national bank of pakistan internship report

University Of Gujrat

CHAPTER # 1

INTRODUCTION OF THE STUDY

Introduction:

This report contains the material about National Bank of Pakistan.NBP came into existence in

1949 and since then it has it has expended its existence and network making itself mote worth

able and valuable, becoming the largest commercial bank of the county. Different products and

services, this bank is offering to the customers with the sense of making quick responsiveness to

the customer needs and necessities.

The students are required to complete Two months internship at some reputable organization of

solid background for the completion of their degree.

The internship has the purpose of making the students acquainting with the practical atmosphere

of the organization and develop practicality of the knowledge what they were taught during their

academic curriculum

Also the internship fulfills the purpose of developing know how of skills, techniques procedures,

systems, measures and dealings which are taught in syllabus.

To see what is the implementation of the concepts which he has been taught and studying as

curriculum, internship serves this purpose in a best way.

I did my internship in National Bank of Pakistan, Railway Road Branch (0788) from 10-10-2011

to 21-11-2011.

During my internship, the strange phenomenon I discovered that there is a close collaboration in

theoretical and practical knowledge. The theoretical knowledge gained during the university life,

helped me greatly to show its manifestation at the practical exposure.

However, slightly difference exists between bookish knowledge and academic knowledge. The

difference is depends on how much the organization implements the skills, tools and practices to

make the environment proactive and responsive.

1.1: Background of study

University requires from the students, submission of internship report of the company wherever

they want to do internship. Al the phenomenon depends upon the student whichever the

organization he likes for this purpose.

I selected National Bank of Pakistan Railway Road Branch for this purpose. Following reasons

stands for it

Largest branches network

Customer responsiveness

Largest commercial Activities

Most trusted Bank as owned by the Govt. of Pakistan.

Less risky for the investment.

I selected this branch for internship because this branch is near to the locality where I live. It is

much easy for me to go home after doing routine work at the branch.

1.2: Purpose of the Study

The compilation of internship report is the basic purpose of the activity. Practical information,

knowledge, exposure and wisdom about working environment attracts me for the compilation of

the report. Following are the salient purposes for which this report is being compiled.

Practical work in an organization

Observation and interpretation of the necessary date

Get acquaintance with the organizational environment

Observation of the management work and liabilities

Development of interpersonal communication.

Knowledge of interactive and supportive organizational environment.

1.3: Scope of Internship

General banking procedures and practices was my basic motive during my internship at National

Bank of Pakistan. Remittance, deposits, advances, account opening, foreign exchange etc include

the operations where I got the opportunity for close observation and practicality.

Also this report covers overall aspects of national Bank of Pakistan.

1.4: Objectives of the Study

To conduct thorough study of National Bank of Pakistan.

To get some field experience about the job

To understand the various operations of the bank

To equip with the practical knowledge and practices.

To get acquaintance with the procedures and practices of general banking

To get familiarity with the banking atmosphere and practical environment

To study the policy acquired by the national Bank of Pakistan.

1.5: Methodology

Primary as well secondary data is the methodology for the compilation of the report. Both these

data helped me greatly to understand and analyze the data.

Personal observation, working with the staff, having discussions with them is the biggest source

of my getting knowledge & also interviews, discussions with various bodies at the bank helped

me greatly in this regarded.

Primary data:

Primary data include Personal observation and Interviews of The Staff members.

Secondary data:

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

1.6: Organization

The organization in which I got an opportunity for the internship is National Bank of Pakistan

which is purely owned by the Government of Pakistan. Its head office is on Chandrigar Road,

Karachi Pakistan. It is the largest Commercial bank of Pakistan with splendid network of branch

throughout the country.

It is serving the nation since 1949. Its balance sheet super passes that of any of the other bank

functioning in the same region and atmosphere. It has shown tremendous progress and

development in becoming modern commercial bank. Its services are available to individual as

well as to corporate sector and the government.

It has also branch offices in:

USA, Canada, Germany, France, Egypt. Bulgaria, Hong Kong, Japan, South Korea, the peoples of

Republic of China, Afghanistan, Turkmenistan, Uzbekistan and Azerbaijan

1.7: Summary

For the accomplishment of the degree of Masters of Business Administration, students are

required to compile the six week report. General banking operations and practices was my main

focus as an internee at National Bank of Pakistan.

To equip with practical knowledge and see the difference between bookish and practical

knowledge serves as basic purpose of the internship in this esteem organization.

CHAPTER # 2

ROLES AND FUNCTIONS OF ORGANIZATION

INTRODUCTION

My work is about the organization National Bank of Pakistan (NBP), which is one of the most

important and legendary function based bank in commercial banking world. I have made focus

of my work performance, policies, efficiencies and contribution in economy. Also the salient

feature of m internship is, in the end, I have made critical overview of this bank.

This bank performs functions of different nature boosted with the purpose of serving the nation

in a prioritize manner. It has designed its each and every aspects of its working to be in

forefronts in national service.

2.1: overall respective sectors in Pakistan

Pakistan came into existence after the division of subcontinent in 1947. It was very panic for the

new born state that the economic sectors were much backward especially banking services in eh

areas, forming the Pakistan were insufficient. Always economic activities flourish under the

umbrella of strong banking shadow.

More addition to the problem was the absence of central bank and banking facilities in the organs

of the new born states as compare India which was bestowed all the developed areas of the

subcontinent. The reserve Bank of India had 99 branches of which only one was located in the

Pakistan, continued to operate as a currency and banking authority for the Pakistan and India

simultaneously, until June 1948. United India had 3,496 branches of scheduled banks. However,

on creation of Pakistan only 213 branches were functional in the area which became Pakistan.

The share of paid-up capital and reserves of these branches was merely 1.5 percent. The State

Bank of Pakistan began operations on 1 July 1948 and became the sole note-issuing authority.

In the first eighteen months of the operation of the State Bank of Pakistan, 52 new branches were

opened in both East and West Pakistan, of which 28 were Pakistani banks, 12 were Indian, 4

were Exchange (i.e. foreign) banks, and 7 were opened by the newly formed National Bank of

Pakistan, of which 6 were in East Pakistan. By December 1949, there were 35 scheduled banks

in Pakistan. Over the years, as the number of branches of banks began to grow, the State Bank

of Pakistan decided to set up a system of new branches under which a certain quota had to be

opened in regions designated by the State Bank.

Commercial banks were asked to extend their areas of operation to regions that were not

particularly economically viable. The Pakistan banking council prepared a scheme for the

recognition of banks. The bank (amalgamation) scheme 1974 was notified in April, providing

for the amalgamation of the smaller banks with bigger ones and following the five units in there

phases:

National bank limited

Habib bank limited

United bank limited

Muslim commercial bank limited

Allied bank of Pakistan limited

The number of branches, which stood at 3397 on Dec 31, 1973, reached on 7661 by end June

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

mark about 323 corers.

2.2: Role of the organization in Pakistan

Much efficient role is National bank is paying to uplift the economy, monetary and banking

sector by introducing different types of schemes and programs for the welfare and betterment of

the nation and country. Significant is its role in boosting up the small and medium size industrial

sector of the economy. To enhance business, economy and cater general public, it has introduced

different types of consumer products. It has designed special policies and programs for the low

and middle income segments of the society.

The salient services offered by this innovative Bank are NBP Karobar, NBP advance salary,

NBP Saibaan, NBP Kisan Dost, NBP cash and Gold. The credit schemes implemented by the

bank are small finance for the agriculture, business and industries, administrator to Qare-e-

Hasna, loans to students, self employment and public transport schemes.

It has made its position amongst top ten banks of the world. It has left far behind all Asian banks

including the banks working in private and public sector of the region.

Global Finance Intelligence magazine "The Banker", published by the prestigious Financial

Times Group, London in its worldwide survey compiled a merit list of top 1000 banks on the

basis of best Profit on Capital, Capital to Assets and Profit on Assets ratios. On best Profit on

Capital (percentage) scale, National Bank of Pakistan was rated as the highest in all of Asia &

8th in the world. This is for the first time that a Pakistani bank got upper position on world

ranking.

2.3: Overall organization and functions of National Bank of Pakistan

NBP was established under the National Bank of Pakistan Ordinance 1949 in Pakistan, Where

the state bank does not have its own ranches, national bank acts as agent of the state bank.

NBP occupies a unique position in the financial sector of Pakistan. It acts as an agent of the

Central Bank wherever the State Bank does not have its own Branch. It also undertakes

Government Treasury operations. NBP is 100% owned by the Government of Pakistan (GOP). :

NBP has an extensive domestic branch network of over 1200 branches located all over Pakistan.

The Bank also has a presence in 24 international locations including the USA, United Kingdom,

Europe and the Far East. It holds 24.6% share of time and demand deposits in the country. Local

currency deposits comprise 67% of bank's total deposits while foreign currency deposits account

for the rest. NBP is Pakistan's largest bank with a customer base of more than 10 million accounts. It

is also the country's leading lender with nearly two million customers.

Vision:

“To be recognized as a leader and a brand synonymous with trust, highest standards of service

quality, international best practices and social responsibility.”

Mission:

NBP will aspire to the values that make NBP truly the Nation’s Bank, by:

Institutionalizing a merit and performance culture

Implementing best and efficient international rules and regulations

Boost up banking sector by flourishing the business and carporate culture.

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

Adopting the best international management practices

Maximizing stakeholders value

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

we operate

Provision of highest performance standards

Prioritizing the customers by providing them best possible schemes and services.

Values:

Highest standards of Integrity

Excellent in programs.

Developing sense of responsibility in all employees

Caring for all the stakeholders.

Flourishing of abilities and professional indulgencies.

Institutionalizing team work and performance culture

Excellence in service

Advancement of skills for tomorrow’s challenges.

Awareness of social and community responsibility

Value creation for all stakeholders

Board of directors:

NAME DISIGNATIONQamar Hussain Chairman & President

Mr. Tariq Kirmani Director

Mrs. Haniya Shahid Naseem Director

Ms. Nazrat Bashir Director

Mr. Ekhlaq Ahmed Secretary Board of Directors

Senior management

Qamar Hussain:

Chief Operating Officer, Head of Credit & Risk Management Group

Dr. Asif A. Brohi

SEVP & Group Chief, Operations Group

Shahid Anwar Khan

SEVP & Group Chief, Overseas Banking Group / Corporate & Investment Banking Group

Ziaullah Khan

SEVP & Group Chief Agriculture Finance Group

Dr. Mirza Abrar Baig

SEVP & Group Chief, Human Resources Management & Administration Group

Amer Siddiqui

SEVP & Group Chief, Commercial & Retail Banking Group

Tariq Jamali

SEVP & Group Chief, Compliance Group

Nadeem A. Ilyas

SEVP Group Chief, Assets Recovery Group / Corporate & Investment Banking Group

Muhammad Nusrat Vohra

SEVP & Group Chief, Treasury Management Group

Khalid Bin Shaheen

SEVP & Group Chief, Global Home Remittance Management Group

Imam Bakhsh Baloch

SEVP & Group Chief, Audit & Inspection Group

N. B. Soomro

SEVP, Special Assignments, President's Secretriate

Agha Fidaullah

EVP/Group Chief, Special Assets Management Group

Shafique Ahmed Khan

EVP & Divisional Head, Islamic Banking Division

Ekhlaq Ahmed

EVP & Secretary Board of Directors

Fazal-ur-Rehman

EVP & Head P&IR Division, HRM&A Group

Muhammad Hanif

EVP & Head HR & OD Division, HRM&A Group

Muhammad Iqbal Qasim

EVP & Head SC & CSR Division, HRM&A Group

Tahira Raza

EVP & Head Risk Review Division, Credit and Risk Management

Ali Hassan

SVP & Divisional Head, IT Division / Chief Information Security Officer

Aamir Sattar

SVP & Divisional Head, Financial Control Division

Faisal Mahmood

VP & Divisional Head (A) , PMO & Project Director CBA

Structure of the National Bank of Pakistan

In National Bank of Pakistan, the head is called “Chairman” or “President” of the Bank. And

after President there is Five Broad of Directors. National Bank of Pakistan has eleven Groups

which control the working of the Divisions, Wing, Department, Section and Regional of the

National bank of Pakistan. In NBP, “Department” is called “Wings”.

Organizational hierarchy chart:

NBP PRODUCTS

NBP Saibaan:

The NBP Saibaan is most affordable and attractive scheme introduce by the NBP at a function

presided over, Shaukat Aziz, Finance Minister of Pakistan, The common man can avail this

facility for house construction and can repay the amount within 3 to 20 years in easy installments

and lowest rates.

PRESIDENT

BOARD OF DIRECTORS

MEMBER EXECUTIVE BOARD

REGIONAL HEADS

BRANCH MANAGERS

Finance is available for home purchase, home construction and home improvement.

Period of repayment ranges between 3-20 years.

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

Mark-up choices available. Rate ranges between 7.5% – 9.75%.

Minimum approval and disbursement timing.

NBP Advance Salary:

10 month salaries in advance (certain conditions apply).

Minimum documentation.

Repayable in 5 years.

No processing charges; no collaterals, no guarantees, no insurance.

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

NBP Cash n Gold:

No maximum limit of cash.

Repayable after one year.

Roll over facility.

No penalty for early repayment.

Facility of Rs.35000 against 10 Grams of Gold.

Mark-up 15.5% per annum.

NBP Kisan Dost:

Loans available for the farmers for production, development purposes, for purchase of tractors,

for installation of tube wells, for purchase of agricultural implements, micro loans, for godown

construction, for construction of fish pond, for livestock farming, for milk processing, for cold

storage, bio-gas plants etc.

Agricultural experts to guide farmers.

Loans available against agricultural passbooks, gold ornaments and paper security.

Mark-up 15.5% per annum.

Loans available at the farmer’s doorsteps.

NBP Karobar (Mera Apna Karobar)

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

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

Life & disability insurance paid by GOP

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

Tenure 1 to 5 years (for PCO 2 years)

Grace period 3 months

Maximum loan amount Rs. 200,000/-

Age 18-45 years

Subject to the availability of subsidy from GOP

NBP Premium Amdani:

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

Free Demand Draft, Pay Order and Cheque Book

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

Free NBP Cash Card (ATM+Debit)

Running finance facility up to 90%

Monthly Income Scheme

Earn up to 11% p.a.

NBP Services:

International banking

National Bank of Pakistan is pioneer of introducing the international banking products in

Pakistan which is proven by the fact tht it has made its successful existence In all the major

capital giants of the world. More pleasant aspect of the bank is that it has established

Financial institution Wing, which works under the Risk Management Group.

The role of the financial institution wing is as under:

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

Determination and analysis of the risk exposure of the organization.

Taking care of all stakeholders in term of financial aspects.

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

NBP Offers:

Offers to support international trade

Provision of the banking services to other organization.

The lowest rates on exports and other international banking products

Access to different local commercial banks in international banking

DEMAND DRAFTS

The NBP offers Demand Drafts at very reasonable rate for very safe, speedy and reliable transfer

of money anywhere. For availing this facility, it is no mandatory for the person to be the account

holder for the bank. Any person can transfer money from ne place to other.

MAIL TRANSFERS:

Move your money safely and quickly using NBP Mail Transfer service. And we also offer the

most competitive rates in the market.

PAY ORDER:

NBP provides another reason to transfer your money using our facilities. Our pay orders are a

secure and easy way to move your money from one place to another. And, as usual, our charges

for this service are extremely competitive.

TRAVELER'S CHEQUES:

Negotiability: Pak Rupees Traveler's 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

LETTER OF CREDIT

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

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

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

Credit are the best way to do your business transactions.

COMMERCIAL FINANCE

Our dedicated team of professionals truly understands the needs of professionals, agriculturists,

large and small business and other segments of the economy. They are the customer's best

resource in making NBP's products and services work for them.

FOREIGN REMITTANCES:

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken

a number of measures to:

Increase home remittances through the banking system

Meet the SBP directives/instructions for timely and prompt delivery of remittances to

the beneficiaries

SWIFT SYSTEM

The SWIFT system (Society for Worldwide Interbank Financial Telecommunication) has been

introduced for speedy services in the area of home remittances. The system has built-in features

of computerized test keys, which eliminates the manual application of tests that often cause delay

in the payment of home remittances.

The SWIFT Center is operational at National Bank of Pakistan with a universal access number

NBP-PKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing

remittances through SWIFT. Using the NBP network of branches, you can safely and speedily

transfer money for our business and personal needs.

SHORT TERM INVESTMENTS:

NBP now offers excellent rates of profit on all it's short term investment accounts. Whether you

are looking to invest for 3 months or 1 year, NBP's rates of profit are extremely attractive, along

with the security and service only NBP can provide.

Equity Investment:

NBP has accelerated its activities in the stock market to improve its economic base and restore

investor confidence. The bank is now regarded as the most active and dominant player in the

development of the stock market. NBP is involved in the following:

Investment into the capital market

Introduction of capital market accounts (under process)

N.I.D.A:

National Income Daily Account The scheme 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 accounts in

operation throughout the country.

OTHER LOANS:

Agricultural finance:

NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who

produce some of the best agricultural products in the World.

Agricultural Finance Services:

“I Feed the World” program, a new product, is introduced by NBP with the aim to help farmers

maximize the per acre production with minimum of required input. Select farms will be made

role models for other farms and farmers to follow, thus helping farmers across Pakistan to

increase production.

Agricultural Credit:

The agricultural financing strategy of NBP is aimed at three main objectives:-

Providing reliable infrastructure for agricultural customers

Help farmers utilize funds efficiently to further develop and achieve better production

Provide farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

Agricultural Credit (Medium Term):

Production and development

Watercourse improvement

Wells

Farm power

Development loans for tea plantation

Fencing

Solar energy

Equipment for sprinklers

Farm Credit:

NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal

basis.

Operating loans

Land improvement loans

Equipment loans for purchase of tractors, farm implements or any other equipment

Livestock loans for the purchase, care, and feeding of livestock

Production Loans:

Production loans are meant for basic inputs of the farm and are short term in nature. Seeds,

fertilizers, sprayers, etc are all covered under this scheme. If you require any further information,

please do not hesitate to e-mail us.

CORPORATE FINANCE

Working Capital and Short Term Loans:

NBP specializes in providing Project Finance, Export Refinance to exporters, Pre-shipment and

Post-shipment financing to exporters, Running finance, Cash Finance , Small Finance,

Discounting & Bills Purchased, Export Bills Purchased, Pre-shipment and Post Shipment

Agricultural Production Loans

Medium term loans and Capital Expenditure Financing:

NBP provides financing for its clients' capital expenditure and other long-term investment

needs. By sharing the risk associated with such long-term investments, NBP expedites clients'

attempt to upgrade and expand their operation thereby making possible the fulfillment of our

clients' vision. This type of long term financing proves the bank's belief in its client's

capabilities, and its commitment to the country.

Loan Structuring and Syndication:

National Bank's leadership in loan syndicating stems from ability to forge strong relationships

not only with borrowers but also with bank investors. Because we understand our syndicate

partners' asset criteria, we help borrowers meet substantial financing needs by enabling them to

reach the banks most interested in lending to their particular industry, geographic location and

structure through syndicated debt offerings. Our syndication capabilities are complemented by

our own capital strength and by industry teams, who bring specialized knowledge to the structure

of a transaction.

Cash Management Services:

With National Bank's Cash Management Services (in process of being set up), the customer's

sales collection will be channeled through vast network of NBP branched spread across the

country. This will enable the customer to manage their company's total financial position right

from your desktop computer. They will also be able to take advantage of our outstanding range

of payment, ejection, liquidity and investment services. In fact, with NBP, you'll be provided

everything, which takes to manage your cash flow more accurately.

Functions of the NBP

Financial Intermediaries or banks interacts two types of individuals and institutions.

Deficit-spending individuals and institutions

Surplus- saving individuals and institutions

Deficit-spending individuals and institutions are those whose expenditures exceed their income,

they need extra money to further carry on their movements required through capital i.e. through

borrowing of money or issuance of stock.

Surplus-saving individuals and institutions are those whose income exceed their level of

expenditures, they have extra money in his pocket; they invest surplus money or deposit it for

savings. In simple words we can say that, a bank is a financial intermediary which accepts

deposit from general public and granting loans. The bank performs following important

functions:

Accepting of deposits:

Bank performed this function by opening of the different type of accounts, which are as follows:

Saving Account

Current Account

Fixed Deposits

N.I.D.A. account

Advancing of loans:

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

Running Finance

Over Draft

Demand Finance Gold

Payment of pensions:

NBP performed this function as a govt. treasurer and all the pensions of federal govt. provincial

Govt. and semi Govt. employees is paid through this bank.

Payment of Cheques:

All the cheques drawn against different types of deposits are honored and paid in cash as they are

presented.

Transfer of funds from one place to another:

Bank is transferred money from one place to another by different means like Demand Draft, Mail

Transfer, Telegraphic or Telephonic Transfer ,Travelers Cheques etc.

Act As Agent Of His Customer:

NBP act as an agent of his customer in different dealing with the third party in the absence of the

customer by servicing nominal charges for these kind of services. Collection of fees and money

for Hajj pilgrimage, National Bank collects the fee and money from the people proceeding for

hajj and act as there agent.

Issuing of traveler’s cheques:

The traveler’s cheques are issued by NBP for safe transfer of money from one place to another,

without charging any commission.　

Salary management governmental institutions:

The salary of govt. and semi govt. employees is first credited to the account of NBP and is then

credited to there personal account.

2.4: Organization office in which you are working:

The office in which I did my internship is NBP, Railway Road Branch Gujrat (0788).There were

(7) employees in the office named as with office responsibility as:

Name Designation Status

Malik Imtaz Ahmed Branch Manager OG-I

Ansar Mehmood Operational Manager OG-II

Javed Iqbal Accountant OG-II

Munir Hassan Cashier OG-II

Saima Kousar Cashier OG-III

Khaliq ur Rehman MTO OG-II

Akhter Mehmood Peon

There are 3 guards which perform their duties on alternative days. It is a small branch which is

established to meet the needs of local area which are usually rural areas. I worked in the branch

as assistance of operations manager and really enjoyed my work by gaining practical knowledge

of banking operations. The branch manager Malik Imtiaz Ahmed is very hard working and

honest person with the experience of about 14 years in NBP different branches. He keeps on

motivating the staff by encouraging and appreciating them. His attitude with the customers was

good and friendly.

2.5: Summary

At the time of Pakistan establishment, Pakistan had not strong banking system. The State Bank

of Pakistan started their operations on 1st July 1948 with passage of time SBP expand their

branches and also established scheduled banks throughout the country provide banking facilities

all people of the country. National Bank of Pakistan also govt. and scheduled bank, it established

under the National Bank of Pakistan Ordinance 1949 in Pakistan. The NBP play vital role in the

economic development of the Pakistan and also introduced different welfare scheme and

programmes. NBP also act as agent of SBP, where SBP has no branch. NBP has more then1200

branches network all over the Pakistan and has also different locations in different foreign

countries. The vision, mission and values is also stated in this chapter which is very important for

an organization. The main functions perform by the NBP is Accepting of deposits , Advancing of

loans that is the main functions which is performed by the bank other functions include Payment

of pensions, Payment of cheques, Salary management governmental institutions.

Chapter # 3

Organization

3.1: Introduction

The topics depicted in this chapter are, history of the NBP, the way of communication between

the head office the NBP and the branch. Moreover, the detail information about the departments

of the NBP has been elaborated. I have complete description about the branch where I have done

my internship has been elaborated. I have made complete and through analysis of the concerns of

NBP about its employees, the way of motivation, rewards and benefits to the employees have

also been analyzed and described. The complete discussion has been summarized how this bank

strengthens its relationship with its employees and customers.

3.1.2: Relationship of Head Office to the Branch Offices:

NBP acquires traditions modes of communicator with its branches. Usually NBP issues the

information by circulars and then sends it to the branches through the post office of via the

courier companies as electronic communication is not in common use in NBP. So, Bank

currently depending upon the traditional modes of communication.

The branch manager sends letter in response or reply in case of any problem or queries acquiring

the same modes of communication traditionally. The reason is that in government organization

much focus is not made on oral or electronic communication.

3.1.3: Number of departments

Following are the departments working in the branch

Account Opening department

Cash department

Clearance department

Advances department

Remittances department

Account opening:

If a person wants to open new A/C with the NBP, account opening officer requires the CNIC of

that person and send it to the NADRA office for certification.

After the verification, account opening officer, issues and application form to the customer.

Customer files the application form and attaches the required documents with the form. After

analyzing the document the officer make entries into the account opening register and issues

account number to the customer, after depositing g certain amount customer can operate his

account.

Documents Required in Account Opening:

Two photograph

Specimen Signature card (Provided By Bank)

N.I.C Copy.

Account opening form (provided by bank)

Types of Account:

Individual Account

The single person can operate this account. The banker runs the account according to the rules

and regulation but if customer gives special instruction the bank will have to follow it.

Joint account:

This type of account will require two or more than two persons to open an account. The account

will be operated by one account holder in case of (either of the survival). If the instructions are

not given, all the account holders will have to sign the check.

Account opening department offer three main types of A/C.

Current account

Profit and loss saving account

Fixed deposit account

Current account:

Current account is a nonprofit account which is flexible with a greater convenience for individual

(in singles or joint names), minor (to be operated by the guardian). Current account can be

opened with a minimum amount of Rs.1000/-(One thousand rupees) Rs.50 will be deduct per

month from account if balance decrease from Rs.5000/-

PLS saving account:

PLS saving account is a simple saving account with a great convenience for individual ( in single

or joint names) minors ( to be operated by the guardian). The account can be opened with the

minimum amount of Rs 100/- (five Hundred rupees). Rs.50 will be deduct per month if balance

decrease from Rs.5000/-

Fixed deposit account:

Fixed deposit account is type of account in which customer deposits their money for fixed period

of time and during this period customer cannot withdraw money if he does so he will have to pay

the extra charges.

CASH DEPARTMENT:

This is very important department because cash is the most liquid asset and most of the frauds

are made in this department, therefore extra care is taken in this department and nobody is

allowed to enter or leave the area freely.

Mostly cash area is grilled and its door is under the supervision of the head of that department.

All the books are maintained in this department and checked by an officer. The following books

are maintained in the cash department.

Cash Balance Book.

Scroll Book.

Receiving Cashier Book.

Paying Cashier Book.

Token Book.

Cash which is received in counter is entered in the scroll book and receiving cashier book. At the

close of day, these are balanced with each other.

If the cheques or any negotiable instrument is presented by the customer for payment, it is

entered in the token book and token is issued to the customer. At the close of day, the token book

& paying cashier book are balanced. Finally the figure of receipt and payment of cash is entered

in the cash balance book and drawn closing balance of cash.

Closing Balance= Opening Balance + Receipts – payments

REMITANCES DEPARTEMNT:

Current business world demand fast movement of cash from one geo-graphic location to

another.NBP Railway Road Branch (0788) Remittances Department performs following

functions.

Demand draft (D.D)

D.D is a negotiable instrument issued by branch of the bank drawn on other branch of the same

bank.

DD Issuance Procedure:

Purchaser is asked to fill in an application form duly singed by applicant. Three things should be

maintained in the form.

Amount of D.D

Place of payment

Name of the Payee

Commission is charged on D.D as bank income, then applicant is asked to deposit the cash

specified on the application form. After depositing cash the remittances incharge prepare a D.D.

Bank also provides this facility to general public who don’t have account in NBP. They will have

to submit a N.I.C copy along with D.D application form.

Mail Transfer (MT):

If the money is not required immediately, the remittances can also be made by MT. Here the

selling officer of the bank sends instructions in writing by mail to the paying bank for the

payment of a specified amount of money. The payment under transfer is made by debiting the

buyer’s account at the sending office and crediting it the recipient’s account at the paying bank.

Telegraphic Transfer (TT):

Transfer is quite simple. First the application form is filled then concerning officer shall fill the

telegraphic transfer form. Then it is sent to the required bank which on receiving the mail

immediately makes the payment to the customer and then the voucher is sent to that bank by

ordinary mail.

Offices or field offices:

National bank is the one of the biggest bank in Pakistan having more than 1266 branches that is

serving the customers.

Head office of National Bank of Pakistan:

National Bank of Pakistan, Head Office NBP Building, I.I. Chandigarh Road,Karachi, Pakistan.

Domestic Branches:

The National bank of Pakistan has 1250 branches in the Pakistan. That is operating in whole of

Pakistan in:

Punjab

Sindh

Baluchistan

Khaber Pakhtoonkha

Islamabad

Azad Kashmir

Gilgit Bultistan

Overseas branches:

NBP has the overseas branches /offices in the following countries:

1. USA,

2. Canada

3. Germany

4. France

5. Bahrain

6. Saudi Arabia

7. Bangladesh

8. Hong Kong

9. Japan

10. South Korea

11. The Peoples Republic of China

12. Afghanistan

13. Turkmenistan

14. Kyrgyz Republic

15. Kazakhstan

16. Uzbekistan and

17. Azerbaijan

3.2 Current staff

Name of Branch where I did my internship

National Bank of Pakistan

Railway Road Branch Gujrat

http://en.wikipedia.org/wiki/Azerbaijan

http://en.wikipedia.org/wiki/Uzbekistan

http://en.wikipedia.org/wiki/Kazakhstan

http://en.wikipedia.org/wiki/Kyrgyz_Republic

http://en.wikipedia.org/wiki/Turkmenistan

http://en.wikipedia.org/wiki/Afghanistan

http://en.wikipedia.org/wiki/The_Peoples_Republic_of_China

http://en.wikipedia.org/wiki/South_Korea

http://en.wikipedia.org/wiki/Japan

http://en.wikipedia.org/wiki/Hong_Kong

http://en.wikipedia.org/wiki/Bangladesh

http://en.wikipedia.org/wiki/Bahrain

http://en.wikipedia.org/wiki/France

http://en.wikipedia.org/wiki/Germany

http://en.wikipedia.org/wiki/Canada

http://en.wikipedia.org/wiki/USA

Branch Code : (0788)

Branch manager: MALIK IMTIAZ AHMED

Following are the prominent of the staff at the branch.

Name Designation Status

Malik Imtaz Ahmed Branch Manager OG-I

Ansar Mehmood Operational Manager OG-II

Javed Iqbal Accountant OG-II

Munir Ahmed Head Cashier OG-II

Saima Kousar Cashier OG-III

Khaliq ur Rehman MTO OG-II

Akhter Mehmood Peon

Training received by no of people or no of employee:

All the members of the branch have proper training of the basic banking operations. Training is

given to the employees through proper procedure. If there is a new employee of the bank he has

been sent to the Regional Branch Sialkot for proper training. So, employees often sent to the

Regional Branch for one or two days training. If any new product is introduced in the bank then

employees were also sending to the head office for the temporary training basis.

Workload:

Work load of the bank staff is based upon on the daily biases. The office timing starts from 9:00

am to 5:30 pm from Monday to Thursday and 9:00 am to 6:00 pm for Friday. After the bank

timing the staff fulfill the daily vouchers transaction and made the entries on the net system and

then counted the cash, put it in the safe. The banking staff should finished their work on daily

basis whether there work is short or long.

Salary structure:

Officer’s salary structure includes the following addition

basic pay

house rent allowance

travelling allowance

medical allowance

telephone allowance

bonuses

Following are the deductions

provident fund

social security fund

loan repayment installment

And salary structures of other employees are simple which lower ranks are.

Name Designation Status Salary

Malik Imtaz Ahmed Branch Manager OG-01 80,000/-

Ansar Mehmood Operational manager OG-02 70,000/-

Javed Iqbal Accountant OG-01 70,000/-

Munir Hassan Head Cashier OG-02 50,000/-

Saima Kousar Cashier OG-III 25000/-

Khaliq ur Rehman MTO OG-02 40000/-

Akhter Mehmood peon 8000/-

Promotion system:

In the NBP the promotion is given to the employees on seniority and performance biases.

Incentives & motivation:

Incentives and motivation is always required to keep the employees energetic and for

organizational success as well.

NBP is the bank that is backed by the government of Pakistan so every benefit that is given to

the other government employees NBP employees also get these benefits. in case of any

emergency for example if an employee suffer from a long term disease or accident bank not

only provide the salary to the affected employees but also bear the expenditure of that particular

diseases.

Responsibilities:

Following are the responsibilities of the branch members which they are performing,

Malik Imtiaz Ahmed is working as branch manager with the responsibility to check the daily

bases work to oversees and control the operations of the bank in order bring conformity with the

NBP rules and regulation. The main responsibilities endured by the bank manager are as follow:.

To check the daily basis work

Implementation of rules and regulations:

To bring conformity with the bank.

Name Designation Responsibilities

Malik Imtaz Ahmed Branch Manager Efficient daily operations Administrative work

Ansar Mehmood Operational Manager Handling all the Operations

Javed Iqbal Accountant Entries in accounts

Munir Hassan Head Cashier Incharge of cash

Saima Kousar Cashier Helping Head Cashier in Cash Collection

Khaliq ur Rehman MTO Assist the Operational manager

Akhter Mehmood peon Office boy

Critical analysis of the branch

Since now bank, is using conventional systems of communication with all the stakeholders. The

bank is making untiring efforts to computerize all the branches but the main aspect which

becomes hurdle in this way that most of the NBP employees don’t have computer skills

background and they till work manually. Most of the staff, working at the branch is aged and

reaching near to retirement. The old employees are not well educated and don’t have any

computer and information technology background. So they are much resistant to fast adaptability

of computer systems. Moreover, there are no facilities for females, old age customers, so they

have to face number of problems in the bank. Further, I observe at the branch, building

construction work is under process. So they employees have to face the problem. Much dreadful

aspect is that almost all of the work is manual. So it takes long for the completion of different

processes. Both the stakeholders including staff and customers are inconvenient with the manual

systems. Intense the situation become with the load shedding problems.

Much panic I was to see the inadequate staff in some departments. So much of dependence is

developed upon the internees for the completion of the work and they go back much late in

evening which makes the employees tired and tense in the stuff work. In-spite all these, much

powerful problem which making the branch unsecure by security point of view is law and order

situation. So branch has to face so many problems especially in the dates of pensions because all

types of pensioner’s are treated same day that’s why this creates problem. The balance sheet and

income statement provides the brief summary of the branch success.

Following are the few things that should be improved at the branch.

Communication system:

The communication system of NBP is poor because it takes a long time to reach information

from head office to the branch. In technological world of banking you can’t rely on the

communication through post office or Courier Company. The communication among the

members of the staff was good.

Hiring system:

The hiring system of NBP is very effective, employees are selected through proper recruitment

process, and there are no of tests which a candidate has to go through. But there is a political

pressure on hiring system by some politicians as it is Govt. bank. So there is political influence

in the hiring system of NBP.

3.3.: Physical facilities

The branch where I have done my internship is NBP Railway Road Branch (0788), the physical

facilities available to the customers and staff is adequate, there is a proper sitting arrangement for

customer, there is facility of gas heater in winter and air conditioners for summer. Proper rooms

are available for keeping record registers and refreshment facility for employees as well. The

facility of printer, internet, and phone is also available

3.4: Performances

The performance of the branch in terms of quality is good and customers are satisfied about the

services that are provided to them. The behavior of the staff with the customers is very good and

pleasant.

3.5: Summaries

This chapter is usually about the organizational attitude towards its employees and employee’s

satisfaction.NBP has the traditional way of communication in order to communicate with the

offices or branches. NBP provide wide range of functions and services having different

departments to retain and maintain their customers. Some of these departments are the account

opening department, Advance department, Bill department, clearing department etc. NBP has

very affective training department and every employee of bank has received the basic training of

banking course. NBP has the different structure of salary for its employees. To motivate the

employees NBP provide many allowances and facilities to its employees such as medical facility,

huge amount of bonuses and also motivate the employees through promotions. In NBP some

time hiring system is influenced by the politicians because it a government backed bank.

Chapter # 4

NBP Policies and Strategies

4.1 Policies:

Liquidity Risk

Asset and Liability Committee (ALCO) through Treasury and management Group manages the

liquidity positions. This committee is also responsible for the maintenance of balance sheet

liquidity, ratios, depositor’s concentrating both in terms of overall funding mix and avoidance of

undue reliance on large individual deposits and liquidity contingencies plan.

No Gender discrimination:

Jobs are purely offered on merit basis. The people of knowledge, particular skills and abilities

are considered as successful for the job and also there is no discrimination on gender basis i.e

male and female disparity. It offers opportunities equally to bath males and females.

Opening account policy:

Basic information about residence, occupation, source of income, expected level of activity in

the account and reasons for opening the account, bank requires for the opening of a new

account..

Policy related to training of employees:

NBP has designed strategy and procedures for the training of all the employees. And also

hereafter development programs are after for the achievement of specialization work to azquire

organizational goals.

Revenue Recognition:

Accrual basis policy is used by NBP for revenue recognition. NBP also invest its money other

than the advances, while investing in the securities NBP has the following policy to invest in:

a) Held for trading

b) Held to maturity

c)

In the light SBP regulations quoted securities are shown at market values and any changes

arising are taken to profit and loss account only upon actual realization.

Renewal of Loan:

If a borrower is not able to pay the liability in a specified period, then NBP has the policy to

renew the loan on the demand of the borrower. If borrower is not agree with this policy the

security can be sold by the bank to recover the amount the borrower has no claim on its security

in this particular case. So through this practice, bank has the right for the recovery of amount

from the borrower.

Risk management:

The interest rate policy is related to risk management policy of the bank. Credit and currency

risks by using different tools i.e. swap, collateral etc, serves in this regard. To identify, monitor

and manage, the bank has developed a framework for the implementation of the risk policy

Human Resource Function:

For the development of core banking skills, abilities and knowledge, bank has very solid and

comprehensive training program which is offered to the employees from time to time. Also

employees are awarder to boost their motivational level and turn them as loyal with the

organization to exert and achieve higher organizational goals and performances. A merit based

system is developed to empower the employees through appraisal system.

Internship Policy:

NBP Is such an excellent bank which makes its preference to serve all types of the customers and

devotes each and every moment to cope with the demands of the customers. Also it has designed

the policy to accommodate the students for six weeks internship which is offered from time to

time.

4.2: Strategies

Retain old customers, attract new customers more and more stands as NBP competitive strategy.

For the achievement of the objectives and goals, NBP devise different strategies which are

implemented for their successful results. These strategies are as under.

Cost leadership:

NBP is offering its services at as low prices as possible than the other bank in the same locality

to prove its existence as cost leadership. But the quality of service is never compromised.

Unique service provider:

NBP makes no stone unturned to provide excellent and unique services to its customers who are

its prime priority. NBP always stands in forefronts in order to cope with the challenges and

proves it a different bank.

Customer oriented:

NBP designs such king of policies and procedures to offer such excellent services to the

customers which they cannot get from other competitors.

Offer variety in products and services:

NBP is aimed at providing verity of products and services to its customers in order to attain the

unique position in the market to get core competencies and also using it as the corporate strategy.

The products include different types of account, loans and other services which are very helpful

to the customers and these products and services are very helpful in completing several purposes

of the bank.

Online facility:

NBP is striving hard to make its existence possible for 24 hours a day and for this purpose an

extensive internet system is used which ensures the improvement in this context and much

efforts are being made in this context to make the system more effective and powerful.

Review of sick units at regular interval:

The loans are provided for the boost up of the sick units, agricultural and industrial nits

frequently use this facility. The employees of the banks regularly review and judge the

performance of sick units for the reimbursement of the loans.

Visits of Senior Executives:

To keep the employees motivate and morale check, the executives from the Head Office,

frequently visits the field staff. It proves very effective to keep the field force loyal with the

organization. This strategy is very powerful for the achievement of the organizational objectives.

Reward mechanism:

Very attractive rewards are offered to result and performance oriented employees. This is much

effective policy to keep the employees much loyal and motivated. This is also helpful in building

the strong relationship with the organization.

4.3: Success

National Bank of Pakistan's profitability has earned it a place amongst top ten banks of the

world. It has beaten all Asian banks including those in private and public sectors in the region.

Global Finance Intelligence magazine "The Banker", published by the prestigious Financial

Times Group, London in its worldwide survey compiled a merit list of top 1000 banks on the

basis of best Profit on Capital, Capital to Assets and Profit on Assets ratios. On best Profit on

Capital (percentage) scale, National Bank of Pakistan was rated as the highest in all of Asia &

8th in the world. This is for the first time that a Pakistani bank got upper position on world

ranking.

NBP is Pakistan's largest bank with a customer base of more than 10 million accounts. It is also

the country's leading lender with nearly two million customers

“Bank of the Year” awarded for the year 2005 by the world renowned “The Banker”

magazine owned by the Financial Times Group, London.

4.4: Summary

The whole scenario of this chapter is about policies, strategies and procedures which have been

manifested for achieving stated objectives and destination. Some of the policies have been

covered in this chapter to depict how this bank is turning itself as customer oriented and proving

itself as cost leadership. Also the policies about risk management, account opening, internship

policy, and revenue recognition and reward system have also been mentioned to show the picture

how the bank is effective in the customer regard and responsible in this context.

Chapter # 5

NBP Analysis

Introduction

In this chapter the internal and external analysis of NBP is under consideration. First NBP

strengths, weaknesses are discussed then through pest analysis the environment in which NBP is

working is scan. The following are the details of the above stated analysis.

5.1: SWOT ANALYSIS

In this chapter we examine the internal & external analysis of NBP. SWOT analysis is used for

finding out strengths, weakness, opportunities, and threats SWOT analysis is watchful valuation

of an organization’s internal strengths and weakness. It also checked out the environmental

opportunities and threats for an organization.

“The overall assessment of a company strengths, weaknesses, opportunities and threats is known

SWOT analysis.”

A view of Internal & external environment is very important part of the strategy formulation

process of any organization. Environmental factor of the firm can be classified into strengths &

weakness while as, external factors are opportunities, and threats for the organization.

STRENGTHS:

The strengths of a firm are the capabilities & resources which can be used as a basis for

formulation of competitive edge for a firm.

Following are the strengths of National Bank of Pakistan:-

Largest Bank in Pakistan:

National Bank is the largest bank in Pakistan having 24.6% share of time & demand Deposits in

the Pakistan. 67% of bank total deposit comprised of local currency deposits & remains accounts

are foreign currency deposits.

Government Bank & Agent of Central Bank:

National Bank of Pakistan is working for Government of Pakistan by taking responsibilities for

all claims regarding payment & recovery of funds. On other hand where the State Bank of

Pakistan does not have their branches, NBP perform on behalf on State Bank of Pakistan.

Wide Network:

The bank has another capability i.e. it has wide network of branches throughout the Pakistan &

also more than one branch in high productive cities. The customers are provided services in

nearest possible place to confirm customer satisfaction. (1266) Branches are opened in Pakistan

to provide different services.

Employee Benefits:

NBP is offering reasonable monetary benefit. Moreover two bonuses are given Eid-Ul-Fitar &

Eid-Ul-Azha are also paid to the employees. This serves as an additional benefit and proficiency

for the bank and a source of inspiration for its employees.

Rules & Regulation:

Rules & Regulations are strictly followed by bank & its employees in order to enhance the

performance of the bank. The disciplined environment at NBP supports its image and also

increases the overall output of the National Bank of Pakistan. Customer has to follow procedure

for account opening and availing loan from National bank of Pakistan. Rules are follow to

maintain discipline in order to increase overall performance of the organization.

WEAKNESSES:

Weaknesses are the absence of certain strengths.

Following are the weak points of National Bank of Pakistan:

Lack of Computerized System:

The Banks are using technology to reduce the time, energy & resources, but in National Bank of

Pakistan there is a lack of technology usage. If the bank online its all branches it will become the

strength of the bank & will able to satisfy its customers. They should offer ATM facility in all

branches. Other commercial banks are offering this faculty in their branches.

Political Interference:

A strong political influence by government and their dominance is distressing the bank in a negative way.

The bank, sometime provide loan under the political pressure, which increase the Non-performing loan

portion of bank & altimetry effect the Profit & Loss statement of the Bank.

Lack of Products:

The bank falls far behind when the innovative and new schemes are considered. It has not been

involved in the tug of war between the competitors to the accounts and strengthens the existing

customer base. This stands out to be the major incompetence and weakness of the banks.

Poor Counter Services:

In main Branches, during rush of work, the employees are flopped to handle the people. The

Pensioners, Bill payers & Salary employees of different departments are approaching from

windows and doors. The bank has not enough space to provide setting arrangement for these

customers with is considered a weakness for the bank.

Un-fair Work distribution:

The workload in NBP is not equally distributed and the workload is likely to be more on some

employees while others abscond away from their responsibilities, which server as a de -

motivational factor for employees performing above average work.

OPPORTUNITIES:

External environment analysis demonstrates certain new opportunities for organization to

increase its profit growth. Following are some Opportunities for National Bank of Pakistan:

Electronic Banking:

The world today has become a global village because of development in the technologies,

particularly in communication segment. More importance is now given to avail the technologies

to improve the results. NBP can exploit the electronic banking opportunity to ensure on line

banking 24 hours a day.

Micro Financing:

The need for micro financing in the Small business is going on increasing side, there is lot of

opportunities in this area of financing. Other banks have already taking steps to increase micro

financing, now the time has arrived when the NBP must understand it and take on step to

accommodate an ongoing demand.

Training Programs:

The training programs for employees may be developed to increase the skills of existing staff.

The hiring system of new employees also needs to be revised. The management should need to

reduce the political influence during employee’s selection process.

Appraisal System for employees:

The improvement in appraisal system for employees may lead to increase the motivation in the

employees. A fair system for increasing Grads of the staff is introduced in National Bank of

Pakistan.

THREATS:

Political Pressure by Government:

The political forces in the country affect the performance of the bank. When the loans are

sanctioned to the politically powerful persons it creates a sense of insecurity and discouragement

to the customer as well as employees.

Emergence of New Competitors:

The bank is facing threats with the appearance of new competitors in banking industries. These

foreign banks are operational with heavy financial power and new ways of promoting and

performing their work. The bank has to initiate program in this regard otherwise it will find itself

far back as compared to its competitors.

New Products/Services of Competitors:

The Banks and other financial institutes are offering new attractive products/ services to the

customers. The free services on minimum deposits from HBL & other attractive offers from

banks is creating threat for NBP to retain its customers.

Customers Care:

No regular and specific system of the removal of customer complaints in available in National

Bank of Pakistan. The customer complaints are ignored with without satisfaction of the

customers. The bank should focus on this segment to attract more customers for its products/

services.

5.2: PEST analysis:

Identification of external and macro factors that influence buyers and thus change the size and composition of market overtime involves initially building customer profiles. These influences include:

Political and legal environment Economic trends Socio cultural environment Technological factors

POLITICAL AND LEGAL ENVIRONMENT:

Political and legal environment is composed of regulatory agencies and government law that

influence and limit various organizations and individuals. Mostly these laws create new

opportunities for business. The banks' performance over the near to medium term could be adversely

affected by recent political developments in Pakistan though the ratings agency views such risks to

be adequately reflected in the low individual ratings.NBP is a Govt. own bank so due to change in

the political and legal environment its operations will be affected and ultimately performance

will suffer. Usually these regulations

Protect banking companies from unfair competition.

Protect the interest of the society from unbridled business behavior.

Try to stable the political environment.

Protect consumers from unfair business practices adopted by banking companies.

ECONOMIC TRENDS:

Pakistan’s economy continued to suffer from the after effects of the economic sanctions of

1998 and the impact of the international economic recession. Even some of the macro-economic

indicators improved during 2000, however the operating environment of the banking sector

continued to remain difficult. The overall demand for bank credit remained lower because

of no investment in any of the sector .this low demand led to an intense competition among

banks for relatively few good borrowers in the market, resulting in substantial reduction in

the lending rates. At the same time managed exchange rate.

A banking market requires better consumer market in volume along with higher borrowing

power. Marketers need to consider the state of a trading economy in the short and long-terms.

This is especially true when planning for international marketing. You need to look at:

Interest rates.

The level of inflation and employment level.

Long-term prospects for the economy GDP per capita, and so on.

Consumer income

Saving rates

Consumption patterns

Rates of interest

Budget deficit

Exchange rates

Cost of living

SOCIO-CULTRAL ENVIRONMENT:

A society is shaped by beliefs, norms and values. The social and cultural influences on business

vary from country to country. It is very important that such factors are considered. Factors

include:

The low demand of bank credit led to increase competition among banks for relatively

few good borrowers in the market

the dominant religion

the attitudes to foreign products and services? In many sectors,

Threat of new entrants

New market positioning assumed by new banks especially HBL

Consciousness about services

Concern for environment

Improved customer relation

TECHNOLOGICAL FACTORS:

Forces of technological advancement have played the most important role in shaping the lives of

people. The rate of change of technology has greatly affected the rate of growth of economy.

Technology is vital for competitive advantage, and is a major driver of globalization.

NBP is the largest banking group signified its renewed commitment to building its IT

infrastructure to deliver growth and improved services to its customers across Pakistan and

across the globe and provides services like

ATMs System

Electronic Banking

SWIFT

Telephone Banking

New technology is creating deep rooted affects which could be observed in long run. The

improvement techniques involved in on line banking.

Technology is vital for competitive advantage, and is a major driver of globalization. Consider

the following points:

Does technology allow for products and services to be made more cheaply and to

a better standard of quality?

Do the technologies offer consumer and businesses more innovative products and

services such as internet banking, new generation mobile telephones, etc?

How is distribution changed by new technologies e.g. books via the internet,

flight tickets, auctions, etc?

Does technology offer companies a new way to communicate with consumers e.g.

banners, customer relationship management (CRM), etc?

In brief PEST analysis affects the overall banking companies and provides us the information

about the external macro condition.

5.3: Financial Statements:


Balance Sheet as at December 31, 2009/2010

Assets 2009 2010

(Rs.000 (Rs.000)

Cash and balance with Banks 79,155,081 70,944,010

Balances with other Banks 30,001,482 29,150,948

Lending to financial Institutions 18,749,309 15,939,501

Investments 71,759,449 72,609,081

Advances 170,319,096 140,318,362

Other Assets 36,952,148 35,944,790

Operating fixed Assets 7,199,835 6,729,046

Deferred Tax Assets 952,590 Nil

Total Assets 415,088,990 371,635,738

LiabilitiesBills Payable 2,245,349 2,152,050

Borrowing from financial Institution 11,424,963 10,298,970

Deposits and other accounts 349,617,068 316,493,342

Liabilities against Assets 46,092 _____

Other Liabilities 34,185,081 25,274,874

Deferred tax Liabilities _____ 433,585

Total Liabilities 397,578,553 354,652,821

Net Assets 17,510,437 16,982,917

Represented By:

Share Capital 3,730,384 1,463,880

Reserves 7,476,063 9,728,799

Unappropriated profit 752,226 184,848

Total 11,958,673 11,377,527

Surplus on Revaluation of Assets 5,551,764 5,605,390

Total 17,510,437 16,982,917

National Bank of PakistanHorizontal Analysis

Balance SheetAs on 31st December 2009

Assets 2008 2009 (Inc/dec) %age

(Rs.000 (Rs.000)

Cash and balance with Banks 79,155,081 ``` 70,944,010 8,211,048 11.57

Balances with other Banks ``` 30,001,482 29,150,948, 505, 34 2.92

Lending to financial Institutions 18,749,309 15,939,501 2809,808 17.63

Investments 71,759,449 72,609,081 (849,632) (1.70)

Advances 170,319,09 140,318,362 30,000,734 21.38

Other Assets 36,952,148 35,944,790 1,007,358 2.80

Operating fixed Assets 7,199,835 6,729,046 470,789 7.00

Deferred Tax Assets 952,590 Nil 952,590 Nil

Total Assets 415,088,990 371,635,738 43,453,252 11.69

LiabilitiesBills Payable 2,245,349 2,152,050 93,299 4.39

Borrowing from financial Institution 11,424,963 10,298,970 1,185,993 11.52

Deposits and other accounts 349,617,068 316,493,342 33,123,726 10.47

Liabilities against 46,092 _____ 46,092 Nil

Other Liabilities 34,185,081 25,274,874 8,910,207 35.25

Deferred tax Liabilities 433,585 (433,585) 100.00

Total Liabilities 397,578,553 354,652,821 42,925,732 12.10

Net Assets 17,510,437 16,982,917 527,520 3.11

Represented By Share Capital 3,730,384 1,463,880 2,266,504 154.83

Reserves 7,476,063 9,728,799 (2,252,736) (23.16)

Unappropriated profit 752,226 184,848 567,378 306.94

Total 11,958,673 11,377,527 581,146 5.11

Surplus on Revaluation of Assets 5,551,764 5,605,390 53,626 0.96

Total 17,510,437 16,982,917 527,520 3.11


Vertical AnalysisBalance Sheet

As on 31st December, 2010.

Assets 2009 % age 2008 %age

(Rs.000) (Rs.000)

Cash and balance with Banks 79,155,081 19.07 70,944,010 19.09

Balances with other Banks 30,001,482 7.23 29,150,948 7.84

Lending to financial Institutions : 18,749,309 4.16 15,939,501 4.29

Investments 71,759,449 17.29 72,609,081 19.53

Advances 170,319,096 41.03 140,318,362 37.73

Other Assets 36,952,148 1.73 35,944,790 1.81

Operating fixed Assets 7,199,835 8.90 6,729,046 9.67

Deferred Tax Assets 952,590 0.23 Nil Nil

Total Assets 415,088,990 100.00 371,635,738 100.00

Liabilities

Bills Payable 2,245,349 0.54 2,152,050 0.57

Borrowing from financial Institution 11,424,963 2.77 10,298,970 2.77

Deposits and other accounts 349,617,068 84.23 316,493,342 5.16

Liabilities against 46,092 0.01 _____ Nil

Other Liabilities 34,185,081 8.23 25, 274, 870 6.80

Deferred tax Liabilities _____ Nil 433,585 0.12

Total Liabilities 397578553 95.7 354,652,821 95.43

Net Asset 17,510,437 4.2 16,982,917 4.57

Represented By

Share Capital 3,730,384 0.89 1,463,880 0.39

.Reserves 7,476,063 1.80 9,728,799 2.61

Unappropriated profit 7,52,226 0.18 184,848 0.05

Total 11,958,673 2.88 11,377,527 3.61

Surplus on Revaluation of Assets 5,551,764 1.34 5,605,390 1.51

Total 17,510,437 4.22 16,982,917 4.70

Note:

Total Assets are used as base for vertical Analysis for 2009 & 2008.


Profit & loss AccountFor the year ended December 31st,2009

Particulars 2010 2009

(Rs.000) (Rs.000)

Net markup/Interest income 10,272,710 7,141,959

Non markup/Interest income 4,501,568 4,030,248

Total Income 14,774,278 11,172,207

Operating Expences

Administrative expenses 8,709,895 8,008,620

Other provisions 332,912 (516,463)

Loss of joint venture 6,456 Nil

Other charges 8,790 17,788

Total opr expenses 9,058,053 7,509,945

Amortization of deferred cost 2,700,596 2,629,862

Total Expenses 11,758,649 10,139,807

Profit before taxes 3,015,629 1,032,400

Net Taxes Payable 1,867,100 571,173

Profit after taxes 1,148,529 461,227

Unappr:profit/loss 184,848 (230,256)

Profit available for appropriation 1,333,377 230,971

Appropriation:

Statutory reserves 114,853 46,123

Cash dividend 466,298 Nil

Total 581,151 46,123

Unapproprated profit 752,226 184,848

Earnings per share 3.08 1.24

National Bank of PakistanHorizontal Analysis

Profit & loss Account

For the year ended December 31st,2010.

Particulars 2010. 2009. Inc/(dec) %age

(Rs.000) (Rs.000)

Net markup/Interest income 10,272,710 7,141,959 3130751 43.84

Non markup/Interest income 4,501,568 4,030,248 471320 11.70

Total Income 14,774,278 11,172,207 3602071 0.09

Administrative expenses 8,709,895 8,008,620 701275 8.76

Other provisions 332,912 (516,463) 849375 164.46

Loss of joint venture 6,456 Nil 6456 100.00

Other charges 8,790 17,788 (8998) (50.58)

Total opr expenses 9,058,053 7,509,945 1548108 20.61

Amortization of deferred cost 2,700,596 2,629,862 70734 2.70

Total Expenses

Profit before taxes 3,015,629 1,032,400 1983229 192.10

Net Taxes Payable 1,867,100 571,173 1295927 276.89

Profit after taxes 1,148,529 461,227 687302 149.02

Unappr:profit/loss 184,848 (230,256) 415104 180.30

Profit available for appropriation 1,333,377 230,971 1102406 477.30

Appropriation:

Statutory reserves 114,853 46,123 68730 149.01

Cash dividend 466,298 Nil 466298 Nil

Total 581,151 46,123 535028 160.00

Unapproprated profit 752,226 184,848 567378 306.94

Earning per share 3.08 1.24 1.84 148.39

5.4:Ratios Analysis

There is almost an infuriate number of ratios which can be used particularly by the management

to construct financial mode to determine the impact of increase or decrease in the cost of

inputs .The financial ratios which have a universal application almost all types of an organization

are the follows

1. Liquidity Ratios.

2. Management Ratios.

3. Profitability Ratios.

4. Market value Ratios.

For the ratios analysis of banks the following data is available.

2010 2009

(Rs.000) (Rs.000)

1. Current Assets. 237570059 224588330

2. Current Liabilities 47961485 38159479

3. Owners Equity 11958673 11377527

4. Total Assets 415088990 371635738

5. Advances 170319096 140318362

6. Profit Before taxes 3015629 1032400

7. Profit after taxes 1148529 461227

8. Paid up capital 3730384 1463880

9. No of equity shares 3730384 146388

10. Outsider funds 361102031 326792312

11. Total income 14774278 11172207

12. Total deposits 349617068 316493342

1. The Current Ratio

Formula: (Current assets / Current Liabilities)

2010

(237570059/47961485)=1:4.95

2009

(224588330/38159479)=1:5.89

* Interpretation:

This ratio is showing a increasing trend as it is 1:4.95 in 2010 and 1:5.89 in 2009 and according

to the recommendation of State Bank of Pakistan a ratio of 1:1 is considered Good. So the

current Ratio of the Bank is very good.

2. Working Capital:

Formula: (Current Assets -Current Liabilities)

2010

(237570059-47961485)=189608574

2009

(224588330-38159479)=186428851

3. Return on Share Holders Investment:

Formula: (Net profit after taxes/Share Holder equity *100)

2010

1148529/11958673*100=9.60%

2009

461227/11377527*100=4.05%

4. Return on Equity Capital:

Formula: (Net profit after taxes /paid up equity capital *100)

2010

1148529 / 3730384 *100=30.79%

2009

461227 / 1463880*100=31.51%

Interpretation:

Return on equity capital ratio shows a decrease in a ratio in 2009 it was 31.51% While in 2010 it

is 30.79% it shows that the return on equity capital is decreases In 2010

5. Earning per Share:

Formula: (Net profit after taxes / no of equity shares)

2010

1148529/373038 =Rs.3.08 per share.

2009

461227/146388= Rs.3.15 per share.

Interpretation:

Earning per share ratio shows a decrease in a ratio 2009 it was Rs.3.15 per share while in 2010 it

is 3.08 per share it shows that the earning per share decreased in 2009.

6. Debt Equity Ratio:

Formula: (Outsiders funds / Share Holder equity)

2010

361102031/ 11958673=1:30.20

2009

326792312/11377527=1:28.72.

7. Equity Ratio:

Formula: (Share Holder Funds/Total Assests *100)

2010

11958673/415088990*100=2.88%

2009

9978164/371635738*100=2.68%

Interpretation:

Equity ratio is increased 0.20% in 2009 as compared to 2010

8. Return on Assets:

Formula: (Net profit after taxes / Total Assets * 100)

2010

1148529/415088990*100=0.27%

2009

461227/371635738*100=0.12%

Interpretation:

Return on assets shows a favorable position in 2009.

9. Assets turn over Ratio:

Formula :( Total Income/Total Assets)

2010

14774278/415088990=1:0.0355

2009

11172207/371635738=1:0.030

10. Return on Deposits:

Formula: (Net profit after taxes/Total Deposit)

2010

1148529/349617068=1:0.0032

2009

461227/316493342=1:0.0014

Interpretation:

Return on Deposit shows of favorable position in 2010 as compared to 2009.

11. . Advances to Deposits :

Formula: (Advances/Total Deposits*100)

2010

170319096/349617068*100=48.71%

2009

140318362/316493342*100=44.3%

Interpretation:

Advances to deposits in 2009 48.71% and in 2008 44.3% which shows a increasing position

As compared to 2010

12. Solvencey Ratio:

Formula: (Total Assets / Total Liabilities)

2010

415088990/397578553=1:1.044

2009

371635738/354652821=1:1.047

Interpretation:

Solvency Ratio has been decreased 0.003 in 2010 as compared to 2009 which is Satisfactory.

Final Remarks:

By analyzing the overall performance I can say that the bank has improved its working And it

link to be getting better in profit earning sector and it is expected that the Profitability of the bank

will be improved in the future year as it has financed many Projects in the country such as

Subsidiary Company, National Discounting Services Ltd. Taurus Securities Ltd. , National Bank

Modarba Management Company Ltd. and National Agriculture Ltd.

Summary

In this chapter we have discussed internal and external analysis of the NBP through SWOT as

internal and PEST as external analysis. The NBP has a core strength that is it is backed by the

business and people that have the trust on it. And weakness is that there is a lack of adoptability

to the technological changes that have take place in the environment. NBP has the opportunity to

focus the retail market and provide the services to individuals. If the NBP don’t take the benefits

of the opportunity then this opportunity will convert into threat.

Chapter # 6

Recommendations with their feasibility (economics, political, financial)

The bank should improve the quality of training of its employees and the integrity, controls

and efficiency of its systems, processes and financial reporting.

NBP major fault is that wasn’t keep its pace with ongoing changing in banking industry

unlike other bank. Now this bank combining all it power and trying to approach other banks.

Latest reorganizing efforts are necessary in order to make it cost effective also making its

facility accordingly to modern banking. These must continue.

To attract the customer in the future NBP have to make extensive effort to give facilities of

retail and consumer banking. Plus the technology in the banking which will be necessary for

future banking is another week area need to be stressed.

The outlook and interior lay out of the branches is another thing which needs to be improved

The procedure for providing services must be easier and straight forward not involving long

procedure for simple task.

The bank should improve its pension scheme in order to avoid the complexity.

The bank should develop software for pension disbursement.

NBP, being the only lending arm to the government for public sector development should

design, develop and deliver product and services for economic growth.

The NBP should adopt modern banking tools and techniques. Quality leadership, clear

vision, investment in IT infrastructure and human resource development

References

http://www.nbp.com.pk

http://en.wikipedia.org/wiki/National_Bank_of_Pakistan

http://pkproblems.com/index.php/banking-evolution-in-pakistan/

http://www.privatisation.gov.pk/Finance/Nbp.htm

http://www.highbeam.com/doc/1G1-82482715.html


http://www.quickmba.com/strategy/swot/

MALIK IMTIAZ BRANCH MANAGER

ANSAR MEHMOOD OPERATIONS MANAGER

JAVED IQBAL ACCOUNTANT

http://www.quickmba.com/strategy/swot/



http://www.privatisation.gov.pk/Finance/Nbp.htm

http://pkproblems.com/index.php/banking-evolution-in-pakistan/

http://en.wikipedia.org/wiki/National_Bank_of_Pakistan

http://www.nbp.com.pk/

University Of Gujrat

Name Tahir Mahmood

Roll Number 11014220-004