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INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

SHARA-E-IQBAL BRANCH

PRESENTED BY: Muhammad AfzalMosam khan

Class: 3rd semester

Session: M2009-11

Internship Date: 1st January

Report completed: 28 February

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DEDICATION

I dedicate to my Dear Parents & my respectable teachers

whose assistance is always with me. And I personally do

great respect by heart.

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Acknowledgement

Here very thanks to Almighty Allah whose guidance

helped me to be trained in a top class organization, NBP,

as well as to complete this report in a very limited time.

My thanks also to young, dynamic, congenial,

and qualified staff of NBP who never let me alone indifferent situations related to my internship. Without

their humble help, it was not easy.I am thankful tothe Bank Manager Muhammad Javed,NBP share-e-

iqbal Brach Quetta.He guided me during my

intership from 1stJanuary, to 1stMarch 2011.

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Executive summary

This report is about my internship program with NATIONAL

BANK. In this comprehensive report, I have discussed aboutevery major aspect of the bank, which I observed and perceivedduring my internship program. In this report you will find thedetail about the bank right from its incorporation to the currentposition. Along with it, the processes, policies and procedures ofthe bank are also discussed in detail.

As the main purpose of internship is to learn by working inpractical environment and to apply the knowledge acquiredduring the studies in a real world scenario in order to tackle theproblems using the knowledge and skill learned during theacademic process.

In this report the detailed analysis of the organization has beendone and the financial, technical, managerial and strategicaspects have been evaluated to analyze the current position ofthe organization.

This report also contains my perceptions about the employees

satisfaction, motivation level and the working environment ofthe organization.

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TABALE OF CONTENTS:

Sr.# Contents Page #

1. INTRODUCTION AND BRIEF HISTORY OF NBP 6

2. EVOLUTION OF BANKS IN PAKISTAN 7

3. PRESENT STATUS AND HISTORY 84. BANKING REFORMS 1972

5. FINANCIAL POSITION 12

6. PRODUCTS OF NATIONAL BANK OF PAKISTAN 15

7. SAIBAAN SCHEME 16

8. FOREIGN CURRENCY 17

9. EXPORT DEPARTMENT 19

10. IMPORT DEPRTMENT 19

11. DIFFERENT SCHEMES CONDUCTED BY NBP 21

12. ORGANIZATIONAL STRUCTURE 22

13. DEPARTMENTALIZATION 29

14. GENERAL OBSERVATION DURING TRAINING PROGRAM 46

15. MANAGEMENT INFORMATION SYSTEM (MIS 54

16. STRUCTURE OF THE MIS DEPARTMENT 57

17. FUNCTIONS OF THE MIS DEPARTMENT 58

19. COMPETITIVE ANALYSIS 63

20. CONCLUSION 65

21. RECOMMENDATIONS 63

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1. INTRODUCTION

BRIEF HISTORY OF NATIONAL BANK OF 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 ofPakistan 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.i

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

securities on behalf of NIT. The National Bank of Pakistan has assets worth Rupees 737976.44

million on September 30, 2008.ii

National Bank of Pakistan is today a progressive, efficient, and customer focused institution. It has

developed a wide range of consumer products, to enhance business and cater to the different

segments of society. Some schemes have been specifically designed for the low to middle income

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segments of the population. These include NBP Karobar, NBP Advance Salary, NBP Saibaan,

NBP Kisan Dost, and NBP Cash n Gold.

The National Bank of Pakistan has implemented special credit schemes like small finance for

agriculture, business and industries, administrator to Qarz-e-Hasna loans to students, self

employment scheme for unemployed persons, public transport scheme. The Bank has expanded its

range of products and services to include Shariah Compliant Islamic Banking products. For the

promotion of literature, NBP recently initiated the Annual Awards for Excellence in Literature.

NBP will confer annual awards to the best books in Urdu and in all prominent regional languages

published during the defined period. Patronage from NBP would help creative work in the field of

literature. The Bank is also the largest sponsor of sports in Pakistan. It has provided generously to

philanthropic causes whenever the need arose.

It has taken various measures to facilitate overseas Pakistanis to send their remittances in a

convenient and efficient manner. In 2002 the Bank signed an agreement with Western Union for

expanding the base for documented remittances. More recently it has started Electronic Home

Remittances Project. This project introduces technology based system to handle inward

remittances efficiently, by ensuring that the Bank's branches keep a track of the remittance

received from abroad till its final receipt.

A number of initiatives have been taken, in terms of institutional restructuring, changes in the field

structure, in policies and procedures, in internal control systems with special emphasis on

corporate governance, adoption of Capital Adequacy Standards under Basel II framework, in the

up gradation of the IT infrastructure and developing the human resources.

National Bank has earned recognition and numerous awards internationally. It has been the

recipient of The Bank of the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine, the

Best Foreign Exchange Bank Pakistan for 2004, 2005, 2006 and 2007, Global Finance, 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.iii

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

operations is as fallows:

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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.

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.

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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.

Scope of Studies

As an internee in National Bank of Pakistan the main focus of my study researchis on general banking procedures in one of the branches of NBP in MIS environment. Theseoperations include remittances, deposits, advances and foreign exchange.Similarly different aspects of overall of NBP are also covered in this report.

Research Methodology

The report is based on six weeks internship program in National Bank of Pakistan. Themethodology reported for collection of data is primary as well as secondary data. The biggestsource of information is my personal observation while working with staff and having discussionwith them. Formally arranged interviews and discussions also helped me in this regards.

2.EVOLUTION OF BANKS IN PAKISTAN

There are different opinions that how the word Bank originated. Some of the authors opinionthat this word is derived from the word Bancus or Banque, which means a bench. Theexplanation of this origin is attributed to the fact that the Jews in Lombard transacted the businessof money exchange on benches in the market place; and when the business failed, the peopledestroyed the bench. Incidentally the word Bankrupts said to have evolved from this practice.Some of the authors are of opinion that the word Bank is derived from the German word back,which means joint stock fund. Later on when the German occupied major part of the Italy the

word Back was italicized into Back.In fact human left the need of bank when it begins to realize the importance of money as a mediumof exchange. Perhaps it where the Babylonian who developed banking system as early as 2000 BC.At that time temples were used as banks because of their prevalent respect. During the rule of kingHamurabi (1788 1686 BC) the founder of Babylonians Empire, loans were started being grantedfor interest. The borrower has to provide guarantee or he had to pledge his goods or valuables.King Hamurabi drew up a code wherein he laid down standards rules for procedures for bankingoperations by temples and great landowners. Also in Greece, the temples were used as banks,

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where the people deposited their money and other valuables for safe custody and security. InEurope with the revival of civilization (Renaissance) in the middle of twelve century, trade andcommerce started expanding and this development compelled the business community to borrowthe money from the Hebrew money lenders on high rates of interest and usury. Seeing the greatdemand, these moneylenders started organizing themselves and bank started up at the principle

seaports of southern Europe. Soon Venice and Geneva became the most important money marketsof the time and banking though different from its present form, flourished. What we know asmodern banking originated in the 14th century in Barcelona

National Bank of Pakistan (NBP) was established under the National Bank of PakistanOrdinance 1949. The primary objective of NBP was to purchase jute from the growers in theformer East Pakistan and also to perform the commercial banking functions in the country.

National Bank of Pakistan is now the biggest financial institution with assets totaling over Rs.310billion with 1428 local and 23 foreign branches. The bank is the higher financer in agriculture andcommodity operation sector.

As part of the academic requirement for completing MBA (MIS) Master BusinessAdministration of the students are required to under go six/eight weeks of internship with anorganization. The internship is to serve the purpose of acquainting the students with the practice ofknowledge of the discipline of banking administration.This report is about National Bank Pakistan. NBP was established in 1949 and since then, it hasexpended its network, becoming the largest commercial Bank of the country. It offers differentproducts of services to its customers..

3.PRESENT STATUS AND HISTORY

National Bank of Pakistan maintain its position as Pakistanis premier Bank determinedto set higher standards of achievements. It is the major business partner for the government ofPakistan with special emphasis on fostering Pakistanis economic growth through aggressive andbalanced lending policies, technologically oriented branches.

The National Bank of Pakistan came into existence on 20th November 1949 under theNational Bank of Pakistan Ordinance No.21 of 1949.It is a semipublic bank and functions likeother commercial banks. Therefore it receives funds from the depositors and provides loans/creditfacilities in all sectors including trade, industry and agriculture. It also functions as an agent of theCentral Bank and operates the treasuries at places where no branch of State Bank of Pakistanexists. The National Bank of Pakistan was also nationalized, along with other banks, in January1974. The Bank of Bahawalpur was also merged into this Bank.

MANAGEMENT

An Executive Board composed of six Senior Executives of the Bank and the President whois also the Chief Executive supervises the affairs and business of the Bank.

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CAPITAL

The authorized capital of the Bank is Rs.2500 million divided into 100 million ordinaryshares of Rs.10 each. After nationalization, all the shares held by persons other than the Federal

Government or Corporations i.e., owned and controlled by the Federal Government wasconsidered as transferred and vested in the Government.

BRANCHES

The Bank had a network of 1531branches in the country and 28 branches in foreigncountries. These countries are as follows:1) - United States of America2) - United Kingdom3) - France

4) - Germany5) - Africa, Middle East Region6) - Bahrain Obu7) - Asia Pacific Region8) - Japan9) - Republic of Korea10) - Central Asian States11) - Bangladesh12)-Peoples Republic of China13) -Pakistan.

The main of the study in hand is together relevant information to compile internship reporton National Bank of Pakistan.

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

To work practically in an organization.

To develop interpersonal communication.

4.Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reformswere introduced to make the banks more responsive to the requirements of economics growth withsocial justice. The reforms aimed at bringing about a more purposeful and equitable distribution of

bank credit, improving the soundness and efficiency of the banks, and securing greater socialaccountability of the banking system as a whole.The role of the banking system had been truly spectacular in mobilizing savings of the communityand meeting the credit needs of the economy. But at the same time, the banks had generallyneglected their role in promoting social justice and had failed to play an effective role in ensuring awider and more equitable dispersal of the benefits of economic growth. In particular the interlocking of ownership with commercial and industrial interests had led to the misuse of bankresources. There was a heavy concentration of credit in big accounts and in urban area. Credit

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facilities for agriculture, small business, newly emerging exports and housing had remainedobviously inadequate while the banks indulged in capital financing in few selected business sectorsand issued guarantees on behalf of favored clients, term clients, term financing facilities forindustry were wholly absent.Under the banking reforms introduced in May 1972 the state bank of Pakistan was accorded wider

powers. It was authorized to remove directors or managerial personnel, if necessary and supersedethe board of directors of a banking company and appoint administrators during the period of suchsuper session. It was also empowered to nominate directors on the board of every bank. As regardbank directors, it was provided that anyone defaulting in meeting his obligations to bank wouldforfeit his directorship. Moreover, it was laid down that no person could serve as director of a bankfor more than six years continuously. Each bank was required to have a paid up capital of not lessthan 5 percent age of its deposits to be progressively build up to 10 percent age over a period oftime. The banks were also required to transfer 10 percentage of their profit their reserves everyyears after the reserve became equal to the paid up capital. With a view to diversity the ownershipof the banks, the banks were required to raise new capital from the market. Unsecured loans todirectors, their families or firms and companies, were totally prohibited.

The bank reforms also brought about the establishment of new institutions to achieve newobjectives. A national credit consultative was setup under the supervise of the state bank withrepresentation form the government and the private sector. It was assigned the task of determiningof economys annual credit needs within the safe limits of monetary and credit expansion withreference to the annual development plan. Such a credit plan was to cover the public and privatesectors. Alongside the National credit council and Agricultural Advisory Committee was formed toallocate agriculture credit for various purposes, to coordinate the operation or the agriculture creditagencies and to oversee the flow of credit to the designated targets. A standing committee onexports in general and the new emerging exports in particular, was also established. With a view toencourage the banks to extend credit to small borrowers, a credit guarantee scheme was introducedunder which the state bank under took to share any bonfire losses incurred by the commercialbanks in case of small loans of advances to agriculture.At the same time two financing institutions were established. The peoples Finance Corporationwas designed to provide finance to people of small means while the National DevelopmentFinance Corporation was setup of finance public sector owned and managed industries andenterprises.

The banking reforms turned to be transitional and interim step and when they were hardly eighteenmonths old the government nationalized the banking systems, with the following main objectives.

To enable the government to use the capital concentrated in the hands of a few rich bankersfor the rapid economic development of the country and the more urgent social welfare

objectives.

To distribute equitably credit too different classes sectors and regions.

To coordinate the banking policies in various area of feasible joint activity withouteliminating healthy competition among banks.

The act passed for the nationalization of banks is known as the banks Nationalization Act1974.

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Thus under this act the state bank of Pakistan and all the commercial banks incorporated inPakistan and carrying business in or outside the country were brought under governmentownership with effect from Jan 1, 1974. The ownership, management and control of all Pakistanibanks stood transferred to and vested in the Federal government. The shareholders were providedcompensation in the form of federal government bonds redeemable at par anytime within the

period of fifteen years. Under the Nationalization act, the Chairman, Directors and Executives ofvarious banks, other than those appointed by federal government were removed from their officesand the central boards of the banks and all local bodies were dissolved. Pakistan banking councilwas established to coordinate the activities of the Nationalized Commercial banks. At the time ofNationalization on December31, 1973 there were following 14 Pakistani commercial banks with3323 offices allover Pakistan and 74 offices in foreign countries:

National banks of Pakistan

Habib bank limited

Habib bank (overseas) limited

United bank limited

Muslim commercial bank limited Commerce bank limited

Standard bank limited

Australia bank limited

Bank of Bahawalpur limited

Premium bank limited

Pak Bank limited

Sarhad bank limited

Lahore commercial limited

Punjab provincial co-operative bank limited

The Pakistan banking council prepared a scheme for the recognition of banks. The bank(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of the smallerbanks with bigger ones and following the five units in there phases:

National bank limited

Habib bank limited

United bank limited

Muslim commercial bank limited

Allied bank of Pakistan limited

The first phase was completed on 30th June. 1974. When the bank Bahawalpur was merged withthe National Bank of Pakistan. The premier Bank Limited with Muslim Commercial Bank limitedand Sarhad Bank Limited and Pak bank limited and renamed as Allied Bank of Pakistan limited.

The second phase was completed on 31st Dec.1974, when the commerce bank limitedmerged with the United Bank limited. The third and the final phase were completed on 30th June,1975 when the standard bank limited was merged with Habib Bank limited.

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The nationalization was very smooth and gave very positive results.The number of branches, which stood at 3397 on Dec31, 1973, reached on 7661 by end June 1992.The bank deposits which stood at Rs. 1925 corers at the end 1973 reached the highest mark about323 corers

5.FINANCIAL POSITION

NBP balance sheet to cross Rs 1 trillion

KARACHI: The National Bank of Pakistan has a largest balance sheet in Pakistan stands at Rs 980billion that will cross Rs 1 trillion by next fiscal year, Syed Ali Raza, president NBP said.

Addressing the newly general body members of Karachi Press Club (KPC) Saturday, Raza said theNBP a diversified commercial bank was going to open its branch in Saudi Arabia in February2010 and would be first bank from Pakistan to set up branch in Saudi Arabia. President NBP said

the bank was expanding its operations abroad and besides having branches in Central Asia,Afghanistan and Europe the bank would be among only the six foreign banks that are allowed toset up their branches in Saudi Arabia.

Only China and South Asia are 50 percent of the worlds population and the centre of gravity willbe Central Asia after few years that is why we are focusing on growing our business in thisregion. He said the development of alternate delivery channels, use of information technology andleveraging large customer base for cross selling were the key strategies of NBP for increasing itsbusiness. staff reportNBP assets reach Rs 1.035 trillion

KARACHI - Board of Director's of National Bank of Pakistan in their meeting held on March 01,2011 approved the financial statements of the bank for the year ended December 31, 2010 andannounced 25 percent bonus and 75 percent (Rs 7.5 per share ) cash dividend payout to the shareholder's for the year 2010. In an already challenging environment, historic floods in the countryintensified the effects on already fragile economy.The floods affected around 20 million people, majority of whom were subsistence farmers, andtherefore not only there was a financial impact but also presented a social and humanitarianchallenge. There was large scale damage to infrastructure as well as the irrigation system of thecountry.In wake of these floods the GDP growth target of the country was also revised from initial 4.5percent to best estimates of 2.5 percent to 3.0 percent. Year 2010 was a milestone year for the bankas NBP became the first financial institution in the country to surpass the '1.0 trillion rupee' mark.Total assets of the bank were at Rs 1.035 trillion at the year end up by 9.5 percent from year end2009, an appreciable growth in a challenging economic environment. The pre-tax profit increasedby 15 percent from Rs 21.3 billion to Rs 24.4 billion despite making general provision of Rs 1.7billion against advances and non-repetition of capital gain on NIT Units of Rs 3.9 billion in 2009.The increase is owing to higher core revenues and lower provision charge. Earnings per share,however, remained at last year level of Rs 13.05 due to prior year tax reversal of Rs 4.1 billion in2009.

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The top line (operating revenue) increased by 7.8 percent from Rs 56.5 billion in 2009 to Rs 60.9billion in 2010. Net interest income increased by 15.4 percent or Rs 5.8 billion from thecorresponding period last year due to higher balance sheet size and re-profiling of liability side.The bank's total deposits increased by Rs 104.7 billion or 14.4 percent. The bank also managed toincrease its CASA deposit ratio from 56 percent last year to 62 percent. The core revenue from fee

business increased by eight percent attributable to enhanced focus on trade business and higherrevenue from general banking. Capital gains are lower by 45 percent mainly due to recording of Rs3.9 billion capital gain last year on redemption of NIT Units.However, the bank took advantage of higher share prices and was able to realise capital gains of Rs2.5 billion in 2010, which is higher by Rs 1.4 billion from 2009 capital gains excluding NITredemption.Provision charge against advances decreased by Rs 4 billion, from Rs 11.0 billion in 2009 to Rs7.0 billion in 2010 despite making general provision against advances of Rs 1.7 billion in 2010 tofurther strengthen the balance sheet.The bank was reaffirmed "AAA" rating by JCR-VIS Credit Rating Company in June 2010. Thebank was awarded "Bank of the Year" award for the year 2010. The bank has been ranked in "Top

500 banks" in the world by "The Banker Magazine" in its July 2010 edition.

6.PRODUCTS OF NATIONAL BANK OF PAKISTAN

Retail Product

1. Premium Aamdani Home PageUnprecedented Safety - Unprecedented Return

2. Premium Saver Home PageUnprecedented Safety - Unprecedented Return

3. Karobar Home PagePresident's Rozgar Scheme - Easy financing for self employment

4. Saibaan Home PageAffordable, Flexible & Convenient home financing for all

5. Advance Salary Home PageTake up to 20 Advance Salaries - Affordable Installations from 1 - 60 months

6.Cash Card Home PageOne Card does it all - ATM plus Debit Card in one

7. Investor Advantage Home PageInvest with Confidence - Marginal Finance Facility

8. Cash and Gold Home PageMeet your need for ready cash against your idle gold jewelry with no minimum limits

http://www.nbp.com.pk/Aamdani/index.htmhttp://www.nbp.com.pk/Premium/index.htmhttp://www.nbp.com.pk/Karobar/index.htmhttp://www.nbp.com.pk/Saibaan/index.htmhttp://www.nbp.com.pk/advancesalary/index.htmhttp://www.nbp.com.pk/cashcard/index.htmhttp://www.nbp.com.pk/Margin/Index.htmhttp://www.nbp.com.pk/CashnGold/index.htmhttp://www.nbp.com.pk/Aamdani/index.htmhttp://www.nbp.com.pk/Premium/index.htmhttp://www.nbp.com.pk/Karobar/index.htmhttp://www.nbp.com.pk/Saibaan/index.htmhttp://www.nbp.com.pk/advancesalary/index.htmhttp://www.nbp.com.pk/cashcard/index.htmhttp://www.nbp.com.pk/Margin/Index.htmhttp://www.nbp.com.pk/CashnGold/index.htm

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9. Kisan Taqat Home PageNBP KISAN Taqat

10. Kisan Dost Home Page

NBP's affordable agricultural program offers you a wide range of financing

11.Online Home PageKnitting Links - AASAN Banking

12. NBP Helplinefrom 8:30 am to 10:00 pm

7.SAIBAAN SCHEME

NBP SAIBAAN DOCUMENTS FOR SALARIED CLASS

Application form (in original).

CNIC copies of the applicant.

Two references CNIC copies.

Photographs of the applicant(06)

Employment card copy.

Appointment letter.

Service Letter / Certificate.

Salary cum service certificate.

Last three Months salary Certificates.

Branch Accounts statement last six months.

Last Three Month Utility Bills

Approved Map

Original property Documents.

Aks Sajra.

Fard Malkiat

Naqal Intiqal

Khasra Verification report

National Evaluation Companys report.

PT-I

Sale Deed/ Registry.

Processing Fee pay order for Rs.500/= Fee for Evaluator pay order ( in case of construction Rs.2000/= (in case of

Purchase Rs.3000/=

Processing Fee pay for legal opinion order for Rs.1000/=

Borrower Basic Facts Sheet

Confidential Report

ALICO DECLARATION FORM.

http://www.nbp.com.pk/KissanTaqat/Index.htmhttp://www.nbp.com.pk/KisanDost/Index.htmhttp://www.nbp.com.pk/Online/index.htmhttp://www.nbp.com.pk/KissanTaqat/Index.htmhttp://www.nbp.com.pk/KisanDost/Index.htmhttp://www.nbp.com.pk/Online/index.htm

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NBP SAIBAAN DOCUMENTS FOR BUSINESS CLASS

Application form (in original).

CNIC copies of the applicant.

Two references CNIC copies.

Photographs of the applicant(06) Business Related Documents.

Last three years Business Record.

Branch Accounts statement last one year.

Last three month Utility Bills.

ICIL- Department Verification ( Income Estimation)

Approved Map

Registry / Sale Agreement

Aks Sajra. Fard Malkiat

Naqal Intiqal

Khasra Verification report

NOC

National Evaluation Companys report.

PT-I

Sale Deed/ Registry.

Processing Fee pay order for Rs.1000/=financing below Rs. 1 Million.

Fee for Evaluator pay order Rs.3000/=financing between Rs. 1 to Rs. 4 Million.

Processing Fee pay for legal opinion order for Rs.6000/= financing above Rs.4

Million.

Fee for Evaluator pay order ( in case of construction Rs.2000/= (in case ofPurchase Rs.3000/=

Borrower Basic Facts Sheet

Confidential Report

ALICO DECLARATION FORM.

8.FOREIGN CURRENCY

Guaranttee The word guarantee means under taking.

Three parties are involved during the process of Guarantee

Principal (Seller).

Guarantor (Bank).

Beneficiary (Buyer).

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Outward Remittance The outward remittance is the term which emphasizes that to transferamount from one country to another country.

The sources used to transfer the amount are Transfer Transactions (TT), Demand Draft (DD).Theprocedure of outward remittance is initially been undertaken that when account holder fill the

request letter. The request letter contain following information are

Request of debit.

Amount to be mentioned.

Beneficiary name.

Beneficiary account no.

There is the concept of two accounts are NOSTRO A/C, VOSTRO A/C.Western UnionWestern Union is the name of Australian Bank which provide facility of providing payment without wasting time. There are 259 bank8 in world wide who provide the facility where no bank exist

The amount sent to other place for this we do require certain documents are ID copy name ofthe person to whom the amount is sent .Then Bank will assign PIN CODE .The amount is sendwith in 15 minutes. When the receiver go to the bank to receive the amount he had to show his IDCOPY or ORIGINAL PASSPORT then the authorize officer will identify through NADRA itsidentification.

CHARGES

Minimum charges will be received is $20.

Commission will be charged or Rs. 1200.

Inward Remittance In this department the process is contrary to outward remittance the amountfrom foreign country to the Pakistan. In this case the amount received is in the form of cheque, Payorder etc.

9.EXPORT DEPARTMENT

Collection The collection Department is the initial phase of the export department.

First E-Form is to provided to the party .It is given on following criteria

The current account of the exporter should be activated for the issue of the E-Form.

TYPES OF E-FORM

There are four types of form are

Original.

Duplicate.

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Triplicate.

Quadrapled.

The Banks are involved between the parties .All deals and documentation are made between thebanks. The bank of Seller and Buyer contact with their party about the transaction when there is no

conflict between the party the process goes on until transaction is completed.

10. IMPORT DEPRTMENT

In this department they deal with the following section to process the Import Department.

LC opening.

Lodgment.

Retirement of LC.

LC OPENING

Firstly Importer presents the Proforma Invoice to the bank Then Importer will fillthe form (IB-8) which cost Rs.100 .Proforma should not be expired.

C&F(exporter will pay ),FOB( Importer will pay shipment charges) should be mentioned on theform. The LC opening application form requires certain documents are

Name and address of the applicant.

Name and address of the beneficiary.

Insurance detail.

Nature of LC.

Commodity.

LC LODGEMENT

After LC opening Exporter bank will send document to the Importer Bank for the purposeof LC. Advisory bank is the correspondent bank. In case of any discrepancy found and is acceptedthen the $50 is charged for further processing. Normally the discrepancy is created after shipment.When the documents are accepted by Importer and Exporter then payment is to be made.

RETIREMENT OF LC

At time of payment or retirement we deal with following Import channel are LC.

Advance Payment.

Payment after shipment.

Foreign DD & TT.

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LETTER OF CREDIT

LC further categorize in to two things are Sight.Usances.

In case of sight the charges are taken as follows

MARK UP = B.E*Days* 0.4%

1000

In case of Usance the charges are

P&T charges of Rs.400.

Service charges of 0.1%of B.E

Commission is deducted from the party at the time of expiry. When the period is delayed of 1month then charge 0.1%, if the period is 2 month then charges is 0.2%.FED 5% on totalcommission

SERVICE CHARGES

The charges of 0.1% of Bill of Exchange is charged. After the period of 15 days then thecommission is charged .FED is charged on 5% on commission.

ADVANCE OF PAYMENT

The payment is made to the party in advance to the exporter through bank. The bank alsodeduct margin from the Importer so that bank could serve itself

SERVICE CHARGES

Minimum commission for the amount less $400.At increase of every $1000 $ is charged.

FED is to be charged of 5%on commission amount.

P&T is charged of Rs.400

11.DIFFERENT SCHEMES CONDUCTED BY NBP

National Bank of Pakistan always makes efforts to improve its goodwill in the

general public. It introduces different kind of schemes time to time.

The most popular schemes conducted by NBP are as under:

1 ... ... Hajj Mubarak Scheme

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2 ... ... NBP Advance Salary Scheme

3 ... ... Fund Management Scheme

4 ... ... LG TV Scheme

1. HAJJ MUBARAK SCHEME

For the convenience of a person with a limited income who desire to perform Hajj, Hajj

Mubarak Scheme is introduced. Moreover, National Bank of Pakistan process the Hajj applications

of thousands of people successfully more than any other bank in Pakistan.

2. NBP ADVANCE SALARY SCHEME

Do you need urgent funds? If yes then head to National Bank of Pakistan and avail NBP

Advance Salary Scheme, which allow you to draw three months salary in one go. This facility is

available to permanent employees of the:-

1 ... ... Federal and Provincial governments

2 ... ... Semi-governments, autonomous, semi-autonomous, local bodies, and

government corporations

3 ... ... Other corporations approved by NBP

No guarantee, collaterals, or insurance is required to avail this scheme. NBP gives the

facility to repay the excessive amount within 1 to 36 months. The procedure is very easy, just fill

the application form and choice between 1 to 36 months and take your NBP Advance Salary within

3 days after submitting your form.

3. FUND MANAGEMENT SCHEME

This scheme is offered to corporate under customer and is aimed at providing better rate of

return up to 15% per annum. One of the objectives of the scheme is to develop the secondary

market for government securities.

4. LG TV SCHEME

It is the most popular of NBP schemes for people. corporates with LG Appliances Corporation.

If you want a TV set but has not enough money to purchase it then head to NBP, fill an application

form of LG TV Scheme. NBP gives you the facility to pay for the TV set in smaller installments

during a time period of 2 years.

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Any one can avail this scheme. Two government employees are required to present the witness

to repay the loan if the applicant is unable to repay the loan or the applicant should have the Fixed

Term Deposit in NBP more worthily than the amount advanced to the applicant and it should have

the duration of more than two years.

12.ORGANIZATIONAL STRUCTURE

In this section four topics are discussed. The major topics of this section are:

1. Management and Organization of a Commercial Bank2. Senior Management3. Regional Structure4. Branch Structure

1. MANAGEMENT AND ORGANIZATION OF A COMMERCIAL BANK

The ownership, management, and control of all the commercial banks were taken over bythe Government of Pakistan on January 1st, 1974.

A banking council was formed under the Nationalization Act 1974. The banking council was setup for making policy recommendations to the Federal Government, formulating policy guidelinesfor the banks and their reorganization.The management and organizational structure of the nationalized banks have uniformity. Thismanagement and organizational structure is briefly described as under:

Board of Directors

Executive Board

Chief Executive

Divisional Chiefs

Provisional Chiefs

Circle Executive

Zonal Heads

Branch Managers

1.1 Board of Directors

In the management of the banks, the board of directors is at the top of the controlling body. Sincethere are no private share holders now, so there is no general meeting of the share holders and noelected directors. The BOD consists of a nominated President, a Secretary, and 9 other members.The board has limited administrative powers because after the Nationalization Act 1974, most ofpowers are transferred to the Banking Council and Executive Board.

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REGIONALCHIEF

EXECUTIVE

1.2. Executive Board

The general direction and supervision of the affairs of commercial banks lies in their respectiveExecutive Boards. An EB also consists of a President, a Secretary, and 9 other members, appointedby the Federal Government.

1.3. Chief Executive

The President of the Executive Board is the Chief Executive. He is the administrative head of abank and presides over the meetings of Executive Board.1.4. Divisional Chiefs

In order to improve the management and operation of a bank, it has been split up into a numbers ofdivisions. Each division of a bank is placed under the supervision and control of Divisional Chief(also called the Senior Executive Vice President or Executive Vice President)1.5. Provisional Chiefs

In order to improve the performance of banking system, each bank has a Provisional Chief. PC hasthe powers for sanctioning finance and other credit facilities. Each headquarter is situated in each

province e.g. in Lahore, Peshawar, Quetta, and Karachi.

1. 6. Circle Executive

Each commercial bank has a number of circles placed directly under the control and supervision ofChief Executive.1.7. Zonal Heads

Each circle is divided into a number of zones. These zones are administered by Zonal Heads whohold the posts of Vice President or Assistant Vice President.

1.8. Branch Managers Each zone of commercial bank is divided into several branches. Thecontrol and supervision of each branch is mostly entrusted to Assistant Vice President orOfficer G-I

3.REGIONAL STRUCTURE

GENERAL GENERAL GENERALMANAGER MANAGER MANAGER

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MESSANGER

Advances, Legal Planning, Business Administrativeand Recovery Wing Development WingCustomer Servicesand Implementationof Audit

4.BRANCH STRUCTURE

MANAGER OG-I ADVANCE

OG-II ADMIN

OG-II OG-II OG-II OG-III

SERVICES CASHIER ACCOUNTS

ASSISTANT ASSISTANT ASSISTANT ASSISTANT

GODOWN GODOWN GODOWN GODOWNKEEPER KEEPER KEEPER KEEPER

HEAD MESSANGER

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13.DEPARTMENTALIZATION

Dividing an organization into different parts according to the functions is calleddepartmentalization. So NBP is divided into Departments.

1. CASH DEPARTMENT

2. CLEARANCE DEPARTMENT

3. ADVANCES DEPARTMENT

4. REMITTANCE DEPARTMENT

5. Department of HUMAN RESOURCE MANAGEMENT

6. DEPOSIT DEPARTMENT: -

7. FOREIGN EXCHANGE/DEPARTMENT:

1. CASH DEPARTMENT

Cash department performs the following functions1.1) Receipt

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

It is a bankers primary contract to repay money received for this customers account usually byhonoring his cheques.1.3) Cheques and their Payment

The Negotiable Instruments. Act, 1881,Cheque is a bill of exchange drawn on a specified banker and not expressed to be payableotherwise than on demand.

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Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics asmentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say that aCheque can be defined as an:An unconditional order in writing drawn on a specified banker, signed by the drawer, requiringthe banker to pay on demand a sum certain in money to, or to the order of, a specified person or to

the bearer, and which does not order any act to be done in addition to the payment of money.(Law of Banking by Dr. Hart, p.327).1.4) the Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in order to fulfill the requirementsmentioned in Section 6 above the Cheque must have the following.

It should be in writing

The unconditional order

Drawn on specific banker only

Payment on Demand

Sum Certain in money

Payable to a specific person

Signed by the drawer

1.5) Parties to Cheque

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

The Drawer

The Drawee

The Payee

1.6) Types of Cheques

Bankers in Pakistan deal with three types of chequesa) Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be collected throughclearing.b) Order cheque

These types of cheques are also cashable on the counter but its holder must satisfy the banker thathe is the proper man to collect the payment of the cheque and he has to show his identification. Itcan also be collected through clearing.c) Crossed Cheque

These cheques are not payable in cash at the counters of a banker. It can only be credited to thepayees account. If there are two persons having accounts at the same bank, one of the accountholder issues a cross-cheque in favour of the other account holder. Then the cheque will be

credited to the account of the person to whom the cheque was issued and debited from the accountof the person who has actually issued the cheque.

1.7) Payment of Cheques

It is a bankers primary contract to repay money received for his customers account usually byhonouring his cheques. Payment of money deposited by the customer is one of the root functionsof banking. The acid test of banking is the receipt of money etc. from the depositors, andrepayment to them. This paying function is one, which is the distinguishing mark of a banker and

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differentiates him from other institutions, which receive money from the public. However thebankers legal protection is only when payment is in Due Course. The payment in due coursemeans payment in accordance with the apparent tenor of the instrument, in good faith and withoutnegligence to any person in possession thereof under circumstances, which do not afford areasonable ground of believing that he is not entitled to receive payment of the amount therein

mentioned. It is a contractual obligation of a banker to honor his customers cheques if thefollowing essentials are fulfilled.

Cheques should be in a proper form:

Cheque should not be crossed:

Cheque should be drawn on the particular bank:

Cheque should not mutilated:

Funds must be sufficient and available:

The Cheque should not be post dated or stale:

Cheque should be presented during banking hours:

2. CLEARANCE DEPARTMENT

A clearinghouse is an association of commercial banks set up in given locality for thepurpose of interchange and settlement of credit claims. The function of clearinghouse is performedby the central bank of a country by tradition or by law. In Pakistan, the clearing system is operatedby the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as aclearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The use of chequesin making payments has also widely increased. The collection as settlement of mutual obligationsin the form of cheques is now a big task for all the commercial bank. When Cheque is drawn on

one bank and the holder (payee) deposits the same in his account at the bank of the drawer, themutual obligation are settled by the internal bank administration and there arises no inter bankdebits from the use of cheques. The total assets and total liabilities of the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at the samebank as the drawer. He deposits the cheque with his bank other than of payer for the collection ofthe amount. Now the bank in which the cheque has been deposited becomes a creditor of thedrawers bank. The depositor bank will pay his amount of the cheque by transferring it from cashreserves if there are no offsetting transactions. The banks on which the cheques are drawn becomein debt to the bank in which the cheques are deposited. At the same time, the creditors banksreceive large amounts of cheques drawn on other banks giving claims of payment by them.

The easy, safe and most efficient way is to offset the reciprocal claims against the other andreceive only the net amount owned by them. This facility of net inter bank payment is provided bythe clearinghouse.

The representatives of the local commercial banks meet at a fixed time on all the businessdays of the week. The meeting is held in the office of the bank that officially performs the duties ofclearinghouse. The representatives of the commercial banks deliver the cheques payable at other

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local banks and receive the cheques drawn on their bank. The cheques are then sorted according tothe bank on which they are drawn. A summary sheet is prepared which shows the names of thebanks, the total number of cheques delivered and received by them. Totals are also made of all thecheques presented by or to each bank. The difference between the total represents the amount to bepaid by a particular bank and the amount to be received by it. Each bank then receives the net

amount due to it or pays the net amount owed by it.

2.1) In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are being received by thebank in the first clearing. All details of the cheques are recorded in this book.2.2) Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the details of thecheques that the bank has delivered to other banks.3. ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank.The major portion of the profit is earned through this department. The job of this department is tomake proposals about the loans. The Credit Management Division of Head Office directly controlsall the advances. As we known bank is a profit seeking institution. It attracts surplus balances fromthe customers at low rate of interest and makes advances at a higher rate of interest to theindividuals and business firms. Credit extensions are the most important activity of all financialinstitutions, because it is the main source of earning. However, at the same time, it is a very riskytask and the risk cannot be completely eliminated but could be minimized largely with certaintechniques.

Any individual or company, who wants loan from NBP, first of all has to undergo the filling of aprescribed form, which provides the following information to the banker.

3.1) Name and address of the borrower.

Existing financial position of a borrower at a particular branch.Accounts details of other banks (if any).

Security against loan.

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

Signing a promissory note is also a requirement of lending, through this note borrowerpromise that he will be responsible to pay the certain amount of money with interest.

3.2) Principles of Advances

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

Safety

Character

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Capacity

Capital

Liquidity

Dispersal

Remuneration

Suitability Forms of Loans

Cash Finance

Overdraft/Running Finance

Demand Financing/Loans

a. Safety

Bankers funds comprise mainly of money borrowed from numerous customers onvarious accounts such as Current Account, Savings Bank Account, Call Deposit Account, SpecialNotice Account and Fixed Deposit Account. It indicates that whatever money the banker holds isthat of his customers who have entrusted the banker with it only because they have full confidencein the expert handling of money by their banker. Therefore, the banker must be very careful andensure that his depositors money is advanced to safe hands where the risk of loss does not exist.The elements of character, capacity and capital can help a banker in arriving at a conclusionregarding the safety of advances allowed by him.

b. Character

It is the most important factor in determining the safety of advance, for there is no substitute forcharacter. A borrowers character can indicate his intention to repay the advance since his honestyand integrity is of primary importance. If the past record of the borrower shows that his integrityhas been questionable, the banker should avoid him, especially when the securities offered by himare inadequate in covering the full amount of advance.It is obligation on the banker to ensure that his borrower is a person of character and has capacityenough to repay the money borrowed including the interest thereon.

c. Capacity

This is the management ability factor, which tells how successful a business has been in the pastand what the future possibilities are. A businessman may not have vast financial resources, butwith sound management abilities, including the insight into a specific business, he may make hisbusiness very profitable. On the other hand if a person has no insight into the particular businessfor which he wants to borrow funds from the banker, there are more chances of loss to the banker.

d. Capital

This is the monetary base because the money invested by the proprietors represents their faith inthe business and its future. The role of commercial banks is to provide short-term capital forcommerce and industry, yet some borrowers would insist that their bankers provide most of thecapital required. This makes the banker a partner. As such the banker must consider whether theamount requested for is reasonable to the borrowers own resources or investment.

e. Liquidity

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Liquidity means the possibilities of recovering the advances in emergency, because all the moneyborrowed by the customer is repayable in lump sum on demand. Generally the borrowers repaytheir loans steadily, and the funds thus released can be used to allow fresh loans to otherborrowers. Nevertheless, the banker must ensure that the money he is lending is not blocked for anundue long time, and that the borrowers are in such a financial position as to pay back the entire

amount outstanding against them on a short notice. In such a situation, it is very important for abanker to study his borrowers assets to liquidity, because he would prefer to lend only for a shortperiod in order to meet the shortfalls in the wording capital. If the borrower asks for an advance forthe purchase of fixed assets the banker should refuse because it shall not be possible for him torepay when the banker wants his customer to repay the amount. Hence, the baker must adhere tothe consideration of the principles of liquidity very careful.

f. Dispersal

The dispersal of the amount of advance should be broadly based so that large number of borrowingcustomer may benefit from the bankers funds. The banker must ensure that his funds are notinvested in specific sectors like textile industry, heavy engineering or agriculture. He must see that

from his available funds he advances them to a wide range of sector like commerce, industry,farming, agriculture, small business, housing projects and various other financial concerns in orderof priorities.Dispersal of advances is very necessary from the point of security as well, because it reduces therisk of recovery when something goes wrong in one particular sector or in one field.

g. Remuneration

A major portion of the bankers earnings comes form the interest charged on the money borrowedby the customers. The banker needs sufficient earnings to meet the following:Interest payable to the money deposited with him.

Salaries and fringe benefits payable to the staff members.

Overhead expense and depreciation and maintenance of the fixed assets of the bank. An adequate sum to meet possible losses.

Provisions for a reserve fund to meet unforeseen contingencies.

Payment of dividends to the shareholders.

h. Suitability

The word suitability is not to be taken in its usual literary sense but in the broader sense ofpurport. It means that advance should be allowed not only to the carefully selected and suitableborrowers but also in keeping with the overall national development plans chalked out by theauthorities concerned. Before accommodating a borrower the banker should ensure that the lendingis for a purpose in conformity with the current national credit policy laid down by the central bank

of the country.

i. Forms of Loans

In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the formof cash finance, overdrafts and loans. NBP provides advances to different people in different waysas the case demand.

j. Cash Finance

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This is a very common form of borrowing by commercial and industrial concerns and is madeavailable either against pledge or hypothecation of goods, produce or merchandise. In cash financea borrower is allowed to borrow money from the banker up to a certain limit, either at once or asand when required. The borrower prefers this form of lending due to the facility of payingmarkup/services charges only on the amount he actually utilizes.

If the borrower does not utilize the full limit, the banker has to lose return on the un-utilized amount. In order to offset this loss, the banker may provide for a suitable clause in the cashfinance agreement, according to which the borrower has to pay markup/service charges on at leaston self or one quarter of the amount of cash finance limit allowed to him even when he does notutilize that amount.

k. Overdraft/Running Finance

This is the most common form of bank lending. When a borrower requires temporaryaccommodation his banker allows withdrawals on his account in excess of the balance which theborrowing customer has in credit, and an overdraft thus occurs. This accommodation is generallyallowed against collateral securities. When it is against collateral securities it is called Secured

Overdraft and when the borrowing customer cannot offer any collateral security except hispersonal security, the accommodation is called a Clean Overdraft. The borrowing customer is inan advantageous position in an overdraft, because he has to pay service charges only on thebalance outstanding against him. The main difference between a cash finance and overdraft lies inthe fact that cash finance is a bank finance used for long term by commercial and industrialconcern on regular basis, while an overdraft is a temporary accommodation occasionally resortedto.

l. Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodicinstallments or in lump sum at a fixed future time, it is called a loan. When bankers allow loansto their customers against collateral securities they are called secured loans and when nocollateral security is taken they are called clean loans.The amount of loan is placed at the borrowers disposal in lump sum for the period agreed upon,and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets afixed amount of money for his use, while the banker feels satisfied in lending money in fixedamounts for definite short periods against a satisfactory security

4. REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This departmentdeals with either the transfer of money from one bank to other bank or from one branch to anotherbranch for their customers. NBP offers the following forms of remittances.

Demand Draft

Telegraphic Transfer

Pay Order

Mail Transfer

4.1) Demand Draft

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Demand draft is a popular mode of transfer. The customer fills the application form.Application form includes the beneficiary name, account number and a senders name. Thecustomer deposits the amount of DD in the branch. After the payment the DD is prepared andgiven to the customer. NBP officials note the transaction in issuance register on the page of thatbranch of NBP on which DD is drawn and will prepare the advice to send to that branch. The

account of the customer is credited when the DD advice from originating branch comes to theresponding branch and the account is debited when DD comes for clearance. DD are of two types.

Open DD: Where direct payment is made.

Cross DD: Where payment is made though account.NBP CHARGES FOR DD5

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

Over Rs. 50,000/- is 0.1%

4.2) Pay Order

Pay order is made for local transfer of money. Pay order is the most convenient, simpleand secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay order from

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

4.3) Telegraphic Transfer

Telegraphic transfer or cable transfer is the quickest method of making remittances.Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to thespecified person. The customer for requesting TT fills an application form. Vouchers are preparedand sent by ordinary mail to keep the record. TT charges are taken from the customer. No exciseduty is charged on TT. The TT charges are:Telegram/ Fax Charges on TT = Actual-minimum Rs.125.Cable telegram transfer costs more as compared to other title of money. In cable transfer the bankuses a secret system of private code, which is known to the person concerned with this department

and branch manager.

4.4) Mail Transfer

When the money is not required immediately, the remittances can also be made by mailtransfer (MT). Here the selling office of the bank sends instructions in writing by mail to thepaying bank for the payment of a specified amount of money. Debiting to the buyers account atthe selling office and crediting to the recipients account at the paying bank make the paymentunder this transfer. NBP taxes mail charges from the applicant where no excise duty is charged.Postage charges on mail transfer are actual minimum Rs. 40/- if sent by registered post locallyRs.40/- if sent by registered post inland on partys request.

5. Department of HUMAN RESOURCE MANAGEMENTHuman Resource plays a vital role in the success of every service organization. They

interact between man and machine. Their attitude can win or loose the customer. The positiveattitude could only be created in a conducive environment, which can make the staff dedicatedtowards the organization and its objectives. In reality the man is more important than machine as itis the human which could get maximum out of machine to keep a happy customer. However, mostorganizations give little importance to this very important asset.

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Various aspects related to human resource of National Bank of Pakistan are critically examined inthe following text:

5.1) Selection & Recruitment

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

merit. Most of the employees are low educated. This shows that candidates with some strongfamily background or political pressure are given preference in recruitment and qualifiedcandidates are sometimes left behind.

5.2) Job for Life

Like the employee of public sector organizations in Pakistan, the employees of NBP also enjoytheir job for life. Since there is no risk of early retirement or redundancy in rank, they do notperform with their full potentials. This is one redundancy in rank, they do not perform with theirfull potentials, and this is one of the reasons responsible for the low productivity of the employeesof the Bank.

5.3) Performance AppraisalThe performance of employees of the Bank are appraised though their annual confidential reportsat the end of each year. This has become an outdated method of performance appraisal and nolonger used due to the following reasons:

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

Element of subjectivity is involved in this method.

Employees participation is not ensured in the process of evaluation.

Objectives of employees are not quantified.

5.4) Inter Personal Relationship

Modern management acknowledges human resources as one of the most important assetsof an organization. But by their very nature, human beings are also the most unpredictable. Wherea number of persons work together, interactions among them, of necessity, will lead to conflictsand NBP is no exception. Most interpersonal conflicts in NBP can be traced back to the followingmajor heads.

Lack of Communication

Lack of communication is for the biggest reason for conflicts.

Not only it is due to the failure to send a massage but to an interpretation given to themassage by the receiver is different from that intended.

5.5) Diversity in Values

Diversity in values, perceptions, cultural background and life-style is another reasonresponsible for inter personal conflicts in NBP. Different values and perceptions about the sameissue, event or personality hinder understanding. When things come to such a pavement, therefore,interpersonal conflicts are generated.The dominant trend in all modern industrial societies of the world is merit and expertise, whichhelps promote cohesion and reduce conflicts. But the feudalistic mindset is still very strong in ourset up and there is no tradition of tolerance for differing viewpoints. Hence, interpersonal conflictsare generated.

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5.6) Corruption

Our social acceptance of corruption gives rise to corruption at every level of social andorganizational set up. Corruption involves financial embezzlement, favoritism, nepotism, cronyismand other number of such practices. All these cause resentment that keep building up and lead to

conflict sooner or later.In the past few years, some cases of frauds have happened in different branches. The reasons canbe linked with the employee dissatisfaction of NBP.

5.7) Discipline & Authority

Maintaining discipline and implementation of authority (tables) in letter and spirit is the keyto success of any organization. In NBP, The authority tables are not strictly maintained. Linemanagers are not fully equipped with the authority with no vertical or horizontal interference.

6.) DEPOSIT DEPARTMENT: -

It controls the following activities: A/C opening.

Issuance of cheque book.

Current a/c

Saving a/c

Cheque cancellation

Cash

6.1) Account opening

The opening of an account is the establishment of banker customer relationship. Before abanker opens a new account, the banker should determine the prospective customers integrity,

respectability, occupation and the nature of business by the introductory references given at thetime of account opening. Preliminary investigation is necessary because of the following reasons.

Avoiding frauds

Safe guard against unintended over draft.

Negligence.

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

Formal Application

Introduction

Specimen Signature

Minimum Initial Deposit Operating the Account

Pay-In-Slip Book

Pass Book

Issuing Cheque Book6.1.1) Qualification of Customer

The relation of the banker and the customer is purely a contractual one, however, he musthave the following basic qualifications.

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He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.The agreement should be made for lawful object, which create legal relationshipNot expressly declared void.

6.1.2) Types of AccountsFollowing are the main types of accounts

Individual Account

Joint Account

Accounts of Special Types

Partnership account

Joint stock company account

Accounts of clubs, societies and associations

Agents account

Trust account

Executors and administrators accounts

Pak rupee non-resident accounts

Foreign currency accounts

6.2 Issuing of cheque book:

This deptt issue cheque books to account holders.Requirements for issuing cheque book

The account holder must sign the requisition slip

Entry should be made in the cheque book issuing book

Three rupees per cheque should be recovered from a/c holder if not then debit his/heraccount.

6.3 Current account

These are payable to the customer whenever they are demanded. When a banker accepts ademand deposit, he incurs the obligation of paying all cheques etc. drawn against him to the extentof the balance in the account. Because of their nature, these deposits are treated as currentliabilities by the banks. Bankers in Pakistan do not allow any profit on these deposits, andcustomers are required to maintain a minimum balance, failing which incidental charges arededucted from such accounts. This is because the depositors may withdraw Current Account at anytime, and as such the bank is not entirely free to employ such deposits.

Until a few decades back, the proportion of Current Deposits in relation to Fixed Deposits wasvery small. In recent years, however, the position has changed remarkably. Now, the CurrentDeposits have become more important; but still the proportion of Current Deposits and FixedDeposits varies from bank to bank, branch to branch, and from time to time.

6.4) Saving account

Savings Deposits account can be opened with very small amount of money, and thedepositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate calculated on six-

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month basis under the Interest-Free Banking System. There is no restriction on the withdrawalsfrom the deposit accounts but the amount of money withdrawn is deleted from the amount to betaken for calculation of products for assessment of profit to be paid to the account holder. Itdiscourages unnecessary withdrawals from the deposits.

In order to popularize this scheme the State Bank of Pakistan has allowed the Savings Scheme

for school and college students and industrial labor also. The purpose of these accounts is toinculcate the habit of savings in the constituents. As such, the initial deposit required for openingthese accounts is very nominal.

6.5) Cheque cancellation:

This deptt can cancel a cheque on the basis of;

Post dated cheque

Stale cheque

Warn out cheque

Wrong sign etc

6.6) CashThis deptt also deals with cash. Payment of cheques, deposits of cheques etc.

7. FOREIGN EXCHANGE/DEPARTMENT:

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

L/C dealing.

Foreign currency accounts dealing.

Foreign Remittance dealing.7.1) L/C dealing

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

money transfer. If you are a commercial enterprise then our Letter of Credit service is just whatyou are looking for. With competitive rates, security, and ease of transaction, NBP Letters ofCredit are the best way to do your business transactions.7.2) Foreign currency account dealing:

This deptt deals with the foreign currency accounts which mainly include dollar account,euro account etc.7.3) Foreign Remittance dealing.

This is very important function of this deptt.

14.General observation during Training Program

TRAINING SUBSTANCE

In this section topic discussed is as under:

WORK PERORMED BY US

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we joined National Bank of Pakistan, Shara-e-iqbal on 1st January 2011 and completed ourinternship programme on 28th march, 2011 . First day, the manager introduced us about thefunctioning of the branch and the staff. The manager told us that counter is the most importantplace of the bank. During the eight weeks of our internship, we worked in different departments ofthe branch and did the maximum practice of banking system details of which is as under:

During the internship period I was assigned the tasks as fallow:1. Data entry in computer2. Maintaining D.Ds and T.Ts. Registers3. Customer Dealing about the banks products4. Maintaining the cash department.5 Maintaining the I.T Department6. Accounts opening and closing7. Online banking8. Maintaining saving and current accounts.9. Observing the managerial decision making

Dividing an organization into different parts according to their functions is called departmentation.So NBP Shara-e-iqbal branch is divided into parts.

GENERAL BANKING

First of all, we were asked to work in different sections of general banking. We are attached

to Counter with Abdullah who has good command on this section. Here we dealt with new

customer who wanted to get information and to deal with the branch. This is a very interesting

department because here we met people of different types and deal with them accordingly. In this

section, we observed the following functions:

CHEQUE AT COUNTER

A cheque to withdraw the amount is presented on the counter with the following requisites:

1 ... ... Name of the Account Holder

2 ... ... Current or previous date

3 ... ... Amount in figures

4 ... ... Amount in wording

5 ... ... One signature of the account holder in the right bottom corner of the cheque and

two signature of the bearer on the back

6 ... ... Branch Stamp in front of the cheque

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7 ... ... If the Account Holder uses thumb instead of signature then the Pass Book is

necessary with the cheque

Operations officer checks and verifies all these requisites. If it fulfills all the requisites, it is

forwarded for payment after a certain procedure.

Cash Department:

Cash department mainly deals in cash. The Head of department is Saeed and two cashier

The objective of cash department:

To facilitate people in the payments of their bills and taxes and repayments of cashThere are two main functions of cash department.

i. Paymentii. Receipts

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

Receipts mean collection of utilities bills, taxes etc.

General Banking Departments

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

Remittances Department.

Computer Department.

Advances Department. Clearing Department.

Establishment Department.

Remittances Department:

This department is header by Baseer Agha a very competent person. The objective of thisdepartment is:-

To transfer the money of people from one place to another place in safe and comparablewayThe main functions of this department are:

Issuing of demand draft.

Issuing of Mail transfer. Issuing of Telegraphic transfer.

Issuing of payment order.

Issuing of call deposit.

Pension payments etc.

Closing and scrolling of government collections.

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Advances department:

Every bank has a department which advances money to borrowers. In NBP shara-e-iqbalbranch the advances department is head by the Operation Manager Sir Saleem. He is verycompetent person. The objective of Advances Department is

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

conditions.The main function of this Department is to take surplus money from the people at low rates andlend this money to borrowers at high rates to earn profit.

Clearing Department:

A clearing house is an association of commercial banks set in State Bank of Pakistan forthe purpose of interchange and settlement of credit claims.In NBP Shara-e-iqbal Branch this department is headed by Sir Saleem having experience of aboutthirty years. The objective of this department is to

To facilitate customers for payment their Cheques of other banks.

Two type of clearing books are maintained.

i) In word clearing books:

The bank uses this book for the purpose of recording all the cheques that are being receivedby the bank in the first clearing. All detail of the cheques are recorded in this book.ii)Out word clearing book:

The bank uses outward clearing register for the purpose of recording all the details of thecheques that the banks have delivered to other banks.Computer Department:

This department headed by the Sir Saleem and two other persons Mr. Ali changazai andMr.Baseer are performing the real function.

The objective of this Department is to facilitate customers in payment of their cheques.The main functions performed by this department are:

Checking balance.

Deduction from balance on clearing cheques.

Issuing bank statements..

Establishment Department:

NBP Shara-e-iqbal Branch having an Establishment Department. This Department consists of

only one person Amanullah very competent and experienced person. This department mainly dealswith the branch employees. The main objective of this department is to To regulate bankbusiness.

Main functions of this department are:

Keeps the record of attendance of employees.

Employees salaries distribution.

Employees bonuses etc.

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15.MANAGEMENT INFORMATION SYSTEM (MIS)

We worked in MIS/IT department and observed the system during internship allactivities in IT department were noted and made some practical work there.

MIS Analyst Main Responsibilities: - Assist in the development and planning of the managementinformation systems which will provide timely financial information with respect to productprofitability - Conduct financial analysis for proposed new products, business and other projects -Work closely with business units to define the data.Responsibilities Prepare management accounting entries, maintain funds transfer pricing systemrules and validate system output Prepare and distribute monthly management reports Respond touser inquiries on management accounting results Operate and maintain management accountingdatabase.

Management Information System (MIS)

The National Bank Corporate System provides detailed information (MIS) which can help in

controlling expenses. Monthly management reporting is an integral component of the corporateCard offer from National Bank. It gives the management and its employees a complete expensetracking mechanism. It also provides a reasonable credit period.Thus reducing your working capital requirement this will reduce the time and cost associated withexpense control. The report package provides both Summaries and itemizations of charges andpayments. The reports help you;

Streamline expense control

Analyze spending patterns

Forecast future spending

The Individual Card Member Billing Statement

For convenience they give a one-glance statement that details each individual charge. Itshows clearly all purchases, cash advances, applicable finance and service charges andamounts that remain outstanding month-wise.

Consolidated Company StatementUseful for monitoring Card usage and payments, NBP Corporate Card system provides you withdetails of each Card Member's expenditure. It lists the date, place, amount of expenditure, the netamount payable by each Card Member, and at the end of the report, the grand total for thecompany.

Individual Account Description

once you nominate your employees to become NBP Corporate Card Members, you can receive

reports. These will tell you in a variety of useful ways, how Card members are incurring expenses.Your employees simply need to charge expenses and pay back conveniently after receiving theirstatement. Card Members will receive a billing statement each month that lists their charges andpayment activity.

Cost Savings

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Improved cash float: The Corporate Card minimizes the need for cash advances and theadministrative burden involved in tracking & reconciling them. Moreover, Card Members arebilled once every month, which helps improve the Companies cash flow.

Better rates from Suppliers: Management Information (MIS) generated by the Bank Corporate

Card System helps the Corporation identify new savings opportunities and support fact basednegotiations with suppliers.The Merchant Spending Report provides cumulative spending by all Card Members split into thetravel and entertainment heads for e.g. by Hotel property, airlines, travel agencies, ATM cash withdrawl, car rentals, petrol etc. This information can be used to obtain better rates from suppliers, andrealize tangible cost savings.

No Interest costs: The Bank Corporate Card is a Charge Card wherein bills are payable on receipt.This inculcates financial discipline amongst employees, saving the Company unnecessary interestburden on overdue out standing.

Corporate pricing advantage: Unlike other Cards, Bank Corporate Card recognizes yourCompany's buying leverage. As the number of Cards issued in a company increases the annual feepayable per Card keeps reducing saving costs to the corporation

Reduced Administrative Burden

Single Payment instrument: One Card for all your T & E requirements. The Bank CorporateCard significantly reduces paperwork involved in processing and paying multiple vendor billsacross multiple travelers. It also eliminates the need to set up credit lines with a range of vendorsused by your corporation.Flexibility: You can opt for a billing and payment methodology aligned to your internal accountingand reporting procedures.

Multiple Billing & Payment Plan: Bank has the flexibility of sending bills to individual Cardmembers or to a single recipient in your Company. You can also choose to pay Bank centrally orlet individual Card members settle their own bills.

Access to single vendor for all your travel related needs: As a Bank Corporate Card customer,you can access International travel partner, allowing you the convenience and efficiency of dealingwith a single quality supplier for all your travel related requirements.

Option of Individual and Corporate liability:You have the option of opting for the Corporate Card program with individual or corporateliability.

Benefits to the employees

Convenience:

Ease of charging and accounting business expenses:Bank provides you with a billing statement that lists all charges on the Card date wise with

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complete transaction details.So you know how much you spend and where. The descriptive billingstatements help reconciliation of expensesAttractive spending limit: Unlike most other Cards the Bank Corporate Card provides theflexibility to the corporate to set spending limit for the company nominees. Frequent travelers findthis facility extremely useful when handling large expenses and during unexpected situations such

as extended business trips.Wide acceptance at quality establishments where business travelersnormally incur business expenses. Bank Corporate Card is affiliated to Visa and is welcomed atall Visa Merchant Establishments.

Global Customer Assistance Services: Visa provides the following Card related assistanceservices to Bank Corporate Card Members when traveling overseas.

Lost/stolen Card reporting

Emergency Card replacement

Emergency cash disbursement

Security / Insurance Cover

Photo and Signature option for Individual Card Members

Limited loss Card liability. Post reporting the loss of Card, liability is Nil. World Class Service

24 hour customer services delivered to international standards from all over the country.

Membership Rewards:Bank Rewards Plus Program, Opportunity to participate in the most powerful Rewards

program in Pakistan.. And it is so simple to redeem these points. The Card Member needs toaccumulate a minimum of 150 reward points and at the end of the year can redeem these rewardpoints against any items in the rewards catalogue.

Other Benefits to Card Members

Emergency Assistance Services that enables Card Members to obtain emergency legal/medicalreferrals while traveling overseas.

MIS Supports to other departmentsThe Management Information Services Department provides a variety of services relating tocomputer and telecommunications services, application software development, design andproduction services, and software training to all internal Town clients and departments. Theseservices encompass personal computers, networks, printers, servers, and more. The MISDepartment is an innovator in the field of information technology management, using acombination of management solutions that maximize effectiveness and minimize cost. The MIS

Department also consults with other departments to analyze and select proper IT solutions forspecific applications, provides internet access, computer training and support, and mobilecomputing solutions for Town departments.MIS coordinates all Town-wide core business functions and information technologyadministration. This includes accounts payable, utility billing, payroll administration, generalledger, budget, purchasing, human resource management systems, accounts receivable, permitting,code enforcement, police and fire dispatch and EMS reporting, and office automation.

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System and Network Support

Development and maintenance of the Town's core communication infrastructure and wide areanetwork. Maintain file and application servers and network security management, softwaredistribution, and technical support for hardware and software.

Development:It Provides design, development, implementation services and continued support of special data,and databases town wide.

Web Development

The MIS Department designs, develops, implements and maintains the website.Information technology changes rapidly and new systems and technology are continually beingimplemented and installed. The MIS Department strives to translate this technology into higherproductivity for departments, and higher quality output for reduced costs of operations thatultimately benefits the citizens of area.

16.Structure of the MIS Department

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