Regional Head Quarter

MCB Muslim Commercial Bank

MBA Masters of Business Administration

DD Demand Draft

MT Mail Transfer

TT Telegraphic Transfer

ATM Automated Teller Machine

LC Letter of Credit

RTC Rupee traveler cheque

TFCs Term Finance Certificates

FCC Foreign current cash

FTD Fixed term deposit

FCC Foreign current cash

TRF Transfer

FTD Fixed term deposit

PMT Payment

PLS A/c Profit & Loss Sharing account

SWOT Strengths, Weaknesses, Opportunities, Threats

NPL None performing Loans

PACRA Pakistan Credit Rating Agency

ROE Return on Equity

CRR Cash Reserve Requirement

SBP State Bank of Pakistan

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NIFT National Institutions Facilitation Technology

NBP National Bank of Pakistan

UBL United bank Limited

ABL Allied bank Limited

SSGC Sui Southern Gas Company

PO Pay Order

NADRA National data base and registration authority

PEST Political, economic, social, technological


Israr, Siddiqi H. (1998). Practice and Law of banking in Pakistan. Karachi: Decent Print Enterprises. Page 15-17

Sir, Paged John. The law of Banking. The Law of Banking. McGraw Hill Publication: page 51-58

Nasir, Saeed H.(2001). Money and Banking. Pakistan, Kitab Markaz: Page.105-106

Bank Nationalization act 1974.

. http// .services

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