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NATIONAL BANK OF

PAKISTANINTERNSHIP REPORT*

[Pick the date]

@Raja Hamza: This is the approved internship report of national bank of pakistan.

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TABLEOF CONTENTSTable of Contents ....................................................................................................................2

Objectives of Studying the Organization .................................................................................6

Brief History of National Bank of Pakistan ...............................................................................7

Nature of National Bank of Pakistan ......................................................................................10

Business volume of National Bank of Pakistan(mrket trande) ...............................................12

Branch Network of National Bank of Pakistan ........................................................................17

Number of Employees of National Bank of Pakistan ..............................................................19

Product Lines .........................................................................................................................20

Deposits .............................................................................................................................21

Current Deposits .............................................................................................................21

PLS Saving Deposits ........................................................................................................22

Fixed Deposit Account (Time Deposits) ...........................................................................23

Foreign Currency Account ...............................................................................................23

NBP Premium Aamdani...................................................................................................24

National Income Daily Account (NIDA) ............................................................................24

Advances ............................................................................................................................26

NBP Saibaan ....................................................................................................................26

NBP Advance Salary ........................................................................................................27

NBP Cash & Gold .............................................................................................................29

Students Loan Scheme ...................................................................................................29

NBP Karobar- Presidents Rozgar Scheme .......................................................................29

Corporate Advances ...........................................................................................................33

Cash Finance ...................................................................................................................33

Running Finance/ Overdraft ............................................................................................33

Demand Finance .............................................................................................................33

Remittances .......................................................................................................................34

Demand Drafts ................................................................................................................34

Travelers Cheques ..........................................................................................................35

Letter Of Credit ..............................................................................................................35

Foreign Remittances ......................................................................................................36

Swift System ...................................................................................................................36

Mail Transfer ...................................................................................................................37

Telegraphic Transfer .......................................................................................................37

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Pay Order ........................................................................................................................37

Miscellaneous .....................................................................................................................38

Lockers ............................................................................................................................38

NBP Cash Card ................................................................................................................38

International Banking ......................................................................................................39

Organizational Structure of National Bank of Pakistan ..........................................................40

Board of Directors ..............................................................................................................40

Senior Management ...........................................................................................................43

Corporate & Investment Banking Group ..........................................................................45

Compliance Group ...........................................................................................................47

Islamic Banking Group ....................................................................................................48

Treasury Management Group ..........................................................................................49

Credit Management Group ..............................................................................................51

Audit & Inspection Group ................................................................................................52

Human Resource Management & Administration Group .................................................54

Information technology group .........................................................................................55

Financial control Division ................................................................................................56

Overseas Coordination & Management Group ................................................................57

Commercial & Retail Banking Group .............................................................................58

Special Assets Management Group .................................................................................59

Employee Benefits, Disbursements & Trustee Division ...................................................60

Core Banking Application ................................................................................................62

Operations Group ............................................................................................................63

Provincial & Regional Management ....................................................................................64

Branch Management ..........................................................................................................65

Organizational (Management) levels at NBP .........................................................................65

Top Managers .....................................................................................................................66

Middle Managers ................................................................................................................66

First Line Managers or Lower Level Management ...............................................................67

Non Managerial Employees ................................................................................................67

Hierarchy of National Bank of Pakistan ..................................................................................67

Organization Structure of the Branch ....................................................................................68

Centralized Decision Making ..............................................................................................69

Downward Communication ................................................................................................69

Chain of Command .............................................................................................................70

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Authority and Responsibility ...............................................................................................70

Delegation ..........................................................................................................................71

...........................................................................................................................................71

Departments of the Branch ...................................................................................................71

Clearing House Department ...............................................................................................72

Remittance Department .....................................................................................................76

Account Opening Department ............................................................................................78

Cash Department ...............................................................................................................79

Deposits Department .........................................................................................................81

Advances Department ........................................................................................................82

Computer Department .......................................................................................................84

Online branches ..............................................................................................................84

Batch Branches ...............................................................................................................84

Manual Branches .............................................................................................................84

Pension Disbursement Department ....................................................................................86

Accounts Department ........................................................................................................86

Structure of Branchs Accounts Department .........................................................................88

Bank Accounting Operations .................................................................................................92

Role Of CFO (Chief Financial Officer) .....................................................................................94

Use of Electronic Data in Decision Making .............................................................................98

Information System Resources of NBP ...............................................................................99

People Resources ............................................................................................................99

Hardware Resources .....................................................................................................100

Software Resources ......................................................................................................100

Data Resources .............................................................................................................101

Network Resources .......................................................................................................101

Sources of Funds .................................................................................................................101

Generation of funds .............................................................................................................104

Allocation of Funds ..............................................................................................................109

Critical Analysis (Theory vs Practical) .................................................................................113

Balance Sheet .....................................................................................................................115

Income Statement ...............................................................................................................116

Financial Statements Analysis .............................................................................................117

Ratio Analysis ...................................................................................................................118

Profitability Ratios .........................................................................................................119

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Liquidity Ratios .............................................................................................................125

Debt Ratios ...................................................................................................................129

Capital Adequacy Ratios ...............................................................................................132

Operating Performance Ratios ......................................................................................133

Horizontal Analysis ...........................................................................................................136

Horizontal Analysis of Balance Sheet ...............................................................................137

Horizontal Analysis of Income Statement .........................................................................146

.........................................................................................................................................148

.........................................................................................................................................148

Vertical Analysis ...............................................................................................................155

Vertical Analysis of Balance Sheet ...................................................................................156

Vertical Analysis of Income Statement .............................................................................165

............................................................................................................................................167

Bank Analysis with refernce to commercial Banks listed on stock exchange .......................173

Future prospects of National Bank of Pakistan ....................................................................177

Short falls/ Weaknesses of National Bank of Pakistan .........................................................179

Conclusions .........................................................................................................................182

Recommendations ...............................................................................................................183

References ..........................................................................................................................185

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12. To develop my interpersonal communication.

13. I want to enhance my knowledge of the discipline of banking administration.

BRIEF HISTORYOF NATIONAL BANKOF PAKISTAN

The history of National Bank of Pakistan is part of Pakistans struggle for economic

independence. National Bank of Pakistan was established on November 9, 1949 under the

National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions which

were developed after trade deadlock with India and devaluation of Indian Rupee in 1949.

Initially the Bank was established with the objective to extend credit to the agriculture sector.

The normal procedure of establishing a banking company under the Companies Law was set

aside and the Bank was established through the promulgation of an Ordinance, due to the crisis

situation that had developed with regard to financing of jute trade. The Bank commenced its

operations from November 20, 1949 at six important jute centers in the then, East Pakistan and

directed its resources in financing of jute crop. The Banks Karachi and Lahore offices were

subsequently opened in December 1949. The National Bank of Pakistan came forward to

establish its offices in the Cotton growing areas and extended credit facilities liberally in order to

restore stability to the market. In 1951, the country was once again faced with a crisis in the

cotton trade when prices was crashed and touched the lowest level since independence following

the cessation of hostilities in Korea. The bank in collaboration with the cotton board provided the

necessary Credit facilities to the trade and the crisis was tided over. The nature of

responsibilities of the Bank is different and unique from other banks/financial institutions. The

Bank acts as the agent to the State Bank of Pakistan for handling Provincial/Federal Government

Receipts and Payments on their behalf. The Bank has also played an important role in financing

the countrys growing trade, which has expanded through the years as diversification took place .1

The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The bank operates

1249(2008) branches in Pakistan and 22(2008) overseas branches. Under a trust Deed, the bank

also provides services as trustee to National Investment Trust (NIT) including safe custody of

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Best Emerging Market Bank from Pakistan for the year 2005, Global Finance, Kisan Time

Awards 2005 for NBP's services in the agriculture field. It is listed amongst the Region's

largest banks and also amongst the largest banks in South Asia 2005, The Asian Banker. It has

also been presented a Recognition Award 2004 for having a Gender Sensitive Management

by WEBCOP AASHA besides other awards.3

The precise summary of National Bank of Pakistan regarding its countrywide and overseas

operations is as fallows:

1949 National Bank of Pakistan (NBP) was established under the National Bank of

Pakistan Ordinance 1949 and was 100% govt.-owned. NBP acted as an agent of the

Central Bank wherever the State Bank did not have its own Branch. It also undertook

Government Treasury operations. Its first branches were in jute growing areas in East

Pakistan. Offices in Karachi and Lahore followed.

1950 NBP established a branch in Jeddah, Saudi Arabia.

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

the former Bahawalpur State

1955 By this time NBP had branches in London and Calcutta.

1957 NBP established a branch in Baghdad, Iraq.

1962 NBP established a branch in Dar-es-Salaam, Tanganyika.

1964 The Iraqi government nationalized NBP's Baghdad branch.

1965 The Indian government seized the Calcutta branch on the outbreak of hostilities

between India and Pakistan.

1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.

1971 NBP acquired Bank of China's two branches, one in Karachi and one at Chittagong.

At separation of East Pakistan NBP lost its branches there. NBP merged with Eastern

Mercantile Bank and with Eastern Bank Corporation.

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1974 The government of Pakistan nationalized NBP. As part of the concomitant

consolidation of the banking sector, NBP acquired Bank of Bahawalpur (est. 1947).

1977 NBP opened an offshore brain Cairo.

1994 NBP amalgamated Mehran Bank (est. 1991).

1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.

2000 NBP opened a representative office in Almaty, Kazakhstan.

2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani banks

to operate in the UK. NBP and United Bank agreed to merge their operations to form

Pakistan International Bank, of which NBP would own 45% and United Bank 55%.

2003 NBP received permission to open a branch in Afghanistan.

2005 NBP closed its offshore branch in Cairo.

NATUREOF NATIONAL BANKOF PAKISTAN

National Bank of Pakistan was incorporated in Pakistan under the National Bank of Pakistan

Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. The bank is engaged in

providing commercial banking and related services in Pakistan and overseas. The bank operates

1,249 (2007:1,232) branches in Pakistan and 22 (2007:18) overseas branches (including the

Export Processing Zone branch, Karachi). Under a Trust Deed, the bank also provides services

as trustee to National investment Trust (NIT) including safe custody of securities on behalf of

NIT.4

The nature of responsibilities of the Bank is different and unique from other banks/financial

institutions. The bank also handles treasury transactions for the Government of Pakistan as an

agent to the State Bank of Pakistan for handling provincial/Federal Government receipts and

payments on their behalf. The National Bank of Pakistan has also played an important role in

financing the countrys growing trade, which has expanded through the years as diversification

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ANALYSIS

The Total Assets of National Bank of Pakistan fluctuates during all years as they show an

increasing trend. The total assets are increased 4 % in 2005 and 17 % in 2006. The year 2007

represents second highest percentage on account of total assets as it was increased to 38%. There

was an increase of 48 % in 2008 as compare to base year and 10% as compare to 2007.

ANALYSIS

The deposits and other accounts of National Bank of Pakistan show a mixed trend during all

years. In the year 2005, the deposits were increased very marginally, with the year 2006

represents an increase of 8%. The deposits are increased 27% & 34% in the years 2007 and 2008

respectively.

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ANALYSIS

The advances made by National Bank of Pakistan shows an increasing trend in all years as

compare to base year. This implies that National Bank of Pakistan is keener to advance money to

lenders. The advances were increased 22 % in the year 2005 and 43 % in 2006 as compare to

base year. The year 2007 represents an increase of 54 % and 2008 represents highest percentage

among all years that is 87 % as compare to base year.

ANALYSIS

The Banks reserves are banks' holdings of deposits in accounts with their central bank pluscurrency that is physically held in bank vaults (vault cash). The reserves of National Bank of

Pakistan fluctuate during all years as they show an increasing trend. The reserves are increased

25 %, 28 % & 46 % in the years 2005, 2006 & 2007 respectively. The year 2008 represents

highest increasing percentage of 84% as compare to base and previous years.

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ANALYSIS

The investments made by National Bank of Pakistan fluctuate during all years. There was an

increase of 5 % in 2005. The year 2006 indicates a decrease of 6% in investments. The year 2007

represents an increase of 41 %, highest among all years. The investments are increased 14 % in

2008 as compare to base year; however investments are decreased 27 % as compare to the year

2007.

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BRANCH NETWORKOF NATIONAL BANKOF PAKISTAN

With the geographical development of its branches, the National Bank of Pakistan has been able

to extend its services to a much larger number of Pakistanis all over the country. Today the Bank

has more than 8.8 million accounts & Bank maintains its presence in all the major financial

centers of the world through its 22 (2008) overseas branches and 5 representative offices. Of

these, three representative offices have recently been set up at Tashkent (Uzbekistan), Baku

(Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS

countries. Banks role Apart from having a vast branch network, Bank is at the forefront in the

acquisition and application of new technologies in every aspect of its banking facilities. It has

acquired leased telephone lines for on-line banking. The Bank has 12 Regional ComputerCenters to cover various on-line and batch system requirements of branches and controlling

offices.

Presently the National Bank of Pakistan is divided into various Groups headed by SEVPs/EVPs.

Its field operations are controlled by 29 regions ( Annexed II) reporting to as many Regional

chiefs, who control 40 zones and 15 single Branch zones headed by Zonal Chiefs; 12 corporate

branches and 1249 domestic branches headed by Branch Managers. The bank has 12 SWIFT

local centers.

Apart from having a vast branch network, Bank is at the forefront in the acquisition and

application of new technologies in every aspect of its banking facilities. It has acquired leased

telephone lines for on-line banking. Bank has also a presence on the internet. The National Bank

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of Pakistan has 156 online branches throughout the country. It has modernized its services by

installing Automated Teller Machines (ATMs) called CASH LINK at selected branches.

The Bank's organizational structure reflects the three levels at which it operates: international,

national and local. The Head Office formulates and implements the strategic, management and

operational policies.

The Bank's geographical organization consists of branches located in the regional capitals and in

some provincial capitals. The branches' activities relate to the State treasury service, payment

system services, currency circulation, banking and financial supervision, and the analysis of

economic and financial developments at the local level.

The Bank has representative offices abroad, in London, New York and Tokyo; a number of

officers are seconded as financial experts to Italian embassies and consulates. The Bank has

representative offices in Beijing, Tashkent, Chicago and Toronto. It has agency arrangements

with more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd,

NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd,

and CJSC Bank, Almaty, Kazakhstan. The Bank's joint ventures are, United National Bank

(UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture with

NIB Bank & Fullerton Fund Management of Singapore).5

The Branch network of National Bank of Pakistan is divided into following categories

ATM network ( Total ATMs 101 & Total ATMs machines 104)

Domestic network ( 1249 Branches)

Islamic network ( 5 Branches)

Online network ( 156 Branches)

Overseas network ( 29 Branches)

Swift network ( 12 Branches)

Customer Facilitation Centers (6 Customer Facilitation Centers)

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Agriculture branches ( 825 Branches)

NUMBEROF EMPLOYEESOF NATIONAL BANKOF PAKISTAN

Permanent 13237

Temporary/ On Contractual basis 842

Bank's own staff strength at the end of the year 14079

Outsourced 2350

Total Staff Strength 16429

An employee may be defined as: "A person in the service of another under any contract of hire,

express or implied, oral or written, where the employer has the power or right to control and

direct the employee in the material details of how the work is to be performed." 6An employee

contributes labor and expertise to an endeavor. Employees perform the discrete activity of

economic production. Of the three factors of production, employees usually provide the labour.

Specifically, an employee is any person hired by an employer to do a specific "job". In most

modern economies, the term employee refers to a specific defined relationship between an

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individual and a corporation, which differs from those of customer, or client. The relationship

between National Bank of Pakistan and its employees is usually handled through the Human

Resource Management & Administration Group & Employees benefit disbursement & trustee

division. These groups handle the incorporation of new hires, and the disbursement of any

benefits which the employee may be entitled, or any grievances that employee may have.

There are differing classifications of workers within National Bank of Pakistan, these are:

Permanent

Temporary / On Contractual

Outsourced

The Employees of National Bank of Pakistan are organizing into trade unions, which represent

most of the available work force in National Bank of Pakistan. These trade Unions utilize their

representative power to collectively bargain with the management of bank in order to advance

concerns and demands of their membership.

PRODUCT LINES

The most precise definition of product is anything capable of satisfying needs, including tangible

items, services and ideas. In marketing,a product is anything that can be offered to a market that

might satisfy a want or need.7 Since 1575, the word "product" has referred to anything produced.

Since 1695, the word has referred to "thing or things produced. The economic or commercial

meaning of product was first used by political economist Adam Smith.In general usage, product

may refer to a single item or unit, a group of equivalent products, a grouping of goods or

services, or an industrial classification for the goods or services. The consumer banking products

include personal accounts, credit cards, loans, investment products, treasury products and many

more. The National Bank of Pakistan offering for sale several related products individually,

which is commonly known as product lining. A product line is defined as A group of products

that are closely related because they function in a similar manner, are sold to the same customer

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groups, are marketed through same types of outlets, or fall within the given price ranges. 8 The

followings are the main consumer banking products of NBP.

DEPOSITS

The National Bank of Pakistan offers to their clients a variety of Deposit Schemes with

personalized services at competitive rates of interest. Any Pakistani citizen can open his/her

account for any deposit scheme at any of its Branches strategically located throughout Pakistan.

The Bank with its huge network of 1243 branches garners savings from both the rich and the

poor in urban as well as rural areas. Even a poor farmer in a remote village, with his meager

annual income, feels secure to safe keep his minuscule savings in National Bank of Pakistan,

Because National Bank of Pakistan has a long heritage of trust and professional commitment.

CURRENT DEPOSITS

These are payable to the customer when ever 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 nay 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 Current Deposits may be withdrawn by the

depositors at any time, and as such the bank is not entirely free to employ such deposits. 9Current

Accounts/ Basic Banking accounts are opened, on proper introduction and submission of

required documents along with initial deposit prescribed from time to time. Basic banking

accounts are opened for an individuals (single or joint) only whereas current accounts are opened

for individuals (single or joint) Charitable institution, provident and other funds of benevolent

nature of local bodies, autonomous corporations, companies, associations, educational

institutions, firms etc. and in all other cases where the accounts are to opened under the order of

a competent court of law. No profit is paid on the balances of current/basic banking accounts.

The bank is authorized to deduct service charges (incidental charges) on current accounts levied

through its half yearly schedule of charges, in case the average balance falls below the minimum

balance as prescribed by the bank. No balance maintenance condition is applied on basic banking

account.

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PLS SAVING DEPOSITS

InPakistan a Savings Deposits Account can be opened with a very small amount of money, and

the depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate calculated

on six monthly basis under the Interest Free Banking System. There is no restriction on thewithdrawals from the deposit accounts but the amount of money withdraw 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 the

scheme the SBP has allowed the Savings Scheme for school and college students and industrial

labour also. The purpose of these accounts is to inculcate the habit of savings in the constituents.

As such, the initial deposits required for opening these accounts are very nominal. 10NBP charge

Rs.500 for opening of PLS Savings deposits.

The silent features of profit and loss sharing and saving accounts of NBP are as fallows

1. These accounts can be opened by individuals in their own single or joint name. The PLS

savings account can also be opened for provident fund or other benevolent funds of

companies, firms, organizations, NGOs and educational institutions.

2. PLS saving account can be opened with a minimum amount of Rs.500/- only

3. To share in the profit a minimum balance of Rs.500/- must be maintained in the account.

The minimum balance on sixth and last of month will qualify for the profits. The profits

will be calculated on the basis of monthly minimum balance for the periods of six months

i.e. from January to June and July to December

4. The head office of NBP determines the profit or loss on PLS saving deposits and advice

its branches the rate and time of distribution of these profits.

5. There shall be no restrictions on maintaining the maximum balance in PLS saving

account.

6. On the first day of Ramzan each year the Zakat at the rate of 2.5% will be deducted from

these deposits on the balance of that day. But if depositors affix an affidavit of Zakat

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deduction along with account opening form or he is a non-Muslim, no Zakat will be

deducted from his account.

FIXED DEPOSIT ACCOUNT (TIME DEPOSITS)

Thedeposits that can be withdrawn after a specified period of time are referred to as Fixed or

Term Deposits. The period for which these deposits are kept by the bank ordinarily varies from

three months to five years in accordance with the agreement made between the customer and the

banker. Profit/Return is paid to the depositors on all fixed or Time deposits, and the rate of

profit/Return varies with the duration for which the amount is kept with the banker. By lending

out or investing these funds, the bank earns more than the Profit/Return that it has to pay on them

to the depositors.11 By giving an advance notice to the bank the deposit can be withdraw from

the bank before the expiry of the period. Fixed deposit accounts have higher rate of interest as

compare to other accounts. The rate of interest rises with the length of period and the amount of

deposit. The bank grants to the depositor a fix deposit (FDR) which is not transferable to any

other person. The silent features of fixed deposit account of NBP are as fallows

1. The PLS term deposit are opened for individuals in their own single or joint names,

companies firms and other organizations.

2. The PLS term deposit receipt are issued for any amount. There is minimum or maximum

limit or deposits in a single term deposit account.

3. PLS term depositors may be allowed some facilities against the security of these receipt

credits, after making Lien on the relevant receipt and subject to recovery of service

charges.

4. Under term deposit scheme the depositors not cease to earn the profit immediately, after

the respective maturity date.

FOREIGN CURRENCY ACCOUNT

Government of Pakistan has introduced many important reforms in Foreign Exchange Control in

the country since February, 1990, for the purpose of strengthening the Foreign Exchange

Reserves. One of these reforms relates to foreign currency accounts, which can be opened in

United States Dollars, Pound Sterling, Euro and Japanese Yen in any of the authorized branches

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of commercial banks throughout the country.12Foreign currency accounts are opened, on proper

introduction and submission of required documents along with an initial deposit prescribed from

time to time. Rates of return on foreign currency deposits are subject to fluctuation as determined

in accordance with State Bank of Pakistan directives and will be paid on six monthly basis

whereas the return on term deposit/SNTD will be paid on maturity or as prescribed by SBP. The

bank shall have no responsibility for or liability to the account holders for any diminution due to

taxes imposed or depreciation in the value of funds credited to the account whether due to

devaluation or fluctuation in the exchange rate or other wise.

NBP PREMIUM AAMDANI

NBPPremium aamdani is a retail product of the bank. The amount of investment required for

this account is Rs. 20,000/-to Rs. 5,000,000.The investment period is 5 years. Zakat and

withholding tax will be deducted as per rules. In NBP premium aamdani, the account holders

have benefit of free demand draft, pay order; free cheque book and NBP cash card

(ATM+Debit). The Financing facility is available up to 90% of the deposit value.13 Profit paid

every period as follows:

Period Profit Rates

1st year 7.50%

2nd years 8.50%

3rd years 9.50%4th years 10.50%

5th years 11%

a) NBP Premium Saver

NBPPremium saver is a retail product of the bank. The minimum saving balance of Rs. 20,001

and a maximum balance of Rs. 300,000 are required for opening a premium saver account. Two

debit withdrawals allowed in a month and no limit on number of deposit transactions. The profit

is calculated monthly and Paid on half yearly basis. Free NBP Cash Card (ATM + Debit) facility

is available to account holder.14

NATIONAL INCOME DAILY ACCOUNT (NIDA)

The scheme of National income daily account was launched in December 1995 to attract

corporate customers. It is a current account scheme and is part of the profit and loss system of

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accounts in operation throughout the country. Deposits in the NIDA accepted on the condition

that the depositor shall always maintain a minimum balance as prescribed by the bank in his

account. In the event however, that any depositor wishes to withdraw the amount and the balance

in his account is less than the required amount, the account will be converted to the ordinary PLS

SB account for the purpose of calculating profit. An example of how the NIDA accounts are

maintained is shown on the next page.

RATESON NATIONALINCOMEDAILYACCOUNT

From Rs 2/- million to Rs 50/- the rate is 1.4%.

From Rs50/- million but less than Rs 500/-million, the rate is 1.5%.

From Rs 500/- million but below Rs 1000/- the rate is 1.6%.

From Rs 1000/- and above the rate is 1.75%.

SALIENT FEATURES

Rs 2-million is required to open an account and there is no maximum limit.

Profit is paid on half yearly basis on monthly balances.

The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2 million to

2,000 million, the rate fluctuates from 1.4 to 1.75

It is a checking account and there is no limit of withdrawals.

NIDA 1

Date Description of Transaction C Debit (-) Credit (+) Balance Days Products

01/05/2008 Balance 10,000,000 10,000,000

05/05/2008 Cash 500,000 9,500,000 4 38000000

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08/05/2008 Cash 100,000 9,600,000 3 28800000

11/05/2008 Transfer 75,000,000 84,600,000 3 253800000

15/05/2008 Cash 3,000,000 81,600,000 4 326400000

18/05/2008 Cash 78,600,000 160,200,000 3 480600000

20/05/2008 Cash 1,000,000 159,200,000 2 318400000

22/05/2008 Cash 5,000,000 164,200,000 2 328400000

23/05/2008 Cash 700,000 163,500,000 1 163500000

25/05/2008 Cash 10,000 163,510,000 2 327020000

27/05/2008 Cash 300 163,509,700 2 327019400

31/05/2008 Transfer 500,000 164,009,700 4 656038800

01/06/2008 Cash 2,100,000 161,909,700 1 161909700

06/06/2008 Transfer 36,000,000 197,909,700 5 989548500

10/06/2008 Cash 9,870,000 188,039,700 4 752158800

ADVANCES

National Bank of Pakistan plays a pivotal role in translating the government's development plans

in terms of growth in industrial, commercial and agricultural sectors in Pakistan. Accordingly the

Bank has formulated its Credit Policy under the guidelines of SBP-the Central Bank of Pakistan.

NBP SAIBAAN

The NBP Saibaan is retail product of the bank. It has different product items which are home

purchase, home construction, home renovation and purchase of land plus construction. If anyone

has a Home Finance Facility outstanding with another bank he can have it transferred to NBP

through a hassle-free process. 15A brief description of these products is as fallows

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TYPE OFADVANCE

FinancingAmount

FinancingPeriod

Debt toequity Ratio

Home Purchase (House orApartment)

Rs. 35 Million 3 to 20 years 85:15(maximum)

HomeConstruction


HomeRenovation


Purchase of land PlusConstruction

Rs.35 Million 3 to 20 years 80:20(maximum)

NBP ADVANCE SALARY

The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary, the

leading personal loan product of the country, is maintaining its inimitability ever since it was

launched. This was only possible due to its swift growth and remarkable loan disbursement of

over 118 billion.16 You can avail up to 20 net take home salaries with easy repayment

installments. Its hassle free acquisition with no prior formalities and easy availability in a short

turn around time is attributed as the most distinguishing features of the product. The product is

offered countrywide. The terms and conditions of NBP Advance salary is shown on next page:

TERMS & CONDITIONS

Eligibility Permanent Employees of Govt., Semi-Govt.,

Autonomous, Semi Autonomous, Local & other bodies

who are maintaining their Salary A/Cs at NBP.

Repayment Direct deduction from Salary A/C

Maximum Loan

Amount

Rs. 490,000/-

Security Employer will provide undertaking that borrowers Salary

and end of service benefits will route through his/herSalary A/C maintained at NBP during the tenure of the loan

and his/her end of service benefits are at least equal to the

amount of Advance Salary required.

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Hypothecation of Consumer durables owned by the

borrower.

Three (3) Undated ChequesMax. RepaymentPeriod 5 years (60 months)

Advance in terms of #

of net take home

salaries

Up to 20 net take home salaries

Markup Rate 15 %

(Based on diminishing balance method)

Processing Fee 1% of Loan Amount

Verification Charges Rs 500/-

Life Insurance No Insurance of any kind.

Documentation

Charges

at actual

Contact Your Salary disbursing NBP Branch.

Remaining Service

Age

At the time of approval and disbursement the applicantsremaining service age should be 6 months after maturity of

the loan

Debt Burden 50%

Minimum net take

home salary

no minimum take home requirement

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NBP CASH & GOLD

With NBPs Cash & Gold, the customers meet their need for ready cash against their idle gold

jewelry. The rate of mark up is 13% p.a. This product has following features17

Facility of Rs. 7,000 against each 10 grams of net contents of gold

No maximum limits of cash

Repayment after one year

Only gold ornaments acceptable

Weight and quality of gold to be determined by NBP's appointed schroffs

No penalty for early repayment

STUDENTS LOAN SCHEME

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget

speech, a Student Loan Scheme (SLS) for Education was launched by the Government of

Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB and

ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the

meritorious students who have financial constraints for pursuing their studies in Scientific,

Technical and Professional education within Pakistan.The Scheme is being administered by ahigh powered committee comprising Deputy Governor, State Bank of Pakistan, Presidents of the

commercial banks and representative of Ministry of Finance, Government of Pakistan. 18

NBP KAROBAR- PRESIDENTS ROZGARSCHEME

The solution of Pakistans major socio-economic problems primarily lies in the development and

growth of small & micro businesses. These will not only provide employment opportunities to

ever-growing population demand but will also become the catalyst for breaking the vicious circle

of poverty. In this regard, NBP has developed a full range of Products under the Presidents

Rozgar Scheme with a brand name of NBP KAROBAR. The scheme will be offered to eligible

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2. NBP KAROBAR Mobile Utility Store

Financing facility available to purchase a 2/3 wheeler, 4 stroke Petrol/CNG/LPG Vehicle (Auto

Scooter / Motorcycle Rickshaw) with attached Loader body (Thehla type) under franchise from

the USC to carry utility goods for retail sale ideally in areas where accessibility to conventional

utility stores is difficult.

NBP KAROBAR MOBILE GENERAL STORE (WITHOUT USC FRANCHISE)

This financing program has been designed on the similar pattern of Mobile Utility Store. The

only difference is that the borrower will have the liberty of procuring stock/supplies/grocery

items from open market. Under this product the average loan size of Rs.100, 000/- will be given

for a maximum period of five years with a grace period of three months.

NBP KAROBAR TRANSPORT

The NBP Karobar Transport is designed to finance 2/3 wheeler, 4 stroke Petrol/CNG/LPG

Vehicle (Auto Scooter / Motorcycle Rickshaw) to the eligible citizens of Pakistan for providing

less expensive environment friendly transport facility. Under this product average loan size of

Rs.100, 000/- will be provided for a maximum period of five years with a grace period of three

months.

NBP KAROBAR PCO

This product is designed to finance setting-up a PCO. NBP will be providing financing for the

purchase of Mobile/Wireless Telephone Set with connection, Credit Balance. The average

amount of financing under this product will be Rs.5, 000/- for a maximum period of two years

with a grace period of three months.

NBP KAROBAR TELE-CENTER

This product is specially designed to finance setting-up a Tele-center. NBP will be providing

financing for the purchase of Mobile/Wireless Telephone Set with connection, Computer, Printer

and Fax machine cum Photocopier etc. to establish tele-center on a rented shop or owned

premises. The average amount of financing under this product will be Rs.50, 000/- for a

maximum period of two years with a grace period of three months.

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The National Bank of Pakistan provides demand drafts at very reasonable rates with safety,

speedy and reliable way to transfer money. Any person whether an account holder of the bank or

not, can purchase a Demand Draft form a bank.

TRAVELERS CHEQUES

They are generally issued for the convenience of person travelling abroad, but some Pakistani

banks issue them in Pakistan currency also for use within the country as well. Before issuing, the

bankers receive an amount equal to the face value of the cheques, and also charge a small

commission. The travelers cheques are for fixed amount and are treated as Order cheques

payable only to the purchaser whose specimen signature appears on each travelers cheque itself.

Foreign currency travelers cheques are issued and encashed in accordance with the provisions of

the Exchange Control Regulation Act, 1947. While making payment, the paying banker must

insist that the holder signs in his presence.20

The National Bank of Pakistan provides their services for travelers cheque at very reasonable

and competitive rates. It has following features

Negotiability Pak Rupees Travelers Cheques are a negotiable

instrument

Validity There is no restriction on the period of validity

Availability At 700 branches of NBP all over the country

Encashment At all 400 branches of NBP

Limitation No limit on purchase

Safety NBP Travelers Cheques are the safest way to carry our money

LETTER OF CREDIT

Letters of credit are very useful instruments in facilitating commercial relations between

businessmen at various places. Letter of credit state the limit of the credit and the time during

which it is held at the disposal of the grantee, but they are neither negotiable nor transferable.

Letter of credit may be revocable. There are many kinds of letter of credit such as Revolving

credit, Back to Back credit, Claused credit etc.21 NBP is committed to offering its business

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

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students on payment of fees of educational institutions. If some one want a duplicate of payment

order they charges Rs 100/- for NBP account holders and Rs 150/- for non account holders.

MISCELLANEOUS

LOCKERS

National of Pakistan also provides lockers facility in the country. The lockers issued only to the

depositors. No lockers are issued to any unknown person. The dual control system is used for

lockers. The officer has master key to apply on the locker but he cannot open the locker of any

person. The locker holder provides the bank has specimen signature. Whenever the locker

holders come to open the locker, his signatures are verified by the officer and then will be able to

open his locker. If the key of the locker is lost company providing these lockers breaks the locker

and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and

bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the

presence of his heir as mentioned in his will or and his belongings are given to them and the

locker is closed.

NBP CASH CARD

NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which lets you

pay directly from your account as an alternative payment method to cash. The transaction is

authorized and processed by entering PIN. The NBP Cash Card holders are able to transact at

any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP, 1-Link & M-NET ATMs across the country. The followings are the main features of this product:

You won't need to carry a lot of cash with you every time you go out.

Secure and Safe transaction.

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Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment

etc.)

Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.

Enable to Make Purchases from Around 4000 POS (Merchants) Countrywide including

2500+ POS in Karachi.

No Card Issuance Fee for first 12 Months

INTERNATIONAL BANKING

National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven

by the fact that NBP has its branches in all of the major financial capitals of the world.

Additionally, the Bank has recently set up the Financial Institution Wing, which is placed under

the Risk Management Group. The role of the Financial Institution Wing is:-

To effectively manage NBP's exposure to foreign and domestic correspondence

Manage the monetary aspect of NBP's relationship with the correspondents to support

trade, treasury and other key business areas, thereby contributing to the bank's

profitability

Generation of incremental trade-finance business and revenues

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Putting forward the proposal of credit management and development; guiding and

supervising the branch-banks to deal with credit business

Managing the authorized business; dealing with the legal affairs consulted and

coordinated

Establishing development rules on credit; dealing with the acceptance draft; estimating

the loaning accounts

Responsible for reporting the credit statistic statement

Responsible for training client managers

Responsible for dealing with other work according to the directors of the bank

Responsible for the credit-registered consulting system; regulating the five-graded loans

AUDIT & INSPECTION GROUPThe group chief of National Bank of Pakistans Audit & inspection group is Mr. Imam Bakhsh

Baloch. It is one of the core departments at NBP. Its mission is to strive for soundness & stability

of the financial system and safeguard interest of stakeholders through proactive inspection,

compatible with best international practices. This group plays a vital role in meeting NBPs main

responsibility of supervising the banks soundness of the system and protection of the interest of

depositors, thereby ensuring public confidence in the system. In order to assess the branches,

Audit & inspection group conducts regular audit & inspection of branches. Bank's management

has established and is managing an adequate and effective system of internal control which

encompasses the policies, procedures, processes and tasks as approved by the Board of Directors

that facilitate effective and efficient operations. The management and the employees at all levels

within the Bank are required to perform as per these approved Internal Control System

components. The Internal Control System ensures quality of external and internal reporting,

maintenance of proper records and processes, compliance with applicable laws and regulations

and internal policies with respect to conduct of business. The management ensures that an

efficient and effective Internal Control System is in place by identifying control objectives,

reviewing existing procedures and policies and ensuing that control procedure and policies are

amended for time to time wherever required. However, Internal Control System is designed to

manage rather than eliminate the risk of failure to achieve objectives and provide reasonable but

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not absolute assurance against material misstatement or loss.25 The audit system of National

Bank of Pakistan consists of following:

a) Internal Audit

b) External Audit

c) Statutory Audit

INTERNAL AUDIT

The Bank has an independent Internal Audit Group that conducts audit of all Branches, Regions

and Groups at Head Office on an on-going basis to evaluate the efficiency and effectiveness of

Internal Control System. In addition to that, Compliance Group is also in place with independent

Compliance Officer in 119 Branches and 29 Regional Compliance Chiefs with supporting staff

to take care of compliance related issues to strengthen the control environment.26

For the purpose of inspection the National Bank of Pakistan inspects its branches through

inspectors. Inspections are conducted on regular basis in the branches. The current chairmen of

audit committee of NBP are Azam Faruque, Ibrar. A. Mumtaz & Mian Kausar Hameed. The

State Bank of Pakistan conducts the regular full scope examination of banks pursuant to an

inspection schedule; however, flexibility exists in policy for frequency of inspections depending

upon the need to maintain safety & soundness. The CAMELS (Capital, Asset Quality,

Management, Earnings, Liquidity, Sensitivity and System & Controls) rating is a criteria to

determine the frequency of inspection of banks as weak institutions are given greater attention.

Special investigations (targeted inspections) are also conducted as and when circumstances so

warrant on the basis of complaints or market reports about specific institution.

EXTERNAL AUDIT

The Board of Directors on the recommendations of Audit Committee has also recommended

name of Messers Ford Rhodes Sidat Hyder, Chartered Accountants and Yousaf Adil Saleem &

Co. as auditors of National Bank of Pakistan.

STATUTORY AUDIT

The statutory audit of National Bank of Pakistan is conducted to meet the particular requirements

of State Bank of Pakistan. The scope and audit programs are set by the State Bank of Pakistan.

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The National Bank of Pakistan has to pay a penalty of Rs.20000 for each mistake in the Books

and procedures as prescribed by the law plus surcharge of per day from the date of mistake to the

date of statutory audit.

The functions of Audit & inspection group of National Bank of Pakistan are as fallows:

Examine and evaluate adequacy and effectiveness of the internal control systems in the

Bank.

Review the applications and effectiveness of risk management procedures and risk

assessment methodologies in financial, operational and Corporate Governance aspects of

the Banks activities.

Review financial, automation technology and MIS.

Review and ensure accuracy and reliability of accounting records and financial reports.

Perform testing of both transactions and functioning of specific internal control

procedures.

Evaluate and ensure that approved policies and procedures meet legal and regulatory

requirements.

Examine and evaluate effectiveness of existing policies, procedures and give

recommendations for improvements.

Identify opportunities for cost savings in Bank operations and make recommendations.

Examining those resources are acquired economically, used efficiently and safeguarded

adequately.

Review various reports of Banks subsidiaries, recommend improvements and provide

policy guideline

HUMAN RESOURCE MANAGEMENT & ADMINISTRATION GROUP

The group chief of Human resource management & administration group is Mr. Dr. Mirza Abrar

Baig. This Division is responsible for fresh induction of employees and other professionals

through a rigorous induction process in order to ensure presence of quality professionals.

Following units and areas of work are the part of this division. This group is responsible to

develop annual manpower plan for National Bank of Pakistan, conduct job analysis, prepare job

descriptions, and conduct job evaluation process. The other functions of this group include

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The group provides services and solutions to improve and strengthen NBPs technology portfolio

and identify future requirements. Besides providing these useful resources, IT group focuses on

safeguarding the information assets and relevant systems, critical to NBP, through its Security

plans and policies. The information technology group has following divisions:

In-house Development

Software development

Web development

Central Server

System Admin UNIX

System Admin Windows

Customer Support

Database Management

Network Management

Production Support

Administration

Director Section

FINANCIALCONTROL DIVISION

This division is headed by Mr. Atif Hassan Khan, who is also financial controller of National

Bank of Pakistan. The financial control division is responsible to perform and manage following

functions:

Maintenance of books of accounts and preparation of financial statements of the Bank in

accordance with the IAS, as adopted by the Bank.

Coordination and facilitation for Business planning and budgeting function in the Bank

and periodic reporting to the management and to the Board.

Preparation of Annual Financial Statements Accounting Policies for the bank. Quarterly profit updates to the Board of Directors.

Consolidation of Departmental Budgets.

Maintenance of Federal & Provincial Government Account on the basis of receipt and

payments.

Monthly Abstract, Daily Reserves and Weekly review reporting.

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Short/Medium term investment and Swap deposits and maintenance of Foreign Currency

accounts and revaluation of Foreign Currency Assets & Liabilities.

Making of payments to external suppliers and employees of the Bank after independent

verification of transaction documents on the basis of bills/ invoices/claims approved by

the processing units.

Checking and verifying the selected financial transactions to ensure accuracy and

compliance to respective rules and regulations.

Assets capitalization, assets transfers and overall responsibility to manage and maintain

assets physical inventory, keeping track of physical location of assets.

To ensure the smooth and unhampered running of the Fixed Assets Management

function.

To record all the expenses regarding repair/ maintenance and rent taxes for NBP

buildings and equipments.

To deal with various administrative matters arising in the Finance Department.

To respond to various queries rose from various internal and external sources.

OVERSEAS COORDINATION & MANAGEMENT GROUP

The group chief of NBPs overseas coordination & management group is Mr. Tahir Yaqoob.

This department is in charge of the management and operation of foreign exchange business

including marketing and operating of the financial products and trade financing of foreign

exchange in the light of National foreign exchange management policy, and is the governing

department of foreign exchange. The functions of this group are as follows:

Establishing marketing strategy, policy and management system of foreign exchange.

Making annual operating and working plan.

Selecting and opening overseas account under supervision, and establishing and

harmonizing the business among agent banks.

Corresponding and dealing with foreign exchange business among branches.

Showing business requirement of costumers and development of new products;

publicizing foreign exchange business; training managers of customer-service for foreign

exchange business.

Managing and operating foreign fund of the whole bank.

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Making deposit and loan rate of each wholesale foreign exchange according to

management and market situation of deposit and loan rate of foreign exchange

Focusing on direct marketing of VIP customers and overall plans to put all resources

together so as to provide one-stop service.

Examining and approving international business financing(import & export bill purchase,

foreign exchange bill discount, acceptance, documentary credit, stand-by L/C,

international non-financing guarantee and so on) .

Auditing foreign exchange business.

Management and operation of researching credit, and consult and testimony business.

Managing turnover position of exchange settlement and sales.

Declaring international balance, register foreign loans and manage foreign exchange

account.

Supervising wholesale foreign exchange deposit and payment to defend money

laundering and bank swindle.

Managing and operating SWIFT system and foreign exchange system.

Organizing international business research and statistic; establishing and improving

foreign exchange files; making accounting report forms and business report forms.

Regularly examining the executive results of all system of foreign exchange and renovate

all the problems.

Contacting and corresponding with National foreign trade department, customs, industry

governing department and foreign exchange department.

Examining and approving the branches launching foreign exchange business, applying

for new foreign business category to the Peoples Bank of China according to current

foreign exchange policy.

The National Bank of Pakistan is shifting focusing on expanding its market share in trade

finance, home remittance and foreign investments. The Bank is setting high-speed satellite link

along with the extension of S.W.IF.T service to large domestic and international branches.

COMMERCIAL & RETAIL BANKING GROUP

The group chief of National Bank of Pakistans commercial & retail Banking group is Mr. Amer

Siddiqui. Retail banking includes retail lending and deposits, banking services, trust and estates,

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private lending and deposits, banking service, trust and estates investment advice, merchant /

commercial / corporate cards and private labels and retail.27 Commercial banking includes

project finance, real estate, export finance, trade finance, factoring, lending, guarantees, bills of

exchange and deposits.

This group is responsible for serving the needs of the retail and commercial market, focusing on

individual consumers and small and medium size enterprises. This group is responsible for

developing and managing brands which serve the investment needs of the consumer market, and

focuses on deposit mobilization, provision of value added services based on modern technology

and undertaking the centralized marketing and advertising for the Bank. This group is engaged in

the development and management of retail credit schemes. The consumer market in Pakistan has

not only grows exponentially over the last decade or so, but the needs of this segment have

become extremely diverse. In order to sustain competition, it is but imperative to continue

offering innovative consumer credit schemes.

The National Bank of Pakistan plan to establish commercial centers across the country looking at

the business potential in the area, size of the branch and its capabilities to deliver the desired

service in order to attract quality customers. The objective is to target the untapped sectors and

provide them professional quality service, through one window operations and Relationship

Managers stationed at those centers. We expect and hope to reduce the turn around time and

become more competitive and market oriented. Further this customer friendly and dedicated set

up at convenient locations would help in improving the image of the Bank as well. These Centers

would work in conjunction with the existing setup of Commercial Lending done throughout the

NBP branch network. The main purpose of these centers is to generate ancillary business in

addition to funded and non-funded facilities, with quick turn around time in decisions for

customer satisfaction.

SPECIAL ASSETS MANAGEMENT GROUP

The group chief of Special assets management group is Mr. Tajammal Hussain Bokharee. The

Special Asset Management Group (SAMG) is a group of people with specialized skills in

managing the "stressed" assets of National Bank of Pakistan. The group was created with a view

to enable restructuring and recoveries through various initiatives like innovative work-outs,

merger & acquisition strategies, asset stripping, security enhancements and structured sell-

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The bank operates defined benefit approved funded pension scheme for its eligible employees.

The banks costs are determined based on actuarial valuation carried out using Projected Unit

Credit Method. Net cumulative un-recognized actuarial gains/losses relating to previous

reporting period in excess of the highest of 10% of present value of defined benefit obligation or

10% of the fair value of plan assets are recognized as income or expense over the estimated

working lives of the employees. Where the fair value of plan assets exceeds the present value of

defined benefit obligation together with unrecognized actuarial gains or losses and unrecognized

past service cost, the bank reduces the resulting asset to an amount equal to the total of present

value of any economic benefit in the form of reduction in future contributions to the plan and

unrecognized actuarial losses and past service costs.

POSTRETIREMENTMEDICALBENEFITS

The bank operates an un-funded defined post retirement medical benefits scheme for all of its

employees. Provision is made in the financial statements for the benefit based on actuarial

valuation carried out using the Projected Unit Credit Method. Actuarial gains/losses are

accounted for in a manner similar to the pension scheme.

BENEVOLENTSCHEME

The bank also operates an un-funded defined benefit benevolent scheme for its eligible

employees. Provision is made in the financial statements based on the actuarial valuation usingthe Projected Unit Credit Method. Actuarial gains/losses are recognized in the period in which

they arise.

GRATUITYSCHEME

The bank also operates an un-funded defined benefit gratuity scheme for its eligible contractual

employees. Provision is made in the financial statements based on the actuarial valuation using

the Projected Unit Credit Method. Actuarial gains/losses are accounted for in a manner similar to

pension scheme.

OTHEREMPLOYEEBENEFITS

EMPLOYEES' COMPENSATEDABSENCES

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The bank accounts for all accumulating compensated absences when employees render service

that increases their entitlement to future compensated absences. The liability is determined based

on actuarial valuation carried out using the Projected Unit Credit Method.

TRUSTACTIVITIESOF NATIONAL BANKOF PAKISTAN

NATIONAL INVE STMEN T TRUST (NIT)

Under a trust deed, the bank provides services, as a trustee to NIT and is performing functions of

sale/purchase of NIT units, safe custody and maintaining unit holders accounts.

LONG-TERM CREDIT FUND (LTCF)

Consequent upon the NDFC amalgamation, the bank manages on behalf of the Government ofPakistan, LTCF established from the proceeds of loans disbursed by various international

funding agencies for financing private sector energy development projects. The National Bank of

Pakistan is in process of negotiating the charge of fee in consideration of administrative services

to the LTCF.

QARZ-E-HASNA FUNDThe work relating to Qarz-e-Hasna Scheme was attended by Pakistan Banking Council (PBC)

since inception. PBC was dissolved in January 1997. In order to fill the void created by the

dissolution of PBC and in order to continue the scheme, SBP decided to entrust all funds and

transfer all record relating to Qarz-e-Hasna scheme for education to the bank with the

instructions to perform all work relating to the Fund.

CORE BANKING APPLICATION

The head of core banking application is Mr. Naeem Syed. The core banking application is anintegrated application that supports real time, multi banking and multi channel strategies. The

single biggest achievement of implementing the Core Banking Solution is that each customer is

truly the customer of the Bank and not just the customer of the Branch, where his/her account is

maintained. The customer can go to a branch anywhere in the country and perform a transaction.

This is possible as the entire Customer Database is centrally located at the central Data Centre

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and can be accessed throughout the network of branches. Business processes in all the branches

of National Bank of Pakistan update a common database in a central server located at data

centre, which gives a consolidated view of banks operations.

Key features of the Core banking application of NBP

24X7 Banking

As a result of implementing Core Banking, most of the facilities being offered by bank are

available to Customers 24 hours a day, 7 days a week. The transactions are performed using

multiple channels such as ATMs, Internet Banking, Phone Banking and Mobile Banking.

Anywhere Banking

Customers can avail of banking services across the branch and Channel network irrespective of

location where their account is maintained.

Integration with strategic sectors

Core Banking integrates all strategic sectors of Banking such as Trade Finance, Treasury, Asset-

Liability Management and Corporate Balance Sheet. As a result, the information related to these

areas is centrally available for use or reference.

Strengthening MIS, DSS and EIS

Core banking application is more than just a transaction processing system. It provides updated

data for generating various reports for Management information system (MIS), and will facilitate

Decision Support System (DSS) and Executive Information System (EIS). As data is located on

CDC, branches and administrative offices can concurrently avail updated data when required.

Business Process Re-engineering

Core Banking would enable implementation of BPR initiatives of a Bank and facilitate

centralized handling of various processes. Branches would do less and less back office work and

would be able to focus on marketing, customer relationship management and cross selling.

OPERATIONS GROUP

The group chief of National Bank of Pakistans Operation group is Mr. Dr. Asif A. Brohi. This

group is being created to efficiently collect and utilize the feedback from the branches to support

product development and enhance the quality of service. The National Bank of Pakistan is

currently improving the service orientation at its branches, as these constitute the front line of

the Bank in terms of contact with its customers. The operations group is in the process of

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introducing E-Commerce initiatives based on customer friendly technologies. The group creates

products to utilize the benefits of E-Commerce for its customers.

We are committed and focused towards good quality customer service and in 2007 with the

motto of Putting a smile on our Customer's face. We made concerted efforts and took a

number of initiatives. Workshops and seminars were conducted to disseminate the very

important message of Excellent Customer Service. We are transforming our branches to give a

modern look and convenience. A number of branches have been shifted to prominent and

spacious locations. We also have established specialized customer facilitation centers to

exclusively cater to pension payments, utility and government collections. These are expected to

reduce counter traffic at our branches and will increase our distribution channels for better and

convenient services. Business hours have been extended with establishment of customer

facilitation offices at the regional levels to help on the spot resolution of customer complaints.

PROVINCIAL & REGIONAL MANAGEMENT

There are four executives of National Bank of Pakistan to supervise the Banks maters of every

province, as they are called Provincial Chiefs. These provincial chiefs are responsible for the

entire banking operations in their respective provinces. The provincial management includes:

The Provincial Chief Punjab

The Provincial Chief Sind

The Provincial Chief Baluchistan

The Provincial Chief N.W.FP & Kashmir

These provinces are sub-divided into regions, the regions are controlled and manage by Regional

heads, which are responsible for the supervision in their circles and deal with the problems of

their respective Regions. The regional management of National Bank of Pakistan is divided into

two areas which are:

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Overseas

Countrywide

The overseas regions include Middle East, Far East, Europe & USA, and Central Asia. The

country has been divided into 29 regions by National Bank of Pakistan to facilitate its functions.

The detail about National Bank of Pakistans regions is shown as Annexed-II at the end of the

report. These regions are sub divided into Zones, the in charge of a Zone is called Zonal Chief.

BRANCH MANAGEMENT

The National Bank of Pakistan, in order to facilitate its functions on branch level appoints

Branch Managers & other staff according to branchs activities and volume of business. The

branch managers are responsible for all functions and staff within the branch office. The job of

branch managers is to take charge of the entire operation of his branch, making sure that

everything runs smoothly. The other functions involves scheduling of employee work hours,

overseeing training, hiring and firing, assuring that proper procedures are followed, and reporting

to upper management any problems or providing reports and updates as required by banks

protocol.

ORGANIZATIONAL (MANAGEMENT) LEVELSAT NBP

Successful and profitable banking management deepens upon two principal factors:

a) The manner in which the function of banking, that is, the acquiring of deposits, the

investing or converting such deposits into earning assets, and the servicing of each

deposits, are performed.

b) The degree to which officers and employees contribute their talents to the progress and

welfare of the bank in discharging duties and responsibilities.

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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.28The management has two types i.e..,

a) Centralized (Centralized Management tends to concentrate decision making at the top of

the organization)

b) Decentralized (Decentralized disperses decision making and authority throughout and

further down the organizational hierarchy)

National Bank of Pakistan has a centralized type of management because all the decisions are

taken by the top management. The National Bank of Pakistan has four types of management

levels which are as fallows:

TOP MANAGERS

Top managers are responsible for making organization-wide decisions and establishing the plans

and goals that affect the entire organization. These individuals typically have titles such as

executive vice president, president, managing director, chief operating officer, chief executive

officer or chairman of the board. The NBP have its top management in their head office at

Karachi. They are responsible for making the plans and establishing goals the run their business

smoothly all over Pakistan & around the globe. Among seven member of group Chief Executive

is called the president. The bank has directors for superintendence and direction of its business.

The Government appoints six directors as members and one president. These members are also

responsible for making the policy of the bank.

MIDDLE MANAGERS

Middle managers include all levels of management between the first line level and the top levelof the organization. These managers manage the work of first line managers and may have titles

such as department head, project leader, plant manager or division manager.29 NBP divided his

management into various regions such as Rawalpindi region, Gujranwala region etc. In NBP,

regional management falls under this category. They are responsible for the planning,

organizing, leading and controlling of the resources and staff of the whole region.

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FIRST LINE MANAGERSOR LOWERLEVEL MANAGEMENT

First level managers are the lowest level of management and manage the work of non-managerial

individuals who are involved with the production or creation of the organizations products. The

branch managers of NBP fall under this category. These managers are responsible for planning,

organizing, leading and controlling the staff and all affairs of the branch.

NON MANAGERIAL EMPLOYEES

Non managerial employees are not concerned with any decision making. They are normally

specialized in their work. The nature of their job is repetitive & clerical as they do same work

again & again. The non managerial employees of NBP consist of OG-II, OG III and clerical

staff.

HIERARCHYOF NATIONAL BANKOF PAKISTAN

The Hierarchy (An arrangement of objects, people, elements, values, grades, orders, classes etc.,

any system of persons or things ranked one above another) of National Bank of Pakistan is

shown as Annexed III at the end of this report. The hierarchy may include:

Categorization of a group of people according to ability or status.

A body of clergy organized into successive ranks or grades with each level subordinate to

the one above.

A series in which each element is graded or ranked

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A body of officials disposed organically in ranks and orders each subordinate to the one

above it; a body of ecclesiastical rulers.

An organization with few things, or one thing, at the top and with several things below

each other thing.

The President of National Bank of Pakistan is ranked Top at the hierarchy. The other six

directors of National Bank of Pakistan are ranked second in the hierarchy. The Provisional,

Regional & Zonal chiefs are ranked 3rd, 4th & 5th respectively. The vice President & assistant vice

Presidents of National Bank of Pakistan are ranked 6th & 7th respectively. The Officers Grade I, II

& III are ranked 8th at the hierarchy of National Bank of Pakistan. The lower level of National

Bank of Pakistan is consist of Clerical & non- clerical staff.

ORGANIZATION STRUCTUREOFTHE BRANCH

A well-developed and properly coordinate structure is an important requirement for the success

of any organization. It provides the basic framework within which functions and pro

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