abdul rouff nbp report 2012

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National Bank of Pakistan

C H A P T E R NO: 01

Introduction of Report

1.1 Introduction of Report:

It is the requirement of the Master of Commerce of University of Azad

Jammu and Kashmir Muzaffarabad to do an internship that all students of Master

of Commerce have to spend six weeks in any organization to get practical exposure

and to get familiarized with the ways to live in the organizational environment

which is dramatically different from the educational environment. That two

months period called Internship Period , if spent properly and sincerely,

enables the students to be more confident, more knowledgeable, more responsible

and above all, more committed to their work in the practical field.

I have also been assigned to do internship of Six weeks period in National

Bank of Pakistan Main Branch Hajira. It has enabled me to understand the practical

scenario and sharpen my decision making power and utilizing the resources in an

effective and efficient manner, so that our resources generate maximum output. In

preparing this report, I have put all of my best efforts and tried my level best

to gain maximum knowledge about practical work of bank. Despite of my all the

coherent efforts, I do believe that there will always be a room for improvement

in the efforts of learner like me.

1.2 Purpose of the Study:

Purpose of the study was two pronged.

1.2.1 General Purpose:

To get acquaintance to the banking operations.

Department of Commerce University of Azad Jammu and Kashmir Muzaffarabad

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To see the application of our Professional studies especially.

1.2.2 Specific Purpose:

Specific purpose of the study includes.

A partial fulfillment as a requirement for the completion of M.Com

(Accounts )

To objectively observe the operations of National Bank of Pakistan in

general and the operations of National Bank of Pakistan Hajira branch A.J.K

in specific.

To make recommendations or implementation plans for the

improvement of the operations of National Bank of Pakistan Hajira branch

A.J.K in the light of our professional studies.

1.3 Nature of the Study:

The study was conducted to investigate critically into the operations of

National Bank of Pakistan and it also explains that how National Bank of Pakistan

provides facility of online banking to its customers. The annual reports or the

consolidation data of the Bank has not been focused in specific because it does not

reflect on the operational performance of branches. However, they have been referred

to as when and where required.

1.4 Scope of the Study:

The study covers two areas with its variables, which affects the operations of

the branch directly, or indirectly. These two areas of variables are:

Branch specific variable.


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Bank specific variable.

The branch specific variables are the variables under the control of the branch

management and directly affect its operations e.g.

Layout of the branch.

Customers relations.

Departments in the branch

ATM

Online banking.

The bank specific variables are those variables, which are not in control of the

branch management e.g.

History of National Bank of Pakistan

Services provided by National Bank of Pakistan

Role of National Bank of Pakistan

Functions of National Bank of Pakistan

1.5 Limitations of the study:

The Study was subject to the following limitations, the absence of which could

have made this report more accurate, systematic and factual:

Lake of published financial data.

Lack of ATMs back hand information with staff.

Access to data.

The non cooperative behavior of some managers and staff members.

My weak financial position.


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Introduction to National Bank of

Pakistan

2.1 Introduction of National Bank of Pakistan:

National Bank of Pakistan is the largest commercial bank operating in

Pakistan. It is 76% owned by the government of Pakistan. It was awarded the best

bank of Pakistan in 2001, 2002, 2004 and 2005. In 2010 it is awarded the Bank of the

year award. It has redefined its role and has moved from a public sector organization

into a modern commercial bank. The Bank's services are available to individuals,

corporate entities and government. While it continues to act as trustee of public funds

and as the agent to the State Bank of Pakistan. It has diversified its business portfolio

and is today a major lead player in the debt equity market, corporate investment

banking, retail and consumer banking, agricultural financing, treasury services and is

showing growing interest in promoting and developing the country's small and

medium enterprises and at the same time fulfilling its social responsibilities, as acorporate citizen.

2.2 Establishment of NBP:

The National Bank of Pakistan was established as a semi-commercial Bank on

November 21st, 1949 under the National Bank of Pakistan ordinance No.XIX of 1949.

Its Head Office is situated at I.I.Chundrigar Road, Karachi. The National Bank of

Pakistan is engaged in providing Commercial Banking and related Services in

Pakistan. In 1952, the Bank also authorized to act as an agent of the State Bank of

Pakistan and operate treasury functions in those areas where State Bank of Pakistan

does not have its own branches. In 1974, like other commercial banks, National Bank

of Pakistan was also nationalized. The National Bank of Pakistan deserves a Prudent


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and Intellectual management with clear destination and direction. The National Bank

of Pakistans achievements has noticed on the global Banking front and it was

declared Number one in Asia and 8th in the world.

Vision of NBP:

To be recognized as a leader and a brand synonymous with trust, highest

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

Mission of NBP:

NBP will aspire to the values that make NBP truly the Nations Bank, by:

Institutionalizing a merit and performance culture.

Creating a distinctive brand identity by providing the highest standards of services.

Adopting the best international management practices.

Maximizing stakeholders value.

Discharging our responsibility as a good corporate citizen of Pakistan and in

countries where we operate.

Goal of NBP:

To enhance profitability and maximization of NBPshare through increasing

leverage of existing customer base and diversified range of products.

Core values:

Highest standards of Integrity.

Institutionalizing team work and performance culture.

Excellence in service.

Advancement of skills for tomorrows challenges.

Awareness of social and community responsibility.

Value creation for all stakeholders.


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2.3 Features of National Bank of Pakistan:

The salient features ofNational Bank of Pakistan are as following;

i Issued Capital:

The National Bank of Pakistan was setup with an issued capital of Rs.1.5

million.

ii Authorized Capital:

Authorized capital of National Bank of Pakistan in 2000 was Rs.2.5 Billion.

ii Issued, Subscribed, and Paid-up Capital:

Issued, subscribed and paid-up capital in year 2000 was Rs.1.46 Billion.

iv Capitals Structure:

The total Assets of National Bank of Pakistan on March 31, 2007 are $9.3

billion and deposits over $7.8 billion.

v Number of accounts holders:

The total numbers of accounts holders are over 10 million and the borrowers

exceed one million customers.

vii Corporate banking:

It is one of the top institutions in corporate and investment banking market of

the country. It has a favorable standing in lending to corporate sector.

vii Retail banking:


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National Bank of Pakistan has the largest customer based in the country. It is,

therefore, mobilizing deposits by providing quality services to its customers which

now exceed 10 million.

viii SME lending:

The National Bank of Pakistan is actively engaging it self in Small Medium

enterprise lending. The borrowers of the banks are over 10 lakh now.

ix NBP Credit card:

The borrowers of the banks are over 10 lakh now. Under its one cash card is

providing ATM anddebit card services in its main branches. Cash can be drawn up

to Rs. Twenty thousand per day.

x Profit:

The profit of National Bank of Pakistan rose to Rs. 18,212 million in 2009.

xi No of employees:

In 2009 NBP was having 16,248 employees with total assets of 944,233

million.

2.4 Branches of NBP:

National bank of Pakistan carries on its business through a wide network of

branches. These branches perform their functions under the supervision of local

principal offices and head office in Karachi. The bank has 1250 branches in Pakistan

and 18 overseas branches.

2.5 Objectives of National Bank of Pakistan:

National Bank of Pakistans primary objectives are;


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To earn the profit.

To develop the economy.

To provide the latest banking facilities to its customers.

To improve customer service.

To offer specialized services to major corporate.

To reduce the size of non performing loans (NPLs).

2.6 Functions performed by National Bank of Pakistan:

To fulfill the basic objectives of socio-economic nature the bank perform

following important functions:

Accepting of deposits:

This function is performed by the bank by opening of the different type of

accounts, which are as follows: Saving Accounts, Current Accounts, Fixed Deposits

and NIDA accounts.

Advancing of loans:

Different types of loans are granted to different type of people and industries these

include:

Running Finance.

Agriculture Finance.

Demand Finance Gold.

Payment of cheques:


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Cheques drawn against various deposits are honored and paid in cash.

Payment of pensions:

This function is performed by National Bank of Pakistan. As a govt

treasurer all the pensions of federal Govt., provincial Government and semi

Government employees is paid by National Bank of Pakistan.

Salary management of different governmental institutions:

salary of govt. and semi govt. employees is first credited to the account of National

Bank of Pakistan and is then credited to their personal accounts

Issuing of travelers cheques:

The travelers cheques are issued by National Bank of Pakistan for secure

transfer of money from one place to another, without charging any commission.

Collection and sale of prize bonds:

The national prize bonds are purchased and sold at the branches of the

National Bank of Pakistan according to the rules formulated by the State Bank of

Pakistan.

Collection of fees and money from people proceeding on

Hajj pilgrimage:

National Bank of Pakistan collects the fee from the people proceeding for

hajj and act as their agent.

Transfer of funds:


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Money is transferred from one place to another by different means like Bank

Draft, Mail Transfer, Telegraphic or Telephonic Transfer and Travelers Cheques

Collection of Chalans:

Various Govt. revenues are collected by National Bank of Pakistan in the form

of chalans:

Issue Guarantee and Indemnity. Collection of Negotiable Instruments. Act as an Income Tax Advisor. Act as an Agent or Representative to his Customers.


Management and Organization of N B P

3.1 Management of National Bank of Pakistan:

The management of National Bank of Pakistan is given below;

3.1.1 Board of Directors:

In the management of the National Bank of Pakistan, the board of directors is

at the top of the controlling bodies. Since there is no private shareholder, so there is

no general meeting of shareholders and no directors aracted. The board consists of a

nominated president, a secretary and 6 other members. After nationalization in 1974most of the powers have been transferred to the executive board.

3.1.2 Executive Board:


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It is also called the management committee. The general direction and

supervision of the affairs of the bank lies in their respective executive boards. The

president, secretary and 6 other members of the board are appointed by the federal

govt. The president being the chief executive controls the affairs of the bank.

3.1.3 Chief Executive:

The president is the administrative head of the bank. He manages and controls

the affairs of the bank. The president holds the office at the pleasure of the federal

government.

3.1.4 Regional chiefs:

In order to improve the performance of the banking system, the bank has

appointed regional chiefs also. The regional chief has the powers of sanctioning

finance and other credit facilities.

There are 7 regional head quarters of the regional chiefs of the National Bank

of Pakistan., 1 is in the N.W.F.P., 1 is in Balochistan, 3 are in Punjab, and 2 are

situated in Sindh.

3.1.5 Zonal Cheifs:

Each region is divided into number of zones. They hold the post of VP or AVP

and administer these zones. N.B.P. has 37 zonal offices in Pakistan.

3.1.6 Branch Managers:

Each zone is then sub divided into a number of branches. The control and

supervision of each branch is mostly entrusted to AVP or officers of grade I. Branch

manager operates the branch by workforce of two second officers, two assistants, two

cashiers, to messengers and two armed guards.


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3.1.7 Operation Managers:

Operation managers assist the branch manager or to perform and looking after

the activities in absence of branch manager. Operation Managers mostly woks in main

branches.

3.2 Training and Management Development Wing:

National bank of Pakistan has its national development centers and 4 staff

colleges at: -

1. Karachi

2. Lahore

3. Peshawar

4. Islamabad

In these centers and staff colleges, the banking training is provided to the

officers, managers, and to potential managers. It arranges courses and seminars for

middle and higher management in all. Each year almost 1500 persons receive training

in these training centers.

3.3 Branch Hierarchy of National Bank of Pakistan:


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(Fig: 01)

3.4 Management from Top to Bottom:


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Manager

Operation

Manager

General

Banking

Computer

Department

Credit

Department

Retail

Banking

Account

Department

Bills, Remittance

& Clearing

Department.

Cash

Department

Peon Driver

Assist-CashierCashier

Security Guards


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(Fig: 02)


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Finance DepartmentFinance Department Cash DepartmentCash Department

OfficerOfficer OfficerOfficer

Admin & HR DeptAdmin & HR Dept

OfficerOfficer

Banking DepartmentBanking Department

OfficerOfficer

CHAIRMANCHAIRMAN

Board of DirectorsBoard of Directors

Executive CommitteeExecutive Committee

PresidentPresident

Regional ChiefsRegional Chiefs

Zonal ChiefsZonal Chiefs

ZonesZones

Branch ManagerBranch Manager


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Products and Services of NBP

The National Bank of Pakistan provides the following products to its

customers.

4.1Products of NBP

4.1.1 NBP Saibaan:

National Bank or Pakistan has recently launched NBP Saibaan Scheme inorder to facilitate its customers. Under this scheme finances available for;

Home purchase.

Home construction.

Home improvement.

Important Features:

o Period of repayment ranges between 3-20 years.

o Loans available up to a maximum of Rs.10 million.

o Mark-up choices available. Mark-up rate ranges between 7.5% to 15.50%.

o Minimum approval and disbursement timing.

4.1.2 Advance Salary:

NBP Advance Salary is a convenient finance facility, 20 months salary in

advance to Government employees repayable in maximum 60 months equal

installments. The main highlight of this finance is that it requires no personal

guarantee, no Insurance premium, Containing a shortest documentation and procedure


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easy and fast disbursement. National Bank of Pakistan, advance salary facility is

available for permanent employees of:

Federal and Provincial Governments.

Local Bodies, Government Corporations and other corporation and organizations

approved by National Bank of Pakistan.

Important Features:

Five years of service age.

Salary account at national bank of Pakistan.

20 month salaries in advance (Certain condition apply).

Minimum documentation required.

Affordable installment from 1-60 months.

No processing charges: no collaterals, no guarantees.

No Insurance, no hidden cost.

Mark-up charged at 11% per annum on reducing balance Method.

4.1.3 NBP Cash and Gold:

Finance facility against Gold for needy person on lowest markup rate for one

year, having no maximum limit of cash, easy and fast disbursement of finance.

National Bank of Pakistan offers its customer NBP Cash in Gold scheme to avail the

facility of loan against their gold items. With NBPs Cash in Gold, you can meet your

need for ready cash against your idle gold jewelry.

Important Features:

Lowest mark-up in the market at only 11%


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Facility of Rs.5000 against each 10 grams of gold.

No maximum limit of cash.

Repayable after one year.

Roll over facility.

Only gold ornaments acceptable.

Weight and quality of gold to be determined by NBP

No penalty for early repayment.

4.1.4 NBP Kisan Dost:

Agriculture is one of the dominant sectors of Pakistans economy. Almost allthe banks of Pakistan provide financial assistance to the Agriculture. National Bank of

Pakistan also serves farmers through NBP Kisaan Dost Scheme. Under this scheme

loans available for the farmers for;

Production.

Development Purpose.

Purchase of Tractors.

Installation of Tube Wells.

Purchase of Agriculture Implementation.

Go down Construction.

Construction of fish Pond.

Live stock forming.

Milk Processing.

Cold Storage.

Bio-Gas Plants etc.

Important Features:


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Agricultural experts to guide farmers.

Loans available at the farmers door steps.

Mark-up 11% per annum.

Loans available against agricultural pass books.

Ornaments and paper security.

Production and marketing purposes.

4.1.5 NBP Karsaz (SME):

Discover the easy way to grow your Small or Medium Business at National

Bank of Pakistan. Finance facility to improve and develop the Businesses and

Factories on SME basis. Industry is one of the essential sectors of Pakistans

economy. Most of the Banks of Pakistan provide financial assistance to the industries.

National Bank of Pakistan also serves the industries through NBP Karsaz. Under this

scheme loans available for the farmers for;

Organize the Small Industries.

Development Small Business.

Purchase of material for Factories.

Installation of factory machinery.

And many other purposes related to factories.

ImportantFeatures:

Investment Opportunity to common people.

Loans available on easy process.

Mark-up 11% per annum.

Loans available against stocks.

Development in the country.

High growth in Medium & Small Industries.


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Boost up over all industrialization in the country.

4.1.6 NBP Premium Sever:

Recently National Bank of Pakistan launched its new product known as the

NBP Premium Sever to its customers. The NBP Premium Sever can be benefited by

every individual having PLS/ Saving account in the National Bank of Pakistan.

Important Features:

o Minimum saving balance of Rs. 20,001 and a maximum balance of Rs.

300,000.

o Free NBP Cash card (ATM & Debit Card).

o Two debit withdrawals allowed in a month and no limit on number of

o Profit calculated monthly and paid half yearly basis.

o Earn up to 11% per annum.

4.1.7 NBP Premium Aamdani:

NBP Premium Aamdani is a monthly Income scheme which is offered to the

public.

Important Features

o Amount of investment required from 20,000/ to 5,000,000.

o Investment period is five years.

o Free Demand Draft, Pay Order and Online Aasan Banking.

o Free Cheque book and cash card.

o Financing facility available up to 90% of the deposit value.


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o Premature encashment will attract penalties.

o Earn 11% per annum.

4.1.8 NBP Protection Shield:

Recently the National Bank of Pakistan introduces the NBP Protection Shield.

It is a personal accident insurance scheme. PLS account holders of 18 or above can

avail this facility.

Product Information:

Insurance coverage in case of accidental death including death due to

Riots

Strikes.

Civil Commotions.

Acts of terrorism.

Natural calamities like flood, earthquake and cyclones.

Important Features:

o Coverage of Rs. 200000/- for Rs. 20/- per month.

o Choice of deactivation.

o Fixed Auto Premium deduction facility (after customer consent).

o No documentation.

o No medical required.

4.2 Other Facilities:

Gold finance.

Running Finance.


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Demand Finance.

Agriculture Finance.

4.3 Services of National Bank of Pakistan:

National Bank of Pakistan offers many kinds of services to their customers. The

most important services provided by National Bank of Pakistan are as under;

1. Cash link.

2. NBP Credit Card.

3. National Discounting Services Limited (NDSL).

4. Traveler Check.

5. Local Currency Bond.

6. Capital Market Operation.

7. Corporate Branches.

8. Foreign Currency Financing.

9. National Income Daily Account.

10. Money Transfer Services.

11. Collection of Electricity Bills.

12. Collection of Passport Fee.

13. Government Receipt and Payments.

14. Letter of Credit.


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15. Bill purchased and discounted.

4.3.1 Cash Link:

Automatic Teller Machine (ATM):

Recently ATM is launched by National Bank of Pakistan. ATM is the machine

for people and customer that provide link to the bank 24 hours a day .Through an

ATM one can operates his bank account at any time and he can draw money from

online same bank in Pakistan.

ATM Card:

An ATM Card is the plastic card issued by the bank to the customer for the

purpose of accessing the account after the bank finish round the clock.

4.3.2 NBP Credit Card:

National Bank of Pakistan offers the largest and most comprehensive range incredit cards. All of these cards and visa cards open doors on unlimited privileges at

home and abroad. NBP credit cards also provides accident insurance cover up to 10,

00, 000/-

4.3.3 NDSL:

NDSL Stand for National Discounting Services Ltd. National Bank of

Pakistan Serves different sector and units of national economy from mega

Corporation to private individuals through their discount house a wholly owned

subsidiary of National Bank of Pakistan. The National Bank of Pakistan provides

financing through discounting of:


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Trade bills.

Government Securities.

Semi Government and Corporate securities.

Letter of credit receivable.

Shares of listed companies.

4.3.4 Traveler Cheque:

National Bank of Pakistan provides the services of traveler cheque for their

customers. The main advantage of a Traveler Check is that it saves your money from

theft during traveling. Traveler Check is a symbol of convenience and safety.

4.3.5 Local Currency Bond:

National Bank of Pakistan also playing very effective role to develop the

corporate bond market in the country .The local currency bond will provide by the

bank with a large amount.

4.3.6 Capital Market Operation:

The National bank of Pakistan has started the investment banking and

corporate finances. The National Bank of Pakistan has invested in the shares of

reputable corporate with high potential capital gains. At present buying and selling

activities of shares and being carried out through a selected group of established

brokerage houses. The bank also increasing their efforts developed in house expertise

in equity, research information processing, and transaction completion a settlement.

4.3.7 Corporate Branches:

National Bank of Pakistan also established corporate branches in order to

provide advisory assistant to their corporate Customers. What ever your banking and


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other business related problems are, NBP is present there to assist you in a congenial

professional environment.

4.3.8 Foreign Currency Financing:

The National Bank of Pakistan also provides the facility of foreign currency

financing to their Customers. For this purpose a specified sum of money will allocated

every year for the benefits of customers at main branches of the bank.

4.3.9 National income Daily Account ( N.I.D.A)

National Bank of Pakistan has also provided the facility of National Income

Daily Account to facilitate their customers. NIDA is a perfect match for people who

want the freedom of a checking account .The bank will give daily profit on NIDA.

4.3.10 Money Transfer Services:

The National Bank of Pakistan performs the services of money transfer to their

customers in easy terms and conditions. The National Bank of Pakistan has

introduced a western Union Money Transfer facility for the customer.

4.3.11 Collection of Utility Bills:

National Bank of Pakistan also collects electricity and water bills from the

people on behalf of the concerned department. The bank will charge Rs.2 per bills as

commission from the concerned department. After the bank time has been closed the

bank will prepare cash scroll and send it to the concerned department.

4.3.12 Collection of Passport Fee:


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The National Bank of Pakistan also collects the passport from the people on behalf of

the passport department of the Interior Ministry. The bank will charge Rs.10 per

passport as bank charges remit the remaining amount to the passport department.

4.3.13 Government Receipts and Payments:

The National Bank of Pakistan also received the government receipts in the

shape of tax, token and Chelan etc. The National Bank of Pakistan provides the

facilities to the retied government servant in the form of the payment of pension.

4.3.14 Letter of Credit:

National Bank of Pakistan is committed to offering its business customers the

widest range of options in the form of money transfer. If you are a commercial

enterprise then NBP Letter of Credit is the best way to do your business transactions

with comparative rates, security, and ease of transactions.

4.3.15 Bills Discounted and Purchased:

By discounting bills of exchange, bank makes a payment to the holder of this

negotiable instrument before the date of its maturity. Banks deducts an amount called

discount for making early payments. This discount constitutes the income of the

bank. The holder of the instrument can get finance (cash) from the bank. He does not

have to wait until the maturity of bill.

Banks can also advance loans by purchasing bills. Bank deducted the

commission while making payment against the bill. The commission constitutes the

earnings of bank. The holder of the bill gets cash before the maturity of the bill and hecan use this money to meet his finance requirements.

The bank by purchasing the bills becomes temporary holder of the bill. The

bills are only purchased from trustworthy approved clients. Normally two types of

bills are used for such transaction. This includes clean bill and documentary bill.


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When related documents such as bill of lading, airway notes etc, are attached with the

bill, it is called documentary bill. When no such documents are attached then it is

called clean bill.


National Bank of Pakistan Main Branch

Hajira

5.1 Introduction to NBP Hajira Branch:

National Bank of Pakistan Hajira Branch is located near SCO office at bank

road Hajira. It was launched in 1965. It consists of 6 members of staff .This branch is

working under supervision of Branch Manager. The manager Operation also performs

his duties under the control of Branch Manager. A compliance officer regulates and

monitors the activities of the branch employees and their dealing with the public. The

branch has capable and professionally trained staff. The National Bank of Pakistan

Main Branch Hajira has following departments;

Account Department.

Clearing Department.

Remittance Department.

Foreign Exchange Department.

Cash Department.

Finance/ Credit Department.

Admin Department.

Computer Department.

Now I explain these departments separately and describe activities performed by me

at these departments;


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Activities accomplished by me at Bank.

5.2 Account Department:

Deposits are important to the bank as a backbone is to the body of a man.

They are the lifeblood of the bank. National Bank of Pakistan and all other

commercial banks perform the function of deposit accepting from the general public

by offering suitable rates of interest on them, or on simply a promise to repay on

demand. Current Account is a daily routine account in which transactions are carried

out with out restriction. No interest is given to the current account holders.

5.2.1 Opening of account by an individual:

After entering into bank premises the person goes through the following steps

for opening an account in the bank and for becoming a bank customer.

i An Introduction:

The first important step to take place in bank is to get satisfactory introduction

of the person, who wants to become banks customer. This introduction is made from

the person /party who are respectable and honorable and have an account with the

bank.

In NBP Hajira Branch the branch manager takes great care of this step and

gets introduced with the person himself. His main intention is to determine the

prospective customers integrity, respectability, occupation, and nature of business he

is doing at the time of opening an account.


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The person who wants to open account in NBP, first of all submitted copy of

national identity card because the bank verify the data of his clients from National

Data Base and Registration Authority (NADRA). For this purpose NBP operates the

software of NADRA.

ii Account Opening Form and Specimen Signature Card:

Now the person is provided with an application form known as Account

Opening Form. This form contains;

i. Title of account.

ii. Address.

iii. Computerized Identity National Card No.

iv. Telephone No. (Office and Residence)

v. Introductory reference (all mentioned particulars of introducing him)

vi. Signatures of the applicant.

vii. Amount deposited.

viii. Check book series No.

The customer attaches a copy of his National Identity Card, also copy of two

guarantors who already have their accounts in the same branch, with the account

opening form.

iii Specimen Signature Card:


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Specimen of signatures will be obtained from depositors at the time of opening

his account. A specially designed card is used for this purpose; the card must be

counter signed by an official of the bank not below the rank of an officer.

iv Account Opening Register:

Now the name of the customer will be recorded in account opening register

and from here the account no of the customer will be written on (top most corners)

account opening form and on specimen signature card.

v Issuance of Cheque Book:

The cheque book will ordinarily be issued to all customers desiring to have

chequing facility. Cheque book consists of 10, 25, 50, or 100 leaves depending upon

customer requirement. Customer can withdraw money by signing a cheque and

writing the amount he wants to withdraw from his account. A special cheque book

register is kept to enter the name of the person having cheque book.

vi Issuance of Pass Book:

Pass Book is another important type of book handed over to the customer as

he opens the account with the bank. The withdrawal and deposit of money is recorded

date wise in this book. The pass Book is provided only to Fixed Account holders.

vii Recording into General Ledger:

The concerned officer records the name and amount deposited with the bank into

general ledger. Separate ledgers are maintained for different types of accounts e.g.

Current Account Ledger

Saving Account Ledger


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Fixed Deposit Account Ledger

As and when customer will deposit the money, amount will be credited in

general ledger and the withdrawal will be followed by a debit entry in the ledger.

5.3 Types of accounts maintained by NBP Hajira Branch:

National Bank of Pakistan maintain following types of accounts;

i) Current Accounts.

ii) Saving/ Profit and loss sharing Account.

iii) Fixed deposit Account.

iv) N.I.D.A. Account

5.3.1 Current Account:

This account is also known as running balance account. Simply we can say

A bank account which may be used to lodge payments or to withdraw money on

demand.

Its main purpose is to serve the businessman. Form number F-53 is provided

to the person to open the account. It is a statutory requirement to maintain current

account.

Features:

Minimum amount for opening this account is Rs.500.

Any person can open the account with the bank.

According to banks agreement interest is not paid on

current account.


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Bank act as custodian of money.

Over draft facility is provided to the customers.

Customer can withdraw money through cheque supplied

by bank.

5.3.2 Saving/ Profit and Loss Sharing Account:

In general it is also called saving account .To provide interest free banking

facilities in Pakistan, this type of account was introduced in January 1982 after the

Islamization of banking. National Bank of Pakistan provides the facility of Saving/

Profit & Loss sharing account.

Features:

Instead of having fixed return in the form of interest the deposited

money will be shared in profit and loss of the bank.

One can open the account by depositing minimum Rs.1000.

Withdrawal is allowed 8 times in the month total not exceeding

Rs.15000.

To withdraw a large amount, a notice is given to the bank before 7

days.

Rate of profit is declared at the close of each half-year.

5.3.3 Fixed Deposit Account:

This account is the major source of funds for the banks. This account is best

for people who have surplus money and dont need such funds in nearer future.

The money is deposited for a fixed period of time.


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Features:

Fixed amount is deposited for fixed period.

This account can be open with the amount of 10000.

It is restricted to withdraw the money before the time.

Amount of profit can be obtained after each six months.

Higher will be the time period, higher will be the rate of

profit.

A receipt is used for the amount deposited called fixed

deposit receipt.

Period of deposit can vary from 3 months to 5 years.

The amount can be withdrawn before maturity after

surrendering interest.

A pass book is issued to the account holder for

withdrawn of money and there is no need of cheque book for the depositors.

5.3.4 N.I.D.A. Account:

The NIDA Account can be opened in National Bank of Pakistan. N.I.D.A.

stands for National Income Daily Account. The features of this account are same to

the features of the saving or PLS account except the following ones;

Features:

In this account the minimum balance required to

acquire the benefits of this account is Rs 2 million, and the maximum limit

is 5.0 million.

When the above condition is fulfilled, then the bank will

pay interest on daily basis, which is that if the deposit is minimum


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of 2 million than the mark up rate is 5.2% p/a. and if it is at

maximum that is 5.0 million than the rate is 7.00 % p/a.

In this account the daily balance of account is taken,

products are calculated and the interest is calculated on that balance. If the balance on any day comes below the lower limit,

which is Rs 2 million then interest will not be given.

5.4 Clearing Department

5.4.1 Clearing means:

We can define clearing as the transfer of funds from one branch of bank tothe other branch of the same bank or the other bank on which the instrument is drawn,

with out involving cash through state banks Clearing house, or we can say in other

way that cheques which can not be cashed at the counter of the bank.

Clearing House:

It is one of the services provided by central bank State Bank of Pakistan to the

other commercial banks acts as a clearing house. Different banks are the members of

the clearing house. A representative of each bank represents his bank in the clearing

house. A clearing house is an association of commercial banks set up in a given

locality for the purpose of interchange and settlement of credit Claim. The SBP

maintains the accounts of the NBP like other scheduled banks and debits the account

of the drawee bank and credits the presented bank which is NBP in that case.

5.4.2 Types of Clearing:

Clearing department deals with the two type of the clearance. These are stated

below;

i) Inward Clearance.


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ii) Out ward Clearance.

i Inward Clearance:

Cheque drawn on NBP and presented to the other banks on handed over to

NBP agent in clearing house. That is inward clearance for NBP. So inward clearing

results in outflow of funds to collecting banks reducing the balance in the clearing

account.

ii Outward Clearance:

Similarly cheque, which is drawn on other, bank and presented to NBP are

known as out ward Clearance for NBP. So outward clearing results in inflow of funds

from paying bank into the clearing account maintained with the clearing house,

increasing the balance in the clearing account.

Out ward clearing thus may be.

Local Clearing.

Outstation Clearing.

5.4.3 Types of Cheque.

Some specific types of Cheque are being entertained in the clearing

department of NBP. These types of Cheque are;

i. Local Cheque.

ii. Out Station Cheque.

iii. In house Cheque.


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i Local Cheque:

By local Cheque we mean collection of cheques from the banks which are the

members of the clearing house and which are located within the city.

ii Out Station Cheque:

Out Station cheque we mean Collection of cheque from the banks which are

situated outside the city. It means that presenting bank and the bank on which the

cheque is drawn are not situated in the same city.

iii In House Cheque:

In house cheque are drawn on one branch of NBP and presented to another

branch of NBP such cheques are marked with transfer stamp.

5.4.4 Possible Instruments at clearing Department:

Following instruments can be presented at the clearing department;

1. Cheques.

2. Demand Draft.

3. Pay order.

5.4.5 Collection of Cheques:

The Pay-in-slip is checked and entered in the Inward Bills for Collection or

out ward bills for Collection

a) Inward Bill for Collection (IBC):


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Inward collection means the cheque received and drawn on NBP for Payment.

Inward bills for collection means cheque received from another branch for clearing.

These cheques first cleared and then transferred to the account of Branch. Account

cheque deposited in Karachi branch for HBL, Lahore branch, will receive in Lahore

branch at first then issued for clearing in HBL.

b) Outward Bill for Collection (OBC):

Out ward collection means the cheque of other banks. Outward bills for

collection are the reciprocal of IBC that is drawn on bank and deposited in other bank.

For example a person who is in Islamabad now he deposited the slip in his bank and

his bank is UBL. United Bank Limited Islamabad prepares a draft and send to HajiraBranch. Main Branch debits his account and credit clearing. This branch will be then

transferred back to Islamabad through clearing where credit will be given to customer

and debit to clearing house.

5.4.6 Forms of Clearing:

Following are the two forms of clearing;

i) Local Clearing.

ii) Collection.

Now I explain these two types of clearing separately;

i Local Clearing:

By local clearing we mean collection of cheques from the banks, which are

members of clearing house within the city. Banks take this responsibility by endorsing

these cheques. Sort out these cheques bank wise; prepare the settlement sheet bearing

the name of the bank and number of cheques with total amounts.


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There is a time for clearing the cheques in clearing house. If before that time

cheques are not sent to clearing house. Then they will be delayed for next day. On the

specific time gate of clearing house has been closed and nobody can enter into it. So

next day bank presents cheques in clearing house. Cheques sent to clearing

department must be debited to SBP and credited to customer account, and when bank

receive back these cheques then debits customer and credits SBP.A simple example

for understanding the entries made, is that, when cheque comes to clearing house

from Citibank (e.g. any customer of NBP has made Payment to a person who is

customer of Citibank) then SBP will credit the city bank and debit the NBP account

because cheque is of NBP.

ii Collection:

In Case if any bank or branch of bank is not the member of the clearing house

then bank present or receives cheques through collection.

5.4.7 Items to be checked on clearing Cheques:

Following items necessary to be checked immediately;

Cross Stamp.

Clearing Stamp.

Date.

Endorsement Stamp on backside.

Amount in figures and words should be matched.

5.4.8 Cheque Returned:

There may be a case when the bank returns cheque when it is received from

clearing. There may be any one or more than one reasons. These reasons are written

on the slip.


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This slip is called cheque returned slip and contains following items;

Cheque no.

Amount of Cheque.

Name of person who has drawn it.

Date.

This cheque returned slip contains the list of following reasons.

Refer to drawer.

Not arranged for.

Payment stopped by drawer.

Exceed arrangement.

Amount in words and figures differs.

Drawers signature incomplete.

Cheque is out of date.

Alteration in date.

Payees endorsement required.

Endorsement requires Banks guarantee.

Clearing banks endorsement required.

5.5 Remittance Department:

5.5.1 Remittance Meaning:

Money or some thing equivalent to money sent by any person to another on

another station, either in cash, money order, postal order, bill of exchange, cheque,

bank draft etc is known as a Remittance. The National Bank of Pakistan, now-a-days

provides this facility to its customers and to the general public in general in the

following modes;


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i Bank Drafts.

ii Mail Transfer.

iii Telegraphic Transfer.

iv Travelers cheques.

v Preparation of Balance Certificates.

Now I will explain the procedure and importance of each type of remittance.

5.5.2 Bank Draft: (DD):

Bank draft can be defined as;

An un-conditional instrument in writing drawn by a bank in favor of any

person on a branch of its own bank or any other bank to pay a certain sum of money

to his order, for value received. From the definition it is clear that the draft is payable

to the beneficiary himself or to his order. The beneficiary or payee has to prove his

identification at the paying office of the bank, which sometimes causes inconvenienceto the public. Draft is the most popular and common form of remitting funds from one

place to another. Any person who may or may not happen to be the banks customer

against payment of bank charges can purchase drafts. It is considered to be a source of

income for the bank.

Procedure:

In National Bank of Pakistan, the drafts are issued on submission ofapplication form (always printed) filled in and signed by the purchaser with his full

name and address.

The following particulars are generally required in the application form;


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Date.

The Name of the office on which it is drawn.

The name of the beneficiary.

Amount in words and figures.

Bank exchange rates.

The signature and address of the applicant.

The draft is issued after the applicant tenders the money. Two authorized

signatories of the bank always sign draft. A separate book Draft issued register is

kept to record the particulars of the draft issued. The drawing branch of the bank will

give credit to the drawee branch on the same date when the draft is issued; through

their account for settling inter branch transactions. Usually all the banks insert special

code number known as CHECK SIGNAL on the relative draft advices for all the

drafts for more than Rs.5000/-.

National bank of Pakistan does not pay the drafts before the receipt of relative

advice. On receipt of relative advice the drawee branch will credit the amount into

their draft payable account and each time a draft is paid this account will be debited

with the amount of the draft paid.

In case the draft advice is not received, the draft will be paid ex advice duly

entered in the "ex-advice register and the entry in the said register will be marked off

on receipt of the relative advice.

Issue of Duplicate Draft:


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In case a draft is lost or destroyed by mistake, its duplicate can be issued at the

request of the purchaser after obtaining indemnity bond on stamped paper of

appropriate value. This is done to cover the risk of double payment by mistake.

Drafts of most banks in Pakistan are valid for a period of six months only.

After the expiry of this period the draft will have to be revalidated from the issuing

branch of the bank.

5.5.3 Mail Transfer: (MT)

The same application form is used for drafts and mail transfers generally in

National Bank of Pakistan. The mail transfer instrument is not delivered to the

purchaser but instead the issuing office to the beneficiarys branch on its own risk and

responsibility sends it. This type of remittance facility is provided only when the

beneficiary happens to be the customer of the bank.

The amount is directly credited to the beneficiarys account and as such loss of

mail transfer has no concern with the applicant. A bank customer can very

conveniently remit the funds from one place to another regularly if he desires by

giving standing instructions to his bank.

Also the credit balance of a customers account is transferred from one branch

to another branch with the help of this instrument in case the customer desire so. The

applicant desiring to remit the funds by way of mail transfer can either deposit cash or

he may ask the bank to debit his account with the cost of mail transfer including bank

charges.

An exchange memo is issued to the applicant in case he desires to have some

sort of receipt from the bank for his office record.


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The participants of mail transfer are recorded in the mail transfer issue register

just like drafts while at the paying branch the instrument is treated as branch voucher

for credit into the beneficiarys account.

5.5.4 Telegraphic Transfer (TT):

The money sent by mail has been described as mail transfer which takes

three to four days, or more depending upon the distance between the two branches.

When the applicant wants to save the time wasted in transit of the instrument, he can

request for transfer of funds by means of a telegraphic transfer.

In this case he will have to bear the telegram charges in addition to usual bank

exchange. The amount so remitted will reach its destination within 24 hours. Business

community generally avails of this facility in order to save time in their business

dealings. The funds so remitted are either credited directly into the account of the

beneficiary or paid by means of pay order in case he is not keeping his account at the

paying office of the bank. It should be noted that such remittances are affected

between two stations having telegraph office. The remitting office sends the message

by telegram in code language instructing check signal number at both ends of the

message for security purpose. As check signal books are supplied to all the branches

of the bank in order to verify the genuineness of the message. All banks have their

separate check signal apparatuses. The entries at issuing office are recorded in the

telegraphic transfer issued register while at the other end it is entered in the T.T.

Payable register.

The papers pertaining to such transfer are properly kept in separate files

telegraphic transfer issued and paid files and kept in the custody of an officer(Accountant/Manager). In case check signal number turns out to be incorrect at the

paying office, the message is got repeated till such time it is found correct. It is

therefore, necessary to be vigilant at the time of calculating the special numbers


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otherwise the very purpose of urgency is defeated and the bank will be responsible for

the delay.

5.5.5 Travelers Cheques (TC):

When a traveler proceeds from one place to another he needs money at

different places. The remittances explained so far will be available to the beneficiary

only at a particular place, and that too all in one time; where as the requirement of a

traveler may be otherwise. National Bank of Pakistan has designed its own travelers

cheques to be used in Pakistan only. For different denominations their colors are

different.

The denominations of travelers cheques provided by National Bank of

Pakistan are: -Rs.5, 000/-Rs.10, 000/-Rs.50, 000/-Rs.100, 000/-. The face of Traveler

Cheque consists of: -Signature of the purchaser, Name of the purchaser, Name of

issuing office and the date of issue.

On the back of the cheque this can preferably be done by means of small

rubber stamp. Application for the purchase of the cheque application forms is taken.

The original remains with the issuing office as voucher and the duplicate is passed to

the main branch of the bank where account of bank is kept.

Recording:

The issuance of cheque is recorded in the travelers cheque issue register .The

total amount of T.C. sold is credited to the main branch of the bank and the exchange

charged credited to the branch exchange account.

Delivery:

The travelers cheques are delivered to the purchaser in thick cardboard cover

for their safety.


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5.5.6 Preparation of Balance Certificates:

It is also duties of remittance department to prepare the balance certificates of

their clients .These certificates are prepared on monthly basis. These certificates

show the balance of the clients in their account, and can also be prepared on the

request of the client when he needs it as early as possible.

These certificates of balance are then sent to the clients on the address of their

offices or on residence address.

5.6 Foreign Exchange department:

This Foreign Exchange Department performs the following functions;

i Spot Sell.

ii Spot purchase.

iii Forward Sell.

iv Forward Purchase.

v Clearing.

Now I explain these functions of Foreign Exchange Department;

i Spot Sell:

Sale of dollars on daily basis is called a spot sell.

ii Spot Purchase:


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When dollars are purchase for fulfilling the daily needs of the payment, this

process is called a spot purchase.

iii Forward Sell:

If the payment is received in advance then these dollars will be sold at current

rate, this is called forward sell.

iv Forward Purchase:

When dollars are required in future then these are purchase at current rate for

future purpose. This is called a forward purchase.

v Clearing:

Foreign exchange department also performs this function. We can define

clearing that transfer of funds from one branch of bank to the other branch of same

bank or the other bank on which the instrument is drawn without involving cash,

through the State Bank of Pakistan clearing house.

Whenever there is need of sale or purchase of dollars in import, export, credit,

cash, or remittance department they are reported under foreign exchange department.

Its commission is given to the credit department. Banks are not allowed to keep

dollars with them but sell them .So purchase the dollars only, when they are needed.

Head office is responsible for sale or purchase of currencies, in the market at

market rate.

5.6.1 Foreign Remittance:

Foreign remittance Department deals with remittance out side the country, but

in foreign currency. This section of foreign remittance is divided into two parts.


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1. Out going F.C Remittance.

2. Incoming F.C Remittance.

These terms out going & incoming remittance means sale and purchase of

foreign exchange in the form of foreign currencies.

5.7 Cash Department:

Cash department of National Bank of Pakistan is given the complete

responsibility of handling all receipts and disbursement of cash as a result of

transactions in both local and foreign currencies or near cash items such as traveler

cheque etc.

As a consequence, it is also responsible for the book-keeping of those

transactions and the safe custody of cash and near cash securities.

5.7.1 Functions of Cash Department

1) Cash Receipt.

2) Encashment of Cheque.

1) Cash Receipt.

The depositor uses cheque deposit slip for depositing the amount. There are

two types of cash deposit slip

One for current account holders.

Other for saving account holders.

Both are in different colures for clear identification. There are two parts of cash

deposit slips.


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Counter foil.

Adjacent credit voucher.

Procedure:

The cashier first verifies all the requirements of the cash deposit slip that

whether these are fulfilled or not and verifies the amount written in words and figures.

After that he enters the detail of the receipt in the Inward Cash Register. The

deposit slip is stamped, cash is received and counter foil is given to the depositor. The

adjacent credit voucher is used for recording and posting purpose.

2) Encashment of Cheque:

Cheque encashment includes the following steps;

i Accepting of Cheques.

ii Affirmation of Signatures.

iii Computer terminal process.

iv Payment of Cash.

i Accepting of Cheque:

The cash is paid against the cheque of the client. The following points are kept

in mind while receiving the cheque from the client.

Cheque should be drawn on NBP.

It should not be post dated.

It should be a bearer cheque so the word bearer should not be crossed.

Payment is not stopped by the drawer.

Amount in words and figure should be same.


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The drawers full signature on the cheque.

If signatures are not the same then it is returned back other wise

forwarded to computer terminal.

ii Affirmation of Signature:

After receiving the cheque the office verifies the signature of S.S Card of the

account holder with the signature on the cheque .If signature are not matched it is

returned back otherwise forwarded to computer terminal.

iii Computer Terminal Process:

The cheque is received in computer terminal, where the computer operator

checks the balance of the account holder. The operator also sees whether the stop

payment instructions are received from account holder or not .After considering these

two points computer operator posts the cheque in account holders ledger and returns

the cheque back to the officer.

iv Payment of Cash:

The cheque is cancelled after posting is returned to cashier. The cashier enters

the cheque in Cash Paid register. Pays against the second signature of the receiver on

the back of the check.

Nearly every week in the evening time, cash comes from the state Bank of

Pakistan in the bank branch. This cash is required by the bank to meet the current

needs of cash.

5.7.2 Requirements to Encashment of a Cheque:

No Stop Payments Instructions.

Instrument in writing.

Cheque must be crossed.


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The amount of money must be certain.

Drawers Signatures.

5.7.3 Stop Payments Instructions:

If a customer lost his cheque book and he would make stop payment

instructions to cash department of NBP. Stop payment instructions can be made in

two ways;

Verbal.

Written.

The customer could inform the cash department on telephone or face to face

meeting to stop payment, but later a written instruction must be made on a prescribed

form. If customer make stop payment instructions to the bank and bank make

payment to some on else after lodgment of stop payment instructions in the computer,

bank would be liable for fault.

5.8 Finance/ Credit Department:

National bank of Pakistan Hajira branch maintains a separate finance section.

Its purpose is to grant loans to the needy people, small and large business concerns

and to industries. Advances in the form of money are the most remunerative use of

bank resources. The management of the bank will be very careful while granting the

loans.

The person/proprietor of the business will go through a long process of

application, documentation and securitization etc. while requesting for loan. After

proper satisfaction from the party concerned, the bank will grant loan to the party.

Under the Islamic modes of financing from 1982 onwards, National bank of Pakistan


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gives loans on the basis of Mark-up instead of interest. Mark-up rate is different

depending upon the type loan.

5.8.1 Procedure for Granting of Loans:

The following procedure is maintained by National Bank of Pakistan Hajira

branch while granting loan to any person;

i Loan Application Form & Specimen Signature Card:

The bank provides a prescribed application form to the borrower. The

borrower will fill the form. In that form the borrower will tell about;

Type of the loan.

Amount of the loan he needs.

Period of time.

Applicant will also be provided a specimen signature card, to be filed by him.

ii Declaration of Properties Form:

This form will provide the information about the business he is involved and

also provide the information about his properties in Pakistan.

Investigation:

Now the bank after analyzing his application, investigate about the applicants

credit worthiness, and also the information that he provided about his properties. In

case of business owners request for loan, investigation will be made on following

ways for different businesses;

Sole Proprietorship / Partnership Business:


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This Investigation will be about;

Personal reputation of the borrower.

Nature of the business.

Types of properties (shop, houses, and land) their locations with their

present market value.

Cash, jewelry, shares, security, bonds etc.

Stock in trade.

Their liabilities.

Partnership Firm.

Name and addresses of the partners.

Partnership deed.

Branches if they exist.

Amount invested in the firm.

Purpose of the loan.

List of assets and liabilities.

Import export registration.

Private and Public Ltd. Companies:

Name of the company.

Addresses with telephone numbers.

Whether private or public.

Date of incorporation.

Nature of the business.

Branches if any.

Authorized capital.


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Paid-up capital.

Financial highlights of the company.Details of

security offered to other

banks under each head and charges created against fixed assets.

Certificate copy of memorandum of association.

Copies of certificates of incorporation.

Certificate of commencement of business.

Auditors certificate regarding paid-up capital.

5.8.2 Granting of Loan:

After detailed investigation and documentation if the finance section finds

the party well satisfactory and feasible then they sanction the finance to the concerned

party and the amount is transferred in his personal account.

5.8.3 Types of Securities:

The word security means any thing given to protect or safeguard the

repayment of an advance and to justify this term the thing so given should itself be

safe; otherwise the object for which it is given is defeated. The National Bank of

Pakistan usually has three ways in which securities can be made available in the bank

against finances. These types are;

i) Pledge.

ii) Hypothecation.

iii) Mortgage.

In each case the bank does not become the owner of the property but the bank

has only the right over the property until the borrower makes payment of his debt.


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i Pledge:

In a pledge, the possession of the property but not the ownership passes to the

creditor. The pledgee is entitled to the exclusive possession of the property until the

debt is repaid but the ownership remains in the pledgor subject to the pledgees right.

ii Hypothecation:

In case of hypothecation, the property in goods is charged as security for a

loan from the bank. But the ownership and possession is left with the borrower. In

case of hypothecation, neither the property in goods and nor the possession of

property pass to bank, but only the security is granted in a form of letter of

hypothecation, which usually gives the bankers charge on the hypothecated goods.

iii Mortgage:

In a mortgage, the property in the thing mortgage is conveyed to the

mortgagee conditionally. The possession, until default in repaying the loan, generally,

remains in the original owner subject to the mortgagees rights.

5.9 Types of Loans:

National Bank of Pakistan Hajira branch provides various types of loans

depending upon the requirement of the borrowers. Some of the important types of

loans are;

5.9.1 Demand Finance:

Under a demand loan arrangement, a fresh demand loan account is opened

through the borrower may be having other deposit accounts with the banks. The

amount of loan has to be drawn by the borrower in lump sum and is to be repaid in


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installments or as agreed upon. The borrower can not operate a demand loan account

by depositing and withdrawing amounts periodically. The demand finance may be

short, medium and long term.

Demand Finance Gold:

Characteristics:

Security Gold is used as a security.

Recording: Single debit entry is recorded at the time of granting loan.

Loan type: Short, medium & long term loan.

Rate of markup: 15.50%

Required Documents:

Application form.

Introductory reference sanction advice.

Valuation certificate by gold smith.

Insurance letter.

IB-12 (Promissory Note).

IB-26 (Letter of Pledge).

IB-6A (Agreement Form).

Delivery letter (f.205).

Note:


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Only National Bank of Pakistan Performs the function of advancing of loan

against pledging gold. No other bank advance gold pledged loan.

5.9.2 Running Finance:

Running finance is very similar to over draft. A huge amount is granted

through running finance scheme. Running finance scheme of National Bank of

Pakistan is classified into following categories;

i Clean Running Finance.

ii Secured Running Finance.

i Clean Running Finance:

Under the clean running finance, loan is granted mostly to the employees of

the bank without demanding any type of security from them.

Characteristics:

Type of loan: Short Term loan.

Number of transactions: frequent transactions are made.

Rate of markup: 7.0%.

Repayment: Monthly installments.

Payment of balance: It will be made in lump sum.

Required Documents:

Account Opening Form.

Specimen Signature Card.


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IB-12.

IB-6.

IB31 (sale and buy back agreement).

Copy of pay slip of employees.

ii Secured Running Finance:

Secured running finance is the type of running finance in which loan is

provided to some person on the guarantee or security may be obtained from the

borrower.

Characteristics:

Type of loan: Short term loan.

Rate of Mark up: 15.50%.

Payment: In installment or lump sum as mentioned in conditions.

Security: Individuals Guarantee.

5.9.3 Agriculture Finance:

Agricultural finance is of great importance in Pakistan, as 65% of the

population of the country engage in the profession of agriculture. The agriculture

finance is granted for the agricultural purposes which include the development and

production purposes. Agriculture finance is categories into three types;

1. Short Term loan.

2. Medium Term Loan.


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3. Long Term Loan.

1 Short Term Loan:

The short term loan is taken at the most for one crop period and is fully

recoverable from the proceeds of the same crop after its harvest. This loan is needed

for seeds, fertilizers, pesticides and wages of hired labors which are meant for input

for a particular crop.

2 Medium Term Loan:

The medium term loan is usually taken for the period of three years and is

taken for the purchase of tractors, tube wells, cattle,, livestock and dairy and poultry

farming etc.

3 Long Term Loan:

The long term loan is generally taken for a period above three years and the

amount is used for buying land, construction embankments, improvement of land of

for arranging drainage etc.

Required Documents:

Application form.

Introductory references sanction advice.

IB-12 (Promissory Note).

IB-26 (Letter of Pledge).

IB-6A (Agreement Form).

CNIC copy of two witnesses.


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Characteristics:

Type of loan: Short, Medium and Long Term loan.

Number of transactions: frequent transactions are made.

Rate of markup: 15.50% per annum.

Repayment: Monthly installments.

Payment of balance: It will be made in lump sum.

Securities: Two personal securities or Defense Saving Certificates.

5.9.4 Cash Finances:

Under this type of credit National Bank of Pakistan grant loan to its customers.

Under the cash credit arrangement, a customer is granted an advance up to certain

limit, which he can draw time to time as required by him. In this case, a new cash

credit account is opened in the name of customers. This is a long term loan and has

following securities;

1. Hypothecation of stock.

2. Mortgage of properties.

3. Personal guarantees of all the partners of directors.

5.9.5 Formula to calculate the mark up rate:

Total financed amount financed days

36500

5.10 Admin Department:


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The admin department is considered the backbone of any organization because

any organization cannot performs its functions and duties without the assistance of

Admin Department. The National bank of Pakistan Hajira branch also has its Admin

Department which performs the following functions and duties;

5.10.1 Duties of Admin Department:

Keep track of lists of staff in register and assign their duties in different

departments.

Procurement of office supplies.

Provides security clearance when cash is send to the other local branch or

cash receive from the State Bank.

Manage the Vehicle for staff and holds its Log Book and Check its repair

and maintenance.

Check daily attendance of the staff.

Employee Leave record and calculating leaves encashment.

To keep the record of office stationary and maintain the minimum stock

level for each stationary items

Make the Inventory of the equipment of the Office.

Update office inventory and submit to Head Quarter on monthly basis.

Prepare monthly summary sheet for all expenses.

To ensure that all office equipments are working properly and effectively.

Maintain the cash book, bank books & reconciliation of accounts.

Control & safeguard the cash & cash disbursement.

Record financial data in Electronic Banking System (EBS).

Asst other departments to verify the accuracy of allocability of all financial


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transactions (Expenses, advances ,transfers etc) for recording into the

computerized accounting system

Examine vouchers and invoices for legality and completion, and prepare

Paper work for payments to staff, and vendors.

Create database /spreadsheet to track office telephone bills and other office

expenses.

Issues the transfer letters to the staffs who are transferred to the local

branches as directed by the Regional Head Quarter (RHQ) or Heed Office.

Look after the security guards and provide security to local branches when

they requested.

Receive orders from the RHO for the staff training and implement upon

these instructions.

5.11 Computer Department:National Bank of Pakistan Hajira

Branch has its own computer department which is responsible to store the

record of all bank transactions. This department performs the following duties;

5.11.1 Duties of Computer Department:

All the cheques, receipts and deposit slips are posted in the computer is

the key responsibility and duty of this department.

This department is also responsible to look after the networking system

of all the computers and server.

This department carried out the duties of installing software and

maintenance of all computers and printers.

This department is prints the Daily Day Book (Journal/ ledger) on

daily basis and Bank Book (Bank reconciliation Statement) when

accounts holders required and demanded.

5.12 NBP Hajira Branch Hierarchy and Departments.


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FINANCIAL STATEMENT ANALYSIS OF NBP.

6.1 National Bank of PakistanBalance Sheet

As on December 31, 2011


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Manager

Operation

Manager

General

Banking

Computer

Department

Credit

Department

Admin

Department

Account

Department

Clearing, Remittance &

Foreign Exchange

Department.

Cash

Department

Peon Driver

Assist-CashierCashier

Security Guards


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6.2 National Bank of PakistanProfit and loss AccountFor the Year ended December 31, 2011


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SWOT Analysis of NBP Main Branch Hajira

7.1 What is SWOT Analysis?

The SWOT analysis is done by the organization for the environmentalscanning. SWOT analysis is useful for the internal and external assessment of any

organization.

SWOT analysis includes the Strengths and Weaknesses which are internally

and it depends on the organization how it performs these forces. Opportunities and

Threats are faced by any organization externally and are uncontrollable by a firm.

Now I describe the SWOT analysis of National Bank of Pakistan Hajira

Branch.

7.2 Strengths of NBP Hajira:

National Banks brand image is its major strength. It has always been

considered as the pillar of the country's economic scenario asset wise or balance sheet

wise. Its image, work force, network and reputation have created a sentimental and

emotional attachment of the people with the bank. The National Bank of Pakistan

Hajira Branch has the following Strengths;

i Security to depositors:

It is said that the money lying in private bank is not safe. National Bank

provided much needed security to depositors. It is a merit of branch.

ii Large Network:

Strength of NBP Hajira Branch is that it is the main branch in Hajira which

cover the most difficult ruler areas such as Chaffarr and Mehmood Gali which is edge

upon competitors. Because these branches mobilize saving of people.


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iii Team Work:

Strength of NBP Hajira Branch is its team work. All the members are

cooperative and positive due to this, achieving high targets easily and timely.

iv Good Reputation:

The reputation of the bank is very positive .Therefore, customers are willing to

enjoy with this branch.

v Computerized Networking:

One of the biggest strength of NBP Hajira is that it has fully computerized

banking system. The computer system not only helps them in providing the customer

better and efficient services, but also reduces the manual work required by the staff.

7.3 Weaknesses of NBP Hajira:

National Bank of Pakistan created its own weakness by downsizing andtransferring the potential employees. Due to downsizing various experienced and

devoted employees were either forced or given the option to leave. Only those people

were left who had no organization better to join.

National Bank of Pakistan Hajira branch has following Weaknesses;

i Heavy Rush:

Due to heavy rush, the employees of the bank can not work efficiently and

effectively.

ii Communication Gap:


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There is a communication gap between manager and other staff due to the

heavy pressure of customers on Manager.

iii Credit Cards:

Major weakness of the NBP Hajira branch is that it is not offering credit cards,

which creates dissatisfaction. Because it is a big branch it should offer credit card

facility in the area.

iv Shortage of Staff:

Now a day due to incident of 8th Oct 2005, the banking functions of NBP

Hajira increases in this area. But NBP Hajira branch faces the staff shortage problem